PLASTIC TOWN CENTER CORPORATION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM) -KATIPUNAN, RESPONDENTS.

An issue in this petition is the interpretation of certain
provisions of the Collective Bargaining Agreement (CBA) between Plastic Town
Center Corporation and the respondent union.

On September 7, 1984,
the respondent Nagkakaisang Lakas
Ng Manggagawa (NLM) – Katipunan
filed a complaint dated August 30,
1984 charging the petitioner with:

a.  Violation of Wage Order
No. 5, by crediting the P1.00 per day increase in the CBA as part of the
compliance with said Wage Order No. 5, and

b.  Unfair labor practice thru violation of the CBA by giving only
twenty-six (26) days pay instead of thirty (30) days equivalent to one (1)
month as gratuity pay to resigning employees. 
(p.3, Rollo)

On July 25, 1985,
Labor Arbiter Ruben Alberto ruled in favor of Plastic Town Center Corporation.  The pertinent portions of the decision read
as follows:

“x x x In this particular case, the P1.00 increase was ahead of the
implementation of the CEA provision or could
be said was advantageous to complainant members, chronologically stated.  For the above cogent reason we can not fault respondent for its refusal to grant a
second P1.00 increase on July 1, 1984.

xxx                   xxx                   xxx

“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 worker in a month as a
month salary.  In this case the salary
for 26 days is a month salary.

“We agree with the respondent’s interpretation.  As daily wage earner, there would be no
instance that the worker would work for 30 days a month since work does not
include Sundays or rest days.  In the
mind of the daily worker in a month he could not expect a month salary
exceeding the equivalent of 26 days service. 
To award the daily wage earner pay for more than 26 days is pay for days
he does not work.  But as regards the
monthly paid workers he expects his monthly salary to be fixed which is a month salary. 
Hence, a distinction separates him with the daily wages.

“IN VIEW OF THE FOREGOING, the unfair labor practice charge
should be, as it is hereby dismissed for lack of legal and factual basis.”
(pp. 56-57, Rollo)

On August 30, 1987,
the respondent labor union appealed to the National Labor Relations Commission.

On June 30, 1987,
the NLRC rendered the questioned decision
with the following dispositive portion:

“WHEREFORE, the appealed decision is hereby reversed and the
respondent is ordered to grant P1.00 increase for July 1, 1984 and the equivalent of thirty days salary in
gratuity pay, as required by its CBA with the complainants.” (p. 39, Rollo)

The motion for reconsideration of said decision was denied on December 7, 1987.  Hence, this petition.

The applicable provisions of the CBA read as follows:

“Section 1 – The company agrees to grant permanent/regular
rank and file workers covered by this Agreement who have rendered at least one
year of continuous service, across the­ board
wage increases as follows:

” ‘a. Effective 1 July, 1983 – P1.00
per worked day;

“ ‘b. Effective 1 July, 1984 – P1.00 per
worked day;

“ ‘c. Effective 1 July, 1985 – P1.00 per
worked day;

“Section 3 -It is agreed and understood by the parties herein
that the aforementioned increase in pay shall be credited against future
allowances or wage orders hereinafter implemented or enforced by virtue of
Letters of Instructions, Decrees and
other labor legislation.” (pp. 36-37, Rollo)

 Wage Order No. 4 provided
for the integration of the mandatory emergency cost of living allowances
(ECOLA) under Presidential Decrees 1614, 1634, 1678 and 1713 into the basic pay
of all covered workers effective May 1,
1984.  It further provided
that after the integration, the applicable statutory minimum daily wage rate
must be complied with, which in this
case is P32.00.

The petitioner incurred a deficiency of P1.00 in the wage rate
after integrating the ECOLA with the basic pay. 
So the petitioner advanced to May
1, 1984 or two months earlier the implementation of the one-peso
wage increase provided for in the CBA starting July 1, 1984 for the benefit of the workers.

The petitioner argues that it did not credit the P1.00 per day
across the board increase under the CBA as compliance with Wage Order No. 5 implemented on June 16, 1984 since it gave an
additional P3.00 per day to the basic salary pursuant to said order.  It, however, credited the P1.00 a day
increase to the requirement under Wage Order No. 4 to which the private
respondents allegedly did not object.

