G.R. No.

145561

June 15, 2005

HONDA PHILS., INC., petitioner,

vs.
SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA, respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review under Rule 45 seeks the reversal of the Court of Appeals decision 1 dated September 14,
20002 and its resolution3 dated October 18, 2000, in CA-G.R. SP No. 59052. The appellate court affirmed the decision
dated May 2, 2000 rendered by the Voluntary Arbitrator who ruled that petitioner Honda Philippines, Inc.s (Honda)
pro-rated payment of the 13th and 14th month pay and financial assistance to its employees was invalid.
As found by the Court of Appeals, the case stems from the Collective Bargaining Agreement (CBA) forged between
petitioner Honda and respondent union Samahan ng Malayang Manggagawa sa Honda (respondent union) which
contained the following provisions:
Section 3. 13th Month Pay
The COMPANY shall maintain the present practice in the implementation [of] the 13th month pay.
Section 6. 14th Month Pay
The COMPANY shall grant a 14th Month Pay, computed on the same basis as computation of 13th Month Pay.
Section 7. The COMPANY agrees to continue the practice of granting, in its discretion, financial assistance to covered
employees in December of each year, of not less than 100% of basic pay.
This CBA is effective until year 2000. In the latter part of 1998, the parties started re-negotiations for the fourth and
fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on
the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, then Department
of Labor and Employment (DOLE) Secretary Laguesma assumed jurisdiction over the labor dispute and ordered the
parties to cease and desist from committing acts that would aggravate the situation. Both parties complied accordingly.
On May 11, 1999, however, respondent union filed a second Notice of Strike on the ground of unfair labor practice
alleging that Honda illegally contracted out work to the detriment of the workers. Respondent union went on strike and
picketed the premises of Honda on May 19, 1999. On June 16, 1999, DOLE Acting Secretary Felicisimo Joson, Jr.
assumed jurisdiction over the case and certified the same to the National Labor Relations Commission (NLRC) for
compulsory arbitration. The striking employees were ordered to return to work and the management accepted them
back under the same terms prior to the strike staged.
On November 22, 1999, the management of Honda issued a memorandum 4 announcing its new computation of the
13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike shall be
considered unworked days for purposes of computing said benefits. As per the companys new formula, the amount
equivalent to 1/12 of the employees basic salary shall be deducted from these bonuses, with a commitment however
that in the event that the strike is declared legal, Honda shall pay the amount deducted.
Respondent union opposed the pro-rated computation of the bonuses in a letter dated November 25, 1999. Honda
sought the opinion of the Bureau of Working Conditions (BWC) on the issue. In a letter dated January 4, 2000, 5 the
BWC agreed with the pro-rata payment of the 13th month pay as proposed by Honda.
The matter was brought before the Grievance Machinery in accordance with the parties existing CBA but when the
issue remained unresolved, it was submitted for voluntary arbitration. In his decision 6 dated May 2, 2000, Voluntary
Arbitrator Herminigildo C. Javen invalidated Hondas computation, to wit:
WHEREFORE, in view of all foregoing premises being duly considered and evaluated, it is hereby ruled that the
Companys implementation of pro-rated 13th Month pay, 14th Month pay and Financial Assistance [is] invalid. The
Company is thus ordered to compute each provision in full month basic pay and pay the amounts in question within
ten (10) days after this Decision shall have become final and executory.
The three (3) days Suspension of the twenty one (21) employees is hereby affirmed.

