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[G.R. NO. 168654 : March 25, 2009]




Before the Court is a Petition for Review on Certiorari 1 under Rule 45 of the 1997 Rules of Civil Procedure, assailing the decision2 and resolution3 of the Court of Appeals in CA-G.R. SP No. 85038. The Court of Appeals' decision reduced the monetary award granted to petitioner by the National Labor Relations Commission (NLRC) while the resolution denied petitioner's motion for reconsideration for lack of merit.

The following factual antecedents are matters of record.

Respondent KPMG Laya Mananghaya & Co. (respondent firm) is a general professional partnership duly organized under the laws of the Philippines. Respondent firm hired petitioner Zayber John B. Protacio as Tax Manager on 01 April 1996. He was subsequently promoted to the position of Senior Tax Manager. On 01 October 1997, petitioner was again promoted to the position of Tax Principal.4

However, on 30 August 1999, petitioner tendered his resignation effective 30 September 1999. Then, on 01 December 1999, petitioner sent a letter to respondent firm demanding the immediate payment of his 13th month pay, the cash commutation of his leave credits and the issuance of his 1999 Certificate of Income Tax Withheld on Compensation. Petitioner sent to respondent firm two more demand letters for the payment of his reimbursement claims under pain of the legal action.5

Respondent firm failed to act upon the demand letters. Thus, on 15 December 1999, petitioner filed before the NLRC a complaint for the non-issuance of petitioner's W-2 tax form for 1999 and the non-payment of the following benefits: (1) cash equivalent of petitioner's leave credits in the amount of P55,467.60; (2) proportionate 13th month pay for the year 1999; (3) reimbursement claims in the amount of P19,012.00; and (4) lump sum pay for the fiscal year 1999 in the amount of P674,756.70. Petitioner also sought moral and exemplary damages and attorney's fees. Respondent Mario T. Managhaya was also impleaded in his official capacity as respondent firm's managing partner.6

In his complaint,7 petitioner averred, inter alia, that when he was promoted to the position of Tax Principal in October 1997, his compensation package had consisted of a monthly gross compensation of P60,000.00, a 13th month pay and a lump sum payment for the year 1997 in the amount of P240,000.00 that was paid to him on 08 February 1998.

According to petitioner, beginning 01 October 1998, his compensation package was revised as follows: (a) monthly gross compensation of P95,000.00, inclusive of nontaxable allowance; (b) 13th month pay; and (c) a lump sum amount in addition to the aggregate monthly gross compensation. On 12 April 1999, petitioner received the lump sum amount of P573,000.00 for the fiscal year ending 1998.8

Respondent firm denied it had intentionally delayed the processing of petitioner's claims but alleged that the abrupt departure of petitioner and three other members of the firm's Tax Division had created problems in the determination of petitioner's various accountabilities, which could be finished only by going over voluminous documents. Respondents further averred that they had been taken aback upon learning about the labor case filed by petitioner when all along they had done their best to facilitate the processing of his claims.9

During the pendency of the case before the Labor Arbiter, respondent firm on three occasions sent check payments to petitioner in the following amounts: (1) P71,250.00, representing petitioner's 13th month pay; (2) P54,824.18, as payments for the cash equivalent of petitioner's leave credits and reimbursement claims; and (3) P10,762.57, for the refund of petitioner's taxes withheld on his vacation leave credits. Petitioner's copies of his withholding tax certificates were sent to him along with the check payments.10 Petitioner acknowledged the receipt of the 13th month pay but disputed the computation of the cash value of his vacation leave credits and reimbursement claims.11

On 07 June 2002, Labor Arbiter Eduardo J. Carpio rendered a decision,12 the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering respondents to jointly and solidarily pay complainant the following:

P12,681.00 - representing the reimbursement claims of complainant;

P28,407.08 - representing the underpayment of the cash equivalent of the unused leave credits of complainant;

P573,000.00 - representing complainant's 1999 year-end lump sum payment; andcralawlibrary

10% of the total judgment awards way of attorney's fees.


