AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO), petitioner,

vs.NATIONAL LABOR RELATIONS COMMISSION (Fourth Division),

RODOLFO M. RETISO and 165 OTHERS,[1] respondents.

DECISION

GONZAGA-REYES, J.:

In his petition for certiorari and prohibition with prayer for writ of preliminary injunction
and/or temporary restraining order, petitioner assails (a) the decision dated April 20,
1995, of public respondent National Labor Relations Commission (NLRC), Fourth (4th)
Division, Cebu City, in NLRC Case No. V-0143-94 reversing the February 25, 1994
decision of Labor Arbiter Dennis D. Juanon and ordering petitioner to pay wages in the
aggregate amount of P6,485,767.90 to private respondents, and (b) the resolution dated
July 28, 1995 denying petitioners motion for reconsideration, for having been issued with
grave abuse of discretion.

A temporary restraining order was issued by this Court on October 9, 1995 enjoining
public respondent from executing the questioned decision upon a surety bond posted by
petitioner in the amount of P6,400,000.00.[2]

The facts as found by the Labor Arbiter are as follows:[3]

"These are consolidated cases/claims for non-payment of salaries and

wages, 13th month pay, ECOLA and other fringe benefits as rice, medical
and clothing allowances, submitted by complainant Rodolfo M. Retiso and
163 others, Lyn E. Banilla and Wilson B. Sallador against respondents
Aklan Electric Cooperative, Inc. (AKELCO), Atty. Leovigildo Mationg in
his capacity as General Manager; Manuel Calizo, in his capacity as Acting
Board President, Board of Directors, AKELCO.

Complainants alleged that prior to the temporary transfer of the office of

AKELCO from Lezo Aklan to Amon Theater, Kalibo, Aklan,
complainants were continuously performing their task and were duly paid
of their salaries at their main office located at Lezo, Aklan.

That on January 22, 1992, by way of resolution of the Board of Directors

of AKELCO allowed the temporary transfer holding of office at Amon
Theater, Kalibo, Aklan per information by their Project Supervisor, Atty.
Leovigildo Mationg, that their head office is closed and that it is
dangerous to hold office thereat;

Nevertheless, majority of the employees including herein complainants

continued to report for work at Lezo Aklan and were paid of their salaries.
That on February 6, 1992, the administrator of NEA, Rodrigo Cabrera,
wrote a letter addressed to the Board of AKELCO, that he is not
interposing any objections to the action taken by respondent Mationg

That on February 11, 1992, unnumbered resolution was passed by the

Board of AKELCO withdrawing the temporary designation of office at
Kalibo, Aklan, and that the daily operations must be held again at the main
office of Lezo, Aklan;[4]

That complainants who were then reporting at the Lezo office from
January 1992 up to May 1992 were duly paid of their salaries, while in the
meantime some of the employees through the instigation of respondent
Mationg continued to remain and work at Kalibo, Aklan;

That from June 1992 up to March 18, 1993, complainants who

continuously reported for work at Lezo, Aklan in compliance with the
aforementioned resolution were not paid their salaries;

That on March 19, 1993 up to the present, complainants were again

allowed to draw their salaries; with the exception of a few complainants
who were not paid their salaries for the months of April and May 1993;

Per allegations of the respondents, the following are the facts:

1. That these complainants voluntarily abandoned their respective

work/job assignments, without any justifiable reason and without
notifying the management of the Aklan Electric Cooperative, Inc.
(AKELCO), hence the cooperative suffered damages and systems loss;

2. That the complainants herein defied the lawful orders and other
issuances by the General Manager and the Board of Directors of the
AKELCO. These complainants were requested to report to work at the
Kalibo office x x x but despite these lawful orders of the General
Manager, the complainants did not follow and wilfully and maliciously
defied said orders and issuance of the General Manager; that the Board of
Directors passed a Resolution resisting and denying the claims of these
complainants, x x x under the principle of "no work no pay" which is
legally justified; That these complainants have "mass leave" from their
customary work on June 1992 up to March 18, 1993 and had a "sit-down"
stance for these periods of time in their alleged protest of the appointment
of respondent Atty. Leovigildo Mationg as the new General Manager of
the Aklan Electric Cooperative, Inc. (AKELCO) by the Board of Directors
and confirmed by the Administrator of the National Electrification
Administration (NEA), Quezon City; That they engaged in " . . .
slowdown mass leaves, sit downs, attempts to damage, destroy or sabotage
 plant equipment and facilities of the Aklan Electric Cooperative, Inc.
(AKELCO)."

On February 25, 1994, a decision was rendered by Labor Arbiter Dennis D. Juanon
dismissing the complaints.[5]

Dissatisfied with the decision, private respondents appealed to the respondent

Commission.

On appeal, the NLRCs Fourth Division, Cebu City,[6] reversed and set aside the Labor
Arbiters decision and held that private respondents are entitled to unpaid wages from
June 16, 1992 to March 18, 1993, thus:[7]

"The evidence on records, more specifically the evidence submitted by the

complainants, which are: the letter dated April 7, 1993 of Pedrito L.
Leyson, Office Manager of AKELCO (Annex "C"; complainants position
paper; Rollo, p.102) addressed to respondent Atty. Leovigildo T. Mationg;
respondent AKELCO General Manager; the memorandum of said Atty.
Mationg dated 14 April 1993, in answer to the letter of Pedrito Leyson
(Annex "D" complainants position paper); as well as the computation of
the unpaid wages due to complainants (Annexes "E" to "E-3";
complainants position paper, Rollo, pages 1024 to 1027) clearly show that
complainants had rendered services during the period - June 16, 1992 to
March 18, 1993. The record is bereft of any showing that the respondents
had submitted any evidence, documentary or otherwise, to controvert this
asseveration of the complainants that services were rendered during this
period. Subjecting these evidences submitted by the complainants to the
crucible of scrutiny, We find that respondent Atty. Mationg responded to
the request of the Office Manager, Mr. Leyson, which We quote, to wit:

"Rest assured that We shall recommend your aforesaid

request to our Board of Directors for their consideration
and appropriate action. This payment, however, shall be
subject, among others, to the availability of funds."