SO ORDERED.7
Hondas Motion for Partial Reconsideration was denied in a resolution dated May 22, 2000. Thus, a petition was filed
with the Court of Appeals, however, the petition was dismissed for lack of merit.
Hence, the instant petition for review on the sole issue of whether the pro-rated computation of the 13th month pay
and the other bonuses in question is valid and lawful.
The petition lacks merit.
A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. 8 As
in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs, public order or public policy.9 Thus, where
the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by
the express policy of the law.10
In some instances, however, the provisions of a CBA may become contentious, as in this case. Honda wanted to
implement a pro-rated computation of the benefits based on the "no work, no pay" rule. According to the company, the
phrase "present practice" as mentioned in the CBA refers to the manner and requisites with respect to the payment of
the bonuses, i.e., 50% to be given in May and the other 50% in December of each year. Respondent union, however,
insists that the CBA provisions relating to the implementation of the 13th month pay necessarily relate to the
computation of the same.
We agree with the findings of the arbitrator that the assailed CBA provisions are far from being unequivocal. A cursory
reading of the provisions will show that they did not state categorically whether the computation of the 13th month pay,
14th month pay and the financial assistance would be based on one full months basic salary of the employees, or prorated based on the compensation actually received. The arbitrator thus properly resolved the ambiguity in favor of
labor as mandated by Article 1702 of the Civil Code.11 The Court of Appeals affirmed the arbitrators finding and added
that the computation of the 13th month pay should be based on the length of service and not on the actual wage
earned by the worker.
We uphold the rulings of the arbitrator and the Court of Appeals. Factual findings of labor officials, who are deemed to
have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but
even finality, and bind us when supported by substantial evidence. It is not our function to assess and evaluate the
evidence all over again, particularly where the findings of both the arbiter and the Court of Appeals coincide. 12
Presidential Decree No. 851, otherwise known as the 13th Month Pay Law, which required all employers to pay their
employees a 13th month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. It
was enacted on December 16, 1975 after it was noted that there had been no increase in the minimum wage since
1970 and the Christmas season was an opportune time for society to show its concern for the plight of the working
masses so that they may properly celebrate Christmas and New Year.13
Under the Revised Guidelines on the Implementation of the 13 th month pay issued on November 16, 1987, the salary
ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13 th month pay required by
law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar
year. The guidelines pertinently provides:
The "basic salary" of an employee for the purpose of computing the 13 th month pay shall include allremunerations or
earnings paid by his employer for services rendered but does not include allowances and monetary benefits which
are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation
and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances. 14 (Emphasis
supplied)
For employees receiving regular wage, we have interpreted "basic salary" to mean, not the amount actually
received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given
calendar year. Thus, we exclude from the computation of "basic salary" payments for sick, vacation and maternity
leaves, night differentials, regular holiday pay and premiums for work done on rest days and special
holidays.15 In Hagonoy Rural Bank v. NLRC,16 St. Michael Academy v. NLRC,17 Consolidated Food Corporation v.
NLRC,18 and similar cases, the 13th month pay due an employee was computed based on the employees basic
monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment.
The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from
work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of

