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

The Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a complaint against Plastic Town Center Corporation for alleged violations of their Collective Bargaining Agreement (CBA). The first charge involved Wage Orders. The CBA provided for a P1.00 daily wage increase effective July 1, 1984. Separately, Wage Order No. 4, effective May 1, 1984, required integrating emergency cost-of-living allowances into basic pay. The company advanced the July 1984 CBA increase to May 1984 to comply with Wage Order No. 4, arguing this credit was allowed under the CBA. The union contended this advance should not excuse granting a second P1.00 increase on the stipulated July 1, 1984 date.
The second charge concerned gratuity pay for voluntarily resigning employees. The CBA entitled eligible employees to “1 month salary” as gratuity. The company argued that for daily wage earners, one month’s salary meant 26 days, reflecting actual working days in a month excluding Sundays. The union insisted it meant 30 days’ pay, as per the Civil Code definition of a month.

ISSUE

The issues are: (1) Whether the company correctly credited the advanced CBA wage increase against its obligation under Wage Order No. 4, thereby negating a separate increase on July 1, 1984; and (2) Whether “one month salary” as gratuity pay for daily wage earners under the CBA means 26 days’ pay or 30 days’ pay.

RULING

The Supreme Court dismissed the petition, upholding the NLRC’s decision in favor of the union. On the wage issue, the Court found the CBA provisions clear and unambiguous. Section 3 of the CBA stated that negotiated wage increases “shall be credited against future allowances or wage orders.” Wage Order No. 4 was implemented future to the CBA’s execution. Therefore, the company correctly applied the July 1984 increase to comply with Wage Order No. 4 effective May 1984. Consequently, the company had no further obligation to grant an additional P1.00 increase on July 1, 1984, as that increase had already been advanced and credited.
On the gratuity pay issue, the Court ruled that “one month salary” means 30 days’ pay. The CBA itself did not qualify the term. Gratuity pay is a contractual benefit intended to reward past satisfactory service, not compensation for actual days worked. Interpreting it based on a 26-day work month would improperly conflate it with wages for services rendered. Applying rules of contract interpretation and the Civil Code provision that a month is 30 days when not otherwise specified, and construing any ambiguity in favor of labor under Article 1702 of the Civil Code and the Labor Code’s protective principle, the Court affirmed that the gratuity must be computed using the 30-day standard. The NLRC committed no grave abuse of discretion in its ruling.