Wesleyan University-Philippines vs. Wesleyan University-Philippines Faculty and Staff Association

Employer-established benefits that have ripened into practice cannot be unilaterally withdrawn or diminished without the employees' consent, provided such practice was consistently and deliberately implemented over a long period of time; furthermore, unilateral modifications to CBA provisions regarding leave credits that impose limitations not agreed upon by the parties are invalid as they violate the binding force of the CBA and the non-diminution rule under Article 100 of the Labor Code.

Wesleyan University-Philippines, a non-stock, non-profit educational institution, employed rank-and-file faculty and staff represented by the Wesleyan University-Philippines Faculty and Staff Association as their sole and exclusive bargaining agent. In December 2003, the parties executed a five-year Collective Bargaining Agreement effective from June 1, 2003 to May 31, 2008, which provided for, inter alia, vacation and sick leave benefits and retirement plans. Prior to and during the effectivity of this CBA, the University had maintained a practice of granting retiring employees benefits under both the Private Education Retirement Annuity Association (PERAA) Plan and a separate CBA Retirement Plan.

• The Collective Bargaining Agreement: In December 2003, petitioner and respondent executed a five-year CBA effective June 1, 2003 until May 31, 2008. Article XII (Sections 1 and 2) thereof granted all regular and non-tenured rank-and-file faculty and staff fifteen (15) days vacation leave with pay annually, convertible to cash after the second year of service, and fifteen (15) days sick leave with pay annually. Article XVI provided for a separate Retirement Plan distinct from the Private Education Retirement Annuity Association (PERAA) Plan, with specific eligibility requirements and benefit computations.

• The Assailed Memorandum: On August 16, 2005, petitioner issued a Memorandum through its President, Atty. Guillermo T. Maglaya, modifying the implementation of leave benefits. The Memorandum provided that vacation and sick leave credits were "not automatic" but had to be earned monthly at a rate of 1.25 days per month, with complete credits of 15 days only accruing at the cut-off date of May 31 of each year. It further restricted vacation leave commutation to occur only after the second year of continuous service, effectively delaying the benefit for employees who had not yet completed two full years.

• Labor-Management Committee Meeting: On February 8, 2006, during a Labor Management Committee meeting, petitioner advised respondent to file a formal grievance regarding the leave policy and announced the implementation of a "one-retirement policy," purportedly merging the CBA Retirement Plan with the PERAA Plan. Respondent objected to both measures as violations of the CBA and existing practice.

• Evidence of Practice: Before the Voluntary Arbitrator, respondent submitted affidavits from retired and incumbent employees establishing that petitioner had consistently granted two separate retirement benefits—one under the PERAA Plan and another under the CBA Retirement Plan—since at least 1997. Petitioner failed to present countervailing evidence to refute these declarations.

• Identity of Retirement Plans: Petitioner maintained that the CBA Retirement Plan and the PERAA Plan constituted one and the same retirement scheme, arguing that there never existed two separate retirement benefits.

• Absence of Company Practice: Petitioner argued that no company practice or policy of granting dual retirement benefits existed, and that any previous dual releases were merely administrative errors or oversights lacking Board Resolution authorization.

• Self-Serving Evidence: The affidavits submitted by respondent were characterized as self-serving declarations unworthy of credit, lacking probative value to establish a binding practice.

• Validity of Memorandum: The August 16, 2005 Memorandum was defended as valid and consistent with existing policy, merely implementing guidelines for leave credits that were in full accord with the CBA.

• Burden of Proof: Petitioner contended that respondent bore the burden of proving the existence of a Board Resolution authorizing two retirement benefits, and that the absence of such resolution rendered the practice illegal and unenforceable.

• Distinct Retirement Plans: Respondent countered that the PERAA Plan and CBA Retirement Plan were separate and distinct, with the PERAA Plan having been implemented for over thirty years independently of the CBA provisions.

• Established Company Practice: Respondent argued that the consistent and deliberate grant of two retirement benefits to retiring employees since 1997 had ripened into a company practice protected by the non-diminution rule under Article 100 of the Labor Code.

• Substantial Evidence: The affidavits constituted substantial evidence sufficient to establish the existence of the two-retirement practice, particularly in light of petitioner's failure to present contradictory evidence.