This assurance is an admission that complainants are entitled to payment

for services rendered from June 16, 1992 to March 18, 1993, specially so
that the recommendation and request comes from the office manager
himself who has direct knowledge regarding the services and performance
of employees under him. For how could one office manager recommend
payment of wages, if no services were rendered by employees under him.
An office manager is the most qualified person to know the performance
of personnel under him. And therefore, any request coming from him for
payment of wages addressed to his superior as in the instant case shall be
given weight.
 Furthermore, the record is clear that complainants were paid of their
wages and other fringe benefits from January, 1992 to May, 1992 and
from March 19, 1993 up to the time complainants filed the instant cases.
In the interegnum, from June 16, 1992 to March 18, 1993, complainants
were not paid of their salaries, hence these claims. We could see no rhyme
nor reason in respondents refusal to pay complainants salaries during this
period when complainants had worked and actually rendered service to
AKELCO.

While the respondents maintain that complainants were not paid during
this interim period under the principle of "no work, no pay", however, no
proof was submitted by the respondents to substantiate this allegation. The
labor arbiter, therefore, erred in dismissing the claims of the complainants,
when he adopted the "no work, no pay" principle advanced by the
respondents.

WHEREFORE, in view of the foregoing, the appealed decision dated

February 25, 1994 is hereby Reversed and Set Aside and a new one
entered ordering respondent AKELCO to pay complainants their claims
amounting to P6,485,767.90 as shown in the computation (Annexes "E" to
"E-3")."

A motion for reconsideration was filed by petitioner but the same was denied by public
respondent in a resolution dated July 28, 1995.[8]

Petitioner brought the case to this Court alleging that respondent NLRC committed grave
abuse of discretion citing the following grounds:[9]

1. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION IN REVERSING THE FACTUAL FINDINGS AND
CONCLUSIONS OF THE LABOR ARBITER, AND DISREGARDING
THE EXPRESS ADMISSION OF PRIVATE RESPONDENTS THAT
THEY DEFIED PETITIONERS ORDER TRANSFERRING THE
PETITIONERS OFFICIAL BUSINESS OFFICE FROM LEZO TO
KALIBO AND FOR THEM TO REPORT THEREAT.

2. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION IN CONCLUDING THAT PRIVATE RESPONDENTS
WERE REALLY WORKING OR RENDERING SERVICE ON THE
BASIS OF THE COMPUTATION OF WAGES AND THE BIASED
RECOMMENDATION SUBMITTED BY LEYSON WHO IS ONE OF
THE PRIVATE RESPONDENTS WHO DEFIED THE LAWFUL
ORDERS OF PETITIONER.

3. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION IN CONSIDERING THE ASSURANCE BY
 PETITIONERS GENERAL MANAGER MATIONG TO RECOMMEND
THE PAYMENT OF THE CLAIMS OF PRIVATE RESPONDENTS AS
AN ADMISSION OF LIABILITY OR A RECOGNITION THAT
COMPENSABLE SERVICES WERE ACTUALLY RENDERED.

4. GRANTING THAT PRIVATE RESPONDENTS CONTINUED TO

REPORT AT THE LEZO OFFICE, IT IS STILL GRAVE ABUSE OF
DISCRETION FOR PUBLIC RESPONDENT TO CONSIDER THAT
PETITIONER IS LEGALLY OBLIGATED TO RECOGNIZE SAID
CIRCUMSTANCE AS COMPENSABLE SERVICE AND PAY WAGES
TO PRIVATE RESPONDENTS FOR DEFYING THE ORDER FOR
THEM TO REPORT FOR WORK AT THE KALIBO OFFICE WHERE
THE OFFICIAL BUSINESS AND OPERATIONS WERE
CONDUCTED.

5. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION AND SERIOUS, PATENT AND PALPABLE ERROR IN
RULING THAT THE "NO WORK, NO PAY" PRINCIPLE DOES NOT
APPLY FOR LACK OF EVIDENTIARY SUPPORT WHEN PRIVATE
REPONDENTS ALREADY ADMITTED THAT THEY DID NOT
REPORT FOR WORK AT THE KALIBO OFFICE.

6. PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION IN ACCORDING WEIGHT AND CREDIBILITY TO
THE SELF-SERVING AND BIASED ALLEGATIONS OF PRIVATE
RESPONDENTS, AND ACCEPTING THEM AS PROOF, DESPITE
THE ESTABLISHED FACT AND ADMISSION THAT PRIVATE
RESPONDENTS DID NOT REPORT FOR WORK AT THE KALIBO
OFFICE, OR THAT THEY WERE NEVER PAID FOR ANY WAGES
FROM THE TIME THEY DEFIED PETITIONERS ORDERS.

