Escolar Documentos
Profissional Documentos
Cultura Documentos
Department Order No. 9. [21 June 1997], and Department Order No. 40, [17
February 2003]
SYLLABUS
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — It is thus erroneous for petitioner to
isolate Section 1, Article VIII of the 1989 CBA from the other related section on
sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify
the discontinuance or withdrawal of the privilege of commutation or conversion to
cash of the unenjoyed portion of the sick leave benefit to regular intermittent
workers. The manner they were deprived of the privilege previously recognized
and extended to them by petitioner-company during the lifetime of the CBA of
October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a
period of three (3) years and nine (9) months, is not only tainted with
arbitrariness but likewise discriminatory in nature. It must be noted that the 1989
CBA has two (2) sections on sick leave with pay benefits which apply to two (2)
distinct classes of workers in petitioner's company, namely: (1) the regular non-
intermittent workers or those workers who render a daily eight-hour service to the
company and are governed by Section 1, Article VIII of the 1989 CBA; and (2)
intermittent field workers who are members of the regular labor pool and the
present regular extra labor pool as of the signing of the agreement on April 15,
1989 or those workers who have irregular working days and are governed by
Section 3, Article VIII of the 1989 CBA. It is not disputed that both classes of
workers are entitled to sick leave with pay benefits provided they comply with the
conditions set forth under Section 1 in relation to the last paragraph of Section 3,
to wit: (1) the employee-applicant must be regular or must have rendered at least
one year of service with the company; and (2) the application must be
accompanied by a certification from a company-designated physician. the phrase
"herein sick leave privilege," as used in the last sentence of Section 1, refers to
the privilege of having a fixed 15-day sick leave with pay which, as mandated by
Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick
leave with pay benefit should be distinguished from the variable number of days
of sick leave, not to exceed 15 days, extended to intermittent workers under
Section 3 depending on the number of hours of service rendered to the company,
including overtime pursuant to the schedule provided therein. It is only fair and
reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with
pay for its regular intermittent workers since, as the term "intermittent" implies,
there is irregularity in their work-days. Reasonable and practical interpretation
must be placed on contractual provisions. Interpetatio fienda est ut res magis
valeat quam pereat. Such interpretation is to be adopted, that the thing may
continue to have efficacy rather than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. — Sick
leave benefits, like other economic benefits stipulated in the CBA such as
maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be
earned because an employee is not working during the period of said leaves.
They are non-contributory in nature, in the sense that the employees contribute
nothing to the operation of the benefits. By their nature, upon agreement of the
parties, they are intended to alleviate the economic condition of the workers.
DECISION
ROMERO, J p:
"ARTICLE VIII
Section 1. Sick Leaves — The Company agrees to grant 15 days sick leave with
pay each year to every regular non-intermittent worker who already rendered at
least one year of service with the company. However, such sick leave can only
be enjoyed upon certification by a company designated physician, and if the
same is not enjoyed within one year period of the current year, any unenjoyed
portion thereof, shall be converted to cash and shall be paid at the end of the
said one year period. And provided however, that only those regular workers of
the company whose work are not intermittent, are entitled to the herein sick leave
privilege.
Section 3. — All intermittent field workers of the company who are members of
the Regular Labor Pool shall be entitled to vacation and sick leaves per year of
service with pay under the following schedule based on the number of hours
rendered including overtime, to wit:
The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits
were reproduced under Sections 1 and 3, Article VIII of the new CBA, but the
coverage of the said benefits was expanded to include the "present Regular
Extra Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as
revised, provides, thus:
"Section 3. — All intermittent field workers of the company who are members of
the Regular Labor Pool and present Regular Extra Labor Pool as of the signing
of this agreement shall be entitled to vacation and sick leaves per year of service
with pay under the following schedule based on the number of hours rendered
including overtime, to wit:
The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985 until three (3) months after
its renewal on April 15, 1989, or until July 1989 (a total of three (3) years and
nine (9) months), all the field workers of petitioner who are members of the
regular labor pool and the present regular extra labor pool who had rendered at
least 750 hours up to 1,500 hours were extended sick leave with pay benefits.
Any unenjoyed portion thereof at the end of the current year was converted to
cash and paid at the end of the said one-year period pursuant to Sections 1 and
3, Article VIII of the CBA. The number of days of their sick leave per year
depends on the number of hours of service per calendar year in accordance with
the schedule provided in Section 3, Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of
the intermittent workers or its conversion to cash was, however, discontinued or
withdrawn when petitioner-company under a new assistant manager, Mr.
Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's
resignation in June 1989), stopped the payment of its cash equivalent on the
ground that they are not entitled to the said benefits under Sections 1 and 3 of
the 1989 CBA.
Upon failure of the parties to amicably settle the issue on the interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA, the Union brought the matter for
voluntary arbitration before the National Conciliation and Mediation Board,
Regional Arbitration Branch XI at Davao City by way of complaint for
enforcement of the CBA. The parties mutually designated public respondent
Ruben Abarquez, Jr. to act as voluntary arbitrator.
After the parties had filed their respective position papers, 2 public respondent
Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the
Union ruling that the regular intermittent workers are entitled to commutation of
their unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989
CBA, the dispositive portion of which reads:
SO ORDERED."
Petitioner-company argued that it is clear from the language and intent of the last
sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers
whose work are not intermittent are entitled to the benefit of conversion to cash
of the unenjoyed portion of sick leave, thus: ". . . And provided, however, that only
those regular workers of the Company whose work are not intermittent are
entitled to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid
the cash equivalent of their unenjoyed sick leave with pay benefits during the
previous management of Mr. Beltran who misinterpreted Sections 1 and 3 of
Article VIII of the 1985 CBA, it was well within petitioner-company's rights to
rectify the error it had committed and stop the payment of the said sick leave with
pay benefits. An error in payment, according to petitioner-company, can never
ripen into a practice.
While the terms and conditions of a CBA constitute the law between the
parties, 3 it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. 4 A CBA, as a labor contract
within the contemplation of Article 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, is not merely contractual in
nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction
upon it, giving due consideration to the context in which it is negotiated
and purpose which it is intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989
CBA from the other related section on sick leave with pay benefits,
specifically Section 3 thereof, in its attempt to justify the discontinuance or
withdrawal of the privilege of commutation or conversion to cash of the
unenjoyed portion of the sick leave benefit to regular intermittent workers.
The manner they were deprived of the privilege previously recognized and
extended to them by petitioner-company during the lifetime of the CBA of
October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a
period of three (3) years and nine (9) months, is not only tainted with
arbitrariness but likewise discriminatory in nature. Petitioner-company is of the
mistaken notion that since the privilege of commutation or conversion to
cash of the unenjoyed portion of the sick leave with pay benefits is found
in Section 1, Article VIII, only the regular non-intermittent workers and no
other can avail of the said privilege because of the proviso found in the last
sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay
benefits which apply to two (2) distinct classes of workers in petitioner's
company, namely: (1) the regular non-intermittent workers or those workers who
render a daily eight-hour service to the company and are governed by Section 1,
Article VIII of the 1989 CBA; and (2) intermittent field workers who are members
of the regular labor pool and the present regular extra labor pool as of the signing
of the agreement on April 15, 1989 or those workers who have irregular working
days and are governed by Section 3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay
benefits provided they comply with the conditions set forth under Section 1 in
relation to the last paragraph of Section 3, to wit: (1) the employee-applicant
must be regular or must have rendered at least one year of service with the
company; and (2) the application must be accompanied by a certification from a
company-designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as
maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be
earned because an employee is not working during the period of said leaves. 6
They are non-contributory in nature, in the sense that the employees contribute
nothing to the operation of the benefits. 7 By their nature, upon agreement of the
parties, they are intended to alleviate the economic condition of the workers.
Public respondent correctly observed that the parties to the CBA clearly
intended the same sick leave privilege to be accorded the intermittent
workers in the same way that they are both given the same treatment with
respect to vacation leaves - non-commutable and non-cumulative. If they
are treated equally with respect to vacation leave privilege, with more
reason should they be on par with each other with respect to sick leave
privileges. 9 Besides, if the intention were otherwise, during its
renegotiation, why did not the parties expressly stipulate in the 1989 CBA
that regular intermittent workers are not entitled to commutation of the
unenjoyed portion of their sick leave with pay benefits?
Whatever doubt there may have been early on was clearly obliterated when
petitioner-company recognized the said privilege and paid its intermittent
workers the cash equivalent of the unenjoyed portion of their sick leave
with pay benefits during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989. Well-settled is it that
the said privilege of commutation or conversion to cash, being an existing
benefit, the petitioner-company may not unilaterally withdraw, or diminish
such benefits. 10 It is a fact that petitioner-company had, on several
instances in the past, granted and paid the cash equivalent of the
unenjoyed portion of the sick leave benefits of some intermittent workers.
11 Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn. 12
SO ORDERED.
Herein private respondent PT&T Union-ALU initiated this case via a complaint,
filed on 25 November 1986, charging petitioner Philippine Telegraph and
Telephone Corporation ("PT&T") with unfair labor practice acts and
underpayment of statutory and contractual benefits claimed to be due pursuant to
Wage Orders No. 3, 4, 5 and 6, and also under Sections 2 and 3, Article IX, of
the 1984 Collective Bargaining Agreement ("CBA") and Section 2, Article XII, of
the 1986 CBA. Petitioner denied the charges.
On 27 April 1989, the Labor Arbiter, following the respective submissions made
by the parties, rendered judgment thusly:
In a resolution, dated 31 October 1989, the NLRC dismissed the appeal for lack
of merit. Petitioner moved for reconsideration stressing that only the higher
remuneration from either the statutorily mandated increase or the CBA should be
given and paid to the employees. This motion, as well as the supplement thereto,
was denied by public respondent.
Hence, this petition for certiorari.
We need not belabor the first of the two grounds raised by petitioner corporation.
We see no merit at all in the contention that the NLRC has committed grave
abuse of discretion, amounting to lack of jurisdiction, in finding petitioner to have
failed in its compliance with the increases mandated by Wage Orders No. 3, 4, 5
and 6, as well as the 1984 and 1986 CBAs. That this factual finding is not without
basis should be fairly evident from the statement of the Labor Arbiter, adopted by
the respondent Commission, thusly:
Petitioner's position, however, on the second issue is well taken. The Solicitor
General likewise agrees that petitioner cannot, given the circumstances here
obtaining, be obligated to pay both the CBA and statutory, wage increases. The
common provisions of Wage Orders No. 3, 5, and 6, state that:
Petitioner company and private respondent union, in the 1984 and 1986 CBAs, in
turn, have stipulated that:
The foregoing CBA provisions reveal quite sufficiently the parties' intention
to consider salary increases provided in the CBA to be creditable to wage
increases that are or may be mandated within the applicable period by law.
There is nothing sinister in this stipulation. In Filipinas Golf and Country
Club, Inc., vs. National Labor Relations Commission , 176 SCRA 625, we
have said that such agreements merely create an equivalence between
legal and contractual imperatives, rendering both obligations susceptible
performance by compliance with either, subject only to the condition that
where the increases given under agreement fall short in amount of those
fixed by law, the difference must be made up by the employer.
SO ORDERED.
a) Black Saturday
b) November 1
c) December 31
During the first year of the effectivity of the CBAs in 2000, December
31 which fell on a Sunday was declared by the national government as a
special holiday. Respondents thus claimed payment of their members
salaries, invoking the above-stated CBA provision. Petitioner refused the
claims for payment, averring that December 31, 2000 was not compensable
as it was a rest day. The controversy resulted in a deadlock, drawing the
parties to submit the same for voluntary arbitration.
Following the submission by the parties of their respective position papers,
Voluntary Arbitrator (VA) Bernardino M. Volante, by Decision [1] of October 11,
2001, declared that the above-quoted provision of the CBA is clear. It accordingly
ruled in favor of respondents and ordered petitioner to pay the salaries of
respondents members for December 31, 2000, and to pay attorneys fees to
respondents equivalent to 10% of the monetary award.
Its motion for reconsideration of the VA ruling having been denied,
[2]
petitioner appealed to the Court of Appeals which affirmed the same by
Decision[3] dated October 30, 2003.
The appellate court held that if it was indeed petitioners intent to pay the
salaries of daily-paid employees during a special holiday, even if unworked, only
if such special holiday fell on weekdays, then it should have been clearly and
expressly stipulated in the CBAs. And it held inapplicable Kimberly Clark
Philippines v. Lorredo[4] cited by petitioner which case held that whenever there is
a conflict between the words in the CBA and the evident intention of the parties,
the latter prevails. For, so the appellate court explained, there were no words or
provisions in the CBAs which would result in an absurd interpretation vis a vis the
parties true intention.
In sustaining the award of attorneys fees, the appellate court ruled that
respondents were entitled thereto as they were compelled to engage a lawyer to
pursue their claims.
Petitioners motion for reconsideration having been denied, the present
petition was filed.
Petitioner insists that the CBA provision in question was intended
to protect the employees from reduction of their take-home pay, hence, it was not
meant to remunerate them on Sundays, which are rest days, nor to increase their
salaries.
On the award of attorneys fees, petitioner argues that it is not warranted
as it did not arbitrarily refuse to pay respondents demands.
The petition is bereft of merit.
If the terms of a CBA are clear and have no doubt upon the intention
of the contracting parties, as in the herein questioned provision, the literal
meaning thereof shall prevail. That is settled.[5] As such, the daily-paid
employees must be paid their regular salaries on the holidays which are so
declared by the national government, regardless of whether they fall on
rest days.
The CBA is the law between the parties, hence, they are obliged to
comply with its provisions. Indeed, if petitioner and respondents intended
the provision in question to cover payment only during holidays falling on
work or weekdays, it should have been so incorporated therein.
Petitioner maintains, however, that the parties failed to foresee a
situation where the special holiday would fall on a rest day. The Court is
not persuaded. The Labor Code specifically enjoins that in case of doubt in
the interpretation of any law or provision affecting labor, it should be
interpreted in favor of labor.
Respondents having been compelled to litigate as a result of petitioners
failure to satisfy their valid claim, the Court deems it just and equitable to sustain
the award of attorneys fees.
WHEREFORE, the petition is DENIED.
SO ORDERED.
SYNOPSIS
San Miguel Corporation (SMC), which allegedly needed to streamline its operations due to
financial losses shut down some of its plants and declared 55 positions as redundant.
Consequently, the private respondent union (SMCEU) filed several grievance cases for the said
retrenched employees, praying for the redeployment of the said employees to the other divisions
of the company. During the grievance proceedings, however, most of the employees were
redeployed, while others accepted early retirement. As a result, only 17 employees remained
when the parties proceeded to the third level of the grievance procedure. The private respondent
filed with the National Conciliation and Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE) a notice of strike. Petitioner, on the other hand, moved to dismiss the notice
of strike, but the NCMB failed to act on the motion. Petitioner SMC filed a complaint with the
respondent NLRC praying for the dismissal of the notice of strike, and an order compelling the
respondent union to submit to grievance and arbitration the issue listed in the notice of strike, and
the recovery of the expenses of litigation. Respondent NLRC came out with a minute resolution
dismissing the complaint. Aggrieved by the resolution, petitioner found its way to this Court via
the present petition.
In the case under consideration, the grounds relied upon by the private respondent union are
non-strikeable. Their grounds appear more illusory than real. The Court held that the violation of
the CBA is chargeable against the private respondent union. The Supreme Court granted the
instant petition. SMCEU-PTGWO was directed to complete the third level of the Grievance
Procedure and proceed with the Arbitration proceedings if necessary.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; COLLECTIVE BARGAINING
AGREEMENT; COLLECTIVE BARGAINING DEADLOCK; DEFINED; NOT PRESENT IN
CASE AT BAR. Collective Bargaining Deadlock is defined as the situation between the labor
and the management of the company where there is failure in the collective bargaining
negotiations resulting in a stalemate. This situation, is non-existent in the present case since
there is a Board assigned on the third level (Step 3) of the grievance machinery to resolve
the conflicting views of the parties. Instead of asking the Conciliation Board composed of
five representatives each from the company and the union, to decide the conflict, petitioner
declared a deadlock, and thereafter, filed a notice of strike. For failing to exhaust all the
steps in the grievance machinery and arbitration proceedings provided in the Collective
Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and
private respondent union ordered to proceed with the grievance and arbitration proceedings.
In the case of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike
staged by the union for not complying with the grievance procedure provided in the collective
bargaining agreement, ruling that: xxx the main purpose of the parties in adopting a
procedure in the settlement of their disputes is to prevent a strike. This procedure must be
followed in its entirely if it is to achieve its objective. xxx strikes held in violation of the terms
contained in the collective bargaining agreement are illegal, specially when they provide for
conclusive arbitration clauses. These agreements must be strictly adhered to and respected
if their ends have to be achieved. xxx
2. ID.; ID.; ID.; ABOLITION OF DEPARTMENT OR POSITION IS ONE OF THE RECOGNIZED
MANAGEMENT PREROGATIVE; IN THE ABSENCE OF PROOF THE ACT IS ILL
MOTIVATED, IT IS PRESUMED THAT HE ACTED IN GOOD FAITH. In abandoning the
grievance proceedings and stubbornly refusing to avail of the remedies under the CBA,
private respondent violated the mandatory provisions of the collective bargaining
agreement. Abolition of departments or positions in the company is one of the recognized
management prerogatives. Noteworthy is the fact that the private respondent does not
question the validity of the business move of petitioner. In the absence of proof that the act
of petitioner was ill-motivated, it is presumed that petitioner San Miguel Corporation acted in
good faith. In fact, petitioner acceded to the demands of the private respondent union by
redeploying most of the employees involved: such that from an original 17 excess
employees in BLD, 15 were successfully redeployed. In AOC, out of the 17 original excess,
15 were redeployed. In the Magnolia Manila Buying Station, out of 18 employees, 6 were
deployed and only 12 were terminated.
DECISION
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court,
assailing the Resolution[1] of the National Labor Relations Commission in NLRC
NCR CASE NO. 00094-90, which dismissed the complaint of San Miguel
Corporation (SMC), seeking to dismiss the notice of strike given by the private
respondent union and to compel the latter to comply with the provisions of the
Collective Bargaining Agreement (CBA)[2] on grievance machinery, arbitration,
and the no-strike clause, with prayer for the issuance of a temporary restraining
order.
The antecedent facts are as follows:
In July 1990, San Miguel Corporation, alleging the need to streamline its
operations due to financial losses, shut down some of its plants and declared 55
positions as redundant, listed as follows: seventeen (17) employees in the
Business Logistics Division (BLD), seventeen (17) in the Ayala Operations
Center (AOC), and eighteen (18) in the Magnolia-Manila Buying
[3]
Station (Magnolia-MBS). Consequently, the private respondent union filed
several grievance cases for the said retrenched employees, praying for
the redeployment of the said employees to the other divisions of the company.
The grievance proceedings were conducted pursuant to Sections 5 and 8,
Article VIII of the parties 1990 Collective Bargaining Agreement providing for the
following procedures, to wit:
Sec.5. Processing of Grievance. - Should a grievance arise, an
earnest effort shall be made to settle the grievance expeditiously in
accordance with the following procedures:
Step 1. - The individual employee concerned and the Union
Directors, or the Union Steward shall, first take up the employees
grievance orally with his immediate superior. If no satisfactory
agreement or adjustment of the grievance is reached, the
grievance shall, within twenty (20) working days from the
occurrence of the cause or event which gave rise to the grievance,
be filed in writing with the Department Manager or the next level
superior who shall render his decision within ten (10) working days
from the receipt of the written grievance. A copy of the decision
shall be furnished the Plant Personnel Officer.
Step 2. - If the decision in Step 1 is rejected, the employee
concerned may elevate or appeal this in writing to the Plant
Manager/Director or his duly authorized representative within
twenty (20) working days from the receipt of the Decision of the
Department Manager. Otherwise, the decision in Step 1 shall be
deemed accepted by the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer
shall determine the necessity of conducting grievance meetings. If
necessary, the Plant Manager/Director and the Plant Personnel
Officer shall meet the employee concerned and the Union
Director/Steward on such date(s) as may be designated by the
Plant Manager. In every plant/office, Grievance Meetings shall be
scheduled at least twice a month.
The Plant Manager shall give his written comments and decision
within ten (10) working days after his receipt of such grievance or
the date of submission of the grievance for resolution, as the case
may be. A copy of his Decision shall be furnished the Employee
Relations Directorate.
Step 3. - If no satisfactory adjustment is arrived at Step 2, the
employee may appeal the Decision to the Conciliation Board as
provided under Section 6 hereof, within fifteen (15) working days
from the date of receipt of the decision of the Plant
Manager/Director or his designate. Otherwise, the decision in Step
2 shall be deemed accepted by the employee.
