Republic of the Philippines additional privilege because the Cebu branch is making profits, and vice versa.
additional privilege because the Cebu branch is making profits, and vice versa." This view is now disputed by
SUPREME COURT
Manila
EN BANC
G.R. No. L-7694 October 18, 1955
SUN-RIPE COCONUT PRODUCTS, INC., petitioner,
vs.
THE NATIONAL LABOR UNION, respondent.
Claro M. Recto for petitioner.
Emilio Lopez for respondent Court of Industrial Relations.
Eulogio R. Lerum for respondent National Labor Union.
BAUTISTA ANGELO, J.:
This is a petition for review of a decision of the Court of Industrial Relations rendered on June 18, 1954 which grants
to the employees and laborers of the Kap. Bisig ng Buenavista, a labor union composed of workers in the Desiccated
Coconut Department of the Sun-Ripe Coconut Products, Inc., "fourteen (14) days vacation leave for every year of
continuous, faithful, and satisfactory service during the year 1947 and 1950." Said labor union is an affiliate of the
National Labor Union which instituted these proceedings in its behalf.
On March 11, 1952, the National Labor Union, in behalf of the Kap. Bisig ng Buenavista, filed in the Court of
Industrial Relations a petition against the Sun-Ripe Coconut Products, Inc., containing several labor demands
including one for fourteen (14) days vacation leave with pay. After a preliminary conference held before the industrial
court, the company and the union entered into an agreement on January 12, 1953 wherein it was stipulated that, if
the court should verify the financial losses suffered by the company, the union would withdraw its demand for
vacation leave.
On September 17, 1953, after the union had presented its evidence, another agreement was entered into between
the parties wherein it was stated that all the demands of the union were satisfactorily settled except the demand for
vacation leave which, it was agreed, it shall be submitted to the court for determination.
Agreeably with the stipulation abovementioned, the court appointed examiners to look into the financial condition of
the company during the years 1947 to 1952 who later submitted their report showing that during said period the
company suffered a net loss of P832,980.32. It should be stated, however, that the same report showed that in the
year 1947 the Desiccated Coconut Department of the company realized a net profit of P238,108.69 and in the year
1950, P240,592.20.
On January 29, 1954, Judge Jose S. Bautista, who received the evidence, rendered decision granting the petitioning
laborers fifteen (15) days annual vacation leave with pay during the period of their employment but, on July 8, 1954,
this decision was modified by the court in banc, on a motion for reconsideration, the court stating that the laborers of
the Desiccated Coconut Department are only entitled to fourteen (14) days vacation leave with pay for the years
1947 and 1950 considering the profits realized by said department during those years. No vacation leave was
granted for the year 1953 for lack of proof as to the financial condition of the company in that year.
In considering the demand for vacation leave by the petitioning laborers the issue with which the industrial court was
confronted was whether said demand should be made to depend upon the overall operation of the business of the
company or merely upon the individual operation of each department, considering its profits and losses apart from
those obtained or suffered by the whole business, and the court chose to adopt the view that, for the purposes of
vacation leave, it is enough that the financial condition of each department be considered "in order to give more
incentive and premium to those employees and laborers who, because of their efficient work and accomplishments,
have contributed their share in a more productive enterprise." And elaborating on this view, Judge Bautista made the
following comment: "There is no doubt that each of the abovementioned departments has its own personnel, and the
claim of such personnel depends upon the business operation of the department in which they are employed alone,
and not upon the overall operation of the corporation insofar as the privilege of vacation leave with pay is concerned.
In other words, the workers in Cebu have their equity in the business operations of the Cebu branch only; the
workers in the Merchandising Department, in the said department only; and the workers in the Desiccated Coconut
Department, in the said department only. This goes to prove that if the Cebu Branch, for example, is making profits,
while the Desiccated Coconut Department is suffering losses, the workers of the latter department cannot ask for
counsel for the company who claims it to be derogatory to the principle of unity and interdependence that should
exist in the several departments of an entity which was organized to accomplish one common purpose.
We are inclined to agree with this counsel's view. While a corporation organized to engaged in business, like
petitioner, may be composed of several departments, one filing a function different in nature from the others, the
same cannot be considered separate and independent in relation to its business, but merely as integral parts, with
coordinate and interrelated functions, of one whole organization. They are like parts of a machine which function
coordinately and harmoniously to accomplish its objective and wherein the failure of one affects the efficiency of the
whole. This is true in every corporation and the petitioner is no exception. This view can be better explained by
considering the factors that intervene in the promotion of the business.
We begin by stating that petitioning corporation was organized with one single capital. Because of the nature of its
business, its functions were distributed into several departments, the merchandising, the desiccated, and the Cebu
branch. These functions were separate but coordinate. While each department has its own personnel, the
employees are paid not by the department but by the company. The profits and losses of each reflect in favor or
against the whole business, not merely in a particular department, and whatever concessions in the form of bounty,
gratuity of leave granted are necessarily borne by the general funds. And consistent with this view, the industrial
court, in acting on the petition of the union, directed its examiners to look into the financial condition of the whole
business.
Fairness, equality and justice also react adversely to the application of the view of the industrial court for it sanctions
the award of a premium to one employee at the cost of another in the interrelation of a corporate business.
Considering the coordinate functions of the different departments of a corporation, it is discriminatory to give
concessions to the employees of one because of certain gain it realizes when in bringing it about the efforts of the
others are also brought into play. Such discrimination is obnoxious to the harmonious relation that should prevail in
an integrated body and is productive of demoralization and jealousy among the employees. This situation should be
avoided. Economically and ethically this view is unsound.
Another point raised by petitioner is that the industrial court awarded vacation leave to the laborers of the Desiccated
Coconut Department for the years 1947 and 1950 in spite of the fact that the union merely asked for leave for the
year 1952 and not for previous years.
There is nothing wrong with the industrial court in making such award if warranted considering the provision of the
law that "The court shall not be restricted to the specific relief claimed . . . but may include in the award . . . any
matter of determination which may be deemed necessary or expedient for the purpose of settling the dispute."
(Section 13, Commonwealth Act No. 103). But the purpose of vacation leave is to afford to a laborer a chance to get
a much-needed rest to replenish his worn out energies and acquire a new vitality to enable him to efficiently perform
his duties, and not merely to give him additional salary or bounty. This privilege must be demanded it its opportune
time and if he allows the years to go by in silence, he waives it. It becomes a mere concession or act of grace of the