Petitioner contends that public respondent committed grave abuse of discretion in finding
that private respondents are entitled to their wages from June 16, 1992 to March 18,
1993, thus disregarding the principle of "no work, no pay". It alleges that private
respondents stated in their pleadings that they not only objected to the transfer of
petitioners business office to Kalibo but they also defied the directive to report thereat
because they considered the transfer illegal. It further claims that private respondents
refused to recognize the authority of petitioners lawful officers and agents resulting in the
disruption of petitioners business operations in its official business office in Lezo, AKlan,
forcing petitioner to transfer its office from Lezo to Kalibo transferring all its equipments,
records and facilities; that private respondents cannot choose where to work, thus, when
they defied the lawful orders of petitioner to report at Kalibo, private respondents were
considered dismissed as far as petitioner was concerned. Petitioner also disputes private
respondents allegation that they were paid their salaries from January to May 1992 and
again from March 19, 1993 up to the present but not for the period from June 1992 to
March 18, 1993 saying that private respondents illegally collected fees and charges due
petitioner and appropriated the collections among themselves for which reason they are
claiming salaries only for the period from June 1992 to March 1993 and that private
respondents were paid their salaries starting only in April 1993 when petitioners Board
agreed to accept private respondents back to work at Kalibo office out of compassion and
not for the reason that they rendered service at the Lezo office. Petitioner also adds that
compensable service is best shown by timecards, payslips and other similar documents
and it was an error for public respondent to consider the computation of the claims for
wages and benefits submitted merely by private respondents as substantial evidence.

The Solicitor General filed its Manifestation in lieu of Comment praying that the decision
of respondent NLRC be set aside and payment of wages claimed by private respondents
be denied for lack of merit alleging that private respondents could not have worked for
petitioner's office in Lezo during the stated period since petitioner transferred its business
operation in Kalibo where all its records and equipments were brought; that computations
of the claims for wages and benefits submitted by private respondents to petitioner is not
proof of rendition of work. Filing its own Comment, public respondent NLRC claims that
the original and exclusive jurisdiction of this Court to review decisions or resolutions of
respondent NLRC does not include a correction of its evaluation of evidence as factual
issues are not fit subject for certiorari.

Private respondents, in their Comment, allege that review of a decision of NLRC in a

petition for certiorariunder Rule 65 does not include the correctness of its evaluation of
the evidence but is confined to issues of jurisdiction or grave abuse of discretion and that
factual findings of administrative bodies are entitled to great weight, and accorded not
only respect but even finality when supported by substantial evidence. They claim that
petitioner's Board of Directors passed an unnumbered resolution on February 11, 1992
returning back the office to Lezo from Kalibo Aklan with a directive for all employees to
immediately report at Lezo; that the letter-reply of Atty. Mationg to the letter of office
manager Leyson that he will recommend the payment of the private respondents' salary
from June 16, 1992 to March 18, 1993 to the Board of Directors was an admission that
private respondents are entitled to such payment for services rendered. Private
respondents state that in appreciating the evidence in their favor, public respondent
NLRC at most may be liable for errors of judgment which, as differentiated from errors
of jurisdiction, are not within the province of the special civil action of certiorari.

Petitioner filed its Reply alleging that review of the decision of public respondent is
proper if there is a conflict in the factual findings of the labor arbiter and the NLRC and
when the evidence is insufficient and insubstantial to support NLRCs factual findings;
that public respondents findings that private respondents rendered compensable services
were merely based on private respondents computation of claims which is self-serving;
that the alleged unnumbered board resolution dated February 11, 1992, directing all
employees to report to Lezo Office was never implemented because it was not a valid
action of AKELCOs legitimate board.

The sole issue for determination is whether or not public respondent NLRC committed
grave abuse of discretion amounting to excess or want of jurisdiction when it reversed the
findings of the Labor Arbiter that private respondents refused to work under the lawful
orders of the petitioner AKELCO management; hence they are covered by the "no work,
no pay" principle and are thus not entitled to the claim for unpaid wages from June 16,
1992 to March 18, 1993.

We find merit in the petition.

At the outset, we reiterate the rule that in certiorari proceedings under Rule 65, this Court
does not assess and weigh the sufficiency of evidence upon which the labor arbiter and
public respondent NLRC based their resolutions. Our query is limited to the
determination of whether or not public respondent NLRC acted without or in excess of its
jurisdiction or with grave abuse of discretion in rendering the assailed
resolutions.[10] While administrative findings of fact are accorded great respect, and even
finality when supported by substantial evidence, nevertheless, when it can be shown that
administrative bodies grossly misappreciated evidence of such nature as to compel a
contrary conclusion, this court had not hesitated to reverse their factual
findings.[11] Factual findings of administrative agencies are not infallible and will be set
aside when they fail the test of arbitrariness.[12] Moreover, where the findings of NLRC
contradict those of the labor arbiter, this Court, in the exercise of its equity jurisdiction,
may look into the records of the case and reexamine the questioned findings.[13]

We find cogent reason, as shown by the petitioner and the Solicitor General, not to affirm
the factual findings of public respondent NLRC.

We do not agree with the finding that private respondents had rendered services from
June 16, 1992 to March 18, 1993 so as to entitle them to payment of wages. Public
respondent based its conclusion on the following: (a) the letter dated April 7, 1993 of
Pedrito L. Leyson, Office Manager of AKELCO addressed to AKELCOs General
Manager, Atty. Leovigildo T. Mationg, requesting for the payment of private respondents
unpaid wages from June 16, 1992 to March 18, 1993; (b) the memorandum of said Atty.
Mationg dated 14 April 1993, in answer to the letter request of Pedrito Leyson where
Atty. Mationg made an assurance that he will recommend such request; (c) the private
respondents own computation of their unpaid wages. We find that the foregoing does not
constitute substantial evidence to support the conclusion that private respondents are
entitled to the payment of wages from June 16, 1992 to March 18, 1993. Substantial
evidence is that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.[14] These evidences relied upon by public respondent did
not establish the fact that private respondents actually rendered services in the Kalibo
office during the stated period.

