In the case of Societe Internationale De Telecommunications Aeronautiques (SITA) vs. Theodore L. Huliganga, the Supreme Court clarified that managerial employees are generally not entitled to the retirement benefits exclusively granted to rank-and-file employees under a Collective Bargaining Agreement (CBA), unless a clear and consistent company practice of extending such benefits is proven. This ruling reinforces the distinction between managerial and rank-and-file employees in labor law, emphasizing that benefits negotiated in a CBA primarily apply to members of the bargaining unit. The decision underscores the importance of establishing a long-standing, deliberate, and consistent company practice to warrant the extension of CBA benefits to managerial staff.

Extending CBA Benefits: When Does Company Practice Override Employment Status?

The central issue in this case revolves around Theodore Huliganga’s claim for deficiency in his retirement benefits from Societe Internationale De Telecommunications Aeronautiques (SITA). Huliganga, a managerial employee, argued that he was entitled to the same retirement benefits as rank-and-file employees under the CBA, citing a company practice of extending CBA benefits to managerial staff. The Labor Arbiter and the National Labor Relations Commission (NLRC) ruled against Huliganga, finding no sufficient evidence of such established company practice. The Court of Appeals (CA), however, partly granted Huliganga’s petition, prompting SITA to appeal to the Supreme Court.

The Supreme Court, in reversing the CA’s decision, emphasized the general rule that managerial employees are not eligible for benefits under a CBA, referencing Article 245 of the Labor Code, which states that managerial employees are not eligible to join, assist, or form any labor organization. The Court acknowledged an exception to this rule: when an employer extends CBA benefits to managerial employees as a matter of policy or established practice. However, the burden of proving this exception lies with the employee claiming such benefit.

To establish a company practice, the Court reiterated the requirements of consistency and deliberateness over a long period. It is not enough to show isolated instances or acts of generosity. The claimant must demonstrate that the employer agreed to continue giving the benefits, fully aware that the employees are not legally covered by the law requiring such payment. The Court quoted:

To be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.

Huliganga attempted to prove the existence of a company practice by presenting the affidavit of Delia M. Beaniza, a former Administrative Assistant. However, the NLRC and the Supreme Court found Beaniza’s affidavit to be of limited value. The NLRC reasoned that Ms. Beaniza had been retired from service since 1997 or 12 years ago and she, therefore, lacks the competency to determine with accuracy what is considered a company practice. It was also held by the Labor Arbiter that even if Ms. Beaniza’s retirement was based on the rate provided in the then prevailing CBA, this does not convert the concession into a company practice.

The Supreme Court, in siding with the Labor Arbiter and the NLRC, reiterated the principle of according respect and finality to the factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdictions. The Court emphasized that only upon a clear showing of grave abuse of discretion or that such factual findings were arrived at arbitrarily or in disregard of the evidence on record will the Supreme Court intervene and conduct its own independent evaluation of the facts. The Court stated:

It must also be remembered that factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdictions are generally accorded not only respect, but even finality, and are binding on the courts. Only upon clear showing of grave abuse of discretion, or that such factual findings were arrived at arbitrarily or in disregard of the evidence on record will this Court step in and proceed to make its own independent evaluation of the facts.

In this case, the Court found that the CA erred in disregarding the factual findings of the Labor Arbiter and the NLRC, as Huliganga failed to substantially establish an established company practice of extending CBA concessions to managerial employees. The Supreme Court’s decision serves as a reminder of the importance of adhering to the established legal framework that distinguishes between the rights and benefits of managerial and rank-and-file employees, unless there is a clear, consistent, and deliberate company practice to the contrary.

FAQs

What was the key issue in this case?	The key issue was whether a managerial employee was entitled to the same retirement benefits as rank-and-file employees under a CBA, based on the claim of an established company practice.
Who was the petitioner in this case?	The petitioners were Societe Internationale De Telecommunications Aeronautiques (SITA), SITA Information Networking Computing B.V., Equant Services, Inc., and Lee Chee Wee.
Who was the respondent in this case?	The respondent was Theodore L. Huliganga, a former managerial employee of SITA.
What is a Collective Bargaining Agreement (CBA)?	A CBA is a negotiated agreement between an employer and a labor union representing the employees, which sets the terms and conditions of employment.
What does the Labor Code say about managerial employees and labor organizations?	Article 245 of the Labor Code states that managerial employees are not eligible to join, assist, or form any labor organization.
What constitutes an established company practice?	An established company practice requires the consistent and deliberate giving of benefits over a long period, with the employer being fully aware that the employees are not legally covered by the law requiring such payment.
What evidence did Huliganga present to prove company practice?	Huliganga presented the affidavit of a former Administrative Assistant, Delia M. Beaniza, stating that SITA had adopted the formulation provided in the CBA to its managerial employees.
Why was Beaniza’s affidavit not considered sufficient evidence?	The NLRC and the Supreme Court found Beaniza’s affidavit to be of limited value because she had been retired from service since 1997 or 12 years ago, and therefore lacked the competency to determine with accuracy what is considered a company practice.
What was the ruling of the Supreme Court?	The Supreme Court reversed the CA’s decision and reinstated the NLRC’s decision, ruling that Huliganga was not entitled to the retirement benefits under the CBA.

The Supreme Court’s decision in SITA vs. Huliganga underscores the importance of clearly defining the scope and applicability of CBA benefits. Employers should be mindful of their practices concerning the extension of benefits to managerial employees, ensuring that any such extension is consistently and deliberately implemented. Employees, on the other hand, must gather substantial evidence to prove the existence of an established company practice to successfully claim CBA benefits.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.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: SOCIETE INTERNATIONALE DE TELECOMMUNICATIONS AERONAUTIQUES (SITA) VS. THEODORE L. HULIGANGA, G.R. No. 215504, August 20, 2018