10/2/2016 AmericanWire&CableDailyRatedEmployeesUnionvsAmericanWire&CableCoInc:155059:April29,2005:J.

ChicoNazario:SecondDivision

SECONDDIVISION

[G.R.No.155059.April29,2005]

AMERICANWIREANDCABLEDAILYRATEDEMPLOYEESUNION,petitioner,vs.
AMERICAN WIRE AND CABLE CO., INC. and THE COURT OF APPEALS,
respondents.
DECISION
CHICONAZARIO,J.:
[1]

Before Us is a special civil action for certiorari, assailing the Decision of the Special Eighth
[2]
Division of the Court of Appeals dated 06 March 2002. Said Decision upheld the Decision and
[3]
Order of Voluntary Arbitrator Angel A. Ancheta of the National Conciliation and Mediation Board
(NCMB)dated25September2001and05November2001,respectively,whichdeclaredtheprivate
respondenthereinnotguiltyofviolatingArticle100oftheLaborCode,asamended.Assailedlikewise,
[4]
is the Resolution of the Court of Appeals dated 12 July 2002, which denied the motion for
reconsiderationofthepetitioner,forlackofmerit.
THEFACTS
Thefactsofthiscasearequitesimpleandnotindispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable MonthlyRated
EmployeesUnion(MonthlyRatedUnion)andtheAmericanWireandCableDailyRatedEmployees
Union(DailyRatedUnion).
On16February2001,anoriginalactionwasfiledbeforetheNCMBoftheDepartmentofLabor
and Employment (DOLE) by the two unions for voluntary arbitration. They alleged that the private
respondent,withoutvalidcause,suddenlyandunilaterallywithdrewanddeniedcertainbenefitsand
entitlementswhichtheyhavelongenjoyed.Thesearethefollowing:
a.ServiceAward
b.35%premiumpayofanemployeesbasicpayfortheworkrenderedduringHolyMonday,Holy
Tuesday,HolyWednesday,December23,26,27,28and29
c.ChristmasPartyand
d.PromotionalIncrease.
Apromotionalincreasewasaskedbythepetitionerforfifteen(15)ofitsmemberswhoweregiven
or assigned new job classifications.According to petitioner, the new job classifications were in the
natureofapromotion,necessitatingthegrantofanincreaseinthesalariesofthesaid15members.

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On 21 June 2001, a Submission Agreement was filed by the parties before the Office for
VoluntaryArbitration.AssignedasVoluntaryArbitratorwasAngelA.Ancheta.
On04July2001,thepartiessimultaneouslyfiledtheirrespectivepositionpaperswiththeOfficeof
theVoluntaryArbitrator,NCMB,andDOLE.
[5]

On25September 2001, a Decision was rendered by Voluntary Arbitrator Angel A. Ancheta in

favoroftheprivaterespondent.ThedispositiveportionofthesaidDecisionisquotedhereunder:
WHEREFORE,withalltheforegoingconsiderations,itisherebydeclaredthattheCompanyisnotguiltyof
violatingArticle100oftheLaborCode,asamended,orspecificallyforwithdrawingtheserviceaward,
Christmaspartyand35%premiumforworkrenderedduringHolyWeekandChristmasseasonandfornot
grantinganypromotionalincreasetotheallegedfifteen(15)DailyRatedUnionMembersintheabsenceofa
promotion.TheCompanyhowever,isdirectedtogranttheserviceawardtodeservingemployeesinamounts
[6]
andextentatitsdiscretion,inconsultationwiththeUnionsongroundsofequityandfairness.
[7]

A motion for reconsideration was filed by both unions where they alleged that the Voluntary
ArbitratormanifestlyerredinfindingthatthecompanydidnotviolateArticle100oftheLaborCode,as
amended,whenitunilaterallywithdrewthesubjectbenefits,andwhennopromotionalincreasewas
grantedtotheaffectedemployees.
[8]

On05November2001,anOrder wasissuedbyVoluntaryArbitratorAngelA.Ancheta.Partof
theOrderisquotedhereunder:
Consideringthattheissuesraisedintheinstantcaseweremeticulouslyevaluatedandlength[i]lydiscussedand
explainedbasedonthepleadingsanddocumentaryevidenc[e]adducedbythecontendingparties,wefindno
cogentreasontochange,modify,ordisturbsaiddecision.
WHEREFORE,lettheinstantMOTION[S]FORRECONSIDERATIONbe,astheyarehereby,deniedforlack
[9]
ofmerit.Ourdecisiondated25September2001isaffirmedentoto.
An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the DailyRated
[10]
UnionbeforetheCourtofAppeals anddocketedasCAG.R.SPNo.68182.Thepetitioneraverred
thatVoluntaryArbitratorAngelA.AnchetaerredinfindingthatthecompanydidnotviolateArticle100
oftheLaborCode,asamended,whenthesubjectbenefitswereunilaterallywithdrawn.Further,they
assert,theVoluntaryArbitratorerredinadoptingthecompanysunauditedRevenuesandProfitability
[11]

Analysisfortheyears19962000injustifyingthelatterswithdrawalofthequestionedbenefits.