time he worked during the year, reckoned from the time he started working during the calendar year. 19 The Court of
Appeals thus held that:
Considering the foregoing, the computation of the 13th month pay should be based on the length of service and not on
the actual wage earned by the worker. In the present case, there being no gap in the service of the workers during the
calendar year in question, the computation of the 13th month pay should not be pro-rated but should be given in
full.20 (Emphasis supplied)
More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13 th month pay before
the instant case. Honda did not adduce evidence to show that the 13 th month, 14th month and financial assistance
benefits were previously subject to deductions or pro-rating or that these were dependent upon the companys
financial standing. As held by the Voluntary Arbitrator:
The Company (Honda) explicitly accepted that it was the strike held that prompt[ed] them to adopt a pro-rata
computation, aside [from] being in [a] state of rehabilitation due to 227M substantial losses in 1997, 114M in 1998 and
215M lost of sales in 1999 due to strike. This is an implicit acceptance that prior to the strike, a full month basic pay
computation was the "present practice" intended to be maintained in the CBA.21
The memorandum dated November 22, 1999 which Honda issued shows that it was the first time a pro-rating scheme
was to be implemented in the company. It was a convenient coincidence for the company that the work stoppage held
by the employees lasted for thirty-one (31) days or exactly one month. This enabled them to devise a formula using
11/12 of the total annual salary as base amount for computation instead of the entire amount for a 12-month period.
That a full month payment of the 13th month pay is the established practice at Honda is further bolstered by the
affidavits executed by Feliteo Bautista and Edgardo Cruzada. Both attested that when they were absent from work
due to motorcycle accidents, and after they have exhausted all their leave credits and were no longer receiving their
monthly salary from Honda, they still received the full amount of their 13 th month, 14th month and financial assistance
pay.22
The case of Davao Fruits Corporation v. Associated Labor Unions, et al. 23 presented an example of a voluntary act of
the employer that has ripened into a company practice. In that case, the employer, from 1975 to 1981, freely and
continuously included in the computation of the 13 th month pay those items that were expressly excluded by the law.
We have held that this act, which was favorable to the employees though not conforming to law, has ripened into a
practice and therefore can no longer be withdrawn, reduced, diminished, discontinued or eliminated. Furthermore,
in Sevilla Trading Company v. Semana,24 we stated:
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, the company practice lasted for six (6) years. In another case, Davao Integrated Port Stevedoring
Services vs. Abarquez, 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. 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.25 (Emphasis supplied)
Lastly, the foregoing interpretation of law and jurisprudence is more in keeping with the underlying principle for the
grant of this benefit. It is primarily given to alleviate the plight of workers and to help them cope with the exorbitant
increases in the cost of living. To allow the pro-ration of the 13 th month pay in this case is to undermine the wisdom
behind the law and the mandate that the workingmans welfare should be the primordial and paramount
consideration.26 What is more, the factual milieu of this case is such that to rule otherwise inevitably results to
dissuasion, if not a deterrent, for workers from the free exercise of their constitutional rights to self-organization and to
strike in accordance with law.27
WHEREFORE, the instant petition is DENIED. The decision and the resolution of the Court of Appeals dated
September 14, 2000 and October 18, 2000, respectively, in CA-G.R. SP No. 59052, affirming the decision rendered by
the Voluntary Arbitrator on May 2, 2000, are hereby AFFIRMED in toto.
SO ORDERED.

G.R. No. 176985

April 1, 2013

RICARDO E. VERGARA, JR., Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent.
DECISION
PERALTA, J.:
Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure assailing the January 9,
2007 Decision1 and March 6, 2007 Resolution2 of the Court of Appeals (CA) in CA .. G.R. SP No. 94622, which
affirmed the January 31, 2006 Decision3 and March 8, 2006 Resolution4 of the National Labor Relations Commission
(NLRC) modifying the September 30, 2003 Decision5 of the Labor Arbiter (LA) by deleting the sales management
incentives in the computation of petitioner's retirement benefits.
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May 1968
until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro Manila. As
stipulated in respondents existing Retirement Plan Rules and Regulations at the time, the Annual Performance
Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits, as follows:
Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance incentive earned
during the year immediately preceding 12 months) No. of Years in Service. 6
Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) 7 and to the amount
of PhP496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers
within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the payment of his "Full
Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary
Damages, and Attorneys Fees."8
After a series of mandatory conference, both parties partially settled with regard the issue of merit increase and length
of service.9 Subsequently, they filed their respective Position Paper and Reply thereto dealing on the two remaining
issues of SMI entitlement and illegal deduction.
On September 30, 2003, the LA rendered a Decision 10 in favor of petitioner, directing respondent to reimburse the
amount illegally deducted from petitioners retirement package and to integrate therein his SMI privilege. Upon appeal
of respondent, however, the NLRC modified the award and deleted the payment of SMI.
Petitioner then moved to partially execute the reimbursement of illegal deduction, which the LA granted despite
respondents opposition.11 Later, without prejudice to the pendency of petitioners petition for certiorari before the CA,
the parties executed a Compromise Agreement12 on October 4, 2006, whereby petitioner acknowledged full payment
by respondent of the amount of PhP496,016.67 covering the amount illegally deducted.
The CA dismissed petitioners case on January 9, 2007 and denied his motion for reconsideration two months
thereafter. Hence, this present petition to resolve the singular issue of whether the SMI should be included in the
computation of petitioners retirement benefits on the ground of consistent company practice. Petitioner insistently
avers that many DSSs who retired without achieving the sales and collection targets were given the average SMI in
their retirement package.
We deny.
This case does not fall within any of the recognized exceptions to the rule that only questions of law are proper in a
petition for review on certiorari under Rule 45 of the Rules of Court. Settled is the rule that factual findings of labor
officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally
accorded not only respect but even finality, and bind us when supported by substantial evidence. 13Certainly, it is not
Our function to assess and evaluate the evidence all over again, particularly where the findings of both the CA and the
NLRC coincide.
In any event, even if this Court would evaluate petitioner's arguments on its supposed merits, We still find no reason to
disturb the CA ruling that affirmed the NLRC. The findings and conclusions of the CA show that the evidence and the
arguments of the parties had all been carefully considered and passed upon. There are no relevant and compelling
facts to justify a different resolution which the CA failed to consider as well as no factual conflict between the CA and
the NLRC decisions.

Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. 14Thus,
any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer.15 The principle of non-diminution of benefits is actually founded on the Constitutional
mandate to protect the rights of workers, to promote their welfare, and to afford them full protection. 16 In turn, said
mandate 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." 17
There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded on a policy
or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is
not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or
discontinuance is done unilaterally by the employer.18
To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of
the benefit is done over a long period of time, and that it has been made consistently and deliberately. 19Jurisprudence
has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in
order to constitute voluntary employer practice.20 The common denominator in previously decided cases appears to be
the regularity and deliberateness of the grant of benefits over a significant period of time. 21 It requires an indubitable
showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered
by any provision of the law or agreement requiring payment thereof.22 In sum, the benefit must be characterized by
regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time. 23
Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to all retired
DSSs regardless of whether or not they qualify to the same had ripened into company practice. Despite more than
sufficient opportunity given him while his case was pending before the NLRC, the CA, and even to this Court,
petitioner utterly failed to adduce proof to establish his allegation that SMI has been consistently, deliberately and
voluntarily granted to all retired DSSs without any qualification or conditions whatsoever. The only two pieces of
evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of Renato C.
Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998,
respectively. They claimed that the SMI was included in their retirement package even if they did not meet the sales
and collection qualifiers.24 However, juxtaposing these with the evidence presented by respondent would reveal the
frailty of their statements.
The declarations of Hidalgo and Velazquez were sufficiently countered by respondent through the affidavits executed
by Norman R. Biola (Biola), Moises D. Escasura (Escasura), and Ma. Vanessa R. Balles (Balles). 25Biola pointed out
the various stop-gap measures undertaken by respondent beginning 1999 in order to arrest the deterioration of its
accounts receivables balance, two of which relate to the policies on the grant of SMI and to the change in the
management structure of respondent upon its re-acquisition by San Miguel Corporation. Escasura represented that he
has personal knowledge of the circumstances behind the retirement of Hidalgo and Velazquez. He attested that
contrary to petitioners claim, Hidalgo was in fact qualified for the SMI. As for Velazquez, Escasura asserted that even
if he (Velazquez) did not qualify for the SMI, respondents General Manager in its Calamba plant still granted his
(Velazquez) request, along with other numerous concessions, to achieve industrial peace in the plant which was then
experiencing labor relations problems. Lastly, Balles confirmed that petitioner failed to meet the trade receivable
qualifiers of the SMI. She also cited the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), both
DSSs of respondent who retired on January 31, 2002 and December 30, 2002, respectively. She noted that, unlike
Valencia, Gutierrez also did not receive the SMI as part of his retirement pay, since he failed to qualify under the policy
guidelines. The verity of all these statements and representations stands and holds true to Us, considering that
petitioner did not present any iota of proof to debunk the same.1wphi1
Therefore, respondent's isolated act of including the SMI in the retirement package of Velazquez could hardly be
classified as a company practice that may be considered an enforceable obligation. To repeat, the principle against
diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a
practice over a long period of time which is consistent and deliberate; it presupposes that a company practice, policy
and tradition favorable to the employees has been clearly established; and that the payments made by the company
pursuant to it have ripened into benefits enjoyed by them. 26 Certainly, a practice or custom is, as a general rule, not a
source of a legally demandable or enforceable right. 27 Company practice, just like any other fact, habits, customs,
usage or patterns of conduct, must be proven by the offering party who must allege and establish specific, repetitive
conduct that might constitute evidence of habit or company practice. 28
To close, We rule that petitioner could have salvaged his case had he step up to disprove respondents contention that
he miserably failed to meet the collection qualifiers of the SMI. Respondent argues that
An examination of the Companys aged trial balance reveals that petitioner did not meet the trade receivable qualifier.
On the contrary, the said trial balance reveals that petitioner had a large amount of uncollected overdue accounts. For
the year 2001, his percentage collection efficiency for current issuance was at an average of 13.5% a month as
against the required 70%. For the same, petitioners collection efficiency was at an average of 60.25% per month for

