Manila
EN BANC
G.R. No. 107487 September 29, 1997
THE MANILA BANKING CORPORATION ("Manilabank") and ARNULFO B. AURELLANO in his capacity as Statutory Receiver of Manilabank, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES and 14 other Senior Mangers similarly situated; AURORA VILLACERAN and 34 others Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents.
G.R. No. 107902 September 29, 1997
THE MANILA BANKING CORPORATION ("Manilabank") and ARNULFO B. AURELIANO in his capacity as Statutory Receiver of Manilabank, petitioners,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION-NCR, LABOR ARBITER FELIPE PATI and VICTOR L. MENDOZA, RODOLFO VE. TIMBOL, RUBEN G. ASEDILLO, FLORINDA S. DAYRIT, and 19 other Senior Officers similarly situated; HORACE REYES, JOSE BELMONTE and 14 other Senior Managers and 53 Managers similarly situated; AURORA VILLACERAN and 34 other Assistant Managers similarly situated; CONSUELO RIZARRI, EMERENCIANA SAMSON, BRENDA C. BERMUDEZ, FLORYPEE ABRIGO, EMMA BALDERAMA, and 211 other Junior Officers similarly situated, respondents.
KAPUNAN, J.:
The principal issue presented for resolution in these petitions for certiorari1 under Rule 65 of the Rules of Court is whether or not public respondent.
National Labor Relations Commission (NLRC) committed grave abuse of discretion in affirming with slight modifications Labor Arbiter Felipe Pati's decision awarding herein private respondents' claim of P193,338,212.33 consisting of:
1. Wage increase of 25% of gross monthly wage from January 1985 to December 1988;
2. Christmas Bonus of one and one-half (1-1/2) months pay from December 1985 to December 1987;
3. Mid-year Bonus of one (1) month pay from 1985 to 1988, inclusive;
4. Profit Sharing of 5% of net profit for 1985 and 1986;
5. Differentials on accrued leaves, retirement benefits and Christmas and Mid-Year bonuses;
6. Longevity pay, Loyalty Bonus and Medical, Dental and Optical Benefits;
7. Uniform allowance of P600.00 per year from January 1985 to January 1988, inclusive;
8. One-half (1/2) month pay 1987 Christmas Bonus which was deducted from the retirement benefit of each complainant;
9. Travel Plan and Car Plan with respect to the 23 complainants Senior Officers; and
10. Car Plan and Gasoline Allowance benefits with respect to the 15 complainants, Senior Managers and 54 Assistant Managers.
annual interest thereon of 12% and attorney's fees amounting to 10% of the said amount.
The antecedents show that on June 5, 1984, petitioner Manila Banking Corporation (Manilabank) was placed under comptrollership by then Central Bank Governor Jose B. Fernandez in view of the bank's financial distress.2
The decision of the Monetary Board of the Central Bank was based on the findings that the bank was experiencing liquidity problems and had incurred chronic reserve deficiencies against deposit liabilities. In fact, on May 23, 1984, a month before it was placed under comptrollership, Manilabank was prohibited by the Monetary Board from granting new loans and making new investments except investments in government securities with Central Bank support, and from declaring cash or stock dividends.3
A February 19, 1986 Central Bank report on Manilabank's financial condition as of December 31, 1985 disclosed, among other things, that the bank's operations for the preceding year resulted in a net loss of P362.4 million. It likewise revealed that the bank's financial condition continued to
deteriorate.4
Consequently, on May 22, 1987, the Monetary Board issued Resolution No. 505 prohibiting Manilabank from doing business in the Philippines. The said resolution reads:
Finding to be true the statements of the Assistant to the Governor and Officer-in-Charge, Supervision and Examination Sector (SES) Department I, in his memorandum dated April 28, 1987 submitting a report on the financial condition at The Manila Banking Corporation (TMBC) as of March 31, 1987, that the financial condition of TMBC is one of insolvency and its continuance in business would involve probable loss to its depositors and creditors and considering, among other things, that:
1. During the 3-month period January 1 to March 31, 1987, TMBC incurred losses of 62.3 million, before interest on Central Bank overdraft and penalties on reserve deficiencies (P242.9 million for the three months);
2. Prior notices had been made to TMBC of a condition which may be considered as one indicating insolvency as defined under Sec. 29 of R.A. No. 265, as amended, in various letters of Mr. Antonio T. Castro, Jr., Special Assistant to the Governor and Head, SES Department I, dated December 9, 1985, December 13, 1985 and October 16, 1986 and in a letter of the Governor, dated February 27, 1987;
3. Mr. Vicente G. Puyat, in response to his request conveyed by Mrs. Reyes to the Monetary Board, for a chance to appear before the Monetary Board in representation of the majority stockholders of TMBC, in connection with the rehabilitation plan for TMBC, had been invited three times to appear before the Board: first on May 13, 1987, then on May 18, 1987 upon his request, and on May 22, 1987, which invitations he did not respond to himself and neither did he attend the Board meetings held on May 18, 1987 and May 22, 1987;
4. TMBC has not submitted a rehabilitation plan acceptable to the Central Bank; and
5. The said Assistant to the Governor, who was present during the Monetary Board meeting held on May 22, 1987, had categorically confirmed that, after considering all the adjustments, TMBC would still be insolvent even with an additional capital infusion of P500 million.
