Honda Philippines vs.

Samahan ng Malayang
Manggagawa sa Honda
Facts: Honda Phils, Inc (company) and
Samahan ng Malayang Manggagawa sa
Honda (union) started renegotiations of their
CBA. When there was a bargaining deadlock,
the union filed a notice of strike. The
company likewise filed a notice of lockout.
SOLE assumed jurisdiction and ordered both
parties to desist from their strike and
lockout.
However, the union subsequently filed a
second notice of strike on the ground of
unfair labor practice, alleging that the
company illegally contracted out work to the
detriment of the workers. The union went on
strike. SOLE assumed jurisdiction and
certified the case to NLRC for compulsory
arbitration. The striking employees were
ordered to return to work and management
accepted them back.

Honda then issued a memorandum

announcing its new computation of the 13th
and 14th month pay whereby the 31-day
strike shall be considered unworked days for
the purpose of computing said benefits. The
amount equivalent to 1/12 of the employees
basic salary shall be deducted from
the bonuses (because they did not work for 1
month). Furthermore, Honda wanted a prorata paymentof the 13th month pay.
The union opposed said computation
because it was contrary to the Sections 3
and 6 in their current CBA which mandates
that the company shall maintain the present
practice in the implementation of the 13th
month pay and that the 14th month pay
shall be computed in the same way as the
former.
The Bureau of Working Conditions (BWC)
sided with the company. But the issue was
unresolved by the grievance machinery, so it
was submitted for voluntary arbitration. The
Voluntary Arbiter invalidated Hondas

computation and ordered the computation of

the benefits based on the full month basic
pay.
CA affirmed, hence this petition.
Issues:
(1) Whether or not there is ambiguity in the
CBA provisions concerning the 13th and 14th
month pay
(2) Whether or not the proposed computation
of Honda deducting 1/12 of the employees
basic salary from the 13th and 14th month
pay and its pro-rata payment are valid
Held:
(1) YES. A collective bargaining agreement
refers to the negotiated contract between a
legitimate labor organization and the
employer concerning wages, hours of work
and all other terms and conditions of
employment in a bargaining unit. The parties
in a CBA may establish such stipulations,
clauses, terms and conditions as they may
deem convenient as long as they are not
contrary to law, morals, good customs,
public order or public policy. Where the CBA
is clear and unambiguous, it becomes the
law between the parties.
However, there are times when the CBA
provisions may become contentious. In this
case, Honda wanted to implement a prorated computation based on the no work, no
pay rule. Honda argues that the phrase
present practice in the CBA refers to the
manner ofpayment of the bonuses (50% in
May and 50% in December). The union, on
the other hand, insists that the CBA
provisions necessarily relate to the
computation of the benefits.

As the voluntary arbitrator has correctly

observed, there is ambiguity in the assailed
CBA provisions because they did not
categorically state whether the computation

of the 13th and 14th month pay would be

based on a one full months basic salary of
the employees, or pro-rated based on the
compensation actually received.

(2) NO. The ambiguity in the CBA provisions

was correctly resolved by the arbitrator by
relying on Article 1702 of the Civil Code,
which provides that in case of doubt, all
labor legislation and all labor contracts shall
be construed in favor of the safety and
decent living of the laborer. CA is also
correct in ruling that the computation of the
13th month pay should be based on the
length of service and not on the actual wage
earned by the worker.
PD 851 or the 13th Month Pay Law was
issued to protect the level of wages of
workers from worldwide inflation. Under the
IRR of said law, the minimum 13th month
pay shall not be less than 1/12 of the total
basic salary earned by an employee within a
calendar year. The Court has interpreted
basic salary to mean, NOT the amount
actually received by an employee, but 1/12
of their standard monthly wage multiplied by
their length of service within a given
calendar year.
The IRR also provide for a pro-ration of this
benefit ONLY in cases of resignation or
separation from work. In the present case,
there being no resignation/separation, the
computation of the 13th month pay should
not be pro-rated but should be given in full.
Moreover, it has not been proven that Honda
has been implementing pro-rating of the
13th month pay before the present case. It is
not a company practice. In fact, there was an
implicit acceptance that prior to the strike, a
full month basic pay computation was the
present practice intended in the CBA. It
was the second strike that prompted the
company to adopt the pro-rata computation.