GR L 69741; (August, 1986) (Digest)
G.R. No. L-69741 August 19, 1986
BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION AND THE BROKENSHIRE MEMORIAL HOSPITAL EMPLOYEES AND WORKERS UNION-FFW, respondents.
FACTS
The private respondent union filed a complaint against petitioner Brokenshire Memorial Hospital, alleging that the hospital was obligated to pay its employees a Christmas bonus in addition to the 13th-month pay mandated by Presidential Decree No. 851. The hospital had been granting a Christmas bonus equivalent to one month’s basic salary prior to the effectivity of PD 851 on December 16, 1975. After the decree took effect, the hospital credited this existing Christmas bonus against its 13th-month pay obligation, paying only the difference if the bonus was less than 1/12 of the employee’s annual basic salary. The Labor Arbiter ruled in favor of the union, ordering the hospital to pay a separate Christmas bonus on top of the full 13th-month pay. This decision was affirmed by the National Labor Relations Commission.
ISSUE
The core issue is whether an employer already granting a Christmas bonus equivalent to at least one month’s basic salary is required by PD 851 to pay an additional, separate 13th-month pay on top of that existing bonus.
RULING
The Supreme Court reversed the NLRC decision and dismissed the union’s complaint. The Court reiterated its established doctrine from National Federation of Sugar Workers vs. Ovejera and Dole Philippines, Inc. vs. Leogardo, Jr., which held that the clear intent of PD 851 was to grant relief only to employees not already receiving a 13th-month pay or its equivalent. The law exempts employers already paying such benefits. An existing Christmas bonus amounting to at least 1/12 of the basic annual salary is considered an “equivalent” under the law and its implementing rules. Therefore, an employer complying with PD 851 may legally credit such a bonus against the statutory obligation, paying only the difference to reach the required 1/12th of the annual basic salary. To compel payment of a separate 13th-month pay on top of an existing equivalent bonus would impose an unfair double burden on compliant employers, penalizing their prior munificence or contractual commitments. This could discourage voluntary grants and lead to adverse consequences for labor relations. The hospital’s practice of crediting its Christmas bonus was thus legally sound and in full compliance with PD 851.