The Labor Arbiter awarded petitioner's reimbursement claims on the ground that respondent firm's refusal to grant the same was not so much because the claim was baseless but because petitioner had failed to file the requisite reimbursement forms. He held that the formal defect was cured when petitioner filed several demand letters as well as the case before him.14

The Labor Arbiter held that petitioner was not fully paid of the cash equivalent of the leave credits due him because respondent firm had erroneously based the computation on a basic pay of P61,000.00. He held that the evidence showed that petitioner's monthly basic salary was P95,000.00 inclusive of the other benefits that were deemed included and integrated in the basic salary and that respondent firm had computed petitioner's 13th month pay based on a monthly basic pay of P95,000.00; thus, the cash commutation of the leave credits should also be based on this figure.15

The Labor Arbiter also ruled that petitioner was entitled to a year-end payment of P573,000.00 on the basis of the company policy of granting yearly lump sum payments to petitioner during all the years of service and that respondent firm had failed to give petitioner the same benefit for the year 1999 without any explanation.16

Aggrieved, respondent firm appealed to the NLRC. On 21 August 2003, the NLRC rendered a modified judgment,17 the dispositive portion of which states:

WHEREFORE, the Decision dated June 7, 2002 is hereby Affirmed with the modification that the complainant is only entitled to receive P2,301.00 as reimbursement claims. The award of P12,681.00 representing the reimbursement claims of complainant is set aside for lack of basis.


From the amount of P12,681.00 awarded by the Labor Arbiter as payment for the reimbursement claims, the NLRC lowered the same to P2,301.00 representing the amount which remained unpaid.19 As regards the issues on the lump sum payments and cash equivalent of the leave credits, the NLRC affirmed the findings of the Labor Arbiter.

Respondents filed a motion for reconsideration20 but the NLRC denied the motion for lack of merit.21 Hence, respondents elevated the matter to the Court of Appeals via a petition for certiorari .22

In the assailed Decision dated 19 April 2005, the Court of Appeals further reduced the total money award to petitioner, to wit:

WHEREFORE, in the light of the foregoing, the assailed resolution of public respondent NLRC dated August 21, 2003 in NLRC NCR Case No. 30-12-00927-99 (CA No. 032304-02) is hereby MODIFIED, ordering petitioner firm to pay private respondent the following:

(1) P2,301.00 representing private respondent's reimbursement claims;

(2) P9,802.83 representing the underpayment of the cash equivalent of private respondent's unused leave credits;

(3) P10,000.00 attorney's fees.


Petitioner sought reconsideration. In the assailed Resolution dated 27 June 2005, the Court of Appeals denied petitioner's motion for reconsideration for lack of merit.

Hence, the instant petition, raising the following issues:









Before delving into the merits of the petition, the issues raised by petitioner adverting to the Constitution must be addressed. Petitioner contends that the Court of Appeals' resolution which denied his motion for reconsideration violated Article VIII, Section 14 of the Constitution, which states:

Section 14. No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based.

No Petition for Review or motion for reconsideration of a decision of the court shall be refused due course or denied without stating the legal basis therefor.

Obviously, the assailed resolution is not a "decision" within the meaning of the Constitutional requirement. This mandate is applicable only in cases "submitted for decision," i.e., given due course and after filing of briefs or memoranda and/or other pleadings, as the case may be.25 The requirement is not applicable to a resolution denying a motion for reconsideration of the decision. What is applicable is the second paragraph of the above-quoted Constitutional provision referring to "motion for reconsideration of a decision of the court." The assailed resolution complied with the requirement therein that a resolution denying a motion for reconsideration should state the legal basis of the denial. It sufficiently explained that after reading the pleadings filed by the parties, the appellate court did not find any cogent reason to reverse itself.

