Republic of the
Supreme Court
THIRD DIVISION
|
EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC.,
Petitioner, - versus - EASTERN TELECOMS
EMPLOYEES Respondent. |
|
G.R. No. 185665 Present: VELASCO, JR., J., Chairperson, BERSAMIN,* ABAD, PERLAS-BERNABE, JJ. Promulgated: February 8, 2012 |
x
----------------------------------------------------------------------------------------x
D E C I S I O
N
MENDOZA, J.:
Before the Court is a petition for review on certiorari seeking modification of the June 25, 2008 Decision[1] of
the Court of Appeals (CA) and its December 12, 2008 Resolution,[2] in
CA-G.R. SP No. 91974, annulling the April 28, 2005 Resolution[3] of
the National Labor Relations Commission (NLRC) in NLRC-NCR-CC-000273-04
entitled In the Matter of the Labor Dispute in Eastern Telecommunications,
Philippines, Inc.
The Facts
As synthesized by the NLRC, the facts of the case are as follows, viz:
Eastern Telecommunications Phils., Inc. (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.
Eastern Telecoms Employees Union (ETEU) is the
certified exclusive bargaining agent of the companys rank and file employees
with a strong following of 147 regular members. It has an existing collecti[ve]
bargaining agreement with the company to expire in the year 2004 with a Side
Agreement signed on
In essence, the labor dispute was a spin-off of
the companys plan to defer payment of the 2003 14th, 15th
and 16th month bonuses sometime in April 2004. The companys main
ground in postponing the payment of bonuses is due to allege continuing
deterioration of companys 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.
Invoking the Side Agreement of the existing
Collective Bargaining Agreement for the period 2001-2004 between ETPI and ETEU
which stated as follows:
4. Employment Related Bonuses. The Company
confirms that the 14th, 15th and 16th month
bonuses (other than 13th month pay) are granted.
The union strongly opposed the deferment in
payment of the bonuses by filing a preventive mediation complaint with the NCMB
on
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. Thus, considering the
agreement forged between the parties, the said agreement was reduced to a
Memorandum of Agreement. The union requested that the President of the company
should be made a signatory to the agreement, however, the latter refused to
sign. In addition to such a refusal, 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.
The companys change in position was contained
in a letter dated
Thus, on
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 pursuant to Article 263
(q) of the Labor Code as amended.
Acting on the certified labor dispute, a hearing
was called on
In its position paper,[5] the
Eastern Telecoms Employees Union (ETEU) claimed that Eastern Telecommunications
Philippines, Inc. (ETPI) had consistently and voluntarily been giving
out 14th month bonus during the month of April, and 15th
and 16th month bonuses every December of each year (subject
bonuses) to its employees from 1975 to 2002, even when it did not realize
any net profits. ETEU posited that by reason of its long and regular
concession, the payment of these monetary benefits had ripened into a company
practice which could no longer be unilaterally withdrawn by ETPI. ETEU added
that this long-standing company practice had been expressly confirmed in the
Side Agreements of the 1998-2001 and 2001-2004 Collective Bargaining Agreements
(CBA) which provided for the continuous grant of these bonuses in no
uncertain terms. ETEU theorized that the grant of the subject bonuses is not
only a company practice but also a contractual obligation of ETPI to the union
members.
ETEU contended that
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 (ULP). According to ETEU, such refusal was nothing but a
ploy to spite the union for bringing the matter of delay in the payment of the
subject bonuses to the National Conciliation and Mediation Board (NCMB).
It prayed for the award of moral and exemplary damages as well as attorneys
fees for the unfair labor practice allegedly committed by the company.
On the other hand,
ETPI in its position paper,[6] questioned
the authority of the NLRC to take cognizance of the case contending that it had
no jurisdiction over the issue which merely involved the interpretation of the
economic provision of the 2001-2004 CBA Side Agreement. Nonetheless, it maintained
that the complaint for nonpayment of 14th, 15th and 16th
month bonuses for 2003 and 14th month bonus for 2004 was bereft of
any legal and factual basis. It averred that the subject 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. It posited that it resorted to the discontinuance of
payment of the bonuses due to the unabated huge losses that the company had
continuously experienced. It claimed that it had been suffering serious
business losses since 2000 and to require the company to pay the subject
bonuses during its dire financial straits would in effect penalize it for its
past generosity. It alleged that the non-payment of the subject bonuses was
neither flagrant nor malicious and, hence, would not amount to unfair labor
practice.
