G.R. No.

81176 April 19, 1989

PLASTIC TOWN CENTER CORPORATION, petitioner,
vs.

NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG

MANGGAGAWA (NLM)-KATIPUNAN, respondents.
Facts:
On September 1984, respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed
a complaint against petitioner Plastic Town Center Corporation with:

violation of CBA by crediting the P1 per day increase in gratuity pay to resigning employees
instead of 30 days equivalent to one month
unfair labor practice by giving only 26 days pay instead of 30 days equivalent to one month as
gratuity pay to resigning employees.

In the CBA, it was provided that:

Company agreed to grant regular workers who rendered at least one year of continuous service
of P1 per worked day.
Company to grant gratuity pay to a resigning employee or laborer amounting to, among others,
one month salary for those who rendered two to five years of service.

Plastic Town Center Corporation maintained that under the principle of fair days wage for fair
days labor, gratuity pay should be computed on the basis of 26 days for one month salary
considering that the employees are daily paid.

Labor Arbiter: Ruled in favor of NLM Union. As daily wage earner, there would be no instance
that the worker would work for 30 days a month since work does not include Sunday or rest
days.

NLRC: Reversed the decision of Labor Arbiter and held that PTC should grant gratuity pay
equivalent of thirty days salary.

Issue:
Whether the Plastic Town Centers contention that the gratuity pay should be computed on the
basis of 26 days for one month salary instead of 30 days is valid.

Held:
No, PTCs contention does not hold merit in this case.

Gratuity pay is 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.

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 salary, which
are covered in Labor Code. Nowhere has it ever been stated that gratuity pay should be based
on actual number of days worked over the period of years forming its basis. Court saw 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 favor of the laborer. When months are not designated by name,
a month is understood to be 30 days.

As such, NLRC did not act with grave abuse of discretion when it decided that the gratuity pay
should be equivalent to 30 days.

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

[G.R. No. 113097. April 27, 1998]

NASIPIT LUMBER COMPANY, INC., and PHILIPPINE WALLBOARD

CORPORATION, petitioners, vs. NATIONAL WAGES AND PRODUCTIVITY
COMMISSION, WESTERN AGUSAN WORKERS UNION (WAWU-ULGWP LOCAL
101), TUNGAO LUMBER WORKERS UNION (TULWU-ULGWP LOCAL 102) and
UNITED WORKERS UNION (UWU-ULGWP LOCAL 103), respondents.
Facts:

On October 20, 1990, the Region X [Tripartite Wages and Productivity] Board issued Wage
Order No. RX-01 which provides as follows:

Section 1. Upon the effectivity of this Wage Order, the increase in minimum wage rates
applicable to workers and employees in the private sector in Northern Mindanao (Region X).

Subsequently, a supplementary Wage Order No. RX-01-A was issued by the Board on
November 6, 1990 which provides as follows:

Section 1. Upon the effectivity of the original Wage Order RX-01, all workers and employees in
the private sector in Region X already receiving wages above the statutory minimum wage rates
up to one hundred and twenty pesos (P120.00) per day shall also receive an increase
of P13, P11, P9 per day, as provided for under Wage Order No. RX-01;

Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine Wallboard Corporation

(PWC), and Anakan Lumber Company (ALCO), claiming to be separate and distinct from each
other but for expediency and practical purposes, jointly filed an application for exemption from
the above-mentioned Wage Orders as distressed establishments under Guidelines No. 3,
issued by the herein Board on November 26, 1990, specifically Sec. 3(2) thereof which, among
others, provides:

A. For purposes of this Guidelines the following criteria to determine whether the applicant-
firm is actually distressed shall be used.

Applicants/appellees aver that they are engaged in logging and integrated wood processing
industry but are distressed due to conditions beyond their control. On the other hand,
oppositor/appellant Unions jointly opposed the application for exemption on the ground that said
companies are not distressed establishments since their capitalization has not been impaired by
25%.

