G.R. No. 100701 March 28, 2001
Producers Bank of the Philippines, petitioner, vs. National Labor Relations Commission and Producers Bank Employees Association, respondents.

FACTS

The Producers Bank Employees Association filed a complaint against Producers Bank for diminution of benefits (mid-year and Christmas bonuses and 13th month pay), non-compliance with Wage Order No. 6, and non-payment of holiday pay. The Labor Arbiter dismissed the complaint. The NLRC reversed this decision, ordering the bank to pay the claimed benefits and wage differentials. The bank, placed under conservatorship in 1984 due to financial distress, filed a motion for partial reconsideration, which was denied, prompting this petition for certiorari. The bank argued that the NLRC committed grave abuse of discretion, particularly in ignoring its financial losses and the applicable exemptions.
The bank contended that the bonuses were discretionary and could be withdrawn due to its dire financial condition, evidenced by conservatorship and millions in losses from 1984 to 1988. It also claimed exemption from Wage Order No. 6 due to its distressed status and argued that the holiday pay claim was unfounded as it was already integrated into the employees’ salaries. The union asserted that the bonuses, given consistently for over thirteen years, had ripened into a vested right under Article 100 of the Labor Code, prohibiting their unilateral diminution.

ISSUE

Whether the NLRC committed grave abuse of discretion in ordering the bank to pay the claimed bonuses, wage differentials, and holiday pay.

RULING

The Supreme Court granted the petition and set aside the NLRC decision. On the bonuses, the Court ruled that while a bonus may become a demandable right if given consistently over a long period, the employer’s financial incapacity is a valid defense for its discontinuance. Citing Traders Royal Bank v. NLRC, the Court held that the bank’s proven financial distress, including placement under conservatorship and substantial losses, justified the reduction and non-payment of the discretionary bonuses. The grant was not an enforceable obligation given the bank’s insolvency.
Regarding Wage Order No. 6, the Court found the bank exempt. The Wage Order expressly exempted distressed employers, defined as those currently incurring substantial losses. The bank’s conservatorship and financial statements conclusively proved its distressed status, making the wage differential claim untenable. On holiday pay, the Court ruled the bank had complied with Article 94 of the Labor Code. The holiday pay was already integrated into the employees’ monthly salaries, as confirmed by the collective bargaining agreement and the bank’s payroll system, which used the “factor” method for computation. Thus, no separate holiday pay was due. The NLRC’s decision was reversed for lack of legal basis.