SECOND DIVISION

[G.R. No. 152456. April 28, 2004.]

SEVILLA TRADING COMPANY, petitioner, vs. A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS
UNION-SUPER, respondents.

DECISION

PUNO, J p:

On appeal is the Decision 1 of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining
the Decision 2 of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its subsequent
Resolution 3 dated 06 March 2002 denying petitioner's Motion for Reconsideration.

The facts of the case are as follows:

For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic
corporation engaged in trading business, organized and existing under Philippine laws, added to the base figure, in its
computation of the 13th-month pay of its employees, the amount of other benefits received by the employees which
are beyond the basic pay. These benefits included:

(a) Overtime premium for regular overtime, legal and special holidays;

(b) Legal holiday pay, premium pay for special holidays;

(c) Night premium;

(d) Bereavement leave pay;

(e) Union leave pay;

(f) Maternity leave pay;

(g) Paternity leave pay;

(h) Company vacation and sick leave pay; and

(i) Cash conversion of unused company vacation and sick leave.

Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation
and payment of the 13th-month pay and other benefits. When it changed its person in charge of the payroll in the
process of computerizing its payroll, and after audit was conducted, it allegedly discovered the error of including non-
basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. It cited
the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b)
which stated that:

"Basic salary" shall include all remunerations or earnings paid by an employer to an employee
for services rendered but may not include cost-of-living allowances granted pursuant to P.D. No. 525
or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits
which are not considered or integrated as part of the regular or basic salary of the employee at the
time of the promulgation of the Decree on December 16, 1975. ITScAE

Petitioner then effected a change in the computation of the thirteenth month pay, as follows:

13th-month pay = net basic pay

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 —————
12 months
where:
net basic pay = gross pay – (non-basic pay or other benefits)
Now excluded from the base figure used in the computation of the thirteenth month pay are the following:

a) Overtime premium for regular overtime, legal and special holidays;

b) Legal holiday pay, premium pay for special holidays;

c) Night premium;

d) Bereavement leave pay;

e) Union leave pay;

f) Maternity leave pay;

g) Paternity leave pay;

h) Company vacation and sick leave pay; and

i) Cash conversion of unused vacation/sick leave.

Hence, the new computation reduced the employees' thirteenth month pay. The daily piece-rate workers
represented by private respondent Sevilla Trading Workers Union — SUPER (Union, for short), a duly organized and
registered union, through the Grievance Machinery in their Collective Bargaining Agreement, contested the new
computation and reduction of their thirteenth month pay. The parties failed to resolve the issue.

On March 24, 2000, the parties submitted the issue of "whether or not the exclusion of leaves and other related
benefits in the computation of 13th-month pay is valid" to respondent Accredited Voluntary Arbitrator Tomas E. Semana
(A.V.A. Semana, for short) of the National Conciliation and Mediation Board, for consideration and resolution.

The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees'
benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid leaves, like sick leave,
vacation leave, paternity leave, union leave, bereavement leave, holiday pay and other leaves with pay in the CBA
should be included in the base figure in the computation of their 13th-month pay.

On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic salary,
excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that, in adjusting its
computation of the 13th-month pay, it merely rectified the mistake its personnel committed in the previous years.

A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows:

WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that:

1. The company is hereby ordered to include sick leave and vacation leave, paternity leave,
union leave, bereavement leave and other leave with pay in the CBA, premium for work done on rest
days and special holidays, and pay for regular holidays in the computation of the 13th-month pay to all
covered and entitled employees;

2. The company is hereby ordered to pay corresponding backwages to all covered and entitled
employees arising from the exclusion of said benefits in the computation of 13th-month pay for the
year 1999.

Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the Court of
Appeals, a "Manifestation and Motion for Time to File Petition for Certiorari" on January 19, 2001. A month later, on
February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the
nullification of the Decision of the Arbitrator. In addition to its earlier allegations, petitioner claimed that assuming the
old computation will be upheld, the reversal to the old computation can only be made to the extent of including non-

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basic benefits actually included by petitioner in the base figure in the computation of their 13th-month pay in the prior
years. It must exclude those non-basic benefits which, in the first place, were not included in the original computation.
The appellate court denied due course to, and dismissed the petition. TEAcCD

Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:

1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13TH-
MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS
WITHOUT LEGAL BASIS.

2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION

WHICH WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS. 4

First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the
arbitrator is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for certiorari under
Rule 65. Section 1 of Rule 43 states:

RULE 43

Appeals from the Court of Tax Appeals and

Quasi-Judicial Agencies to the Court of Appeals

SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil
Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission,
Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic
Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and
voluntary arbitrators authorized by law. [Emphasis supplied.]

It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an
appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal
within the fifteen-day reglementary period from its notice of the adverse decision of A.V.A. Semana. It received a copy
of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal under Rule 43 of the 1997
Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a "Manifestation and
Motion for Time to File Petition for Certiorari," and on February 19, 2001, it filed a petition for certiorari under Rule 65
of the 1997 Rules of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it.

A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for
review on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65 is an independent action
that cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule 43,
in the case at bar), especially if such loss or lapse was occasioned by one's own neglect or error in the choice of
remedies. 5

Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading filed its
petition for certiorari on February 19, 2001. More particularly, the decision of A.V.A. Semana became final and
executory upon the lapse of the fifteen-day reglementary period to appeal, or on January 5, 2001. Hence, the Court of
Appeals is correct in holding that it no longer had appellate jurisdiction to alter, or much less, nullify the decision of
A.V.A. Semana.

Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a
proper action, we still find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A.
Semana. "Grave abuse of discretion" has been interpreted to mean "such capricious and whimsical exercise of judgment
as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty

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or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." 6 We find nothing of that
sort in the case at bar.

On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and
jurisprudence. A.V.A. Semana is correct in holding that petitioner's stance of mistake or error in the computation of the
thirteenth month pay is unmeritorious. Petitioner's submission of financial statements every year requires the services
of a certified public accountant to audit its finances. It is quite impossible to suggest that they have discovered the
alleged error in the payroll only in 1999. This implies that in previous years it does not know its cost of labor and
operations. This is merely basic cost accounting. Also, petitioner failed to adduce any other relevant evidence to support
its contention. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay, petitioner
merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged "corrected"
computation of the thirteenth month pay. There was no explanation whatsoever why its inclusion of non-basic benefits
in the base figure in the computation of their 13th-month pay in the prior years was made by mistake, despite the clarity
of statute and jurisprudence at that time. ACcaET

The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC, 7 which
petitioner Sevilla Trading invokes. In that case, this Court decided on the proper computation of the cost-of-living
allowance (COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage Order No. 6 (effective 30
October 1984), increased the COLA of its monthly-paid employees by multiplying the P3.00 daily COLA by 22 days, which
is the number of working days in the company. The Union disagreed with the computation, claiming that the daily COLA
rate of P3.00 should be multiplied by 30 days, which has been the practice of the company for several years. We upheld
the contention of the petitioner corporation. To answer the Union's contention of company practice, we ruled that:

Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982
and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be
construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn
by petitioner. To be considered as such, it should have been practiced over a long period of time, and
must be shown to have been consistent and deliberate . . . The test of long practice has been
enunciated thus:

. . . Respondent Company agreed to continue giving holiday pay knowing fully well
that said employees are not covered by the law requiring payment of holiday pay." (Oceanic
Pharmacal Employees Union [FFW] vs. Inciong, 94 SCRA 270 [1979])

Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the
implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4
were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly
equivalent was laid down.

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous
application of the law . . .

In the above quoted case, the grant by the employer of benefits through an erroneous application of the law
due to absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally
discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct when it pointed out that as
early as 1981, this Court has held in San Miguel Corporation vs. Inciong 8 that:

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is
used as the basis in the determination of his 13th-month pay. Any compensations or remunerations
which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory
bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:

a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of

Instruction No. 174;

b) Profit sharing payments;

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 c) All allowances and monetary benefits which are not considered or integrated as
part of the regular basic salary of the employee at the time of the promulgation of the Decree
on December 16, 1975.

Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree
851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are
excluded as part of the basic salary and in the computation of the 13th-month pay.

The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of
Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other
payments which are properly considered as "fringe" benefits. Likewise, the catch-all exclusionary
phrase "all allowances and monetary benefits which are not considered or integrated as part of the
basic salary" shows also the intention to strip basic salary of any and all additions which may be in the
form of allowances or "fringe" benefits.

Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is
even more empathic in declaring that earnings and other remunerations which are not part of the
basic salary shall not be included in the computation of the 13th-month pay.

While doubt may have been created by the prior Rules and Regulations Implementing
Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an
employer to an employee, this cloud is dissipated in the later and more controlling Supplementary
Rules and Regulations which categorically, exclude from the definition of basic salary earnings and
other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules
indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad
exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to
include all remunerations and earnings within the definition of basic salary. aTEHIC

The all-embracing phrase "earnings and other remunerations" which are deemed not part of
the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium
for works performed on rest days and special holidays, pay for regular holidays and night differentials.
As such they are deemed not part of the basic salary and shall not be considered in the computation
of the 13th-month pay. If they were not so excluded, it is hard to find any "earnings and other
remunerations" expressly excluded in the computation of the 13th-month pay. Then the exclusionary
provision would prove to be idle and with no purpose.

In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or
application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of its employees,
such as maternity leave pay, cash equivalent of unused vacation and sick leave, among others in the computation of the
13th-month pay, this may only be construed as a voluntary act on its part. Putting the blame on the petitioner's payroll
personnel is inexcusable.

In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that: 9

The "Supplementary Rules and Regulations Implementing P.D. No. 851" which put to rest all
doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as early
as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules.
And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items
therein until 1981. Petitioner continued its practice in December 1981, after promulgation of the
aforequoted San Miguel decision on February 24, 1981, when petitioner purportedly "discovered" its
mistake.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the
computation of its employees' thirteenth month pay, without the payments for sick, vacation and
maternity leave, premium for work done on rest days and special holidays, and pay for regular
holidays. The considerable length of time the questioned items had been included by petitioner
indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake.

A company practice favorable to the employees had indeed been established and the
payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and
supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or

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 eliminated by the employer, by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No.
851, and Art. 100 of the Labor Code of the Philippines which prohibit the diminution or elimination by
the employer of the employees' existing benefits. [Tiangco vs. Leogardo,Jr., 122 SCRA 267 (1983)]

With regard to the length of time the company practice should have been exercised to constitute voluntary
employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid
down any rule requiring a specific minimum number of years. In the above quoted case of Davao Fruits Corporation vs.
Associated Labor Unions, 10 the company practice lasted for six (6) years. In another case, Davao Integrated Port
Stevedoring Services vs. Abarquez, 11 the employer, for three (3) years and nine (9) months, approved the commutation
to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs.
Leogardo, Jr., 12 the employer carried on the practice of giving a fixed monthly emergency allowance from November
1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court held that the grant of these
benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case at bar,
petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we rule likewise constitutes
voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the
Labor Code:

Art. 100. Prohibition against elimination or diminution of benefits. — Nothing in this Book shall
be construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.

IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 63086 dated
27 November 2001 and its Resolution dated 06 March 2002 are hereby AFFIRMED.

SO ORDERED

||| (Sevilla Trading Co. v. Semana, G.R. No. 152456, [April 28, 2004], 472 PHIL 220-236)

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 p:

This treats of the Petition for Review 1 of the Resolution 2 and Decision 3 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
Uy/Accredited Voluntary Arbitrator Apron M. Mangabat, 4 which ruled that the 13th 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 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. The employees were:
1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004

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 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 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 hereby AFFIRMED WITH MODIFICATION in that the 13th month pay, bonus, vacation leave
and sick leave conversions to cash shall be paid to the employees in full, irrespective of the actual
service rendered within a year. 7

Petitioner moved for the reconsideration of the decision but its motion was denied, hence this petition.
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:

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 every 1st Saturday of December of each year.

However, if the 1st 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

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 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 every 1st 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 become due and payable on the 1st
Saturday of December each year.