receivables aged 1-30 days, which is again, way below the required 90%. For receivables aged 31-60 days during
said year, petitioners collection efficiency was at an average of 56.17% per month, which is approximately half of the
required 100%. Worse, for receivables over 60 days old, petitioners average collection efficiency per month was a
reprehensively low 14.10% as against the required 100%. 29
The above data was repeatedly raised by respondent in its Rejoinder (To Complainants Reply) before the
LA,30Memorandum of Appeal31 and Opposition (To Complainant-Appellees Motion for Reconsideration) 32 before the
NLRC, and Comment (On the Petition), 33 Memorandum (For the Private Respondent),34 and Comment (On the Motion
for Reconsideration)35 before the CA. Instead of frontally rebutting the data, petitioner treated them with deafening
silence; thus, reasonably and logically implying lack of evidence to support the contrary.
WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6, 2007 Resolution of the Court of
Appeals in CA-G.R. SP No. 94622, which affirmed the January 31, 2006 Decision and March 8, 2006 Resolution of
the NLRC deleting the LA's inclusion of sales management incentives in the computation of petitioner's retirement
benefits, is hereby AFFIRMED.
SO ORDERED.
Solidbank vs. NLRC
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on certiorari,1 under Rule 45 of the Rules of Court, seeking to set aside the
May 28, 2004 Decision2 and October 28, 2004 Resolution3 of the Court of Appeals (CA), in CA-G.R. SP No. 76879.
The CA awarded financial assistance to respondents Rodolfo Bombita et al. out of "compassionate justice" despite the
fact that petitioner Solidbank Corporation had already paid the respondents their separation pay in accordance with
Article 283 of the Labor Code.
The facts of the case are as follows:
Sometime in May 2000, petitioner decided to cease its commercial banking operations and forthwith surrendered to
the Bangko Central ng Pilipinas its expanded banking license. As a result of petitioners decision to cease its
operations, 1,867 of its employees would be terminated.
On July 25, 2000, petitioner sent individual letters to its employees, including respondents, advising them of its
decision to cease operations and informing them that their employment would be terminated. The pertinent portions of
said letter are hereunder reproduced, to wit:
With the cessation of the banking operations of Solidbank Corporation and the surrender of its banking license to the
Bangko Sentral ng Pilipinas (BSP), the employment of all Solidbankers will have to be terminated.
We regret that your services as an employee of Solidbank are hereby terminated, effective the close of business hours
on 31 August 2000. Your separation package will be in accordance with the implementing guidelines issued to all
officers and staff in President/CEO D.N. Vistans Memorandum of 14 July 2000. You will receive your separation pay
only upon release of your clearance, but not later than the effectivity date of your termination from the Bank.
We wish you success in your future endeavors.4
On July 31, 2000, petitioner sent to the Department of Labor and Employment a letter 5 dated July 28, 2000, informing
said office of the termination of its employees, the pertinent portions of which read:
In compliance with the provisions of Article 283 of the Labor Code, we would like to inform the Department of Labor
and Employment that Solidbank Corporation will cease operations and surrender its banking license to the Bangko
Sentral ng Pilipinas effective 31 August 2000.
Due to the cessation of the Banks operations, the employment of all officers and staff of Solidbank will be terminated
effective the close of business hours on 31 August 2000. As a result, the Bank will implement a separation program in
accordance with the attached guidelines. The separation package offered to Solidbankers is more than what is
required by law.6
Petitioner granted to its employees separation pay equivalent to 150% of gross monthly pay per year of service, and
cash equivalent of earned and accrued vacation and sick leaves as a result of their dismissal. Upon receipt of their

