Documente Academic
Documente Profesional
Documente Cultură
vs.
WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION, Respondent.
DECISION
DEL CASTILLO, J.:
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a legitimate labor organization concerning the terms and
conditions 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 suspensions in the implementation of the provisions of the CBA, therefore, cannot be allowed without the consent of
both parties.
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails the September 25, 2007 Decision4 and the February 5, 2008
Resolution5 of the Court of Appeals (CA) in CA-G.R. SP No. 97053.
Factual Antecedents
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized and existing under the laws of the
Philippines.6 Respondent Wesleyan University-Philippines Faculty and Staff Association, on the other hand, is a duly registered labor
organization7 acting as the sole and exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.8
In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until May 31, 2008.10
On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (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:
1. VACATION AND SICK LEAVE CREDITS
Vacation and sick leave credits are not automatic. They have to be 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 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 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 employee, therefore, who takes VL or SL beyond his
leave credits as of date will have to file leave without pay for leaves beyond his credit.
2. VACATION LEAVE COMMUTATION
Only vacation leave is commuted or monetized to cash. Vacation leave commutation is effected after the second year of continuous
service of an employee. Hence, an employee who started working June 1, 2005 will get his commutation on May 31, 2007 or thereabout.12
On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara) wrote a letter13 to Atty. Maglaya informing him that respondent is not
amenable to the unilateral changes made by petitioner.14 De Lara questioned the guidelines for being violative of existing practices and the
CBA,15 specifically Sections 1 and 2, Article XII of the CBA, to wit:
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and staff who are entitled to receive shall enjoy fifteen (15) days
vacation leave with pay annually.
1.1 All unused vacation leave after the second year of service shall be converted 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 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff shall enjoy fifteen (15) days sick leave with pay annually.16
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which petitioner advised respondent to file a grievance
complaint on the implementation of the vacation and sick leave policy.17 In the same meeting, petitioner announced its plan of implementing a one-
retirement policy,18 which was unacceptable to respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the grievance level, the parties referred the matter to a Voluntary Arbitrator. During the hearing, respondent
submitted affidavits to prove that there is an established practice of giving two retirement 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 XVI of the CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be automatic for all full-time, regular staff and tenured faculty of the
University, except the University President. Membership in the Plan shall commence on the first day of the month coincident with or next following
his statement of Regular/Tenured Employment Status.
SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date of each Member shall be as follows:
a. Faculty – The last day of the School Year, coincident with his attainment of age sixty (60) with at least five (years) of unbroken, credited
service.
b. Staff – Upon reaching the age of sixty (60) with at least five (5) years of unbroken, credited service.
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 the University shall be the basis of computing x x x his retirement benefits regardless of his chronological age.
SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum equivalent to 100% of the member’s final monthly salary for
compulsory retirement.
For optional retirement, the vesting schedule shall be:
x x x x19
On November 2, 2006, the Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum dated August 16,
20
respondent, eliminate the two-retirement policy and implement a one-retirement policy as this would violate the rule on non-diminution of benefits.
As a last ditch effort to abolish the two-retirement policy, petitioner contends that such practice is illegal or unauthorized and that the benefits were
erroneously given by the previous administration. No evidence, however, was presented by petitioner to substantiate its allegations.
Considering the foregoing disquisition, we agree with the findings of the Voluntary Arbitrator, as affirmed by the CA, that there is substantial
evidence to prove that there is an existing practice of giving two retirement benefits, one under the PERAA Plan and another under the CBA
Retirement Plan.
The Memorandum dated August 16,
2005 is contrary to the existing CBA.
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.
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 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 August 30 of each year.
The Memorandum dated August 16, 2005, however, states that vacation and sick leave credits are not automatic as leave credits would be earned
on a month-to-month basis. This, in effect, limits the available leave credits of an employee at the start of the school year. For example, for the first
four months of the school year or from June to September, an employee is only entitled to five days vacation leave and five days sick
leave.46 Considering that the Memorandum dated August 16, 2005 imposes a limitation not agreed upon by the parties nor stated in the CBA, we
agree with the CA that it must be struck down.
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 stipulation shall govem.47
However, if there is doubt in its interpretation, it should be resolved in favor of labor,48 as this is mandated by no less than the Constitution.49
WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007 Decision and the February 5, 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 97053 are hereby AFFIRMED.
SO ORDERED.
benefits under Article VIII, Section 116 of the CBA because he was not confined in a hospital.17
E. Failure to comply with the time-off with pay provision
Article II, Section 8 of the CBA provides:
Section 8. Time-Off with Pay. The COMPANY shall grant to the UNION’s duly authorized representative/s or to any employee who are on duty, if
summoned by the UNION to testify, if 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 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 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 contended that under the said provision, petitioner was obliged to grant a paid time-off to respondent’s duly authorized representative
or to any employee who was on duty, when summoned by respondent to testify or when the employee’s presence was necessary in the grievance
hearings, meetings, or investigations.19
Petitioner admitted that it did not honor the claim for wages of the union officers who attended the grievance meetings because these meetings
were initiated by respondent itself. It argued that since the union officers
were performing their functions as such, and not as employees of the company, the latter should not be liable. Petitioner further asserted that it is
not liable to pay the wages of the union officers when the meetings are held beyond company time (3:00 p.m.). It claimed that time-off with pay is
allowed only if the venue of the meeting is outside company premises and the meeting involves the implementation and interpretation of the CBA.20
In reply, respondent averred that the above quoted provision does not make a qualification that the meetings should be held during office hours
(7:00 a.m. to 3:00 p.m.); hence, for as long as the presence of the employee is needed, time spent during the grievance meeting should be paid.21
F. Visitors’ free access to company premises Respondent charged petitioner with violation of Article II, Section 7 of the CBA which provides:
Section 7. Free Access to Company Premises. Local Union and Federation officers (subject to company’s security measure) shall be allowed
during working hours to enter the COMPANY premises for the following reasons:
a. To investigate grievances that have arisen;
b. To interview Union Officers, Stewards and members during reasonable hours; and
c. To attend to any meeting called by the Management or the UNION.22
G. Failure to comply with reporting time-off provision
Respondent maintained that a brownout is covered by Article XII, Section 3 of the CBA which states:
Section 3. Reporting Time-Off. The employees who have reported for work but are unable to continue working because of emergencies such as
typhoons, flood, earthquake, 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 illness of an immediate member of the family of the employee living with him/her
and no one in the house can bring the sick family member to the hospital, shall be paid as follows:
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
Respondent averred that petitioner paid the employees’ salaries for one hour only of the four-hour brownout that occurred on July 25, 2005 and
refused to pay for the remaining three hours. In defense, petitioner simply insisted that brownouts are not included in the above list of
emergencies.24
Respondent rejoined that, under the principle of ejusdem generis, brownouts or power 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 provision, it cannot be denied
that brownouts fall within the same kind or class of the enumerated emergencies. Respondent maintained that the intention of the provision was to
compensate the employees for occurrences which are beyond their control, and power outage is one of such occurrences. It insisted that the list of
emergencies is not an exhaustive list but merely gives an idea as to what constitutes an actual emergency that is beyond the control of the
employee.25
H. Dismissal of Diosdado Madayag
Diosdado Madayag was employed as welder by petitioner. He was served a Notice of Termination dated March 14, 2005 which read:
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.
This is based on the medical certificate submitted by your attending physician, Lucy Anne E. Mamba, M.D., Jose R. Reyes Memorial Medical
Center dated March 7, 2005 with the following diagnosis:
‘Diabetes Mellitus Type 2’
Please be guided accordingly.26
Respondent contended that Madayag’s 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 medical treatment.