The Conciliation Board shall meet on the grievance in such dates
as shall be designated by the Division/Business Unit Manager or
his representative. In every Division/Business Unit, Grievance
Meetings of the Conciliation Board shall be scheduled at least once
a month.
The Conciliation Board shall have fifteen (15) working days from
the date of submission of the grievance for resolution within which
to decide on the grievance.
SEC. 6. Conciliation Board. - There shall be a conciliation Board
per Business Unit or Division. Every Conciliation Board shall be
composed of not more than five (5) representatives each from the
Company and the Union. Management and the Union may be
assisted by their respective legal counsels.
In every Division/Business Unit, the names of the Company and
Union representatives to the Conciliation Board shall be submitted
to the Division/Business Unit Manager not later than January of
every year.The Conciliation Board members shall act as such for
one (1) year until removed by the Company or the Union, as the
case may be.
xxx
Sec. 8. Submission to Arbitration. - If the employee or Union is
not satisfied with the Decision of the Conciliation Board and desires
to submit the grievance to arbitration, the employee or the Union
shall serve notice of such intention to the Company within fifteen
(15) working days after receipt of the Boards decision. If no such
written notice is received by the Company within fifteen (15)
working days, the grievance shall be considered settled on the
basis of the companys position and shall no longer be available for
arbitration.[4]
During the grievance proceedings, however, most of the employees were
redeployed, while others accepted early retirement. As a result only 17
employees remained when the parties proceeded to the third level (Step 3) of the
grievance procedure. In a meeting on October 26, 1990, petitioner informed
private respondent union that if by October 30, 1990, the remaining 17
employees could not yet be redeployed, their services would be terminated on
November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II,
a representative of the union, declared that there was nothing more to discuss in
view of the deadlock.[5]
On November 7, 1990, the private respondent filed with the National
Conciliation and Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE) a notice of strike on the following grounds: a) bargaining
deadlock; b) union busting; c) gross violation of the Collective Bargaining
Agreement (CBA), such as non-compliance with the grievance
procedure; d) failure to provide private respondent with a list of vacant positions
pursuant to the parties side agreement that was appended to the 1990 CBA;
and e) defiance of voluntary arbitration award. Petitioner on the other hand,
moved to dismiss the notice of strike but the NCMB failed to act on the motion.
On December 21, 1990, petitioner SMC filed a complaint [6] with the
respondent NLRC, praying for: (1) the dismissal the notice of strike; (2) an order
compelling the respondent union to submit to grievance and arbitration the issue
listed in the notice of strike; (3) the recovery of the expenses of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution
dismissing the complaint; holding, thus:
NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation,
Complainant -versus- San Miguel Corporation Employees Union-
PTWO (SMCEU), Respondent. - Considering the allegations in the
complaint to restrain Respondent Union from declaring a strike and
to enforce mutual compliance with the provisions of the collective
bargaining agreement on grievance machinery, and the no-strike
clause, with prayer for issuance of temporary restraining order, and
the evidence adduced therein, the Answer filed by the respondent
and the memorandum filed by the complainant in support of its
application for the issuance of an injunction, the Second Division,
after due deliberation, Resolved to dismiss the complaint for lack of
merit.[7]
Aggrieved by the said resolution, petitioner found its way to this court via the
present petition, contending that:
I
IT IS THE POSITIVE LEGAL DUTY OF RESPONDENT NLRC TO COMPEL
ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO
STRIKE CLAUSE.
II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR
THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS
DESIGNED TO AVOID.[8]
On June 3, 1991, to preserve the status quo, the Court issued a
Resolution[9] granting petitioners prayer for the issuance of a Temporary
Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the
Labor Code[10], reads:
Section 1. Grounds for strike and lockout. -- A strike or lockout may
be declared in cases of bargaining deadlocks and unfair labor
practices. Violations of the collective bargaining agreements,
except flagrant and/or malicious refusal to comply with its economic
provisions, shall not be considered unfair labor practice and shall
not be strikeable. No strike or lockout may be declared on grounds
involving inter-union and intra-union disputes or on issues brought
to voluntary or compulsory arbitration.
In the case under consideration, the grounds relied upon by the private
respondent union are non-strikeable. The issues which may lend
substance to the notice of strike filed by the private respondent union are:
collective bargaining deadlock and petitioners alleged violation of the
collective bargaining agreement. These grounds, however, appear more
illusory than real.
Collective Bargaining Deadlock is defined as the situation between the labor
and the management of the company where there is failure in the collective
bargaining negotiations resulting in a stalemate [11]This situation, is non-existent
in the present case since there is a Board assigned on the third level (Step
3) of the grievance machinery to resolve the conflicting views of the
parties. Instead of asking the Conciliation Board composed of five
representatives each from the company and the union, to decide the
conflict, petitioner declared a deadlock, and thereafter, filed a notice of
strike. For failing to exhaust all the steps in the grievance machinery and
arbitration proceedings provided in the Collective Bargaining Agreement,
the notice of strike should have been dismissed by the NLRC and private
respondent union ordered to proceed with the grievance and arbitration
proceedings. In the case of Liberal Labor Union vs. Phil. Can Co.,[12] the court
declared as illegal the strike staged by the union for not complying with the
grievance procedure provided in the collective bargaining agreement, ruling
that:
x x x the main purpose of the parties in adopting a procedure in the
settlement of their disputes is to prevent a strike. This procedure must
be followed in its entirety if it is to achieve its objective. x x x strikes
held in violation of the terms contained in the collective bargaining
agreement are illegal, specially when they provide for conclusive arbitration
clauses. These agreements must be strictly adhered to and respected if their
ends have to be achieved. x x x[13]
As regards the alleged violation of the CBA, we hold that such a
violation is chargeable against the private respondent union. In
abandoning the grievance proceedings and stubbornly refusing to avail of
the remedies under the CBA, private respondent violated the mandatory
provisions of the collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized
management prerogatives.[14] Noteworthy is the fact that the private respondent
does not question the validity of the business move of petitioner. In the absence
of proof that the act of petitioner was ill-motivated, it is presumed that petitioner
San Miguel Corporation acted in good faith. In fact, petitioner acceded to the
demands of the private respondent union by redeploying most of the employees
involved; such that from an original 17 excess employees in BLD, 15 were
successfully redeployed. In AOC, out of the 17 original excess, 15 were
redeployed. In the Magnolia - Manila Buying Station, out of 18 employees, 6
were redeployed and only 12 were terminated. [15]
So also, in filing complaint with the NLRC, petitioner prayed that the private
respondent union be compelled to proceed with the grievance and arbitration
proceedings. Petitioner having evinced its willingness to negotiate the fate of the
remaining employees affected, there is no ground to sustain the notice of strike
of the private respondent union.
All things studiedly considered, we are of the ineluctable conclusion, and so
hold, that the NLRC gravely abused its discretion in dismissing the complaint of
petitioner SMC for the dismissal of the notice of strike, issuance of a temporary
restraining order, and an order compelling the respondent union to settle the
dispute under the grievance machinery of their CBA.
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San
Miguel Corporation and private respondent San Miguel Corporation Employees
Union - PTGWO are hereby directed to complete the third level (Step 3) of the
Grievance Procedure and proceed with the Arbitration proceedings if
necessary. No pronouncement as to costs.
SO ORDERED.
DECISION
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court to
annul the decision of the National Labor Relations Commission in an unfair labor
practice case instituted by a local union against its employer company and the
officers of its national federation.
The petitioner, Malayang Samahan ng mga Manggagawa sa M. Greenfield, Inc.,
(B) (MSMG), hereinafter referred to as the "local union", is an affiliate of the
private respondent, United Lumber and General Workers of the Philippines
(ULGWP), referred to as the "federation". The collective bargaining agreement
between MSMG and M. Greenfield, Inc. names the parties as follows:
-and-
xxxxxx
xxxxxx
Article IX
On September 12, 1986, a local union election was held under the auspices of
the ULGWP wherein the herein petitioner, Beda Magdalena Villanueva, and the
other union officers were proclaimed as winners. Minutes of the said election
were duly filed with the Bureau of Labor Relations on September 29, 1986.
On March 21, 1987, a Petition for Impeachment was filed with the national
federation ULGWP by the defeated candidates in the aforementioned election.
On June 16, 1987, the federation conducted an audit of the local union funds.
The investigation did not yield any unfavorable result and the local union officers
were cleared of the charges of anomaly in the custody, handling and disposition
of the union funds.
On April 17, 1988, the local union held a general membership meeting at the
Caruncho Complex in Pasig. Several union members failed to attend the
meeting, prompting the Executive Board to create a committee tasked to
investigate the non-attendance of several union members in the said assembly,
pursuant to Sections 4 and 5, Article V of the Constitution and By-Laws of the
union, which read:
On June 27, 1988, the local union wrote respondent company a letter requesting
it to deduct the union fines from the wages/salaries of those union members who
failed to attend the general membership meeting. A portion of the said letter
stated:
On July 11, 1988, the Federation wrote respondent company a letter advising the
latter not to deduct the fifty-peso fine from the salaries of the union members
requesting that:
The following day, respondent company sent a reply to petitioner unions request
in a letter, stating that it cannot deduct fines from the employees salary without
going against certain laws. The company suggested that the union refer the
matter to the proper government office for resolution in order to avoid placing the
company in the middle of the issue.
The imposition of P50.00 fine became the subject of bitter disagreement between
the Federation and the local union culminating in the latters declaration of
general autonomy from the former through Resolution No. 10 passed by the local
executive board and ratified by the general membership on July 16, 1988.
The company was thus constrained to file a Complaint for Interpleader with a
Petition for Declaratory Relief with the Med-Arbitration Branch of the Department
of Labor and Employment, docketed as Case No. OD-M-8-435-88. This was
resolved on October 28, 1988, by Med-Arbiter Anastacio Bactin in an Order,
disposing thus:
On October 27, 1988, the said administrator wrote the respondent company
informing the latter of its designation of a certain Alfredo Kalingking as local union
president and "disauthorizing" the incumbent union officers from representing the
employees. This action by the national federation was protested by the
petitioners in a letter to respondent company dated November 11, 1988.
On November 13, 1988, the petitioner union officers received identical letters
from the administrator requiring them to explain within 72 hours why they should
not be removed from their office and expelled from union membership.
(c) Advising that their union did not commit any act of disloyalty as it
has remained an affiliate of ULGWP;
(d) Giving ULGWP a period of five (5) days to cease and desist
from further committing acts of coercion, intimidation and
harrassment.[8]
However, as early as November 21, 1988, the officers were expelled from the
ULGWP. The termination letter read:
"Effective today, November 21, 1988, you are hereby expelled from
UNITED LUMBER AND GENERAL WORKERS OF THE
PHILIPPINES (ULGWP) for committing acts of disloyalty and/or
acts inimical to the interest and violative to the Constitution and by-
laws of your federation.
You failed and/or refused to offer an explanation inspite of the time
granted to you.
On the same day, the federation advised respondent company of the expulsion of
the 30 union officers and demanded their separation from employment pursuant
to the Union Security Clause in their collective bargaining agreement. This
demand was reiterated twice, through letters dated February 21 and March 4,
1989, respectively, to respondent company.
Thereafter, the Federation filed a Notice of Strike with the National Conciliation
and Mediation Board to compel the company to effect the immediate termination
of the expelled union officers.
In view thereof, we are left with no alternative but to comply with the
provisions of the Union Security Clause of our CBA. Accordingly,
we hereby serve notice upon you that we are dismissing you from
your employment with M. Greenfield, Inc., pursuant to Sections 1
and 4, Article II of the CBA effective immediately." [10]
On that same day, the expelled union officers assigned in the first shift were
physically or bodily brought out of the company premises by the companys
security guards. Likewise, those assigned to the second shift were not allowed to
report for work. This provoked some of the members of the local union to
demonstrate their protest for the dismissal of the said union officers. Some union
members left their work posts and walked out of the company premises.
On the other hand, the Federation, having achieved its objective, withdrew the
Notice of Strike filed with the NCMB.
On March 8, 1989, the petitioners filed a Notice of Strike with the NCMB, DOLE,
Manila, docketed as Case No. NCMB-NCR-NS-03-216-89, alleging the following
grounds for the strike:
(a) Discrimination
The following day, March 9, 1989, a strike vote referendum was conducted and
out of 2, 103 union members who cast their votes, 2,086 members voted to
declare a strike.
On March 10, 1989, the thirty (30) dismissed union officers filed an urgent
petition, docketed as Case No. NCMB-NCR-NS-03-216-89, with the Offfice of the
Secretary of the Department of Labor and Employment praying for the
suspension of the effects of their termination from employment. However, the
petition was dismissed by then Secretary Franklin Drilon on April 11, 1989, the
pertinent portion of which stated as follows:
SO ORDERED."[11]
On March 13 and 14, 1989, a total of 78 union shop stewards were placed under
preventive suspension by respondent company. This prompted the union
members to again stage a walk-out and resulted in the official declaration of
strike at around 3:30 in the afternoon of March 14, 1989. The strike was attended
with violence, force and intimidation on both sides resulting to physical injuries to
several employees, both striking and non-striking, and damage to company
properties.
The employees who participated in the strike and allegedly figured in the violent
incident were placed under preventive suspension by respondent company. The
company also sent return-to-work notices to the home addresses of the striking
employees thrice successively, on March 27, April 8 and April 31, 1989,
respectively. However, respondent company admitted that only 261 employees
were eventually accepted back to work. Those who did not respond to the return-
to-work notice were sent termination letters dated May 17, 1989, reproduced
below:
xxx
By:
WENZEL STEPHEN LIGOT
On August 7, 1989, the petitioners filed a verified complaint with the Arbitration
Branch, National Capital Region, DOLE, Manila, docketed as Case No. NCR-00-
09-04199-89, charging private respondents of unfair labor practice which
consists of union busting, illegal dismissal, illegal suspension, interference in
union activities, discrimination, threats, intimidation, coercion, violence, and
oppresion.
After the filing of the complaint, the lease contracts on the respondent companys
office and factory at Merville Subdivision, Paraaque expired and were not
renewed. Upon demand of the owners of the premises, the company was
compelled to vacate its office and factory.
The complaint for unfair labor practice was assigned to Labor Arbiter Manuel
Asuncion but was thereafter reassigned to Labor Arbiter Cresencio Ramos when
respondents moved to inhibit him from acting on the case.
On December 15, 1992, finding the termination to be valid in compliance with the
union security clause of the collective bargaining agreement, Labor Arbiter
Cresencio Ramos dismissed the complaint.
The First Division affirmed the Labor Arbiters disposition. With the denial of their
motion for reconsideration on January 28, 1994, petitioners elevated the case to
this Court, attributing grave abuse of discretion to public respondent NLRC in:
Before delving into the main issue, the procedural flaw pointed out by the
petitioners should first be resolved.
Petitioners contend that the decision rendered by the First Division of the NLRC
is not valid because Commissioner Tanodra, who is from the Third Division, did
not have any lawful authority to sit, much less write the ponencia, on a case
pending before the First Division. It is claimed that a commissioner from one
division of the NLRC cannot be assigned or temporarily designated to another
division because each division is assigned a particular territorial jurisdiction.
Thus, the decision rendered did not have any legal effect at all for being
irregularly issued.
It must be remembered that during the pendency of the case in the First Division
of the NLRC, one of the three commissioners, Commissioner Romeo Putong,
retired, leaving Chairman Bartolome Carale and Commissioner Vicente Veloso
III. Subsequently, Commissioner Veloso inhibited himself from the case because
the counsel for the petitioners was his former classmate in law school. The First
Division was thus left with only one commissioner. Since the law requires the
concurrence of two commisioners to arrive at a judgment or resolution, the
Commission was constrained to temporarily designate a commissioner from
another division to complete the First Division. There is nothing irregular at all in
such a temporary designation for the law empowers the Chairman to make
temporary assignments whenever the required concurrence is not met. The law
does not say that a commissioner from the first division cannot be temporarily
assigned to the second or third division to fill the gap or vice versa. The territorial
divisions do not confer exclusive jurisdiction to each division and are merely
designed for administrative efficiency.
Going into the merits of the case, the court finds that the Complaint for unfair
labor practice filed by the petitioners against respondent company which charges
union busting, illegal dismissal, illegal suspension, interference in union activities,
discrimination, threats, intimidation, coercion, violence, and oppression actually
proceeds from one main issue which is the termination of several employees by
respondent company upon the demand of the labor federation pursuant to the
union security clause embodied in their collective bargaining agreement.
Petitioners contend that their dismissal from work was effected in an arbitrary,
hasty, capricious and illegal manner because it was undertaken by the
respondent company without any prior administrative investigation; that, had
respondent company conducted prior independent investigation it would have
found that their expulsion from the union was unlawful similarly for lack of prior
administrative investigation; that the federation cannot recommend the dismissal
of the union officers because it was not a principal party to the collective
bargaining agreement between the company and the union; that public
respondents acted with grave abuse of discretion when they declared petitioners
dismissals as valid and the union strike as illegal and in not declaring that
respondents were guilty of unfair labor practice.
Private respondents, on the other hand, maintain that the thirty dismissed
employees who were former officers of the federation have no cause of action
against the company, the termination of their employment having been made
upon the demand of the federation pursuant to the union security clause of the
CBA; the expelled officers of the local union were accorded due process of law
prior to their expulsion from their federation; that the strike conducted by the
petitioners was illegal for noncompliance with the requirements; that the
employees who participated in the illegal strike and in the commission of violence
thereof were validly terminated from work; that petitioners were deemed to have
abandoned their employment when they did not respond to the three return to
work notices sent to them; that petitioner labor union has no legal personality to
file and prosecute the case for and on behalf of the individual employees as the
right to do so is personal to the latter; and that, the officers of respondent
company cannot be liable because as mere corporate officers, they acted within
the scope of their authority.
Public respondent, through the Labor Arbiter, ruled that the dismissed union
officers were validly and legally terminated because the dismissal was effected in
compliance with the union security clause of the CBA which is the law between
the parties. And this was affimed by the Commission on appeal. Moreover, the
Labor Arbiter declared that notwithstanding the lack of a prior administrative
investigation by respondent company, under the union security clause provision
in the CBA, the company cannot look into the legality or illegality of the
recommendation to dismiss by the union nd the obligation to dismiss is
ministerial on the part of the company.[13]
This ruling of the NLRC is erroneous. Although this Court has ruled that
union security clauses embodied in the collective bargaining agreement
may be validly enforced and that dismissals pursuant thereto may likewise
be valid, this does not erode the fundamental requirement of due process.
The reason behind the enforcement of union security clauses which is the
sanctity and inviolability of contracts[14] cannot override ones right to due
process.
In the case of Cario vs. National Labor Relations Commission, [15] this Court
pronounced that while the company, under a maintenance of membership
provision of the collective bargaining agreement, is bound to dismiss any
employee expelled by the union for disloyalty upon its written request, this
undertaking should not be done hastily and summarily. The company acts
in bad faith in dismissing a worker without giving him the benefit of a
hearing.
In the case under scrutiny, petitioner union officers were expelled by the
federation for allegedly committing acts of disloyalty and/or inimical to the interest
of ULGWP and in violation of its Constitution and By-laws. Upon demand of the
federation, the company terminated the petitioners without conducting a separate
and independent investigation. Respondent company did not inquire into the
cause of the expulsion and whether or not the federation had sufficient grounds
to effect the same. Relying merely upon the federations allegations, respondent
company terminated petitioners from employment when a separate inquiry could
have revealed if the federation had acted arbitrarily and capriciously in expelling
the union officers. Respondent companys allegation that petitioners were
accorded due process is belied by the termination letters received by the
petitioners which state that the dismissal shall be immediately effective.
While respondent company may validly dismiss the employees expelled by the
union for disloyalty under the union security clause of the collective bargaining
agreement upon the recommendation by the union, this dismissal should not be
done hastily and summarily thereby eroding the employees right to due process,
self-organization and security of tenure. The enforcement of union security
clauses is authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due process. [16] Even on the
assumption that the federation had valid grounds to expell the union
officers, due process requires that these union officers be accorded a
separate hearing by respondent company.
Again, such a contention is untenable. While it is true that the issue of expulsion
of the local union officers is originally between the local union and the federation,
hence, intra-union in character, the issue was later on converted into a
termination dispute when the company dismissed the petitioners from work
without the benefit of a separate notice and hearing. As a matter of fact, the
records reveal that the the termination was effective on the same day that the the
termination notice was served on the petitioners.
In the case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. [17],
the Court held the company liable for the payment of backwages for having acted
in bad faith in effecting the dismissal of the employees.
"xxx Bad faith on the part of the respondent company may be
gleaned from the fact that the petitioner workers were dismissed
hastily and summarily. At best, it was guilty of a tortious act, for
which it must assume solidary liability, since it apparently chose to
summarily dismiss the workers at the unions instance secure in the
unions contractual undertaking that the union would hold it free
from any liability arising from such dismissal."
