Cosue vs.

Ferritz Integrated Development Corporation this agreement and chose to be absent, he should be considered absent without leave.
G.R. No. 230664 July 24, 2017 As for petitioner’s money claims, FIDC averred that petitioner was entitled to receive
only his latest unpaid salary, if any, and his pro rata 13thmonth pay. Respondents,
Facts: however, would later concede that there were underpayments which would have to be
Petitioner started working for respondent Ferritz Integrated Development computed.
Corporation (FIDC) on August 23, 1993 as a construction worker. He subsequently The LA held that other than petitioner’s general assertion that he was dismissed, no
became a regular employee of FIDC, performing work as janitor/maintenance staff. evidence was presented to support such claim. The LA stressed that the rule that the
Around 5 p.m. of July 10, 2014, respondent Germino, as Head of FIDC’s Property employer bears the burden of proof in illegal dismissal cases could not be applied as
Management Division, asked petitioner to stay in the FIDC’s building to watch over respondents denied dismissing petitioner. The LA, however, found no reason to
the generator due to the frequent power outage, and to assist the guards on duty since conclude that petitioner abandoned his job, absent proof of petitioner’s clear intention
they were newly hired. Petitioner agreed. to sever the employer-employee relationship. Backwages were not awarded as there
According to petitioner, around 9 p.m. on July 10, 2014, he saw two security guards, was neither dismissal nor abandonment. However, finding that there was underpayment
together with an unidentified man, on their way to the electrical room. They had a of salaries, the LA awarded salary differentials computed at P8,819.01.
knapsack which did not look heavy. When they left the room, petitioner saw one of The NLRC, in its resolution, affirmed LA’s decision. Additionally, the NLRC also
them carrying the knapsack which, by this time, appeared to contain something heavy. held that since the claims for service incentive leave, overtime pay and 13th month pay
The next morning, petitioner borrowed the key to the electrical room and together with were not indicated in the Complaint nor prayed for in petitioner’s Position Paper, the
fellow maintenance personnel, Alcallaga, looked for the electrical wires that were LA did not gravely abuse her discretion in not awarding them. Furthermore, the NLRC
stored therein. Unfortunately, the wires were no longer there. Petitioner was convinced found it improper to award damages and attorney’s fees given its finding that there was
that the two guards and their unidentified companion took the wires. At 1 p.m., he was no illegal dismissal.
summoned by Germino who verbally informed him that he was suspended from July Affirmed by CA. Hence, this petition.
16, 2014 to August 13, 2014 on suspicion that he stole the electrical wires. Beginning
July 16, 2014 until August 13, 2014, he was no longer allowed to work.5 Thus, on Issue: WON petitioner was constructively dismissed.
October 9, 2014, he filed a Complaint against FIDC, Germino and FIDC President, for
actual illegal dismissal and underpayment of salaries, with prayer for moral and Held:
exemplary damages and attorney’s fees.6 In his Position Paper, petitioner additionally No. Claim of constructive dismissal fails. Bare allegations of constructive
made claims for underpayment of his holiday pay, 13th month pay and service dismissal, when uncorroborated by the evidence on record, as in this case, cannot be
incentive leave pay. He sought to recover on the alleged underpayments for the period given credence. The rule is that one who alleges a fact has the burden of proving it;
covering “three (3) years backward from the time of the filing of (his) complaint.” thus, petitioner was burdened to prove his allegation that respondents dismissed him
Following an investigation, Germino issued a memorandum of suspension to from his employment. It must be stressed that the evidence to prove this fact must be
petitioner for obtaining the keys to the electrical room and entering without permission, clear, positive and convincing. The rule that the employer bears the burden of proof in
and for leaving his post and joining Alcallaga in the electrical room. Petitioner was illegal dismissal cases finds no application here because the respondents deny having
suspended for twenty-five (25) days from July 16, 2014 to August 13, 2014, pending dismissed the petitioner. In illegal dismissal cases, while the employer bears the burden
further investigation. Petitioner returned to FIDC on August 13, 2014, but was told to to prove that the termination was for a valid or authorized cause, the employee must
come back as Germino was on leave. When petitioner came back on August 27, 2014, first establish by substantial evidence the fact of dismissal from service.
he was able to speak to Germino and they agreed that he would voluntarily resign. Furthermore, Petitioner’s insistence that he had been unjustifiably dismissed for
However, petitioner did not file his resignation, and eventually instituted his Complaint abandonment of his job, without the benefit of due process, is untenable. Firstly,
for illegal dismissal.8 petitioner failed to establish that he had been dismissed. Secondly, it was not
Respondents argued that there was no illegal dismissal as there was an agreement respondents’ position that petitioner abandoned his job. As they were waiting for
between FIDC and petitioner that the latter would just resign. As petitioner reneged on petitioner to tender his resignation conformably with their agreement, they did not
consider petitioner’s absence as an abandonment of his job which would necessitate reinstatement, and an increase from his previous request of salary differential to
the sending of a notice of abandonment or an order to return to work. P180,590.00.
