G.R. No. 225115, January 27, 2020
DEL MONTE FRESH PRODUCE (PHILIPPINES), INC., PETITIONER, VS. DEL MONTE FRESH SUPERVISORS UNION, RESPONDENT.

FACTS

Respondent Del Monte Fresh Supervisors Union, the exclusive bargaining representative of petitioner company’s supervisory employees, filed a complaint before the Voluntary Arbitrator on behalf of 18 supervisor-members. The complaint sought payment of accrued salary differentials and adjustments, alleging underpayment resulting from the non-implementation of the company’s salary structure as outlined in its policies. The pertinent policies were the Global Policy on Salary Administration and the May 1, 2000 Local Policy on Salary Administration. The Local Policy stated that the company, at the hiring manager’s discretion, could offer a salary below the minimum for a Hay Level during probation, provided it was not lower than 10% of the minimum, and that upon regularization, the employee’s salary “shall be raised to the minimum level.” The Global Policy contained similar provisions, indicating that an employee hired below the minimum rate could be eligible for an increase to reach the minimum salary level upon regularization after a performance review. The affected supervisors were hired at various Hay Levels but were paid probationary and subsequent regularization rates below the stipulated minimum rates for their respective levels. The Voluntary Arbitrator dismissed the complaint, upholding the sanctity of the employment contracts where the supervisors accepted their stipulated salaries. The Court of Appeals reversed the Voluntary Arbitrator’s decision, granting the money claims for salary differentials from the dates of regularization and remanding the case for computation.

ISSUE

Whether regularization of employment automatically entitles an employee to payment of the minimum salary rate set by company policy.

RULING

Yes. The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision and Resolution. The Court held that the company policies, once officially issued, became part of the employment contracts. The Local Policy clearly provided that an employee hired below the minimum during probation “shall be raised to the minimum level” upon becoming regular. The term “shall” is imperative and denotes a mandatory obligation. Therefore, regularization, based on a satisfactory performance review, automatically entitles the employee to the minimum rate for the Hay Level. This entitlement is not contingent on a merit promotion. The Court rejected the argument that enforcing the policy interfered with management prerogative, stating that while the formulation of policy is a management prerogative, its implementation after issuance is a contractual obligation. The Court also dismissed the procedural issue regarding the timeliness of the appeal, citing the ruling in Guagua National Colleges v. Court of Appeals, and affirmed that rules of statutory construction can be applied to interpret labor contracts, especially under Article 1702 of the Civil Code, which mandates construction in favor of labor in case of doubt. The defense of sanctity of contracts was also rejected, as labor contracts are imbued with public interest.