STATES MARINE CORP V CEBU SEAMEN'S ASSOC 7 SCRA 294 PAREDES; February 28, 1963 NATURE Writ for

certiorari FACTS - States Marine Corporation and Royal Line, Inc. (SMC) were engaged in the business of marine coastwise transportation, employing steamships of Philippine registry. They had a collective bargaining contract with Cebu Seamen's Association, Inc. (CSA) - On September 12, 1952, the SMC filed with the CIR, a petition against SMC. The Union alleged that the officers and men working on board the petitioners' vessels have not been paid their sick leave, vacation leave and overtime pay; that CSA threatened or coerced them to accept a reduction of salaries, observed by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their employees on board their vessels, to pay the sum of P.40 for every meal, while the masters and officers were not required to pay their meals. - CSA answered by saying that they have suffered financial losses in the operation of their vessels and that there is no law which provides for the payment of sick leave or vacation leave to employees or workers of private firms; that as regards the claim for overtime pay, the petitioners have always observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law), notwithstanding the fact that it does not apply to those who provide means of transportation. - A decision was rendered in favor of the union. In its decision, it also held that Pepito Severino, one of its boatsmen, rendered overtime work and was not paid. The motion for reconsideration, having been denied, the companies filed the present writ of certiorari, to resolve legal question involved. ISSUES WON the CIR erred in holding that Severino Pepito, a boatsman, had rendered overtime work notwithstanding the provisions of section 1, of C.A. No. 444 HELD NO - The provisions of sec. 1, of Comm. Act No. 444, states that "When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted." Severino Pepito categorically stated that he worked during the late hours of the evening and during the early hours of the day when the boat docks and unloads. Aside from the above, he did other jobs such as removing rusts and cleaning the vessel, which overtime work totalled to 6 hours a day, and of which he has not been paid as yet. Sec. 1, of Comm. Act No. 444 find no application in his case. Disposition petition is dismissed, with costs against the petitioners. We hold that such deductions are not authorized. In the coastwise business of transportation of passengers and freight, the men who compose the complement of a vessel are provided with free meals by the shipowners, operators or agents, because they hold on to their work and duties, regardless of "the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk ahead in the midst of the high seas." If there are no supplements given, within the meaning and contemplation of section 19, but merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as they should be harmonized. And even if there is such a conflict, the respondent CIR should resolve the same in favor of the safety and decent living laborers (Art. 1702, new Civil Code).. The benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage, is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose. Considering, therefore, as definitely found by the

respondent court that the meals were freely given to crew members prior to August 4, 1951, while they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage", the deductions therein made for the meals given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected should continue giving the same benefit.. It has been found and held that the meals or food in question are not facilities but supplements. The petition is dismissed

PLASTIC TOWN CENTER CORPORATION V NLRC (NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN) 172 SCRA 380 NATURE Petition for review of the decision of the NLRC FACTS - There are 2 provisions of the CBA in question in this case. 1) P1 increase in salary is granted every July 1. Also, section 3 provides: It is agreed and understood by the parties herein that the aforementioned increase in pay shall be credited against future allowances or wage orders hereinafter implemented or enforced by virtue of Letters of Instructions, Decrees and other labor legislation. - Wage order number 4, effective on May 1 1984, provided for the integration of the emergency cost of living allowances (ECOLA). It also provided that the minimum daily wage rate be P32. Petitioner Plastic Town incurred a deficiency of P1 after integrating the ECOLA. They then advanced the implementation of the wage increase as provided for by the CBA. The petitioner argues that it did not credit the Pl.00 per day across the board increase under the CBA as compliance with Wage Order No. 5 implemented on June 16,1984 since it gave an additional P3.00 per day to the basic salary pursuant to said order. It, however, credited the Pl.00 a day increase to the requirement under Wage Order No. 4 to which the private respondents allegedly did not object. 2) gratuity pay to resigning employees - Gratuity pay is based on the monthly salary. Petitioner argues that the computation of the monthly salary should be the equivalent of 26 days of salary, not 30 days as the respondents aver. ISSUES 1. WON the petitioners can credit the P1 increase in the CBA as compliance with wage order number 4 2. WON the monthly salary is equivalent to 26 days HELD 1. NO. - In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 increase pursuant to Wage Order No. 4 which in consonance with Section 3 of the CBA was to be credited to the July 1, 1984