Since there was neither dismissal nor abandonment, the CA correctly sustained Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC,
the LA and the NLRC’s decision to order petitioner’s reinstatement but without a complaint for underpayment of wages, COLA, non-payment of meal and
backwages. transportation allowances which was granted by Labor Arbiter. The Labor Arbiter
Anent petitioner’s claim for his 13th month pay for 2014, the same was not limited the claim to the 3-year prescriptive period, that is from the date of filing back
alleged in his Complaint or his Position Paper. It appears to have been raised for the to June 5, 2003 and granted him a total of P37,084.73 as salary differential, among the
first time in his partial appeal to the NLRC. However, it should be noted that other awards.
respondents effectively admitted in their Position Paper that petitioner was entitled to NLRC, noting the exemption from the Wage Order Nos. 10 and 11 granted to
his pro rata 13th month pay for 2014. To withhold this benefit from petitioner, despite JAKA, modified the amounts ordered by the Labor Arbiter to be paid by JAKA to
respondents’ admission that he should be paid the same, will not serve the ends of Ampeloquio, ruling him being entitled only to a salary differential and granting him
substantial justice. Hand in hand with the concept of admission against interest, the the amount of P22,172, removing the transportation allowances and the moral and
concept of estoppel, a legal and equitable concept, necessarily must come into play. exemplary damages. CA dismissed Ampeloquio’s petition for certiorari finding no
Furthermore, it is settled that technical rules of procedure may be relaxed in labor cases grave abuse of discretion in the NLRC’s ruling and finding that, in fact, it is supported
to serve the demands of substantial justice. by substantial evidence.
Finally, petitioner is entitled to attorney’s fees at 10% of the total monetary award.
It has been determined that petitioner was underpaid his wages. Attorney’s fees may Issue:
be recovered by an employee whose wages have been unlawfully withheld. There need Whether or not Ampeloquio is entitled to all benefits or privileges received by
not even be any showing that the employer acted maliciously or in bad faith; there need other employees subsequently hired by JAKA just by the fact of his seniority in the
only be a showing that lawful wages were not paid accordingly, as in this case. service with JAKA.

Ampeloquio v. Jaka Distribution, Inc. G.R. No. 196936, 2 July 2014 Held:
No, Ampeloquio is not entitled to all benefits or privileges received by other
Facts: employees subsequently hired by JAKA just by the fact of his seniority in the service
Respondents RMI Marketing Corp., (now known as JAKA DISTRIBUTION, with JAKA.
INC.) and Teodoro Barzabal, are ordered to reinstate, petitioner, Monchito Ampeloquio Seniority rights refer to the creditable years of service in the employment record
in his former position as merchandiser without loss of seniority rights and other benefits of the illegally dismissed employee as if he or she never ceased working for the
and to pay him backwages and attorney’s fees. Ampeloquio resumed work as employer. In other words, the employee’s years of service is deemed continuous and
merchandiser at JAKA and reported at JAKA’s outlets within Metro Manila, Shopwise never interrupted. Such is likewise the rationale for reinstatement’s twin relief of full
Makati and Alabang. He received a daily wage of P252.00, without meal and backwages.
transportation allowance. Ampeloquio is correct in asserting that he is a senior employee compared to the
Later, Ampeloquio was transferred outside of Metro Manila, to Lucena City other merchandisers whom he himself designates as casual or contractual
and subsequently to San Pablo City. At that time, he was receiving the same daily wage merchandisers. He is likewise senior to other regular employees subsequently hired by
of P252.00, without meal and transportation allowance. Ampeloquio was given a JAKA, specifically two regular messenger employees which Ampeloquio claims
monthly cost of living allowance (COLA) of P720.00. receive wages higher than what he is receiving from JAKA.
In a Letter addressed to JAKA’s general manager, Ampeloquio requested for However, the case of Ampeloquio is outside the ordinary. His reinstatement
salary adjustment and benefits retroactive to the date of his reinstatement and payment was ordered when merchandisers like him were no longer employed by JAKA. He is
of salary differential in the amount of P42,196.00. In another Letter, he wrote JAKA not entitled to the same terms and conditions of employment as that which was offered
reiterating his request for salary adjustment and payment of benefits retroactive to his to the other regular employees (not merchandisers) subsequently hired by JAKA.