separation pay, the employees of petitioner, including respondents, individually signed a "Release, Waiver, and
Quitclaim."7
On September 27, 2000, respondents filed with the Labor Arbiter (LA) complaints for illegal dismissal, underpayment
of separation pay, plus damages and attorneys fees, and these were docketed as NLRC NCR Case Nos. 30-0903843-00, 30-1004350-00, 30-10-03928-00, 30-10-04200-00, and 30-10-04036-00.
On July 22, 2002, the LA rendered a Decision8 ruling that respondents were validly terminated from employment as a
result of petitioners decision to cease its banking operations. The LA, however, inspired by compassionate justice,
awarded financial assistance of one months salary to respondents. The dispositive portion of the Decision reads:
WHEREFORE, the Complaints for illegal dismissal filed by the complainants under the above-stated case numbers
are hereby dismissed for lack of merit. However, inspired by compassionate justice, this Office hereby orders the
respondent Solidbank Corporation to provide each complainant a financial assistance of one months salary.
Metrobanks motion to dismiss the claim against it for want of jurisdiction is DENIED for lack of merit.
Complainants motion to admit annexes dated March 12, 2001, together with their motions to amend
affidavits/complaints dated January 22, 2001 are hereby GRANTED for being meritorious.
Solidbanks counterclaim is dismissed for lack of merit.
SO ORDERED.9
Both parties appealed the LAs Decision to the National Labor Relations Commission (NLRC).
On October 29, 2002, the NLRC rendered a Decision10 affirming the findings of the LA that respondents were validly
terminated. The NLRC ruled that the closure of a business is an authorized cause sanctioned under Article 283 of the
Labor Code and one that is ultimately a management prerogative. The NLRC, however, modified the LAs Decision by
increasing the amount of financial assistance to two months salary out of compassionate justice. The dispositive
portion of the Decision reads:
WHEREFORE, premises considered, the Decision appealed from is affirmed with modification as to the award of the
financial assistance.
SO ORDERED.11
Aggrieved by the NLRC Decision, petitioner then appealed to the CA, specifically questioning the grant of financial
assistance to respondents.
On May 28, 2004, the CA rendered a Decision reversing the Decision of the NLRC. The CA shared the view of the LA
that respondents should only be awarded one months salary as financial assistance and not two months salary as
previously decreed by the NLRC. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the assailed Decision is hereby REVERSED, and the 22 July 2002 Decision of
the Labor Arbiter is hereby REINSTATED.
SO ORDERED.12
Petitioner then filed a motion for reconsideration, which was, however, denied by the CA in a Resolution dated
October 28, 2004.
Hence, herein petition, with petitioner raising the following assignment of errors, to wit:
THERE IS NO LEGAL BASIS FOR THE COURT OF APPEALS AWARD OF FINANCIAL ASSISTANCE EQUIVALENT
TO ONE-MONTHS SALARY TO THE RESPONDENTS AFTER ITS FINDING THAT SOLIDBANK HAS MORE THAN
COMPLIED WITH THE MANDATE OF THE LAW ON PAYMENT OF SEPARATION PAY.13
THE AWARD OF FINANCIAL ASSISTANCE CANNOT BE JUSTIFIED ON THE BASIS OF "COMPASSIONATE
JUSTICE" AND AS A FORM OF "EQUITABLE RELIEF."14

