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PHILIPPINE JOURNALISTS, INC., , v.

JOURNAL EMPLOYEES UNION (JEU), many changes in its management and executives, she had never done anything
FOR ITS UNION MEMBER, MICHAEL ALFANTE, that will cause them to issue a memorandum against her or her work attitude,
more so, reasons to terminate her services; that she got dismissed because she
was the Union President who was very active in defending and pursuing the rights
The coverage of the term legal dependent as used in a stipulation in a collective of her union members, and in fighting against the abuses of respondent
bargaining agreement (CBA) granting funeral or bereavement benefit to a regular Corporate Officers; and that she got the ire of respondents when the employees
employee for the death of a legal dependent, if the CBA is silent about it, is to be filed a complaint against the Corporate Officers before Malacaang and which was
construed as similar to the meaning that contemporaneous social legislations later indorsed to the Office of the Ombudsman.
have set. This is because the terms of such social legislations are deemed
incorporated in or adopted by the CBA. The second complainant Michael L. Alfante alleged that he started to work with
respondents as computer technician at Management Information System under
The decision of the Court of Appeals (CA) under review summarizes the factual manager Neri Torrecampo on 16 May 2000; that on 15 July 2001, he was
and procedural antecedents, as follows:cralavvonlinelawlibrary regularized receiving a monthly salary of P9,070.00 plus other monetary benefits;
that sometime in 2001, Rico Pagkalinawan replaced Torrecampo, which was
Complainant Judith Pulido alleged that she was hired by respondent as opposed by complainant and three other co-employees; that Pagkalinawan took
proofreader on 10 January 1991; that she was receiving a monthly basic salary of offense of their objection; that on 22 October 2002, complainant Alfante received
P15,493.66 plus P155.00 longevity pay plus other benefits provided by law and a memorandum from Pagkalinawan regarding his excessive tardiness; that on 10
their Collective Bargaining Agreement; that on 21 February 2003, as union June 2003, complainant Alfante received a memorandum from Executive Vice-
president, she sent two letters to President Gloria Arroyo, regarding their President Arnold Banares, requiring him to explain his side on the evaluation of
complaint of mismanagement being committed by PIJ executive; that sometime his performance submitted by manager Pagkalinawan; that one week after
in May 2003, the union was furnished with a letter by Secretary Silvestre Afable, complainant submitted his explanation, he was handed his notice of dismissal on
Jr. head of Presidential Management Staff (PMS), endorsing their letter-complaint the ground of poor performance; and that complainant was dismissed effective
to Ombudsman Simeon V. Marcelo; that respondents took offense and started 28 July 2003.
harassments to complainant union president; that on 30 May 2003, complainant
received a letter from respondent Fundador Soriano, International Edition Complainant Alfante submitted that he was dismissed without just cause.
managing editor, regarding complainants attendance record; that complainant
submitted her reply to said memo on 02 June 2003; that on 06 June 2003, Respondents, in their position paper, averred that complainants Pulido and
complainant received a memorandum of reprimand; that on 04 July 2003, Alfante were dismissed for cause and with due process.
complainant received another memo from Mr. Soriano, for not wearing her
company ID, which she replied the next day 05 July 2003; that on 04 August With regard to complainant Pulido, respondents averred that in a memorandum
2003, complainant again received a memo regarding complainants tardiness; dated 30 May 2003, directed complainant to explain her habitual tardiness, at
that on 05 August 2003, complainant received another memorandum asking her least 75 times from January to May of 2003. In a memorandum, dated 06 June
to explain why she should not be accused of fraud, which she replied to on 07 2003, directed complainant to observe the 3 p.m. rule to avoid grammatical
August 2003; and that on the same day between 3:00 to 4:00 P.M., Mr. Ernesto lapses, use of stale stories just to beat the 10:00 p.m. deadline. In the same
Estong San Agustin, a staff of HRD handed her termination paper. memorandum complainant was given the warning that any repeated violation of
the rules shall be dealt with more severely. Once again, in a memorandum, dated
Complainant added that in her thirteen (13) years with the company and after so 04 August 2003, complainant Pulido was required to explain why no disciplinary
action should be taken against her for habitual tardiness 18 times out of the 23
reporting days during the period from 27 June 27 July 2003 and on 05 August Upon the foregoing backdrop, Labor Arbiter Corazon C. Borbolla rendered her
2003, complainant was directed to explain in writing why complainant should not decision on March 29, 2006, disposing thusly:cralavvonlinelawlibrary
be administratively sanctioned for committing fraud or attempting to commit
fraud against respondents. Respondents found complainants explanations WHEREFORE, foregoing premises considered, judgment is hereby rendered,
unsatisfactory. On 07 August 2003, respondents dismissed complainant Pulido for finding complainant Judith Pulido to have been illegally dismissed. As such, she is
habitual tardiness, gross insubordination, utter disrespect for superiors, and entitled to reinstatement and backwages from 07 August 2003 up to her actual or
committing fraud or attempting to commit fraud which led to the respondents payroll reinstatement. To date, complainants backwages is P294,379.54.
loss of confidence upon complainant Pulido.
Respondent Philippine Journalist, Inc. is hereby ordered to pay complainant Judith
In case of complainant Alfante, respondents averred in defense that complainant Pulido her backwages from 07 August 2003 up to her actual or payroll
was dismissed for poor performance after an evaluation by his superior, and reinstatement and to reinstate her to her former position without loss of seniority
after being forewarned that complainant may be removed if there was no right.
showing of improvement in his skills and knowledge on current technology.
Respondent is further ordered to submit a report to this Office on complainants
In both instances, respondents maintained that they did not commit any act of reinstatement ten (10) days from receipt of this decision.
unfair labor practices; that they did not commit acts tantamount to interfering,
restraining, or coercing employees in the exercise of their right to self- The charge of illegal dismissal by Michael Alfante is hereby dismissed for lack of
organization. merit.

Respondents deny liabilities as far as complainants monetary claims are The charge of unfair labor practice is dismissed for lack of basis.
concerned. Concerning violations of the provision on wage distortion under Wage
Order No. 9, respondents stressed that complainants were not affected since SO ORDERED.2
their salary is way over the minimum wage.
Complainant Michael Alfante (Alfante), joined by his labor organization, Journal
With respect to the alleged non-adjustment of longevity pay and burial aid, Employees Union (JEU), filed a partial appeal in the National Labor Relations
respondent PJI pointed out that it complies with the provisions of the CBA and Commission (NLRC).3
that both complainants have not claimed for the burial aid.
In the meantime, on May 10, 2006, petitioner and Judith Pulido (Pulido), the
Respondents put forward the information that the alleged non-payment of rest other complainant, jointly manifested to the NLRC that the decision of March 29,
days every Monday for the past three (3) years is a matter that is still at issue 2006 had been fully satisfied as to Pulido under the following terms, namely: (a)
in NLRC Case No. 02-0402973-93, which case is still pending before this she would be reinstated to her former position as editorial staffmember, or an
Commission. equivalent position, without loss of seniority rights, effective May 15, 2006; (b)
she would go on maternity leave, and report to work after giving birth; (c) she
Respondents asserted that the respondents Arturo Dela Cruz, Bobby Capco, would be entitled to backwages of P130,000.00; and (d) she would execute the
Arnold Banares, Ruby Ruiz-Bruno and Fundador Soriano should not be held liable quitclaim and release on May 11, 2006 in favor of petitioner. 4 This left Alfante as
on account of complainants dismissal as they merely acted as agents of the remaining complainant.
respondent PJI.1
On January 31, 2007, the NLRC rendered its decision dismissing the partial jurisdiction.10
appeal for lack of merit.5
The Court denied with finality JEU and Alfantes ensuing motion for
JEU and Alfante moved for the reconsideration of the decision, but the NLRC reconsideration through the resolution of December 8, 2010.11 The entry of
denied their motion on April 24, 2007.6 judgment in G.R. No. 192478 issued in due course on February 1, 2011. 12

Thereafter, JEU and Alfante assailed the decision of the NLRC before the CA On its part, petitioner likewise appealed (G.R. No. 192601), seeking the review of
on certiorari (C.A.-G.R. SP No. 99407). the CAs disposition in the decision of February 5, 2010 on the granting of the
funeral and bereavement aid stipulated in the CBA.
On February 5, 2010, the CA promulgated its decision in C.A.-G.R. SP No.
99407,7 decreeing:cralavvonlinelawlibrary In its petition for review, petitioner maintained that under Section 4, Article XIII
of the CBA, funeral and bereavement aid should be granted upon the death of
WHEREFORE, premises considered, the instant petition is PARTLY GRANTED. a legal dependent of a regular employee; that consistent with the definition
provided by the Social Security System (SSS), the term legal dependent referred
The twin Resolutions dated January 31, 2007 and April 24, 2007, respectively, of to the spouse and children of a married regular employee, and to the parents and
the Third Division of the National Labor Relations Commission (NLRC), in NLRC siblings, 18 years old and below, of a single regular employee;13 that the CBA
NCR CA No. 048785-06 (NLRC NCR Case No. 00-10-11413-04), are MODIFIED considered the term dependents to have the same meaning as beneficiaries, as
insofar as the funeral or bereavement aid is concerned, which is hereby provided in Section 5, Article XIII of the CBA on the payment of death
GRANTED, but only after submission of conclusive proofs that the deceased is a benefits;14 that its earlier granting of claims for funeral and bereavement aid
parent, either father or mother, of the employees concerned, as well as the death without regard to the foregoing definition of the legal dependents of married or
certificate to establish the fact of death of the deceased legal dependent. single regular employees did not ripen into a company policy whose unilateral
withdrawal would constitute a violation of Article 100 of the Labor Code,15 the law
The rest of the findings of fact and law in the assailed Resolutions are hereby disallowing the non-diminution of benefits;16 that it had approved only four claims
AFFIRMED. from 1999 to 2003 based on its mistaken interpretation of the term legal
dependents, but later corrected the same in 2000;17 that the grant of funeral and
SO ORDERED. bereavement aid for the death of an employees legal dependent, regardless of
the employees civil status, did not occur over a long period of time, was not
Both parties moved for reconsideration, but the CA denied their respective consistent and deliberate, and was partly due to its mistake in appreciating a
motions for reconsideration on June 2, 2010.8 doubtful question of law; and that its denial of subsequent claims did not amount
to a violation of the law against the non-diminution of benefits.18
JEU and Alfante appealed to the Court (G.R. No. 192478) to challenge the CAs
dispositions regarding the legality of: (a) Alfantes dismissal; (b) the non- In their comment,19 JEU and Alfante countered that the CBA was a bilateral
compliance with Minimum Wage Order No. 9; and (c) the non-payment of the contractual agreement that could not be unilaterally changed by any party during
rest day.9 its lifetime; and that the grant of burial benefits had already become a company
practice favorable to the employees, and could not anymore be reduced,
On August 18, 2010, the Court denied due course to the petition in G.R. No. diminished, discontinued or eliminated by petitioner.
192478 for failure of petitioners to sufficiently show that the CA had committed
any reversible error to warrant the Courts exercise of its discretionary appellate Issue
In view of the entry of judgment issued in G.R. No. 192478, JEU and Alfantes a. Death of a regular employee in line of duty P50,000
submissions on the illegality of his dismissal, the non-payment of his rest days,
and the violation of Minimum Wage Order No. 9 shall no longer be considered and b. Death of a regular employee not in line of duty P40,000
passed upon.
c. Death of legal dependent of a regular employee P15,000. (Emphasis
The sole remaining issue is whether or not petitioners denial of respondents supplied)
claims for funeral and bereavement aid granted under Section 4, Article XIII of Petitioner insists that notwithstanding the silence of the CBA, the term legal
their CBA constituted a diminution of benefits in violation of Article 100 of dependent should follow the definition of it under Republic Act (R.A.) No. 8282
the Labor Code. (Social Security Law),24 so that in the case of a married regular employee, his or
her legal dependents include only his or her spouse and children, and in the case
Ruling of a single regular employee, his or her legal dependents include only his or her
parents and siblings, 18 years old and below; and that the term dependents has
The petition for review lacks merit. the same meaning as beneficiaries as used in Section 5, Article XIII of the CBA.

The nature and force of a CBA are delineated in Honda Phils., Inc. v. Samahan ng We cannot agree with petitioners insistence.
Malayang Manggagawa sa Honda,20 thuswise:cralavvonlinelawlibrary
Social legislations contemporaneous with the execution of the CBA have given a
A collective bargaining agreement (or CBA) refers to the negotiated contract meaning to the term legal dependent. First of all, Section 8(e) of the Social
between a legitimate labor organization and the employer concerning wages, Security Law provides that a dependent shall be the following, namely: (a) the
hours of work and all other terms and conditions of employment in a bargaining legal spouse entitled by law to receive support from the member; (b) the
unit. As in all contracts, the parties in a CBA may establish such stipulations, legitimate, legitimated, or legally adopted, and illegitimate child who is
clauses, terms and conditions as they may deem convenient provided these are unmarried, not gainfully employed and has not reached 21 of age, or, if over 21
not contrary to law, morals, good customs, public order or public policy. Thus, years of age, is congenitally or while still a minor has been permanently
where the CBA is clear and unambiguous, it becomes the law between the parties incapacitated and incapable of self-support, physically or mentally; and (c) the
and compliance therewith is mandated by the express policy of the law. parent who is receiving regular support from the member. Secondly, Section 4(f)
Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the of R.A. No. 7875, as amended by R.A. No. 9241,25 enumerates who are the legal
law between the parties, must be complied with by them.21 The literal meaning of dependents, to wit: (a) the legitimate spouse who is not a member; (b) the
the stipulations of the CBA, as with every other contract, control if they are clear unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged
and leave no doubt upon the intention of the contracting parties.22 children as appearing in the birth certificate; legally adopted or step-children
below 21 years of age; (c) children who are 21 years old and order but suffering
Here, a conflict has arisen regarding the interpretation of the term legal from congenital disability, either physical or mental, or any disability acquired
dependent in connection with the grant of funeral and bereavement aid to a that renders them totally dependent on the member of our support; and (d) the
regular employee under Section 4, Article XIII of the CBA,23 which stipulates as parents who are 60 years old or older whose monthly income is below an amount
follows:cralavvonlinelawlibrary to be determined by the Philippine Health Insurance Corporation in accordance
with the guiding principles set forth in Article I of R.A. No. 7875. And, thirdly,
SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a Section 2(f) of Presidential Decree No. 1146, as amended by R.A. No.
funeral/bereavement aid in the following instances:cralavvonlinelawlibrary 8291,26 states that dependents shall include: (a) the legitimate spouse dependent
for support upon the member or pensioner; (b) the legitimate, legitimated, The obvious conclusion then is that a wife who is already separated de facto from
legally adopted child, including the illegitimate child, who is unmarried, not her husband cannot be said to be dependent for support upon the husband,
gainfully employed, not over the age of majority, or is over the age of majority absent any showing to the contrary. Conversely, if it is proved that the husband
but incapacitated and incapable of self-support due to a mental or physical defect and wife were still living together at the time of his death, it would be safe to
acquired prior to age of majority; and (c) the parents dependent upon the presume that she was dependent on the husband for support, unless it is shown
member for support. that she is capable of providing for herself.

It is clear from these statutory definitions of dependent that the civil status of the Considering that existing laws always form part of any contract, and are deemed
employee as either married or single is not the controlling consideration in order incorporated in each and every contract,28 the definition of legal
that a person may qualify as the employees legal dependent. What is rather dependents under the aforecited social legislations applies herein in the absence
decidedly controlling is the fact that the spouse, child, or parent is actually of a contrary or different definition mutually intended and adopted by the parties
dependent for support upon the employee. Indeed, the Court has adopted this in the CBA. Accordingly, the concurrence of a legitimate spouse does not
understanding of the term dependent in Social Security System v. De Los disqualify a child or a parent of the employee from being a legal dependent
Santos,27 viz:cralavvonlinelawlibrary provided substantial evidence is adduced to prove the actual dependency of the
child or parent on the support of the employee.
Social Security System v. Aguas is instructive in determining the extent of the
required dependency under the SS Law. In Aguas, the Court ruled that although In this regard, the differentiation among the legal dependents is significant only
a husband and wife are obliged to support each other, whether one is actually in the event the CBA has prescribed a hierarchy among them for the granting of a
dependent for support upon the other cannot be presumed from the fact of benefit; hence, the use of the terms primary beneficiaries and secondary
marriage alone. beneficiaries for that purpose. But considering that Section 4, Article XIII of the
CBA has not included that differentiation, petitioner had no basis to deny the
Further, Aguas pointed out that a wife who left her family until her husband died claim for funeral and bereavement aid of Alfante for the death of his parent
and lived with other men, was not dependent upon her husband for support, whose death and fact of legal dependency on him could be substantially proved.
financial or otherwise, during the entire period.
Pursuant to Article 100 of the Labor Code, petitioner as the employer could not
Said the Court:cralavvonlinelawlibrary reduce, diminish, discontinue or eliminate any benefit and supplement being
enjoyed by or granted to its employees. This prohibition against the diminution of
In a parallel case involving a claim for benefits under the GSIS law, the Court benefits is founded on the constitutional mandate to protect the rights of workers
defined a dependent as one who derives his or her main support from another. and to promote their welfare and to afford labor full protection.29 The application
Meaning, relying on, or subject to, someone else for support; not able to exist or of the prohibition against the diminution of benefits presupposes that a company
sustain oneself, or to perform anything without the will, power, or aid of someone practice, policy or tradition favorable to the employees has been clearly
else. It should be noted that the GSIS law likewise defines a dependent established; and that the payments made by the employer pursuant to the
spouse as the legitimate spouse dependent for support upon the member or practice, policy, or tradition have ripened into benefits enjoyed by them.30 To be
pensioner. In that case, the Court found it obvious that a wife who abandoned considered as a practice, policy or tradition, however, the giving of the benefits
the family for more than 17 years until her husband died, and lived with other should have been done over a long period of time, and must be shown to have
men, was not dependent on her husband for support, financial or otherwise, been consistent and deliberate.31 It is relevant to mention that we have not yet
during that entire period. Hence, the Court denied her claim for death benefits. settled on the specific minimum number of years as the length of time sufficient
to ripen the practice, policy or tradition into a benefit that the employer cannot
unilaterally withdraw.32 Every Collective Bargaining Agreement (CBA) shall provide a grievance machinery to which
all disputes arising from its implementation or interpretation will be subjected to compulsory
The argument of petitioner that the grant of the funeral and bereavement benefit negotiations. This essential feature of a CBA provides the parties with a simple, inexpensive
was not voluntary but resulted from its mistaken interpretation as to who was and expedient system of finding reasonable and acceptable solutions to disputes and helps in
considered a legal dependent of a regular employee deserves scant consideration. the attainment of a sound and stable industrial peace.
To be sure, no doubtful or difficult question of law was involved inasmuch as the
several cogent statutes existing at the time the CBA was entered into already Before us is a Petition for Review on Certiorari1 assailing the August 31, 2006 Decision2 of the
defined who were qualified as the legal dependents of another. Moreover, the Court of Appeals (CA) in CA-G.R. SP No. 93578, which dismissed petitioner Carlos L.
voluntariness of the grant of the benefit became even manifest from petitioners Octavio's (Octavio) Petition for Certiorari3assailing the September 30, 2005 Resolution4 of the
admission that, despite the memorandum it issued in 200033 in order to correct National Labor Relations Commission (NLRC). Said NLRC Resolution affirmed the August
the interpretation of the term legal dependent, it still approved in 2003 the claims 30, 2004 Decision5 of the Labor Arbiter which dismissed Octavio's Complaint for payment of
salary increases against respondent Philippine Long Distance Company (PLDT). Likewise
for funeral and bereavement aid of two employees, namely: (a) Cecille Bulacan,
assailed in this Petition is the November 15, 2006 Resolution 6 which denied Octavios Motion
for the death of her father; and (b) Charito Cartel, for the death of her mother,
for Reconsideration.7
based on its supposedly mistaken interpretation.34
Factual Antecedents
It is further worthy to note that petitioner granted claims for funeral and
bereavement aid as early as 1999, then issued a memorandum in 2000 to correct
its erroneous interpretation of legal dependent under Section 4, Article XIII of the On May 28, 1999, PLDT and Gabay ng Unyon sa Telekominaksyon ng mga
CBA. This notwithstanding, the 2001-2004 CBA35 still contained the same Superbisor (GUTS) entered into a CBA covering the period January 1, 1999 to December 31,
2001 (CBA of 1999-2001). Article VI, Section I thereof provides:
provision granting funeral or bereavement aid in case of the death of a legal
dependent of a regular employee without differentiating the legal dependents
according to the employees civil status as married or single. The continuity in the Section 1. The COMPANY agrees to grant the following across-theboard salary increase
during the three years covered by this Agreement to all employees covered by the bargaining
grant of the funeral and bereavement aid to regular employees for the death of
unit as of the given dates:
their legal dependents has undoubtedly ripened into a company policy. With that,
the denial of Alfantes qualified claim for such benefit pursuant to Section 4,
Article XIII of the CBA violated the law prohibiting the diminution of benefits. Effective January 1, 1999 10% of basic wage or P2,000.00 whichever is higher;

WHEREFORE, the Court AFFIRMS the decision promulgated on February 5, Effective January 1, 2000 11% of basic wage or P2,250.00 whichever is higher;
2010; and ORDERS petitioner to pay the costs of suit.
Effective January 1, 2001 12% of basic wage or P2,500.00 whichever is higher.8

CARLOS L. OCTAVIO, Petitioner, On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status.
vs. He became a member of GUTS. When Octavio was regularized on January 1, 2001, he was
PIDLIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent. receiving a monthly basic salary of P10,000.00. On February 1, 2002, he was promoted to
the position of Sales System Analyst 2 and his salary was increased to P13,730.00.
DECISION
On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1,
DEL CASTILLO, J.: 2002 to December 31, 2004 (CBA of 2002-2004) which provided for the following salary
increases: 8% of basic wage or P2,000.00 whichever is higher for the first year (2002); 10% C) Upon the effectivity of his promotion on February 1, 2002, his basic
of basic wage or P2,700.00 whichever is higher for the second year (2003); and, 10% of monthly salary was adjusted to P13,730.00, the minimum salary of the new
basic wage or P2,400.00 whichever is higher for the third year (2004). 9 position.

Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 D) In June 2002, the GUTS-CBA was concluded and Mr. Octavios basic
and P2,000.00 effective January 1, 2002, Octavio wrote the President of GUTS, Adolfo salary was recomputed to include the P2,000.00 1st year increase retroactive
Fajardo (Fajardo).10 Acting thereon and on similar grievances from other GUTS members, January 2002. The resulting basic salary was P12,000.00.
Fajardo wrote the PLDT Human Resource Head to inform management of the GUTS
members claim for entitlement to the across-the-board salary increases. 11 E) Applying the above-mentioned policy, Mr. Octavios basic salary was
adjusted to the minimum salary of the new position, which is P13,730.00.
Accordingly, the Grievance Committee convened on October 7, 2002 consisting of
representatives from PLDT and GUTS. The Grievance Committee, however, failed to reach Issue # 2:
an agreement. In effect, it denied Octavios demand for salary increases. The Resolution
(Committee Resolution), reads as follows: All regularized supervisory employees as of January 1 are not entitled to the GUTS CBA
increase. However, as agreed with GUTS in the grievance case of 18 personnel of
October 7, 2002 International & Luzon Core Network Management Center, probationary employees who were
hired outside of PLDT and regularized as supervisors/management personnel on January 1,
UNION ISSUE : 2002 shall be entitled to GUTS CBA. This decision shall be applied prospectively and all
previous similar cases are not covered.
1. Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database, was
promoted to S2 from S1 last February 01, 2002. He claimed that the RESOLUTION :
whole P2,000 (1st yr. GUTS-CBA increase) was not given to him.
After protracted deliberation of these issues, the committee failed to reach an agreement.
2. He was hired as a probationary employee on October 01, 2000 and was Hence, Management position deemed adopted.
regularized on January 01, 2001. He claimed that Management failed to
grant him the GUTS-CBA increase last January 2001.
MANAGEMENT UNION
MANAGEMENT POSITION :
_______(signed)_______ _______(signed)_______
Issue # 1: WILFREDO A. GUADIA ADOLFO L.FAJARDO

A) Promotional Policy: adjustment of basic monthly salary to the minimum


salary of the new position. _______(signed)_______ _______(signed)_______
ROSALINDA S. RUIZ CONFESOR A. ESPIRITU
B) Mr. Octavios salary at the time of his promotion and before the conclusion
of the GUTS CBA was P10,000.00. _______(signed)_______ _______(signed)_______
ALEJANDRO C. FABIAN CHARLITO A. AREVALO12
Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment Upon Octavios appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor
of said salary increases. Arbiters Decision. It upheld the Labor Arbiters finding that Octavios salary had already been
adjusted in accordance with the provisions of the CBA. The NLRC further ruled that it has no
Ruling of the Labor Arbiter jurisdiction to decide the issues presented by Octavio, as the same involved the interpretation
and implementation of the CBA. According to it, Octavio should have brought his claim before
the proper body as provided in the 2002-2004 CBAs provision on grievance machinery and
Octavio claimed entitlement to salary increases per the CBAs of 1999-2001 and 2002-2004.
procedure.
He insisted that when he was regularized as a supervisory employee on January 1, 2001, he
became entitled to receive the across-the-board increase of P2,500.00 as provided for under
the CBA of 1999-2001 which took effect on January 1, 1999. Then pursuant to the CBA of Octavios Motion for Reconsideration was likewise dismissed by the NLRC in its November
2002-2004, he should have received an additional increase of P2,000.00 apart from the merit 21, 2005 Resolution.13
increase of P3,730.00 which was given him due to his promotion on February 1, 2002.
However, PLDT unilaterally decided to deem as included in the said P3,730.00 the P2,000.00 Ruling of the Court of Appeals
across-the-board increase for 2002 as stipulated in the CBA of 2002-2004. This, according to
Octavio, amounts to diminution of benefits. Moreover, Octavio averred that the CBA cannot Octavio thus filed a Petition for Certiorari14 which the CA found to be without merit. In its
be the subject of further negotiation as it has the force of law between the parties. Finally, August 31, 2006 Decision,15 the CA declared the Committee Resolution to be binding on
Octavio claimed that PLDT committed an act of unfair labor practice because, while it granted Octavio, he being a member of GUTS, and because he failed to question its validity and
the claim for salary increase of 18 supervisory employees who were regularized on January enforceability.
1, 2002 and onwards, it discriminated against him by refusing to grant him the same salary
increase. He thus prayed for an additional award of damages and attorneys fees. In his Motion for Reconsideration,16 Octavio disclaimed his alleged failure to question the
Committee Resolution by emphasizing that he filed a Complaint before the NLRC against
PLDT countered that the issues advanced by Octavio had already been resolved by the PLDT. However, the CA denied Octavios Motion for Reconsideration in its November 15,
Union-Management Grievance Committee when it denied his claims through the Committee 2006 Resolution.17
Resolution. Moreover, the grant of across-the board salary increase for those who were
regularized starting January 1, 2002 and the exclusion thereto of those who were regularized Issues
on January 1, 2001, do not constitute an act of unfair labor practice as would result in any
discrimination or encourage or discourage membership in a labor organization. In fact, when
the Union-Management Grievance Committee came up with the Committee Resolution, they Hence, Octavio filed this Petition raising the following issues for our consideration:
considered the same as the most practicable and reasonable solution for both management
and union. At any rate, the said Committee Resolution had already become final and a. Whether x x x the employer and bargaining representative may amend the
conclusive between the parties for failure of Octavio to elevate the same to the proper forum. provisions of the collective bargaining agreement without the consent and approval of
In addition, PLDT claimed that the NLRC has no jurisdiction to hear and decide Octavios the employees;
claims.
b. If so, whether the said agreement is binding [on] the employees;
In a Decision dated August 30, 2004, the Labor Arbiter dismissed the Complaint of Octavio
and upheld the Committee Resolution. c. Whether x x x merit increases may be awarded simultaneously with increases
given in the Collective Bargaining Agreement;
Ruling of the National Labor Relations Commission
d. Whether x x x damages may be awarded to the employee for violation by the
employer of its commitment under its existing collective bargaining agreement. 18
Octavio submits that the CA erred in upholding the Committee Resolution which denied his Step 1. Any employee (or group of employees) who believes that he has a justifiable
claim for salary increases but granted the same request of 18 other similarly situated grievance shall present the matter initially to his division head, or if the division is involved in
employees. He likewise asserts that both PLDT and GUTS had the duty to strictly implement the grievance, to the company official next higher to the division head (the local manager in
the CBA salary increases; hence, the Committee Resolution, which effectively resulted in the the provincial exchanges) not later that fifteen (15) days after the occurrence of the incident
modification of the CBAs provision on salary increases, is void. giving rise to the grievance. The initial presentation shall be made to the division head either
by the aggrieved party himself or by the Union Steward or by any Executive Officer of the
Octavio also insists that PLDT is bound to grant him the salary increase of P2,000.00 for the Union who is not a member of the grievance panel.1wphi1 The initial presentation may be
year 2002 on top of the merit increase given to him by reason of his promotion. It is his made orally or in writing.
stance that merit increases are distinct and separate from across-the-board salary increases
provided for under the CBA. Step 2. Any party who is not satisfied with the resolution of the grievance at Step 1 may
appeal in writing to the Union-Management Grievance Committee within seven (7) days from
Our Ruling the date of receipt of the department heads decision.

The Petition has no merit. Step 3. If the grievance is not settled either because of deadlock or the failure of the
committee to decide the matter, the grievance shall be transferred to a Board of
Arbitrators for the final decision. The Board shall be composed of three (3) arbitrators, one
Under Article 26019 of the Labor Code, grievances arising from the interpretation or
to be nominated by the Union, another to be nominated by the Management, and the third to
implementation of the parties CBA should be resolved in accordance with the grievance
be selected by the management and union nominees. The decision of the board shall be final
procedure embodied therein. It also provides that all unsettled grievances shall be
and binding both the company and the Union in accordance with law. Expenses of arbitration
automatically referred for voluntary arbitration as prescribed in the CBA.
shall be divided equally between the Company and the Union. 21 (Emphasis supplied)
In its Memorandum,20 PLDT set forth the grievance machinery and procedure provided under
Indisputably, the present controversy involves the determination of an employees salary
Article X of the CBA of 2002-2004, viz:
increases as provided in the CBAs. When Octavios claim for salary increases was referred to
the Union-Management Grievance Committee, the clear intention of the parties was to
Section 1. GRIEVANCE MACHINERY - there shall be a Union-Management Grievance resolve their differences on the proper interpretation and implementation of the pertinent
Committee composed of three (3) Union representatives designated by the UNION Board of provisions of the CBAs. And in accordance with the procedure prescribed therein, the said
Directors and three (3) Management representatives designated by the company President. committee made up of representatives of both the union and the management convened.
The committee shall act upon any grievance properly processed in accordance with the Unfortunately, it failed to reach an agreement. Octavios recourse pursuant to the CBA was to
prescribed procedure. The Union representatives to the Committee shall not lose pay for elevate his grievance to the Board of Arbitrators for final decision. Instead, nine months later,
attending meetings where Management representatives are in attendance. Octavio filed a Complaint before the NLRC.

