SECOND DIVISION

[G.R. No. 155059. April 29, 2005.]

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION ,

petitioner, vs . AMERICAN WIRE AND CABLE CO., INC. and THE COURT
OF APPEALS , respondents.

DECISION

CHICO-NAZARIO , J : p

Before Us is a special civil action for certiorari, assailing the Decision 1 of the Special
Eighth Division of the Court of Appeals dated 06 March 2002. Said Decision upheld the
Decision 2 and Order 3 of Voluntary Arbitrator Angel A. Ancheta of the National Conciliation
and Mediation Board (NCMB) dated 25 September 2001 and 05 November 2001,
respectively, which declared the private respondent herein not guilty of violating Article
100 of the Labor Code, as amended. Assailed likewise, is the Resolution 4 of the Court of
Appeals dated 12 July 2002, which denied the motion for reconsideration of the petitioner,
for lack of merit.
The Facts
The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of
wires and cables. There are two unions in this company, the American Wire and Cable
Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire and Cable
Daily-Rated Employees Union (Daily-Rated Union).
On 16 February 2001, an original action was led before the NCMB of the
Department of Labor and Employment (DOLE) by the two unions for voluntary arbitration.
They alleged that the private respondent, without valid cause, suddenly and unilaterally
withdrew and denied certain bene ts and entitlements which they have long enjoyed.
These are the following:
a. Service Award;
b. 35% premium pay of an employee's basic pay for the work rendered
during Holy Monday, Holy Tuesday, Holy Wednesday, December 23,
26, 27, 28 and 29;
c. Christmas Party; and
d. Promotional Increase.
A promotional increase was asked by the petitioner for fteen (15) of its members
who were given or assigned new job classi cations. According to petitioner, the new job
classi cations were in the nature of a promotion, necessitating the grant of an increase in
the salaries of the said 15 members.
On 21 June 2001, a Submission Agreement was led by the parties before the
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 Office for Voluntary Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously led their respective position papers
with the Office of the Voluntary Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision 5 was rendered by Voluntary Arbitrator Angel A.
Ancheta in favor of the private respondent. The dispositive portion of the said Decision is
quoted hereunder:
WHEREFORE, with all the foregoing considerations, it is hereby declared
that the Company is not guilty of violating Article 100 of the Labor Code, as
amended, or speci cally for withdrawing the service award, Christmas party and
35% premium for work rendered during Holy Week and Christmas season and for
not granting any promotional increase to the alleged fteen (15) Daily-Rated
Union Members in the absence of a promotion. The Company however, is directed
to grant the service award to deserving employees in amounts and extent at its
discretion, in consultation with the Unions on grounds of equity and fairness. 6

A motion for reconsideration was led by both unions 7 where they alleged that the
Voluntary Arbitrator manifestly erred in finding that the company did not violate Article 100
of the Labor Code, as amended, when it unilaterally withdrew the subject bene ts, and
when no promotional increase was granted to the affected employees. EAHcCT

On 05 November 2001, an Order 8 was issued by Voluntary Arbitrator Angel A.

Ancheta. Part of the Order is quoted hereunder:
Considering that the issues raised in the instant case were meticulously
evaluated and length[i]ly discussed and explained based on the pleadings and
documentary evidenc[e] adduced by the contending parties, we nd no cogent
reason to change, modify, or disturb said decision.
WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as
they are hereby, denied for lack of merit. Our decision dated 25 September 2001 is
affirmed "en toto." 9

An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the
Daily-Rated Union before the Court of Appeals 1 0 and docketed as CA-G.R. SP No. 68182.
The petitioners averred that Voluntary Arbitrator Angel A. Ancheta erred in nding that the
company did not violate Article 100 of the Labor Code, as amended, when the subject
bene ts were unilaterally withdrawn. Further, it asserts, the Voluntary Arbitrator erred in
adopting the company's unaudited Revenues and Pro tability Analysis for the years 1996-
2000 in justifying the latter's withdrawal of the questioned benefits. 1 1
On 06 March 2002, a Decision in favor of herein respondent company was
promulgated by the Special Eighth Division of the Court of Appeals in CA-G.R. SP No.
68182. The decretal portion of the decision reads:
WHEREFORE, premises considered, the present petition is hereby DENIED
DUE COURSE and accordingly DISMISSED, for lack of merit. The Decision of
Voluntary Arbitrator Angel A. Ancheta dated September 25, 2001 and his Order
dated November 5, 2001 in VA Case No. AAA-10-6-4-2001 are hereby AFFIRMED
and UPHELD. 1 2

