American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc.
REITERATIONFacts
The Antecedents: American Wire and Cable Co., Inc. (the Company) is engaged in the manufacture of wires and cables and has two employee unions: the American Wire and Cable Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated Employees Union (petitioner). In February 2001, both unions filed an action for voluntary arbitration, alleging that the Company unilaterally withdrew and denied several benefits previously enjoyed by employees. These benefits included a Service Award, 35% premium pay for specific workdays, the annual Christmas Party, and promotional increases for certain employees. Procedural History: The dispute was submitted to Voluntary Arbitrator Angel A. Ancheta. After the parties filed their respective position papers, the Voluntary Arbitrator rendered a decision on September 25, 2001, finding the Company not guilty of violating Article 100 of the Labor Code. The Voluntary Arbitrator declared that the withdrawal of the service award, Christmas party, and premium pay, as well as the denial of promotional increases, were not violations. A motion for reconsideration by the unions was denied on November 5, 2001. The Daily-Rated Union then appealed to the Court of Appeals under Rule 43, which affirmed the Voluntary Arbitrator's decision on March 6, 2002. A subsequent motion for reconsideration was denied on July 12, 2002. The Petition: The petitioner, the American Wire and Cable Daily-Rated Employees Union, filed the instant special civil action for certiorari under Rule 65, assailing the Court of Appeals' decision and resolution. The petitioner argues that the Court of Appeals erred in holding that the Company did not violate Article 100 of the Labor Code by unilaterally withdrawing benefits that had been long-standing practices and were not dependent on profits. They also contend that the Court of Appeals improperly relied on the Company's unaudited financial analysis to justify the withdrawal of benefits and erred in not recognizing the service award as a benefit based on service, not profit. The core issue presented to the Supreme Court is whether the private respondent is guilty of violating Article 100 of the Labor Code.
Issue(s)
Whether the private respondent is guilty of violating Article 100 of the Labor Code, as amended, when it unilaterally withdrew the benefits/entitlements. Whether the Court of Appeals erred in accepting the respondent company's unaudited Revenues and Profitability Analysis. Whether the yearly service award is dependent on profit or service.
Ruling
The Supreme Court affirmed the Decision and Resolution of the Court of Appeals, upholding the ruling of the Voluntary Arbitrator. The Court found that the benefits withdrawn were in the nature of bonuses, which are management prerogatives and not demandable obligations unless made part of the wage or salary, or expressly agreed upon, or had a fixed amount and were a long and regular practice. The Court also found no proof of promotion for the fifteen (15) employees, thus negating the claim for promotional increase.
Ratio Decidendi
On the alleged violation of Article 100 of the Labor Code by unilateral withdrawal of benefits: The Court reiterated the definition of a bonus as an amount granted out of generosity and munificence, which is not a demandable and enforceable obligation except when it is made part of the wage, salary, or compensation. The 35% premium pay, Christmas party, and service award with cash incentives were characterized as bonuses. These benefits were not subjects of any express agreement, not incorporated in the Collective Bargaining Agreement (CBA), and did not have fixed amounts. The Court noted a downtrend in the amounts given for service awards and in the scale of Christmas parties, indicating inconsistency. The 35% premium pay was only granted for two years with an express reservation from the owner due to the company's financial situation, thus not ripening into a company practice. To hold an employer liable for withdrawing bonuses granted out of kindness would penalize past generosity. Therefore, the withdrawal did not violate Article 100 of the Labor Code. On the acceptance of the respondent company's unaudited Revenues and Profitability Analysis: The Court found it unnecessary to delve into the Revenues and Profitability Analysis for the years 1996-2000. Having ruled that the withdrawn benefits were bonuses and not demandable obligations, the justification for their withdrawal, whether based on audited or unaudited financial statements, became moot. The Court acknowledged that while audited financial statements are the normal method of proof for profit and loss, the cited cases did not mandate it as the only legal method. However, the core issue was the nature of the benefits themselves, not the company's financial justification for their withdrawal. On whether the yearly service award is dependent on profit or service: The Court classified the service award, particularly when accompanied by cash incentives, as a bonus. As such, it falls under the same principles as other bonuses. The Court noted that the amount given as service award had shown a downtrend over the years, indicating inconsistency. While service is a factor, the accompanying cash incentive, when granted, was considered part of a bonus. The Court reiterated that for a bonus to be enforceable, it must be a demandable obligation, which was not established in this case for the service award with cash incentives. The Voluntary Arbitrator's direction for the company to grant service awards at its discretion, in consultation with the unions on grounds of equity and fairness, was noted but did not alter the classification of the cash incentive as a non-demandable bonus.
Main Doctrine
The withdrawal of benefits that are considered bonuses, which are not made part of the wage, salary, or compensation, and which have not been incorporated into the Collective Bargaining Agreement or established as a regular and consistent practice, is a management prerogative and does not violate Article 100 of the Labor Code, as amended. Furthermore, the grant of a promotional increase requires proof of actual promotion.