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Sevilla Trading Co. (P) v. A.V.A.

Tomas Semana, Sevilla that, in adjusting its computation of the 13th-month pay, it merely
Trading Workers Union-Super (R), GR 152456, April 28, 2004 rectified the mistake its personnel committed in the previous years.
[Per J. Puno, 2nd] A.V.A. Semana decided in favor of the Union. 
FACTS Sevilla Trading filed before the Court of Appeals, a "Manifestation
For two to three years prior to 1999, Sevilla Trading Company, a and Motion for Time to File Petition for Certiorari" on January 19,
domestic corporation engaged in trading business, added to the base 2001. A month later, on February 19, 2001, it filed its Petition for
figure, in its computation of the 13th-month pay of its employees, the Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the
amount of other benefits received by the employees which are nullification of the Decision of the Arbitrator. In addition to its earlier
beyond the basic pay. Sevilla Trading Co. claimed that it entrusted allegations, petitioner claimed that assuming the old computation will
the preparation of the payroll to its office staff, including the be upheld, the reversal to the old computation can only be made to
computation and payment of the 13th-month pay and other benefits. the extent of including non-basic benefits actually included by
When it changed its person in charge of the payroll in the process of petitioner in the base figure in the computation of their 13th-month
computerizing its payroll, and after audit was conducted, it allegedly pay in the prior years. It must exclude those non-basic benefits which,
discovered the error of including non-basic pay or other benefits in in the first place, were not included in the original computation. The
the base figure used in the computation of the 13th-month pay of its appellate court denied due course to, and dismissed the petition.
employees and it cited the Rules and Regulations Implementing P.D. Hence, this appeal.
No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. ISSUE
2(b): “Basic salary" shall include all remunerations or earnings paid WON the reduction in the 13th month pay is valid
by an employer to an employee for services rendered but may not HELD
include cost-of-living allowances granted pursuant to P.D. No. 525 or No. A.V.A. Semana is correct in holding that Sevilla Trading’s stance
Letter of Instruction No. 174, profit-sharing payments, and all of mistake or error in the computation of the thirteenth month pay is
allowances and monetary benefits which are not considered or unmeritorious. Sevilla Trading’s submission of financial statements
integrated as part of the regular or basic salary of the employee at every year requires the services of a certified public accountant to
the time of the promulgation of the Decree on December 16, 1975.” audit its finances. It is quite impossible to suggest that they have
Hence, the new computation reduced the employees’ thirteenth discovered the alleged error in the payroll only in 1999. This implies
month pay. The daily piece-rate workers represented by Sevilla that in previous years it does not know its cost of labor and
Trading Workers Union – SUPER, a duly organized and registered operations. This is merely basic cost accounting. Also, petitioner
union, through the Grievance Machinery in their Collective Bargaining failed to adduce any other relevant evidence to support its
Agreement, contested the new computation and reduction of their contention. Aside from its bare claim of mistake or error in the
thirteenth month pay. The parties failed to resolve the issue. computation of the thirteenth month pay, petitioner merely appended
The Union alleged that petitioner violated the rule prohibiting the to its petition a copy of the 1997-2002 Collective Bargaining
elimination or diminution of employees’ benefits as provided for in Agreement and an alleged "corrected" computation of the thirteenth
Art. 100 of the Labor Code, as amended. They claimed that paid month pay. There was no explanation whatsoever why its inclusion of
leaves, like sick leave, vacation leave, paternity leave, union leave, non-basic benefits in the base figure in the computation of their 13th-
bereavement leave, holiday pay and other leaves with pay in the CBA month pay in the prior years was made by mistake, despite the clarity
should be included in the base figure in the computation of their 13th- of statute and jurisprudence at that time.
month pay. A company practice favorable to the employees had indeed been
On the other hand, Sevilla Trading insisted that the computation of established and the payments made pursuant thereto, ripened into
the 13th-month pay is based on basic salary, excluding benefits such benefits enjoyed by them. And any benefit and supplement being
as leaves with pay, as per P.D. No. 851, as amended. It maintained enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer, by virtue of Sec. 10 of implement the latest wage order. Petitioner company rejected,
the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of claiming that since none of the employees were receiving a daily
the Labor Code of the Philippines which prohibit the diminution or salary rate lower than 250 and there was no wage distortion, it was
elimination by the employer of the employees’ existing benefits. not obliged to grant the wage increase
With regard to the length of time the company practice should have ISSUE
been exercised to constitute voluntary employer practice which Whether or not the company was obliged to grant the wage increase
cannot be unilaterally withdrawn by the employer, we hold that under the Wage Order issued as a matter of practice
jurisprudence has not laid down any rule requiring a specific HELD
minimum number of years. Court held that the grant of these benefits No. It is not obliged to grant the wage increase. The wage order
has ripened into company practice or policy which cannot be provides that only those in the private sector in the NCR receiving the
peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading daily minimum wage rate of 223 per day would receive an increase,
kept the practice of including non-basic benefits such as paid leaves thereby setting the wage rate to 250 pesos. There is no dispute that
for unused sick leave and vacation leave in the computation of their when the wage order was issued, the lowest paid employee of the
13th-month pay for at least two (2) years. This, we rule likewise company was receiving a wage higher than 250 pesos. As such,
constitutes voluntary employer practice which cannot be unilaterally employees had not right to demand for the increase.
withdrawn by the employer without violating Art. 100 of the Labor
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.

Pag-asa Steel Works, Inc. v. CA, GR 166647, March 31, 2006

RTWPB issued a Wage Order providing for an increase of ₱13 in the
salaries of employees receiving the minimum wage and a consequent
increase in the rate to 198. Subsequent to this, petitioner-company
and the Union entered into a Collective Bargaining Agreement which
granted an increase of ₱15 for the first year, 25 for the second year
and 30 for the third year. Months later, a wage order was issued by
the NCR providing for a 25 pesos increase in the salary of employees
receiving the minimum wage and increased the minimum wage to
223.50. Petitioner paid the 25 pesos increase to all its employees. A
year after, the employees were granted the second year increase
provided in the CBA. On that same year, a wage order was issued
which provided for the setting of the new minimum wage at 250.00 or
an increase of 26 pesos. The Union then requested the company to