Section 2. GRIEVANCE PROCEDURE - The parties agree that all disputes between labor It is settled that "when parties have validly agreed on a procedure for resolving grievances
and management may be settled through friendly negotiations; that the parties have the same and to submit a dispute to voluntary arbitration then that procedure should be strictly
interest in the continuity of work until all points in dispute shall have been discussed and observed."22 Moreover, we have held time and again that "before a party is allowed to seek
settled; that an open conflict in any form involves losses to the parties; and that therefore, the intervention of the court, it is a precondition that he should have availed of all the means
every effort shall be exerted to avoid such an open conflict. In furtherance of these principles, of administrative processes afforded him. Hence, if a remedy within the administrative
the parties agree to observe the following grievance procedures. machinery can still be resorted to by giving the administrative officer concerned every
opportunity to decide on a matter that comes within his jurisdiction, then such remedy should
be exhausted first before the courts judicial power can be sought. The premature invocation
of the courts judicial intervention is fatal to ones cause of action." 23 "The underlying principle All told, we find no error on the part of the Labor Arbiter, the NLRC and the CA in unanimously
of the rule on exhaustion of administrative remedies rests on the presumption that when the upholding the validity and enforceability of the Grievance Committee Resolution dated
administrative body, or grievance machinery, is afforded a chance to pass upon the matter, it October 7, 2002.
will decide the same correctly."24
WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and November 15,
By failing to question the Committee Resolution through the proper procedure prescribed in 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 93578 are AFFIRMED.
the CBA, that is, by raising the same before a Board of Arbitrators, Octavio is deemed to have
waived his right to question the same. Clearly, he departed from the grievance procedure
mandated in the CBA and denied the Board of Arbitrators the opportunity to pass upon a ROYAL PLANT WORKERS UNION, Petitioner,
matter over which it has jurisdiction. Hence, and as correctly held by the CA, Octavios failure vs.
to assail the validity and enforceability of the Committee Resolution makes the same binding COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.
upon him. On this score alone, Octavios recourse to the labor tribunals below, as well as to
the CA, and, finally, to this Court, must therefore fail.
DECISION

At any rate, Octavio cannot claim that the Committee Resolution is not valid, binding and
MENDOZA, J.:
conclusive as to him for being a modification of the CBA in violation of Article 253 25 of the
Labor Code. It bears to stress that the said resolution is a product of the grievance procedure
outlined in the CBA itself. It was arrived at after the management and the union through their Assailed in this petition is the May 24, 2011 Decision1 and the September 2, 2011
respective representatives conducted negotiations in accordance with the CBA. On the other Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 05200, entitled Coca-Cola
hand, Octavio never assailed the competence of the grievance committee to take cognizance Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant Workers Union, which nullified and set
of his case. Neither did he question the authority or credibility of the union representatives; aside the June 11, 2010 Decision3 of the Voluntary Arbitration Panel (Arbitration Committee)
hence, the latter are deemed to have properly bargained on his behalf since "unions are the in a case involving the removal of chairs in the bottling plant of Coca-Cola Bottlers
agent of its members for the purpose of securing just and fair wages and good working Philippines, Inc. (CCBPI).
conditions."26 In fine, it cannot be gainsaid that the Committee Resolution is a modification of
the CBA. Rather, it only provides for the proper implementation of the CBA provision The Factual and Procedural
respecting salary increases.
Antecedents
Finally, Octavios argument that the denial of his claim for salary increases constitutes a
violation of Article 10027 of the Labor Code is devoid of merit. Even assuming that there has The factual and procedural antecedents have been accurately recited in the May 24, 2011 CA
been a diminution of benefits on his part, Article 100 does not prohibit a union from offering decision as follows:
and agreeing to reduce wages and benefits of the employees as the right to free collective
bargaining includes the right to suspend it.28 PLDT averred that one of the reasons why Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in
Octavios salary was recomputed as to include in his salary of P13,730.00 the P2,000.00 the manufacture, sale and distribution of softdrink products. It has several bottling plants all
increase for 2002 is to avoid salary distortion. At this point, it is well to emphasize that over the country, one of which is located in Cebu City. Under the employ of each bottling plant
bargaining should not be equated to an "adversarial litigation where rights and obligations are are bottling operators. In the case of the plant in Cebu City, there are 20 bottling operators
delineated and remedies applied."29 Instead, it covers a process of finding a reasonable and who work for its Bottling Line 1 while there are 12-14 bottling operators who man its Bottling
acceptable solution to stabilize labor-management relations to promote stable industrial Line 2. All of them are male and they are members of herein respondent Royal Plant Workers
peace.30Clearly, the Committee Resolution was arrived at after considering the intention of Union (ROPWU).
both PLDT and GUTS to foster industrial peace.
The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the issue, both parties availed of the conciliation/mediation proceedings before the National
second shift is from 5 p.m. up to the time production operations is finished. Thus, the second Conciliation and Mediation Board (NCMB) Regional Branch No. VII. They failed to arrive at an
shift varies and may end beyond eight (8) hours. However, the bottling operators are amicable settlement.
compensated with overtime pay if the shift extends beyond eight (8) hours. For Bottling Line
1, 10 bottling operators work for each shift while 6 to 7 bottling operators work for each shift Thus, the process of arbitration continued and the parties appointed the chairperson and
for Bottling Line 2. members of the Arbitration Committee as outlined in the CBA. Petitioner and respondent
respectively appointed as members to the Arbitration Committee Mr. Raul A. Kapuno, Jr. and
Each shift has rotations of work time and break time. Prior to September 2008, the rotation is Mr. Luis Ruiz while they both chose Atty. Alice Morada as chairperson thereof. They then
this: after two and a half (2 ) hours of work, the bottling operators are given a 30-minute executed a Submission Agreement which was accepted by the Arbitration Committee on 01
break and this goes on until the shift ends. In September 2008 and up to the present, the October 2009. As contained in the Submission Agreement, the sole issue for arbitration is
rotation has changed and bottling operators are now given a 30-minute break after one and whether the removal of chairs of the operators assigned at the production/manufacturing line
one half (1 ) hours of work. while performing their duties and responsibilities is valid or not.

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their Both parties submitted their position papers and other subsequent pleadings in amplification
request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be of their respective stands. Petitioner argued that the removal of the chairs is valid as it is a
provided also with chairs. Their request was likewise granted. Sometime in September 2008, legitimate exercise of management prerogative, it does not violate the Labor Code and it
the chairs provided for the operators were removed pursuant to a national directive of does not violate the CBA it contracted with respondent. On the other hand, respondent
petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner espoused the contrary view. It contended that the bottling operators have been performing
for bottling operators, wherein every bottling operator is given the responsibility to keep the their assigned duties satisfactorily with the presence of the chairs; the removal of the chairs
machinery and equipment assigned to him clean and safe. The program reinforces the task of constitutes a violation of the Occupational Health and Safety Standards, the policy of the
bottling operators to constantly move about in the performance of their duties and State to assure the right of workers to just and humane conditions of work as stated in Article
responsibilities. 3 of the Labor Code and the Global Workplace Rights Policy.

With this task of moving constantly to check on the machinery and equipment assigned to Ruling of the Arbtration Committee
him, a bottling operator does not need a chair anymore, hence, petitioners directive to
remove them. Furthermore, CCBPI rationalized that the removal of the chairs is implemented On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal Plant
so that the bottling operators will avoid sleeping, thus, prevent injuries to their persons. As Workers Union (the Union) and against CCBPI, the dispositive portion of which reads, as
bottling operators are working with machines which consist of moving parts, it is imperative follows:
that they should not fall asleep as to do so would expose them to hazards and injuries. In
addition, sleeping will hamper the efficient flow of operations as the bottling operators would Wherefore, the undersigned rules in favor of ROPWU declaring that the removal of the
be unable to perform their duties competently. operators chairs is not valid. CCBPI is hereby ordered to restore the same for the use of the
operators as before their removal in 2008.4
The bottling operators took issue with the removal of the chairs. Through the representation
of herein respondent, they initiated the grievance machinery of the Collective Bargaining The Arbitration Committee ruled, among others, that the use of chairs by the operators had
Agreement (CBA) in November 2008. Even after exhausting the remedies contained in the been a company practice for 34 years in Bottling Line 2, from 1974 to 2008, and 20 years in
grievance machinery, the parties were still at a deadlock with petitioner still insisting on the Bottling Line 1, from 1988 to 2008; that the use of the chairs by the operators constituted a
removal of the chairs and respondent still against such measure. As such, respondent sent a company practice favorable to the Union; that it ripened into a benefit after it had been
Notice to Arbitrate, dated 16 July 2009, to petitioner stating its position to submit the issue on enjoyed by it; that any benefit being enjoyed by the employees could not be reduced,
the removal of the chairs for arbitration. Nevertheless, before submitting to arbitration the diminished, discontinued, or eliminated by the employer in accordance with Article 100 of the
Labor Code, which prohibited the diminution or elimination by the employer of the employees The CA stated that CCBPI complied with the conditions of a valid exercise of a management
benefit; and that jurisprudence had not laid down any rule requiring a specific minimum prerogative when it decided to remove the chairs used by the bottling operators in the
number of years before a benefit would constitute a voluntary company practice which could manufacturing/production lines. The removal of the chairs was solely motivated by the best
not be unilaterally withdrawn by the employer. intentions for both the Union and CCBPI, in line with the "I Operate, I Maintain, I Clean"
program for bottling operators, wherein every bottling operator was given the responsibility to
The Arbitration Committee further stated that, although the removal of the chairs was done in keep the machinery and equipment assigned to him clean and safe. The program would
good faith, CCBPI failed to present evidence regarding instances of sleeping while on duty. reinforce the task of bottling operators to constantly move about in the performance of their
There were no specific details as to the number of incidents of sleeping on duty, who were duties and responsibilities. Without the chairs, the bottling operators could efficiently
involved, when these incidents happened, and what actions were taken. There was no supervise these machineries operations and maintenance. It would also be beneficial for
evidence either of any accident or injury in the many years that the bottling operators used them because the working time before the break in each rotation for each shift was
chairs. To the Arbitration Committee, it was puzzling why it took 34 and 20 years for CCBPI to substantially reduced from two and a half hours (2 ) to one and a half hours (1 ) before
be so solicitous of the bottling operators safety that it removed their chairs so that they would the 30-minute break. This scheme was clearly advantageous to the bottling operators as the
not fall asleep and injure themselves. number of resting periods was increased. CCBPI had the best intentions in removing the
chairs because some bottling operators had the propensity to fall asleep while on the job and
sleeping on the job ran the risk of injury exposure and removing them reduced the risk.
Finally, the Arbitration Committee was of the view that, contrary to CCBPIs position, line
efficiency was the result of many factors and it could not be attributed solely to one such as
the removal of the chairs. The CA added that the decision of CCBPI to remove the chairs was not done for the purpose
of defeating or circumventing the rights of its employees under the special laws, the
Collective Bargaining Agreement (CBA) or the general principles of justice and fair play. It
Not contented with the Arbitration Committees decision, CCBPI filed a petition for review
opined that the principles of justice and fair play were not violated because, when the chairs
under Rule 43 before the CA.
were removed, there was a commensurate reduction of the working time for each rotation in
each shift. The provision of chairs for the bottling operators was never part of the CBAs
Ruling of the CA contracted between the Union and CCBPI. The chairs were not provided as a benefit
because such matter was dependent upon the exigencies of the work of the bottling
On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside the operators. As such, CCBPI could withdraw this provision if it was not necessary in the
decision of the Arbitration Committee. The dispositive portion of the CA decision reads: exigencies of the work, if it was not contributing to the efficiency of the bottling operators or if
it would expose them to some hazards. Lastly, the CA explained that the provision of chairs to
WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision, the bottling operators cannot be covered by Article 100 of the Labor Code on elimination or
dated 11 June 2010, of the Arbitration Committee in AC389-VII-09-10-2009D is NULLIFIED diminution of benefits because the employees benefits referred to therein mainly involved
and SET ASIDE. A new one is entered in its stead SUSTAINING the removal of the chairs of monetary considerations or privileges converted to their monetary equivalent.
the bottling operators from the manufacturing/production line. 5
Disgruntled with the adverse CA decision, the Union has come to this Court praying for its
The CA held, among others, that the removal of the chairs from the manufacturing/production reversal on the following GROUNDS
lines by CCBPI is within the province of management prerogatives; that it was part of its
inherent right to control and manage its enterprise effectively; and that since it was the I
employers discretion to constantly develop measures or means to optimize the efficiency of
its employees and to keep its machineries and equipment in the best of conditions, it was THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE
only appropriate that it should be given wide latitude in exercising it. ERROR IN HOLDING THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE RULES
OF COURT IS THE PROPER REMEDY OF CHALLENGING BEFORE SAID COURT THE
DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL OF VOLUNTARY presence of chairs for more than 30 years made the operators awake and alert as they could
ARBITRATORS UNDER THE LABOR CODE. relax from time to time. There are sanctions for those caught sleeping while on duty. Before
the removal of the chairs, the efficiency of the operators was much better and there was no
II recorded accident. After the removal of the chairs, the efficiency of the operators diminished
considerably, resulting in the drastic decline of line efficiency.
THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN NULLIFYING AND SETTING ASIDE THE DECISION OF THE PANEL OF Finally, the Union asserts that the removal of the chairs constitutes violation of the
VOLUNTARY ARBITRATORS WHICH DECLARED AS NOT VALID THE REMOVAL OF THE Occupational Health and Safety Standards, which provide that every company shall keep and
CHAIRS OF THE OPERATORS IN THE MANUFACTURING AND/OR PRODUCTION LINE. maintain its workplace free from hazards that are likely to cause physical harm to the workers
or damage to property. The removal of the chairs constitutes a violation of the State policy to
assure the right of workers to a just and humane condition of work pursuant to Article 3 of the
In advocacy of its positions, the Union argues that the proper remedy in challenging the
Labor Code and of CCBPIs Global Workplace Rights Policy. Hence, the unilateral
decision of the Arbitration Committee before the CA is a petition for certiorari under Rule 65.
withdrawal, elimination or removal of the chairs, which have been in existence for more than
The petition for review under Rule 43 resorted to by CCBPI should have been dismissed for
30 years, constitutes a violation of existing practice.
being an improper remedy. The Union points out that the parties agreed to submit the
unresolved grievance involving the removal of chairs to voluntary arbitration pursuant to the
provisions of Article V of the existing CBA. Hence, the assailed decision of the Arbitration The respondents position
Committee is a judgment or final order issued under the Labor Code of the Philippines.
Section 2, Rule 43 of the 1997 Rules of Civil Procedure, expressly states that the said rule CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the Rules of
does not cover cases under the Labor Code of the Philippines. The judgments or final orders Court was the proper remedy to question the decision of the Arbitration Committee. It likewise
of the Voluntary Arbitrator or Panel of Voluntary Arbitrators are governed by the provisions of echoes the ruling of the CA that the removal of the chairs was a legitimate exercise of
Articles 260, 261, 262, 262-A, and 262-B of the Labor Code of the Philippines. management prerogative; that it was done not to harm the bottling operators but for the
purpose of optimizing their efficiency and CCBPIs machineries and equipment; and that the
On the substantive aspect, the Union argues that there is no connection between CCBPIs "I exercise of its management prerogative was done in good faith and not for the purpose of
Operate, I Maintain, I Clean" program and the removal of the chairs because the circumventing the rights of the employees under the special laws, the CBA or the general
implementation of the program was in 2006 and the removal of the chairs was done in 2008. principles of justice and fair play.
The 30-minute break is part of an operators working hours and does not make any
difference. The frequency of the break period is not advantageous to the operators because it The Courts Ruling
cannot compensate for the time they are made to stand throughout their working time. The
bottling operators get tired and exhausted after their tour of duty even with chairs around. The decision in this case rests on the resolution of two basic questions. First, is an appeal to
How much more if the chairs are removed? the CA via a petition for review under Rule 43 of the 1997 Rules of Civil Procedure a proper
remedy to question the decision of the Arbitration Committee? Second, was the removal of
The Union further claims that management prerogatives are not absolute but subject to the bottling operators chairs from CCBPIs production/manufacturing lines a valid exercise of
certain limitations found in law, a collective bargaining agreement, or general principles of fair a management prerogative?
play and justice. The operators have been performing their assigned duties and
responsibilities satisfactorily for thirty (30) years using chairs. There is no record of poor The Court sustains the ruling of the CA on both issues.
performance because the operators are sitting all the time. There is no single incident when
the attention of an operator was called for failure to carry out his assigned tasks. CCBPI has Regarding the first issue, the Union insists that the CA erred in ruling that the recourse taken
not submitted any evidence to prove that the performance of the operators was poor before by CCBPI in appealing the decision of the Arbitration Committee was proper. It argues that
the removal of the chairs and that it has improved after the chairs were removed. The the proper remedy in challenging the decision of the Voluntary Arbitrator before the CA is by
filing a petition for certiorari under Rule 65 of the Rules of Court, not a petition for review The provisions may be new to the Rules of Court but it is far from being a new law. Section 2,
under Rule 43. Rules 42 of the 1997 Rules of Civil Procedure, as presently worded, is nothing more but a
reiteration of the exception to the exclusive appellate jurisdiction of the Court of Appeals, as
CCBPI counters that the CA was correct in ruling that the recourse it took in appealing the provided for in Section 9, Batas Pambansa Blg. 129, as amended by Republic Act No. 7902:
decision of the Arbitration Committee to the CA via a petition for review under Rule 43 of the
Rules of Court was proper and in conformity with the rules and prevailing jurisprudence. (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
A Petition for Review commissions, including the Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor
under Rule 43 is the
Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of
this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
proper remedy paragraph of Section 17 of the Judiciary Act of 1948.

CCBPI is correct. This procedural issue being debated upon is not novel. The Court has The Court took into account this exception in Luzon Development Bank but, nevertheless,
already ruled in a number of cases that a decision or award of a voluntary arbitrator is held that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not
appealable to the CA via a petition for review under Rule 43. The recent case of Samahan Ng come within its ambit x x x."
Mga Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary Arbitrator
Buenaventura C. Magsalin and Hotel Enterprises of the Philippines 6 reiterated the well-settled
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended,
doctrine on this issue, to wit:
provide:
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan,7 we
"SECTION 1. Scope. - This Rule shall apply to appeals from judgments or final orders of the
repeated the well-settled rule that a decision or award of a voluntary arbitrator is appealable
Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized
to the CA via petition for review under Rule 43. We held that:
by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these
agencies are the x x x, and voluntary arbitrators authorized by law.
"The question on the proper recourse to assail a decision of a voluntary arbitrator has already
been settled in Luzon Development Bank v. Association of Luzon Development Bank
xxxx
Employees, where the Court held that the decision or award of the voluntary arbitrator or
panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular No. 1-95 (now embodied in Rule 43 of SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the Court of Appeals
the 1997 Rules of Civil Procedure), just like those of the quasi-judicial agencies, boards and within the period and in the manner therein provided, whether the appeal involves questions
commissions enumerated therein, and consistent with the original purpose to provide a of fact, of law, or mixed questions of fact and law.
uniform procedure for the appellate review of adjudications of all quasi-judicial entities.
SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days from notice of
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia the award, judgment, final order or resolution, or from the date of its last publication, if
v. Court of Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held publication is required by law for its effectivity, or of the denial of petitioners motion for new
that notwithstanding Section 2 of Rule 43, the ruling in Luzon Development Bank still stands. trial or reconsideration duly filed in accordance with the governing law of the court or agency
The Court explained, thus: a quo. x x x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators Resolution denying reduction of the operating hours of the bottling operators from a two-and-one-half (2 )-hour
petitioners motion for reconsideration, petitioner should have filed with the CA, within the rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of the break
fifteen (15)-day reglementary period, a petition for review, not a petition for certiorari. period from 15 to 30 minutes between rotations.

On the second issue, the Union basically claims that the CCBPIs decision to unilaterally Apparently, the decision to remove the chairs was done with good intentions as CCBPI
remove the operators chairs from the production/manufacturing lines of its bottling plants is wanted to avoid instances of operators sleeping on the job while in the performance of their
not valid because it violates some fundamental labor policies. According to the Union, such duties and responsibilities and because of the fact that the chairs were not necessary
removal constitutes a violation of the 1) Occupational Health and Safety Standards which considering that the operators constantly move about while working. In short, the removal of
provide that every worker is entitled to be provided by the employer with appropriate seats, the chairs was designed to increase work efficiency. Hence, CCBPIs exercise of its
among others; 2) policy of the State to assure the right of workers to a just and humane management prerogative was made in good faith without doing any harm to the workers
condition of work as provided for in Article 3 of the Labor Code; 8 3) Global Workplace Rights rights.
Policy of CCBPI which provides for a safe and healthy workplace by maintaining a productive
workplace and by minimizing the risk of accident, injury and exposure to health risks; and 4) The fact that there is no proof of any operator sleeping on the job is of no moment. There is
diminution of benefits provided in Article 100 of the Labor Code. 9 no guarantee that such incident would never happen as sitting on a chair is relaxing. Besides,
the operators constantly move about while doing their job. The ultimate purpose is to promote
Opposing the Unions argument, CCBPI mainly contends that the removal of the subject work efficiency.
chairs is a valid exercise of management prerogative. The management decision to remove
the subject chairs was made in good faith and did not intend to defeat or circumvent the rights No Violation of Labor Laws
of the Union under the special laws, the CBA and the general principles of justice and fair
play. The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. The CA correctly ruled that the Labor
Again, the Court agrees with CCBPI on the matter. Code, specifically Article 13211 thereof, only requires employers to provide seats for women.
No similar requirement is mandated for men or male workers. It must be stressed that all
A Valid Exercise of concerned bottling operators in this case are men.

Management Prerogative There was no violation either of the Health, Safety and Social Welfare Benefit provisions
under Book IV of the Labor Code of the Philippines. As shown in the foregoing, the removal of
The Court has held that management is free to regulate, according to its own discretion and the chairs was compensated by the reduction of the working hours and increase in the rest
judgment, all aspects of employment, including hiring, work assignments, working methods, period. The directive did not expose the bottling operators to safety and health hazards.
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline, The Union should not complain too much about standing and moving about for one and one-
dismissal and recall of workers. The exercise of management prerogative, however, is not half (1 ) hours because studies show that sitting in workplaces for a long time is hazardous
absolute as it must be exercised in good faith and with due regard to the rights of labor.10 to ones health. The report of VicHealth, Australia,12 disclosed that "prolonged workplace
sitting is an emerging public health and occupational health issue with serious implications for
In the present controversy, it cannot be denied that CCBPI removed the operators chairs the health of our working population. Importantly, prolonged sitting is a risk factor for poor
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program, health and early death, even among those who meet, or exceed, national 13 activity
launched to enable the Union to perform their duties and responsibilities more efficiently. The guidelines." In another report,14 it was written:
chairs were not removed indiscriminately. They were carefully studied with due regard to the
welfare of the members of the Union. The removal of the chairs was compensated by: a) a
Workers needing to spend long periods in a seated position on the job such as taxi drivers, In addition, people who interrupted their sitting time more often just by standing or with light
call centre and office workers, are at risk for injury and a variety of adverse health effects. activities such as housework, shopping, and moving about the office had healthier blood
sugar and fat levels, and smaller waistlines than those whose sitting time was not broken up.
The most common injuries occur in the muscles, bones, tendons and ligaments, affecting the
neck and lower back regions. Prolonged sitting: Of course, in this case, if the chairs would be returned, no risks would be involved because of
the shorter period of working time. The study was cited just to show that there is a health risk
reduces body movement making muscles more likely to pull, cramp or strain when in prolonged sitting.
stretched suddenly, causes fatigue in the back and neck muscles by slowing the blood supply
and puts high tension on the spine, especially in the low back or neck, and No Violation of the CBA

causes a steady compression on the spinal discs that hinders their nutrition and can The CBA15 between the Union and CCBPI contains no provision whatsoever requiring the
contribute to their premature degeneration. management to provide chairs for the operators in the production/manufacturing line while
performing their duties and responsibilities. On the contrary, Section 2 of Article 1 of the CBA
Sedentary employees may also face a gradual deterioration in health if they do not exercise expressly provides as follows:
or do not lead an otherwise physically active life. The most common health problems that
these employees experience are disorders in blood circulation and injuries affecting their Article I
ability to move. Deep Vein Thrombosis (DVT), where a clot forms in a large vein after
prolonged sitting (eg after a long flight) has also been shown to be a risk. SCOPE

Workers who spend most of their working time seated may also experience other, less SECTION 2. Scope of the Agreement. All the terms and conditions of employment of
specific adverse health effects. Common effects include decreased fitness, reduced heart and employees and workers within the appropriate bargaining unit (as defined in Section 1 hereof)
lung efficiency, and digestive problems. Recent research has identified too much sitting as an are embodied in this Agreement and the same shall govern the relationship between the
important part of the physical activity and health equation, and suggests we should focus on COMPANY and such employees and/or workers. On the other hand, all such benefits and/or
the harm caused by daily inactivity such as prolonged sitting. privileges as are not expressly provided for in this Agreement but which are now being
Associate professor David Dunstan leads a team at the Baker IDI in Melbourne which is accorded, may in the future be accorded, or might have previously been accorded, to the
specifically researching sitting and physical activity. He has found that people who spend long employees and/or workers, shall be deemed as purely voluntary acts on the part of the
periods of time seated (more than four hours per day) were at risk of: COMPANY in each case, and the continuance and repetition thereof now or in the future, no
matter how long or how often, shall not be construed as establishing an obligation on the part
higher blood levels of sugar and fats, of the COMPANY. It is however understood that any benefits that are agreed upon by and
between the COMPANY and the UNION in the Labor-Management Committee Meetings
larger waistlines, and regarding the terms and conditions of employment outside the CBA that have general
application to employees who are similarly situated in a Department or in the Plant shall be
implemented. [emphasis and underscoring supplied]
higher risk of metabolic syndrome

As can be gleaned from the aforecited provision, the CBA expressly provides that benefits
regardless of how much moderate to vigorous exercise they had.
and/or privileges, not expressly given therein but which are presently being granted by the
company and enjoyed by the employees, shall be considered as purely voluntary acts by the
management and that the continuance of such benefits and/or privileges, no matter how long
or how often, shall not be understood as establishing an obligation on the companys part.
Since the matter of the chairs is not expressly stated in the CBA, it is understood that it was a Union vs. American Wire and Cable Company, Inc.,20 involving service awards with cash
purely voluntary act on the part of CCBPI and the long practice did not convert it into an incentives, premium pay, Christmas party with incidental benefits and promotional increase.
obligation or a vested right in favor of the Union.
In this regard, the Court agrees with the CA when it resolved the matter and wrote:
No Violation of the general principles
Let it be stressed that the aforequoted article speaks of non-diminution of supplements and
of justice and fair play other employee benefits. Supplements arc privileges given to an employee which constitute
as extra remuneration besides his or her basic ordinary earnings and wages. From this
The Court completely agrees with the CA ruling that the removal of the chairs did not violate definition, We can only deduce that the other employee benefits spoken of by Article 100
the general principles of justice and fair play because the bottling operators working time was pertain only to those which are susceptible of monetary considerations. Indeed, this could
considerably reduced from two and a half (2 ) hours to just one and a half (1 ) hours and only be the most plausible conclusion because the cases tackling Article 100 involve mainly
the break period, when they could sit down, was increased to 30 minutes between rotations. with monetary considerations or privileges converted to their monetary equivalents.
The bottling operators new work schedule is certainly advantageous to them because it
greatly increases their rest period and significantly decreases their working time. A break time xxxx
of thirty (30) minutes after working for only one and a half (1 ) hours is a just and fair work
schedule. Without a doubt, equating the provision of chairs to the bottling operators Ds something within
the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching the
No Violation of Article 100 coverage of the law. The interpretations of Article 100 of the Labor Code do not show even
with the slightest hint that such provision of chairs for the bottling operators may be sheltered
of the Labor Code under its mantle.21

The operators chairs cannot be considered as one of the employee benefits covered in Jurisprudence recognizes the exercise of management prerogatives. Labor Jaws also
Article 10016 of the Labor Code. In the Courts view, the term "benefits" mentioned in the discourage interference with an employer's judgment in the conduct of its business. For this
non-diminution rule refers to monetary benefits or privileges given to the employee with reason, the Court often declines to interfere in legitimate business decisions of employers.
monetary equivalents. The law must protect not only the welfare of the employees, but also the right of the
employers.22
Such benefits or privileges form part of the employees wage, salary or compensation making
them enforceable obligations. WHEREFORE, the petition is DENIED.

This Court has already decided several cases regarding the non-diminution rule where the RICARDO E. VERGARA, JR., Petitioner, v. COCA-COLA BOTTLERS
benefits or privileges involved in those cases mainly concern monetary considerations or PHILIPPINES, INC., Respondent.
privileges with monetary equivalents. Some of these cases are: Eastern Telecommunication
Phils. Inc. v. Eastern Telecoms Employees Union,17 where the case involves the payment of DECISION
14th, 15th and 16th month bonuses; Central Azucarera De Tarlac v. Central Azucarera De
Tarlac Labor Union-NLU,18 regarding the 13th month pay, legal/special holiday pay, night
PERALTA, J.:
premium pay and vacation and sick leaves; TSPIC Corp. v. TSPIC Employees
Union,19 regarding salary wage increases; and American Wire and Cable Daily Employees
Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure assailing the January 9, 2007 Decision1 and March 6, 2007
Resolution2 of the Court of Appeals (CA) in CA .. G.R. SP No. 94622, which to the pendency of petitioner's petition for certiorari before the CA, the parties
affirmed the January 31, 2006 Decision3 and March 8, 2006 Resolution4 of the executed a Compromise Agreement12 on October 4, 2006, whereby petitioner
National Labor Relations Commission (NLRC) modifying the September 30, 2003 acknowledged full payment by respondent of the amount of PhP496,016.67
Decision5 of the Labor Arbiter (LA) by deleting the sales management incentives covering the amount illegally deducted.
in the computation of petitioner's retirement benefits.
The CA dismissed petitioner's case on January 9, 2007 and denied his motion for
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola reconsideration two months thereafter. Hence, this present petition to resolve the
Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a singular issue of whether the SMI should be included in the computation of
District Sales Supervisor (DSS) for Las Pias City, Metro Manila. As stipulated in petitioner's retirement benefits on the ground of consistent company practice.
respondent's existing Retirement Plan Rules and Regulations at the time, the Petitioner insistently avers that many DSSs who retired without achieving the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered sales and collection targets were given the average SMI in their retirement
in the computation of retirement benefits, as follows: Basic Monthly Salary + package.
Monthly Average Performance Incentive (which is the total performance incentive
earned during the year immediately preceding 12 months) No. of Years in We deny.
Service.6chanroblesvirtualawlibrary
This case does not fall within any of the recognized exceptions to the rule that
Claiming his entitlement to an additional PhP474,600.00 as Sales Management only questions of law are proper in a petition for review on certiorari under Rule
Incentives (SMI)7 and to the amount of PhP496,016.67 which respondent 45 of the Rules of Court. Settled is the rule that factual findings of labor officials,
allegedly deducted illegally, representing the unpaid accounts of two dealers who are deemed to have acquired expertise in matters within their respective
within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, jurisdiction, are generally accorded not only respect but even finality, and bind us
2002 for the payment of his "Full Retirement Benefits, Merit Increase, when supported by substantial evidence.13 Certainly, it is not Our function to
Commission/Incentives, Length of Service, Actual, Moral and Exemplary assess and evaluate the evidence all over again, particularly where the findings of
Damages, and Attorney's Fees."8chanroblesvirtualawlibrary both the CA and the NLRC coincide.

