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Question

EFFECT AND APPLICATION OF LAWS: CUSTOM (Civil Code, Arts. 11-12)

Based on the given scenario below, answer the following questions:

Scenario:

ABC Corporation is a telecommunications company operating in the Philippines. In its daily operations, the company has a practice of giving its employees a 13th-month pay as a form of additional compensation during the Christmas season. The practice has been in place for over a decade, and employees have come to expect and rely on this additional benefit. Recently, a new management board took over the company and decided to cease the practice of giving a 13th-month pay, citing financial difficulties and cost-cutting measures.

1. Is the practice of giving a 13th-month pay considered a custom? Explain.
2. Can the new management board legally terminate the practice? Why or why not?
3. What legal rights do the employees have in relation to the cessation of the 13th-month pay?

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Answer