PHIL. JOURNALIST, INC.

VS JOURNAL
MICHAEL ALFANTE
G.R. No. 192601, June 3, 2013

EMPLOYEES

UNION,

FOR

FACTS:
In the case of Judith Pulido:
Was hired as proofreader on January 10, 1991 with a salary of Php 15,
493.66 plus Php 155 longetivity pay and other benefits granted by law
and the CBA
As the president of the Union, she sent President Gloria MacapagalArroyo two letters regarding the mismanagement of the PIJ Executive;
The letter was endorsed to Ombudsman Simeon V. Marcelo which
started the harassments from the respondents.
Received a letter from Fundador Soriano on may 30, 2003 regarding
her attendance record; submitted a reply on June 2, 2003
Received a memorandum of reprimand on June 6,2003
Received memorandum from Mr. Soriano for not wearing her ID; she
immediately relied on the next day July 5
Received memo regarding her tardiness on August 4,2003
August 5: Received memorandum asking her to explain why he should
not be accused of fraud; she replied on August 7
August 7, 2003, between 3:00-4:00pm, she was handed her
termination paper by Mr. Ernesto San Agustin
In the case of Michael Alfante:
Started to work with respondents as Computer Technician at
Management Information System under Neri Torrecampo
Regularized on July 15,2001 with monthly salary of Php 9,070 plus
other monetary benefits.
Sometime in 2001, Rico Pagkalinawan replaced Torrecampo which was
objected by Alfante
On October 22, 2002, Alfante received a memorandum regarding his
excessive tardiness
On June 10, 2003, received a memorandum from Executive Vice
President Arnold Banares requiring him to explain his side on the
evaluation of his performance
One week after submission, he was handed his notice of dismissal on
the ground of poor performance; was dismissed effectively on July
28,2003
Both Pulido and Alfante averred that they were dismissed without just cause
and non-adjustment of longetivity pay and burial aid.

LA: Judith Puliod had been illegally dismissed and is entitled to

reinstatement and backwages amounting to Php 294, 379.54. The charge of
illegal dismissal by Alfante is dismissed for lack of merit
Alfante, joined by the Journal Employees Union, filed a partial
appeal in NLRC.
NLRC: Dismissed the partial appeal for lack of merit.
CA: The petition is PARTLY GRANTED. The Resolutions are MODIFIED insofar
as the funeral or bereavement aid is concerned, is GRANTED, but only after
submission of conclusive proofs that the deceased is a parent, either father
or mother, of the employees concerned, as well as the death certificate to
establish the fact of death of the deceased legal dependent.
JEU and Alfante appealed to the court to challenge the CAs disposition
regarding the legality of (a) Alfantes dismissal, (b) non-compliance with
Minimum Wage Order No. 9 and (c) the non-payment of the rest day.
SC: Denied due to failure to sufficiently show that CA committed any
reversible error.
Petitioner appealed seeking to review CAs disposition in granting the funeral
and bereavement aid stipulated in CBA.
ISSUE: Whether or not petitioners denial of respondents claims for funeral
and bereavement aid granted under Section 4, Article XIII of their CBA
constituted diminution of benefits in violation of Article 100 of the Labor
Code
HELD:
The Court affirms the decision of the CA. The petition for review lacks
merit.
A conflict has arisen regarding the interpretation of the term legal
department in connection with he grant of funeral and bereavement aid to a
regular employee under Section 4, Article XIII of the CBA, which stipulates:
SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to
grant a funeral/bereavement aid in the following instances:
a. Death of a regular employee in line of duty P50,000
b. Death of a regular employee not in line of duty P40,000
c. Death of legal dependent of a regular employee
P15,000.
(Emphasis supplied)
From the statutory definitions of legal dependent, civil status of the
employee as either married or single is not the controlling consideration in
order that a person may qualify as the employees legal dependent. What is
rather decidedly controlling is the fact that the spouse, child, or parent is
actually dependent for support upon the employee. Considering that Section

4, Article XIII of the CBA has not included the differentiation of primary and
secondary dependents; petitioner had no basis to deny the claim for funeral
and bereavement aid of Alfante for the death of his parent whose death and
fact of legal dependency on him could be substantially proved.
Pursuant to Article 100 of the Labor Code, petitioner as the employer
could not reduce, diminish, discontinue or eliminate any benefit and
supplement being enjoyed by or granted to its employees. This prohibition
against the diminution of benefits is founded on the constitutional mandate
to protect the rights of workers and to promote their welfare and to afford
labor full protection. The application of the prohibition against the diminution
of benefits presupposes that a company practice, policy or tradition
favorable to the employees has been clearly established; and that the
payments made by the employer pursuant to the practice, policy, or tradition
have ripened into benefits enjoyed by them. To be considered as a practice,
policy or tradition, however, the giving of the benefits should have been
done over a long period of time, and must be shown to have been consistent
and deliberate.
The voluntariness of the grant of the benefit became manifest from
petitioners admission that, despite the memorandum it issued in 2003 in
order to correct the interpretation of the term legal dependent, it still
approved in 2003 the claims for funeral and bereavement aid of two
employees, namely: (a) Cecille Bulacan, for the death of her father; and (b)
Charito Cartel, for the death of her mother, based on its supposedly mistaken
interpretation. It is further worthy to note that petitioner granted claims for
funeral and bereavement aid as early as 1999, then issued a memorandum
in 2000 to correct its erroneous interpretation of legal dependent under
Section 4, Article XIII of the CBA. With that, the denial of Alfante's
qualified claim for such benefit pursuant to Section 4, Article XIII of
the CBA violated the law prohibiting the diminution of benefits.
SUMMARY:
Michael Alfante was illegally dismissed due to his opposition with the
newly appointed supervisor of the Management Information System
Department. He claims for funeral and bereavement aid from his employer
and was deprived of it by his employer in violation of Article 100 of the Labor
Code.
OCTAVIO vs. PLDT
Petitioner: Carlos L. Octavio
Respondent: Philippine Long Distance Telephone Company
Docket No.: G.R. No. 175492
Date of Promulgation: February 27, 2013
Ponente: Del Castillo, J.
FACTS:

Petition for Review on Certiorari.

May 28, 1999
o PLDT and Gabay ng Unyon sa Telekominaksyon ng mga
Superbisor (GUTS) entered into a CBA covering the period
January 1, 1999 to December 31, 2001 (CBA of 1999-2001).
o Article VI, Section I thereof provides:
Section 1. The COMPANY agrees to grant the following across-the
board salary increase during the three years covered by this
Agreement to all employees covered by the bargaining unit as of
the given dates:
1. Effective January 1, 1999 10% of basic wage
or P2,000.00 whichever is higher
2. Effective January 1, 2000 11% of basic wage
or P2,250.00 whichever is higher
3. Effective January 1, 2001 12% of basic wage
or P2,500.00 whichever is higher
October 1, 2000
o PLDT hired Octavio as Sales System Analyst I on a probationary
status.
o He became a member of GUTS.
January 1, 2001
o Octavio was regularized and was receiving a monthly basic
salary of P10,000.00.
February 1, 2002
o Octavio was promoted to the position of Sales System Analyst 2
and his salary was increased to P13,730.00.
May 31, 2002
o PLDT and GUTS entered into another CBA covering the period
January 1, 2002 to December 31, 2004 (CBA of 2002-2004) which
provided for the following salary increases:
1. 8% of basic wage or P2,000.00 whichever is higher for the
first year (2002)
2. 10% of basic wage or P2,700.00 whichever is higher for the
second year (2003)
3. 10% of basic wage or P2,400.00 whichever is higher for the
third year (2004)
However, Octavio claimed that he was not given the salary increases
of P2,500.00 effective January 1, 2001 and P2,000.00 effective January
1, 2002.
He, then, wrote the President of GUTS, Adolfo Fajardo (Fajardo).
Acting thereon and on similar grievances from other GUTS members,
Fajardo wrote the PLDT Human Resource Head to inform management
of the GUTS members claim for entitlement to the across-the-board
salary increases.

October 7, 2002
o The Grievance Committee convened on consisting of
representatives from PLDT and GUTS.
Labor Arbiters Level
o Octavio claimed that he was entitled to the salary increases per
the CBAs agreed upon. However, PLDT refuses to grant him such
increases and such results to his diminution of benefits. He also
averred that PLDT committed an act of unfair labor practice for
granting the claim for salary increase of 18 supervisory
employees who were regularized on January 1, 2002 and
onwards, it discriminated against him by refusing to grant him
the same salary increase. He prayed for an additional award of
damages and attorneys fees.
o PLDT countered that the issues advanced by Octavio had already
been resolved by the Union-Management Grievance Committee.
Moreover, they stated that their act do not constitute an act of
unfair labor practice as would result in any discrimination or
encourage or discourage membership in a labor organization. In
fact, they considered the same as the most practicable and
reasonable solution for both management and union. PLDT also
claimed that the NLRC has no jurisdiction to hear and decide
Octavios claims.
o August 30, 2004 Decision
Labor Arbiter dismissed the Complaint of Octavio and
upheld the Committee Resolution.
NLRCs Level
o September 30, 2005
NLRC affirmed the Labor Arbiters Decision.
NLRCs findings states that the salary of Octavio has been
adjusted accordingly.
NLRC also ruled that it has no jurisdiction to decide the
issues presented by Octavio, as the same involved the
interpretation and implementation of the CBA.
o November 21, 2005
o Octavios Motion for Reconsideration was likewise
dismissed.
Court of Appeals Level
o Octavio filed a Petition for Certiorari which the CA found to be
without merit.
o August 31, 2006
CA declared the Committee Resolution to be binding on
Octavio, he being a member of GUTS, and because he
failed to question its validity and enforceability.
o November 15, 2006

CA denied his Motion for Reconsideration.