Section 2. Employees/workers covered by this agreement who have rendered 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 xxx 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 2nd 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 the 13th 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 the 13th 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 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

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

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 5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 2003 11
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 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 Davao Fruits 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.
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:

5. 13th month pay, bonus, and cash conversion of unused/earned vacation leave, sick leave and
emergency leave are computed and paid in full to employees who rendered services to the company
for the entire year and proportionately to those employees who rendered service to the company for
a period less than one (1) year or 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 company
but to other employees as well. 24

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

9|Page
 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.
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, Carpio-Morales and Velasco, Jr., JJ., concur.
Brion, J., with separate concurring opinion.

Separate Opinions

BRION, J., concurring:

I fully agree with the ponencia that the enhanced 13th month pay and bonus computations made by the
company have ripened into an established benefit that can no longer be unilaterally withdrawn. The company claim
— supported solely by the affidavit of a company officer that the computations were "clear oversights" that should
not be taken against it — must fail as against the undisputed evidence of the number of times and years the
enhanced computations have been in place. At most, the company claim raises a doubt about the real character of
these computations but any such doubt we have to resolve in favor of labor (Article 4, Labor Code).
I concur separately to clarify that the basis for the prohibition against diminution of established benefits is
not really Article 100 of the Labor Code as the respondents claimed and as the cases cited in the ponencia
mentioned. Article 100 refers solely to the non-diminution of benefits enjoyed at the time of the promulgation of the
Labor Code. Employer-employee relationship is contractual and is based on the express terms of the employment
contract as well as on its implied terms, among them, those not expressly agreed upon but which the employer has
freely, voluntarily and consistently extended to its employees. Under the principle of mutuality of contracts
embodied in Article 1308 of the Civil Code, the terms of a contract — both express and implied — cannot be
withdrawn except by mutual consent or agreement of the contracting parties. In the present case, the lack of
consent or agreement was precisely the basis for the employees' complaint
||| (Arco Metal Products, Co., Inc. v. Samahan ng mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734, [May 14,
2008], 577 PHIL 1-12)

SECOND DIVISION

[G.R. No. 74156. June 29, 1988.]

GLOBE MACKAY CABLE AND RADIO CORPORATION, FREDERICK WHITE and JESUS SANTIAGO,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, FFW-GLOBE MACKAY EMPLOYEES
UNION and EDA CONCEPCION, respondents.

Castillo, Laman, Tan & Pantaleon for petitioners.

Edwin D. Dellaban for private respondent.

DECISION

MELENCIO-HERRERA, J p:

A special civil action for Certiorari with a prayer for a Temporary Restraining Order to enjoin respondents from enforcing
the Decision of 10 March 1986 of the National Labor Relations Commission (NLRC), in NCR Case No. 1-168-85 entitled
10 | P a g e
"FFW-Globe Mackay Employees Union, et al., vs. Globe Mackay Cable & Radio Corporation, et al.," the dispositive
portion of which reads:

"WHEREFORE, premises considered, the appealed Decision is as it is hereby SET ASIDE and another
one issued:

1. Declaring respondents-appellees (petitioners herein) guilty of illegal deductions of cost-of-living

allowance;

2. Ordering respondents-appellees to pay complainants-appellants their back allowances reckoned

from the time of illegal deduction; and

3. Ordering respondents-appellees from further illegally deducting the allowances of complainants-

appellants.

SO ORDERED."

Presiding Commissioner of the NLRC, Diego P. Atienza, concurred in the result, while Commissioner Cleto T. Villaltuya
dissented and voted to affirm in toto the Labor Arbiter's Decision.

On 19 May 1986, we issued the Temporary Restraining Order enjoining respondents from enforcing the assailed
Decision. On 2 September 1987, we gave due course to the petition and required the submittal of memoranda, by the
parties, which has been complied with.

The facts follow:

Wage Order No. 6, which took effect on 30 October 1984, increased the cost-of-living allowance of non-agricultural
workers in the private sector. Petitioner corporation complied with the said Wage Order by paying its monthly-paid
employees the mandated P3.00 per day COLA. However, in computing said COLA, Petitioner Corporation multiplied the
P3.00 daily COLA by 22 days, which is the number of working days in the company.

Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA rate of P3.00
should be multiplied by 30 days to arrive at the monthly COLA rate. The union alleged furthermore that prior to the
effectivity of Wage Order No. 6, Petitioner Corporation had been computing and paying the monthly COLA on the basis
of thirty (30) days per month and that this constituted an employer practice, which should not be unilaterally
withdrawn. prcd

After several grievance proceedings proved futile, the Union filed a complaint against Petitioner Corporation, its
President, F. White, and Vice-President, J. Santiago, for illegal deduction, underpayment, unpaid allowances, and
violation of Wage Order No. 6. Petitioners White and Santiago were sought to be held personally liable for the money
claims thus demanded.

Labor Arbiter Adelaido F. Martinez sustained the position of Petitioner Corporation by holding that since the individual
petitioners acted in their corporate capacity they should not have been impleaded; and that the monthly COLA should
be computed on the basis of twenty two (22) days, since the evidence showed that there are only 22 paid days in a
month for monthly-paid employees in the company. His reasoning, inter alia, was as follows:

"To compel the respondent company to use 30 days in a month to compute the allowance and retain
22 days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably
unjust. If 30 days is used as divisor, then it must be used for the computation of all benefits, not just
the allowance. But this is not fair to complainants, not to mention that it will contravene the provision
of the parties' CBA."

On appeal, the NLRC reversed the Labor Arbiter, as heretofore stated, and held that Petitioner Corporation was guilty of
illegal deductions, upon the following considerations: (1) that the P3.00 daily COLA under Wage Order No. 6 should be
paid and computed on the basis of thirty (30) days instead of twenty-two (22) days since workers paid on a monthly
basis are entitled to COLA on Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full allowance
enjoyed by Petitioner Corporation's monthly-paid employees before the CBA executed between the parties in 1982
constituted voluntary employer practice, which cannot be unilaterally withdrawn; and (3) that petitioners White and
Santiago were properly Impleaded as respondents in the case below.

11 | P a g e
Hence, this Petition, anchored on the charge of grave abuse of discretion by the NLRC.

We are constrained to reverse the reversal.

Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 uniformly read as follows:

"Section 5. Allowance for Unworked Days.

"All covered employees shall be entitled to their daily living allowance during the days that they are
paid their basic wage, even if unworked." (emphasis supplied)

The primordial consideration, therefore, for entitlement to COLA is that basic wage is being paid. In other words, the
payment of COLA is mandated only for the days that the employees are paid their basic wage, even if said days are
unworked. So that, on the days that employees are not paid their basic wage, the payment of COLA is not mandated. As
held in University of Pangasinan Faculty Union vs. University of Pangasinan, L-63122, February 20, 1984, 127 SCRA 691):

" . . . it is evident that the intention of the law is to grant ECOLA upon the payment of basic wages.
Hence, we have the principle of 'No Pay, No ECOLA.'"

Applied to monthly-paid employees if their monthly salary covers all the days in a month, they are deemed paid their
basic wages for all those days and they should be entitled to their COLA on those days "even if unworked," as the NLRC
had opined. Peculiar to this case, however, is the circumstance that pursuant to the Collective Bargaining Agreement
(CBA) between Petitioner Corporation and Respondent Union, the monthly basic pay is computed on the basis of five (5)
days a week, or twenty two (22) days a month. Thus, the pertinent provisions of that Agreement read:

"Art. XV (a) — Eight net working hours shall constitute the regular work day for five days."

"Art. XV (b) — Forty net hours of work, 5 working days, shall constitute the regular work week."

"Art. XVI, Sec. 1 (b) — All overtime worked in excess of eight net hours daily or in excess of 5 days
weekly shall be computed on hourly basis at the rate of time and one half."

The Labor Arbiter also found that in determining the hourly rate of monthly paid employees for purposes of computing
overtime pay, the monthly wage is divided by the number of actual work days in a month and then, by eight (8) working
hours. If a monthly-paid employee renders overtime work, he is paid his basic salary rate plus one-half thereof. For
example, after examining the specimen payroll of employee Jesus L. Santos, the Labor Arbiter found:

"the employee Jesus L. Santos, who worked on Saturday and Sunday was paid base pay plus 50%
premium. This is over and above his monthly basic pay as supported by the fact that base pay was
paid. If the 6th and 7th days of the week are deemed paid even if unworked and included in the
monthly salary, Santos should not have been paid his base pay for Saturday and Sunday but should
have received only the 50% overtime premium."

Similarly, the specimen payrolls of employees, Dennis Dungon and Rene Sanvictores, showed that in computing the
vacation and sick leaves of the employees, Petitioner Corporation consistently used twenty-two (22) days. LibLex

Under the peculiar circumstances obtaining, therefore, where the company observes a 5-day work week, it will have to
be held that the COLA should be computed on the basis of twenty two (22) days, which is the period during which the
monthly paid employees of Petitioner Corporation receive their basic wage. The CBA is the law between the parties and,
if not acceptable, can be the subject of future re-negotiation.

2) Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with
Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer
practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been
practiced over a long period of time, and must be shown to have been consistent and deliberate. Adequate proof is
wanting in this respect. The test of long practice has been enunciated thus:

" . . . Respondent Company agreed to continue giving holiday pay knowing fully well that said
employees are not covered by the law requiring payment of holiday pay." (Oceanic Pharmacal
Employees Union [FFW] vs. Inciong, L-50568, November 7, 1979, 94 SCRA 270). (Emphasis ours)

12 | P a g e
Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage
Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the
conversion of the daily allowance to its monthly equivalent was laid down, thus:.

"Section 3. Application of Section 2 —

xxx xxx xxx

"(a) Monthly rates for non-agricultural workers covered Under PDs 1614, 1634, 1678 and 1713:

xxx xxx xxx

"(3) For workers who do not work and are not considered paid on Saturdays and Sundays:

P60 + P90 + P60 + (P2.00 x 262) divided by 12 = P253.70" (Emphasis ours)

As the Labor Arbiter had analyzed said formula:

"Under the aforecited formula/guideline, issued for the first time, when applied to a company like
respondent which observes a 5-day work week (or where 2 days in a week, not necessarily Saturday
and Sunday, are not considered paid), the monthly equivalent of a daily allowance is arrived at by
multiplying the daily allowance by 262 divided by 12. This formula results in the equivalent of 21.8
days in a month." prcd

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law.
Payment may be said to have been made by reason of a mistake in the construction or application of a "doubtful or
difficult question of law." (Article 2155, 1 in relation to Article 2154 2 of the Civil Code). Since it is a past error that is
being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor
Code 3 may be said to have resulted by virtue of the correction.

With the conclusions thus reached, there is no further need to discuss the liability of the officers of Petitioner
Corporation.

WHEREFORE, Certiorari is granted, the Decision of the National Labor Relations Commission, dated 10 March 1986, is
SET ASIDE, and the Decision of the Labor Arbiter, dated 9 May 1985, is hereby REINSTATED. The Temporary Restraining
Order heretofore issued is hereby made permanent.

SO ORDERED

||| (Globe Mackay Cable v. National Labor Relations Commission, G.R. No. 74156, [June 29, 1988], 246 PHIL 73-80)

SECOND DIVISION

[G.R. No. 174040-41. September 22, 2010.]

INSULAR HOTEL EMPLOYEES UNION-NFL, petitioner, vs. WATERFRONT INSULAR HOTEL DAVAO,
respondent.

DECISION

PERALTA, J p:

13 | P a g e
 Before this Court is a petition for review on certiorari, 1 under Rule 45 of the Rules of Court, seeking to set
aside the Decision 2 dated October 11, 2005, and the Resolution 3 dated July 13, 2006 of the Court of Appeals (CA)
in consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657. Said Decision reversed the
Decision 4 dated the April 5, 2004 of the Accredited Voluntary Arbitrator Rosalina L. Montejo (AVA Montejo). aTcSID
The facts of the case, as culled from the records, are as follows:
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 5 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.
In a letter 6 dated November 8, 2000, Rojas intimated that the members of the Union were determined to
keep their jobs and that they believed they too had to help respondent, thus:

xxx xxx xxx

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

In another letter 8 dated November 10, 2000, Rojas reiterated the Union's desire to help respondent, to wit:

We would like to thank you for giving us the opportunity to meet [with] your representatives in order
for us to air our sentiments and extend our helping hands for a possible reconsideration of the
company's decision.

