G.R. No. 188949 - Central Azucarera de Tarlac vs. Central Azucarera de Tarlac Labor Union-NLU

Petitioner, Central Azucarera de Tarlac, is a domestic corporation engaged in sugar manufacturing.
Respondent, Central Azucarera de Tarlac Labor Union-NLU, is the exclusive bargaining representative of petitioner’s rank-and-file employees.
The dispute concerns the interpretation of "basic pay" as it relates to the computation of the 13th-month pay under Presidential Decree (P.D.) No. 851.

Since 1975, petitioner complied with P.D. No. 851 by granting the mandatory 13th-month pay.
Petitioner’s formula for 13th-month pay was: Total Basic Annual Salary divided by 12. The Total Basic Annual Salary included:

On November 6, 2004, respondent staged a strike; petitioner declared temporary cessation of operations during the strike.
In December 2005, striking members returned to work, followed by another temporary cessation in April and May 2006.
Operations resumed in June 2006 with a fifteen-day rotation basis for employees until September 2006.

In December 2006, petitioner computed the 13th-month pay based on total earnings divided by 12.
Respondent challenged this, claiming:

The divisor should be 8 months, reflecting actual months worked in 2006,
Petitioner failed to uphold the company practice of guaranteeing a one-month pay minimum if computed 13th-month pay was less than basic monthly salary.

Petitioner explained that the change in 2006 aimed to rectify an error, limiting "basic pay" to the basic monthly salary only.

The parties engaged in grievance procedures and preventive mediation through the National Conciliation and Mediation Board but failed to settle.
On March 29, 2007, respondent filed a complaint for money claims for erroneous 13th-month pay computation before the NLRC.

On October 31, 2007, Labor Arbiter dismissed the complaint, affirming petitioner’s right to rectify the error.
Respondent appealed, and on August 14, 2008, the NLRC reversed the Labor Arbiter, ordering petitioner to adhere to established practice including premium pay and guarantee of one-month pay minimum.
Petitioner’s motion for reconsideration was denied.

Petitioner filed a certiorari petition before the CA, which was dismissed on May 28, 2009, affirming the NLRC decisions.
Petitioner escalated the case to the Supreme Court.

Whether the petitioner erred in its computation of the 13th-month pay by excluding premium, night differential, and leave pays from the "basic pay."
Whether the right of petitioner to rectify its earlier long-standing computation error is valid despite nearly 30 years of practice.
Whether the non-diminution rule under Article 100 of the Labor Code prohibits petitioner from unilaterally changing the computation of the 13th-month pay.
Whether petitioner can claim exemption from compliance with the 13th-month pay law based on its financial losses without securing prior authorization from the Secretary of Labor.