THIRD DIVISION

[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.

Generosa R. Jacinto for petitioner.

The Solicitor General for public respondent.

SYLLABUS

1. LABOR LAW; COLLECTIVE BARGAINING AGREEMENT;

INTERPRETATION OF PROVISIONS THEREOF; LITERAL MEANING SHOULD BE
ADOPTED WHEN WORDS AND TERMS OF CONTRACTS ARE NOT AMBIGUOUS.
— 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 duly 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
co we find no need for any further construction or interpretation (Dihiansan
v. Court of Appeals, 153 SCRA 712 [1987]).
2. ID.; ID.; ID.; GRATUITY PAY; MEANING AND PURPOSE THEREOF. —
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.
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 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.
3. ID.; ID.; ID.; ANY DOUBTS OR AMBIGUITY THEREIN SHOULD BE
RESOLVED IN FAVOR OF LABOR. — 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.
4. ID.; ID.; ID.; MONTH UNDERSTOOD TO BE THIRTY DAYS. — The
Civil Code provides that when months are not designated by name, a month
is understood to be thirty (30) days.

DECISION

GUTIERREZ, JR., J : p

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:
". . . 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 the
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 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 band, 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 of 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. llcd

"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 increased
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)
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 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 basic pay. So the petitioner advanced to May 1,
1984 or two month's 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. LLpr

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
: Two and One-half (2
"2. Six (6) to Ten (10) yrs. of
1/2)
service months salary
Eleven (11) to Fifteen yrs. : 4 months salary
"3.
of service
Sixteen (16) to twenty yrs. : 6 months salary
"4.
of service
Twenty one yrs. of service : Twelve (12) months
"5.
and salary."
above
(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
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 interpreting contracts, the rules on contract must govern. prcd

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
duly 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 co 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. 6 on June 16, 1984. The fact that the
respondent had complied with Wage Order No. 4 and Wage Order No. 6
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 day's 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
". . . 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 payment for days worked but payment of gratuity pay
equivalent to one month or 30 days salary." (p. 29, Rollo)
Looking into the definition of Fatuity, 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
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 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: prLL

"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., Feliciano, Bidin and Cortes, JJ., concur.

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