Philippine Journalists, Inc. vs. Journal Employees Union (JEU), for its Union Member, Michael Alfante

Where a CBA grants funeral or bereavement aid for the death of a “legal dependent” of a regular employee but does not define the term, the term is construed consistently with contemporaneous social legislation, which focuses on actual dependency for support rather than the employee’s civil status; the employer’s continuous grant of such benefit may ripen into a company policy that cannot be unilaterally diminished under Article 100 of the Labor Code. The concurrence of a legitimate spouse does not disqualify a child or parent from being a legal dependent provided actual dependency is substantially proved.

Philippine Journalists, Inc. (PJI) and the Journal Employees Union (JEU) were parties to a collective bargaining agreement covering PJI’s regular employees, including Michael Alfante. Section 4, Article XIII of the CBA granted funeral or bereavement aid for the death of a regular employee in line of duty, for the death of a regular employee not in line of duty, and for the death of a legal dependent of a regular employee, but the CBA did not define the term legal dependent. Contemporaneous social legislation—the Social Security Law, the National Health Insurance Act, and the GSIS Law—defined dependents by reference to actual dependency for support. Article 100 of the Labor Code prohibited the elimination or diminution of employee benefits.

Philippine Journalists, Inc. (PJI) employed Judith Pulido as a proofreader on January 10, 1991, and Michael L. Alfante as a computer technician at the Management Information System under manager Neri Torrecampo on May 16, 2000. Alfante was regularized on July 15, 2001, receiving a monthly salary of ₱9,070.00 plus other monetary benefits. PJI and the Journal Employees Union (JEU) were covered by a CBA whose Section 4, Article XIII granted funeral or bereavement aid in three instances: death of a regular employee in line of duty, ₱50,000; death of a regular employee not in line of duty, ₱40,000; and death of a legal dependent of a regular employee, ₱15,000. The CBA did not define the term legal dependent.

Pulido, as union president, sent two letters to President Gloria Arroyo on February 21, 2003 regarding alleged mismanagement by PIJ executives. In May 2003, the union received a letter from Secretary Silvestre Afable, Jr. of the Presidential Management Staff endorsing the complaint to Ombudsman Simeon V. Marcelo. Pulido alleged that the employer and its officers took offense and harassed her, issuing memoranda regarding attendance, failure to wear her company ID, tardiness, and fraud, and that on August 7, 2003, between 3:00 and 4:00 p.m., Ernesto “Estong” San Agustin of HRD handed her termination paper. She claimed she was dismissed because she was the active union president defending members’ rights and complaining against corporate officers.

Alfante alleged that in 2001 Rico Pagkalinawan replaced Torrecampo, which he and three co-employees opposed; Pagkalinawan took offense. On October 22, 2002, Alfante received a memorandum from Pagkalinawan regarding excessive tardiness. On June 10, 2003, he received a memorandum from Executive Vice-President Arnold Banares requiring him to explain the performance evaluation submitted by Pagkalinawan. One week after submitting his explanation, he was handed a notice of dismissal on the ground of “poor performance,” effective July 28, 2003. Alfante submitted that he was dismissed without just cause.

PJI and the individual respondents in the labor case averred that Pulido and Alfante were dismissed for cause and with due process. Pulido was cited for habitual tardiness, insubordination, utter disrespect for superiors, and fraud or attempted fraud leading to loss of confidence; Alfante was dismissed for poor performance after evaluation and warning. Respondents denied unfair labor practices and monetary liabilities, said complainants were not affected by Wage Order No. 9 because their salaries exceeded the minimum wage, said PJI complied with the CBA on longevity pay and burial aid, said the rest-day claim was pending in NLRC Case No. 02-0402973-93, and asserted that the individual respondents merely acted as agents of PJI.

PJI granted claims for funeral or bereavement aid as early as 1999. It issued a memorandum in 2000 to “correct” its interpretation of legal dependent under Section 4, Article XIII of the CBA. Despite this, it still approved in 2003 the claims of Cecille Bulacan for the death of her father and Charito Cartel for the death of her mother based on its supposedly mistaken interpretation. The 2001-2004 CBA still contained the same provision granting funeral or bereavement aid for the death of a legal dependent of a regular employee without differentiating legal dependents according to the employee’s civil status as married or single. PJI denied Alfante’s claim for funeral or bereavement aid for the death of his parent.