Further, ETPI argued that
the bonus provision in the 2001-2004 CBA Side Agreement was a mere affirmation
that the distribution of bonuses was discretionary to the company, premised and
conditioned on the success of the business and availability of cash. It
submitted that said bonus provision partook of the nature of a one-time grant
which the employees may demand only during the year when the Side Agreement was
executed and was never intended to cover the entire term of the CBA. Finally,
ETPI emphasized that even if it had an unconditional obligation to grant
bonuses to its employees, the drastic decline in its financial condition had
already legally released it therefrom pursuant to Article 1267 of the Civil
Code.
On April 28, 2005, the NLRC
issued its Resolution dismissing ETEUs complaint and held that ETPI could not
be forced to pay the union members the 14th, 15th and 16th
month 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 NLRC
pronounced that ETPI may not be obliged to pay these extra compensations in
view of the substantial decline in its financial condition. Likewise, the NLRC
found that ETPI was not guilty of the ULP charge elaborating that no sufficient
and substantial evidence was adduced to attribute malice to the company for its
refusal to pay the subject bonuses. The dispositive portion of the resolution reads:
WHEREFORE, premises considered, the instant
complaint is hereby DISMISSED for lack of merit.
SO ORDERED.[7]
Respondent ETEU moved for
reconsideration but the motion was denied by the NLRC in its Resolution dated
Aggrieved, ETEU filed a
petition for certiorari[8] before
the CA ascribing grave abuse of discretion on the NLRC for disregarding its
evidence which allegedly would prove that the subject bonuses were part of the
union members wages, salaries or compensations. In addition, ETEU asserted
that the NLRC committed grave abuse of discretion when it ruled that ETPI is not
contractually bound to give said bonuses to the union members.
In its assailed June 25,
2008 Decision, 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. It held that ETPI could not
seek refuge under Article 1267 of the Civil Code because this provision would
apply only when the difficulty in fulfilling the contractual obligation was
manifestly beyond the contemplation of the parties, which was not the case therein.
The CA, however, sustained the NLRC finding that the allegation of ULP was
devoid of merit. The dispositive portion of the questioned decision reads:
WHEREFORE, premises considered, the instant
petition is GRANTED and the resolution of the National Labor Relations
Commission dated
SO ORDERED.[9]
ISSUES
Dissatisfied, ETPI now comes
to this Court via Rule 45, raising the following errors allegedly committed by
the CA, to wit:
I.
THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT ANNULLED AND
SET ASIDE THE RESOLUTIONS OF THE NLRC DISREGARDING THE WELL SETTLED RULE THAT A
WRIT OF CERTIORARI (UNDER RULE 65) ISSUES ONLY FOR CORRECTION OF ERRORS OF
JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.
II.
THE COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW WHEN IT DISREGARDED
THE RULE THAT FINDINGS OF FACTS OF QUASI-JUDICIAL BODIES ARE ACCORDED FINALITY
IF THEY ARE SUPPORTED BY SUBSTANTIAL EVIDENCE CONSIDERING THAT THE CONCLUSIONS
OF THE NLRC WERE BASED ON SUBSTANTIAL AND OVERWHELMING EVIDENCE AND UNDISPUTED
FACTS.
III.
IT WAS A GRAVE ERROR OF LAW FOR THE COURT OF APPEALS TO CONSIDER THAT
THE BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS EMPLOYEES IS NOT DEPENDENT ON
THE REALIZATION OF PROFITS.
IV.
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT DISREGARDED
THE UNDISPUTED FACT THAT EASTERN COMMUNICATIONS IS SUFFERING FROM TREMENDOUS
FINANCIAL LOSSES, AND ORDERED EASTERN COMMUNICATIONS TO GRANT THE BONUSES
REGARDLESS OF THE FINANCIAL DISTRESS OF EASTERN COMMUNICATIONS.
V.
