**Facts:** Eastern Telecommunications Philippines, Inc. (ETPI), a telecommunications company employing around 400 personnel, faced a labor dispute with its certified bargaining agent for rank-and-file employees, the Eastern Telecoms Employees Union (ETEU), with 147 regular members. The dispute originated from ETPI’s 2004 announcement to defer the payment of the 2003 14th, 15th, and 16th month bonuses due to alleged financial deterioration since 2000. ETPI delayed these payments to April 2004, contingent on fund availability. ETEU, citing a Collecting Bargaining Agreement (CBA) side agreement, contested this, leading to filing a preventive mediation complaint with the National Conciliation and Mediation Board (NCMB) in July 2003. The parties initially agreed on the deferment, but ETPI later rescinded, prompting ETEU to file a Notice of Strike for unfair labor practice (ULP). The labor dispute was certified for compulsory arbitration by the Secretary of Labor and Employment, leading to the National Labor Relations Commission (NLRC) decision on April 28, 2005, dismissing ETEU’s complaint. ETEU appealed to the Court of Appeals (CA), which annulled the NLRC’s resolution, mandating ETPI to pay the disputed bonuses but upheld the dismissal of the ULP charge.
**Issues:** The legal issues revolve around whether ETPI is contractually obligated to pay the 2003 and 2004 bonuses despite financial losses and if the CA erred in not dismissing ETEU’s petition for certiorari outright.
**Court’s Decision:** The Supreme Court denied the petition, affirming the CA’s decision that the side agreements of the CBA created a contractual obligation for ETPI to pay the specified bonuses without conditions. The Court rejected ETPI’s defense of financial losses, noting that the company had been aware of its financial state when it entered the agreements. They also established that the continuous granting of bonuses from 1975 to 2002 had evolved into a company practice, making it a demandable obligation. However, the allegation of unfair labor practice was still found meritless.
**Doctrine:** This case underscores the principle that bonuses can become a demandable and enforceable obligation when included as part of the wage, salary, or compensation of employees in a collective bargaining agreement. Furthermore, continuous giving of bonuses over a long period can evolve into a company practice, creating an obligation for the employer to continue the practice.
**Class Notes:**
1. **Bonuses as Contractual Obligations:** Bonuses specified in a collective bargaining agreement without conditions become part of the employees’ wage or salary, and thus, demandable.
2. **Company Practice:** A long and uninterrupted practice of giving bonuses can evolve into a demandable right, even if not specified in the employment contract.
3. **CBA and Side Agreements:** The importance of clarity and specificity in collective bargaining agreements and any accompanying side agreements to avoid disputes over interpretations.
4. **Financial Losses as Defense:** Financial losses do not automatically release an employer from fulfilling contractual obligations unless specifically provided for in the agreement or unless the situation fits exceptions under applicable laws, e.g., Article 1267 of the Civil Code.
5. **Unfair Labor Practice (ULP):** The criteria for a ULP involve more than just disputes over the fulfillment of contractual obligations unless there is evidence of malice or bad faith in the refusal to fulfill these obligations.
**Historical Background:** This case highlights the evolving nature of labor relations in the Philippines, where economic challenges and negotiations between employers and employees play a critical role in shaping labor practices and policies. It exemplifies how collective bargaining agreements and even long-standing company practices can lead to disputes requiring judicial intervention. This decision reinforces the principle that contractual commitments and established practices cannot be unilaterally altered or rescinded by employers, emphasizing the legal protections afforded to workers in the Philippines.
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