Thus, notwithstanding the fact that the dismissal was at the instance of the
federation and that it undertook to hold the company free from any liability
resulting from such a dismissal, the company may still be held liable if it was
remiss in its duty to accord the would-be dismissed employees their right to be
heard on the matter.
Anent petitioners contention that the federation was not a principal party to the
collective bargaining agreement between the company and the union, suffice it to
say that the matter was already ruled upon in the Interpleader case filed by
respondent company. Med-Arbiter Anastacio Bactin thus ruled:
Likewise on appeal, Director Pura Ferrer-Calleja put the issue to rest as follows:
It has been established also that the company and ULGWP signed
a 3-year collective bargaining agreement effective July 1, 1986 up
to June 30, 1989.[19]
Although the issue of whether or not the federation had reasonable grounds to
expel the petitioner union officers is properly within the original and exclusive
jurisdiction of the Bureau of Labor Relations, being an intra-union conflict, this
Court deems it justifiable that such issue be nonetheless ruled upon, as the
Labor Arbiter did, for to remand the same to the Bureau of Labor Relations would
be to intolerably delay the case.
The Labor Arbiter found that petitioner union officers were justifiably expelled
from the federation for committing acts of disloyalty when it "undertook to
disaffiliate from the federation by charging ULGWP with failure to provide any
legal, educational or organizational support to the local. x x x and declared
autonomy, wherein they prohibit the federation from interfering in any internal and
external affairs of the local union."[20]
It is well-settled that findings of facts of the NLRC are entitled to great respect
and are generally binding on this Court, but it is equally well-settled that the Court
will not uphold erroneous conclusions of the NLRC as when the Court finds
insufficient or insubstantial evidence on record to support those factual findings.
The same holds true when it is perceived that far too much is concluded, inferred
or deduced from the bare or incomplete facts appearing of record. [21]
In its decision, the Labor Arbiter declared that the act of disaffiliation and
declaration of autonomy by the local union was part of its "plan to take over the
respondent federation." This is purely conjecture and speculation on the part of
public respondent, totally unsupported by the evidence.
A local union has the right to disaffiliate from its mother union or declare its
autonomy. A local union, being a separate and voluntary association, is free to
serve the interests of all its members including the freedom to disaffiliate or
declare its autonomy from the federation to which it belongs when circumstances
warrant, in accordance with the constitutional guarantee of freedom of
association.[22]
Thus, a local union which has affiliated itself with a federation is free to sever
such affiliation anytime and such disaffiliation cannot be considered disloyalty. In
the absence of specific provisions in the federations constitution prohibiting
disaffiliation or the declaration of autonomy of a local union, a local may
dissociate with its parent union.[24]
The evidence on hand does not show that there is such a provision in ULGWPs
constitution. Respondents reliance upon Article V, Section 6, of the federations
constitution is not right because said section, in fact, bolsters the petitioner
unions claim of its right to declare autonomy:
There is no disloyalty to speak of, neither is there any violation of the federations
constitution because there is nothing in the said constitution which specifically
prohibits disaffiliation or declaration of autonomy. Hence, there cannot be any
valid dismissal because Article II, Section 4 of the union security clause in the
CBA limits the dismissal to only three (3) grounds, to wit: failure to maintain
membership in the union (1) for non-payment of union dues, (2) for resignation;
and (3) for violation of the unions Constitution and By-Laws.
To support the finding of disloyalty, the Labor Arbiter gave weight to the fact that
on February 26, 1989, the petitioners declared as vacant all the responsible
positions of ULGWP, filled these vacancies through an election and filed a
petition for the registration of UWP as a national federation. It should be pointed
out, however, that these occurred after the federation had already expelled the
union officers. The expulsion was effective November 21, 1988. Therefore, the
act of establishing a different federation, entirely separate from the federation
which expelled them, is but a normal retaliatory reaction to their expulsion.
With regard to the issue of the legality or illegality of the strike, the Labor Arbiter
held that the strike was illegal for the following reasons: (1) it was based on an
intra-union dispute which cannot properly be the subject of a strike, the right to
strike being limited to cases of bargaining deadlocks and unfair labor practice (2)
it was made in violation of the "no strike, no lock-out" clause in the CBA, and (3)
it was attended with violence, force and intimidation upon the persons of the
company officials, other employees reporting for work and third persons having
legitimate business with the company, resulting to serious physical injuries to
several employees and damage to company property.
On the submission that the strike was illegal for being grounded on a non-
strikeable issue, that is, the intra-union conflict between the federation and the
local union, it bears reiterating that when respondent company dismissed the
union officers, the issue was transformed into a termination dispute and brought
respondent company into the picture. Petitioners believed in good faith that in
dismissing them upon request by the federation, respondent company was guilty
of unfair labor pratice in that it violated the petitioners right to self-organization.
The strike was staged to protest respondent companys act of dismissing the
union officers. Even if the allegations of unfair labor practice are subsequently
found out to be untrue, the presumption of legality of the strike prevails. [25]
Another reason why the Labor Arbiter declared the strike illegal is due to the
existence of a no strike no lockout provision in the CBA. Again, such a ruling is
erroneous. A no strike, no lock out provision can only be invoked when the strike
is economic in nature, i.e. to force wage or other concessions from the employer
which he is not required by law to grant. [26] Such a provision cannot be used to
assail the legality of a strike which is grounded on unfair labor practice, as was
the honest belief of herein petitioners. Again, whether or not there was indeed
unfair labor practice does not affect the strike.
With respect to the dismissal of individual petitioners, the Labor Arbiter declared
that their refusal to heed respondents recall to work notice is a clear indication
that they were no longer interested in continuing their employment and is
deemed abandonment. It is admitted that three return to work notices were sent
by respondent company to the striking employees on March 27, April 11, and
April 21, 1989 and that 261 employees who responded to the notice were
admittted back to work.
In the present case, respondents failed to prove that there was a clear intention
on the part of the striking employees to sever their employer-employee
relationship. Although admittedly the company sent three return to work notices
to them, it has not been substantially proven that these notices were actually sent
and received by the employees. As a matter of fact, some employees deny that
they ever received such notices. Others alleged that they were refused entry to
the company premises by the security guards and were advised to secure a
clearance from ULGWP and to sign a waiver. Some employees who responded
to the notice were allegedly told to wait for further notice from respondent
company as there was lack of work.
Furthermore, this Court has ruled that an employee who took steps to protest his
lay-off cannot be said to have abandoned his work. [30] The filing of a complaint for
illegal dismissal is inconsistent with the allegation of abandonment. In the case
under consideration, the petitioners did, in fact, file a complaint when they were
refused reinstatement by respondent company.
Anent public respondents finding that there was no unfair labor practice on the
part of respondent company and federation officers, the Court sustains the same.
As earlier discussed, union security clauses in collective bargaining agreements,
if freely and voluntarily entered into, are valid and binding. Corrolarily, dismissals
pursuant to union security clauses are valid and legal subject only to the
requirement of due process, that is, notice and hearing prior to dismissal. Thus,
the dismissal of an employee by the company pursuant to a labor unions demand
in accordance with a union security agreement does not constitute unfair labor
practice.[31]
Lastly, the Court is of the opinion, and so holds, that respondent company
officials cannot be held personally liable for damages on account of the
employees dismissal because the employer corporation has a personality
separate and distinct from its officers who merely acted as its agents.
It has come to the attention of this Court that the 30-day prior notice requirement
for the dismissal of employees has been repeatedly violated and the sanction
imposed for such violation enunciated in Wenphil Corporation vs. NLRC[32] has
become an ineffective deterrent. Thus, the Court recently promulgated a decision
to reinforce and make more effective the requirement of notice and hearing, a
procedure that must be observed before termination of employment can be
legally effected.
In Ruben Serrano vs. NLRC and Isetann Department Store (G.R. No. 117040,
January 27, 2000), the Court ruled that an employee who is dismissed, whether
or not for just or authorized cause but without prior notice of his termination, is
entitled to full backwages from the time he was terminated until the decision in
his case becomes final, when the dismissal was for cause; and in case the
dismissal was without just or valid cause, the backwages shall be computed from
the time of his dismissal until his actual reinstatement. In the case at bar, where
the requirement of notice and hearing was not complied with, the aforecited
doctrine laid down in the Serrano case applies.
SO ORDERED.
o. Other than for mandatory activities under the Code, no special assessments,
attorney’s fees, negotiation fees or any other extraordinary fees may be
checked off from any amount due to an employee without an individual
written authorization duly signed by the employee. The authorization
should specifically state the amount, purpose and beneficiary of the
deduction; and
GANCAYCO, J.:
Can a special assessment be validly deducted by a labor union from the lump-
sum pay of its members, granted under a collective bargaining agreement (CBA),
notwithstanding a subsequent disauthorization of the same by a majority of the
union members? This is the main issue for resolution in the instant petition for
certiorari.
As gleaned from the records of the case, the pertinent facts are as follows:
On October 12, 1987, the respondent Manila CCBPI Sales Force Union
(hereinafter referred to as the Union), as the collective bargaining agent of all
regular salesmen, regular helpers, and relief helpers of the Manila Plant and
Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Philippines),
Inc. (hereinafter referred to as the Company) concluded a new collective
bargaining agreement with the latter. 1 Among the compensation benefits granted
to the employees was a general salary increase to be given in lump sum
including recomputation of actual commissions earned based on the new rates of
increase.
On the same day, the president of the Union submitted to the Company the
ratification by the union members of the new CBA and authorization for the
Company to deduct union dues equivalent to P10.00 every payday or P20.00
every month and, in addition, 10% by way of special assessment, from the CBA
lump-sum pay granted to the union members. The last one among the
aforementioned is the subject of the instant petition.
As embodied in the Board Resolution of the Union dated September 29, 1987,
the purpose of the special assessment sought to be levied is "to put up a
cooperative and credit union; purchase vehicles and other items needed for the
benefit of the officers and the general membership; and for the payment for
services rendered by union officers, consultants and others." 2 There was also an
additional proviso stating that the "matter of allocation ... shall be at the discretion
of our incumbent Union President."
This "Authorization and CBA Ratification" was obtained by the Union through a
secret referendum held in separate local membership meetings on various
dates. 3 The total membership of the Union was about 800. Of this number, 672
members originally authorized the 10% special assessment, while 173 opposed
the same. 4
In its answer, the Union countered that the deductions not only have the popular
indorsement and approval of the general membership, but likewise complied with
the legal requirements of Article 241 (n) and (o) of the Labor Code in that the
board resolution of the Union imposing the questioned special assessment had
been duly approved in a general membership meeting and that the collection of a
special fund for labor education and research is mandated.
On appeal to the Bureau of Labor Relations, however, the order of the Med-
Arbiter was reversed and set aside by the respondent-Director in a resolution
dated August 19, 1988 upholding the claim of the Union that the special
assessment is authorized under Article 241 (n) of the Labor Code, and that the
Union has complied with the requirements therein.
Petitioners further assert that assuming arguendo that Article 241(n) should
prevail over paragraph (o), the Union has nevertheless failed to comply with the
procedure to legitimize the questioned special assessment by: (1) presenting
mere minutes of local membership meetings instead of a written resolution; (2)
failing to call a general membership meeting; (3) having the minutes of three (3)
local membership meetings recorded by a union director, and not by the union
secretary as required; (4) failing to have the list of members present included in
the minutes of the meetings; and (5) failing to present a record of the votes
cast. 7 Petitioners concluded their argument by citing Galvadores.
After a careful review of the records of this case, We are convinced that the
deduction of the 10% special assessment by the Union was not made in
accordance with the requirements provided by law.
Petitioners are correct in citing the ruling of this Court in Galvadores which is
applicable to the instant case. The principle "that employees are protected by
law from unwarranted practices that diminish their compensation without
their known edge and consent" 8 is in accord with the constitutional
principle of the State affording full protection to labor. 9
The respondent-Union brushed aside the defects pointed out by petitioners in the
manner of compliance with the legal requirements as "insignificant technicalities."
On the contrary, the failure of the Union to comply strictly with the
requirements set out by the law invalidates the questioned special
assessment. Substantial compliance is not enough in view of the fact that
the special assessment will diminish the compensation of the union
members. Their express consent is required, and this consent must be
obtained in accordance with the steps outlined by law, which must be
followed to the letter. No shortcuts are allowed.
The applicable provisions are clear. The Union itself admits that both paragraphs
(n) and (o) of Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o)
refers to "check-off" of a special assessment. Both provisions must be
complied with. Under paragraph (n), the Union must submit to the
Company a written resolution of a majority of all the members at a general
membership meeting duly called for the purpose. In addition, the secretary
of the organization must record the minutes of the meeting which, in turn,
must include, among others, the list of all the members present as well as
the votes cast.
As earlier outlined by petitioners, the Union obviously failed to comply with the
requirements of paragraph (n). It held local membership meetings on separate
occasions, on different dates and at various venues, contrary to the express
requirement that there must be a general membership meeting. The contention
of the Union that "the local membership meetings are precisely the very general
meetings required by law" 10 is untenable because the law would not have
specified a general membership meeting had the legislative intent been to allow
local meetings in lieu of the latter.
Paragraph (o) on the other hand requires an individual written authorization duly
signed by every employee in order that a special assessment may be validly
checked-off. Even assuming that the special assessment was validly levied
pursuant to paragraph (n), and granting that individual written authorizations
were obtained by the Union, nevertheless there can be no valid check-off
considering that the majority of the union members had already withdrawn their
individual authorizations. A withdrawal of individual authorizations is equivalent to
no authorization at all. Hence, the ruling in Galvadores that "no check-offs from
any amounts due employees may be effected without an individual written
authorization signed by the employees ... " is applicable.
The Union points out, however, that said disauthorizations are not valid for being
collective in form, as they are "mere bunches of randomly procured signatures,
under loose sheets of paper." 11 The contention deserves no merit for the simple
reason that the documents containing the disauthorizations have the signatures
of the union members. The Court finds these retractions to be valid. There is
nothing in the law which requires that the disauthorization must be in individual
form.
Moreover, it is well-settled that "all doubts in the implementation and
interpretation of the provisions of the Labor Code ... shall be resolved in favor of
labor."12 And as previously stated, labor in this case refers to the union members,
as employees of the Company. Their mere desire to establish a separate
bargaining unit, albeit unproven, cannot be construed against them in relation to
the legality of the questioned special assessment. On the contrary, the same may
even be taken to reflect their dissatisfaction with their bargaining representative,
the respondent-Union, as shown by the circumstances of the instant petition, and
with good reason.
The mandate of the majority rank and file have (sic) to be respected
considering they are the ones directly affected and the realities of
the high standards of survival nowadays. To ignore the mandate of
the rank and file would enure to destabilizing industrial peace and
harmony within the rank and file and the employer's fold, which we
cannot countenance.
The last stated purpose is contended by petitioners to fall under the coverage of
Article 222 (b) of the Labor Code. The contention is impressed with merit. Article
222 (b) prohibits attorney's fees, negotiations fees and similar charges
arising out of the conclusion of a collective bargaining agreement from
being imposed on any individual union member. The collection of the
special assessment partly for the payment for services rendered by union
officers, consultants and others may not be in the category of "attorney's
fees or negotiations fees." But there is no question that it is an exaction
which falls within the category of a "similar charge," and, therefore, within
the coverage of the prohibition in the aforementioned article. There is an
additional proviso giving the Union President unlimited discretion to allocate the
proceeds of the special assessment. Such a proviso may open the door to abuse
by the officers of the Union considering that the total amount of the special
assessment is quite considerable — P1,027,694.33 collected from those union
members who originally authorized the deduction, and P1,267,863.39 from those
who did not authorize the same, or subsequently retracted their
authorizations. 13 The former amount had already been remitted to the Union,
while the latter is being held in trust by the Company.
The Court, therefore, stakes down the questioned special assessment for being a
violation of Article 241, paragraphs (n) and (o), and Article 222 (b) of the Labor
Code.
SO ORDERED.
Bank of the Philippine Islands vs. BPI Employees Union - Davao Chapter -
Federation of Unions in BPI Unibank, G.R. No. 164301, 10 August 2010; En
Banc.
May a corporation invoke its merger with another corporation as a valid ground to
exempt its absorbed employees from the coverage of a union shop clause
contained in its existing Collective Bargaining Agreement (CBA) with its own
certified labor union? That is the question we shall endeavor to answer in this
petition for review filed by an employer after the Court of Appeals decided in
favor of respondent union, which is the employees recognized collective
bargaining representative.
At the outset, we should call to mind the spirit and the letter of the Labor
Code provisions on union security clauses, specifically Article 248 (e), which
states, x x x Nothing in this Code or in any other law shall stop the parties
from requiring membership in a recognized collective bargaining agent as
a condition for employment, except those employees who are already
members of another union at the time of the signing of the collective bargaining
agreement.[1] This case which involves the application of a collective bargaining
agreement with a union shop clause should be resolved principally from the
standpoint of the clear provisions of our labor laws, and the express terms of the
CBA in question, and not by inference from the general consequence of the
merger of corporations under the Corporation Code, which obviously does not
deal with and, therefore, is silent on the terms and conditions of employment in
corporations or juridical entities.
This issue must be resolved NOW, instead of postponing it to a future time
when the CBA is renegotiated as suggested by the Honorable Justice Arturo D.
Brion because the same issue may still be resurrected in the renegotiation if the
absorbed employees insist on their privileged status of being exempt from any
union shop clause or any variant thereof.
We find it significant to note that it is only the employer, Bank of the
Philippine Islands (BPI), that brought the case up to this Court via the instant
petition for review; while the employees actually involved in the case did not
pursue the same relief, but had instead chosen in effect to acquiesce to the
decision of the Court of Appeals which effectively required them to comply with
the union shop clause under the existing CBA at the time of the merger of BPI
with Far East Bank and Trust Company (FEBTC), which decision had already
become final and executory as to the aforesaid employees. By not appealing
the decision of the Court of Appeals, the aforesaid employees are bound by the
said Court of Appeals decision to join BPIs duly certified labor union. In view of
the apparent acquiescence of the affected FEBTC employees in the Court of
Appeals decision, BPI should not have pursued this petition for review. However,
even assuming that BPI may do so, the same still cannot prosper.
What is before us now is a petition for review under Rule 45 of the Rules
of Court of the Decision [2] dated September 30, 2003 of the Court of Appeals, as
reiterated in its Resolution [3] of June 9, 2004, reversing and setting aside the
Decision[4] dated November 23, 2001 of Voluntary Arbitrator Rosalina Letrondo-
Montejo, in CA-G.R. SP No. 70445, entitled BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank v. Bank of the Philippine Islands, et
al.
The antecedent facts are as follows:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles
of Merger executed on January 20, 2000 by and between BPI, herein petitioner,
and FEBTC.[5] This Article and Plan of Merger was approved by the Securities
and Exchange Commission on April 7, 2000.[6]
Pursuant to the Article and Plan of Merger, all the assets and liabilities of
FEBTC were transferred to and absorbed by BPI as the surviving
corporation. FEBTC employees, including those in its different branches across
the country, were hired by petitioner as its own employees, with their status and
tenure recognized and salaries and benefits maintained.
Respondent BPI Employees Union-Davao Chapter - Federation of Unions
in BPI Unibank (hereinafter the Union, for brevity) is the exclusive bargaining
agent of BPIs rank and file employees in Davao City. The former FEBTC rank-
and-file employees in Davao City did not belong to any labor union at the time of
the merger. Prior to the effectivity of the merger, or on March 31, 2000,
respondent Union invited said FEBTC employees to a meeting regarding the
Union Shop Clause (Article II, Section 2) of the existing CBA between petitioner
BPI and respondent Union.[7]
The parties both advert to certain provisions of the existing CBA, which are
quoted below:
ARTICLE I
Section 1. Recognition and Bargaining Unit The BANK recognizes
the UNION as the sole and exclusive collective bargaining
representative of all the regular rank and file employees of the Bank
offices in Davao City.
Section 2. Exclusions
ARTICLE II
After the meeting called by the Union, some of the former FEBTC
employees joined the Union, while others refused. Later, however, some of
those who initially joined retracted their membership. [9]
Respondent Union then sent notices to the former FEBTC employees who
refused to join, as well as those who retracted their membership, and called them
to a hearing regarding the matter. When these former FEBTC employees refused
to attend the hearing, the president of the Union requested BPI to implement the
Union Shop Clause of the CBA and to terminate their employment pursuant
thereto.[10]
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN RULING THAT THE FORMER FEBTC EMPLOYEES
SHOULD BE CONSIDERED NEW EMPLOYEES OF BPI FOR
PURPOSES OF APPLYING THE UNION SHOP CLAUSE OF THE
CBA
II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN FINDING THAT THE VOLUNTARY ARBITRATORS
INTERPRETATION OF THE COVERAGE OF THE UNION SHOP
CLAUSE IS AT WAR WITH THE SPIRIT AND THE RATIONALE
WHY THE LABOR CODE ITSELF ALLOWS THE EXISTENCE OF
SUCH PROVISION[16]
In essence, the sole issue in this case is whether or not the former FEBTC
employees that were absorbed by petitioner upon the merger between FEBTC
and BPI should be covered by the Union Shop Clause found in the existing CBA
between petitioner and respondent Union.
