Case Digest:

Imperial Textile Mills Inc. vs. National Labor Relations Commission, 217 SCRA 237

Facts:

Imperial Textile Mills, Inc. (ITM) is a textile manufacturing company that has
been operating for several decades. In 1987, the company entered into a collective
bargaining agreement (CBA) with its employees' union, the Imperial Textile Mills
Workers Union - Associated Labor Union (ITMWU-ALU). The CBA included a
provision that provided for a 13th-month pay to be given to employees who have
rendered at least one year of service. The provision also stated that employees who
have been dismissed for cause are not entitled to the 13th-month pay.

In 1988, ITM dismissed several employees, including those who were

qualified to receive the 13th-month pay. The ITMWU-ALU filed a complaint with the
National Labor Relations Commission (NLRC) claiming that the dismissal was illegal
and that the affected employees should be paid their 13th-month pay.

Issue:

Whether or not the dismissed employees are entitled to receive their 13th-
month pay despite being terminated for cause.

Ruling:

The NLRC ruled in favor of the ITMWU-ALU, stating that the dismissed
employees are still entitled to their 13th-month pay. ITM appealed the decision to the
Supreme Court.

The Supreme Court affirmed the decision of the NLRC, stating that the 13th-
month pay is a form of wage that is mandatory under Presidential Decree No. 851.
The Court also noted that the provision in the CBA stating that employees who have
been dismissed for cause are not entitled to the 13th-month pay is null and void. The
Court explained that the provision violates the principle of non-diminution of benefits,
which prohibits employers from reducing or removing benefits that have already
been granted to employees.

Furthermore, the Court held that the dismissal of the employees for cause
does not automatically disqualify them from receiving the 13th-month pay. The
entitlement to the 13th-month pay is based on the employee's length of service and
not on the reason for the termination of employment.

Therefore, the Court ordered ITM to pay the dismissed employees their 13th-
month pay as provided for in the CBA.

Conclusion:

The case of Imperial Textile Mills Inc. vs. National Labor Relations
Commission highlights the importance of upholding the rights of employees,
particularly when it comes to their entitlements. The ruling serves as a reminder to
employers to carefully review their employment contracts and agreements to ensure
that they comply with labor laws and regulations. It also emphasizes the principle of
non-diminution of benefits and the importance of recognizing the entitlements of
employees based on their length of service, regardless of the reason for the
termination of their employment.