American Wire and Cable Daily Rated Employees’ Union v. American Wire and Cable Co., Inc.

2005
J. Chico-Nazario

SUBJECT MATTER:
Past Practices

ACTION BEFORE THE SUPREME COURT:

Special civil action for certiorari, assailing the CA Decision, upholding the Decision and Order of Voluntary Arbitrator of the
National Conciliation and Mediation Board, which declared the private respondent not guilty of violating Article 100 of the
Labor Code.

Petitioner(s): American Wire and Cable Daily Rated Employees Union

Respondent(s): American Wire and Cable Co., Inc. (private respondent); Court of Appeals (public respondent)

SUMMARY:
The two labor unions of the respondent corporation, instituted actions before the National Conciliation and Mediation
Board (NCMB) of the Department of Labor and Employment (DOLE), for voluntary arbitration—the petitioner submits that
the withdrawal of the private respondent of the 35% premium pay for selected days during the Holy Week and Christmas
season, the holding of the Christmas Party and its incidental benefits, and the giving of service awards, which they have
long enjoyed, violated Article 100 of the Labor Code 1.

The Voluntary Arbitrator found for respondent. On appeal, the CA affirmed the Arbitrator’s decision.

The Court ruled, however, that respondent is not guilty of violating Article 100 of the Labor Code. The benefits and
entitlements mentioned in the instant case are all considered bonuses which were given by the private respondent out of
its generosity and munificence. A bonus is not a demandable and enforceable obligation, except when it is made part of
the wage, salary or compensation of the employee. The granting of a bonus is a management prerogative, something
given in addition to what is ordinarily received by or strictly due the recipient.

FACTS:
 February 16, 2001 – an original action was filed before the NCMB of the Department of Labor and Employment
(DOLE) by the two unions for voluntary arbitration

o They alleged that the private respondent, without valid cause, suddenly and unilaterally withdrew and
denied certain benefits2 and entitlements which they have long enjoyed

 July 04, 2001 – the parties simultaneously filed their respective position papers with the Office of the Voluntary
Arbitrator, NCMB, and DOLE

 September 05, 2001 – The Voluntary Arbitrator ruled in favor of the private respondent, declaring that they are
not guilty of violating Article 100 of the Labor Code; they did, however, direct the private respondent to grant the
service award to deserving employees on grounds of equity and fairness

o A motion for reconsideration was filed by both unions, but they were denied by the Voluntary Arbitrator

1
Article 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.
2
Service Award; 35% premium pay of an employee’s basic pay for the work rendered during Holy Monday, Holy Tuesday,
December 23, 26, 27, 28, and 29; Christmas Party; and Promotional Increase
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  Upon appeal, the public respondent CA rendered a Decision once again in favor of private respondents,
dismissing the petition for lack of merit
o A motion for reconsideration was filed by the petitioner, but they were denied by the CA
 Hence the instant petition,
PETITIONER/PLAINTIFF
● The withdrawal of the 35% premium pay for
selected days during the Holy Week and the
Christmas break, the holding of the Christmas
Party and its incidental benefits, and the giving of
service awards violated Article 100 of the Labor
Code.
● The grant of these benefits was a customary
practice that can no longer be unilaterally
withdrawn by private respondent without the tacit
consent of the petitioner.
● Even assuming that it can be treated as just a
“bonus”, the grant of the same, by reason of its
long and regular concession, may be regarded as
part of regular compensation.
● On respondent company’s Revenues and
Profitability Analysis, the same was unaudited,
and thus should not have justified the sudden
writhdrawal of the benefits/entitlements; it should
have been through a financial statement audited
by an independent auditor.
ISSUE, HOLDING, AND RATIO:
W/N private respondent is guilty of violating Article 100 of the Labor Code, as amended, when the benefits/entitlements
given to the members of petitioner union were withdrawn. NO, they were not.
RULING RATIO
NO, the private respondents are not guilty
of violating Article 100 of the Labor Code.
RESPONDENT/DEFENDANT
● 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 the benefits was conditional based
upon the performance of the company and the
conditions have changed substantially.
● The company’s financial performance was
affected by the recent political turmoil and
instability that led the entire nation to a bleeding
economy.
● On the unaudited financial statement, the one
pointed to by petitioner is not the only way. The
cases only provide that an audited financial
statement is the normal method.
 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 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. (Producers Bank of
the Philippines v. NLRC)
 Based on the above pronouncement, it is obvious that
the benefits/entitlements of the instant cases are all
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 bonuses which were given by the private respondent
out of its generosity and munificence.

 All that was unilaterally retracted by the private

respondent are in excess of what the law requires
each employer to give its employees; they are a
management prerogative—whenever management
sees necessary, they may withdraw it, unless they
have made it a part of the wage or salary or
compensation of the employees.

 For a bonus to be enforceable, it must have been: (1)

promised by the employer and expressly agreed upon
by the parties, or it must have had a fixed amount, and
(2) had been a long and regular practice on the part of
the employer.

 There has been no evidence adduced to prove that

these benefits have been given by respondent since
time immemorial

 The Christmas parties + incidental benefits cannot be

said to have fixed amounts

 The record reveals that there has actually been a

downtrend in the amount given as service award and
the holding of Crhstimas parties, which indicates cost-
cutting, and which further indicates that there is
nothing consistent about these practices as petitioner
claims

 The additional 35% premium pay for work cannot be

held to have ripened into a company practice

DISPOSITIVE:

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the CA are AFFIRMED.

B2023 (LOPEZ) - LAW 113, PROF. KUA