Petitioner is of the position that the former FEBTC employees are not new
employees of BPI for purposes of applying the Union Shop Clause of the CBA,
on this note, petitioner points to Section 2, Article II of the CBA, which provides:
Petitioner argues that the term new employees in the Union Shop Clause
of the CBA is qualified by the phrases who may hereafter be regularly employed
and after they become regular employees which led petitioner to conclude that
the new employees referred to in, and contemplated by, the Union Shop Clause
of the CBA were only those employees who were new to BPI, on account of
having been hired initially on a temporary or probationary status for possible
regular employment at some future date. BPI argues that the FEBTC employees
absorbed by BPI cannot be considered as new employees of BPI for purposes of
applying the Union Shop Clause of the CBA.[18]
We do not agree.
To reiterate, petitioner insists that the term new employees, as the same is used
in the Union Shop Clause of the CBA at issue, refers only to employees hired by
BPI as non-regular employees who later qualify for regular employment and
become regular employees, and not those who, as a legal consequence of a
merger, are allegedly automatically deemed regular employees of BPI. However,
the CBA does not make a distinction as to how a regular employee attains such a
status. Moreover, there is nothing in the Corporation Law and the merger
agreement mandating the automatic employment as regular employees by the
surviving corporation in the merger.
It is apparent that petitioner hinges its argument that the former FEBTC
employees were absorbed by BPI merely as a legal consequence of a merger
based on the characterization by the Voluntary Arbiter of these absorbed
employees as included in the assets and liabilities of the dissolved corporation -
assets because they help the Bank in its operation and liabilities because
redundant employees may be terminated and company benefits will be paid to
them, thus reducing the Banks financial status. Based on this ratiocination, she
ruled that the same are not new employees of BPI as contemplated by the CBA
at issue, noting that the Certificate of Filing of the Articles of Merger and Plan of
Merger between FEBTC and BPI stated that x x x the entire assets and liabilities
of FAR EASTERN BANK & TRUST COMPANY will be transferred to
and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining
supplied).[26] In sum, the Voluntary Arbiter upheld the reasoning of petitioner that
the FEBTC employees became BPI employees by operation of law because they
are included in the term assets and liabilities.
In legal parlance, however, human beings are never embraced in the term
assets and liabilities. Moreover, BPIs absorption of former FEBTC employees
was neither by operation of law nor by legal consequence of contract. There was
no government regulation or law that compelled the merger of the two banks or
the absorption of the employees of the dissolved corporation by the surviving
corporation. Had there been such law or regulation, the absorption of employees
of the non-surviving entities of the merger would have been mandatory on the
surviving corporation.[27] In the present case, the merger was voluntarily entered
into by both banks presumably for some mutually acceptable consideration. In
fact, the Corporation Code does not also mandate the absorption of the
employees of the non-surviving corporation by the surviving corporation in
the case of a merger. Section 80 of the Corporation Code provides:
Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000
did not contain any specific stipulation with respect to the employment contracts
of existing personnel of the non-surviving entity which is FEBTC. Unlike the
Voluntary Arbitrator, this Court cannot uphold the reasoning that the general
stipulation regarding transfer of FEBTC assets and liabilities to BPI as set forth in
the Articles of Merger necessarily includes the transfer of all FEBTC employees
into the employ of BPI and neither BPI nor the FEBTC employees allegedly could
do anything about it. Even if it is so, it does not follow that the absorbed
employees should not be subject to the terms and conditions of
employment obtaining in the surviving corporation.
In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the
shop work of three formerly separate railroad corporations, which
had previously operated separate facilities, was consolidated in the
shops of one of the roads. Displaced employees of the other two
roads were given preference for the new jobs created in the shops
of the railroad which took over the work.A controversy arose
between the employees as to whether the displaced employees
were entitled to carry with them to the new jobs the seniority rights
they had accumulated with their prior employers, that is, whether
the rosters of the three corporations, for seniority purposes, should
be "dovetailed" or whether the transferring employees should go to
the bottom of the roster of their new employer. Labor
representatives of the various systems involved attempted to work
out an agreement which, in effect, preserved the seniority status
obtained in the prior employment on other roads, and the action
was for specific performance of this agreement against a demurring
group of the original employees of the railroad which was operating
the consolidated shops.The relief sought was denied, the court
saying that, absent some specific contract provision otherwise,
seniority rights were ordinarily limited to the employment in which
they were earned, and concluding that the contract for which
specific performance was sought was not such a completed and
binding agreement as would support such equitable relief, since the
railroad, whose concurrence in the arrangements made was
essential to their effectuation, was not a party to the agreement.
Justice Brion takes the position that because the surviving corporation continues
the personality of the dissolved corporation and acquires all the latters rights and
obligations, it is duty-bound to absorb the dissolved corporations employees,
even in the absence of a stipulation in the plan of merger. He proposes that this
interpretation would provide the necessary protection to labor as it spares
workers from being left in legal limbo.
Moreover, assuming for the sake of argument that there is an obligation to hire or
absorb all employees of the non-surviving corporation, there is still no basis to
conclude that the terms and conditions of employment under a valid collective
bargaining agreement in force in the surviving corporation should not be made to
apply to the absorbed employees.
Even assuming we accept Justice Brions theory that in a merger situation the
surviving corporation should be compelled to absorb the dissolved corporations
employees as a legal consequence of the merger and as a social justice
consideration, it bears to emphasize his dissent also recognizes that the
employee may choose to end his employment at any time by voluntarily
resigning. For the employee to be absorbed by BPI, it requires the employees
implied or express consent. It is because of this human element in employment
contracts and the personal, consensual nature thereof that we cannot agree that,
in a merger situation, employment contracts are automatically transferable from
one entity to another in the same manner that a contract pertaining to purely
proprietary rights such as a promissory note or a deed of sale of property is
perfectly and automatically transferable to the surviving corporation.
That BPI is the same entity as FEBTC after the merger is but a legal fiction
intended as a tool to adjudicate rights and obligations between and among the
merged corporations and the persons that deal with them. Although in a merger it
is as if there is no change in the personality of the employer, there is in reality a
change in the situation of the employee. Once an FEBTC employee is absorbed,
there are presumably changes in his condition of employment even if his
previous tenure and salary rate is recognized by BPI.It is reasonable to assume
that BPI would have different rules and regulations and company practices than
FEBTC and it is incumbent upon the former FEBTC employees to obey these
new rules and adapt to their new environment. Not the least of the changes in
employment condition that the absorbed FEBTC employees must face is the fact
that prior to the merger they were employees of an unorganized establishment
and after the merger they became employees of a unionized company that had
an existing collective bargaining agreement with the certified union. This
presupposes that the union who is party to the collective bargaining agreement is
the certified union that has, in the appropriate certification election, been shown
to represent a majority of the members of the bargaining unit.
Likewise, with respect to FEBTC employees that BPI chose to employ and
who also chose to be absorbed, then due to BPIs blanket assumption of liabilities
and obligations under the articles of merger, BPI was bound to respect the years
of service of these FEBTC employees and to pay the same, or commensurate
salaries and other benefits that these employees previously enjoyed with FEBTC.
As the Union likewise pointed out in its pleadings, there were benefits under
the CBA that the former FEBTC employees did not enjoy with their previous
employer. As BPI employees, they will enjoy all these CBA benefits upon their
absorption. Thus, although in a sense BPI is continuing FEBTCs employment of
these absorbed employees, BPIs employment of these absorbed employees was
not under exactly the same terms and conditions as stated in the latters
employment contracts with FEBTC. This further strengthens the view that BPI
and the former FEBTC employees voluntarily contracted with each other for their
employment in the surviving corporation.
Proper Appreciation of the Term New
Employees Under the CBA
The Union Shop Clause in the CBA simply states that new employees who
during the effectivity of the CBA may be regularly employed by the Bank must
join the union within thirty (30) days from their regularization. There is nothing in
the said clause that limits its application to only new employees who possess
non-regular status, meaning probationary status, at the start of their
employment. Petitioner likewise failed to point to any provision in the CBA
expressly excluding from the Union Shop Clause new employees who are
absorbed as regular employees from the beginning of their employment. What is
indubitable from the Union Shop Clause is that upon the effectivity of the CBA,
petitioners new regular employees (regardless of the manner by which they
became employees of BPI) are required to join the Union as a condition of their
continued employment.
The dissenting opinion of Justice Brion dovetails with Justice Carpios view
only in their restrictive interpretation of who are new employees under the
CBA. To our dissenting colleagues, the phrase new employees (who are covered
by the union shop clause) should only include new employees who were hired as
probationary during the life of the CBA and were later granted regular
status. They propose that the former FEBTC employees who were deemed
regular employees from the beginning of their employment with BPI should be
treated as a special class of employees and be excluded from the union shop
clause.
Justice Brion himself points out that there is no clear, categorical definition of new
employee in the CBA. In other words, the term new employee as used in the
union shop clause is used broadly without any qualification or
distinction. However, the Court should not uphold an interpretation of the term
new employee based on the general and extraneous provisions of the
Corporation Code on merger that would defeat, rather than fulfill, the purpose of
the union shop clause. To reiterate, the provision of the Article 248(e) of the
Labor Code in point mandates that nothing in the said Code or any other
law should stop the parties from requiring membership in a recognized
collective bargaining agent as a condition of employment.
In other words, even though BPI steps into the shoes of FEBTC as the
surviving corporation, BPI does so at a particular point in time, i.e., the effectivity
of the merger upon the SECs issuance of a certificate of merger. In fact, the
articles of merger themselves provided that both BPI and FEBTC will continue
their respective business operations until the SEC issues the certificate of merger
and in the event SEC does not issue such a certificate, they agree to hold each
other blameless for the non-consummation of the merger.
Considering the foregoing principle, BPI could have only become the
employer of the FEBTC employees it absorbed after the approval by the SEC of
the merger. If the SEC did not approve the merger, BPI would not be in the
position to absorb the employees of FEBTC at all. Indeed, there is evidence on
record that BPI made the assignments of its absorbed employees in BPI effective
April 10, 2000, or after the SECs approval of the merger. [34] In other words, BPI
became the employer of the absorbed employees only at some point after the
effectivity of the merger, notwithstanding the fact that the absorbed employees
years of service with FEBTC were voluntarily recognized by BPI.
Even assuming for the sake of argument that we consider the absorbed
FEBTC employees as old employees of BPI who are not members of any union
(i.e., it is their date of hiring by FEBTC and not the date of their absorption
that is considered), this does not necessarily exclude them from the union
security clause in the CBA. The CBA subject of this case was effective from April
1, 1996 until March 31, 2001. Based on the allegations of the former FEBTC
employees themselves, there were former FEBTC employees who were hired
by FEBTC after April 1, 1996 and if their date of hiring by FEBTC is considered
as their date of hiring by BPI, they would undeniably be considered new
employees of BPI within the contemplation of the Union Shop Clause of the said
CBA. Otherwise, it would lead to the absurd situation that we would discriminate
not only between new BPI employees (hired during the life of the CBA) and
former FEBTC employees (absorbed during the life of the CBA) but also among
the former FEBTC employees themselves. In other words, we would be treating
employees who are exactly similarly situated (i.e., the group of absorbed FEBTC
employees) differently. This hardly satisfies the demands of equality and justice.
Petitioner limited itself to the argument that its absorbed employees do not
fall within the term new employees contemplated under the Union Shop Clause
with the apparent objective of excluding all, and not just some, of the former
FEBTC employees from the application of the Union Shop Clause.
However, in law or even under the express terms of the CBA, there is no special
class of employees called absorbed employees. In order for the Court to apply or
not apply the Union Shop Clause, we can only classify the former FEBTC
employees as either old or new. If they are not old employees, they are
necessarily new employees. If they are new employees, the Union Shop Clause
did not distinguish between new employees who are non-regular at their hiring
but who subsequently become regular and new employees who are absorbed as
regular and permanent from the beginning of their employment. The Union Shop
Clause did not so distinguish, and so neither must we.
Verily, we agree with the Court of Appeals that there are no substantial
differences between a newly hired non-regular employee who was regularized
weeks or months after his hiring and a new employee who was absorbed from
another bank as a regular employee pursuant to a merger, for purposes of
applying the Union Shop Clause. Both employees were hired/employed only after
the CBA was signed. At the time they are being required to join the Union, they
are both already regular rank and file employees of BPI. They belong to the
same bargaining unit being represented by the Union. They both enjoy benefits
that the Union was able to secure for them under the CBA. When they both
entered the employ of BPI, the CBA and the Union Shop Clause therein were
already in effect and neither of them had the opportunity to express their
preference for unionism or not. We see no cogent reason why the Union Shop
Clause should not be applied equally to these two types of new employees, for
they are undeniably similarly situated.
It is but fair that similarly situated employees who enjoy the same
privileges of a CBA should be likewise subject to the same obligations the CBA
imposes upon them. A contrary interpretation of the Union Shop Clause will be
inimical to industrial peace and workers solidarity. This unfavorable situation will
not be sufficiently addressed by asking the former FEBTC employees to simply
pay agency fees to the Union in lieu of union membership, as the dissent of
Justice Carpio suggests. The fact remains that other new regular employees, to
whom the absorbed employees should be compared, do not have the option to
simply pay the agency fees and they must join the Union or face termination.
Petitioners restrictive reading of the Union Shop Clause could also
inadvertently open an avenue, which an employer could readily use, in order to
dilute the membership base of the certified union in the collective bargaining unit
(CBU). By entering into a voluntary merger with a non-unionized company that
employs more workers, an employer could get rid of its existing union by the
simple expedient of arguing that the absorbed employees are not new
employees, as are commonly understood to be covered by a CBAs union
security clause. This could then lead to a new majority within the CBU that could
potentially threaten the majority status of the existing union and, ultimately, spell
its demise as the CBUs bargaining representative. Such a dreaded but not
entirely far-fetched scenario is no different from the ingenious and creative union-
busting schemes that corporations have fomented throughout the years, which
this Court has foiled time and again in order to preserve and protect the valued
place of labor in this jurisdiction consistent with the Constitutions mandate of
insuring social justice.
There is nothing in the Labor Code and other applicable laws or the CBA
provision at issue that requires that a new employee has to be of probationary or
non-regular status at the beginning of the employment relationship. An employer
may confer upon a new employee the status of regular employment even at the
onset of his engagement.Moreover, no law prohibits an employer from voluntarily
recognizing the length of service of a new employee with a previous employer in
relation to computation of benefits or seniority but it should not unduly be
interpreted to exclude them from the coverage of the CBA which is a binding
contractual obligation of the employer and employees.
The union shop clause offers protection to the certified bargaining agent
by ensuring that future regular employees who (a) enter the employ of the
company during the life of the CBA; (b) are deemed part of the collective
bargaining unit; and (c) whose number will affect the number of members of the
collective bargaining unit will be compelled to join the union. Such compulsion
has legal effect, precisely because the employer by voluntarily entering in to a
union shop clause in a CBA with the certified bargaining agent takes on the
responsibility of dismissing the new regular employee who does not join the
union.
Without the union shop clause or with the restrictive interpretation thereof as
proposed in the dissenting opinions, the company can jeopardize the majority
status of the certified union by excluding from union membership all new regular
employees whom the Company will absorb in future mergers and all new regular
employees whom the Company hires as regular from the beginning of their
employment without undergoing a probationary period. In this manner, the
Company can increase the number of members of the collective bargaining unit
and if this increase is not accompanied by a corresponding increase in union
membership, the certified union may lose its majority status and render it
vulnerable to attack by another union who wishes to represent the same
bargaining unit.[35]
Or worse, a certified union whose membership falls below twenty percent (20%)
of the total members of the collective bargaining unit may lose its status as a
legitimate labor organization altogether, even in a situation where there is no
competing union.[36] In such a case, an interested party may file for the
cancellation of the unions certificate of registration with the Bureau of Labor
Relations.[37]
Plainly, the restrictive interpretation of the union shop clause would place the
certified unions very existence at the mercy and control of the
employer. Relevantly, only BPI, the employer appears to be interested in
pursuing this case. The former FEBTC employees have not joined BPI in this
appeal.
For the foregoing reasons, Justice Carpios proposal to simply require the former
FEBTC to pay agency fees is wholly inadequate to compensate the certified
union for the loss of additional membership supposedly guaranteed by
compliance with the union shop clause. This is apart from the fact that treating
these absorbed employees as a special class of new employees does not
encourage worker solidarity in the company since another class of new
employees (i.e. those whose were hired as probationary and later regularized
during the life of the CBA) would not have the option of substituting union
membership with payment of agency fees.
Justice Brion, on the other hand, appears to recognize the inherent unfairness of
perpetually excluding the absorbed employees from the ambit of the union shop
clause. He proposes that this matter be left to negotiation by the parties in the
next CBA. To our mind, however, this proposal does not sufficiently address the
issue. With BPI already taking the position that employees absorbed pursuant to
its voluntary mergers with other banks are exempt from the union shop clause,
the chances of the said bank ever agreeing to the inclusion of such employees in
a future CBA is next to nil more so, if BPIs narrow interpretation of the union shop
clause is sustained by this Court.
The dissenting opinions place a premium on the fact that even if the
former FEBTC employees are not old employees, they nonetheless were
employed as regular and permanent employees without a gap in their
service. However, an employees permanent and regular employment status in
itself does not necessarily exempt him from the coverage of a union shop clause.
In the past this Court has upheld even the more stringent type of union security
clause, i.e., the closed shop provision, and held that it can be made applicable to
old employees who are already regular and permanent but have chosen not to
join a union. In the early case of Juat v. Court of Industrial Relations,[38] the Court
held that an old employee who had no union may be compelled to join the union
even if the collective bargaining agreement (CBA) imposing the closed shop
provision was only entered into seven years after of the hiring of the said
employee. To quote from that decision:
Although the present case does not involve a closed shop provision that included
even old employees, the Juat example is but one of the cases that laid down the
doctrine that the right not to join a union is not absolute. Theoretically, there is
nothing in law or jurisprudence to prevent an employer and a union from
stipulating that existing employees (who already attained regular and permanent
status but who are not members of any union) are to be included in the coverage
of a union security clause. Even Article 248(e) of the Labor Code only expressly
exempts old employees who already have a union from inclusion in a union
security clause.[39]
Contrary to the assertion in the dissent of Justice Carpio, Juat has not been
overturned by Victoriano v. Elizalde Rope Workers Union[40] nor by Reyes v.
Trajano.[41] The factual milieus of these three cases are vastly different.
In Victoriano, the issue that confronted the Court was whether or not employees
who were members of the Iglesia ni Kristo (INK) sect could be compelled to join
the union under a closed shop provision, despite the fact that their religious
beliefs prohibited them from joining a union. In that case, the Court was asked to
balance the constitutional right to religious freedom against a host of other
constitutional provisions including the freedom of association, the non-
establishment clause, the non-impairment of contracts clause, the equal
protection clause, and the social justice provision. In the end, the Court held that
religious freedom, although not unlimited, is a fundamental personal right and
liberty, and has a preferred position in the hierarchy of values. [42]
However, Victoriano is consistent with Juat since they both affirm that the right to
refrain from joining a union is not absolute. The relevant portion of Victoriano is
quoted below:
If Juat exemplified an exception to the rule that a person has the right not to join
a union, Victoriano merely created an exception to the exception on the ground
of religious freedom.
Reyes, on the other hand, did not involve the interpretation of any union security
clause. In that case, there was no certified bargaining agent yet since the
controversy arose during a certification election. In Reyes, the Court highlighted
the idea that the freedom of association included the right not to associate or join
a union in resolving the issue whether or not the votes of members of the INK
sect who were part of the bargaining unit could be excluded in the results of a
certification election, simply because they were not members of the two
contesting unions and were expected to have voted for NO UNION in view of
their religious affiliation. The Court upheld the inclusion of the votes of the INK
members since in the previous case of Victoriano we held that INK members
may not be compelled to join a union on the ground of religious freedom and
even without Victoriano every employee has the right to vote no union in a
certification election as part of his freedom of association. However, Reyes is not
authority for Justice Carpios proposition that an employee who is not a member
of any union may claim an exemption from an existing union security clause
because he already has regular and permanent status but simply prefers not to
join a union.