JAKA’s decision to grant or withhold certain benefits to other employees is part of its giving out 14th month bonus during the month of April, and 15th and 16th month
management prerogative as a function of an employer’s constitutionally protected right bonuses every December of each year (subject bonuses) to its employees from 1975 to
to reasonable return on investments. 2002, even when it did not realize any net profits. ETEU posited that by reason of its
The phrase without loss of seniority rights applies with practical and real effect long and regular concession, the payment of these monetary benefits had ripened into
to Ampeloquio upon his retirement because he will reach earlier than other regular a company practice which could no longer be unilaterally withdrawn by ETPI. ETEU
employees of JAKA the required number of years of service to qualify for retirement. added that this long-standing company practice had been expressly confirmed in the
In all, the labor tribunals were right in using as guidepost the existing statutory Side Agreements of the 1998-2001 and 2001-2004 Collective Bargaining
minimum wages and COLA during the three (3) year prescriptive period within which Agreements (CBA) which provided for the continuous grant of these bonuses in no
Ampeloquio can make his money claims. uncertain terms. ETEU theorized that the grant of the subject bonuses is not only a
The Court is not unaware that reinstatement is the rule and such covers company practice but also a contractual obligation of ETPI to the union members.
reinstatement to the same or substantially equivalent position without loss of seniority ETEU contended that the unjustified and malicious refusal of the company to pay
rights and privileges. the subject bonuses was a clear violation of the economic provision of the CBA and
In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e., constitutes unfair labor practice (ULP). According to ETEU, such refusal was nothing
(1) strained relations, or (2) abolition of the position; JAKA immediately complied with but a ploy to spite the union for bringing the matter of delay in the payment of the
the Labor Arbiter’s order of reinstatement even if such position no longer exists and subject bonuses to the National Conciliation and Mediation Board (NCMB). It prayed
has been abolished with the contracting of this job function. for the award of moral and exemplary damages as well as attorney’s fees for the unfair
The option of reinstatement to a substantially equivalent position does not apply labor practice allegedly committed by the company.
herein as reinstatement to a substantially equivalent position entails the same or similar On the other hand, ETPI in its position paper, maintained that the complaint for
job functions and not just same wages or salary. As applied to this case, Ampeloquio nonpayment of 14th, 15th and 16th month bonuses for 2003 and 14th month bonus for
cannot be reinstated to a messengerial position although such is a regular employment 2004 was bereft of any legal and factual basis. It averred that the subject bonuses were
enjoying the same employment benefits and privileges. His employment cannot not part of the legally demandable wage and the grant thereof to its employees was an
likewise be converted into a contractual employment as such is actually a downgrade act of pure gratuity and generosity on its part, involving the exercise of management
from his regular employment enjoying security of tenure with JAKA. prerogative and always dependent on the financial performance and realization of
As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, profits. It posited that it resorted to the discontinuance of payment of the bonuses due
at the minimum, to the standard minimum wage at the time of his employment and to to the unabated huge losses that the company had continuously experienced. It claimed
the wages he would have received from JAKA had he not been illegally dismissed, as that it had been suffering serious business losses since 2000 and to require the company
if there was no cessation of employment. Ampeloquio is likewise entitled to any to pay the subject bonuses during its dire financial straits would in effect penalize it for
increase which JAKA may have given across the board to all its regular employees. its past generosity. It alleged that the non-payment of the subject bonuses was neither
To repeat, Ampeloquio is not entitled to all benefits or privileges received by other flagrant nor malicious and, hence, would not amount to unfair labor practice.
employees subsequently hired by JAKA just by the fact of his seniority in the service Further, ETPI argued that the bonus provision in the 2001-2004 CBA Side
with JAKA. 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
Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees availability of cash. It submitted that said bonus provision partook of the nature of a
Union “one-time” grant which the employees may demand only during the year when the Side
G.R. No. 185665 February 8, 2012 Agreement was executed and was never intended to cover the entire term of the CBA.
Finally, ETPI emphasized that even if it had an unconditional obligation to grant
Facts: bonuses to its employees, the drastic decline in its financial condition had already
The Eastern Telecoms Employees Union (ETEU) claimed that Eastern legally released it therefrom pursuant to Article 1267 of the Civil Code.