• Definition of Legal Dependent: Petitioner maintained that under Section 4, Article XIII of the CBA, funeral and bereavement aid should be granted upon the death of a legal dependent of a regular employee; consistent with the SSS definition, the term legal dependent referred to the spouse and children of a married regular employee, and to the parents and siblings, 18 years old and below, of a single regular employee.
• CBA Interpretation: Petitioner argued that the CBA considered the term dependents to have the same meaning as beneficiaries under Section 5, Article XIII of the CBA on the payment of death benefits.
• No Company Policy: Petitioner maintained that its earlier granting of claims for funeral and bereavement aid without regard to the foregoing definition did not ripen into a company policy whose unilateral withdrawal would violate Article 100 of the Labor Code; it had approved only four claims from 1999 to 2003 based on its mistaken interpretation, but later corrected the same in 2000.
• No Diminution: Petitioner argued that the grant of funeral and bereavement aid for the death of an employee’s legal dependent, regardless of the employee’s civil status, did not occur over a long period of time, was not consistent and deliberate, and was partly due to its mistake in appreciating a doubtful question of law; its denial of subsequent claims did not amount to a violation of the law against the non-diminution of benefits.

• CBA Cannot Be Unilaterally Changed: JEU and Alfante countered that the CBA was a bilateral contractual agreement that could not be unilaterally changed by any party during its lifetime.
• Company Practice: They argued that the grant of burial benefits had already become a company practice favorable to the employees, and could not anymore be reduced, diminished, discontinued, or eliminated by petitioner.

• Diminution of Benefits: Whether petitioner’s denial of respondents’ claims for funeral and bereavement aid granted under Section 4, Article XIII of their CBA constituted a diminution of benefits in violation of Article 100 of the Labor Code.

• Diminution of Benefits: Yes. The denial constituted a diminution of benefits in violation of Article 100 of the Labor Code, because the CBA’s term legal dependent is construed consistently with contemporaneous social legislation and petitioner’s continuous grant of the benefit had ripened into a company policy.

• Diminution of Benefits: The CBA is the law between the parties, and its clear stipulations control. Section 4, Article XIII granted funeral or bereavement aid for the death of a legal dependent of a regular employee but did not define “legal dependent.” Petitioner urged the SSS definition, which would limit legal dependents by civil status. This was rejected. Contemporaneous social legislations—Section 8(e) of the Social Security Law, Section 4(f) of R.A. No. 7875 as amended by R.A. No. 9241, and Section 2(f) of P.D. No. 1146 as amended by R.A. No. 8291—define dependents by actual dependency for support, not by the employee’s civil status. Existing laws are deemed incorporated into contracts; absent a contrary CBA definition, those statutory definitions applied. Thus, the concurrence of a legitimate spouse did not disqualify a child or parent from being a legal dependent if actual dependency was substantially proved. Because Section 4, Article XIII did not prescribe a hierarchy among legal dependents, petitioner had no basis to deny Alfante’s claim for the death of his parent once death and legal dependency were substantially proved. Article 100 of the Labor Code prohibits an employer from reducing, diminishing, discontinuing, or eliminating benefits enjoyed by employees. The prohibition applies when a company practice, policy, or tradition favorable to employees has been clearly established and the payments have ripened into benefits; the practice must have been followed over a long period and be consistent and deliberate, although no specific minimum number of years has been fixed. Petitioner’s claim of mistaken interpretation was unpersuasive because no doubtful question of law was involved; the statutes already defined legal dependents. Petitioner admitted that despite its 2000 memorandum to correct its interpretation, it still approved in 2003 the claims of Cecille Bulacan and Charito Cartel based on the supposedly mistaken interpretation. It had granted claims as early as 1999, and the 2001-2004 CBA retained the same provision without differentiating dependents by civil status. This continuity ripened into a company policy. The denial of Alfante’s qualified claim therefore violated Article 100.

