G.R. No. 185665 ; February 8, 2012
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner, vs. EASTERN TELECOMS EMPLOYEES UNION, Respondent.

FACTS

Eastern Telecommunications Philippines, Inc. (ETPI) and the Eastern Telecoms Employees Union (ETEU) had a Collective Bargaining Agreement (CBA) with a Side Agreement confirming the grant of 14th, 15th, and 16th month bonuses. Due to alleged financial losses, ETPI informed the union it would defer payment of the 2003 bonuses to April 2004, subject to fund availability. The union initially agreed to this deferment during conciliation at the National Conciliation and Mediation Board (NCMB). However, ETPI subsequently refused to sign the resulting Memorandum of Agreement and declared it would withhold all bonus payments pending compulsory arbitration, citing the union’s earlier filing of a preventive mediation case as voiding the deferment agreement.
ETEU filed a Notice of Strike for unfair labor practice. The Secretary of Labor certified the dispute for compulsory arbitration. The union argued before the National Labor Relations Commission (NLRC) that the bonuses, granted consistently since 1975 regardless of profit, had ripened into a demandable company practice and a contractual obligation under the CBA Side Agreement. ETPI countered that the bonuses were mere gratuities dependent on profitability and thus subject to management prerogative, and that the NLRC lacked jurisdiction as the issue involved mere CBA interpretation.

ISSUE

Whether ETPI’s unilateral discontinuance of the payment of the 14th, 15th, and 16th month bonuses constitutes a violation of the CBA and/or an established company practice.

RULING

The Supreme Court denied ETPI’s petition and affirmed the Court of Appeals’ decision, which upheld the NLRC’s ruling in favor of the union. The Court held that the grant of the bonuses had become a regular company practice that ETPI could not unilaterally withdraw. The consistent and deliberate payment of these bonuses over a long period (from 1975 to 2002) created an enforceable expectation among employees, crystallizing into a benefit that forms part of their compensation. This practice was further solidified by its express confirmation in the CBA Side Agreements, transforming it into a contractual obligation.
The Court rejected ETPI’s claim that the bonuses were discretionary gratuities. The failure to present convincing evidence to rebut the union’s claim of consistent payment regardless of financial condition was fatal to ETPI’s position. The principle of non-diminution of benefits under Article 100 of the Labor Code prohibits the unilateral withdrawal of benefits that have been given consistently over a long period. ETPI’s belated attempt to condition payment on profitability, after years of unconditional grant, was invalid. The Court also found no merit in the jurisdictional challenge, as the certified labor dispute properly vested the NLRC with authority to resolve the matter.