GR L 60018; (October, 1982) (Digest)
G.R. No. L-60018 and L-60019 October 23, 1982
DOLE PHILIPPINES, INC., petitioner, vs. THE HON. VICENTE LEOGARDO, JR. (in his capacity as Deputy Minister of Labor), and ASSOCIATED LABOR UNION (ALU), et al., respondents.
FACTS
Dole Philippines, Inc. (formerly Standard Philippines Fruit Corporation or STANFILCO) entered into a Collective Bargaining Agreement (CBA) with the Associated Labor Union effective June 1, 1975. The CBA stipulated the grant of a year-end productivity bonus equivalent to ten days’ basic wage, contingent upon attaining an 80% production level. This bonus was paid for 1975. Subsequently, Presidential Decree No. 851 took effect on December 16, 1975, mandating employers to pay a 13th-month pay to employees. Section 2 of the decree exempted employers already paying their employees a 13th-month pay “or its equivalent.”
To comply, STANFILCO paid its workers the difference between 1/12th of their annual basic salary and the amount of the year-end productivity bonus already received, treating the bonus as an advance credit against the statutory 13th-month pay. The company followed this method for 1975 to 1978. The labor union filed complaints, arguing the contractual bonus was separate and distinct from the mandatory 13th-month pay and must be paid in full. The Regional Director and the Deputy Minister of Labor ruled in favor of the workers, ordering Dole to pay the CBA bonuses for those years in addition to the 13th-month pay.
ISSUE
Whether the year-end productivity bonus provided in the CBA can be credited as part of the 13th-month pay required under P.D. No. 851.
RULING
The Supreme Court granted the petition and set aside the orders of the labor officials. The Court ruled that the CBA-stipulated year-end productivity bonus is legally considered an integral part of the 13th-month pay for the purpose of compliance with P.D. No. 851. The legal logic is anchored on the statutory exemption under Section 2 of P.D. 851 for employers already paying “its equivalent.” The Implementing Rules define “its equivalent” to include “Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary.”
The Court, citing its precedent in National Federation of Sugar Workers vs. Oveñera, held that any bonus, whether granted voluntarily or by contractual agreement like a CBA, and regardless of being conditional, qualifies as an equivalent if actually paid. Crediting such payment prevents an absurd and oppressive situation where an employer who generously granted a bonus via contract would be penalized by having to pay more than an employer who only complied due to the law’s mandate. Therefore, Dole correctly paid only the difference to meet the 1/12th statutory threshold. The law, being benevolent, did not intend to impose a double burden, effectively creating a 14th-month pay, on employers already granting such benefits.