employer. As it was once held "The stipulation in the contract for the allowance of a vacation to employees is merely
a recognition by management and labor that a short interval of complete rest and relaxation from daily routine with
the benefit of full pay is essential to the mental and physical well being of the workman . . .. The parties to the
agreement in contracting for the allowance of vacation, did not intend that the stipulation should be considered as
providing a cash bonus in lieu of vacation pay . . .." (Bondio vs. Joseph Binder, Inc., 24 So. 2d 398; 30 A. L. R. 2d
352.) The only case where vacation pay may take the form of a bonus is when there is an agreement whereby that
option is given to the laborer (30 A. L. R. 2d p. 372). At any rate, the rule is that vacation leave should be demanded
opportunely considering its purpose and if this is not done, it is deemed waived (Schurr vs. Savigny, et al., 48 N. W.
549; Giorno vs. Banco Di Napoli Trust Co., 43 N. Y. X. 2d 921).
Wherefore, the decision appealed from is hereby reversed, without pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 102132. March 19, 1993.
DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V. ABARQUEZ, in his capacity as
an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions (ATUTUCP).
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS; COLLECTIVE BARGAINING AGREEMENT;
DEFINED; NATURE THEREOF; CONSTRUCTION TO BE PLACED THEREON. A collective bargaining
agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed upon request of either the
employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with
respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting
any grievances or questions arising under such agreement. While the terms and conditions of a CBA constitute the
law between the parties, it is not, however, an ordinary contract to which is applied the principles of law governing
ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the
Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed
with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it is intended to serve.
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. It is thus erroneous for petitioner to isolate Section 1, Article VIII of the
1989 CBA from the other related section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt
to justify the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed
portion of the sick leave benefit to regular intermittent workers. The manner they were deprived of the privilege
previously recognized and extended to them by petitioner-company during the lifetime of the CBA of October 16,
1985 until three (3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9) months, is
not only tainted with arbitrariness but likewise discriminatory in nature. It must be noted that the 1989 CBA has two
(2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's company,
namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the
company and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are
members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on
April 15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of the
1989 CBA. It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they
comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to wit: (1) the
employee-applicant must be regular or must have rendered at least one year of service with the company; and (2)
the application must be accompanied by a certification from a company-designated physician. the phrase "herein
sick leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick
leave with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day
sick leave with pay benefit should be distinguished from the variable number of days of sick leave, not to exceed 15
days, extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the
company, including overtime pursuant to the schedule provided therein. It is only fair and reasonable for petitioner-
company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term
"intermittent" implies, there is irregularity in their work-days. Reasonable and practical interpretation must be placed
on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be
adopted, that the thing may continue to have efficacy rather than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. Sick leave benefits, like other economic
benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among others, are by their
nature, intended to be replacements for regular income which otherwise would not be earned because an employee
is not working during the period of said leaves. They are non-contributory in nature, in the sense that the employees
contribute nothing to the operation of the benefits. By their nature, upon agreement of the parties, they are intended
to alleviate the economic condition of the workers.
4. ID.; ID.; JURISDICTION OF VOLUNTARY ARBITRATOR; CASE AT BAR. Petitioner-company's objection to
the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay
benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned
directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as
Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from
the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse
of discretion was committed by public respondent in issuing the award (decision). Moreover, his interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct.
5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS;
BENEFITS GRANTED PURSUANT TO COMPANY PRACTICE OR POLICY CANNOT BE PEREMPTORILY
WITHDRAWN. Whatever doubt there may have been early on was clearly obliterated when petitioner-company
recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their
sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal
on April 15, 1989. Well-settled is it that the said privilege of commutation or conversion to cash, being an existing
benefit, the petitioner-company may not unilaterally withdraw, or diminish such benefits. It is a fact that petitioner-
company had, on several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the
sick leave benefits of some intermittent workers. Under the circumstances, these may be deemed to have ripened
into company practice or policy which cannot be peremptorily withdrawn.
DECISION
ROMERO, J p:
In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to reverse the Award 1
issued on September 10, 1991 by respondent Ruben V. Abarquez, in his capacity as Voluntary Arbitrator of the
National Conciliation and Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-
10-003-91 which directed petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the
sick leave with pay benefits to its intermittent field workers who are members of the regular labor pool and the
present regular extra pool in accordance with the Collective Bargaining Agreement (CBA) executed between
petitioner and private respondent Association of Trade Unions (ATU-TUCP), from the time it was discontinued and
henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent ATU-TUCP
(Union), the exclusive collective bargaining agent of the rank and file workers of petitioner-company, entered into a
collective bargaining agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII thereof,
provide for sick leave with pay benefits each year to its employees who have rendered at least one (1) year of
service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves The Company agrees to grant 15 days sick leave with pay each year to every regular non-
intermittent worker who already rendered at least one year of service with the company. However, such sick leave
can only be enjoyed upon certification by a company designated physician, and if the same is not enjoyed within one
year period of the current year, any unenjoyed portion thereof, shall be converted to cash and shall be paid at the
end of the said one year period. And provided however, that only those regular workers of the company whose work
are not intermittent, are entitled to the herein sick leave privilege.
xxx xxx xxx
Section 3. All intermittent field workers of the company who are members of the Regular Labor Pool shall be 926 1,050 9 9
entitled to vacation and sick leaves per year of service with pay under the following schedule based on the number of
hours rendered including overtime, to wit: 1,051 1,125 10 10

