Sevilla Trading Company v. Semana

DECISION PUNO, J.:

On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining the Decision2 of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its subsequent Resolution3 dated 06 March 2002 denying petitioner's Motion for Reconsideration. The facts of the case are as follows: For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic corporation engaged in trading business, organized and existing under Philippine laws, added to the base figure, in its computation of the 13th-month pay of its employees, the amount of other benefits received by the employees which are beyond the basic pay. These benefits included: (a) Overtime premium for regular overtime, legal and special holidays; (b) Legal holiday pay, premium pay for special holidays; (c) Night premium; (d) Bereavement leave pay; (e) Union leave pay; (f) Maternity leave pay; (g) Paternity leave pay; (h) Company vacation and sick leave pay; and (i) Cash conversion of unused company vacation and sick leave.

Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation and payment of the 13th-month pay and other benefits. When it changed its person in charge of the payroll in the process of computerizing its payroll, and after audit was conducted, it allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. It cited the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which stated that: "Basic salary"

shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. Petitioner then effected a change in the computation of the thirteenth month pay, as follows: 13th-month pay = net basic pay