6/28/2019 ARCO METAL PRODUCTS v.
SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU
577 Phil. 1
SECOND DIVISION
[ G.R. No. 170734, May 14, 2008 ]
ARCO METAL PRODUCTS, CO., INC., AND MRS. SALVADOR UY, PETITIONERS,
VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU (SAMARM-
NAFLU), Respondent.
DECISION
TINGA, J,:
[1] [2] [3]
This treats of the Petition for Review of the Resolution and Decision of the
Court of Appeals dated 9 December 2005 and 29 September 2005, respectively in
CA-G.R. SP No. 85089 entitled Samahan ng mga Manggagawa sa Arco Metal-
NAFLU (SAMARM-NAFLU) v. Arco Metal Products Co., Inc. and/or Mr. Salvador
[4]
Uy/Accredited Voluntary Arbitrator Apron M. Mangabat, which ruled that the
th
13 month pay, vacation leave and sick leave conversion to cash shall be paid in full
to the employees of petitioner regardless of the actual service they rendered within
a year.
Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of petitioner's rank and file employees. Sometime in
th
December 2003, petitioner paid the 13 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. The employees were:
1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004
2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003
3. Rodelio Collantes Sickness August 2003 to February 2004
Respondent protested the prorated scheme, claiming that on several occasions
petitioner did not prorate the payment of the same benefits to seven (7) employees
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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.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and
found that the giving of the contested benefits in full, irrespective of the actual
service rendered within one year has not ripened into a practice. He noted the
affidavit of Joselito Baingan, manufacturing group head of petitioner, which states
that the giving in full of the benefit was a mere error. He also interpreted the 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.[5]
Unsatisfied, respondent filed a Petition for Review[6] under Rule 43 before the
Court of Appeals, imputing serious error to Mangabat's conclusion. The Court of
Appeals ruled that the CBA did not intend to foreclose the application of prorated
payments of leave benefits to covered employees. The 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 petitioner's 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. The dispositive portion of the court's decision reads:
WHEREFORE, premises considered, the instant petition is hereby
GRANTED and the Decision of Accredited Voluntary Arbiter Apron M.
Mangabat in NCMB-NCR Case No. PM-12-345-03, dated June 18, 2004 is
th
hereby AFFIRMED WITH MODIFICATION in that the 13 month pay,
bonus, vacation leave and sick leave conversions to cash shall be paid to the
[7]
employees in full, irrespective of the actual service rendered within a year.
Petitioner moved for the reconsideration of the decision but its motion was denied,
hence this petition.
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Petitioner submits that the Court of Appeals erred when it ruled that 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.[8]
The petition ultimately fails.
First, we determine whether the intent of the CBA provisions is to grant full benefits
regardless of service actually rendered by an employee to the company. According
to petitioner, there is a one-year cutoff in the entitlement to the benefits provided
in the CBA which is evident from the wording of its pertinent provisions as well as
of the existing law.
We agree with petitioner on the first issue. The applicable CBA provisions read:
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ARTICLE XIV-VACATION LEAVE
Section 1. Employees/workers covered by this agreement who have rendered at
least one (1) year of service shall be entitled to sixteen (16) days vacation leave
with pay for each year of service. Unused leaves shall not be cumulative but
shall be converted into its cash equivalent and shall become due and payable
st
every 1 Saturday of December of each year.
st
However, if the 1 Saturday of December falls in December 1, November 30
(Friday) being a holiday, the management will give the cash conversion of
leaves in November 29.
Section 2. In case of resignation or retirement of an employee, his vacation
leave shall be paid proportionately to his days of service rendered during the
year.
ARTICLE XV-SICK LEAVE
Section 1. Employees/workers covered by this agreement who have rendered at
least one (1) year of service shall be entitled to sixteen (16) days of sick leave
with pay for each year of service. Unused sick leave shall not be cumulative but
shall be converted into its cash equivalent and shall become due and payable
st
every 1 Saturday of December of each year.
Section 2. Sick Leave will only be granted to actual sickness duly certified by
the Company physician or by a licensed physician.
Section 3. All commutable earned leaves will be paid proportionately upon
retirement or separation.
ARTICLE XVI EMERGENCY LEAVE, ETC.
Section 1. The Company shall grant six (6) days emergency leave to employees
covered by this agreement and if unused shall be converted into cash and
st
become due and payable on the 1 Saturday of December each year.
Section 2. Employees/workers covered by this agreement who have rendered
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at least one (1) year of service shall be entitled to seven (7) days of Paternity
Leave with pay in case the married employee's legitimate spouse gave birth.
Said benefit shall be non-cumulative and non-commutative and shall be
deemed in compliance with the law on the same.
Section 3. Maternity leaves for married female employees shall be in
accordance with the SSS Law plus a cash grant of P1,500.00 per month.
xxx
ARTICLE XVIII- 13TH MONTH PAY & BONUS
Section 1. The Company shall grant 13th Month Pay to all employees covered
by this agreement. The basis of computing such pay shall be the basic salary
per day of the employee multiplied by 30 and shall become due and payable
every 1st Saturday of December.
Section 2. The Company shall grant a bonus to all employees as practiced
which shall be distributed on the 2 nd Saturday of December.
Section 3. That the Company further grants the amount of Two Thousand Five
Hundred Pesos (P2,500.00) as signing bonus plus a free CBA Booklet.[9]
(Underscoring ours)
There is no doubt that in order to be entitled to the full monetization of sixteen (16)
days of vacation and sick leave, one must have rendered at least one year of service.
