[Producers Bank of the Philippines vs NLRC and
On the alleged non-payment of legal holiday pay,
Producers Bank Employees Association] (2001)
[J. Gonzaga-Reyes]
I. FACTS:
Present petition for certiorari is filed by Producers Bank
of the Philippines (employer) to assail the decision of
the Arbitration Branch-NCR of NLRC charging it with
diminution of benefits, non-compliance with Wage
Order No. 6, and non-payment of holiday pay.
Producers Bank Employees Association (employees)
also prayed for damages.
On Mar. 31, 1989, LA Nieves de Castro found the
claims unmeritorious and dismissed such. However,
the NLRC completely reversed the decision and
granted all of the claims except damages.
Petitioner filed a Motion for Partial Reconsideration but
was denied in 1991. Hence, this case.
Petitioner contends that NLRC gravely abused its
discretion in the ruling when:
1. On the alleged diminution of benefits, (1) it
contravened the SC decision in Traders Royal Bank v.
NLRC, G.R. No. 88168, promulgated on August 30,
1990, (2) its ruling is not justified by law and Art. 100 of
the Labor Code, (3) its ruling is contrary to the CBA,
and (4) the so-called "company practice invoked by it
has no legal and moral bases";
2. On the alleged non-compliance with WO NO. 6, it
patently and palpably erred in holding that it is "more
inclined to adopt the stance of employees in this issue
since it is more in keeping with the law and its
implementing provisions and the intendment of the
parties as revealed in their CBA" without giving any
reason or justification for such conclusions as the
stance of employees does not traverse the clear and
correct finding and conclusion of the Labor Arbiter.
Furthermore, the petitioner, under conservatorship
and distressed, is exempted under WO No. 6.
Finally, the "wage differentials under WO NO. 6 for
November 1, 1984 and the corresponding adjustment
thereof", has prescribed.
3.
it patently and palpably erred in approving and
adopting the position of employees without giving
any reason or justification therefor which position
does not squarely traverse or refute the Labor Arbiter's
correct finding and ruling.
On July 29, 1991, SC issued petitioner's prayer for
TRO enjoining the execution of the NLRC decision and
resolution.
II. ISSUES:
Whether or not the employees are entitled to the
claimed benefits? (The ratio is discussed according to
each benefit claim.)
III. RATIONALE:
BONUSES
Employees argue that:
1. Producers Bank has been providing several benefits
to its employees since 1971 when it started its
operation. Among the benefits it had been regularly
giving is a mid-year bonus equivalent to an employee's
one-month basic pay and a Christmas bonus
equivalent to an employee's one whole month salary
(basic pay plus allowance);
2. When PD 851 (13th month law) took effect, the basic
pay previously being given as part of the Christmas
bonus was applied as compliance to it, the allowances
remained as Christmas bonus;
3. From 1981-1983, the bank continued giving one
month basic pay as mid-year bonus, one month basic
pay as 13th month pay but the Christmas bonus was
no longer based on the allowance but on the basic pay
of the employees which is higher;
4. In the early part of 1984, the bank was placed
under conservatorship but it still provided the
traditional mid-year bonus;
5. By virtue of an alleged Monetary Board Resolution
No. 1566, the bank only gave a one-half (1/2) month
basic pay as compliance of the 13th month pay and
none for the Christmas bonus. Summary:

Employees argue that, for being given for 13 years, the
mid-year and Christmas bonuses have ripened into a
vested right and can no longer be unilaterally
withdrawn without violating Art. 100 of PD 442.
On the other hand, employer asserts that it cannot
be compelled to pay the alleged bonus differentials
due to its depressed financial condition, as
evidenced by it being placed under conservatorship by
the Monetary Board. Employer also points out that the
CBA does not provide for the payment of any mid-year
or Christmas bonus. In fact, section 4 of the CBA
states that:
Acts of Grace. Any other benefits or privileges which
are not expressly provided in this Agreement, even if
now accorded or hereafter accorded to the employees,
shall be deemed purely acts of grace dependent upon
the sole judgment and discretion of the BANK to grant,
modify or withdraw.
"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
profits. It is an act of generosity granted by an
enlightened employer to spur the employee to
greater efforts for the success of the business and
realization of bigger profits. The granting of a
bonus is a management prerogative,…"
In Traders Royal Bank v. NLRC, SC held that:
"It is clear x x x that the petitioner may not be obliged to pay
bonuses to its employees. The matter of giving them bonuses
over and above their lawful salaries and allowances is entirely
dependent on the profits, if any, realized by the Bank from its
operations during the past year."
SC held that employees' contention regarding giving of
bonuses as company practice has no legal and moral
bases.