• Invalidity of Unilateral Changes: The Memorandum dated August 16, 2005 arbitrarily imposed limitations on leave credits not contemplated by the CBA, while the one-retirement policy constituted a unilateral diminution of benefits without respondent's consent.

• Substantial Evidence: Whether the Court of Appeals committed grave error in sustaining the Voluntary Arbitrator's ruling that affidavits constituted substantial evidence proving the practice of granting two retirement benefits.

• Existence of Practice: Whether the Court of Appeals erred in ruling that a practice of granting two retirement benefits had been established as defined by law and jurisprudence.

• Burden of Proof: Whether the Court of Appeals committed error in placing upon petitioner the burden of proving that no Board Resolution authorized the dual retirement benefits.

• Validity of Memorandum: Whether the Court of Appeals erred in revoking the August 16, 2005 Memorandum for being contrary to extant policy and the CBA.

• Substantial Evidence: Affidavits from retired employees who had already received their benefits and had no stake in the controversy, corroborated by incumbent employees, were sufficient to establish the practice of granting two retirement benefits. The claim that these were self-serving was rejected because the affiants stood to gain nothing from the outcome.

• Existence of Practice: The practice of granting benefits under both the PERAA Plan and the CBA Retirement Plan was consistently and deliberately implemented from 1997 until the unilateral change in 2006, ripening into a binding obligation protected by Article 100 of the Labor Code. Petitioner's own internal memorandum dated May 11, 2006, which discussed defenses to justify abolition of the "double retirement policy," contradicted its assertion that only one plan existed.

• Burden of Proof: Petitioner's claim that the benefits were granted in error or without authority was unsupported by evidence. Allegations of illegality or lack of Board Resolution required substantiation, which petitioner failed to provide.

• Validity of Memorandum: The Memorandum was struck down as it imposed a month-to-month accrual system (1.25 days per month) that limited employees to only five days of leave during the first four months of the school year, directly contradicting Article XII of the CBA which granted automatic 15-day annual entitlements. Such unilateral modifications altering the terms and conditions of employment without the employees' consent violated the binding nature of the CBA.

• Non-Diminution Rule (Article 100, Labor Code) — Benefits based on express policy, written contract, or established practice cannot be eliminated or reduced. To qualify as an established practice, the benefit must be consistently and deliberately granted by the employer over a long period of time. An exception exists only where the practice resulted from an error in the construction or application of a doubtful or difficult question of law, provided the error is corrected immediately upon discovery; otherwise, the rule applies.

• Interpretation of Collective Bargaining Agreements — Where CBA provisions are clear and leave no doubt as to the parties' intention, the literal meaning governs. However, any doubt in interpretation must be resolved in favor of labor, pursuant to the constitutional mandate protecting workers' rights and welfare.

• Substantial Evidence — Affidavits of employees regarding company practices may constitute substantial evidence when uncontroverted and when the affiants have no personal interest in the outcome of the case.

• "The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice."

• "To be considered a practice, it must be consistently and deliberately made by the employer over a long period of time."

• "An exception to the rule is when 'the practice is due to error in the construction or application of a doubtful or difficult question of law.' The error, however, must be corrected immediately after its discovery; otherwise, the rule on Non-Diminution of Benefits would still apply."

• "when the provision of the CBA is clear, leaving no doubt on the intention of the parties, the literal meaning of the stipulation shall govern. However, if there is doubt in its interpretation, it should be resolved in favor of labor, as this is mandated by no less than the Constitution."

• Central Azucarera De Tarlac v. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010 — Cited as controlling precedent defining the elements of the non-diminution rule and the exception for errors of law.

• National Federation of Labor v. Court of Appeals, 483 Phil. 626 (2004) — Cited for the principle that a CBA is a contract with the force of law between the parties.

• Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union (NMS-IND-APL), G.R. No. 185556, March 28, 2011 — Cited for rules on CBA interpretation.

• 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.

• Article II, Section 18, 1987 Constitution — Mandates the State to affirm labor as a primary social economic force and protect workers' rights.

• Article XII, Sections 1 and 2 of the CBA — Granted automatic 15-day annual vacation and sick leave credits to covered employees.

Antonio T. Carpio (Chairperson), Arturo D. Brion, Jose Portugal Perez, and Estela M. Perlas-Bernabe.