After a series of mandatory conference, both parties partially settled with regard In any event, even if this Court would evaluate petitioner's arguments on its
the issue of merit increase and length of service.9 Subsequently, they filed their supposed merits, We still find no reason to disturb the CA ruling that affirmed the
respective Position Paper and Reply thereto dealing on the two remaining issues NLRC. The findings and conclusions of the CA show that the evidence and the
of SMI entitlement and illegal deduction. arguments of the parties had all been carefully considered and passed upon.
There are no relevant and compelling facts to justify a different resolution which
On September 30, 2003, the LA rendered a Decision10 in favor of petitioner, the CA failed to consider as well as no factual conflict between the CA and the
directing respondent to reimburse the amount illegally deducted from petitioner's NLRC decisions.
retirement package and to integrate therein his SMI privilege. Upon appeal of
respondent, however, the NLRC modified the award and deleted the payment of Generally, employees have a vested right over existing benefits voluntarily
SMI. granted to them by their employer.14 Thus, any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
Petitioner then moved to partially execute the reimbursement of illegal deduction, eliminated by the employer.15 The principle of non-diminution of benefits is
which the LA granted despite respondent's opposition.11 Later, without prejudice actually founded on the Constitutional mandate to protect the rights of workers,
to promote their welfare, and to afford them full protection.16 In turn, said even if they did not meet the sales and collection qualifiers.24 However,
mandate is the basis of Article 4 of the Labor Code which states that "all doubts juxtaposing these with the evidence presented by respondent would reveal the
in the implementation and interpretation of this Code, including its implementing frailty of their statements.
rules and regulations, shall be rendered in favor of
labor."17chanroblesvirtualawlibrary The declarations of Hidalgo and Velazquez were sufficiently countered by
respondent through the affidavits executed by Norman R. Biola (Biola), Moises D.
There is diminution of benefits when the following requisites are present: (1) the Escasura (Escasura), and Ma. Vanessa R. Balles (Balles).25 Biola pointed out the
grant or benefit is founded on a policy or has ripened into a practice over a long various stop-gap measures undertaken by respondent beginning 1999 in order to
period of time; (2) the practice is consistent and deliberate; (3) the practice is arrest the deterioration of its accounts receivables balance, two of which relate to
not due to error in the construction or application of a doubtful or difficult the policies on the grant of SMI and to the change in the management structure
question of law; and (4) the diminution or discontinuance is done unilaterally by of respondent upon its re-acquisition by San Miguel Corporation. Escasura
the employer.18chanroblesvirtualawlibrary represented that he has personal knowledge of the circumstances behind the
retirement of Hidalgo and Velazquez. He attested that contrary to petitioner's
To be considered as a regular company practice, the employee must prove by claim, Hidalgo was in fact qualified for the SMI. As for Velazquez, Escasura
substantial evidence that the giving of the benefit is done over a long period of asserted that even if he (Velazquez) did not qualify for the SMI, respondent's
time, and that it has been made consistently and deliberately.19 Jurisprudence has General Manager in its Calamba plant still granted his (Velazquez) request, along
not laid down any hard-and-fast rule as to the length of time that company with other numerous concessions, to achieve industrial peace in the plant which
practice should have been exercised in order to constitute voluntary employer was then experiencing labor relations problems. Lastly, Balles confirmed that
practice.20 The common denominator in previously decided cases appears to be petitioner failed to meet the trade receivable qualifiers of the SMI. She also cited
the regularity and deliberateness of the grant of benefits over a significant period the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), both
of time.21 It requires an indubitable showing that the employer agreed to continue DSSs of respondent who retired on January 31, 2002 and December 30, 2002,
giving the benefit knowing fully well that the employees are not covered by any respectively. She noted that, unlike Valencia, Gutierrez also did not receive the
provision of the law or agreement requiring payment thereof.22 In sum, the SMI as part of his retirement pay, since he failed to qualify under the policy
benefit must be characterized by regularity, voluntary and deliberate intent of the guidelines. The verity of all these statements and representations stands and
employer to grant the benefit over a considerable period of holds true to Us, considering that petitioner did not present any iota of proof to
time.23chanroblesvirtualawlibrary debunk the same.

Upon review of the entire case records, We find no substantial evidence to prove Therefore, respondent's isolated act of including the SMI in the retirement
that the grant of SMI to all retired DSSs regardless of whether or not they qualify package of Velazquez could hardly be classified as a company practice that may
to the same had ripened into company practice. Despite more than sufficient be considered an enforceable obligation. To repeat, the principle against
opportunity given him while his case was pending before the NLRC, the CA, and diminution of benefits is applicable only if the grant or benefit is founded on an
even to this Court, petitioner utterly failed to adduce proof to establish his express policy or has ripened into a practice over a long period of time which is
allegation that SMI has been consistently, deliberately and voluntarily granted to consistent and deliberate; it presupposes that a company practice, policy and
all retired DSSs without any qualification or conditions whatsoever. The only two tradition favorable to the employees has been clearly established; and that the
pieces of evidence that he stubbornly presented throughout the entirety of this payments made by the company pursuant to it have ripened into benefits
case are the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V. enjoyed by them.26 Certainly, a practice or custom is, as a general rule, not a
Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998, source of a legally demandable or enforceable right.27 Company practice, just like
respectively. They claimed that the SMI was included in their retirement package any other fact, habits, customs, usage or patterns of conduct, must be proven by
the offering party who must allege and establish specific, repetitive conduct that
might constitute evidence of habit or company
practice.28chanroblesvirtualawlibrary

To close, We rule that petitioner could have salvaged his case had he step up to UE vs UEEA
disprove respondent's contention that he miserably failed to meet the collection
qualifiers of the SMI. Respondent argues that ?cralawlibrary
Before the Court is a petition for review under Rule 45 of the Rules of Court assailing the February 26,
An examination of the Company's aged trial balance reveals that petitioner did 2007 Decision[1] and September 5, 2007 Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No.
not meet the trade receivable qualifier. On the contrary, the said trial balance
90740, which set aside the February 28, 2005 Decision and May 31, 2005 Resolution of the National
reveals that petitioner had a large amount of uncollected overdue accounts. For
the year 2001, his percentage collection efficiency for current issuance was at an Labor Relations Commission (NLRC) in NLRC-NCR-00-04-05015-99. The dispositive portion of the
average of 13.5% a month as against the required 70%. For the same, CA decision reads:
petitioner's collection efficiency was at an average of 60.25% per month for
receivables aged 1-30 days, which is again, way below the required 90%. For
receivables aged 31-60 days during said year, petitioner's collection efficiency WHEREFORE, the instant petition is GRANTED. The Decision
was at an average of 56.17% per month, which is approximately half of the dated 28 February 2005 and Resolution dated 31 May 2005 rendered by the
required 100%. Worse, for receivables over 60 days old, petitioner's average NLRC are SET ASIDE. The final resolutions dated 29 April 2004 and 24
collection efficiency per month was a reprehensively low 14.10% as against the August 2004 hereby REMAIN in effect.
required 100%.29chanroblesvirtualawlibrary
SO ORDERED.[3]
The above data was repeatedly raised by respondent in its Rejoinder (To Facts of the Case
Complainant's Reply) before the LA,30 Memorandum of Appeal31 and Opposition
(To Complainant-Appellee's Motion for Reconsideration)32 before the NLRC, and
Comment (On the Petition),33 Memorandum (For the Private Respondent),34 and Petitioner University of the East (UE) is an educational institution duly organized and existing under
Comment (On the Motion for Reconsideration)35 before the CA. Instead of Philippine laws. On the other hand, respondent University of the East Employees
frontally rebutting the data, petitioner treated them with deafening silence; thus,
reasonably and logically implying lack of evidence to support the contrary. Association (UEEA) is a duly registered labor union of the rank-and-file employees of UE.

WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6, It appears from the records that prior to school year (SY) 1983-1984, the 70% incremental proceeds
2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94622, which affirmed from tuition fee increases as mandated by Presidential Decree No. 451 (P.D. No. 451), as amended,
the January 31, 2006 Decision and March 8, 2006 Resolution of the NLRC deleting was distributed by UE in proportion to the average number of academic and non-academic personnel.
the LA's inclusion of sales management incentives in the computation of
petitioner's retirement benefits, is hereby AFFIRMED. The distribution scheme became the subject of an Agreement [4] dated October 18, 1983 signed by the
management, faculty association and respondent. [5]Starting SY 1994-1995, however, the 70%
incremental proceeds from the tuition fee increase was distributed by UE to its covered employees
based on a new formula of percentage of salary.
to school personnel in any case) xxx. In this light, Article XX Section 5 of our
Not in conformity, UEEA, thru its president Ernesto C. Verceles (Verceles), sent a
past and current CBAs provide succinctly that:
letter[6] dated December 22, 1994 to then UE President, Dr. Rosalina S. Cajucom (Dr.
Cajucom), questioning the manner of distribution of the employees share in the 1994-1995 tuition fee The UNIVERSITY agrees to continue the
implementation of all benefits hitherto enjoyed by the employees
increase. The letter reads: not embodied herein and are the subject of
communication between the UNIVERSITY and the
Dear President Cajucom: ASSOCIATION provided they are not inconsistent with the
provisions of the Agreement or of the Labor Code. All other
This is with reference to the recent distribution of the employees share in the existing clauses, covenants, provisions or agreements shall
1994-95 tuition fee increase. remain in force.
We understand that the University unilaterally instituted a partial
distribution of FIVE PERCENT (5%) only of the basic wage of employees, We, therefore, urge the University to rectify the aforementioned
faculty members and administration personnel. erroneous, unfair and irregular distribution instituted last December 13,
1994.
This, to our mind, is quite irregular and unfair in view of the
following considerations: We believe that you may have been misled by your staff in so arriving
at such objectionable manner of distributing our tuition fee shares. We
1.) We have all along instituted the practice of having a Tripartite therefore hope that in the spirit of the season, the University thru your good
Meeting where the three (3) sectors involved, i.e. management, faculty and self would institute the necessary correction, thereby affording our lower
employees representatives go over the incremental proceeds that have been salaried employees and faculty members the means to have a more
realized and come to an agreement on the distribution of the share whether meaningful Christmas celebration.
partial or total in nature;

2.) The accepted and traditional practice was that for every 1.00 per xxx
share of faculty members based on the full load equivalent, management
personnel and rank-and-file employees receive 100.00 a month;
On February 23, 1995, UEEA sent another letter[7] to the UE President reiterating its earlier
3.) Using as a basis 5% of the wages of University personnel entitled objection to the distribution scheme of the 70% incremental proceeds from the tuition fee increase and
thereto besides being a departure from past practices, creates that unfair
requested a tripartite conference among management, faculty, administration, and rank-and-file
situation where those who have higher salaries receive more to the prejudice
of low salaried employees and faculty members; representatives to address the issue.
On June 19, 1995, a tripartite meeting was held among the representatives of management, faculty
4.) There is an existing Tripartite Agreement, with a xerox copy
attached hereto as ANNEX A, clearly specifying the agreed manner of union and UEEA. In the said meeting, it was agreed that the distribution of the incremental proceeds
distribution. Even [if] the May 17, 1994 letter to UE President Rosa[lina] would now be based on percentage of salary, and not anymore on the average number of
Cajucom by then Secretary of Education, Culture and Sports Armand V.
Fabella, states under the third paragraph thereof that the discretion is vested personnel. The Minutes[8] of the June 19, 1995 meeting was signed and attested to by UEEA officers
upon the school authorities xxx, but, in the same breath, the Secretary who attended.
qualifies the distribution or manner of remittance thereof with the phrase
(except where it forms part of a collective bargaining agreement but accrues
On April 27, 1999, UEEA filed a complaint before the NLRC for non-payment/underpayment distribution of the incremental increase would be 9.96% of the salaries of the employees as of May 31,
of the rank-and-file employees share of the tuition fee increases against UE pursuant to P.D. No. 451, 1994. In fact, copies of the minutes of the meeting were distributed and signed by the
as amended, and Republic Act (R.A.) No. 6728 otherwise known as Government Assistance to Students participants. Hence, UEEA was estopped from questioning the distribution scheme when it accepted
and Teachers in Private Education Act. the benefits.

In its position paper,[9] UEEA alleged that starting SY 1994-1995, UE had been withholding Lastly, UE asserted that the claim of the UEEA was already barred since it was filed three (3)
from the rank-and-file employees a sizeable portion of their share in the tuition fee increases as years from the time its supposed cause of action accrued.
mandated by P.D. No. 451, as amended. It asserted that before SY 1994-1995, shares of tuition fee
On September 4, 2002, Labor Arbiter Francisco A. Robles (LA) rendered a
increases were distributed proportionately among the management, faculty and rank-and-file
[11]
decision favoring UEEA, the fallo of which reads:
employees based on equal sharing or on a share-and-share alike basis. In SY 1994-1995, however, UE
arbitrarily and unilaterally distributed the tuition fee increase proceeds through percentage based on
WHEREFORE, premises considered, judgment is hereby rendered
salaries, thereby reducing the shares of the rank-and-file employees, while increasing those of the ordering the respondent University of the East, to pay the members of
management personnel. University of the East Employees Association (UEEA) the amount of
TWENTY-FIVE MILLION SEVEN HUNDRED FORTY-NINE THOUSAND
In its reply, [10] UE denied that the implementation of the new scheme in the distribution of the NINE HUNDRED NINETY-FIVE PESOS AND 40/100 (25,749,995.40)
70% incremental proceeds derived from tuition fee increases starting SY 1994-1995 was made representing the portions of the tuition fee increases for the school year 1994-
1995 and up to May 31, 2002 which were denied/withheld and/or lost by the
arbitrarily and/or unilaterally. It explained that the distribution scheme was only implemented after members of the aforesaid Union as a result of the disputed distribution
inquiry from the Department of Education, Culture and Sports (DECS) regarding the provision of R.A. scheme based on percentage of salary which was arbitrarily and unilaterally
adopted and implemented by the respondent. Furthermore, the respondent is
No. 6728. DECS explained that the law was silent on the manner of the distribution of the 70% hereby directed to submit to this Office a report to show compliance to the
incremental proceeds and stated that discretion in the distribution was vested in the school authorities. order herein stated.
What the law clearly required was that the incremental proceeds from the tuition fee increases should
SO ORDERED.[12]
be allocated for the payment of salaries/wages, allowances and other benefits of the teaching and non-
The LA ruled that the equal sharing distribution scheme in relation to the incremental
teaching personnel except the administrators who were principal stockholders of the school. Thus, UE
proceeds from the tuition fee increases had been adopted as a matter of policy by UE since 1983 and
insisted that it may distribute the entire 70% incremental proceeds for an across-the-board salary
was made part of its collective bargaining agreement with the UEEA. In addition, the LA noted that the
increase, or for merit increase, or for allowances and other employment benefits.
existence of the said policy or practice in the university was made part of the tripartite agreement
dated October 18, 1983, among UE, UEFA and UEEA. There was no evidence on record that the said
Furthermore, UE pointed out that the new distribution scheme was implemented after a
agreement was superseded by another agreement between UE and UEEA. Furthermore, UEs reliance
tripartite meeting was held on June 19, 1995 among the representatives of the management, UE
on the letter-reply of then DECS Secretary Armand V. Fabella was misplaced as the law imposed a
Faculty Association (UEFA) and the UEEA, wherein it was agreed that for SY 1994-1995, the
limitation on the extent of the discretionary authority given to the school officials such as when the
disposition had been agreed upon in a collective bargaining agreement. The LA concluded that UE was resolution had attained finality and could no longer be modified in any respect, even if the modification
legally bound to keep and maintain the established practice of distributing equally among its was meant to correct what was perceived to be an erroneous conclusion of fact or law.
employees the incremental proceeds from the tuition fee increases particularly in light of the aforesaid UE filed a motion for reconsideration of the CA decision but it was denied in a
tripartite agreement dated October 18, 1983 and the provisions of Article XX, Section 5 of the UE- resolution[20] dated September 5, 2007. Hence, this appeal, anchored on the following:
UEEA collective bargaining agreement.
GROUNDS:
Undaunted, UE interposed an appeal before the NLRC. The NLRC, in its April 29,
I
2004 Resolution,[13] dismissed the appeal and sustained the LA decision. UE filed a motion for
reconsideration but it was denied in a resolution [14] dated August 24, 2004 with a warning that no WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
DECLARED THAT PETITIONERS SECOND MOTION FOR
further motion for reconsideration shall be entertained. RECONSIDERATION IS A PROHIBITED PLEADING.

Nonetheless, on September 20, 2004, UE filed a motion for leave to file and admit a second II
motion for reconsideration, incorporating therein its second motion for reconsideration. UE alleged
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
that the NLRC resolution was not valid for failure to pass upon and consider the new and vital issues
HELD THAT THERE ARE [NO] EXTRAORDINARY PERSUASIVE
raised in its motion for reconsideration and for failure to comply with the prescribed form for NLRC REASONS IN THE INSTANT CASE WARRANTING THE ALLOWANCE OF
resolutions pursuant to Section 13, Rule VII, NLRC New Rules of Procedure.[15] A SECOND MOTION FOR RECONSIDERATION.

III
On February 28, 2005, the NLRC gave due course to the second motion for reconsideration,
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
reversed its earlier ruling and declared valid the distribution of the 70% incremental proceeds from RULED THAT THE ISSUANCE OF THE ENTRY OF JUDGMENT
tuition fee increases based on the percentage of salary of the covered employees. [16] Consequently, DATED OCTOBER 15, 2004 IS NOT PREMATURE.
UEEA filed a motion for reconsideration[17] but it was denied in the NLRC Resolution [18] dated May 31,
IV
2005.
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT
FOUND PETITIONER UNIVERSITYS MOTION FOR RECONSIDERATION
Aggrieved, UEEA filed a petition before the CA. The appellate court granted the petition and A PRO FORMA MOTION.
set aside the questioned decision and resolution of the NLRC. [19] The CA declared that since the second
motion for reconsideration was a prohibited pleading, it did not interrupt the running of the
The issues for resolution are: (1) whether or not UEs second motion for
reglementary period. Therefore, the NLRC Resolution dated August 24, 2004 became final and
reconsideration (MR) before the NLRC is a prohibited pleading; and (2) whether or not the change in
executory after ten (10) days from receipt of the copy thereof by the parties. Accordingly, the said
the scheme of distribution of the incremental proceeds from tuition fee increase is a diminution of Indeed, a second MR as a rule, is generally a prohibited pleading. [24] The Court, however, does
benefit. not discount instances when it may authorize the suspension of the rules of procedure so as to allow the
resolution of a second motion for reconsideration, in cases of extraordinarily persuasive reasons [25] such
UE argues that the CA erred in holding that the second MR was a prohibited pleading. It as when the decision is a patent nullity.[26]
asserts that while a second MR is generally a prohibited pleading, it may be allowed in meritorious
cases. Section 14 of the NLRC rules cannot be construed as to prevent the NLRC from relieving itself Time and again, the Court has upheld the theory that the rules of procedure are designed to
from patent errors in order to render justice. UE stresses that the technical rules of procedure are not secure and not to override substantial justice. [27] These are mere tools to expedite the decision or
meant to frustrate but to facilitate justice.[21] resolution of cases, hence, their strict and rigid application which would result in technicalities that
tend to frustrate rather than promote substantial justice must be avoided.[28]
UE further contends that the Court in resolving the issue on the second MR should not be too
dogmatic in its ruling. It persuades the Court to adopt a complete and holistic view, taking into On the second issue, after a careful review of the records and the arguments of the parties, the
consideration the peculiar circumstances of the case as well as the provisions on the liberal Court finds the position of the petitioner meritorious.
interpretation of the rules and the inherent power of the NLRC to amend and reverse its findings and
conclusions as may be necessary to render justice.[22] The Court agrees with petitioner UE that the change in the distribution of the 70%
incremental proceeds from tuition fee increase from equal sharing to percentage of salaries is not a
Petitioner further contends that there exist extraordinary persuasive reasons warranting the diminution of benefits. Its distribution to covered employees based on equal sharing scheme cannot be
allowance of the second MR. First, it argues that the complaint is a money claim arising from considered to have ripened into a company practice that the respondents have a right to demand.
employer-employee relationship; hence, it prescribes in three (3) years. Since the complaint was filed
only on April 27, 1999, more than three (3) years from the alleged violation in 1994, prescription has Generally, employees have a vested right over existing benefits voluntarily granted to them by
set in. Second, UE maintains that the distribution of tuition fee increase based on percentage of salary their employer, thus, said benefits cannot be reduced, diminished, discontinued or eliminated by the
was not arbitrary and/or unilateral because the new distribution scheme was taken up and agreed upon latter.[29] This principle against diminution of benefits, however, is applicable only if the grant or
in the tripartite meeting held on June 19, 1995 and was adopted only after consultation with the DECS benefit is founded on an express policy or has ripened into a practice over a long period of time which
Secretary Armand Fabella. Third, the faculty union, UE Faculty Association (UEFA), a party to the is consistent and deliberate. [30] It does not contemplate the continuous grant of unauthorized or irregular
Agreement dated October 18, 1983, did not complain against the new distribution scheme. Lastly, the compensation but it presupposes that a company practice, policy and tradition favourable to the
new distribution scheme is in accordance with law. UE claims that the law and jurisprudence are clear employees has been clearly established; and that the payments made by the company pursuant to it
that a private educational institution has the discretion on the disposition of the 70% incremental have ripened into benefits enjoyed by them. [31] The test or rationale of this rule on long
proceeds from tuition fee increase, with the only condition imposed that the proceeds should go to the practice requires an indubitable showing that the employer agreed to continue giving the
[23]
salaries, wages and allowances and other benefits of teachers and non-teaching personnel. benefits knowing fully well that said employees are not covered by the law requiring payment thereof.
[32]
In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the 1994[38] and February 23, 1995,[39] to then UE President, Dr. Cajucom, questioning the change in the
employer to grant the benefits over a significant period of time. [33] distribution scheme from equal sharing to percentage of salary and requesting a tripartite meeting to
settle the issue.
In the case at bench, contrary to UEEAs claim, the distribution of the 70% incremental
Consequently, a tripartite meeting was held on June 19, 1995. The said meeting was attended
proceeds based on equal sharing scheme cannot be held to have ripened into a company practice that
by the representatives of the management, UEFA and UEEA. From the minutes of the meeting, the
the respondents have a right to demand. Jurisprudence is replete with the rule specifying a minimum
tuition fee incremental proceeds for SY 1994-95 and the manner of its distribution based on percentage
number of years within which a company practice must be exercised in order to constitute voluntary
of the salaries of the covered employees were discussed and UEEA representatives, namely, Salvador
company practice.[34] Even if UE had been continuously distributing the 70% incremental proceeds
Blancia and Miguel Teao, did not object. They even later signed the minutes of the meeting to signify
based on equal sharing scheme to all its covered employees, the same could not have ripened into a
their conformity to it.
vested right because such grant would not have been characterized by a deliberate and voluntary act on
the part of the petitioner.
It was likewise erroneous for UEEA to rely on the October 18, 1983 Agreement[40] which
provides:
As pronounced by the Court in the case of Globe Mackay Cable and Radio Corporation v.
NLRC,[35] the grant by an employer of benefits through an erroneous application of the law due to The University of the East, represented by its Chairman of the Board
and Chief Executive Officer, the UE Faculty Association (UEFA), represented
absence of clear administrative guidelines is not considered a voluntary act which cannot be by its President, and the UE Employees Association (UEEA), represented by
unilaterally discontinued. Here, no vested rights accrued to respondents. R.A. No. 6728 simply its President , all assisted by their respective panels, hereby mutually agree:
mandates that the 70% incremental proceeds arising from tuition fee increases should go to the 1. That in determining the allocation of the 60% incremental
payment of salaries, wages, allowances, and other benefits of the teaching and non-teaching personnel proceeds from the approved increase in school fees effective school year
1982-83 among the three sectors (faculty, rank-and-file, and management
except administrators who are principal stockholders of the school. [36] As to the manner of its
personnel), the formula used in previous years shall be followed namely, the
distribution, however, the law is silent. The letter [37] of then DECS Secretary Armand Fabella, correctly allocation shall be in proportion to the average number of academic and non-
academic personnel in the service as of the start of the first and second
stated that the discretion on what distribution scheme to adopt is vested upon the school authorities. In
semesters of the school year 1982-83;
fact, the school can distribute the entire 70% for an across-the-board salary increase, for merit increase
and/or for allowances or other benefits. The only limitations provided are [1] the benefit must accrue to 2. That the proposal of the UEEA, whereby the number of academic
personnel is to be determined by using the full load equivalent, shall be
specific individual school personnel; and [2] the benefit once given for a specific year cannot be adopted in allocating the 60% incremental proceeds from the approved
revoked for that same year. increase in school fees effective school year 1983-84.

Manila, October 18, 1983.


Neither can UEEA claim that the change in the distribution scheme from equal sharing to
percentage of salary was done peremptorily. Verceles wrote two (2) letters dated December 22,
Clearly, the said agreement only pertains to the distribution of incremental proceeds for SY Petitioner Supreme Steel Pipe Corporation is a domestic corporation engaged in the business
of manufacturing steel pipes for domestic and foreign markets. Respondent Nagkakaisang
1982-83. Besides, such agreement is deemed superseded by another agreement taken up during Manggagawa ng Supreme Independent Union is the certified bargaining agent of petitioners
tripartite meeting held on June 19, 1995. rank-and-file employees. The CBA2 in question was executed by the parties to cover the
period from June 1, 2003 to May 31, 2008.

The Court agrees with UE and holds that UEEAs right to question the distribution of the The Case
incremental proceeds for SY 1994-1995 has already prescribed. Article 291 of the Labor Code provides
On July 27, 2005, respondent filed a notice of strike with the National Conciliation and
that money claims arising from an employer-employee relationship must be filed within three (3) years Mediation Board (NCMB) on the ground that petitioner violated certain provisions of the CBA.
from the time the cause of action accrued. In the present case, the cause of action accrued when the The parties failed to settle their dispute. Consequently, the Secretary of Labor certified the
case to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code.
distribution of the incremental proceeds based on percentage of salary of the covered employees was
discussed in the tripartite meeting held on June 19, 1995. UEEA did not question the manner of its Respondent alleged eleven CBA violations, delineated as follows:
distribution and only on April 27, 1999 did it file an action based therein. Hence, prescription had set
in. A. Denial to four employees of the CBA- provided wage increase

Article XII, Section 1 of the CBA provides:


WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 90740 are REVERSED and SET ASIDE. The Decision of the National Section 1. The COMPANY shall grant a general wage increase, over and above to all
employees, according to the following schedule:
Labor Relations Commission dated February 28, 2005 is REINSTATED.
A. Effective June 1, 2003 P14.00 per working day;
SUPREME STEEL CORPORATION, Petitioner,
B. Effective June 1, 2004 P12.00 per working day; and
vs.
NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMS-IND-
APL), Respondent. C. Effective June 1, 2005 P12.00 per working day.3

DECISION Respondent alleged that petitioner has repeatedly denied the annual CBA increases to at
least four individuals: Juan Nio, Reynaldo Acosta, Rommel Talavera, and Eddie Dalagon.
According to respondent, petitioner gives an anniversary increase to its employees upon
NACHURA, J.:
reaching their first year of employment. The four employees received their respective
anniversary increases and petitioner used such anniversary increase to justify the denial of
This petition for review on certiorari assails the Court of Appeals (CA) Decision 1 dated their CBA increase for the year.4
September 30, 2008, and Resolution dated December 4, 2008, which affirmed the finding of
the National Labor Relations Commission (NLRC) that petitioner violated certain provisions of
Petitioner explained that it has been the companys long standing practice that upon reaching
the Collective Bargaining Agreement (CBA).
one year of service, a wage adjustment is granted, and, once wages are adjusted, the
increase provided for in the CBA for that year is no longer implemented. Petitioner claimed
that this practice was not objected to by respondent as evidenced by the employees pay lies in its number, which becomes crucial especially during negotiations; after all, an employer
slips.5 will not bargain seriously with a union whose membership constitutes a minority of the total
workforce of the company. According to respondent, out of the 500 employees of the
Respondent countered that petitioner failed to prove that, as a matter of company practice, company, only 147 are union members, and at least 60 employees would have been eligible
the anniversary increase took the place of the CBA increase. It contended that all employees for union membership had they been recognized as regular employees. 9
should receive the CBA stipulated increase for the years 2003 to 2005. 6
For its part, petitioner admitted that it hired temporary workers. It purportedly did so to cope
B. Contracting-out labor with the seasonal increase of the job orders from abroad. In order to comply with the job
orders, petitioner hired the temporary workers to help the regular workers in the production of
steel pipes. Petitioner maintained that these workers do not affect respondents membership.
Article II, Section 6 of the CBA provides:
Petitioner claimed that it agreed to terminate these temporary employees on the condition
that the regular employees would have to perform the work that these employees were
Section 6. Prohibition of Contracting Out of Work of Members of Bargaining Unit. Thirty (30) performing, but respondent refused. Respondents refusal allegedly proved that petitioner
days from the signing of this CBA, contractual employees in all departments, except was not contracting out the services being performed by union members. Finally, petitioner
Warehouse and Packing Section, shall be phased out. Those contractual employees who are insisted that the hiring of temporary workers is a management prerogative. 10
presently in the workforce of the COMPANY shall no longer be allowed to work after the
expiration of their contracts without prejudice to being hired as probationary employees of the
C. Failure to provide shuttle service
COMPANY.7

Petitioner has allegedly reneged on its obligation to provide shuttle service for its employees
Respondent claimed that, contrary to this provision, petitioner hired temporary workers for
pursuant to Article XIV, Section 7 of the CBA, which provides:
five months based on uniformly worded employment contracts, renewable for five months,
and assigned them to almost all of the
Section 7. Shuttle Service. As per company practice, once the company vehicle used for the
purpose has been reconditioned.11
departments in the company. It pointed out that, under the CBA, temporary workers are
allowed only in the Warehouse and Packing Section; consequently, employment of
contractual employees outside this section, whether direct or agency-hired, was absolutely Respondent claimed that the company vehicle which would be used as shuttle service for its
prohibited. Worse, petitioner never regularized them even if the position they occupied and employees has not been reconditioned by petitioner since the signing of the CBA on February
the services they performed were necessary and desirable to its business. Upon the 26, 2004.12 Petitioner explained that it is difficult to implement this provision and simply denied
expiration of their contracts, these workers would be replaced with other workers with the that it has reneged on its obligation.13
same employment status. This scheme is a clear circumvention of the laws on regular
employment. 8 D. Refusal to answer for the medical expenses incurred by three employees