ISSUE:
Whether or not the decision of the Grievance Committee is binding in
this case and that the LA, NLRC and CA made an error in its judgment.
HELD:
YES. The Committees decision is binding.
Under Article 260 of the Labor Code, grievances arising from the
interpretation or implementation of the parties CBA should be resolved in
accordance with the grievance procedure embodied therein. It also provides
that all unsettled grievances shall be automatically referred for voluntary
arbitration as prescribed in the CBA.
Indisputably, the present controversy involves the determination of an
employees salary increases as provided in the CBAs. When Octavios claim
for salary increases was referred to the Union-Management Grievance
Committee, the clear intention of the parties was to resolve their differences
on the proper interpretation and implementation of the pertinent provisions
of the CBAs. And in accordance with the procedure prescribed therein, the
said committee made up of representatives of both the union and the
management convened. Unfortunately, it failed to reach an agreement.
Octavios recourse pursuant to the CBA was to elevate his grievance to the
Board of Arbitrators for final decision. Instead, nine months later, Octavio
filed a Complaint before the NLRC.
It is settled that "when parties have validly agreed on a procedure for
resolving grievances and to submit a dispute to voluntary arbitration then
that procedure should be strictly observed." Moreover, the Court held time
and again that "before a party is allowed to seek the intervention of the
court, it is a precondition that he should have availed of all the means of
administrative processes afforded him. Hence, if a remedy within the
administrative machinery can still be resorted to by giving the administrative
officer concerned every opportunity to decide on a matter that comes within
his jurisdiction, then such remedy should be exhausted first before the
courts judicial power can be sought. The premature invocation of the courts
judicial intervention is fatal to ones cause of action." "The underlying
principle of the rule on exhaustion of administrative remedies rests on the
presumption that when the administrative body, or grievance machinery, is
afforded a chance to pass upon the matter, it will decide the same correctly."
By failing to question the Committee Resolution through the proper
procedure prescribed in the CBA, that is, by raising the same before a Board
of Arbitrators, Octavio is deemed to have waived his right to question the
same. Clearly, he departed from the grievance procedure mandated in the
CBA and denied the Board of Arbitrators the opportunity to pass upon a
matter over which it has jurisdiction. Hence, and as correctly held by the CA,
Octavios failure to assail the validity and enforceability of the Committee
Resolution makes the same binding upon him. On this score alone, Octavios

recourse to the labor tribunals below, as well as to the CA, and, finally, to this
Court, must therefore fail.
At any rate, Octavio cannot claim that the Committee Resolution is not
valid, binding and conclusive as to him for being a modification of the CBA in
violation of Article 253 of the Labor Code. It bears to stress that the said
resolution is a product of the grievance procedure outlined in the CBA itself.
It was arrived at after the management and the union through their
respective representatives conducted negotiations in accordance with the
CBA. On the other hand, Octavio never assailed the competence of the
grievance committee to take cognizance of his case. Neither did he question
the authority or credibility of the union representatives; hence, the latter are
deemed to have properly bargained on his behalf since "unions are the agent
of its members for the purpose of securing just and fair wages and good
working conditions." In fine, it cannot be gainsaid that the Committee
Resolution is a modification of the CBA. Rather, it only provides for the proper
implementation of the CBA provision respecting salary increases.
Finally, Octavios argument that the denial of his claim for salary
increases constitutes a violation of Article 100 of the Labor Code is devoid of
merit. Even assuming that there has been a diminution of benefits on his
part, Article 100 does not prohibit a union from offering and agreeing to
reduce wages and benefits of the employees as the right to free collective
bargaining includes the right to suspend it. PLDT averred that one of the
reasons why Octavios salary was recomputed as to include in his salary
of P13,730.00 the P2,000.00 increase for 2002 is to avoid salary distortion.
At this point, it is well to emphasize that bargaining should not be equated to
an "adversarial litigation where rights and obligations are delineated and
remedies applied. Instead, it covers a process of finding a reasonable and
acceptable solution to stabilize labor-management relations to promote
stable industrial peace. Clearly, the Committee Resolution was arrived at
after considering the intention of both PLDT and GUTS to foster industrial
peace.
The LA, NLRC and CA committed no error in affirming the Committees
decision.
Hence, current petition is denied.
SUMMARY:
Every Collective Bargaining Agreement (CBA) shall provide a grievance
machinery to which all disputes arising from its implementation or
interpretation will be subjected to compulsory negotiations. This essential
feature of a CBA provides the parties with a simple, inexpensive and
expedient system of finding reasonable and acceptable solutions to disputes
and helps in the attainment of a sound and stable industrial peace.
LABOR LAW CONCEPTS:
Grievance Procedures & Collective Bargaining Agreements (CBA):

Under Article 260 of the Labor Code, grievances arising from the
interpretation or implementation of the parties Collective Bargaining
Agreement should be resolved in accordance with the grievance
procedure embodied therein. Under Article 260 of the Labor Code,
grievances arising from the interpretation or implementation of the
parties CBA should be resolved in accordance with the grievance
procedure embodied therein. It also provides that all unsettled
grievances shall be automatically referred for voluntary arbitration as
prescribed in the CBA.

Grievance Procedures:
When parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed. Moreover, we have held time
and again that before a party is allowed to seek the intervention of
the court, it is a precondition that he should have availed of all the
means of administrative processes afforded him. It is settled that
when parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed. Moreover, we have held time
and again that before a party is allowed to seek the intervention of
the court, it is a precondition that he should have availed of all the
means of administrative processes afforded him. Hence, if a remedy
within the administrative machinery can still be resorted to by giving
the administrative officer concerned every opportunity to decide on a
matter that comes within his jurisdiction [,then] such remedy should be
exhausted first before the courts judicial power can be sought. The
premature invocation of [the] courts judicial intervention is fatal to
ones cause of action. The underlying principle of the rule on
exhaustion of administrative remedies rests on the presumption that
when the administrative body, or grievance machinery, is afforded a
chance to pass upon the matter, it will decide the same correctly.

ROYAL PLANT WORKERS UNION, vs. COCA-COLA BOTTLERS

PHILIPPINES, INC.-CEBU PLANT
Summary: The issue of the removal of chairs in the bottling plant of CocaCola Bottlers Philippines, Inc. (CCBPI). The Court held that removal of the
chair is a valid exercise of Management Prerogative and Benefits under
Article 100 of the Labor Code only refers to monetary equivalents.
Facts

Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation

engaged in the manufacture, sale and distribution of softdrink products. In
Cebu City, there are 20 bottling operators who work for its Bottling Line 1
while there are 12-14 bottling operators who man its Bottling Line 2. All of
them are male and they are members of herein respondent Royal Plant
Workers Union (ROPWU).
The bottling operators work in two shifts.
FIRST SHIFT
SECOND SHIFT
from 8 a.m. to 5 p.m
from 8 a.m. to 5 p.m
The second shift varies and may end beyond eight (8) hours. However, the
bottling operators are compensated with overtime pay if the shift extends
beyond eight (8) hours.
For Bottling Line 1, 10 bottling operators work for each shift while 6 to 7
bottling operators work for each shift for Bottling Line 2.
Each shift has rotations of work time and break time.
Prior to September 2008

September 2008 and up to the

present
after two and a half (2 ) hours of
operators are given a 30-minute
work, the bottling operators are given break after one and one half (1 )
a 30-minute break and this goes on
hours of work.
until the shift ends
In 1974, the bottling operators of then Bottling Line 2 were provided with
chairs upon their request. In 1988, the bottling operators of then Bottling
Line 1 followed suit and asked to be provided also with chairs. Their request
was likewise granted.
Sometime in September 2008, the chairs provided for the operators were
removed pursuant to a national directive of petitioner. This directive is in line
with the "I Operate, I Maintain, I Clean" program of petitioner for bottling
operators, wherein every bottling operator is given the responsibility
to keep the machinery and equipment assigned to him clean and
safe. The program reinforces the task of bottling operators to constantly
move about in the performance of their duties and responsibilities.
With this task of moving constantly to check on the machinery and
equipment assigned to him, a bottling operator does not need a chair

anymore, hence, petitioners directive to remove them. Furthermore, CCBPI

rationalized that the removal of the chairs is implemented so that the
bottling operators will avoid sleeping, thus, prevent injuries to their
persons. As bottling operators are working with machines which consist of
moving parts, it is imperative that they should not fall asleep as to do so
would expose them to hazards and injuries. In addition, sleeping will hamper
the efficient flow of operations as the bottling operators would be unable to
perform their duties competently.
The bottling operators took issue with the removal of the chairs. Through the
representation of herein respondent, they initiated the grievance
machinery of the Collective Bargaining Agreement (CBA) in November
2008. Even after exhausting the remedies contained in the grievance
machinery, the parties were still at a deadlock with petitioner still insisting
on the removal of the chairs and respondent still against such measure. As
such, respondent sent a Notice to Arbitrate, dated 16 July 2009, to petitioner
stating its position to submit the issue on the removal of the chairs for
arbitration. Nevertheless, before submitting to arbitration the issue, both
parties availed of the conciliation/mediation proceedings before the National
Conciliation and Mediation Board (NCMB) Regional Branch No. VII. They failed
to arrive at an amicable settlement.
Thus, the process of arbitration continued and the parties appointed the
chairperson and members of the Arbitration Committee as outlined in the
CBA. Petitioner and respondent respectively appointed as members to the
Arbitration Committee Mr. Raul A. Kapuno, Jr. and Mr. Luis Ruiz while they
both chose Atty. Alice Morada as chairperson thereof. They then executed a
Submission Agreement which was accepted by the Arbitration Committee on
01 October 2009. As contained in the Submission Agreement, the sole issue
for arbitration is whether the removal of chairs of the operators assigned at
the production/manufacturing line while performing their duties and
responsibilities is valid or not.
Petitioners Argument:
The removal of the chairs is valid as it is a legitimate exercise of
management prerogative, it does not violate the Labor Code and it
does not violate the CBA it contracted with the respondents.
Respondents Argument:

The bottling operators have been performing their assigned duties

satisfactorily with the presence of the chairs; the removal of the chairs
constitutes a violation of the Occupational Health and Safety
Standards, the policy of the State to assure the right of workers to just
and humane conditions of work as stated in Article 3 of the Labor Code
and the Global Workplace Rights Policy.
Arbitration Committee
On June 11, 2010, the Arbitration Committee rendered a decision that the
removal of the operators chairs is not valid and ordered to restore the same
for the use of the operators as before their removal in 2008.
Reason for decision:
1. The use of chairs by the operators had been a company practice for
34 years in Bottling Line 2, from 1974 to 2008, and 20 years in
Bottling Line 1, from 1988 to 2008; that the use of the chairs by the
operators constituted a company practice favorable to the Union; that
it ripened into a benefit after it had been enjoyed by it; that any
benefit being enjoyed by the employees could not be reduced,
diminished, discontinued, or eliminated by the employer.
Law Cited:
Article 100 of the Labor Code: prohibited the diminution or elimination by
the employer of the employees benefit; and that jurisprudence had not laid
down any rule requiring a specific minimum number of years before a benefit
would constitute a voluntary company practice which could not be
unilaterally withdrawn by the employer.
2. Although the removal of the chairs was done in good faith, CCBPI failed
to:
a. Present evidence regarding instances of sleeping while on duty.
b. Provide specific details as to the number of incidents of sleeping on
duty, who were involved, when these incidents happened, and what
actions were taken.

c. Present evidence either of any accident or injury in the many years

that the bottling operators used chairs.
3. Efficiency is the result of many factors and it could not be attributed
solely to one such as the removal of the chairs.
Court of Appeals
On May 24, 2011, the CA held the removal of the chairs from the
manufacturing/production lines by CCBPI is within the province of
management prerogatives:
1. That it was part of its inherent right to control and manage its
enterprise effectively
2. That since it was the employers discretion to constantly develop
measures or means to optimize the efficiency of its employees and to
keep its machineries and equipment in the best of conditions, it was
only appropriate that it should be given wide latitude in exercising it.
Reason for the Decision:
The removal of the chairs was solely motivated by the best intentions for
both the Union and CCBPI, in line with the "I Operate, I Maintain, I Clean"
program for bottling operators, wherein every bottling operator was given
the responsibility to keep the machinery and equipment assigned to him
clean and safe. The program would reinforce the task of bottling operators to
constantly move about in the performance of their duties and
responsibilities.
Without the chairs, the bottling operators could efficiently supervise
these machineries operations and maintenance. It would also be
beneficial for them because the working time before the break in each
rotation for each shift was substantially reduced from two and a half hours (2
) to one and a half hours (1 ) before the 30-minute break.
This scheme was clearly advantageous to the bottling operators as the
number of resting periods was increased. CCBPI had the best intentions
in removing the chairs because some bottling operators had the propensity
to fall asleep while on the job and sleeping on the job ran the risk of injury
exposure and removing them reduced the risk.