The letter of Pedrito Leyson to Atty. Mationg was considered by public respondent as
evidence that services were rendered by private respondents during the stated period, as
the recommendation and request came from the office manager who has direct
knowledge regarding the services and performance of employees under him. We are not
convinced. Pedrito Leyson is one of the herein private respondents who are claiming for
unpaid wages and we find his actuation of requesting in behalf of the other private
respondents for the payment of their backwages to be biased and self-serving, thus not
credible.

On the other hand, petitioner was able to show that private respondents did not render
services during the stated period. Petitioners evidences show that on January 22, 1992,
petitioners Board of Directors passed a resolution temporarily transferring the Office
from Lezo, Aklan to Amon Theater, Kalibo, Aklan upon the recommendation of Atty.
Leovigildo Mationg, then project supervisor, on the ground that the office at Lezo was
dangerous and unsafe. Such transfer was approved by then NEA Administrator, Rodrigo
E. Cabrera, in a letter dated February 6, 1992 addressed to petitioners Board of
Directors.[15] Thus, the NEA Administrator, in the exercise of supervision and control
over all electric cooperatives, including petitioner, wrote a letter dated February 6, 1992
addressed to the Provincial Director PC/INP Kalibo Aklan requesting for military
assistance for the petitioners team in retrieving the electric cooperatives equipments and
other removable facilities and/or fixtures consequential to the transfer of its principal
business address from Lezo to Kalibo and in maintaining peace and order in the
cooperatives coverage area.[16] The foregoing establishes the fact that the continuous
operation of the petitioners business office in Lezo Aklan would pose a serious and
imminent threat to petitioners officials and other employees, hence the necessity of
temporarily transferring the operation of its business office from Lezo to Kalibo. Such
transfer was done in the exercise of a management prerogative and in the absence of
contrary evidence is not unjustified. With the transfer of petitioners business office from
its former office, Lezo, to Kalibo, Aklan, its equipments, records and facilities were also
removed from Lezo and brought to the Kalibo office where petitioners official business
was being conducted; thus private respondents allegations that they continued to report
for work at Lezo to support their claim for wages has no basis.

Moreover, private respondents in their position paper admitted that they did not report at
the Kalibo office, as Lezo remained to be their office where they continuously reported,
to wit:[17]

"On January 22, 1991 by way of a resolution of the Board of Directors of

AKELCO it allowed the temporary holding of office at Amon Theater,
Kalibo, Aklan, per information by their project supervisor, Atty.
Leovigildo Mationg that their head office is closed and that it is dangerous
to hold office thereat.

Nevertheless, majority of the employees including the herein

complainants, continued to report for work at Lezo, Aklan and were paid
of their salaries.

xxx

The transfer of office from Lezo, Aklan to Kalibo, Aklan being illegal for
failure to comply with the legal requirements under P.D. 269, the
complainants remained and continued to work at the Lezo Office until
 they were illegally locked out therefrom by the respondents. Despite the
illegal lock out however, complainants continued to report daily to the
location of the Lezo Office, prepared to continue in the performance of
their regular duties.

Complainants thus could not be considered to have abandoned their work

as Lezo remained to be their office and not Kalibo despite the temporary
transfer thereto. Further the fact that they were allowed to draw their
salaries up to May, 1992 is an acknowledgment by the management that
they are working during the period.

xxx

It must be pointed out that complainants worked and continuously

reported at Lezo office despite the management holding office at Kalibo.
In fact, they were paid their wages before it was withheld and then were
allowed to draw their salaries again on March 1993 while reporting at
Lezo up to the present.

Respondents acts and payment of complainants salaries and again from

March 1993 is an unequivocal recognition on the part of respondents that
the work of complainants is continuing and uninterrupted and they are
therefore entitled to their unpaid wages for the period from June 1992 to
March 1993."

The admission is detrimental to private respondents cause. Their excuse is that the
transfer to Kalibo was illegal but we agree with the Labor Arbiter that it was not for
private respondents to declare the managements act of temporarily transferring the
AKELCO office to Kalibo as an illegal act. There is no allegation nor proof that the
transfer was made in bad faith or with malice. The Labor Arbiter correctly rationalized in
its decision as follows:[18]

"We do not subscribe to complainants theory and assertions. They, by

their own allegations, have unilaterally committed acts in violation of
managements/respondents directives purely classified as management
prerogative. They have taken amongst themselves declaring managements
acts of temporarily transferring the holding of the AKELCO office from
Lezo to Kalibo, Aklan as illegal. It is never incumbent upon themselves to
declare the same as such. It is lodged in another forum or body legally
mantled to do the same. What they should have done was first to follow
managements orders temporarily transferring office for it has the first
presumption of legality. Further, the transfer was only temporary. For:

"The employer as owner of the business, also has inherent

rights, among which are the right to select the persons to be
hired and discharge them for just and valid cause; to
 promulgate and enforce reasonable employment rules and
regulations and to modify, amend or revoke the same; to
designate the work as well as the employee or employees to
perform it; to transfer or promote employees; to schedule,
direct, curtail or control company operations; to introduce
or install new or improved labor or money savings
methods, facilities or devices; to create, merge, divide,
reclassify and abolish departments or positions in the
company and to sell or close the business.

xxx

Even as the law is solicitous of the welfare of the

employees it must also protect the right of an employer to
exercise what are clearly management prerogatives. The
free will of management to conduct its own business affairs
to achieve its purpose can not be denied. The transfer of
assignment of a medical representative from Manila to the
province has therefore been held lawful where this was
demanded by the requirements of the drug companys
marketing operations and the former had at the time of his
employment undertaken to accept assignment anywhere in
the Philippines. (Abbot Laboratories (Phils.), Inc., et al. vs.
NLRC, et al., G.R. No. L-76959, Oct. 12, 1987).

