580

SUPREMECOURTREPORTSANNOTATED Plastic Town Center Corporation vs. NLRC G.R.No.81176.April19,1989.

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PLASTIC TOWN CENTER CORPORATION, petitioner, vs.NATIONALLABORRELATIONSCOMMISSIONAND NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM) KATIPUNAN,respondents.
Labor; Collective bargaining agreement; The CBA is a contract which constitutes the law between the parties.The subject for interpretationinthispetitionforreviewisnottheLaborCodeorits implementing rules and regulations but the provisions of the collective bargaining agreement entered into by management and the labor union. As a contract, it constitutes the law between the parties (Fegurin v. National Labor Relations Commission, 120 SCRA 910 [1983]) and in interpreting contracts, the rules on contractmustgovern. Same; Same; Same; Interpretation; How contracts which are not ambiguous to be interpreted.Contractswhicharenotambiguous aretobeinterpretedaccordingtotheirliteral meaning and should not be interpreted beyond their obvious intendment (Herrera v. PetrophilCorp.,146SCRA385[1986]).

Same; Same; Same; Same; Same; Where the words of the contract are plain and readily understandable, there is no need for any further construction; CBAgranted increases cannot be retroactively applied to mean compliance with Wage Order No. 4.In the case at bar, the petitioner alleges that on May 1, 1984, it granted a P1.00 increase pursuant to Wage Order No. 4 which in consonance with Section3oftheCBAwastobecreditedtotheJuly1,1984 increaseunderthe
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* THIRDDIVISION.

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CBA. It was, therefore, a July increase. Section 3 of the CBA, however, clearly states that CBA granted increases shallbecreditedagainstfutureallowancesorwageorders. Thus,theCBAincreasetobeeffectedonJuly1,1984can notberetroactivelyappliedtomeancompliancewithWage OrderNo.4whichtookeffectonMay1,1984.Thewordsof thecontractareplainandreadilyunderstandablesowefind no need for any further construction or interpretation (Dihiansanv.CourtofAppeals,153SCRA712[1987]). Same; Same; Same; Gratuity, defined.Lookingintothe definition of gratuity, we find the following in Morenos Philippine Law Dictionary,to wit: Something given freely, orwithoutrecompense;agift;somethingvoluntarilygiven inreturnforafavororservices;abounty;atip.Pirovanov. DelaRamaSteamshipCo.,96Phil.357.Thatpaidtothe beneficiary for past services rendered purely out of the generosity of the giver or grantor. Peralta v. Auditor General,100Phil.1054.Salaryorcompensation.Thevery term gratuity differs from the words salary or compensation in leaving the amount thereof, within the limitsofreason,tothearvitramentofthegiver.Herranz& Garrizv.Barbudo,12Phil.9. Same; Same; Same; Same; Nature of gratuity pay; Gratuity pay is not based on the actual number of days worked over the period of years forming its basis.From theforegoing,gratuitypayistherefore,notintendedtopay aworkerforactualservicesrendered.Itisamoneybenefit giventotheworkerswhosepurposeistorewardemployees or laborers, who have rendered satisfactory and efficient service to the company. (Sec. 2, CBA) While it may be enforcedonceitformspartofacontractualundertaking,the grantofsuchbenefitisnotmandatorysoastobeconsidered apartoflaborstandardlawunlikethesalary,costofliving allowances, holiday pay, leave benefits, etc., which are coveredbytheLaborCode.Nowherehasiteverbeenstated thatgratuitypayshouldbebasedontheactualnumberof daysworkedovertheperiodofyearsformingitsbasis.We seenopointincountingthenumberofdaysworkedovera

tenyearperiodtodeterminethemeaningoftwoandone halfmonthsgratuity. Same; Same; Same; Under the Civil Code and the Labor Code, all doubts or ambiguity in the contract are resolved in favor of labor.Moreoverany doubts or ambiguity in the contract between management and the union members should be resolved in the light of Article 1702 of the Civil Code.xxxThisisalsoinconsonancewiththe
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principle enunciated in the Labor Code that all doubts shouldberesolvedinfavoroftheworker. Same; Same; Same; Civil Law; Interpretation; When months are not designated by name, a month is understood to be 30 days.TheCivilCodeprovidesthatwhenmonths are not designated by name, a month is understood to be thirty (30) days. The provision applies under the circumstancesofthiscase. PETITIONtoreviewthedecisionoftheNationalLabor RelationsCommission. ThefactsarestatedintheopinionoftheCourt. Generosa R. Jacintoforpetitioner. The Solicitor Generalforpublicrespondent. GUTIERREZ,JR.,J.: An issue in this petition is the interpretation of certain provisions of the Collective Bargaining Agreement (CBA) between Plastic Town Center Corporation and the respondentunion. On September 7, 1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)Katipunan filed a complaint dated August 30, 1984 charging the petitioner with: a.ViolationofWageOrderNo.5,bycreditingtheP1.00 perdayincreaseintheCBAaspartofthecompliancewith saidWageOrderNo.5,and b. Unfair labor practice thru violation of the CBA by giving only twentysix (26) days pay instead of thirty (30) days equivalent to one (1) month as gratuity pay to

