TL;DR

The Supreme Court ruled that managerial employees are not automatically entitled to the retirement benefits outlined in Collective Bargaining Agreements (CBAs) intended for rank-and-file employees, unless a clear company practice of extending such benefits is unequivocally proven. In this case, a former Country Operating Officer of SITA sought higher retirement benefits based on a CBA, claiming it was company practice to apply CBA terms to managerial staff. The Court overturned the Court of Appeals’ decision, reinforcing that CBAs primarily cover unionized rank-and-file employees, and that extending benefits to managerial staff requires solid evidence of a consistent, deliberate, and long-standing company practice, which was not sufficiently demonstrated by the claimant.

Beyond the Bargaining Table: Managerial Retirement and the Quest for ‘Company Practice’

This case, Societe Internationale De Telecommunications Aeronautiques (SITA) v. Huliganga, delves into the nuanced area of retirement benefits for managerial employees in the Philippines, specifically when claims are made based on practices typically reserved for rank-and-file staff under Collective Bargaining Agreements (CBAs). Theodore Huliganga, a former Country Operating Officer at SITA, contended that he was entitled to a higher retirement benefit, mirroring the terms of the CBA negotiated for rank-and-file employees. He argued that SITA had established a company practice of extending the economic benefits of CBAs to its managerial personnel. This claim was rooted in the premise that SITA consistently updated its Employee Regulations Manual to reflect the enhanced economic benefits secured through CBAs, effectively applying these improvements across the board, including to managerial positions.

The core legal question revolved around whether a company practice existed that would entitle a managerial employee, explicitly excluded from CBA coverage under Article 245 of the Labor Code, to receive retirement benefits stipulated in a CBA. Article 245 of the Labor Code is unequivocal in stating:

“Managerial employees are not eligible to join, assist or form any labor organization.”

This provision underscores a fundamental principle in Philippine labor law: managerial employees, by virtue of their roles and responsibilities, stand apart from the collective bargaining framework designed for rank-and-file employees. Huliganga’s initial complaint was dismissed by the Labor Arbiter and the National Labor Relations Commission (NLRC), both finding no merit in his claim of established company practice. However, the Court of Appeals (CA) reversed these decisions, partly granting Huliganga’s petition and directing SITA to pay the retirement benefit deficiency. This divergence in rulings set the stage for the Supreme Court to clarify the evidentiary burden required to prove a company practice of extending CBA benefits to managerial employees.

In its analysis, the Supreme Court emphasized the general principle that factual findings of labor tribunals, possessing specialized expertise in labor matters, are typically accorded great respect and finality. However, recognizing exceptions to this rule, particularly when findings are contradictory or lack evidentiary basis, the Court undertook a thorough review. The Court highlighted that to establish a ‘company practice,’ the alleged benefit must be shown to have been granted consistently and deliberately over a significant period. The rationale is that the employer must have knowingly and willingly extended the benefit, understanding that there was no legal obligation to do so. Huliganga presented an affidavit from a former Administrative Assistant, Ms. Beaniza, to support his claim of company practice. However, both the Labor Arbiter and NLRC deemed this evidence insufficient. The NLRC pointed out that Ms. Beaniza had been retired for over a decade and lacked current knowledge of company practices and that her personal retirement benefits, even if aligned with CBA rates, did not automatically constitute a company-wide practice.

The Supreme Court concurred with the labor tribunals, finding that Huliganga failed to provide substantial evidence of a consistent and deliberate company practice. The Court underscored that the affidavit presented was weak and lacked the necessary weight to overturn the established principle that managerial employees are generally outside the scope of CBA benefits. The decision effectively reinstates the uniform factual findings of the Labor Arbiter and the NLRC, reinforcing the principle that claims of company practice must be substantiated by clear, convincing, and consistent evidence, especially when seeking to extend benefits designed for a different employee category to managerial staff. This ruling serves as a significant reminder of the distinct legal framework governing managerial employees and the evidentiary standards required to demonstrate exceptions based on company practice.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SITA vs. Huliganga, G.R. No. 215504, August 20, 2018