Republic of the Philippines

COURT OF APPEALS
Manila

SEVENTH DIVISION
********

ALFREDO MOLOS, IMELDA MOJICA, CA-G.R. SP No. 100762

VILMA VITO CRUZ, EDNA
FANDIALEN, ALBERT CAPISTRANO,
RICARDO ABUEL, NIMFA
MACABITAS, ROMULO JOSON,
CLARO PEQUIT, MARIANO AGUILUS
III, EDWIN MADRIGAL, RODERICK Members:
CASTILLO, JOSELITO ORTEGA,
MARIANO ORTEGA, REGINO
ABATAYO, JR., FELICISIMO REYES, B., Chairman
BAJASAN, ANGEL MANANO, DIMAAMPAO, and
GODOFREDO MANONGSONG, JUN VILLAMOR, JJ:
ARILES, CANDIDO LAGONOY,
CARLOS MAGALANG, ARMANDO
DELA CRUZ, CONRADO GARCIA,
RENATO CRUZ, WARREN SANCHEZ,
RENATO DEL ROSARIO, ANGELES
BESIN, BERNADETTE GARCIA, JOSE
DOMAGAS, ARNULFO TAMAYO,
ARNOLD JOSE, ROBERTO
ARAGONCILLO, JOSE BAJADO, VINA
CABANGAL, HENRY SERATO, DANIEL
NESPEROS, JOSEFINO SILVERIO,
FELIXBERTO MILAMBILING,
ANTONIO LAJOM, RODOLFO DELA
CRUZ, JONATHAN MABALE, ISIDRO
URBINA, NOEL ANTONIO, RENE
ORDOÑEZ, EUGENIO PALCE,
PAULINO NAVARRO, JOSE REYES,
HIPOLITO MATIAS, PEDRO
VALENCIA, RICARDO MERCADO,
MARCELO MARIANO, ORLANDO
CANSILAO, JOEL RAÑADA, JAIME
ABELIS, JR., RODOLFO TORENTE,
WILFREDO TOLENTINO, DANTE
JAGOS, RICARDO SILVA, EDWIN PROMULGATED:
GALOPE, DAVID GLORIA, RICARDO
TINIO, PEDRO RAMIL PALACIO, _________________
CA-G.R. SP No. 100762 Page 2
DECISION

DANTE MAGISTRADO, LORENZO

PAJARITO, NESTOR GONZALES,
ROSELLER GARCIA, ET AL.,
Petitioners,

-versus-

LIWAYWAY PUBLISHING INC. and/or

DON EMILIO YAP, MR. CESAR TAN, MR.
RENE ESPINA, AND NATIONAL LABOR
RELATIONS COMMISSION,
Respondents.
X------------------------------------------------------------------------------------------------------------------------------------------------------------X

DECISION
DIMAAMPAO, J.:

Every so often, it is no happenstance that the Labor

Arbiter's findings are at variance with that of the National Labor
Relations Commission. The instant Petition brought to light such
inevitable incongruity. We shall sustain only the verdict that
passes judicial muster.
1
Through this Petition for Certiorari under Rule 65 of the
2
1997 Rules of Civil Procedure, petitioners assail the Decision
3
dated 20 April 2005 and Resolution dated 18 July 2007 of the
National Labor Relations Commission (“NLRC”), which
4
reversed the Decision dated 30 October 2003 of the Labor
Arbiter; and denied petitioners' Motion for Reconsideration
thereof, respectively.

The instant controversy has its precursor in a Complaint

for unfair labor practice (“ULP”) instituted by petitioners
against private respondents before the Labor Arbiter sometime
in 2002. The acts of ULP allegedly committed by private
respondents consisted of flagrant violation of the economic
1
Rollo, pp. 2-12.
2
Id., pp. 91-101.
3
Id., pp. 109-112.
4
Id., pp. 62-70.
CA-G.R. SP No. 100762 Page 3
DECISION

provisions of the Collective Bargaining Agreement (“CBA”),

particularly the non-payment of night differential, and mid-
year, December and signing bonuses. Petitioners likewise
sought for actual, moral and exemplary damages, as well as
5
attorney’s fees.

