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Date of Decision: FEBRUARY 8, 2011
G.R. Number: G.R. No. 185665
Eastern Telecom Philippines, Inc. (ETPI) plans to defer payment of the 2003 14th,
15th and 16th month bonuses sometime in April 2004. The company's main ground
in postponing the payment of bonuses is due to allege continuing deterioration of
company's financial position which started in the year 2000. However, ETPI while
postponing payment of bonuses sometime in April 2004, such payment would also
be subject to availability of funds. The union strongly opposed the deferment in
payment of the bonuses by filing a preventive mediation complaint with the NCMB
on July 3, 2003, the purpose of which complaint is to determine the date when the
bonus should be paid. In the conference held at the NCMB, ETPI reiterated its stand
that payment of the bonuses would only be made in April 2004 to which date of
payment, the union agreed. Subsequently, the company made a sudden turnaround
in its position by declaring that they will no longer pay the bonuses until the issue is
resolved through compulsory arbitration. Thus, on April 26, 2004, the union filed a
Notice of Strike on the ground of unfair labor practice for failure of ETPI to pay the
bonuses in gross violation of the economic provision of the existing CBA. On May 19,
2004, the Secretary of Labor and Employment, finding that the company is engaged
in an industry considered vital to the economy and any work disruption thereat will
adversely affect not only its operation but also that of the other business relying on
its services, certified the labor dispute for compulsory arbitration. Acting on the
certified labor dispute, a hearing was called on July 16, 2004 wherein the parties
have submitted that the issues for resolution. Thereafter, they were directed to
submit their respective position papers and evidence in support thereof after which
submission, they agreed to have the case considered submitted for decision. On
April 28, 2005, the NLRC issued its Resolution dismissing ETEU's complaint and held
that ETPI could not be forced to pay the union members the bonuses for the year
2003 and the 14th month bonus for the year 2004 inasmuch as the payment of
these additional benefits was basically a management prerogative, being an act of
generosity and munificence on the part of the company and contingent upon the
realization of profits. The CA declared that the Side Agreements of the 1998 and
2001 CBA created a contractual obligation on ETPI to confer the subject bonuses to
its employees without qualification or condition. It also found that the grant of said
bonuses has already ripened into a company practice and their denial would
amount to diminution of the employees' benefits.
Issue: Whether or not ETPI is liable to pay 14th, 15th and 16th month bonuses for
the year 2003 and 14th month bonus for the year 2004 to the members of
respondent union.

Decision: From a legal point of view, a bonus is a gratuity or act of liberality of the
giver which the recipient cannot demand as a matter of right. The grant of a bonus
is basically a management prerogative which cannot be forced upon the employer
who may not be obliged to assume the onerous burden of granting bonuses.
However, a bonus becomes a demandable or enforceable obligation if the additional
compensation is granted without any conditions imposed for its payment. In such
case, the bonus is treated as part of the wage, salary or compensation of the
employee. In this case, there is no dispute that Eastern Telecommunications Phils.,
Inc. and Eastern Telecoms Employees Union agreed on the inclusion of a provision
for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side
Agreement, as well as in their 2001-2004 CBA Side Agreement, which contained no
qualification for its payment. There were no conditions specified in the CBA Side
Agreements for the grant of the bonus. There was nothing in the relevant provisions
of the CBA which made the grant of the bonus dependent on the company's
financial standing or contingent upon the realization of profits. There was also no
statement that if the company derives no profits, no bonus will be given to the
employees. In fine, the payment of these bonuses was not related to the
profitability of business operations. Consequently, the giving of the subject bonuses
cannot be peremptorily withdrawn by Eastern Telecommunications Phils., Inc.
without violating Article 100 of the Labor Code, which prohibits the unilateral
elimination or diminution of benefits by the employer. The rule is settled that any
benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer.

Pag-asa Steel Works v. CA

[G.R.No. 166647.March 31, 2006]
RTWPB issued a Wage Order providing for an increase of 13 pesos in the salaries of
employees receiving the minimum wage and a consequent increase in the rate to
198. Subsequent to this, petitioner-company and the Union entered into a Collective
Bargaining Agreement which granted an increase of 15 pesos for the first year, 25
for the second year and 30 for the third year. Months later, a wage order was issued
by the NCR providing for a 25 pesos increase in the salary of employees receiving
the minimum wage and increased the minimum wage to 223.50. Petitioner paid the
25 pesos increase to all its employees. A year after, the employees were granted
the second year increase provided in the CBA. On that same year, a wage order was
issued which provided for the setting of the new minimum wage at 250.00 or an
increase of 26 pesos. The Union then requested the company to implement the
latest wage order. Petitioner company rejected, claiming that since none of the
employees were receiving a daily salary rate lower than 250 and there was no wage
distortion, it was not obliged to grant the wage increase.

Issue: Whether or not the company was obliged to grant the wage increase under
the Wage Order issued as a matter of practice
No. It is not obliged to grant the wage increase. The wage order provides that only
those in the private sector in the NCR receiving the daily minimum wage rate of 223
per day would receive an increase, thereby setting the wage rate to 250 pesos.
There is no dispute that when the wage order was issued, the lowest paid employee
of the company was receiving a wage higher than 250 pesos. As such, employees
had not right to demand for the increase. (FROM PINOY LEGAL WEBPAGE)