Employees' contention that the decrease in the
mid-year and year-end bonuses constituted a
diminution of the employees' salaries is not correct
for bonuses are not part of labor standards in the
same class as salaries, cost of living allowances,
holiday pay, and leave benefits.
SC held that the fact of being placed under
conservatorship means that it is unable to maintain
a condition of liquidity or solvency.
Sec. 28-A of RA 265 as amended by PD 72 provides:
"Whenever … the Monetary Board finds that a bank is
in a state of continuing inability or unwillingness to
maintain a condition of solvency and liquidity deemed
adequate to protect the interest of depositors and
creditors, the Monetary Board may appoint a
conservator to take charge of the assets, liabilities, and
the management of that banking institution, collect all
monies and debts due said bank and exercise all
powers necessary to preserve the assets of the bank,
reorganize the management thereof and restore its
viability…"
Similar to the case of Central Bank v CA, Court
adduced to the evidence that Producers Bank had
been continuously suffering losses from 1984 to 1988:
Since Producers Bank was in dire financial
condition, the conservator was justified in
reducing the mid-year and Christmas bonuses of
petitioner's employees. To hold otherwise would be
to defeat the reason for the conservatorship which is to
preserve the assets and restore the viability of the
bank. Ultimately, it is to the employees' advantage that
the conservatorship achieve its purposes.
13TH MONTH PAY
NLRC took the position of the employees that the
conservator was not justified in diminishing or not
paying the 13th month pay and that employer should
have just applied for exemption under Sec. 7 of PD
851, but the latter did not do so. Employer, however,
argues that it is not covered by PD 851 because the
mid-year and Christmas bonuses exceed the one
month salary of the employees and such amount
should be credited as 13th month pay.
"PD 851 … requires all employers to pay their employees receiving
a basic salary of not more than P1,000 a month, regardless of the
nature of the employment, a 13th month pay, not later than
December 24 of every year. However, employers already paying
their employees a 13th month pay or its equivalent are not covered
by the law."
SC held that employer is justified in crediting such
bonuses as part of the 13th month pay because such
payments were at least equal or even more than the
one month basic salary of the employees. Thus, the
bonuses were equivalent to the 13th month pay.
WAGE ORDER NO. 6
WO NO. 6, which came into effect on 1 November
1984, increased the statutory minimum wage of
workers, with different increases being specified for
agricultural plantation and non-agricultural workers.
The bone of contention, however, involves Section 4
which reads:
"All wage increase in wage and/or allowance granted by
employers between June 17, 1984 and the effectivity of
this Order shall be credited as compliance with the
minimum wage and allowance adjustments prescribed
herein provided that where the increases are less than
the applicable amount provided in this Order, the
employer shall pay the difference."
On Nov. 16, 1984, the parties entered into a CBA
providing for salary adjustments. Some details are:
(i) Effective March 1, 1984 - P225.00 per month as
salary increase plus P100.00 per month as increase in
allowance...; (ii) Effective March 1, 1985 - P125.00 per
month as salary increase plus P100.00 per month as
increase in allowance...; (iii) Effective March 1, 1986 -
P125.00 per month as salary increase plus P100.00
per month as increase in allowance...
Employer argues that it complied with WO NO. 6
because the first year salary and allowance
increase provided for under the collective
bargaining agreement can be credited against the
wage and allowance increase mandated by such
wage order. It asserts that although the CBAwas
signed by the parties on 16 November 1984, the
first year salary and allowance increase was made
to take effect retroactively, beginning from 1 March
1984 until 28 February 1985.
On the other hand, employees contend that the first
year salary and allowance increases under the
CBA cannot be applied towards the satisfaction of
the increases prescribed by WO NO. 6 because the
former were not granted within the period of
creditability provided for in such wage order.
SC held that employer actually granted wage and
allowance increases sufficient to cover the increases
mandated by Wage Order No. 5 and part of the
increases mandated by WO NO. 6.
HOLIDAY PAY
Art. 94 of the LC provides that every worker shall be paid his
regular daily wage during regular holidays and that the
employer may require an employee to work on any holiday but
such employee shall be paid a compensation equivalent to
twice his regular rate.
In this case, there was an issue on the reduction of the
divisor used to compute salary-related benefits (from
314 to 303). SC agreed with the LA and held that the
reduction of the divisor to 303 was done for the sole
purpose of increasing the employees' overtime pay,
and was not meant to exclude holiday pay from the
monthly salary of petitioner's employees. In fact, it was
expressly stated in the inter-office memorandum - also
referred to by private respondent in its pleadings - that
the divisor of 314 will still be used in the computation
for cash conversion and in the determination of the
daily rate.
Damages
SC upheld NLRC decision that there is no basis for
such claim.
IV. DISPOSITIVE:
NLRC decision is SET ASIDE except for the portion
on claim for damages.