ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, PETITIONER, VS. ATOK-BIG WEDGE MINING COMPANY, INCORPORATED, RESPONDENTS.

Atok-Big Wedge Mutual Benefit Association versus Atok-Big Wedge Mining Company

The Case

This is a labor case between a labor union, the Atok-Big Wedge Mutual Benefit Association, and its employer, the Atok-Big Wedge Mining Company. The union sought to enforce what it claimed was the correct minimum wage and differential pay owed to the workers under a compromise agreement and the Minimum Wage Law. The case matters because it teaches how a valid compromise agreement, freely entered into under the mediation of the Court of Industrial Relations, governs the wage relationship of the parties, and how the law distinguishes between facilities, which form part of wages and may be deducted, and supplements, which may not be reduced.

Procedural History

The dispute began when the union filed demands with the mining company, including a demand for an increase in daily wage. The matter was referred to the Court of Industrial Relations for arbitration and settlement. On July 14, 1951, the Court of Industrial Relations rendered a decision fixing the minimum wage at two pesos and sixty-five centavos a day with rice ration, or three pesos and twenty centavos without rice ration, and denying the deduction of housing facilities and efficiency bonuses. The mining company appealed that decision to the Supreme Court.

While that appeal was pending, the mining company filed an urgent petition to stop operations and lay off employees due to heavy losses. To avert closure, the Court of Industrial Relations convened the parties for conciliation, and on October 29, 1952, the parties reached a compromise agreement effective from August 4, 1952 to December 31, 1954. The agreement was approved by the Court of Industrial Relations on December 26, 1952, giving it the effect of an award or decision.

The Supreme Court later affirmed the decision of the Court of Industrial Relations fixing the minimum cash wage. The union then filed a petition for enforcement of the agreement, claiming it was modified by the Supreme Court decision and the Minimum Wage Law. The Court of Industrial Relations denied the petition in an order dated September 22, 1953, and also denied the union's claim for additional compensation for Sunday and holiday work. After its motion for reconsideration was denied, the union filed a petition for review by certiorari with the Supreme Court.

Facts

On September 4, 1950, the Atok-Big Wedge Mutual Benefit Association submitted several demands to the Atok-Big Wedge Mining Company, including an increase of fifty centavos in daily wage. The matter was referred to the Court of Industrial Relations. On July 14, 1951, the Court fixed the minimum wage at two pesos and sixty-five centavos a day with rice ration, or three pesos and twenty centavos without rice ration, and denied the deduction of housing facilities and efficiency bonuses. The mining company appealed.

While the appeal was pending, the mining company filed an urgent petition to stop operations and lay off employees due to heavy losses, increased taxes, high cost of materials, negligible ore deposits, and the enforcement of the Minimum Wage Law. To avert closure, the Court of Industrial Relations convened the parties for voluntary conciliation. On October 29, 1952, the parties reached an agreement effective from August 4, 1952 to December 31, 1954. Under the agreement, the company agreed to abide by the Supreme Court's decision in the pending case, and the parties valued the facilities given to workers as follows: rice ration at fifty-five centavos per day, housing facility at forty centavos per day, and all other facilities at eighty-five centavos per day, for a total of one peso and eighty centavos per day. The agreement was approved by the Court on December 26, 1952.

The Supreme Court later affirmed the decision fixing the minimum cash wage. The union then filed a petition for enforcement, claiming it was entitled to a minimum cash wage of three pesos and forty-five centavos a day with rice ration, or four pesos without rice ration, plus differential pay from August 4, 1952. The mining company opposed, arguing that the agreement was intended to prevent any increase in production cost and to supersede the Supreme Court decision and the Minimum Wage Law. The Court of Industrial Relations denied the petition, and also denied the union's claim for additional compensation for Sunday and holiday work. The union filed a petition for review by certiorari.

Issues

• Whether or not the compromise agreement of October 29, 1952, particularly paragraph three allowing the deduction of all facilities from the minimum wage, was superseded by the Supreme Court decision and the Minimum Wage Law, entitling the laborers to a higher cash wage.
• Whether or not the additional compensation for work on Sundays and holidays should be computed on the minimum wage of four pesos rather than on the cash portion of two pesos and twenty centavos.

Applicable Provisions

Section 20 of Republic Act Number 602 provides:

No agreement or contract, oral or written, to accept a lower wage or less than any other under this Act, shall be valid.

This provision is invoked by the union to argue that the deductions from the minimum wage constitute a waiver of the minimum wage and are therefore void.

Section 2 of Republic Act Number 602 provides:

Wage includes the fair and reasonable value as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.

This provision is the basis for the Court's holding that facilities furnished by the employer form part of wages and may be deducted from the minimum wage.

Section 19 of Republic Act Number 602 provides:

Nothing in this Act shall justify an employer in reducing supplements furnished on the date of enactment.

This provision is invoked by the union to argue that the deductions reduce supplements, but the Court distinguishes facilities from supplements.