Next, petitioner argues that the Court of Appeals erred in giving due course to the petition for certiorari when the resolution thereof hinged on mere evaluation of evidence. Petitioner opines that respondents failed to make its case in showing that the Labor Arbiter and the NLRC had exercised their discretion in an arbitrary and despotic manner.

As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court, the appellate court does not assess and weigh the sufficiency of evidence upon which the Labor Arbiter and the NLRC based their conclusion. The query in this proceeding is limited to the determination of whether or not the NLRC acted without or in excess of its jurisdiction or with grave abuse of discretion in rendering its decision. However, as an exception, the appellate court may examine and measure the factual findings of the NLRC if the same are not supported by substantial evidence.26 The Court has not hesitated to affirm the appellate court's reversals of the decisions of labor tribunals if they are not supported by substantial evidence.27

The Court is not unaware that the appellate court had reexamined and weighed the evidence on record in modifying the monetary award of the NLRC. The Court of Appeals held that the amount of the year-end lump sum compensation was not fully justified and supported by the evidence on record. The Court fully agrees that the lump sum award of P573,000.00 to petitioner seemed to have been plucked out of thin air. Noteworthy is the fact that in his position paper, petitioner claimed that he was entitled to the amount of P674,756.70.28 The variance between the claim and the amount awarded, with the record bereft of any proof to support either amount only shows that the appellate court was correct in holding that the award was a mere speculation devoid of any factual basis. In the exceptional circumstance as in the instant case, the Court finds no error in the appellate court's review of the evidence on record.

After an assessment of the evidence on record, the Court of Appeals reversed the findings of the NLRC and the Labor Arbiter with respect to the award of the year-end lump sum pay and the cash value of petitioner's leave credits. The appellate court held that while the lump sum payment was in the nature of a proportionate share in the firm's annual income to which petitioner was entitled, the payment thereof was contingent upon the financial position of the firm. According to the Court of Appeals, since no evidence was adduced showing the net income of the firm for fiscal year ending 1999 as well as petitioner's corresponding share therein, the amount awarded by the labor tribunals was a baseless speculation and as such must be deleted.29

On the other hand, the NLRC affirmed the Labor Arbiter's award of the lump sum payment in the amount of P573,000.00 on the basis that the payment thereof had become a company policy which could not be withdrawn arbitrarily. Furthermore, the NLRC held that respondent firm had failed to controvert petitioner's claim that he was responsible for generating some P7,365,044.47 in cash revenue during the fiscal year ending 1999.

The evidence on record establishes that aside from the basic monthly compensation,30 petitioner received a yearly lump sum amount during the first two years31 of his employment, with the payments made to him after the annual net incomes of the firm had been determined. Thus, the amounts thereof varied and were dependent on the firm's cash position and financial performance.32 In one of the letters of respondent Mananghaya to petitioner, the amount was referred to as petitioner's "share in the incentive compensation program."33

While the amount was drawn from the annual net income of the firm, the distribution thereof to non-partners or employees of the firm was not, strictly speaking, a profit-sharing arrangement between petitioner and respondent firm contrary to the Court of Appeals' finding. The payment thereof to non-partners of the firm like herein petitioner was discretionary on the part of the chairman and managing partner coming from their authority to fix the compensation of any employee based on a share in the partnership's net income.34 The distribution being merely discretionary, the year-end lump sum payment may properly be considered as a year-end bonus or incentive. Contrary to petitioner's claim, the granting of the year-end lump sum amount was precisely dependent on the firm's net income; hence, the same was payable only after the firm's annual net income and cash position were determined.

By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient.35 A bonus is 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 profits.36 Generally, a bonus is not a demandable and enforceable obligation. It is so only when it is made part of the wage or salary or compensation. When considered as part of the compensation and therefore demandable and enforceable, the amount is usually fixed. If the amount would be a contingent one dependent upon the realization of the profits, the bonus is also not demandable and enforceable.37

In the instant case, petitioner's claim that the year-end lump sum represented the balance of his total compensation package is incorrect. The fact remains that the amounts paid to petitioner on the two occasions varied and were always dependent upon the firm's financial position.