Respondent argued that the right to self-organization goes beyond the maintenance of union Respondent asserted that petitioner is liable for the expenses incurred by three employees
membership. It emphasized that the CBA maintains a union shop clause which gives the who were injured while in the company premises. This liability allegedly stems from Article
regular employees 30 days within which to join respondent as a condition for their continued VIII, Section 4 of the CBA which provides:
employment. Respondent maintained that petitioners persistent refusal to grant regular
status to its employees, such as Dindo Buella, who is assigned in the Galvanizing Section 4. The COMPANY agrees to provide first aid medicine and first aid service and
Department, violates the employees right to self-organization in two ways: (1) they are consultation free of charge to all its employees.14
deprived of a representative for collective bargaining purposes; and (2) respondent is
deprived the right to expand its membership. Respondent contended that a unions strength
According to respondent, petitioners definition of what constitutes first aid service is limited to were performing their functions as such, and not as employees of the company, the latter
the bare minimum of treating injured employees while still within the company premises and should not be liable. Petitioner further asserted that it is not liable to pay the wages of the
referring the injured employee to the Chinese General Hospital for treatment, but the travel union officers when the meetings are held beyond company time (3:00 p.m.). It claimed that
expense in going to the hospital is charged to the employee. Thus, when Alberto Guevarra time-off with pay is allowed only if the venue of the meeting is outside company premises and
and Job Canizares, union members, were injured, they had to pay P90.00 each for the meeting involves the implementation and interpretation of the CBA. 20
transportation expenses in going to the hospital for treatment and going back to the company
thereafter. In the case of Rodrigo Solitario, petitioner did not even shoulder the cost of the first In reply, respondent averred that the above quoted provision does not make a qualification
aid medicine, amounting to P2,113.00, even if he was injured during the company sportsfest, that the meetings should be held during office hours (7:00 a.m. to 3:00 p.m.); hence, for as
but the amount was deducted, instead, from his salary. Respondent insisted that this violates long as the presence of the employee is needed, time spent during the grievance meeting
the above cited provision of the CBA.15 should be paid.21

Petitioner insisted that it provided medicine and first aid assistance to Rodrigo F. Visitors free access to company premises Respondent charged petitioner with violation of
Solitario.1avvphi1 It alleged that the latter cannot claim hospitalization benefits under Article Article II, Section 7 of the CBA which provides:
VIII, Section 116 of the CBA because he was not confined in a hospital. 17
Section 7. Free Access to Company Premises. Local Union and Federation officers (subject
E. Failure to comply with the time-off with pay provision to companys security measure) shall be allowed during working hours to enter the
COMPANY premises for the following reasons:
Article II, Section 8 of the CBA provides:
a. To investigate grievances that have arisen;
Section 8. Time-Off with Pay. The COMPANY shall grant to the UNIONs duly authorized
representative/s or to any employee who are on duty, if summoned by the UNION to testify, if b. To interview Union Officers, Stewards and members during reasonable hours; and
his/her presence is necessary, a paid time-off for the handling of grievances, cases,
investigations, labor-management conferences provided that if the venue of the case is c. To attend to any meeting called by the Management or the UNION. 22
outside Company premises involving [the] implementation and interpretation of the CBA, two
(2) representatives of the UNION who will attend the said hearing shall be considered time-off
with pay. If an employee on a night shift attends grievance on labor-related cases and could G. Failure to comply with reporting time-off provision
not report for work due to physical condition, he may avail of union leave without need of the
two (2) days prior notice.18 Respondent maintained that a brownout is covered by Article XII, Section 3 of the CBA which
states:
Respondent contended that under the said provision, petitioner was obliged to grant a paid
time-off to respondents duly authorized representative or to any employee who was on duty, Section 3. Reporting Time-Off. The employees who have reported for work but are unable to
when summoned by respondent to testify or when the employees presence was necessary in continue working because of emergencies such as typhoons, flood, earthquake,
the grievance hearings, meetings, or investigations. 19 transportation strike, where the COMPANY is affected and in case of fire which occurs in the
block where the home of the employee is situated and not just across the street and serious
Petitioner admitted that it did not honor the claim for wages of the union officers who attended illness of an immediate member of the family of the employee living with him/her and no one
the grievance meetings because these meetings were initiated by respondent itself. It argued in the house can bring the sick family member to the hospital, shall be paid as follows:
that since the union officers
a. At least half day if the work stoppage occurs within the first four (4) hours of work;
and
b. A whole day if the work stoppage occurs after four (4) hours of work. 23 Petitioner, on the other hand, alleged that Madayag was validly terminated under Art. 284 28 of
the Labor Code and that his leg was amputated by reason of diabetes, which disease is not
Respondent averred that petitioner paid the employees salaries for one hour only of the four- work-related. Petitioner claimed that it was willing to pay Madayag 13 days for every year of
hour brownout that occurred on July 25, 2005 and refused to pay for the remaining three service but respondent was asking for additional benefits. 29
hours. In defense, petitioner simply insisted that brownouts are not included in the above list
of emergencies.24 I. Denial of paternity leave benefit to two employees

Respondent rejoined that, under the principle of ejusdem generis, brownouts or power Article XV, Section 2 of the CBA provides:
outages come within the "emergencies" contemplated by the CBA provision. Although
brownouts were not specifically identified as one of the emergencies listed in the said CBA Section 2. Paternity Leave. As per law[,] [t]he Company shall, as much as possible, pay
provision, it cannot be denied that brownouts fall within the same kind or class of the paternity leave within 2 weeks from submission of documents. 30
enumerated emergencies. Respondent maintained that the intention of the provision was to
compensate the employees for occurrences which are beyond their control, and power Petitioner admitted that it denied this benefit to the claimants for failure to observe the
outage is one of such occurrences. It insisted that the list of emergencies is not an exhaustive requirement provided in the Implementing Rules and Regulations of Republic Act No. 8187
list but merely gives an idea as to what constitutes an actual emergency that is beyond the (Paternity Leave Act of 1995), that is, to notify the employer of the pregnancy of their wives
control of the employee.25 and the expected date of delivery.31

H. Dismissal of Diosdado Madayag Respondent argued that petitioner is relying on technicalities by insisting that the denial was
due to the two employees failure to notify it of the pregnancy of their respective spouses. It
Diosdado Madayag was employed as welder by petitioner. He was served a Notice of maintained that the notification requirement runs counter to the spirit of the law. Respondent
Termination dated March 14, 2005 which read: averred that, on grounds of social justice, the oversight to notify petitioner should not be dealt
with severely by denying the two claimants this benefit. 32
Please consider this as a Notice of Termination of employment effective March 14, 2005
under Art. 284 of the Labor Code and its Implementing Rules. J. Discrimination and harassment

This is based on the medical certificate submitted by your attending physician, Lucy Anne E. According to respondent, petitioner was contemptuous over union officers for protecting the
Mamba, M.D., Jose R. Reyes Memorial Medical Center dated March 7, 2005 with the rights of union members. In an affidavit executed by Chito Guadaa, union secretary, he
following diagnosis: narrated that Alfred Navarro, Officer-in-Charge of the Packing Department, had been harsh in
dealing with his fellow employees and would even challenge some workers to a fight. He
Diabetes Mellitus Type 2 averred that Navarro had an overbearing attitude during work and grievance meetings. In
November 2004, Navarro removed Guadaa, a foreman, from his position and installed
Please be guided accordingly.26 another foreman from another section. The action was allegedly brought about by earlier
grievances against Navarros abuse. Petitioner confirmed his transfer to another section in
violation of Article VI, Section 6 of the CBA,33 which states in part:
Respondent contended that Madayags dismissal from employment is illegal because
petitioner failed to obtain a certification from a competent public authority that his disease is
of such nature or at such stage that it cannot be cured within six months even after proper Section 6. Transfer of Employment. No permanent positional transfer outside can be
medical treatment. Petitioner also failed to prove that Madayags continued employment was effected by the COMPANY without discussing the grounds before the Grievance Committee.
prejudicial to his health or that of his colleagues.27
All transfer shall be with advance notice of two (2) weeks. No transfer shall interfere with the such is not an act of harassment but a precautionary measure to protect Masangcays
employees exercise of the right to self-organization. 34 interest.39

Respondent also alleged that Ariel Marigondon, union president, was also penalized for K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
working for his fellow employees. One time, Marigondon inquired from management about
matters concerning tax discrepancies because it appeared that non-taxable items were Respondent posited that any form of wage increase granted through the CBA should not be
included as part of taxable income. Thereafter, Marigondon was transferred from one area of treated as compliance with the wage increase given through the wage boards. Respondent
operation to another until he was allegedly forced to accept menial jobs of putting control tags claimed that, for a number of years, petitioner has complied with Article XII, Section 2 of the
on steel pipes, a kind of job which did not require his 16 years of expertise in examining steel CBA which provides:
pipes.35
Section 2. All salary increase granted by the COMPANY shall not be credited to any future
Edgardo Masangcay, respondents Second Vice President, executed an affidavit wherein he contractual or legislated wage increases. Both increases shall be implemented separate and
cited three instances when his salary was withheld by petitioner. The first incident happened distinct from the increases stated in this Agreement. It should be understood by both parties
on May 28, 2005 when petitioner refused to give his salary to his wife despite presentation of that contractual salary increase are separate and distinct from legislated wage increases,
a proof of identification (ID) and letter of authorization. On June 18, 2005, petitioner also thus the increase brought by the latter shall be enjoyed also by all covered employees. 40
refused to release his salary to Pascual Lazaro despite submission of a letter of authority and
his ID and, as a result, he was unable to buy medicine for his child who was suffering from Respondent maintained that for every wage order that was issued in Region 3, petitioner
asthma attack. The third instance happened on June 25, 2005 when his salary was short never hesitated to comply and grant a similar increase. Specifically, respondent cited
of P450.00; this amount was however released the following week. 36 petitioners compliance with Wage Order No. RBIII-10 and grant of the mandated P15.00 cost
of living allowance (COLA) to all its employees. Petitioner, however, stopped implementing it
Petitioner explained that the transfer of the employee from one department to another was to non-minimum wage earners on July 24, 2005. It contended that this violates Article 100 of
the result of downsizing the Warehouse Department, which is a valid exercise of the Labor Code which prohibits the diminution of benefits already enjoyed by the workers and
management prerogative. In Guadaas case, Navarro denied that he was being harsh but that such grant of benefits had already ripened into a company practice. 41
claimed that he merely wanted to stress some points. Petitioner explained that Guadaa was
transferred when the section where he was assigned was phased out due to the installation Petitioner explained that the COLA provided under Wage Order No. RBIII-10 applies to
of new machines. Petitioner pointed out that the other workers assigned in said section were minimum wage earners only and that, by mistake, it implemented the same across the board
also transferred.37 or to all its employees. After realizing its mistake, it stopped integrating the COLA to the basic
pay of the workers who were earning above the minimum wage. 42
For the petitioner, Emmanuel Mendiola, Production Superintendent, also executed an affidavit
attesting that the allegation of Ariel Marigondon, that he was harassed and was a victim of The NLRCs Ruling
discrimination for being respondents President, had no basis. Marigondon pointed out that
after the job order was completed, he was reassigned to his original shift and group. 38
Out of the eleven issues raised by respondent, eight were decided in its favor; two (denial of
paternity leave benefit and discrimination of union members) were decided in favor of
Petitioner also submitted the affidavits of Elizabeth Llaneta Aguilar, disbursement clerk and petitioner; while the issue on visitors free access to company premises was deemed settled
hiring staff, and Romeo T. Sy, Assistant Personnel Manager. Aguilar explained that she did during the mandatory conference. The dispositive portion of the NLRC Decision dated March
not mean to harass Masangcay, but she merely wanted to make sure that he would receive 30, 2007 reads:
his salary. Affiant Sy admitted that he refused to release Masangcays salary to a woman who
presented herself as his (Masangcays) wife since nobody could attest to it. He claimed that
WHEREFORE, Supreme Steel Pipe Corporation (the Company) is hereby ordered to:
1) implement general wage increase to Juan Nio, Eddie Dalagon and Rommel 14) E. Masangcay - P175.75
Talavera pursuant to the CBA in June 2003, 2004 and 2005;
15) A. Marigondon - P181.66
2) regularize workers Dindo Buella and 60 other workers and to respect CBA
provision on contracting-out labor; 16) E. Masangcay - P175.75

3) recondition the company vehicle pursuant to the CBA; 17) A. Marigondon - P181.66

18) F. Servano - P174.02


4) answer for expenses involved in providing first aid services including transportation
expenses for this purpose, as well as to reimburse Rodrigo Solitario the sum 19) R. Estrella - P181.50
of P2,113.00;
20) A. Marigondon - P181.66
5) pay wages of union members/officers who attended grievance meetings as
follows: 6) pay workers their salary for the 3 hours of the 4 hour brownout as follows:

1) D. Serenilla - P115.24375 1) Alagon, Jr., Pedro - P130.0875


2) D. Miralpes - P115.80625 2) Aliwalas, Cristeto - P108.5625
3) E. Mallari - P 3) Baltazar, Roderick - P 90.1875
4) C. Cruz - P114.65313 4) Baez, Oliver - P 90.9375
5) J. Patalbo - P 5) Prucal, Eduardo - P126.015
6) J.J. Muoz - P111.19375 6) Calimquin, Rodillo - P131.0362
7) C. Guadaa - P 7) Clave, Arturo - P125.64
8) J. Patalbo - P 8) Cadavero, Rey - P108.5625
9) E. Mallari - P 9) De Leon, Romulo - P124.35
10) C. Guadaa - P 10) Lactao, Noli - P126.015
11) A. Marigondon - P170.30625 11) Layco, Jr., Dandino - P130.5375
12) A. Marigondon - 12) Legaspi, Melencio - P127.63
13) A. Marigondon -
9) dismiss the charge of harassment and discrimination for lack of merit; and to
13) Quiachon, Rogelio - P

14) Sacmar, Roberto - P 10) continue to implement COLA under Wage Order Nos. [RBIII]-10 & 11 across the
board.
15) Tagle, Farian - P
The issue on Visitors Free Access to Company Premises is dismissed for being moot and
16) Villavicencio, Victor - academic after it was settled during the scheduled conferences.
17) Agra, Romale -
SO ORDERED.43
18) Basabe, Luis - P
Forthwith, petitioner elevated the case to the CA, reiterating its arguments on the eight issues
19) Bornasal, Joel - resolved by the NLRC in respondents favor.
20) Casitas, Santiago - P
The CAs Ruling
21) Celajes, Bonifacio - P
On September 30, 2008, the CA rendered a decision dismissing the petition, thus:
22) Avenido, Jerry - P
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE
23) Gagarin, Alfredo - P and accordingly DISMISSED, for lack of merit. The assailed Decision dated March 30, 2007
and Resolution dated April 28, 2008 of the National Labor Relations Commission in NLRC
24) Layson, Paulo -
NCR CC No. 000305-05 are hereby AFFIRMED.
25) Lledo, Asalem - P
With costs against the petitioner.
26) Marigondon, Ariel -
SO ORDERED.44
27) Orcena, Sonnie -

28) Servano, Fernando - According to the CA, petitioner failed to show that the NLRC committed grave abuse of
discretion in finding that it violated certain provisions of the CBA. The NLRC correctly held
29) Versola, Rodrigo - that every employee is entitled to the wage increase under the CBA despite receipt of an
anniversary increase. The CA concluded that, based on the wording of the CBA, which uses
the words "general increase" and "over and above," it cannot be said that the parties have
7) reinstate Diosdado Madayag to his former position without loss of seniority rights intended the anniversary increase to be given in lieu of the CBA wage increase. 45
and to pay full backwages and other benefits from 14 March 2005, date of dismissal,
until the date of this Decision; if reinstatement is impossible[,] to pay separation pay The CA declared that the withdrawal of the COLA under Wage Order No. RBIII-10 from the
of one month pay for every year of service in addition to backwages; employees who were not minimum wage earners amounted to a diminution of benefits
because such grant has already ripened into a company practice. It pointed out that there
8) dismiss the claim for paternity leave for failure of claimants to observe the was no ambiguity or doubt as to who were covered by the wage order. Petitioner, therefore,
requirements; may not invoke error or mistake in extending the COLA to all employees and such act can
only be construed as "as a voluntary act on the part of the employer." 46 The CA opined that, a CBA are clear and there is no doubt as to the intention of the contracting parties, the literal
considering the foregoing, the ruling in Globe Mackay Cable and Radio Corp. v. meaning of its stipulation shall prevail.54 Moreover, the CBA must be construed liberally rather
NLRC47 clearly did not apply as there was no doubtful or difficult question involved in the than narrowly and technically and the Court must place a practical and realistic construction
present case.48 upon it.55 Any doubt in the interpretation of any law or provision affecting labor should be
resolved in favor of labor.56
The CA sustained the NLRCs interpretation of Art. VIII, Section 4 of the CBA as including the
expenses for first aid medicine and transportation cost in going to the hospital. The CA Upon these well-established precepts, we sustain the CAs findings and conclusions on all the
stressed that the CBA should be construed liberally rather than narrowly and technically, and issues, except the issue pertaining to the denial of the COLA under Wage Order No. RBIII-10
the courts must place a practical and realistic construction upon it, giving due consideration to and 11 to the employees who are not minimum wage earners.
the context in which it was negotiated and the purpose which it intended to serve. 49
The wording of the CBA on general wage increase cannot be interpreted any other way: The
Based on the principle of liberal construction of the CBA, the CA likewise sustained the CBA increase should be given to all employees "over and above" the amount they are
NLRCs rulings on the issues pertaining to the shuttle service, time-off for attendance in receiving, even if that amount already includes an anniversary increase. Stipulations in a
grievance meetings/hearings, and time-off due to brownouts. 50 contract must be read together, not in isolation from one another.57Consideration of Article
XIII, Section 2 (non-crediting provision), bolsters such interpretation. Section 2 states that
The CA further held that management prerogative is not unlimited: it is subject to limitations "[a]ll salary increase granted by the company shall not be credited to any future contractual or
found in law, a CBA, or the general principles of fair play and justice. It stressed that the CBA legislated wage increases." Clearly then, even if petitioner had already awarded an
provided such limitation on management prerogative to contract-out labor, and compliance anniversary increase to its employees, such increase cannot be credited to the "contractual"
with the CBA is mandated by the express policy of the law.51 increase as provided in the CBA, which is considered "separate and distinct."

Finally, the CA affirmed the NLRCs finding that Madayags dismissal was illegal. It Petitioner claims that it has been the company practice to offset the anniversary increase with
emphasized that the burden to prove that the employees disease is of such nature or at such the CBA increase. It however failed to prove such material fact. Company practice, just like
stage that it cannot be cured within a period of six months rests on the employer. Petitioner any other fact, habits, customs, usage or patterns of conduct must be proven. The offering
failed to submit a certification from a competent public authority attesting to such fact; hence, party must allege and prove specific, repetitive conduct that might constitute evidence of
Madayags dismissal is illegal.52 habit,58 or company practice. Evidently, the pay slips of the four employees do not serve as
sufficient proof.
Petitioner moved for a reconsideration of the CAs decision. On December 4, 2008, the CA
denied the motion for lack of merit.53 Petitioners excuse in not providing a shuttle service to its employees is unacceptable. In fact,
it can hardly be considered as an excuse. Petitioner simply says that it is difficult to
implement the provision. It relies on the fact that "no time element [is] explicitly stated [in the
Dissatisfied, petitioner filed this petition for review on certiorari, contending that the CA erred
CBA] within which to fulfill the undertaking." We cannot allow petitioner to dillydally in
in finding that it violated certain provisions of the CBA.
complying with its obligation and take undue advantage of the fact that no period is provided
in the CBA. Petitioner should recondition the company vehicle at once, lest it be charged with
The Courts Ruling and found guilty of unfair labor practice.

The petition is partly meritorious. Petitioner gave a narrow construction to the wording of the CBA when it denied (a)
reimbursement for the first-aid medicines taken by Rodrigo Solitario when he was injured
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the during the company sportsfest and the transportation cost incurred by Alberto Guevara and
parties and compliance therewith is mandated by the express policy of the law. If the terms of Job Canizares in going to the hospital, (b) payment of the wages of certain employees during
the time they spent at the grievance meetings, and (c) payment of the employees wages Indeed, jurisprudence recognizes the right to exercise management prerogative. Labor laws
during the brownout that occurred on July 25, 2002. As previously stated, the CBA must be also discourage interference with an employer's judgment in the conduct of its business. For
construed liberally rather than narrowly and technically. It is the duty of the courts to place a this reason, the Court often declines to interfere in legitimate business decisions of
practical and realistic construction upon the CBA, giving due consideration to the context in employers. The law must protect not only the welfare of employees, but also the right of
which it is negotiated and the purpose which it is intended to serve. Absurd and illogical employers.63 However, the exercise of management prerogative is not unlimited. Managerial
interpretations should be avoided.59 A CBA, like any other contract, must be interpreted prerogatives are subject to limitations provided by law, collective bargaining agreements, and
according to the intention of the parties.60 general principles of fair play and justice.64 The CBA is the norm of conduct between the
parties and, as previously stated, compliance therewith is mandated by the express policy of
The CA was correct in pointing out that the concerned employees were not seeking the law.65
hospitalization benefits under Article VIII, Section 1 of the CBA, but under Section 4 thereof;
hence, confinement in a hospital is not a prerequisite for the claim. Petitioner should The CBA is clear in providing that temporary employees will no longer be allowed in the
reimburse Solitario for the first aid medicines; after all, it is the duty of the employer to company except in the Warehouse and Packing Section. Petitioner is bound by this provision.
maintain first- aid medicines in its premises.61 Similarly, Guevara and Canizares should also It cannot exempt itself from compliance by invoking management prerogative. Management
be reimbursed for the transportation cost incurred in going to the hospital. The Omnibus prerogative must take a backseat when faced with a CBA provision. If petitioner needed
Rules Implementing the Labor Code provides that, where the employer does not have an additional personnel to meet the increase in demand, it could have taken measures without
emergency hospital in its premises, the employer is obliged to transport an employee to the violating the CBA.
nearest hospital or clinic in case of emergency.62
Respondent claims that the temporary employees were hired on five-month contracts,
We likewise agree with the CA on the issue of nonpayment of the time-off for attending renewable for another five months. After the expiration of the contracts, petitioner would hire
grievance meetings. The intention of the parties is obviously to compensate the employees other persons for the same work, with the same employment status.
for the time that they spend in a grievance meeting as the CBA provision categorically states
that the company will pay the employee "a paid time-off for handling of grievances, Plainly, petitioners scheme seeks to prevent employees from acquiring the status of regular
investigations, labor-management conferences." It does not make a qualification that such employees. But the Court has already held that, where from the circumstances it is apparent
meeting should be held during office hours or within the company premises. that the periods of employment have been imposed to preclude acquisition of security of
tenure by the employee, they should be struck down or disregarded as contrary to public
The employees should also be compensated for the time they were prevented from working policy and morals.66 The primary standard to determine a regular employment is the
due to the brownout. The CBA enumerates some of the instances considered as reasonable connection between the particular activity performed by the employee in relation
"emergencies" and these are "typhoons, flood earthquake, transportation strike." As correctly to the business or trade of the employer. The test is whether the former is usually necessary
argued by respondent, the CBA does not exclusively enumerate the situations which are or desirable in the usual business or trade of the employer. If the employee has been
considered "emergencies." Obviously, the key element of the provision is that employees performing the job for at least one year, even if the performance is not continuous or merely
"who have reported for work are unable to continue working" because of the incident. It is intermittent, the law deems the repeated and continuing need for its performance as sufficient
therefore reasonable to conclude that brownout or power outage is considered an evidence of the necessity, if not indispensability, of that activity to the business of the
"emergency" situation. employer. Hence, the employment is also considered regular, but only with respect to such
activity and while such activity exists.67
Again, on the issue of contracting-out labor, we sustain the CA. Petitioner, in effect, admits
having hired "temporary" employees, but it maintains that it was an exercise of management We also uphold the CAs finding that Madayags dismissal was illegal. It is already settled that
prerogative, necessitated by the increase in demand for its product. the burden to prove the validity of the dismissal rests upon the employer. Dismissal based on
Article 284 of the Labor Code is no different, thus:
The law is unequivocal: the employer, before it can legally dismiss its employee on the not have been due to error in the construction or application of a doubtful or difficult question
ground of disease, must adduce a certification from a competent public authority that the of law is a distinct requirement.
disease of which its employee is suffering is of such nature or at such a stage that it cannot
be cured within a period of six months even with proper treatment. The implementation of the COLA under Wage Order No. RBIII-10 across the board, which
only lasted for less than a year, cannot be considered as having been practiced "over a long
xxxx period of time." While it is true that jurisprudence has not laid down any rule requiring a
specific minimum number of years in order for a practice to be considered as a voluntary act
In Triple Eight Integrated Services, Inc. v. NLRC, the Court explains why the submission of of the employer, under existing jurisprudence on this matter, an act carried out within less
the requisite medical certificate is for the employers compliance, thus: than a year would certainly not qualify as such. Hence, the withdrawal of the COLA Wage
Order No. RBIII-10 from the salaries of non-minimum wage earners did not amount to a
"diminution of benefits" under the law.
The requirement for a medical certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employees illness and thus defeat the public policy on There is also no basis in enjoining petitioner to implement Wage Order No. RBIII-11 across
the protection of labor. the board. Similarly, no proof was presented showing that the implementation of wage orders
across the board has ripened into a company practice. In the same way that we required
petitioner to prove the existence of a company practice when it alleged the same as defense,
x x x x68
at this instance, we also require respondent to show proof of the company practice as it is
now the party claiming its existence. Absent any proof of specific, repetitive conduct that
However, with respect to the issue of whether the COLA under Wage Order Nos. RBIII-10 might constitute evidence of the practice, we cannot give credence to respondents claim. The
and 11 should be implemented across the board, we hold a different view from that of the CA. isolated act of implementing a wage order across the board can hardly be considered a
No diminution of benefits would result if the wage orders are not implemented across the company practice,71 more so when such implementation was erroneously made.
board, as no such company practice has been established.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The CA Decision
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed September 30, 2008 and Resolution dated December 4, 2008 are AFFIRMED with
by the employees. There is diminution of benefits when it is shown that: (1) the grant or MODIFICATION that the order for petitioner to continue implementing Wage Order No. RBIII-
benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the 10 and 11 across the board is SET ASIDE. Accordingly, item 10 of the NLRC Decision dated
practice is consistent and deliberate; (3) the practice is not due to error in the construction or March 30, 2007 is modified to read "dismiss the claim for implementation of Wage Order Nos.
application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is RBIII-10 and 11 to the employees who are not minimum wage earners."
done unilaterally by the employer.69
SO ORDERED
To recall, the CA arrived at its ruling by relying on the fact that there was no ambiguity in the
wording of the wage order as to the employees covered by it. From this, the CA concluded
GENESIS TRANSPORT SERVICE, INC. and G.R. No. 182114
that petitioner actually made no error or mistake, but acted voluntarily, in granting the COLA
RELY L. JALBUNA,
to all its employees. It therefore took exception to the Globe Mackay case which, according to
Petitioners, Present:
it, applies only when there is a doubtful or difficult question involved.
- versus - PUNO, C.J., Chairperson,
The CA failed to note that Globe Mackay primarily emphasized that, for the grant of the CARPIO MORALES,
benefit to be considered voluntary, "it should have been practiced over a long period of time, UNYON NG MALAYANG MANGGAGAWA LEONARDO-DE CASTRO,
and must be shown to have been consistent and deliberate." 70 The fact that the practice must NG GENESIS TRANSPORT (UMMGT), and BERSAMIN, and
JUAN TAROY, VILLARAMA, JR., JJ.
contrary to company practice; and that deductions were also taken from the bus conductors earnings to
Respondents.
Promulgated: thus result to double deduction.
April 5, 2010
x--------------------------------------------------x
Genesis Transport countered that Taroy committed several violations of company rules for
DECISION
which he was given warnings or disciplined accordingly;that those violations, the last of which was the
April 20, 2002 incident, included poor driving skills, tardiness, gambling inside the premises, use
CARPIO MORALES, J.:
of shabu, smoking while driving, insubordination and reckless driving; [3] and that Taroys dismissal was
Respondent Juan Taroy was hired on February 2, 1992 by petitioner Genesis Transport
on a valid cause and after affording him due process.
Service, Inc. (Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip.

In support of its claim that Taroy was afforded due process, Genesis Transport cited his
On May 10, 2002, Taroy was, after due notice and hearing, terminated from employment after
preventive suspension; the directive for him to explain in writing[4] his involvement in the April 20,
an accident on April 20, 2002 where he was deemed to have been driving recklessly.
2002 accident; and the conduct of a hearing during which the expert opinion of its Maintenance
Department, as well as an independent entity the Columbian Motors Corporation, [5] was considered in
Taroy thus filed on June 7, 2002 a complaint[1] for illegal dismissal and payment of service
the determination of whether the accident was due to his reckless driving or, as he contended, to faulty
incentive leave pay, claiming that he was singled out for termination because of his union activities,
brakes.
other drivers who had met accidents not having been dismissed from employment.

Genesis Transport went on to claim that as the result of the investigation [6] showed that the
Taroy later amended[2] his complaint to implead his herein co-respondent Unyon ng Malayang
cause of the accident was Taroys reckless driving, and his immediate past infraction of company rules
Manggagawa ng Genesis Transport (the union) as complainant and add as grounds of his cause of
on January 25, 2001 smoking inside the bus already merited a final warning, [7] it validly
action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment
terminated[8] his employment.
of service incentive leave pay.

By Decision[9] of June 30, 2004, the Labor Arbiter found that Genesis Transport discharged
Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner
the burden of proof that Taroys dismissal was on a valid cause; that while Taroys past infractions can
started deducting from his weekly earnings an amount ranging from P160 to P900 representing toll
not be used against him, still, they showed habituality; and that Genesis Transport complied with the
fees, without his consent and written authorization as required under Article 113 of the Labor Code and
twin requirements of notice and hearing, hence, Taroys dismissal was effected with due process.
As to the charge of ULP, the Labor Arbiter ruled that the respondent union failed to prove that of his complaint for constructive dismissal and ULP, and failure to award him service incentive leave
Taroys dismissal was due to his union membership and/or activities. pay.