A motion for reconsideration 1 3 was led by the petitioner, contending that the
Court of Appeals misappreciated the facts of the case, and that it committed serious error
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 when it ruled that the unaudited nancial statement bears no importance in the instant
case.
The Court of Appeals denied the motion in its Resolution dated 12 July 2002 1 4
because it did not present any new matter which had not been considered in arriving at the
decision. The dispositive portion of the Resolution states:
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of
merit. 1 5

Dissatis ed with the court a quo's ruling, petitioner instituted the instant special civil
action for certiorari, 1 6 citing grave abuse of discretion amounting to lack of jurisdiction.
Assignment of Errors
The petitioner assigns as errors the following:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT
VIOLATE ARTICLE 100 OF THE LABOR CODE, AS AMENDED, WHEN IT
UNILATERALLY WITHDREW THE BENEFITS OF THE MEMBERS OF PETITIONER
UNION, TO WIT: 1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS
INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN TRUTH AND IN
FACT SAID BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME
IMMEMORIAL, AS A MATTER OF LONG ESTABLISHED COMPANY PRACTICE,
WITH THE FURTHER FACT THAT THE SAME NOT BEING DEPENDENT ON
PROFITS.
II

THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND
SINKER, THE RESPONDENT COMPANY'S SELF SERVING AND UNAUDITED
REVENUES AND PROFITABILITY ANALYSIS FOR THE YEARS 1996-2000 WHICH
THEY SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF
UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING FROM THE
PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS.
III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE
AWARD IS NOT DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT
BE UNILATERALLY WITHDRAWN BY RESPONDENT COMPANY.

Issue
Synthesized, the solitary issue that must be addressed by this Court is whether or
not private respondent is guilty of violating Article 100 of the Labor Code, as amended,
when the benefits/entitlements given to the members of petitioner union were withdrawn.
The Court's Ruling
Before we address the sole issue presented in the instant case, it is best to rst
discuss a matter which was raised by the private respondent in its Comment. The private
respondent contends that this case should have been dismissed outright because of
petitioner's error in the mode of appeal. According to it, the petitioner should have elevated
the instant case to this Court through a petition for review on certiorari under Rule 45, and
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 not through a special civil action for certiorari under Rule 65, of the 1997 Rules on Civil
Procedure. 1 7
Assuming arguendo that the mode of appeal taken by the petitioner is improper,
there is no question that the Supreme Court has the discretion to dismiss it if it is
defective. However, sound policy dictates that it is far better to dispose the case on the
merits, rather than on technicality. 1 8
The Supreme Court may brush aside the procedural barrier and take cognizance of
the petition as it raises an issue of paramount importance. The Court shall resolve the
solitary issue on the merits for future guidance of the bench and bar. 1 9
With that out of the way, we shall now resolve whether or not the respondent
company is guilty of violating Article 100 of the Labor Code, as amended.
Article 100 of the Labor Code provides:
ART. 100. 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 bene ts being enjoyed at the time of
promulgation of this Code.CcTIDH

The petitioner submits that the withdrawal of the private respondent of the 35%
premium pay for selected days during the Holy Week and Christmas season, the holding of
the Christmas Party and its incidental bene ts, and the giving of service awards violated
Article 100 of the Labor Code. The grant of these bene ts was a customary practice that
can no longer be unilaterally withdrawn by private respondent without the tacit consent of
the petitioner. The bene ts in question were given by the respondent to the petitioner
consistently, deliberately, and unconditionally since time immemorial. The
bene ts/entitlements were not given to petitioner due to an error in interpretation, or a
construction of a di cult question of law, but simply, the grant has been a practice over a
long period of time. As such, it cannot be withdrawn from the petitioner at private
respondent's whim and caprice, and without the consent of the former. The bene ts given
by the private respondent cannot be considered as a "bonus" as they are not founded on
pro t. Even assuming that it can be treated as a "bonus," the grant of the same, by reason
of its long and regular concession, may be regarded as part of regular compensation. 2 0

With respect to the fteen (15) employees who are members of petitioner union
that were given new job classi cations, it asserts that a promotional increase in their
salaries was in order. Salary adjustment is a must due to their promotion. 2 1
On respondent company's Revenues and Pro tability Analysis for the years 1996-
2000, the petitioner insists that since the former was unaudited, it should not have justi ed
the company's sudden withdrawal of the bene ts/entitlements. The normal and/or legal
method for establishing pro t and loss of a company is through a nancial statement
audited by an independent auditor. 2 2
The petitioner cites our ruling in the case of Saballa v. NLRC , 2 3 where we held that
nancial statements audited by independent auditors constitute the normal method of
proof of the pro t and loss performance of the company . Our ruling in the case of Bogo-
Medellin Sugarcane Planters Association, Inc., et al. v. NLRC, et al . 2 4 was likewise invoked.
In this case, we held:
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 . . . The Court has previously ruled that nancial statements audited by
independent external auditors constitute the normal method of proof of the pro t
and loss performance of a company.

