G.R. No.

L-12444             February 28, 1963

STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners,

vs.
CEBU SEAMEN'S ASSOCIATION, INC., respondent.

Pedro B. Uy Calderon for petitioners.

Gaudioso C. Villagonzalo for respondent.

PAREDES, J.:

Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of marine
coastwise transportation, employing therein several steamships of Philippine registry. They had a
collective bargaining contract with the respondent Cebu Seamen's Association, Inc. On September
12, 1952, the respondent union filed with the Court of Industrial Relations (CIR), a petition (Case No.
740-V) against the States Marine Corporation, later amended on May 4, 1953, by including as party
respondent, the petitioner Royal Line, Inc. The Union alleged that the officers and men working on
board the petitioners' vessels have not been paid their sick leave, vacation leave and overtime pay;
that the petitioners threatened or coerced them to accept a reduction of salaries, observed by other
shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their
employees on board their vessels, to pay the sum of P.40 for every meal, while the masters and
officers were not required to pay their meals and that because Captain Carlos Asensi had refused to
yield to the general reduction of salaries, the petitioners dismissed said captain who now claims for
reinstatement and the payment of back wages from December 25, 1952, at the rate of P540.00,
monthly.

The petitioners' shipping companies, answering, averred that very much below 30 of the men and
officers in their employ were members of the respondent union; that the work on board a vessel is
one of comparative ease; that petitioners have suffered financial losses in the operation of their
vessels and that there is no law which provides for the payment of sick leave or vacation leave to
employees or workers of private firms; that as regards the claim for overtime pay, the petitioners
have always observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law),
notwithstanding the fact that it does not apply to those who provide means of transportation; that the
shipowners and operators in Cebu were paying the salaries of their officers and men, depending
upon the margin of profits they could realize and other factors or circumstances of the business; that
in enacting Rep. Act No. 602 (Minimum Wage Law), the Congress had in mind that the amount of
P.40 per meal, furnished the employees should be deducted from the daily wages; that Captain
Asensi was not dismissed for alleged union activities, but with the expiration of the terms of the
contract between said officer and the petitioners, his services were terminated.

A decision was rendered on February 21, 1957 in favor of the respondent union. The motion for
reconsideration thereof, having been denied, the companies filed the present writ of certiorari, to
resolve legal question involved. Always bearing in mind the deep-rooted principle that the factual
findings of the Court of Industrial Relations should not be disturbed, if supported by substantial
evidence, the different issues are taken up, in the order they are raised in the brief for the petitioners.

1. First assignment of error. — The respondent court erred in holding that it had jurisdiction
over case No. 740-V, notwithstanding the fact that those who had dispute with the
petitioners, were less than thirty (30) in number.

The CIR made a finding that at the time of the filing of the petition in case No. 740-V,
respondent Union had more than thirty members actually working with the
 companies, and the court declared itself with jurisdiction to take cognizance of the
case. Against this order, the herein petitioners did not file a motion for
reconsideration or a petition for certiorari. The finding of fact made by the CIR
became final and conclusive, which We are not now authorized to alter or modify. It
is axiomatic that once the CIR had acquired jurisdiction over a case, it continues to
have that jurisdiction, until the case is terminated (Manila Hotel Emp. Association v.
Manila Hotel Company, et al., 40 O.G. No. 6, p. 3027). It was abundantly shown that
there were 56 members who signed Exhibits A, A-I to A-8, and that 103 members of
the Union are listed in Exhibits B, B-1 to B-35, F, F-1 and K-2 to K-3. So that at the
time of the filing of the petition, the respondent union had a total membership of 159,
working with the herein petitioners, who were presumed interested in or would be
benefited by the outcome of the case (NAMARCO v. CIR, L-17804, Jan. 1963).
Annex D, (Order of the CIR, dated March 8, 1954), likewise belies the contention of
herein petitioner in this regard. The fact that only 7 claimed for overtime pay and only
7 witnesses testified, does not warrant the conclusion that the employees who had
some dispute with the present petitioners were less than 30. The ruling of the CIR,
with respect to the question of jurisdiction is, therefore, correct.