Telecommunications Philippines, Inc. (ETPI) had consistently and voluntarily been
 On April 28, 2005, the NLRC issued its Resolution dismissing ETEU’s complaint is paid only if profits are realized or if a certain level of productivity is achieved, it
and held that ETPI could not be forced to pay the union members the 14th, 15th and cannot be considered part of the wage. Where it is not payable to all but only to some
16th month bonuses for the year 2003 and the 14th month bonus for the year 2004 employees and only when their labor becomes more efficient or more productive, it is
inasmuch as the payment of these additional benefits was basically a management only an inducement for efficiency, a prize therefore, not a part of the wage.”
prerogative, being an act of generosity and munificence on the part of the company and In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion
contingent upon the realization of profits. The NLRC pronounced that ETPI may not of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001
be obliged to pay these extra compensations in view of the substantial decline in its CBA Side Agreement, as well as in the 2001-2004 CBA Side Agreement, which was
financial condition. Likewise, the NLRC found that ETPI was not guilty of the ULP signed on September 3, 2001. The provision, which was similarly worded, states:
charge elaborating that no sufficient and substantial evidence was adduced to attribute “Employment-Related Bonuses. The Company confirms that the 14th, 15th and
malice to the company for its refusal to pay the subject bonuses. 16th month bonuses (other than the 13th month pay) are granted.”
Aggrieved, ETEU filed a petition for certiorari before the CA. In its assailed June A reading of the above provision reveals that the same provides for the giving of
25, 2008 Decision, the CA declared that the Side Agreements of the 1998 and 2001 14th, 15th and 16th month bonuses without qualification. The wording of the provision
CBA created a contractual obligation on ETPI to confer the subject bonuses to its does not allow any other interpretation. There were no conditions specified in the CBA
employees without qualification or condition. It also found that the grant of said Side Agreements for the grant of the benefits contrary to the claim of ETPI that the
bonuses has already ripened into a company practice and their denial would amount to same is justified only when there are profits earned by the company. Terse and clear,
diminution of the employees’ benefits. It held that ETPI could not seek refuge under the said provision does not state that the subject bonuses shall be made to depend on
Article 1267 of the Civil Code because this provision would apply only when the the ETPI’s financial standing or that their payment was contingent upon the realization
difficulty in fulfilling the contractual obligation was manifestly beyond the of profits. Neither does it state that if the company derives no profits, no bonuses are
contemplation of the parties, which was not the case therein. The CA, however, to be given to the employees. In fine, the payment of these bonuses was not related to
sustained the NLRC finding that the allegation of ULP was devoid of merit. the profitability of business operations.
The records are also bereft of any showing that the ETPI made it clear before or
Issue: WON petitioner ETPI is liable to pay 14th, 15th and 16th month bonuses for during the execution of the Side Agreements that the bonuses shall be subject to any
the year 2003 and 14th month bonus for the year 2004 to the members of respondent condition. Indeed, if ETPI and ETEU intended that the subject bonuses would be
union. dependent on the company earnings, such intention should have been expressly
declared in the Side Agreements or the bonus provision should have been deleted
Held: altogether. In the absence of any proof that ETPI’s consent was vitiated by fraud,
Yes. From a legal point of view, a bonus is a gratuity or act of liberality of the giver mistake or duress, it is presumed that it entered into the Side Agreements voluntarily,
which the recipient has no right to demand as a matter of right. The grant of a bonus is that it had full knowledge of the contents thereof and that it was aware of its
basically a management prerogative which cannot be forced upon the employer who commitment under the contract. Verily, by virtue of its incorporation in the CBA Side
may not be obliged to assume the onerous burden of granting bonuses or other benefits Agreements, the grant of 14th, 15th and 16th month bonuses have become more than
aside from the employee’s basic salaries or wages. A bonus, however, becomes a just an act of generosity on the part of ETPI but a contractual obligation it has
demandable or enforceable obligation when it is made part of the wage or salary or undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union
compensation of the employee. Particularly instructive is the ruling of the Court members from 1998 to 2002 by virtue of the Side Agreements evidently negates its
in Metro Transit Organization, Inc. v. National Labor Relations Commission, where it argument that the giving of the subject bonuses is a management prerogative. From the
was written: foregoing, ETPI cannot insist on business losses as a basis for disregarding its
“Whether or not a bonus forms part of wages depends upon the circumstances and undertaking.
