MANILA HOTEL COMPANY, PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS AND PINES HOTEL EMPLOYEES ASS’N. (CUGCO), RESPONDENTS.

Manila Hotel Company versus Court of Industrial Relations and Pines Hotel Employees Association

The Case

This case consolidates three appeals brought by the Manila Hotel Company against the Court of Industrial Relations and the Pines Hotel Employees Association. The disputes arose from the company's operation of the Pines Hotel in Baguio City, beginning with an unfair labor practice charge and culminating in the abrupt termination of all eighty-six employees upon the hotel's sudden sale. The case matters because it defines the scope of the industrial court's jurisdiction to enforce settlements and grant affirmative relief, and it illustrates what constitutes unlawful discrimination in the grant of company benefits.

Procedural History

The first case began when the Court of Industrial Relations prosecutor, at the union's instance, filed an unfair labor practice charge against the company and its general manager. After hearing, the industrial court found the company guilty on two counts of discrimination and ordered it to cease and desist, distribute the 1965 Christmas bonus on a pro-rata basis, and implement salary adjustments under the new Minimum Wage Law. The company's motion for reconsideration was denied, and it appealed to the Supreme Court.

While that case was pending, the hotel was sold and all employees were terminated. The union filed an urgent petition with the industrial court, which was docketed as a supplemental case. The court ordered payment of gratuities to the employees, and the company appealed those payment orders as well. The Supreme Court consolidated all three appeals because of their related nature.

Facts

The company had followed a practice for six or seven years of distributing its Christmas bonus, amounting to seven percent of net profit, pro-rata among all employees of its three establishments. In 1965, however, it radically departed from this practice, allotting fifty percent of the bonus to eight Manila Hotel employees, twenty-five percent to the Taal Vista Lodge, and only twenty-five percent to the one hundred twenty Pines Hotel employees. Two Manila employees received year-end bonuses of over two thousand pesos each, while no Pines Hotel employee received any year-end bonus.

When the Minimum Wage Law took effect in July 1965, mandating a two-peso increase in the daily minimum wage, the company again discriminated. The eight Manila office employees received eighteen thousand pesos in salary adjustments, while eighty Pines Hotel employees received only fifteen thousand pesos in the aggregate. The company claimed financial reverses, yet it granted generous adjustments to its Manila employees where no union existed.

On March 28, 1968, the National Development Company sold the Pines Hotel to a third party, and the company abruptly terminated all eighty-six employees effective the close of business that same day. The union filed an urgent petition, and at conferences before the industrial court, the company agreed to pay retirement gratuities. Its board approved payment to those with twenty years or more of service in accordance with law, and to those with one to nineteen years of service at the rate of one month's salary for every year of service, not exceeding twelve months. The company deposited one hundred thousand pesos with the court, and the union withdrew its picket line.

Issues

• Whether or not the company committed unfair labor practice by discriminating against Pines Hotel employees in the distribution of the 1965 Christmas bonus.
• Whether or not the company committed unfair labor practice by discriminating against Pines Hotel employees in the granting of salary adjustments under the Minimum Wage Law.
• Whether or not the Court of Industrial Relations had jurisdiction to issue payment orders enforcing the settlement agreement for gratuities to the terminated employees.

Applicable Provisions

Section 5 of Republic Act 875, the Industrial Peace Act, provides for the court's power to prevent unfair labor practices and to grant affirmative relief. The decision quotes the relevant portion as follows:

Section 5. Unfair labor practice cases. — The Court shall prevent any person from engaging in any unfair labor practice. This power shall be exclusive and shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, code, law, or otherwise.

This provision authorized the industrial court to order the pro-rata distribution of the bonus and the salary adjustments as affirmative relief once discrimination was found.

Ruling

On the first issue, the Court ruled that the company committed unfair labor practice through discrimination in the Christmas bonus. The company's claim that the Manila Hotel realized a profit while the other establishments incurred losses was bereft of factual basis. The record showed that the Manila Hotel's only income came from leasing its building, with which the eight administrative employees had nothing to do. The Court quoted the industrial court's finding with approval:

To the mind of the Court, whether or not the Pines Hotel incurred losses is of no moment. The fact that management granted Christmas bonus to its employees, the same should have been divided equally as it has been done before. This is a clear case of discrimination, it appearing that there is no union at the Manila Hotel or the Taal Vista Lodge.

On the second issue, the Court ruled that the company's failure to implement the new minimum wage was likewise discriminatory. The interpretative bulletin relied upon by the company referred to daily wage employees, not monthly paid ones, and was merely an opinion. The company's claim of financial distress was belied by its grant of large adjustments to Manila employees and year-end bonuses to two of them.

On the third issue, the Court ruled that the industrial court had jurisdiction to issue the payment orders. The company had recognized the court's jurisdiction by settling the dispute, depositing one hundred thousand pesos, and agreeing to pay gratuities. The Court held that since the employees' claims had been settled, the industrial court certainly had jurisdiction to issue its payment orders to implement the very agreement and settlement arrived at by the parties.

Doctrine

An employer commits unfair labor practice when it discriminates in the grant of benefits between employees based on union membership, even where the grant of such benefits is discretionary. Once management grants a benefit, it must be distributed without discrimination against union members.

The Court of Industrial Relations has jurisdiction to enforce a settlement agreement voluntarily entered into by the parties during the pendency of an unfair labor practice case, including the power to order payment of amounts agreed upon, even after the employer-employee relationship has ceased.

Disposition

The Supreme Court affirmed the decisions and orders of the Court of Industrial Relations, and the appeals of the Manila Hotel Company were dismissed.

Remember This

Discrimination in company benefits based on union activity is unfair labor practice, and the industrial court may order affirmative relief to correct it. Examiners like to use this case to test whether a discretionary benefit, once given, must be distributed without anti-union discrimination.