Hours of Service Per Vacation Sick Leave 1,126 1,200 11 11

Calendar Year Leave 1,201 1,275 12 12

Less than 750 NII NII 1,276 1,350 13 13

751 825 6 days 6 days 1,351 1,425 14 14

826 900 7 7 1,426 1,500 15 15

901 925 8 8 The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above
provided Sections 1 and 2 hereof, respectively."
926 1,050 9 9
During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April 15, 1989, or until
1,051 1,125 10 10 July 1989 (a total of three (3) years and nine (9) months), all the field workers of petitioner who are members of the
regular labor pool and the present regular extra labor pool who had rendered at least 750 hours up to 1,500 hours
1,126 1,200 11 11 were extended sick leave with pay benefits. Any unenjoyed portion thereof at the end of the current year was
converted to cash and paid at the end of the said one-year period pursuant to Sections 1 and 3, Article VIII of the
CBA. The number of days of their sick leave per year depends on the number of hours of service per calendar year
1,201 1,275 12 12 in accordance with the schedule provided in Section 3, Article VIII of the CBA.

1,276 1,350 13 13 The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent workers or its
conversion to cash was, however, discontinued or withdrawn when petitioner-company under a new assistant
1,351 1,425 14 14 manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June 1989),
stopped the payment of its cash equivalent on the ground that they are not entitled to the said benefits under
1,426 1,500 15 15 Sections 1 and 3 of the 1989 CBA.

The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above
provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced under Sections 1
and 3, Article VIII of the new CBA, but the coverage of the said benefits was expanded to include the "present
Regular Extra Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised, provides, thus:
"Section 3. All intermittent field workers of the company who are members of the Regular Labor Pool and present
Regular Extra Labor Pool as of the signing of this agreement shall be entitled to vacation and sick leaves per year of
service with pay under the following schedule based on the number of hours rendered including overtime, to wit:
The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed sick leave
with pay benefits of petitioner's intermittent workers contending that it is a deviation from the true intent of the parties
that negotiated the CBA; that it would violate the principle in labor laws that benefits already extended shall not be
taken away and that it would result in discrimination between the non-intermittent and the intermittent workers of the
petitioner-company.
Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3, Article VIII of the
1989 CBA, the Union brought the matter for voluntary arbitration before the National Conciliation and Mediation
Board, Regional Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA. The parties
mutually designated public respondent Ruben Abarquez, Jr. to act as voluntary arbitrator.

After the parties had filed their respective position papers, 2 public respondent Ruben Abarquez, Jr. issued on
Hours of Service Per Vacation Sick Leave
September 10, 1991 an Award in favor of the Union ruling that the regular intermittent workers are entitled to
commutation of their unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the dispositive
Calendar Year Leave portion of which reads:

Less than 750 NII NII "WHEREFORE, premises considered, the management of the respondent Davao Integrated Port Stevedoring
Services Corporation is hereby directed to grant and extend the sick leave privilege of the commutation of the
751 825 6 days 6 days unenjoyed portion of the sick leave of all the intermittent field workers who are members of the regular labor pool and
the present extra pool in accordance with the CBA from the time it was discontinued and henceforth.
826 900 7 7
SO ORDERED."
901 925 8 8
Petitioner-company disagreed with the aforementioned ruling of public respondent, hence, the instant petition.
Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1, Article VIII
of the 1989 CBA that only the regular workers whose work are not intermittent are entitled to the benefit of
conversion to cash of the unenjoyed portion of sick leave, thus: ". . . And provided, however, that only those regular
workers of the Company whose work are not intermittent are entitled to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of their
unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran who misinterpreted Sections
1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-company's rights to rectify the error it had
committed and stop the payment of the said sick leave with pay benefits. An error in payment, according to
petitioner-company, can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed
upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached
after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it is not, however, an ordinary
contract to which is applied the principles of law governing ordinary contracts. 4 A CBA, as a labor contract within the
contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and
capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good.
As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is
intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related section on
sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or withdrawal of
the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular
intermittent workers. The manner they were deprived of the privilege previously recognized and extended to them by
petitioner-company during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April
15, 1989, or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise
discriminatory in nature. Petitioner-company is of the mistaken notion that since the privilege of commutation or
conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article VIII, only
the regular non-intermittent workers and no other can avail of the said privilege because of the proviso found in the
last sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2)
distinct classes of workers in petitioner's company, namely: (1) the regular non-intermittent workers or those workers
who render a daily eight-hour service to the company and are governed by Section 1, Article VIII of the 1989 CBA;
and (2) intermittent field workers who are members of the regular labor pool and the present regular extra labor pool
as of the signing of the agreement on April 15, 1989 or those workers who have irregular working days and are
governed by Section 3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with
the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to wit: (1) the employee-
applicant must be regular or must have rendered at least one year of service with the company; and (2) the
application must be accompanied by a certification from a company-designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation leave
benefits, among others, are by their nature, intended to be replacements for regular income which otherwise would
not be earned because an employee is not working during the period of said leaves. 6 They are non-contributory in
nature, in the sense that the employees contribute nothing to the operation of the benefits. 7 By their nature, upon
agreement of the parties, they are intended to alleviate the economic condition of the workers.
After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of the facts and
circumstances attendant in the instant case, we find and so hold that the last sentence of Section 1, Article VIII of the
1989 CBA, invoked by petitioner-company does not bar the regular intermittent workers from the privilege of
commutation or conversion to cash of the unenjoyed portion of their sick leave with pay benefits, if qualified. For the
phrase "herein sick leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed
15-day sick leave with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This
fixed 15-day sick leave with pay benefit should be distinguished from the variable number of days of sick leave, not
to exceed 15 days, extended to intermittent workers under Section 3 depending on the number of hours of service
rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair and reasonable
for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as
the term "intermittent" implies, there is irregularity in their work-days. Reasonable and practical interpretation must be
placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be
adopted, that the thing may continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical distinction readily discernible in Section 1, in relation to Section 3,
Article VIII of the 1989 CBA between the two classes of workers in the company insofar as sick leave with pay
benefits are concerned. Any other distinction would cause discrimination on the part of intermittent workers contrary
to the intention of the parties that mutually agreed in incorporating the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave privilege to be
accorded the intermittent workers in the same way that they are both given the same treatment with respect to
vacation leaves - non-commutable and non-cumulative. If they are treated equally with respect to vacation leave
privilege, with more reason should they be on par with each other with respect to sick leave privileges. 9 Besides, if
the intention were otherwise, during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA that
regular intermittent workers are not entitled to commutation of the unenjoyed portion of their sick leave with pay
benefits?
Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said
privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay
benefits during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989.
Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the petitioner-
company may not unilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner-company had, on
several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave
benefits of some intermittent workers. 11 Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the
unenjoyed portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. Article 261
of the Labor Code is clear. The questioned directive of the herein public respondent is the necessary consequence
of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide
all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement."
We, therefore, find that no grave abuse of discretion was committed by public respondent in issuing the award
(decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is
absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public respondent dated
September 10, 1991 is hereby AFFIRMED. No costs.
G.R. No. 117460 January 6, 1997
REPUBLIC PLANTERS BANK now known as PNB-REPUBLIC BANK, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO G. SANTOS, respondents.
BELLOSILLO, J.:
ANTONIO G. SANTOS was employed by Republic Planters Bank, now known as PNB-Republic Bank (PNB-RB), for
thirty-one (31) years and fifteen (15) days occupying various positions. At the time of his retirement on 31 May 1990
he was a Department Manager with a monthly salary of P8,965.00 and accumulated leave credits of two hundred
and seventy-two (272) days. He received a gratuity pay of P434,468.52 out of which P20,615.62 was deducted for
taxes due.