The removal of the chairs were not done for the purpose of defeating or
circumventing the rights of its employees under the special laws, the
Collective Bargaining Agreement (CBA) or the general principles of justice
and fair play. It opined that the principles of justice and fair play were not
violated because, when the chairs were removed, there was a
commensurate reduction of the working time for each rotation in
each shift. The provision of chairs for the bottling operators was never part
of the CBAs contracted between the Union and CCBPI. The chairs were not
provided as a benefit because such matter was dependent upon the
exigencies of the work of the bottling operators. As such, CCBPI could
withdraw this provision if it was not necessary in the exigencies of the work,
if it was not contributing to the efficiency of the bottling operators or if it
would expose them to some hazards.
The provision of chairs to the bottling operators cannot be covered by
Article 100 of the Labor Code on elimination or diminution of benefits
because the employees benefits referred to therein mainly involved
monetary considerations or privileges converted to their monetary
equivalent.
Supreme Court Ruling
The Court ruled in favor of Respondent CCBPI.
A Valid Exercise of Management Prerogative:
Management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work,
processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers, and
discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be
1. The chairs were not removed indiscriminately. They were carefully
studied with due regard to the welfare of the members of the Union.
The removal of the chairs was compensated by:
a) A reduction of the operating hours of the bottling operators from a
two-and-one-half (2 )-hour rotation period to a one-and-a-half (1 )
hour rotation period.

b) An increase of the break period from 15 to 30 minutes between

rotations.
2. The decision to remove the chairs was done with good intentions as
CCBPI wanted to avoid instances of operators sleeping on the job while
in the performance of their duties and responsibilities and because of
the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal
of the chairs was designed to increase work efficiency. Hence, CCBPIs
exercise of its management prerogative was made in good faith
without doing any harm to the workers rights

3. The fact that there is no proof of any operator sleeping on the job is of
no moment. There is no guarantee that such incident would never
happen as sitting on a chair is relaxing. Besides, the operators
constantly move about while doing their job. The ultimate purpose is to
promote work efficiency.
B. No Violation of Labor Laws
The rights of the Union under any labor law were not violated. There is no
law that requires employers to provide chairs for bottling operators.
Article 132 the Labor Code only requires employers to provide seats for
women. No similar requirement is mandated for men or male workers. It
must be stressed that all concerned bottling operators in this case are men.
There was no violation either of the Health, Safety and Social Welfare
Benefit provisions under Book IV of the Labor Code of the Philippines. As
shown in the foregoing, the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest period. The directive
did not expose the bottling operators to safety and health hazards.
C. No Violation of the CBA.
The CBA between the Union and CCBPI contains no provision whatsoever
requiring the management to provide chairs for the operators in the
production/manufacturing line while performing their duties and
responsibilities.

D. No Violation of the general principles of justice and fair play

The removal of the chairs did not violate the general principles of justice and
fair play because the bottling operators working time was considerably
reduced from two and a half (2 ) hours to just one and a half (1 ) hours
and the break period, when they could sit down, was increased to 30 minutes
between rotations. The bottling operators new work schedule is certainly
advantageous to them because it greatly increases their rest period and
significantly decreases their working time. A break time of thirty (30)
minutes after working for only one and a half (1 ) hours is a just and fair
work schedule.
E No Violation of Article 100 of the Labor Code
The operators chairs cannot be considered as one of the employee
benefits covered in Article 100 of the Labor Code. The term "benefits"
mentioned in the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees wage, salary or
compensation making them enforceable obligations.

VERGARA vs COCA-COLA
G.R. NO. 176985 : April 1, 2013
Article 100: Non-Diminution of Benefits

FACTS: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent

Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on January
31, 2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro Manila.
As stipulated in respondent's existing Retirement Plan Rules and Regulations
at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs
shall be considered in the computation of retirement benefits, as follows:
Basic Monthly Salary + Monthly Average Performance Incentive (which is the

total performance incentive earned during the year immediately preceding

12 months) No. of Years in Service.
Claiming his entitlement to an additional PhP474,600.00 as Sales
Management Incentives (SMI) and to the amount of PhP496,016.67 which
respondent allegedly deducted illegally, representing the unpaid accounts of
two dealers within his jurisdiction, petitioner filed a complaint before the
NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits, Merit
Increase, Commission/Incentives, Length of Service, Actual, Moral and
Exemplary Damages, and Attorney's Fees."
After a series of mandatory conference, both parties partially settled
with regard the issue of merit increase and length of service. Subsequently,
they filed their respective Position Paper and Reply thereto dealing on the
two remaining issues of SMI entitlement and illegal deduction.
LA rendered a Decision in favor of petitioner, directing respondent to
reimburse the amount illegally deducted from petitioner's retirement
package and to integrate therein his SMI privilege. The NLRC modified the
award and deleted the payment of SMI. On appeal, the CA dismissed
petitioner's case and denied his motion for reconsideration.

ISSUE: Whether or not the SMI should be included in the computation of

petitioner's retirement benefits on the ground of consistent company
practice.
HELD: No. Generally, employees have a vested right over existing benefits
voluntarily granted to them by their employer. Thus, any benefit and
supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. 15 The principle of non-diminution
of benefits is actually founded on the Constitutional mandate to protect the
rights of workers, to promote their welfare, and to afford them full
protection.16 In turn, said mandate is the basis of Article 4 of the Labor Code
which states that "all doubts in the implementation and interpretation of this
Code, including its implementing rules and regulations, shall be rendered in
favor of labor."
There is diminution of benefits when the following requisites are
present: (1) the grant or benefit is founded on a policy or has ripened into a

practice over a long period of time; (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.
To be considered as a regular company practice, the employee must
prove by substantial evidence that the giving of the benefit is done over a
long period of time, and that it has been made consistently and
deliberately.19 Jurisprudence has not laid down any hard-and-fast rule as to
the length of time that company practice should have been exercised in
order to constitute voluntary employer practice. 20 The common denominator
in previously decided cases appears to be the regularity and deliberateness
of the grant of benefits over a significant period of time. 21 It requires an
indubitable showing that the employer agreed to continue giving the benefit
knowing fully well that the employees are not covered by any provision of
the law or agreement requiring payment thereof. 22 In sum, the benefit must
be characterized by regularity, voluntary and deliberate intent of the
employer to grant the benefit over a considerable period of time.
Upon review of the entire case records, we find no substantial
evidence to prove that the grant of SMI to all retired DSSs
regardless of whether or not they qualify to the same had ripened
into company practice. Despite more than sufficient opportunity given him
while his case was pending before the NLRC, the CA, and even to this Court,
petitioner utterly failed to adduce proof to establish his allegation that SMI
has been consistently, deliberately and voluntarily granted to all retired DSSs
without any qualification or conditions whatsoever. The only two pieces of
evidence that he stubbornly presented throughout the entirety of this case
are the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V.
Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and
1998, respectively. They claimed that the SMI was included in their
retirement package even if they did not meet the sales and collection
qualifiers.24 However, juxtaposing these with the evidence presented by
respondent would reveal the frailty of their statements.
Therefore, respondent's isolated act of including the SMI in the
retirement package of Velazquez could hardly be classified as a
company practice that may be considered an enforceable obligation.
To repeat, the principle against diminution of benefits is applicable only if the
grant or benefit is founded on an express policy or has ripened into a

practice over a long period of time which is consistent and deliberate; it

presupposes that a company practice, policy and tradition favorable to the
employees has been clearly established; and that the payments made by the
company pursuant to it have ripened into benefits enjoyed by
them.26 Certainly, a practice or custom is, as a general rule, not a source of a
legally demandable or enforceable right.27 Company practice, just like any
other fact, habits, customs, usage or patterns of conduct, must be proven by
the offering party who must allege and establish specific, repetitive conduct
that might constitute evidence of habit or company practice.
WHEREFORE, the petition is DENIED.

SUMMARY: The petitioner insists his entitlement on Sales Management

Incentives in the computation of retirement benefits alleging that it is the
practice of the employer to give such benefit to all retired DSSs. However,
the petitioner failed to establish such practice as the grant thereof to
Velasquez is just an isolated case.

LABOR LAW CONCEPTS: See highlighted

Supreme Steel Corporation v. Nagkakaisang Manggagawa ng

Supreme Independent Union
Facts:
Respondent Union filed a notice of strike on the ground that petitioner
corporation violated certain provisions of the CBA. Respondent alleged
eleven CBA violations stated as follows:
A. Denial to four employees of the CBA-provided wage increase
B. aContracting-out labor
C. Failure to provide shuttle service
D. Refusal to answer for the medical expenses incurred by three employees
E. Failure to comply with the time-off with pay provision
F. Visitors free access to company premises
G. Failure to comply with reporting time-off prevision
H. Dismissal of Diosdado Madayag

I. Denial of paternity leave benefit to two employees

J. Discrimination and harassment
K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
Respondent cited petitioners compliance with Wage Order Nos RBIII-10
and grant of the mandated P15.00 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 had already
enjoyed by the workers and that such grant of benefits had already ripened
into a company practice.
Petitioner explained that the COLA provided under Wage Order applies
to minimum wage earners only and that by employees. After realizing its
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.
NLRCs Ruling:
Out of 11 issues raised, 8 were decided in its favor; 2 (Denial of
paternity leave benefit and discrimination of union members) were decided
in favor of petitioner; while issue in visitors free access to company premises
was deemed settled during the mandatory conference.
CAs Ruling
NLRCs Ruling were Affirmed. In the issue of Non-implementation of
COLA, it pointed out that there was no ambiguity or doubt as to who were
covered by the wage order. Petitioner, therefore, may not invoke error or
mistake in extending the COLA to all employees and such act can only be
construed as as a voluntary act on the part of the employer.
Issue: W/N petitioners should continue to implement COLA to non-minimum
wage earners.
Held:
No. the SC dismissed the claim for implementation of Wage Order Nos.
RBIII-10 and 11 to the employees who are not minimum wage earners.
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 of time;

(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.
The fact that the practice should have been practiced over a long
period of time, whereas in this case, implementation of COLA only lasted for
less than a year. Additionally, it must not have been due to error in the
construction or application of a doubtful or difficult question of law.
Respondent failed to prove repetitive conduct that might constitute evidence
of the practice.

