G.R. No. 161713 ; August 20, 2008
LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. LEPANTO LOCAL STAFF UNION, respondent.

FACTS

Lepanto Consolidated Mining Company (petitioner) and the Lepanto Local Staff Union (respondent) entered into their fourth Collective Bargaining Agreement (4th CBA). A dispute arose when respondent filed a complaint alleging petitioner’s failure to pay two benefits: longevity pay of P30.00 per month effective July 1, 1998, and night shift differential pay for employees on the second shift (e.g., 7:00 A.M. to 4:00 P.M.) for work rendered beyond 3:00 P.M. Petitioner contested both claims, arguing that longevity pay was payable only starting July 1, 1999, and that the CBA’s night shift differential provision applied only to the first and third shifts, not the second shift.
The Voluntary Arbitrator ruled in favor of the union, ordering payment of both benefits. The arbitrator interpreted the CBA to mean longevity pay was due starting July 1998, and that a specific clause stating “for overtime work… there [will] be no night differential pay added before the overtime pay is calculated” implied an entitlement to such differential for second-shift work beyond 3:00 P.M., with the clause merely governing the order of computation. The Court of Appeals affirmed this decision.

ISSUE

Whether the Court of Appeals erred in affirming the Voluntary Arbitrator’s interpretation of the 4th CBA that employees on the second shift are entitled to night shift differential pay for work performed beyond 3:00 P.M.

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision. The legal logic rests on the principle that a CBA’s terms constitute the law between the parties, and their intention is paramount. The Court held that the disputed clause on night shift differential was not meant to exclude second-shift workers from receiving the benefit for work past 3:00 P.M. Rather, it only specified that the differential should be excluded in the computation of overtime pay, indicating the benefit itself was granted.
To ascertain contractual intent, contemporaneous acts, contractual history, and past practice are considered. The provision existed in the parties’ first three CBAs, and petitioner had a history of paying the night shift differential to union members for work beyond 3:00 P.M. during those periods. Crucially, petitioner continued this practice during the effectivity of the 4th CBA, even after the Voluntary Arbitrator’s decision. The Court found petitioner’s claim of erroneous payment unsubstantiated. This consistent conduct estopped petitioner from denying the benefit and conclusively demonstrated the parties’ mutual intent to include second-shift workers in the night differential scheme.