104 wesleyan university v wesleyan faculty and staff association (103) grp 1

Wesleyan University-Phil ippines v. Wesleyan University-Phil ippines Faculty & Staff Association

G.R. No. 181806 | March 12, 2014 | Del Castillo, J. AMSantos | Law 113 | Labor 1

FACTS • December 2003 – The University and the Association signed a 5 year CBA effective June 1, 2003 until May 31, 2008.

o Article XII covers Vacation Leave and Sick Leave, stating that all regular and non-tenured rank-and-file faculty and staff shall enjoy 15 days vacation leave and sick leave with pay annually.

o All unused vacation leave after the second year of service shall be converted into cash and be paid to the entitled employee at the end of each school year to be given not later than August 30 of each year.

• August 16, 2005 – The University, through its President, Atty. Guillermo Maglaya, issued a Memorandum providing guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation.

o Vacation and sick leave credits are not automatic. They have to be earned. Monthly, a qualified employee earns an equivalent of 1.25 days credit each for VL and SL. Vacation Leave and Sick Leave credits of 15 days become complete at the cut off date of May 31 of each year.

o An employee who takes VL or CL beyond his leave credits as of date will have to file leave without pay. o Only vacation leave is commuted. Vacation leave commutation is effected after the second year of continuous service of

an employee. • August 25, 2005 – The association wrote a letter to Atty. Maglaya informing him that it is not amenable to the UNILATERAL

CHANGES made by the petitioner regarding the implementation of vacation leave and sick leave. • February 8, 2006 – A Labor Management Committee meeting was held regarding the issue on leave implementation. The

University also announced its plan to implement a one-retirement policy. o Employees were receiving two retirement benefits – one from the Private Education Retirement Annuity Association

(PERAA) Plan and another from the CBA Retirement Plan. • The matter was referred to a Voluntary Arbitrator who ruled that the one-retirement policy and leave memorandum were contrary

to law. • The University appealed to the CA. CA affirmed the nullification of the policy and memorandum on the ground that these

unilaterally amended the CBA without the consent of the respondent. MR was also denied.

ISSUE/HELD WON the implementation of the leave memorandum and the one-retirement policy constitutes a diminution of benefits. YES.

RATIO • University’s argument: There is only one retirement plan – the CBA retirement plan and PERAA plan are one and the same.

There is no established company practice of giving two retirement benefits. If this had happened in the past, it was done by mistake. The leave memorandum is also valid because it is in full accord with existing policy

• Association’s argument: The standing practice of 30 years is that of giving two retirement benefits, as substantiated by affidavits of retirees. The PERAA plan is different from the PERAA plan. As to the leave memorandum, it is arbitrary and contrary to the CBA and existing practices as it added qualifications or limitations which were not agreed upon by the parties.

• 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.

o This rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice.

o 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;;43 otherwise, the rule on Non-Diminution of Benefits would still apply.

• As to the practice of giving two retirement benefits, the Court found the aff idavits to be substantial evidence supporting the association’s claim.

o The University failed to present evidence to refute the veracity of the affidavits. The retired employees who executed the affidavits have nothing to lose or gain in this case as they have already received their retirement benefits.

o The claim that the PERAA plan and the CBA retirement plan are one and the same was not supported by evidence.

§ There is nothing in Article XVI of the CBA to indicate or even suggest that the "Plan" referred to in the CBA is the PERAA Plan.

§ There would not have been a need to announce the one-retirement policy in the LMC meeting if it was already the current practice.

o The two-retirement policy is a practice. Therefore, the University cannot, without the consent of respondent, eliminate the two-retirement policy and implement a one-retirement policy as this would violate the rule on non-diminution of benefits.

• The court also found the leave memorandum to be contrary to the CBA. o The memorandum limits the available leave credits of an employee at the start of the school year. For

example, for the first four months of the school year or from June to September, an employee is only entitled to five days vacation leave and five days sick leave.

o “Considering that the Memorandum dated August 16, 2005 imposes a limitation not agreed upon by the parties nor stated in the CBA, we agree with the CA that it must be struck down.”