G.R. No. 133385 - People vs. Delos Reyes

On November 18, 1986, the Traders Royal Bank (TRB) faced a letter-complaint filed by its employees’ union through its president with the Bureau of Labor Relations.
The complaint alleged several irregularities including:

TRB’s payment of holiday pay without furnishing the computation basis to the union.
An alleged decrease in the daily salary rate leading to a corresponding reduction in overtime pay.
A diminution in employee benefits, specifically a change in the computation of mid-year and year-end bonuses from previous practices (from two months gross pay to two months basic pay for the mid-year bonus, and from three months gross pay to two months gross pay for the year-end bonus).
The management’s unilateral decision not to recall active union members from branch transfers, purportedly initiated solely at the direction of a branch manager.

In its answer, TRB noted that the complaints involving monetary claims should be addressed by the National Labor Relations Commission (NLRC) and not under the jurisdiction of the Bureau of Labor Relations.
On March 24, 1987, the Secretary of Labor certified the complaint to the NLRC. The issues submitted for resolution mirrored the union’s allegations regarding computation of holiday pay, reduction of bonuses, and improper transfer practices.

Concurrent with the complaint, TRB and the union were engaged in negotiations for a collective bargaining agreement.
The parties reached agreement on several points regarding bonus payments:

No claim for bonus diminution would be made if the bonus paid was less than in previous years.
Only two months bonus were guaranteed, thereby making only this portion a part of regular compensation.
Additional bonuses (the third and fourth) were to be determined based on the bank’s income, hence non-demandable as fixed compensation.

Despite the terms of the CBA, the union maintained that the agreement applied prospectively, thus preserving their right to claim for bonus differentials prior to its effectivity.

On September 2, 1988, the NLRC rendered a decision in favor of the employees, ordering TRB to pay:

A holiday differential for the period of 1983-1986 (with computation adjustments starting November 11, 1983).
Differential payments for the mid-year bonus (the difference between two months gross and two months basic pay).
An end-year bonus differential equating to one month gross pay for 1986.

The NLRC dismissed the claim for the holiday differential prior to November 11, 1983 due to prescription and dismissed the charge of unfair labor practice.
A motion for reconsideration by TRB was filed but subsequently denied, leading to this petition for certiorari challenging the NLRC’s award related to bonus differentials.

The practice of bonus payment, traditionally two months basic mid-year and two months gross year-end, was challenged on the grounds that bonuses are determined by the profitability of the bank.
Evidence indicated that from 1979–1985, bonus amounts were lower due to decreased income; however, in 1986, TRB paid out its usual bonus despite an income of only 20.2 million pesos.
Subsequent to 1986, TRB experienced significant decline due to political developments, leading to its sequestration and management under the Presidential Commission on Good Government (PCGG).

Whether the negotiated collective bargaining agreement (CBA) should apply prospectively only, thus barring the union’s claims for bonus differentials arising before its effectivity.
Whether the NLRC erred in ordering TRB to pay mid-year and year-end bonus differentials for 1986, given that bonuses are inherently a voluntary act of liberality or a management prerogative.
Whether the NLRC gravely abused its discretion, particularly in mandating bonus differential payments when such bonuses are dependent on the bank’s profits and are not a fixed component of employee compensation.