On the matter of the withdrawal of the service award, the petitioner argues that it is
the employee's length of service which is taken as a factor in the grant of this bene t, and
not whether the company acquired profit or not. 2 5
In answer to all these, the respondent corporation avers that the grant of all subject
bene ts has not ripened into practice that the employees concerned can claim a
demandable right over them. The grant of these bene ts was conditional based upon the
nancial performance of the company and that conditions/circumstances that existed
before have indeed substantially changed thereby justifying the discontinuance of said
grants. The company's nancial performance was affected by the recent political turmoil
and instability that led the entire nation to a bleeding economy. Hence, it only necessarily
follows that the company's nancial situation at present is already very much different
from where it was three or four years ago. 2 6
On the subject of the unaudited nancial statement presented by the private
respondent, the latter contends that the cases cited by the petitioner indeed uniformly
ruled that nancial statements audited by independent external auditors constitute the
normal method of proof of the pro t and loss performance of a company. However, these
cases do not require that the only legal method to ascertain pro t and loss is through an
audited nancial statement. The cases only provide that an audited nancial statement is
the normal method. 2 7
The respondent company likewise asseverates that the 15 members of petitioner
union were not actually promoted. There was only a realignment of positions. 2 8
From the foregoing contentions, it appears that for the Court to resolve the issue
presented, it is critical that a determination must be rst made on whether the
bene ts/entitlements are in the nature of a bonus or not, and assuming they are so,
whether they are demandable and enforceable obligations.
In the case of Producers Bank of the Philippines v. NLRC 29 we have characterized
what a bonus is, viz:
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 pro ts. It is an act of generosity granted by an
enlightened employer to spur the employee to greater efforts for the success of
the business and realization of bigger pro ts. The granting of a bonus is a
management prerogative, something given in addition to what is ordinarily
received by or strictly due the recipient. Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the wage, salary or
compensation of the employee.

Based on the foregoing pronouncement, it is obvious that the bene ts/entitlements

subjects of the instant case are all bonuses which were given by the private respondent
out of its generosity and muni cence. The additional 35% premium pay for work done
during selected days of the Holy Week and Christmas season, the holding of Christmas
parties with ra e, and the cash incentives given together with the service awards are all in
excess of what the law requires each employer to give its employees. Since they are above
what is strictly due to the members of petitioner-union, the granting of the same was a
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 management prerogative, which, whenever management sees necessary, may be
withdrawn, unless they have been made a part of the wage or salary or compensation of
the employees.
The consequential question therefore that needs to be settled is if the subject
bene ts/entitlements, which are bonuses, are demandable or not. Stated another way, can
these bonuses be considered part of the wage or salary or compensation making them
enforceable obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by the employer and
expressly agreed upon by the parties, 3 0 or it must have had a xed amount 3 1 and had
been a long and regular practice on the part of the employer. 3 2
The bene ts/entitlements in question were never subjects of any express
agreement between the parties. They were never incorporated in the Collective Bargaining
Agreement (CBA). As observed by the Voluntary Arbitrator, the records reveal that these
benefits/entitlements have not been subjects of any express agreement between the union
and the company, and have not yet been incorporated in the CBA. In fact, the petitioner has
not denied having made proposals with the private respondent for the service award and
the additional 35% premium pay to be made part of the CBA. 3 3
The Christmas parties and its incidental bene ts, and the giving of cash incentive
together with the service award cannot be said to have xed amounts. What is clear from
the records is that over the years, there had been a downtrend in the amount given as
service award. 3 4 There was also a downtrend with respect to the holding of the Christmas
parties in the sense that its location changed from paid venues to one which was free of
charge, 3 5 evidently to cut costs. Also, the grant of these two aforementioned bonuses
cannot be considered to have been the private respondent's long and regular practice. To
be considered a "regular practice," the giving of the bonus should have been done over a
long period of time, and must be shown to have been consistent and deliberate. 3 6 The
downtrend in the grant of these two bonuses over the years demonstrates that there is
nothing consistent about it. Further, as held by the Court of Appeals:
Anent the Christmas party and ra e of prizes, We agree with the Voluntary
Arbitrator that the same was merely sponsored by the respondent corporation out
of generosity and that the same is dependent on the nancial performance of the
company for a particular year. . . 3 7

