KAMAYA POINT HOTEL, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, FEDERATION OF FREE WORKERS AND MEMIA QUIAMBAO, RESPONDENTS.

This petition for review on certiorari filed by herein
petitioner Kamaya Point Hotel seeks to set aside the decision^[1]
of the National Labor Relations Commission dated June 25, 1986 in NLRC Case No.
RAB III-4-1191-83 which affirmed with modification the decision of the Labor
Arbiter dated May 31, 1984.

Respondent Memia Quiambao
with thirty others who are members of private respondent Federation of Free
Workers (FFW) were employed by petitioner as hotel
crew.  On the basis of the profitability
of the company’s business operations, management granted a 14th month pay to
its employees starting in 1979.  In
January 1982, operations ceased to give way to the hotel’s conversion into a
training center for Libyan scholars. 
However, due to technical and financing problems, the Libyans
pre-terminated the program on July 7,
1982, leaving petitioner without any business, aside from the fact
that it was not paid for the use of the hotel premises and in addition had to
undertake repairs of the premises damaged by the Libyan students.  All in all petitioner
allegedly suffered losses amounting to P2-million.

Although petitioner reopened the hotel premises to the public, it
was not able to pick-up its lost patronage. 
In a couple of months it effected a
retrenchment program until finally on January
7, 1984, it totally closed its business.^[2]

On April 18, 1983,
private respondent Federation of Free Workers (FFW), a
legitimate labor organization, filed with the Ministry of Labor and Employment,
Bataan Provincial Office, Bataan
Export Processing Zone, Mariveles, Bataan, a complaint against petitioner for
illegal suspension, violation of the CBA and non-payment of the 14th month pay.^[3]
Records however show that the case was submitted for decision on the sole issue
of alleged non-payment of the 14th month pay for the year 1982.^[4]

After the hearing, Executive Labor Arbiter Francisco M. Jose, Jr.
rendered a decision dated May 31, 1984,
the dispositive portion of which reads:

“WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby
rendered:

“1. Ordering
the respondent Kamaya Point Hotel to pay the 14th month pay for 1982 of all its
rank and file employees;

“2. Ordering
the same respondent to pay the monetary equivalent of the benefits mentioned in
Section 6 of Article XII and Sections 1 and 2 of Article XII of the then existing
Collective Bargaining Agreement which will expire on 1 July 1984.”^[5]

On appeal, the National Labor Relations Commission (NLRC) in its
decision dated June 25, 1986 set aside the award of monetary benefits under the
CBA but affirmed the grant of the 14th month pay adopting the Labor Arbiter’s
reasoning, thus:

“x x x             x x x                 x x x

“We agree with respondent that there is no law granting a 14th
month pay.  We likewise agree with
respondent that there is no provision in the Collective Bargaining Agreement
granting a 14th month pay.  Despite all
these, however, we believe that individual complainants
herein are still entitled to the 14th
month pay for 1982 because to our
mind, the granting of this 14th month
pay has already ripened into a company
practice which respondent company cannot withdraw
unilaterally.  This 14th
month pay is now an existing benefit
which cannot be withdrawn without violating
Article 100 of the Labor Code.  To allow its withdrawal now would certainly amount
to a diminution of existing benefits which complainants are presently
enjoying.  Premised on the above, the
individual complainants are entitled to the 14th month pay for 1982 and
respondent should pay the same.” (Underscoring supplied)^[6]

Before this Court, petitioner now seeks to reverse the decision
of the NLRC arguing that the latter tribunal committed grave abuse of
discretion when it adopted the Labor Arbiter’s decision saying that the 14th
month pay cannot be withdrawn without violating Article 100 of the Labor Code
which states:

“Prohibition against elimination or
diminution of benefits.  – Nothing
in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of promulgation
of this Code.”

We find it difficult to comprehend why the NLRC and the Labor
Arbiter, despite their admission that the 14th month pay has no contractual or
legal basis, still chose to rule in favor of private respondents.  It is patently obvious that Article 100 is
clearly without applicability.  The date
of effectivity of the Labor Code is May 1, 1974.  In the case at bar,
petitioner extended its 14th month pay beginning 1979 until 1981.  What is demanded is payment of the 14th month
pay for 1982.  Indubitably from these
facts alone, Article 100 of the Labor Code cannot apply.

Moreover, there is no law that mandates the payment of the 14th
month pay.  This is emphasized in the
grant of exemption under Presidential Decree 851 (13th Month Pay Law) which states:  “Employers already paying their
employees a 13th month pay or its equivalent are not covered by this
Decree.” Necessarily then, only the 13th month pay is
mandated.  Having enjoyed the
additional income in the form of the 13th month pay, private respondents’
insistence on the 14th month pay for 1982 is already an unwarranted expansion
of the liberality of the law.

Also contractually, as gleaned from the collective bargaining
agreement between management and the union, there is no stipulation as to such
extra remuneration.  Evidently, this
omission is an acknowledgement that such benefit is entirely contingent or
dependent on the profitability of the company’s operations.

 Verily, a 14th month pay
is a misnomer because it is basically a bonus and, therefore, gratuitous in
nature.  The granting of the 14th month
pay is a management prerogative which cannot be forced upon the employer.  It is something given in addition to what is
ordinarily received by or strictly due the recipient.  It is a gratuity to which the recipient has
no right to make a demand.^[7]

This Court is not prepared to compel petitioner to grant the 14th
month pay solely because it has allegedly ripened into a “company
practice” as the labor arbiter has put it. 
Having lost its catering business derived from Libyan students, Kamaya
Hotel should not be penalized for its previous liberality.

An employer may not be obliged to assume a “double
burden” of paying the 13th month pay in addition to bonuses or other
benefits aside from the employee’s basic salaries or wages.^[8]
Restated differently, we rule that an employer may not be obliged to assume the
onerous burden of granting bonuses or other benefits aside from the employee’s
basic salaries or wages in addition to the required 13th month pay.

WHEREFORE, the petition is hereby GRANTED.  The portion of the decision of the National
Labor Relations Commission dated June
25, 1986 ordering the payment of 14th month pay to private
respondents is set aside.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.

^[1] Penned by Presiding Commissioner Guillermo Medina; Gabriel Gatchalian and Miguel Valera,
Commis­sioners, concurring.

^[2] Rollo, p. 6.

^[3] Rollo, p. 32.

^[4] Rollo, p. 45.

^[5] Rollo, p. 12.

^[6] Rollo, p. 34.

^[7] Words and Phrases, “Bonus”, Vol. 5-A, pp. 158 & 161.

^[8]
National Federation of Sugar Workers (NFSW) v. Ovejera,
G.R. No. 59743, May 31, 1982, 114 SCRA 354; Brokenshire
Memorial Hospital, Inc. v. NLRC, G.R. No. 69741, August 19, 1986,143
SCRA 564.