UE V UEEA GR. NO. 179593

Summary: Employees have a vested right over existing benefits voluntarily
granted to them by their employer, thus, said benefits cannot be reduced,
diminished, discontinued or eliminated by the latter. This principle against
diminution of benefits, however, is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long
period of time which is consistent and deliberate
Labor Standards Concepts:
Grant by an 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
Article 291 of the Labor Code provides that money claims arising from an
employer-employee relationship must be filed within three (3) years from the
time the cause of action accrued.

Facts of the Case

Prior to school year (SY) 1983-1984, the 70% incremental proceeds from
tuition fee increases as mandated by Presidential Decree No. 451 (P.D. No.
451), as amended, was distributed by petitioner UE in proportion to the
average number of academic and non-academic personnel. The distribution
scheme became the subject of an Agreement signed by the management,
faculty association and respondent. Starting SY 1994-1995, however, the

70% incremental proceeds from the tuition fee increase was distributed by
UE to its covered employees based on a new formula of percentage of salary.
Not in conformity, UEEA, sent a letter [ to then UE President, questioning the
manner of distribution of the employees share in the 1994-1995 tuition fee
increase. UEEA questioned the University unilaterally institution of partial
distribution of FIVE PERCENT (5%) only of the basic wage of employees,
faculty members and administration personnel. For UEEA this was quite
irregular and unfair because they had all along instituted the practice of
having a Tripartite Meeting where the three (3) sectors involved, i.e.
management, faculty and employees representatives go over the
incremental proceeds that have been realized and come to an agreement on
the distribution of the share whether partial or total in nature; second, the
accepted and traditional practice was that for every 1.00 per share of
faculty members based on the full load equivalent, management personnel
and rank-and-file employees receive 100.00 a month; third, using as a basis
5% of the wages of University personnel entitled besides being a departure
from past practices, creates that unfair situation where those who have
higher salaries receive more to the prejudice of low salaried employees and
faculty members; lastly, the existing Tripartite Agreement clearly specifies
the agreed manner of distribution. Thus, it qualifies the distribution or
manner of remittance thereof with the phrase (except where it forms part of
a collective bargaining agreement but accrues to school personnel in any
case), the UNIVERSITY agrees to continue the implementation of all benefits
enjoyed by the employees not embodied herein and are the subject of
communication between the UNIVERSITY and the ASSOCIATION provided
they are not inconsistent with the provisions of the Agreement or of the
Labor Code.
A tripartite meeting was held among the representatives of management,
faculty union and UEEA. In the said meeting, it was agreed that the
distribution of the incremental proceeds would now be based on percentage
of salary, and not anymore on the average number of personnel.
UEEA filed a complaint before the NLRC for non-payment/underpayment of
the rank-and-file employees share of the tuition fee increases against UE
pursuant to P.D. No. 451, as amended, and Republic Act (R.A.) No. 6728
otherwise known as Government Assistance to Students and Teachers in
Private Education Act.
UEEA alleged that starting SY 1994-1995, UE had been withholding from the
rank-and-file employees a sizeable portion of their share in the tuition fee
increases as mandated by P.D. No. 451, as amended. It asserted that before
SY 1994-1995, shares of tuition fee increases were distributed
proportionately among the management, faculty and rank-and-file
employees based on equal sharing or on a share-and-share alike basis. In SY

1994-1995, however, UE arbitrarily and unilaterally distributed the tuition fee

increase proceeds through percentage based on salaries, thereby reducing
the shares of the rank-and-file employees, while increasing those of the
management personnel.
UE denied that the implementation of the new scheme in the distribution of
the 70% incremental proceeds derived from tuition fee increases starting SY
1994-1995 was made arbitrarily and/or unilaterally. It explained that the
distribution scheme was only implemented after inquiry from the
Department of Education, Culture and Sports (DECS) regarding the provision
of R.A. No. 6728. DECS explained that the law was silent on the manner of
the distribution of the 70% incremental proceeds and stated that discretion
in the distribution was vested in the school authorities. What the law clearly
required was that the incremental proceeds from the tuition fee increases
should be allocated for the payment of salaries/wages, allowances and other
benefits of the teaching and non-teaching personnel except the
administrators who were principal stockholders of the school. Thus, UE
insisted that it may distribute the entire 70% incremental proceeds for an
across-the-board salary increase, or for merit increase, or for allowances and
other employment benefits. Furthermore, UE pointed out that the new
distribution scheme was implemented after a tripartite meeting among the
representatives of the management. Lastly, UE asserted that the claim of the
UEEA was already barred since it was filed three (3) years from the time its
supposed cause of action accrued.
Labor Arbiter rendered a decision favoring UEEA ordering the respondent
University of the East, to pay the members of University of the East
Employees Association (UEEA) the amount of TWENTY-FIVE MILLION SEVEN
HUNDRED FORTY-NINE THOUSAND NINE HUNDRED NINETY-FIVE PESOS AND
40/100 (25,749,995.40). It ruled that the equal sharing distribution scheme
in relation to the incremental proceeds from the tuition fee increases had
been adopted as a matter of policy by UE since 1983 and was made part of
its collective bargaining agreement with the UEEA. In addition, the LA noted
that the existence of the said policy or practice in the university was made
part of the tripartite agreement dated October 18, 1983, among UE, UEFA
and UEEA. There was no evidence on record that the said agreement was
superseded by another agreement between UE and UEEA. Furthermore, UEs
reliance on the letter-reply of then DECS Secretary Armand V. Fabella was
misplaced as the law imposed a limitation on the extent of the discretionary
authority given to the school officials such as when the disposition had been
agreed upon in a collective bargaining agreement. The LA concluded that UE
was legally bound to keep and maintain the established practice of
distributing equally among its employees the incremental proceeds from the
tuition fee increases particularly in light of the aforesaid tripartite agreement
and the provisions of Article XX, Section 5 of the UE-UEEA collective
bargaining agreement.

Undaunted, UE interposed an appeal before the NLRC. NLRC, dismissed the

appeal and sustained the LA decision. It gave due course to the second
motion for reconsideration, reversed its earlier ruling and declared valid the
distribution of the 70% incremental proceeds from tuition fee increases
based on the percentage of salary of the covered employees.
Aggrieved, UEEA filed a petition before the CA. The appellate court granted
the petition and set aside the questioned decision and resolution of the
NLRC. The CA declared that since the second motion for reconsideration was
a prohibited pleading, it did not interrupt the running of the reglementary
period. Therefore, the NLRC Resolution dated August 24, 2004 became final
and executory after ten (10) days from receipt of the copy thereof by the
parties. Accordingly, the said resolution had attained finality and could no
longer be modified in any respect, even if the modification was meant to
correct what was perceived to be an erroneous conclusion of fact or law.
Issue:
Whether or not the change in the scheme of distribution of the
incremental proceeds from tuition fee increase is a diminution of benefit.
Held:
The Court finds the position of the petitioner meritorious.
The Court agrees with petitioner UE that the change in the distribution of the
70% incremental proceeds from tuition fee increase from equal sharing to
percentage of salaries is not a diminution of benefits. Its distribution to
covered employees based on equal sharing scheme cannot be considered to
have ripened into a company practice that the respondents have a right to
demand.
Generally, employees have a vested right over existing benefits voluntarily
granted to them by their employer, thus, said benefits cannot be reduced,
diminished, discontinued or eliminated by the latter. This principle against
diminution of benefits, however, is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long
period of time which is consistent and deliberate. It does not contemplate
the continuous grant of unauthorized or irregular compensation but it
presupposes that a company practice, policy and tradition favourable to the
employees has been clearly established; and that the payments made by the
company pursuant to it have ripened into benefits enjoyed by the. ] The test
or rationale of this rule on long practice requires an indubitable showing that
the employer agreed to continue giving the benefits knowing fully well that
said employees are not covered by the law requiring payment thereof. In
sum, the benefit must be characterized by regularity, voluntary and

deliberate intent of the employer to grant the benefits over a significant

period of time.
In the case at bench, contrary to UEEAs claim, the distribution of the 70%
incremental proceeds based on equal sharing scheme cannot be held to
have ripened into a company practice that the respondents have a right to
demand. Jurisprudence is replete with the rule specifying a minimum number
of years within which a company practice must be exercised in order to
constitute voluntary company practice. Even if UE had been continuously
distributing the 70% incremental proceeds based on equal sharing scheme to
all its covered employees, the same could not have ripened into a vested
right because such grant would not have been characterized by a deliberate
and voluntary act on the part of the petitioner.
As pronounced by the Court in the case of Globe Mackay Cable and Radio
Corporation v. NLRC,[35] the grant by an employer of benefits through an
erroneous application of the law due to absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally
discontinued. Here, no vested rights accrued to respondents. R.A. No. 6728
simply mandates that the 70% incremental proceeds arising from tuition fee
increases should go to the payment of salaries, wages, allowances, and other
benefits of the teaching and non-teaching personnel except administrators
who are principal stockholders of the school. As to the manner of its
distribution, however, the law is silent. The letter [ of then DECS Secretary
Armand Fabella, correctly stated that the discretion on what distribution
scheme to adopt is vested upon the school authorities. In fact, the school can
distribute the entire 70% for an across-the-board salary increase, for merit
increase and/or for allowances or other benefits. The only limitations
provided are [1] the benefit must accrue to specific individual school
personnel; and [2] the benefit once given for a specific year cannot be
revoked for that same year.
Consequently, a tripartite meeting was held on June 19, 1995. Clearly, the
said agreement only pertains to the distribution of incremental proceeds for
SY 1982-83. Besides, such agreement is deemed superseded by another
agreement taken up during tripartite meeting held on June 19, 1995.
The Court agrees with UE and holds that UEEAs right to question the
distribution of the incremental proceeds for SY 1994-1995 has already
prescribed. Article 291 of the Labor Code provides that money claims arising
from an employer-employee relationship must be filed within three (3) years
from the time the cause of action accrued. In the present case, the cause of
action accrued when the distribution of the incremental proceeds based on
percentage of salary of the covered employees was discussed in the
tripartite meeting held on June 19, 1995. UEEA did not question the manner

of its distribution and only on April 27, 1999 did it file an action based
therein. Hence, prescription had set in.
WHEREFORE, the petition is GRANTED. The Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 90740 are REVERSED and SET
ASIDE. The Decision of the National Labor Relations Commission
dated February 28, 2005 is REINSTATED.

