PHILIPPINE EDUCATION CO., INC., PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS AND UNION OF PHILIPPINE EDUCATION EMPLOYEES (NLU), RESPONDENTS.

On 9 August 1950 the respondent Union of Philippine Education
Employees (NLU) filed a petition in the Court of Industrial Relations submitting
a 17-point demand for arbitration and adjudication (Case No. 489-V). On 27
November, the respondent union filed in the same case a motion (No. 489-V[4]),
pleading—

1. That it had been the established policy and practice of the
   respondent to consider its employees and laborers as part-owners of its business
   and to grant them a share in the profits annually in the form of a bonus;

2. That for the fiscal year ending on March 31, 1950, the
   respondent made a net profit of P513,666.39 out of its invested capital of
   P1,973,300.00;

3. That on September 20, 1950, a demand was made by the
   petitioner on the respondent for the payment of the bonus corresponding to the
   share of the employees and laborers in the profits made by it, but by reason of
   the union activities of the said employees and laborers, the respondent refused
   to pay the same;

4. That a profit of 12 per cent of the capital invested had
   been considered by this Court as a fair return on investments.

The motion ends with a prayer that the petitioner “be ordered
to pay its employees and laborers as their share in the profits in the form of a
bonus the amount of P513,666.39 less an amount corresponding to 12 per cent of
P1,973,300 as the profit of the company on its invested capital.”

Petitioner’s answer denied the allegations of the respondent
union that it had considered its employees and laborers as part owners of its
business and that for that reason granted them a share in the profits annually
in the form of bonuses, the truth being that bonuses have been paid by the
company in us discretion, merely as a gift to deserving employees as it saw fit;
admitted that it had realized profits amounting to P513,666.39 upon its invested
capital of P1,973,300.00; that a demand for payment of bonuses was made but they
were not paid not because of union activities but of losses sustained by reason
of the strike and of the damaging effects of the import and exchange controls;
alleged that the court did not have jurisdiction over the subject matter of the
motion and could not entertain it for the reason that the basic petition of the
respondent union contained no demand for payment of bonus, and that it would be
taking property without due process of law and, therefore, unconstitutional, if the court would compel the petitioner to pay its employees and laborers the
profits it had realized in excess of 12 per cent of its invested capital.

On 30 July 1951 the Court of Industrial Relations issued an
order directing the petitioner to pay the amount of P90,706.36 set aside as
bonus to its officers and employees who had been in the service during the
fiscal year ending 31 March 1950 in proportion to their respective salaries and
length of service. This order was followed by another in bane denying
unanimously a motion for reconsideration.

The case is now before us upon a petition for a writ of
certiorari to review the order.

It is contended that in accordance with sections 2 and 4 of
Rule 2, which discourage multiplicity of suits or splitting a cause of action,
the petition filed on 9 August 1950 which failed to include a demand for the
payment of bonus may be pleaded in abatement of the motion praying for such
payment. This is true in ordinary civil suits but not in proceedings in the
Court of Industrial Relations. However, the original 17-demand petition was
filed on 9 August 1950, the demand for the payment of bonus was made on 20
September and the motion to compel the petitioner to pay it was filed on 27
November after the latter’s refusal to pay the same, so that the motion may be
deemed to be a supplemental pleading of a demand which arose subsequent to the
filing of the original petition. The respondent union could not have included
the demand for the payment of bonus in its original 17-point demand petition
because on the date of its filing it did not know whether its demand for the
payment of bonus was to be granted.

Petitioner’s admission of the facts pleaded in par. 2 of the
motion of 27 November which reads thus—

That for the fiscal year ending on March 31, 1950, the
respondent made a net profit of P513,666.39 out of its invested capital of
P1,973.300.00,

despite objection to the hearing of the motion to compel it to
pay bonus upon its erroneous belief that the court had no jurisdiction to hear
the motion which led it not to present any evidence, dispenses with the
presentation of evidence on the amount of profit realized out of the capital
invested in its business during the fiscal year ending 31 March 1950. Although
there is no express admission by the petitioner as to the sum of P90,706.36 set
aside to pay bonus the evidence shows that such amount has been set aside for
the purpose (Exhibit F). The petitioner does not deny it.

