Supreme Court orders Central Azucarera de Tarlac: Restore higher 13th-month pay

MANILA, Philippines - In what could be an early display of independence from the new administration, the Supreme Court (SC) has ruled against the sugar mill and refinery owned by President Aquino’s family in Tarlac.

In a 10-page decision, the SC Second Division junked the petition of Central Azucarera de Tarlac (CAT) seeking the reversal of a ruling of the Court of Appeals (CA) last year that ordered it to restore the higher 13th month pay to its employees.

The SC affirmed the CA ruling, noting that CAT had acted in bad faith in reducing the 13th-month pay of its employees who were involved in the violent strike six years ago that left seven workers dead.

The SC said the practice of giving 13th-month pay should not be unilaterally withdrawn.

The court noted CAT has been providing 13th-month pay to its employees based on their gross annual earnings that included the basic month salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay.

CAT continued the practice for almost 30 years.

“The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employee.

“Petitioner only changed the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and employees erupted,” said the SC ruling penned by Associate Justice Antonio Eduardo Nachura.

“This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith,” the SC added.

The SC dismissed CAT’s claim that there was an error in the computation of the 13th-month pay of its employees.

CAT said the error was discovered by the management only when the workers’ union, Central Azucarera de Tarlac Labor Union, raised a question concerning the computation of their 13th-month pay for 2006.

The SC said CAT couldn’t use the argument that it is suffering from financial losses in claiming exemption from the coverage of the law on 13th-month pay.

The court said the exemption would require authorization from the Secretary of Labor.

The SC said CAT failed to obtain such authorization, thus it is not entitled to such exemption.