Binding and obligatory

Usually during Christmas time, employers gratuitously and voluntarily give bonuses to their employees as gestures of gratitude and as a way of enabling them to celebrate a merrier and happier holidays. In fact this practice is typical among Filipinos who are imbued with the Christmas spirit for quite a long period and who thus celebrate Christmas very much earlier. However, since this is usually a gratuitous gesture, can the employer just stop giving them especially because business is not doing well? Or can the employer stop giving it even if such bonus has been agreed upon in a collective bargaining agreement (CBA)? These are answered in this case.

This case involves a corporation (LCI) existing and operating by virtue of Philippine laws primarily to manufacture, buy and sell, on wholesale basis, tiles, marbles, mosaic and other similar products. One December, it gave P3,000 bonus to its employees who are members of the company’s employees association (LCEA).

The following year, a few months before Christmas, LCI and LCEA entered into a collective bargaining agreement granting Christmas gift package/bonus to the employees who are members of the LCEA which is among the existing benefit, practice and traditional rights being enjoyed by the employees. The agreement shall be effective for four years and binding on every member and present and future officers of LCEA. For the next three years, the bonus was not in cash but in products worth P3,000. Then on the fourth year, LCI gave only P600 benefit and offered the employees cash advance equivalent to one month salary payable in one year.

LCEA objected and argued that this was in violation of the CBA so it filed a notice of strike with the National Conciliation Mediation Board (NCMB). When conciliation failed, the case was referred to an Arbitrator for resolution. LCEA insisted that it has been the traditional practice of LCI to grant its members Christmas bonuses every year in the amount of P3,000 as an expression of gratitude for the company’s continued existence in the market. But LCI said that for the year in question, bonus would not be given as the company’s earnings will be used to pay its bank loans. It claimed that said bonus has no basis and is not a demandable and enforceable obligation based only on the company’s available resources for a given year. The company also emphasized that even if the CBA contained an unconditional obligation to grant said bonus, the present difficult economic times had already legally released it from said obligation.

The arbitrator however declared that LCI is bound to grant each of the workers the Christmas bonus of P3,000 because it was given prior to the effectivity of the CBA and that the financial losses of the company is not a sufficient reason to exempt it from granting the same because the CBA is a binding contract which is the law between the parties. So it ordered LCI to pay the bonus of P3,000 minus the P600 it has already paid.

This ruling was affirmed in toto by the Court of Appeals (CA) and subsequently by the Supreme Court (SC). The SC ruled that the findings of labor officials who are deemed to acquire expertise on the matter, are generally accorded not only respect but even finality when supported by substantial evidence. Given that the bonus here is integrated in the CBA it is a demandable obligation because it has become more than just an act of generosity but a contractual obligation. It is clear in the CBA that the giving of the Christmas bonus is without qualification. LCI cannot thus insist on business losses as a basis for disregarding the CBA especially it is very much aware of the imminence and possibility of business losses since there was already a financial crisis when it first granted said bonus and when it entered into a CBA. What it can do is to just serve a written notice to LCEA to terminate or modify the ABA at least prior to its expiration date. (Lepanto Ceramics Inc. vs. Lepanto Ceramics Employees Association, G.R. 180866 March 2, 2010).

* * *

Email: [email protected]