conditions for its payment. If it is additional compensation which the employer Granting arguendo that the CBA Side Agreement does not contractually bind
promised and agreed to give without any conditions imposed for its payment, such as petitioner ETPI to give the subject bonuses, nevertheless, the Court finds that its act of
success of business or greater production or output, then it is part of the wage. But if it granting the same has become an established company practice such that it has virtually
become part of the employees’ salary or wage. A bonus may be granted on equitable On October 2000, the Regional Tripartite Wage and Productivity Board,
consideration when the giving of such bonus has been the company’s long and regular National Capital Region, issued Wage Order No. NCR-08 (WO No. 8) which raised
practice. the daily minimum wage from PhP 223.50 to PhP 250 effective November 1, 2000. In
The records show that ETPI, aside from complying with the regular 13th month conformity, 17 probationary employees’ wages were increased. The 17 were thereafter
bonus, has been further giving its employees 14th month bonus every April as well as regularized, and as per the CBA received 25% of the 10% of their salaries.
15th and 16th month bonuses every December of the year, without fail, from 1975 to On January 2001, TSPIC implemented the new wage rates as mandated by the
2002 or for 27 years whether it earned profits or not. The considerable length of time CBA. As a result, the senior employees received less salary as compared to the recently
ETPI has been giving the special grants to its employees indicates a unilateral and regularized employees. On January 19, TSPIC informed 24 employees that due to an
voluntary act on its part to continue giving said benefits knowing that such act was not error in the automated payroll system, they were overpaid and that such overpayment
required by law. Accordingly, a company practice in favor of the employees has been would be deducted from their salaries on a staggered basis, explaining that the
established and the payments made by ETPI pursuant thereto ripened into benefits erroneous computation was based on the crediting provision under the CBA.
enjoyed by the employees. The Union asserted that there was no error and the issue was brought to the
The rule is settled that any benefit and supplement being enjoyed by the grievance machinery, but the parties failed to come to an agreement. Thereafter, they
employees cannot be reduced, diminished, discontinued or eliminated by the employer. underwent voluntary arbitration on whether the deductions constituted diminution of
The principle of non-diminution of benefits is founded on the constitutional mandate pay.
to protect the rights of workers and to promote their welfare and to afford labor full On September 13, Arbitrator Jimenez ruled in favor of the respondents, under
protection. Article 100 of the Labor Code. The subsequent MR was likewise denied.
In the CA, the appellate court dismissed the petition of the petitioner, ruling that
the computation allowing P287 daily wages was correct, in conformity with Wage
TSPIC Corporation v. TSPIC Employees Union (FFW) G.R. No. 163419, 13 Order No. 8 and the CBA.
February 2008
Issue:
Facts: 1. Whether the formula proposed by the Union, adopted by the arbitrator and affirmed
The path towards industrial peace is a two-way street. Fundamental fairness and by the CA, was flawed, inasmuch as it completely disregarded the "crediting
protection to labor should always govern dealings between labor and management. provision" contained in the last paragraph of Sec. 1, Art. X of the CBA.
Seemingly conflicting provisions should be harmonized to arrive at an interpretation 2. Whether charging the overpayments made to the 16 respondents through staggered
that is within the parameters of the law, compassionate to labor, yet, fair to deductions from their salaries does not constitute diminution of benefits.
management.
Facts: Held:
In 1999, TSPIC and the Union entered into a CBA for 2000 to 2004. One of the 1. Yes. If the terms of a contract, as in a CBA, are clear and leave no doubt upon
stipulations in the CBA was that the salaries of all regular employees would be the intention of the contracting parties, the literal meaning of their stipulations shall
increased by 10% of base salary on 2000, 12% on 2001, and 11% on 2002. The wage control. However, sometimes, as in this case, though the provisions of the CBA seem
salary increase of the first year shall be over and above the increase, including wage clear and unambiguous, the parties sometimes arrive at conflicting interpretations.
distortion adjustment granted by the TSPIC as per Wage Order No. NCR-07. It also Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase
added that the wage salary increases for 2001 and 2002 shall be deemed inclusive of granted under the CBA. According to TSPIC, it is specifically provided in the CBA
the mandated minimum wage increases under future Wage Orders and shall be that "the salary/wage increase for the year 2001 shall be deemed inclusive of the
considered a correction of any wage distortion that may be brought about by such Wage mandated minimum wage increases under future wage orders that may be issued after
Orders. Wage Order No. 7." The Union, on the other hand, insists that the "crediting" provision
of the CBA finds no application in the present case, since at the time WO No. 8 was
issued, the probationary employees (second group) were not yet covered by the CBA, Respondents attained regular employment status before January 1, 2001. WO
particularly by its crediting provision. No. 8, increasing the minimum wage, was issued after WO No. 7. Thus, respondents
As a general rule, in the interpretation of a contract, the intention of the parties rightfully received the 12% salary increase for the year 2001 granted in the CBA; and
is to be pursued. Absurd and illogical interpretations should also be avoided. consequently, TSPIC rightfully credited that 12% increase against the increase granted
Considering that the parties have unequivocally agreed to substitute the benefits by WO No. 8.