The talks have enabled us to initially come up with a suggestion of solving the high cost on payroll.

We propose that 25 years and above be paid their due retirement benefits and put their length of
service to zero without loss of status of employment with a minimum hiring rate.

Thru this scheme, the company would be able to save a substantial amount and reduce greatly the
payroll costs without affecting the finance of the families of the employees because they will still have
a job from where they could get their income. CIAacS

Moreover, we are also open to a possible reduction of some economic benefits as our gesture of
sincere desire to help.

We are looking forward to a more fruitful round of talks in order to save the hotel. 9

In another letter 10 dated November 20, 2000, Rojas sent respondent more proposals as a form of the
Union's gesture of their intention to help the company, thus:

1) Suspension of [the] CBA for ten years, No strike no lock-out shall be enforced.

2) Pay all the employees their benefits due, and put the length of service to zero with a minimum
hiring rate. Payment of benefits may be on a staggered basis or as available.

3) Night premium and holiday pays shall be according to law. Overtime hours rendered shall be
offsetted as practiced.

4) Reduce the sick leaves and vacation leaves to 15 days/15days.

5) Emergency leave and birthday off are hereby waived.

14 | P a g e
 6) Duty meal allowance is fixed at P30.00 only. No more midnight snacks and double meal allowance.
The cook drinks be stopped as practiced.

7) We will shoulder 50% of the group health insurance and family medical allowance be reduced to
1,500.00 instead of 3,000.00.

8) The practice of bringing home our uniforms for laundry be continued.

9) Fixed manning shall be implemented, the rest of manpower requirements maybe sourced thru WAP
and casual hiring. Manpower for fixed manning shall be 145 rank-and-file union members.

10) Union will cooperate fully on strict implementation of house rules in order to attain desired
productivity and discipline. The union will not tolerate problem members.

11) The union in its desire to be of utmost service would adopt multi-tasking for the hotel to be more
competitive.

It is understood that with the suspension of the CBA renegotiations, the same existing CBA shall be
adopted and that all provisions therein shall remain enforced except for those mentioned in this
proposal.

These proposals shall automatically supersede the affected provisions of the CBA. 11

In a handwritten letter 12 dated November 25, 2000, Rojas once again appealed to respondent for it to
consider their proposals and to re-open the hotel. In said letter, Rojas stated that manpower for fixed manning shall
be one hundred (100) rank-and-file Union members instead of the one hundred forty-five (145) originally proposed.
ScaCEH
Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to respondent a Manifesto 13
concretizing their earlier proposals.
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 14 (MOA) wherein
respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in its Manifesto.
Accordingly, respondent downsized its manpower structure 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" 15 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.
On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of the National
Federation of Labor (NFL), filed a Notice of Mediation 16 before the National Conciliation and Mediation Board
(NCMB), Region XI, Davao City. In said Notice, it was stated that the Union involved was "DARIUS JOVES/DEBBIE
PLANAS ET AL., National Federation of Labor." The issue raised in said Notice was the "Diminution of wages and
other benefits through unlawful Memorandum of Agreement."
On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of
settling the conflict. In the said conference, respondent and petitioner Insular Hotel Employees Union-NFL (IHEU-
NFL), represented by Joves, signed a Submission Agreement 17 wherein they chose AVA Alfredo C. Olvida (AVA
Olvida) to act as voluntary arbitrator. Submitted for the resolution of AVA Olvida was the determination of whether
or not there was a diminution of wages and other benefits through an unlawful MOA. In support of his authority to
file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo), presented several Special Powers of Attorney (SPA)
which were, however, undated and unnotarized.
On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion for a Second
Preliminary Conference, 18 raising the following grounds:

1) The persons who filed the instant complaint in the name of the Insular Hotel Employees Union-NFL
have no authority to represent the Union;

2) The individuals who executed the special powers of attorney in favor of the person who filed the
instant complaint have no standing to cause the filing of the instant complaint; and
15 | P a g e
 3) The existence of an intra-union dispute renders the filing of the instant case premature. 19

On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo denied
any existence of an intra-union dispute among the members of the union. Cullo, however, confirmed that the case
was filed not by the IHEU-NFL but by the NFL. When asked to present his authority from NFL, Cullo admitted that the
case was, in fact, filed by individual employees named in the SPAs. The hearing officer directed both parties to
elevate the aforementioned issues to AVA Olvida. 20 ACIESH
The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent again
raised its objections, specifically arguing that the persons who signed the complaint were not the authorized
representatives of the Union indicated in the Submission Agreement nor were they parties to the MOA. AVA Olvida
directed respondent to file a formal motion to withdraw its submission to voluntary arbitration.
On October 16, 2002, respondent filed its Motion to Withdraw. 21 Cullo then filed an Opposition 22 where
the same was captioned:

NATIONAL FEDERATION OF LABOR

And 79 Individual Employees, Union Members,

Complainants,

-versus-

Waterfront Insular Hotel Davao,

Respondent.

In said Opposition, Cullo reiterated that the complainants were not representing IHEU-NFL, to wit:

xxx xxx xxx

2. Respondent must have been lost when it said that the individuals who executed the SPA have no
standing to represent the union nor to assail the validity of Memorandum of Agreement
(MOA). What is correct is that the individual complainants are not representing the union
but filing the complaint through their appointed attorneys-in-fact to assert their individual
rights as workers who are entitled to the benefits granted by law and stipulated in the
collective bargaining agreement. 23

On November 11, 2002, AVA Olvida issued a Resolution 24 denying respondent's Motion to Withdraw. On
December 16, 2002, respondent filed a Motion for Reconsideration 25 where it stressed that the Submission
Agreement was void because the Union did not consent thereto. Respondent pointed out that the Union had not
issued any resolution duly authorizing the individual employees or NFL to file the notice of mediation with the
NCMB.
Cullo filed a Comment/Opposition 26 to respondent's Motion for Reconsideration. Again, Cullo admitted
that the case was not initiated by the IHEU-NFL, to wit:

The case was initiated by complainants by filling up Revised Form No. 1 of the NCMB duly furnishing
respondent, copy of which is hereto attached as Annex "A" for reference and consideration of the
Honorable Voluntary Arbitrator. There is no mention there of Insular Hotel Employees Union, but only
National Federation of Labor (NFL). The one appearing at the Submission Agreement was only a
matter of filling up the blanks particularly on the question there of Union; which was filled up with
Insular Hotel Employees Union-NFL. There is nothing there that indicates that it is a complainant as
the case is initiated by the individual workers and National Federation of Labor, not by the local union.
The local union was not included as party-complainant considering that it was a party to the assailed
MOA. 27

On March 18, 2003, AVA Olvida issued a Resolution 28 denying respondent's Motion for Reconsideration.
He, however, ruled that respondent was correct when it raised its objection to NFL as proper party-complainant,
thus: AEHCDa

Anent to the real complainant in this instant voluntary arbitration case, the respondent is correct
when it raised objection to the National Federation of Labor (NFL) and as proper party-complainants.
16 | P a g e
 The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL, the recognized and
incumbent bargaining agent of the rank-and-file employees of the respondent hotel. In the submission
agreement of the parties dated August 29, 2002, the party complainant written is INSULAR HOTEL
EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79 other members.

However, since the NFL is the mother federation of the local union, and signatory to the existing CBA,
it can represent the union, the officers, the members or union and officers or members, as the case
may be, in all stages of proceedings in courts or administrative bodies provided that the issue of the
case will involve labor-management relationship like in the case at bar.

The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The
resolution dated November 11, 2002 is modified in so far as the party-complainant is concerned; thus,
instead of "National Federation of Labor and 79 individual employees, union members," shall be
"Insular Hotel Employees Union-NFL et al., as stated in the joint submission agreement dated August
29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11,
2002,

No further motion of the same nature shall be entertained. 29

On May 9, 2003, respondent filed its Position Paper Ad Cautelam, 30 where it declared, among others, that
the same was without prejudice to its earlier objections against the jurisdiction of the NCMB and AVA Olvida and the
standing of the persons who filed the notice of mediation.
Cullo, now using the caption "Insular Hotel Employees Union-NFL, Complainant," filed a Comment 31 dated
June 5, 2003. On June 23, 2003, respondent filed its Reply. 32
Later, respondent filed a Motion for Inhibition 33 alleging AVA Olvida's bias and prejudice towards the cause
of the employees. In an Order 34 dated July 25, 2003, AVA Olvida voluntarily inhibited himself out of "delicadeza"
and ordered the remand of the case to the NCMB.
On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before the conciliator for the
selection of a new voluntary arbitrator.
In a letter 35 dated August 19, 2003 addressed to the NCMB, respondent reiterated its position that the
individual union members have no standing to file the notice of mediation before the NCMB. Respondent stressed
that the complaint should have been filed by the Union. cEaDTA
On September 12, 2003, the NCMB sent both parties a Notice 36 asking them to appear before it for the
selection of the new voluntary arbitrator. Respondent, however, maintained its stand that the NCMB had no
jurisdiction over the case. Consequently, at the instance of Cullo, the NCMB approved ex parte the selection of AVA
Montejo as the new voluntary arbitrator.
On April 5, 2004, AVA Montejo rendered a Decision 37 ruling in favor of Cullo, the dispositive portion of
which reads:

WHEREOF, in view of the all the foregoing, judgment is hereby rendered:

1. Declaring the Memorandum of Agreement in question as invalid as it is contrary to law and public
policy;

2. Declaring that there is a diminution of the wages and other benefits of the Union members and
officers under the said invalid MOA.

3. Ordering respondent management to immediately reinstate the workers wage rates and other
benefits that they were receiving and enjoying before the signing of the invalid MOA;

4. Ordering the management respondent to pay attorney's fees in an amount equivalent to ten
percent (10%) of whatever total amount that the workers union may receive representing individual
wage differentials.

As to the other claims of the Union regarding diminution of other benefits, this accredited voluntary
arbitrator is of the opinion that she has no authority to entertain, particularly as to the computation
thereof.
17 | P a g e
 SO ORDERED. 38

Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the Decision in so far as it
did not categorically order respondent to pay the covered workers their differentials in wages reckoned from the
effectivity of the MOA up to the actual reinstatement of the reduced wages and benefits. Cullos' petition was
docketed as CA-G.R. SP No. 83831. Respondent, for its part, questioned among others the jurisdiction of the NCMB.
Respondent maintained that the MOA it had entered into with the officers of the Union was valid. Respondent's
petition was docketed as CA-G.R. SP No. 83657. Both cases were consolidated by the CA. STDEcA
On October 11, 2005, the CA rendered a Decision 39 ruling in favor of respondent, the dispositive portion of
which reads:

WHEREFORE, premises considered, the petition for review in CA-G.R. SP No. 83657 is hereby
GRANTED, while the petition in CA-G.R. SP No. 83831 is DENIED. Consequently, the assailed Decision
dated April 5, 2004 rendered by AVA Rosalina L. Montejo is hereby REVERSED and a new one entered
declaring the Memorandum of Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties are
DIRECTED to comply with the terms and conditions thereof.

SO ORDERED. 40

Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by the CA in a Resolution
41 dated July 13, 2006.

Hence, herein petition, with Cullo raising the following issues for this Court's resolution, to wit:

I.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN FINDING
THAT THE ACCREDITED VOLUNTARY ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY
BECAUSE THE NOTICE OF MEDIATION DOES NOT MENTION THE NAME OF THE LOCAL UNION BUT
ONLY THE AFFILIATE FEDERATION THEREBY DISREGARDING THE SUBMISSION AGREEMENT DULY
SIGNED BY THE PARTIES AND THEIR LEGAL COUNSELS THAT MENTIONS THE NAME OF THE LOCAL
UNION.