GENESIS v. UNYON
G.R. No. 182114, April 5, 2010, 617 SCRA 352
/
Facts: Juan Taroy was hired by petitioner Genesis Transport as a driver on
commission basis on February 2, 1992. He was dismissed after due notice
and hearing on May 10, 2002, after an accident on April 20, 2002 where it
was found that he had been driving recklessly.
He filed on June 7, 2002 for illegal dismissal and payment of service
incentive leave, unfair labor practice, and reimbursement of illegal
deductions on tollgate fees. He stated that petitioner deducted from his
weekly earnings an amount ranging from P160 to P190 representing toll fees,
without his consent and written authorization as required by Article 113 of
the Labor Code and contrary to company practice.
Labor Arbiter: Taroys dismissal was on a valid cause. Petitioner complied
with the twin requirements of notice and hearing. However, LA ordered
Petitioner to refund to complainant the underpayment/differential due to him
as a result of the deduction of the tollgate fees from the gross receipts and
attorneys fees.
NLRC: Affirmed LAs decision with modification. It deleted the award on
attorneys fees.
CA: Affirmed LAs decision to refund Taroy underpayment.
Issue: WON petitioner should refund Taroys underpayment as a result of the
deduction of the tollgate fees.
Ruling: Yes. Albeit the amounts representing tollgate fees were deducted
from gross revenues and not directly from Taroys commissions, the labor
tribunal and the appellate court correctly held that the withholding of those
amounts reduced the amount from which Taroys 9% commission would be
computed. Such a computation not only marks a change in the method of
payment of wages, resulting in a diminution of Taroys wages in violation of
Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be
underlined that without Taroys written consent or authorization, the
deduction is considered illegal.

Besides, the invocation of the rule on company practice is generally used

with respect to the grant of additional benefits to employees, not on issues
involving diminution of benefits.
Summary: Juan Taroy claims that the deduction on tollgate fees from his
weekly earnings are illegal and contrary to company practice. The Court
ruled in favour of Taroy, the rule on company practice is generally used
with respect to the grant of additional benefits to employees, not on issues
involving diminution of benefits.
Labor Law Concepts: The invocation of the rule on company practice is
generally used with respect to the grant of additional benefits to employees,
not on issues involving diminution of benefits.
Issues not raised below cannot be raised for the first time on appeal. Genesis
Transport Service, Inc. vs. Unyon ng Malayang Manggagawa ng Genesis
Transport.
If the suspension exceeds the 30-day period without any corresponding
action on the part of the employer, the employer must reinstate the
employee or extend the period of suspension, provided the employees
wages and benefits are paid in the interim.
ARCO METAL VS SAMAHAN
G.R. No. 170734
May 14, 2008
Ponente: TINGA, J.:
Facts: Petitioner is a company engaged in the manufacture of metal
products, whereas respondent is the labor union of petitioners rank and file
employees. Sometime in December 2003, petitioner paid the 13th month
pay, bonus, and leave encashment of three union members in amounts
proportional to the service they actually rendered in a year, which is less
than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several
occasions petitioner did not prorate the payment of the same benefits to
seven (7) employees who had not served for the full 12 months. The
payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004.
According to respondent, the prorated payment violates the rule against
diminution of benefits under Article 100 of the Labor Code. Thus, they filed a
complaint before the National Conciliation and Mediation Board (NCMB). The
parties submitted the case for voluntary arbitration.

Voluntary arbitrator: Ruled in favor of petitioner and found that the giving
of the contested benefits in full, irrespective of the actual service rendered
within one year has not ripened into a practice. He noted the affidavit of
Joselito Baingan, manufacturing group head of petitioner, which states that
the giving in full of the benefit was a mere error. He also interpreted the
phrase for each year of service found in the pertinent CBA provisions to
mean that an employee must have rendered one year of service in order to
be entitled to the full benefits provided in the CBA.
Court of Appeals: Ruled that the CBA did not intend to foreclose the
application of prorated payments of leave benefits to covered employees.
The appellate court found that petitioner, however, had an existing voluntary
practice of paying the aforesaid benefits in full to its employees, thereby
rejecting the claim that petitioner erred in paying full benefits to its seven
employees. The appellate court noted that aside from the affidavit of
petitioners officer, it has not presented any evidence in support of its
position that it has no voluntary practice of granting the contested benefits
in full and without regard to the service actually rendered within the year. It
also questioned why it took petitioner eleven (11) years before it was able to
discover the alleged error.
Petitioner moved for the reconsideration of the decision but its motion was
denied, hence this petition.
Issue: Whether or not the grant of 13th month pay, bonus, and leave
encashment in full regardless of actual service rendered constitutes
voluntary employer practice and, consequently, the prorated payment of the
said benefits does not constitute diminution of benefits under Article 100 of
the Labor Code.
Held: Any benefit and supplement being enjoyed by employees cannot be
reduced, diminished, discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional
mandate to "protect the rights of workers and promote their welfare, and
to afford labor full protection. Said mandate in turn is the basis of Article 4
of the Labor Code which states that all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations
shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the right of employees to
benefits which were voluntarily given by the employer and which ripened
into company practice. Thus in Davao Fruits Corporation v. Associated Labor
Unions, et al. where an employer had freely and continuously included in the
computation of the 13th month pay those items that were expressly
excluded by the law, we held that the act which was favorable to the
employees though not conforming to law had thus ripened into a practice
and could not
be withdrawn, reduced, diminished, discontinued or

eliminated.
In Sevilla Trading Company v. Semana, we ruled that the
employers act of including non-basic benefits in the computation of the 13th
month pay was a voluntary act and had ripened into a company practice
which cannot be peremptorily withdrawn.
Meanwhile in Davao Integrated Port Stevedoring Services v. Abarquez, the
Court ordered the payment of the cash equivalent of the unenjoyed sick
leave benefits to its intermittent workers after finding that said workers had
received these benefits for almost four years until the grant was stopped due
to a different interpretation of the CBA provisions. We held that the employer
cannot unilaterally withdraw the existing privilege of commutation or
conversion to cash given to said workers, and as also noted that the
employer had in fact granted and paid said cash equivalent of the unenjoyed
portion of the sick leave benefits to some intermittent workers.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted
a policy of freely, voluntarily and consistently granting full benefits to its
employees regardless of the length of service rendered. True, there were
only a total of seven employees who benefited from such a practice, but it
was an established practice nonetheless.
Jurisprudence has not laid down any rule specifying a minimum number of
years within which a company practice must be exercised in order to
constitute voluntary company practice.[20] Thus, it can be six (6) years,[21]
three (3) years,[22] or even as short as two (2) years.[23] Petitioner cannot
shirk away from its responsibility by merely claiming that it was a mistake or
an error, supported only by an affidavit of its manufacturing group head.
In cases involving money claims of employees, the employer has the burden
of proving that the employees did receive the wages and benefits
and that the same were paid in accordance with law.
IN VIEW HEREOF, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP No. 85089 dated 29 September 2005 is and its
Resolution dated 9 December 2005 are hereby AFFIRMED.
Summary: Petitioner paid the 13th month pay, bonus, and leave
encashment to 3 union members in amounts proportional to the service they
actually rendered in a year, which is less than a full twelve (12) months the
respondent protested the prorated scheme, according to respondent, the
prorated payment violates the rule against diminution of benefits under
Article 100 of the Labor Code. The petition was denied and the previous
ruling of the Court of Appeals favoring the respondent was Affirmed.
Labor law Concept: Principle of non-diminution of benefits is founded
on the Constitutional mandate to "protect the rights of workers and promote
their welfare, and to afford labor full protection. Said mandate in turn is
the basis of Article 4 of the Labor Code which states that all doubts in the

implementation and interpretation of this Code, including its implementing

rules and regulations shall be rendered in favor of labor.

TSPIC CORPORATION vs. TSPIC EMPLOYEES UNION

G.R No. 163419. February 13, 2008
FACTS: TSPI Corporation entered into a Collective Bargaining Agreement
with the Corporation Union for the increase of salary for the latters members
for the year 2000 to 2002 starting from January 2000. Thus, the increase in
salary was materialized on January 1, 2000. However, on October 6, 2000,
the Regional Tripartite Wage and Production Board raised daily minimum
wage from P 223.50 to P 250.00 starting November 1, 2000. Conformably,
the wages of the 17 probationary employees were increased to P250.00 and
became regular employees therefore receiving another 10% increase in
salary. In January 2001, TSPIC implemented the new wage rates as mandated
by the CBA. As a result, the nine employees who were senior to the 17
recently regularized employees received less wages. On January 19, 2001,
TSPICs HRD notified the 24 employees who are private respondents, that
due to an error in the automated payroll system, they were overpaid and the
overpayment would be deducted from their salaries starting February 2001.
The Union on the other hand, asserted that there was no error and the
deduction of the alleged overpayment constituted diminution of pay.
ISSUE: Whether or not the alleged overpayment constitutes diminution of
pay as alleged by the Union.
HELD: Yes, because it is considered that Collective Bargaining Agreement
entered into by unions and their employers are binding upon the parties and
be acted in strict compliance therewith. Thus, the CBA in this case is the law
between the employers and their employees.
Therefore, there was no overpayment when there was an increase of salary
for the members of the union simultaneous with the increasing of minimum
wage for workers in the National Capital Region. The CBA should be followed
thus, the senior employees who were first promoted as regular employees
shall be entitled for the increase in their salaries and the same with lower
rank workers.
SUMMARY: A Collective Bargaining Agreement (CBA) is the law between the
parties and they are obliged to comply with its provisions.
LABOR LAW CONCEPT:
1. Collective Bargaining AgreementIt is a 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. We said so in Honda

Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, 460 SCRA
187 (2005): 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.
2. Diminution of Benefits - 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.
3. An erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits.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 GlobeMackay Cable and Radio Corp. v. NLRC, 163
SCRA 71 (1988): 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.
Metropolitan Bank and Trust Company vs. National Labor Relations
Commission,
589 SCRA 376, G.R. No. 152928 June 18, 2009
FACTS:
Respondents Patag and Flora were former employees of petitioner
Metrobank. Both respondents availed of the banks compulsory retirement
plan in accordance with the 1995 Officers Benefits Memorandum. Patag

retired on February 1, 1998 as an Assistant Manager with a monthly salary of

P32,100.00. Flora retired on April 1, 1998 as a Senior Manager with a
monthly salary of P48,500.00. Consequently, the new 1998 CBA was issued
increasing the retirement benefits from 185% to 200%. The 1998 CBA covers
employees for year 1998-2000 provided that they should not resign before
June 15, 1998. With this, the private respondents requested to extend the
benefits of the 1998 CBA to them but they were denied by the petitioner
because they had already resigned before June 15, 1998. The LA dismissed
the complaint. NLRC reversed the LA by granting the respondents the
benefits endowed by the 1998 CBA. The CA affirmed the NLRC by stating that
notwithstanding the stipulation of the 1998 CBA, it has been the petitioners
long practice to extend the newly issued CBAs towards its employees every
1st of January for 11 years from 1986 to 1997 without any conditions that an
employee must not resign prior to a settled date. Hence, this petition.
ISSUE:
Whether respondents can still recover higher benefits under the 1998
Officers Benefits Memorandum despite the fact that they have compulsorily
retired prior to the issuance of said memorandum
RULING:
YES. It is a jurisprudential rule that where there is an established
employer practice of regularly, knowingly and voluntarily granting
benefits to employees over a significant period of time, despite the
lack of a legal or contractual obligation on the part of the employer
to do so, the grant of such benefits ripens into a vested right of the
employees and can no longer be unilaterally reduced or withdrawn
by the employer
To be considered a company practice, the giving of the benefits should have
been done over a long period of time, and must be shown to have been
consistent and deliberate. The test or rationale of this rule on long practice
requires an indubitable showing that the employer agreed to continue giving
the benefits knowing fully well that said employees are not covered by the
law requiring payment thereof.
In the case at bar, petitioner Metrobank favorably adjusted its officers
benefits, including retirement benefits, after the approval of each CBA with
the rank and file employees, to be effective every January 1st of the same
year as the CBAs approval, and without any condition regarding the date of
employment of the officer, from 1986 to 1997 or for about eleven (11) years.
This constitutes voluntary employer practice which cannot be
unilaterally withdrawn or diminished by the employer without
violating the spirit and intent of Art. 100 of the Labor Code which
prohibits the diminution of benefits of the employee. The condition
that an officer must still be in the service of petitioner bank as of June 15,
1998 effectively reduced benefits of employees who retired prior to the

issuance of the 1998 Officers Benefits Memorandum despite the fact in the
past no such condition was imposed by the bank and previous retirees
presumably enjoyed the higher benefits regardless of their date of retirement
as long as they were still employees of petitioner as of the January 1st
effectivity date.
SUMMARY: The respondents, who were the former employees of the
petitioner, requested the benefits endowed by the 1998 CBA but they were
denied by the petitioner because the latter resigned prior to the settled date
conditioned by the said CBA. The Court ruled in favor of the respondents by
stating that the long practice of the petitioner of voluntarily covering the
employees benefits in every CBA for 11 years from 1986 to 1997 every 1 st of
January without any conditions must apply also to the 1998 CBA.
LABOR LAW CONCEPTS:
1 It is a jurisprudential rule that where there is an established employer
practice of regularly, knowingly and voluntarily granting benefits to
employees over a significant period of time, despite the lack of a legal
or contractual obligation on the part of the employer to do so, the
grant of such benefits ripens into a vested right of the employees and
can no longer be unilaterally reduced or withdrawn by the employer
2 Wages and Benefits and Retirement - To be considered a company
practice, the giving of the benefits should have been done over a long
period of time, and must be shown to have been consistent and
deliberate.
3 The right to file a labor complaint or assert a cause of action against an
employer is a personal right of each employee
4 It is a time-honored rule that in controversies between a laborer and
his master, doubts reasonably arising from the evidence or in the
interpretation of agreements and writings should be resolved in the
formers favor

INSULAR HOTEL EMPLOYEES UNION-NFL VS WATERFRONT INSULAR

HOTEL DAVAO
G.R. Nos. 174040-41, September 22, 2010
FACTS:

On November 6, 2000, respondent Waterfront Insular Hotel Davao

(respondent) sent the Department of Labor and Employment (DOLE), Region
XI, Davao City, a Notice of Suspension of Operations notifying the same that
it will suspend its operations for a period of six months due to severe and
serious business losses. In said notice, respondent assured the DOLE that if
the company could not resume its operations within the six-month period,
the company would pay the affected employees all the benefits legally due
to them. During the period of the suspension, Domy R. Rojas (Rojas), the
President of Davao Insular Hotel Free Employees Union (DIHFEU-NFL), the
recognized labor organization in Waterfront Davao, sent respondent a
number
of
letters
asking
management
to
reconsider
its
decision. After series of negotiations, respondent and DIHFEU-NFL,
represented by its President, Rojas, and Vice-Presidents, Exequiel J. Varela Jr.
and Avelino C. Bation,Jr., signed a Memorandum of Agreement (MOA) wherein
respondent agreed to re-open the hotel subject to certain concessions
offered
by
DIHFEU-NFL
in
its
Manifesto. Accordingly, respondent downsized its manpowerstructure to 100
rank-and-file employees as set forth in the terms of the MOA. Moreover, as
agreed upon in the MOA, a new pay scale was also prepared by respondent.
The retained employees individually signed a "Reconfirmation of
Employment" which embodied the new terms and conditions of their
continued employment. Each employee was assisted by Rojas who also
signed the document. On June 15, 2001, respondent resumed its business
operations.
Issue: whether or not a union is prohibited from offering and agreeing to
reduce wages and benefits of the employees?
Held: Article 100 of the Labor Code provides:
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 the
promulgation of this Code.
Clearly, the prohibition against elimination or diminution of benefits set
out in Article 100 of the Labor Code is specifically concerned with benefits
already enjoyed at the time of the promulgation of the Labor Code. Article
100 does not, in other words, purport to apply to situations arising after the
promulgation date of the Labor Code x x Even assuming arguendo that Article
100 applies to the case at bar, the Court agrees with respondent that the
same does not prohibit a union from offering and agreeing to reduce wages
and benefits of the employees .In Rivera v. Espiritu, this Court ruled that the
right to free collective bargaining, after all, includes the right to suspend it,
thus:

A CBA is "a contract executed upon request

of either the employer or the exclusive
bargaining representative in corporating the
agreement reached after negotiations with
respect to wages, hours of work and all other
terms and conditions of employment, including
proposals for adjusting any grievances or
questions arising under such agreement." The
primary purpose of a CBA is the stabilization of
labor-management relations in order to create a
climate of a sound and stable industrial peace.
In construing a CBA, the courts must be
practical
and
realistic
and
give
due
consideration to the context in which it is
negotiated and the purpose which it is intended
to serve.
While the scales of justice usually tilt in favor of labor, the peculiar
circumstances herein prevent this Court from applying the same in the
instant petition. Even if our laws endeavor to give life to the constitutional
policy on social justice and on the protection of labor, it does not mean that
every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play.
SUMMARY:
Waterfront Insular Hotel Davao filed a Notice of Suspension on Operations to
DOLE. Due to this, its employees offered lowering their salary and other
benefits to help the company sustain its operations despite its financial
standing. This is proven by the MOA signed by both parties. With the MOA,
Joves and Planas, filed a Notice of Mediation. The alleged diminution of
wages is without merit as the DIHFEU-NFL voluntarily offered and agreed to
reduce the wages and benefits of the employees.
CENTRAL AZUCARERA vs. CA LABOR
Petitioner: Central Azucarera De Tarlac
Respondent: Central Azucarera De Tarlac Labor Union-NLU
Docket No.: G.R. No. 188949
Date of Promulgation: July 26, 2010
Ponente: Nachura, J.
FACTS:
Petition for review on certiorari under Rule 45 of the Rules of Court.
o Petitioner is a domestic corporation engaged in the business of
sugar manufacturing, while respondent is a legitimate labor

organization which serves as the exclusive bargaining

representative of petitioners rank-and-file employees.
o Controversy stems from the interpretation of the term basic pay,
essential in the computation of the 13th-month pay.
In compliance with Presidential Decree (P.D.) No. 851, petitioner
granted its employees the mandatory thirteenth-month pay since
1975.
Formula used until 2006 in computing the 13 th-month pay: Total Basic
Annual Salary divided by twelve (12); included are computation of the
Total Basic Annual Salary were the following: basic monthly salary; first
eight (8) hours overtime pay on Sunday and legal/special holiday; night
premium pay; and vacation and sick leaves for each year.
November 6, 2004
o Respondent staged a strike.
o During the strike, petitioner declared a temporary cessation of
operations.
December 2005
o All the striking union members were allowed to return to work.
o Subsequently, petitioner declared another temporary cessation
of operations for the months of April and May 2006.
June 2006
o Suspension of operation was lifted but the rank-and-file
employees were allowed to report for work on a fifteen (15) dayper-month rotation basis that lasted until September 2006.
December 2006
o Petitioner gave the employees their 13th-month pay based on the
employees total earnings during the year divided by 12.
o However, respondent objected to this computation.
Respondent claimed that petitioner did not adhere to the
usual computation of the 13th-month pay because the
divisor should have been eight (8) instead of 12, because
the employees worked for only 8 months in 2006.
It asserted that petitioner did not observe the company
practice of giving its employees the guaranteed amount
equivalent to their one month pay, in instances where the
computed 13th-month pay was less than their basic
monthly pay.
Petitioner and respondent tried to thresh out their differences in
accordance with the grievance procedure as provided in their collective
bargaining agreement.
o During the grievance meeting, the representative of petitioner
explained that the change in the computation of the 13 th-month
pay was intended to rectify an error in the computation,

particularly the concept of basic pay which should have included

only the basic monthly pay of the employees.
However, as the parties failed to arrive at a settlement, respondent
applied for preventive mediation before the National Conciliation and
Mediation Board but still failed to settle the dispute after four (4)
meetings.
March 29, 2007
o Respondent filed a complaint against petitioner for money claims
based on the alleged diminution of benefits/erroneous
computation of 13th-month pay before the Regional Arbitration
Branch of the National Labor Relations Commission (NLRC).
Labor Arbiters Level
o October 31, 2007
Labor Arbiter dismissed the complaint and declared that
the petitioner had the right to rectify the error in the
computation of the 13th-month pay of its employees.
NLRCs Level
o Respondents filed an appeal.
o August 14, 2008
NLRC reversed the Labor Arbiters decision.
Petitioner was ordered to compute the 13 th-month
pay according to the number of months the
respondents reported for work.
o November 27, 2008
Petitioner filed a motion for reconsideration but was
denied.
Court of Appeals Level
o Petitioner then filed a petition for certiorari under Rule 65.
o May 28, 2009
CA dismissed the petition, and affirmed the decision
and resolution of the NLRC.