On 06 March 2002, a Decision in favor of herein respondent company was promulgated by the
SpecialEighthDivisionoftheCourtofAppealsinCAG.R.SPNo.68182.Thedecretalportionofthe
decisionreads:
WHEREFORE,premisesconsidered,thepresentpetitionisherebyDENIEDDUECOURSEandaccordingly
DISMISSED,forlackofmerit.TheDecisionofVoluntaryArbitratorAngelA.AnchetadatedSeptember25,
2001andhisOrderdatedNovember5,2001inVACaseNo.AAA10642001areherebyAFFIRMEDand
[12]
UPHELD.
[13]

A motion for reconsideration was filed by the petitioner, contending that the Court of Appeals
misappreciated the facts of the case, and that it committed serious error when it ruled that the
unauditedfinancialstatementbearsnoimportanceintheinstantcase.
[14]

TheCourtofAppealsdeniedthemotioninitsResolutiondated12July2002 becauseitdidnot
present any new matter which had not been considered in arriving at the decision. The dispositive
portionoftheResolutionstates:
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[15]

WHEREFORE,themotionforreconsiderationisherebyDENIEDforlackofmerit.

Dissatisfied with the court a quos ruling, petitioner instituted the instant special civil action for
[16]
certiorari, citinggraveabuseofdiscretionamountingtolackofjurisdiction.
ASSIGNMENTOFERRORS
Thepetitionerassignsaserrorsthefollowing:
I

THECOURTOFAPPEALSERREDINHOLDINGTHATTHECOMPANYDIDNOTVIOLATEARTICLE
100OFTHELABORCODE,ASAMENDED,WHENITUNILATERALLYWITHDREWTHEBENEFITS
OFTHEMEMBERSOFPETITIONERUNION,TOWIT:1)35%PREMIUMPAY2)CHRISTMASPARTY
ANDITSINCIDENTALBENEFITSAND3)SERVICEAWARD,WHICHINTRUTHANDINFACTSAID
BENEFITS/ENTITLEMENTSHAVEBEENGIVENTHEMSINCETIMEIMMEMORIAL,ASAMATTER
OFLONGESTABLISHEDCOMPANYPRACTICE,WITHTHEFURTHERFACTTHATTHESAMENOT
BEINGDEPENDENTONPROFITS.
II

THECOURTOFAPPEALSERREDWHENITJUSTACCEPTEDHOOK,LINEANDSINKER,THE
RESPONDENTCOMPANYSSELFSERVINGANDUNAUDITEDREVENUESANDPROFITABILITY
ANALYSISFORTHEYEARS19962000WHICHTHEYSUBMITTEDTOFALSELYJUSTIFYTHEIR
UNLAWFULACTOFUNILATERALLYANDSUDDENLYWITHDRAWINGORDENYINGFROMTHE
PETITIONERTHESUBJECTBENEFITS/ENTITLEMENTS.
III

THECOURTOFAPPEALSERREDINNOTHOLDINGTHATTHEYEARLYSERVICEAWARDISNOT
DEPENDENTONPROFITBUTONSERVICEANDTHUS,CANNOTBEUNILATERALLY
WITHDRAWNBYRESPONDENTCOMPANY.
ISSUE
Synthesized, the solitary issue that must be addressed by this Court is whether or not private
respondent is guilty of violating Article 100 of the Labor Code, as amended, when the
benefits/entitlementsgiventothemembersofpetitionerunionwerewithdrawn.
THECOURTSRULING
Beforeweaddressthesoleissuepresentedintheinstantcase,itisbesttofirstdiscussamatter
whichwasraisedbytheprivaterespondentinitsComment.Theprivaterespondentcontendsthatthis
case should have been dismissed outright because of petitioners error in the mode of appeal.
Accordingtoit,thepetitionershouldhaveelevatedtheinstantcasetothisCourtthroughapetitionfor
reviewoncertiorariunderRule45,andnotthroughaspecialcivilactionforcertiorariunderRule65,
[17]

ofthe1997RulesonCivilProcedure.

Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no
question that the Supreme Court has the discretion to dismiss it if it is defective. However, sound
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policydictatesthatitisfarbettertodisposethecaseonthemerits,ratherthanontechnicality.

[18]

TheSupremeCourtmaybrushasidetheproceduralbarrierandtakecognizanceofthepetitionas
itraisesanissueofparamountimportance.TheCourtshallresolvethesolitaryissueonthemeritsfor
futureguidanceofthebenchandbar.

[19]

Withthatoutoftheway,weshallnowresolvewhetherornottherespondentcompanyisguiltyof
violatingArticle100oftheLaborCode,asamended.
Article100oftheLaborCodeprovides:
ART.100.PROHIBITIONAGAINSTELIMINATIONORDIMINUTIONOFBENEFITS.Nothingin
thisBookshallbeconstruedtoeliminateorinanywaydiminishsupplements,orotheremployeebenefitsbeing
enjoyedatthetimeofpromulgationofthisCode.
Thepetitionersubmitsthatthewithdrawaloftheprivaterespondentofthe35%premiumpayfor
selecteddaysduringtheHolyWeekandChristmasseason,theholdingoftheChristmasPartyandits
incidentalbenefits,andthegivingofserviceawardsviolatedArticle100oftheLaborCode.Thegrant
of these benefits was a customary practice that can no longer be unilaterally withdrawn by private
respondent without the tacit consent of the petitioner. The benefits in question were given by the
respondenttothepetitionerconsistently,deliberately,andunconditionallysincetimeimmemorial.The
benefits/entitlementswerenotgiventopetitionerduetoanerrorininterpretation,oraconstructionof
a difficult question of law, but simply, the grant has been a practice over a long period of time. As
such, it cannot be withdrawn from the petitioner at respondents whim and caprice, and without the
consentoftheformer.Thebenefitsgivenbytherespondentcannotbeconsideredasabonusasthey
arenotfoundedonprofit.Evenassumingthatitcanbetreatedasabonus,thegrantofthesame,by
[20]
reasonofitslongandregularconcession,mayberegardedaspartofregularcompensation.
Withrespecttothefifteen(15)employeeswhoaremembersofpetitionerunionthatweregiven
new job classifications, it asserts that a promotional increase in their salaries was in order. Salary
[21]
adjustmentisamustduetotheirpromotion.
On respondent companys Revenues and Profitability Analysis for the years 19962000, the
petitioner insists that since the former was unaudited, it should not have justified the companys
suddenwithdrawalofthebenefits/entitlements.Thenormaland/orlegalmethodforestablishingprofit
andlossofacompanyisthroughafinancialstatementauditedbyanindependentauditor.

[22]

[23]

The petitioner cites our ruling in the case of Saballa v. NLRC, where we held that financial
statements audited by independent auditors constitute the normal method of proof of the profit and
loss performance of the company. Our ruling in the case of BogoMedellin Sugarcane Planters
[24]
Association,Inc.,etal.v.NLRC,etal. waslikewiseinvoked.Inthiscase,weheld:
TheCourthaspreviouslyruledthatfinancialstatementsauditedbyindependentexternalauditorsconstitutethe
normalmethodofproofoftheprofitandlossperformanceofacompany.
Onthematterofthewithdrawaloftheserviceaward,thepetitionerarguesthatitistheemployees
lengthofservicewhichistakenasafactorinthegrantofthisbenefit,andnotwhetherthecompany
[25]
acquiredprofitornot.
Inanswertoallthese,therespondentcorporationaversthatthegrantofallsubjectbenefitshas
notripenedintopracticethattheemployeesconcernedcanclaimademandablerightoverthem.The
grantofthesebenefitswasconditionalbaseduponthefinancialperformanceofthecompanyandthat
conditions/circumstancesthatexistedbeforehaveindeedsubstantiallychangedtherebyjustifyingthe
discontinuance of said grants. The companys financial performance was affected by the recent
political turmoil and instability that led the entire nation to a bleeding economy. Hence, it only
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necessarilyfollowsthatthecompanysfinancialsituationatpresentisalreadyverymuchdifferentfrom
[26]

whereitwasthreeorfouryearsago.

Onthesubjectoftheunauditedfinancialstatementpresentedbytheprivaterespondent,thelatter
contendsthatthecasescitedbythepetitionerindeeduniformlyruledthatfinancialstatementsaudited
by independent external auditors constitute the normal method of proof of the profit and loss
performance of a company. However, these cases do not require that the only legal method to
ascertain profit and loss is through an audited financial statement. The cases only provide that an
auditedfinancialstatementisthenormalmethod.

[27]

Therespondentcompanylikewiseasseveratesthatthe15membersofpetitionerunionwerenot
actuallypromoted.Therewasonlyarealignmentofpositions.