Citing liquidity problems and business decline in the wood-processing industry, the
RTWPB approved the applicants joint application for exemption. Dissatisfied with the RTWPBs
Decision, the private respondents lodged an appeal with the NWPC, which affirmed ALCOs
application but reversed the applications of herein petitioners, NALCO and PWC. The NWPC
reasoned:

The Guidelines No. 3 dated November 26, 1990, issued by the herein Board cannot be used as
valid basis for granting applicants/appellees application for exemption since it did not pass the
approval of this Commission.

Issue: Whether or not a guideline issued by an RTWPB without the approval of or, worse,
contrary to the guidelines promulgated by the NWPC is valid.

Held: No. Petitioners contend that the NWPC gravely abused its discretion in overturning the
RTWPBs approval of their application for exemption from Wage Orders RX-01 and RX-01-
A. They argue that under Art. 122 (e) of the Labor Code, the RTWPB has the power [t]o receive,
process and act on applications for exemption from prescribed wage rates as may be provided
by law or any wage order.[10] They also maintain that no law expressly requires the approval of
the NWPC for the effectivity of the RTWPBs Guideline No. 3. Assuming arguendo that the
approval of the NWPC was legally necessary, petitioners should not be prejudiced by their
observance of the guideline, pointing out that the NWCPs own guidelines[11] took effect only
on March 18, 1991 long after Guideline No. 3 was issued on November 26, 1990.[12] Lastly, they
posit that the NWPC guidelines cannot be given retroactive effect as [they] will affect or change
the petitioners vested rights.

To justify the exemption of a distressed establishment from effects of wage orders, the
NWPC requires the applicant, if a stock corporation like petitioners, to prove that its
accumulated losses impaired its paid-up capital by at least 25 percent in the last full accounting
period preceding the application[27] or the effectivity of the order.[28] In the case at bar, it is
undisputed that during the relevant accounting period, NALCO, ALCO and PWC sustained
capital impairments of 1.89, 28.72, and 5.03 percent, respectively.[29] Clearly, it was only ALCO
which met the exemption standard. Hence, the NWPC did not commit grave abuse of discretion
in approving the application only of ALCO and in denying those of petitioners. Indeed, the
NWPC acted within the ambit of its administrative prerogative when it set guidelines for the
exemption of a distressed establishment. Absent any grave abuse of discretion, NWPCs actions
will not be subject to judicial review.[30] Accordingly, we deem the appealed Decisions to be
consistent with law.

G.R. No. 85073 August 24, 1993

DAVAO FRUITS CORPORATION, petitioner,

vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rank-and-file
workers/employees of DAVAO FRUITS CORPORATION and NATIONAL LABOR
RELATIONS COMMISSION, respondents.
Facts: On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of
all the rank-and-file workers and employees of petitioner, filed a complaint before the Ministry of
Labor and Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for
"Payment of the Thirteenth-Month Pay Differentials. Respondent ALU sought to recover from
petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent
to their sick, vacation and maternity leaves, premium for work done on rest days and special
holidays, and pay for regular holidays which petitioner, allegedly in disregard of company
practice since 1975, excluded from the computation of the thirteenth month pay for 1982. A
decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of
respondent ALU. Petitioner appealed the decision of the Labor Arbiter to the NLRC, which
affirmed the said decision accordingly dismissed the appeal for lack of merit.Petitioner elevated
the matter to this Court in a petition for review under Rule 45 of the Revised Rules of Court.

Issue: Whether or not NLRC acted a grave abuse of discretion in affirming the decision of
Associated Labor Unions.

Held: No. The "Supplementary Rules and Regulations Implementing P.D. No. 851," which put to
rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of
Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and
its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without
excluding the subject items therein until 1981.

A company practice favorable to the employees had indeed been established and the payments
made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement
being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by
the employer, by virtue of Section 10 of the Rules and Regulations Implementing P.D. No. 851,
and Article 100 of the labor of the Philippines, which prohibit the diminution or elimination by the
employer of the employees' existing benefits

WHEREFORE, finding no grave abuse of discretion on the part of the NLRC, the petition is
hereby DISMISSED, and the questioned decision of respondent NLRC is AFFIRMED
accordingly.