resigningemployees.(p.3,Rollo) OnJuly25,1985,LaborArbiterRubenAlbertoruledin favor of Plastic Town Center Corporation. The pertinent portionsofthedecisionreadasfollows:
xx x In this particular case, the P1.00 increase was ahead of the implementation of the CBA provision or could be said was advantageous to complainant members, chronologically stated. For theabovecogentreasonwecannotfaultrespondentforitsrefusal tograntasecondP1.00increaseonJuly1,1984. xxxxxxxxx
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Complainant sustains the view that a month salary pertains to salary for 30 days, citing the provision of the Civil Code on the matter. Upon the other hand, respondents understanding of the controverted provision is pragmatic or practical. Since the workers are paid on daily basis, it computed the salary received by the workerinamonthasamonthsalary.Inthiscasethesalaryof26 daysisamonthsalary. We agree with the respondents interpretation. As daily wage earner,therewouldbenoinstancethattheworkerwouldworkfor 30daysamonthsinceworkdoesnotincludeSundaysorrestdays. In the mind of the daily worker in a month he could not expect a monthsalaryexceedingtheequivalentof26daysservice.Toaward thedailywageearnerpayformorethan26daysispayfordayshe doesnotwork.Butasregardsthemonthlypaidworkersheexpects his monthly salary to be fixed which is a month salary. Hence, a distinctionseparateshimwiththedailywages. IN VIEW OF THE FOREGOING, the unfair labor practice charge should be, as it is hereby dismissed for lack of legal and factualbasis.(pp.5657,Rollo)

OnAugust30,1987,therespondentlaborunionappealedto theNationalLaborRelationsCommission. On June 30, 1987, the NLRC rendered the questioned decisionwiththefollowingdispositiveportion:
WHEREFORE, the appealed decision is hereby reversed and the respondentisorderedtograntP1.00increaseforJuly1,1984and theequivalentofthirtydayssalaryingratuitypay,asrequiredby

itsCBAwiththecomplainants.(p.39,Rollo)

The motion for reconsideration of said decision was denied onDecember7,1987.Hence,thispetition. TheapplicableprovisionsoftheCBAreadasfollows:
Section1Thecompanyagreestograntpermanent/regularrank and file workers covered by this Agreement who have rendered at least one year of continuous service, acrosstheboard wage increasesasfollows: a. Effective1July,1983P1.00perworkedday; b. Effective1July,1984P1.00perworkedday; c. Effective1July,1985P1.00perworkedday;
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Section3Itisagreedandunderstoodbythepartieshereinthat theaforementionedincreaseinpayshallbecreditedagainstfuture allowances or wage orders hereinafter implemented or enforced by virtue of Letters of Instructions, Decrees and other labor legislation.(pp.3637,Rollo)

Wage Order No. 4 provided for the integration of the mandatory emergency cost of living allowances (ECOLA) underPresidentialDecrees1614,1634,1678and1713into thebasicpayofallcoveredworkerseffectiveMay1,1984.It further provided that after the integration, the applicable statutoryminimumdailywageratemustbecompliedwith, whichinthiscaseisP32.00. ThepetitionerincurredadeficiencyofP1.00inthewage rate after integrating the ECOLA with basic pay. So the petitioner advanced to May 1, 1984 or two months earlier theimplementationoftheonepesowageincreaseprovided forinthe CBA starting July 1, 1984 for the benefit of the workers. ThepetitionerarguesthatitdidnotcredittheP1.00per dayacrosstheboardincreaseundertheCBAascompliance withWageOrderNo.5implementedonJune16,1984since it gave an additional P3.00 per day to the basic salary pursuanttosaidorder.It,however,creditedtheP1.00aday increase to the requirement under Wage Order No. 4 to

whichtheprivaterespondentsallegedlydidnotobject. TheothercontrovertedprovisionoftheCBAreads:
Section 2. It is the intention of both the COMPANY and the UNION,thatthegrantofgratuitypaybytheCOMPANYhereinset forth is to reward employees and laborers, who have rendered satisfactory and efficient service with the COMPANY. THUS, in case of voluntary resignation, which is not covered by Section 1 above, the COMPANY nevertheless agrees to grant a gratuity pay totheresigningemployeeorlaborerasfollows: 1. 2. 3. 4. TwotoFiveyearsofservice Six(6)toTen(10)yrs.of service Eleven(11)toFifteenyrs.of service Sixteen(16)totwentyyrs.of : 1monthsalary : TwoandOnehalf(21/2) monthssalary : 4monthssalary : 5monthssalary
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VOL.172,APRIL19,1989 Plastic Town Center Corporation vs. NLRC 5. service

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Twentyoneyrs,ofserviceand : Twelve(12)monthssalary. above p.38,Rollo)