The other controverted provision of the
CBA reads:

“Section 2.  It is the intention of both the COMPANY and
the UNION,
that the grant of gratuity pay by the COMPANY herein set 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 to the resigning employee or
laborer as follows:

“1. Two to Five
years of service                   : 1
month salary

“2. Six (6) to Ten (10) yrs. of service           : Two and One-half (2 1/2) months salary

“3. Eleven (11) to Fifteen
yrs. of service      : 4 months salary

“4. Sixteen (16) to twenty
yrs. service          : 5 months salary

“5. Twenty one yrs. of
service and above    : Twelve (12) months
salary.”

(p. 38, Rollo)

The petitioner alleges that one month salary for daily paid
workers should be computed on the basis of twenty-six (26) days and not thirty
(30) days since daily wage workers do not work every day of the month includ­ing
Sundays and holidays.

The petition is devoid of merit.

The subject for interpretation in this petition for review 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 rules on contract must govern.

Contracts which are not ambiguous are to be inter­preted
according to their literal meaning and should not be interpreted beyond their
obvious intendment (Herrera v. Petrophil Corp., 146
SCRA 385 [1986]).

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 Section 3 of the
CBA was to be credited to the July 1, 1984 increase under the CBA.  It was, therefore, a July increase.  Section
3 of the CBA, however, clearly states that CBA granted increases shall be
credited against future allowances
or wage orders.  Thus, the CBA increase
to be effected on July 1, 1984 can not be retroactively applied to mean com­pliance
with Wage Order No. 4 which took effect on May 1, 1984.  The
words of the contract are plain and readily understandable so we find no need
for any further cons­truction or interpretation (Dihiansan
v. Court of Appeals, 153 SCRA 712 [1987]). 
Furthermore, we agree with the NLRC as it held:

“It is our finding that the respondent is bound by the CBA to
grant an increase on July 1, 1984.

“In this case, between July
1, 1983 and July 1, 1984,
there were actually two increases mandated by Wage Order No. 4 on May 1, 1984 and by Wage Order-NO. 5 on
June 16, 1984.  The fact that the respondent had complied
with Wage Order No. 4 and Wage Order No. 5 does not relieve it of its
obligation to grant the P1.00 increase under the CBA.” (pp. 37-38, Rollo)

With regards to the second issue, the petitioner maintains that
under the principle of “fair days wage for fair day’s labor”,
gratuity pay should be computed on the basis of 26 days for one month salary
considering that the employees are daily paid.

We find no abuse of discretion on the part of the NLRC in granting gratuity pay
equivalent to one month or 30 days
salary.

We quote with favor the NLRC decision which states:

xxx                   xxx                   xxx

“x x x To say that awarding
the daily wage earner salary for more
than 26 days is paying him for days he does not work misses the point
entirely.  The issue here is not pay merit for days worked but payment of gratuity pay
equivalent to one month or 30 days salary.” (p. 29, Rollo)

Looking into the definition of gratuity, we find the following in
Moreno’s Philippine Law
Dictionary, to wit:

“Something given freely, or without
recompense; a gift; something voluntarily given in return for a favor or
services; a bounty; a tip. – Pirovano v. De la
Rama Steamship Co., 96 Phil. 357.

“That paid to the beneficiary for past services rendered
purely out of the genero­sity of the
giver or grantor. – Peralta v. Auditor General, 100 Phil. 1054.

“Salary or compensation.  The very term ‘gratuity’ differs from the
words ‘salary’ or ‘compensation’ in leaving the amount thereof, within the limits of reason, to the arvitrament
of the giver. – Herranz & Garriz v. Barbudo, 12 Phil.
9.”

From the foregoing, gratuity pay is therefore, not intended to
pay a worker for actual services rendered. 
It is a money benefit given to the workers whose purpose is “to
reward employees or laborers, who have rendered satisfactory and efficient
service to the company.” (Sec. 2, CBA) While it may be enforced once it
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
covered by the Labor Code.  Nowhere has
it ever been stated that gratuity pay should be based on the actual number of
days worked over the period of years
forming its basis.  We see no point in counting the number of days
worked over a ten-year period to determine the meaning of “two and
one-half months’ gratuity.” Moreover any 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 that:

“In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for the
laborer.”

This is also in consonance with the principle enunciated in the
Labor Code that all doubts should be resolved in favor of the worker.

The Civil Code provides that when months are not designated by
name, a month is understood to be thirty (30) days.  The provision applies under the circumstances
of this case.

In view of the foregoing, the public respondent did not act with
grave abuse of discretion when it rendered the assailed decision which is in accordance with law and
jurisprudence.

WHEREFORE, the petition is hereby DISMISSED for lack of
merit.

SO
ORDERED.

Fernan, C.J., (Chairman), Feliciano, Bidin, and Cortes, JJ., concur.