G.R. No. 230919 - Blue Manila, Inc. vs. Jamias

Eastern Telecommunications Philippines, Inc. (ETPI) – A corporation engaged in telecommunications services, employing around 400 employees.
Eastern Telecoms Employees Union (ETEU) – The certified exclusive bargaining agent for ETPI’s rank-and-file employees, with 147 regular members.

Collective Bargaining Agreement (CBA) – Between ETPI and ETEU, valid until 2004.
Side Agreement dated September 3, 2001 – Part of the 2001-2004 CBA providing for payment of the 14th, 15th, and 16th month bonuses.

ETPI deferred payment of the 2003 14th, 15th, and 16th month bonuses, citing ongoing financial deterioration since 2000 and payment dependent on fund availability.
The Union opposed the deferment and filed a preventive mediation complaint with the NCMB in July 2003 to determine the payment date of bonuses.
Both parties agreed on payment in April 2004; this was memorialized in a Memorandum of Agreement, though ETPI’s President refused to sign.
ETPI later changed its stance, refusing to pay bonuses pending compulsory arbitration as per a letter dated April 14, 2004.

ETEU filed a Notice of Strike on April 26, 2004, alleging unfair labor practice (ULP) for failure to pay economic benefits stipulated in the CBA.
The Secretary of Labor designated the dispute as a certified labor dispute subject to compulsory arbitration.

Issues: (a) whether there was unfair labor practice; (b) entitlement to 14th, 15th, and 16th month bonuses for 2003 and the 14th month bonus for 2004.
ETEU’s Position:

Bonuses were regularly given from 1975 to 2002 regardless of profits.
Bonuses had become company practice and contractual obligation through CBAs and side agreements.
Failure to pay constituted unfair labor practice.
Sought moral and exemplary damages and attorney’s fees.

Bonuses are discretionary, gratuities based on financial performance and company profits.
Alleged sustained losses justified withholding bonuses.
Bonuses do not form part of demandable wages.
Nonpayment was neither flagrant nor malicious.
Relief under Article 1267 of the Civil Code due to financial difficulties.

NLRC dismissed ETEU’s complaint on April 28, 2005.
Held that bonuses are management prerogative, conditional on profitability, and not legally enforceable.
Found no sufficient evidence of malice for ULP charge.
Denied ETEU’s motion for reconsideration.

CA annulled NLRC’s resolution on June 25, 2008.
Declared the bonuses as contractual obligations with no conditions attached.
Held that bonuses had ripened into company practice.
Determined that financial difficulties did not excuse ETPI from paying bonuses under Article 1267.
Dismissed ULP complaint.

Is ETPI liable to pay the 14th, 15th, and 16th month bonuses for 2003 and the 14th month bonus for 2004 to ETEU members?

Did the Court of Appeals err in annulling the NLRC’s resolution and in entertaining ETEU’s petition for certiorari?