Santos filed the instant suit for underpayment of gratuity pay, non-payment of accumulated sick and vacation leaves,
mid-year and year-end bonuses, financial assistance, at the same time claiming damages and attorney's fees.
The Labor Arbiter found for complainant Santos and this finding was affirmed by the National Labor Relations
Commission (NLRC) on appeal.
PNB-RB alleges in this petition that the resolution of NLRC is contrary to the evidence and existing jurisprudence;
that NLRC gravely abused its discretion when it upheld the order of the Labor Arbiter awarding P661,210.63 to
Santos; and, that the award to Santos of mid-year and year-end bonuses, moral and exemplary damages and
attorney's fees has no legal basis. Petitioner argues that Santos is not entitled to the award as he signed
a Release, Waiver and Quitclaim therefor when he received his gratuity pay of P434,468.52.
We are not unaware that a quitclaim by an employee in favor of his employer amounts to a valid and binding
compromise agreement between them. 1 An agreement voluntarily entered into which represents a reasonable
settlement is binding on the parties and may not later be disowned simply because of a change of mind. 2
On the other hand, we are not also unmindful of the principle that quitclaims are ineffective to bar recovery for the full
measure of the worker's rights 3 and that acceptance thereof does not amount to estoppel. 4 Generally, quitclaims by
laborers are frowned upon as contrary to public policy. 5 And the fact that the consideration given in exchange
thereof was very much less than the amount claimed renders the quitclaim null and void. 6 In the instant case, the
total amount claimed by Santos is P908,022.65 of which only P434,468.52 was received by him. Considering that
the Release, Waiver and Quitclaim was signed by Santos under protest as found by the Labor Arbiter and the NLRC,
and the difference between the amount claimed and that paid cannot in any way be considered negligible, we deem
it proper to recompute and determine the exact amount of the retirement benefits due private respondent. We
perceive the waiver under the facts of the case to dangerously encroach on the entrenched domain of public policy.
Petitioner invokes Periquet v. National Labor Relations Commission 7 to thwart private respondent's claim.
Unfortunately, the case does not provide the desired relief. In Periquet, the consideration for the quitclaim was found
to be credible and reasonable. In the case before us, we are unable to make such finding for the difference involved
is considerably big and substantial. The total of the claim is P908,022.65. Deducting therefrom the amount of
P434,468.52 already received by respondent Santos leaves a difference of P473,554.13 which is even more than
what he had been given.
PNB-RB avers that the NLRC gravely abused its discretion when it computed the gratuity pay of Santos at
P661,210.63 based on the salary rate of the next higher rank on the theory that he acquired a vested right over it
pursuant to the 1971-1973 Collective Bargaining Agreement (CBA). Petitioner posits that as the CBA had long
expired it could no longer be used as basis in computing the gratuity pay of its retiring officers; instead, the
computation should be based on the practice and policy of the bank effective at the time of the employee's
retirement.
We cannot agree. Not so long ago we resolved exactly the same issues in Republic Planters Bank v. National Labor
Relations Commissions 8 which, coincidentally, emanated from a similar set of facts. In that case, Macario de
Guzman resigned from PNB-RB on 3 June 1985. The following day he filed a complaint with the Department of
Labor and Employment for underpayment of gratuity pay, underpayment of unused leaves and non-payment of
accrued leave credits. De Guzman bewailed the erroneous computation of his gratuity pay and the cash value of his
accumulated leave credits, and maintained that it should have been based on the provisions of the 1971-1973 CBA
instead of the 1982-1985 CBA entered into between PNB-RB and its rank-and-file employees. In finding for de
Guzman we ruled
Prior to private respondent's resignation, there were other managerial employees who resigned
and/or retired from petitioner's employ who received their corresponding gratuity benefits and
the cash value of their accumulated leave credits pursuant to the provisions of the old CBA of
1971-73 despite its expiration in 1976. Among them were Simplicio Manalo and Miguel Calimbas
who resigned on 15 March 1977 and 15 July 1978, respectively. With such a practice and policy,
petitioner cannot refuse to pay private respondent his gratuity benefits under the old CBA. Under
Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code, it
is provided:
Sec. 14. Retirement Benefits. (a) An employee who is retired pursuant to
a bonafide retirement plan or in accordance with the applicable individual or
collective agreement or established employer policy shall be entitled to all
the retirement benefits provided therein. . . (Emphasis supplied).
The foregoing provision explicitly states that a company practice or policy is a labor standard in
determining the retirement benefits of its employees.
The petitioner's theory that the computation of the benefits of private respondent should be
based on the 1982-85 CBA which was the one enforced at the time of his resignation is
untenable. Said CBA was entered into by petitioner with its rank-and-file employees. Private
respondent is a managerial employee who, by express provision of law, is excepted from the
coverage of the aforesaid contract. Private respondent was not a party thereto and could not be
bound thereby.
Since no new CBA had been entered into between the managerial employees and petitioner
upon the expiration of the said 1971-73 CBA, private respondent has acquired a vested right to
the said established policy of petitioner in applying the 1971-73 CBA to retiring or resigning
executives of managerial employees. Such right cannot be curtailed or diminished. 9
We maintain the same dictum in the case before us. PNB-RB insists on disowning any practice or policy of granting
gratuity pay to its retiring officers based on the salary rate of the next higher rank. It admitted however that it granted
gratuity pay on the basis of the salary rate of the next higher rank but only in the case of Simplicio Manalo. As to
other instances when it granted gratuity pay based on the salary rate of the next higher rank, PNB-RB explains that
those were not voluntarily done but were in lawful compliance with court orders.
PNB-RB asserts that our findings in the Republic Planters Bank v. National Labor Relations Commission 10 were
definitely erroneous as they
were contrary to law and the facts of the case. Thus, the error should not be perpetuated. 11
A punctilious perusal of the records leads us to the same conclusion, i.e., that PNB-RB has adopted the policy of
granting gratuity benefits to its retiring officers based on the salary rate of the next higher rank. It continued to adopt
this practice even after the expiration of the 1971-1973 CBA. The grant was consistent and deliberate although
petitioner knew fully well that it was not required to give the benefits after the expiration of the 1971-1973 CBA.
Under these circumstances, the granting of the gratuity pay on the basis of the salary rate of the rank next higher
may be deemed to have ripened into company practice or policy which can no longer be peremptorily
withdrawn. 12Any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No.
851 and Art. 100 of the Labor Code which prohibit the diminution or elimination by the employer of the employees'
existing benefits. 13 Leave credits should likewise be computed based on the upgraded salary rate, i.e., the salary
rate of the next higher rank in conformity with the provisions of the 1971-1973 CBA which in part read
Sec. 14. The Bank agrees to grant to each regular supervisor employee upon his retirement,
resignation or separation without cause after July 1, 1969, the following benefits:
a) Gratuity pay equivalent to one (1) month salary plus the corresponding living allowance of the
rank next higher than the rank of such supervisor at the time of his retirement, resignation or
separation without cause, for every year of service in the Bank, provided that the said supervisor
has at least five (5) years of continuous service with the Bank.
b) The cash equivalent of the accumulated sick and vacation leaves since the time of his initial
employment with the Bank. 14
Under this section, only the gratuity pay is expressly entitled to be computed based on the salary rate of the rank
next higher. This however should not be interpreted in isolation. In this instance, it may be worth to look into the
reasons which motivated the parties to enter into the above agreement. The conversion of leave credits into their
cash equivalent is aimed primarily to encourage workers to work continuously and with dedication for the company.
Companies offer incentives, such as the conversion of the accumulated leave credits into their cash equivalent, to
lure employees to stay with the company. Leave credits are normally converted into their cash equivalent based on
the last prevailing salary received by the employee. Considering all these, the accumulated leave credits should be
converted based on the upgraded salary of the retiree, which is the salary rate of the rank next higher.
PNB-RB avers that it has sufficiently established that the salary of an officer is pegged to a minimum or maximum
depending on his performance appraisal in accordance with the Executive Compensation Salary Structure 15(ECSS)
effective 1 May 1987. Since Santos' latest performance rating was only satisfactory, his gratuity pay should be based
on the minimum and not on the maximum amount of the rate of the salary of the rank next higher. In this regard, we
quote with approval the Comment of the Solicitor General that
Nothing in the provisions of the 1971 CBA from which emanated the one rank higher policy
indicates a minimum or maximum range of the next higher rank. Instead, what is provided is an
unqualified one rank higher concept. Petitioner is, therefore, precluded from drawing a distinction
where none has been stated in the contract. Besides, assuming that an ambiguity does exist, the
same must be resolved in the light of Article 1702 of the Civil Code that: In case of doubt, the
labor legislation and all labor contracts shall be construed in favor of the safety and decent living
for the laborer. Such should be liberally construed in favor of the persons intended to be
benefited thereby.
Moreover, petitioner, by invoking the salary structure and criteria for promotion as basis for
determining the amount of gratuity has confused the two distinct concepts of gratuity and salary.
Gratuity pay, unlike salary, is paid to the beneficiary for the past services or favor rendered
purely out of the generosity of the giver or grantor. Gratuity, therefore, is not intended to pay a
worker for actual services rendered or for actual performance. It is a money benefit or bounty
given to the worker, the purpose of which is to reward employees who have rendered
satisfactory service to the company. Salary, on the other hand, is a part of labor standard law
based on the actual amount of work rendered or the number of days worked over the period of
years. Hence, petitioner's attempt to apply the salary structure to determine gratuity would
eradicate the very essence of a gratuity award, and make it partake of the character of a wage
or salary given on the basis of actual work or performance. Such
was never the intendment of the law and would run counter to essential social justice. 16
Additionally, computing the gratuity pay based on the performance rating of the retiring officer is a practice that is
very likely susceptible to abuse as he will be placed at the mercy of the members of the performance appraisal
committee.
Petitioner argues that the claim of Santos for bonuses corresponding to the years 1985, 1986 and mid-year of 1987
has already prescribed. This is correct. Article 291 of the Labor Code states in part
All money claims arising from employer-employee relations accruing during the effectivity of this
Code shall be filed within three (3) years from the time the cause of action accrued; otherwise
they shall be forever barred.
Since Santos filed his complaint only on 12 July 1990, his claim for 1985 (mid-year and year-end), 1986 (mid-year
and year-end), and 1987 (mid-year) bonuses already prescribed. As regards bonuses for 1987 (year-end), 1988
(mid-year and year-end), 1989 (mid-year and year-end), and 1990 (mid-year), we agree with petitioner that these
should be based on the existing salary rate at the time of their accrual. The record shows however that in 1988
Santos was found guilty of an administrative charge. Hence, in consonance with existing company policy, the 1988
(mid-year and year-end) bonus should be forfeited in favor of the Bank. 17
As regards the award of moral and exemplary damages, as well as attorney's fees, we quote with approval the
Comment of private respondent thus
On the matter of moral and exemplary damages, the same is a must considering that petitioner
is guilty of bad faith by its continued refusal to pay his claims despite the final rulings of the
Supreme Court in similar other cases earlier cited. By refusing to abide by the doctrinal
pronouncements of the Highest Tribunal, petitioner has shown to be anti-labor. This stubborn
attitude is not only contemptible but also contrary to morals, good customs and public policy.
Regardless of its own thinking on the issues presented vis-a-vis the judicial pronouncements
already made, petitioner is duty-bound to respect the Supreme Court decisions which have
become part of the law of the land.
Consequently, private respondent had suffered mental anguish and sleepless nights and
therefore, should be entitled to moral damages. And to serve as example for the public good so
that others similarly inclined could be dissuaded from adopting the same detestable practice,
petitioner should also be sanctioned in the form of exemplary damages.
In addition, petitioner had continuously and openly declared that it will continuously deny the
existence of said policy as it was based on erroneous assumption of facts, and private
respondent is not at all surprised that petitioner has been throwing all kinds of blockade or
obstacle, so as to stop a snowball application of the Supreme Court decision. Such act of the
petitioner of arrogantly defying a well-laid down jurisprudence on the issue at hand (resulted) to
the great prejudice of private respondent's interest. The delay on the part of the petitioner to
rectify its error and grant private respondent what is really due him must have certainly caused
undue damages on the part of the latter. Such defiant attitude does not really set good example
on how one should abide by the decision of the highest tribunal of the land.
xxx xxx xxx
Private respondent has been dragged into this case because petitioner refuses and arrogantly
defies the doctrine of stare decisis that had long set in, compelling private respondent to litigate.
In this regard, private respondent's award for attorney's fees is proper. 18
ACCORDINGLY, the 30 June 1993 Decision of the Labor Arbiter and the 30 August 1994 Resolution of the National
Labor Relations Commission are AFFIRMED with the modification that petitioner PNB-REPUBLIC BANK is ordered
to pay private respondent Antonio G. Santos the amount of P423,661.00, less the applicable taxes, computed as
follows:
Basic gratuity Day:
 Applicable monthly rate (P15,840.00) G.R. No. 140364 August 15, 2000
x length of service (31 years and
15 days) = ACE NAVIGATION CO., INC. and/or CONNING SHIPPING LTD., petitioners,
vs.
P15,840.00 x 31 years P491,040.00 COURT OF APPEALS (THIRTEENTH DIVISION), NATIONAL LABOR RELATIONS COMMISSION (FIRST
P15,840.00 x 15/251 days 946.00 DIVISION) and ORLANDO ALONSAGAY, respondents.