It is the employers prerogative to abolish a position which it deems no

longer necessary, and the courts, absent any findings of malice on the part
of the management, cannot erase that initiative simply to protect the
person holding office (Great Pacific Life Assurance Corporation vs.
NLRC, et al., G.R. No. 88011, July 30, 1990)."

Private respondents claim that petitioners Board of Directors passed an unnumbered

resolution dated February 11, 1992 returning back the office from its temporary office in
Kalibo to Lezo. Thus, they did not defy any lawful order of petitioner and were justified
in continuing to remain at Lezo office. This allegation was controverted by petitioner in
its Reply saying that such unnumbered resolution was never implemented as it was not a
valid act of petitioners Board. We are convinced by petitioners argument that such
unnumbered resolution was not a valid act of petitioners legitimate Board considering the
subsequent actions taken by the petitioners Board of Directors decrying private
respondents inimical act and defiance, to wit (1) Resolution No. 411, s. of 1992 on
September 9, 1992, dismissing all AKELCO employees who were on illegal strike and
who refused to return to work effective January 31, 1992 despite the directive of the NEA
project supervisor and petitioners acting general manager;[19] (2) Resolution No. 477, s. of
1993 dated March 10, 1993 accepting back private respondents who staged illegal strike,
defied legal orders and issuances, out of compassion, reconciliation, Christian values and
humanitarian reason subject to the condition of "no work, no pay"[20] (3) Resolution No.
496, s. of 1993 dated June 4, 1993, rejecting the demands of private respondents for
backwages from June 16, 1992 to March 1993 adopting the policy of "no work, no pay"
as such demand has no basis, and directing the COOP Legal Counsel to file criminal
cases against employees who misappropriated collections and officers who authorized
disbursements of funds without legal authority from the NEA and the AKELCO
Board.[21] If indeed there was a valid board resolution transferring back petitioners office
to Lezo from its temporary office in Kalibo, there was no need for the Board to pass the
above-cited resolutions.

We are also unable to agree with public respondent NLRC when it held that the assurance
made by Atty. Mationg to the letter-request of office manager Leyson for the payment of
private respondents wages from June 1992 to March 1993 was an admission on the part
of general manager Mationg that private respondents are indeed entitled to the same. The
letter reply of Atty. Mationg to Leyson merely stated that he will recommend the request
for payment of backwages to the Board of Directors for their consideration and
appropriate action and nothing else, thus, the ultimate approval will come from the Board
of Directors. We find well-taken the argument advanced by the Solicitor General as
follows:[22]

The allegation of private respondents that petitioner had already approved

payment of their wages is without basis. Mationgs offer to recommend the
payment of private respondents' wages is hardly approval of their claim
for wages. It is just an undertaking to recommend payment. Moreover, the
offer is conditional. It is subject to the condition that petitioners Board of
Directors will give its approval and that funds were available. Mationgs
reply to Leysons letter for payment of wages did not constitute approval or
assurance of payment. The fact is that, the Board of Directors of petitioner
rejected private respondents demand for payment (Board Resolution No.
496, s. 1993).

We are accordingly constrained to overturn public respondents findings that petitioner is

not justified in its refusal to pay private respondents wages and other fringe benefits from
June 16, 1992 to March 18, 1993; public respondents stated that private respondents were
paid their salaries from January to May 1992 and again from March 19, 1993 up to the
present. As cited earlier, petitioners Board in a Resolution No. 411 dated September 9,
1992 dismissed private respondents who were on illegal strike and who refused to report
for work at Kalibo office effective January 31, 1992; since no services were rendered by
private respondents they were not paid their salaries. Private respondents never
questioned nor controverted the Resolution dismissing them and nowhere in their
Comment is it stated that they questioned such dismissal. Private respondents also have
not rebutted petitioners claim that private respondents illegally collected fees and charges
due petitioner and appropriated the collections among themselves to satisfy their salaries
from January to May 1992, for which reason, private respondents are merely claiming
salaries only for the period from June 16, 1992 to March 1993.
Private respondents were dismissed by petitioner effective January 31, 1992 and were
accepted back by petitioner, as an act of compassion, subject to the condition of "no
work, no pay" effective March 1993 which explains why private respondents were
allowed to draw their salaries again. Notably, the letter-request of Mr. Leyson for the
payment of backwages and other fringe benefits in behalf of private respondents was
made only in April 1993, after a Board Resolution accepting them back to work out of
compassion and humanitarian reason. It took private respondents about ten months before
they requested for the payment of their backwages, and the long inaction of private
respondents to file their claim for unpaid wages cast doubts as to the veracity of their
claim.

The age-old rule governing the relation between labor and capital, or management and
employee of a "fair days wage for a fair days labor" remains as the basic factor in
determining employees wages. If there is no work performed by the employee there can
be no wage or pay unless, of course, the laborer was able, willing and ready to work but
was illegally locked out, suspended or dismissed,[23] or otherwise illegally prevented from
working,[24] a situation which we find is not present in the instant case. It would neither be
fair nor just to allow private respondents to recover something they have not earned and
could not have earned because they did not render services at the Kalibo office during the
stated period.