The other cases cited in Justice Carpios dissent on this point are likewise
inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas,[44] Anucension v. National Labor Union,
[45]
and Gonzales v. Central Azucarera de Tarlac Labor Union [46] all involved
members of the INK. In line with Victoriano, these cases upheld the INK
members claimed exemption from the union security clause on religious
grounds. In the present case, the former FEBTC employees never claimed any
religious grounds for their exemption from the Union Shop Clause. As for Philips
Industrial Development, Inc. v. National Labor Relations
Corporation[47] and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,[48] the employees
who were exempted from joining the respondent union or who were excluded
from participating in the certification election were found to be not members of
the bargaining unit represented by respondent union and were free to
form/join their own union. In the case at bar, it is undisputed that the former
FEBTC employees were part of the bargaining unit that the Union
represented. Thus, the rulings in Philips and Knitjoy have no relevance to the
issues at hand.
Time and again, this Court has ruled that the individual employees right
not to join a union may be validly restricted by a union security clause in a
CBA[49] and such union security clause is not a violation of the employees
constitutional right to freedom of association.[50]
The rationale for upholding the validity of union shop clauses in a CBA,
even if they impinge upon the individual employees right or freedom of
association, is not to protect the union for the unions sake. Laws and
jurisprudence promote unionism and afford certain protections to the certified
bargaining agent in a unionized company because a strong and effective union
presumably benefits all employees in the bargaining unit since such a union
would be in a better position to demand improved benefits and conditions of work
from the employer. This is the rationale behind the State policy to promote
unionism declared in the Constitution, which was elucidated in the above-cited
case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc. [54]
In the case at bar, since the former FEBTC employees are deemed covered by
the Union Shop Clause, they are required to join the certified bargaining agent,
which supposedly has gathered the support of the majority of workers within the
bargaining unit in the appropriate certification proceeding. Their joining the
certified union would, in fact, be in the best interests of the former FEBTC
employees for it unites their interests with the majority of employees in the
bargaining unit. It encourages employee solidarity and affords sufficient
protection to the majority status of the union during the life of the CBA which are
the precisely the objectives of union security clauses, such as the Union Shop
Clause involved herein. We are indeed not being called to balance the interests
of individual employees as against the State policy of promoting unionism, since
the employees, who were parties in the court below, no longer contested the
adverse Court of Appeals decision. Nonetheless, settled jurisprudence has
already swung the balance in favor of unionism, in recognition that ultimately the
individual employee will be benefited by that policy. In the hierarchy of
constitutional values, this Court has repeatedly held that the right to abstain from
joining a labor organization is subordinate to the policy of encouraging unionism
as an instrument of social justice.
Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire
consequences to the former FEBTC employees who refuse to join the union is
the forfeiture of their retirement benefits. This is clearly not the case precisely
because BPI expressly recognized under the merger the length of service of the
absorbed employees with FEBTC.Should some refuse to become members of
the union, they may still opt to retire if they are qualified under the law, the
applicable retirement plan, or the CBA, based on their combined length of service
with FEBTC and BPI. Certainly, there is nothing in the union shop clause that
should be read as to curtail an employees eligibility to apply for retirement if
qualified under the law, the existing retirement plan, or the CBA as the case may
be.
In sum, this Court finds it reasonable and just to conclude that the Union
Shop Clause of the CBA covers the former FEBTC employees who were
hired/employed by BPI during the effectivity of the CBA in a manner which
petitioner describes as absorption. A contrary appreciation of the facts of this
case would, undoubtedly, lead to an inequitable and very volatile labor situation
which this Court has consistently ruled against.
In the case of former FEBTC employees who initially joined the union but
later withdrew their membership, there is even greater reason for the union to
request their dismissal from the employer since the CBA also contained a
Maintenance of Membership Clause.
SO ORDERED.
Inguillo vs. First Philippines Scales, Inc., 588 SCRA 471 [2009]
Assailed in this petition for review under Rule 45 of the Rules of Court are the
Court of Appeals (1) Decision [1] dated March 11, 2004 in CA-G.R. SP No. 73992,
which dismissed the Petition for Certiorari of petitioners Zenaida Bergante
(Bergante) and Herminigildo Inguillo (Inguillo); and
(2) Resolution[2] dated September 17, 2004 denying petitioners' Motion for
Reconsideration. The appellate court sustained the ruling of the National Labor
Relations Commission (NLRC) that petitioners were validly dismissed pursuant to
a Union Security Clause in the collective bargaining agreement.
The facts of the case are as follows:
In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)
[3]
entered into a Collective Bargaining Agreement (CBA), [4] the duration of which
was for a period of five (5) years starting on September 12, 1991 until September
12, 1996. On September 19, 1991, the members of FPSILU ratified the CBA in a
document entitled RATIPIKASYON NG KASUNDUAN.[5] Bergante and Inguillo,
who were members of FPSILU, signed the said document. [6]
During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees
joined another union, the Nagkakaisang Lakas ng Manggagawa (NLM), which
was affiliated with a federation called KATIPUNAN (NLM-KATIPUNAN, for
brevity). Subsequently, NLM-KATIPUNAN filed with the Department of Labor and
Employment (DOLE) an intra-union dispute[7] against FPSILU and FPSI. In said
case, the Med-Arbiter decided[8] in favor of FPSILU. It also ordered the officers
and members of NLM-KATIPUNAN to return to FPSILU the amount
of P90,000.00 pertaining to the union dues erroneously collected from the
employees. Upon finality of the Med-Arbiter's Decision, a Writ of Execution [9] was
issued to collect the adjudged amount from NLM-KATIPUNAN. However, as no
amount was recovered, notices of garnishment were issued to United Coconut
Planters Bank (Kalookan City Branch)[10] and to FPSI[11] for the latter to hold for
FPSILU the earnings of Domingo Grutas, Jr. (Grutas) and Inguillo, formerly
FPSILU's President and Secretary for Finance, respectively, to the extent
of P13,032.18. Resultantly, the amount of P5,140.55 was collected,[12] P1,695.72
of which came from the salary of Grutas, while the P3,444.83 came from that of
Inguillo.
Meanwhile, on March 29, 1996, the executive board and members of the FPSILU
addressed a document dated March 18, 1996 denominated as Petisyon [13] to
FPSI's general manager, Amparo Policarpio (Policarpio), seeking the termination
of the services of the following employees, namely: Grutas, Yolanda Tapang,
Shirley Tapang, Gerry Trinidad, Gilbert Lucero, Inguillo, Bergante, and Vicente
Go, on the following grounds:[14] (1) disloyalty to the Union by separating from it
and affiliating with a rival Union, the NLM-KATIPUNAN; (2) dereliction of duty by
failing to call periodic membership meetings and to give financial reports; (3)
depositing Union funds in the names of Grutas and former Vice-President
Yolanda Tapang, instead of in the name of FPSILU, care of the President; (4)
causing damage to FPSI by deliberately slowing down production, preventing the
Union to even attempt to ask for an increase in benefits from the former; and (5)
poisoning the minds of the rest of the members of the Union so that they would
be enticed to join the rival union.
On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or
Policarpio (respondents) for illegal withholding of salary and damages, docketed
as NLRC-NCR-Case No. 00-05-03036-96.[15]
On May 16, 1996, respondents terminated the services of the employees
mentioned in the Petisyon.
The following day, two (2) separate complaints for illegal dismissal, reinstatement
and damages were filed against respondents by: (1) NLM-KATIPUNAN,
Grutas, Trinidad, Bergante, Yolanda Tapang, Go, Shirley Tapang and
Lucero[16] (Grutas complaint, for brevity); and (2) Inguillo [17] (Inguillo
complaint). Both complaints were consolidated with Inguillo's prior complaint for
illegal withholding of salary, which was pending before Labor Arbiter Manuel
Manansala. After the preliminary mandatory conference, some of the
complainants agreed to amicably settle their cases. Consequently, the Labor
Arbiter issued an Order[18] dated October 1, 1996, dismissing with prejudice the
complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas, and Trinidad.
[19]
Lucero also settled the case after receiving his settlement money and
executing a Quitclaim and Release in favor of FPSI and Policarpio. [20]
Bergante and Inguillo, the remaining complainants, were directed to submit their
respective position papers, after which their complaints were submitted for
resolution on February 20, 1997.[21]
In their Position Paper,[22] Bergante and Inguillo claimed that they were not aware
of a petition seeking for their termination, and neither were they informed of the
grounds for their termination. They argued that had they been informed, they
would have impleaded FPSILU in their complaints. Inguillo could not think of a
valid reason for his dismissal except the fact that he was a very vocal and active
member of the NLM-KATIPUNAN. Bergante, for her part, surmised that she was
dismissed solely for being Inguillo's sister-in-law. She also reiterated the absence
of a memorandum stating that she committed an infraction of a company rule or
regulation or a violation of law that would justify her dismissal.
Inguillo also denounced respondents' act of withholding his salary, arguing that
he was not a party to the intra-union dispute from which the notice of
garnishment arose. Even assuming that he was, he argued that his salary was
exempt from execution.
Zenaida Bergante
Separation pay.................P43,225.00
Legal Holiday Pay........... 839.00
Total 44,064.00
SO ORDERED.[25]
Bergante and Inguillo appealed before the NLRC, which reversed the Labor
Arbiter's Decision in a Resolution [26] dated June 8, 2001, the dispositive portion of
which provides:
WHEREFORE, the assailed decision is set aside. Respondents are
hereby ordered to reinstate complainants Inguillo and Bergante with
full backwages from the time of their dismissal up [to] their
actual reinstatement. Further, respondents are also directed to pay
complainant Inguillo the amount representing his withheld salary for
the period March 15, 1998 to April 16, 1998. The sum
corresponding to ten percent (10%) of the total judgment award by
way of attorney's fees is likewise ordered. All other claims are
ordered dismissed for lack of merit.
SO ORDERED.[27]
In reversing the Labor Arbiter, the NLRC[28] ratiocinated that respondents failed to
present evidence to show that Bergante and Inguillo committed acts inimical to
FPSILU's interest. It also observed that, since the two (2) were not informed of
their dismissal, the justification given by FPSI that it was merely constrained to
dismiss the employees due to persistent demand from the Union clearly proved
the claim of summary dismissal and violation of the employees' right to due
process.
Respondents filed a Motion for Reconsideration, which was referred by the
NLRC to Executive Labor Arbiter Vito C. Bose for report and recommendation. In
its Resolution[29]dated August 26, 2002, the NLRC adopted in toto the report and
recommendation of Arbiter Bose which set aside its previous Resolution
reversing the Labor Arbiter's Decision.This time, the NLRC held that Bergante
and Inguillo were not illegally dismissed as respondents merely put in force the
CBA provision on the termination of the services of disaffiliating Union members
upon the recommendation of the Union. The dispositive portion of the said
Resolution provides:
SO ORDERED.[30]
Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a
petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals (CA). The CA dismissed the petition for lack of merit [31] and denied the
subsequent motion for reconsideration. [32] In affirming the legality of the dismissal,
the CA ratiocinated, thus:
In their Petition, Bergante and Inguillo assail the legality of their termination
based on the Union Security Clause in the CBA between FPSI and
FPSILU. Article II[42] of the CBA pertains to Union Security and Representatives,
which provides:
The Court is now tasked to determine whether the enforcement of the aforesaid
Union Security Clause justified herein petitioners' dismissal from the service.
We hold that all the requisites have been sufficiently met and FPSI was justified
in enforcing the Union Security Clause, for the following reasons:
First. FPSI was justified in applying the Union Security Clause, as it was a valid
provision in the CBA, the existence and validity of which was not questioned by
either party.Moreover, petitioners were among the 93 employees who affixed
their signatures to the document that ratified the CBA. They cannot now turn their
back and deny knowledge of such provision.
Third. FPSILU's decision to ask for the termination of the employees in the
Petisyon was justified and supported by the evidence on record. Bergante and
Inguillo were undisputably former members of FPSILU. In fact, Inguillo was the
Secretary of Finance, the underlying reason why his salary was garnished to
satisfy the judgment of the Med-Arbiter who ordered NLM-KATIPUNAN to return
the Union dues it erroneously collected from the employees. Their then affiliation
with FPSILU was also clearly shown by their signatures in the document which
ratified the CBA. Without a doubt, they committed acts of disloyalty to
the Union when they failed not only to maintain their membership but also
disaffiliated from it. They abandoned FPSILU and even joined another union
which works against the former's interests. This is evident from the intra-union
dispute filed by NLM-KATIPUNAN against FPSILU. Once affiliated with NLM-
KATIPUNAN, Bergante and Inguillo proceeded to recruit other employees to
disaffiliate from FPSILU and even collected Union dues from them.
In Del Monte Philippines,[44] the stipulations in the CBA authorizing the dismissal
of employees are of equal import as the statutory provisions on dismissal under
the Labor Code, since a CBA is the law between the company and the Union,
and compliance therewith is mandated by the express policy to give protection to
labor. In Caltex Refinery Employees Association (CREA) v. Brillantes,[45] the Court
expounded on the effectiveness of union security clause when it held that it is
one intended to strengthen the contracting union and to protect it from the
fickleness or perfidy of its own members. For without such safeguards, group
solidarity becomes uncertain; the union becomes gradually weakened and
increasingly vulnerable to company machinations. In this security clause lies the
strength of the union during the enforcement of the collective bargaining
agreement. It is this clause that provides labor with substantial power in collective
bargaining.
Nonetheless, while We uphold dismissal pursuant to a union security clause, the
same is not without a condition or restriction. For to allow its untrammeled
enforcement would encourage arbitrary dismissal and abuse by the employer, to
the detriment of the employees. Thus, to safeguard the rights of the employees,
We have said time and again that dismissals pursuant to union security clauses
are valid and legal, subject only to the requirement of due process, that is, notice
and hearing prior to dismissal. [46] In like manner, We emphasized that the
enforcement of union security clauses is authorized by law, provided such
enforcement is not characterized by arbitrariness, and always with due process.
[47]
There are two (2) aspects which characterize the concept of due process under
the Labor Code: one is substantivewhether the termination of employment was
based on the provisions of the Labor Code or in accordance with the prevailing
jurisprudence; the other is procedural - the manner in which the dismissal was
effected.
The second aspect of due process was clarified by the Court in King of Kings
Transport v. Mamac,[48] stating, thus:
In the present case, the required two notices that must be given to herein
petitioners Bergante and Inguillo were lacking. The records are bereft of any
notice that would have given a semblance of substantial compliance on the part
of herein respondents. Respondents, however, aver that they had furnished the
employees concerned, including petitioners, with a copy of FPSILU's
Petisyon. We cannot consider that as compliance with the requirement of either
the first notice or the second notice. While the Petisyon enumerated the several
grounds that would justify the termination of the employees mentioned therein,
yet such document is only a recommendation by the Union upon which the
employer may base its decision. It cannot be considered a notice of
termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter
may only recommend to the former a Union member's suspension or
dismissal. Nowhere in the controverted Union Security Clause was there a
mention that once the union gives a recommendation, the employer is bound
outright to proceed with the termination.
Even assuming that the Petisyon amounts to a first notice, the employer cannot
be deemed to have substantially complied with the procedural
requirements. True, FPSILU enumerated the grounds in said Petisyon. But a
perusal of each of them leads Us to conclude that what was stated were general
descriptions, which in no way would enable the employees to intelligently
prepare their explanation and defenses. In addition, the Petisyon did not provide
a directive that the employees are given opportunity to submit their written
explanation within a reasonable period. Finally, even if We are to assume that
the Petisyon is a second notice, still, the requirement of due process is
wanting. For as We have said, the second notice, which is aimed to inform the
employee that his service is already terminated, must state that the employer
has considered all the circumstances which involve the charge and the grounds
in the first notice have been established to justify the severance of
employment. After the claimed dialogue between Policarpio and the employees
mentioned in the Petisyon, the latter were simply told not to report for work
anymore.
These defects are bolstered by Bergante and Inguillo who remain steadfast in
denying that they were notified of the specific charges against them nor were
they given any memorandum to that effect. They averred that had they been
informed that their dismissal was due to FPSILU's demand/petition, they could
have impleaded the FPSILU together with the respondents. The Court has
always underscored the significance of the two-notice rule in dismissing an
employee and has ruled in a number of cases that non-compliance therewith is
tantamount to deprivation of the employees right to due process. [51]
SO ORDERED.
PICOP Resources, Inc. (PRI) vs. Anacleto Taneca et. al, G.R. No. 160828, 09
August 2010
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking the reversal of the Decision[1] dated July 25, 2003 and Resolution [2] dated
October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, setting aside
the Resolutions dated October 8, 2001 [3] and April 29, 2002[4] of the National
Labor Relations Commission in NLRC CA No. M-006309-2001 and reinstating
the Decision[5] dated March 16, 2001 of the Labor Arbiter.
On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to
the management of PRI demanding the termination of employees who allegedly
campaigned for, supported and signed the Petition for Certification Election of the
Federation of Free Workers Union (FFW) during the effectivity of the
CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the
petition for certification election of FFW as an act of disloyalty and a valid basis
for termination for a cause in accordance with its Constitution and By-Laws, and
the terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2
on Union Security Clause.
In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the
management of PRI to investigate those union members who signed the Petition
for Certification Election of FFW during the existence of their CBA. NAMAPRI-
SPFL, likewise, furnished PRI with machine copy of the authorization letters
dated March 19, 20 and 21, 2000, which contained the names and signatures of
employees.
Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL,
Atty. Romero A. Boniel issued a memorandum addressed to the concerned
employees to explain in writing within 72 hours why their employment should not
be terminated due to acts of disloyalty as alleged by their Union.
After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the
management of PRI that the Union found the member's explanations to be
unsatisfactory. He reiterated the demand for termination, but only of 46 member-
employees, including respondents.
On October 16, 2000, PRI served notices of termination for causes to the
31 out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on
the ground of acts of disloyalty committed against it when respondents allegedly
supported and signed the Petition for Certification Election of FFW before the
freedom period during the effectivity of the CBA. A Notice dated October 21,
2000 was also served on the Department of Labor and Employment Office
(DOLE), Caraga Region.
Respondents alleged that none of them ever withdrew their membership from
NAMAPRI-SPFL or submitted to PRI any union dues and check-off
disauthorizations against NAMAPRI-SPFL. They claimed that they continue to
remain on record as bona fide members of NAMAPRI-SPFL. They pointed out
that a patent manifestation of ones disloyalty would have been the explicit
resignation or withdrawal of membership from the Union accompanied by an
advice to management to discontinue union dues and check-off deductions. They
insisted that mere affixation of signature on such authorization to file a petition for
certification election was not per se an act of disloyalty. They claimed that while it
may be true that they signed the said authorization before the start of the
freedom period, the petition of FFW was only filed with the DOLE on May 18,
2000, or 58 days after the start of the freedom period.
Respondents maintained that their acts of signing the authorization signifying
support to the filing of a Petition for Certification Election of FFW was merely
prompted by their desire to have a certification election among the rank-and-file
employees of PRI with hopes of a CBA negotiation in due time; and not to cause
the downfall of NAMAPRI-SPFL.
Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in
giving in to the wishes of the Union in discharging them on the ground of
disloyalty to the Union amounted to interference with, restraint or coercion of
respondents exercise of their right to self-organization. The act indirectly required
petitioners to support and maintain their membership with NAMAPRI-SPFL as a
condition for their continued employment. The acts of NAMAPRI-SPFL, Atty.
Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners
in the exercise of their rights to self-organization and constituted acts of unfair
labor practice.
In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the
respondents dismissal to be illegal and ordered PRI to reinstate respondents to
their former or equivalent positions without loss of seniority rights and to jointly
and solidarily pay their backwages. The dispositive portion of which reads:
SO ORDERED.[9]
Respondents filed a motion for reconsideration, but it was denied on April 29,
2001 for lack of merit.
Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the
Court of Appeals and sought the nullification of the Resolution of the NLRC dated
October 8, 2001 which reversed the Decision dated March 16. 2001 of Labor
Arbiter and the Resolution dated April 29, 2002, which denied respondents
motion for reconsideration.
On July 25, 2003, the Court of Appeals reversed and set aside the assailed
Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of
the Labor Arbiter.
Thus, before this Court, PRI, as petitioner, raised the following issues:
I
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING
AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND
EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS
UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR
PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO.
II
WHETHER OR NOT AN HONEST ERROR IN THE
INTERPRETATION AND/OR CONCLUSION OF LAW FALL WITHIN
THE AMBIT OF THE EXTRAORDINARY REMEDY OF
CERTIORARI UNDER RULE 65, REVISED RULES OF COURT. [10]
Petitioner is mistaken.
The power of the Court of Appeals to review NLRC decisions via Rule 65 or
Petition for Certiorari has been settled as early as in our decision in St. Martin
Funeral Home v. National Labor Relations Commission.[11] This Court held that
the proper vehicle for such review was a Special Civil Action for Certiorari under
Rule 65 of the Rules of Court, and that this action should be filed in the Court of
Appeals in strict observance of the doctrine of the hierarchy of courts.
