SUN-RIPE COCONUT PRODUCTS, INC., PETITIONER, VS. THE NATIONAL LABOR UNION, RESPONDENT.

This is a petition for review of a decision of the Court of Industrial
Relations rendered on June 18, 1954 which grants to the employees and laborers
of the. Kap. Bisig ng Buenavista, a labor union composed of workers in
the Desiccated Coconut Department of the Sun-Ripe Coconut Products, Inc.,
“fourteen (14) days vacation leave for every year of continuous, faithful, and
satisfactory service during the years 1947 and 1950.” Said labor union is an
affiliate of the National Labor Union which instituted these proceedings in its
behalf.

On March 11, 1952, the National Labor Union, in behalf of the Kap. Bisig
ng Buenavista, filed in the Court of Industrial Relations a petition
against the Sun-Ripe Coconut Products, Inc., containing several labor demands
including one for fourteen (14) days vacation leave with pay. After a
preliminary conference held before the industrial court, the company and the
union entered into an agreement on January 12, 1953 wherein it was stipulated
that, if the court should verify the financial losses suffered by the company,
the union would withdraw its demand for vacation leave.

On September 17,1953, after the union had presented its evidence, another
agreement was entered into between the parties wherein it was stated that all
the demands of the union were satisfactorily settled except the demand for
vacation leave which, it was agreed, it shall be submitted to the court for
determination.

Agreeably with the stipulation above-mentioned, the court appointed examiners
to look into the financial condition of the company during the years 1947 to
1952 who later submitted their report showing that during said period the
company suffered a net loss of P832,980.32. It should be stated, however, that
the same report showed that in the year 1947 the Desiccated Coconut Department
of the company realized a net profit of P238,108.69 and in the year 1950,
P240,592.20.

On January 29, 1954, Judge Jose S. Bautista, who received the evidence,
rendered decision granting the petitioning laborers fifteen (15) days annual
vacation leave with pay during the period of their employment but, on July 8,
1954, this decision was modified by the court in banc, on a motion for
reconsideration, the court stating that the laborers of the Desiccated Coconut
Department are only entitled to fourteen (14) days vacation leave with pay for
the years 1947 and 1950 considering the profits realized by said department
during those years. No vacation leave was granted for the year 1953 for lack of
proof as to the financial condition of the company in that year.

In considering the demand for vacation leave by the petitioning laborers the
issue with which the industrial court was confronted was whether said demand
should be made to depend upon the overall operation of the business of the
company or merely upon the individual operation of each department, considering
its profits and losses apart from those obtained or suffered by the whole
business, and the court chose to adopt the view that, for the purposes of
vacation leave, it is enough that the financial condition of each department be
considered “in order to give more incentive and premium to those employees and
laborers who, because of their efficient work and accomplishments, have
contributed their share in a more productive interprise.” And elaborating on
this view, Judge Bautista made the following comment: “There is no doubt that
each of the above-mentioned departments has its own personnel, and the claim of
such personnel depends upon the business operation of the department in which
they are employed alone, and not upon the overall operation of the corporation
insofar as the privilege of vacation leave with pay is concerned. In other
words, the workers in Cebu have their equity in the business operations of the
Cebu branch only; the workers in the Merchandising Department, in the said
department only; and the workers in the Desiccated Coconut Department, in the
said department only. This goes to prove that if the Cebu Branch, for example,
is making profits, while the Desiccated Coconut Department is suffering losses,
the workers of the latter department cannot ask for additional privilege because
the Cebu branch is making profits, and vice versa.” This view is now disputed by
counsel for the company who claims it to be derogatory to the principle of unity
and interdependence that should exist in the several departments of an entity
which was organized to accomplish one common purpose.

We are inclined to agree with this counsel’s view. While a corporation
organized to engaged in business, like petitioner, may be composed of several
departments, one filing a function different in nature from the others, the same
cannot be considered separate and independent in relation to its business, but
merely as integral parts, with coordinate and interrelated functions, of one
whole organization. They are like parts of a machine which function coordinately
and harmoniously to accomplish its objective and wherein the failure of one
affects the efficiency of the whole. This is true in every corporation and the
petitioner is no exception. This view can be better explained by considering the
factors that intervene in the promotion of the business.

We begin by stating that petitioning corporation was organized with one
single capital. Because of the nature of its business, its functions were
distributed into several departments, the merchandising, the desiccated, and the
Cebu branch. These functions are separate but coordinate. While each department
has its own personnel, the employees are paid not by the department but by the
company. The profits and losses of each reflect in favor or against the whole
business, not merely in a particular department, and whatever concessions in the
form of bounty, gratuity or leave granted are necessarily borne by the general
funds. And consistent with this view, the industrial court, in acting on the
petition of the union, directed its examiners to look into the financial
condition of the whole business.

Fairness, equality and justice also react adversely to the application of the
view of the industrial court for it sanctions the award of a premium to one
employee at the cost of another in the interrelation of a corporate business.
Considering the coordinate functions of the different departments of a
corporation, it is descriminatory to give concessions to the employees of one
because of certain gain it realizes when in bringing it about the efforts of the
others are also brought into play. Such discrimination is obnoxious to the
harmonious relation that should prevail in an integrated body and is productive
of demoralization and jealousy among the employees. This situation should be
avoided. Economically and ethically this view is unsound.

Another point raised by petitioner is that the industrial court awarded
vacation leave to the laborers of the Desiccated Coconut Department for the
years 1947 and 1950 in spite of the fact that the union merely asked for leave
for the year 1952 and not for previous years.

There is nothing wrong with the industrial court in making such award if
warranted considering the provision of the law that “The court shall not be
restricted to the specific relief claimed * * * but may include in the award * *
* any matter of determination which may be deemed necessary or expedient for the
purpose of settling the dispute.” (Section 13, Commonwealth Act No. 103). But
the purpose of vacation leave is to afford to a laborer a chance to get a
much-needed rest to replenish his worn out energies and acquire a new vitality
to enable him to efficiently perform his duties, and not merely to give him
additional salary or bounty. This privilege must be demanded in its opportune
time and if he allows the years to go by in silence, he waives it. It becomes a
mere concession or act of grace of the employer. As it was once held “The
stipulation in the contract for the allowance of a vacation to employees is
merely a recognition by management and labor that a short interval of
complete rest and relaxation from daily routine with the benefit of full pay is
essential to the mental and physical wellbeing of the workman * * *. The parties
to the agreement in contracting for the allowance of vacation, did not intend
that the stipulation should be considered as providing a cash bonus in lieu of
vacation pay * * *.” (Bondio vs. Joseph Binder, Inc., 24 So. 2d 398; 30
A. L. R. 2d 352,) The only case where vacation pay may take the form of a bonus
is when there is an agreement whereby that option is given to the laborer (30 A.
L. R. 2d p. 372). At any rate, the rule is that vacation leave should be
demanded opportunely considering Its purpose and if this is not done, it is
deemed waived (Schurr vs. Savigny, et al., 48 N. W. 549; Giorno
vs. Banco Di Napoli Trust Co., 43 N. Y. S. 2d 921).

Wherefore, the decision appealed from is hereby reversed, without
pronouncement as to costs.

Bengzon, Padilla, Montemayor, Reyes, A. Jugo, Labrador, Concepcion,
and Reyes, J.B.L., JJ., concur.