II.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR BY
DISREGARDING THE PROVISIONS OF THE CBA SIMPLY BECAUSE IT BELIEVED THE UNPROVEN
ALLEGATIONS OF RESPONDENT HOTEL THAT IT WAS SUFFERING FROM FINANCIAL CRISIS.

III.

THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED IN CONCLUDING THAT ARTICLE
100 OF THE LABOR CODE APPLIES ONLY TO BENEFITS ENJOYED PRIOR TO THE ADOPTION OF THE
LABOR CODE WHICH, IN EFFECT, ALLOWS THE DIMINUTION OF THE BENEFITS ENJOYED BY EMPLOYEES
FROM ITS ADOPTION HENCEFORTH. 42

The petition is not meritorious.

Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact that before the case
was submitted to voluntary arbitration, the parties signed a Submission Agreement which mentioned the name of
the local union and not only NFL. Cullo, thus, contends that the CA committed error when it ruled that the voluntary
arbitrator had no jurisdiction over the case simply because the Notice of Mediation did not state the name of the
local union thereby disregarding the Submission Agreement which states the names of local union as Insular Hotel
Employees Union-NFL. 43 HEDSIc
In its Memorandum, 44 respondent maintains its position that the NCMB and Voluntary Arbitrators had no
jurisdiction over the complaint. Respondent, however, now also contends that IHEU-NFL is a non-entity since it is
DIHFEU-NFL which is considered by the DOLE as the only registered union in Waterfront Davao. 45 Respondent
argues that the Submission Agreement does not name the local union DIHFEU-NFL and that it had timely withdrawn
its consent to arbitrate by filing a motion to withdraw.

18 | P a g e
 A review of the development of the case shows that there has been much confusion as to the identity of the
party which filed the case against respondent. In the Notice of Mediation 46 filed before the NCMB, it stated that
the union involved was "DARIUS JOVES/DEBBIE PLANAS ET AL., National Federation of Labor." In the Submission
Agreement, 47 however, it stated that the union involved was "INSULAR HOTEL EMPLOYEES UNION-NFL."
Furthermore, a perusal of the records would reveal that after signing the Submission Agreement,
respondent persistently questioned the authority and standing of the individual employees to file the complaint.
Cullo then clarified in subsequent documents captioned as "National Federation of Labor and 79 Individual
Employees, Union Members, Complainants" that the individual complainants are not representing the union, but
filing the complaint through their appointed attorneys-in-fact. 48 AVA Olvida, however, in a Resolution dated March
18, 2003, agreed with respondent that the proper party-complainant should be INSULAR HOTEL EMPLOYEES UNION-
NFL, to wit:

. . . In the submission agreement of the parties dated August 29, 2002, the party complainant written
is INSULAR HOTEL EMPLOYEES UNION-NFL and not the NATIONAL FEDERATION OF LABOR and 79
other members. 49

The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by respondent is DENIED. The
resolution dated November 11, 2002, is modified in so far as the party complainant is concerned, thus,
instead of "National Federation of Labor and 79 individual employees, union members," shall be
"Insular Hotel Employees Union-NFL et al., as stated in the joint submission agreement dated August
29, 2002. Respondent is directed to comply with the decision of this Arbitrator dated November 11,
2002. 50

After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted "Insular Hotel Employees Union-NFL et
al., Complainant" as the caption in all his subsequent pleadings. Respondent, however, was still adamant that
neither Cullo nor the individual employees had authority to file the case in behalf of the Union.
While it is undisputed that a submission agreement was signed by respondent and "IHEU-NFL," then
represented by Joves and Cullo, this Court finds that there are two circumstances which affect its validity: first, the
Notice of Mediation was filed by a party who had no authority to do so; second, that respondent had persistently
voiced out its objection questioning the authority of Joves, Cullo and the individual members of the Union to file the
complaint before the NCMB.
Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the
NCMB. It is only after this step that a submission agreement may be entered into by the parties concerned.
Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive
mediation, to wit: TDcAIH

Who may file a notice or declare a strike or lockout or request preventive mediation. —

Any certified or duly recognized bargaining representative may file a notice or declare a strike or
request for preventive mediation in cases of bargaining deadlocks and unfair labor practices. The
employer may file a notice or declare a lockout or request for preventive mediation in the same cases.
In the absence of a certified or duly recognized bargaining representative, any legitimate labor
organization in the establishment may file a notice, request preventive mediation or declare a strike,
but only on grounds of unfair labor practice.

From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a notice or
request for preventive mediation. It is curious that even Cullo himself admitted, in a number of pleadings, that the
case was filed not by the Union but by individual members thereof. Clearly, therefore, the NCMB had no jurisdiction
to entertain the notice filed before it.
Even though respondent signed a Submission Agreement, it had, however, immediately manifested its
desire to withdraw from the proceedings after it became apparent that the Union had no part in the complaint. As a
matter of fact, only four days had lapsed after the signing of the Submission Agreement when respondent called the
attention of AVA Olvida in a "Manifestation with Motion for a Second Preliminary Conference" 51 that the persons
who filed the instant complaint in the name of Insular Hotel Employees Union-NFL had no authority to represent the
Union. Respondent cannot be estopped in raising the jurisdictional issue, because it is basic that the issue of
jurisdiction may be raised at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel.
In Figueroa v. People, 52 this Court explained that estoppel is the exception rather than the rule, to wit:
19 | P a g e
 Applying the said doctrine to the instant case, the petitioner is in no way estopped by laches in
assailing the jurisdiction of the RTC, considering that he raised the lack thereof in his appeal before the
appellate court. At that time, no considerable period had yet elapsed for laches to attach. True, delay
alone, though unreasonable, will not sustain the defense of "estoppel by laches" unless it further
appears that the party, knowing his rights, has not sought to enforce them until the condition of the
party pleading laches has in good faith become so changed that he cannot be restored to his former
state, if the rights be then enforced, due to loss of evidence, change of title, intervention of equities,
and other causes. In applying the principle of estoppel by laches in the exceptional case of
Sibonghanoy, the Court therein considered the patent and revolting inequity and unfairness of having
the judgment creditors go up their Calvary once more after more or less 15 years. The same, however,
does not obtain in the instant case.

We note at this point that estoppel, being in the nature of a forfeiture, is not favored by law. It is to be
applied rarely — only from necessity, and only in extraordinary circumstances. The doctrine must be
applied with great care and the equity must be strong in its favor. When misapplied, the doctrine of
estoppel may be a most effective weapon for the accomplishment of injustice. . . . (Italics supplied.) 53

The question to be resolved then is, do the individual members of the Union have the requisite standing to
question the MOA before the NCMB? On this note, Tabigue v. International Copra Export Corporation (INTERCO) 54
is instructive:

Respecting petitioners' thesis that unsettled grievances should be referred to voluntary arbitration as
called for in the CBA, the same does not lie. The pertinent portion of the CBA reads: TcDAHS

In case of any dispute arising from the interpretation or implementation of this Agreement or
any matter affecting the relations of Labor and Management, the UNION and the COMPANY
agree to exhaust all possibilities of conciliation through the grievance machinery. The
committee shall resolve all problems submitted to it within fifteen (15) days after the
problems ha[ve] been discussed by the members. If the dispute or grievance cannot be settled
by the Committee, or if the committee failed to act on the matter within the period of fifteen
(15) days herein stipulated, the UNION and the COMPANY agree to submit the issue to
Voluntary Arbitration. Selection of the arbitrator shall be made within seven (7) days from the
date of notification by the aggrieved party. The Arbitrator shall be selected by lottery from
four (4) qualified individuals nominated by in equal numbers by both parties taken from the
list of Arbitrators prepared by the National Conciliation and Mediation Board (NCMB). If the
Company and the Union representatives within ten (10) days fail to agree on the Arbitrator,
the NCMB shall name the Arbitrator. The decision of the Arbitrator shall be final and binding
upon the parties. However, the Arbitrator shall not have the authority to change any
provisions of the Agreement. The cost of arbitration shall be borne equally by the parties.

Petitioners have not, however, been duly authorized to represent the union. Apropos is this Court's
pronouncement in Atlas Farms, Inc. v. National Labor Relations Commission, viz.:

. . . Pursuant to Article 260 of the Labor Code,the parties to a CBA shall name or designate
their respective representatives to the grievance machinery and if the grievance is unsettled in
that level, it shall automatically be referred to the voluntary arbitrators designated in advance
by parties to a CBA. Consequently, only disputes involving the union and the company shall
be referred to the grievance machinery or voluntary arbitrators. (Emphasis and underscoring
supplied.) 55 HEDCAS

If the individual members of the Union have no authority to file the case, does the federation to which the
local union is affiliated have the standing to do so? On this note, Coastal Subic Bay Terminal, Inc. v. Department of
Labor and Employment 56 is enlightening, thus:

. . . A local union does not owe its existence to the federation with which it is affiliated. It is a separate
and distinct voluntary association owing its creation to the will of its members. Mere affiliation does
not divest the local union of its own personality, neither does it give the mother federation the
license to act independently of the local union. It only gives rise to a contract of agency, where the
former acts in representation of the latter. Hence, local unions are considered principals while the
federation is deemed to be merely their agent. . . . 57

20 | P a g e
 Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled that
NFL had no authority to file the complaint in behalf of the individual employees, to wit:

Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the case.
Waterfront contents that the Notice of Mediation does not mention the name of the Union but
merely referred to the National Federation of Labor (NFL) with which the Union is affiliated. In the
subsequent pleadings, NFL's legal counsel even confirmed that the case was not filed by the union but
by NFL and the individual employees named in the SPAs which were not even dated nor notarized.

Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the
local union and the labor federation or national union with which the former was affiliated is generally
understood to be that of agency, where the local is the principal and the federation the agency. Being
merely an agent of the local union, NFL should have presented its authority to file the Notice of
Mediation. While We commend NFL's zealousness in protecting the rights of lowly workers, We
cannot, however, allow it to go beyond what it is empowered to do.

As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining
representative and an employer may file a notice of mediation, declare a strike or lockout or request
preventive mediation. The Collective Bargaining Agreement (CBA), on the other, recognizes that
DIHFEU-NFL is the exclusive bargaining representative of all permanent employees. The inclusion of
the word "NFL" after the name of the local union merely stresses that the local union is NFL's affiliate.
It does not, however, mean that the local union cannot stand on its own. The local union owes its
creation and continued existence to the will of its members and not to the federation to which it
belongs. The spring cannot rise higher than its source, so to speak. 58

In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that DIHFEU-NFL is the only
recognized bargaining unit in their establishment. While the resolution of the said argument is already moot and
academic given the discussion above, this Court shall address the same nevertheless.
While the November 16, 2006 Certification 59 of the DOLE clearly states that "IHEU-NFL" is not a registered
labor organization, this Court finds that respondent is estopped from questioning the same as it did not raise the
said issue in the proceedings before the NCMB and the Voluntary Arbitrators. A perusal of the records reveals that
the main theory posed by respondent was whether or not the individual employees had the authority to file the
complaint notwithstanding the apparent non-participation of the union. Respondent never put in issue the fact that
DIHFEU-NFL was not the same as IHEU-NFL. Consequently, it is already too late in the day to assert the same.
HCDAac
Anent the second issue raised by Cullo, the same is again without merit.
Cullo contends that respondent was not really suffering from serious losses as found by the CA. Cullo
anchors his position on the denial by the Wage Board of respondent's petition for exemption from Wage Order No.
RTWPB-X1-08 on the ground that it is a distressed establishment. 60 In said denial, the Board ruled:

A careful analysis of applicant's audited financial statements showed that during the period ending
December 31, 1999, it registered retained earnings amounting to P8,661,260.00. Applicant's interim
financial statements for the quarter ending June 30, 2000 cannot be considered, as the same was
not audited. Accordingly, this Board finds that applicant is not qualified for exemption as a distressed
establishment pursuant to the aforecited criteria. 61

In its Decision, the CA held that upholding the validity of the MOA would mean the continuance of the
hotel's operation and financial viability, to wit:

. . . We cannot close Our eyes to the impending financial distress that an employer may suffer should
the terms of employment under the said CBA continue.