The additional 35% premium pay for work rendered during selected days of the Holy
Week and Christmas season cannot be held to have ripened into a company practice that
the petitioner herein have a right to demand. Aside from the general averment of the
petitioner that this bene t had been granted by the private respondent since time
immemorial, there had been no evidence adduced that it had been a regular practice. As
propitiously observed by the Court of Appeals:
. . . [N]otwithstanding that the subject 35% premium pay was deliberately
given and the same was in excess of that provided by the law, the same however
did not ripen into a company practice on account of the fact that it was only
granted for two (2) years and with the express reservation from respondent
corporation's owner that it cannot continue to grant the same in view of the
company's current financial situation. 3 8

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 To hold that an employer should be forced to distribute bonuses which it granted
out of kindness is to penalize him for his past generosity. 3 9
Having thus ruled that the additional 35% premium pay for work rendered during
selected days of the Holy Week and Christmas season, the holding of Christmas parties
with its incidental bene ts, and the grant of cash incentive together with the service award
are all bonuses which are neither demandable nor enforceable obligations of the private
respondent, it is not necessary anymore to delve into the Revenues and Pro tability
Analysis for the years 1996-2000 submitted by the private respondent. SHAcID

On the alleged promotion of 15 members of the petitioner union that should warrant
an increase in their salaries, the factual finding of the Voluntary Arbitrator is revealing, viz:
. . . Considering that the Union was unable to adduce proof that a
promotion indeed occur[ed] with respect to the 15 employees, the Daily Rated
Union's claim for promotional increase likewise fall[s] there being no promotion
established under the records at hand. 4 0

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the
Court of Appeals dated 06 March 2002 and 12 July 2002, respectively, which a rmed and
upheld the decision of the Voluntary Arbitrator, are hereby AFFIRMED. No pronouncement
as to costs.
SO ORDERED.
Puno, Austria-Martinez, Callejo, Sr. and Tinga, JJ., concur.

Footnotes
1. Rollo, pp. 216-222; Penned by Associate Justice Martin S. Villarama, Jr. with Associate
Justices Conchita Carpio-Morales and Mariano L. Del Castillo concurring.
2. Rollo, pp. 191-200.
3. Rollo, p. 214.
4. Rollo, p. 241.
5. Rollo, pp. 191-200.
6. Rollo, pp. 199-200.
7. Rollo, pp. 201-213.
8. Rollo, p. 214.
9. Id.
10. CA Rollo, pp. 2-30.
11. Ibid., pp. 10-11.
12. Rollo, p. 222.
13. Rollo, pp. 223-239.

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 14. Rollo, p. 241.
15. Id.
16. Rollo, pp. 3-37.
17. Rollo, pp. 247-248.
18. Asia Traders Insurance Corporation v. Court of Appeals, G.R. No. 152537, 16 February
2004, 423 SCRA 114, citing AFP Mutual Benefits Association v. Court of Appeals, G.R.
No. 126745, 26 July 1999, 311 SCRA 143.

19. Del Rosario v. Montaña, G.R. No. 134433, 28 May 2004, 430 SCRA 109.
20. Rollo, pp. 20-24.
21. Rollo, pp. 25-27.
22. Rollo, p. 28.
23. G.R. Nos. 102472-84, 22 August 1996, 260 SCRA 697.
24. G.R. No. 97846, 25 September 1998, 296 SCRA 108.
25. Rollo, pp. 30-31.
26. Rollo, pp. 252-254.
27. Rollo, p. 265.
28. Rollo, p. 266.
29. G.R. No. 100701, 28 March 2001, 355 SCRA 489, citing Luzon Stevedoring Corp. v.
Court of Industrial Relations, G.R. No. L-17411, 31 December 1965, 15 SCRA 660; Traders
Royal Bank v. NLRC, G.R. No. 88168, 30 August 1990, 189 SCRA 274; Philippine National
Construction Corp. v. NLRC, G.R. No. 128345, 18 May 1999, 307 SCRA 218; and Atok-Big
Wedge Mutual Benefit Association v. Atok-Big Wedge Mining Co., 92 Phil. 754 (1953).
30. cf. Marcos v. NLRC, G.R. No. 111744, 08 September 1995, 248 SCRA 146.
31. Manila Banking Corp. v. NLRC, G.R. No. 107487, 29 September 1997, 279 SCRA 602.
32. Philippine Appliance Corp. v. Court of Appeals, G.R. No. 149434, 03 June 2004, 430
SCRA 525.
33. Rollo, p. 196; see Annexes "15" and "17" of the Company's Position Paper at Rollo, pp.
84-187.
34. Rollo, pp. 255-257.
35. Rollo, p. 258.
36. Philippine Appliance Corporation v. Court of Appeals, supra, Note 32.
37. Rollo, p. 221; emphasis supplied.
38. Rollo, p. 220.
39. cf. Producers Bank of the Philippines v. NLRC, supra, Note 29.
40. Rollo, p. 199.
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