The clear wording of the provisions does not allow any other interpretation. Anent
th
the 13 month pay and bonus, we agree with the findings of Mangabat that the
CBA provisions did not give any meaning different from that given by the law, thus
it should be computed at 1/12 of the total compensation which an employee
receives for the whole calendar year. The bonus is also equivalent to the amount of
th
the 13 month pay given, or in proportion to the actual service rendered by an
employee within the year.
On the second issue, however, petitioner founders.
As a general rule, in petitions for review under Rule 45, the Court, not being a trier
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of facts, does not normally embark on a re-examination of the evidence presented
by the contending parties during the trial of the case considering that the findings
of facts of the Court of Appeals are conclusive and binding on the Court.[10] The
rule, however, admits of several exceptions, one of which is when the findings of the
Court of Appeals are contrary to that of the lower tribunals. Such is the case here,
as the factual conclusions of the Court of Appeals differ from that of the voluntary
arbitrator.
Petitioner granted, in several instances, full benefits to employees who have not
served a full year, thus:
Name Reason Duration
Name Reason Duration
1. Percival Bernas Sickness July 1992 to November 1992
2. Cezar Montero Sickness 21 Dec. 1992 to February 1993
3. Wilson Sayod Sickness May 1994 to July 1994
4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996
5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003
[11]
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 2003
Petitioner claims that its full payment of benefits regardless of the length of service
to the company does not constitute voluntary employer practice. It points out that
the payments had been erroneously made and they occurred in isolated cases in the
years 1992, 1993, 1994, 1999, 2002 and 2003. According to petitioner, it was only
in 2003 that the accounting department discovered the error "when there were
already three (3) employees involved with prolonged absences and the error was
corrected by implementing the pro-rata payment of benefits pursuant to law and
their existing CBA."[12] It adds that the seven earlier cases of full payment of
benefits went unnoticed considering the proportion of one employee concerned (per
year) vis à vis the 170 employees of the company. Petitioner describes the situation
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as a "clear oversight" which should not be taken against it.[13] To further bolster its
case, petitioner argues that for a grant of a benefit to be considered a practice, it
should have been practiced over a long period of time and must be shown to be
consistent, deliberate and intentional, which is not what happened in this case.
Petitioner tries to make a case out of the fact that the CBA has not been modified to
incorporate the giving of full benefits regardless of the length of service, proof that
the grant has not ripened into company practice.
We disagree.
Any benefit and supplement being enjoyed by employees cannot be reduced,
diminished, discontinued or eliminated by the employer.[14] The principle of non-
diminution of benefits is founded on the Constitutional mandate to "protect the
rights of workers and promote their welfare,"[15] and "to afford labor full
protection."[16] 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 DavaoFruits Corporation v. Associated Labor Unions,
et al.[17]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,[18] we ruled that the employer's 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,[19] the Court ordered the
payment of the cash equivalent of the unenjoyed sick leave benefits to its
intermittent workers after finding that said workers had received these benefits for
almost four years until the grant 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.
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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 portions of which
read:
th
5. 13 month pay, bonus, and cash conversion of unused/earned vacation
leave, sick leave and emergency leave are computed and paid in full to
employees who rendered services to the company for the entire year and
proportionately to those employees who rendered service to the company
for a period less than one (1) year or twelve (12) months in accordance
with the CBA provision relative thereto.
6. It was never the intention much less the policy of the management to
grant the aforesaid benefits to the employees in full regardless of whether
or not the employee has rendered services to the company for the entire
year, otherwise, it would be unjust and inequitable not only to the
[24]
company but to other employees as well.
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.[25]
Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it
could have easily presented other proofs, such as the names of other employees who
did not fully serve for one year and thus were given prorated benefits.
Experientially, a perfect attendance in the workplace is always the goal but it is
seldom achieved. There must have been other employees who had reported for work
less than a full year and who, as a consequence received only prorated benefits. This
could have easily bolstered petitioner's theory of mistake/error, but sadly, no
evidence to that effect was presented.
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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.
SO ORDERED.
Quisumbing, (Chairperon), Carpio Morales and Velasco, Jr., JJ., concur.
Brion, J., with seperate concurring opinion,
[1] Rollo, pp. 3-31.
[2] Id. at 36.
[3] Id. at 38-56.
[4] Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices Eugenio
S. Labitoria and Eliezer R. De Los Santos, concurring.
[5] Id. at 175.
[6] Id. at 57-77.
[7] Id. at 55.
[8] Id. at 17.
[9] Id. at 110-111. These provisions were carried over from four (4) previous CBAs
covering the following dates: 28 August 1990 to 27 August 1991, 1 August 1993 to 31
July 1996, 1 August 1996 to 31 July 1999, and 1 August 1999 to 31 July 2002.
[10] New City Builders, Inc. v. National Labor Relations Commission, G.R. No.
149281, 15 June 2005, 460 SCRA 220, 227.
[11] Rollo, p. 22.
[ ]
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[12] Id.
[13] Id. at 23.
[14] Tiangco, et al. v. Hon. Leogardo, Jr., etc., et al., 207 Phil. 2235 (1983) .
[15]Constitution, Article II, Section 18.
[16] Constitution, Article XIII, Section 3.
[17] G.R. No. 85073, 24 August 1993, 225 SCRA 562.
[18] G.R. No. 152456, 28 April 2004, 428 SCRA 239, 249.
[19] G.R. No. 102132, 19 March 1993, 220 SCRA 197.
[20]Sevilla Trading Company v. Semana, supra note 12.
[21] Davao Fruits Corporation v. Associated Labor Unions, supra note 11.
[22] Tianco v. Leogardo, Jr., supra note 10
[23] Sevilla Trading Company v. Semana, supra.
[24] Rollo, pp. 120-121.
[25] Mark Roche International v. NLRC, 372 Phil. 238, 247 (1999).
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