G.R. No. 215504 , August 20, 2018
Societe Internationale De Telecommunications Aeronautiques (SITA), et al., Petitioners vs. Theodore L. Huliganga, Respondent

FACTS

Respondent Theodore L. Huliganga was employed by petitioner Societe Internationale De Telecommunications Aeronautiques (SITA) from 1980 until his retirement on December 31, 2008. Upon retirement, he received benefits computed at 1.5 months of basic pay per year of service. Huliganga filed a complaint, claiming a deficiency in his retirement pay. He argued that the applicable coefficient should be 2 months per year, as stipulated in the 2005-2010 Collective Bargaining Agreement (CBA) covering SITA’s rank-and-file employees. Huliganga asserted that it was a well-established company practice for SITA to adopt new economic benefits from the CBA as amendments to its Employee Regulations Manual, thereby extending such benefits to managerial employees like himself.
The Labor Arbiter and the National Labor Relations Commission (NLRC) dismissed Huliganga’s complaint. They found no employer-employee relationship between Huliganga and the other corporate petitioners (SITA, INC. and EQUANT) and ruled that he had received his full retirement benefits from SITA. The NLRC upheld the dismissal, noting that Huliganga, as a managerial employee, was excluded from the CBA’s coverage. However, the Court of Appeals partially granted Huliganga’s petition, modifying the NLRC decision. The CA directed SITA to pay Huliganga a deficiency, ruling that the practice of extending CBA benefits to managerial employees had ripened into a company practice.

ISSUE

Whether the Court of Appeals erred in ruling that respondent Huliganga, a managerial employee, is entitled to the increased retirement benefits provided under the CBA for rank-and-file employees based on alleged company practice.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court held that while managerial employees are expressly excluded from joining or forming a labor organization and are not covered by a CBA under Article 245 of the Labor Code, they are not automatically barred from receiving benefits granted therein if a voluntary company practice of extending such benefits is established. The legal logic centers on the principle that a company practice, when consistently and deliberately practiced over a period of time, can create a vested right for employees, even if not stipulated in a contract or manual.
In this case, the Court found that Huliganga sufficiently proved the existence of such a practice. Evidence showed that SITA had a history of adopting improved economic benefits from successive CBAs and applying them to all employees, including managers, by issuing corresponding amendments to the Employee Regulations Manual. This practice was not unilateral or motivated by nudum pactum but was a deliberate corporate policy. Since the practice was not shown to be founded on an error or abruptly discontinued, it had crystallized into a benefit that Huliganga had a right to expect upon his retirement. The Court emphasized that factual findings of the CA, when supported by substantial evidence, are generally conclusive. Consequently, SITA was obligated to compute Huliganga’s retirement pay using the 2-month coefficient, making him entitled to the awarded deficiency.