the Board decided as follows:
1. To prohibit TMBC to do business in the Philippines and place its assets and affairs under receivership in accordance with the provisions of Section 29 of R.A. No. 265, as amended; and
2. To designate the Assistant to the Governor and Officer-in-Charge, SES Department I, as Receiver of TMBC, to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors exercising all the powers necessary for these purposes including, but not limited to, bringing suits and foreclosing mortgages in its name.5
Thereafter, Feliciano Miranda, Jr. was designated as receiver. He immediately took charge of the bank's assets and liabilities. He likewise terminated the employment of about 343 officers and top managers of the bank. All these officers and top managers, who are private respondents herein, were paid whatever separation and/or retirement benefits were due them.
On November 11, 1988, the Monetary Board issued Resolution No. 1003 ordering the liquidation of Manilabank on account of insolvency. The resolution reads as follows:
Having determined and confirmed on the basis of the memorandum of the Special Assistant to the Governor and Head, Supervision and Examination Sector (SES) Department I, and Receiver, The Manila Banking Corporation (TMBC), dated November 4, 1988, submitting a report on the financial condition of TMBC as of July 31, 1988, that the financial condition of the bank continues to be one of insolvency and it can no longer resume business with safety to its depositors, creditors and the general public, and considering the opinion of the Central Bank legal counsel that, with the Supreme Court's decision dated March 10, 1988 (a) setting aside the decision of the Court of Appeals sustaining the decision of the Regional Trial Court to issue a writ of preliminary injunction dated July 14, 1987 against the enforcement of Monetary Board Resolution No. 505 dated May 22, 1987, (b) dissolving the said writ of preliminary injunction, and (c) making permanent the temporary restraining order issued by the Supreme Court on February 16, 1988, the liquidation of TMBC may now be ordered by the Monetary Board and that its authority to order such liquidation is not affected by the pendency of Civil Case No. 87-40659 nor of the Supreme Court's resolution of March 10, 1988 (enjoining the Court of Appeals from interfering in the receivership of TMBC), the Board decided as follows:
1. To order the liquidation of TMBC in accordance with Section 29 of R.A. No. 265, as amended; and
2. To designate Mr. Renan V. Santos, Special Assistant to the Governor, and Head, Supervision and Examination Sector Department V, as Liquidator of TMBC.6
Of even date, private respondents filed a complaint against Manilabank and its statutory receiver with. the arbitration branch of the National Labor Relations Commission (NLRC) claiming entitlement to the following additional benefits alleged to have accrued from 1984 to their effective dates of termination, viz: (a) Wage increases; (b) Christmas bonuses; (c) Mid-year bonuses; (d) Profit sharing; (e) Car and travel plans; (f) Gasoline allowances; (g) Differentials on accrued leaves, retirement and other bonuses; (h) Longevity pay and loyalty pay; (i) Medical, dental and optical benefits; and (j) Uniform allowances.7 Such claim to entitlement of the foregoing benefits was based on Manilabank's alleged practice, policy and tradition of awarding said benefits. They contended that the policy has ripened into vested property rights in their favor.
Manilabank, on its part, alleged that the additional benefits sought are without basis in fact and in law. It argued that the same are conferred by management only when it deems necessary to do so. The award of the said benefits is in the nature of a "management prerogative" which, it contended, can be withheld by management upon a clear showing that the company is not in a position to grant them either because of financial difficulties or circumstances which do not warrant conferment of such benefits. And since it was experiencing financial distress, it claimed that it was in no position to give the benefits sought. Additionally, it asseverated that it was deprived of its right to present evidence in a fill-blown trial by the labor arbiter.