ISSUE:
Whether or not the CA committed a reversible error in affirming
the decision of NLRC.
HELD:
No. The computation prayed for by the respondents is the correct
computation for 13th-month pay.
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851
represents an additional income based on wage but not part of the wage. It
is equivalent to one-twelfth (1/12) of the total basic salary earned by an
employee within a calendar year. All rank-and-file employees, regardless of
their designation or employment status and irrespective of the method by
which their wages are paid, are entitled to this benefit, provided that they
have worked for at least one month during the calendar year. If the

employee worked for only a portion of the year, the 13th-month pay is
computed pro rata.
The computation used by petitioner was an error that was repeatedly
committed for almost thirty (30) years. Petitioner insists that the length of
time during which an employer has performed a certain act beneficial to the
employees, does not prove that such an act was not done in error. It
maintains that for the claim of mistake to be negated, there must be a clear
showing that the employer had freely, voluntarily, and continuously
performed the act, knowing that he is under no obligation to do so. Petitioner
asserts that such voluntariness was absent in this case.
"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic
salary of an employee within a calendar year; 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.
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 13 thmonth 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. 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.

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 13 th-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. In this case, no such prior authorization has been
obtained by petitioner; thus, it is not entitled to claim such exemption.
This petition is denied and the Court affirmed the Court of Appeals
decision.
SUMMARY:
In the computation of the 13th-month pay, it shall be equivalent to onetwelfth (1/12) of the total basic salary earned by an employee within a
calendar year. All rank-and-file employees, regardless of their designation or
employment status and irrespective of the method by which their wages are
paid, are entitled to this benefit, provided that they have worked for at least
one month during the calendar year. However, if the employee worked for
only a portion of the year, the 13th-month pay is computed pro rata.
(Computation of pro-rata is according to the number of months within a year
that the employee has rendered service to the employer.)
LABOR LAW CONCEPTS:
Computation of 13th-month pay should be pro-rated.
Overtime pay, earnings, and other remuneration that are not part of
the basic salary shall not be included in the computation of the 13thmonth pay.
The minimum 13th-month pay required by the law shall not be less
than one-twelfth (1/12) of the total basic salary earned by an employee
within a calendar year.
Benefits given to employees cannot be taken back or reduced
unilaterally by the employer because the benefit has become a part of
the employment contract, written or unwritten.
Distressed employees shall qualify for exempti

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC v. EASTERN

TELECOMS EMPLOYEES UNION
Summary: The deferment of payment of the 2003 14th, 15th and 16th month
bonuses of ETPI to respondent Union. The Court held that bonuses given to
the respondent was part of the CBA, it was clearly phrased and does not
include the condition of the financial condition of the company and refusal to
provide constitute a violation of Article 100 of the Labor Code.
The Facts
Petitioner
A corporation engaged in
the business of providing
telecommunications
facilities,
particularly
leasing international date
lines or circuits, regular
landlines, internet and
data services, employing
approximately
400
employees.

Respondent
The
certified
exclusive
bargaining
agent of the companys
rank and file employees
with a strong following of
147 regular members. It
has an existing collective
bargaining
agreement
with the company to
expire in the year 2004
with a Side Agreement
signed on September 3,
2001.

Dispute:
The companys plan to defer payment of the 2003 14th, 15th and
16th month bonuses sometime in April 2004.
Reason: due to allege continuing deterioration of companys financial
position which started in the year 2000. However, ETPI while

postponing payment of bonuses sometime in April 2004, such payment

would also be subject to availability of funds.
The union strongly opposed the deferment in payment of the bonuses
by filing a preventive mediation complaint with the NCMB on July 3,
2003, the purpose of which complaint is to determine the date when
the bonus should be paid.
In the conference held at the NCMB, ETPI reiterated its stand that
payment of the bonuses would only be made in April 2004 to which
date of payment, the union agreed. Thus, considering the agreement
forged between the parties, the said agreement was reduced to a
Memorandum of Agreement. The union requested that the President of
the company should be made a signatory to the agreement, however,
the latter refused to sign. In addition to such a refusal, the company
made a sudden turnaround in its position by declaring that they will no
longer pay the bonuses until the issue is resolved through compulsory
arbitration.
The companys change in position was contained in a letter dated April
14, 2004 written to the union by Mr. Sonny Javier, Vice-President for
Human Resources and Administration, stating that the deferred release
of bonuses had been superseded and voided due to the unions filing of
the issue to the NCMB onJuly 18, 2003. He declared that until the
matter is resolved in a compulsory arbitration, the company cannot
and will not pay any bonuses to any and all union members.
Thus, on April 26, 2004, ETEU filed a Notice of Strike on the ground of
unfair labor practice for failure of ETPI to pay the bonuses in gross
violation of the economic provision of the existing CBA.
On May 19, 2004, the Secretary of Labor and Employment, finding that
the company is engaged in an industry considered vital to the
economy and any work disruption thereat will adversely affect not only
its operation but also that of the other business relying on its services,
certified the labor dispute for compulsory arbitration pursuant to
Article 263 (q) of the Labor Code as amended.
Respondents Argument:
1 Claimed that Eastern Telecommunications Philippines, Inc. (ETPI) had
consistently and voluntarily been giving out 14 th month bonus during
the month of April, and 15th and 16th month bonuses every December

of each year (subject bonuses) to its employees from 1975 to 2002,

even when it did not realize any net profits.
2 The unjustified and malicious refusal of the company to pay the subject
bonuses was a clear violation of the economic provision of the CBA and
constitutes unfair labor practice (ULP).
Petitioners Arguments:
1 Questioned the authority of the NLRC to take cognizance of the case
contending that it had no jurisdiction over the issue which merely
involved the interpretation of the economic provision of the 20012004 CBA Side Agreement. Nonetheless, it maintained that the
complaint for nonpayment of 14 th, 15th and 16th month bonuses for
2003 and 14th month bonus for 2004 was bereft of any legal and
factual basis.
2 It averred that the subject bonuses were not part of the legally
demandable wage and the grant thereof to its employees was an
act of pure gratuity and generosity on its part, involving the
exercise of management prerogative and always dependent
on the financial performance and realization of profits. It
posited that it resorted to the discontinuance of payment of the
bonuses due to the unabated huge losses that the company had
continuously experienced.
3 It claimed that it had been suffering serious business losses
since 2000 and to require the company to pay the subject bonuses
during its dire financial straits would in effect penalize it for its past
generosity. It alleged that the non-payment of the subject bonuses
was neither flagrant nor malicious and, hence, would not amount to
unfair labor practice.
4 The bonus provision in the 2001-2004 CBA Side Agreement was a
mere affirmation that the distribution of bonuses was
discretionary to the company, premised and conditioned on the
success of the business and availability of cash.
NLRCs Decision
On April 28, 2005, the NLRC issued its Resolution dismissing ETEUs
complaint and held that:
1 ETPI could not be forced to pay the union members the 14 th, 15th and
16th month bonuses for the year 2003 and the 14th month bonus for the
year 2004 inasmuch as the payment of these additional benefits was
basically a management prerogative, being an act of generosity and
munificence on the part of the company and contingent upon the
realization of profits.
2 ETPI may not be obliged to pay these extra compensations in view of
the substantial decline in its financial condition.

3 ETPI was not guilty of the ULP charge elaborating that no sufficient and
substantial evidence was adduced to attribute malice to the company
for its refusal to pay the subject bonuses.
Court of Appeals Decision
On June 25, 2008 Decision, the CA declared that the Side Agreements of the
1998 and 2001 CBA created a contractual obligation on ETPI to confer the
subject bonuses to its employees without qualification or condition. It also
found that the grant of said bonuses has already ripened into a company
practice and their denial would amount to diminution of the
employees benefits.
It held that ETPI could not seek refuge under Article 1267 of the Civil Code
because this provision would apply only when the difficulty in fulfilling the
contractual obligation was manifestly beyond the contemplation of the
parties, which was not the case therein.
The CA, however, sustained the NLRC finding that the allegation of ULP was
devoid of merit.
Issue:
Whether or not petitioner ETPI is liable to pay 14 th, 15th and 16th month
bonuses for the year 2003 and 14 th month bonus for the year 2004 to
the members of respondent union.
Supreme Courts Decision
The Court sustained the ruling of the Court of Appeals
A bonus is a gratuity or act of liberality of the giver which the recipient has
no right to demand as a matter of right. The grant of a bonus is basically a
management prerogative which cannot be forced upon the employer who
may not be obliged to assume the onerous burden of granting bonuses or
other benefits aside from the employees basic salaries or wages.
A bonus, however, becomes a demandable or enforceable obligation
when it is made part of the wage or salary or compensation of the employee.
ETPI and ETEU agreed on the inclusion of a provision for the grant of
14 , 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement, as
well as in the 2001-2004 CBA Side Agreement, which was signed
on September 3, 2001.
th

The agreement reveals that the giving of 14th, 15th and 16th month
bonuses is without qualification.
1 There were no conditions specified in the CBA Side Agreements for
the grant of the benefits contrary to the claim of ETPI that the same
is justified only when there are profits earned by the company.
2 The agreement does not state that the subject bonuses shall be
made to depend on the ETPIs financial standing or that their
payment was contingent upon the realization of profits. Neither
does it state that if the company derives no profits, no bonuses are
to be given to the employees. In fine, the payment of these bonuses
was not related to the profitability of business operations.
ETPI appears to be well aware of its deteriorating financial condition
when it entered into the 2001-2004 CBA Side Agreement with ETEU and
obliged itself to pay bonuses to the members of ETEU. Considering that ETPI
had been continuously suffering huge losses from 2000 to 2002, its business
losses in the year 2003 were not exactly unforeseen or unexpected.
Consequently, it cannot be said that the difficulty in complying with its
obligation under the Side Agreement was manifestly beyond the
contemplation of the parties.
The giving of the subject bonuses cannot be peremptorily withdrawn
by ETPI without violating Article 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.
The rule is settled that any benefit and supplement being enjoyed by
the employees cannot be reduced, diminished, discontinued or eliminated by
the employer. The principle of non-diminution of benefits is founded on the
constitutional mandate to protect the rights of workers and to promote their
welfare and to afford labor full protection.
ETPI never presented countervailing evidence to refute ETEUs claim
that the company has been continuously paying bonuses since 1975 up to
2002 regardless of its financial state. Its failure to controvert the allegation,
when it had the opportunity and resources to do so, works in favor of ETEU.
Time and again, it has been held that should doubts exist between the
evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter.

WESLEYAN vs WESLEYAN FACULTY

GR. 181806

March 12, 2014

Article 100: Non-Diminution of Benefits (Error in Construction)

FACTS: Petitioner Wesleyan University-Philippines is a non-stock, non-profit

educational institution duly organized and existing under the laws of the
Philippines. Respondent Wesleyan University-Philippines Faculty and Staff
Association, on the other hand, is a duly registered labor organization acting
as the sole and exclusive bargaining agent of all rank-and-file faculty and
staff employees of petitioner.
In December 2003, the parties signed a 5-year CBA effective June 1,
2003 until May 31, 2008. On August 16, 2005, petitioner issued a
Memorandum 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.

