G.R. No. 152456 - Sevilla Trading Co. vs. Semana

Sevilla Trading Company (petitioner), a domestic trading corporation, for two to three years prior to 1999, included various non-basic benefits in the base figure for computing the 13th-month pay of its employees.
These benefits were:

Petitioner entrusted payroll preparation, including computation of 13th-month pay, to office staff. After changing payroll personnel during computerization and conducting an audit, petitioner claimed it discovered the inclusion of non-basic benefits was erroneous.

13th-month pay = net basic pay for 12 months
Where net basic pay = gross pay minus non-basic pay or other benefits (those listed above)

The Sevilla Trading Workers Union (respondent union), representing daily piece-rate workers, contested the new computation through grievance procedures under their Collective Bargaining Agreement (CBA).
The Union argued the exclusion of leaves and related benefits from the base amount violated Article 100 of the Labor Code, which prohibits diminution or elimination of benefits.
Petitioner insisted inclusion of only basic salary (excluding leaves with pay) in 13th-month pay as mandated by P.D. No. 851 and its implementing rules.

The parties submitted the dispute to Accredited Voluntary Arbitrator (A.V.A.) Tomas E. Semana for resolution.
A.V.A. Semana ruled in favor of the Union, ordering the company to:

Include sick leave, vacation leave, paternity leave, union leave, bereavement leave, premium for work on rest days and special holidays, and pay for regular holidays in the 13th-month pay computation.
Pay corresponding backwages for 1999 due to prior exclusion.

Petitioner received the decision on December 20, 2000, but failed to timely appeal.

Petitioner filed a petition for certiorari under Rule 65 on February 19, 2001, aiming to nullify the Arbitrator’s decision.
The Court of Appeals denied the petition and affirmed the Arbitrator’s ruling, holding that the proper remedy was a petition for review under Rule 43, not certiorari.
Petitioner appealed to the Supreme Court.

Whether the exclusion of leaves and other related benefits from the base figure in the computation of the 13th-month pay is valid under law.
Whether the petitioner’s unilateral change in the computation of the 13th-month pay to exclude these benefits was lawful.
Whether petitioner had the right to correct alleged payroll computation errors after years of inclusion of these non-basic benefits.
Whether petitioner availed of the proper remedy in challenging the Arbitrator’s decision.