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EASTERN TELECOMMUNICATIONS PHILIPPINES v. EASTERN TELECOMS EMPLOYEES UNION

FACTS:

The dispute in this case involves the Eastern Telecommunications Philippines, Inc. (ETPI) and the Eastern Telecommunication Employees Union (ETEU). ETPI planned to defer the payment of the 14th, 15th, and 16th month bonuses for the year 2003, citing financial deterioration. ETEU opposed this deferral and filed a preventive mediation complaint. During a conference at the National Conciliation and Mediation Board (NCMB), an agreement was reached, but ETPI later reneged on this agreement. As a result, ETEU filed a Notice of Strike on the grounds of unfair labor practice. The Secretary of Labor and Employment certified the labor dispute for compulsory arbitration, with the issues for resolution being unfair labor practice and the grant of bonuses. ETEU claimed that the payment of bonuses was a company practice and contractual obligation, while ETPI disputed the authority of the National Labor Relations Commission (NLRC) to decide on the case.

In another set of facts, ETPI discontinued the payment of the 14th, 15th, and 16th month bonuses for the year 2003, as well as the 14th month bonus for the year 2004, due to serious business losses. ETEU filed a complaint with the NLRC, seeking the payment of these bonuses and alleging unfair labor practice on the part of ETPI. The NLRC dismissed the complaint, stating that the payment of bonuses was a management prerogative and that ETPI could not be compelled to pay the bonuses due to its financial condition. The Court of Appeals (CA) later annulled the NLRC's decision, holding that the bonuses were part of the employees' wages and that ETPI had a contractual obligation to pay them. ETPI appealed to the Supreme Court (SC), arguing that the CA committed several errors in its decision.

The issues in this case include whether ETPI is liable to pay the bonuses and whether the CA erred in not dismissing the union's petition. ETPI argues that the bonuses are not part of the employees' demandable wage and can be withheld due to economic difficulties and financial losses. They also contend that the CA should have dismissed the petition, as it only sought a re-evaluation of the evidence and not a question of jurisdiction. ETPI claims that the NLRC's findings, based on substantial evidence, were disregarded by the CA.

ISSUES:

  1. Whether or not ETPI is liable to pay the 14th, 15th, and 16th month bonuses for the year 2003 and the 14th month bonus for the year 2004 to the members of ETEU.

  2. Whether or not the CA erred in not dismissing outright ETEU's petition for certiorari.

RULING:

  1. The Supreme Court ruled that ETPI is liable to pay the 14th, 15th, and 16th month bonuses for the year 2003 and the 14th month bonus for the year 2004 to the members of ETEU. The bonuses are considered a contractual obligation and a company practice, making them enforceable and demandable regardless of ETPI's financial condition.

  2. The Supreme Court did not find merit in the contention that the CA erred in not dismissing ETEU's petition for certiorari. The Court affirmed the factual findings and rulings of the CA over those of the NLRC.

PRINCIPLES:

  1. Company Practice: A long-standing and consistent practice of granting bonuses becomes part of the employees' wages or salaries, making it demandable.

  2. Contractual Obligation: Provisions in side agreements of CBAs that grant bonuses without conditions impose a binding contractual obligation on the employer.

  3. Non-Diminution of Benefits: Article 100 of the Labor Code prohibits the elimination or diminution of benefits being enjoyed by employees.

  4. Management Prerogative: While bonuses are generally discretionary, they can become an enforceable right if established as part of a company practice or contractual obligation.

  5. Pecuniary Inability: Mere financial difficulty or business losses do not release a company from its contractual obligations under an existing CBA.

  6. Certiorari Under Rule 65: Find of fact by quasi-judicial bodies are final if supported by substantial evidence; exceptions occur when findings are contrary to lower bodies.