Petitioner also failed to prove that Madayag’s continued employment was prejudicial to his health or that of his colleagues.27
Petitioner, on the other hand, alleged that Madayag was validly terminated under Art. 28428 of the Labor Code and that his leg was amputated by
reason of diabetes, which disease is not work-related. Petitioner claimed that it was willing to pay Madayag 13 days for every year of service but
respondent was asking for additional benefits.29
I. Denial of paternity leave benefit to two employees
Article XV, Section 2 of the CBA provides:
Section 2. Paternity Leave. As per law[,] [t]he Company shall, as much as possible, pay paternity leave within 2 weeks from submission of
documents.30
Petitioner admitted that it denied this benefit to the claimants for failure to observe the requirement provided in the Implementing Rules and
Regulations of Republic Act No. 8187 (Paternity Leave Act of 1995), that is, to notify the employer of the pregnancy of their wives and the expected
date of delivery.31
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 maintained that the notification requirement runs counter to the spirit of the law. Respondent 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
J. Discrimination and harassment
According to respondent, petitioner was contemptuous over union officers for protecting the rights of union members. In an affidavit executed by
Chito Guadaña, union secretary, he 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 averred that Navarro had an overbearing attitude during work and
grievance meetings. In November 2004, Navarro removed Guadaña, a foreman, from his position and installed another foreman from another
section. The action was allegedly brought about by earlier grievances against Navarro’s abuse. Petitioner confirmed his transfer to another section
in violation of Article VI, Section 6 of the CBA,33 which states in part:
Section 6. Transfer of Employment. – No permanent positional transfer outside can be effected by the COMPANY without discussing the grounds
before the Grievance Committee. All transfer shall be with advance notice of two (2) weeks. No transfer shall interfere with the employee’s exercise
of the right to self-organization.34
Respondent also alleged that Ariel Marigondon, union president, was also penalized for working for his fellow employees. One time, Marigondon
inquired from management about matters concerning tax discrepancies because it appeared that non-taxable items were included as part of
taxable income. Thereafter, Marigondon was transferred from one area of operation to another until he was allegedly forced to accept menial jobs
of putting control tags on steel pipes, a kind of job which did not require his 16 years of expertise in examining steel pipes.35
Edgardo Masangcay, respondent’s Second Vice President, executed an affidavit wherein he cited three instances when his salary was withheld by
petitioner. The first incident happened on May 28, 2005 when petitioner refused to give his salary to his wife despite presentation of a proof of
identification (ID) and letter of authorization. On June 18, 2005, petitioner also 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 asthma attack. The third
instance happened on June 25, 2005 when his salary was short of ₱450.00; this amount was however released the following week.36
Petitioner explained that the transfer of the employee from one department to another was the result of downsizing the Warehouse Department,
which is a valid exercise of management prerogative. In Guadaña’s case, Navarro denied that he was being harsh but claimed that he merely
wanted to stress some points. Petitioner explained that Guadaña was transferred when the section where he was assigned was phased out due to
the installation of new machines. Petitioner pointed out that the other workers assigned in said section were also transferred.37
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 discrimination for being respondent’s President, had no basis. Marigondon pointed out that after the job order
was completed, he was reassigned to his original shift and group.38
Petitioner also submitted the affidavits of Elizabeth Llaneta Aguilar, disbursement clerk and hiring staff, and Romeo T. Sy, Assistant Personnel
Manager. Aguilar explained that she did not mean to harass Masangcay, but she merely wanted to make sure that he would receive his salary.
Affiant Sy admitted that he refused to release Masangcay’s salary to a woman who presented herself as his (Masangcay’s) wife since nobody could
attest to it. He claimed that such is not an act of harassment but a precautionary measure to protect Masangcay’s interest.39
K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
Respondent posited that any form of wage increase granted through the CBA should not be treated as compliance with the wage increase given
through the wage boards. Respondent claimed that, for a number of years, petitioner has complied with Article XII, Section 2 of the CBA which
provides:
Section 2. All salary increase granted by the COMPANY shall not be credited to any future contractual or legislated wage increases. Both increases
shall be implemented separate and distinct from the increases stated in this Agreement. It should be understood by both parties that contractual
salary increase are separate and distinct from legislated wage increases, thus the increase brought by the latter shall be enjoyed also by all
covered employees.40
Respondent maintained that for every wage order that was issued in Region 3, petitioner never hesitated to comply and grant a similar increase.
Specifically, respondent cited petitioner’s compliance with Wage Order No. RBIII-10 and grant of the mandated ₱15.00 cost of living allowance
(COLA) to all its employees. Petitioner, however, stopped implementing it to non-minimum wage earners on July 24, 2005. It contended that this
violates Article 100 of the Labor Code which prohibits the diminution of benefits already enjoyed by the workers and that such grant of benefits had
already ripened into a company practice.41
Petitioner explained that the COLA provided under Wage Order No. RBIII-10 applies to minimum wage earners only and that, by mistake, it
implemented the same across the board 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
The NLRC’s Ruling
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; while the issue on visitor’s free access to company premises was deemed settled during the
mandatory conference. The dispositive portion of the NLRC Decision dated March 30, 2007 reads:
WHEREFORE, Supreme Steel Pipe Corporation (the Company) is hereby ordered to:
1) implement general wage increase to Juan Niño, Eddie Dalagon and Rommel Talavera pursuant to the CBA in June 2003, 2004 and
2005;
2) regularize workers Dindo Buella and 60 other workers and to respect CBA provision on contracting-out labor;
3) recondition the company vehicle pursuant to the CBA;
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 of ₱2,113.00;
5) pay wages of union members/officers who attended grievance meetings as follows:
1) D. Serenilla - ₱115.24375
2) D. Miralpes - ₱115.80625
3) E. Mallari - ₱108.7625
4) C. Cruz - ₱114.65313
5) J. Patalbo - ₱161.0625
8) J. Patalbo - ₱161.0625
9) E. Mallari - ₱108.7625
Furthermore, the term "basic salary" of an employee for the purpose of computing the 13th-month pay was interpreted to include all remuneration
or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of
the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday
pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the
13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the
employees.
Based on the foregoing, it is clear that there could have no erroneous 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 P.D. No. 851 on December 16, 1975, clear-cut administrative
guidelines have been issued to insure uniformity in the interpretation, application, and enforcement of the provisions of P.D. No. 851 and
its implementing regulations.
As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based on the employees’ gross annual earnings which included the
basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty
(30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or
reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. 18 The rule against
diminution of 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 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 is done soon after discovery
of the error.19
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 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 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.
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. 851, distressed employers shall qualify for exemption from the requirement of 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 entitled to claim
such exemption.
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.
SO ORDERED.
G.R. No. 152456 April 28, 2004
SEVILLA TRADING COMPANY, petitioner,
vs.
A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS UNION–SUPER, respondents.
DECISION
PUNO, J.:
On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining the Decision2 of Accredited
Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its subsequent Resolution3 dated 06 March 2002 denying petitioner’s
Motion for Reconsideration.
The facts of the case are as follows:
For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic corporation engaged in
trading business, organized and existing under Philippine laws, added to the base figure, in its computation of the 13th-month pay of its
employees, the amount of other benefits received by the employees which are beyond the basic pay. These benefits included:
(a) Overtime premium for regular overtime, legal and special holidays;
(b) Legal holiday pay, premium pay for special holidays;
(c) Night premium;
(d) Bereavement leave pay;
(e) Union leave pay;
(f) Maternity leave pay;
(g) Paternity leave pay;
(h) Company vacation and sick leave pay; and
(i) Cash conversion of unused company vacation and sick leave.
Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation and payment of the 13th-month pay
and other benefits. When it changed its person in charge of the payroll in the process of computerizing its payroll, and after audit was conducted, it
allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its
employees. It cited the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which
stated that:
"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include
cost-of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances
and monetary 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 December 16, 1975.
Petitioner then effected a change in the computation of the thirteenth month pay, as follows:
net basic pay
13th-month pay =
12 months
where:
net basic pay = gross pay – (non-basic pay or other benefits)
Now excluded from the base figure used in the computation of the thirteenth month pay are the following:
a) Overtime premium for regular overtime, legal and special holidays;
b) Legal holiday pay, premium pay for special holidays;
c) Night premium;
d) Bereavement leave pay;
e) Union leave pay;
f) Maternity leave pay;
g) Paternity leave pay;
h) Company vacation and sick leave pay; and
i) Cash conversion of unused vacation/sick leave.
Hence, the new computation reduced the employees’ thirteenth month pay. The daily piece-rate workers represented by private respondent Sevilla
Trading Workers Union – SUPER (Union, for short), a duly organized and registered union, through the Grievance Machinery in their Collective
Bargaining Agreement, contested the new computation and reduction of their thirteenth month pay. The parties failed to resolve the issue.
On March 24, 2000, the parties submitted the issue of "whether or not the exclusion of leaves and other related benefits in the computation of 13th-
month pay is valid" to respondent Accredited Voluntary Arbitrator Tomas E. Semana (A.V.A. Semana, for short) of the National Conciliation and
Mediation Board, for consideration and resolution.
The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees’ benefits as provided for in Art. 100 of the
Labor Code, as amended. They claimed that paid leaves, like sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday
pay and other leaves with pay in the CBA should be included in the base figure in the computation of their 13th-month pay.
On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic salary, excluding benefits such as leaves with
pay, as per P.D. No. 851, as amended. It maintained that, in adjusting its computation of the 13th-month pay, it merely rectified the mistake its
personnel committed in the previous years.
A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows:
WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that:
1. The company is hereby ordered to include sick leave and vacation leave, paternity leave, union leave, bereavement leave and
other leave with pay in the CBA, premium for work done on rest days and special holidays, and pay for regular holidays in the
computation of the 13th-month pay to all covered and entitled employees;
2. The company is hereby ordered to pay corresponding backwages to all covered and entitled employees arising from the
exclusion of said benefits in the computation of 13th-month pay for the year 1999.
Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the Court of Appeals, a "Manifestation and Motion
for Time to File Petition for Certiorari" on January 19, 2001. A month later, on February 19, 2001, it filed its Petition for Certiorari under Rule 65 of
the 1997 Rules of Civil Procedure for the nullification of the Decision of the Arbitrator. In addition to its earlier allegations, petitioner claimed that
assuming the old computation will be upheld, the reversal to the old computation can only be made to the extent of including non-basic benefits
actually included by petitioner in the base figure in the computation of their 13th-month pay in the prior years. It must exclude those non-basic
benefits which, in the first place, were not included in the original computation. The appellate court denied due course to, and dismissed the
petition.
Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:
1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13th-MONTH PAY ON THE
BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS WITHOUT LEGAL BASIS.
2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION WHICH WILL CAUSE
GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.4
First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the arbitrator is a petition for review under Rule
43 of the 1997 Rules of Civil Procedure, not a petition for certiorari under Rule 65. Section 1 of Rule 43 states:
RULE 43
Appeals from the Court of Tax Appeals and
Quasi-Judicial Agencies to the Court of Appeals
SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards,
judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among
these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of
the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission,
Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. [Emphasis supplied.]
It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an appeal, where the latter remedy is
available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal within the fifteen-day reglementary period from its notice of the
adverse decision of A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal
under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a "Manifestation and
Motion for Time to File Petition for Certiorari," and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.
A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for review on certiorari under Rule 45
(Rule 43, in the case at bar) of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of
an ordinary appeal, including that under Rule 45 (Rule 43, in the case at bar), especially if such loss or lapse was occasioned by one’s own neglect
or error in the choice of remedies.5
Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading filed its petition for certiorari on February 19,
2001. More particularly, the decision of A.V.A. Semana became final and executory upon the lapse of the fifteen-day reglementary period to appeal,
or on January 5, 2001. Hence, the Court of Appeals is correct in holding that it no longer had appellate jurisdiction to alter, or much less, nullify the
decision of A.V.A. Semana.
Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a proper action, we still find no grave
abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. Semana. "Grave abuse of discretion" has been interpreted to
mean "such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law."6 We find nothing of that sort in the case at
bar.
On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and jurisprudence. A.V.A. Semana is correct in
holding that petitioner’s stance of mistake or error in the computation of the thirteenth month pay is unmeritorious. Petitioner’s submission of
financial statements every year requires the services of a certified public accountant to audit its finances. It is quite impossible to suggest that they
have discovered the alleged error in the payroll only in 1999. This implies that in previous years it does not know its cost of labor and operations.
This is merely basic cost accounting. Also, petitioner failed to adduce any other relevant evidence to support its contention. Aside from its bare
claim of mistake or error in the computation of the thirteenth month pay, petitioner merely appended to its petition a copy of the 1997-2002
Collective Bargaining Agreement and an alleged "corrected" computation of the thirteenth month pay. There was no explanation whatsoever why its
inclusion of non-basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake, despite the
clarity of statute and jurisprudence at that time.
The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,7 which petitioner Sevilla Trading invokes. In
that case, this Court decided on the proper computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner Corporation,
pursuant to Wage Order No. 6 (effective 30 October 1984), increased the COLA of its monthly-paid employees by multiplying the ₱3.00 daily
COLA by 22 days, which is the number of working days in the company. The Union disagreed with the computation, claiming that the daily COLA
rate of ₱3.00 should be multiplied by 30 days, which has been the practice of the company for several years. We upheld the contention of the
petitioner corporation. To answer the Union’s contention of company practice, we ruled that:
Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos.
1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be
unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be
shown to have been consistent and deliberate . . . The test of long practice has been enunciated thus:
. . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the
law requiring payment of holiday pay." (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, 94 SCRA 270 [1979])
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only
when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to
its monthly equivalent was laid down.
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law . . .
In the above quoted case, the grant by the employer of benefits through an erroneous application of the law due to absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally discontinued. Such is not the case now. In the case at bar, the Court of
Appeals is correct when it pointed out that as early as 1981, this Court has held in San Miguel Corporation vs. Inciong8 that:
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his
13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the
computation of the mandatory bonus.
Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic
salary:
a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174;
b) Profit sharing payments;
c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the
employee at the time of the promulgation of the Decree on December 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary
Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-
month pay.
The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments
indicate the intention to strip basic salary of other payments which are properly considered as "fringe" benefits. Likewise, the catch-all
exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary" shows also
the intention to strip basic salary of any and all additions which may be in the form of allowances or "fringe" benefits.
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more empathic in declaring that
earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay.
While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary
to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling
Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations
paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad
inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules
to include all remunerations and earnings within the definition of basic salary.
The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within its meaning
payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays
and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-
month pay. If they were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in the computation
of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.