TO SUSTAIN THE COURT OF APPEALS AWARD OF FINANCIAL ASSISTANCE TO THE 140 VALIDLY-DISMISSED
RESPONDENTS WOULD RESULT IN A HIGHLY ANOMALOUS SITUATION WHERE THE SAID RESPONDENTS
WOULD BE ACCORDED BETTER BENEFITS THAN OTHER FORMER SOLIDBANK EMPLOYEES WHO WERE
SIMILARLY SITUATED.15
The petition is meritorious. The errors being interrelated, this Court shall discuss the same seriatim.
Before anything else, this Court shall first address the allegations raised by respondents in their Comment, 16which
deal with the issue of the validity of their termination. Respondents, in the main, claim that their termination was
unlawful as petitioner did not really cease its operations. 17 Thus, notwithstanding their admission that the LA, the
NLRC, and the CA all ruled in unison that their termination was in accordance with law, respondents seek this Courts
discretion to reverse such findings.
On this note, it is well settled that this Court is not a trier of facts. To begin with, the question of whether respondents
were dismissed for authorized cause is a question of fact which is beyond the province of a petition for review
on certiorari. It is fundamental that the scope of the Supreme Courts judicial review under Rule 45 of the Rules of
Court is confined only to errors of law. It does not extend to questions of fact; more so, in labor cases where the
doctrine applies with greater force.18
The LA and the NLRC have already determined the factual issues, and these were affirmed by the CA. Thus, they are
accorded not only great respect but also finality, and are deemed binding upon this Court so long as they are
supported by substantial evidence. A heavy burden rests upon respondents to convince the Court that it should take
exception from such a settled rule.19
Moreover, what is damning to the cause of the respondents is the fact that the issue of the validity of their dismissal is
now already final. As correctly manifested by petitioner, respondents had earlier filed with this Court a petition for
review20 dated December 28, 2004, docketed as G.R. No. 165985, entitled Rodolfo Bombita, et al. v. Solidbank
Corporation, et al., which questioned the validity of their termination. A perusal of said petition shows that the issues
raised therein are the very same issues respondents now raise in their Comment. On February 21, 2005, this Courts
Second Division issued a Resolution21 denying respondents petition for review. On September 20, 2005, an Entry of
Judgment22 was rendered. Based on the foregoing, the validity of the termination of respondents is an issue that this
Court must no longer look into as a necessary consequence of the denial of their petition for review before this Court.
Now, going to the issues raised by petitioner, this Court finds the same to be impressed with merit.
Article 283 of the Labor Code provides:
ARTICLE 283. Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment
or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year. 23
Based on Article 283, in case of cessation of operations, the employer is only required to pay his employees a
separation pay of one month pay or at least one-half month pay for every year of service, whichever is higher. That is
all that the law requires.
In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their gross
monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves. Clearly,
petitioner had gone over and above the requirements of the law. Despite this, however, petitioner has been ordered to
pay respondents an additional amount, equivalent to one months salary, as a form of financial assistance.
The LA awarded the financial assistance out of "compassionate justice." The CA affirmed such grant also out of
"compassionate justice" and as a form of "equitable relief" for the employees who were suddenly dismissed due to
exigencies of business.24
After a thorough consideration of the circumstances at bar, this Court finds that the award of financial assistance is
bereft of legal basis and serves to penalize petitioner who has complied with the requirements of the law.

