G.R.

No. 100701 March 28, 2001 AUTHOR: LAST NAME

PRODUCERS BANK OF THE PHILIPPINES, petitioner, NOTES: Sinama ko lang yung issue about bonus.
vs.
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NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS YEAR MID- YEAR CHRISTMAS 13 MO. PAY
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BANK EMPLOYEES ASSOCIATION, respondents. BONUS BONUS
Previous one mo. one mo. basic one mo.
TOPIC: Bonus; Definition; When Demandable years basic basic
1984 one mo. None One-half mo.
PONENTE: GONZAGA-REYES basic basic
1985 one-half none one-half mo.
mo. basic basic
1986 one-half one-half mo. one mo.
mo. basic basic Basic
1987 one-half one-half mo. one mo.
mo. basic basic Basic


CASE LAW/ DOCTRINE: The matter of giving them bonuses over and above their lawful salaries and allowances is entirely
dependent on the profits, if any, realized by the Bank from its operations during the past year. Bonuses are not part of
labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided
by the Labor Code.
FACTS: Producers Bank of the Philippines, a banking institution, has been providing several benefits to its employees since 1971
when it started its operation. Among the benefits it had been regularly giving is a mid-year bonus equivalent to an employee's one-
month basic pay and a Christmas bonus equivalent to an employee's one whole month salary (basic pay plus allowance);

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When P.D. 851, the law granting a 13 month pay, took effect, the basic pay previously being given as part of the Christmas bonus
was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus;

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From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus, one month basic pay as 13 month pay
but the Christmas bonus was no longer based on the allowance but on the basic pay of the employees which is higher;

In the early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year bonus;

By virtue of an alleged Monetary Board Resolution No. 1566, the bank only gave a one-half (1/2) month basic pay as compliance of
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the 13 month pay and none for the Christmas bonus.

Thus, a complaint was filed by private respondent with the Arbitration Branch NCR of NLRC charging petitioner with diminution of
benefits.

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Labor Arbiter found private respondent's claims to be unmeritorious and dismissed its complaint. In a complete reversal, however,
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the NLRC granted all of private respondent's claims except for damages.

Consquently, the petitioners filed a petition for certiorari before the SC.

Petitioner asserts that it cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as
evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained
losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, petitioner points
out that the collective bargaining agreement of the parties does not provide for the payment of any mid-year or Christmas bonus.
On the contrary, section 4 of the collective bargaining agreement states that –

Acts of Grace. Any other benefits or privileges which are not expressly provided in this Agreement, even if now
accorded or hereafter accorded to the employees, shall be deemed purely acts of grace dependent upon the sole
judgment and discretion of the BANK to grant, modify or withdraw .

On the other hand, private respondent argues that the mid-year and Christmas bonuses, by reason of their having been
given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn
by petitioner without violating Article 100 of Presidential Decree No. 4429 which prohibits the diminution or elimination of
benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is
discretionary on the part of the employer, it argues that, by reason of its long and regular concession, it may become part
of the employee's regular compensation.

ISSUE(S): Whether Petitioner is justified in reducing the bonus

HELD: Yes.
RATIO: A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the
employer's business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to
spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a
management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is
not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee.

However, an employer cannot be forced to distribute bonuses which it can no longer afford to pay. To hold otherwise would be to
penalize the employer for his past generosity. Thus, in Traders Royal Bank v. NLRC, we held that:

The matter of giving them bonuses over and above their lawful salaries and allowances is entirely dependent on
the profits, if any, realized by the Bank from its operations during the past year. Bonuses are not part of labor
standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits, which are
provided by the Labor Code.

