CASE TITLE: Arco Metal Products Co., Inc v.

Samahan ng mga Manggagawa sa

Arco Metal-NAFLU

FACTS OF THE CASE: Petitioner Arco Metal granted benefits such as 13th month
pay, bonus, and leave encashment to three union members in amounts
proportional to the service they rendered in less than a full twelve months, but
failed on several occasions to do the same for seven other union members in the
same situation. This prompted respondent to file a complaint before the National
Conciliation and Mediation Board, arguing that such failure violates the rule
against diminution of benefits under Article 100 of the Labor Code. Upon
submitting the case for voluntary arbitration, the arbitrator ruled in favor of the
petitioner, holding that the CBA stipulated that employees shall be entitled to full
benefits upon rendering a year of service and that in addition, the giving of the
contested benefits in full regardless of actual service rendered has not ripened
into a practice. When the issue was raised to the CA, it modified the decision after
finding that the practice of paying benefits in full to employees had already
existed.

ISSUE: Whether or not the full payment of benefits constituted voluntary

employer practice

RULING: Yes, the full payment of benefits already constituted voluntary employer
practice as shown by how Petitioner, in several instances, granted full benefits to
employees who have not served a full twelve months. The Court ruled such policy
had ripened into a company practice. Jurisprudence has not established a
minimum number of years before a company practice becomes a voluntary
employer practice hence, even as short as two years can be considered. In
addition, the principle of non-diminution of benefits prevents an employer from
reducing, or eliminating any benefit and supplement being enjoyed by employees.
Given that granting full benefits regardless of length of service rendered had
ripened into policy, the prorated payment of the benefits constitute diminution.

DOCTRINE: Granting full benefits that has ripened into company policy may not
be reduced, diminished, or eliminated as it is violative of the principle of non-
diminution.