Case Summary (G.R. No. 210488)
Initial Collective Bargaining and Bonus Offer
During the 1997 CBA negotiations, petitioner offered a four thousand pesos (₱4,000.00) early conclusion bonus to each employee as a unilateral incentive to expedite negotiation efforts. This bonus was paid after the conclusion of the CBA. Upon the expiration of that CBA, negotiations for a new agreement began in 1999 but eventually reached an impasse after eleven meetings. The labor union declared a deadlock and filed a Notice of Strike.
Conciliation and Mediation Efforts
Conciliation and mediation conferences were held under the National Conciliation and Mediation Board (NCMB) with eighteen unresolved negotiation items initially. By November 20, 1999, an agreement was reached on fourteen items, but four significant issues—wages, rice subsidy, signing bonus, and retroactive pay—remained unsettled. Consequently, the union launched an eleven-day strike starting January 18, 2000, which caused operational disruption and financial losses for PHILACOR, prompting a labor dispute resolution petition to the Department of Labor and Employment (DOLE).
Secretary of Labor’s Orders
Labor Secretary Laguesma intervened, ordering the strikers to return to work and directing PHILACOR to reinstate them. Subsequently, on April 14, 2000, the Secretary issued an order setting wage increases and maintaining other benefits at current levels but ruling in favor of PHILACOR’s proposal to grant a signing bonus of ₱3,000. He directed both parties to formalize the CBA including these terms and previously agreed items.
Petitioner’s Motion for Reconsideration and Ruling
PHILACOR filed a motion for reconsideration contesting the signing bonus award, asserting that the bonus was an incentive unrelated to regular employee benefits or enforceable obligations under the law or CBA. The company argued that since mutual agreement on the CBA was not achieved, the condition for the bonus was unmet. Secretary Laguesma denied this motion, noting the union bore no sole responsibility for the negotiation failure and that the bonus had been granted in the previous CBA period.
Court of Appeals and Supreme Court Review
PHILACOR appealed to the Court of Appeals, which upheld the Labor Secretary’s decision. The Court reasoned that the bonus offer was still operative and enforceable since PHILACOR had not withdrawn it when the dispute was brought before DOLE, preventing inconsistent postures by the employer. The petition for reconsideration was denied, prompting this appeal to the Supreme Court.
Core Legal Issue: Signing Bonus as Incentive vs. Demandable Benefit
The Supreme Court focused on whether the signing bonus constitutes a demandable benefit under existing labor laws and CBA doctrine, primarily relying on the 1987 Constitution provisions and precedents such as the Caltex case (G.R. No. 123782, 1997) and MERALCO case (G.R. No. 127598, 1999). The Caltex decision clarified that signing bonuses are incentives for swift and amicable CBA conclusion and not regular benefits covered by the “maintenance of existing benefits” clause. They are not demandable unless agreed upon or consistently practiced as a regular benefit.
Application of the Caltex Doctrine and Precedents
The Court found that PHILACOR’s signing bonus offer was conditional on the amicable and speedy conclusion of negotiations, a condition unfulfilled given the labor dispute and strike. The absence of mutual agreement and the breakdown of negotiations extinguished the basis for the bonus. Furthermore, evidence showed the signing bonus was offered only once in the previous CBA negotiations, thus lacking the continuity and consistency required to establish it as a regular practice. As held in prior cases, the mere granting of a bonus once does not amount to a long-standing, deliberate practice that creates an enforceable obligation.
Conclusion and Final Ruling
The Supreme Court ruled that the award of the ₱3,000 signing bonus to PHILACOR employees was unjustified, unfair, and unreasonable given the failure of the parties to reach a new CBA through mutual effort. Bonuses remain discretionary and not demandable unless proved
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Case Syllabus (G.R. No. 210488)
Facts of the Case
- Philippine Appliance Corporation (PHILACOR) is a domestic manufacturer of refrigerators, freezers, and washing machines.
- The United Philacor Workers Union-NAFLU is the certified collective bargaining representative of PHILACOR's rank-and-file employees.
- In 1997, during the collective bargaining negotiations covering July 1, 1997 to August 31, 1999, PHILACOR offered its employees a P4,000 early conclusion bonus as a unilateral incentive to expedite the collective bargaining agreement (CBA) negotiations.
- The early signing bonus was subsequently given upon the conclusion of the said CBA.
- When the 1997-1999 CBA expired, the Union notified PHILACOR of its desire to negotiate a new CBA.
- Negotiations took place with 18 unresolved items at the outset.
- By November 20, 1999, 14 items were agreed upon, leaving four unresolved: wages, rice subsidy, signing bonus, and retroactive pay.
- The negotiations resulted in deadlock declared by the Union on October 22, 1999 after eleven bargaining meetings.
- A strike was declared on January 18, 2000, lasting 11 days, severely affecting PHILACOR’s manufacturing operations.
- The strike led PHILACOR to file a petition before the Department of Labor and Employment (DOLE), and Secretary Bienvenido E. Laguesma assumed jurisdiction.
- Secretary Laguesma ordered the return to work of striking employees and directed PHILACOR to reinstate them.
DOLE Secretary’s Disposition and Orders
- On April 14, 2000, Secretary Laguesma issued an order fixing wage increases at P30 per day for the first year and P25 for the second year of the new CBA.
- The rice subsidy and retroactive pay base were maintained at prior levels.
- The Secretary ruled in favor of PHILACOR’s proposal on the signing bonus, awarding a P3,000 signing bonus per employee as fair and reasonable.
- The Secretary directed PHILACOR and the Union to conclude a CBA for the term July 1, 1999 to June 30, 2001, incorporating the above dispositions.
Petitioner’s Arguments Against the Signing Bonus Award
- PHILACOR accepted the Secretary’s decision except for the signing bonus award, which it challenged via a partial motion for reconsideration.
- PHILACOR contended that the signing bonus was not a component of employees’ salaries, benefits, or the collective bargaining agreement but an incentive, and thus, it was not demandable or enforceable.
- The company argued the condition for the bonus—a swift and amicable conclusion of the CBA—was not fulfilled because the negotiations failed.
- PHILACOR maintained that since the CBA was not mutually concluded, the purpose of the early signing bonus was not served and the bonus should not have been awarded.
- The DOLE Secretary denied the reconsideration motion, noting the bonus was granted in the prior CBA and that delays in negotiation could not be solely attributed to the Union.
Procedural History and Issues on Appeal
- PHILACOR filed a Petition for Certiorari before the Court of Appeals (CA) challenging the award of the signing bonu