Almirante: Non-diminution of benefits

Dominador A. Almirante
·3 min read

In 1997, petitioner Home Credit Mutual Building and Loan Association gave its employee, respondent Ma. Rollette G. Prudente, her first service vehicle. Later, Rollette purchased the vehicle from the petitioner at its depreciated value. In 2003, petitioner granted Rollette’s request for a second service vehicle. However, petitioner required Rollette to pay for additional equity in excess of the maximum limit of P660,000. In 2008, Rollette again purchased the vehicle at its depreciated value.

In 2011, Rollette applied for a third service vehicle. This time, the petitioner required Rollette to pay the equity more than P550,000. Petitioner likewise adopted a cost sharing scheme where Rollette must shoulder 40 percent of the acquisition price. Aggrieved, Rollette filed a complaint against the petitioner for violation of Article 100 of the Labor Code on non-diminution of benefits before the Labor Arbiter.

Does her claim find merit?

Ruling: No.

Clearly, the non-diminution rule applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. In this case, Rollette’s claim that the car plan was part of her hiring package was unsubstantiated. Admittedly, Home Credit has no existing car plan at the time Rollette was hired. Rollette’s employment contract does not even contain any express provision on her entitlement to a service vehicle at full company cost. Therefore, it is incongruous for the Court of Appeals to conclude that the grant of a service vehicle was part of Rollette’s hiring package.

Similarly, we find that the car plan has not ripened into a company practice. As a rule, “practice” or “custom” is not a source of a legally demandable or enforceable right. In labor cases, however, benefits which were voluntarily given by the employer, and which have ripened into company practice, are considered as rights and are subject to the non-diminution rule. To be considered a company practice, the benefit must be consistently and deliberately granted by the employer over a long period of time. It requires an indubitability, showing that the employer agreed to continue giving the benefit knowing fully well that the employee is not covered by any provision of law or agreement for its payment. The burden to establish that the benefit has ripened into a company practice rests with the employee.

Here, the labor tribunals correctly held that Home Credit’s act of giving service vehicles to Rollette has been a company practice — but not as to the non-participation aspect. There was no substantial evidence to prove that the car plan at full company cost had ripened into company practice. Notably, the only time Rollette was given a service vehicle fully paid for by the company was for her first car. For the second vehicle, the company already imposed a maximum limit of P660,000 but Rollette never questioned this. She willingly paid for the equity in excess of said limit. Thus, the elements of consistency and deliberateness are not present.

At this point, we emphasize that any employee benefit enjoyed cannot be reduced and discontinued. Otherwise, the constitutional mandate to afford full protection to labor is offended. But, even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives, like the adoption of a new car plan at a new cost sharing scheme, with a reduced maximum limit. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied, especially in this case wherein Home Credit is willing to give one hand by giving a service vehicle to Rollette but she wanted to grab the entire arm. (Home Credit Building and Mutual Loan Association, et al. vs. Ma. Rollette G. Prudente, G.R. 200010, Aug. 27, 2020).