Labor laws of the philippines - Chan Robles and Associates Law Firm

Pre-Week Guide on Labor Law 2006 Bar Examinations Prof. Joselito Guianan Chan
In another case where the company used to pay to its drivers and conductors, who were
assigned outside of the city limits, aside from their regular salary, a certain percentage of their
daily wage, as allowance for food, it was ruled that the company should continue granting the
said privilege. (Cebu Autobus Company vs. United Cebu Autobus Employees Association, G. R.
No. L-9742, Oct. 27, 1955).
GRATUITY AND ALLOWANCES:
69. What is a gratuity?
“Gratuity” is a gift freely given by the employer in appreciation of certain favors
or services rendered. It is not part of wages since, strictly speaking, it is not intended
as compensation for actual work. It is further not demandable as a matter of right.
70. Are allowances part of wage?
BONUS:
"Allowances" are not part of wages. Therefore, in the computation of the amount
of retirement and other benefits, allowances shall not be included therein.
71. What is bonus? Is it demandable?
“Bonus” is an amount granted and paid ex gratia to the employee for his industry or
loyalty, hence, generally not demandable or enforceable. If there is no profit, there
should be no bonus. If profit is reduced, bonus should likewise be reduced, absent any
agreement making such bonus part of the compensation of the employees.
72. When is bonus demandable and enforceable?
On the basis of equitable considerations, long practice, agreement (e.g., CBA)
and other peculiar circumstances, bonus may become demandable and enforceable.
Consequently, if bonus is given as an additional compensation which the employer
agreed to give without any condition such as success of business or more efficient or
more productive operation, it is deemed part of wage or salary, hence, demandable.
Unlike 13 th month pay, bonus may be forfeited in case employee is found guilty
of an administrative charge.
Bonus, when considered a company 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. (Globe
Mackay Cable and Radio Corporation vs. NLRC, G.R. No. L-74156, 163 SCRA 71).
The test or rationale of this rule on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowing fully well that said employees are not
covered by the law requiring payment thereof. (National Sugar Refineries Corporation v. NLRC,
G.R. No. 101761, 220 SCRA 452).
Thus, even if the bonus has been given for quite some time or since “time-immemorial”
as asserted by the union, in an amount equivalent to two (2) months gross pay for mid-year bonus
and three (3) months gross pay for the year-end bonus, the employer may validly reduce it to two
(2) months basic pay for mid-year bonus, and two-months for year-end bonus, without violating
the non-diminution clause in the law since bonuses are not part of labor standards in the same
class as salaries, cost-of-living allowances, holiday pay and leave benefits, provided under the
Labor Code. The contention of the union that the granting of said bonuses had ripened into a
company practice that may no longer be adjusted to the prevailing condition of the bank has no
legal and moral bases. Its fiscal condition having declined, the bank may not be forced to
distribute bonuses which it can no longer afford to pay and, in effect, be penalized for its past
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