Title
Home Credit Mutual Building and Loan Association vs. Prudente
Case
G.R. No. 200010
Decision Date
Aug 27, 2020
Employee challenged employer's cost-sharing scheme for car benefits, alleging violation of non-diminution rule. SC ruled no violation, upholding management prerogative.
cost sharing scheme
car plan
express policy

Case Summary (G.R. No. 200010)

Factual Background

In 1997 respondent received her first company service vehicle from petitioner and later purchased that vehicle at its depreciated value. In 2003 petitioner granted a second service vehicle but imposed a maximum company contribution of P660,000.00, which respondent accepted and paid equity for in excess of that limit. Respondent again purchased a vehicle at depreciated value in 2008. In 2009, when respondent applied for a third service vehicle, petitioner required a higher equity contribution of more than P550,000.00 and adopted a cost sharing scheme obliging respondent to pay forty percent of the acquisition price. Respondent filed a complaint before the Labor Arbiter alleging violation of Article 100, Labor Code, and asserting that the car plan had ripened into a company practice or formed part of her hiring package.

Labor Arbiter and NLRC Proceedings

The Labor Arbiter dismissed respondent's complaint on October 30, 2009, holding that the employer's grant of transportation facilities had ripened into a practice only as to the general grant of a service vehicle but that specific terms—such as covered employees, depreciation period, car model, and company participation—remained subject to management prerogative. The National Labor Relations Commission affirmed the Labor Arbiter's dismissal in its August 5, 2010 Decision, finding no grave abuse of discretion in the resolution of the issues.

Court of Appeals Decision

On certiorari the Court of Appeals reversed the labor tribunals on August 31, 2011. The CA concluded that the car plan at full company cost on a non-participatory basis had evolved into a company practice and formed part of respondent's hiring package. The CA held that the employer could not unilaterally withdraw or diminish that benefit, that the service vehicle was not a gratuitous bonus, and that there was no competent evidence showing the benefit was contingent on company profits. The CA ordered petitioner to provide respondent a service vehicle of the same worth as a Honda Civic LXi on a non-participatory basis with ownership transfer after five years, and awarded moral damages of P50,000.00, exemplary damages of P50,000.00, and attorney’s fees equivalent to ten percent of the total award.

Issues Presented

The principal issue was whether petitioner violated the rule against diminution of benefits by adopting a forty percent employee cost sharing scheme and reducing its maximum company contribution for service vehicles. Subsidiary issues were whether the grant of a service vehicle had been part of respondent's hiring package and whether the car benefit had ripened into a company practice at full company cost, thereby creating a vested right protected against unilateral diminution.

Parties' Contentions

Respondent contended that the continuous practice of providing service vehicles had ripened into a company practice and that the benefit formed part of her hiring package, thus invoking the non-diminution of benefits rule. Petitioner maintained that while it had voluntarily granted vehicles, the specific terms of the grant were subject to management prerogative and that it had not agreed to an irrevocable, non-participatory scheme; petitioner argued that no express contract or consistent, deliberate practice established entitlement to full company cost for subsequent vehicles.

Supreme Court Disposition

The Supreme Court granted the petition. The Court reversed and set aside the Court of Appeals Decision dated August 31, 2011 in CA-G.R. SP No. 117332, and reinstated the National Labor Relations Commission Decision dated August 5, 2010 that affirmed the Labor Arbiter's dismissal of respondent's complaint. The Supreme Court concluded that respondent failed to carry the burden of proving that the car plan at full company cost had ripened into a company practice or that the benefit formed part of her hiring package.

Legal Basis and Reasoning

The Court reaffirmed that employees acquire vested rights in voluntarily granted benefits when such benefits arise from an express policy, a written contract, or when they have ripened into company practice, and that such rights are protected against diminution consistent with Article 100, Labor Code, and the constitutional mandate to protect labor. The Court cited Arco Metal Products, Co., Inc. v. Samahan ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-NAFLU, et al.) for the constitutional foundation of the non-diminution rule and referenced Justice Brion's concurrence clarifying that Article 100 strictly addresses benefits enjoyed at the time of the Labor Code's promulgation, while benefits subsequently given arise from the employer's voluntary acts and the contractual principle of mutuality of contracts. The Court reiterated that the employee bears the burden to show that a benefit has ripened into a c

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