Pag-Asa Steel Works, Inc. vs. CA, GR No.

166647, 31 March 2006

FACTS:
RTWPB issued a Wage Order providing for an increase of 13 pesos in the salaries of
employees receiving the minimum wage and a consequent increase in the rate to 198.
Subsequent to this, petitioner-company and the Union entered into a Collective
Bargaining Agreement which granted an increase of 15 pesos for the first year, 25 for the
second year and 30 for the third year.
Months later, a wage order was issued by the NCR providing for a 25 pesos increase in
the salary of employees receiving the minimum wage and increased the minimum wage
to 223.50.
Petitioner paid the 25 pesos increase to all its employees.
A year after, the employees were granted the second year increase provided in the CBA.
On that same year, a wage order was issued which provided for the setting of the new
minimum wage at 250.00 or an increase of 26 pesos.
The Union then requested the company to implement the latest wage order.
Petitioner company rejected, claiming that since none of the employees were receiving a
daily salary rate lower than 250 and there was no wage distortion, it was not obliged to
grant the wage increase.
ISSUE:
Whether the company was obliged to grant the wage increase under the Wage Order
issued as a matter of practice
RULING:
NO. To ripen into a company practice that is demandable as a matter of right, the giving
of the increase should not be by reason of a strict legal or contractual obligation, but by
reason of an act of liberality on the part of the employer. Hence, even if the company
continuously grants a wage increase as mandated by a wage order or pursuant to a CBA,
the same would not automatically ripen into a company practice. In this case, petitioner
granted the increase under Wage on its belief that it was obliged to do so under the CBA.