To buttress their claim, petitioners espoused that the

CBA entered into by them and private respondents, effective 1
July 1998 to 30 June 2003, mandated the grant of the
aforesaid benefits, in addition to medicine and t-shirts,
calamity and assistance loan, and company doctor. The
pertinent provisions thereof are quoted hereunder:

“x x x xxx

SECTION 7, The employees shall be granted, in

addition to their basic pay, a night differential as follows:

10:00 PM to 12:00 Midnight – 10% (ten percent)

12:01 AM to 6:00 AM – 10% (ten percent)

Such differential pay shall be paid on the 10 th day of

6
the succeeding month.

xxx xxx

SECTION 6. The COMPANY shall, upon request,

furnish each employee at the end of each year a copy of his
account on medicine in excess of P700.00 for his information
so that he shall be able to regulate the same.

SECTION 7. Management agrees to provide twelve (12)

T-shirts of good quality per CBA year, to be given quarterly,
7
to plant and production employees.

xxx xxx

SECTION 3. The COMPANY agrees to extend calamity

assistance in the form of the emergency loan to a maximum
of P10,000.00 to any employee whose house is destroyed by
fire, floods, earthquakes or typhoons as certified by the

5
See Petition dated 28 September 2007; Rollo, p. 5.
6
Id., p. 113.
7
Id., p. 114.
CA-G.R. SP No. 100762 Page 4
DECISION

proper government office subject to the Company's

verification.

SECTION 4. All regular employees who have served the

Company for 15 continuous years can avail of an interest-
free loan equivalent to one-half (½) of the total amount of his
retirement pay, payable on amortization, provided that the
8
loan shall be with marital consent.

xxx xxx

ARTICLE XVI
BONUSES

SECTION 1. The COMPANY as an act of liberality shall

continue to give Mid-year and December bonuses aside from
9
the 13th month pay whenever its finances warrant.

xxx xxx

ARTICLE XIX
SAFETY AND HEALTH REGULATIONS

xxx xxx

SECTION 2. The COMPANY shall continue to maintain

its clinic, staffed by a doctor and two nurses. The nurse,
however, shall be assigned in the shift which has the most
number of employees. For shifts wherethere are no nurses
the COMPANY shall provide an emergency kit of medicines
10
under the care of the Security Guard.

xxx xxx

ARTICLE XXVI
SIGNING BONUS

A signing bonus of P5,000.00 shall be granted to every

regular employee who is a member of the bargaining unit.
The said bonus shall be given immediately after the signing
11
of this Agreement.

8
Rollo, p. 115.
9
Ibid.
10
Id., p. 116.
11
Id., p. 117.
CA-G.R. SP No. 100762 Page 5
DECISION

All the same, private respondents failed to fully comply

with their obligations under the CBA due to their alleged tight
financial condition. The two and a half (2 ½) months salary
mid-year bonus and the three (3) months salary December
bonus remained unpaid since 1999. On the other hand, the
P5,000.00 signing bonus was not paid in full as there was still
an unpaid amount of P2,000.00 per employee. Petitioners
asserted that they had been receiving the said benefits even
12
prior to the execution of the CBA.

In contrast, private respondents vehemently confuted

petitioner's allegations and posited that under Section 1,
Article XVI of the CBA, the grant of bonuses, specifically the
mid-year and December bonuses, was purely an act of
liberality on the part of the company, and dependent on the
latter's financial capacity. Sadly, though, as early as 1999, the
global economic downtrend started to take its toll on the local
publishing industry. Since most businesses opted to cut costs,
particularly advertising costs, private respondents' advertising
revenues for the year 1999 suffered a marked reduction
compared to its previous average advertising revenues. For the
past four years, too, private respondents were not able to
recover enough return on its investment based on the average
government treasury bills rate vis-a-vis the company's
stockholders' equity. This can be gleaned from their audited
financial statements for the years 1999 up to 2002. These
economic factors, as well as the company's declining financial
state, adversely affected the company's cash flow thereby
preventing private respondent from granting the
13
aforementioned benefits and bonuses.