[12]
Moreover, it is already settled that under Section 9 of Batas Pambansa
Blg. 129, as amended by Republic Act No. 7902[10] (An Act Expanding the
Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine
of Batas Pambansa Blg. 129 as amended, known as the Judiciary
Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its
original jurisdiction over Petitions for Certiorari is specifically given the power to
pass upon the evidence, if and when necessary, to resolve factual issues. [13]
We now come to the main issue of whether there was just cause to
terminate the employment of respondents.
PRI argued that the dismissal of the respondents was valid and legal. It claimed
to have acted in good faith at the instance of the incumbent union pursuant to the
Union Security Clause of the CBA.
Citing Article 253 of the Labor Code, [14] PRI contends that as parties to the CBA,
they are enjoined to keep the status quo and continue in full force and effect the
terms and conditions of the existing CBA during the 60-day period and/or until a
new agreement is reached by the parties.
Petitioner's argument is untenable.
As to the first requisite, there is no question that the CBA between PRI
and respondents included a union security clause, specifically, a maintenance of
membership as stipulated in Sections 6 of Article II, Union Security and Check-
Off. Following the same provision, PRI, upon written request from the Union, can
indeed terminate the employment of the employee who failed to maintain its good
standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2)
occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to
terminate the employment of respondents due to their acts of disloyalty to the
Union.
PRI alleged that respondents were terminated from employment based on the
alleged acts of disloyalty they committed when they signed an authorization for
the Federation of Free Workers (FFW) to file a Petition for Certification Election
among all rank-and-file employees of PRI. It contends that the acts of
respondents are a violation of the Union Security Clause, as provided in their
Collective Bargaining Agreement.
We are unconvinced.
We are in consonance with the Court of Appeals when it held that the mere
signing of the authorization in support of the Petition for Certification Election of
FFW on March 19, 20 and 21, or before the freedom period, is not sufficient
ground to terminate the employment of respondents inasmuch as the petition
itself was actually filed during the freedom period. Nothing in the records would
show that respondents failed to maintain their membership in good standing in
the Union. Respondents did not resign or withdraw their membership from the
Union to which they belong. Respondents continued to pay their union dues and
never joined the FFW.
We will emphasize anew that the power to dismiss is a normal prerogative of the
employer. This, however, is not without limitations. The employer is bound to
exercise caution in terminating the services of his employees especially so when
it is made upon the request of a labor union pursuant to the Collective Bargaining
Agreement. Dismissals must not be arbitrary and capricious. Due process must
be observed in dismissing an employee, because it affects not only his position
but also his means of livelihood. Employers should, therefore, respect and
protect the rights of their employees, which include the right to labor. [25]
An employee who is illegally dismissed is entitled to the twin reliefs of full
backwages and reinstatement. If reinstatement is not viable, separation pay is
awarded to the employee. In awarding separation pay to an illegally dismissed
employee, in lieu of reinstatement, the amount to be awarded shall be equivalent
to one month salary for every year of service. Under Republic Act No. 6715,
employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the
time their actual compensation was withheld from them up to the time of their
actual reinstatement. But if reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal termination up to the finality of the
decision. Moreover, respondents, having been compelled to litigate in order to
seek redress for their illegal dismissal, are entitled to the award of attorneys fees
equivalent to 10% of the total monetary award.[26]
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and
the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP
No. 71760, which set aside the Resolutions dated October 8, 2001 and April
29, 2002 of the National Labor Relations Commission in NLRC CA No. M-
006309-2001, are AFFIRMEDaccordingly. Respondents are hereby awarded
full backwages and other allowances, without qualifications and diminutions,
computed from the time they were illegally dismissed up to the time they are
actually reinstated. Let this case be remanded to the Labor Arbiter for proper
computation of the full backwages due respondents, in accordance with Article
279 of the Labor Code, as expeditiously as possible.
SO ORDERED.
New demands not otherwise touched upon or disposed of are hereby denied.
The motions for reconsideration and clarification of the above Order filed by
both petitioner and private respondent were denied in the second assailed Order
dated November 21, 1995, which disposed: [4]
WHEREFORE, except the modifications hereinabove set forth, the Order dated 9
October 1995 is hereby affirmed.
The parties are given another ten (10) days from receipt hereof to submit their
respective position papers and evidences (sic) relative to the issue of the legality
of strike and termination of the union officers.
The Facts
The parties are further directed to cease and desist from committing any and all
acts which might exacerbate the situation.
To expedite the resolution of the instant dispute, the parties are further directed to
submit their respective position papers and evidence within ten (10) days from
receipt hereof.
The proceedings concerning the legal issues involving the legality of strike and
the termination of the Union officers will be commenced by the Office of the
Secretary after the resolution of the CBA issues.
The Issues
Petitioner does not specifically pinpoint the issues it wants the Court to rule
upon. It appears, however, that petitioner questions public respondents resolution
of five issues in the CBA, specifically on wage increase, union security clause,
retirement benefits or application of the new retirement plan, signing bonus and
grievance and arbitration machineries.
[10]
Private respondent, on the other hand, submits this lone issue:
It should be noted, in the first place, that the instant petition is a special civil
action for certiorari under Rule 65 of the Revised Rules of Court. An
extraordinary remedy, its use is available only and restrictively in truly exceptional
cases -- those wherein the action of an inferior court, board or officer performing
judicial or quasi-judicial acts is challenged for being wholly void on grounds of
jurisdiction.The sole office of the writ of certiorari is the correction of errors of
jurisdiction including the commission of grave abuse of discretion amounting to
lack or excess of jurisdiction. It does not include correction of public respondent
NLRCs evaluation of the evidence and factual findings based thereon, which are
generally accorded not only great respect but even finality.
1. Wage Increase
The main assailed Order dated October 9, 1995 resolved the ticklish demand
for wage increase as follows: [15]
With this in mind and taking into view similar factors as financial capacity,
position in the industry, package of existing benefits, inflation rate, seniority, and
maintenance of the wage differentiation between and among the various classes
of employees within the entire Company, this Office hereby finds the following
improved benefits fair, reasonable and equitable:
1. Wage Increases
Petitioner belittles the awarded increases. It insists that the increase should
be ruled on the basis of four factors: (a) the economic needs of the [u]nions
members; (b) the [c]ompanys financial capacity; (c) the bargaining history
between the [u]nion and the [c]ompany; and (d) the traditional parity in wages
between Caltex and Shell Refinery Employees. [17]
Petitioner contends that the inflation rate rose to 11.8% in September [1995],
rose further in October, and is still a double-digit figure at the time of this
writing. Therefore, public respondents so-called improved benefits are in reality
retrogressive. [18]
Petitioner tries to show private respondents immense financial capacity by
citing Caltexs Banaba Housing Up-grading which would cost not less
than P200,000,000.00 [19] Petitioner does not begrudge private respondents
pampering of its [r]efinery [m]anagers and supervisors, but asks that the rank and
file employees be not left too far behind. [20]
Petitioner maintains that the salaries of Shell Refinery employees be used as
a reference point in upgrading the compensation of private respondents
employees because these two companies are in the same industry and their
refineries are both in Batangas. Thus, the wage increase of petitioners members
should be 15%/15%/15%. [21]
Private respondent counters with a proposed 9% 7% 7% increase for the
same period with automatic adjustment should the increase fall short of the
inflation rate. Hence, the Secretarys award of 14% 14% 13% increase really
comes closer to the Unions position. [22]
Petitioners arguments fail to impress us. First, the matter of inflation rate was
clearly addressed in public respondents Order dated November 21,
1995. Contrary to petitioners undocumented claim of 11.8% inflation in
September of 1995, the truth of the matter is that the average inflation for the first
ten (10) months was only 7.496%, and Central Bank projections indicate that it
will take a 13.5% inflation for November and December to record an average
inflation of 8.5% for the year. [23] Second, private respondents financial capacity
has been insufficiently explained in its Comment dated April 16, 1996 in which it
stated that the Banaba upgrading should not be construed as a yardstick of its
financial standing: [24]
The above reasoning convinces us that such upgrading should not be equated
with private respondents financial capacity to pay the proposed wage increase,
but should be evaluated as a business judgment to survive and remain globally
competitive. We believe that the standard proof of a companys financial standing
is its financial statements duly audited by independent and credible external
auditors. [25] Third, the traditional parity in wages used by petitioner to justify its
proposal is flimsy and trivial. Aside from its bare allegation of similarity in salaries
and locations, petitioner did not proffer any substantial reason to impute grave
abuse of discretion on the part of the public respondent. On the other hand, we
find private respondents discussion of this matter reasonable, as the following
shows: [26]
It is further amazing that the Union continues to use an outmoded concept of the
Shell yardstick and relative parities in wages to justify an imperative need for
them to keep their traditional edge in pay over their industry counterparts. It is not
just a matter of being above the rest. Sound compensation principle of higher
productivity equals higher pay, as well as, recent developments in the industry
have negated this argument. Both Shell and Petron continue to benefit from
increasing manpower productivity. Shell, for instance, produces 155,000 barrels
per day on a 120 manpower complement of operatives and rank and file; while
the Company only produces 65,000 barrels per day with its 221 manpower
complement. In addition, the counterpart union at Shell incurs an average
overtime rate of 37%, as a percentage of base pay; the Unions overtime rate is
102%.
Thus, the issue is productivity, not sales, and so far, the Companys Refinery is
not as productive as Shells or Petrons. To ask for relative parity in the face of this
reality is not only unreasonable, it is likewise illogical.
As it is, the wage increase of 14%, 14% and 13% will result in an average basic
salary of P23,510.00 at the end of the three-year cycle. The resulting pay is
excessive and disproportionately high compared with the value of the jobs within
the bargaining unit. Stated differently, this average salary will be unreasonably
high for the skills and qualifications needed for the job.
Even now, with an average monthly salary (prior to the DOLE awarded CBA
increases) of P16,010 plus overtime, holiday and other premiums way above
those mandated by law, the Union members are already the highest paid in the
Philippines, in terms of gross income.
The relevant provisions found in Article III of the CBA, which is hereby read, thus:
Section 1. Employees of the COMPANY who at the signing of this Agreement are
members of the UNION and those who subsequently become members thereof
shall maintain their membership with the UNION for the duration of this
Agreement as a condition of employment.
Section 1. Employees of the Company who at the signing of this Agreement are
members of the Union and those who subsequently become members thereof
shall maintain their membership in GOOD STANDING with the Union for the
duration of this Agreement as a condition of CONTINUOUS employment.
The proposed amendment of the Union gives the same substantial effect as the
existing provision. Rather, the same tackles more on procedure which, to our
belief, is already sufficiently provided under its constitution and by-laws. Insofar
as Union security is concerned, this is sufficiently addressed by the present
provisions in the CBA. Hence, we find we are not competent to arbitrarily
incorporate any modification thereof. We are convinced that any amendment on
this matter should be a product of mutual concern and agreement. [29]
Petitioner contends that the foregoing disposition leaving to the parties the
decision on the union security clause issue is contrary to the whole idea of
assumption of jurisdiction.Petitioner argues that in spite of the provisions on the
union security clause, it may expel a member only on any of three grounds: non-
payment of dues, subversion, or conviction for a crime involving moral
turpitude. If the employees act does not constitute any of these three grounds,
the member would continue to be employed by private respondent. Thus, the
disagreement between petitioner and private respondent on this issue is not only
procedural but also substantial. [30]
On the other hand, private respondent argues that nothing prevents
petitioner from expelling its members; however, termination of employment
should be based only on these three grounds agreed upon in the existing
CBA. Further, private respondent explains that petitioners citation of Article 249
(a) [31] of the Labor Code is out of context. It adds that the cited section provides
only for the right of a union to prescribe its own rules with respect to the
acquisition and retention of membership, and that upholding the arguments of
petitioner would make the private respondent a policeman of the union. [32]
We agree with petitioner. The disagreement between petitioner and private
respondent on the union security clause should have been definitively resolved
by public respondent. The labor secretary should take cognizance of an issue
which is not merely incidental to but essentially involved in the labor dispute
itself, or which is otherwise submitted to him for resolution. [33] In this case, the
parties have submitted the issue of the union security clause for public
respondents disposition. But the secretary of labor has given no valid reason for
avoiding the said issue; he merely points out that this issue is a procedural
matter. Such vacillation clearly sidesteps the nature of the union security clause
as one intended to strengthen the contracting union and to protect it from the
fickleness or perfidy of its own members. Without such safeguard, group
solidarity becomes uncertain; the union becomes gradually weakened and
increasingly vulnerable to company machinations. In this security clause lies the
strength of the union during the enforcement of the collective bargaining
agreement. It is this clause that provides labor with substantial power in collective
bargaining. The secretary of labor assumed jurisdiction over this labor dispute in
an industry indispensable to national interest, precisely to settle once and for all
the disputes over which he has jurisdiction at his level. In not performing his duty,
the secretary of labor committed a grave abuse of discretion.
Third, the matter of retirement benefits deserves a second look considering that
the concerned employees were already previously granted the option to choose
between the old and the new plan at the time the latter was initiated and they
choose to be covered under the Old Plan. To accede to the Unions demand to
cover them under the new plan entails a different arrangement under a new
scheme and likewise requires the approval of a Board of Trustees. It is, therefore,
understood that the new Retirement Plan does not apply to the more or less 40
employees being sought by the Union to be covered under the New Plan.
Petitioner contends that 40 of its members who are still covered by the Old
Retirement Plan because they were not able to exercise the option to shift to the
New Retirement Plan, for one reason or another, when such option was given in
the past are included in the New Retirement Plan. Petitioner argues that the
exclusion of forty employees from the New Plan constitutes grave abuse of
discretion for three reasons. First, it is a case of the left hand taking away, so to
speak, what the right hand had given. Second, the change was done for a very
shallow reason. The new scheme was no longer new, as the New Retirement
Plan had been in place for at least two years. Third, in not applying the New
Retirement Plan to the 40 employees, public respondent was perpetrating his
departments discriminatory practice. [35]
Private respondent counters that these 40 or so employees have opted to
remain covered by the old plan despite opportunities given them in 1985 to shift
to the New Plan. [36]
We hold that public respondent did not commit grave abuse of discretion in
respecting the free and voluntary decision of the employees in regard to the
Provident Plan and the irrevocable one-time option provided for in the New
Retirement Plan. Although the union has every right to represent its members in
the negotiation regarding the terms and conditions of their employment, it cannot
negate their wishes on matters which are purely personal and individual to
them. In this case, the forty employees freely opted to be covered by the Old
Plan; their decision should be respected. The company gave them every
opportunity to choose, and they voluntarily exercised their choice. The union
cannot pretend to know better; it cannot impose its will on them.
All grievances submitted to the grievance machinery which are not settled within
seven (7) calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the Collective Bargaining
Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and
designate in advance a Voluntary Arbitrators or panel of voluntary arbitrators,
include in the agreement a procedure for the selection of such Voluntary
Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified
Voluntary Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection procedure agreed upon in the Collective
Bargaining Agreement, which shall act with same force and effect as if the
Arbitrator or panel of Arbitrators has been selected by the parties as described
above.
5. Signing Bonus
Fifth, specifically on the issue of whether the signing bonus is covered under
the maintenance of existing benefits clause, we find that a clarification is indeed
imperative. Despite the expressed provision for a signing bonus in the previous
CBA, we uphold the principle that the award for a signing bonus should partake
the nature of an incentive and premium for peaceful negotiations and amicable
resolution of disputes which apparently are not present in the instant case. Thus,
we are constrained to rule that the award of signing bonus is not covered by
the maintenance of existing benefits clause.
The parties acknowledge that during the negotiations which resulted in the
execution of this Agreement, each of them had the unlimited opportunity to make
demands and proposals with respect to any and all subjects and matters proper
for collective bargaining and not prohibited by law; and the parties further
acknowledge that the understandings and agreements arrived at by them after
the exercise of that right and unlimited opportunity are fully set forth in this
Agreement. Therefore, the COMPANY and the UNION during the life of this
Agreement, each voluntarily and unqualifiedly waives the right and each agrees
that the other shall not be obligated to bargain collectively with respect to any
subject or matter referred to or covered in this Agreement or with respect to any
subject or matter not specifically referred to or covered in this Agreement even
though such subject or matter may not have been within the knowledge or
contemplation of either or both parties at the time they negotiated or signed this
Agreement.
Epilogue
We have carefully reviewed the assailed Orders. Other than his failure to rule
on the issue of union security, the secretary of labor cannot be indicted for grave
abuse of discretion amounting to want or excess of jurisdiction.
The Court has previously held that judges and arbiters should draw up their
decisions and resolutions with due care, and make certain that they truly and
accurately reflect their conclusions and their final dispositions. x x x The same
thing goes for the findings of fact made by the NLRC, as it is a settled rule that
such findings are entitled to great respect and even finality when supported by
substantial evidence; otherwise, they shall be struck down for being whimsical
and capricious and arrived at with grave abuse of discretion. It is a requirement
of due process and fair play that the parties to a litigation be informed of how it
was decided, with an explanation of the factual and legal reasons that led to the
conclusions of the court. A decision that does not clearly and distinctly state the
facts and the law of which it is based leaves the parties in the dark as to how it
was reached and is especially prejudicial to the losing party, who is unable to
pinpoint the possible errors of the court for review by a higher tribunal.
BPI vs. BPI Employees Union – Metro Manila, G.R. No. 175678, 22 August 2012
THIRD DIVISION
DECISION
PERALTA, J.:
For resolution of this Court is the Petition for Review under Rule 45 of the
Revised Rules of Court, dated January 20, 2007, of petitioner Bank of the
Philippine Islands (BPI) which seeks to reverse and set aside the Court of
Appeals' (CA) Decision[1] and Resolution,[2] dated June 8, 2006 and November
29, 2006, respectively, in CA-G.R. SP No. 83387.
xxxx
Section 14. Multi-Purpose Loan, Real Estate Secured Housing Loan and Car
Loan. - The Bank agrees to continue and maintain its present policy and practice,
embodied in its Collective Bargaining Agreement with the Union which expired on
31 March 2001, extending to qualified regular employees the multi-purpose and
real estate secured housing loans, subject to the increased limits and provisions
hereinbelow, to wit:
(a) Multi-Purpose Loan not exceeding FORTY THOUSAND PESOS
(P40,000.00), payable within the period not exceeding three (3) years via semi-
monthly salary deductions, with interest at the rate of eight percent (8%) per
annum computed on the diminishing balance.
(b) Real Estate-Secured Housing Loan not exceeding FOUR HUNDRED FIFTY
THOUSAND " PESOS (P450,000.00), payable over a period not exceeding
fifteen (15) years via semi-monthly salary deductions, with interest at the rate of
nine percent (9%) per annum computed on the diminishing balance.
The rate of interest on real estate secured loans, however, may be reduced to six
percent (6%) per annum, subject to the following conditions:
1. If the loan is accepted for coverage by the Home Insurance and Guaranty
Corporation (HIGC).
4. The BANK may increase the six percent (6%) interest if the HIGC or the
Government imposes new conditions or restrictions necessitating a higher
interest in order to maintain the BANK'S position before such conditions or
restrictions were imposed.
The BANK shall make strong representations with the Bangko Sentral ng
Pilipinas for a second upgrade and/or availment under the Housing Loan
Program.
(c) Car Loan. - The BANK shall submit a revised plan for the approval of the
Bangko Sentral ng Pilipinas which shall incorporate a car loan program in its
existing Housing Loan Program. The said car loan shall be a sub-limit under the
program such that any availment thereof shall operate to decrease the available
housing loan limit. Therefore, the combined amount of both housing and car
loans that may be availed of shall not exceed FOUR HUNDRED FIFTY
THOUSAND PESOS (P450,000.00). This supplemental revision of the loan
program shall be subject to the rules and regulations {e.g., amount of sub-limit,
credit ratio, type and age of vehicle, interest rate, etc.) which the BANK may
promulgate, and to the terms of the approval of the Bangko Sentral ng Pilipinas.
The multi-purpose and housing loans stated in the next preceding paragraphs, as
well as the car loan which shall be incorporated in the housing loan program,
shall be subject further to the applicable provisions, guidelines and restrictions
set forth in the Central Bank Circular No. 561, as amended by Central Bank
Circular No. 689, and to the rules, regulations and policies of the BANK on such
loans insofar as they do not violate the provisions, guidelines and restrictions set
forth in said Central Bank Circular No. 561, as amended.
Section 15. Emergency Loans. - The BANK agrees to increase the amount of
emergency loans assistance, upon approval by the Central Bank of the
Philippines, from a maximum amount of Ten Thousand Pesos (PI 0,000.00) to a
maximum amount of Fifteen Thousand Pesos (P15,000.00) to qualified
employees intended to cover emergencies only, i.e., expenses incurred but could
not be foreseen such as those arising from natural calamities, emergency
medical treatment and/or hospitalization of an employee and/or his immediate
family and other genuine emergency cases of serious hardship as the BANK may
determine. Hospital expenses for caesarian delivery of a female employee or an
employee's wife not covered by the Group Hospitalization Insurance Plan shall
qualify for the emergency loan.