Section 4 of Commonwealth Act Number 444 provides:

No person, firm, or corporations, business establishment or place or center of labor shall compel an employee or laborer to work during Sundays and holidays, unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration.

This provision sets the minimum additional compensation for Sunday and holiday work, which the Court uses to test whether the company's payments complied with the law.

Ruling

On the first issue, the Court held that the contention of the union is untenable. The intention of the parties could not have been to make the arrangement in paragraph three merely provisional pending the decision of the Supreme Court, because the agreement was expressly made retroactive and effective as of August 4, 1952, and to be in force up to and including December 31, 1954. When concluded on October 29, 1952, neither party could anticipate the date when the Supreme Court decision would be rendered. The Court explained that the agreement was prompted by an urgent petition to close operations and lay off laborers because of heavy losses and the full enforcement of the Minimum Wage Law. To avoid such eventuality, a compromise was reached whereby the company would pay the minimum wage fixed by law, but the facilities then being received by the laborers would be evaluated and charged as part of the wage, without reducing the cash portion of their wages. The Court interpreted the provision to abide by the Supreme Court decision as follows: the company agreed to pay whatever award the Court would make from September 4, 1950 up to August 3, 1952, and from August 4, 1952 to December 31, 1954, the parties are bound by their agreement of October 29, 1952.

For the first period, only rice rations are to be regarded as forming part of the wage and deductible. The minimum wage was then fixed at three pesos and twenty centavos without rice ration, or two pesos and sixty-five centavos with rice ration. Since the company had been paying a basic cash wage of two pesos prior to the decision and up to August 3, 1952, the laborers are entitled to a differential pay of sixty-five centavos per working day from September 4, 1950 up to August 3, 1952. From August 4, 1952, the laborers should be paid a minimum wage of four pesos a day. From this amount, the company is given the right to charge each laborer in full or partially the facilities enumerated in paragraph three of the agreement, namely rice ration at fifty-five centavos per day, housing facility at forty centavos per day, and other facilities at eighty-five centavos per day, or a total of one peso and eighty centavos, which facilities constitute part of his wages. Since the company had actually been paying the minimum wage of two pesos and twenty centavos since August 4, 1952, the laborers are not entitled to any differential pay from this date.

The Court rejected the argument that the deductions constitute a waiver of the minimum wage. An agreement to deduct certain facilities received by the laborers from their employer is not a waiver of the minimum wage fixed by law. Wage, as defined by section 2 of Republic Act Number 602, includes the fair and reasonable value of board, lodging, or other facilities customarily furnished by the employer to the employee. Thus, the law permits the deduction of such facilities from the laborer's minimum wage of four pesos, as long as their value is fair and reasonable. It was not claimed that the valuations fixed in the agreement were not fair and reasonable. The Court also rejected the argument that the deductions violate section 19 of the law regarding supplements. The Court distinguished supplements from facilities. Supplements constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence, so that by express provision of the law they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. The facilities mentioned in the agreement do not come within the term supplements.

On the second issue, the Court held that the minimum legal additional compensation for work on Sundays and legal holidays is twenty-five per cent of the laborer's regular remuneration. Under the Minimum Wage Law, this minimum additional compensation is one peso a day, which is twenty-five per cent of four pesos, the minimum daily wage. While the company computes the additional compensation on the cash portion of two pesos and twenty centavos, it is giving fifty per cent thereof, or one peso and ten centavos a day. Considering that the minimum additional compensation fixed by law is one peso, the compensation being paid by the company is even higher than such minimum legal additional compensation. The Court found no error in the holding of the Court of Industrial Relations that the company has not violated the law with respect to the payment of additional compensation for work rendered on Sundays and legal holidays.

Doctrine

A compromise agreement voluntarily entered into by the parties under the mediation of the Court of Industrial Relations, and approved by the Court, has the effect of an award or decision and is binding upon the parties. The intention of the parties is ascertained from the terms of the agreement and the circumstances surrounding its execution. When the agreement is expressly made retroactive and effective for a fixed period, the parties cannot later claim that it was merely provisional and superseded by a subsequent court decision.

Under the Minimum Wage Law, facilities furnished by the employer to the laborer, such as rice ration, housing, and other items necessary for existence and subsistence, form part of the wage and may be deducted from the minimum wage, provided their value is fair and reasonable. This is not a waiver of the minimum wage. Supplements, on the other hand, are extra remuneration or special privileges over and above ordinary earnings and may not be reduced. The law permits the deduction of facilities but not the reduction of supplements.

The minimum additional compensation for work on Sundays and legal holidays is twenty-five per cent of the laborer's regular remuneration. If the employer pays an amount equal to or higher than this minimum, there is no violation of the law.

Disposition

The petition for review is dismissed, with costs against the petitioner Atok-Big Wedge Mutual Benefit Association.

Remember This

Facilities are part of wages and may be deducted from the minimum wage if their value is fair and reasonable, but supplements are extra benefits that cannot be reduced. Examiners use this case to test the distinction between facilities and supplements under the Minimum Wage Law, and the binding effect of a compromise agreement approved by the Court of Industrial Relations.