If indeed We are to tilt the balance of justice to labor, then We would be inclined to favor for the
nonce petitioner Waterfront. To uphold the validity of the MOA would mean the continuance of the
hotel's operation and financial viability. Otherwise, the eventual permanent closure of the hotel would
only result to prejudice of the employees, as a consequence thereof, will necessarily lose their jobs. 62

In its petition before the CA, respondent submitted its audited financial statements 63 which show that for
the years 1998, 1999, until September 30, 2000, its total operating losses amounted to P48,409,385.00. Based on
the foregoing, the CA was not without basis when it declared that respondent was suffering from impending
21 | P a g e
financial distress. While the Wage Board denied respondent's petition for exemption, this Court notes that the
denial was partly due to the fact that the June 2000 financial statements then submitted by respondent were not
audited. Cullo did not question nor discredit the accuracy and authenticity of respondent's audited financial
statements. This Court, therefore, has no reason to question the veracity of the contents thereof. Moreover, it bears
to point out that respondent's audited financial statements covering the years 2001 to 2005 show that it still
continues to suffer losses. 64
Finally, anent the last issue raised by Cullo, the same is without merit.
Cullo argues that the CA must have erred in concluding that Article 100 of the Labor Code applies only to
benefits already enjoyed at the time of the promulgation of the Labor Code.
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.

On this note, Apex Mining Company, Inc. v. NLRC 65 is instructive, to wit:

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 . . . . 66

Even assuming arguendo that Article 100 applies to the case at bar, this 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, 67 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 incorporating 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.

The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations
undertaken in the light of the severe financial situation faced by the employer, with the peculiar and
unique intention of not merely promoting industrial peace at PAL, but preventing the latter's
closure. We find no conflict between said agreement and Article 253-A of the Labor Code.Article 253-
A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the
agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement
satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein
negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties
from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the
same. EICScD

In the instant case, it was PALEA, as the exclusive bargaining agent of PAL's ground employees, that
voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year
suspension of the CBA. Either case was the union's exercise of its right to collective bargaining. The
right to free collective bargaining, after all, includes the right to suspend it. 68

Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-Laws specifically
provides that "the results of the collective bargaining negotiations shall be subject to ratification and approval by
majority vote of the Union members at a meeting convened, or by plebiscite held for such special purpose." 69
Accordingly, it is undisputed that the MOA was not subject to ratification by the general membership of the Union.
The question to be resolved then is, does the non-ratification of the MOA in accordance with the Union's
constitution prove fatal to the validity thereof?
It must be remembered that after the MOA was signed, the members of the Union individually signed
contracts denominated as "Reconfirmation of Employment." 70 Cullo did not dispute the fact that of the 87
members of the Union, who signed and accepted the "Reconfirmation of Employment," 71 are the respondent
22 | P a g e
 employees in the case at bar. Moreover, it bears to stress that all the employees were assisted by Rojas, DIHFEU-
NFL's president, who even co-signed each contract.
Stipulated in each Reconfirmation of Employment were the new salary and benefits scheme. In addition, it
bears to stress that specific provisions of the new contract also made reference to the MOA. Thus, the individual
members of the union cannot feign knowledge of the execution of the MOA. Each contract was freely entered into
and there is no indication that the same was attended by fraud, misrepresentation or duress. To this Court's mind,
the signing of the individual "Reconfirmation of Employment" should, therefore, be deemed an implied ratification
by the Union members of the MOA.
In Planters Products, Inc. v. NLRC, 71 this Court refrained from declaring a CBA invalid notwithstanding that
the same was not ratified in view of the fact that the employees had enjoyed benefits under it, thus:

Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties
to a collective [bargaining] agreement are required to furnish copies of the appropriate Regional
Office with accompanying proof of ratification by the majority of all the workers in a bargaining unit.
This was not done in the case at bar. But we do not declare the 1984-1987 CBA invalid or void
considering that the employees have enjoyed benefits from it. They cannot receive benefits under
provisions favorable to them and later insist that the CBA is void simply because other provisions turn
out not to the liking of certain employees. . . . . Moreover, the two CBAs prior to the 1984-1987 CBA
were not also formally ratified, yet the employees are basing their present claims on these CBAs. It is
iniquitous to receive benefits from a CBA and later on disclaim its validity. 72

Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain
benefits previously enjoyed by the members of the Union, it cannot escape this Court's attention that it was the
execution of the MOA which paved the way for the re-opening of the hotel, notwithstanding its financial distress.
More importantly, the execution of the MOA allowed respondents to keep their jobs. It would certainly be iniquitous
for the members of the Union to sign new contracts prompting the re-opening of the hotel only to later on renege
on their agreement on the fact of the non-ratification of the MOA.
In addition, it bears to point out that Rojas did not act unilaterally when he negotiated with respondent's
management. The Constitution and By-Laws of DIHFEU-NFL clearly provide that the president is authorized to
represent the union on all occasions and in all matters in which representation of the union may be agreed or
required. 73 Furthermore, Rojas was properly authorized under a Board of Directors Resolution 74 to negotiate with
respondent, the pertinent portions of which read:

SECRETARY's CERTIFICATE

I, MA. SOCORRO LISETTE B. IBARRA, . . ., do hereby certify that, at a meeting of the Board of Directors
of the DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly constituted, the following resolutions were
unanimously approved:

RESOLVED, as it is hereby resolved that the Manifesto dated 25 Feb. 2001 be approved ratified
and adopted; ScaATD

RESOLVED, FURTHER, that Mr. Domy R. Rojas, the president of the DIHFEU-NFL, be hereby
authorized to negotiate with Waterfront Insular Hotel Davao and to work for the latter's
acceptance of the proposals contained in DIHFEU-NFL Manifesto; and

RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby authorized to sign any and all
documents to implement, and carry into effect, his foregoing authority. 75

Withal, 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. 76
WHEREFORE, premises considered, the petition is DENIED. The Decision dated October 11, 2005, and the
Resolution dated July 13, 2006 of the Court of Appeals in consolidated labor cases docketed as CA-G.R. SP No. 83831
and CA-G.R. SP No. 83657, are AFFIRMED.

SO ORDERED

23 | P a g e
||| (Insular Hotel Employees Union-NFL v. Waterfront Insular Hotel Davao, G.R. No. 174040-41, [September 22, 2010],
645 PHIL 387-420)

FIRST DIVISION

[G.R. Nos. 58094-95. March 15, 1989.]

MAMERTO B. ASIS, petitioner, vs. MINISTER OF LABOR AND EMPLOYMENT, CENTRAL AZUCARERA
DE PILAR, and EMMANUEL JAVELLANA, respondents.

Belo, Ermitaño, Abiera & Associates for petitioner.

Yolanda, Quisumbing-Javellana & Associates for respondent Emmanuel Q. Javellana.

V. Veloso & Associates for respondent Central Azucarera.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; NATIONAL LABOR RELATIONS ; APPEAL; PAYMENT OF APPEAL FEE,
JURISDICTIONAL. — Payment of the appeal fee is an essential requirement in the perfection of an appeal (Acda vs.
MOLE, 119 SCRA 306, [1982]).

2. ID.; ID.; ID.; ID.; MAY BE ALLOWED DESPITE LATE PAYMENT OF APPEAL FEE. — Where the fee had been paid, although
payment was delayed, the broader interest or justice and the desired objective of resolving controversies on the merits
demanded that the appeal be given course as, in fact, it was so given by the NLRC. Besides, it was within the inherent
power of the NLRC to have allowed the late payment of the appeal fee. (Del Rosario & Sons Logging Enterprises, Inc. vs.
NLRC, 136 SCRA 669, 672)

3. ID.; ID.; EMPLOYMENT; FRINGE BENEFITS ENJOYED BY AN EMPLOYEE MAY BE WITHDRAWN. — As regards the
temporary revocation of the petitioner's monthly ration of fuel, suffice it to point out that, as the Solicitor General
stresses, this had been occasioned by force of circumstances affecting the Central's business. The monthly ration was
not a part of his basic salary, and is not indeed found in any of the management payroll vouchers pertinent to the
petitioner. Moreover, the adverse consequences of the suspension of the monthly rations had been largely if not
entirely negated by the Central's undertaking to reimburse the petitioner for his actual consumption of fuel during the
period of suspension.

4. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE DEPUTY MINISTER OF LABOR SUPPORTED BY SUBSTANTIAL
EVIDENCE, GENERALLY AFFIRMED ON APPEAL. — A review of the record demonstrates that there is substantial evidence
supporting the factual findings of the respondent Deputy Minister. Said findings, as well as the legal conclusions derived
therefrom, cannot be said to have been rendered with grave abuse of discretion, and will thus be affirmed.

DECISION

NARVASA, J p:

The facts of this case depict a picture that is hardly edifying: avidity trying to wear the mantle of right. The facts raise a
twofold issue: whether a company which has been haled to court by its own in-house counsel is obliged to continue his
employment and entrust its legal affairs to him, specially when his cause of action has been shown to be devoid of
merit; and whether a firm is bound to retain in its service a personnel manager who has incited the very employees
under his supervision and control to file complaints against it. Asserting a right to sue his employer for a legitimate
grievance without meriting retaliatory action, the petitioner claims that his dismissal for such conduct or on the ground,
essentially, of loss of confidence, was illegal; and he asks this Court to annul the judgment of the respondent

24 | P a g e
Commission, which upheld the termination of his services in respondent company. Said claim finds no support in either
the law or the established facts and must, therefore, be rejected.

The petitioner was appointed Legal Counsel of the Central Azucarera de Pilar. 1 Later, concurrently with his position as
Legal Counsel, he was named Head of its Manpower and Services Department. LLpr

In addition to his basic salaries and other fringe benefits, his employer granted him, and a few other officials of the
company, a monthly ration of 200 liters of gasoline and a small tank of liquefied petroleum gas (LPG). 2 This monthly
ration was temporarily revoked some five (5) years later as a cost reduction measure of the Central. 3 The petitioner and
the other officials adversely affected moved for reconsideration. Their plea was denied.

The petitioner then commenced an action against the Central with the Regional Office of the Ministry of Labor and
Employment, seeking restoration of his monthly ration of gasoline and LPG which, as aforesaid, had been temporarily
suspended. The case was docketed as LRD Case No. 1632.

Shortly afterwards, he filed another action against his employer, docketed as LRD Case No. 1685, this time complaining
against the Central's memorandum ordaining his relief (by being placed on leave of absence) as the Central's Legal
Counsel and Head of the Manpower Services Department, impleaded by the petitioner as co-respondent was Emmanuel
Q. Javellana, the Finance Manager and Comptroller of the Central, who had signed the memorandum for his relief. 4 The
petitioner theorized that he had in effect been dismissed, illegally. 5

The two cases were jointly heard and decided by the Regional Director. The latter's judgment 6 was for the petitioner's
reinstatement to his former positions without loss of seniority, benefits and other privileges, the payment to him of back
wages from date of his relief up to time of reinstatement, and the delivery to him of the monthly benefits from the time
of their temporary revocation up to actual restoration or, at his option, the money equivalent thereof. 7

The Deputy Minister of Labor however reversed this decision of the Regional Director, on appeal taken by the Central;
the Deputy Minister ordered the dismissal of the petitioner's complaint. 8 The Deputy Minister found that the evidence
satisfactorily established that the Central's suspension of the petitioner's and others' monthly ration of gasoline and
LPG, had been caused by unavoidable financial constraints; that such a suspension, in line with its conservation and cost-
saving policy, did not in truth effect any significant diminution of said benefits, since the petitioner was nevertheless
entitled to reimbursement of the actual amount of gas consumed; that petitioner had encouraged his co-employees to
file complaints against the Central over the rations issue, and this, as well as his institution of his own actions, had
created an atmosphere of enmity in the Central, and caused the loss by the Central of that trust and confidence in him
so essential in a lawyer-client relationship as that theretofore existing between them; and that under the circumstances,
petitioner's discharge as the Central's Legal Counsel and Head of the Manpower & Services Department was justified.
The Deputy Minister's order of dismissal was however subsequently modified, at the petitioner's instance, by decreeing
the payment to the latter of separation pay equivalent to one month's salary for every year of service rendered. 9

The petitioner theories that apart from the fact that the Deputy Minister lacked jurisdiction to entertain the Central's
appeal from the decision of the Regional Director, he had gravely abused his discretion in reaching his factual
conclusions, pejoratively described as guesswork and speculation.