Thereafter, petitioner issued a "no negative data bank policy" [5] for the
implementation/availment of the manpower loans which the respondent objected
to, thus, resulting into labor-management dialogues. Unsatisfied with the result of
those dialogues, respondent brought the matter to the grievance machinery and
afterwards, the issue, not having been resolved, the parties raised it to the
Voluntary Arbitrator.
In his decision, the Voluntary Arbitrator found merit in the respondent's cause.
Hence, the dispositive portion of the said decision reads as follows:
WHEREFORE, viewed in the light of the foregoing circumstances, this Arbitrator
hereby rules:
1. That the imposition of the NO NEGATIVE DATA BANK as a new condition for
the implementation and availment of the manpower loan benefits by the
employees evidently violates the CBA;
2. That all employees who were not allowed or deprived of the manpower loan
benefits due to the NO NEGATIVE DATA BANK POLICY be immediately granted
in accordance with their respective loan benefits applied for;
3. That the respondent herein is ordered likewise to pay ten percent (10%) of the
total amount of all loans to be granted to all employees concerned as Attorney's
Fees; and
4. That the parties herein are directed to report compliance with the above
directives within ten (10) days from receipt of this ORDER.
SO ORDERED.[6]
Aggrieved, petitioner appealed the case to the CA via Rule 43, but the latter
affirmed the decision of the Voluntary Arbitrator with the modification that the
award of attorney's fees be deleted. The dispositive portion states:
SO ORDERED.[7]
Petitioner filed a motion for reconsideration, but it was denied in a
Resolution[8] dated November 29, 2006.
A. The "No NDB policy" is a valid and reasonable requirement that is consistent
with sound banking practice and is meant to inculcate among officers and
employees of the petitioner the need for fiscal responsibility and discipline,
especially in an industry where the element of trust is paramount.
B. The "No NDB policy" does not violate the parties' Collective Bargaining
Agreement.
C. The "No NDB policy" conforms to existing BSP regulations and circulars, and
to safe and sound banking practices.[9]
Respondent, on the other hand, claims that the petition did not comply with
Section 4, Rule 45 of the Revised Rules of Court and must be dismissed outright
in accordance with Section 5 of the same rule; that the CA did not commit any
reversible error in the questioned judgment to warrant the exercise of its
discretionary appellate jurisdiction; and that the Voluntary Arbitrator and the CA
duly passed upon the same issues raised in the instant petition and their
decisions are based on substantial evidence and are in accordance with law and
jurisprudence.[10]
Tn its Reply[11] dated September 21, 2007, petitioner reiterates the issues it
presented in its petition. It also argues that the present petition must not be
dismissed based on mere technicality.
Petitioner's arguments are mere rehash of those it raised in the CA. It insists that
the rationale behind the use of the "no negative data bank policy" aims to
encourage employees of a banking institution to exercise the highest standards
of conduct, considering the bank's fiduciary relationship with its depositors and
clients. It likewise contends that a scrutiny of the CBA reveals an express
conformity to petitioner's prerogative to issue policies that would guide the parties
in the availment of manpower loans under the CBA.
Furthermore, petitioner avers that the subject policy does not only conform to the
provisions of the parties' CBA, but it is also in harmony with the circulars and
regulations of the Bangko Sentral ng Pilipinas.
The CBA in this case contains no provision on the "no negative data bank policy"
as a prerequisite in the entitlement of the benefits it set forth for the employees.
In fact, a close reading of the CBA would show that the terms and conditions
contained therein relative to the availment of the loans are plain and clear, thus,
all they need is the proper implementation in order to reach their objective. The
CA was, therefore, correct when it ruled that, although it can be said that
petitioner is authorized to issue rules and regulations pertinent to the availment
and administration of the loans under the CBA, the additional rules and
regulations, however, must not impose new conditions which are not
contemplated in the CBA and should be within the realm of reasonableness. The
"no negative data bank policy" is a new condition which is never contemplated in
the CBA and at some points, unreasonable to the employees because it provides
that before an employee or his/her spouse can avail of the loan benefits under
the CBA, the said employee or his/her spouse must not be listed in the negative
data bank, or if previously listed therein, must obtain a clearance at least one
year or six months as the case may be, prior to a loan application.
This Court also notes petitioner's argument that the "no negative data bank
policy" is intended to exact a high standard of conduct from its employees.
However, the terms and conditions of the CBA must prevail. Petitioner can
propose the inclusion of the said policy upon the expiration of the CBA, during
the negotiations for a new CBA, but in the meantime, it has to honor the
provisions of the existing CBA.
Article 1702 of the New Civil Code provides that, in case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and
decent living of the laborer. Thus, this Court has ruled that any doubt or
ambiguity in the contract between management and the union members should
be resolved in favor of the latter.[18] Therefore, there is no doubt, in this case, that
the welfare of the laborers stands supreme.
WHEREFORE, the Petition for Review under Rule 45 of the Revised Rules of
Court, dated January 20, 2007, of petitioner Bank of the Philippine Islands, is
hereby DENIED and the Court of Appeals' Decision and Resolution, dated June
8, 2006 and November 29, 2006, respectively, are hereby AFFIRMED.
SO ORDERED.
Velasco, Jr., (Chairperson), Abad, Mendoza, and Perlas-Bernabe, JJ., concur.
[1]
Penned by Associate Justice Mariflor P. Punzalan Castillo, with Associate
Justices Remedios A. Salazar-Fernando and Noel G.Tijam, concurring; rollo, pp.
30-41.
[2]
Id at. 42-43.
[3]
Rollo, pp. at 84-105.
[4]
Id. at 96-98.
[5]
As bank employees, one is expected to practice the highest standards of
financial prudence and sensitivity to basic rules of credit and management of
his/her financial resources and needs, it is for this reason that Management
deemed fit that reference to the Negative Data Bank (NDB) and other sources of
financial data handling shall be made for purposes of evaluation of manpower
loans.
xxx These procedures apply to all employees, whether officer or staff, regardless
of loan type (multi-purpose, emergency, car, housing).
1. Outstanding obligation should be fully paid at least one year prior to loan
application.
- even if cleared/fully paid, but within the one-year penalty box, the application
wili not be considered.
- if card or lending company, the date of full payment should be clearly indicated
in the certification.
- if closed account due to mishandling, date of account closure.
- f court case, date of dismissal of case.
3. Employees will be asked to explain in writing the reason/circumstances for
being in the NDB.
4. Final approval of the loan will be with the HR Head, SVP Jess Razon.
1. Outstanding obligation should be fully paid at least six months prior to the loan
application.
2. Clearance certification from BCC or other Unibank unit where the obligation
occurred.
Philippine Journalist Inc. vs. Journal Employees Union, G.R. No. 192601, 26
June 2013
DECISION
BERSAMIN, J.:
Complainant added that in her thirteen (13) years with the company and after so
many changes in its management and executives, she had never done anything
that will cause them to issue a memorandum against her or her work attitude,
more so, reasons to terminate her services; that she got dismissed because she
was the Union President who was very active in defending and pursuing the
rights of her union members, and in fighting against the abuses of respondent
Corporate Officers; and that she got the ire of respondents when the employees
filed a complaint against the Corporate Officers before Malacañang and which
was later indorsed to the Office of the Ombudsman.
The second complainant Michael L. Alfante alleged that he started to work with
respondents as computer technician at Management Information System under
manager Neri Torrecampo on 16 May 2000; that on 15 July 2001, he was
regularized receiving a monthly salary of ₱9,070.00 plus other monetary benefits;
that sometime in 2001, Rico Pagkalinawan replaced Torrecampo, which was
opposed by complainant and three other co-employees; that Pagkalinawan took
offense of their objection; that on 22 October 2002, complainant Alfante received
a memorandum from Pagkalinawan regarding his excessive tardiness; that on 10
June 2003, complainant Alfante received a memorandum from Executive Vice-
President Arnold Banares, requiring him to explain his side on the evaluation of
his performance submitted by manager Pagkalinawan; that one week after
complainant submitted his explanation, he was handed his notice of dismissal on
the ground of "poor performance"; and that complainant was dismissed effective
28 July 2003.
In both instances, respondents maintained that they did not commit any act of
unfair labor practices; that they did not commit acts tantamount to interfering,
restraining, or coercing employees in the exercise of their right to self-
organization.
With respect to the alleged non-adjustment of longevity pay and burial aid,
respondent PJI pointed out that it complies with the provisions of the CBA and
that both complainants have not claimed for the burial aid.
Respondents put forward the information that the alleged nonpayment of rest
days – every Monday for the past three (3) years is a matter that is still at issue in
NLRC Case No. 02-0402973-93, which case is still pending before this
Commission.
Respondents asserted that the respondents Arturo Dela Cruz, Bobby Capco,
Arnold Banares, Ruby Ruiz-Bruno and Fundador Soriano should not be held
liable on account of complainants’ dismissal as they merely acted as agents of
respondent PJI.1
Upon the foregoing backdrop, Labor Arbiter Corazon C. Borbolla rendered her
decision on March 29, 2006, disposing thusly:
The charge of illegal dismissal by Michael Alfante is hereby dismissed for lack of
merit.
SO ORDERED.2
In the meantime, on May 10, 2006, petitioner and Judith Pulido (Pulido), the
other complainant, jointly manifested to the NLRC that the decision of March 29,
2006 had been fully satisfied as to Pulido under the following terms, namely: (a)
she would be reinstated to her former position as editorial staffmember, or an
equivalent position, without loss of seniority rights, effective May 15, 2006; (b)
she would go on maternity leave, and report to work after giving birth; (c) she
would be entitled to backwages of ₱130,000.00; and (d) she would execute the
quitclaim and release on May 11, 2006 in favor of petitioner. 4 This left Alfante as
the remaining complainant.
On January 31, 2007, the NLRC rendered its decision dismissing the partial
appeal for lack of merit.
JEU and Alfante moved for the reconsideration of the decision, but the NLRC
denied their motion on April 24, 2007.
Thereafter, JEU and Alfante assailed the decision of the NLRC before the CA on
certiorari (C.A.-G.R. SP No. 99407).
The twin Resolutions dated January 31, 2007 and April 24, 2007, respectively, of
the Third Division of the National Labor Relations Commission (NLRC), in NLRC
NCR CA No. 048785-06 (NLRC NCR Case No. 00-10-11413-04), are MODIFIED
insofar as the funeral or bereavement aid is concerned, which is hereby
GRANTED, but only after submission of conclusive proofs that the deceased is a
parent, either father or mother, of the employees concerned, as well as the death
certificate to establish the fact of death of the deceased legal dependent.
The rest of the findings of fact and law in the assailed Resolutions are hereby
AFFIRMED.
SO ORDERED.
Both parties moved for reconsideration, but the CA denied their respective
motions for reconsideration on June 2, 2010.8
JEU and Alfante appealed to the Court (G.R. No. 192478) to challenge the CA’s
dispositions regarding the legality of: (a) Alfante’s dismissal; (b) the non-
compliance with Minimum Wage Order No. 9; and (c) the non-payment of the rest
day.9
On August 18, 2010, the Court denied due course to the petition in G.R. No.
192478 for failure of petitioners to sufficiently show that the CA had committed
any reversible error to warrant the Court’s exercise of its discretionary appellate
jurisdiction.10
The Court denied with finality JEU and Alfante’s ensuing motion for
reconsideration through the resolution of December 8, 2010. 11 The entry of
judgment in G.R. No. 192478 issued in due course on February 1, 2011. 12
On its part, petitioner likewise appealed (G.R. No. 192601), seeking the review of
the CA’s disposition in the decision of February 5, 2010 on the granting of the
funeral and bereavement aid stipulated in the CBA.
In its petition for review, petitioner maintained that under Section 4, Article XIII of
the CBA, funeral and bereavement aid should be granted upon the death of a
legal dependent of a regular employee; that consistent with the definition
provided by the Social Security System (SSS), the term legal dependent referred
to the spouse and children of a married regular employee, and to the parents and
siblings, 18 years old and below, of a single regular employee; 13that the CBA
considered the term dependents to have the same meaning as beneficiaries, as
provided in Section 5, Article XIII of the CBA on the payment of death
benefits;14 that its earlier granting of claims for funeral and bereavement aid
without regard to the foregoing definition of the legal dependents of married or
single regular employees did not ripen into a company policy whose unilateral
withdrawal would constitute a violation of Article 100 of the Labor Code, 15 the law
disallowing the non-diminution of benefits; 16 that it had approved only four claims
from 1999 to 2003 based on its mistaken interpretation of the term legal
dependents, but later corrected the same in 2000; 17 that the grant of funeral and
bereavement aid for the death of an employee’s legal dependent, regardless of
the employee’s civil status, did not occur over a long period of time, was not
consistent and deliberate, and was partly due to its mistake in appreciating a
doubtful question of law; and that its denial of subsequent claims did not amount
to a violation of the law against the non-diminution of benefits. 18
In their comment,19 JEU and Alfante countered that the CBA was a bilateral
contractual agreement that could not be unilaterally changed by any party during
its lifetime; and that the grant of burial benefits had already become a company
practice favorable to the employees, and could not anymore be reduced,
diminished, discontinued or eliminated by petitioner.
Issue
In view of the entry of judgment issued in G.R. No. 192478, JEU and Alfante’s
submissions on the illegality of his dismissal, the non-payment of his rest days,
and the violation of Minimum Wage Order No. 9 shall no longer be considered
and passed upon.
Ruling
Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the
law between the parties, must be complied with by them. The literal meaning of
the stipulations of the CBA, as with every other contract, control if they are clear
and leave no doubt upon the intention of the contracting parties. 22
Here, a conflict has arisen regarding the interpretation of the term legal
dependent in connection with the grant of funeral and bereavement aid to a
regular employee under Section 4, Article XIII of the CBA, 23 which stipulates as
follows:
Petitioner insists that notwithstanding the silence of the CBA, the term legal
dependent should follow the definition of it under Republic Act (R.A.) No. 8282
(Social Security Law),24 so that in the case of a married regular employee, his or
her legal dependents include only his or her spouse and children, and in the case
of a single regular employee, his or her legal dependents include only his or her
parents and siblings, 18 years old and below; and that the term dependents has
the same meaning as beneficiaries as used in Section 5, Article XIII of the CBA.
Social legislations contemporaneous with the execution of the CBA have given a
meaning to the term legal dependent. First of all, Section 8(e) of the Social
Security Law provides that a dependent shall be the following, namely: (a) the
legal spouse entitled by law to receive support from the member; (b) the
legitimate, legitimated, or legally adopted, and illegitimate child who is unmarried,
not gainfully employed and has not reached 21 of age, or, if over 21 years of age,
is congenitally or while still a minor has been permanently incapacitated and
incapable of self-support, physically or mentally; and (c) the parent who is
receiving regular support from the member. Secondly, Section 4(f) of R.A. No.
7875, as amended by R.A. No. 9241,25 enumerates who are the legal
dependents, to wit: (a) the legitimate spouse who is not a member; (b) the
unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged
children as appearing in the birth certificate; legally adopted or step-children
below 21 years of age; (c) children who are 21 years old and order but suffering
from congenital disability, either physical or mental, or any disability acquired that
renders them totally dependent on the member of our support; and (d) the
parents who are 60 years old or older whose monthly income is below an amount
to be determined by the Philippine Health Insurance Corporation in accordance
with the guiding principles set forth in Article I of R.A. No. 7875. And, thirdly,
Section 2(f) of Presidential Decree No. 1146, as amended by R.A. No.
8291,dependent for support upon the member or pensioner; (b) the legitimate,
legitimated, legally adopted child, including the illegitimate child, who is
unmarried, not gainfully employed, not over the age of majority, or is over the age
of majority but incapacitated and incapable of self-support due to a mental or
physical defect acquired prior to age of majority; and (c) the parents dependent
upon the member for support.1âwphi1
It is clear from these statutory definitions of dependent that the civil status of the
employee as either married or single is not the controlling consideration in order
that a person may qualify as the employee’s legal dependent. What is rather
decidedly controlling is the fact that the spouse, child, or parent is actually
dependent for support upon the employee. Indeed, the Court has adopted this
understanding of the term dependent in Social Security System v. De Los
Santos,27 viz:
Further, Aguas pointed out that a wife who left her family until her husband died
and lived with other men, was not dependent upon her husband for support,
financial or otherwise, during the entire period.
In a parallel case involving a claim for benefits under the GSIS law, the Court
defined a dependent as "one who derives his or her main support from another.
Meaning, relying on, or subject to, someone else for support; not able to exist or
sustain oneself, or to perform anything without the will, power, or aid of someone
else." It should be noted that the GSIS law likewise defines a dependent spouse
as "the legitimate spouse dependent for support upon the member or pensioner."
In that case, the Court found it obvious that a wife who abandoned the family for
more than 17 years until her husband died, and lived with other men, was not
dependent on her husband for support, financial or otherwise, during that entire
period. Hence, the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto
from her husband cannot be said to be "dependent for support" upon the
husband, absent any showing to the contrary. Conversely, if it is proved that the
husband and wife were still living together at the time of his death, it would be
safe to presume that she was dependent on the husband for support, unless it is
shown that she is capable of providing for herself.
Considering that existing laws always form part of any contract, and are deemed
incorporated in each and every contract, 28 the definition of legal dependents
under the aforecited social legislations applies herein in the absence of a
contrary or different definition mutually intended and adopted by the parties in the
CBA. Accordingly, the concurrence of a legitimate spouse does not disqualify a
child or a parent of the employee from being a legal dependent provided
substantial evidence is adduced to prove the actual dependency of the child or
parent on the support of the employee.
In this regard, the differentiation among the legal dependents is significant only in
the event the CBA has prescribed a hierarchy among them for the granting of a
benefit; hence, the use of the terms primary beneficiaries and secondary
beneficiaries for that purpose. But considering that Section 4, Article XIII of the
CBA has not included that differentiation, petitioner had no basis to deny the
claim for funeral and bereavement aid of Alfante for the death of his parent
whose death and fact of legal dependency on him could be substantially proved.
Pursuant to Article 100 of the Labor Code, petitioner as the employer could not
reduce, diminish, discontinue or eliminate any benefit and supplement being
enjoyed by or granted to its employees. This prohibition against the diminution of
benefits is founded on the constitutional mandate to protect the rights of workers
and to promote their welfare and to afford labor full protection. 29 The application
of the prohibition against the diminution of benefits presupposes that a company
practice, policy or tradition favorable to the employees has been clearly
established; and that the payments made by the employer pursuant to the
practice, policy, or tradition have ripened into benefits enjoyed by them. 30 To be
considered as a practice, policy or tradition, however, the giving of the benefits
should have been done over a long period of time, and must be shown to have
been consistent and deliberate.31 It is relevant to mention that we have not yet
settled on the specific minimum number of years as the length of time sufficient
to ripen the practice, policy or tradition into a benefit that the employer cannot
unilaterally withdraw.32
The argument of petitioner that the grant of the funeral and bereavement benefit
was not voluntary but resulted from its mistaken interpretation as to who was
considered a legal dependent of a regular employee deserves scant
consideration. To be sure, no doubtful or difficult question of law was involved
inasmuch as the several cogent statutes existing at the time the CBA was
entered into already defined who were qualified as the legal dependents of
another. Moreover, the voluntariness of the grant of the benefit became even
manifest from petitioner’s admission that, despite the memorandum it issued in
200033 in order to "correct" the interpretation of the term legal dependent, it still
approved in 2003 the claims for funeral and bereavement aid of two employees,
namely: (a) Cecille Bulacan, for the death of her father; and (b) Charito Cartel, for
the death of her mother, based on its supposedly mistaken interpretation. 34
It is further worthy to note that petitioner granted claims for funeral and
bereavement aid as early as 1999, then issued a memorandum in 2000 to
correct its erroneous interpretation of legal dependent under Section 4, Article
XIII of the CBA. This notwithstanding, the 2001-2004 CBA 35 still contained the
same provision granting funeral or bereavement aid in case of the death of a
legal dependent of a regular employee without differentiating the legal
dependents according to the employee's civil status as married or single. The
continuity in the grant of the funeral and bereavement aid to regular employees
for the death of their legal dependents has undoubtedly ripened into a company
policy. With that, the denial of Alfante's qualified claim for such benefit pursuant
to Section 4, Article XIII of the CBA violated the law prohibiting the diminution of
benefits.
SO ORDERED.
