Sevilla Trading Company v. Semana
REITERATIONFacts
1. The Antecedents: For two to three years prior to 1999, Sevilla Trading Company (Sevilla Trading) included various benefits beyond basic pay, such as overtime premiums, holiday pay, night premiums, and various paid leaves (bereavement, union, maternity, paternity, company vacation and sick leave, and cash conversion of unused leave), in the computation of its employees' 13th-month pay. The company claimed this was an error by its payroll staff and, after an audit, changed its computation method to exclude these non-basic benefits, thereby reducing the 13th-month pay. 2. Procedural History: The Sevilla Trading Workers Union – SUPER (Union) contested this reduction through the grievance machinery. Failing to resolve the issue, the parties submitted it to Accredited Voluntary Arbitrator Tomas E. Semana (A.V.A. Semana). A.V.A. Semana ruled in favor of the Union, ordering Sevilla Trading to include the previously excluded benefits in the 13th-month pay computation and to pay corresponding backwages. Sevilla Trading then filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure with the Court of Appeals, arguing the A.V.A.'s decision was erroneous. The Court of Appeals dismissed the petition, holding that the proper remedy was an appeal under Rule 43 and that Sevilla Trading had failed to file it within the reglementary period. 3. The Petition: Sevilla Trading filed the present appeal, arguing that the Court of Appeals erred in dismissing its petition and that the A.V.A.'s decision to revert to the old computation was without legal basis. The company contended that companies should have the means to correct computational errors, even if it causes damage to employers. The Supreme Court, however, affirmed the Court of Appeals' decision, primarily finding that Sevilla Trading should have filed an appeal under Rule 43, not a petition for certiorari under Rule 65, and that its failure to do so rendered the A.V.A.'s decision final and executory. The Court also found no grave abuse of discretion by the A.V.A., noting that the inclusion of non-basic benefits in the 13th-month pay computation for several years constituted a company practice that could not be unilaterally withdrawn.
Issue(s)
Whether the Court of Appeals erred in dismissing Sevilla Trading's Petition for Certiorari under Rule 65, regarding the proper remedy for decisions of a voluntary arbitrator. Whether Sevilla Trading's inclusion of non-basic benefits in the computation of the 13th-month pay for several years constituted a company practice that could not be unilaterally withdrawn, and whether Sevilla Trading could correct alleged errors in its previous computation of the 13th-month pay.
Ruling
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 affirmed.
Ratio Decidendi
On the propriety of the remedy: The Court affirmed the Court of Appeals' ruling that a Petition for Certiorari under Rule 65 was not the proper remedy from the decision of a voluntary arbitrator. The appropriate remedy is an appeal under Rule 43 of the Rules of Civil Procedure. Sevilla Trading failed to file its appeal within the fifteen-day reglementary period from notice of the arbitrator's decision. Consequently, the decision of the Voluntary Arbitrator had become final and executory, and the Court of Appeals correctly held that it no longer had appellate jurisdiction to alter or nullify it. A special civil action under Rule 65 cannot be a substitute for a lost remedy of appeal, especially when such loss is due to the petitioner's own neglect or error in choosing the remedy. On the existence of company practice and the correction of errors: The Court found no grave abuse of discretion on the part of the Voluntary Arbitrator. Sevilla Trading's claim of discovering an error in its computation of the 13th-month pay after several years of including non-basic benefits was deemed unmeritorious. The Court noted that the company's submission of audited financial statements annually made it improbable that such an error, involving basic cost accounting, would go unnoticed for so long. The Court distinguished the present case from Globe Mackay Cable and Radio Corp. vs. NLRC, where an erroneous application of the law due to lack of clear administrative guidelines was not considered a voluntary act. In this case, the inclusion of non-basic benefits in the 13th-month pay computation for at least two years constituted a voluntary employer practice. This practice, favorable to the employees, had ripened into a benefit that could not be unilaterally withdrawn by the employer, as it would violate Article 100 of the Labor Code, which prohibits the elimination or diminution of existing employee benefits. The Court reiterated the rulings in San Miguel Corporation vs. Inciong and Davao Fruits Corporation vs. Associated Labor Unions, emphasizing that the Supplementary Rules and Regulations Implementing P.D. No. 851 clearly exclude earnings and other remunerations not part of the basic salary from the computation of the 13th-month pay. The Court concluded that putting the blame on payroll personnel for such an error was inexcusable, as the law and jurisprudence on the matter were clear.
Main Doctrine
The inclusion of non-basic benefits in the computation of the 13th-month pay, when done consistently over a period of time, ripens into a company practice which cannot be unilaterally withdrawn by the employer without violating Article 100 of the Labor Code, prohibiting the elimination or diminution of employee benefits. Furthermore, appeals from decisions of voluntary arbitrators must be filed under Rule 43, not Rule 65, of the Rules of Civil Procedure.