The petitioner's theory of the Deputy Minister's lack of jurisdiction, founded on the tardy payment by the Central of the
appeal fee of P25.00, is quickly disposed of by simply adverting to our holding in Del Rosario & Sons Logging Enterprises,
Inc. v. NLRC, 10 to wit:

It may be that, as held in Acda vs. MOLE, 119 SCRA 306 [1982], payment of the appeal fee is by no
means a mere technicality but is an essential requirement in the perfection of an appeal. However,
where as in this case, the fee had been paid, unlike in the Acda case, although payment was delayed,
the broader interest of justice and the desired objective of resolving controversies on the merits
demanded that the appeal he given course as, in fact, it was so given by the NLRC. Besides, it was
within the inherent power of the NLRC to have allowed the late payment of the appeal fee. LLpr

As regards the temporary revocation of the petitioner's monthly ration of fuel, suffice it to point out that, as the Solicitor
General stresses, this had been occasioned by force of circumstances affecting the Central's business. The monthly
ration was not a part of his basic salary, and is not indeed found in any of the management payroll vouchers pertinent to
the petitioner. 11 Moreover, the adverse consequences of the suspension of the monthly rations had been largely if not
entirely negated by the Central's undertaking to reimburse the petitioner for his actual consumption of fuel during the
period of suspension. These facts are entirely distinct from those obtaining in the case of States Marine Corporation and

25 | P a g e
Royal Line, Inc. v. Cebu Seamen's Association, Inc., 12 invoked by petitioner and thus preclude application of the ruling
therein laid down to the case at bar.

A review of the record demonstrates that there is substantial evidence supporting the factual findings of the respondent
Deputy Minister. Said findings, as well as the legal conclusions derived therefrom, cannot be said to have been rendered
with grave abuse of discretion, and will thus be affirmed. In fine, and as petitioner could not but have realized from the
outset, neither he nor any other employee similarly situated had any legitimate grievance against the Central.

WHEREFORE, the petition is DISMISSED for lack of merit, with costs against petitioner

||| (Asis v. Minister of Labor and Employment, G.R. Nos. 58094-95, [March 15, 1989], 253 PHIL 230-235)

SECOND DIVISION

[G.R. No. 155059. April 29, 2005.]

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, petitioner, vs. AMERICAN WIRE AND
CABLE CO., INC. and THE COURT OF APPEALS, respondents.

DECISION

CHICO-NAZARIO, J p:

Before Us is a special civil action for certiorari, assailing the Decision 1 of the Special Eighth Division of the Court
of Appeals dated 06 March 2002. Said Decision upheld the Decision 2 and Order 3 of Voluntary Arbitrator Angel A.
Ancheta of the National Conciliation and Mediation Board (NCMB) dated 25 September 2001 and 05 November 2001,
respectively, which declared the private respondent herein not guilty of violating Article 100 of the Labor Code, as
amended. Assailed likewise, is the Resolution 4 of the Court of Appeals dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.

The Facts

The facts of this case are quite simple and not in dispute.

American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are
two unions in this company, the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and
the American Wire and Cable Daily-Rated Employees Union (Daily-Rated Union).

On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment
(DOLE) by the two unions for voluntary arbitration. They alleged that the private respondent, without valid cause,
suddenly and unilaterally withdrew and denied certain benefits and entitlements which they have long enjoyed. These
are the following:

a. Service Award;

b. 35% premium pay of an employee's basic pay for the work rendered during Holy Monday, Holy
Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;

c. Christmas Party; and

d. Promotional Increase.

26 | P a g e
 A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or assigned
new job classifications. According to petitioner, the new job classifications were in the nature of a promotion,
necessitating the grant of an increase in the salaries of the said 15 members.

On 21 June 2001, a Submission Agreement was filed by the parties before the Office for Voluntary Arbitration.
Assigned as Voluntary Arbitrator was Angel A. Ancheta.

On 04 July 2001, the parties simultaneously filed their respective position papers with the Office of the
Voluntary Arbitrator, NCMB, and DOLE.

On 25 September 2001, a Decision 5 was rendered by Voluntary Arbitrator Angel A. Ancheta in favor of the
private respondent. The dispositive portion of the said Decision is quoted hereunder:

WHEREFORE, with all the foregoing considerations, it is hereby declared that the Company is
not guilty of violating Article 100 of the Labor Code, as amended, or specifically for withdrawing the
service award, Christmas party and 35% premium for work rendered during Holy Week and Christmas
season and for not granting any promotional increase to the alleged fifteen (15) Daily-Rated Union
Members in the absence of a promotion. The Company however, is directed to grant the service
award to deserving employees in amounts and extent at its discretion, in consultation with the Unions
on grounds of equity and fairness. 6

A motion for reconsideration was filed by both unions 7 where they alleged that the Voluntary Arbitrator
manifestly erred in finding that the company did not violate Article 100 of the Labor Code, as amended, when it
unilaterally withdrew the subject benefits, and when no promotional increase was granted to the affected employees.
EAHcCT

On 05 November 2001, an Order 8 was issued by Voluntary Arbitrator Angel A. Ancheta. Part of the Order is
quoted hereunder:

Considering that the issues raised in the instant case were meticulously evaluated and
length[i]ly discussed and explained based on the pleadings and documentary evidenc[e] adduced by
the contending parties, we find no cogent reason to change, modify, or disturb said decision.

WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby,
denied for lack of merit. Our decision dated 25 September 2001 is affirmed "en toto." 9

An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union before the
Court of Appeals 10 and docketed as CA-G.R. SP No. 68182. The petitioners averred that Voluntary Arbitrator Angel A.
Ancheta erred in finding that the company did not violate Article 100 of the Labor Code, as amended, when the subject
benefits were unilaterally withdrawn. Further, it asserts, the Voluntary Arbitrator erred in adopting the company's
unaudited Revenues and Profitability Analysis for the years 1996-2000 in justifying the latter's withdrawal of the
questioned benefits. 11

On 06 March 2002, a Decision in favor of herein respondent company was promulgated by the Special Eighth
Division of the Court of Appeals in CA-G.R. SP No. 68182. The decretal portion of the decision reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit. The Decision of Voluntary Arbitrator Angel A. Ancheta dated
September 25, 2001 and his Order dated November 5, 2001 in VA Case No. AAA-10-6-4-2001 are
hereby AFFIRMED and UPHELD. 12

A motion for reconsideration 13 was filed by the petitioner, contending that the Court of Appeals
misappreciated the facts of the case, and that it committed serious error when it ruled that the unaudited financial
statement bears no importance in the instant case.

The Court of Appeals denied the motion in its Resolution dated 12 July 2002 14 because it did not present any
new matter which had not been considered in arriving at the decision. The dispositive portion of the Resolution states:

WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit. 15

27 | P a g e
 Dissatisfied with the court a quo's ruling, petitioner instituted the instant special civil action for certiorari, 16
citing grave abuse of discretion amounting to lack of jurisdiction.

Assignment of Errors

The petitioner assigns as errors the following:

THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE ARTICLE 100 OF
THE LABOR CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW THE BENEFITS OF THE
MEMBERS OF PETITIONER UNION, TO WIT: 1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS
INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN TRUTH AND IN FACT SAID
BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME IMMEMORIAL, AS A MATTER OF LONG
ESTABLISHED COMPANY PRACTICE, WITH THE FURTHER FACT THAT THE SAME NOT BEING
DEPENDENT ON PROFITS.

II

THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND SINKER, THE RESPONDENT
COMPANY'S SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY ANALYSIS FOR THE YEARS
1996-2000 WHICH THEY SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF UNILATERALLY
AND SUDDENLY WITHDRAWING OR DENYING FROM THE PETITIONER THE SUBJECT
BENEFITS/ENTITLEMENTS.

III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS NOT
DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT BE UNILATERALLY WITHDRAWN BY
RESPONDENT COMPANY.

Issue

Synthesized, the solitary issue that must be addressed by this Court is whether or not private respondent is
guilty of violating Article 100 of the Labor Code, as amended, when the benefits/entitlements given to the members of
petitioner union were withdrawn.

The Court's Ruling

Before we address the sole issue presented in the instant case, it is best to first discuss a matter which was
raised by the private respondent in its Comment. The private respondent contends that this case should have been
dismissed outright because of petitioner's error in the mode of appeal. According to it, the petitioner should have
elevated the instant case to this Court through a petition for review on certiorari under Rule 45, and not through a
special civil action for certiorari under Rule 65, of the 1997 Rules on Civil Procedure. 17

Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no question that the
Supreme Court has the discretion to dismiss it if it is defective. However, sound policy dictates that it is far better to
dispose the case on the merits, rather than on technicality. 18

The Supreme Court may brush aside the procedural barrier and take cognizance of the petition as it raises an
issue of paramount importance. The Court shall resolve the solitary issue on the merits for future guidance of the bench
and bar. 19

With that out of the way, we shall now resolve whether or not the respondent company is guilty of violating
Article 100 of the Labor Code, as amended.

Article 100 of the Labor Code provides:

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. CcTIDH
28 | P a g e
 The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for selected days
during the Holy Week and Christmas season, the holding of the Christmas Party and its incidental benefits, and the
giving of service awards violated Article 100 of the Labor Code. The grant of these benefits was a customary practice
that can no longer be unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The
benefits in question were given by the respondent to the petitioner consistently, deliberately, and unconditionally since
time immemorial. The benefits/entitlements were not given to petitioner due to an error in interpretation, or a
construction of a difficult question of law, but simply, the grant has been a practice over a long period of time. As such, it
cannot be withdrawn from the petitioner at private respondent's whim and caprice, and without the consent of the
former. The benefits given by the private respondent cannot be considered as a "bonus" as they are not founded on
profit. Even assuming that it can be treated as a "bonus," the grant of the same, by reason of its long and regular
concession, may be regarded as part of regular compensation. 20

With respect to the fifteen (15) employees who are members of petitioner union that were given new job
classifications, it asserts that a promotional increase in their salaries was in order. Salary adjustment is a must due to
their promotion. 21

On respondent company's Revenues and Profitability Analysis for the years 1996-2000, the petitioner insists that
since the former was unaudited, it should not have justified the company's sudden withdrawal of the
benefits/entitlements. The normal and/or legal method for establishing profit and loss of a company is through a
financial statement audited by an independent auditor. 22

The petitioner cites our ruling in the case of Saballa v. NLRC, 23 where we held that financial statements audited
by independent auditors constitute the normal method of proof of the profit and loss performance of the company. Our
ruling in the case of Bogo-Medellin Sugarcane Planters Association, Inc., et al. v. NLRC, et al. 24 was likewise invoked. In
this case, we held:

. . . The Court has previously ruled that financial statements audited by independent external
auditors constitute the normal method of proof of the profit and loss performance of a company.

On the matter of the withdrawal of the service award, the petitioner argues that it is the employee's length of
service which is taken as a factor in the grant of this benefit, and not whether the company acquired profit or not. 25

In answer to all these, the respondent corporation avers that the grant of all subject benefits has not ripened
into practice that the employees concerned can claim a demandable right over them. The grant of these benefits was
conditional based upon the financial performance of the company and that conditions/circumstances that existed
before have indeed substantially changed thereby justifying the discontinuance of said grants. The company's financial
performance was affected by the recent political turmoil and instability that led the entire nation to a bleeding
economy. Hence, it only necessarily follows that the company's financial situation at present is already very much
different from where it was three or four years ago. 26

On the subject of the unaudited financial statement presented by the private respondent, the latter contends
that the cases cited by the petitioner indeed uniformly ruled that financial statements audited by independent external
auditors constitute the normal method of proof of the profit and loss performance of a company. However, these cases
do not require that the only legal method to ascertain profit and loss is through an audited financial statement. The
cases only provide that an audited financial statement is the normal method. 27

The respondent company likewise asseverates that the 15 members of petitioner union were not actually
promoted. There was only a realignment of positions. 28

From the foregoing contentions, it appears that for the Court to resolve the issue presented, it is critical that a
determination must be first made on whether the benefits/entitlements are in the nature of a bonus or not, and
assuming they are so, whether they are demandable and enforceable obligations.