2. Second assignment of error. — The CIR erred in holding, that inasmuch as in the shipping
articles, the herein petitioners have bound themselves to supply the crew with provisions and
with such "daily subsistence as shall be mutually agreed upon" between the master and the
crew, no deductions for meals could be made by the aforesaid petitioners from their wages
or salaries.

3. Third assignment of error. — The CIR erred in holding that inasmuch as with regard to
meals furnished to crew members of a vessel, section 3(f) of Act No. 602 is the general rule,
which section 19 thereof is the exception, the cost of said meals may not be legally deducted
from the wages or salaries of the aforesaid crew members by the herein petitioners.

4. Fourth assignment of error. — The CIR erred in declaring that the deduction for costs of
meals from the wages or salaries after August 4, 1951, is illegal and same should be
reimbursed to the employee concerned, in spite of said section 3, par. (f) of Act No. 602.

It was shown by substantial evidence, that since the beginning of the operation of the petitioner's
business, all the crew of their vessels have been signing "shipping articles" in which are stated
opposite their names, the salaries or wages they would receive. All seamen, whether members of
the crew or deck officers or engineers, have been furnished free meals by the ship owners or
operators. All the shipping articles signed by the master and the crew members, contained, among
others, a stipulation, that "in consideration of which services to be duly performed, the said master
hereby agrees to pay to the said crew, as wages, the sums against their names respectively
expressed in the contract; and to supply them with provisions as provided herein ..." (Sec. 8, par. [b],
shipping articles), and during the duration of the contract "the master of the vessel will provide each
member of the crew such daily subsistence as shall be mutually agreed daily upon between said
master and crew; or, in lieu of such subsistence the crew may reserve the right to demand at the
time of execution of these articles that adequate daily rations be furnished each member of the
crew." (Sec. 8, par. [e], shipping articles). It is, therefore, apparent that, aside from the payment of
the respective salaries or wages, set opposite the names of the crew members, the petitioners
bound themselves to supply the crew with ship's provisions, daily subsistence or daily rations, which
include food.

This was the situation before August 4, 1951, when the Minimum Wage Law became effective. After
this date, however, the companies began deducting the cost of meals from the wages or salaries of
crew members; but no such deductions were made from the salaries of the deck officers and
engineers in all the boats of the petitioners. Under the existing laws, therefore, the query converges
on the legality of such deductions. While the petitioners herein contend that the deductions are legal
and should not be reimbursed to the respondent union, the latter, however, claims that same are
illegal and reimbursement should be made.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and
approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove
their case not covered by this stipulation of facts. 
1äwphï1.ñët

We hold that such deductions are not authorized. In the coastwise business of transportation of
passengers and freight, the men who compose the complement of a vessel are provided with free
meals by the shipowners, operators or agents, because they hold on to their work and duties,
regardless of "the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk
ahead in the midst of the high seas."

Section 3, par. f, of the Minimum Wage Law, (R.A. No. 602), provides as follows —

(f) Until and unless investigations by the Secretary of Labor on his initiative or on petition of
any interested party result in a different determination of the fair and reasonable value,
the furnishing of meals shall be valued at not more than thirty centavos per meal for
agricultural employees and not more than forty centavos for any other employees covered by
this Act, and the furnishing of housing shall be valued at not more than twenty centavos daily
for agricultural workers and not more than forty centavos daily for other employees covered
by this Act.

Petitioners maintain, in view of the above provisions, that in fixing the minimum wage of employees,
Congress took into account the meals furnished by employers and that in fixing the rate of forty
centavos per meal, the lawmakers had in mind that the latter amount should be deducted from the
daily wage, otherwise, no rate for meals should have been provided.

However, section 19, same law, states —

SEC. 19. Relations to other labor laws and practices.— Nothing in this Act shall deprive an
employee of the right to seek fair wages, shorter working hours and better working conditions
nor justify an employer in violating any other labor law applicable to his employees, in
reducing the wage now paid to any of his employees in excess of the minimum wage
established under this Act, or in reducing supplements furnished on the date of enactment.

