Kamaya Point Hotel

G.R. No.
75289 August 31, 1989
KAMAYA POINT HOTEL, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, FEDERATION OF FREE WORKERS and
MEMIA QUIAMBAO, respondents.
FERNAN, C.J.:
This petition for review on certiorari filed by herein petitioner Kamaya Point Hotel seeks to set
aside the decision of the National Labor Relations Commission dated June 25, 1986 in NLRC
1
Case No. RAB III-4-1191-83 which affirmed with modification the decision of the Labor Arbiter
dated May 31, 1984.
Respondent Memia Quiambao with thirty others who are members of private respondent
Federation of Free Workers (FFW) were employed by petitioner as hotel crew. On the basis of
the profitability of the company's business operations, management granted a 14th month pay
to its employees starting in 1979. In January 1982, operations ceased to give way to the hotel's
conversion into a training center for Libyan scholars. However, due to technical and financing
problems, the Libyans pre-terminated the program on July 7, 1982, leaving petitioner without
any business, aside from the fact that it was not paid for the use of the hotel premises and in
addition had to undertake repairs of the premises damaged by the Libyan students. All in all
petitioner allegedly suffered losses amounting to P2 million.
Although petitioner reopened the hotel premises to the public, it was not able to pick-up its lost
patronage. In a couple of months it effected a retrenchment program until finally on January 7,
1984, it totally closed its business.
2
On April 18, 1983, private respondent Federation of Free Workers (FFW); a legitimate labor
organization, filed with the Ministry of Labor and Employment, Bataan Provincial Office, Bataan
Export Processing Zone, Mariveles, Bataan, a complaint against petitioner for illegal
suspension, violation of the CBA and non-payment of the 14th month pay. Records however
3
show that the case was submitted for decision on the sole issue of alleged non-payment of the
14th month pay for the year 1982 . 4
After the hearing, Executive Labor Arbiter Francisco M. Jose, Jr. rendered a decision dated May
31, 1984, the dispositive portion of which reads:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby

rendered:
1. Ordering the respondent Kamaya Point Hotel to pay the 14th month pay for
1982 of all its rank and file employees;
2. Ordering the same respondent to pay the monetary equivalent of the benefits
mentioned in Section 6 of Article XII and Sections I and 2 of Article XII of the
then existing Collective Bargaining Agreement which will expire on 1 July 1984. 5
On appeal, the National Labor Relations Commission (NLRC) in its decision dated June 25,
1986 set aside the award of monetary benefits under the CBA but affirmed the grant of the 14th
month pay adopting the Labor Arbiter's reasoning, thus:
xxx xxx xxx
We agree with respondent that there is no law granting a 14th month pay. We
likewise agree with respondent that there is no provision in the Collective
Bargaining Agreement granting a 14th month pay. Despite all these, however,
we believe that individual complainants herein are still entitled to the 14th month
pay for 1982 because to our mind, the granting of this 14th month pay has
already ripened into a company practice which respondent company cannot
withdraw unilaterally. This 14th month pay is now an existing benefit which
cannot be withdrawn without violating article 100 of the Labor Code. To allow its
withdrawal now would certainly amount to a diminution of existing benefits which
complainants are presently enjoying. Premised on the above, the individual
complainants are entitled to the 14th month pay for 1982 and respondent should
pay the same. (Emphasis supplied) 6
Before this Court, petitioner now seeks to reverse the decision of the NLRC arguing that the
latter tribunal committed grave abuse of discretion when it adopted the Labor Arbiter's decision
saying that the 14th month pay cannot be withdrawn without violating Article 100 of the Labor
Code which states:
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 benefits being enjoyed at the time of promulgation of this Code.
We find it difficult to comprehend why the NLRC and the Labor Arbiter, despite their admission
that the 14th month pay has no contractual or legal basis, still chose to rule in favor of private
respondents. It is patently obvious that Article 100 is clearly without applicability. The date of
effectivity of the Labor Code is May 1, 1974. In the case at bar, petitioner extended its 14th
month pay beginning 1979 until 1981. What is demanded is payment of the 14th month pay for
1982. Indubitably from these facts alone, Article 100 of the Labor Code cannot apply.
Moreover, there is no law that mandates the payment of the 14th month pay. This is
emphasized in the grant of exemption under Presidential Decree 851 (13th Month Pay Law)
which states: "Employers already paying their employees a 13th month pay or its equivalent are
not covered by this Decree." Necessarily then, only the 13th month pay is mandated. Having
enjoyed the additional income in the form of the 13th month pay, private respondents' insistence
on the 14th month pay for 1982 is already an unwarranted expansion of the liberality of the law.
Also contractually, as gleaned from the collective bargaining agreement between management
and the union, there is no stipulation as to such extra remuneration. Evidently, this omission is
an acknowledgment that such benefit is entirely contilagent or dependent on the profitability of
the company's operations.
Verily, a 14th month pay is a misnomer because it is basically a bonus and, therefore, gratuitous
in nature. The granting of the 14th month pay is a management prerogative which cannot be
forced upon the employer. It is something given in addition to what is ordinarily received by or
strictly due the recipient. It is a gratuity to which the recipient has no right to make a demand. 7
This Court is not prepared to compel petitioner to grant the 14th month pay solely because it
has allegedly ripened into a company practice" as the labor arbiter has put it. Having lost its
catering business derived from Libyan students, Kamaya Hotel should not be penalized for its
previous liberality.
An employer may not be obliged to assume a "double burden" of paying the 13th month pay in
addition to bonuses or other benefits aside from the employee's basic salaries or wages. 8
Restated differently, we rule that an employer may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the employee's basic salaries or
wages in addition to the required 13th month pay.
8
WHEREFORE, the petition is hereby GRANTED. The portion of the decision of the National
Labor Relations Commission dated June 25, 1986 ordering the payment of 14th month pay to
private respondents is set aside.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

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G.R. No.

75289 August 31, 1989

KAMAYA POINT HOTEL, petitioner,

WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby

xxx xxx xxx

Prohibition against elimination or diminution of benefits.- Nothing in this Book

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.

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