The respondent questioned the guidelines for being violative of

existing practices and the CBA, 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.

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.
In the same meeting, petitioner announced its plan of implementing a oneretirement policy, which was unacceptable to respondent.
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.
Ruling of the Voluntary Arbitrator
On November 2, 2006, the Voluntary Arbitrator rendered a Decision
declaring the one-retirement policy and the Memorandum dated August 16,
2005 contrary to law.
Ruling of the Court of Appeals
The CA affirmed the nullification of the one-retirement policy and the
Memorandum dated August 16, 2005 on the ground that these unilaterally
amended the CBA without the consent of respondent.

ISSUES:
1 Whether or not the one retirement policy is contrary to law for there is
substantial evidence to prove that there is an existing practice of giving
two retirement benefits.
2 Whether or not Memorandum dated August 6, 2005 on the availment of
vacation and sick leave credits and vacation leave commutation contrary
to law.

HELD: Both the one retirement policy and the Memorandum on the
implementation of vacation and sick leave policy are contrary to law.
1 The practice of giving two retirement benefits to petitioners
employees is supported by substantial evidence.
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly
prohibits employers from eliminating or reducing the benefits received by
their employees. This rule, however, applies only if the benefit is based on an
express policy, a written contract, or has ripened into a practice. To
be considered a practice, it must be consistently and deliberately made by
the employer over a long period of time. An exception to the rule is when
the practice is due to error in the construction or application of a doubtful or
difficult question of law. The error, however, must be corrected immediately
after its discovery; otherwise, the rule on Non-Diminution of Benefits would
still apply.
In this case, respondent was able to present substantial evidence in
the form of affidavits to support its claim that there are two retirement plans.
Based on the affidavits, petitioner has been giving two retirement benefits as
early as 1997. Petitioner, on the other hand, failed to present any evidence
to refute the veracity of these affidavits. Petitioners contention that these
affidavits are self-serving holds no water. The retired employees of petitioner
have nothing to lose or gain in this case as they have already received their
retirement benefits. Thus, they have no reason to perjure themselves.
Obviously, the only reason they executed those affidavits is to bring out the
truth. As we see it then, their affidavits, corroborated by the affidavits of
incumbent employees, are more than sufficient to show that the granting of
two retirement benefits to retiring employees had already ripened into a
consistent and deliberate practice.
Moreover, petitioners assertion that there is only one retirement plan
as the CBA Retirement Plan and the PERAA Plan are one and the same is not
supported by any evidence. There is nothing in Article XVI of the CBA to
indicate or even suggest that the Plan referred to in the CBA is the PERAA
Plan. Besides, any doubt in the interpretation of the provisions of the CBA
should be resolved in favor of respondent. In fact, petitioners assertion is
negated by the announcement it made during the LMC Meeting on February
8, 2006 regarding its plan of implementing a one-retirement plan. For if it
were true that petitioner was already implementing a one-retirement policy,
there would have been no need for such announcement. Equally damaging is
the letter-memorandum dated May 11, 2006, entitled Suggestions on the
defenses we can introduce to justify the abolition of double retirement
policy, prepared by the petitioners legal counsel. These circumstances,
taken together, bolster the finding that the two-retirement policy is a
practice. Thus, petitioner cannot, without the consent of 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.

2 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. 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 govern. However, if there is doubt in its
interpretation, it should be resolved in favor of labor, as this is mandated by
no less than the Constitution.
WHEREFORE, the Petition is hereby DENIED.

SUMMARY: The one retirement policy is contrary to law for this violate
the rule on non-diminution of benefits for the practice of giving two
retirement benefits to employees is supported by substantial evidence.
Likewise, the Memorandum issued by the petitioner on the implementation
of sick and vacation leave policy is contrary to law as this is violates the CBA.

LABOR LAW CONCEPTS: See highlighted.

Netlink Computer Inc. v. Eric Delmo

Facts:
On November 3, 1991, Netlink hired Delmo as account manager tasked
to canvass and source clients and convince them to purchase the products
and services of Netlink. Delmo worked in the field most of the time. He and
his fellow account managers were not required to accomplish time cards to
record their personal presence in the office of Netlink. He was able to
generate sales worth P35,000,000.00, more or less, from which he earned
commissions amounting to P993,558.89 and US$7,588.30. He then
requested payment of his commissions, but Netlink refused and only gave
him partial cash advances chargeable to his commissions. In order to force
him to resign, Netlink issued several memoranda detailing his supposed
infractions of the companys attendance policy. Thereafter, Delmo was
shocked when he was refused entry into the company premises by the
security guard pursuant to a memorandum to that effect. His personal
belongings were still inside the company premises and he sought their return
to him. This incident prompted Delmo to file a complaint for illegal dismissal.
Labor Arbiter ruled that Delmo was illegally and unjustly dismissed by
the respondent. However, upon appeal to NLRC, it ruled that there is a valid
and just causes for the termination of Delmos employment however, the
respondent company failed to observe procedural due process.
In other arguments of the petitioner, CA ruled that Nettling failed to
refute by evidence that Delmo is not entitled to the commissions payable in
US dollars. Neither is there any reason that thee computation of commissions
must be based at the time of sale.
Issue: W/N the payment of the commissions should be in dollars
Held:
Yes. SC affirmed the ruling of CA.
As a general rule, all obligations shall be paid in Philippine currency.
However, contracting parties may stipulate that foreign currencies may be
used for settling obligations.

There was no written contract between Netlink and Delmo stipulating

that the latters commissions would be paid in US dollars. The absence of the
contractual stipulation notwithstanding, Netlink was still liable to pay Delmo
in US dollars because the practice of paying its sales agents in US dollars for
their US dollar-denominatedsales had become a company policy.
The principle of non-diminution of benefits, which has been
incorporated in Article 10013 of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or eliminating the practice.
Verily, the phrase "supplements, or other employee benefits" in Article 100 is
construed to mean the compensation and privileges received by an
employee aside from regular salaries or wages.
With the payment of US dollar commissions having ripened into a
company practice, there is no way that the commissions due to Delmo were
to be paid in US dollars or their equivalent in Philippine currency determined
at the time of the sales. To rule otherwise would be to cause an unjust
diminution of the commissions due and owing to Delmo.
Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme
Independent Union
Facts:
Respondent Union filed a notice of strike on the ground that petitioner
corporation violated certain provisions of the CBA. Respondent alleged
eleven CBA violations stated as follows:
A. Denial to four employees of the CBA-provided wage increase
B. aContracting-out labor
C. Failure to provide shuttle service
D. Refusal to answer for the medical expenses incurred by three employees
E. Failure to comply with the time-off with pay provision
F. Visitors free access to company premises
G. Failure to comply with reporting time-off prevision
H. Dismissal of Diosdado Madayag
I. Denial of paternity leave benefit to two employees
J. Discrimination and harassment
K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
Respondent cited petitioners compliance with Wage Order Nos RBIII-10
and grant of the mandated P15.00 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 had already

enjoyed by the workers and that such grant of benefits had already ripened
into a company practice.
Petitioner explained that the COLA provided under Wage Order applies
to minimum wage earners only and that by employees. After realizing its
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.
NLRCs Ruling:
Out of 11 issues raised, 8 were decided in its favor; 2 (Denial of
paternity leave benefit and discrimination of union members) were decided
in favor of petitioner; while issue in visitors free access to company premises
was deemed settled during the mandatory conference.
CAs Ruling
NLRCs Ruling were Affirmed. In the issue of Non-implementation of
COLA, it pointed out that there was no ambiguity or doubt as to who were
covered by the wage order. Petitioner, therefore, may not invoke error or
mistake in extending the COLA to all employees and such act can only be
construed as as a voluntary act on the part of the employer.
Issue: W/N petitioners should continue to implement COLA to non-minimum
wage earners.
Held:
No. the SC dismissed the claim for implementation of Wage Order Nos.
RBIII-10 and 11 to the employees who are not minimum wage earners.
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 of time;
(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.
The fact that the practice should have been practiced over a long
period of time, whereas in this case, implementation of COLA only lasted for
less than a year. Additionally, it must not have been due to error in the
construction or application of a doubtful or difficult question of law.

Respondent failed to prove repetitive conduct that might constitute evidence

of the practice.

Netlink Computer Inc. v. Eric Delmo

Facts:
On November 3, 1991, Netlink hired Delmo as account manager tasked
to canvass and source clients and convince them to purchase the products
and services of Netlink. Delmo worked in the field most of the time. He and
his fellow account managers were not required to accomplish time cards to
record their personal presence in the office of Netlink. He was able to
generate sales worth P35,000,000.00, more or less, from which he earned
commissions amounting to P993,558.89 and US$7,588.30. He then
requested payment of his commissions, but Netlink refused and only gave
him partial cash advances chargeable to his commissions. In order to force
him to resign, Netlink issued several memoranda detailing his supposed
infractions of the companys attendance policy. Thereafter, Delmo was
shocked when he was refused entry into the company premises by the
security guard pursuant to a memorandum to that effect. His personal
belongings were still inside the company premises and he sought their return
to him. This incident prompted Delmo to file a complaint for illegal dismissal.
Labor Arbiter ruled that Delmo was illegally and unjustly dismissed by
the respondent. However, upon appeal to NLRC, it ruled that there is a valid
and just causes for the termination of Delmos employment however, the
respondent company failed to observe procedural due process.
In other arguments of the petitioner, CA ruled that Nettling failed to
refute by evidence that Delmo is not entitled to the commissions payable in
US dollars. Neither is there any reason that thee computation of commissions
must be based at the time of sale.
Issue: W/N the payment of the commissions should be in dollars
Held:
Yes. SC affirmed the ruling of CA.
As a general rule, all obligations shall be paid in Philippine currency.
However, contracting parties may stipulate that foreign currencies may be
used for settling obligations.

There was no written contract between Netlink and Delmo stipulating

that the latters commissions would be paid in US dollars. The absence of the
contractual stipulation notwithstanding, Netlink was still liable to pay Delmo
in US dollars because the practice of paying its sales agents in US dollars for
their US dollar-denominatedsales had become a company policy.
The principle of non-diminution of benefits, which has been
incorporated in Article 10013 of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or eliminating the practice.
Verily, the phrase "supplements, or other employee benefits" in Article 100 is
construed to mean the compensation and privileges received by an
employee aside from regular salaries or wages.
With the payment of US dollar commissions having ripened into a
company practice, there is no way that the commissions due to Delmo were
to be paid in US dollars or their equivalent in Philippine currency determined
at the time of the sales. To rule otherwise would be to cause an unjust
diminution of the commissions due and owing to Delmo.