At first blush, it would appear that there exists a contradiction between the provisions of section 3(f)
and section 19 of Rep. Act No. 602; but from a careful examination of the same, it is evident that
Section 3(f) constitutes the general rule, while section 19 is the exception. In other words, if there are
no supplements given, within the meaning and contemplation of section 19, but merely facilities,
section 3(f) governs. There is no conflict; the two provisions could, as they should be harmonized.
And even if there is such a conflict, the respondent CIR should resolve the same in favor of the
safety and decent living laborers (Art. 1702, new Civil Code)..

It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew
members in question, were mere "facilities" which should be deducted from wages, and not
"supplements" which, according to said section 19, should not be deducted from such wages,
because it is provided therein: "Nothing in this Act shall deprive an employee of the right to such fair
wage ... or in reducing supplements furnished on the date of enactment." In the case of Atok-Big
Wedge Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are
defined as follows —

"Supplements", therefore, constitute extra remuneration 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 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.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage, is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The criterion is not so much with the kind
of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose. Considering,
therefore, as definitely found by the respondent court that the meals were freely given to crew
members prior to August 4, 1951, while they were on the high seas "not as part of their wages but as
a necessary matter in the maintenance of the health and efficiency of the crew personnel during the
voyage", the deductions therein made for the meals given after August 4, 1951, should be returned
to them, and the operator of the coastwise vessels affected should continue giving the same benefit..

In the case of Cebu Autobus Company v. United Cebu Autobus Employees Assn., L-9742, Oct. 27,
1955, the company used to pay to its drivers and conductors, who were assigned outside of the City
limits, aside from their regular salary, a certain percentage of their daily wage, as allowance for food.
Upon the effectivity of the Minimum Wage Law, however, that privilege was stopped by the
company. The order CIR to the company to continue granting this privilege, was upheld by this
Court.

The shipping companies argue that the furnishing of meals to the crew before the effectivity of Rep.
Act No. 602, is of no moment, because such circumstance was already taken into consideration by
Congress, when it stated that "wage" includes the fair and reasonable value of boards customarily
furnished by the employer to the employees. If We are to follow the theory of the herein petitioners,
then a crew member, who used to receive a monthly wage of P100.00, before August 4, 1951, with
no deduction for meals, after said date, would receive only P86.00 monthly (after deducting the cost
of his meals at P.40 per meal), which would be very much less than the P122.00 monthly minimum
wage, fixed in accordance with the Minimum Wage Law. Instead of benefiting him, the law will
adversely affect said crew member. Such interpretation does not conform with the avowed intention
of Congress in enacting the said law.

One should not overlook a fact fully established, that only unlicensed crew members were made to
pay for their meals or food, while the deck officers and marine engineers receiving higher pay and
provided with better victuals, were not. This pictures in no uncertain terms, a great and unjust
discrimination obtaining in the present case (Pambujan Sur United Mine Workers v. CIR, et al., L-
7177, May 31, 1955).

Fifth, Sixth and Seventh assignments of error.— The CIR erred in holding that Severino Pepito, a
boatsman, had rendered overtime work, notwithstanding the provisions of section 1, of C.A. No. 444;
in basing its finding ofthe alleged overtime, on the uncorroborated testimony of said Severino Pepito;
and in ordering the herein petitioners to pay him. Severino Pepito was found by the CIR to have
worked overtime and had not been paid for such services. Severino Pepito categorically stated that
he worked during the late hours of the evening and during the early hours of the day when the boat
docks and unloads. Aside from the above, he did other jobs such as removing rusts and cleaning the
vessel, which overtime work totalled to 6 hours a day, and of which he has not been paid as yet.
This statement was not rebutted by the petitioners. Nobody working with him on the same boat "M/V
Adriana" contrawise. The testimonies of boatswains of other vessels(M/V Iruna and M/V Princesa),
are incompetent and unreliable. And considering the established fact that the work of Severino
Pepito was continuous, and during the time he was not working, he could not leave and could not
completely rest, because of the place and nature of his work, the provisions of sec. 1, of Comm. Act
No. 444, which states "When the work is not continuous, the time during which the laborer is not
working and can leave his working place and can rest completely shall not be counted", find no
application in his case.