In the case of Producers Bank of the Philippines v. NLRC 29 we have characterized what a bonus is, viz:

A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer's business and made possible the realization of profits. It is
an act of generosity granted by an enlightened employer to spur the employee to greater efforts for
the success of the business and realization of bigger profits. The granting of a bonus is a management

29 | P a g e
 prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.
Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.

Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects of the instant case
are all bonuses which were given by the private respondent out of its generosity and munificence. The additional 35%
premium pay for work done during selected days of the Holy Week and Christmas season, the holding of Christmas
parties with raffle, and the cash incentives given together with the service awards are all in excess of what the law
requires each employer to give its employees. Since they are above what is strictly due to the members of petitioner-
union, the granting of the same was a management prerogative, which, whenever management sees necessary, may be
withdrawn, unless they have been made a part of the wage or salary or compensation of the employees.

The consequential question therefore that needs to be settled is if the subject benefits/entitlements, which are
bonuses, are demandable or not. Stated another way, can these bonuses be considered part of the wage or salary or
compensation making them enforceable obligations?

The Court does not believe so.

For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the
parties, 30 or it must have had a fixed amount 31 and had been a long and regular practice on the part of the employer.
32

The benefits/entitlements in question were never subjects of any express agreement between the parties. They
were never incorporated in the Collective Bargaining Agreement (CBA). As observed by the Voluntary Arbitrator, the
records reveal that these benefits/entitlements have not been subjects of any express agreement between the union
and the company, and have not yet been incorporated in the CBA. In fact, the petitioner has not denied having made
proposals with the private respondent for the service award and the additional 35% premium pay to be made part of the
CBA. 33

The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service
award cannot be said to have fixed amounts. What is clear from the records is that over the years, there had been a
downtrend in the amount given as service award. 34 There was also a downtrend with respect to the holding of the
Christmas parties in the sense that its location changed from paid venues to one which was free of charge, 35 evidently
to cut costs. Also, the grant of these two aforementioned bonuses cannot be considered to have been the private
respondent's long and regular practice. To be considered a "regular practice," the giving of the bonus should have been
done over a long period of time, and must be shown to have been consistent and deliberate. 36 The downtrend in the
grant of these two bonuses over the years demonstrates that there is nothing consistent about it. Further, as held by the
Court of Appeals:

Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that
the same was merely sponsored by the respondent corporation out of generosity and that the same is
dependent on the financial performance of the company for a particular year. . . 37

The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas
season cannot be held to have ripened into a company practice that the petitioner herein have a right to demand. Aside
from the general averment of the petitioner that this benefit had been granted by the private respondent since time
immemorial, there had been no evidence adduced that it had been a regular practice. As propitiously observed by the
Court of Appeals:

. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same
was in excess of that provided by the law, the same however did not ripen into a company practice on
account of the fact that it was only granted for two (2) years and with the express reservation from
respondent corporation's owner that it cannot continue to grant the same in view of the company's
current financial situation. 38

To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize
him for his past generosity. 39

Having thus ruled that the additional 35% premium pay for work rendered during selected days of the Holy
Week and Christmas season, the holding of Christmas parties with its incidental benefits, and the grant of cash incentive
together with the service award are all bonuses which are neither demandable nor enforceable obligations of the

30 | P a g e
private respondent, it is not necessary anymore to delve into the Revenues and Profitability Analysis for the years 1996-
2000 submitted by the private respondent. SHAcID

On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their
salaries, the factual finding of the Voluntary Arbitrator is revealing, viz:

. . . Considering that the Union was unable to adduce proof that a promotion indeed occur[ed]
with respect to the 15 employees, the Daily Rated Union's claim for promotional increase likewise
fall[s] there being no promotion established under the records at hand. 40

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of Appeals dated 06
March 2002 and 12 July 2002, respectively, which affirmed and upheld the decision of the Voluntary Arbitrator, are
hereby AFFIRMED. No pronouncement as to costs.

SO ORDERED

||| (American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co. Inc., G.R. No. 155059, [April
29, 2005], 497 PHIL 213-227)

THIRD DIVISION

[G.R. No. 198783. April 15, 2013.]

ROYAL PLANT WORKERS UNION, petitioner, vs. COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU
PLANT, respondent.

DECISION

MENDOZA, J p:

Assailed in this petition is the May 24, 2011 Decision 1 and the September 2, 2011 Resolution 2 of the Court of Appeals
(CA) in CA-G.R. SP No. 05200, entitled Coca-Cola Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant Workers Union, which
nullified and set aside the June 11, 2010 Decision 3 of the Voluntary Arbitration Panel (Arbitration Committee) in a case
involving the removal of chairs in the bottling plant of Coca-Cola Bottlers Philippines, Inc. (CCBPI).

The Factual and Procedural

Antecedents

The factual and procedural antecedents have been accurately recited in the May 24, 2011 CA decision as follows:

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the
manufacture, sale and distribution of softdrink products. It has several bottling plants all over the
country, one of which is located in Cebu City. Under the employ of each bottling plant are bottling
operators. In the case of the plant 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. The first shift is from 8 a.m. to 5 p.m. and the second shift is
from 5 p.m. up to the time production operations is finished. Thus, 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.

31 | P a g e
 Each shift has rotations of work time and break time. Prior to September 2008, the rotation is this:
after two and a half (2 1/2) hours of work, the bottling operators are given a 30-minute break and this
goes on until the shift ends. In September 2008 and up to the present, the rotation has changed and
bottling operators are now given a 30-minute break after one and one half (1 1/2) hours of work.

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. AcSIDE

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, petitioner's 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.

Both parties submitted their position papers and other subsequent pleadings in amplification of their
respective stands. Petitioner argued that 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 respondent. On the other hand, respondent espoused the contrary view. It contended
that 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.

Ruling of the Arbitration Committee

On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal Plant Workers Union (the Union)
and against CCBPI, the dispositive portion of which reads, as follows:

Wherefore, the undersigned rules in favor of ROPWU declaring that the removal of the operators
chairs is not valid. CCBPI is hereby ordered to restore the same for the use of the operators as before
their removal in 2008. 4

The Arbitration Committee ruled, among others, that 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

32 | P a g e
been enjoyed by it; that any benefit being enjoyed by the employees could not be reduced, diminished, discontinued, or
eliminated by the employer in accordance with Article 100 of the Labor Code,which prohibited the diminution or
elimination by the employer of the employees' 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.

The Arbitration Committee further stated that, although the removal of the chairs was done in good faith, CCBPI failed
to present evidence regarding instances of sleeping while on duty. There were no specific details as to the number of
incidents of sleeping on duty, who were involved, when these incidents happened, and what actions were taken. There
was no evidence either of any accident or injury in the many years that the bottling operators used chairs. To the
Arbitration Committee, it was puzzling why it took 34 and 20 years for CCBPI to be so solicitous of the bottling operators'
safety that it removed their chairs so that they would not fall asleep and injure themselves.

Finally, the Arbitration Committee was of the view that, contrary to CCBPI's position, line efficiency was the result of
many factors and it could not be attributed solely to one such as the removal of the chairs. SHcDAI

Not contented with the Arbitration Committee's decision, CCBPI filed a petition for review under Rule 43 before the CA.

Ruling of the CA

On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside the decision of the Arbitration
Committee. The dispositive portion of the CA decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED and the Decision, dated 11 June
2010, of the Arbitration Committee in AC389-VII-09-10-2009D is NULLIFIED and SET ASIDE. A new one
is entered in its stead SUSTAINING the removal of the chairs of the bottling operators from the
manufacturing/production line. 5

The CA held among others, that the removal of the chairs from the manufacturing/production lines by CCBPI is within
the province of management prerogatives; that it was part of its inherent right to control and manage its enterprise
effectively; and that since it was the employer's 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.

The CA stated that CCBPI complied with the conditions of a valid exercise of a management prerogative when it decided
to remove the chairs used by the bottling operators in the manufacturing/production lines. 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
1/2) to one and a half hours (1 1/2) 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 CA added that the decision of CCBPI to remove the chairs was not done for the purpose of defeating or
circumventing the rights of its employees under the special laws, the Collective Bargaining Agreement (CBA) or the
general principles of justice and fair play. It 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. Lastly, the
CA explained that 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 employee's benefits referred to therein mainly involved monetary
considerations or privileges converted to their monetary equivalent.

Disgruntled with the adverse CA decision, the Union has come to this Court praying for its reversal on the following:

33 | P a g e
 GROUNDS

THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING
THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE RULES OF COURT IS THE PROPER REMEDY
OF CHALLENGING BEFORE SAID COURT THE DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL
OF VOLUNTARY ARBITRATORS UNDER THE LABOR CODE.

II

THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
NULLIFYING AND SETTING ASIDE THE DECISION OF THE PANEL OF VOLUNTARY ARBITRATORS
WHICH DECLARED AS NOT VALID THE REMOVAL OF THE CHAIRS OF THE OPERATORS IN THE
MANUFACTURING AND/OR PRODUCTION LINE. ADCSEa

In advocacy of its positions, the Union argues that the proper remedy in challenging the decision of the Arbitration
Committee before the CA is a petition for certiorari under Rule 65. The petition for review under Rule 43 resorted to by
CCBPI should have been dismissed for being an improper remedy. The Union points out that the parties agreed to
submit the unresolved grievance involving the removal of chairs to voluntary arbitration pursuant to the provisions of
Article V of the existing CBA. Hence, the assailed decision of the Arbitration Committee is a judgment or final order
issued under the Labor Code of the Philippines. Section 2, Rule 43 of the 1997 Rules of Civil Procedure, expressly states
that the said rule does not cover cases under the Labor Code of the Philippines. The judgments or final orders of the
Voluntary Arbitrator or Panel of Voluntary Arbitrators are governed by the provisions of Articles 260, 261, 262, 262-A,
and 262-B of the Labor Code of the Philippines.

On the substantive aspect, the Union argues that there is no connection between CCBPI's "I Operate, I Maintain, I Clean"
program and the removal of the chairs because the implementation of the program was in 2006 and the removal of the
chairs was done in 2008. The 30-minute break is part of an operator's working hours and does not make any difference.
The frequency of the break period is not advantageous to the operators because it cannot compensate for the time they
are made to stand throughout their working time. The bottling operators get tired and exhausted after their tour of duty
even with chairs around. How much more if the chairs are removed?

The Union, further claims that management prerogatives are not absolute but subject to certain limitations found in law,
a collective bargaining agreement, or general principles of fair play and justice. The operators have been performing
their assigned duties and responsibilities satisfactorily for thirty (30) years using chairs. There is no record of poor
performance because the operators are sitting all the time. There is no single incident when the attention of an operator
was called for failure to carry out his assigned tasks. CCBPI has not submitted any evidence to prove that the
performance of the operators was poor before the removal of the chairs and that it has improved after the chairs were
removed. The presence of chairs for more than 30 years made the operators awake and alert as they could relax from
time to time. There are sanctions for those caught sleeping while on duty. Before the removal of the chairs, the
efficiency of the operators was much better and there was no recorded accident. After the removal of the chairs, the
efficiency of the operators diminished considerably, resulting in the drastic decline of line efficiency.

Finally, the Union asserts that the removal of the chairs constitutes violation of the Occupational Health and Safety
Standards, which provide that every company shall keep and maintain its workplace free from hazards that are likely to
cause physical harm to the workers or damage to property. The removal of the chairs constitutes a violation of the State
policy to assure the right of workers to a just and humane condition of work pursuant to Article 3 of the Labor Code and
of CCBPI's Global Workplace Rights Policy. Hence, the unilateral withdrawal, elimination or removal of the chairs, which
have been in existence for more than 30 years, constitutes a violation of existing practice.