[28]

Fromtheforegoingcontentions,itappearsthatfortheCourttoresolvetheissuepresented,itis
criticalthatadeterminationmustbefirstmadeonwhetherthebenefits/entitlementsareinthenature
of a bonus or not, and assuming they are so, whether they are demandable and enforceable
obligations.
[29]

InthecaseofProducersBankofthePhilippinesv.NLRC
is,viz:

wehavecharacterizedwhatabonus

Abonusisanamountgrantedandpaidtoanemployeeforhisindustryandloyaltywhichcontributedtothe
successoftheemployersbusinessandmadepossibletherealizationofprofits.Itisanactofgenerositygranted
byanenlightenedemployertospurtheemployeetogreatereffortsforthesuccessofthebusinessandrealization
ofbiggerprofits.Thegrantingofabonusisamanagementprerogative,somethinggiveninadditiontowhatis
ordinarilyreceivedbyorstrictlyduetherecipient.Thus,abonusisnotademandableandenforceable
obligation,exceptwhenitismadepartofthewage,salaryorcompensationoftheemployee.
Basedontheforegoingpronouncement,itisobviousthatthebenefits/entitlementssubjectsofthe
instant case are all bonuses which were given by the private respondent out of its generosity and
munificence.Theadditional35%premiumpayforworkdoneduringselecteddaysoftheHolyWeek
and Christmas season, the holding of Christmas parties with raffle, and the cash incentives given
togetherwiththeserviceawardsareallinexcessofwhatthelawrequireseachemployertogiveits
employees.Sincetheyareabovewhatisstrictlyduetothemembersofpetitionerunion,thegranting
ofthesamewasamanagementprerogative,which,whenevermanagementseesnecessary,maybe
withdrawn, unless they have been made a part of the wage or salary or compensation of the
employees.
The consequential question therefore that needs to be settled is if the subject
benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these
bonuses be considered part of the wage or salary or compensation making them enforceable
obligations?
TheCourtdoesnotbelieveso.
For a bonus to be enforceable, it must have been promised by the employer and expressly
[30]

agreeduponbytheparties,

[31]

oritmusthavehadafixedamount

andhadbeenalongandregular

[32]

practiceonthepartoftheemployer.

Thebenefits/entitlementsinquestionwereneversubjectsofanyexpressagreementbetweenthe
parties.TheywereneverincorporatedintheCollectiveBargainingAgreement(CBA).Asobservedby
theVoluntaryArbitrator,therecordsrevealthatthesebenefits/entitlementshavenotbeensubjectsof
anyexpressagreementbetweentheunionandthecompany,andhavenotyetbeenincorporatedin
theCBA.Infact,thepetitionerhasnotdeniedhavingmadeproposalswiththeprivaterespondentfor
[33]

theserviceawardandtheadditional35%premiumpaytobemadepartoftheCBA.
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The Christmas parties and its incidental benefits, and the giving of cash incentive together with
theserviceawardcannotbesaidtohavefixedamounts.Whatisclearfromtherecordsisthatover
[34]

the years, there had been a downtrend in the amount given as service award. There was also a
downtrendwithrespecttotheholdingoftheChristmaspartiesinthesensethatitslocationchanged
[35]
frompaidvenuestoonewhichwasfreeofcharge, evidentlytocutcosts.Also,thegrantofthese
two aforementioned bonuses cannot be considered to have been the private respondents long and
regularpractice.Tobeconsideredaregularpractice,thegivingofthebonusshouldhavebeendone
[36]
over a long period of time, and must be shown to have been consistent and deliberate. The
downtrend in the grant of these two bonuses over the years demonstrates that there is nothing
consistentaboutit.Further,asheldbytheCourtofAppeals:
AnenttheChristmaspartyandraffleofprizes,WeagreewiththeVoluntaryArbitratorthatthesamewasmerely
sponsoredbytherespondentcorporationoutofgenerosityandthatthesameisdependentonthefinancial
[37]

performanceofthecompanyforaparticularyear

Theadditional35%premiumpayforworkrenderedduringselecteddaysoftheHolyWeekand
Christmasseasoncannotbeheldtohaveripenedintoacompanypracticethatthepetitionerherein
havearighttodemand.Asidefromthegeneralavermentofthepetitionerthatthisbenefithadbeen
grantedbytheprivaterespondentsincetimeimmemorial,therehadbeennoevidenceadducedthatit
hadbeenaregularpractice.AspropitiouslyobservedbytheCourtofAppeals:
...[N]otwithstandingthatthesubject35%premiumpaywasdeliberatelygivenandthesamewasinexcessof
thatprovidedbythelaw,thesamehoweverdidnotripenintoacompanypracticeonaccountofthefactthatit
wasonlygrantedfortwo(2)yearsandwiththeexpressreservationfromrespondentcorporationsownerthatit
[38]

cannotcontinuetorantthesameinviewofthecompanyscurrentfinancialsituation.