8. Eighth assignment of error.— The CIR erred in ordering petitioners to reinstate Capt. Carlos
Asensi to his former position, considering the fact that said officer had been employed since January
9, 1953, as captain of a vessel belonging to another shipping firm in the City of Cebu.

The CIR held —

Finding that the claims of Captain Carlos Asensi for back salaries from the time of his alleged
lay-off on March 20, 1952, is not supported by the evidence on record, the same is hereby
dismissed. Considering, however, that Captain Asensi had been laid-off for a long time and
that his failure to report for work is not sufficient cause for his absolute dismissal,
respondents are hereby ordered to reinstate him to his former job without back salary but
under the same terms and conditions of employment existing prior to his lay-off, without loss
of seniority and other benefits already acquired by him prior to March 20, 1952. This Court is
empowered to reduce the punishment meted out to an erring employee (Standard Vacuum
Oil Co., Inc. v. Katipunan Labor Union, G.R. No. L-9666, Jan. 30, 1957). This step taken is in
consonance with section 12 of Comm. Act 103, as amended." (p. 16, Decision, Annex 'G').

The ruling is in conformity with the evidence, law and equity.

Ninth and Tenth assignments of error. — The CIR erred in denying a duly verified motion for new
trial, and in overruling petitioner's motion for reconsideration.

The motion for new trial, supported by an affidavit, states that the movants have a good and valid
defense and the same is based on three orders of the WAS (Wage Administration Service), dated
November 6, 1956. It is alleged that they would inevitably affect the defense of the petitioners. The
motion for new trial is without merit. Having the said wage Orders in their possession, while the case
was pending decision, it was not explained why the proper move was not taken to introduce them
before the decision was promulgated. The said wage orders, dealing as they do, with the evaluation
of meals and facilities, are irrelevant to the present issue, it having been found and held that the
meals or food in question are not facilities but supplements. The original petition in the CIR having
been filed on Sept. 12, 1952, the WAS could have intervened in the manner provided by law to
express its views on the matter. At any rate, the admission of the three wage orders have not altered
the decision reached in this case.

IN VIEW HEREOF, the petition is dismissed, with costs against the petitioners.
Digest:

The petitioners state marine corporation and royal line incorporated were engaged in the business of
marine coastwise transportation and they had a collective bargaining agreement with the respondent
Cebu Seamen’s Association, Incorporated.

Later on, the respondent’s union filed with the Court of Industrial Relation a petition against the state
marine corporation and royal line incorporated alleging that the petitioners required their employees on
board to pay for every meal while the masters and officers were not required to pay for their meals. And
because one of the employees refused to deduct the meals on his salary, the petitioner dismissed him.

On the petitioners’ answer, they averred that under the minimum wage law, the amount or payment of
meal furnished to the employees should be deducted from their daily wages. And the said employee
was not dismissed for his refusal to deduct the meals on his salary but because of the expiration of the
contract between him and the company.

The Court of Industrial Relation then rendered a decision in favor of the respondent union.

Hence, the present petition.

Issue: Whether the deduction of the meal to the employees’ wages are valid.

Ruling:

The court ruled that the deduction of the meal to the employees’ wages are not valid. The court said
that, a benefit of privilege given to the employee which constitutes an extra remuneration above and
over his basic wage is considered as supplement, and when the said benefit or privilege is part of the
laborers’ basic wages, it is considered a facility. The criteria however do not depend on what kind of
benefit or item was given but depend on its purpose. In this case, considering that the employees were
on the high seas, the meals given to them were not part of their wages but a necessary matter for the
maintenance of their health and efficiency during the voyage. Hence, the meals were considered as
supplements and not as facility. Therefore, it cannot be deducted from the employees’ wages.