The respondent's position

CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the Rules of Court was the proper
remedy to question the decision of the Arbitration Committee. It likewise echoes the ruling of the CA that the removal
of the chairs was a legitimate exercise of management prerogative that it was done not to harm the bottling operators
but for the purpose of optimizing their efficiency and CCBPI's machineries and equipment; and that the exercise of its
management prerogative, was done in good faith and not for the purpose of circumventing the alights of the employees
under the special laws, the CBA or the general principles of justice and fair play.

The Court's Ruling

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The decision in this case rests on the resolution of two basic questions. First, is an appeal to the CA via a petition for
review under Rule 43 of the 1997 Rules of Civil Procedure a proper remedy to question the decision of the Arbitration
Committee? Second, was the removal of the bottling operators' chairs from CCBPI's production/manufacturing lines a
valid exercise of a management prerogative?

The Court sustains the ruling of the CA on both issues.

Regarding the first issue, the Union insists that the CA erred in ruling that the recourse taken by CCBPI in appealing the
decision of the Arbitration Committee was proper. It argues that the proper remedy in challenging the decision of the
Voluntary Arbitrator before the CA is by filing a petition for certiorari under Rule 65 of the Rules of Court, not a petition
for review under Rule 43. TAaEIc

CCBPI counters that the CA was correct in ruling that the recourse it took in appealing the decision of the Arbitration
Committee to the CA via a petition for review under Rule 43 of the Rules of Court was proper and in conformity with the
rules and prevailing jurisprudence.

A Petition for Review

under Rule 43 is the
proper remedy

CCBPI is correct. This procedural issue being debated upon is not novel. The Court has already ruled in a number of cases
that a decision or award of a voluntary arbitrator is appealable to the CA via a petition for review under Rule 43. The
recent case of Samahan ng mga Manggagawa sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary Arbitrator
Buenaventura C. Magsalin and Hotel Enterprises of the Philippines 6 reiterated the well-settled doctrine on this issue, to
wit:

In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v. Bacungan, 7 we repeated

the well-settled rule that a decision or award of a voluntary arbitrator is appealable to the CA via
petition for review under Rule 43. We held that:

"The question on the proper recourse to assail a decision of a voluntary arbitrator has already
been settled in Luzon Development Bank v. Association of Luzon Development Bank
Employees, where the Court held that the decision or award of the voluntary arbitrator or
panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular No. 1-95 (now embodied in Rule 43 of
the 1997 Rules of Civil Procedure), just like those of the quasi-judicial agencies, boards and
commissions enumerated therein, and consistent with the original purpose to provide a
uniform procedure for the appellate review of adjudications of all quasi-judicial entities.

Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint Employees Union-Olalia v.
Court of Appeals, the Court reiterated the aforequoted ruling. In Alcantara, the Court held
that notwithstanding Section 2 of Rule 43, the ruling in Luzon Development Bank still stands.
The Court explained, thus:

'The provisions may be new to the Rules of Court but it is far from being a new law.
Section 2, Rules 42 of the 1997 Rules of Civil Procedure, as presently worded, is
nothing more but a reiteration of the exception to the exclusive appellate jurisdiction
of the Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902:

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees' Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph
of Section 17 of the Judiciary Act of 1948.'

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 The Court took into account this exception in Luzon Development Bank but, nevertheless, held
that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not come
within its ambit . . . ." aTADcH

Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil Procedure, as amended, provide:

"SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized
by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these
agencies are the . . ., and voluntary arbitrators authorized by law.

xxx xxx xxx

SEC. 3. Where to appeal. — An appeal under this Rule may be taken to the Court of Appeals
within the period and in the manner therein provided, whether the appeal involves questions
of fact, of law, or mixed questions of fact and law.

SEC. 4. Period of appeal. — The appeal shall be taken within fifteen (15) days from notice of
the award, judgment, final order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the denial of petitioner's motion for new
trial or reconsideration duly filed in accordance with the governing law of the court or agency
a quo. . . . . (Emphasis supplied.)"

Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrator's Resolution denying petitioner's
motion for reconsideration, petitioner should have filed with the CA, within the fifteen (15)-day
reglementary period, a petition for review, not a petition for certiorari.

On the second issue, the Union basically claims that the CCBPI's decision to unilaterally remove the operators' chairs
from the production/manufacturing lines of its bottling plants is not valid because it violates some fundamental labor
policies. According to the Union, such removal constitutes a violation of the 1) Occupational Health and Safety Standards
which provide that every worker is entitled to be provided by the employer with appropriate seats, among others; 2)
policy of the State to assure the right of workers to a just and humane condition of work as provided for in Article 3 of
the Labor Code; 8 3) Global Workplace Rights Policy of CCBPI which provides for a safe and healthy workplace by
maintaining a productive workplace and by minimizing the risk of accident, injury and exposure to health risks; and 4)
diminution of benefits provided in Article 100 of the Labor Code.9

Opposing the Union's argument, CCBPI mainly contends that the removal of the subject chairs is a valid exercise of
management prerogative. The management decision to remove the subject chairs was made in good faith and did not
intend to defeat or circumvent the rights of the Union under the special laws, the CBA and the general principles of
justice and fair play.

Again, the Court agrees with CCBPI on the matter.

A Valid Exercise of
Management Prerogative

The Court has held that 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 exercised in good faith and with due regard to the rights of labor. 10

In the present controversy, it cannot be denied that CCBPI removed the operators' chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their
duties and responsibilities more efficiently. 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 1/2)-hour rotation period to a
one-and-a-half (1 1/2) hour rotation period; and b) an increase of the break period from 15 to 30 minutes between
rotations.

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Apparently, 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, CCBPI's exercise of its management prerogative
was made in good faith without doing any harm to the workers' rights. cTEICD

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.

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. The CA correctly ruled that the Labor Code, specifically Article 132 11 thereof, only requires
employers to provide seats for women. No similar requirement is mandated for men or male workers. It must be
stressed that all 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.

The Union should not complain too much about standing and moving about for one and one-half (1 1/2) hours because
studies show that sitting in workplaces for a long time is hazardous to one's health. The report of VicHealth, Australia, 12
disclosed that "prolonged workplace sitting is an emerging public health and occupational health issue with serious
implications for the health of our working population. Importantly, prolonged sitting is a risk factor for poor health and
early death, even among those who meet, or exceed, national 13 activity guidelines." In another report, 14 it was
written:

Workers needing to spend long periods in a seated position on the job such as taxi drivers, call
centre and office workers, are at risk for injury and a variety of adverse health effects.

The most common injuries occur in the muscles, bones, tendons and ligaments, affecting the neck
and lower back regions. Prolonged sitting:

• reduces body movement making muscles more likely to pull, cramp or strain when stretched
suddenly,

• causes fatigue in the back and neck muscles by slowing the blood supply and puts high
tension on the spine, especially in the low back or neck, and

• causes a steady compression on the spinal discs that hinders their nutrition and can
contribute to their premature degeneration.

Sedentary employees may also face a gradual deterioration in health if they do not exercise or do
not lead an otherwise physically active life. The most common health problems that these
employees experience are disorders in blood circulation and injuries affecting their ability to move.
Deep Vein Thrombosis (DVT), where a clot forms in a large vein after prolonged sitting (e.g., after a
long flight) has also been shown to be a risk.

Workers who spend most of their working time seated may also experience other, less specific
adverse health effects. Common effects include decreased fitness, reduced heart and lung
efficiency, and digestive problems. Recent research has identified too much sitting as an important
part of the physical activity and health equation, and suggests we should focus on the harm caused
by daily inactivity such as prolonged sitting.

Associate professor David Dunstan leads a team at the Baker IDI in Melbourne which is specifically
researching sitting and physical activity. He has found that people who spend long periods of time
seated (more than four hours per day) were at risk of:

• higher blood levels of sugar and fats,

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 • larger waistlines, and

• higher risk of metabolic syndrome

regardless of how much moderate to vigorous exercise they had.

In addition, people who interrupted their sitting time more often just by standing or with light
activities such as housework, shopping, and moving about the office had healthier blood sugar and
fat levels, and smaller waistlines than those whose sitting time was not broken up. HcACST

Of course, in this case, if the chairs would be returned, no risks would be involved because of the shorter period of
working time. The study was cited just to show that there is a health risk in prolonged sitting.

No Violation of the CBA

The CBA 15 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. On the
contrary, Section 2 of Article 1 of the CBA expressly provides as follows:

Article I

SCOPE

SECTION 2. Scope of the Agreement. — All the terms and conditions of employment of employees and
workers within the appropriate bargaining unit (as defined in Section 1 hereof) are embodied in this
Agreement and the same shall govern the relationship between the COMPANY and such employees
and/or workers. On the other hand, all such benefits and/or privileges as are not expressly provided
for in this Agreement but which are now being accorded, may in the future be accorded, or might
have previously been accorded, to the employees and/or workers, shall be deemed as purely
voluntary acts on the part of the COMPANY in each case, and the continuance and repetition
thereof now or in the future, no matter how long or how often, shall not be construed as
establishing an obligation on the part of the COMPANY. It is however understood that any benefits
that are agreed upon by and between the COMPANY and the UNION in the Labor-Management
Committee Meetings regarding the terms and conditions of employment outside the CBA that have
general application to employees who are similarly situated in a Department or in the Plant shall be
implemented. [emphasis and underscoring supplied]

As can be gleaned from the aforecited provision, the CBA expressly provides that benefits and/or privileges, not
expressly given therein but which are presently being granted by the company and enjoyed by the employees, shall be
considered as purely voluntary acts by the management and that the continuance of such benefits and/or privileges, no
matter how long or how often, shall not be understood as establishing an obligation on the company's part. Since the
matter of the chairs is not expressly stated in the CBA, it is understood that it was a purely voluntary act on the part of
CCBPI and the long practice did not convert it into an obligation or a vested right in favor of the Union.

No Violation of the general principles

of justice and fair play

The Court completely agrees with the CA ruling that 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 1/2)
hours to just one and a half (1 1/2) 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 1/2) hours is a just and fair work schedule.

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 16 of the Labor
Code.In the Court's view, 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.

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This Court has already decided several cases regarding the non-diminution rule where the benefits or privileges involved
in those cases mainly concern monetary considerations or privileges with monetary equivalents. Some of these cases
are: Eastern Telecommunication Phils., Inc. v. Eastern Telecoms Employees Union, 17 where the case involves the
payment of 14th, 15th and 16th month bonuses; Central Azucarera De Tarlac v. Central Azucarera De Tarlac Labor
Union-NLU, 18 regarding the 13th month pay, legal/special holiday pay, night premium pay and vacation and sick leaves;
TSPIC Corp. v. TSPIC Employees Union, 19 regarding salary wage increases; and American Wire and Cable Daily
Employees Union vs. American Wire and Cable Company, Inc., 20 involving service awards with cash incentives, premium
pay, Christmas party with incidental benefits and promotional increase. CIaASH

In this regard, the Court agrees with the CA when it resolved the matter and wrote:

Let it be stressed that the aforequoted article speaks of non-diminution of supplements and other
employee benefits. Supplements are privileges given to an employee which constitute as extra
remuneration besides his or her basic ordinary earnings and wages. From this definition, We can only
deduce that the other employee benefits spoken of by Article 100 pertain only to those which are
susceptible of monetary considerations. Indeed, this could only be the most plausible conclusion
because the cases tackling Article 100 involve mainly with monetary considerations or privileges
converted to their monetary equivalents.

xxx xxx xxx

Without a doubt, equating the provision of chairs to the bottling operators as something within the
ambit of "benefits" in the context of Article 100 of the Labor Code is unduly stretching the coverage of
the law. The interpretations of Article 100 of the Labor Code do not show even with the slightest hint
that such provision of chairs for the bottling operators may be sheltered under its mantle. 21

Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage interference with an
employer's judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate
business decisions of employers. The law must protect not only the welfare of the employees, but also the right of the
employers. 22

WHEREFORE, the petition is DENIED.

SO ORDERED

||| (Royal Plant Workers Union v. Coca-Cola Bottlers Phils., Inc., G.R. No. 198783, [April 15, 2013], 709 PHIL 350-371)

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