In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or application of the law. When petitioner
Sevilla Trading still included over the years non-basic benefits of its employees, such as maternity leave pay, cash equivalent of unused vacation
and sick leave, among others in the computation of the 13th-month pay, this may only be construed as a voluntary act on its part. Putting the blame
on the petitioner’s payroll personnel is inexcusable.
In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:9
The "Supplementary Rules and Regulations Implementing P.D. No. 851" which put to rest all doubts in the computation of the thirteenth
month pay, was issued by the Secretary of Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and
its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until
1981. Petitioner continued its practice in December 1981, after promulgation of the aforequoted San Miguel decision on February 24,
1981, when petitioner purportedly "discovered" its mistake.
From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees’ thirteenth month pay, without
the payments for sick, vacation and maternity leave, premium for work done on rest days and special holidays, and pay for regular holidays. The
considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in
itself to negate any claim of mistake.
A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits
enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by
the employer, by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor Code of the Philippines
which prohibit the diminution or elimination by the employer of the employees’ existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA 267 (1983)]
With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be
unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. In the
above quoted case of Davao Fruits Corporation vs. Associated Labor Unions,10 the company practice lasted for six (6) years. In another
case, Davao Integrated Port Stevedoring Services vs. Abarquez,11 the employer, for three (3) years and nine (9) months, approved the
commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo,
Jr.,12 the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years
and four (4) months. In all these cases, this Court held that the grant of these benefits has ripened into company practice or policy which cannot be
peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we rule likewise constitutes
voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code:
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 promulgation of this Code.
IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 and its
Resolution dated 06 March 2002 are hereby AFFIRMED.
SO ORDERED.
REYNALDO TIANGCO and VICTORIA TIANGCO, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., as Deputy Minister of the Ministry of Labor and Employment, AURELIO ILUSTRISIMO, ABRAHAM
GILBUENA, ROGELIO CARABIO, JESUS GILBUENA, PEPITO GILBUENA, DOMINADOR LASERNA, CLEMENTE VILLARUEL, RUSTOM
OFQUERIA, ERNESTO DIONG, GRACIANO DURANA, AGUEDO MARABE, SOLOMON CLARIN, ALCAFONE ESGANA, JUAN CASTRO,
ANTONIO GILBUENA, GREGORIO LAYLAY, DANIEL CABRERA, ROBERTO BAYON-ON, ELIAS ESCARAN, ERNESTO BATOY, EDDIE
BATOBALANOS, TOMAS CAPALAR, JUAN GIHAPON, JOSE OFQUERIA, FRUTO GIHAPON, PEPITO BATOY, and SERAFIO
YADAWON, respondents.
Florencio Pineda for petitioners.
The Solicitor General for respondents.
2. Aguedo 1,160.00
Morabe.................
3. Gregorio 1,150.00
Laylay..................
4. Fruto 1,170.00
Gihapon.....................
5. Solomon 1,150.00
Clarin ...................
6. Pepito 1,170.00
Batoy........................
7. Jose 1,170.00
Ofqueria.......................
8. Daniel 1,150.00
Cabrera.....................
9. Juan 1,160.00
Castro..........................
2. Pepito 1,970.00
Gilbuena.................
3. Rogelio 1,910.00
Carabio.................
4. Abraham 1,910.00
Gilbuena.............
5. Rustom 1,930.00
Ofqueria................
6. Ernesto 1,930.00
Diong....................
7. Jesus 1,920.00
Gilbuena...................
8. Emerenciano 1,910.00
Villaruel........
9. Dominador 1,940.00
Lacerna............
GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS SANTIAGO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES UNION and EDA CONCEPCION, respondents.
Castillo, Laman, Tan & Pantaleon for petitioners.
Edwin D. Dellaban for private respondents.
MELENCIO-HERRERA, J.:
A special civil action for certiorari with a prayer for a Temporary Restraining Order to enjoin respondents from enforcing the Decision of 10 March 1986 of the National Labor Relations Commission (NLRC), in
NCR Case No. 1-168-85 entitled "FFW-Globe Mackay Employees Union, et al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive portion of which reads:
WHEREFORE, premises considered, the appealed Decision is as it is hereby SET ASIDE and another one issued:
1. Declaring respondents-appellees (petitioners herein) guilty of illegal deductions of cost-of-living allowance;
2. Ordering respondents-appellees to pay complainants-appellants their back allowances reckoned from the time of illegal
deduction; and
3. Ordering respondents-appellees from further illegally deducting the allowances of complainants-appellants.
SO ORDERED.
Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while Commissioner Cleto T. Villaltuya dissented and voted to
affirm in toto the Labor Arbiter's Decision.
On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from enforcing the assailed Decision. On 2 September 1987,
we gave due course to the petition and required the submittal of memoranda, by the parties, which has been complied with.
The facts follow:
Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance of non-agricultural workers in the private sector.
Petitioner corporation complied with the said Wage Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in
computing said COLA, Petitioner Corporation multiplied the P 3.00 daily COLA by 22 days, which is the number of working days in the company.
Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA rate of P3.00 should be multiplied by 30 days
to arrive at the monthly COLA rate. The union alleged furthermore that prior to the effectivity of Wage Order No. 6, Petitioner Corporation had been
computing and paying the monthly COLA on the basis of thirty (30) days per month and that this constituted an employer practice, which should not
be unilaterally withdrawn.
After several grievance proceedings proved futile, the Union filed a complaint against Petitioner Corporation, its President, F. White, and Vice-
President, J. Santiago, for illegal deduction, underpayment, unpaid allowances, and violation of Wage Order No. 6. Petitioners White and Santiago
were sought to be held personally liable for the money claims thus demanded.
Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that since the individual petitioners acted in their
corporate capacity they should not have been impleaded; and that the monthly COLA should be computed on the basis of twenty two (22) days,
since the evidence showed that there are only 22 paid days in a month for monthly-paid employees in the company. His reasoning, inter alia, was
as follows:
To compel the respondent company to use 30 days in a month to compute the allowance and retain 22 days for vacation and
sick leave, overtime pay and other benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it must be used
for the computation of all benefits, not just the allowance. But this is not fair to complainants, not to mention that it will
contravene the provision of the parties' CBA.
On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner Corporation was guilty of illegal deductions, upon
the following considerations: (1) that the P3.00 daily COLA under Wage Order No. 6 should be paid and computed on the basis of thirty (30) days
instead of twenty-two (22) days since workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays and legal holidays "even if
unworked;" (2) that the full allowance enjoyed by Petitioner Corporation's monthly-paid employees before the CBA executed between the parties in
1982 constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3) that petitioners White and Santiago were properly
impleaded as respondents in the case below.
Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC.
We are constrained to reverse the reversal.
Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:
Section 5. Allowance for Unworked Days.
All covered employees shall be entitled to their daily living allowance during the days that they are paid their basic wage, even if
unworked. (Emphasis supplied)
The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is mandated
only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees are not paid
their basic wage, the payment of COLA is not mandated. As held in University of Pangasinan Faculty Union vs. University of Pangasinan, L-63122,
February 20, 1984, 127 SCRA 691):
... it is evident that the intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of
'No Pay, No ECOLA.
Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are deemed paid their basic wages for all those days
and they should be entitled to their COLA on those days "even if unworked," as the NLRC had opined. Peculiar to this case, however, is the
circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner Corporation and Respondent Union, the monthly
basic pay is computed on the basis of five (5) days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement read:
Art. XV(a)—Eight net working hours shall constitute the regular work day for five days.
Art. XV(b)—Forty net hours of work, 5 working days, shall constitute the regular work week.