increase under the CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that CBA granted increases shall be credited against future allowances or wage orders. Thus, the CBA increase to be effected on July 1, 1984 can not be retroactively applied to mean compliance with Wage Order No. 4 which took effect on May 1, 1984. 2. NO. It should be 30 days - To say that awarding the daily wage earner salary for more than 26 days is paying him for days he does not work misses the point entirely. The issue here is not payment for days worked but payment of gratuity pay equivalent to one month or 30 days salary - From the foregoing, gratuity pay is therefore, not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is "to reward employees or laborers, who have rendered satisfactory and efficient service to the company." (Sec. 2, CBA) While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law unlike the salary, cost of living allowances, holiday pay, leave benefits, etc., which are covered by the Labor Code. Nowhere has it ever been stated that gratuity pay should be based on the actual number of days worked over the period of years forming its basis. We see no point in counting the number of days worked over a ten-year period to determine the meaning of "two and one- half months' gratuity." Moreover any doubts or ambiguity in the contract between management and the union members should be resolved in the light of Article 1702 of the Civil Code that: - In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer Disposition Decision affirmed

ISAE vs. Quisumbing Facts: Private Respondent (International School Manila) pursuant to PD 732 is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. The school is authorized to employ its own teaching and management personnel selected by it either locally or abroad. The teachers are qualified in two: foreign hires and local hires. The school employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: What is ones domicile? Where is one;s home economy? To which country does one owe allegiance? Was the individual hired abroad to work in the school and was the school responsible for bringing that individual to the Philippines. Should the answers point to the Philippines, then the faculty is classified as a local hire. Otherwise, his a foreign hire. The foreign hires enjoy certain benefits not accorded to local hires such as: housing, transportation, shipping costs, taxes and home leave travel allowance. They are also paid a salary rate of 25% more than local hires. The school justifies such benefits because of dislocation factor and limited tenure. When negotiations for a new collective bargaining agreement were held, the petitioner, a legitimate labor union and the collective bargaining representative of all faculty members of the school contested the difference in salary rates between foreign hires and local hires. This issues as well as the question of including the foreign hires in the bargaining unit caused a deadlock between the parties.

The petitioner filed a notice of strike. The DOLE assumed jurisdiction over the dispute for failure of the NCMB (National Conciliation and Mediation Board) to bring the parties to a compromise. The DOLE acting secretary Trajano issued an order resolving the parity representation issues in favor of the School. Then DOLE Secretary Quisumbing denied petitioners motion for reconsideration. Petitioner seeks a relief in SC. The petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. The acting secretary upheld the said classification and the principle of equal pay for equal work is not applicable in this case. This is because, the existence of a system of salaries and benefits accorded to foreign hired personnel is universally recognized. Also foreign hires have limited contract as compared to local hires who enjoy security of tenure. Also, it was stipulated in the 1992-1995 CBA that both parties recognize the difference in the status of 2 types of employess, hence the difference in their salaries ( that the superintendent of the school has the discretion to recruit and hire expatriate teachers and that the 25% differential is reflective of the agreed value of system displacement). The union cannot invole the equal protection clause to justify its claim of parity because the said distinction is based on a reasonable classification, a substantial distinction between foreing hires and local hires, the former has a limited tenure, having no amenities to the Philippines and must be given a good salary packager in order for them to attract teaching here. Issue: W/n the school violated the equal work for equal pay principle, that the foreign hires receive 25% more in the salary rate than the local hires? Ruling: Yes. 1. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. If an employee receives less than the other employees, it is the burden of the employer to explain why is such the case. In the case at bar, there is no evidence that the foreign-hires perform 25% more efficiently than the local hires. Both groups have similar functions which they perform under similar conditions. 2. The school cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinctions in salary without violating the principle of equal work for equal pay. The local hires perform the same services as the foreign hires and they ought to be paid the same salaries as the latter. For the same reason, the dislocation factor the foreign hires limited tenure cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure are well compensated in terms of housing, transporatation, shipping costs, taxes and home leave travel allowances. 3. The point-of-hire classification is invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local hires. The practice of paying foreing hires higher salaries is contrary to public policy. 4. The court agree however that foreign hires do not belong to the same bargaining unit as the local hires. A bargaining unit is defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equality to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. Factors in determining the appropriate collective bargaining unit 1. will of the employees 2. affinity of the employees interest such as substantial similarity of work and duties 3. prior collective bargaining history 4. similarity of employment status. The basic test is whether or not is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights. In the case, it does not appear that foreign hires intend to be grouped together with local-hires for purposes of collective bargaining.