Thepetitionerallegesthatonemonthsalaryfordailypaid workersshouldbecomputedonthebasisoftwentysix(26) days and not thirty (30) days since daily wage workers do not work every day of the month including Sundays and holidays. Thepetitionisdevoidofmerit. Thesubjectforinterpretationinthispetitionforreview is not the Labor Code or its implementing rules and regulations but the provisions of the collective bargaining agreement entered into by management and the labor union. As a contract, it constitutes the law between the parties(Fegurin v. National Labor Relations Commission, 120 SCRA 910 [1983]) and in interpreting contracts, the rulesoncontractmustgovern. Contractswhicharenotambiguousaretobeinterpreted according to their literal meaning and should not be

interpreted beyond their obvious intendment (Herrera v. PetrophilCorp.,146SCRA385[1986]). Inthecaseatbar,thepetitionerallegesthatonMay1, 1984,itgrantedaP1.00increasepursuanttoWageOrder No.4whichinconsonancewithSection3oftheCBAwasto becreditedtotheJuly1,1984increaseundertheCBA.It was, therefore, a July increase. Section 3 of the CBA, however,clearlystatesthatCBAgrantedincreasesshallbe creditedagainstfutureallowancesorwageorders.Thus,the CBA increase to be effected on July 1, 1984 can not be retroactivelyappliedtomeancompliancewithWageOrder No. 4 which took effect on May 1, 1984. The words of the contractareplainandreadilyunderstandablesowefindno need for any further construction or interpretation (Dihiansan v. Court of Appeals, 153 SCRA 712 [1987]). Furthermore,weagreewiththeNLRCasitheld:
ItisourfindingthattherespondentisboundbytheCBAtogrant anincreaseonJuly1,1984. Inthiscase,betweenJuly1,1983andJuly1,1984,therewere actuallytwo increases mandated by Wage Order No. 4 on May 1, 1984
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and by Wage Order No. 5 on June 16, 1984. The fact that the respondenthad complied with Wage Order No. 4 and Wage Order No.5doesnotrelieveitofitsobligationtogranttheP1.00increase undertheCBA.(pp.3738,Rollo)

Withregards to the second issue, the petitioner maintains that under the principle of fair days wage for fair days labor,gratuitypayshouldbecomputedonthebasisof26 days for one month salary considering that the employees aredailypaid. WefindnoabuseofdiscretiononthepartoftheNLRCin granting gratuity pay equivalent to one month or 30 days salary. WequotewithfavortheNLRCdecisionwhichstates:
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xxxTosaythatawardingthedailywageearnersalaryfor

morethan26daysispayinghimfordayshedoesnotwork missesthepointentirely.Theissuehereisnotpaymentfor daysworkedbutpaymentofgratuitypayequivalenttoone monthor30dayssalary.(p.29,Rollo) Looking into the definition of gratuity, we find the followinginMorenosPhilippine Law Dictionary,towit:
Somethinggiven freely, or without recompense; a gift; something voluntarilygiven in return for a favor or services; a bounty; a tip. Pirovanov.DelaRamaSteamshipCo.,96Phil.357. That paid to the beneficiary for past services rendered purely out of the generosity of the giver or grantor.Peralta v. Auditor General,100Phil.1054. Salary or compensation. The very term gratuity differs from thewordssalary or compensation in leaving the amount thereof, within the limits of reason, to the arvitrament of the giver. Herranz&Garrizv.Barbudo,12Phil.9.

Fromtheforegoing,gratuitypayistherefore,notintended topayaworkerforactualservicesrendered.Itisamoney benefit given to the workers whose purpose is to reward employeesorlaborers,whohaverenderedsatisfactoryand efficientservicetothecompany.(Sec.2,CBA)Whileitmay beenforcedonceit
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forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law unlike the salary, cost of living allowances, holiday pay, leave benefits, etc., which are coveredbytheLaborCode.Nowherehasiteverbeenstated thatgratuitypayshouldbebasedontheactualnumberof daysworkedovertheperiodofyearsformingitsbasis.We seenopointincountingthenumberofdaysworkedovera tenyearperiodtodeterminethemeaningoftwoandone half months gratuity. Moreover any doubts or ambiguity in the contract between management and the union membersshould be resolved in the light of Article 1702 of theCivilCodethat:
Incaseofdoubt,alllaborlegislationandalllaborcontractsshallbe construedinfavorofthesafetyanddecentlivingforthelaborer.

Thisisalsoinconsonancewiththeprincipleenunciatedin theLaborCodethatalldoubtsshouldberesolvedinfavorof theworker. The Civil Code provides that when months are not designatedbyname,amonthisunderstoodtobethirty(30) days.Theprovisionappliesunderthecircumstancesofthis case. Inviewoftheforegoing,thepublicrespondentdidnotact withgraveabuseofdiscretionwhenitrenderedtheassailed decisionwhichisinaccordancewithlawandjurisprudence. WHEREFORE, the petition is hereby DISMISSED for lackofmerit. SOORDERED. Fernan (C.J.), Feliciano, Bidin and Corts, JJ., concur. Petition dismissed. Notes.Collective bargaining constitutes the law betweentheparties.(Fergurin vs. NLRC,120SCRA910.) Agreements have the force of law between the parties. (Herrera vs. Petrophil Corp.,146SCRA385.) o0o
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