Art. XVI, Sec. 1(b)—All overtime worked in excess of eight net hours daily or in excess of 5 days weekly shall be computed on
hourly basis at the rate of time and one half.
The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the monthly
wage is divided by the number of actual work days in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime
work, he is paid his basic salary rate plus one-half thereof. For example, after examining the specimen payroll of employee Jesus L. Santos, the
Labor Arbiter found:
the employee Jesus L. Santos, who worked on Saturday and Sunday was paid base pay plus 50% premium. This is over and
above his monthly basic pay as supported by the fact that base pay was paid. If the 6th and 7th days of the week are deemed
paid even if unworked and included in the monthly salary, Santos should not have been paid his base pay for Saturday and
Sunday but should have received only the 50% overtime premium.
Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that in computing the vacation and sick leaves of
the employees, Petitioner Corporation consistently used twenty-two (22) days.
Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work week, it will have to be held that the COLA
should be computed on the basis of twenty two (22) days, which is the period during which the monthly-paid employees of Petitioner Corporation
receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be the subject of future re-negotiation.
2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26
March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally
withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been
consistent and deliberate. Adequate proof is wanting in this respect. The test of long practice has been enunciated thus:
... Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the
law requiring payment of holiday pay.' (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, L-50568, November 7, 1979,
94 SCRA 270). (Emphasis ours)
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the
Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly
equivalent was laid down, thus:
Section 3. Application of Section 2--
xxx xxx xxx
(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634, 1678 and 1713:
xxx xxx xxx
(3) For workers who do not work and are not considered paid on Saturdays and Sundays:
P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P 253.70 (Emphasis ours)
As the Labor Arbiter had analyzed said formula:
Under the aforecited formula/guideline, issued for the first time, when applied to a company like respondent which observes a 5-
day work week (or where 2 days in a week, not necessarily Saturday and Sunday, are not considered paid), the monthly
equivalent of a daily allowance is arrived at by multiplying the daily allowance by 262 divided by 12. This formula results in the
equivalent of 21.8 days in a month.
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law. Payment may be said to have
been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law." (Article 2155, 1 in relation to Article
2154 2 of the Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of benefit
under Article 100 of the Labor Code3 may be said to have resulted by virtue of the correction.
With the conclusions thus reached, there is no further need to discuss the liability of the officers of Petitioner Corporation.
WHEREFORE, certiorari is granted, the Decision of the National Labor Relations Commission, dated 10 March 1986, is SET ASIDE, and the
Decision of the Labor Arbiter, dated 9 May 1985, is hereby REINSTATED. The Temporary Restraining Order heretofore issued is hereby made
permanent.
SO ORDERED.
TSPIC CORPORATION, petitioner,
vs.
TSPIC EMPLOYEES UNION (FFW), representing MARIA FE FLORES, FE CAPISTRANO, AMY DURIAS,1 CLAIRE EVELYN VELEZ, JANICE
OLAGUIR, JERICO ALIPIT, GLEN BATULA, SER JOHN HERNANDEZ, RACHEL NOVILLAS, NIMFA ANILAO, ROSE SUBARDIAGA,
VALERIE CARBON, OLIVIA EDROSO, MARICRIS DONAIRE, ANALYN AZARCON, ROSALIE RAMIREZ, JULIETA ROSETE, JANICE NEBRE,
NIA ANDRADE, CATHERINE YABA, DIOMEDISA ERNI,2 MARIO SALMORIN, LOIDA COMULLO,3 MARIE ANN DELOS SANTOS,4 JUANITA
YANA, and SUZETTE DULAY, respondents.
DECISION
VELASCO, JR., J.:
The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should always govern dealings between labor
and management. Seemingly conflicting provisions should be harmonized to arrive at an interpretation that is within the parameters of the law,
compassionate to labor, yet, fair to management.
In this Petition for Review on Certiorari under Rule 45, petitioner TSPIC Corporation (TSPIC) seeks to annul and set aside the October 22, 2003
Decision5 and April 23, 2004 Resolution6 of the Court of Appeals (CA) in CA-G.R. SP No. 68616, which affirmed the September 13, 2001
Decision7 of Accredited Voluntary Arbitrator Josephus B. Jimenez in National Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57.
TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve the communication, automotive, data
processing, and aerospace industries. Respondent TSPIC Employees Union (FFW) (Union), on the other hand, is the registered bargaining agent
of the rank-and-file employees of TSPIC. The respondents, Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir,
Jerico Alipit, Glen Batula, Ser John Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire,
Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo,
Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, are all members of the Union.
In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA)8 for the years 2000 to 2004. The CBA included a provision on
yearly salary increases starting January 2000 until January 2002. Section 1, Article X of the CBA provides, as follows:
Section 1. Salary/ Wage Increases.––Employees covered by this Agreement shall be granted salary/wage increases as follows:
a) Effective January 1, 2000, all employees on regular status and within the bargaining unit on or before said date shall be
granted a salary increase equivalent to ten percent (10%) of their basic monthly salary as of December 31, 1999.
b) Effective January 1, 2001, all employees on regular status and within the bargaining unit on or before said date shall be
granted a salary increase equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000.
c) Effective January 1, 2002, all employees on regular status and within the bargaining unit on or before said date shall be
granted a salary increase equivalent to eleven percent (11%) of their basic monthly salary as of December 31, 2001.
The wage salary increase of the first year of this Agreement shall be over and above the wage/salary increase, including the wage
distortion adjustment, granted by the COMPANY on November 1, 1999 as per Wage Order No. NCR-07.
The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under
future Wage Orders, that may be issued after Wage Order No. NCR-07, and shall be considered as correction of any wage distortion that
may have been brought about by the said future Wage Orders. Thus the wage/salary increases in 2001 and 2002 shall be deemed as
compliance to future wage orders after Wage Order No. NCR-07.
Consequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10% increase in their salary. Accordingly, the
following nine (9) respondents (first group) who were already regular employees received the said increase in their salary: Maria Fe Flores, Fe
Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen Batula, Ser John Hernandez, and Rachel Novillas.9
The CBA also provided that employees who acquire regular employment status within the year but after the effectivity of a particular salary increase
shall receive a proportionate part of the increase upon attainment of their regular status. Sec. 2 of the CBA provides:
SECTION 2. Regularization Increase.––A covered daily paid employee who acquires regular status within the year subsequent to the
effectivity of a particular salary/wage increase mentioned in Section 1 above shall be granted a salary/wage increase in proportionate
basis as follows:
Regularization Period Equivalent Increase
- 1st Quarter 100%
- 2nd Quarter 75%
- 3 Quarter
rd 50%
- 4 Quarter
th 25%
Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on May 1, 2000, i.e., during the second
quarter and subsequent to the January 1, 2000 wage increase under this Agreement, will be entitled to a wage increase equivalent to
seventy-five percent (75%) of ten percent (10%) of his basic pay. In the same manner, an employee who acquires regular status on
December 1, 2000 will be entitled to a salary increase equivalent to twenty-five percent (25%) of ten percent (10%) of his last basic pay.
On the other hand, any monthly-paid employee who acquires regular status within the term of the Agreement shall be granted
regularization increase equivalent to 10% of his regular basic salary.
Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National Capital Region, issued Wage Order No. NCR-0810 (WO
No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250 effective November 1, 2000. Conformably, the wages of 17 probationary
employees, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta
Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and
Suzette Dulay (second group), were increased to PhP 250.00 effective November 1, 2000.