Finally, we hold that public respondent erred in merely relying on the computations of
compensable services submitted by private respondents. There must be competent proof
such as time cards or office records to show that they actually rendered compensable
service during the stated period to entitle them to wages. It has been established that the
petitioners business office was transferred to Kalibo and all its equipments, records and
facilities were transferred thereat and that it conducted its official business in Kalibo
during the period in question. It was incumbent upon private respondents to prove that
they indeed rendered services for petitioner, which they failed to do. It is a basic rule in
evidence that each party must prove his affirmative allegation. Since the burden of
evidence lies with the party who asserts the affirmative allegation, the plaintiff or
complainant has to prove his affirmative allegations in the complaint and the defendant or
the respondent has to prove the affirmative allegation in his affirmative defenses and
counterclaim.[25]

WHEREFORE, in view of the foregoing, the petition for CERTIORARI is GRANTED.

Consequently the decision of public respondent NLRC dated April 20, 1995 and the
Resolution dated July 28, 1995 in NLRC Case No. V-0143-94 are hereby REVERSED
and SET ASIDE for having been rendered with grave abuse of discretion amounting to
lack or excess of jurisdiction. Private respondents complaint for payment of unpaid
wages before the Labor Arbiter is DISMISSED.

SO ORDERED.
LIDUVINO M. MILLARES, J. CAPISTRANO CORDITA, SHIRLEY P. UY,
DIONISIO J. REQUINA, GABRIEL A. DEJERO, NELSON T. GOMONIT,
IMELDA IMPEYNADO SULPICIO B. SUMILE, MA. CONSUELO
AVIEL, SILVINO S. GUEVARRA, FIDEL DUMANHOG, NELFA T.
POLOTAN, LEMUEL C. RISMA, JUANITO M. GONZALES, ROGELIO
B. CABATUAN, EPIFANCIO E. GANANCIAL, DOMINADOR D. ATOK,
CONRADO U. SERRANO, ISIDRO J. BARNAJA, ROMEO VIRTUDAZO,
AVELINO NABLE, EDGAR TAMPOS, ERNESTO ORIAS, DALMACIO
LEGARAY, ROMEO R . BULA, ROBERTO G. GARCIA, RUDOLFO
SUZON, JERRY S. DANO, AUGUST G. ESCUDERO, OSCAR B.
CATBAGAN, TEOFILO C. SISON, NARCISO BULASA, ALBERTO
CORTEZ, LILIA C. CABRERA, NESTOR A. ACASO, BIENVENIDO
MOZO, ISIDORO A. ALMENDAREZ, VICENTE M. PILONGO,
ROBERTO N. LUMPOT, PATRICIO BANDOLA, MANUEL S. ESPINA,
ISIDRO K. BALCITA, JR., EMMANUEL O. ABRAHAM, OLEGARIO A.
EPIS, NESTOR D. PEREGRINO, RAMON A. USANAGA, PRESTO
BARTOLOME, BRADY EMPEYNADO, PORFERIO N. CONDADO,
AQUILLO V. CORDOVA, LEONARDO ESTOSI, PACIFICO B.
DACORINA, PABLITO B. LLUBIT, ANTONIO DOZA, LEONITO
LABADIA, EDGARDO BELLIZA, FEDENCIO P. GEBERTAS, VIRGILIO
D. GULBE, MANUEL A. LERIO, JR., ROGELIO B. OCAMIA, RODOLFO
A. CASTILLO, EDMUNDO L PLAZA, ROBERTO D. YAGONIA, JR.,
PETRONIO ESTELA, JR, CRISOLOGO A. LOGRONIO, ERNESTO T.
MORIO, ROGELIO M. DAVID, BENJAMIN U. ARLIGUE, APOLONIO
MUNDO, JR., NENE M. E NOSA, NILO B. BALAORO, GERONIMO S.
CONVI, VICENTE R. TARAGOZA, YOLANDO A. SALAZAR, MANUEL
A. NERI, ROGELIO C. TICAR, ROBERTO A. MACALAM, MIGUEL
MACARIOLA, WALTERIO DAPADAP, SILVERIO CUAMAG,
EUPARQUIO PLANOS, GILBERTO M. MIRA, REYNALDO BACSARSA,
DIOSDADO B. ABING, ARISTARCO V. SALON, TOMAS N. CATACTE,
RODOLFO MEMORIA, PAPENIANO CURIAS, JOSE S. CANDIA,
DESIDERIO C. NAVARRO, EMMANUEL O. ABRAHAM, JOSELITO D.
ARLAN, FRANCISCO S. SANCHEZ, MANSUETO B. LINGGO, ISIDRO
BARNAJA, ROMEO S. CABRERA, LEODEGARIO CAINTIC, NESTOR
G. BLANDO, FLORENCIO B. DELIZO, MILAN M. ETES, GONZALO C.
PADILLO, LEONARDO CAGAKIT, JOSEFINO E. DULGUIME, PEPITO
G. ARREZA, AMADOR G. CAGALAWAN, GAUDENCIO C.
SARMIENTO, FLORENTINO J. BRACAMONTE, DOMINADOR H. TY,
LEOPOLDO T. SUPIL, JOSE A. DOHINOG, ANIANO T. REYES,
CARLITO G. UY, PLACIDO D. PADILLO, TERESITA C. ADRIANO,
CANDIDO S. ADRIANO, and AVELINO G. VENERACION, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH
DIVISION), and PAPER INDUSTRIES CORPORATION OF THE
PHILIPPINES (PICOP), respondents.