• CBA as the law between the parties — A CBA is the negotiated contract between a legitimate labor organization and the employer concerning wages, hours, and all other terms and conditions of employment. Where its terms are clear and unambiguous, it becomes the law between the parties and compliance is mandated by law. Here, Section 4, Article XIII of the CBA governed the grant of funeral or bereavement aid and had to be complied with; the dispute concerned the undefined term “legal dependent.”
• Legal dependent construed under contemporaneous social legislation — If a CBA grants a benefit for the death of a “legal dependent” but is silent on the term’s meaning, the term is construed as similar to the meaning set by contemporaneous social legislations, whose terms are deemed incorporated in or adopted by the CBA. The controlling consideration is actual dependency for support, not the employee’s civil status. The concurrence of a legitimate spouse does not disqualify a child or parent from being a legal dependent if actual dependency is substantially proved. Applied: Alfante’s parent could qualify upon proof of death and actual dependency; PJI had no basis to deny the claim solely because of its civil-status-based SSS interpretation.
• Prohibition against diminution of benefits — Article 100 of the Labor Code prohibits an employer from eliminating or diminishing supplements or other employee benefits being enjoyed at the time of the Code’s promulgation. The prohibition presupposes a company practice, policy, or tradition favorable to employees that has been clearly established and whose payments have ripened into benefits; the practice must have been followed over a long period and be consistent and deliberate, though no specific minimum number of years is fixed. Applied: PJI’s continuous grant of funeral or bereavement aid from 1999, including 2003 approvals despite its 2000 corrective memorandum, and the unchanged 2001-2004 CBA provision ripened into a company policy; denial of Alfante’s claim violated Article 100.
• Incorporation of existing laws into contracts — Existing laws form part of any contract and are deemed incorporated in each and every contract. Applied: because the CBA did not define “legal dependent,” the definitions in the Social Security Law, R.A. No. 7875 as amended, and P.D. No. 1146 as amended were read into the CBA.
• Dependency not presumed from marriage — Under Social Security System vs. De Los Santos, a spouse is not automatically a dependent; actual dependency for support must be shown, and a wife separated de facto from her husband cannot be said to be dependent absent contrary proof. Conversely, if the spouses were living together at the time of death, dependence may be presumed unless the wife is shown capable of self-support. Applied: the Court used this to reinforce that actual dependency, not civil status, determines who is a legal dependent under the CBA.

• "The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement (CBA) granting funeral or bereavement benefit to a regular employee for the death of a legal dependent, if the CBA is silent about it, is to be construed as similar to the meaning that contemporaneous social legislations have set. This is because the terms of such social legislations are deemed incorporated in or adopted by the CBA." — States the ratio decidendi on how an undefined CBA term is interpreted through contemporaneous social legislation.
• "It is clear from these statutory definitions of dependent that the civil status of the employee as either married or single is not the controlling consideration in order that a person may qualify as the employee’s legal dependent. What is rather decidedly controlling is the fact that the spouse, child, or parent is actually dependent for support upon the employee." — Defines the controlling test for legal dependency under the CBA and rejects the civil-status-based SSS interpretation.
• "Pursuant to Article 100 of the Labor Code, petitioner as the employer could not reduce, diminish, discontinue or eliminate any benefit and supplement being enjoyed by or granted to its employees. This prohibition against the diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection." — Articulates the statutory and constitutional basis of the prohibition against diminution of benefits.
• "The continuity in the grant of the funeral and bereavement aid to regular employees for the death of their legal dependents has undoubtedly ripened into a company policy. With that, the denial of Alfante's qualified claim for such benefit pursuant to Section 4, Article XIII of the CBA violated the law prohibiting the diminution of benefits." — Applies the company-practice doctrine to the employer’s continuous grant and concludes that the denial violated Article 100.