Toholdthatanemployershouldbeforcedtodistributebonuseswhichitgrantedoutofkindness
istopenalizehimforhispastgenerosity.

[39]

Havingthusruledthattheadditional35%premiumpayforworkrenderedduringselecteddaysof
theHolyWeekandChristmasseason,theholdingofChristmaspartieswithitsincidentalbenefits,and
the grant of cash incentive together with the service award are all bonuses which are neither
demandable nor enforceable obligations of the private respondent, it is not necessary anymore to
delve into the Revenues and Profitability Analysis for the years 19962000 submitted by the private
respondent.
Ontheallegedpromotionof15membersofthepetitionerunionthatshouldwarrantanincreasein
theirsalaries,thefactualfindingoftheVoluntaryArbitratorisrevealing,viz:
ConsideringthattheUnionwasunabletoadduceproofthatapromotionindeedoccur[ed]withrespecttothe15
employees,theDailyRatedUnionsclaimforpromotionalincreaselikewisefall[s]therebeingnopromotion
[40]
establishedundertherecordsathand.
WHEREFORE,inviewofalltheforegoing,theassailedDecisionandResolutionoftheCourtof
Appealsdated06March2002and12July2002,respectively,whichaffirmedandupheldthedecision
oftheVoluntaryArbitrator,areherebyAFFIRMED.Nopronouncementastocosts.
SOORDERED.
Puno,(Chairman),AustriaMartinez,Callejo,Sr.,andTinga,JJ.,concur.
[1]

Rollo, pp. 216222 Penned by Associate Justice Martin S. Villarama, Jr. with Associate Justices Conchita Carpio
MoralesandMarianoL.DelCastilloconcurring.

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[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]

Rollo,pp.191200.
Rollo,p.214.
Rollo,p.241.
Rollo,pp.191200.
Rollo,pp.199200.
Rollo,pp.201213.
Rollo,p.214.
Id.

[10]
[11]

CARollo,pp.230.

Ibid.,pp.1011.

[12]
[13]
[14]
[15]
[16]
[17]
[18]

[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]

[30]

Rollo,p.222.
Rollo,pp.223239.
Rollo,p.241.
Id.
Rollo,pp.337.
Rollo,pp.247248.
Asia Traders Insurance Corporation v. Court of Appeals, G.R. No. 152537, 16 February 2004, 423 SCRA 114, citing
AFPMutualBenefitsAssociationv.CourtofAppeals,G.R.No.126745,26July1999,311SCRA143.
DelRosariov.Montaa,G.R.No.134433,28May2004,430SCRA109.
Rollo,pp.2024.
Rollo,pp.2527.
Rollo,p.28.
G.R.Nos.10247284,22August1996,260SCRA697.
G.R.No.97846,25September1998,296SCRA108.
Rollo,pp.3031.
Rollo,pp.252254.
Rollo,p.265.
Rollo,p.266.
G.R.No.100701,28March2001,355SCRA489,citingLuzonStevedoringCorp.v.CourtofIndustrialRelations,G.R.
No.L17411,31December1965,15SCRA660TradersRoyalBankv.NLRC,G.R.No.88168,30August1990,
189SCRA274PhilippineNationalConstructionCorp.v.NLRC,G.R.No.128345,18May1999,307SCRA218
andAtokBigWedgeMutualBenefitAssociationv.AtokBigWedgeMiningCo.,92Phil.754(1953).
cf.Marcosv.NLRC,G.R.No.111744,08September1995,248SCRA146.

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[31]
[32]
[33]
[34]
[35]
[36]
[37]
[38]
[39]
[40]

ManilaBankingCorp.v.NLRC,G.R.No.107487,29September1997,279SCRA602.
PhilippineApplianceCorp.v.CourtofAppeals,G.R.No.149434,03June2004,430SCRA525.
Rollo,p.196seeAnnexes15and17oftheCompanysPositionPaperatRollo,pp.84187.
Rollo,pp.255257.
Rollo,p.258.
PhilippineApplianceCorporationv.CourtofAppeals,supra,Note32.
Rollo,p.221emphasissupplied.
Rollo,p.220.
cf.ProducersBankofthePhilippinesv.NLRC,supra,Note29.
Rollo,p.199.

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