It behooves this Court as to why the CA affirmed the grant of financial assistance notwithstanding its pronouncement
that it would be inequitable to allow respondents to receive benefits than those prescribed by law and jurisprudence, to
wit:
In the instant case, both the Labor Arbiter and the NLRC upheld the validity of the dismissal of the employees and of
the quitclaim agreements between the affected employees and employer Solidbank. However, it was a strange
occurrence when the NLRC granted an additional award of separation pay in an amount equivalent to two months
salary to each employee. This means that Solidbank now has the obligation to pay the employees not only their
wages, benefits and other privileges under the law, and separation pay in an amount equivalent to 150% of their one
months pay, but also financial assistance equivalent to two months pay to each employee. Such a situation cannot be
upheld by this Court. As discussed above, all that the law requires in cases of dismissal due to an authorized cause is
that the employer must pay financial assistance or separation pay in an amount equivalent to "one months pay or
one-half months for every year of service, whichever is higher." Solidbank has complied with the mandate of the law.
Hence, it would be unjust and inequitable to allow the employees to receive higher benefits than those prescribed by
the Labor Code and jurisprudence.25
Moreover, a review of jurisprudence relating to the application of "compassionate and social justice" in granting
financial assistance in labor cases shows that the same has been generally used in instances when an employee has
been dismissed for a just cause under Article 282 of the Labor Code and not when an employee has been dismissed
for an authorized cause under Article 283.
As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 26 of
the Labor Code is not entitled to separation pay.27 Although by way of exception, the grant of separation pay or some
other financial assistance may be allowed to an employee dismissed for just causes on the basis of equity. 28
The reason that the law does not statutorily grant separation pay or financial assistance in instances of termination
due to a just cause is precisely because the cause for termination is due to the acts of the employee. In such
instances, however, this Court, inspired by compassionate and social justice, has in the past awarded financial
assistance to dismissed employees when circumstances warranted such an award.1avvphi1
In Central Philippines Bandag Retreaders, Inc. v. Diasnes,29 this Court discussed the parameters of awarding
separation pay to dismissed employees as a measure of financial assistance, viz:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based
on social justice when an employees dismissal is based on serious misconduct or willful disobedience; gross and
habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or
his immediate family - grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be
most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to
provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the
Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as here. In
fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of
the liberality of the law.30
Thus, in Philippine Commercial International Bank v. Abad,31 this Court, having considered the circumstances present
therein and as a measure of social justice, awarded separation pay to a dismissed employee for a just cause under
Article 282. The same concession was given by this Court in Aparente, Sr. v. National Labor Relations
Commission32 and Tanala v. National Labor Relations Commission.33
Looking now at Article 283, this Court holds that the same was drafted by the legislature, taking the best interest of
laborers in mind. It is clear that the causes of the termination of an employee under Article 283 are due to
circumstances beyond their control, such as when management decides to reduce personnel based on valid grounds,
or when the employer decides to cease operations. Thus, the bias towards labor is very apparent, as the employer is
statutorily required to pay separation pay, the amount of which is also statutorily prescribed.
While the CA should not be faulted for sympathizing with the plight of respondents as they suddenly lost their means
of livelihood, this Court holds that it is precisely because of the sudden loss of employment one that is beyond the
control of labor that the law statutorily grants separation pay and dictates how the same should be computed. Thus,
any business establishment that decides to cease its operations has the burden of complying with the law. This Court
should refrain from adding more than what the law requires, as the same is within the realm of the legislature.
It bears to stress, however, that petitioner may, as it has done, grant on a voluntary and ex gratia basis, any amount
more than what is required by the law, but to insist that more financial assistance be given is certainly something that
this Court cannot countenance, as the same serves to penalize petitioner, which has already given more than what the
law requires. Moreover, any award of additional financial assistance to respondents would put them at an advantage

and in a better position than the rest of their co-employees who similarly lost their employment because of petitioners
decision to cease its operations.
Withal, the law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the
employer. While the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in favor of labor. The management also
has its own rights, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern
for those with less privileges in life, the Supreme Court has inclined more often than not toward the worker and upheld
his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that justice
is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and
doctrine.34
WHEREFORE, premises considered, the petition is GRANTED. The May 28, 2004 Decision and October 28, 2004
Resolution of the Court of Appeals, in CA-G.R SP No. 76879, are REVERSED and SET ASIDE.
SO ORDERED.