Christmas bonus a contractual obligation if stipulated in CBA

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Persida Acosta

Persida Acosta

Dear PAO,
We were always given a P3,000 Christmas bonus by my company since I signed up working for them in 1999. This year, they said they are incurring losses and are effectively removing this benefit. Our CBA provided for the bonus and this agreement with management has not yet been changed. Is my employer-company’s action valid anyway?
Sincerely yours,
Jay

Dear Jay,
The Supreme Court (SC) speaking through Associate Justice Jose Perez discussed the concept of Christmas bonus that may be applicable to your situation. The case of Lepanto Ceramics Inc. v. Lepanto Ceramics Employees Association (G.R. No. 18066, 2 March 2010), where the SC upheld the release of the company’s Christmas bonus explained:

“By definition, a bonus is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employers business and made possible the realization of profits.

“A bonus is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.


“Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.” [Emphasis supplied]

In the said case, the Christmas bonus given to the employees over the years had been likewise incorporated in the company’s CBA. Thus, it was implied that it was given not just out of generosity but the same already forms part of the employees’ compensation.

In the said case, the employers even argued that they can no longer give the said benefit due to the losses they have incurred in the company.

The Honorable Supreme Court noted:

“All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.

“Hence, absent any proof that petitioners consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the contract.”

Consequently, since the employers in the said case failed to adduce proof of losses and that they have full knowledge of the existence of the said bonus in the CBA, the Christmas bonus was continued to be enjoyed by the company’s employees.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.

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