Petition is granted in part. The orders of the Secretary of Labor and Employment are reversed and set aside insofar as they uphold the practice of respondent school of according foreign-hires higher salaries than local-hires.

Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco-Metal-NAFLU Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code. Ruling: Any benefit and supplement being enjoyed by 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 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. Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employers act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head. Hence, petition was denied.

PAG-ASA STEEL WORKS, INC., Petitioner, vs. COURT OF APPEALS, FORMER SIXTH DIVISION and PAG-ASA STEEL WORKERS UNION (PSWU), FACTS: Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees of petitioner. On January 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of the National Capital Region (NCR) issued Wage Order No. NCR-06. It provided for an increase of P13.00 per day in the salaries of employees receiving the minimum wage, and a consequent increase in the minimum wage rate to P198.00 per day. Petitioner and the Union negotiated on how to go about the wage adjustments. Petitioner forwarded a letter dated March 10, 1998 to the Union with the list of the salary adjustments of the rank-and-file employees after the implementation of Wage Order No. NCR-06, and the notation that said "adjustments [were] in accordance with the formula [they] have discussed and [were] designed so as no distortion shall result from the implementation of Wage Order No. NCR-06." On September 23, 1999, petitioner and the Union entered into a Collective Bargaining Agreement (CBA), effective July 1, 1999 until July 1, 2004 to grant all workers the increase however if no wage increase given by the Wage Board within six (6) month the management is willing to give increase. On October 14, 1999, Wage Order No. NCR-07 was issued, and on October 26, 1999, its Implementing Rules and Regulations. It provided for a P25.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file employees. On July 1, 2000, the rank-and-file employees were granted the second year increase provided in the CBA in the amount of P25.00 per day. On November 1, 2000, Wage Order No. NCR-08 took effect. Thereby setting the minimum wage rate at (P250.00) per day. On July 1, 2000, the rank-and-file employees were granted the second year increase provided in the CBA in the amount of P25.00 per day. Then Union president Lucenio Brin requested petitioner to implement the increase under Wage Order No. NCR-08 in favor of the companys rank -andfile employees. Petitioner rejected the request, the Union elevated the matter to the National Conciliation and Mediation Board. When the parties failed to settle, they agreed to refer the case to voluntary arbitration. On June 6, 2001, the VA rendered judgment in favor of the company and ordered the case dismissed. The Union filed a petition for review with the CA, they diverted the issue whether or not the increase of (P26.50 ) must be paid in the union members as a matter of practice and parol evidence can be resorted to in proving or explaining the existence of a collateral agreement despite that the employees are receiving wage above the minimum wage and whether wage distortion exist.. On September 23, 2004, the CA rendered judgment in favor of the Union and reversed that of the VA. Petitioner filed a motion for reconsideration which the CA denied for lack of merit on January 11, 2005. ISSUE: Whether or not the company was obliged to grant the wage increase under Wage Order No. NCR-08 as a matter of practice? Ruling: The Court favors the petitioner that wage increase shall not be granted by virtue of CBA or matter of practice by the company. It is submitted that employers unless exempt are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. The provision of wage

order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the workers. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in support of an across-the-board increase. If such were the intentions of this provision, then the company could have simply accepted the original demand of the union for such across-the-board implementation, as set forth in their original proposal. The fact that the company rejected this proposal can only mean that it was never its intention to agree, to such across-the-board implementation. Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein, and not all employees across-the-board as respondent Union would want petitioner to do. Considering therefore that none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company practice.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents. Facts: Petitioner National Sugar Refineries Corporation, a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work. Two years after the implementation of the JE Program, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. Executive Labor Arbiter decided in favour of labor.

Respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation Issue: Whether supervisory employees, should be considered as officers or members of the managerial staff, and hence are not entitled to overtime rest day and holiday pay. Held: Yes Ratio: "Art. 82 Coverage. The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations. "As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis supplied.) It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day. Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom. As correctly pointed benefits which attach their promotions and matter of law and out by petitioner, if the union members really wanted to continue receiving the to their former positions, there was nothing to prevent them from refusing to accept their corresponding benefits. As the saying goes by, they could not, as a simple fairness, get the best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive.

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION V AMERICAN WIRE AND CABLE CO., INC. FACTS - American Wire and Cable Co., is a corporation engaged in the manufacture of wires and cables. On Feb.16, 2001, an original action was filed before the NCMB of the DOLE by the two unions (American Wire and Cable Daily Rated Employees and American Wire and Cable Monthly Rated Employees) for voluntary arbitration. They alleged that respondent company, without valid cause, suddenly and unilaterally withdrew and denied certain benefits which they have long enjoyed. These are: a) Service Award b) 35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29 c) Christmas party d) Promotional increase. - A promotional increase was sought by 15 of its members who were given new job classifications. These new hob classifications according to the union are in the form of a promotion. Increase was not given. Petitioners contention - withdrawal of the 35% premium pay for selected days during Holy Week and Christmas season, the holding of a Christmas party, and its incidental benefits, and the giving of service awards was a customary practice that can no longer be unilaterally withdrawn by respondent without consent of the petitioner. The benefits in question were given by respondent consistently, deliberately and unconditionally since time immemorial. The benefits given by the respondent cannot be considered as a bonus as they are not founded on profit. Even assuming that it can be treated as a bonus, the grant of the same, by reason of its ling and regular concession, may be regarded as part of regular compensation. Respondents contention -The grant of all subject benefits has not ripened into practice that the employees concerned can claim a demandable right over them. The grant of these benefits was conditional based upon the financial conditions that existed before have indeed substantially changed thereby justifying the discontinuance of said grants. ISSUE: WON respondent is guilty of violating article 100 of the Labor Code, when the benefits/entitlements given to the members of petitioner union were withdrawn HELD: *preliminary issue raised by respondent was the error in the mode of appeal by the petitioners. Respondent contends that petitioner should have raised a petition for review on certiorari under Rule 45, and not through a special civil action for certiorari under Rule 65 of the Rules on Civil Procedure. Thus, case should be dismissed outright. NO - Court ruled that the SC may brush aside the procedural barrier and take cognizance of the petition as it raises an issue of paramount importance.

- 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. - a determination must first be made on whether the benefits are in the nature of a bonus or no, and assuming they are so, whether they are demandable and enforceable obligations. - Definition of bonus (Producers Bank of the Philippines v. NLRC) a bonus is an amount granted and paid to an employee for his industry and loyalty it is an act of generosity granted by an enlightened employer to spur the employee to greater efforts the granting of a bonus is a management prerogative thus a bonus is n ot a demandable and enforceable obligation except when it is made part of the wage, salary or compensation of the employee. - Court ruled that the benefits /entitlements subjects of the instant case are all bonuses given by respondent out of its generosity and munificence. Benefits/entitlements are all in excess of what the law requires each employer to give its employees. Since they are above what is strictly due, the granting of the same was a management prerogative, which, whenever management sees necessary, may be withdrawn. - the consequential question therefore that needs to be settled is if the subject benefits, which are bonuses, are demandable or not. - the Court does not believe so. For a bonus to be enforceable, it has to be promised by the employer and expressly agreed upon by the parties or it must have a fixed amount and had been a long and regular practice on the part of the employer. To be considered regular practice 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 benefits in question were never part of any express agreement. They were never even incorporated in the Collective Bargaining Agreement. The Christmas party and its incidental benefits and the giving of cash incentive together with the service award cannot be said to have fixed amounts. There was a downtrend in the amount given for service awards. There was also a downtrend with respect to the holding of Christmas parties as the locations were changed from paid venues to free ones. -The additional 35% premium pay for work during Holy Week and Christmas season cannot be held to have ripened into a company practice that the petitioners have a right to demand. This practice was only granted for two years and with the express reservation from respondent corpora tions owner that it cannot continue the same in view of the companys current financial condition.

LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE ASSURANCE CO., LTD., respondents. Facts: Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but they were dismissed when their positions were declared redundant. A special redundancy benefit was paid to them, which included payment of accrued vacation leave and fifty percent (50%) of unused current sick leave,

special redundancy benefit, equivalent to three (3) months salary for every year of service; and additional 3 cash benefits, in lieu of other benefits provided by the company or required by law. Before the termination of their services, petitioner Marcos had been in the employ of private respondent for more than twenty (20) years; petitioner Andrada, more than twenty-five (25) years; petitioner Lopez, exactly thirty (30) years; and petitioner Cruz, more than twenty (20) years. Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to respondent company questioning the redundancy package, She claimed that they should receive their respective service awards and other prorated bonuses which they had earned at the time they were dismissed. In addition, Lopez argued that "the cash service awards have already been budgeted in a fund distinct and apart from 5 redundancy fund. Thereafter, private respondent required petitioners to execute a "Release and Quitclaim," and petitioners complied but with a written protest reiterating their previous demand that they were nonetheless entitled to receive their service awards. Meanwhile, in the same year, private respondent celebrated its 80th anniversary wherein the management approved the grant of an anniversary bonus equivalent to one (1) month salary only to 9 permanent and probationary employees as of November 15, 1990. On March 26, 1991, respondent company announced the grant of performance bonus to both rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2) months salary and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus, however, would 10 be given only to permanent employees as of March 30, 1991. In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay petitioners their service awards, anniversary bonuses and prorated performance bonuses, including ten percent (10%) thereof as attorney's fees. ISSUE: WON respondent NLRC committed reversible error or grave abuse of discretion in affirming the validity of the "Release and Quitclaim" and, consequently, that petitioners are not entitled to payment of service awards and other bonuses HELD: YES Ratio On Release and Quitclaim - The fact that an employee has signed a satisfaction receipt for his claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. Renuntiatio non praesumitur. While there may be possible exceptions to this holding, we do not perceive any in the case at bar. Reasoning a. The element of total voluntariness in executing that instrument is negated by the fact that they expressly stated therein their claim for the service awards, a manifestation equivalent to a protest and a disavowal of any waiver thereof. b. Petitioners even sought the opinion of the Department of Labor and Employment to determine where and how they stood in the controversy. This act only shows their adamant desire to obtain their service
6

awards and to underscore their disagreement with the "Release and Quitclaim" they were virtually forced to sign in order to receive their separation pay. c. While rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. - Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This runs counter to Art. 22 of the Civil Code which provides that no one shall be unjustly enriched at the expense of another. Ratio On Service Awards and other Bonuses - The petitioners are entitled to receive service awards and other bonuses. The contention of the respondent that service award is a bonus and therefore is an act of gratuity which the complainants have no right to demand and service awards are governed by respondent's employee's manual and (are) therefore contractual in nature is not impressive. Reasoning a. Anniversary and performance bonuses have ripened into a company practice therefore become demandable. It is not disputed that it is respondent's practice to give an anniversary bonus every five years from its incorporation. The prerogative of the employer to determine who among its employees shall be entitled to receive bonuses which are, as a matter of practice, given periodically cannot be exercised arbitrarily. b. Pursuant to their policies on the matter, the service award differential is given at the end of the year to an employee who has completed years of service divisible by 5. c. A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what would ordinarily be given. The term "bonus" as used in employment contracts, also conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage which the employer agrees to pay. - If one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity. Disposition The assailed decision and resolution of respondent National Labor Relations Commissions are hereby SET ASIDE and the decision of Labor Arbiter Alex Arcadio Lopez is REINSTATED.