On the claim for service incentive leave pay, the Labor Arbiter ruled that Taroy was not By Resolution of December 29, 2005, the NLRC affirmed the Labor Arbiters decision with
entitled thereto since he was a field personnel paid on commission basis. modification. It deleted the award to Taroy of attorneys fees. It brushed aside Taroys claim of having
been illegally suspended, it having been raised for the first time on appeal.
With respect to Taroys claim for refund, however, the Labor Arbiter ruled in his favor for if, as
contended by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses The parties filed their respective motions for reconsideration which were denied.
for fuel and maintenance also charged to overhead expense. The Labor Arbiter thus concluded that it
would appear that the tollgate fees are deducted from the gross revenues and not from the salaries of On respondents appeal, the Court of Appeals, by the assailed Decision of August 24, 2007,
drivers and conductors, but certainly the deduction thereof diminishes the take home pay of the partly granted the same, it ruling that petitioner Genesis Transport violated Taroys statutory right to due
employees. process when he was preventively suspended for more than thirty (30) days, in violation of the
Implementing Rules and Regulations of the Labor Code.
Thus, the Labor Arbiter disposed: The appellate court thus held Taroy to be entitled to nominal damages in the amount
of P30,000. And it reinstated the Labor Arbiters order for petitioners to refund Taroy the
WHEREFORE, premises considered, judgment is hereby
underpayment.
rendered dismissing instant complaint for illegal dismissal for lack of
merit. However, respondents are hereby ordered to refund to complainant the
underpayment/differential due him as a result of the deduction of the tollgate fees
from the gross receipts. Actual computation shall be based on and limited to the Their motion for reconsideration having been denied by Resolution of March 13, 2008,
evidence at hand, which is in the amount of P5,273.16. For having been compelled to petitioners filed the present recourse.
litigate, respondents are hereby also ordered to pay complainant 10% attorneys
fees. (underscoring supplied)
On the issue of refund of underpayment, petitioners aver that cases of similar import
involving also the respondent union have been decided with finality in their favor by the
Both parties appealed to the National Labor Relations Commission (NLRC), petitioners NLRC, viz: UMMGT v. Genesis Transport Service, Inc. (NLRC RAB III Case No. 04-518-03)
questioning the order for them to refund underpayment and pay attorneys fees, and respondents and Reyes v. Genesis Transport Service, Inc. (NLRC CA No. 04862-04); and Santos v. Genesis
questioning the Labor Arbiters failure to pass on the propriety of his preventive suspension, dismissal Transport Service, Inc. (NLRC CA No. 041869-04).
principal guide in determining what facts may be assumed to be judicially known is
Petitioners thus pray that the Court accord respect to the rulings of the NLRC in the above- that of notoriety. Hence, it can be said that judicial notice is limited to facts
cited cases and apply the principle of res judicata vis--vis the present case. evidenced by public records and facts of general notoriety. Moreover, a judicially
noticed fact must be one not subject to a reasonable dispute in that it is either:
(1) generally known within the territorial jurisdiction of the trial court; or (2)
On the appellate courts award of nominal damages, petitioners reiterate that Taroy was not capable of accurate and ready determination by resorting to sources whose
accuracy cannot reasonably be questionable.
entitled thereto, his dismissal having been based on a valid cause, and he was accorded due process.
Things of common knowledge, of which courts take judicial matters coming
to the knowledge of men generally in the course of the ordinary experiences of life,
Further, petitioners note that the issue of preventive suspension, on which the appellate court or they may be matters which are generally accepted by mankind as true and are
capable of ready and unquestioned demonstration. Thus, facts which are universally
based its ruling that it violated Taroys right to due process, was raised only on appeal to the NLRC, known, and which may be found in encyclopedias, dictionaries or other publications,
are judicially noticed, provided, they are of such universal notoriety and so generally
hence, it should not be considered.
understood that they may be regarded as forming part of the common knowledge of
every person. As the common knowledge of man ranges far and wide, a wide variety
of particular facts have been judicially noticed as being matters of common
Finally, petitioners assert that the delay in the service of the Notice of Dismissal (dated May knowledge. But a court cannot take judicial notice of any fact which, in part, is
10, 2002, but received by Taroy only on June 4, 2002) was due to Taroys premeditated refusal to dependent on the existence or non-existence of a fact of which the court has no
constructive knowledge. (emphasis supplied)
acknowledge receipt thereof.

The petition is partly meritorious. None of the material requisites for the Court to take judicial notice of a particular matter was
Absent proof that the NLRC cases cited by petitioners have attained finality, the Court may established by petitioners.
not consider them to constitute res judicata on petitioners claim for refund of the underpayment due
Taroy.
Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from
Neither may the Court take judicial notice of petitioners claim that the deduction of tollgate Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding of
fees from the gross earnings of drivers is an accepted and long-standing practice in the transportation those amounts reduced the amount from which Taroys 9% commission would be computed. Such a
industry. Expertravel & Tours, Inc. v. Court of Appeals[10] instructs: computation not only marks a change in the method of payment of wages, resulting in a diminution of
Taroys wages in violation of Article 113 vis--visArticle 100 of the Labor Code, as amended. It need
Generally speaking, matters of judicial notice have three material not be underlined that without Taroys written consent or authorization, the deduction is considered
requisites: (1) the matter must be one of common and general knowledge; (2) it
illegal.
must be well and authoritatively settled and not doubtful or uncertain; and (3)
it must be known to be within the limits of the jurisdiction of the court. The
Besides, the invocation of the rule on company practice is generally used with respect to the cannot be raised for the first time on appeal. Points of law, theories, issues and arguments not
grant of additional benefits to employees, not on issues involving diminution of benefits. brought to the attention of the lower court need not be, and ordinarily will not be, considered by the
reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of due
Respecting the issue of statutory due process, the Court holds that Taroys right thereto was not process impel the adoption of this rule.[12]
violated. Sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules and Regulations of the
Labor Code provide: In any event, what the Rules require is that the employer act on the suspended workers status
of employment within the 30-day period by concluding the investigation either by absolving him of the
Section 8. Preventive suspension. The employer may place the worker
concerned under preventive suspension if his continued employment poses a serious charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension
and imminent threat to the life or property of the employer or his co-workers.
exceeds the 30-day period without any corresponding action on the part of the employer, the employer
xxxx must reinstate the employee or extend the period of suspension, provided the employees wages and

Section 9. Period of Suspension No preventive suspension shall last benefits are paid in the interim.
longer than thirty (30) days. The employer shall thereafter reinstate the worker in
his former or in a substantially equivalent position or the employer may extend the
period of suspension provided that during the period of extension, he pays the wages In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by
and other benefits due to the worker. In such case, the worker shall not be bound to
terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated
reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker. (emphasis supplied) even if the termination notice was received only on June 4, 2002, absent any showing that the delayed
service of the notice on Taroy was attributable to Genesis Transport.

To the appellate court, Genesis Transports act of placing Taroy under preventive suspension for more
Taroys statutory due process not having been violated, he is not entitled to the award of
than thirty (30) days was a predetermined effort to dismiss [him] from employment, negating the
nominal damages.
argument that the delay in the service of the notice of dismissal was not an issue and that the same was
allegedly due to Taroys inaction to receive the same. Hence, the appellate court concluded, while there
WHEREFORE, the challenged Court of Appeals Decision of August 24, 2007 and
was a just and valid cause for the termination of his services, his right to statutory due process was
Resolution[13] of March 13, 2008 are AFFIRMED, with the MODIFICATION that the award of
[11]
violated to entitle him to nominal damages, following Agabon v. NLRC.
nominal damages to respondent Juan Taroy is DELETED.

The propriety of Taroys preventive suspension was raised by respondents for the first time on ARCO METAL PRODUCTS, CO., G.R. No. 170734
INC., and MRS. SALVADOR UY,
appeal, however. The well-settled rule, which also applies in labor cases, is that issues not raised below Petitioners, Present:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is
QUISUMBING, J.,
Chairperson, the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid
- versus - TINGA,
VELASCO, and the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to
BRION, JJ. the service they actually rendered in a year, which is less than a full twelve (12) months. The

SAMAHAN NG MGA MANGGAGAWA employees were:


SA ARCO METAL-NAFLU (SAMARM-
NAFLU), Promulgated: 1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004
Respondent. 2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003
May 14, 2008 3. Rodelio Collantes Sickness August 2003 to February 2004
x---------------------------------------------------------------------------x

Respondent protested the prorated scheme, claiming that on several occasions petitioner did
DECISION
not prorate the payment of the same benefits to seven (7) employees who had not served for the full
TINGA, J.:
12 months. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004. According to
respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of
[1] [2]
This treats of the Petition for Review of the Resolution and the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board
[3]
Decision of the Court of Appeals dated 9 December 2005 and 29 September 2005, (NCMB). The parties submitted the case for voluntary arbitration.
respectively in CA-G.R. SP No. 85089 entitled

The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the
giving of the contested benefits in full, irrespective of the actual service rendered within one year has
not ripened into a practice. He noted the affidavit of Joselito Baingan, manufacturing group head of
petitioner, which states that the giving in full of the benefit was a mere error. He also interpreted the
Samahan ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU) v. Arco Metal Products
phrase for each year of service found in the pertinent CBA provisions to mean that an employee
Co., Inc. and/or Mr. Salvador Uy/Accredited Voluntary Arbitrator Apron M. Mangabat, [4] which ruled
must have rendered one year of service in order to be entitled to the full benefits provided in the CBA.
that the 13th month pay, vacation leave and sick leave conversion to cash shall be paid in full to the
[5]
employees of petitioner regardless of the actual service they rendered within a year.
Unsatisfied, respondent filed a Petition for Review [6] under Rule 43 before the Court of Appeals,
imputing serious error to Mangabats conclusion. The Court of Appeals ruled that the CBA did not
intend to foreclose the application of prorated payments of leave benefits to covered employees. The
The petition ultimately fails.
appellate court found that petitioner, however, had an existing voluntary practice of paying the
aforesaid benefits in full to its employees, thereby rejecting the claim
First, we determine whether the intent of the CBA provisions is to grant full benefits regardless
that petitioner erred in paying full benefits to its seven
of service actually rendered by an employee to the company. According to petitioner, there is a one-
year cutoff in the entitlement to the benefits provided in the CBA which is evident from the wording of
its pertinent provisions as well as of the existing law.
employees. The appellate court noted that aside from the affidavit of petitioners officer, it has not
presented any evidence in support of its position that it has no voluntary practice of granting the We agree with petitioner on the first issue. The applicable CBA provisions read:
contested benefits in full and without regard to the service actually rendered within the year. It also
ARTICLE XIV-VACATION LEAVE
questioned why it took petitioner eleven (11) years before it was able to discover the alleged error. The
dispositive portion of the courts decision reads: Section 1. Employees/workers covered by this agreement who have
rendered at least one (1) year of service shall be entitled to sixteen (16) days vacation
leave with pay for each year of service. Unused leaves shall not be cumulative but
WHEREFORE, premises considered, the instant petition is shall be converted into its cash equivalent and shall become due and payable every
hereby GRANTED and the Decision of Accredited Voluntary Arbiter Apron M. 1st Saturday of December of each year.
Mangabat in NCMB-NCR Case No. PM-12-345-03, dated June 18, 2004 is
hereby AFFIRMED WITH MODIFICATION in that the 13th month pay, bonus, However, if the 1st Saturday of December falls in December 1, November 30
vacation leave and sick leave conversions to cash shall be paid to the employees in (Friday) being a holiday, the management will give the cash conversion of leaves in
full, irrespective of the actual service rendered within a year.[7] November 29.

Section 2. In case of resignation or retirement of an employee, his vacation


Petitioner moved for the reconsideration of the decision but its motion was denied, hence this leave shall be paid proportionately to his days of service rendered during the year.

petition.
ARTICLE XV-SICK LEAVE
th
Petitioner submits that the Court of Appeals erred when it ruled that the grant of 13 month pay,
Section 1. Employees/workers covered by this agreement who have
bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary rendered at least one (1) year of service shall be entitled to sixteen (16) days of sick
leave with pay for each year of service. Unused sick leave shall not be cumulative
employer practice and, consequently, the prorated payment of the said benefits does not constitute but shall be converted into its cash equivalent and shall become due and payable
diminution of benefits under Article 100 of the Labor Code.[8] every 1st Saturday of December of each year.
Section 3. That the Company further grants the amount of Two Thousand Five
Hundred Pesos (P2,500.00) as signing bonus plus a free CBA Booklet. [9]
(Underscoring ours)
Section 2. Sick Leave will only be granted to actual sickness duly certified by
the Company physician or by a licensed physician.

Section 3. All commutable earned leaves will be paid proportionately upon There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of
retirement or separation.
vacation and sick leave, one must have rendered at least one year of service. The clear wording of the
ARTICLE XVI EMERGENCY LEAVE, ETC. provisions does not allow any other interpretation. Anent the 13th month pay and bonus, we agree with

Section 1. The Company shall grant six (6) days emergency leave to the findings of Mangabat that the CBA provisions did not give any meaning different from that given
employees covered by this agreement and if unused shall be converted into cash and by the law, thus it should be computed at 1/12 of the total compensation which an employee receives
become due and payable on the 1st Saturday of December each year.
for the whole calendar year. The bonus is also equivalent to the amount of the 13 th month pay given, or
Section 2. Employees/workers covered by this agreement who have rendered
in proportion to the actual service rendered by an employee within the year.
at least one (1) year of service shall be entitled to seven (7) days of Paternity Leave
with pay in case the married employees legitimate spouse gave birth. Said benefit
shall be non-cumulative and non-commutative and shall be deemed in compliance
with the law on the same. On the second issue, however, petitioner founders.

Section 3. Maternity leaves for married female employees shall be in


accordance with the SSS Law plus a cash grant of P1,500.00 per month. As a general rule, in petitions for review under Rule 45, the Court, not being a trier of facts,
does not normally embark on a re-examination of the evidence presented by the contending parties
xxx
during the trial of the case considering that the findings of facts of the Court of Appeals are conclusive
and binding on the Court.[10] The rule, however, admits of several exceptions, one of which is when the
ARTICLE XVIII- 13TH MONTH PAY & BONUS
findings of the Court of Appeals are contrary to that of the lower tribunals. Such is the case here, as the
Section 1. The Company shall grant 13th Month Pay to all employees covered
by this agreement. The basis of computing such pay shall be the basic salary per day factual conclusions of the Court of Appeals differ from that of the voluntary arbitrator.
of the employee multiplied by 30 and shall become due and payable every
1st Saturday of December.
Petitioner granted, in several instances, full benefits to employees who have not served a full
Section 2. The Company shall grant a bonus to all employees as practiced year, thus:
which shall be distributed on the 2nd Saturday of December.

Name Reason Duration


1. Percival Bernas Sickness July 1992 to November 1992
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
2. Cezar Montero Sickness 21 Dec. 1992 to February 1993
3. Wilson Sayod Sickness May 1994 to July 1994 discontinued or eliminated by the employer.[14] The principle of non-diminution of benefits is founded
4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996
5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999 on the Constitutional mandate to "protect the rights of workers and promote their welfare, [15] and to
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003 afford labor full protection.[16] Said mandate in turn is the basis of Article 4 of the Labor Code which
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 2003[11]
states that all doubts in the implementation and interpretation of this Code, including its implementing
rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which

Petitioner claims that its full payment of benefits regardless of the length of service to the recognize the right of employees to benefits which were voluntarily given by the employer and which

company does not constitute voluntary employer practice. It points out that the payments had been ripened into company practice. Thus in Davao Fruits Corporation v. Associated Labor Unions, et al.
[17]
erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and where an employer had freely and continuously included in the computation of the 13 thmonth pay

2003. According to petitioner, it was only in 2003 that the accounting department discovered the error those items that were expressly excluded by the law, we held that the act which was favorable to the

when there were already three (3) employees involved with prolonged absences and the error was employees though not conforming to law had thus ripened into a practice and could not be withdrawn,

corrected by implementing the pro-rata payment of benefits pursuant to law and their existing reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana,[18] we ruled

CBA.[12] It adds that the seven earlier cases of full payment of benefits went unnoticed considering that the employers act of including non-basic benefits in the computation of the 13 th month pay was a

the proportion of one employee voluntary act and had ripened into a company practice which cannot be peremptorily
withdrawn. Meanwhile in Davao Integrated Port Stevedoring Services v. Abarquez,[19] the Court
ordered the payment of the cash equivalent of the unenjoyed sick leave benefits to its intermittent
workers after finding that said workers had received these benefits for almost four years until the grant
concerned (per year) vis vis the 170 employees of the company. Petitioner describes the situation as
was stopped due to a different interpretation of the CBA provisions. We held that the employer cannot
a clear oversight which should not be taken against it. [13] To further bolster its case, petitioner argues
unilaterally withdraw the existing privilege of commutation or conversion to cash given to said
that for a grant of a benefit to be considered a practice, it should have been practiced over a long period
workers, and as also noted that the employer had in fact granted and paid said cash equivalent of the
of time and must be shown to be consistent, deliberate and intentional, which is not what happened in
unenjoyed portion of the sick leave benefits to some intermittent workers.
this case. Petitioner tries to make a case out of the fact that the CBA has not been modified to
incorporate the giving of full benefits regardless of the length of service, proof that the grant In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely,
has not ripened into company practice. voluntarily and consistently granting full benefits to its employees regardless of the length of service
rendered. True, there were only a total of seven employees who benefited from such a practice, but it
We disagree.
was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a
minimum number of years within which a company practice must be exercised in order to constitute than a full year and who, as a consequence received only prorated benefits. This could have easily
voluntary company practice.[20] Thus, it can be six (6) years, [21] three (3) years,[22] or even as short as bolstered petitioners theory of mistake/error, but sadly, no evidence to that effect was presented.
[23]
two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a
mistake or an error, supported only by an affidavit of its manufacturing group head portions of which IN VIEW HEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R.
read: SP No. 85089 dated 29 September 2005 is and its Resolution dated 9 December 2005 are hereby
AFFIRMED.
5. 13th month pay, bonus, and cash conversion of unused/earned vacation
leave, sick leave and emergency leave are computed and paid in full to employees
who rendered services to the company for the entire year and proportionately to those
employees who rendered service to the company for a period less than one (1) year or SO ORDERED.
twelve (12) months in accordance with the CBA provision relative thereto. METROPOLITAN BANK and TRUST G.R. No. 152928
COMPANY,
6. It was never the intention much less the policy of the management to Petitioner,
grant the aforesaid benefits to the employees in full regardless of whether or not the Present:
employee has rendered services to the company for the entire year, otherwise, it
would be unjust and inequitable not only to the company but to other employees as PUNO, C.J., Chairperson,
well.[24] - versus - CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.
NATIONAL LABOR RELATIONS
In cases involving money claims of employees, the employer has the
COMMISSION, FELIPE A. PATAG and
burden of proving that the employees did receive the wages and benefits and that the same w BIENVENIDO C. FLORA, Promulgated:
Respondents.
ere paid in accordance with law.[25] June 18, 2009

x------------------------------------------------------------------------------------------x
Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily
DECISION
presented other proofs, such as the names of other employees who did not fully serve for one year and
thus were given prorated benefits. Experientially, a perfect attendance in the workplace is always the LEONARDO-DE CASTRO, J.:
goal but it is seldom achieved. There must have been other employees who had reported for work less
In this petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, petitioner
seeks to set aside and annul the Decision [1] dated December 13, 2001 and the Resolution[2] dated April The records show that since the 1986-1988 CBA, and continuing with each CBA concluded thereafter
9, 2002 rendered by the Court of Appeals (CA) in CA-G.R. No. 63144. with its rank and file employees, Metrobank would issue a Memorandum granting similar or better
benefits to its managerial employees or officers, retroactive to January 1 st of the first year of effectivity
The CA decision affirmed an earlier resolution[3] of the National Labor Relations Commission (NLRC) of the CBA. When the 1998-2000 CBA was approved, Metrobank, in line with its past practice, issued
dated March 31, 2000 which ruled in favor of herein respondents. on June 10, 1998, a Memorandum on Officers Benefits, which provided for improved benefits to its
The factual antecedents are as follows: officers (the 1998 Officers Benefits Memorandum). This Memorandum was signed by then Metrobank
President Antonio S. Abacan, Jr. Pertinently, the compulsory retirement benefit for officers was
Respondents Felipe Patag (Patag) and Bienvenido Flora (Flora) were former employees of petitioner increased from 185% to 200% effective January 1, 1998, but with the condition that the benefits shall
Metropolitan Bank and Trust Company (Metrobank).Both respondents availed of the banks only be extended to those who remain in service as of June 15, 1998.[6]
compulsory retirement plan in accordance with the 1995 Officers Benefits Memorandum. At the time
of his retirement on February 1, 1998, Patag was an Assistant Manager with a monthly salary On June 29, 1998, Flora again wrote a letter,[7] asking Metrobank for a reconsideration of its condition
of P32,100.00. Flora was a Senior Manager with a monthly salary of P48,500.00 when he retired on that the new officers benefits shall apply only to those officers still employed as of June 15,
April 1, 1998. Both of them received their respective retirement benefits computed at 185% of their 1998. Metrobank denied this request on July 17, 1998.[8]
gross monthly salary for every year of service as provided under the said 1995 Memorandum. In all, Consequently on August 31, 1998, Patag and Flora, through their counsel, wrote a letter to Metrobank
Patag was fully paid the total amount of P1,957,782.71 while Flora was paid the total amount demanding the payment of their unpaid retirement benefits amounting to P284,150.00
of P3,042,934.29 in retirement benefits. and P448,050.00, respectively, representing the increased benefits they should have received under the
1998 Officers Benefits Memorandum.[9]
Early in 1998, Collective Bargaining Agreement (CBA) negotiations were on-going between
Metrobank and its rank and file employees for the period 1998-2000. Patag wrote a letter dated In its letter-reply dated September 17, 1998, Metrobanks First Vice-President Paul Lim, Jr. informed
[4]
February 2, 1998 to the bank requesting that his retirement benefits be computed at the new rate Patag and Flora of their ineligibility to the improved officers benefits as they had already ceased their
should there be an increase thereof in anticipation of possible changes in officers benefits after the employment and were no longer officers of the bank as of June 15, 1998.[10]
signing of the new CBA with the rank and file. Flora likewise wrote Metrobank in March 25, 1998,
[5]
requesting the bank to use as basis in the computation of their retirement benefits the increased rate On September 25, 1998, Patag and Flora filed with the Labor Arbiter their consolidated complaint
of 200% as embodied in the just concluded CBA between the bank and its rank and file against Metrobank for underpayment of retirement benefits and damages, asserting that pursuant to the
employees. Metrobank did not reply to their requests. 1998 Officers Benefits Memorandum, they were entitled to additional retirement benefits. Patag, for
his part, also claimed he was entitled to payment of his 1997 profit share and 1998 structural I. THE HONORABLE COURT OF APPEALS COMMITTED
adjustment. SERIOUS ERROR IN AFFIRMING THE NLRCS DECISION AND
RESOLUTION BY RULING THAT THE PRIVATE RESPONDENTS
ARE ENTITLED TO THEIR BELATED CLAIM FOR ADDITIONAL
On June 8, 1999, Labor Arbiter Geobel A. Bartolabac rendered a decision, [11] dismissing the complaint (RETIREMENT) BENEFITS EVEN AFTER THEY EFFECTIVELY
CEASED THEIR EMPLOYMENT WITH PETITIONER AND
of Patag and Flora. As expected, Patag and Flora filed an appeal with the NLRC. In a DESPITE THEIR UNQUALIFIED ACKNOWLEDGMENT AND
resolution[12] dated March 31, 2000, the Third Division of the NLRC partially granted the appeal and RECEIPT OF THE PAYMENT IN FULL OF THEIR RETIREMENT
BENEFITS, CONTRARY TO LAW AS WELL AS OTHER LAWFUL
directed Metrobank to pay Patag and Flora their unpaid beneficial improvements under the 1998 ORDERS AND SETTLED JURISPRUDENCE ON THE MATTER.[14]
II. THE HONORABLE COURT OF APPEALS FAVORABLE
Officers Benefits Memorandum.
APPLICATION OF THE 1998 IMPROVED OFFICERS
(RETIREMENT) BENEFITS TO THE RESPONDENTS DESPITE
THEIR NON-COMPLIANCE WITH THE REQUIREMENTS OF
Aggrieved with the ruling of the NLRC, Metrobank elevated the matter to the CA by way of a ELIGIBILITY THERETO, IS PATENTLY CONTRARY TO LAW AND
petition for certiorari, docketed as CA-G.R. No. 63144. THE WELL-SETTLED JURISPRUDENCE ON THE MATTER.[15]
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN NOT FINDING THAT RESPONDENTS ARE BARRED BY
On December 13, 2001, the CA promulgated its assailed decision dismissing Metrobanks ESTOPPEL FROM INSTITUTING THE ACTION AFTER HAVING
UNQUALIFIEDLY ACKNOWLEDGED AND RECEIVED THE
petition and affirming the resolution of the NLRC. In so ruling, the CA declared: FULL PAYMENT OF THEIR RETIREMENT BENEFITS.[16]

Upon the other hand, the private respondents (Patag and Flora) evidence
reveals that from 1986 to 1995, it has been the practice of the petitioner (Metrobank)
that whenever it enters and signs a new CBA with its rank and file employees, it Petitioner contends that respondents Patag and Flora, having qualified for compulsory
likewise issues a memorandum extending benefits to its officers which are higher or retirement under the 1995 Officers Benefits Memorandum, cannot now claim to be eligible to higher
at least the same as those provided in the said CBA for the rank and file employees
effective every 1st of January of the year, without any condition that the officers- retirement benefits under the 1998 Improved Benefits Memorandum. In fact, according to petitioner,
beneficiaries should remain employees of the petitioner as of a certain date of a given Patag and Flora had unqualifiedly received the full payment of their retirement benefits. Also, the 1998
year. xxx. Under the circumstances, the same may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn.[13] Improved Benefits Memorandum was issued after Patag and Flora compulsorily retired on February 1,
1998 and April 1, 1998, respectively, and there was an express condition in the 1998 Officers Benefits
Memorandum that the improved benefits shall apply only to officers who remain in service as of June
Petitioners subsequent motion for reconsideration was denied by the CA in its Resolution
15, 1998.
dated April 9, 2002.

Hence, the instant petition where Metrobank raised the following arguments:
From the facts, it is clear that the core issue hinges on whether respondents can still recover the benefits knowing fully well that said employees are not covered by the law requiring payment
higher benefits under the 1998 Officers Benefits Memorandum despite the fact that they have thereof.[18]
compulsorily retired prior to the issuance of said memorandum and did not meet the condition therein
requiring them to be employed as of June 15, 1998. It was the NLRCs finding, as affirmed by the CA, that there is a company practice of paying
improved benefits to petitioner banks officers effective every January 1 of the same year the improved
The main issue in this case involves a question of fact. As a rule, the Supreme Court is not a benefits are granted to rank and file employees in a CBA. We find that the NLRCs and CAs factual
trier of facts and this applies with greater force in labor cases. Hence, factual findings of quasi-judicial conclusions were fully supported by substantial evidence on record. Respondents were able to prove
bodies like the NLRC, particularly when they coincide with those of the Labor Arbiter and if supported that for the period 1986-1997, Metrobank issued at least four (4) separate memoranda, coinciding with
by substantial evidence, are accorded respect and even finality by this Court. However, where the the approval of four (4) different CBAs with the rank and file, wherein bank officers were granted
findings of the NLRC and the Labor Arbiter are contradictory, as in this case, the reviewing court may benefits, including retirement benefits, that were commensurate or superior to those provided for in
[17]
delve into the records and examine for itself the questioned findings. Metrobanks CBA with its rank and file employees. Respondents attached to their position paper filed
with the Labor Arbiter copies of the CBAs that petitioner entered into with its rank and file employees
It is Metrobanks position that the CA and the NLRC erred when they recognized that there for the period 1986-1997 and also the various officers benefits memoranda issued by the bank after
was an established company practice or policy of granting improved benefits to its officers effective each CBA signing. Respondents had no hand in the preparation of these officers benefits memoranda
January 1 of the year and without any condition that the officers should remain employees of for they appeared to be issuances of the bank alone, signed by its President or other proper
Metrobank as of a certain date. Metrobank claims that although its officers were extended the same as officer. Thus, petitioner cannot credibly argue that respondents claim of a company practice was
or higher benefits than those contained in its CBA with its rank and file employees from 1986 to 1997, baseless or self-serving.
the same cannot be concluded to have ripened into a company practice since the provisions of the
retirement plan itself and the law on retirement should be controlling. The record further reveals that these improved officers benefits were always made to retroact
effective every January 1 of the year of issuance of said memoranda and without any condition
We do not agree.
regarding the term or date of employment. The condition that the managerial employee or bank officer
must still be employed by petitioner as of a certain date was imposed for the first time in the 1998
To be considered a company practice, the giving of the benefits should have been done over a
Officers Benefits Memorandum.
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
In other words, for over a decade, Metrobank has consistently, deliberately and
voluntarily granted improved benefits to its officers, after the signing of each CBA with its rank and
Art. 100. Prohibition against elimination or diminution of benefits. Nothing
file employees, retroactive to January 1st of the same year as the grant of improved benefits and in this Book shall be construed to eliminate or in any way diminish supplements, or
without the condition that the officers should remain employees as of a certain date. This undeniably other employee benefits being enjoyed at the time of promulgation of this Code.
indicates a unilateral and voluntary act on Metrobanks part, to give said benefits to its officers, The condition that an officer must still be in the service of petitioner bank as of June 15, 1998
knowing that such act was not required by law or the company retirement plan. effectively reduced benefits of employees who retired prior to the issuance of the 1998 Officers
Benefits Memorandum despite the fact in the past no such condition was imposed by the bank and
With regard to the length of time the company practice should have been exercised to previous retirees presumably enjoyed the higher benefits regardless of their date of retirement as long
constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, as they were still employees of petitioner as of the January 1st effectivity date.
jurisprudence has not laid down any hard and fast rule. In the case of Davao Fruits Corporation v.
Associated Labor Unions,[19] the company practice of including in the computation of the 13th-month If it were true that notwithstanding the existence of the previous officers benefits memoranda
pay the maternity leave pay and cash equivalent of unused vacation and sick leave lasted for six (6) (which all did not contain the same condition as the 1998 memorandum) there was no company
years. In another case, Tiangco v. Leogardo, Jr., [20]
the employer carried on the practice of giving a practice of granting the improved benefits to officers who retired from the bank prior to the issuance of
fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and the officers benefits memorandum, it would have been simple enough for the bank to prove this. A
[21]
four (4) months. While in Sevilla Trading v. Semana, the employer kept the practice of including company as large and prestigious as petitioner would certainly have a comprehensive and efficient
non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of system of keeping employee records. All it had to do was show some examples of past retirees over the
their 13th-month pay for at least two (2) years. In all these cases, this Court held that the grant of these period 1986 to 1997 who retired prior to the issuance of the relevant officers benefits memorandum but
benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. The after the usual January 1st memorandum effectivity date and whose retirement benefits were computed
common denominator in these cases appears to be the regularity and deliberateness of the grant of at the old rate and not at the improved rate. Unfathomably, Metrobank presented no such
benefits over a significant period of time. evidence. Contrary to petitioners insistent view, the CA committed no error when it ruled that
petitioner failed to present convincing evidence to substantiate its claims.
In the case at bar, petitioner Metrobank favorably adjusted its officers benefits, including
retirement benefits, after the approval of each CBA with the rank and file employees, to be effective Anent petitioners line of reasoning that it had no obligation under Article 287 of the Labor
every January 1st of the same year as the CBAs approval, and without any condition regarding the date Code or the express terms of the retirement plan to grant improved benefits to employees who are no
of employment of the officer, from 1986 to 1997 or for about eleven (11) years. This constitutes longer in the service at the time of the grant, it appears to us that petitioner is deliberately missing the
voluntary employer practice which cannot be unilaterally withdrawn or diminished by the employer point. Ordinarily, an employee would have no right to demand benefits that the employer was not
without violating the spirit and intent of Art. 100 of the Labor Code, to wit: obligated by law or contract to give. However, it is the jurisprudential rule that where there is an
established employer practice of regularly, knowingly and voluntarily granting benefits to employees
over a significant period of time, despite the lack of a legal or contractual obligation on the part of the would be their prerogative and their own look out. It should not prejudice respondents or ban them
employer to do so, the grant of such benefits ripens into a vested right of the employees and can no from asserting their rights and pursuing their legal remedies against petitioner.
[22]
longer be unilaterally reduced or withdrawn by the employer.
It is worth reiterating that the condition requiring bank officers to be still employed as of June
With respect to petitioners argument that respondents should be deemed estopped from 15, 1998 to be eligible to the adjusted benefits, was included by Metrobank for the first time in the
claiming additional benefits in view of their unqualified receipt of their retirement benefits and other 1998 Officers Benefits Memorandum dated June 10, 1998. [24] Significantly, petitioner took such action
benefits, we find the same lacking in merit. There was nothing in the receipts/vouchers signed by only after Patag and Flora wrote letters dated February 2, 1998 [25] and March 25, 1998,[26] respectively,
respondents to indicate that they acknowledged full receipt of all amounts due them or that they are requesting the bank to use as basis in the computation of their retirement benefits the increased rate
waiving their right to claim any deficiency in their benefits. Indeed, in this jurisdiction, even written, that might be granted with the signing of the 1998-2000 CBA between the bank and its rank and file
express quitclaims, releases and waivers in labor cases may be invalidated under certain employees. Thus, when Metrobank opted to impose a new condition in its Officers Benefits
circumstances. As a rule, quitclaims, waivers or releases are looked upon with disfavor and are Memorandum dated June 10, 1998, it already had knowledge of respondents requests. Indeed, the
commonly frowned upon as contrary to public policy and ineffective to bar claims for the measure of a imposition of the said condition shortly after respondents made their requests is suspicious, to say the
[23]
workers legal rights. In this case, respondents consistent acts of demanding the improved benefits least. Such conduct on the part of Metrobank deserves no sympathy from this Court.
before and after their actual receipt of their partial benefits belie any intention to waive their legal right
to demand the deficiency in their benefits. Thus, we cannot accept petitioners view that there is It is a time-honored rule that in controversies between a laborer and his master, doubts
estoppel or even implied waiver on the part of respondents. reasonably arising from the evidence or in the interpretation of agreements and writings should be
resolved in the formers favor. The policy is to extend the applicability to a greater number of
Finally, petitioner contends that the CAs ruling would result in unfair discrimination since employees who can avail of the benefits under the law, which is in consonance with the avowed policy
there were at least twelve (12) other retirees in 1998 similarly situated as respondents whose retirement of the State to give maximum aid and protection to labor.[27] This principle gives us even greater reason
benefits were computed at the old rate but who did not file cases against Metrobank. Petitioner posits to affirm the findings of the CA.
the view that the CA ruling would unlawfully grant greater benefits to respondents vis a vis the other
retirees who did not demand the improved benefits.This argument similarly deserves no credit. The WHEREFORE, the petition for review is hereby DENIED. The assailed decision and resolution of
right to file a labor complaint or assert a cause of action against an employer is a personal right of each
the CA in CA-G.R. No. 63144 are hereby AFFIRMED.
employee. It is most certainly not dependent on whether or not other employees similarly situated
would also file a case against the employer. If there are other employees in the same boat as
respondents who decided, for whatever reason, not to demand payment of the improved benefits, that
G.R. Nos. 174040-41
SP No. 83657. Said Decision reversed the Decision [4] dated the April 5, 2004 of the Accredited
INSULAR HOTEL EMPLOYEES UNION-NFL,
Voluntary Arbitrator Rosalina L. Montejo (AVA Montejo).
Petitioner, The facts of the case, as culled from the records, are as follows:
Present:

On November 6, 2000, respondent Waterfront Insular Hotel Davao (respondent) sent the Department of
CARPIO, J., Chairperson, Labor and Employment (DOLE), Region XI, Davao City, a Notice of Suspension of
VELASCO, JR., *
PERALTA, Operations[5] notifying the same that it will suspend its operations for a period of six months due to
BERSAMIN, ** and
severe and serious business losses. In said notice, respondent assured the DOLE that if the company
ABAD, JJ.
- versus -
could not resume its operations within the six-month period, the company would pay the affected

Promulgated: employees all the benefits legally due to them.