On various dates during the last quarter of 2000, the above named 17 employees attained regular employment11 and received 25% of 10% of their
salaries as granted under the provision on regularization increase under Article X, Sec. 2 of the CBA.
In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees (first group), who were senior
to the above-listed recently regularized employees, received less wages.
On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPIC’s Human Resources Department notified 24
employees,12 namely: Maria Fe Flores, Janice Olaguir, Rachel Novillas, Fe Capistrano, Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez,
Ser John Hernandez, Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta
Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, and Marie Ann Delos Santos, that due to an
error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries in a staggered basis, starting
February 2001. TSPIC explained that the correction of the erroneous computation was based on the crediting provision of Sec. 1, Art. X of the
CBA.
The Union, on the other hand, asserted that there was no error and the deduction of the alleged overpayment from employees constituted
diminution of pay. The issue was brought to the grievance machinery, but TSPIC and the Union failed to reach an agreement.
Consequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or not the acts of the management in
making deductions from the salaries of the affected employees constituted diminution of pay.
On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made by TSPIC violated Art. 10013 of the
Labor Code. The fallo reads:
WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment is hereby rendered in favor of the
Union and the named individual employees and against the company, thereby ordering the [TSPIC] to pay as follows:
1) to the sixteen (16) newly regularized employees named above, the amount of P12,642.24 a month or a total of P113,780.16
for nine (9) months or P7,111.26 for each of them as well as an additional P12,642.24 (for all), or P790.14 (for each), for every
month after 30 September 2001, until full payment, with legal interests for every month of delay;
2) to the nine (9) who were hired earlier than the sixteen (16); also named above, their respective amount of entitlements,
according to the Union’s correct computation, ranging from P110.22 per month (or P991.98 for nine months) to P450.58 a month
(or P4,055.22 for nine months), as well as corresponding monthly entitlements after 30 September 2001, plus legal interests
until full payment,
3) to Suzette Dulay, the amount of P608.14 a month (or P5,473.26), as well as corresponding monthly entitlements after 30
September 2001, plus legal interest until full payment,
4) Attorney’s fees equal to 10% of all the above monetary awards.
The claim for exemplary damages is denied for want of factual basis.
The parties are hereby directed to comply with their joint voluntary commitment to abide by this Award and thus, submit to this Office
jointly, a written proof of voluntary compliance with this DECISION within ten (10) days after the finality hereof.
SO ORDERED.14
TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.
Aggrieved, TSPIC filed before the CA a petition for review under Rule 43 docketed as CA-G.R. SP No. 68616. The appellate court, through its
October 22, 2003 Decision, dismissed the petition and affirmed in toto the decision of the voluntary arbitrator. The CA declared TSPIC’s
computation allowing PhP 287 as daily wages to the newly regularized employees to be correct, noting that the computation conformed to WO No.
8 and the provisions of the CBA. According to the CA, TSPIC failed to convince the appellate court that the deduction was a result of a system error
in the automated payroll system. The CA explained that when WO No. 8 took effect on November 1, 2000, the concerned employees were still
probationary employees who were receiving the minimum wage of PhP 223.50. The CA said that effective November 1, 2000, said employees
should have received the minimum wage of PhP 250. The CA held that when respondents became regular employees on November 29, 2000, they
should be allowed the salary increase granted them under the CBA at the rate of 25% of 10% of their basic salary for the year 2000; thereafter, the
12% increase for the year 2001 and the 10% increase for the year 2002 should also be made applicable to them.15
TSPIC filed a Motion for Reconsideration which was denied by the CA in its April 23, 2004 Resolution.
TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPIC’s decision to deduct the alleged overpayment from
the salaries of the affected members of the Union constitute diminution of benefits in violation of the Labor Code?
TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the CA, was flawed, inasmuch as it completely
disregarded the "crediting provision" contained in the last paragraph of Sec. 1, Art. X of the CBA.
We find TSPIC’s contention meritorious.
A Collective Bargaining Agreement is the law between the parties
It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its
provisions.16 We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:
A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a
CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the
parties and compliance therewith is mandated by the express policy of the law. 17
Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of
their stipulations shall control.18 However, sometimes, as in this case, though the provisions of the CBA seem clear and unambiguous, the parties
sometimes arrive at conflicting interpretations. Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase granted under the
CBA. According to TSPIC, it is specifically provided in the CBA that "the salary/wage increase for the year 2001 shall be deemed inclusive of the
mandated minimum wage increases under future wage orders that may be issued after Wage Order No. 7." The Union, on the other hand, insists
that the "crediting" provision of the CBA finds no application in the present case, since at the time WO No. 8 was issued, the probationary
employees (second group) were not yet covered by the CBA, particularly by its crediting provision.
As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued.19 Littera necat spiritus vivificat. An instrument must
be interpreted according to the intention of the parties. It is the duty of the courts to place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and the purpose which it is intended to serve.20 Absurd and illogical interpretations should also
be avoided. Considering that the parties have unequivocally agreed to substitute the benefits granted under the CBA with those granted under
wage orders, the agreement must prevail and be given full effect.
Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement that, effective January 1, 2001, all employees on regular status
and within the bargaining unit on or before said date shall be granted a salary increase equivalent to twelve (12%) of their basic monthly salary as
of December 31, 2000. The 12% salary increase is granted to all employees who (1) are regular employees and (2) are within the bargaining unit.
Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in salary granted under WO No. 7 and
the correction of the wage distortion for November 1999.
The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the years 2001 and 2002 shall be deemed
inclusive of the mandated minimum wage increases under future wage orders, that may be issued after WO No. 7, and shall be considered as
correction of the wage distortions that may be brought about by the said future wage orders. Thus, the wage/salary increases in 2001 and 2002
shall be deemed as compliance to future wage orders after WO No. 7.
Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It, however, clashes with the last paragraph which
specifically states that the salary increases for the years 2001 and 2002 shall be deemed inclusive of wage increases subsequent to those granted
under WO No. 7. It is a familiar rule in interpretation of contracts that conflicting provisions should be harmonized to give effect to all.21 Likewise,
when general and specific provisions are inconsistent, the specific provision shall be paramount to and govern the general provision.22 Thus, it may
be reasonably concluded that TSPIC granted the salary increases under the condition that any wage order that may be subsequently issued shall
be credited against the previously granted increase. The intention of the parties is clear: As long as an employee is qualified to receive the 12%
increase in salary, the employee shall be granted the increase; and as long as an employee is granted the 12% increase, the amount shall be
credited against any wage order issued after WO No. 7.
Respondents should not be allowed to receive benefits from the CBA while avoiding the counterpart crediting provision. They have received their
regularization increases under Art. X, Sec. 2 of the CBA and the yearly increase for the year 2001. They should not then be allowed to avoid the
crediting provision which is an accompanying condition.
Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the minimum wage, was issued after WO No. 7.
Thus, respondents rightfully received the 12% salary increase for the year 2001 granted in the CBA; and consequently, TSPIC rightfully credited
that 12% increase against the increase granted by WO No. 8.