DECISION
BELLOSILLO, J.:

Petitioners numbering one hundred sixteen (116)[1] occupied the positions of

Technical Staff, Unit Manager, Section Manager, Department Manager, Division
Manager and Vice President in the mill site of respondent Paper Industries Corporation of
the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP suffered a major
financial setback allegedly brought about by the joint impact of restrictive government
regulations on logging and the economic crisis. To avert further losses, it undertook a
retrenchment program and terminated the services of petitioners. Accordingly, petitioners
received separation pay computed at the rate of one (1) month basic pay for every year of
service. Believing however that the allowances they allegedly regularly received on a
monthly basis during their employment should have been included in the computation
thereof they lodged a complaint for separation pay differentials.
The allowances in question pertained to the following -

1. Staff/Manager's Allowance -

Respondent PICOP provides free housing facilities to supervisory and managerial

employees assigned in Bislig. The privilege includes free water and electric
consumption. Owing however to shortage of such facilities, it was constrained to grant
Staff allowance instead to those who live in rented houses outside but near the vicinity of
the mill site. But the allowance ceases whenever a vacancy occurs in the company's
housing facilities. The former grantee is then directed to fill the vacancy. For Unit,
Section and Department Managers, respondent PICOP gives an additional amount to
meet the same kind of expenses called Manager's allowance.

2. Transportation Allowance -

To relieve respondent PICOP's motor pool in Bislig from a barrage of requests for
company vehicles and to stabilize company vehicle requirements it grants transportation
allowance to key officers and Managers assigned in the mill site who use their own
vehicles in the performance of their duties. It is a conditional grant such that when the
conditions no longer obtain, the privilege is discontinued. The recipients of this kind of
allowance are required to liquidate it by submitting a report with a detailed enumeration
of expenses incurred.

3. Bislig Allowance -

The Bislig Allowance is given to Division Managers and corporate officers assigned in
Bislig on account of the hostile environment prevailing therein. But once the recipient is
transferred elsewhere outside Bislig, the allowance ceases.

Applying Art.,97, par. (f), of the Labor Code which defines if wage," the Executive
Labor Arbiter opined that the subject allowances, being customarily furnished by
respondent PICOP and regularly received by petitioners, formed part of the latter's
wages. Resolving the controversy from another angle, on the strength of the ruling
in Santos v. NLRC[2] and Soriano v. NLRC[3] that in the computation of separation pay
account should be taken not just of the basic salary but also of the regular allowances that
the employee had been receiving, he concluded that the allowances should be included in
petitioners' base pay. Thus respondent PICOP was ordered on 28 April 1994 to pay
petitioners Four Million Four Hundred Eighty-One Thousand Pesos (P4,481,000.00)
representing separation pay differentials plus ten per cent (10%) thereof as attorney's
fees.[4]

The National Labor Relations Commission (NLRC) did not share the view of the
Executive Labor Arbiter. On 7 October 1994 it set aside the assailed decision by
decreeing that the allowances did not form part of the salary base used in computing
separation pay.[5]
Its ruling was based on the finding that the cases relied upon by the Executive Labor
Arbiter were inapplicable since they involved illegal dismissal where separation pay was
granted in lieu of reinstatement which was no longer feasible. Instead, what it considered
in point was Estate of the late Eugene J. Kneebone v. NLRC[6] where the Court held that
representation and transportation allowances were deemed not part of salary and should
therefore be excluded in the computation of separation benefits. Relating the present case
with Art. 97, par. (f), of the Labor Code, the NLRC likewise found that petitioners'
allowances were contingency-based and thus not included in their salaries. On 26
September 1995 reconsideration was denied.[7]
In this petition for certiorari, petitioners submit that their allowances are included in
the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and
indispensable for their existence and subsistence. Furthermore they claim that their
availment of the monetary equivalent of those "facilities" on a monthly basis was
characterized by permanency, regularity and customariness. And to fortify their
arguments they insist on the applicability of Santos,[8] Soriano,[9] The Insular Life
Assurance Company,[10] Planters Products, Inc.[11] and Songco[12] which are all against the
NLRC holding that the salary base in computing separation pay includes not just the
basic salary but also the regular allowances.
There is no showing of grave abuse of discretion on the part of the NLRC. In case of
retrenchment to prevent losses, Art. 283 of the the Labor Code imposes on the employer
an obligation to grant to the affected employees separation pay equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. Since the law speaks of "pay," the question arises, "What exactly does the term
connote?" We correlate Art. 283 with Art. 97 of the same Code on definition of
terms. "Pay" is not defined therein but "wage." In Songco the Court explained that both
words (as well as salary) generally refer to one and the same meaning, i.e., a reward or
recompense for services performed. Specifically, "wage" is defined in letter (f) as the
remuneration or earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee.
We invite attention to the above-underlined clause. Stated differently, when an
employer customarily furnishes his employee board, lodging or other facilities, the fair
and reasonable value thereof, as determined by the Secretary of Labor and Employment,
is included in "wage." In order to ascertain whether the subject allowances form part of
petitioner's "wages," we divide the discussion on the following - "customarily furnished;"
"board, lodging or other facilities;" and, "fair and reasonable value as determined by the
Secretary of Labor."
"Customary" is founded on long-established and constant practice[13] connoting
regularity.[14] The receipt of an allowance on a monthly basis does not ipso
facto characterize it as regular and forming part of salary[15] because the nature of the
grant is a factor worth considering. We agree with the observation of the Office of the
Solicitor General- that the subject allowances were temporarily, not regularly, received
by petitioners because -

In the case of the housing allowance, once a vacancy occurs in the company-provided
housing accommodations, the employee concerned transfers to the company premises
and his housing allowance is discontinued x x x x

On the other hand, the transportation allowance is in the form of advances for actual
transportation expenses subject to liquidation x x x given only to employees who have
personal cars.

