Case Digest: Atok-Big Wedge Mutual Benefit Association v. Atok-Big Wedge Mining Co., Inc., GR L-734, July 19, 1955

  Labor Law | Facilities, Supplements

Facts: 

On September 4, 1950, Atok-Big Wedge Mutual Benefit Association submitted demands, including a wage increase, to Atok-Big Wedge Mining Co., Inc. 

The matter was referred to the Court of Industrial Relations for arbitration. Some demands were granted, but the wage increase was rejected.

In 1951, the Court set the minimum wage at P 2.65 with rice ration or P 3.20 without rice ration, retroactive from September 4, 1950.

In 1952, the mining company petitioned to stop operations due to financial issues. Instead, parties reached an agreement to allow facilities (rice ration, housing, etc.) to be deducted from the minimum wage effective from August 4, 1952 to December 31, 1954. It was approved by the Court.

In 1953, the Supreme Court affirmed the decision of the Court of Industrial Relations fixing the minimum wage at P 3.20 cash, without rice ration, or P 2.65, with rice ration. (G.R. No. L-5276)

The labor union petitioned for enforcement of the agreement, seeking P 3.45 with rice ration or P 4 without rice ration, as allegedly modified by the decision of the Court and the provisions of the Minimum Wage Law.

The mining company opposed, claiming the agreement intended to supersede the court decision and Minimum Wage Law, preventing increased production costs.

CIR: Denied the petition, stating that the parties had intended to be bound by the terms of their agreement.

Issue: WoN the agreement is effective. YES

The first issue submitted to us arises from an apparent contradiction in the Agreement of October 29, 1952. By paragraph III thereof, the parties by common consent evaluated the facilities furnished by the Company to its laborers (rice rations, housing, recreation, medical treatment, water, light, fuel, etc.) at P1.80 per day, and authorized the company to have such value "charge in full or partially — against any laborer or employee as it may see fit" ; while in paragraph I, the Company agreed to abide by the decision of this Court (pending at the time the agreement was had) in G. R. No. L-5594; and as rendered, the decision was to the effect that the Company could deduct from the minimum wage only the value of the rice ration.

It is contended by the petitioner union that the two provisions should be harmonized by holding paragraph III (deduction of all facilities) to be merely provisional, effective only while this Court had not rendered its decision in G.R. No. L-5594; and that the terms of said paragraph should be deemed superseded by the decision from the time the latter became final, some four or five months after the agreement was entered into; in consequence, (it is claimed), the laborers became entitled by virtue of said decision to the prevailing P4.00 minimum wage with no other deduction than that of the rice ration, or a net cash wage of P3.45.

This contention, in our opinion, is untenable. The intention of the parties could not have been to make the arrangement in paragraph III a merely provisional arrangement pending the decision of the Supreme Court for "this agreement" was expressly made retroactive and effective as of August 4, 1952, and to be in force up to and including December 31, 1954" (Par. IV). When concluded on October 29, 1952, neither party could anticipate the date when the decision of the Supreme Court would be rendered; nor is any reason shown why the parties should desire to limit the effects of the decision to the period 1952-1954 if it was to supersede the agreement of October 29, 1952.

To ascertain the true import of paragraph I of said Agreement providing that the respondent company agreed to abide by whatever decision the Supreme Court would render in G. R. No. L-5276, it is important to remember that, as shown by the records, the agreement was prompted by an urgent petition filed by the respondent mining company to close operations and lay-off laborers because of heavy losses and the full enforcement of the Minimum Wage Law in the provinces, requiring it to pay its laborers the minimum wage of P4; to avoid such eventuality, through the mediation of the Court of Industrial Relations, a compromise was reached whereby it was agreed that the company would pay the minimum wage fixed by the law, but the facilities then being received by the laborers would be evaluated and charged as part of the wage, but without in any way reducing the P2.00 cash portion of their wages which they were receiving prior to the agreement (hearing of Oct. 28, 1952, CIR, t. s. n. 47). In other words, while it was the objective of the parties to comply with the requirements of the Minimum Wage Law, it was also deemed important that the mining company should not have to increase the cash wages it was then paying its laborers, so that its cost of production would not also be increased, in order to prevent its closure and the lay-off of employees and laborers. And as found by the Court below in the order appealed from (which finding is conclusive upon us), "it is this eventuality that the parties did not like to happen, when they have executed the said agreement" (Rec. p. 49). Accordingly, after said agreement was entered into, the Company started paying its laborers a basic cash or "take-home" wage of P2.20 (Rec. p. 9), representing the difference between P4 (minimum wage) and P1.80 (value of all facilities).