THE COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW WHEN IT ARRIVED AT
THE CONCLUSION THAT THE GRANT OF BONUS GIVEN BY EASTERN COMMUNICATIONS TO ITS
EMPLOYEES HAS RIPENED INTO A COMPANY PRACTICE.[10]
A careful perusal of the
voluminous pleadings filed by the parties leads the Court to conclude that this
case revolves around the following core issues:
1. Whether or not petitioner 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; and
2. Whether or not the CA erred in not dismissing
outright ETEUs petition for certiorari.
ETPI insists that it is under no
legal compulsion to pay 14th, 15th and 16th month bonuses for
the year 2003 and 14th month bonus for the year 2004 contending that
they are not part of the demandable wage or salary and that their grant is
conditional based on successful business performance and the availability of
company profits from which to source the same. To thwart ETEUs monetary claims,
it insists that the distribution of the subject bonuses falls well within the
companys prerogative, being an act of pure gratuity and generosity on its part.
Thus, it can withhold the grant thereof especially since it is currently plagued
with economic difficulties and financial losses. It alleges that the companys
fiscal situation greatly declined due to tremendous and extraordinary losses it
sustained beginning the year 2000. It claims that it cannot be compelled to act
liberally and confer upon its employees additional benefits over and above
those mandated by law when it cannot afford to do so. It posits that so long as
the giving of bonuses will result in the financial ruin of an already
distressed company, the employer cannot be forced to grant the same.
ETPI further avers that the
act of giving the subject bonuses did not ripen into a company practice arguing
that it has always been a contingent one dependent on the realization of
profits and, hence, the workers are not entitled to bonuses if the company does
not make profits for a given year. It asseverates that the 1998 and 2001 CBA
Side Agreements did not contractually afford ETEU a vested property right to a
perennial payment of the bonuses. It opines that the bonus provision in the
Side Agreement allows the giving of benefits only at the time of its execution.
For this reason, it cannot be said that the grant has ripened into a company
practice. In addition, it argues that even if such traditional company practice
exists, the CA should have applied Article 1267 of the Civil Code which
releases the obligor from the performance of an obligation when it has become
so difficult to fulfill the same.
It is the petitioners stance that
the CA should have dismissed outright the respondent unions petition for
certiorari alleging that no question of jurisdiction whatsoever was raised
therein but, instead, what was being sought was a judicial re-evaluation of the
adequacy or inadequacy of the evidence on record. It claims that the CA erred
in disregarding the findings of the NLRC which were based on substantial and
overwhelming evidence as well as on undisputed facts. ETPI added that the CA
court should have refrained from tackling issues of fact and, instead, limited
itself on issues of jurisdiction and grave abuse of jurisdiction amounting to
lack or excess of it.
The Courts Ruling
As a general rule, in petitions for
review under Rule 45, the Court, not being a trier of facts, does not normally
embark on a re-examination of the evidence presented by the contending parties
during the trial of the case considering that the findings of facts of the CA
are conclusive and binding on the Court. The rule, however, admits of several
exceptions, one of which is when the findings of the appellate court are
contrary to those of the trial court or the lower administrative body, as the
case may be.[11] Considering
the incongruent factual conclusions of the CA and the NLRC, this Court finds Itself
obliged to resolve it.
The pivotal question determinative of
this controversy is whether the members of ETEU are entitled to the payment of 14th, 15th
and 16th month bonuses for the year 2003 and 14th month
bonus for year 2004.
After an assiduous assessment of the record, the
Court finds no merit in the petition.
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.[12] 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 employees basic salaries or
wages.[13]
A bonus, however, becomes a
demandable or enforceable obligation when it is made part of the wage or salary
or compensation of the employee.[14]
Particularly instructive is the ruling of the Court in Metro Transit
Organization, Inc. v. National Labor Relations Commission,[15]
where it was written:
Whether or not a bonus forms part of wages depends
upon the circumstances and conditions for its payment. 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. But if it is paid only if
profits are realized or if a certain level of productivity is achieved, it
cannot be considered part of the wage. Where it is not payable to all but only
to some employees and only when their labor becomes more efficient or more
productive, it is only an inducement for efficiency, a prize therefore, not a
part of the wage.