On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision ordering Manilabank and its statutory receiver to pay in full all the claims of private respondents amounting to P193,338,212.33, plus 12% interest annually and 10% of the total award as attorney's fees. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the complainants and against the respondents, ordering and authorizing the Receiver RENAN V. SANTOS to pay, pursuant to the provisions of Article 110 of the Labor Code, as amended:
1. The complainants the net amount of claims due appearing opposite the name of each complainant listed in the Computation of Net Claim consisting of six (6) pages hereto attached and made part of this Decision;
2. The complainants' counsel the amount equal to 10% of the total amount awarded to complainants in this action as attorney's fees.
SO ORDERED.8
On November 25, 1989, petitioners Manilabank and the CB statutory receiver appealed to the NLRC and posted an appeal bond in the form of a certification from the Central Bank to the effect that a portion of Manilabank's funds in an amount equal to that of the total award of the labor arbiter, has been reserved and set aside by the Central Bank to answer for the private respondents' claims should they finally be adjudged to be entitled thereto.
On December 8, 1989, private respondents opposed the appeal and filed a motion for the issuance of a writ of execution of the labor arbiter's judgment on the ground that the Central Bank certification cannot be considered as an appeal bond.
On June 21, 1991, the NLRC issued an order requiring petitioners to deposit with the Cashier of the NLRC a cash bond or its equivalent in treasury bills, warrants and/or other government securities in the amount of P193,000,000.00, plus ten percent (10%) thereof as attorney's fees within ten (10) days from receipt thereof.
On July 5, 1991, petitioners moved to reconsider said order. However, pending resolution of said motion for reconsideration, petitioners submitted to the NLRC a Certificate of Time Deposit issued by the Philippine National Bank (PNB) in the amount of P212,700,000.00, payable to the receiver of Manilabank.
On January 16, 1992, the NLRC held a hearing where the parties agreed that the certificate of time deposit submitted by Manilabank to the NLRC be considered substantial compliance of the requirement of an appeal bond, on the condition that it will be periodically renewed and re-deposited with the NLRC Cashier upon its maturity, and that the securities deposited should be free from any other claims or liens.
On September 9, 1992, the NLRC issued a resolution on the merits of the case and, as above-stated, affirmed with slight modifications, the decision of the labor arbiter. The decretal portion of the same reads:
WHEREFORE, except for the modification we provided on the manner "medical, dental and optical benefits" should be claimed/paid, and our awarding annual interest of 12% to whatever has been awarded below, the appealed decision is hereby affirmed and respondents' appeal is hereby dismissed.
SO ORDERED.9
Petitioners filed a motion for reconsideration from the aforequoted resolution.
On October 14, 1992, private respondents filed an ex parte motion for the issuance of a writ of execution. Petitioners opposed the same, reasoning that the assets of Manilabank are exempt from execution and that the NLRC resolution had not become final and executory.
On October 22, 1992, the NLRC issued an order directing petitioners, under pain of contempt, to renew the certificate of time deposit and to have the same issued in the name of, and deposited with, the cashier of the NLRC.
In response, petitioners Manilabank and Arnulfo Aurellano filed a petition for certiorari before this Court, docketed as G.R. No. 107487, to set aside said order alleging that the same was issued with grave abuse of discretion because it (as re-phrased):
a. violated an existing statute.10
b. arbitrarily compelled the Receiver to violate his statutory duty to preserve Manilabank's assets for the benefit of all creditors.11
c. whimsically deprived petitioners of their right to file a motion for reconsideration of the Order.12
d. was not anchored upon any cogent reason other than to preempt petitioners from invoking the corrective powers of this Honorable Court of last resort.13
On November 26, 1992, petitioners' earlier motion for reconsideration of the NLRC Decision dated September 9, 1992 was denied for lack of merit in an order which dispositively reads as follows:
Wherefore, premises considered, order is hereby issued:
1. denying respondents' motion for reconsideration;
2. directing the NLRC Cashier to hold in her custody re-submitted Certificate of Time Deposit No. 890530-D dated October 27, 1992 with maturity date on December 28, 1992;
3. directing the respondents to post an additional bond, either in cash, surety, or certificate of time deposit drawn in the name of the Cashier, NLRC, in the amount of "P76,572,000.00" to cover, the additional award detailed in our September 9, 1992 resolution;
4. directing, accordingly, the Executive Clerk to cause the personal service of this Order upon the parties, particularly the respondents and their counsel; and
5. holding in abeyance the execution of our September 9, 1992 resolution (despite its finality now) for a period of ten (10) calendar days from respondents' receipt of this Order, with the warning, however, that should this Commission not receive a restraining order from the Supreme Court within said period of ten (10) calendar days, then a writ of execution will be issued to enforce our now final judgment.