Several dialogues were held between petitioners and

private respondents with the end in view of settling their
conflict but the same proved futile. Expectedly, petitioners
filed a Notice of Strike with the National Conciliation Mediation
Board (NCMB) on the ground of ULP brought about by private

12
See Petition dated 28 September 2007; Rollo, at pp. 5-6.
13
See Comment dated 23 November 2007; Id., at pp. 141-142.
CA-G.R. SP No. 100762 Page 6
DECISION

respondents' malicious refusal to comply with their economic

14
obligations under the CBA.

During the conciliation and mediation proceedings,

15
private respondents, through their counsel, acknowledged
their obligation to pay the aforesaid benefits as enshrined in
the CBA. However, he intimated the company's real financial
woes but it exerted earnest efforts to pay its obligation
16
gradually.

Dissatisfied therewith, and in order to forestall further

delay in the payment of their benefits, petitioners elevated the
matter to the NLRC for compulsory arbitration. Inevitably, the
17
labor dispute with the NCMB was deemed withdrawn.
18
However, the case was not settled amicably before the NLRC.

On 30 October 2003, the Labor Arbiter rendered his

Decision, the decretal portion of which reads—

“WHEREFORE, judgment is hereby rendered:

1. Finding the complainants entitled to payment of

their 2 ½ months salary mid-year bonus and three (3)
months salary December bonus and ordering the
respondents jointly and severally to pay the said bonuses to
all complainants in accordance with the computation in
Annexes “B” to “B-3” in complainants' position paper and are
hereby adopted and incorporated in this decision except the
amount relative to Signing Bonus, in the total amount of
P23,481,736.00; and(,)

2. Ordering the respondent, jointly and severally, to

pay attorney’s fees equivalent to 10% of the salary award.

19
SO ORDERED.”

14
See Petition dated 28 September 2007; Rollo, at p. 6.
15
Atty. Aladdin Trinidad.
16
See Minutes of Conciliation and Mediation Proceedings dated 7 October 2002; Id., pp. 122-123.
17
See Minutes of Conciliation and Mediation Proceedings dated 18 October 2002; Id., p. 124.
18
Comment dated 23 November 2007; Id., at p. 142.
19
Id., p. 70.
CA-G.R. SP No. 100762 Page 7
DECISION

20
On appeal by private respondents, the NLRC, rendered
the assailed Decision reversing the judgment of the Labor
Arbiter and dismissing petitioners' Complaint for lack of merit.
Petitioners moved for a reconsideration thereof but the same
21
was denied in the challenged Resolution.

Saddled with disbelief, petitioners now come before Us

asserting that—

THE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICITION IN DISMISSING THE COMPLAINT OF
THE PETITIONERS

The Petition lacks merit.

By definition, a “bonus” is a gratuity or act of liberality of

the giver. It is something given in addition to what is ordinarily
received by or strictly due the recipient. A bonus is 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. Generally, a bonus is
not a demandable and enforceable obligation. It is so only
when it is made part of the wage or salary or compensation.
When considered as part of the compensation and therefore
demandable and enforceable, the amount is usually fixed. If
the amount would be a contingent one dependent upon the
realization of the profits, the bonus is also not demandable
and enforceable. The granting 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
22
employees’ basic salaries or wages.

Indeed, the lis mota of this controversy is whether or not

the subject bonuses can be considered part of the wage, salary

20
See Memorandum on Appeal dated 11 December 2003; Rollo, pp. 71-84.
21
Id., pp. 109-112.
22
See Protacio v. Velasco, Jr., et al., G.R. No. 168654, 25 March 2009.
CA-G.R. SP No. 100762 Page 8
DECISION

or compensation of petitioners, making them enforceable

obligations.

Petitioners contend that they have been enjoying the

aforementioned bonuses for a considerable period of time even
before the execution of the 1 July 1998 to 30 June 2003 CBA.
Hence, these grants cannot be discontinued without violating
their right to non-diminution of benefits.

Petitioners' contention fails to inspire assent.