The Bislig allowance is given to Division Managers and corporate officers assigned in
Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance
stops.[16]

We add that in the availment of the transportation allowance, respondent PICOP set
another requirement that the personal cars be used by the employees in the performance
of their duties. When the conditions for availment ceased to exist, the allowance reached
the cutoff point. The finding of the NLRC along the same line likewise merits
concurrence, i.e., petitioners' continuous enjoyment of the disputed allowances was based
on contingencies the occurrence of which wrote finis to such enjoyment.
Although it is quite easy to comprehend "board" and "lodging," it is not so with
"facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor
Code gives meaning to the term as including articles or services for the benefit of the
employee or his family but excluding tools of the trade or articles or service primarily
for the benefit of the employer or necessary to the conduct of the
employer's business. The Staff /Manager's allowance may fall under "lodging" but the
transportation and Bislig allowances are not embraced in "facilities" on the main
consideration that they are granted as well as the Staff/Manager's allowance for
respondent PICOP's benefit and convenience, i.e., to insure that petitioners render quality
performance. In determining whether a privilege is a facility, the criterion is not so much
its kind but its purpose.[17] That the assailed allowances were for the benefit and
convenience of respondent company was supported by the circumstance that they were
not subjected to withholding tax. Revenue Audit Memo Order No. 1-87 pertinently
provides -

3.2 x x x x transportation, representation or entertainment expenses shall not constitute

taxable compensation if:

(a) It is for necessary travelling and representation or entertainment expenses paid or

incurred by the employee in the pursuit of the trade or business of the employer, and

(b) The employee is required to, and does, make an accounting/liquidation for such
expense in accordance with the specific requirements of substantiation for such category
or expense.

Board and lodging allowances furnished to an employee not in excess of the latter's needs
and given free of charge, constitute income to the latter except if such allowances or
benefits are furnished to the employee for the convenience of the employer and as
necessary incident to proper performance of his duties in which case such benefits or
allowances do not constitute taxable income.[18]

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of
the Rules Implementing the Labor Code may from time to time fix in appropriate
issuances the "fair and reasonable value of board, lodging and other facilities customarily
furnished by an employer to his employees." Petitioners' allowances do not represent
such fair and reasonable value as determined by the proper authority simply because the
Staff/Manager's allowance and transportation allowance were amounts given by
respondent company in lieu of actual provisions for housing and transportation needs
whereas the Bislig allowance was given in consideration of being assigned to the hostile
environment then prevailing in Bislig.
The inevitable conclusion is that, as reached by the NLRC, subject allowances did
not form part of petitioners' wages.
In Santos[19] the Court decreed that in the computation of separation pay awarded in
lieu of reinstatement, account must be taken not only of the basic salary but also of
transportation and emergency living allowances. Later, the Court
in Soriano, citing Santos, was general in its holding that the salary base properly used in
computing separation pay where reinstatement was no longer feasible should include not
just the basic salary but also the regular allowances that the employee had been
receiving. Insular merely reiterated the aforementioned rulings. The rationale is not
difficult to discern. It is the obligation of the employer to pay an illegally dismissed
employee the whole amount of his salaries plus all other benefits, bonuses and general
increases to which he would have been normally entitled had he not been dismissed and
had not stopped working.[20] The same holds true in case of retrenched employees. And
thus we applied Insular and Soriano in Planters in the computation of separation pay of
retrenched employees. Songcolikewise involved retrenchment and was relied upon
in Planters, Soriano and Santos in determining the proper amount of separation pay. As
culled from the foregoing jurisprudence, separation pay when awarded to an illegally
dismissed employee in lieu of reinstatement or to a retrenched employee should be
computed based not only on the basic salary but also on the regular allowances that the
employee had been receiving.But in view of the previous discussion that the disputed
allowances were not regularly received by petitioners herein, there was no reason at all
for petitioners to resort to the above cases.
Neither is Kneebone applicable, contrary to the finding of the NLRC, because of the
difference in factual circumstances. In Kneebone, the Court was tasked to resolve the
issue whether the representation and transportation allowances formed part of salary as to
be considered in the computation of retirement benefits.The ruling was in the negative on
the main ground that the retirement plan of the company expressly excluded such
allowances from salary.
WHEREFORE, the petition is DISMISSED. The resolution of public respondent
National Labor Relations Commission dated 7 October 1994 holding that the Staff
/Manager's, transportation and Bislig allowances did not form part of the salary base used
in computing the separation pay of petitioners, as well as its resolution dated 26
September 1995 denying reconsideration, is AFFIRMED. No costs.
SO ORDERED.
Puno, Mendoza, Quisumbing, and Buena, JJ., concur.

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.

GUTIERREZ, JR., J.:

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 Pl.00 per day increase in the CBA as
part of the compliance with said Wage Order No. 5, and y instead of thirty (30) days
equivalent to one (1) month as gratuity pay to resigning employees. (p. 3, Rollo)
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 above cogent
reason we can not fault respondent for its refusal to grant a second Pl.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 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 Sunday 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 Pl.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-Pl.00 per worked day;

b Effective 1 July, 1984-Pl.00 per worked day;

c. Effective 1 July, 1985-Pl.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 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 Pl.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 Pl.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 : Two and One-half (21/2)service months
salary

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

4 Sixteen (16) to twenty yrs. of : 5 months

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 Pl.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 petition
(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
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 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.