ZAYBER JOHN B. PROTACIO, PETITIONER, VS. LAYA MANANGHAYA & CO. AND/OR MARIO T. MANANGHAYA, RESPONDENTS.

Protacio versus Laya Mananghaya and Company

The Case

This is a labor case that began when Zayber John Protacio, a former Tax Principal of the accounting firm Laya Mananghaya and Company, sued the firm and its managing partner, Mario Mananghaya, for unpaid benefits after his resignation. The labor tribunals and the Court of Appeals disagreed on how much he was owed, and the Supreme Court was asked to settle the matter. The case matters to a reviewee because it draws the line between a demandable wage and a mere bonus, and because it explains when an appellate court may look behind the factual findings of the labor tribunals.

Procedural History

Protacio filed a complaint before the National Labor Relations Commission. The Labor Arbiter, Eduardo Carpio, ruled in his favor and ordered the firm to pay reimbursement claims, the underpayment of the cash equivalent of his unused leave credits, his year-end lump sum payment, and attorney's fees. The firm appealed to the National Labor Relations Commission, which affirmed the decision but reduced the reimbursement claims. The firm then went to the Court of Appeals on a petition for certiorari. The Court of Appeals modified the award, further reducing the money judgment and deleting the lump sum payment. Protacio's motion for reconsideration was denied. He then came to the Supreme Court by a petition for review on certiorari under Rule 45.

Facts

The firm hired Protacio as Tax Manager in April 1996 and promoted him twice, first to Senior Tax Manager and then, in October 1997, to Tax Principal. In August 1999 he tendered his resignation effective the end of September 1999. Beginning in December 1999 he sent demand letters for his thirteenth month pay, the cash commutation of his leave credits, his tax withholding certificate, and his reimbursement claims. When the firm did not act, he filed his labor complaint in December 1999.

During the pendency of the case, the firm sent him checks covering his thirteenth month pay, part of his leave credits and reimbursement claims, and a refund of taxes withheld on his vacation leave credits. He acknowledged the thirteenth month pay but disputed the computation of the rest. The firm explained that his abrupt departure, together with three other members of its Tax Division, had made it difficult to determine his accountabilities.

The dispute centered on three amounts. On the year-end lump sum, the evidence showed that Protacio had received a yearly lump sum during his first two years of employment, paid only after the firm's annual net income had been determined, so that the amounts varied with the firm's financial performance. On the leave credits, the firm had paid his thirteenth month pay based on a monthly figure of 95,000 pesos, which included his basic salary and several regular allowances. On the divisor, the firm's counsel had expressly admitted in a letter that it used a 26 working day divisor.

Issues

• Whether or not the Court of Appeals violated the constitutional requirement that decisions state the facts and the law when it denied the motion for reconsideration in a summary resolution.
• Whether or not the Court of Appeals committed grave abuse of discretion in taking cognizance of the certiorari petition and re-evaluating the evidence.
• Whether or not the Court of Appeals erred in using a larger divisor in computing the daily salary rate, thereby diminishing the benefits due.
• Whether or not the Court of Appeals erred in reversing the concurring findings of the Labor Arbiter and the National Labor Relations Commission on the compensable nature of the year-end lump sum claim.

Applicable Provisions

Section 14, Article VIII of the Constitution provides:

Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based. No petition for review or motion for reconsideration of a decision of the court shall be refused due course or denied without stating the legal basis therefor.

This governs the first issue, on whether the denial of the motion for reconsideration had to state its legal basis.

Section 2, Rule IV, Book III of the implementing rules of the Labor Code provides:

Section 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve.

This is the provision the Court of Appeals relied on for its 30 day divisor, which the Supreme Court held inapplicable to the commutation of leave credits.

Ruling

On the first issue, the Court held that the assailed resolution was not a decision within the meaning of the constitutional requirement. That mandate applies only to cases submitted for decision. What applies to a denial of a motion for reconsideration is the second paragraph, and the resolution complied with it because it stated the legal basis of the denial, namely that the appellate court found no cogent reason to reverse itself.

On the second issue, the Court restated the general rule that in certiorari the appellate court does not weigh the sufficiency of evidence, its query being limited to whether the labor tribunal acted without or in excess of jurisdiction or with grave abuse of discretion. It recognized the exception: the appellate court may examine the factual findings if they are not supported by substantial evidence. The Court found the exception present, because the lump sum award of 573,000 pesos seemed to have been plucked out of thin air, especially since Protacio himself had claimed 674,756.70 pesos, with no proof supporting either figure.

On the fourth issue, taken before the third in the Court's discussion, the Court held that the year-end lump sum was a bonus, not a demandable wage. It defined a bonus as a gratuity or act of liberality of the giver, something given in addition to what is ordinarily received or strictly due. A bonus is generally not a demandable and enforceable obligation; it becomes so only when made part of the wage or salary or compensation, and when it is, the amount is usually fixed. If the amount is contingent on the realization of profits, the bonus is not demandable. Since the payments varied and depended on the firm's financial position, and since granting the bonus was a management prerogative, the firm was justified in declining it on account of Protacio's unsatisfactory performance.

On the third issue, the Court held that the monthly compensation of 71,250 pesos used by the Court of Appeals was totally without basis. The evidence showed a monthly compensation of 95,000 pesos, consisting of a basic salary of 61,000 pesos, advance incentive pay of 15,000 pesos, transportation allowance of 15,000 pesos, and representation allowance of 4,000 pesos, all deemed part of his compensation package. The firm's act of paying his thirteenth month pay at the rate of 95,000 pesos was an admission that this was his basic monthly salary. On the divisor, the Court held that the provision invoked by the Court of Appeals had long been nullified and was in any case inapplicable, since it referred to holiday pay for monthly-paid employees. The firm's counsel had expressly admitted the use of a 26 working day divisor. With a monthly compensation of 95,000 pesos and a 26 day divisor, the daily rate is 3,653.85 pesos, and the cash equivalent of 23.5 leave credits is 85,865.48 pesos. Since he had already received 46,009.67 pesos, a balance of 39,855.80 pesos remained payable.

Doctrine

A bonus is a gratuity or act of liberality of the giver, and is generally not a demandable and enforceable obligation. It becomes demandable only when it is made part of the wage or salary or compensation, and when so considered the amount is usually fixed. If the amount is contingent upon the realization of profits, the bonus remains not demandable. The granting of a bonus is a management prerogative that cannot be forced upon the employer.

In certiorari against the labor tribunals, the appellate court as a general rule does not assess the sufficiency of evidence, but it may do so by way of exception when the findings are not supported by substantial evidence.

In computing the cash commutation of leave credits, the monthly compensation includes regular allowances customarily furnished by the employer, and the divisor is the one actually used and admitted by the employer, not the 30 day divisor of the implementing rules, which has been nullified and which in any case governs only holiday pay for monthly-paid employees.

Disposition

The petition was partly granted. The decision of the Court of Appeals was affirmed with the modification that the respondents are liable for the underpayment of the cash equivalent of the petitioner's leave credits in the amount of 39,855.80 pesos.

Remember This

Memorize the line that a bonus is a gratuity or act of liberality of the giver, demandable only when made part of the wage or fixed in amount, and not when contingent on profits. Examiners use this case to test the bonus-versus-wage distinction and the exception allowing the appellate court to review the labor tribunals' factual findings.