SO ORDERED.14
Consequently, petitioners filed another petition for certiorari before this Court, this time docketed as G.R. No. 107902, contending that:
a. Public respondents, in grave abuse of discretion, effectively violated petitioners' right to due process because —
(1) The monstrous award totalling about P212 million was decided based purely on private respondents' worthless papers which were never identified nor supported by any single affidavit.
(2) The Labor Arbiter proceeded to decide the case solely on the bases of the pleadings filed, despite the enormity of the claims and the repeated demands for a full-dress trial (which, ironically, were initially granted by the Office of the Labor Arbiter), made necessary by the conflicting factual allegations of the parties and the worthless papers passed off by private respondents as their "evidence".15
b. Public respondents unlawfully arrogated unto themselves the jurisdiction to pass upon the question of Manilabank's insolvency, despite the pleaded pendency of that prejudicial question before the RTC of Manila which had acquired exclusive jurisdiction to rule on the issue to the exclusion of all others.16
c. The money award adjudged against the insolvent Manilabank violates all notions of justice and equity, considering that the beneficiaries thereof are former officers and top managers of Manilabank who, being part of management, were partly to blame for the bank's financial decline.17
d. A statutory receiver has the power to adopt and implement prudent policies aimed at preserving the assets of an insolvent bank including regulating, according to his own discretion and judgment, all aspects of employment.18
e. Public respondents' arbitrary findings that salary increases, Christmas and mid-year bonuses and other benefits have been regularly and unconditionally paid by Manilabank to private respondents, and that Manilabank earned profits in 1984, 1985 and 1986, are contrary to the evidence on record and are based on pure unsubstantiated guesswork.19
f. The award of attorney's fees is unconscionable, especially in light of its dissipative effect on the remaining assets of the insolvent Manilabank and its prejudicial consequences on Manilabank's stockholders and creditors.20
g. The NLRC's award of legal interest on the amount awarded by the labor arbiter and its order to deposit an additional bond to cover such interest have no legal basis and give an undue advantage to other creditors of the insolvent Manilabank.21
h. The NLRC's threat to execute the judgment would be unlawful if carried out, because Manilabank's assets are legally exempt from execution.22
On December 9, 1992, this Court ordered that G.R. No. 107902 be consolidated with G.R. No. 107487.23
On December 16, 1992, this Court issued a Resolution temporarily enjoining public respondent NLRC from enforcing and/or carrying out the decision of the labor arbiter dated November 14, 1989 and its resolution dated September 9, 1992 and order dated November 26, 1992, all issued in NLRC NCR Case No. 00-11-04624-88.24
G.R. No. 107902 is impressed with merit.
Both the Labor Arbiter and the NLRC opted to award all the additional benefits claimed by the 343 private respondents who had already been duly paid separation pay and/or retirement benefits upon termination of their employment. The NLRC erroneously adopted the findings of the labor arbiter, misapplying the time-honored rule that factual findings of quasi-judicial agencies are accorded not only respect but even finality if supported by substantial evidence. It declared that the additional benefits sought are in the nature of "bonuses" which when made part of the wage or salary or compensation of an employee become demandable and enforceable.25
Both the Labor Arbiter's and the NLRC's findings and conclusions are flawed.
By definition, a "bonus" is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right.26 It is something given in addition to what is ordinarily received by or strictly due the recipient. The granting of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages,27 especially so if it is incapable of doing so.ℒαwρhi৷
In Philippine Education Co., Inc., v. Court of Industrial Relations,28 cited in Philippine Duplicators, Inc. v. NLRC,29 the Court expounded on the nature of a bonus, thus:
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 rearization 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. . . . From the legal point of view, a bonus is not a demandable and enforceable obligation. It is so when it is made 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. . . . (Emphasis supplied).30
Clearly then, a bonus is an amount given ex gratia to an employee by an employer on account of success in business or realization of profits. How then can an employer be made liable to pay additional benefits in the nature of bonuses to its employees when it has been operating on considerable net losses for a given period of time?
Records bear out that petitioner Manilabank was already in dire financial straits in the mid-80's. As early as 1984, the Central Bank found that Manilabank had been suffering financial losses. Presumably the problems commenced even before their discovery in 1984. As earlier chronicled, the Central Bank placed petitioner bank under comptrollership in 1984 because of liquidity problems and excessive interbank borrowings. In 1987, it was placed under receivership and was ordered to close operation. In 1988, it was ordered liquidated.
