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CENTRAL AZUCARERA DE TARLAC v. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU

FACTS:

The petitioner in this case is a domestic corporation engaged in sugar manufacturing. The respondent is a legitimate labor organization serving as the exclusive bargaining representative of the petitioner's rank-and-file employees. The dispute arose from the interpretation of the term "basic pay" in relation to the computation of the 13th-month pay. The petitioner has been granting its employees the mandatory 13th-month pay since 1975, using a formula that divides the total basic annual salary by 12. In 2006, the petitioner changed its computation and gave the employees their 13th-month pay based on their total earnings during the year divided by 12. The respondent objected to this change, arguing that the divisor should have been 8 instead of 12 because the employees only worked for 8 months in 2006. The parties attempted to settle their differences through the grievance procedure but failed to reach an agreement. The respondent filed a complaint with the NLRC, which initially dismissed the complaint but was later reversed on appeal. The petitioner's motion for reconsideration was denied, leading it to file a petition for certiorari before the Court of Appeals. The CA affirmed the decision of the NLRC, prompting the petitioner to file a petition for review on certiorari with the Supreme Court. However, the petition was denied for lack of merit.

ISSUES:

  1. Whether petitioner correctly computed the 13th-month pay by including all the components of the Total Basic Annual Salary.

  2. Whether petitioner is required to observe the guaranteed one-month pay by way of 13th-month pay.

RULING:

  1. No. The Court held that petitioner incorrectly computed the 13th-month pay by including components of the Total Basic Annual Salary that should not be considered as part of the basic pay. The basic pay should only include the basic monthly salary of the employees.

  2. Yes. The Court ruled that petitioner is required to observe the guaranteed one-month pay by way of 13th-month pay.

PRINCIPLES:

  • The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage.

  • The basic pay for the computation of the 13th-month pay should only include the basic monthly salary of the employees.