G.R. No. L-23794 - Ormoc Sugar Co., Inc. vs. Treasurer of Ormoc City

Petitioner Ricardo E. Vergara, Jr. was employed by respondent Coca-Cola Bottlers Philippines, Inc. from May 1968 until his retirement on January 31, 2002, as a District Sales Supervisor (DSS) in Las Piñas City, Metro Manila.
Under respondent’s existing Retirement Plan Rules and Regulations at the time, Annual Performance Incentive Pay of Regional Sales Managers (RSMs), District Sales Supervisors (DSSs), and Senior Sales Supervisors (SSSs) was to be considered in the computation of retirement benefits as follows:

Basic Monthly Salary plus Monthly Average Performance Incentive (total performance incentive earned during the year immediately preceding divided by 12 months), multiplied by Number of Years in Service.

Petitioner claimed entitlement to additional PhP474,600.00 as Sales Management Incentives (SMI) — formerly termed as Sales Performance Incentive (SPI) — and PhP496,016.67 representing allegedly illegal deductions from unpaid accounts of two dealers in his jurisdiction.
On June 11, 2002, petitioner filed a complaint before the National Labor Relations Commission (NLRC) for full payment of retirement benefits, merit increase, commissions/incentives, length of service benefits, actual, moral and exemplary damages, and attorney’s fees.
After a series of mandatory conferences, the parties partially settled the merit increase and length of service issues but maintained disputes on the SMI entitlement and illegal deduction.
On September 30, 2003, the Labor Arbiter (LA) ruled in favor of petitioner, ordering reimbursement of illegal deductions and integration of SMI in petitioner’s retirement package.
On appeal by respondent, the NLRC modified the award by deleting the payment of SMI from the retirement benefits.
Petitioner moved for partial execution to reimburse the illegal deduction, which the LA granted.

While petitioner filed a petition for certiorari before the Court of Appeals (CA), parties executed a Compromise Agreement on October 4, 2006, wherein petitioner acknowledged full payment of the PhP496,016.67 amount allegedly illegally deducted.
The CA affirmed the NLRC’s ruling deleting SMI from the retirement benefit computation in a Decision dated January 9, 2007, and denied petitioner’s motion for reconsideration on March 6, 2007.
Petitioner filed the present petition for review on certiorari under Rule 45, assailing the CA rulings and insisting the SMI should be included in his retirement benefits due to an alleged consistent company practice.

Petitioner argued that other DSS retirees who failed to meet sales and collection targets still received the average SMI in their retirement packages, suggesting a company practice.
The respondent countered this with affidavits and data proving petitioner did not meet the trade receivable collection qualifiers of the SMI policy:

Petitioner had low percentages of collection efficiency in 2001 for current issuance and aged receivables, far below company standards.

Petitioner presented sworn statements of two former DSSs (Renato C. Hidalgo and Ramon V. Velazquez) who claimed to have received SMI despite not meeting targets.
Respondent presented counter-affidavits demonstrating:

Hidalgo was qualified for SMI.
The inclusion of SMI for Velazquez was an isolated act granted to maintain industrial peace in the plant, not a company-wide practice.
Other DSS retirees (e.g., Ed Valencia and Emmanuel Gutierrez) who failed to meet qualifications did not receive SMI, showing the policy’s consistent application.

Petitioner failed to provide substantial evidence disproving respondent’s claim or proving a consistent, deliberate company practice to include SMI regardless of qualification.

Whether the sales management incentive (SMI) should be included in the computation of petitioner’s retirement benefits based on an alleged consistent and deliberate company practice.