granted under the CBA with those granted under wage orders, the agreement must
prevail and be given full effect. 2. Yes. Diminution of benefits is the unilateral withdrawal by the employer of
Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement benefits already enjoyed by the employees. There is diminution of benefits when it is
that, effective January 1, 2001, all employees on regular status and within the shown that: (1) the grant or benefit is founded on a policy or has ripened into a practice
bargaining unit on or before said date shall be granted a salary increase equivalent to over a long period; (2) the practice is consistent and deliberate; (3) the practice is not
twelve (12%) of their basic monthly salary as of December 31, 2000. The 12% salary due to error in the construction or application of a doubtful or difficult question of law;
increase is granted to all employees who (1) are regular employees and (2) are within and (4) the diminution or discontinuance is done unilaterally by the employer.
the bargaining unit. Second paragraph of (c) provides that the salary increase for the As correctly pointed out by TSPIC, the overpayment of its employees was a
year 2000 shall not include the increase in salary granted under WO No. 7 and the result of an error. This error was immediately rectified by TSPIC upon its discovery.
correction of the wage distortion for November 1999. We have ruled before that an erroneously granted benefit may be withdrawn without
The last paragraph, on the other hand, states the specific condition that the violating the prohibition against non-diminution of benefits.
wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the Here, no vested right accrued to individual respondents when TSPIC corrected
mandated minimum wage increases under future wage orders, that may be issued after its error by crediting the salary increase for the year 2001 against the salary increase
WO No. 7, and shall be considered as correction of the wage distortions that may be granted under WO No. 8, all in accordance with the CBA.
brought about by the said future wage orders. Thus, the wage/salary increases in 2001 Hence, any amount given to the employees in excess of what they were entitled
and 2002 shall be deemed as compliance to future wage orders after WO No. 7. to, as computed above, may be legally deducted by TSPIC from the employees’
Par. (b) is a general provision which allows a salary increase to all those who salaries. It was also compassionate and fair that TSPIC deducted the overpayment in
are qualified. It, however, clashes with the last paragraph which specifically states that installments over a period of 12 months starting from the date of the initial deduction
the salary increases for 2001 and 2002 shall be deemed inclusive of wage increases to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to
subsequent to those granted under WO No. 7. individual respondents any amount deducted from their salaries which was in excess
It is a familiar rule in interpretation of contracts that conflicting provisions of what TSPIC is legally allowed to deduct from the salaries based on the computations
should be harmonized to give effect to all. Likewise, when general and specific discussed in this Decision.
provisions are inconsistent, the specific provision shall be paramount to and govern the As a last word, it should be reiterated that though it is the state’s responsibility
general provision. Thus, it may be reasonably concluded that TSPIC granted the salary to afford protection to labor, this policy should not be used as an instrument to oppress
increases under the condition that any wage order that may be subsequently issued shall management and capital. In resolving disputes between labor and capital, fairness and
be credited against the previously granted increase. The intention of the parties is clear: justice should always prevail.
As long as an employee is qualified to receive the 12% increase in salary, the employee CENTRAL AZUCARERA vs. CENTRAL AZUCARERA LABOR UNION G.R.
shall be granted the increase; and as long as an employee is granted the 12% increase, No. 188949 | July 26, 2010
the amount shall be credited against any wage order issued after WO No. 7. Facts:
In the case, Respondents should not be allowed to receive benefits from the 1. Petitioner is a domestic corporation engaged in the business of sugar
CBA while avoiding the counterpart crediting provision. They have received their manufacturing, while respondent is a legitimate labor organization which serves as
regularization increases under Art. X, Sec. 2 of the CBA and the yearly increase for the the exclusive bargaining representative of petitioner’s rank-and-file employees.
year 2001. They should not then be allowed to avoid the crediting provision which is 2. Petitioner granted its employees the mandatory 13th-month pay since 1975. The
an accompanying condition. formula used by petitioner in computing the 13thmonth pay was: Total Basic
 Annual Salary divided by twelve (12). Included in petitioner’s computation of the not mean that it freely and voluntarily wanted to perform such a beneficial act for
Total Basic Annual Salary were the following: the employees.