Proper formula for computing the salaries for the year 2001
Thus, the proper computation of the salaries of individual respondents is as follows:
(1) With regard to the first group of respondents who attained regular employment status before the effectivity of WO No. 8, the computation is as
follows:
For respondents Jerico Alipit and Glen Batula:23
Wage rate before WO No. 8………………………… PhP 234.67
Increase due to WO No. 8
setting the minimum wage at PhP 250.……………... 15.33
Total Salary upon effectivity of WO No. 8…………. PhP 250.00
Increase for 2001 (12% of 2000 salary)…….....……. PhP 30.00
Less the wage increase under WO No. 8……………. 15.33
Total difference between the wage increase
for 2001 and the increase granted under WO No. 8.. PhP 14.67
Wage rate by December 2000………………………. PhP 250.00
Plus total difference between the wage increase for 2001 and the
increase granted under WO No. 8…….. 14.67
Total (Wage rate range beginning January 1, 2001) PhP 264.67
For respondents Ser John Hernandez and Rachel Novillas:24
Wage rate range before WO No. 8………………….. PhP 234.68
Increase due to WO No. 8
setting the minimum wage at PhP 250……………… 15.32
Total Salary upon effectivity of WO No. 8.………… PhP 250.00
Increase for 2001 (12% of 2000 salary)…………….. PhP 30.00
Less the wage increase under WO No. 8…………… 15.32
Total difference between the wage increase
for 2001 and the increase granted under WO No. 8… PhP 14.68
Wage rate by December 2000………………………. PhP 250.00
Plus total difference between the wage increase for 2001 and the
increase granted under WO No. 8…… 14.68
Total (Wage rate range beginning January 1, 2001) PhP 264.68
For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:25
Wage rate range before WO No. 8………….. PhP 240.26
Increase due to WO No. 8
setting the minimum wage at PhP 250……… 9.74
Total Salary upon effectivity of WO No. 8…. PhP 250.00
Increase for 2001 (12% of 2000 salary)…………… PhP 30.00
Less the wage increase under WO No. 8…………… 9.74
Total difference between the wage increase for 2001
and the increase granted under WO No. 8………… PhP 20.26
Wage rate by December 2000……………………… PhP 250.00
Plus total difference between the wage increase for 2001 and the
increase granted under WO No. 8…… 20.26
Total (Wage rate range beginning January 1, 2001) PhP 270.26
For respondents Ma. Fe Flores and Fe Capistrano:26
Wage rate range before WO No. 8…………… PhP 245.85
Increase due to WO No. 8
setting the minimum wage at PhP 250……….. 4.15
Total Salary upon effectivity of WO No. 8…... PhP 250.00
Increase for 2001 (12% of 2000 salary)…………… PhP 30.00
Less the wage increase under WO No. 8………......... 4.15
Total difference between the wage increase for 2001
and the increase granted under WO No. 8………… PhP 25.85
Wage rate by December 2000……………………… PhP 250.00
Plus total difference between the wage increase for 2001 and the
increase granted under WO No. 8…… 25.85
Total (Wage rate range beginning January 1, 2001) PhP 275.85
(2) With regard to the second group of employees, who attained regular employment status after the implementation of WO No. 8, namely: Nimfa
Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia
Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, the proper
computation of the salaries for the year 2001, in accordance with the CBA, is as follows:
Compute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage before WO No. 8 from the minimum wage
per the wage order to arrive at the wage increase, thus:
Minimum Wage per Wage Order………….. PhP 250.00
Wage rate before Wage Order…………….. 223.50
Wage Increase………………………………. PhP 26.50
Upon attainment of regular employment status, the employees’ salaries were increased by 25% of 10% of their basic salaries, as provided for in
Sec. 2, Art. X of the CBA, thus resulting in a further increase of PhP 6.25, for a total of PhP 256.25, computed as follows:
Wage rate after WO No. 8………………………………. PhP 250.00
Regularization increase (25 % of 10% of basic salary) 6.25
Total (Salary for the end of year 2000)…………………. PhP 256.25
To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employees’ salaries as of December 31, 2000; then
subtract from that amount, the amount increased in salaries as granted under WO No. 8 in accordance with the crediting provision of the CBA, to
arrive at the increase in salaries for the year 2001 of the recently regularized employees. Add the result to their salaries as of December 31, 2000
to get the proper salary beginning January 1, 2001, thus:
Increase for 2001 (12% of 2000 salary)………………... PhP 30.75
Less the wage increase under WO No. 8………………. 26.50
Difference between the wage increase
for 2001 and the increase granted under WO No. 8…… PhP 4.25
Wage rate after regularization increase………………... PhP 256.25
Plus total difference between the wage increase and
the increase granted under WO No. 8…………………. 4.25
Total (Wage rate beginning January 1, 2001)…………. PhP 260.50
With these computations, the crediting provision of the CBA is put in effect, and the wage distortion between the first and second group of
employees is cured. The first group of employees who attained regular employment status before the implementation of WO No. 8 is entitled to
receive, starting January 1, 2001, a daily wage rate within the range of PhP 264.67 to PhP 275.85, depending on their wage rate before the
implementation of WO No. 8. The second group that attained regular employment status after the implementation of WO No. 8 is entitled to receive
a daily wage rate of PhP 260.50 starting January 1, 2001.
Diminution of benefits
TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered deductions from their salaries does not
constitute diminution of benefits.
We agree with TSPIC.
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees. There is diminution of benefits
when it is shown that: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period; (2) the practice is consistent
and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or
discontinuance is done unilaterally by the employer.27
As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error was immediately rectified by TSPIC upon
its discovery. We have ruled before that an erroneously granted benefit may be withdrawn without violating the prohibition against non-diminution of
benefits. We ruled in Globe-Mackay Cable and Radio Corp. v. NLRC:
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law. Payment may be said
to have been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law". (Article 2155, in
relation to Article 2154 of the Civil Code). Since it is a past error that is being corrected, no vested right may be said to have arisen nor
any diminution of benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the correction.28
Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary increase for the year 2001 against
the salary increase granted under WO No. 8, all in accordance with the CBA.
Hence, any amount given to the employees in excess of what they were entitled to, as computed above, may be legally deducted by TSPIC from
the employees’ salaries. It was also compassionate and fair that TSPIC deducted the overpayment in installments over a period of 12 months
starting from the date of the initial deduction to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to individual respondents
any amount deducted from their salaries which was in excess of what TSPIC is legally allowed to deduct from the salaries based on the
computations discussed in this Decision.
As a last word, it should be reiterated that though it is the state’s responsibility to afford protection to labor, this policy should not be used as an
instrument to oppress management and capital.29 In resolving disputes between labor and capital, fairness and justice should always prevail. We
ruled in Norkis Union v. Norkis Trading that in the resolution of labor cases, we have always been guided by the State policy enshrined in the
Constitution: social justice and protection of the working class. Social justice does not, however, mandate that every dispute should be
automatically decided in favor of labor. In any case, justice is to be granted to the deserving and dispensed in the light of the established facts and
the applicable law and doctrine.30
WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National Conciliation and Mediation Board Case
No. JBJ-AVA-2001-07-57 and the October 22, 2003 CA Decision in CA-G.R. SP No. 68616 are hereby AFFIRMED with MODIFICATION. TSPIC is
hereby ORDERED to pay respondents their salary increases in accordance with this Decision, as follows:
Name of Employee Daily Wage Rate No. of Working No. of Months in Total Salary for
Days in a Month a Year 2001
Nimfa Anilao 260.5 26 12 81,276.00
Rose Subardiaga 260.5 26 12 81,276.00
Valerie Carbon 260.5 26 12 81,276.00
Olivia Edroso 260.5 26 12 81,276.00
Maricris Donaire 260.5 26 12 81,276.00
Analyn Azarcon 260.5 26 12 81,276.00
Rosalie Ramirez 260.5 26 12 81,276.00
Julieta Rosete 260.5 26 12 81,276.00
Janice Nebre 260.5 26 12 81,276.00
Nia Andrade 260.5 26 12 81,276.00
Catherine Yaba 260.5 26 12 81,276.00
Diomedisa Erni 260.5 26 12 81,276.00
Mario Salmorin 260.5 26 12 81,276.00
Loida Camullo 260.5 26 12 81,276.00
Marie Ann Delos Santos 260.5 26 12 81,276.00
Juanita Yana 260.5 26 12 81,276.00
Suzette Dulay 260.5 26 12 81,276.00
Jerico Alipit 264.67 26 12 82,577.04
Glen Batula 264.67 26 12 82,577.04
Ser John Hernandez 264.68 26 12 82,580.16
Rachel Novillas 264.68 26 12 82,580.16
Amy Durias 270.26 26 12 84,321.12
Claire Evelyn Velez 270.26 26 12 84,321.12
Janice Olaguir 270.26 26 12 84,321.12
Maria Fe Flores 275.85 26 12 86,065.20
Fe Capistrano 275.85 26 12 86,065.20
The award for attorney’s fees of ten percent (10%) of the total award is MAINTAINED.