Moreover, in Philippine Duplicators, Inc. v. NLRC,38 the Court held that if the bonus is paid only if profits are realized or a certain amount of productivity achieved, it cannot be considered part of wages. If the desired goal of production is not obtained, of the amount of actual work accomplished, the bonus does not accrue.39 Only when the employer promises and agrees to give without any conditions imposed for its payment, such as success of business or greater production or output, does the bonus become part of the wage.40

Petitioner's assertion that he was responsible for generating revenues amounting to more than P7 million remains a mere allegation in his pleadings. The records are absolutely bereft of any supporting evidence to substantiate the allegation.

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 employees' basic salaries or wages.41 Respondents had consistently maintained from the start that petitioner was not entitled to the bonus as a matter of right. The payment of the year-end lump sum bonus based upon the firm's productivity or the individual performance of its employees was well within respondent firm's prerogative. Thus, respondent firm was also justified in declining to give the bonus to petitioner on account of the latter's unsatisfactory performance.

Petitioner failed to present evidence refuting respondents' allegation and proof that they received a number of complaints from clients about petitioner's "poor services." For purposes of determining whether or not petitioner was entitled to the year-end lump sum bonus, respondents were not legally obliged to raise the issue of substandard performance with petitioner, unlike what the Labor Arbiter had suggested. Of course, if what was in question was petitioner's continued employment vis - à-vis the allegations of unsatisfactory performance, then respondent firm was required under the law to give petitioner due process to explain his side before instituting any disciplinary measure. However, in the instant case, the granting of the year-end lump sum bonus was discretionary and conditional, thus, petitioner may not question the basis for the granting of a mere privilege.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

With regard to the computation of the cash equivalent of petitioner's leave credits, the Court of Appeals used a base figure of P71,250.00 representing petitioner's monthly salary as opposed to P95,000.00 used by the Labor Arbiter and NLRC. Meanwhile, respondents insist on a base figure of only P61,000.00, which excludes the advance incentive pay of P15,000.00, transportation allowance of P15,000.00 and representation allowance of P4,000.00, which petitioner regularly received every month. Because of a lower base figure (representing the monthly salary) used by the appellate court, the cash equivalent of petitioner's leave credits was lowered from P28,407.08 to P9,802.83.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

The monthly compensation of P71,250.00 used as base figure by the Court of Appeals is totally without basis. As correctly held by the Labor Arbiter and the NLRC, the evidence on record reveals that petitioner was receiving a monthly compensation of P95,000.00 consisting of a basic salary of P61,000.00, advance incentive pay of P15,000.00, transportation allowance of P15,000.00 and representation allowance of P4,000.00. These amounts totaling P95,000.00 are all deemed part of petitioner's monthly compensation package and, therefore, should be the basis in the cash commutation of the petitioner's leave credits. These allowances were customarily furnished by respondent firm and regularly received by petitioner on top of the basic monthly pay of P61,000.00. Moreover, the Labor Arbiter noted that respondent firm's act of paying petitioner a 13th month-pay at the rate of P95,000.00 was an admission on its part that petitioner's basic monthly salary was P95,000.00

The Court of Appeals, Labor Arbiter and NLRC used a 30-working day divisor instead of 26 days which petitioner insists. The Court of Appeals relied on Section 2, Rule IV, Book III42 of the implementing rules of the Labor Code in using the 30-working day divisor. The provision essentially states that monthly-paid employees are presumed to be paid for all days in the month whether worked or not.

The provision has long been nullified in Insular Bank of Asia and American Employees' Union (IBAAEU) v. Hon. Inciong, etc., et al.,43 where the Court ruled that the provision amended the Labor Code's provisions on holiday pay by enlarging the scope of their exclusion.44 In any case, the provision is inapplicable to the instant case because it referred to the computation of holiday pay for monthly-paid employees.