Without a penumbra of doubt, Section 1, Article XVI of

the CBA provides that the subject bonuses were given to
petitioners out of private respondents' generosity, conditioned
upon the latter's financial capacity --

"ARTICLE XVI
BONUSES

SECTION 1. The COMPANY as an act of liberality

shall continue to give Mid-year and December bonuses aside
from the 13th month pay whenever its finances warrant."
(Emphasis Ours)

We concur with the disquisitions of the NLRC that

petitioners' allegation that they have been receiving the
aforesaid benefits even prior to the execution of the CBA loses
its significance in the light of the aforequoted provision. It is
jurisprudentially settled that if the bonus is paid only if profits
are realized or a certain amount of productivity achieved, it
cannot be considered part of wages. If the desired goal of
production is not obtained, or the amount of actual work
accomplished, the bonus does not accrue. Only when the
employer promises and agrees to give without any conditions
imposed for its payment, such as success of business or
greater production output, does the bonus become part of the
23
wage.

Petitioners intransigently argue that private respondents'

justification for their non-compliance with the economic
23
See Protacio v. Velasco, Jr., et al., G.R. No. 168654, 25 March 2009.
CA-G.R. SP No. 100762 Page 9
DECISION

provisions of the CBA, i.e., they are in a tight financial

position, is implausible because the latter's financial
statements reflect that the company is liquid. As of 31
December 2000, private respondents had retained earnings
24
amounting to P10,057,070.00. What is more, private
respondents even donated the amount of P500,000.00 to the
flood victims of Agusan del Sur and Surigao del Norte in
25
1999. Clearly, the giving of financial support to other groups
is inconsistent with private respondents' stance that they are
in a poor financial condition.

We remain unswayed.

Petitioners' theory crumbles in comparison with the

evidence on record. Contrary to petitioners' posture, the NLRC
emphatically declared that private respondents' financial
statements for the years 1999, 2000, 2001 and 2002 indicate
that the company earned a measly total of P4,340,622.00 net
profit in those four years, or a yearly average of
P1,085,155.50. Well-ensconced is the rule that financial
statements audited by independent auditors constitute the
normal method of proof of the profit and loss performance of
26
the company. On the other hand, the total award claimed by
petitioners, as computed by the Labor Arbiter, amounted to a
whopping P25,829,909.00. Unquestionably, such amount will
not only easily wipe out the total net profits of private
respondents for the past four years but will also produce a
yearly net loss of P5,372,321.50. Perceivably, private
respondents' financial status does not warrant the payment of
the subject bonuses. The amount being claimed will even
impair private respondents' capital and will eventually result
in the closure of the company and the consequent loss of jobs
of all its employees. The 2 ½ months mid-year bonus alone
already amounts to P5.7 Million, enough to consume the
entire net profits of private respondents for four years. The
grant of such award, therefore, is patently unconscionable and

24
See Annex “T”, Petition; Rollo, p. 128.
25
See Annex “U”, Petition; Id., p. 129.
26
See American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc.,
457 SCRA 684, 694 (2005).
CA-G.R. SP No. 100762 Page 10
DECISION

violative of the condition set forth in the CBA that the said
bonuses are dependent on the financial capability of the
company. As an act of liberality and kindness, private
respondents could not be forced to distribute bonuses when
they are not in the position to grant them on the basis of their
27
profits. To do so is to penalize private respondents for their
28
past generosity.

In a nutshell, We hold and so rule that the NLRC

committed no grave abuse of discretion amounting to lack or
excess of jurisdiction in rendering the assailed Decision and in
issuing the impugned Resolution.

WHEREFORE, the Petition for Certiorari is hereby

DISMISSED. The Decision dated 20 April 2005 and Resolution
dated 18 July 2007 of the National Labor Relations
Commission, First Division, in NLRC NCR CA No. 038720-04
[NLRC NCR Case No. 00-01-00121-2003], are AFFIRMED.

SO ORDERED.

JAPAR B. DIMAAMPAO
Associate Justice

WE CONCUR:

BIENVENIDO L. REYES ANTONIO L. VILLAMOR

Associate Justice Associate Justice

27
See assailed Decision dated 20 April 2005; Rollo, p. 98.
28
See American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc.,
457 SCRA 684, 698 (2005).
CA-G.R. SP No. 100762 Page 11
DECISION

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it

is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to
the writer of the opinion of the Court.

BIENVENIDO L. REYES
Associate Justice
Chairperson, Seventh Division