(a) basic monthly salary;
(b) first eight (8) hours overtime pay on Sunday and legal/special holiday Issues:
(c) night premium pay; and 1) Whether, under PD 851’s IRR, “basic pay” includes overtime pay, premium
(d) vacation and sick leaves for each year. pay, night shift differential, paid vacation and sick leaves.
3. Throughout the years, petitioner used this computation until 2006. 2) Whether petitioner’s use of its formula has become company practice.
4. On November 6, 2004, respondent staged a strike. During the pendency of the Ratio Decidendi:
strike, petitioner declared a temporary cessation of operations. In December 2005, 1) NO. The 13th-month pay mandated by PD 851 represents an additional income
all the striking union members were allowed to return to work. Subsequently, based on wage but not part of the wage. It is equivalent to 1/12 of the total basic
petitioner declared another temporary cessation of operations for the months of salary earned by an employee within a calendar year. All rank-and-file employees,
April and May 2006. The suspension of operation was lifted on June 2006, but the regardless of their designation or employment status and irrespective of the method
rank-and-file employees were allowed to report for work on a 15-day-per-month by which their wages are paid, are entitled to this benefit, provided that they have
rotation basis that lasted until September 2006. In December 2006, petitioner gave worked for at least one month during the calendar year. If the employee worked for
the employees their 13th-month pay based on the employee’s total earnings during only a portion of the year, the 13th-month pay is computed pro rata.
the year divided by 12. Let us look at the history of PD 851’s IRR’s. The IRR promulgated on Dec. 22,
5. Respondent union objected to the computation. It claimed that the divisor should 1975 provided that “thirteenth-month pay” shall mean 1/12 of the salary of an
have been 8 instead of 12, because the employees worked for only 8 months in employee within a calendar year. “Basic salary” shall include all remunerations or
2006. It likewise asserted that petitioner did not observe the company practice of earnings paid by an employer to an employee for services rendered but may not
giving its employees the guaranteed amount equivalent to their one month pay, in include cost-of-living allowances granted pursuant to PD 525 or Letter of
instances where the computed 13th-month pay was less than their basic monthly Instructions No. 174, profit-sharing payments, and all allowances and monetary
pay. benefits which are not considered or integrated as part of the regular or basic salary
6. During the grievance meeting, petitioner’s representative explained that the change of the employee at the time of the promulgation of the Decree on December 16,
in the computation of the 13th-month pay was intended to rectify an error in the 1975.
computation, particularly the concept of basic pay which should have included only Next, the Supplementary IRR issued on Jan. 16, 1976 clarified that overtime pay,
the basic monthly pay of the employees. earnings, and other remuneration that are not part of the basic salary shall not be
7. After failed meetings for mediation before the NCMB, respondent filed a complaint included in the computation of the 13th-month pay.
against petitioner for money claims based on alleged diminution of Later on, the Revised Guidelines on the Implementation of the 13th-Month Pay
benefits/erroneous computation of 13th-month pay before the Regional Arbitration Law issued on Nov. 16, 1987 specifically stated that the minimum 13th-month pay
Branch of the NLRC. required by law shall not be less than 1/12 of the total basic salary earned by an
8. LA dismissed the complaint, ruling that petitioner had the right to rectify the error employee within a calendar year. Furthermore, the term “basic salary” of an
in the computation of the 13th-month pay. NLRC reversed. CA affirmed NLRC. employee for the purpose of computing the 13th-month pay was interpreted to
Hence, this petition. include all remuneration or earnings paid by the employer for services rendered,
9. Petitioner argues that there was an error in the computation of the 13th-month pay but does not include allowances and monetary benefits which are not integrated as
of its employees as a result of its mistake in implementing P.D. No. 851, an error part of the regular or basic salary, such as the cash equivalent of unused vacation
that was discovered by the management only when respondent raised a question and sick leave credits, overtime, premium, night differential and holiday pay, and
concerning the computation of the employees’ 13th-month pay for 2006. It avers cost-of-living allowances. However, these salary-related benefits should be
that although the formula was used for almost 30 years, such length of time does 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 WESLEYAN UNIVERSITY-PHILIPPINES, vs. WESLEYAN UNIVERSITY-
are treated as part of the basic salary of the employees. PHILIPPINES FACULTY and STAFF ASSOCIATION
Based on the foregoing, it is clear that there could have no erroneous interpretation Facts:
or application of what is included in the term “basic salary” for purposes of Petitioner Wesleyan University-Philippines is a non-stock, non-profit
computing the 13th-month pay of employees. From the inception of P.D. No. 851 educational institution duly organized and existing under the laws of the Philippines.6
on December 16, 1975, clear-cut administrative guidelines have been issued to Respondent Wesleyan University-Philippines Faculty and Staff Association, on the
insure uniformity in the interpretation, application, and enforcement of the other hand, is a duly registered labor organization acting as the sole and exclusive
provisions of P.D. 851 and its implementing regulations. bargaining agent of all rank-and-file faculty and staff employees of petitioner. In
December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until May
2) YES. Petitioner’s practice in giving 13th-month pay based on the employees’ gross 31, 2008.10
annual earnings which included the basic monthly salary, premium pay for work On August 16, 2005, petitioner, through its President, Atty. Guillermo T.