SO ORDERED.
PUNO, J.:
This case stemmed from a complaint filed by private respondent MARGOT BATISTER for separation pay with prayer for moral and exemplary
damages against her employer, petitioner HINATUAN MINING CORPORATION.
The records show that private respondent was employed by petitioner on July 20, 1981. She rose from the ranks to become the company's chief
chemist. Her duty was to examine and analyze the nickel content of ores in petitioner's mine site in Hinatuan, Talavera, Surigao del Norte, before
they are shipped to Japan.
In November and December, 1991, petitioner sent private respondent on a training grant to Japan to enhance her skills. Her training cost
P175,000.00. After the training, private respondent returned to the Philippines and resumed working for petitioner.
On January 25, 1993, a year after her training, private respondent tendered her resignation effective February 15, 1993. As reason therefor, she
declared that "the need to be with my family always compel me to take this action."1
Petitioner reminded private respondent that she had to stay with the company for three (3) more years in exchange for the expenses it incurred for
her training in Japan. Private respondent was unmoved. She proceeded with her resignation and asked for separation pay. Petitioner denied her
request and instead offered to give her financial assistance in the amount of P20,000.00.
Private respondent thus filed a complaint with the labor arbiter claiming separation pay and damages against petitioner. She alleged that pursuant
to the existing collective bargaining agreement (CBA) in the company, she could have availed of the optional retirement plan considering her eleven
and a half (11 1/2) years of continuous service, but she chose to resign since she would get a higher compensation in the form of separation pay.
She cited the cases of her former co-employees, Marcial P. Lor and Rizalino Alcantara, who were both given separation pay by petitioner despite
their voluntary resignation.
Petitioner opposed private respondent's claim for separation benefits on the grounds that: (1) the provisions regarding retirement or separation
benefits under the CBA do not apply to managerial officers and non-union members like private respondent; (2) private respondent is not entitled to
separation pay for she voluntarily resigned from service; (3) she did not comply with the 30-day advance notice when she tendered her resignation
on January 25, 1993, and; (4) petitioner spent P175,000.00 for her training in Japan and as per the company's policy, private respondent, as
beneficiary of a training grant, should work with the company for at least four (4) years.
In a Decision, dated August 10, 1993, Labor Arbiter Marissa Macaraig-Guiller dismissed the complaint and ruled that private respondent, as
resigning employee, is not entitled to severance benefits. She held that there was no company policy to this effect.2
Private respondent appealed to the National Labor Relations Commission and invoked a 1990 NLRC decision in the case of Rizalino Alcantara
v. Hinatuan Mining Corporation.3 In said case, Alcantara occupied the position of property officer when he voluntarily resigned from petitioner
company on July 30, 1988. He was thus a managerial employee and a non-union member (like private respondent) when his resignation took
effect. Alcantara demanded that he be paid the same severance benefits as given to former Administrative Manager Colonel Acuba and former
Resident Mine Manager Engineer Rogelio Bayutas, both of whom also voluntarily resigned from the company. When his request was denied,
Alcantara filed a complaint with the labor arbiter who ruled in his favor. Alcantara was awarded severance pay after finding that there was a
company practice to this effect. The NLRC affirmed this decision on appeal.
In line with its ruling in Alcantara, public respondent NLRC reversed the labor arbiter's decision and adjudged petitioner liable to private respondent
for the payment of: (1) separation pay (of P122,748.00) equivalent to one month salary per year of service; (2) attorney's fees equivalent to 10% of
the aforesaid monetary award or P12,274.00; and (3) moral and exemplary damages in the amount of P50,000.00 and P25,000.00, respectively.4
Petitioner's motion for reconsideration was denied. Hence this petition.
We affirm the judgment of public respondent NLRC, with modification.
It is well to note that there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. Separation pay may be
awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices, (b) redundancy, (c) retrenchment, (d)
closing or cessation of business operations,5 (e) disease of an employee and his continued employment is prejudicial to himself or his co-
employees,6 or (f) when an employee is illegally dismissed but reinstatement is no longer feasible.7 In fact, the rule is that an employee who
voluntarily resigns from employment is not entitled in the separation pay,8 except when it is sanctioned by established employer practice of policy.9
In the case at bar, it has been shown beyond doubt that there is an established employer practice of awarding separation pay to resigning
employees. Private respondent is similarly situated as Alcantara who was also a managerial employee of petitioner company and a non-union
member when he voluntarily resigned from the service. Alcantara was awarded separation pay by the Labor Arbiter (which decision was affirmed
by the NLRC) after finding that the previous resigning officers of petitioner company (namely, Administrative Officer Colonel Acuba, Asst. Mine
Accountant Mr. Garrido, and Resident Mine Manager Engr. Rogelio Bayutas) were given separation pay. As correctly ruled by the NLRC, to hold
that private respondent is not entitled to separation pay would unduly discriminate against her.
Petitioner insists that private respondent's case is different for the other resigning managerial officers cited by private respondent did not undergo
training overseas immediately prior to their resignation.
We cannot subscribe to petitioner's contention. The records confirm that Resident Mine Manager Engr. Bayutas was also provided a training grant
in Japan but he resigned less than two (2) years after the completion of his training. Nonetheless, he was granted separation pay by petitioner
company. Moreover, petitioner itself admitted that unlike its other trainees, private respondent did not sign any contract binding herself to stay with
petitioner for four (4) years after undergoing the training. 10 Neither was it a company policy considering that, as discussed earlier, Engr. Bayutas,
likewise a beneficiary of a training grant, was allowed to resign two (2) years after his training. Thus, we see no valid reason why private
respondent's separation pay should be withheld from her.
However, as to the actual amount of separation pay, we find that the NLRC erred in computing the same at the rate of one (1) month pay for every
year of service. Private respondent does not dispute that the separation pay granted to previously resigned employees Marcial Lor and Rosario
Alcantara amounted only to one-half (1/2) month pay per year of service. Hence, following the same precedent, the computation of private
respondent's separation pay should be reduced to one-half (1/2) month pay for every year of service.
We also hold that the award of damages to private respondent is supported by evidence. Petitioner, without just and valid cause, unduly withheld
from private respondent her separation pay although it has previously granted the same to its resigning employees similarly situated as private
respondent.
IN VIEW WHEREOF, the impugned Decision of public respondent National Labor Relations Commission is AFFIRMED, with the MODIFICATION
that private respondent's separation pay should be computed at the rate of one-half (1/2) month pay for every year of service. The records of this
case are remanded to NLRC for recomputation of private public respondent separation pay. No Cost.
SO ORDERED.