Pag-Asa Steel Works v. Pag-Asa Steel Workers Union
REITERATIONFacts
The Antecedents: The Regional Tripartite Wages and Productivity Board (Wage Board) of the National Capital Region (NCR) issued Wage Order No. NCR-06, providing for a daily wage increase. Petitioner Pag-Asa Steel Works, Inc. (Petitioner) and respondent Pag-Asa Steel Workers Union (Union) negotiated the implementation, with Petitioner stating adjustments were made to avoid wage distortion. Subsequently, Petitioner and the Union entered into a Collective Bargaining Agreement (CBA) effective July 1, 1999, which stipulated general wage increases and stated that any Wage Order implemented by the Wage Board would be in addition to the CBA increases. Later, Wage Order No. NCR-07 was issued, and Petitioner paid the mandated increase. On November 1, 2000, Wage Order No. NCR-08 took effect, increasing the minimum wage to P250.00 per day. The Union requested Petitioner to implement this increase, but Petitioner refused, asserting that none of its employees received less than P250.00 daily and no wage distortion occurred. Procedural History: The Union elevated the matter to voluntary arbitration. The Voluntary Arbitrator (VA) ruled in favor of Petitioner, finding no company practice of granting wage order increases across-the-board and no CBA provision obligating Petitioner to grant the increase under Wage Order No. NCR-08. The Union appealed to the Court of Appeals (CA), which reversed the VA's decision, ordering Petitioner to pay the P26.50 daily wage increase under Wage Order No. NCR-08. Petitioner's motion for reconsideration was denied. Petitioner then filed a Petition for Review on Certiorari with the Supreme Court. The Petition: Petitioner sought to reverse the CA's decision, arguing that the CA erred in finding that the increases under Wage Order No. 8 could be demanded as a matter of right under the CBA or as a matter of practice. Petitioner contended that the issue of CBA ambiguity was not raised during voluntary arbitration and that there was no established company practice of granting wage order increases across-the-board.
Issue(s)
Whether the Court of Appeals committed a grave reversible error in not finding that the increases provided for under Wage Order No. 8 can be demanded as a matter of right by the respondent under the 1999 CBA. Whether the Court of Appeals committed a grave reversible error in not finding that the increases provided for under Wage Order No. 8 can be demanded by the respondent union as a matter of practice. Whether issues not averred in the complaint nor raised during the trial can be raised for the first time on appeal. Whether the Rules of Statutory Construction, in relation to Article 1370 and 1374 of the New Civil Code, as well as Section 11 of the Rules of Court, requires that contracts must be read in their entirety and the various stipulations in a contract must be read together to give effect to all.
Ruling
The petition is meritorious. The Supreme Court reversed and set aside the decision of the Court of Appeals and reinstated the decision of the Voluntary Arbitrator. Petitioner is not obliged to grant the wage increase under Wage Order No. NCR-08.
Ratio Decidendi
On the issue of whether the increases provided for under Wage Order No. 8 can be demanded as a matter of right under the 1999 CBA: The Court ruled that Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein. Since none of the members of the respondent Union were receiving less than P250.00 per day, the minimum wage requirement under Wage Order No. NCR-08, Petitioner was not obliged to grant the wage increase to them. The CBA provision stating that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted to above" cannot be interpreted to support an across-the-board increase for all employees, especially when the Wage Order itself limits its application. The Court cited Capitol Wireless, Inc. v. Bate to emphasize that CBA provisions must be read in harmony with wage orders, and benefits should only be given to those covered by the wage orders. On the issue of whether the increases provided for under Wage Order No. 8 can be demanded by the respondent union as a matter of practice: The Court found no evidence to prove that the grant of a wage-order-mandated increase to all employees, regardless of their salary rates, had ripened into a company practice before the effectivity of Wage Order No. NCR-08. The Union failed to adduce proof that wage-order-mandated increases were given despite employees receiving salaries above the minimum wage and without wage distortion. The Court noted that the implementation of Wage Order No. NCR-06 was necessitated by the fact that some employees were receiving salaries below the minimum wage, causing a wage distortion, not by company practice. The only instance Petitioner admittedly implemented a wage order despite employees not receiving below the minimum wage was under Wage Order No. NCR-07, but this was due to a CBA stipulation. The Court reiterated that for a practice to ripen into a demandable right, it must not be by reason of a strict legal or contractual obligation, but by an act of liberality. An isolated act, such as the implementation of Wage Order No. NCR-07, could hardly be classified as a company practice or usage. On the procedural issue of raising new issues on appeal: The Court agreed with Petitioner that the issue of CBA ambiguity was not expressly raised before the voluntary arbitration proceedings, as the parties specifically confined the issue to whether Petitioner was obliged to grant an increase as a matter of practice. However, the Court noted that Petitioner, in its Comment on the petition, elaborated on these issues, thereby agreeing for the CA to take cognizance of them. Furthermore, the Court found that the issue of CBA ambiguity was, in fact, raised in the Union's pleadings before the voluntary arbitration, indicating reliance on the CBA to support its claim. Therefore, the Court proceeded to rule on the substantive issues. No specific ratio provided in the source document for the fourth issue.
Main Doctrine
An employer is not obliged to grant a wage increase mandated by a Wage Order if none of its employees are receiving salaries below the prescribed minimum wage, and the Wage Order itself limits its application to those receiving below the minimum. Furthermore, a company practice that grants wage increases must be proven with specificity and frequency, and cannot arise from a strict legal or contractual obligation.