DECISION
P491,986.00
PUNO, J.:
Leave credits:
This is a petition for review of the resolutions1 of the Court of Appeals2 that dismissed the petition for certiorari filed by
P15,840 x 272 x 12/251 205,983.00 petitioners and which denied their motion for reconsideration, respectively.

Accrued Bonuses: First, the facts.

1987-year-end only P1,300.00 19 In June 1994, Ace Navigation Co., Inc. (Ace Nav) recruited private respondent Orlando Alonsagay to work as a
1988-forfeited (due adm. case) bartender on board the vessel M/V "Orient Express" owned by its principal, Conning Shipping Ltd. (Conning). Under
1989-mid year/year-end 11,380.00 20 their POEA approved contract of employment, Orlando shall receive a monthly basic salary of four hundred fifty U.S.
1990-mid-year only 8,965.00 21 dollars (U.S. $450.00), flat rate, including overtime pay for 12 hours of work daily plus tips of two U.S. dollars (U.S.
$2.00) per passenger per day. He, was also entitled to 2.5 days of vacation leave with pay each month. The contract
was to last for one (1) year.
21,645.00
Petitioners alleged that on June 13, 1994, Orlando was deployed and boarded M/V "Orient Express" at the seaport of
P719,614.00 Hong Kong. After the expiration of the contract on June 13, 1995, Orlando returned to the Philippines and demanded
from Ace Nav his vacation leave pay. Ace Nav did not pay him immediately. It told him that he should have been paid
Less: Gratuity already received 434,468.00 prior to his disembarkation and repatriation to the Philippines. Moreover, Conning did not remit any amount for his
vacation leave pay. Ace Nav, however, promised to verify the matter and asked Orlando to return after a few days.
Balance P285,146.00 Orlando never returned.
Add: Moral damages 50,000.00
Exemplary damages 50,000.00 On November 25, 1995, Orlando filed a complaint3 before the labor arbiter for vacation leave pay of four hundred fifty
Attorney's fees 38,515.00 U.S. dollars (U.S. $450.00) and unpaid tips amounting to thirty six, thousand U.S. dollars (U.S. $36,000.00). 4 On
November 15, 1996, Labor Arbiter Felipe P. Pati ordered Ace Nav and Conning to pay jointly and severally Orlando
his vacation leave pay of US$450.00. The claim for tips of Orlando was dismissed for lack of merit. 5
Total P423,661.00
========= Orlando appealed6 to the National Labor Relations Commission (NLRC) on February 3, 1997. In a
decision7promulgated on November 26, 1997, the NLRC ordered Ace Nav and Conning to pay the unpaid tips of
SO ORDERED. Orlando which amounted to US$36,000.00 in addition to his vacation leave pay. Ace Nav and Conning filed a motion
for reconsideration on February 2, 1998 which was denied on May 20, 1999. 8

On July 2, 1999, Ace Nav and Conning filed a petition for certiorari before the Court of Appeals to annul the decision
of the NLRC. On July 28, 1999, the Court of Appeals promulgated a three-page resolution9 dismissing the petition.
Their motion for reconsideration filed on September 8, 1999 was denied on October 8, 1999. Hence this appeal.