• Honda Phils., Inc. vs. Samahan ng Malayang Manggagawa sa Honda, G.R. No. 145561, June 15, 2005, 460 SCRA 186, 190-191 — Cited for the nature and force of a CBA: it is the negotiated contract between a legitimate labor organization and the employer, and where clear and unambiguous, it becomes the law between the parties.
• TSPIC Corporation vs. TSPIC Employees Union (FFW), G.R. No. 163419, February 13, 2008, 545 SCRA 215 — Cited for the rule that the literal meaning of CBA stipulations controls if they are clear and leave no doubt on the parties’ intention.
• Social Security System vs. De Los Santos, G.R. No. 164790, August 29, 2008, 563 SCRA 693, 703-704 — Cited for the dependency requirement: a wife separated de facto from her husband cannot be said to be dependent for support absent contrary proof; if the spouses were living together at the time of death, dependence may be presumed unless the wife is shown capable of self-support.
• Sulo sa Nayon, Inc. vs. Nayong Pilipino Foundation, G.R. No. 170923, January 20, 2009, 576 SCRA 655, 666 — Cited for the principle that existing laws form part of any contract and are deemed incorporated in each and every contract.
• Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union, G.R. No. 185665, February 8, 2012, 665 SCRA 516, 533 — Cited for the constitutional foundation of the prohibition against diminution of benefits: protection of workers’ rights and promotion of their welfare.
• Boncodin vs. National Power Corporation Employees Consolidated Union (NECU), G.R. No. 162716, September 27, 2006, 503 SCRA 611, 628 — Cited for the requirement that a company practice, policy, or tradition favorable to employees be clearly established and that payments have ripened into benefits before the prohibition applies.
• Metropolitan Bank and Trust Company vs. National Labor Relations Commission, G.R. No. 152928, June 18, 2009, 589 SCRA 376, 384 — Cited for the requirement that the giving of benefits be consistent and deliberate to constitute a practice.
• Sevilla Trading Company vs. Semana, G.R. No. 152456, April 28, 2004, 428 SCRA 239, 249 — Cited for the observation that the Court has not fixed a specific minimum number of years for a practice to ripen into a non-diminishable benefit.

• Section 4, Article XIII, CBA — Granted funeral or bereavement aid in three instances: death of a regular employee in line of duty, ₱50,000; death of a regular employee not in line of duty, ₱40,000; and death of a legal dependent of a regular employee, ₱15,000. The provision was the basis of Alfante’s claim and was silent on the definition of legal dependent.
• Article 100, Labor Code — Prohibits the elimination or diminution of supplements or other employee benefits being enjoyed at the time of the Code’s promulgation. Applied: the denial of Alfante’s qualified claim violated the prohibition because the benefit had ripened into a company policy.
• Section 8(e), Social Security Law (R.A. No. 8282) — Defines a dependent as the legal spouse entitled by law to receive support, the legitimate, legitimated, legally adopted, or illegitimate child who is unmarried, not gainfully employed, and has not reached 21 years of age or is incapacitated, and the parent receiving regular support from the member. Applied: the definition was used to construe the CBA’s undefined term legal dependent.
• Section 4(f), R.A. No. 7875 as amended by R.A. No. 9241 — Enumerates legal dependents, including the legitimate spouse who is not a member, unmarried and unemployed children below 21 years of age, children 21 years old or older with disability, and parents 60 years old or older with income below a determined amount. Applied: it supported the conclusion that civil status is not the controlling consideration.
• Section 2(f), P.D. No. 1146 as amended by R.A. No. 8291 — Defines a dependent for support as the spouse dependent for support upon the member or pensioner, the legitimate, legitimated, legally adopted, or illegitimate child who is unmarried, not gainfully employed, and not over the age of majority or incapacitated, and the parents dependent upon the member for support. Applied: it reinforced the actual-dependency standard.
• Article 1370, Civil Code — Provides that the literal meaning of stipulations controls if they are clear and leave no doubt upon the intention of the contracting parties. Applied: the CBA’s stipulations were treated as the law between the parties.

Chief Justice Maria Lourdes P. A. Sereno and Associate Justices Teresita J. Leonardo-De Castro, Martin S. Villarama, Jr., and Bienvenido L. Reyes concurred. Justice Lucas P. Bersamin wrote the decision.