A COMPANY POLICY LIMITING THE TOTAL AMOUNT OF LOAN TO 50% OF THE MONTHLY PAY INTERFERES IN THE DISPOSAL OF WAGES AND IN VIOLATION OF CBA THAT THE COMPANY SHALL PROCESS SSS LOAN APPLICATIONS

A company policy restricting the grant of loan to not more than 50% of the monthly take home pay interferes in the employee’s disposal of wages and adds condition to the SSS rules on salary loan.

Thus, the SC held in the March 2019 case, as follows:

Coca-Cola Bottlers Philippines, Inc. vs. CCBPI Sta. Rosa Plant Employees Union
G.R. No. 197494, March 25, 2019

CBA Provisions; Violation of the CBA restricting the right of employees to avail of the SSS Loans; Interference in the disposal of wages; Management prerogative; Management prerogative must be exercised in good faith; Exercise of management prerogative in violation of the CBA provision demerits the presence of good faith; SSS Salary Loans; The company policy is not an SSS rule;

Facts:

A dispute arose when Petitioner Cola Bottlers Philippines, Inc. (Coca-Cola) implemented a policy which limits the total amount of loan which its employees may obtain from the company and other sources such as the Social Security System (SSS), PAG-IBIG, and employees’ cooperative to 50o/o of their respective monthly pay.

Respondent CCBPI Sta. Rosa Plant Employees’ Union (Union) interpreted such policy as violative of a provision in the Collective Bargaining Agreement (CBA), which states that Coca-Cola shall process all SSS loans of its employees, in spite of any outstanding company loan of said employees, subject to SSS rules and regulations.

After conciliation efforts failed, Union submitted the matter before the Voluntary Arbitrator. Coca-Cola anchored on its stand and argued that the company policy is in compliance with the Labor Code considering that it ensures that the employees’ wages are directly paid to the employees themselves and not to third party creditors.

VA Ruling:

The Voluntary Arbitrator (VA) ruled in favor of the Union.

The Voluntary Arbitrator maintained that Section 2, Article 14 of the CBA is clear when it provided that Coca-Cola shall process all SSS loans, subject only to SSS rules and regulations. As there was no modification of said stipulation, Coca-Cola was ordered to implement said provision without restrictions.

Unsatisfied, Coca-Cola elevated the matter before the CA via Rule 43 of the Rules of Court. On appeal, Coca-Cola insisted that it did not violate the CBA in enforcing the company policy as the limitation was aimed to protect and promote the welfare of the employees and prevent them from becoming saddled with indebtedness.

CA Ruling:

The CA rendered the assailed Decision denying the petition and affirming the Decision of the VA.

The CA observed that such company policy is violative of the CBA in the absence of any SSS regulation supporting the same.

Coca-Cola filed a Motion for Reconsideration which was denied.

Issue/s:

Whether or not the employer can validly restrict the grant of loan to not more than 50% of the monthly pay

Whether or not putting a cap on the grant of loan to not more than 50% of the monthly pay violates the CBA provision obligating employer to process SSS loans subject to SSS rules and regulations

Whether or not the 50% net take home pay requirement can be considered an SSS rule

Whether or not the policy providing the 50% net take home pay requirement further adds condition for an employee to obtain an SSS salary loan

SC Ruling:

The SC denied the petition.

The force and effect of the CBA is that of a law requiring that parties thereto yield to its provisions; otherwise, the purpose for which the same was executed would be rendered futile.

A plain reading of the CBA provision provides for the commitment of the Coca-Cola to process SSS salary loans, in particular, of its employees. The only limitation is the application of SSS rules and regulations pertaining to the same. Undoubtedly, the company policy is not an SSS rule or regulation. Hence, it is important to discuss whether said company policy is sanctioned under SSS rules and regulations.

Digest of the Critical Decisions of the Supreme Court on Labor Cases (Years 2015, 2016, 2017, and 2018) now available on LVS Online and all branches of National Bookstore and Fully Booked

It appears under the Terms and Conditions of a Member Loan Application, pursuant to Social Security Commission Regulation No. 669 that the qualification of a member-borrower is dependent on the amount of loan to be taken, updated payment of his contributions and other loans, and age, which should be below 65 years.

On the other hand, the responsibility of an employer is limited to the collection and remittance of the employee’s amortization to SSS as it causes the deduction of said amortizations from the employee’s salary. Based on said terms and conditions, it does not appear that the employer has the prerogative to impose other conditions which does not involve its duty to collect and remit amortizations.

The 50% net take home pay requirement, in effect, further adds a condition for an employee to obtain an SSS salary loan, on top of the requirements issued by the SSS. Hence, when Coca-Cola requires that the employee should have at least 50o/o net take home pay before it processes a loan application, the same violates the CBA provision when a qualified employee chooses to apply for an SSS loan.

With these, we rule that the company policy violated the provision of the CBA as it imposes a restriction with respect to the right of the employees under the CBA to avail SSS salary loans.

While Coca-Cola’s cause for putting a limitation on the availment of loans, i.e., to promote the welfare of the employees and their families by securing that the salary of the concerned employee shall be taken home to his family, is sympathetic, we cannot subscribe to the same for being in contravention with the prohibition on interfering with the disposal of wages under Article 112 of the Labor Code that no employer shall limit or otherwise interfere with the freedom of any employee to dispose of his wages.

With the implementation of the company policy, an employee, who is qualified to avail an SSS salary loan and chooses to dispose of his salary through payment of monthly amortizations, may not be able to do so should such amortizations be over the 50% cap. In carrying out the 50% cap policy, Coca-Cola effectively limits its employees on the utilization of their salaries when it is apparent that as long as the employee is qualified to avail the same, he/she may apply for an SSS loan.

Learn the Rules on Withholding of Wages, Deductions, and other Labor Rules from HR Bundle Books

With the implementation of the company policy, an employee, who is qualified to avail an SSS salary loan and chooses to dispose of his salary through payment of monthly amortizations, may not be able to do so should such amortizations be over the 50% cap. In carrying out the 50% cap policy, Coca-Cola effectively limits its employees on the utilization of their salaries when it is apparent that as long as the employee is qualified to avail the same, he/she may apply for an SSS loan.

In the absence of an SSS rule or regulation, which limits the qualification of employees to obtain a loan, Coca-Cola has the obligation to process the same so as to comply with the provisions of the CBA.