Supreme Steel v. NMS-IND-APL (G.R. No. 185556; March 28, 2011)


FACTS: On July 27, 2005, respondent filed a notice of strike with the National Conciliation and Mediation Board (NCMB) on the ground that petitioner violated certain provisions of the CBA. The parties failed to settle their dispute. Consequently, the Secretary of Labor certified the case to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code.

Respondent alleged eleven CBA violations, enumerated as follows: (1) denial to four employees of the CBA- provided wage increase, (2) contracting-out labor, (3) failure to provide shuttle service, (4) refusal to answer for medical expenses incurred by three employees, (5) failure to comply with time-off provision, (6) visitors free access to company premises, (7) failure to comply with reporting time-off provision, (8) dismissal of an employee supposedly due to disease, (9) denial of paternity leave benefit to two employees, (10) discrimination and harassment, and (11) non-implementation of COLA in Wage Order Nos. RBIII-10 and 11.

Out of the eleven issues raised by respondent, eight were decided in its favor; two (denial of paternity leave benefit and discrimination of union members) were decided in favor of petitioner; while the issue on visitors free access to company premises was deemed settled during the mandatory conference. Petitioners appeal to the CA was dismissed.

According to the CA, petitioner failed to show that the NLRC committed grave abuse of discretion in finding that it violated certain provisions of the CBA.With regard to wage increase, The CA concluded that, based on the wording of the CBA, which uses the words "general increase" and "over and above," it cannot be said that the parties have intended the anniversary increase to be given in lieu of the CBA wage increase. The CA declared that the withdrawal of the COLA under Wage Order No. RBIII-10 from the employees who were not minimum wage earners amounted to a diminution of benefits because such grant has already ripened into a company practice. Based on the principle of liberal construction of the CBA, the CA likewise sustained the NLRCs rulings on theissues pertaining to medical expenses, the shuttle service, time-off for attendance in grievance meetings/hearings, and time-off due to brownouts. Finally, the CA affirmed the NLRCs finding that Madayags dismissal was illegal. It emphasized that the burden to prove that the employees disease is of such nature or at such stage that it cannot be cured within a period of six months rests on the employer, who failed to prove such.

ISSUE: Did the CA err in affirming the NLRC?HELD: It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and compliance therewith is mandated by the express policy of the law. If the terms of aCBA are clear and there is no doubt as to the intention of the contracting parties, the literal meaning of its stipulation shall prevail. Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it. Any doubt in the interpretation of any law or provision affecting labor should be resolved in favor of labor. Upon these well-established precepts, the CAs findings and conclusions on all the issues are sustained, except the issue pertaining to the denial of the COLA under Wage Order No. RBIII-10 and 11 to the employees who are not minimum wage earners, which respondent avers as a diminution of benefits.

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees. There is diminution of benefits when it is shown that:

[1] the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;
[2] the practice is consistent and deliberate;
[3] the practice is not due to error in the construction or application of a doubtful or difficult question of law; and
[4] the diminution or discontinuance is done unilaterally by the employer.

The implementation of the COLA under Wage Order No. RBIII-10 across the board, which only lasted for less than a year, cannot be considered as having been practiced "over a long period of time." While it is true that jurisprudence has not laid down any rule requiring a specific minimum number of years in order for a practice to be considered as a voluntary act of the employer, under existing jurisprudence on this matter, an act carried out within less than a year would certainly not qualify as such. Hence, the withdrawal of the COLA Wage Order No. RBIII-10 from the salaries of non-minimum wage earners did not amount to a "diminution of benefits" under the law. PARTIALLY GRANTED.