Section 13 of Commonwealth Act No. 103 authorizes and empowers
the Court of Industrial Relations to make awards not only on the specific relief
claimed or demand made by the parties to a dispute, but also on such as it may
deem necessary or expedient to settle or prevent further disputes. One reason
for denying the payment of bonus is the strike by members of the respondent
union which caused losses to the petitioner. The order of the respondent court
states that the strike staged on 20 August 1950 was declared legal in its order
of 27 October from which no appeal was taken. Another is the anticipated adverse
effect on its business by the import and exchange controls.

As a rule, a bonus is an amount granted and paid to an employee
for his industry and loyalty which contributed to the success of the employer’s
business and made possible the realization of profits. It is an act of
generosity of the employer for which the employee ought to be thankful and
grateful. It 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. And the occasion for its grant and payment is usually during the time
of the year when people are more generous and inclined to give. This is the
Christmas holidays. If by the bookkeeping or accounting system, the closing of
the books is not made at the end of the calendar year, bonus is granted at the
close of the fiscal year when the net profits realized in the preceding year are
definitely known. From the legal point of view a bonus is not a demandable and
enforceable obligation. It is so when it is made a part of the wage or salary or
compensation. In such a case the latter would be a fixed amount and the former
would be a contingent one dependent upon the realization of profits. If there be
none, there would be no bonus. In the matter of Sullivan Dry Dock and Repair
Corporation and Local 13, Industrial Union of Marine and Shipbuilding Workers of
America, C.I.O. (Decisions and Orders of the National Labor Relations Board,
Vol. 67, page 627), cited by the respondent court and the respondent union, the
Christmas bonus paid in previous years and paid in 1944 to other workers was
withheld from the timekeepers; the latter through their representative demanded
its payment; the management refused to pay it but proposed that the payment of
bonus for the ensuing year (1945) be made the subject of bargaining for
contract. The company’s attorney and labor relations officer stated that the
bonus paid “has been in existence for such a period of time that it has been,
under the interpretation of the Wage Stabilization Act, an integral part of the
wage structure.” (p. 632.) The bonus demanded was ordered paid. The case of
Singer Mfg, Co. vs. National Labor Relations Board, 119 F. 2d 131, invoked by
the respondent union on the matter of bonus, has no application to the present
case because what the Circuit Court of Appeals, Seventh Circuit, ruled is that
the petitioner refused to bargain in good faith with its employees and their
designated bargaining agent and among the matters to be threshed out was the
payment of bonus as part of the wage. What would support, though faintly,
respondent union’s position is the rule laid down by the Supreme Court of
Washington (state) in Powell et al. vs. Republic Creosoting Co., 19 P. 2d 919,
where it was held (one justice dissenting) that bonus payment made annually for
over a period of years (from 1916 to 1929) by the employer to a branch manager
constituted, by implied agreement, part of the manager’s salary.

As heretofore stated the payment of bonus is not from the legal
point of view a contractual and enforceable obligation. But the petitioner is
not sued before a court of justice. It is before the Court of Industrial
Relations. And according to the law of its creation it may make an award for the
purpose of settling and preventing further disputes. And taking into
consideration the facts and circumstances of the case—that bonuses had been
given to the employees at least in three previous years; that the amount of
P90,706.36 has been set aside for payment as bonus to its employees and laborers
and the reason for withholding the payment thereof was the strike staged by the
employees and laborers for more favorable working conditions which was declared
legal by the respondent court—justice and equity demand that bonus already set
aside for its employees and laborers be paid to them. The award would still be
within the ambit of the respondent court’s power and function which is mainly to
prevent further disputes and perhaps strikes which is so detrimental to both
labor and management and to the public weal. Whether this petition be deemed an
appeal by certiorari under Rule 44 or one of certiorari under Rule 67, it is
clear that the respondent court had under and pursuant to the law of its
creation the power and authority to make the award complained of.

The order appealed from is affirmed, without costs.

Paras, C. J., Pablo, Bengzon, Tuason, Jugo, Bautista Angelo, and Labrador, JJ., concur.