AMERICAN WIRE UNION vs AMERICAN WIRE CO

***union seeks VA to enforce the giving of certain benefits which it claims to have received in the past
consistently. SC held that it was given by the management depending on the profits gained during the
period, which in fact were declining, showing that there is nothing consistent about the grant of bonuses.
Further, there was no such provision in the CBA. It does not constitute past practice.

FACTS:
Petitioners (two unions of the company) filed an action for voluntary arbitration with NCMB of DOLE, where
it assails the withdrawal of certain benefits by the respondent, namely:
a. 35% premium pay given during Holy Week, and Christmas Week
b. Service Award
c. Holding of a Company Christmas Party, and
d. Promotional increase for 15 allegedly promoted employees.
Petitioner avers that the new job classification of the 15 employees was in the nature of a promotion.
Respondent maintains that the giving of said amounts was not part of the regular salary of the employees,
and was determined based on profits during that year, hence it was a management prerogative and not
demandable by the unions.
Respondent avers that given the declining profits, the benefits were subsequently diminished. Petitioners
aver that the financial analysis presented by the company did not determine profitability since it was not
done through an independent auditor.
Voluntary Arbitrator held that it was not demandable, but directed the company to pay service awards to
deserving employees. CA affirmed.

ISSUE:
Whether or not the benefits and bonuses are past practice and can be demanded by the unions

RULING:
No. The bonuses given here are management prerogatives and are not demandable.
For a bonus to be enforceable, there must either be:
a. Express agreement by the management and the employee as to the bonus, OR
b. That the bonus has a fixed amount (consistent), deliberate, and has been done over a long time to
be regular practice.
In this case, there is no express agreement to that effect on the CBA (indeed, the petitioners have been
proposing to include it in the CBA, which the management didnt agree to).
Further, respondent corporation has shown that it was a bonus dependent on the profits of the company.
In the years it has been giving the benefits, there was no fixed amount (in fact, it has been declining in
recent years). There has even been a downtrend in the holding of the Christmas party. These downward
trends in the grant of these two bonuses demonstrates that there is nothing consistent about it.

While jurisprudence mainly relies on the independent financial analysis of independent auditors to
determine profitability of a corporation, it is not the only mode by which it is determined, but is merely the
normal way.

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.