Vergara v. Coca-Cola Bottlers

G.R. No. 176985. April 1, 2013.

FACTS:

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). As stipulated in Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of DSS shall be considered in the computation of retirement benefits.

Petitioner filed a complaint before the NLRC for the payment of his “Full Retirement Benefits and Commission. He claims that respondent allegedly deducted illegally from his retirement package an amount of PhP496,016.67 and entitlement of additional PhP474,600.00 as Sales Management Incentives (SMI).

The management argued that Vergera did not qualify for the SMI thus he is not entitled to receive it as part of retirement pay.

In Defense, Petitioner presented Hidalgo and Vasqeuz, former DSSs claimed that the SMI was included in their retirement package even if they did not meet the sales and collection qualifiers. He asserted that including SMI in the retirement package classified as a company practice is considered an enforceable obligation.

The LA rendered a Decision in favor of petitioner, directing respondent to reimburse the amount illegally deducted from petitioner’s retirement package and to integrate therein his SMI privilege. However, the NLRC modified the award and deleted the payment of SMI.

During the pendency of petitioner’s petition for certiorari before the CA, the parties executed a Compromise Agreement where petitioner acknowledged full payment by respondent of the amount of PhP496,016.67 covering the amount illegally deducted.

The CA dismissed the petitioner’s case. Hence, this present petition.

ISSUE:

Whether the SMI should be included in the computation of petitioner’s retirement benefits on the ground of consistent company practice.

HELD:

NO. There is 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.

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.  There is no hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. There must appears to be the regularity and deliberateness of the grant of benefits over a significant period of time.

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. 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.

Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. 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.

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.

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. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable or enforceable right. 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.

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