With this background, the provision to abide by our decision in G. R. L-5276 can only be interpreted thus: That the company agreed to pay whatever award this Court would make in said case from the date fixed by the decision (which was that of the original demand, September 4, 1950) up to August 3, 1952 (the day previous to the effectivity of the Compromise Agreement) and from August 4, 1952 to December 31, 1954, they are to be bound by their agreement of October 29, 1952.

This means that during the first period (September 4, 1950 to August 3, 1952), only rice rations given to the laborers are to be regarded as forming part of their wage and deductible therefrom. The minimum wage was then fixed (by the Court of Industrial Relations, and affirmed by this Court) at P3.20 without rice ration, or P2.65 with rice ration. Since the respondent company had been paying its laborers the basic cash or "take-home" wage of P2 prior to said decision and up to August 3, 1952, the laborers are entitled to a differential pay of P0.65 per working day from September 4, 1950 (the date of the effectivity of the award in G. R. L-5276) up to August 3, 1952.

From August 4, 1952, the date when the Agreement of the parties of October 29, 1952 became effective (which was also the date when the Minimum Wage Law became fully enforceable in the provinces), the laborers should be paid a minimum wage of P4 a day. From this amount, the respondent mining company is given the right to charge each laborer "in full or partially", the facilities enumerated in par. III of the Agreement; i. e., rice ration at P0.55 per day, housing facility at P0.40 per day, and other facilities at P0.85 per day (or a total of P1.80), which facilities "constitute part of his wages." It appears that the company had actually been paying its laborers the minimum wage of P2.20 since August 4, 1952; hence they are not entitled to any differential pay from this date.

Petitioner argues that to allow the deductions stipulated in the Agreement of October 29, 1952 from the minimum daily wage of P4 would be a waiver of the minimum wage fixed by the law and hence null and void, since Republic Act No. 602, section 20, provides that "no agreement or contract, oral or written, to accept a lower wage or less than any other under this Act, shall be valid." An agreement to deduct certain facilities received by the laborers from their employer is not a waiver of the minimum wage fixed by the law. Wage, as defined by section 2 of Republic Act No. 602, "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." Thus, the law permits the deduction of such facilities from the laborer’s minimum wage of P4, as long as their value is "fair and reasonable." It is not here claimed that the valuations fixed in the Agreement of October 29, 1952 are not fair and reasonable. On the contrary, the agreement expressly states that such valuations ‘have been arrived at after careful study and deliberation by both representatives of both parties, with the assistance of their respective counsels, and in the presence of the Honorable Presiding Judge of the Court of Industrial Relations’ (Rec. p. 2).

Neither is it claimed that the parties, with the aid of the Court of Industrial Relations in a dispute pending before it, may not fix by agreement the valuation of such facilities, without referring the matter to the Department of Labor.

Petitioner also argues that to allow the deductions of the facilities appearing in the Agreement referred to, would be contrary to the mandate of section 19 of the law, that "nothing in this Act shall . . . justify an employer . . . in reducing supplements furnished on the date of enactment."

The meaning of the term "supplements" has been fixed by the Code of Rules and Regulations promulgated by the Wage Administration Office to implement the Minimum Wage Law (Ch. 1, [c]), as

"extra renumeration or benefits received by wage earners from their employers and include but are not restricted to pay for vacation and holidays not worked; paid sick leave or maternity leave; overtime rate in excess of what is required by law; sick, pension, retirement, and death benefits; profit-sharing; family allowances; Christmas, war risk and cost-of-living bonuses; or other bonuses other than those paid as a reward for extra output or time spent on the job."

"Supplements", therefore, constitute extra renumeration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence, so that by express provision of the law (sec. 2[g]) they form part of the wage and when furnished by the employer are deductible therefrom since if they are not so furnished, the laborer would spend and pay for them just the same. It is thus clear that the facilities mentioned in the agreement of October 29, 1952 do not come within the term "supplements" as used in Art. 19 of the Minimum Wage Law. For the above reasons, we find the appeal from the Order of the Court a quo of September 22, 1953 denying the motion of the petitioner labor union for the payment of the minimum wage of P3.45 per day plus rice ration, or P4 without rice ration, to be unmeritorious and untenable.