Petitioner's claim that respondent firm used a 26-working day divisor is supported by the evidence on record. In a letter addressed to

Petitioner, 45 respondents' counsel expressly admitted that respondent used a 26-working day divisor. The Court is perplexed why the tribunals below used a 30-day divisor when there was an express admission on respondents' part that they used a 26-day divisor in the cash commutation of leave credits. Thus, with a monthly compensation of P95,000.00 and using a 26-working day divisor, petitioner's daily rate is P3,653.85.46 Based on this rate, petitioner's cash equivalent of his leave credits of 23.5 is P85,865.48.47 Since petitioner has already received the amount P46,009.67, a balance of P39,855.80 remains payable to petitioner.

WHEREFORE, the instant Petition for Review on Certiorari is PARTLY GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 85038 is AFFIRMED with the MODIFICATION that respondents are liable for the underpayment of the cash equivalent of petitioner's leave credits in the amount of P39,855.80.



* Additional member per Special Order No. 590 in lieu of J. Quisumbing who is on official business

** Additional member per Special Order No. 600 in lieu of J. Carpio Morales who is on official business.

1 Rollo, pp. 9-35.

2 Id. at 37-54. Dated 19 April 2005 and penned by Justice Jose C. Reyes, Jr. and concurred in by Justices Delilah Vidallon-Magtolis, Chairperson of the Fourth Division, and Perlita J. Tria Tirona.

3 Dated 27 June 2005; rollo, p. 56.

4 Id. at 38.

5 Id. at 38-39.

6 Id. at 72.

7 Records, pp. 50-71.

8 Id. at 71-72.

9 Id. at 73-74.

10 Id. at 74-75.

11 Id. at 75.

12 Id. at 70-81.

13 Id. at 80-81.

14 Id. at 80.

15 Id. at 78-79.

16 Id. at 79.

17 Id. at 83-96.

18 Id. at 96.

19 Id. at 94.

20 CA rollo, pp. 175-200.

21 Id. at 42.

22 Id. at 2-39.

23 Rollo, pp. 53-54.

24 Id. at 15-16.

25 Nunal v. Commission on Audit, G.R. No. 78648, 24 January 1989, 169 SCRA 356, 362.

26 Soriano, Jr. v. National Labor Relations Commission, G.R. No. 165594, 23 April 2007, citing Danzas Intercontinental, Inc. v. Daguman, 456 SCRA 382.

27 See Philippine Pizza, Inc., v. Bungabong, G.R. No. 154315, 09 May 2005, 458 SCRA 288; Danzas Intercontinental, Inc. v. Daguman, G.R. No. 154368, 15 April 2005, 456 SCRA 382; Go v. Court of Appeals, G.R. No. 158922, 28 May 2004, 430 SCRA 358.

28 Records, p. 31.

29 Rollo, p. 53.

30 Records, p. 33.

31 Id. at 34-36.

32 Id. at 35.

33 Id. at 33.

34 Section 8, Article IX of respondent firm's Amended Articles of Partnership states: Nothing in this Agreement shall prevent the Chairman and Managing Partner, from fixing the just compensation of any employee of the Firm, fully or partially, on the basis of a share in the Partnership's net profits.

35 The Manila Banking Corp. v. NLRC, 345 Phil. 105, 125 (1997).

36 The Manila Banking Corp. v. NLRC, 345 Phil. 105, 126 (1997).

37 Id.

38 311 Phil. 407 (1995).

39 Id. at 419.

40 Id.

41 Id. at 420.

42 Sec. 2. Status of employees paid by the month. ― Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve.

43 217 Phil. 629 (1984).

44 Id. at 641.

45 Rollo, p. 103.

46 Daily rate (monthly compensation / 26 working days): P95,000.00 / 26 = P3,653.85

47 Cash commutation of leave credits (Daily rate x 23.5): P3,653.85 x 23.5 = P85,865.48

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