Case Brief: Plastic Town Center Corporation v NLRC, et al.

G.R. No. 81176  April 19, 1989





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

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

In the CBA, it was provided that:

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

Plastic Town Center Corporation maintained that under the principle of “fair 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.

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

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


Whether the PTC’s contention that the gratuity pay should be computed on the basis of 26 days for one month salary instead of 30 days is valid.


No, PTC’s contention does not hold merit in this case.

Gratuity pay is not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is “to reward employees or laborers who have rendered satisfactory and efficient service to the company.”

While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law unlike salary, which are covered in Labor Code. Nowhere has it ever been stated that gratuity pay should be based on actual number of days worked over the period of years forming its basis. Court saw no point in counting the number of days worked over a ten-year period to determine the meaning of “two and one- half months’ gratuity.”

Moreover any doubts or ambiguity in the contract between management and the union members should be resolved in favor of the laborer. When months are not designated by name, a month is understood to be 30 days.

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

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


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