on rest days and special holidays, night shift differential pay and holiday pay Maglaya (Atty. Maglaya), issued a Memorandum providing guidelines on the
continued for almost thirty (30) years and has ripened into a company policy or implementation of vacation and sick leave credits as well as vacation leave
practice which cannot be unilaterally withdrawn. commutation.
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara)
mandates that benefits given to employees cannot be taken back or reduced wrote a letter13 to Atty. Maglaya informing him that respondent is not amenable to
unilaterally by the employer because the benefit has become part of the the unilateral changes made by petitioner. De Lara questioned the guidelines for
employment contract, written or unwritten. The rule against diminution of benefits being violative of existing practices and the CBA.
applies if it is shown that the grant of the benefit is based on am express policy or On February 8, 2006, a Labor Management Committee (LMC) Meeting was
has ripened into a practice over a long period of time and that the practice is held during which petitioner advised respondent to file a grievance complaint on the
consistent and deliberate. Nevertheless, the rule will not apply if the practice is implementation of the vacation and sick leave policy. In the same meeting, petitioner
due to error in the construction or application of a doubtful or difficult announced its plan of implementing a one-retirement policy, which was unacceptable
question of law. But even in cases of error, it should be shown that the correction to respondent.
is done soon after discovery of the error. Unable to settle their differences at the grievance level, the parties referred the
Here, there was no doubtful or difficult question of law. Also, the voluntariness of matter to a Voluntary Arbitrator. During the hearing, respondent submitted affidavits
the grant of the benefit was shown by the number of years petitioner had paid the to prove that there is an established practice of giving two retirement benefits, one
benefit to its employees. Petitioner only changed the formula in the computation of from the Private Education Retirement Annuity Association (PERAA) Plan and
the 13thmonth pay after almost 30 years and only after the dispute between the another from the CBA Retirement Plan. On November 2, 2006, the Voluntary
management and employees erupted. This act of petitioner in changing the formula Arbitrator rendered a Decision declaring the one-retirement policy and the
at this time cannot be sanctioned, as it indicates a badge of bad faith. Memorandum dated August 16, 2005 contrary to law.
Furthermore, petitioner cannot use the argument that it is suffering from financial CA rendered a Decision finding the rulings of the Voluntary Arbitrator supported by
losses to claim exemption from the coverage of the law on 13th-month pay, or to substantial evidence. It also affirmed the nullification of the one-retirement policy
spare it from its erroneous unilateral computation of the 13th-month pay of its and the Memorandum dated August 16, 2005 on the ground that these unilaterally
employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. amended the CBA without the consent of respondent.
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 Issue: Whether or not the Court of Appeals committed grave and palpable error in
such prior authorization has been obtained by petitioner; thus, it is not entitled to ruling that a university practice of granting its employees two (2) sets of Retirement
claim such exemption. Benefits had already been established?
Held:
 No. The Non-Diminution Rule found in Article 100 of the Labor Code As a last ditch effort to abolish the two-retirement policy, petitioner contends
explicitly prohibits employers from eliminating or reducing the benefits received by that such practice is illegal or unauthorized and that the benefits were erroneously
their employees. This rule, however, applies only if the benefit is based on an express given by the previous administration. No evidence, however, was presented by
policy, a written contract, or has ripened into a practice. To be considered a practice, petitioner to substantiate its allegations.
it must be consistently and deliberately made by the employer over a long period of Considering the foregoing disquisition, we agree with the findings of the
time. Voluntary Arbitrator, as affirmed by the CA, that there is substantial evidence to
An exception to the rule is when "the practice is due to error in the prove that there is an existing practice of giving two retirement benefits, one under
construction or application of a doubtful or difficult question of law." The error, the PERAA Plan and another under the CBA Retirement Plan.
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. Petitioner’s 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, petitioner’s 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, petitioner’s 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-memorandum45 dated May 11, 2006, entitled "Suggestions on
the defenses we can introduce to justify the abolition of double retirement policy,"
prepared by the petitioner’s 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.