The consequential question
that needs to be settled, therefore, is whether the subject bonuses are
demandable or not. Stated differently, can these bonuses be considered part of
the wage, salary or compensation making them enforceable obligations?
The Court believes so.
In the case at bench, it is
indubitable that ETPI and ETEU agreed on the inclusion of a provision for the
grant of 14th, 15th and 16th month bonuses in
the 1998-2001 CBA Side Agreement,[16] as
well as in the 2001-2004 CBA Side Agreement,[17] which
was signed on
Employment-Related Bonuses
The Company confirms that the 14th,
15th and 16th month bonuses (other than the 13th
month pay) are granted.
A reading of the above provision
reveals that the same provides for the giving of 14th, 15th and 16th
month bonuses without
qualification. The wording of the provision does not allow any other
interpretation. There were no conditions specified in the CBA Side Agreements
for the grant of the benefits contrary to the claim of ETPI that the same is
justified only when there are profits earned by the company. Terse and clear,
the said provision does not state that the subject bonuses shall be made to
depend on the ETPIs financial standing or that their payment was contingent
upon the realization of profits. Neither does it state that if the company
derives no profits, no bonuses are to be given to the employees. In fine, the
payment of these bonuses was not related to the profitability of business
operations.
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. Indeed, if ETPI and
ETEU intended that the subject bonuses would be dependent on the company
earnings, such intention should have been expressly declared in the Side
Agreements or the bonus provision should have been deleted altogether. In the
absence of any proof that ETPIs consent was vitiated by fraud, mistake or
duress, it is presumed that it entered into the Side Agreements voluntarily,
that it had full knowledge of the contents thereof and that it was aware of its
commitment under the contract. Verily, by virtue of its incorporation in the
CBA Side Agreements, the grant of 14th, 15th and 16th
month bonuses has become more than just an act of generosity on the part of
ETPI but a contractual obligation it has undertaken. Moreover, the continuous conferment
of bonuses by ETPI to the union members from 1998 to 2002 by virtue of the Side
Agreements evidently negates its argument that the giving of the subject
bonuses is a management prerogative.
From the foregoing, ETPI cannot
insist on business losses as a basis for disregarding its undertaking. It is
manifestly clear that although it incurred business losses of ₱149,068,063.00
in the year 2000, it continued to distribute 14th, 15th and 16th
month bonuses for said year. Notwithstanding such huge losses, ETPI entered into the 2001-2004 CBA Side
Agreement on
The Court finds no merit in
ETPIs contention that the bonus provision confirms the grant of the subject
bonuses only on a single instance because if this is so, the parties should
have included such limitation in the agreement. 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 Court quotes with approval the observation
of the CA in this regard:
ETPI argues that assuming the bonus provision in
the Side Agreement of the 2001-2004 CBA entitles the union members to the
subject bonuses, it is merely in the nature of a one-time grant and not
intended to cover the entire term of the CBA. The contention is untenable. The
bonus provision in question is exactly the same as that contained in the Side
Agreement of the 1998-2001 CBA and there is no denying that from 1998 to 2001,
ETPI granted the subject bonuses for each of those years. Thus, ETPI may not
now claim that the bonus provision in the Side Agreement of the 2001-2004 CBA
is only a one-time grant.[18]
ETPI then argues that even if
it is contractually bound to distribute the subject bonuses to ETEU members
under the Side Agreements, its current financial difficulties should have
released it from the obligatory force of said contract invoking Article 1267 of
the Civil Code. Said provision declares:
Article 1267. When the service has become so
difficult as to be manifestly beyond the contemplation of the parties, the
obligor may also be released therefrom, in whole or in part.
The Court is not persuaded.
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.[19] In
the case at bench, the Court determines that ETPIs claimed depressed financial
state will not release it from the binding effect of the 2001-2004 CBA Side
Agreement.