September 22, 2010 During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free
WATERFRONT INSULAR HOTEL DAVAO,
Respondent. Employees Union (DIHFEU-NFL), the recognized labor organization in Waterfront Davao, sent
x-----------------------------------------------------------------------------------------x
respondent a number of letters asking management to reconsider its decision.

DECISION In a letter[6] dated November 8, 2000, Rojas intimated that the members of the Union were determined
to keep their jobs and that they believed they too had to help respondent, thus:

xxxx

Sir, we are determined to keep our jobs and push the Hotel up from sinking. We
believe that we have to help in this (sic) critical times. Initially, we intend to suspend
PERALTA, J.:
the re-negotiations of our CBA. We could talk further on possible adjustments on
economic benefits, the details of which we are hoping to discuss with you or any of
your emissaries. x x x[7]

Before this Court is a petition for review on certiorari,[1] under Rule 45 of the Rules of Court, seeking In another letter[8] dated November 10, 2000, Rojas reiterated the Union's desire to help respondent, to
[2] [3]
to set aside the Decision dated October 11, 2005, and the Resolution dated July 13, 2006 of the wit:
Court of Appeals (CA) in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R.
We would like to thank you for giving us the opportunity to meet [with] your 10) Union will cooperate fully on strict implementation of house rules in order
representatives in order for us to air our sentiments and extend our helping hands for to attain desired productivity and discipline. The union will not tolerate problem
a possible reconsideration of the company's decision. members.
The talks have enabled us to initially come up with a suggestion of solving the high 11) The union in its desire to be of utmost service would adopt multi-tasking
cost on payroll. for the hotel to be more competitive.

We propose that 25 years and above be paid their due retirement benefits and put
their length of service to zero without loss of status of employment with a minimum
hiring rate.
Thru this scheme, the company would be able to save a substantial amount and It is understood that with the suspension of the CBA renegotiations, the same
reduce greatly the payroll costs without affecting the finance of the families of the existing CBA shall be adopted and that all provisions therein shall remain enforced
employees because they will still have a job from where they could get their income. except for those mentioned in this proposal.

Moreover, we are also open to a possible reduction of some economic benefits as our These proposals shall automatically supersede the affected provisions of the CBA.
[11]
gesture of sincere desire to help.

We are looking forward to a more fruitful round of talks in order to save the hotel.[9]
In a handwritten letter[12] dated November 25, 2000, Rojas once again appealed to respondent for it to
consider their proposals and to re-open the hotel.In said letter, Rojas stated that manpower for fixed
In another letter[10] dated November 20, 2000, Rojas sent respondent more proposals as a form of the
manning shall be one hundred (100) rank-and-file Union members instead of the one hundred forty-
Union's gesture of their intention to help the company, thus:
five (145) originally proposed.
1) Suspension of [the] CBA for ten years, No strike no lock-out shall be
enforced.
2) Pay all the employees their benefits due, and put the length of service to Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to respondent a
zero with a minimum hiring rate. Payment of benefits may be on a staggered basis Manifesto[13] concretizing their earlier proposals.
or as available.
3) Night premium and holiday pays shall be according to law. Overtime After series of negotiations, respondent and DIHFEU-NFL, represented by its President, Rojas, and
hours rendered shall be offsetted as practiced. Vice-Presidents, Exequiel J. Varela Jr. and Avelino C. Bation, Jr., signed a Memorandum of
4) Reduce the sick leaves and vacation leaves to 15 days/15days.
5) Emergency leave and birthday off are hereby waived. Agreement[14] (MOA) wherein respondent agreed to re-open the hotel subject to certain concessions
6) Duty meal allowance is fixed at P30.00 only. No more midnight snacks
offered by DIHFEU-NFL in its Manifesto.
and double meal allowance. The cook drinks be stopped as practiced.
7) We will shoulder 50% of the group health insurance and family medical
allowance be reduced to 1,500.00 instead of 3,000.00.
8) The practice of bringing home our uniforms for laundry be continued. Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth
9) Fixed manning shall be implemented, the rest of manpower requirements in the terms of the MOA. Moreover, as agreed upon in the MOA, a new pay scale was also prepared by
maybe sourced thru WAP and casual hiring. Manpower for fixed manning shall be
145 rank-and-file union members. respondent.
3) The existence of an intra-union dispute renders the filing of the instant case
The retained employees individually signed a Reconfirmation of Employment [15] which embodied the premature.[19]
new terms and conditions of their continued employment. Each employee was assisted by Rojas who
also signed the document.
On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo
On June 15, 2001, respondent resumed its business operations. denied any existence of an intra-union dispute among the members of the union. Cullo, however,
On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of confirmed that the case was filed not by the IHEU-NFL but by the NFL. When asked to present his
the National Federation of Labor (NFL), filed a Notice of Mediation [16] before the National authority from NFL, Cullo admitted that the case was, in fact, filed by individual employees named in
Conciliation and Mediation Board (NCMB), Region XI, Davao City. In said Notice, it was stated that the SPAs. The hearing officer directed both parties to elevate the aforementioned issues to AVA Olvida.
the Union involved was DARIUS JOVES/DEBBIE PLANAS ET. AL, National Federation of [20]

Labor. The issue raised in said Notice was the Diminution of wages and other benefits through
unlawful Memorandum of Agreement. The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA
Olvida. Respondent again raised its objections, specifically arguing that the persons who signed the
On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility complaint were not the authorized representatives of the Union indicated in the Submission Agreement
of settling the conflict. In the said conference, respondent and petitioner Insular Hotel Employees nor were they parties to the MOA. AVA Olvida directed respondent to file a formal motion to withdraw
[17]
Union-NFL (IHEU-NFL), represented by Joves, signed a Submission Agreement wherein they chose its submission to voluntary arbitration.
AVA Alfredo C. Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the resolution of
AVA Olvida was the determination of whether or not there was a diminution of wages and other On October 16, 2002, respondent filed its Motion to Withdraw.[21] Cullo then filed an
benefits through an unlawful MOA. In support of his authority to file the complaint, Joves, assisted by Opposition[22] where the same was captioned:
Atty. Danilo Cullo (Cullo), presented several Special Powers of Attorney (SPA) which were, however, NATIONAL FEDERATION OF LABOR
undated and unnotarized. And 79 Individual Employees, Union Members,
Complainants,
-versus-
On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion for a Second Waterfront Insular Hotel Davao,
Respondent.
Preliminary Conference,[18] raising the following grounds:

1) The persons who filed the instant complaint in the name of the Insular Hotel
Employees Union-NFL have no authority to represent the Union; In said Opposition, Cullo reiterated that the complainants were not representing IHEU-NFL, to wit:
2) The individuals who executed the special powers of attorney in favor of the xxxx
person who filed the instant complaint have no standing to cause the filing of the
instant complaint; and
2. Respondent must have been lost when it said that the individuals who executed the Anent to the real complainant in this instant voluntary arbitration case, the
SPA have no standing to represent the union nor to assail the validity of Memorandum respondent is correct when it raised objection to the National Federation of Labor
of Agreement (MOA). What is correct is that the individual complainants are not (NFL) and as proper party-complainants.
representing the union but filing the complaint through their appointed attorneys-in-
fact to assert their individual rights as workers who are entitled to the benefits granted The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL,
by law and stipulated in the collective bargaining agreement.[23] the recognized and incumbent bargaining agent of the rank-and-file employees of the
respondent hotel. In the submission agreement of the parties dated August 29, 2002,
On November 11, 2002, AVA Olvida issued a Resolution [24] denying respondent's Motion to the party complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL
Withdraw. On December 16, 2002, respondent filed a Motion for Reconsideration [25] where it stressed and not the NATIONAL FEDERATION OF LABOR and 79 other members.
that the Submission Agreement was void because the Union did not consent thereto. Respondent However, since the NFL is the mother federation of the local union, and signatory to
pointed out that the Union had not issued any resolution duly authorizing the individual employees or the existing CBA, it can represent the union, the officers, the members or union and
officers or members, as the case may be, in all stages of proceedings in courts or
NFL to file the notice of mediation with the NCMB. administrative bodies provided that the issue of the case will involve labor-
management relationship like in the case at bar.

Cullo filed a Comment/Opposition[26] to respondent's Motion for Reconsideration. Again, Cullo


admitted that the case was not initiated by the IHEU-NFL, to wit: The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads:

The case was initiated by complainants by filling up Revised Form No. 1 of the WHEREFORE, premises considered, the motion for reconsideration filed by
NCMB duly furnishing respondent, copy of which is hereto attached as Annex A for respondent is DENIED. The resolution dated November 11, 2002 is modified in so
reference and consideration of the Honorable Voluntary Arbitrator. There is no far as the party-complainant is concerned; thus, instead of National Federation of
mention there of Insular Hotel Employees Union, but only National Federation of Labor and 79 individual employees, union members, shall be Insular Hotel
Labor (NFL). The one appearing at the Submission Agreement was only a matter of Employees Union-NFL et. al., as stated in the joint submission agreement dated
filling up the blanks particularly on the question there of Union; which was filled up August 29, 2002. Respondent is directed to comply with the decision of this
with Insular Hotel Employees Union-NFL. There is nothing there that indicates that Arbitrator dated November 11, 2002,
it is a complainant as the case is initiated by the individual workers and National
Federation of Labor, not by the local union. The local union was not included as No further motion of the same nature shall be entertained.[29]
party-complainant considering that it was a party to the assailed MOA. [27]

On May 9, 2003, respondent filed its Position Paper Ad Cautelam,[30] where it declared, among others,
[28]
On March 18, 2003, AVA Olvida issued a Resolution denying respondent's Motion for
that the same was without prejudice to its earlier objections against the jurisdiction of the NCMB and
Reconsideration. He, however, ruled that respondent was correct when it raised its objection to NFL as
AVA Olvida and the standing of the persons who filed the notice of mediation.
proper party-complainant, thus:

Cullo, now using the caption Insular Hotel Employees Union-NFL, Complainant, filed a
Comment[31] dated June 5, 2003. On June 23, 2003, respondent filed its Reply.[32]
As to the other claims of the Union regarding diminution of other benefits, this
Later, respondent filed a Motion for Inhibition[33] alleging AVA Olvida's bias and prejudice towards the accredited voluntary arbitrator is of the opinion that she has no authority to entertain,
cause of the employees. In an Order [34] dated July 25, 2003, AVA Olvida voluntarily inhibited himself particularly as to the computation thereof.
out of delicadeza and ordered the remand of the case to the NCMB. SO ORDERED.[38]

On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before the conciliator Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the Decision in so
for the selection of a new voluntary arbitrator. far as it did not categorically order respondent to pay the covered workers their differentials in wages
[35]
In a letter dated August 19, 2003 addressed to the NCMB, respondent reiterated its position that the reckoned from the effectivity of the MOA up to the actual reinstatement of the reduced wages and
individual union members have no standing to file the notice of mediation before the NCMB. benefits. Cullos' petition was docketed as CA-G.R. SP No. 83831. Respondent, for its part, questioned
Respondent stressed that the complaint should have been filed by the Union. among others the jurisdiction of the NCMB. Respondent maintained that the MOA it had entered into
with the officers of the Union was valid. Respondent's petition was docketed as CA-G.R. SP No.
[36]
On September 12, 2003, the NCMB sent both parties a Notice asking them to appear before it for the 83657. Both cases were consolidated by the CA.
selection of the new voluntary arbitrator. Respondent, however, maintained its stand that the NCMB
had no jurisdiction over the case. Consequently, at the instance of Cullo, the NCMB approved ex On October 11, 2005, the CA rendered a Decision[39] ruling in favor of respondent, the dispositive
parte the selection of AVA Montejo as the new voluntary arbitrator. portion of which reads:

On April 5, 2004, AVA Montejo rendered a Decision[37] ruling in favor of Cullo, the dispositive portion WHEREFORE, premises considered, the petition for review in CA-G.R. SP No.
83657 is hereby GRANTED, while the petition in CA-G.R. SP No. 83831 is
of which reads: DENIED. Consequently, the assailed Decision dated April 5, 2004 rendered by AVA
WHEREOF, in view of the all the foregoing, judgment is hereby rendered: Rosalina L. Montejo is hereby REVERSED and a new one entered declaring the
Memorandum of Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties
1. Declaring the Memorandum of Agreement in question as invalid as it is are DIRECTED to comply with the terms and conditions thereof.
contrary to law and public policy;
2. Declaring that there is a diminution of the wages and other benefits of the SO ORDERED.[40]
Union members and officers under the said invalid MOA.
3. Ordering respondent management to immediately reinstate the workers
wage rates and other benefits that they were receiving and enjoying before the
signing of the invalid MOA; Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by the CA in a
4. Ordering the management respondent to pay attorneys fees in an amount Resolution[41] dated July 13, 2006.
equivalent to ten percent (10%) of whatever total amount that the workers union may
receive representing individual wage differentials.
Hence, herein petition, with Cullo raising the following issues for this Court's resolution, to wit:
I.
In its Memorandum,[44] respondent maintains its position that the NCMB and Voluntary Arbitrators had
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS ERRORS IN FINDING THAT THE ACCREDITED VOLUNTARY no jurisdiction over the complaint. Respondent, however, now also contends that IHEU-NFL is a non-
ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY BECAUSE
THE NOTICE OF MEDIATION DOES NOT MENTION THE NAME OF THE entity since it is DIHFEU-NFL which is considered by the DOLE as the only registered union in
LOCAL UNION BUT ONLY THE AFFILIATE FEDERATION THEREBY Waterfront Davao.[45] Respondent argues that the Submission Agreement does not name the local union
DISREGARDING THE SUBMISSION AGREEMENT DULY SIGNED BY THE
PARTIES AND THEIR LEGAL COUNSELS THAT MENTIONS THE NAME OF DIHFEU-NFL and that it had timely withdrawn its consent to arbitrate by filing a motion to withdraw.
THE LOCAL UNION.

II. A review of the development of the case shows that there has been much confusion as to the identity of
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED
the party which filed the case against respondent. In the Notice of Mediation [46] filed before the NCMB,
SERIOUS ERROR BY DISREGARDING THE PROVISIONS OF THE CBA
SIMPLY BECAUSE IT BELIEVED THE UNPROVEN ALLEGATIONS OF it stated that the union involved was DARIUS JOVES/DEBBIE PLANAS ET. AL., National
RESPONDENT HOTEL THAT IT WAS SUFFERING FROM FINANCIAL
CRISIS. Federation of Labor. In the Submission Agreement, [47] however, it stated that the union involved was
INSULAR HOTEL EMPLOYEES UNION-NFL.
III.
THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED
IN CONCLUDING THAT ARTICLE 100 OF THE LABOR CODE APPLIES ONLY Furthermore, a perusal of the records would reveal that after signing the Submission Agreement,
TO BENEFITS ENJOYED PRIOR TO THE ADOPTION OF THE LABOR CODE
WHICH, IN EFFECT, ALLOWS THE DIMINUTION OF THE BENEFITS respondent persistently questioned the authority and standing of the individual employees to file the
ENJOYED BY EMPLOYEES FROM ITS ADOPTION HENCEFORTH.[42]
complaint. Cullo then clarified in subsequent documents captioned as National Federation of Labor
and 79 Individual Employees, Union Members, Complainants that the individual complainants are not
The petition is not meritorious.
representing the union, but filing the complaint through their appointed attorneys-in-fact. [48] AVA
Olvida, however, in a Resolution dated March 18, 2003, agreed with respondent that the proper party-
Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact that before the complainant should be INSULAR HOTEL EMPLOYEES UNION-NFL, to wit:
case was submitted to voluntary arbitration, the parties signed a Submission Agreement which
x x x In the submission agreement of the parties dated August 29, 2002, the party
mentioned the name of the local union and not only NFL. Cullo, thus, contends that the CA committed complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not the
NATIONAL FEDERATION OF LABOR and 79 other members.[49]
error when it ruled that the voluntary arbitrator had no jurisdiction over the case simply because the
Notice of Mediation did not state the name of the local union thereby disregarding the Submission
The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads:
Agreement which states the names of local union as Insular Hotel Employees Union-NFL. [43]
WHEREFORE, premises considered, the motion for reconsideration filed by
respondent is DENIED. The resolution dated November 11, 2002, is modified in so
far as the party complainant is concerned, thus, instead of National Federation of
Labor and 79 individual employees, union members, shall be Insular Hotel organization in the establishment may file a notice, request preventive mediation or
Employees Union-NFL et. al., as stated in the joint submission agreement dated declare a strike, but only on grounds of unfair labor practice.
August 29, 2002. Respondent is directed to comply with the decision of this
Arbitrator dated November 11, 2002.[50]

From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a
notice or request for preventive mediation. It is curious that even Cullo himself admitted, in a number
After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted Insular Hotel Employees Union-
of pleadings, that the case was filed not by the Union but by individual members thereof. Clearly,
NFL et. al., Complainant as the caption in all his subsequent pleadings. Respondent, however, was still
therefore, the NCMB had no jurisdiction to entertain the notice filed before it.
adamant that neither Cullo nor the individual employees had authority to file the case in behalf of the
Union.
Even though respondent signed a Submission Agreement, it had, however, immediately manifested its
desire to withdraw from the proceedings after it became apparent that the Union had no part in the
While it is undisputed that a submission agreement was signed by respondent and IHEU-NFL, then
complaint. As a matter of fact, only four days had lapsed after the signing of the Submission
represented by Joves and Cullo, this Court finds that there are two circumstances which affect its
Agreement when respondent called the attention of AVA Olvida in a Manifestation with Motion for a
validity: first, the Notice of Mediation was filed by a party who had no authority to do so; second, that
Second Preliminary Conference[51] that the persons who filed the instant complaint in the name of
respondent had persistently voiced out its objection questioning the authority of Joves, Cullo and the
Insular Hotel Employees Union-NFL had no authority to represent the Union. Respondent cannot be
individual members of the Union to file the complaint before the NCMB.
estopped in raising the jurisdictional issue, because it is basic that the issue of jurisdiction may be
raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.
Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation
with the NCMB. It is only after this step that a submission agreement may be entered into by the
In Figueroa v. People,[52] this Court explained that estoppel is the exception rather than the rule, to wit:
parties concerned.
Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive
Applying the said doctrine to the instant case, the petitioner is in no way estopped by
mediation, to wit: laches in assailing the jurisdiction of the RTC, considering that he raised the lack
thereof in his appeal before the appellate court. At that time, no considerable period
had yet elapsed for laches to attach. True, delay alone, though unreasonable, will not
Who may file a notice or declare a strike or lockout or request preventive mediation. - sustain the defense of estoppel by laches unless it further appears that the party,
Any certified or duly recognized bargaining representative may file a notice or knowing his rights, has not sought to enforce them until the condition of the party
declare a strike or request for preventive mediation in cases of bargaining pleading laches has in good faith become so changed that he cannot be restored to his
deadlocks and unfair labor practices. The employer may file a notice or declare a former state, if the rights be then enforced, due to loss of evidence, change of title,
lockout or request for preventive mediation in the same cases. In the absence of a intervention of equities, and other causes. In applying the principle of estoppel by
certified or duly recognized bargaining representative, any legitimate labor laches in the exceptional case of Sibonghanoy, the Court therein considered the patent
and revolting inequity and unfairness of having the judgment creditors go up their
Calvary once more after more or less 15 years.The same, however, does not obtain in National Conciliation and Mediation Board (NCMB). If the
the instant case. Company and the Union representatives within ten (10) days fail to
agree on the Arbitrator, the NCMB shall name the Arbitrator. The
We note at this point that estoppel, being in the nature of a forfeiture, is not favored by decision of the Arbitrator shall be final and binding upon the
law. It is to be applied rarelyonly from necessity, and only in extraordinary parties. However, the Arbitrator shall not have the authority to
circumstances. The doctrine must be applied with great care and the equity must be change any provisions of the Agreement.The cost of arbitration
strong in its favor.When misapplied, the doctrine of estoppel may be a most effective shall be borne equally by the parties.
weapon for the accomplishment of injustice. x x x (Italics supplied.)[53]
Petitioners have not, however, been duly authorized to represent the
union. Apropos is this Courts pronouncement in Atlas Farms, Inc. v. National Labor
The question to be resolved then is, do the individual members of the Union have the requisite standing
Relations Commission, viz:
to question the MOA before the NCMB? On this note, Tabigue v. International Copra Export
Corporation (INTERCO)[54] is instructive: x x x Pursuant to Article 260 of the Labor Code, the parties to a
CBA shall name or designate their respective representatives to the
Respecting petitioners thesis that unsettled grievances should be referred to voluntary grievance machinery and if the grievance is unsettled in that level,
arbitration as called for in the CBA, the same does not lie.The pertinent portion of it shall automatically be referred to the voluntary arbitrators
the CBA reads: designated in advance by parties to a CBA. Consequently, only
disputes involving the union and the company shall be referred
In case of any dispute arising from the interpretation or to the grievance machinery or voluntary arbitrators. (Emphasis
implementation of this Agreement or any matter affecting the and underscoring supplied.)[55]
relations of Labor and Management, the UNION and the
COMPANY agree to exhaust all possibilities of conciliation
If the individual members of the Union have no authority to file the case, does the federation to which
through the grievance machinery. The committee shall resolve all
problems submitted to it within fifteen (15) days after the problems the local union is affiliated have the standing to do so? On this note, Coastal Subic Bay Terminal, Inc.
ha[ve] been discussed by the members. If the dispute or grievance v. Department of Labor and Employment[56] is enlightening, thus:
cannot be settled by the Committee, or if the committee failed to
act on the matter within the period of fifteen (15) days herein
stipulated, the UNIONand the COMPANY agree to submit the x x x A local union does not owe its existence to the federation with which it is
issue to Voluntary Arbitration. Selection of the arbitrator shall be affiliated. It is a separate and distinct voluntary association owing its creation to the
will of its members. Mere affiliation does not divest the local union of its own
made within seven (7) days from the date of notification by the
personality, neither does it give the mother federation the license to act
aggrieved party. The Arbitrator shall be selected by lottery from independently of the local union. It only gives rise to a contract of agency, where
four (4) qualified individuals nominated by in equal numbers by the former acts in representation of the latter. Hence, local unions are considered
both parties taken from the list of Arbitrators prepared by the principals while the federation is deemed to be merely their agent. x x x[57]
While the November 16, 2006 Certification[59] of the DOLE clearly states that IHEU-NFL is not a
Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled registered labor organization, this Court finds that respondent is estopped from questioning the same as
that NFL had no authority to file the complaint in behalf of the individual employees, to wit: it did not raise the said issue in the proceedings before the NCMB and the Voluntary Arbitrators. A
perusal of the records reveals that the main theory posed by respondent was whether or not the
Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the
individual employees had the authority to file the complaint notwithstanding the apparent non-
case. Waterfront contents that the Notice of Mediation does not mention the name of
the Union but merely referred to the National Federation of Labor (NFL) with which participation of the union. Respondent never put in issue the fact that DIHFEU-NFL was not the same
the Union is affiliated. In the subsequent pleadings, NFL's legal counsel even
confirmed that the case was not filed by the union but by NFL and the individual as IHEU-NFL. Consequently, it is already too late in the day to assert the same.
employees named in the SPAs which were not even dated nor notarized. Anent the second issue raised by Cullo, the same is again without merit.

Even granting that petitioner Union was affiliated with NFL, still the relationship
between that of the local union and the labor federation or national union with which Cullo contends that respondent was not really suffering from serious losses as found by the CA. Cullo
the former was affiliated is generally understood to be that of agency, where the local
is the principal and the federation the agency. Being merely an agent of the local anchors his position on the denial by the Wage Board of respondent's petition for exemption from
union, NFL should have presented its authority to file the Notice of Mediation. While
Wage Order No. RTWPB-X1-08 on the ground that it is a distressed establishment. [60] In said denial,
We commend NFL's zealousness in protecting the rights of lowly workers, We cannot,
however, allow it to go beyond what it is empowered to do. the Board ruled:
A careful analysis of applicant's audited financial statements showed that during the
As provided under the NCMB Manual of Procedures, only a certified or duly period ending December 31, 1999, it registered retained earnings amounting
recognized bargaining representative and an employer may file a notice of mediation, to P8,661,260.00. Applicant's interim financial statements for the quarter ending
declare a strike or lockout or request preventive mediation. The Collective Bargaining June 30, 2000 cannot be considered, as the same was not audited. Accordingly, this
Agreement (CBA), on the other, recognizes that DIHFEU-NFL is the exclusive Board finds that applicant is not qualified for exemption as a distressed establishment
bargaining representative of all permanent employees. The inclusion of the word NFL pursuant to the aforecited criteria.[61]
after the name of the local union merely stresses that the local union is NFL's affiliate.
It does not, however, mean that the local union cannot stand on its own. The local
union owes its creation and continued existence to the will of its members and not to In its Decision, the CA held that upholding the validity of the MOA would mean the continuance of the
the federation to which it belongs. The spring cannot rise higher than its source, so to
speak.[58] hotel's operation and financial viability, to wit:

x x x We cannot close Our eyes to the impending financial distress that an employer
In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that DIHFEU-NFL is the may suffer should the terms of employment under the said CBA continue.
only recognized bargaining unit in their establishment. While the resolution of the said argument is
If indeed We are to tilt the balance of justice to labor, then We would be inclined to
already moot and academic given the discussion above, this Court shall address the same nevertheless. favor for the nonce petitioner Waterfront. To uphold the validity of the MOA would
mean the continuance of the hotel's operation and financial viability. Otherwise, the
eventual permanent closure of the hotel would only result to prejudice of the
employees, as a consequence thereof, will necessarily lose their jobs.[62]
Clearly, the prohibition against elimination or diminution of benefits set out in Article
100 of the Labor Code is specifically concerned with benefits already enjoyed at the
time of the promulgation of the Labor Code. Article 100 does not, in other words,
In its petition before the CA, respondent submitted its audited financial statements [63] which show that purport to apply to situations arising after the promulgation date of the Labor Code x x
x.[66]
for the years 1998, 1999, until September 30, 2000, its total operating losses amounted
Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with respondent
to P48,409,385.00. Based on the foregoing, the CA was not without basis when it declared that
that the same does not prohibit a union from offering and agreeing to reduce wages and benefits of the
respondent was suffering from impending financial distress. While the Wage Board denied
employees. In Rivera v. Espiritu,[67] this Court ruled that the right to free collective bargaining, after all,
respondent's petition for exemption, this Court notes that the denial was partly due to the fact that the
includes the right to suspend it, thus:
June 2000 financial statements then submitted by respondent were not audited. Cullo did not question
nor discredit the accuracy and authenticity of respondent's audited financial statements. This Court,
A CBA is a contract executed upon request of either the employer or the exclusive
therefore, has no reason to question the veracity of the contents thereof.Moreover, it bears to point out bargaining representative incorporating the agreement reached after negotiations
that respondent's audited financial statements covering the years 2001 to 2005 show that it still with respect to wages, hours of work and all other terms and conditions of
continues to suffer losses.[64] employment, including proposals for adjusting any grievances or questions arising
under such agreement. The primary purpose of a CBA is the stabilization of labor-
management relations in order to create a climate of a sound and stable industrial
Finally, anent the last issue raised by Cullo, the same is without merit. peace. In construing a CBA, the courts must be practical and realistic and give due
consideration to the context in which it is negotiated and the purpose which it is
intended to serve.
Cullo argues that the CA must have erred in concluding that Article 100 of the Labor Code applies only
to benefits already enjoyed at the time of the promulgation of the Labor Code. The assailed PAL-PALEA agreement was the result of voluntary collective
bargaining negotiations undertaken in the light of the severe financial situation
Article 100 of the Labor Code provides:
faced by the employer, with the peculiar and unique intention of not merely
promoting industrial peace at PAL, but preventing the latters closure. We find
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS- no conflict between said agreement and Article 253-A of the Labor Code. Article
Nothing in this Book shall be construed to eliminate or in any way diminish 253-A has a two-fold purpose. One is to promote industrial stability and
supplements, or other employee benefits being enjoyed at the time of the promulgation predictability. Inasmuch as the agreement sought to promote industrial peace at PAL
of this Code.
during its rehabilitation, said agreement satisfies the first purpose of Article 253-A.
The other is to assign specific timetables wherein negotiations become a matter of
right and requirement. Nothing in Article 253-A, prohibits the parties from waiving
On this note, Apex Mining Company, Inc. v. NLRC[65] is instructive, to wit: or suspending the mandatory timetables and agreeing on the remedies to enforce the
same.
In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground
Reconfirmation of Employment should, therefore, be deemed an implied ratification by the Union
employees, that voluntarily entered into the CBA with PAL. It was also PALEA that
voluntarily opted for the 10-year suspension of the CBA. Either case was the unions members of the MOA.
exercise of its right to collective bargaining. The right to free collective
bargaining, after all, includes the right to suspend it.[68]
In Planters Products, Inc. v. NLRC,[71] this Court refrained from declaring a CBA invalid
notwithstanding that the same was not ratified in view of the fact that the employees had enjoyed
benefits under it, thus:
Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws
specifically provides that the results of the collective bargaining negotiations shall be subject to Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the
ratification and approval by majority vote of the Union members at a meeting convened, or by Implementing Rules, the parties to a collective [bargaining] agreement are required to
furnish copies of the appropriate Regional Office with accompanying proof of
plebiscite held for such special purpose. [69] Accordingly, it is undisputed that the MOA was not subject ratification by the majority of all the workers in a bargaining unit. This was not done
in the case at bar. But we do not declare the 1984-1987 CBA invalid or void
to ratification by the general membership of the Union. The question to be resolved then is, does the
considering that the employees have enjoyed benefits from it. They cannot receive
non-ratification of the MOA in accordance with the Union's constitution prove fatal to the validity benefits under provisions favorable to them and later insist that the CBA is void
simply because other provisions turn out not to the liking of certain employees. x x x.
thereof? Moreover, the two CBAs prior to the 1984-1987 CBA were not also formally ratified,
yet the employees are basing their present claims on these CBAs. It is iniquitous to
receive benefits from a CBA and later on disclaim its validity.[72]
It must be remembered that after the MOA was signed, the members of the Union individually signed
contracts denominated as Reconfirmation of Employment. [70] Cullo did not dispute the fact that of the
87 members of the Union, who signed and accepted the Reconfirmation of Employment, 71 are the Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain
respondent employees in the case at bar. Moreover, it bears to stress that all the employees were benefits previously enjoyed by the members of the Union, it cannot escape this Court's attention that it
assisted by Rojas, DIHFEU-NFL's president, who even co-signed each contract. was the execution of the MOA which paved the way for the re-opening of the hotel, notwithstanding its
financial distress. More importantly, the execution of the MOA allowed respondents to keep their
Stipulated in each Reconfirmation of Employment were the new salary and benefits jobs. It would certainly be iniquitous for the members of the Union to sign new contracts prompting
scheme. In addition, it bears to stress that specific provisions of the new contract also made reference the re-opening of the hotel only to later on renege on their agreement on the fact of the non-ratification
to the MOA. Thus, the individual members of the union cannot feign knowledge of the execution of of the MOA.
the MOA. Each contract was freely entered into and there is no indication that the same was attended
by fraud, misrepresentation or duress. To this Court's mind, the signing of the individual In addition, it bears to point out that Rojas did not act unilaterally when he negotiated with
respondent's management. The Constitution and By-Laws of DIHFEU-NFL clearly provide that the
president is authorized to represent the union on all occasions and in all matters in which WHEREFORE, premises considered, the petition is DENIED. The Decision dated October 11, 2005,
representation of the union may be agreed or required. [73] Furthermore, Rojas was properly authorized and the Resolution dated July 13, 2006 of the Court of Appeals in consolidated labor cases docketed as
[74]
under a Board of Directors Resolution to negotiate with respondent, the pertinent portions of which CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657, are AFFIRMED.
CENTRAL AZUCARERA DE TARLAC, PETITIONER, VS. CENTRAL
read:
AZUCARERA DE TARLAC LABOR UNION-NLU, RESPONDENT.

