Universal Corn Products (A Division of Universal Robina Corporation) v. National Labor Relations Commission
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the payment of a Christmas bonus. In May 1972, Universal Corn Products (petitioner) and its union entered into a collective bargaining agreement (CBA) that stipulated a Christmas bonus equivalent to seven working days' wages for regular workers with at least one year of continuous service. This agreement was effective from June 1, 1971, to June 1, 1974. The petitioner claims that after the enactment of Presidential Decree No. 851 (the 13th-month pay law) in December 1975, it began paying the mandated 13th-month pay instead of the contractual Christmas bonus. 2. Procedural History: The union filed a complaint with the labor arbiter for the non-payment of the seven-day Christmas bonus from 1975 to 1978, as stipulated in the 1972 CBA. The labor arbiter ruled in favor of the petitioner, holding that the payment of the 13th-month pay precluded the obligation to pay the Christmas bonus. The union appealed this decision to the National Labor Relations Commission (NLRC). The NLRC reversed the labor arbiter's decision, directing the petitioner to pay the seven-day Christmas bonus for the years 1975 to 1978, citing that the bonus was a bargained benefit and could not be diminished or eliminated by the 13th-month pay, referencing Section 10 of the Implementing Rules of PD 851. The NLRC also noted that a subsequent CBA in 1979 did not include this bonus, implying an agreement to discontinue it. 3. The Petition: The petitioner seeks review of the NLRC's decision, invoking the ruling in National Federation of Sugar Workers (NFSW) v. Ovejera which held that PD 851 does not cover employers already paying an equivalent benefit. However, the Supreme Court, in its decision, distinguishes the present case from Ovejera and applies the principle from United CMC Textile Workers Union v. Valenzuela. The Court finds that the seven-day Christmas bonus, being a bargained benefit for loyalty and service, is distinct from the statutory 13th-month pay and is therefore an additional obligation. The Court also holds that the continued effect of the 1972 CBA provisions, even after its expiration and during negotiations for new agreements, provides a basis for the private respondents' claims for the bonus during the period in question.
Issue(s)
Whether the payment of the 13th-month pay under Presidential Decree No. 851 precludes the payment of a Christmas bonus granted under a collective bargaining agreement. Whether the seven-day Christmas bonus provided in the 1972 CBA, which was not included in subsequent agreements, should still be paid for the years 1975 to 1978.
Ruling
The petition is dismissed. The Decision of the NLRC directing the company to pay the 7-day wage bonus for 1975 to 1978 is affirmed.
Ratio Decidendi
On the issue of whether the 13th-month pay precludes the Christmas bonus: The Court held that the seven-day Christmas bonus provided in the collective bargaining agreement (CBA) is considered an additional benefit and not merely an equivalent of the 13th-month pay. This is because the CBA bonus was a result of bargaining negotiations and was intended as a reward for loyalty, evidenced by the requirement of at least one year of continuous service. This purpose is distinct from the mandatory 13th-month pay mandated by Presidential Decree No. 851. The Court cited United CMC Textile Workers Union v. Valenzuela which stated that a bonus under a CBA is an obligation created by contract, while the 13th-month pay is mandated by law, and the intention of the CBA provision was for the bonus to be in addition to the legal requirement. The Court emphasized that Section 10 of the Rules and Regulations Implementing PD 851 prohibits the elimination or diminution of existing employee benefits. On the issue of whether the bonus should still be paid despite the absence in subsequent agreements: The Court ruled that the absence of the seven-day bonus provision in the subsequent CBA (1979-1981) did not extinguish the company's obligation for the period when the 1972 CBA was still in effect or when its provisions continued to apply. It was noted that the 1972 CBA contained a stipulation that if no new agreement was executed, all provisions of the existing agreement would remain in full force until a new one was executed. Therefore, the fact that the new agreements were silent on the seven-day bonus did not preclude the private respondents' claims for the years 1975 to 1978, as the 1972 agreement remained the basis for such claims.
Main Doctrine
The grant of a Christmas bonus through a collective bargaining agreement, which is intended as a reward for loyalty or length of service, is considered an additional benefit and does not preclude the mandatory payment of the 13th-month pay under Presidential Decree No. 851, unless the CBA explicitly states that the bonus is in lieu of the 13th-month pay or is equivalent to it.