In this case, Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses triggered by a bank-
run which began in 1983. In such a depressed financial condition, petitioner cannot be legally compelled to continue paying the
same amount of bonuses to its employees. Thus, the conservator was justified in reducing the mid-year and Christmas bonuses of
petitioner's employees. To hold otherwise would be to defeat the reason for the conservatorship which is to preserve the assets and
restore the viability of the financially precarious bank. Ultimately, it is to the employees' advantage that the conservatorship achieve
its purposes for the alternative would be petitioner's closure whereby employees would lose not only their benefits, but their jobs as
well.
DISSENTING/CONCURRING OPINION(S):

11 Eastern Telecommunications Philippines, Inc. (ETPI) v. AUTHOR: Garcia
Eastern Telecoms Employees Union (ETEU) NOTES:
[G.R. No. 185665 February 8, 2012] Art. 100. Prohibition against elimination or diminution of
TOPIC: PONENTE: benefits. – Nothing in this Book shall be construed to eliminate
or in any way diminish supplements, or other employee benefits
being enjoyed at the time of promulgation of this Code.
CASE LAW/ DOCTRINE:
A bonus is a gratuity or act of liberality of the giver which the recipient has nor right to demand as a matter of right; A bonus,
however, becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the
employee.
FACTS:
• ETPI is a corporation engaged in the business of providing telecommunications facilities, particularly leasing international date
lines or circuits, regular landlines, internet and data services, employing approximately 400 employees.
• ETEU is the certified exclusive bargaining agent of the company’s rank and file employees.
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• The labor dispute was a spin-off of the company’s plan to defer payment of the 2003 14 ,15 , and 16 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.
• 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. They invoked the Side Agreement of the existing CBA (2001-2004):
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o 4. Employment Related Bonuses. The Company confirms that the 14 , 15 , and 16 month bonuses (other
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than 13 month pay) are granted.
• The said agreement was reduced to a MOA. The company made a sudden turnaround it is position by declaring that they will
no longer pay the bonuses until the issue is resolved through compulsory arbitration.
• ETEU filed a Notice of Strike on the ground of unfair labor practice (ULP).
• Secretary of Labor certified the labor dispute for compulsory arbitration.
• ETEU
 o ETPI had consistently and voluntarily been giving out the said bonuses to its employees from 1975 to 2002,
even when it did not realize any net profits.
o The payment of these monetary benefits had ripened into a company practice.
o Such practice had been expressly confirmed in the Side Agreements of the CBA
o The unjustified and malicious refusal of the company to pay the subject bonuses was a clear violation of the
economic provision of the CBA and constitutes unfair labor practice.
• ETPI
o NLRC had no jurisdiction over the issue which merely involved interpretation of the economic provision of the
CBA Side Agreement.
o Bonuses were not part of the legally demandable wage and the grant thereof to its employees was an act of
pure gratuity and generosity on its part, involving the exercise of management prerogative and always
dependent on the financial performance and realization of profits.
o To require the company to pay the bonuses during its dire financial straits would in effect penalize it for its
past generosity.
o Invoked Art. 1267 – rebus sic standibus
o The bonus provision in the Side Agreement was a mere affirmation that the distribution of bonuses was
discretionary to the company.
• NLRC ruled in favor of ETPI and denied ETEU’s motion for reconsideration. CA ruled in favor of the union.
ISSUE(S): Whether the members of the ETEU are entitled to the payment of the subject bonuses

HELD: Yes.
RATIO:
• From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient has no right to 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 or other benefits aside from the employee’s basic
salaries or wages.
• A bonus becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the
employee.
• If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its
payment, such as success of business or greater production or output, then it is part of the wage.
• In this case, it is indubitable that the ETPI and ETEU agreed on the inclusion of a provision for the grant of the subject bonuses in
the Side Agreement (twice one 1998-2001 and another in 2001-2004). A reading of the provision reveals that the same provides
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for the giving of 14 , 15 , and 16 month bonuses without qualification.
• The records are also bereft of any showing that the ETPI made it clear before or during the execution of the Side Agreements
that the bonuses shall be subject to any condition.
• The continuous conferment of bonuses by ETPI to the union members from 1998-22002 by virtue of the Side Agreements
evidently negates its argument that the giving of the subject bonuses is a management prerogative.
• Nowhere in the Side Agreement does it say that the subject bonuses shall be conferred once during the year the Side
Agreement was signed.
• The parties to the contract must be presumed to have assumed the risks of unfavorable developments. It is, therefore, only in
absolutely exceptional changes of circumstances that equity demands assistance for the debtor.
• Considering that ETPI had been continuously suffering huge losses from 2000 to 2002, its business losses in the year 2003 were
not exactly unforeseen or unexpected.
• ETPI’s act of granting the same has become an established company practice such that it has virtually become part of the
employee’s salary wage.
• The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without violating Art. 100 of the Labor Code.
DISSENTING/CONCURRING OPINION(S):

