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SEVILLA TRADING COMPANY v. A.V.A. TOMAS E. SEMANA

FACTS:

Sevilla Trading Company, a domestic corporation, had included non-basic pay and other benefits in the computation of the 13th-month pay of its employees for several years. However, after conducting an audit and changing the person in charge of the payroll, the company discovered the error and changed the computation, excluding the non-basic pay and other benefits. The Sevilla Trading Workers Union, representing the employees, contested the new computation and reduction of their 13th-month pay, arguing that the benefits should be included. The dispute was brought before an Accredited Voluntary Arbitrator who ruled in favor of the Union, ordering the company to include the benefits in the computation and to pay corresponding back wages. The company received a copy of the decision but instead of filing an appeal under Rule 43, it filed a petition for certiorari with the Court of Appeals. The Court of Appeals dismissed the petition on the ground that the proper remedy was an appeal under Rule 43 and that the decision of the arbitrator had already become final and executory.

ISSUES:

  1. Whether a special civil action under Rule 65 of the Rules of Court can be a remedy for failure to timely file a petition for review on certiorari under Rule 45 (Rule 43) of the Rules of Court.

  2. Whether there was a grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. Semana.

  3. Whether cost-of-living allowances, profit sharing payments, and other allowances and monetary benefits are to be included in the computation of the 13th-month pay.

  4. Whether the employer's inclusion of non-basic benefits in the computation of the 13th-month pay can be considered as a voluntary act.

RULING:

  1. A special civil action under Rule 65 cannot be a substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule 43). Rule 65 is an independent action that cannot be availed of as a substitute for failure to timely file a petition for review on certiorari. The decision had already become final and executory upon the lapse of the reglementary period to appeal, thus the Court of Appeals no longer had jurisdiction to alter or nullify the decision.

  2. There was no grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. Semana. The decision was found to be sound, valid, and in accordance with law and jurisprudence. The petitioner's claim of mistake or error in the computation of the thirteenth month pay was unmeritorious as they failed to provide any relevant evidence to support their contention. The inclusion of non-basic benefits in the computation was not excused as a mistake, considering the clarity of the statute and jurisprudence at that time.

  3. Cost-of-living allowances, profit sharing payments, and other allowances and monetary benefits are not to be included in the computation of the 13th-month pay. The clear intent of the law and regulations is to exclude these additional payments from the definition of basic salary.

  4. The inclusion of non-basic benefits in the computation of the 13th-month pay by the employer cannot be considered a voluntary act. The company practice established by the employer, which lasted for a considerable length of time, has ripened into a benefit enjoyed by the employees and cannot be unilaterally withdrawn by the employer.

PRINCIPLES:

  • Rule 65 of the Rules of Court cannot be a substitute for the lost remedy of an ordinary appeal, including that under Rule 45 (Rule 43).

  • "Grave abuse of discretion" requires a capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction or a refusal to perform a duty in contemplation of law.

  • Payment of benefits through an erroneous application of the law due to absence of clear administrative guidelines may not be considered a voluntary act which cannot be unilaterally discontinued.

  • The intention of the law and regulations is to exclude cost-of-living allowances, profit sharing payments, and other allowances and monetary benefits from the computation of the 13th-month pay.

  • Employer's inclusion of non-basic benefits in the computation of the 13th-month pay may be considered as a company practice or policy that cannot be unilaterally withdrawn by the employer.

  • Benefits and supplements enjoyed by employees cannot be reduced, diminished, discontinued, or eliminated by the employer, as provided by the Rules and Regulations Implementing P.D. No. 851 and the Labor Code of the Philippines.

  • Article 100 of the Labor Code prohibits the elimination or diminution of benefits enjoyed by employees at the time of the promulgation of the Code.

  • Voluntary employer practice that has ripened into a company policy or practice cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code.