G.R. No. L-5103 December 24, 1952
PHILIPPINE EDUCATION CO., INC., petitioner, vs. COURT OF INDUSTRIAL RELATIONS and UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU), respondents.

FACTS

On August 1950, the respondent Union of Philippine Education Employees (NLU) filed a petition in the Court of Industrial Relations (CIR) submitting a 17-point demand for arbitration (Case No. 489-V). On November 27, 1950, the union filed a motion in the same case, alleging: (1) it was the established policy and practice of the petitioner company to consider its employees as part-owners and grant them a share in the profits annually as a bonus; (2) for the fiscal year ending March 31, 1950, the company made a net profit of P513,666.39 from an invested capital of P1,973,300.00; (3) on September 20, 1950, the union demanded payment of the bonus, but the company refused due to the employees’ union activities; and (4) a 12% return on investment is considered a fair profit. The motion prayed that the company be ordered to pay its employees their share in the profits as a bonus, amounting to P513,666.39 less 12% of the invested capital.
The petitioner company, in its answer, denied it considered employees as part-owners or that bonus payments were an obligation, asserting bonuses were discretionary gifts to deserving employees. It admitted the profit and capital figures but claimed bonuses were withheld due to losses from a strike and import/exchange controls, not union activities. It also challenged the CIR’s jurisdiction, arguing the original petition contained no bonus demand and that compelling payment would be unconstitutional.
On July 30, 1951, the CIR issued an order directing the petitioner to pay P90,706.36 (an amount set aside as bonus) to its officers and employees for the fiscal year ending March 31, 1950, in proportion to their salaries and length of service. The CIR en banc unanimously denied a motion for reconsideration. The company then filed a petition for certiorari to review the order.

ISSUE

Whether the Court of Industrial Relations had the power and authority to order the petitioner company to pay a bonus to its employees.

RULING

Yes, the Court of Industrial Relations had the power and authority to order the payment. The Supreme Court affirmed the CIR’s order.
The Court held that while a bonus is generally not a demandable and enforceable legal obligation from a contractual standpoint—being an act of generosity or a gift to spur greater efforts—the CIR’s authority under Section 13 of Commonwealth Act No. 103 extends beyond ordinary courts. This provision authorizes the CIR to make awards not only on specific relief claimed but also on such as it deems necessary or expedient to settle or prevent further industrial disputes.
The motion for bonus payment, filed after the original petition and after a demand was made and refused, could be deemed a supplemental pleading arising subsequent to the filing of the original petition. The company’s admission of the profit figures and the evidence showing P90,706.36 was set aside for bonus (Exhibit F) supported the factual basis.
Considering the circumstances—that bonuses had been given in at least three previous years, the specific amount was set aside, and the reason for withholding was a strike declared legal by the CIR—justice and equity demanded the bonus be paid. The award was within the CIR’s statutory function to prevent further disputes detrimental to labor, management, and the public welfare. The order was affirmed without costs.