SECRETARY's CERTIFICATE DECISION


I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby certify that, at a meeting
of the Board of Directors of the DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly NACHURA, J.:
constituted, the following resolutions were unanimously approved:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court, assailing the Decision[1] dated May 28, 2009, and the Resolution[2] dated
July 28, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106657.
RESOLVED, as it is hereby resolved that the Manifesto dated 25
Feb. 2001 be approved ratified and adopted;
The factual antecedents of the case are as follows:
RESOLVED, FURTHER, that Mr. Domy R. Rojas, the
president of the DIHFEU-NFL, be hereby authorized to Petitioner is a domestic corporation engaged in the business of sugar
negotiate with Waterfront Insular Hotel Davao and to work for manufacturing, while respondent is a legitimate labor organization which serves
the latter's acceptance of the proposals contained in DIHFEU- as the exclusive bargaining representative of petitioner's rank-and-file employees.
NFL Manifesto; and The controversy stems from the interpretation of the term "basic pay," essential
in the computation of the 13th-month pay.
RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby
authorized to sign any and all documents to implement, and The facts of this case are not in dispute. In compliance with Presidential Decree
carry into effect, his foregoing authority.[75] (P.D.) No. 851, petitioner granted its employees the mandatory thirteenth (13th) -
month pay since 1975. The formula used by petitioner in computing the 13th-
Withal, while the scales of justice usually tilt in favor of labor, the peculiar circumstances herein
month pay was: Total Basic Annual Salary divided by twelve (12). Included in
prevent this Court from applying the same in the instant petition. Even if our laws endeavor to give life petitioner's computation of the Total Basic Annual Salary were the following: basic
to the constitutional policy on social justice and on the protection of labor, it does not mean that every monthly salary; first eight (8) hours overtime pay on Sunday and legal/special
holiday; night premium pay; and vacation and sick leaves for each year.
labor dispute will be decided in favor of the workers. The law also recognizes that management has Throughout the years, petitioner used this computation until 2006.[3]
rights which are also entitled to respect and enforcement in the interest of fair play.[76]
On November 6, 2004, respondent staged a strike. During the pendency of the
strike, petitioner declared a temporary cessation of operations. In December
2005, all the striking union members were allowed to return to work.
Subsequently, petitioner declared another temporary cessation of operations for
the months of April and May 2006. The suspension of operation was lifted on June
2006, but the rank-and-file employees were allowed to report for work on a
fifteen (15) day-per-month rotation basis that lasted until September 2006. In
December 2006, petitioner gave the employees their 13th-month pay based on Respondents filed an appeal. On August 14, 2008, the NLRC rendered a
the employee's total earnings during the year divided by 12.[4] Decision[11] reversing the Labor Arbiter. The dispositive portion of the Decision
reads:
Respondent objected to this computation. It averred that petitioner did not
adhere to the usual computation of the 13th-month pay. It claimed that the WHEREFORE, the decision appealed is reversed and set aside and respondent-
divisor should have been eight (8) instead of 12, because the employees worked appellee Central Azucarera de Tarlac is hereby ordered to adhere to its
for only 8 months in 2006. It likewise asserted that petitioner did not observe the established practice of granting 13th[-] month pay on the basis of gross annual
company practice of giving its employees the guaranteed amount equivalent to basic which includes basic pay, premium pay for work in rest days and special
their one month pay, in instances where the computed 13th-month pay was less holidays, night shift differential and paid vacation and sick leaves for each year.
than their basic monthly pay.[5]
Additionally, respondent-appellee is ordered to observe the guaranteed
Petitioner and respondent tried to thresh out their differences in accordance with one[-]month pay by way of 13th month pay.
the grievance procedure as provided in their collective bargaining agreement.
During the grievance meeting, the representative of petitioner explained that the SO ORDERED. [12]

change in the computation of the 13th-month pay was intended to rectify an error
in the computation, particularly the concept of basic pay which should have Petitioner filed a motion for reconsideration. However, the same was denied in a
included only the basic monthly pay of the employees.[6] Resolution dated November 27, 2008. Petitioner then filed a petition
for certiorari under Rule 65 of the Rules of Court before the CA.[13]
For failure of the parties to arrive at a settlement, respondent applied for
preventive mediation before the National Conciliation and Mediation Board. On May 28, 2009, the CA rendered a Decision[14] dismissing the petition, and
However, despite four (4) conciliatory meetings, the parties still failed to settle affirming the decision and resolution of the NLRC, viz.:
the dispute. On March 29, 2007, respondent filed a complaint against petitioner
for money claims based on the alleged diminution of benefits/erroneous WHEREFORE, the foregoing considered, the petition is hereby DISMISSED and
computation of 13th-month pay before the Regional Arbitration Branch of the the assailed August 14, 2008 Decision and November 27, 2008 Resolution of the
National Labor Relations Commission (NLRC).[7] NLRC, are hereby AFFIRMED. No costs.

On October 31, 2007, the Labor Arbiter rendered a Decision [8] dismissing the SO ORDERED.[15]
complaint and declaring that the petitioner had the right to rectify the error in the
computation of the 13th-month pay of its employees.[9] The fallo of the Decision Aggrieved, petitioner filed the instant petition, alleging that the CA committed a
reads: reversible error in affirming the Decision of the NLRC, and praying that the
Decision of the Labor Arbiter be reinstated.
WHEREFORE, premises considered, the complaint filed by the
complainants against the respondents should be DISMISSED with The petition is denied for lack of merit.
prejudice for utter lack of merit.
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents
SO ORDERED. [10]
an additional income based on wage but not part of the wage. It is equivalent to
one-twelfth (1/12) of the total basic salary earned by an employee within a
calendar year. All rank-and-file employees, regardless of their designation or earnings, and other remuneration that are not part of the basic salary shall not
employment status and irrespective of the method by which their wages are paid, be included in the computation of the 13th-month pay.
are entitled to this benefit, provided that they have worked for at least one
month during the calendar year. If the employee worked for only a portion of the On November 16, 1987, the Revised Guidelines on the Implementation of the
year, the 13th-month pay is computed pro rata.[16] 13th-Month Pay Law was issued. Significantly, under this Revised Guidelines, it
was specifically stated that the minimum 13th-month pay required by law shall
Petitioner argues that there was an error in the computation of the 13th-month not be less than one-twelfth (1/12) of the total basic salary earned by an
pay of its employees as a result of its mistake in implementing P.D. No. 851, an employee within a calendar year.
error that was discovered by the management only when respondent raised a
question concerning the computation of the employees' Furthermore, the term "basic salary" of an employee for the purpose of
computing the 13th-month pay was interpreted to include all remuneration or
13th-month pay for 2006. Admittedly, it was an error that was repeatedly earnings paid by the employer for services rendered, but does not include
committed for almost thirty (30) years. Petitioner insists that the length of time allowances and monetary benefits which are not integrated as part of the regular
during which an employer has performed a certain act beneficial to the or basic salary, such as the cash equivalent of unused vacation and sick leave
employees, does not prove that such an act was not done in error. It maintains credits, overtime, premium, night differential and holiday pay, and cost-of-living
that for the claim of mistake to be negated, there must be a clear showing that allowances. However, these salary-related benefits should be included as part of
the employer had freely, voluntarily, and continuously performed the act, knowing the basic salary in the computation of the 13th-month pay if, by individual or
that he is under no obligation to do so. Petitioner asserts that such voluntariness collective agreement, company practice or policy, the same are treated as part of
was absent in this case.[17] the basic salary of the employees.

The Rules and Regulations Implementing P.D. No. 851, promulgated on December Based on the foregoing, it is clear that there could have no erroneous
22, 1975, defines 13th-month pay and basic salary as follows: interpretation or application of what is included in the term "basic salary" for
purposes of computing the 13th-month pay of employees. From the inception of
Sec. 2. Definition of certain terms. - As used in this issuance: P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have
been issued to insure uniformity in the interpretation, application, and
(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of enforcement of the provisions of P.D. No. 851 and its implementing regulations.
an employee within a calendar year;
As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay
(b) "Basic salary" shall include all remunerations or earnings paid by an employer based on the employees' gross annual earnings which included the basic monthly
to an employee for services rendered but may not include cost-of-living salary, premium pay for work on rest days and special holidays, night shift
allowances granted pursuant to Presidential Decree No. 525 or Letter of differential pay and holiday pay continued for almost thirty (30) years and has
Instructions No. 174, profit-sharing payments, and all allowances and monetary ripened into a company policy or practice which cannot be unilaterally withdrawn.
benefits which are not considered or integrated as part of the regular or basic
salary of the employee at the time of the promulgation of the Decree on Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule,
December 16, 1975. mandates that benefits given to employees cannot be taken back or reduced
unilaterally by the employer because the benefit has become part of the
On January 16, 1976, the Supplementary Rules and Regulations Implementing employment contract, written or unwritten. [18] The rule against diminution of
P.D. No. 851 was issued. The Supplementary Rules clarifies that overtime pay, benefits applies if it is shown that the grant of the benefit is based on an express
policy or has ripened into a practice over a long period of time and that the
practice is consistent and deliberate. Nevertheless, the rule will not apply if the VELASCO, JR., J., Chairperson,
practice is due to error in the construction or application of a doubtful or difficult
question of law. But even in cases of error, it should be shown that the correction EASTERN TELECOMS
BERSAMIN,
is done soon after discovery of the error.[19] EMPLOYEES UNION,
Respondent.
ABAD,
The argument of petitioner that the grant of the benefit was not voluntary and
was due to error in the interpretation of what is included in the basic salary
MENDOZA, and
deserves scant consideration. No doubtful or difficult question of law is involved in
this case. The guidelines set by the law are not difficult to decipher. The
voluntariness of the grant of the benefit was manifested by the number of years PERLAS-BERNABE, JJ.
the employer had paid the benefit to its employees. Petitioner only changed the
formula in the computation of the 13th-month pay after almost 30 years and only
after the dispute between the management and employees erupted. This act of
petitioner in changing the formula at this time cannot be sanctioned, as it
indicates a badge of bad faith.
Promulgated:
Furthermore, petitioner cannot use the argument that it is suffering from financial
losses to claim exemption from the coverage of the law on 13th-month pay, or to
spare it from its erroneous unilateral computation of the 13th-month pay of its
employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. February 8, 2012
851, distressed employers shall qualify for exemption from the requirement of x ----------------------------------------------------------------------------------------x
the Decree only upon prior authorization by the Secretary of Labor.[20] In this
case, no such prior authorization has been obtained by petitioner; thus, it is not DECISION
entitled to claim such exemption.
MENDOZA, J.:
WHEREFORE, the Decision dated May 28, 2009 and the Resolution dated July
28, 2009 of the Court of Appeals in CA-G.R. SP No. 106657 are
hereby AFFIRMED. Costs against petitioner. Before the Court is a petition for review on certiorari seeking modification of the June 25, 2008

SO ORDERED. Decision[1] of the Court of Appeals (CA) and its December 12, 2008 Resolution,[2] in CA-G.R. SP No.
EASTERN TELECOMMUNICATIONS G.R. No. 185665 91974, annulling the April 28, 2005 Resolution[3] of the National Labor Relations
PHILIPPINES, INC.,
Petitioner, Commission (NLRC) in NLRC-NCR-CC-000273-04 entitled In the Matter of the Labor Dispute in
Present: Eastern Telecommunications, Philippines, Inc.

- versus -
The Facts
Agreement. The union requested that the President of the company should be
made a signatory to the agreement, however, the latter refused to sign. In
As synthesized by the NLRC, the facts of the case are as follows, viz: addition to such a refusal, the company made a sudden turnaround in its
position by declaring that they will no longer pay the bonuses until the issue
is resolved through compulsory arbitration.
Eastern Telecommunications Phils., Inc. (ETPI) is a corporation
engaged in the business of providing telecommunications facilities,
particularly leasing international date lines or circuits, regular landlines, The companys change in position was contained in a letter
internet and data services, employing approximately 400 employees. dated April 14, 2004 written to the union by Mr. Sonny Javier, Vice-President
for Human Resources and Administration, stating that the deferred release of
Eastern Telecoms Employees Union (ETEU) is the certified exclusive bonuses had been superseded and voided due to the unions filing of the issue
bargaining agent of the companys rank and file employees with a strong to the NCMB on July 18, 2003. He declared that until the matter is resolved
following of 147 regular members. It has an existing collecti[ve] bargaining in a compulsory arbitration, the company cannot and will not pay any
agreement with the company to expire in the year 2004 with a Side bonuses to any and all union members.
Agreement signed on September 3, 2001.
Thus, on April 26, 2004, ETEU filed a Notice of Strike on the ground
In essence, the labor dispute was a spin-off of the companys plan to of unfair labor practice for failure of ETPI to pay the bonuses in gross
defer payment of the 2003 14th, 15th and 16th month bonuses sometime in violation of the economic provision of the existing CBA.
April 2004. The companys main ground in postponing the payment of
bonuses is due to allege continuing deterioration of companys financial On May 19, 2004, the Secretary of Labor and Employment, finding
position which started in the year 2000. However, ETPI while postponing that the company is engaged in an industry considered vital to the economy
payment of bonuses sometime in April 2004, such payment would also be and any work disruption thereat will adversely affect not only its operation
subject to availability of funds. but also that of the other business relying on its services, certified the labor
dispute for compulsory arbitration pursuant to Article 263 (q) of the Labor
Invoking the Side Agreement of the existing Collective Bargaining Code as amended.
Agreement for the period 2001-2004 between ETPI and ETEU which stated
as follows: Acting on the certified labor dispute, a hearing was called on July 16,
2004 wherein the parties have submitted that the issues for resolution are (1)
4. Employment Related Bonuses. The Company unfair labor practice and (2) the grant of 14 th, 15th and 16th month bonuses for
confirms that the 14th, 15th and 16th month bonuses (other 2003, and 14th month bonus for 2004. Thereafter, they were directed to
than 13th month pay) are granted. submit their respective position papers and evidence in support thereof after
which submission, they agreed to have the case considered submitted for
The union strongly opposed the deferment in payment of the bonuses by decision.[4]
filing a preventive mediation complaint with the NCMB on July 3, 2003, the
purpose of which complaint is to determine the date when the bonus should
be paid.
In its position paper,[5] the Eastern Telecoms Employees Union (ETEU) claimed that Eastern
In the conference held at the NCMB, ETPI reiterated its stand that Telecommunications Philippines, Inc. (ETPI) had consistently and voluntarily been giving out
payment of the bonuses would only be made in April 2004 to which date of
payment, the union agreed. Thus, considering the agreement forged between 14th month bonus during the month of April, and 15th and 16th month bonuses every December of each
the parties, the said agreement was reduced to a Memorandum of
year (subject bonuses) to its employees from 1975 to 2002, even when it did not realize any net profits. to require the company to pay the subject bonuses during its dire financial straits would in effect
ETEU posited that by reason of its long and regular concession, the payment of these monetary penalize it for its past generosity. It alleged that the non-payment of the subject bonuses was neither
benefits had ripened into a company practice which could no longer be unilaterally withdrawn by flagrant nor malicious and, hence, would not amount to unfair labor practice.
ETPI. ETEU added that this long-standing company practice had been expressly confirmed in the Side
Further, ETPI argued that the bonus provision in the 2001-2004 CBA Side Agreement was a
Agreements of the 1998-2001 and 2001-2004 Collective Bargaining Agreements (CBA) which
mere affirmation that the distribution of bonuses was discretionary to the company, premised and
provided for the continuous grant of these bonuses in no uncertain terms. ETEU theorized that the
conditioned on the success of the business and availability of cash. It submitted that said bonus
grant of the subject bonuses is not only a company practice but also a contractual obligation of ETPI to
provision partook of the nature of a one-time grant which the employees may demand only during the
the union members.
year when the Side Agreement was executed and was never intended to cover the entire term of the
CBA. Finally, ETPI emphasized that even if it had an unconditional obligation to grant bonuses to its
ETEU contended that the unjustified and malicious refusal of the company to pay the subject
employees, the drastic decline in its financial condition had already legally released it therefrom
bonuses was a clear violation of the economic provision of the CBA and constitutes unfair labor
pursuant to Article 1267 of the Civil Code.
practice (ULP). According to ETEU, such refusal was nothing but a ploy to spite the union for bringing
the matter of delay in the payment of the subject bonuses to the National Conciliation and Mediation
On April 28, 2005, the NLRC issued its Resolution dismissing ETEUs complaint and held that
Board (NCMB). It prayed for the award of moral and exemplary damages as well as attorneys fees for
ETPI could not be forced to pay the union members the 14 th, 15th and 16th month bonuses for the year
the unfair labor practice allegedly committed by the company.
2003 and the 14th month bonus for the year 2004 inasmuch as the payment of these additional benefits
was basically a management prerogative, being an act of generosity and munificence on the part of the
On the other hand, ETPI in its position paper, [6] questioned the authority of the NLRC to take
company and contingent upon the realization of profits. The NLRC pronounced that ETPI may not be
cognizance of the case contending that it had no jurisdiction over the issue which merely involved the
obliged to pay these extra compensations in view of the substantial decline in its financial condition.
interpretation of the economic provision of the 2001-2004 CBA Side Agreement. Nonetheless, it
Likewise, the NLRC found that ETPI was not guilty of the ULP charge elaborating that no sufficient
maintained that the complaint for nonpayment of 14 th, 15th and 16th month bonuses for 2003 and
and substantial evidence was adduced to attribute malice to the company for its refusal to pay the
14th month bonus for 2004 was bereft of any legal and factual basis. It averred that the subject bonuses
subject bonuses. The dispositive portion of the resolution reads:
were not part of the legally demandable wage and the grant thereof to its employees was an act of pure
gratuity and generosity on its part, involving the exercise of management prerogative and always WHEREFORE, premises considered, the instant complaint is hereby
DISMISSED for lack of merit.
dependent on the financial performance and realization of profits. It posited that it resorted to the SO ORDERED.[7]
discontinuance of payment of the bonuses due to the unabated huge losses that the company had
continuously experienced. It claimed that it had been suffering serious business losses since 2000 and
Respondent ETEU moved for reconsideration but the motion was denied by the NLRC in its
Resolution dated August 31, 2005. ISSUES

Dissatisfied, ETPI now comes to this Court via Rule 45, raising the following errors allegedly
Aggrieved, ETEU filed a petition for certiorari [8] before the CA ascribing grave abuse of
committed by the CA, to wit:
discretion on the NLRC for disregarding its evidence which allegedly would prove that the subject
bonuses were part of the union members wages, salaries or compensations. In addition, ETEU asserted I.
that the NLRC committed grave abuse of discretion when it ruled that ETPI is not contractually bound THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN
IT ANNULLED AND SET ASIDE THE RESOLUTIONS OF THE NLRC
to give said bonuses to the union members. DISREGARDING THE WELL SETTLED RULE THAT A WRIT OF
CERTIORARI (UNDER RULE 65) ISSUES ONLY FOR CORRECTION OF
ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION
In its assailed June 25, 2008 Decision, the CA declared that the Side Agreements of the 1998 AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
and 2001 CBA created a contractual obligation on ETPI to confer the subject bonuses to its employees
II.
without qualification or condition. It also found that the grant of said bonuses has already ripened into
THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN
a company practice and their denial would amount to diminution of the employees benefits. It held that
IT DISREGARDED THE RULE THAT FINDINGS OF FACTS OF QUASI-
ETPI could not seek refuge under Article 1267 of the Civil Code because this provision would apply JUDICIAL BODIES ARE ACCORDED FINALITY IF THEY ARE
SUPPORTED BY SUBSTANTIAL EVIDENCE CONSIDERING THAT THE
only when the difficulty in fulfilling the contractual obligation was manifestly beyond the CONCLUSIONS OF THE NLRC WERE BASED ON SUBSTANTIAL AND
contemplation of the parties, which was not the case therein. The CA, however, sustained the NLRC OVERWHELMING EVIDENCE AND UNDISPUTED FACTS.

finding that the allegation of ULP was devoid of merit. The dispositive portion of the questioned III.
decision reads:
IT WAS A GRAVE ERROR OF LAW FOR THE COURT OF APPEALS TO
WHEREFORE, premises considered, the instant petition is CONSIDER THAT THE BONUS GIVEN BY EASTERN
GRANTED and the resolution of the National Labor Relations Commission COMMUNICATIONS TO ITS EMPLOYEES IS NOT DEPENDENT ON THE
dated April 28, 2005 is hereby ANNULLED and SET ASIDE. Respondent REALIZATION OF PROFITS.
Eastern Telecommunications Philippines, Inc. is ordered to pay the members
of petitioner their 14th, 15th and 16th month bonuses for the year 2003 and IV.
14th month for the year 2004. The complaint for unfair labor practice against
said respondent is DISMISSED. THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW
SO ORDERED.[9] WHEN IT DISREGARDED THE UNDISPUTED FACT THAT EASTERN
COMMUNICATIONS IS SUFFERING FROM TREMENDOUS FINANCIAL
LOSSES, AND ORDERED EASTERN COMMUNICATIONS TO GRANT
THE BONUSES REGARDLESS OF THE FINANCIAL DISTRESS OF
do so. It posits that so long as the giving of bonuses will result in the financial ruin of an already
EASTERN COMMUNICATIONS.
distressed company, the employer cannot be forced to grant the same.
V.

THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW ETPI further avers that the act of giving the subject bonuses did not ripen into a company
WHEN IT ARRIVED AT THE CONCLUSION THAT THE GRANT OF
BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES practice arguing that it has always been a contingent one dependent on the realization of profits and,
HAS RIPENED INTO A COMPANY PRACTICE.[10] hence, the workers are not entitled to bonuses if the company does not make profits for a given year. It
asseverates that the 1998 and 2001 CBA Side Agreements did not contractually afford ETEU a vested
property right to a perennial payment of the bonuses. It opines that the bonus provision in the Side
A careful perusal of the voluminous pleadings filed by the parties leads the Court to conclude
Agreement allows the giving of benefits only at the time of its execution. For this reason, it cannot be
that this case revolves around the following core issues:
1. Whether or not petitioner ETPI is liable to pay 14 th, 15th and 16th month bonuses said that the grant has ripened into a company practice. In addition, it argues that even if such
for the year 2003 and 14th month bonus for the year 2004 to the members of
traditional company practice exists, the CA should have applied Article 1267 of the Civil Code which
respondent union; and
releases the obligor from the performance of an obligation when it has become so difficult to fulfill the
2. Whether or not the CA erred in not dismissing outright ETEUs petition for
certiorari. same.

It is the petitioners stance that the CA should have dismissed outright the respondent unions
ETPI insists that it is under no legal compulsion to pay 14th, 15th and 16th month bonuses for
petition for certiorari alleging that no question of jurisdiction whatsoever was raised therein but,
the year 2003 and 14th month bonus for the year 2004 contending that they are not part of the
instead, what was being sought was a judicial re-evaluation of the adequacy or inadequacy of the
demandable wage or salary and that their grant is conditional based on successful business
evidence on record. It claims that the CA erred in disregarding the findings of the NLRC which were
performance and the availability of company profits from which to source the same. To thwart ETEUs
based on substantial and overwhelming evidence as well as on undisputed facts. ETPI added that the
monetary claims, it insists that the distribution of the subject bonuses falls well within the companys
CA court should have refrained from tackling issues of fact and, instead, limited itself on issues of
prerogative, being an act of pure gratuity and generosity on its part. Thus, it can withhold the grant
jurisdiction and grave abuse of jurisdiction amounting to lack or excess of it.
thereof especially since it is currently plagued with economic difficulties and financial losses. It alleges
that the companys fiscal situation greatly declined due to tremendous and extraordinary losses it
The Courts Ruling
sustained beginning the year 2000. It claims that it cannot be compelled to act liberally and confer
As a general rule, in petitions for review under Rule 45, the Court, not being a trier of facts,
upon its employees additional benefits over and above those mandated by law when it cannot afford to
does not normally embark on a re-examination of the evidence presented by the contending parties
during the trial of the case considering that the findings of facts of the CA are conclusive and binding
employees and only when their labor becomes more efficient or more
on the Court. The rule, however, admits of several exceptions, one of which is when the findings of the productive, it is only an inducement for efficiency, a prize therefore, not a
appellate court are contrary to those of the trial court or the lower administrative body, as the case may part of the wage.
be.[11] Considering the incongruent factual conclusions of the CA and the NLRC, this Court finds Itself
obliged to resolve it. The consequential question that needs to be settled, therefore, is whether the subject bonuses
are demandable or not. Stated differently, can these bonuses be considered part of the wage, salary or
The pivotal question determinative of this controversy is whether the members of ETEU are compensation making them enforceable obligations?
entitled to the payment of 14th, 15th and 16th month bonuses for the year 2003 and 14 th month bonus for
year 2004. The Court believes so.

After an assiduous assessment of the record, the Court finds no merit in the petition. In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion of a
provision for the grant of 14 th, 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement,
From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the [16]
as well as in the 2001-2004 CBA Side Agreement, [17] which was signed on September 3, 2001. The
[12]
recipient has no right to demand as a matter of right. The grant of a bonus is basically a management provision, which was similarly worded, states:
prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the employees basic salaries or wages. [13] Employment-Related Bonuses
The Company confirms that the 14th, 15th and 16th month bonuses (other than
the 13th month pay) are granted.
A bonus, however, becomes a demandable or enforceable obligation when it is made part of
the wage or salary or compensation of the employee. [14] Particularly instructive is the ruling of the
A reading of the above provision reveals that the same provides for the giving of 14th, 15th and
Court in Metro Transit Organization, Inc. v. National Labor Relations Commission, [15] where it was
16th month bonuses without qualification. The wording of the provision does not allow any other
written:
interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the

Whether or not a bonus forms part of wages depends upon the benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by
circumstances and conditions for its payment. If it is additional the company. Terse and clear, the said provision does not state that the subject bonuses shall be made to
compensation which the employer promised and agreed to give without any
conditions imposed for its payment, such as success of business or greater depend on the ETPIs financial standing or that their payment was contingent upon the realization of
production or output, then it is part of the wage. But if it is paid only if profits profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the
are realized or if a certain level of productivity is achieved, it cannot be
considered part of the wage. Where it is not payable to all but only to some
employees. In fine, the payment of these bonuses was not related to the profitability of business 2003 although it opted to defer the actual grant in April 2004. All given, business losses could not be
operations. cited as grounds for ETPI to repudiate its obligation under the 2001-2004 CBA Side Agreement.

