COCA COLA BOTTLERS PHILS., INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, MARIO G. USTARIS, ANGELINO POSTRADO, JR., CHRISTOPHER ALLAN CAPUCION, EDWIN CUDELDIEGO, RAJ…

Coca Cola Bottlers versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Coca Cola Bottlers Philippines against the National Labor Relations Commission and several of its regular rank-and-file employees, led by Mario Ustaris. The employees claimed that the company stopped giving them a yearly bonus, in addition to their thirteenth month pay, beginning in 2008, and that this amounted to a diminution of benefits. The case matters because it tests the boundary between a mere gratuity, which the law does not compel an employer to give, and a company practice, which has ripened into a demandable right that cannot be withdrawn. It also reminds the reviewee of the narrow scope of certiorari against labor tribunals.

Procedural History

The employees filed their complaint before the Labor Arbiter. Labor Arbiter Melchisedek Guan ruled in their favor, finding a diminution of benefits and ordering the company to pay the yearly bonuses for 2008 to 2010, plus attorney's fees. Coca Cola appealed to the National Labor Relations Commission, which dismissed the appeal and affirmed the Labor Arbiter in full, holding that the giving of the bonus had ripened into a company practice. The company's motion for reconsideration was denied. Coca Cola then came to the Supreme Court by petition for certiorari under Rule 65, assailing both the Commission's decision and its resolution.

Facts

Coca Cola Bottlers is a large beverage company with plants and sales offices throughout the country and thousands of direct employees. Over the years its ownership changed hands, passing through a joint venture, an Australian acquirer, a reacquisition by San Miguel Corporation, and finally full ownership by The Coca Cola Company. Throughout these changes, the employees received, every December, an amount over and above their thirteenth month pay.

The employees submitted payslips showing that these December grants were received in 2003, 2004, 2005, 2006, and 2007. The accompanying memoranda called them a one-time gift, a one-time Christmas gift, a one-time bonus, and a one-time transition bonus. None of the memoranda conditioned the grant on profits, on available funds, or on employee performance. Instead, the Board thanked the employees for their support, dedication, passion, and commitment.

When the grants stopped in 2008, the employees complained of diminution of benefits. The company countered that the amounts were one-time grants of varying amounts and forms, sometimes cash and sometimes gift certificates, and were never a demandable right. The Labor Arbiter and the Commission both sided with the employees, prompting this petition.

Issues

• Whether or not the yearly bonus was a product of a contractual agreement between the parties, whether through individual employment contracts or a collective bargaining agreement.
• Whether or not the previous grants ripened into a company practice, making the bonus a demandable benefit and bringing the case under the rule on non-diminution of benefits.
• Whether or not the National Labor Relations Commission acted with grave abuse of discretion in ruling for the employees.
• Whether or not the doctrine of stare decisis, based on a prior decision involving the company's San Fernando employees, bars the present claim.

Applicable Provisions

The decision anchors the employees' claim on Article 100 of the Labor Code, which the Court cites through the Sevilla Trading ruling. It provides:

With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years.

This tells us that no fixed number of years is required before a voluntary grant becomes a practice that cannot be withdrawn.

The same Sevilla Trading ruling concludes with the statutory command:

This, we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Article 100 of the Labor Code.

Article 100 is thus the provision that forbids the unilateral withdrawal of a benefit already enjoyed by employees.

On the nature of a bonus, the Court quotes Galicto versus Aquino III:

A bonus is not a demandable and enforceable obligation. By definition, a "bonus" is a gratuity or act of liberality of the giver which cannot be demanded as a matter of right by the recipient. It is something given in addition to what is ordinarily received by or strictly due to the recipient. The grant thereof is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages, especially so if it is incapable of doing so. Thus, there can be no oppression to speak of even if these privileges (bonuses, allowances and incentives) cease to be given.

This is the starting point: a bonus is generally a gratuity, not an obligation.

On the standard for certiorari, the Court quotes Arguelles versus Young:

By 'grave abuse of discretion' is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. It should not however, be overlooked that abuse of discretion alone is not sufficient. To warrant the issuance of the writ on that ground, the abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.

This defines the high threshold the company had to meet, and did not.

Ruling

On the first issue, the Court did not rest on contract. It accepted that a bonus can be enforceable if promised by the employer and expressly agreed upon by the parties, but it found the demandable right elsewhere, in company practice.

On the second issue, the Court held that the yearly bonus had ripened into a company practice. The payslips and the sworn statements proved that the grants were given every December from 2003 to 2007, and the company did not deny this. The memoranda attached no condition as to funds, profits, or performance, which showed the grants were given out of liberality. The Court rejected the company's argument that the label one-time meant the grant was given only once, because the fact was that, despite the title, it was given yearly. The Court also rejected the argument that San Miguel, not Coca Cola, gave the bonuses in some years, since the memoranda showed no condition at all. Citing the Meralco case, the Court held that the considerable length of time of giving the special grants indicated a unilateral and voluntary act to continue giving them, knowing the law did not require it, so that withdrawal would amount to diminution of existing benefits.

On the third issue, the Court found no grave abuse of discretion. The Commission's decision rested on evidence the parties submitted, and it relied on jurisprudence, particularly the Meralco ruling. The Court stressed that in certiorari it reviews only errors of jurisdiction, not errors of judgment, and quoted Madrigal Transport versus Lapanday Holdings:

The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the purpose of reviewing the intrinsic correctness of a judgment of the lower court — on the basis either of the law or the facts of the case, or of the wisdom or legal soundness of the decision. Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such correction is normally beyond the province of certiorari. Where the error is not one of jurisdiction, but of an error of law or fact — a mistake of judgment — appeal is the remedy.

On the fourth issue, the Court held that stare decisis did not apply. This was not an appeal where errors of law are corrected; it was a certiorari petition limited to jurisdictional issues. Since the Commission had jurisdiction and committed no grave abuse of discretion, the petition had to be dismissed.

Doctrine

A bonus is, by nature, a gratuity or act of liberality that cannot be demanded as a matter of right, and its grant is a management prerogative. But a bonus becomes enforceable when it is promised by the employer and expressly agreed upon by the parties, or when the giving of it ripens into a company practice. To ripen into a company practice, the grant must be shown to have been given over a long period of time, consistently and deliberately, with an indubitable showing that the employer agreed to continue giving the benefit knowing that the law did not require it. No specific minimum number of years is required. Once ripened, the benefit cannot be unilaterally withdrawn, reduced, diminished, discontinued, or eliminated, because doing so violates Article 100 of the Labor Code on non-diminution of benefits. The label attached to the grant, such as one-time, does not control; what controls is the actual, repeated, and unconditional giving. Finally, a petition for certiorari against the National Labor Relations Commission reaches only errors of jurisdiction and grave abuse of discretion, not errors of judgment.

Disposition

The petition for certiorari was dismissed for lack of merit, and the Commission's decision and resolution were affirmed, so the employees prevailed and the yearly bonuses were upheld.

Remember This

The single line to memorize: a bonus is a gratuity, but a bonus given yearly, consistently, and without condition ripens into a company practice that cannot be withdrawn without violating Article 100. Examiners use this case to test the ripening of bonuses into company practice, the rule on non-diminution of benefits, and the narrow scope of certiorari against labor tribunals.