View full case

NIPPON PAINT PHILIPPINES v. NIPPON PAINT PHILIPPINES EMPLOYEES ASSOCIATION

FACTS:

Nippon Paint Philippines, Inc. (petitioner) and Nippon Paint Philippines Employees Association (respondent) entered into a Collective Bargaining Agreement (CBA) in 2007, which provided that petitioner would pay its employees their holiday remuneration pay every year on regular holidays listed in the CBA. The CBA also granted premium pay to union members on regular holidays. In 2009, Republic Act No. 9849 declared Eidul Adha as a regular holiday. Petitioner's employees received holiday pay for regular holidays in 2010 and 2011, including an additional holiday pay for Eidul Adha. However, in the 2012 CBA, Eidul Adha was not mentioned as a regular holiday, and employees were not given holiday pay for Eidul Adha that year. Respondent argued that the additional holiday pay for Eidul Adha had ripened into a company practice and could not be revoked. Petitioner claimed that the payments in 2010 and 2011 were due to an error in its payroll system and discontinued the practice in 2012.

The Voluntary Arbitrator (VA) ruled that there was no established grant or company practice for Eidul Adha as a regular holiday and that the payments in 2010 and 2011 were a system error. The Court of Appeals (CA) set aside the VA's decision and declared that the employees had a vested right to the additional holiday pay for Eidul Adha, and the practice could not be diminished or discontinued. Petitioner filed a petition for review, disputing the CA's ruling.

ISSUES:

  1. Whether or not the Honorable Court of Appeals erred in ruling that respondent and its members are entitled to an additional 100% pay in 2012 and 2013 for the Eidul Adha holiday.

  2. Whether or not the Honorable Court of Appeals erred in not ruling that herein petitioner is entitled to a refund for the payments made in 2010 and 2011 for the Eidul Adha holiday due to a system error.

RULING:

The Court denies the petition.

PRINCIPLES:

  • Holiday pay is a legislated benefit under the Labor Code of the Philippines.

  • Employees are entitled to holiday pay even if no work is rendered on regular holidays.

  • The principle of non-diminution of benefits, under Article 100 of the Labor Code, ensures that any benefit being enjoyed by employees cannot be reduced or eliminated by the employer.

  • The existence of a company practice can ripen into a vested right if done over a significant period in a consistent and deliberate manner.

  • Jurisprudence demands substantial proof of regular company practice by showing regularity and the deliberate intent of the employer to grant the benefit over a considerable period.

  • Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the Code shall favor labor.

DOCTRINES

  • The principle of non-diminution of benefits protects employees from having regular benefits withdrawn.

  • Company practices can become vested rights for employees if it is shown that the practice was consistent and deliberate.