It is evident, therefore, that petitioner bank was operating on net losses from the years 1984, 1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in 1988. Clearly, there was no success in business or realization of profits to speak of that would warrant the conferment of additional benefits sought by private respondents. No company should be compelled to act liberally and confer upon its employees additional benefits over and above those mandated by law when it is plagued by economic difficulties and financial losses. No act of enlightened generosity and self-interest can be exacted from near empty, if not empty, coffers.1aшphi1
Consequently, on the ten (10) items awarded to herein private respondents (enumerated at page 3) which represent additional benefits, they having already been paid separation and retirement benefits, we rule as follows:
First. The award of 5% profit sharing of petitioner bank's net profits for the years 1985 and 1986 is deleted as there were clearly no profits to share during that period given the bank's financial status in 1985 and 1986 when it was operating on net losses.
Second. The award of wage increases and Christmas and mid-year bonuses from 1985 to 1988, being in the nature of gratuities and dependent as they on the petitioner's liberality and capability to give, is likewise deleted for same reasons above stated.
Third. The award of differentials on accrued leaves, retirement benefits and Christmas and mid-year bonuses is also deleted as a necessary and logical consequence of the denial of the wage increases and Christmas and mid-year bonuses.
Fourth. The award of medical, dental and optical benefits is well-taken and, therefore, affirmed.
Fifth. The claim for travel plans for 23 senior officers, and car plans and gasoline allowances for 23 senior officers, 15 senior managers and 54 assistant managers may only be granted to those officers who have not yet availed of the said benefit subject to the proper determination by the labor arbiter.
Sixth and last. Claims for longevity pay, loyalty bonuses and uniform allowance of P600.00 for 1985 may be granted given the apparent loyalty and allegiance shown by herein private respondents to petitioner bank despite rough sailing during the said period of time.
That disposes of G.R. No. 107902.
With respect to G.R No. 107487, the same is dismissed, the issues raised therein having been rendered moot and academic by the foregoing disquisitions and disposition. Besides, it is beyond dispute that employees indeed enjoy first preference in the event of bankruptcy or liquidation of an employer's business.31
WHEREFORE, premises considered, G.R. No. 107902 is GRANTED and is hereby REMANDED to the Labor Arbiter for the proper computation of the monetary awards in accordance with the foregoing disquisition and with reasonable dispatch. G.R. No. 107487 is hereby DISMISSED.
SO ORDERED.
Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Mendoza, Panganiban and Torres, Jr., JJ., concur.
Vitug, J., Pls. see concurring opinion.
Francisco, J., I join Justice Hermosisima, Jr.. in his dissenting opinion.
Hermosisima, Jr., J., I dissent. Pls. see dissenting opinion.
Footnotes
1 In G.R No. 107487, petitioners Manila Banking Corporation (Manilabank) and Arnulfo B. Aurellano, in his capacity as Statutory Receiver of Manilabank, question the Order dated October 22, 1992 of public respondent National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 00-11-04624-88 which required petitioner Manilabank to renew its Certificate of Time Deposit in place of the appeal bond and to deposit the same with the NLRC cashier.
In G.R No. 107902, petitioners challenge: (1) the Order dated November 26, 1997 of public respondent NLRC in the same NLRC-NCR Case No. 00-11-04624-88 which denied petitioners' motion for reconsideration of the Resolution dated September 9, 1992 and which ordered petitioners to post an additional bond to cover the public respondent's award of interest; and (2) the Resolution dated September 9, 1992 of respondent NLRC, which affirmed with slight modifications the Labor Arbiter's decision of November 14, 1989, granting private respondents' money claims amounting to P193 million plus 10% attorney's fees.
2 Rollo (G.R No. 107902, Vol. 1), p. 630.
3 Id., at 617-619.
4 Id., at 331-337.
5 Id., at 272-273.
6 Id., at 274.
7 Id., at 193; Please see p. 3.
8 Id., at 67-68.
9 Rollo (G.R No. 107487), pp. 134-135.
10 Id., at 12.
11 Id., at 14.
12 Id., at 16.
13 Id., at 17.
14 Id., at 248-249.
15 Rollo (G.R. No. 107902), p. 29.
16 Id., at 50.
17 Id., at 59.
18 Id., at 60.
19 Id., at 61.
20 Id., at 81.
21 Id., at 82.
22 Id., at 86.
23 Id., at 633.
21 Id., at 634-635.
25 Id., at 150-157.
26 Traders Royal Bank v. NLRC, 189 SCRA 274 [1990] citing Aragon v. Cebu Portland Cement Co., 61 O.G. 4567.
27 Kamaya Point Hotel v. NLRC, 177 SCRA 160 (1989).
28 92 Phil. 381 (1952).
29 241 SCRA 380 (1995).
30 Id., at 388.
31 Article 110 of the Labor Code, as amended by R.A. No. 6715.
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