13. Phil. Telegraph & Telephone Company v. NLRC AUTHOR: Laureta (edited Consing’s)
[G.R. No. 118978; May 1997] NOTES:
TOPIC: Workign conditions/Stipulation against marriege PT&T – Phil Telegraph & Telephone Company
PONENTE: Regalado, J.
Petitioner lost the case
DOCTRINE: The government abhors any stipulation or policy against marriage.

FACTS:
• Private Respondent Grace de Guzman was hired by PT&T to work from November 21, 1990 until April 20, 1991. After such,
the company hired her again as a reliever two more times until August 8, 1991.

• On September 2, 1991, de Guzman was hired by PT&T as a probationary employee. Her probation was for a period of 150
days.

• PT&T dismissed de Guzman on January 29, 1992 on two grounds namely that: de Guzman had allegedly misappropriated
funds from the company, and that she had concealed her civil status by stating she was single when she was actually
married.

• De Guzman argues that she was a regular employee who was dismissed without just cause. Furthermore, she had to conceal
her status as a married woman because of the company’s policy against hiring married women.

• PT&T argues that De Guzman’s civil status as a married woman violated company policy, furthermore the fact that she
concealed it amounted to dishonesty which would serve as cause for termination.

• De Guzman filed a case with the Labor Arbiter who ruled in her favor and ordered her reinstatement along with back wages.
This decision was appealed to the NLRC who affirmed the ruling but also modified it stating that De Guzman deserved to be
suspended for 3 months because of her dishonesty in concealing her civil status.
ISSUE(S):
Was PT&T’s policy of not accepting married women in the company legal?

HELD/RATIO:
No.

The government, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no
uncertain terms, as follows:

ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation
of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee
merely by reason of marriage.

Origin can be traced to:

• PD148, aka Women and Child Labor Law, which amended paragraph

• RA 679, An Act to Regulate the Employment of Women and Children, to Provide Penalties for Violations Thereof, and for
Other Purposes.

• Act No. 3071 which became law on March 16, 1923 and which regulated the employment of women and children in shops,
factories, industrial, agricultural, and mercantile establishments and other places of labor in the then Philippine Islands.

Zialcita, et al. vs. Philippine Air Lines, a decision that emanated from the Office of the President. There, a policy of Philippine Air Lines
requiring that prospective flight attendants must be single and that they will be automatically separated from the service once they
marry was declared void, it being violative of the clear mandate in Article 136 of the Labor Code with regard to discrimination against
married women.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free
from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public
policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the
individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order,
or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state that the relations between the parties, that is, of capital and
labor, are not merely contractual, impressed as they are with so much public interest that the same should yield to the common
good.

• It goes on to intone that neither capital nor labor should visit acts of oppression against the other, nor impair the
interest or convenience of the public.

• In the final reckoning, the danger of just such a policy against marriage followed by petitioner PT&T is that it strikes at
the very essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the family as the
foundation of the nation.

In summary, PT&T’s policy was unlawful and De Guzman was reinstated because she was wrongfully terminated. However for her
dishonesty she was ordered suspended for 3 months.
CASE LAW/ DOCTRINE:
The management prerogatives and policies of the businesses should not go against the law.