GR 166647; (March, 2006) (Digest)
G.R. No. 166647 ; March 31, 2006
PAG-ASA STEEL WORKS, INC., Petitioner, vs. COURT OF APPEALS and PAG-ASA STEEL WORKERS UNION (PSWU), Respondent.
FACTS
Pag-Asa Steel Works, Inc. and the Pag-Asa Steel Workers Union (Union) negotiated the implementation of Wage Order No. NCR-06, which mandated a P13.00 daily increase for minimum wage earners. The company implemented the increase using a graduated scheme, granting the full P13.00 only to those at or near the minimum wage and progressively smaller increases to higher-paid employees, purportedly to prevent wage distortion. The Union filed a grievance, arguing that the wage order required a uniform P13.00 increase for all employees, not just those receiving the minimum wage. The Voluntary Arbitrator ruled in favor of the company’s graduated scheme.
Subsequently, Wage Order No. NCR-07 was issued, and the company granted a uniform P25.00 increase to all employees. The Union then argued before the Court of Appeals that this subsequent uniform grant constituted a “company practice” that should be applied retroactively to Wage Order No. NCR-06. The CA agreed with the Union, ordering the company to pay the uniform P13.00 increase for NCR-06, effectively reversing the Voluntary Arbitrator’s decision.
ISSUE
Whether the company’s single act of granting a uniform wage increase under Wage Order No. NCR-07 ripened into a binding company practice that must be applied to the implementation of the earlier Wage Order No. NCR-06.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the decision of the Voluntary Arbitrator. The legal logic is anchored on the strict requirements for establishing a demandable company practice. For a pattern of conduct to crystallize into a binding company practice, it must be shown to have been consistently and deliberately done over a long period, and it must be voluntary and not due to a contractual or legal obligation.
In this case, the grant of a uniform increase under Wage Order No. NCR-07 was an isolated act. Critically, it was not an act of mere liberality; the company explained it was granted because their Collective Bargaining Agreement (CBA) obligated them to give wage increases ordered within six months of the CBA’s signing, in addition to the CBA-mandated increases. Since the act was performed under a belief of a contractual obligation under the CBA, it cannot be considered a voluntary practice that generates a separate, enforceable right. A single instance, especially one motivated by a perceived legal duty, cannot establish a company practice. Therefore, the company’s graduated implementation scheme for Wage Order No. NCR-06, as originally upheld by the Voluntary Arbitrator, was valid.