ETPI appears to be well
aware of its deteriorating financial condition when it entered into the 2001-2004
CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members
of ETEU. 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. Consequently, it cannot be said that the difficulty in complying
with its obligation under the Side Agreement was manifestly beyond the
contemplation of the parties. Besides,
as held in Central Bank of the Philippines v. Court of Appeals,[20]
mere pecuniary inability to fulfill an engagement does not discharge a
contractual obligation. Contracts, once perfected, are binding between the
contracting parties. Obligations arising therefrom have the force of law and
should be complied with in good faith. ETPI cannot renege from the obligation
it has freely assumed when it signed the 2001-2004 CBA Side Agreement.
Granting arguendo that the CBA Side Agreement does
not contractually bind petitioner ETPI to give the subject bonuses,
nevertheless, the Court finds that its act of granting the same has become an
established company practice such that it has virtually become part of the
employees salary or wage. A bonus may be granted on equitable consideration when the giving of such
bonus has been the companys long and regular practice. In Philippine
Appliance Corporation v. Court of Appeals,[21]
it was pronounced:
To be considered a regular
practice, however, the giving of the bonus should have been
done over a long period of time, and must be shown to have been consistent and
deliberate. The test or rationale of this rule on long
practice requires an indubitable showing that the employer agreed to continue
giving the benefits knowing fully well that said employees are not covered by
the law requiring payment thereof.
The records show that ETPI, aside
from complying with the regular 13th month bonus, has been further giving its
employees 14th month
bonus every April as well as 15th and 16th month bonuses
every December of the
year, without fail, from 1975 to 2002 or for 27 years whether it earned profits
or not. The considerable length of time ETPI has been giving the special
grants to its employees indicates a unilateral and voluntary act on its part to
continue giving said benefits knowing that such act was not required by law. Accordingly, a company
practice in favor of the employees has been established and the payments made
by ETPI pursuant thereto ripened into benefits enjoyed by the employees.
The giving of the subject
bonuses cannot be peremptorily withdrawn by ETPI without violating Article 100
of the Labor Code:
Art. 100. Prohibition against elimination or
diminution of 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.
The rule is settled that any benefit
and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of
benefits is founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full protection.[22]
Interestingly, ETPI never presented
countervailing evidence to refute ETEUs claim that the company has been
continuously paying bonuses since 1975 up to 2002 regardless of its financial
state. Its failure to controvert the allegation, when it had the opportunity
and resources to do so, works in favor of ETEU. Time and again, it has been held
that should doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter.[23]
WHEREFORE, the petition is DENIED.
The
SO ORDERED.
JOSE CATRAL
Associate Justice
WE CONCUR:
PRESBITERO
J. VELASCO, JR.
Associate Justice
Chairperson
LUCAS P.
BERSAMIN ROBERTO
A. ABAD
Associate Justice Associate Justice
ESTELA M.
PERLAS-BERNABE
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
PRESBITERO
J. VELASCO, JR.
Associate Justice
Chairperson,
Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairpersons Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
RENATO
C. CORONA
Chief Justice
*
Designated as additional member in lieu of Associate Justice Diosdado M.
Peralta, per Raffle dated
[1] Rollo, pp. 59-71. Penned by Associate Justice Edgardo P. Cruz with Associate Justices Fernanda Lampas Peralta and Ricardo R. Rosario, concurring.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11] New City Builders, Inc. v. National Labor Relations Commission, 499 Phil. 207, 212-213 (2005).
[12] Philippine National Construction Corp. v. National Labor Relations Commission, 345 Phil. 324, 331 (1997).
[13] Traders
Royal Bank v. National Labor Relations Commission, G.R. No. 88168,
[14] Philippine National Construction Corp. v. National Labor Relations Commission, 366 Phil. 678 (1999); Philippine Duplicators, Inc. v. National Labor Relations Commission, 311 Phil. 407, 419 (1995).
[15]
315 Phil. 860, 871 (1995).
[16] Rollo, pp. 560-564.
[17]
[18]
[19] So
v. Food Fest Land, Inc., G.R. No. 183628,
[20] 223
Phil. 266, 274 (1985).
[21] G.R.
No. 149434,
[22] Arco Metal Products Co., Inc. v. Samahan Ng Mga Manggagawa Sa Arco Metal-NAFLU, G.R. No. 170734, May 14, 2008, 554 SCRA 110, 118.
[23] Gu-miro v. Adorable, G.R. No. 160952,480 Phil. 597, 605 (2004).