The records are also bereft of any showing that the ETPI made it clear before or during the The Court finds no merit in ETPIs contention that the bonus provision confirms the grant of
execution of the Side Agreements that the bonuses shall be subject to any condition. Indeed, if ETPI the subject bonuses only on a single instance because if this is so, the parties should have included such
and ETEU intended that the subject bonuses would be dependent on the company earnings, such limitation in the agreement. Nowhere in the Side Agreement does it say that the subject bonuses shall
intention should have been expressly declared in the Side Agreements or the bonus provision should be conferred once during the year the Side Agreement was signed. The Court quotes with approval the
have been deleted altogether. In the absence of any proof that ETPIs consent was vitiated by fraud, observation of the CA in this regard:
mistake or duress, it is presumed that it entered into the Side Agreements voluntarily, that it had full
ETPI argues that assuming the bonus provision in the Side
knowledge of the contents thereof and that it was aware of its commitment under the contract. Verily, Agreement of the 2001-2004 CBA entitles the union members to the subject
by virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses, it is merely in the nature of a one-time grant and not intended to
cover the entire term of the CBA. The contention is untenable. The bonus
bonuses has become more than just an act of generosity on the part of ETPI but a contractual provision in question is exactly the same as that contained in the Side
obligation it has undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union Agreement of the 1998-2001 CBA and there is no denying that from 1998 to
2001, ETPI granted the subject bonuses for each of those years. Thus, ETPI
members from 1998 to 2002 by virtue of the Side Agreements evidently negates its argument that the may not now claim that the bonus provision in the Side Agreement of the
2001-2004 CBA is only a one-time grant.[18]
giving of the subject bonuses is a management prerogative.

From the foregoing, ETPI cannot insist on business losses as a basis for disregarding its ETPI then argues that even if it is contractually bound to distribute the subject bonuses to
undertaking. It is manifestly clear that although it incurred business losses of 149,068,063.00 in the ETEU members under the Side Agreements, its current financial difficulties should have released it
th th th
year 2000, it continued to distribute 14 , 15 and 16 month bonuses for said year. Notwithstanding from the obligatory force of said contract invoking Article 1267 of the Civil Code. Said provision
such huge losses, ETPI entered into the 2001-2004 CBA Side Agreement on September 3, declares:
2001 whereby it contracted to grant the subject bonuses to ETEU in no uncertain terms. ETPI
Article 1267. When the service has become so difficult as to be
continued to sustain losses for the succeeding years of 2001 and 2002 in the amounts of
manifestly beyond the contemplation of the parties, the obligor may also be
348,783,013.00 and 315,474,444.00, respectively. Still and all, this did not deter it from honoring released therefrom, in whole or in part.
the bonus provision in the Side Agreement as it continued to give the subject bonuses to each of the
union members in 2001 and 2002 despite its alleged precarious financial condition. Parenthetically, it
must be emphasized that ETPI even agreed to the payment of the 14th, 15th and 16th month bonuses for
To be considered a regular practice, however, the giving of the bonus
The Court is not persuaded. 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
The parties to the contract must be presumed to have assumed the risks of unfavorable continue giving the benefits knowing fully well that said employees are not
developments. It is, therefore, only in absolutely exceptional changes of circumstances that equity covered by the law requiring payment thereof.

demands assistance for the debtor.[19] In the case at bench, the Court determines that ETPIs claimed
depressed financial state will not release it from the binding effect of the 2001-2004 CBA Side
The records show that ETPI, aside from complying with the regular 13th month bonus, has
Agreement.
been further giving its employees 14th month bonus every April as well as 15th and 16th month bonuses
every December of the year, without fail, from 1975 to 2002 or for 27 years whether it earned profits
ETPI appears to be well aware of its deteriorating financial condition when it entered into the
or not. The considerable length of time ETPI has been giving the special grants to its employees
2001-2004 CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members of
indicates a unilateral and voluntary act on its part to continue giving said benefits knowing that such
ETEU. Considering that ETPI had been continuously suffering huge losses from 2000 to 2002, its
act was not required by law. Accordingly, a company practice in favor of the employees has been
business losses in the year 2003 were not exactly unforeseen or unexpected. Consequently, it cannot be
established and the payments made by ETPI pursuant thereto ripened into benefits enjoyed by the
said that the difficulty in complying with its obligation under the Side Agreement was manifestly
employees.
beyond the contemplation of the parties. Besides, as held in Central Bank of the Philippines v. Court of
Appeals,[20] mere pecuniary inability to fulfill an engagement does not discharge a contractual
obligation. Contracts, once perfected, are binding between the contracting parties. Obligations arising The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without

therefrom have the force of law and should be complied with in good faith. ETPI cannot renege from violating Article 100 of the Labor Code:

the obligation it has freely assumed when it signed the 2001-2004 CBA Side Agreement.
Art. 100. Prohibition against elimination or diminution of benefits.
Nothing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of
Granting arguendo that the CBA Side Agreement does not contractually bind petitioner ETPI
promulgation of this Code.
to give the subject bonuses, nevertheless, the Court finds that its act of granting the same has become
an established company practice such that it has virtually become part of the employees salary or
The rule is settled that any benefit and supplement being enjoyed by the employees cannot be
wage. A bonus may be granted on equitable consideration when the giving of such bonus has been the
reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of
companys long and regular practice. In Philippine Appliance Corporation v. Court of Appeals, [21] it was
benefits is founded on the constitutional mandate to protect the rights of workers and to promote their
pronounced:
welfare and to afford labor full protection.[22]
Factual Antecedents

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational


Interestingly, ETPI never presented countervailing evidence to refute ETEUs claim that the
institution duly organized and existing under the laws of the Philippines.6
company has been continuously paying bonuses since 1975 up to 2002 regardless of its financial state. Respondent Wesleyan University-Philippines Faculty and Staff Association, on the
other hand, is a duly registered labor organization7 acting as the sole and
Its failure to controvert the allegation, when it had the opportunity and resources to do so, works in
exclusive bargaining agent of all rank-and-file faculty and staff employees of
favor of ETEU. Time and again, it has been held that should doubts exist between the evidence petitioner.8crallawlibrary
presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.[23]
In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until
May 31, 2008.10crallawlibrary

WHEREFORE, the petition is DENIED. The June 25, 2008 Decision of the Court of On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya
Appeals and its December 12, 2008 Resolution are AFFIRMED. (Atty. Maglaya), issued a Memorandum11 providing guidelines on the
implementation of vacation and sick leave credits as well as vacation leave
commutation. The pertinent portions of the Memorandum
read:chanRoblesVirtualawlibrary
SO ORDERED.
1. VACATION AND SICK LEAVE CREDITS
WESLEYAN UNIVERSITY PHILIPPINES, Petitioner, v. WESLEYAN
UNIVERSITY- PHILIPPINES FACULTY AND STAFF Vacation and sick leave credits are not automatic. They have to be
ASSOCIATION, Respondent. earned. Monthly, a qualified employee earns an equivalent of 1.25 days
credit each for VL and SL. Vacation Leave and Sick Leave credits of 15
DECISION days become complete at the cut off date of May 31 of each year.
(Example, only a total of 5 days credit will be given to an employee for
DEL CASTILLO, J.: each of sick leave [or] vacation leave, as of month end September, that
is, 4 months from June to September multiplied by 1.25 days). An
A Collective Bargaining Agreement (CBA) is a contract entered into by an employee, therefore, who takes VL or SL beyond his leave credits as of
employer and a legitimate labor organization concerning the terms and conditions date will have to file leave without pay for leaves beyond his credit.
of employment.1 Like any other contract, it has the force of law between the
parties and, thus, should be complied with in good faith.2 Unilateral changes or 2. VACATION LEAVE COMMUTATION
suspensions in the implementation of the provisions of the CBA, therefore, cannot
be allowed without the consent of both parties. Only vacation leave is commuted or monetized to cash. Vacation leave
commutation is effected after the second year of continuous service of an
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails employee. Hence, an employee who started working June 1, 2005 will get
the September 25, 2007 Decision4 and the February 5, 2008 Resolution5 of the his commutation on May 31, 2007 or thereabout.12
Court of Appeals (CA) in CA-G.R. SP No. 97053.
On August 25, 2005, respondents President, Cynthia L. De Lara (De Lara) wrote SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be
a letter13 to Atty. Maglaya informing him that respondent is not amenable to the automatic for all full-time, regular staff and tenured faculty of the University,
unilateral changes made by petitioner.14 De Lara questioned the guidelines for except the University President. Membership in the Plan shall commence on the
being violative of existing practices and the CBA,15 specifically Sections 1 and 2, first day of the month coincident with or next following his statement of
Article XII of the CBA, to wit:chanRoblesVirtualawlibrary Regular/Tenured Employment Status.

ARTICLE XII SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date
VACATION LEAVE AND SICK LEAVE of each Member shall be as follows:chanRoblesVirtualawlibrary

SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty a. Faculty - The last day of the School Year, coincident with his attainment of
and staff who are entitled to receive shall enjoy fifteen (15) days vacation leave age sixty (60) with at least five (years) of unbroken, credited service.
with pay annually.
b. Staff - Upon reaching the age of sixty (60) with at least five (5) years of
1.1 All unused vacation leave after the second year of service shall be converted unbroken, credited service.
into cash and be paid to the entitled employee at the end of each school year to
be given not later than August 30 of each year. SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an optional
retirement prior to his compulsory retirement. His number of years of service in
SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and the University shall be the basis of computing x x x his retirement benefits
staff shall enjoy fifteen (15) days sick leave with pay annually.16 regardless of his chronological age.

On February 8, 2006, a Labor Management Committee (LMC) Meeting was held SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum
during which petitioner advised respondent to file a grievance complaint on the equivalent to 100% of the members final monthly salary for compulsory
implementation of the vacation and sick leave policy.17 In the same meeting, retirement.
petitioner announced its plan of implementing a one-retirement policy,18 which
was unacceptable to respondent. For optional retirement, the vesting schedule shall be:chanRoblesVirtualawlibrary

Ruling of the Voluntary Arbitrator x x x x19

Unable to settle their differences at the grievance level, the parties referred the On November 2, 2006, the Voluntary Arbitrator rendered a Decision 20 declaring
matter to a Voluntary Arbitrator. During the hearing, respondent submitted the one-retirement policy and the Memorandum dated August 16, 2005 contrary
affidavits to prove that there is an established practice of giving two retirement to law. The dispositive portion of the Decision reads:chanRoblesVirtualawlibrary
benefits, one from the Private Education Retirement Annuity Association (PERAA)
Plan and another from the CBA Retirement Plan. Sections 1, 2, 3 and 4 of Article WHEREFORE, the following award is hereby made:chanRoblesVirtualawlibrary
XVI of the CBA provide:chanRoblesVirtualawlibrary
1. The assailed University guidelines on the availment of vacation and sick leave
ARTICLE XVI credits and vacation leave commutation are contrary to law. The University is
SEPARATION, DISABILITY AND RETIREMENT PAY consequently ordered to reinstate the earlier scheme, practice or policy in effect
before the issuance of the said guidelines on August 16, 2005; b.
Whether x x x the [CA] committed grave and palpable error in sustaining the
2. The one retirement policy is contrary to law and is hereby revoked and Voluntary Arbitrators ruling that a university practice of granting its employees
rescinded. The University is ordered x x x to resume and proceed with the two (2) sets of Retirement Benefits had already been established as defined by
established practice of extending to qualified employees retirement benefits the law and jurisprudence especially in light of the illegality and lack of authority
under both the CBA and the PERAA Plan. of such alleged grant.

3. The other money claims are denied.21 c.


Whether x x x the [CA] committed grave and palpable error in sustaining the
Ruling of the Court of Appeals Voluntary Arbitrators ruling that it is incumbent upon Petitioner WU-P to show
proof that no Board Resolution was issued granting two (2) sets of Retirement
Aggrieved, petitioner appealed the case to the CA via a Petition for Review under Benefits.
Rule 43 of the Rules of Court.
d.
On September 25, 2007, the CA rendered a Decision finding the rulings of the
22
Whether x x x the [CA] committed grave and palpable error in revoking the 16
Voluntary Arbitrator supported by substantial evidence. It also affirmed the August 2005 Memorandum of Petitioner WU-P for being contrary to extant
nullification of the one-retirement policy and the Memorandum dated August 16, policy.26
2005 on the ground that these unilaterally amended the CBA without the consent
of respondent.23 Thus:chanRoblesVirtualawlibrary Petitioners Arguments

WHEREFORE, the instant appeal is DISMISSED for lack of merit. Petitioner argues that there is only one retirement plan as the CBA Retirement
Plan and the PERAA Plan are one and the same.27 It maintains that there is no
SO ORDERED.24 established company practice or policy of giving two retirement benefits to its
employees.28 Assuming, without admitting, that two retirement benefits were
Petitioner moved for reconsideration but the same was denied by the CA in its released,29 petitioner insists that these were done by mere oversight or mistake
February 5, 2008 Resolution.25crallawlibrary as there is no Board Resolution authorizing their release.30 And since these
benefits are unauthorized and irregular, these cannot ripen into a company
Issues practice or policy.31 As to the affidavits submitted by respondent, petitioner
claims that these are self-serving declarations,32 and thus, should not be given
Hence, this recourse by petitioner raising the following weight and credence.33crallawlibrary
issues:chanRoblesVirtualawlibrary
In addition, petitioner claims that the Memorandum dated August 16, 2005,
a. which provides for the guidelines on the implementation of vacation and sick
Whether x x x the [CA] committed grave and palpable error in sustaining the leave credits as well as vacation leave commutation, is valid because it is in full
Voluntary Arbitrators ruling that the Affidavits submitted by Respondent WU- accord with existing policy.34crallawlibrary
PFSA are substantial evidence as defined by the rules and jurisprudence that
would substantiate that Petitioner WU-P has long been in the practice of granting Respondents Arguments
its employees two (2) sets of Retirement Benefits.
Respondent belies the claims of petitioner and asserts that there are two have no reason to perjure themselves. Obviously, the only reason they executed
retirement plans as the PERAA Retirement Plan, which has been implemented for those affidavits is to bring out the truth. As we see it then, their affidavits,
more than 30 years, is different from the CBA Retirement Plan.35 Respondent corroborated by the affidavits of incumbent employees, are more than sufficient
further avers that it has always been a practice of petitioner to give two to show that the granting of two retirement benefits to retiring employees had
retirement benefits36 and that this practice was established by substantial already ripened into a consistent and deliberate practice.
evidence as found by both the Voluntary Arbitrator and the CA.37crallawlibrary
Moreover, petitioners assertion that there is only one retirement plan as the CBA
As to the Memorandum dated August 16, 2005, respondent asserts that it is Retirement Plan and the PERAA Plan are one and the same is not supported by
arbitrary and contrary to the CBA and existing practices as it added qualifications any evidence. There is nothing in Article XVI of the CBA to indicate or even
or limitations which were not agreed upon by the parties.38crallawlibrary suggest that the Plan referred to in the CBA is the PERAA Plan. Besides, any
doubt in the interpretation of the provisions of the CBA should be resolved in
Our Ruling favor of respondent. In fact, petitioners assertion is negated by the
announcement it made during the LMC Meeting on February 8, 2006 regarding its
The Petition is bereft of merit. plan of implementing a one-retirement plan. For if it were true that petitioner
was already implementing a one-retirement policy, there would have been no
The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly need for such announcement. Equally damaging is the letter-
prohibits employers from eliminating or reducing the benefits received by their memorandum45 dated May 11, 2006, entitled Suggestions on the defenses we
employees. This rule, however, applies only if the benefit is based on an express can introduce to justify the abolition of double retirement policy, prepared by the
policy, a written contract, or has ripened into a practice.40 To be considered a petitioners legal counsel. These circumstances, taken together, bolster the
practice, it must be consistently and deliberately made by the employer over a finding that the two-retirement policy is a practice. Thus, petitioner cannot,
long period of time.41crallawlibrary without the consent of respondent, eliminate the two-retirement policy and
implement a one-retirement policy as this would violate the rule on non-
An exception to the rule is when the practice is due to error in the construction diminution of benefits.
or application of a doubtful or difficult question of law.42 The error, however,
must be corrected immediately after its discovery;43 otherwise, the rule on Non- As a last ditch effort to abolish the two-retirement policy, petitioner contends that
Diminution of Benefits would still apply. such practice is illegal or unauthorized and that the benefits were erroneously
given by the previous administration. No evidence, however, was presented by
The practice of giving two retirement petitioner to substantiate its allegations.
benefits to petitioners employees is
supported by substantial evidence. Considering the foregoing disquisition, we agree with the findings of the
Voluntary Arbitrator, as affirmed by the CA, that there is substantial evidence to
In this case, respondent was able to present substantial evidence in the form of prove that there is an existing practice of giving two retirement benefits, one
affidavits to support its claim that there are two retirement plans. Based on the under the PERAA Plan and another under the CBA Retirement Plan.
affidavits, petitioner has been giving two retirement benefits as early as 1997.44
Petitioner, on the other hand, failed to present any evidence to refute the veracity The Memorandum dated August 16, 2005
of these affidavits. Petitioners contention that these affidavits are self-serving is contrary to the existing CBA.
holds no water. The retired employees of petitioner have nothing to lose or gain
in this case as they have already received their retirement benefits. Thus, they Neither do we find any reason to disturb the findings of the CA that the
Memorandum dated August 16, 2005 is contrary to the existing CBA. of exchange at the time of payment, not the rate of exchange at the time of the sales,
controls.
Sections 1 and 2 of Article XII of the CBA provide that all covered employees are
entitled to 15 days sick leave and 15 days vacation leave with pay every year and Antecedents
that after the second year of service, all unused vacation leave shall be converted
to cash and paid to the employee at the end of each school year, not later than On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired Eric S.
August 30 of each year. Delmo (Delmo) as account manager tasked to canvass and source clients and convince them
to purchase the products and services of Netlink. Delmo worked in the field most of the time.
The Memorandum dated August 16, 2005, however, states that vacation and sick He and his fellow account managers were not required to accomplish time cards to record
leave credits are not automatic as leave credits would be earned on a month-to- their personal presence in the office of Netlink.1 He was able to generate sales
month basis. This, in effect, limits the available leave credits of an employee at worth P35,000,000.00, more or less, from which he earned commissions amounting
the start of the school year. For example, for the first four months of the school to P993,558.89 and US$7,588.30. He then requested payment of his commissions, but
year or from June to September, an employee is only entitled to five days Netlink refused and only gave him partial cash advances chargeable to his commissions.
vacation leave and five days sick leave.46 Considering that the Memorandum Later on, Netlink began to nitpick and fault find, like stressing his supposed absences and
dated August 16, 2005 imposes a limitation not agreed upon by the parties nor tardiness. In order to force him to resign, Netlink issued several memoranda detailing his
supposed infractions of the companys attendance policy. Despite the memoranda, Delmo
stated in the CBA, we agree with the CA that it must be struck down.
continued to generate huge sales for Netlink.2
In closing, it may not be amiss to mention that when the provision of the CBA is
clear, leaving no doubt on the intention of the parties, the literal meaning of the On November 28, 1996, Delmo was shocked when he was refused entry into the company
premises by the security guard pursuant to a memorandum to that effect. His personal
stipulation shall govern.47 However, if there is doubt in its interpretation, it
belongings were still inside the company premises and he sought their return to him. This
should be resolved in favor of labor,48 as this is mandated by no less than the
incident prompted Delmo to file a complaint for illegal dismissal. 3
Constitution.49crallawlibrary
In its answer to Delmos complaint,Netlink countered that there were guidelines regarding
WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007
company working time and its utilization and how the employees time would be recorded.
Decision and the February 5, 2008 Resolution of the Court of Appeals in CA-G.R.
Allegedly, all personnel were required to use the bundy clock to punch in and out in the
SP No. 97053 are hereby AFFIRMED. morning, and in and out in the afternoon. Excepted from the rules were the company officers,
and the authorized personnel in the field project assignments. Netlink claimed that it would be
NETLINK COMPUTER INCORPORATED, Petitioner, losing on the business transactions closed by Delmo due to the high costs of equipment, and
vs. in fact his biggest client had not yet paid. Netlink pointed out that Delmo had becomevery lax
ERIC DELMO, Respondent. in his obligations, with the other account managers eventually having outperformed him.
Netlink asserted that warning, reprimand, and suspension memoranda were given to
DECISION employees who violated company rules and regulations, but such actions were considered as
a necessary management tool to instill discipline.4
BERSAMIN, J.:
Ruling of the Labor Arbiter
In the absence of a written agreement between the employer and the employee that sales
commissions shall be paid in a foreign currency, the latter has the right to be paid in such On September 23, 1998, the Labor Arbiter ruled against Netlink and in favor of Delmo, to wit:
foreign currency once the same has become an established practice of the former. The rate
WHEREFORE, judgment is hereby rendered declaring complainant as illegally and unjustly 3. US$7,588.30 as unpaid commission;
dismissed and respondents are ordered to reinstate complainant to his former position
without loss of seniority rights with full backwages and other benefits and respondents are 4. P15,000.00 representing the 13th month pay for 1996, 1997, and 1998;
hereby ordered to pay complainant as follows:
5. 10% attorneys fees of the total amount awarded.
P161,000.00 - Backwages, basic pay and allowances from Nov. 1996 to Sept. 1998
SO ORDERED.6
15,000.00 - 13th month pay for 1996 to 1998
The NLRC denied the motion for reconsideration, after which Netlink filed a petition for
993,558.89 - unpaid commissions
certiorariin the CA.
P1,169,558.89 - Total
Judgment of the CA

plus US$7,588.30 - unpaid commissions On May 9, 2003, the CA promulgated its assailed decision upholding the NLRCs ruling
subject to modifications,7viz:
plus 10% attorneys fees
In the present case, since the payment of the commission is made to depend on the future
The reinstatement aspect is immediately executory even pending appeal. In case and uncertain event which is the payment of the accounts by the persons who have
reinstatement is no longer feasible, complainant shall be paid separation pay of one-month transacted business with the petitioner, without payment by the former to the latter, the
pay for every year of service. All other claims are hereby dismissed. obligation to pay the commission has not yet arisen.

SO ORDERED.5 The evidence on record shows that the ALCATEL, private respondents biggest client has not
paid fully the amount it owes to the petitioner as of March 10, 1998. (Rollo, pp. 101, 397, 398)
The obligation therefore, on the part of the petitioner to pay the private respondent for his
Decision of the NLRC commission for the said unpaid account has not yet arisen. Thus it is a grave abuse of
discretion on the part of the public respondent to make petitioner liable to the private
On appeal, the National Labor Relations Commission (NLRC) modified the decision of the respondent for the payment of the said commission, when it is clear on the record, as We
Labor Arbiter by setting aside the backwages and reinstatement decreed by the Labor Arbiter have discussed above, that the obligation therefor has not yet arisen.
due to the existence of valid and just causes for the termination of Delmos employment, to
wit: WHEREFORE, premises considered, the decision of the Labor Arbiter a quo is hereby Perusal of the records, likewise, show that petitioner failed to refute by evidence that the
SET ASIDEand a new one ENTERED, ordering the respondents-appellantsto pay the private respondent is not entitled to the P993, 558.89 commission. Petitioner however
following: claimed that since the amounts out of which the commission will be taken has not yet been
paid fully, petitioner must, likewise, not be made liable for the said commission. However,
1. TWO THOUSAND PESOS (P2,000.00) as indemnity for failure to observe public respondent committed grave abuse of discretion when it disregard the evidence on
procedural due process; record which is not disputed by the private respondent that out of the total commissions of the
private respondent, petitioner has paid the petitioner in the amount of P216,799.45 in the
2. Unpaid commission in the amount of P993,558.89; form of advance payment. (Rollo, p. 12)
In view of the foregoing discussions, therefore, the advance payment made by the petitioner respondent company and as regards its contracts or agreements with its clientele, the
in favorof the private respondent in the amount of P216, 799.45 must be deducted to complainant should not be made to suffer." (Labor Arbiter Ricardo Olairez Decision,
the P993, 558.89 unpaid commission of the private respondent. The difference amounting September 23, 1998, pp. 11-12, Rollo,pp. 328-329) In this regardtherefore, We uphold the
to P776, 779.44 must likewise be deducted to the amount of P4, 066.19 which represents the well settled rule that "the findings of facts of the NLRC, particularly where the NLRC and the
amount which the petitioner had admitted as the net commission payable to private Labor Arbiter are in agreement, are deemed binding and conclusive upon the Court."
respondent. The difference thereof amounting to P772, 713.25 shall represent the unpaid (Permex, Inc. vs National Labor Relations Commission, 323 SCRA 121, 126).
commission which shall be payable to the private respondent by the petitioner upon payment
of the accounts out of which such commission shall be taken. xxxx

We, likewise, agree with the petitioner that the private respondent is not entitled to 13th WHEREFORE, premises considered, the assailed Resolutions are hereby AFFIRMED with
month pay in the years 1997 and 1998. The order of the public respondent making the MODIFICATION, ordering the petitioner to pay the private respondent the following:
petitioner liable to the private respondent for the 13th month pay of the latter in the years
1997 and 1998 is contrary to its findings that there are valid and just cause for the termination 1. TWO-THOUSAND PESOS (P2,000.00) as indemnity for failure to observe
of the private respondent from employment, although private respondent was not given his procedural due process;
right to due process. (Rollo, pp. 32-33) The rule applicable in the present case is the decision
of the Supreme Court in the case of Sebuguero vs National Labor Relations Commission
[248 SCRA 532, 547 (1995)] where it was ruled that "where the dismissal of an employee is in 2. P4,066.19 representing the unpaid commissions that have accrued in favor of the
fact for a just and valid cause and is so proven to be but he is not accorded his right to due private respondent;
process,i.e., he was not furnished the twin requirements of notice and the opportunityto be
heard, the dismissal shall be upheld but the employer must be sanctioned for non-compliance 3. P776,779.44 payable to the private respondent upon payment of the accounts out
with the requirements of or for failureto observe due process." Hence, petitioner should not be of which the said amount will be taken;
made to pay the 13th month pay to private respondent whose employment was terminated for
cause but without due process in 1996. 4. P4,584.00 representing the unpaid 13th month pay of the private respondent;

xxxx 5. US$7,588.30 as unpaid commission;

Thus, private respondent is entitled only to a 13th month pay computed pro-rata from January 6. 10% attorneys fees of the total amount awarded excluding the amount contained
1996 to November 1996 which as properly computed by the petitioner amounts to P4, in the No.3 of this Order.
584.00. (Rollo, p. 11)
SO ORDERED.
With respect to the other arguments of the petitioner, this Court is not persuaded. Petitioner
failed to refute by evidence that private respondent is not entitled to the commissions payable Issues
in US dollars. Neither is there any reason for us to agree with the petitioner that the
computation of these commissions must be based on the value of [the] Peso in relation to a
Hence, this appeal.
Dollar at the time of sale. As properly observed by the Labor Arbiter a quo, viz: "Likewise the
devaluation of the peso cannot be used as a shield against the complainant because that
should have been the lookout of the respondent company in providing for such a clause that Netlink submits that the CA committed a palpable and reversible error of law in not holding
in case of devaluation, the price agreed upon should be at the exchange rate when the that the applicable exchange rate for computing the US dollar commissions of Delmo should
contract of sale had been consummated. For the lack of foresight and inefficiency of the be the rates prevailing at the time when the sales were actually generated, not the rates
prevailing at the time of the payment; and in awarding attorneys fees.
In his comment,8 Delmo counters that because he had earned in US dollars it was only fair There was no written contract between Netlink and Delmo stipulating that the latters
that his commissions be paid in US dollars; that Netlink should not be allowed to flip-flop after commissions would be paid in US dollars.1wphi1 The absence of the contractual stipulation
it had paid commissions in US dollar on the sales generated by its sales agents on US-dollar notwithstanding, Netlink was still liable to pay Delmo in US dollars because the practice of
denominated transactions; and that attorneys fees were warranted because of the paying its sales agents in US dollars for their US dollar-denominatedsales had become a
unanimous finding that there was violation of procedural due process. company policy. This was impliedly admitted by Netlink when it did not refute the allegation
that the commissions earned by Delmo and its other sales agents had been paid in US
In its reply,9 Netlink maintains that the commissions of Delmo should be based on sales dollars. Instead of denying the allegation, Netlink only sought a declaration that the US dollar
generated, actually paid by and collected from the customers; that commissions must be paid commissions be paid using the exchange rate at the time of sale. The principle of non-
on the basis of the conversion of the US dollar to the Philippine peso at the time of sale; and diminution of benefits, which has been incorporated in Article 100 13 of the Labor Code,
that no cogent and justifiable reason existed for the award of attorneys fees. forbade Netlink from unilaterally reducing, diminishing, discontinuing or eliminating the
practice. Verily, the phrase "supplements, or other employee benefits" in Article 100 is
construed to mean the compensation and privileges received by an employee aside from
To be considered for resolution are,therefore, the following, namely: (1) whether or not the
regular salaries or wages.
payment of the commissions should be in US dollars; and (2) whether or not the award
ofattorneys fees was warranted.
With regard to the length of timethe company practice should have been observed to
constitute a voluntary employer practice that cannot be unilaterally reduced, diminished,
Ruling of the Court
discontinued or eliminated by the employer, we find that jurisprudence has not laid down any
rule requiring a specific mmimum number of years. In Davao Fruits Corporation v. Associated
The appeal lacks merit. Labor Unions,14 the company practice lasted for six years. In Davao Integrated Port
Stevedoring Services v. Abarquez,15 the employer, for three years and nine months, approved
As a general rule, all obligations shall be paid in Philippine currency. However, the contracting the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its
parties may stipulate that foreign currencies may be used for settling obligations. This is intermittent workers. In Tiangco v. Leogardo, Jr.,16 the employer carried on the practice of
pursuant to Republic Act No. 8183,10 which provides as follows: giving a fixed monthly emergency allowance from November 1976 to February 1980, or three
years and four months. In Sevilla Trading Company v. Semana, 17 the employer kept the
Section 1. All monetary obligations shall be settled in the Philippine currency which is legal practice of including non-basic benefits such as paid leaves for unused sick leave and
tender in the Philippines. However, the parties may agree that the obligation ortransaction vacation in the computation of their 13th-month pay for at least two years.
shall be settled in any other currency at the time of payment.
With the payment of US dollar commissions having ripened into a company practice, there is
We remarked in C.F. Sharp & Co. v. Northwest Airlines, Inc. 11 that the repeal of Republic Act no way that the commissions due to Delmo were to be paid in US dollars or their equivalent in
No. 529 had the effect of removing the prohibition on the stipulation of currency other than Philippine currency determined at the time of the sales. To rule otherwise would be to cause
Philippine currency, such that obligations or transactions could already be paid in the an unjust diminution of the commissions due and owing to Delmo.
currency agreed upon by the parties. However, both Republic Act No. 529 and Republic Act
No. 8183 did not stipulate the applicable rate of exchange for the conversion of foreign Finally, we affirm the following justification of the CA in granting attorney's fees to Delmo, viz:
currency-incurred obligations to their peso equivalent. It follows, therefore, that the The award of attorney's fees must, likewise, be upheld in line of (sic) the decision of the
jurisprudence established under Republic Act No. 529 with regard to the rate of conversion Supreme Court in the case of Consolidated Rural Bank (Cagayan Valley), Inc. vs. National
remains applicable. In C.F. Sharp, the Court cited Asia World Recruitment,Inc. v. NLRC, 12 to Labor Relations Commission, 301 SCRA 223, 235, where it was held that "in actions for
the effect that the real value of the foreign exchange-incurred obligation up to the date of recovery of wages or where an employee was forced to litigate and thus incur expenses to
itspayment should be preserved. protect her rights and interests, even if not so claimed, an award of attorney's fees equivalent
to ten percent (10%) of the total award is legally and morally justifiable. There is no doubt that
in the present case, the private respondent has incurred expenses for the protection and
enforcement of his right to his commissions.18

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
promulgated on May 9, 2003; and ORDERS the petitioner to pay the costs of suit.