In assailing the dismissal of their petition on technical grounds, petitioners argued that the Court of Appeals erred in
rigidly and technically applying Section 13, Rule 1310 and Section 1, Rule 6511 of the 1997 Rules of Civil
Procedure.12They also contend that the respondent court erred in ruling that they are the ones liable to pay tips to
Orlando. They point out that if tips will be considered as part of the salary of Orlando, it will make him the highest
paid employee on M/V "Orient Express." The ship captain, the highest ranking officer, receives U.S.$3,000.00 per
month without tips. Orlando, who is a bartender, will receive U.S.$3,450.00 per month. Allegedly, this will compel
foreign ship owners to desist from hiring Filipino bartenders. It will create an unfavorable precedent detrimental to the
future recruitment, hiring and deployment of Filipino overseas workers specially in service oriented businesses. It will
also be a case of double compensation that will unjustly enrich Orlando at the expense of petitioners. They also
stress that Orlando never complained that they should pay him the said tips.
Respondent filed a two-page comment to the petition adopting the resolution of the Court of Appeals dated July 28,
1999.
We find merit in the petition.
Rules of procedure are used to help secure and not override substantial justice. 13 Even the Rules of Court mandates
a liberal construction in order to promote their objective of securing a just, speedy and inexpensive disposition of
every action and proceeding.14 Since rules of procedure are mere tools designed to facilitate the attainment of justice,
their strict and rigid application which would result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided.15 Thus, the dismissal of an appeal on purely technical ground is frowned
upon especially if it will result to unfairness.
We apply these sound rules in the case at bar. Petitioners' petition for certiorari before the Court of Appeals
contained the certified true copy of the NLRC's decision dated November 26, 1997, 16 its order dated May 2,
199917and the sworn certification of non-forum shopping.18 Petitioners also explained that their counsel executed an
affidavit of proof of service and explanation in the afternoon of July 1, 1999. However, he forgot to attach it when he
filed their petition the following day because of the volume and pressure of work and lack of office personnel.
However, the Registry Receipt,19 which is the proof of mailing to Orlando's counsel, issued by the Central Post Office
was attached on the original petition they filed with the respondent court. It was also stamped 20 by the NLRC which is
proof of receipt of the petition by the latter. The affidavit of service, which was originally omitted, was attached on
their motion for reconsideration.21 Significantly, it was dated July 1, 1999. In view of the surrounding circumstances,
the subsequent filing of the affidavit of service may be considered as substantial compliance with the rules.
We now come to the merits of the case. The issue is whether petitioners are liable to pay the tips to Orlando.
The word ["tip"] has several meanings, with origins more or less obscure, connected with "tap" and with "top." In the
sense of a sum of money given for good service, other languages are more specific, e.g., Fr. pourboire, for drink. It is
suggested that [the word] is formed from the practice, in early 18th c. London coffeehouses, of having a box in which
persons in a hurry would drop a small coin, to gain immediate attention. The box was labelled To Insure Promptness;
then just with the initials T.I.P.22
It is more frequently used to indicate additional compensation, and in this sense "tip" is defined as meaning a
gratuity; a gift; a present; a fee; money given, as to a servant to secure better or more prompt service. A tip may
range from pure gift out of benevolence or friendship, to a compensation for a service measured by its supposed
value but not fixed by an agreement, although usually the word is applied to what is paid to a servant in addition to
the regular compensation for his service in order to secure better service or in recognition of it. It has been said that a
tip denotes a voluntary act, but it also has been said that from the very beginning of the practice of tipping it was
evident that, whether considered from the standpoint of the giver or the recipient, a tip lacked the essential element
of a gift, namely, the free bestowing of a gratuity without a consideration, and that, despite its apparent voluntariness,
there is an element of compulsion in tipping.23
Tipping is done to get the attention and secure the immediate services of a waiter, porter or others for their services.
Since a tip is considered a pure gift out of benevolence or friendship, it can not be demanded from the customer.
Whether or not tips will be given is dependent on the will and generosity of the giver. Although a customer may give
a tip as a consideration for services rendered, its value still depends on the giver. They are given in addition to the
compensation by the employer. A gratuity given by an employer in order to inspire the employee to exert more effort
in his work is more appropriately called a bonus.
The NLRC and the Court of Appeals held that petitioners were liable to pay tips to Orlando because of the contract of
employment. Thus:
"The contract of employment entered into by and between the complainant and Ace Navigation Co., Inc. (p. 82,
Record) clearly provides xxx:
'That the employee shall be employed on board under the following terms and conditions:
1.1 Duration of Contract: (12 months) 10 months remaining duration of contract
1.2 Position: Bartender
1.3 Basic Monthly Salary: U.S.$450.00 Flat rate including overtime pay for
1.4 Hours of Work: 12 hrs. work daily.
1.5 Overtime: Plus tips of U.S.$2.00 per passenger per day.
1.6 Vacation Leave with Pay: 2.5 days/mo.' (record, p. 82)
"The record of this case shows that the respondent, in the Contract of Employment xxx undertook to pay to
complainant 'tips of U.S.$2.00 per passenger per day.' Yet, there is no showing that the said undertaking was
complied with by the respondents.
"It was thus a serious error on the part of the Labor Arbiter to rule that the tips were already paid, much less to rule
that said tips were directly paid to the crew of M/V "ORIENT PRINCESS." With Article 4 of the Labor Code reminding
us that doubts should be resolved in favor of labor, we all the more find it compelling to rule that the complainant is
still entitled to the contractually covenanted sum of US$36,000.00. xxx."
We disagree. The contract of employment between petitioners and Orlando is categorical that the monthly salary of
Orlando is US$450.00 flat rate. This already included his overtime pay which is integrated in his 12 hours of work.
The words "plus tips of US$2.00 per passenger per day" were written at the line for overtime. Since payment for
overtime was included in the monthly salary of Orlando, the supposed tips mentioned in the contract should be
deemed included thereat.
The actuations of Orlando during his employment also show that he was aware his monthly salary is only
US$450.00, no more no less. He did not raise any complaint about the non-payment of his tips during the entire
duration of his employment. After the expiration of his contract, he demanded payment only of his vacation leave
pay. He did not immediately seek the payment of tips. He only asked for the payment of tips when he filed this case
before the labor arbiter. This shows that the alleged non-payment of tips was a mere afterthought to bloat up his
claim. The records of the case do not show that Orlando was deprived of any monthly salary. It will now be unjust to
impose a burden on the employer who performed the contract in good faith.
Furthermore, it is presumed that the parties were aware of the plain, ordinary and common meaning of the word "tip."
As a bartender, Orlando can not feign ignorance on the practice of tipping and that tips are normally paid by
customers and not by the employer.
It is also absurd that petitioners intended to give Orlando a salary higher than that of the ship captain.1wphi1 As
petitioners point out, the captain of M/V "Orient Princess" receives US$3,000.00 per month while Orlando will receive
US$3,450.00 per month if the tip of US$2.00 per passenger per day will be given in addition to his US$450.00
monthly salary. It will be against common sense for an employer to give a lower ranked employee a higher
compensation than an employee who holds the highest position in an enterprise.
However, Orlando should be paid his vacation leave pay. Petitioners denied this liability by raising the defense that
the usual practice is that vacation leave pay is given before repatriation. But as the labor arbiter correctly observed,
petitioners did not present any evidence to prove that they already paid the amount. The burden of proving payment
was not discharged by the petitioners.
IN VIEW WHEREOF, the resolutions of the Court of Appeals in CA G.R. SP No. 53508 are reversed and set aside.
The decision of the labor arbiter ordering petitioners to pay jointly and severally the unpaid vacation leave pay of
private respondent, Orlando Alonsagay, in the amount of US$450.00 and dismissing his other claim for lack of merit
is reinstated.