5.6.a Producers Bank of The Philippines VS NLRC

PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION

and PRODUCERS BANK EMPLOYEES ASSOCIATION, respondents.
G.R. No. 100701, March 28, 2001

GONZAGA-REYES, J.:
TOPIC
BONUS
FACTS
A complaint was filed by Producers Bank Employees Association with the Arbitration Branch,
National Capital Region, National Labor Relations Commission (NLRC), charging Producers Bank of
the Philippines with diminution of benefits, non-compliance with Wage Order No. 6 and non-
payment of holiday pay. In addition, private respondent prayed for damages.
LA RULING
Found private respondent's claims to be unmeritorious and dismissed its complaint.
NLRC RULING
It reversed the LA ruling.
It granted all of private respondent's claims, except for damages.
Directed the petitioner to pay private respondent the following:

1) Unpaid bonus (mid-year and Christmas bonus) and 13 th month pay
2) Wage differentials under Wage Order No. 6
3) Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years.
PETITIONERS ARGUMENT
NLRC gravely abused its discretion for the following reasons:
1) It contravened the Supreme Court decision in Traders Royal Bank v. NLRC, et al.,
2) Its ruling is not justified by law and Art. 100 of the Labor Code
3) Its ruling is contrary to the CBA
4) The so-called "company practice invoked by it has no legal and moral bases"
5) Petitioner is under conservatorship and distressed, hence exempted under Wage Order No.
6. Thus, 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. 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 –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.
6) Finally, the "wage differentials under Wage Order No. 6 for November 1, 1984 and the
corresponding adjustment thereof" has prescribed.
RESPONDENTS’ ARGUMENT
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.
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
Whether or not the private respondents are entitled to claim bonus?
SC RULING
NO, PRIVATE RESPONDENTS ARE NOT ENTITLED TO BONUS.
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.
In the case at bar, petitioner bank 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.

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PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 100701, March 28, 2001

It reversed the LA ruling.

It granted all of private respondent's claims, except for damages.

Directed the petitioner to pay private respondent the following:

NLRC gravely abused its discretion for the following reasons:

Whether or not the private respondents are entitled to claim bonus?

NO, PRIVATE RESPONDENTS ARE NOT ENTITLED TO BONUS.

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