Re : Christmas Bonus As An Employee Benefits

The company has been giving Christmas Bonus since 1993. Moreover, there are no
expressed terms and conditions for its being due except that of the generosity of the
company. May the benefit be withdrawn?
To help in the determination whether to pay Christmas Bonus or not, the following
concepts on practice benefit are discussed.
Benefit and supplement definition
Employee benefits are compensations given to employees in addition to regular salaries
or wages. Some benefits are legally required, e.g., social security benefits, medicare,
retirement benefits, maternity benefits, service incentive leave, etc. Other benefits are
offered by the employer as an incentive to attract and retain employees as well as increase
employee morale and improve job performance.
Supplements include those benefits or privileges granted to an employee for the
convenience of the employer, e.g., board and lodging within the company premises.
Principle of Non-Diminution Of Benefits
The principle of non-diminution of benefits states that: any benefit and supplement
being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated
by the employer.]
This principle is recognized in the Constitutional mandate to protect the rights of
workers and promote their welfare, and to afford labor full protection. Said mandate in
turn is the basis of Article 4 of the Labor Code which states that all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations shall be rendered in favor of labor.
Application
In employment setting, the principle of non-diminution of benefits finds application when
a change initiated by the employer to existing company policies, specially matters
concerning employee benefits, results in reduction, diminution or withdrawal of some or
all of the benefits already enjoyed by the employees. For example, if the employees of a
certain company is traditionally granted 14th month pay, and the employer subsequently
withdrew such benefit, or reduced its amount, the reduction or withdrawal is
objectionable on the ground that it would result to diminution of benefits.
The application of the principle presupposes that a company practice, policy and tradition
favorable to the employees has been clearly established; and that the payments made by
the company pursuant to it have ripened into benefits enjoyed by them.\1
To ripen into benefits, the following requisites must concur:
1

MERALCO vs Quisumbing, G.R. No. 127598, January 27, 1999

1. It should have been practiced over a long period of time; and

2. It must be shown to have been consistent and deliberate. \2
With regard to the length of time the company practice should have been exercised to
constitute voluntary employer practice which cannot be unilaterally withdrawn by the
employer, the Court has not laid down any rule requiring a specific minimum number of
years.
1. In the case of Davao Fruits Corporation vs Associated Labor Unions (G.R. No.
85073, August 24, 1993), the company practice lasted for six years.
2. In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No. 102132,
March 19, 1993), the employer, for three years and nine months, approved the
commutation to cash of the unenjoyed portion of the sick leave with pay benefits
of its Intermittent workers.
3. In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the employer
carried on the practice of giving a fixed monthly emergency allowance from
November 1976 to February 1980, or three years and four months.
4. In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the
practice of including non-basic benefits such as paid leaves for unused sick leave
and vacation in the computation of their 13th-month pay for at least two (2) years.
In all these cases, the grant of benefits has been held to have ripened into company
practice or policy which cannot be peremptorily withdrawn.

Sevilla Trading Co vs Semana, G.R. No. 152456, April 28, 2004