- Petitioner
- Central Azucarera de Tarlac
- Respondent
- CAT Labor Union-NLU
- Citation
- G.R. No. 188949
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Nachura, J.
- Decided
- July 26, 2010
Computation of 13th-month pay and application of non-diminution of benefits rule
Summary
Central Azucarera de Tarlac attempted to change its 30-year practice of computing 13th-month pay by including additional components beyond basic salary, claiming the previous computation was erroneous. The labor union challenged this change as diminution of benefits. The Supreme Court affirmed lower court rulings that the company's longstanding practice had ripened into a binding policy under Article 100 of the Labor Code's Non-Diminution Rule. The Court rejected the company's error claim, finding the guidelines under P.D. 851 were clear and that changing the computation after 30 years, particularly during labor disputes, demonstrated bad faith. The decision reinforces that consistent, deliberate employment practices become binding contractual obligations that employers cannot unilaterally withdraw, protecting workers' established benefits from arbitrary reduction.