The Collective Bargaining Agreement (CBA) of the parties in this case provides
that the company shoulder the hospitalization expenses of the dependents of
covered employees subject to certain limitations and restrictions. Accordingly,
covered employees pay part of the hospitalization insurance premium through
monthly salary deduction while the company, upon hospitalization of the covered
employees' dependents, shall pay the hospitalization expenses incurred for the
same. The conflict arose when a portion of the hospitalization expenses of the
covered employees' dependents were paid/shouldered by the dependent's own
health insurance. While the company refused to pay the portion of the hospital
expenses already shouldered by the dependents' own health insurance, the
union insists that the covered employees are entitled to the whole and
undiminished amount of said hospital expenses.
Factual Antecedents
The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 provides
for the hospitalization insurance benefits for the covered dependents, thus:
a. The room and board must not exceed three hundred pesos (₱300.00)
per day up to a maximum of thirty-one (31) days. Similarly, Doctor’s Call
fees must not exceed three hundred pesos (₱300.00) per day for a
maximum of thirty-one (31) days. Any excess of this amount shall be
borne by the employee.
d. Payment shall be direct to the hospital and doctor and must be covered
by actual billings.
Each employee shall pay one hundred pesos (₱100.00) per month through
salary deduction as his share in the payment of the insurance premium for the
above coverage with the balance of the premium to be paid by the COMPANY. If
the COMPANY is self-insured the one hundred pesos (₱100.00) per employee
monthly contribution shall be given to the COMPANY which shall shoulder the
expenses subject to the above level of benefits and subject to the same
limitations and restrictions provided for in Annex "B" hereof.
For purposes of this provision, eligible dependents are the covered employees’
natural parents, legal spouse and legitimate or legally adopted or step children
who are unmarried, unemployed who have not attained twenty-one (21) years of
age and wholly dependent upon the employee for support.
This provision applies only in cases of actual confinement in the hospital for at
least six (6) hours.
Maternity cases are not covered by this section but will be under the next
succeeding section on maternity benefits. 6
When the CBA expired on July 31, 1999, the parties executed another
CBA7 effective August 1, 1999 to July 31, 2002 incorporating the same provisions
on dependents’ hospitalization insurance benefits but in the increased amount of
₱50,000.00. The room and board expenses, as well as the doctor’s call fees,
were also increased to ₱375.00.
MMPC paid only a portion of their hospitalization insurance claims, not the full
amount. In the case of Calida, his wife, Lanie, was confined at Sto. Tomas
University Hospital from September 4 to 9, 1998 due to Thyroidectomy. The
medical expenses incurred totalled ₱29,967.10. Of this amount, ₱9,000.00
representing professional fees was paid by MEDICard Philippines, Inc.
(MEDICard) which provides health maintenance to Lanie. 8 MMPC only paid
₱12,148.63.9 It did not pay the ₱9,000.00 already paid by MEDICard and the
₱6,278.47 not covered by official receipts. It refused to give to Calida the
difference between the amount of medical expenses of ₱27,427.10 10 which he
claimed to be entitled to under the CBA and the ₱12,148.63 which MMPC directly
paid to the hospital.
In the case of Martin, his father, Jose, was admitted at The Medical City from
March 26 to 27, 2000 due to Acid Peptic Disease and incurred medical expenses
amounting to ₱9,101.30.14 MEDICard paid ₱8,496.00.15Consequently, MMPC
only paid ₱288.40,16 after deducting from the total medical expenses the amount
paid by MEDICard and the ₱316.90 discount given by the hospital.
Claiming that under the CBA, they are entitled to hospital benefits amounting to
₱27,427.10, ₱6,769.35 and ₱8,123.80, respectively, which should not be
reduced by the amounts paid by MEDICard and by Prosper, Calida, Oabel and
Martin asked for reimbursement from MMPC. However, MMPC denied the claims
contending that double insurance would result if the said employees would
receive from the company the full amount of hospitalization expenses despite
having already received payment of portions thereof from other health insurance
providers.
On August 28, 2000, MMPSEU referred the dispute to the National Conciliation
and Mediation Board and requested for preventive mediation. 19
On the other hand, MMPC argued that the reimbursement of the entire amounts
being claimed by the covered employees, including those already paid by other
insurance companies, would constitute double indemnity or double insurance,
which is circumscribed under the Insurance Code. Moreover, a contract of
insurance is a contract of indemnity and the employees cannot be allowed to
profit from their dependents’ loss.22
Meanwhile, the parties separately sought for a legal opinion from the Insurance
Commission relative to the issue at hand. In its letter 23 to the Insurance
Commission, MMPC requested for confirmation of its position that the covered
employees cannot claim insurance benefits for a loss that had already been
covered or paid by another insurance company. However, the Office of the
Insurance Commission opted not to render an opinion on the matter as the same
may become the subject of a formal complaint before it. 24 On the other hand,
when queried by MMPSEU,25the Insurance Commission, through Atty. Richard
David C. Funk II (Atty. Funk) of the Claims Adjudication Division, rendered an
opinion contained in a letter,26 viz:
Madam:
(SGD.)
Attorney IV
MMPC filed a Petition for Review with Prayer for the Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction 28 before the CA. It claimed
that the Voluntary Arbitrator committed grave abuse of discretion in not finding
that recovery under both insurance policies constitutes double insurance as both
had the same subject matter, interest insured and risk or peril insured against; in
relying solely on the unauthorized legal opinion of Atty. Funk; and in not finding
that the employees will be benefited twice for the same loss. In its
Comment,29 MMPSEU countered that MMPC will unjustly enrich itself and profit
from the monthly premiums paid if full reimbursement is not made.
On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite
the lack of a provision which bars recovery in case of payment by other insurers,
the wordings of the subject provision of the CBA showed that the parties intended
to make MMPC liable only for expenses actually incurred by an employee’s
qualified dependent. In particular, the provision stipulates that payment should be
made directly to the hospital and that the claim should be supported by actual
hospital and doctor’s bills. These mean that the employees shall only be paid
amounts not covered by other health insurance and is more in keeping with the
principle of indemnity in insurance contracts. Besides, a contrary interpretation
would "allow unscrupulous employees to unduly profit from the x x x benefits"
and shall "open the floodgates to questionable claims x x x." 30
SO ORDERED.32
In its Motion for Reconsideration,33 MMPSEU pointed out that the alleged
oppression that may be committed by abusive employees is a mere possibility
whereas the resulting losses to the employees are real. MMPSEU cited Samsel
v. Allstate Insurance Co.,34 wherein the Arizona Supreme Court explicitly ruled
that an insured may recover from separate health insurance providers,
regardless of whether one of them has already paid the medical expenses
incurred. On the other hand, MMPC argued in its Comment 35 that the cited
foreign case involves a different set of facts.
The CA, in its Resolution36 dated December 5, 2006, denied MMPSEU’s motion.
Issues
A.
B.
C.
D.
MMPSEU avers that the Decision of the Voluntary Arbitrator deserves utmost
respect and finality because it is supported by substantial evidence and is in
accordance with the opinion rendered by the Insurance Commission, an agency
equipped with vast knowledge concerning insurance contracts. It maintains that
under the CBA, member-employees are entitled to full reimbursement of medical
expenses incurred by their dependents regardless of any amounts paid by the
latter’s health insurance provider. Otherwise, non-recovery will constitute unjust
enrichment on the part of MMPC. It avers that recovery from both the CBA and
other insurance companies is allowed under their CBA and not prohibited by law
nor by jurisprudence.
Our Ruling
The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk that the
employees may recover benefits from different insurance providers without
regard to the amount of benefits paid by each. According to him, this view is
consistent with the theory of the collateral source rule.
As part of American personal injury law, the collateral source rule was originally
applied to tort cases wherein the defendant is prevented from benefiting from the
plaintiff’s receipt of money from other sources. 38 Under this rule, if an injured
person receives compensation for his injuries from a source wholly independent
of the tortfeasor, the payment should not be deducted from the damages which
he would otherwise collect from the tortfeasor. 39 In a recent Decision40 by the
Illinois Supreme Court, the rule has been described as "an established exception
to the general rule that damages in negligence actions must be compensatory."
The Court went on to explain that although the rule appears to allow a double
recovery, the collateral source will have a lien or subrogation right to prevent
such a double recovery.41 In Mitchell v. Haldar,42 the collateral source rule was
rationalized by the Supreme Court of Delaware:
The collateral source rule is ‘predicated on the theory that a tortfeasor has no
interest in, and therefore no right to benefit from monies received by the injured
person from sources unconnected with the defendant’. According to the collateral
source rule, ‘a tortfeasor has no right to any mitigation of damages because of
payments or compensation received by the injured person from an independent
source.’ The rationale for the collateral source rule is based upon the quasi-
punitive nature of tort law liability. It has been explained as follows:
The collateral source rule is designed to strike a balance between two competing
principles of tort law: (1) a plaintiff is entitled to compensation sufficient to make
him whole, but no more; and (2) a defendant is liable for all damages that
proximately result from his wrong. A plaintiff who receives a double recovery for a
single tort enjoys a windfall; a defendant who escapes, in whole or in part, liability
for his wrong enjoys a windfall. Because the law must sanction one windfall and
deny the other, it favors the victim of the wrong rather than the wrongdoer.
Thus, the tortfeasor is required to bear the cost for the full value of his or her
negligent conduct even if it results in a windfall for the innocent plaintiff. (Citations
omitted)
As seen, the collateral source rule applies in order to place the responsibility for
losses on the party causing them.43Its application is justified so that "'the
wrongdoer should not benefit from the expenditures made by the injured party or
take advantage of contracts or other relations that may exist between the injured
party and third persons."44Thus, it finds no application to cases involving no-fault
insurances under which the insured is indemnified for losses by insurance
companies, regardless of who was at fault in the incident generating the
losses.45 Here, it is clear that MMPC is a no-fault insurer. Hence, it cannot be
obliged to pay the hospitalization expenses of the dependents of its employees
which had already been paid by separate health insurance providers of said
dependents.
The Voluntary Arbitrator therefore erred in adopting Atty. Funk’s view that the
covered employees are entitled to full payment of the hospital expenses incurred
by their dependents, including the amounts already paid by other health
insurance companies based on the theory of collateral source rule.
The conditions set forth in the CBA provision indicate an intention to limit
MMPC’s liability only to actual expenses incurred by the employees’ dependents,
that is, excluding the amounts paid by dependents’ other health insurance
providers.
The Voluntary Arbitrator ruled that the CBA has no express provision barring
claims for hospitalization expenses already paid by other insurers. Hence, the
covered employees can recover from both. The CA did not agree, saying that the
conditions set forth in the CBA implied an intention of the parties to limit MMPC’s
liability only to the extent of the expenses actually incurred by their dependents
which excludes the amounts shouldered by other health insurance companies.
We agree with the CA. The condition that payment should be direct to the
hospital and doctor implies that MMPC is only liable to pay medical expenses
actually shouldered by the employees’ dependents. It follows that MMPC’s
liability is limited, that is, it does not include the amounts paid by other health
insurance providers. This condition is obviously intended to thwart not only
fraudulent claims but also double claims for the same loss of the dependents of
covered employees.
It is well to note at this point that the CBA constitutes a contract between the
parties and as such, it should be strictly construed for the purpose of limiting the
amount of the employer’s liability.46 The terms of the subject provision are clear
and provide no room for any other interpretation. As there is no ambiguity, the
terms must be taken in their plain, ordinary and popular sense. 47 Consequently,
MMPSEU cannot rely on the rule that a contract of insurance is to be liberally
construed in favor of the insured. Neither can it rely on the theory that any doubt
must be resolved in favor of labor.
MMPSEU cannot rely on Samsel v. Allstate Insurance Co. where the Supreme
Court of Arizona allowed the insured to enjoy medical benefits under an
automobile policy insurance despite being able to also recover from a separate
health insurer. In that case, the Allstate automobile policy does not contain any
clause restricting medical payment coverage to expenses actually paid by the
insured nor does it specifically provide for reduction of medical payments benefits
by a coordination of benefits.48 However, in the case before us, the dependents’
group hospitalization insurance provision in the CBA specifically contains a
condition which limits MMPC’s liability only up to the extent of the expenses that
should be paid by the covered employee’s dependent to the hospital and doctor.
This is evident from the portion which states that "payment by MMPC shall be
direct to the hospital and doctor."49 In contrast, the Allstate automobile policy
expressly gives Allstate the authority to pay directly to the insured person or on
the latter’s behalf all reasonable expenses actually incurred. Therefore, reliance
on Samsel is unavailing because the facts therein are different and not decisive
of the issues in the present case.
MMPSEU insists that MMPC is also liable for the amounts covered under other
insurance policies; otherwise, MMPC will unjustly profit from the premiums the
employees contribute through monthly salary deductions.
The CBA has provided for MMPC’s limited liability which extends only up to the
amount to be paid to the hospital and doctor by the employees’ dependents,
excluding those paid by other insurers. Consequently, the covered employees
will not receive more than what is due them; neither is MMPC under any
obligation to give more than what is due under the CBA.
Moreover, since the subject CBA provision is an insurance contract, the rights
and obligations of the parties must be determined in accordance with the general
principles of insurance law.52 Being in the nature of a non-life insurance contract
and essentially a contract of indemnity, the CBA provision obligates MMPC to
indemnify the covered employees’ medical expenses incurred by their
dependents but only up to the extent of the expenses actually incurred. 53 This is
consistent with the principle of indemnity which proscribes the insured from
recovering greater than the loss.54 Indeed, to profit from a loss will lead to unjust
enrichment and therefore should not be countenanced. As aptly ruled by the CA,
to grant the claims of MMPSEU will permit possible abuse by employees.
WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006 and
Resolution dated December 5, 2006 of the Court of Appeals in CA-G.R. SP No.
75630, are AFFIRMED.
SO ORDERED.
REGALADO, J.:
Petitioner Associated Labor Unions (ALU, for brevity) instituted this special civil
action for certiorari and prohibition to overturn the decision of the respondent
direcstor 1 dated December 10, 1986, which ordered the holding of a certification
election among the rank-and-file workers of the private respondent GAW Trading,
Inc. The averments in the petition therefor, which succinctly but sufficiently detail
the relevant factual antecedents of this proceedings, justify their being quoted in
full, thus:
Public respondent ordered the holding of a certification election ruling that the
"contract bar rule" relied upon by her predecessor does not apply in the present
controversy. According to the decision of said respondent, the collective
bargaining agreement involved herein is defective because it "was not duly
submitted in accordance with Section I, Rule IX, Book V of the Implementing
Rules of Batas Pambansa Blg. 130." It was further observed that "(t)here is no
proof tending to show that the CBA has been posted in at least two conspicuous
places in the 1 establishment at least five days before its ratification and that it
has been ratified by the majority of the employees in the bargaining unit."
It bears mention that even in cases where it was the then Minister of Labor
himself who directly certified the union as the bargaining representative, this
Court voided such certification where there was a failure to properly determine
with legal certainty whether the union enjoyed a majority representation. In such
a case, the holding of a certification election at a proper time would not
necessarily be a mere formality as there was a compelling reason not to directly
and unilaterally certify a union. 7
In the first place, the posting of copies of the collective bargaining agreement is
the responsibility of the employer which can easily comply with the requirement
through a mere mechanical act. The fact that there were "no impartial members
of the unit" is immaterial. The purpose of the requirement is precisely to inform
the employees in the bargaining unit of the contents of said agreement so that
they could intelligently decide whether to accept the same or not. The assembly
of the members of ALU wherein the agreement in question was allegedly
explained does not cure the defect. The contract is intended for all employees
and not only for the members of the purpoted representative alone. It may even
be said the the need to inform the non-members of the terms thereof is more
exigent and compelling since, in all likehood, their contact with the persons who
are supposed to represent them is limited. Moreover, to repeat, there was an
apparent and suspicious hurry in the formulation and finalization of said collective
bargaining accord. In the sforementioned letter where respondent company
required petitioner union to present proof of its support by the employees, the
company already suggested that petitioner ALU at the same time submit the
proposals that it intended to embody in the projected agreement. This was on
May 12, 1986, and prompltly on thre following day the negoltiation panel; furnish
respondent company final copies of the desired agreement whcih, with equal
dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective bargaining is the
finding of respondent director that one hundred eighty-one( 181) of the two
hundred eighty-one (281) workers who "ratified" the same now " strongly and
vehemently deny and/or repudiate the alleged negotiations and ratification of the
CBA. " 10 Although petitioner claims that only sev en (7) of the repudiating group
of workers belong to the total number who allegedly ratified the agreement,
nevertheless such substantiated contention weighed against the factujal that the
controverted contract will not promote industrial stability . The Court has long
since declared that:
... Basic to the contract bar rule is the proposition that the delay of
the right to select represen tatives can be justified only where
stability is deemed paramount. Excepted from the contract which
do not foster industrial stability, such as contracts where the identity
of the representative is in doubt. Any stability derived from such
contracts must be subordinated to the employees' freedom of
choice because it does nto establish the type of industrial peace
contemplated by the law. 11
SO ORDERED.
4.Effect:
The petition for certiorari before us seeks to annul and set aside: (a) the order of
May 31, 1988 of the then Secretary of the Department of Labor and Employment
directing the Metro Port Services, Inc., now known as E. Razon, Inc., to satisfy
fully the separation pay of its employees at the rate agree upon in the Agreement
of November 3, 1987; and (b) the order of November 21, 1988, denying the
motion for the reconsideration of the said earlier order (BLR-NS-10-499-87).
ERI became Metro Port Services, Inc. (MPSI) in 1978 when parties close to then
Presient Marcos, specifically his brother-in-law, Alfredo "Bejo" Romualdez,
allegedly coerced Enrique Razon, who owned 93% of ERI's equity, into
endorsing in blank stock certificates covering 60% of such equity. Upon the
expiration of the management contract in 1978, it was extented to June 30, 1980.
The PPA then executed a new contract with ERI/MPSI for a term of eight (8)
years beginning July 1, 1980 (p. 129, Rollo).
On July 19, 1986 or two years before the expiration of the eight-year term, the
PPA cancelled the management contract for alleged violations thereof. PPA took
over the cargo-handling operations as well as all the equipment of MPSI (p.
138, Rollo).
Two days later or on July 21, 1986, the PPA issued Permit No. 104286 for cargo-
handling services to Marina Port Services, Inc. (MARINA) (p. 78, Rollo). The
permit, which was to take effect for one-year period or until July 20,
1987,1 contained the following pertinent paragraph as part of the additional terms
and conditions appended as Annex B to the permit:
Thus, MARINA began the arrastre services and required all workers of ERI/MPSI
to accomplish individual information sheets. Weeks later, the bulk of the 2,700
employees concerned discovered that they had been hired by MARINA as new
employees effective July 21, 1986. Hence, they clamored for the payment of their
separation pay but both the MARINA and ERI/MPSI refused to be liable therefor.
In a bid to prevent disruption of work, PPA authorized MARINA to deduct
P2,000,000.00 from the amount due the MPSI as MARINA's rentals for MPSI
equipment, as partial payment of the employees' separation pay (p. 138, Rollo).
Still dissatisfied, the employees who were members of the Associated Workers
Union (AWU) filed a notice of strike on October 12, 1987. This move prompted
the PPA, MARINA, ERI, and representatives of the AWU, Associated Port
Checkers Workers Union (ASTEU), and Marina Management Employees
(MARINE ME) to meet and forge an Agreement on November 3, 1987 for the
"immediate and reasonable resolution of the long standing claim of separation
benefits which resulted in impending labor strikes". (p. 51, Rollo.) The agreement
provided that the separation benefits would be computed at "one (1) month for
every year of service". (pp. 51 and 192, Rollo.) Another provision of the
Agreement stated:
Although the Agreement specifically stated that the remaining balance of the
separation benefits shall be paid in full before December 24, 1987, the workers
went on strike on December 22, 1987 because they were apprehensive that the
said benefits would not be paid as the appraisal of the pieces of equipment and
machinery of MPSI had not been completed. The members of the AWU were
joined by the APCWU, the ASTEU, and the MARINA ME (p. 139, Rollo).
The separation pay of the workers was later taken from the proceeds of the sale
to PPA of ERI cargo-handling equipment and the rentals from July 21, 1986 to
January 29,1988 of MARINA for the said equipment (Petition, pp. 6-7; pp. 24-
25, Rollo).
On May 31, 1988, Secretary Drilon issued the herein assailed order answering in
the negative the question of whether or not MARINA assumed liability for the
separation pay under Paragraph 7 of the Additional Terms and Conditions
annexed to PPA Permit No. 104286. Proceeding from the general rule laid out
in Fernando vs. Angat Labor Union (5 SCRA 248 [1962], that a collective
bargaining agreement is a contract in personam and, therefore, not enforceable
against the successor-employer, Secretary Drilon brushed aside MPSI's
contention that MARINA assumed the obligation to pay MPSI's workers their
separation pay when, upon the termination of MPSI's contract with PPA, MARINA
took over the arrastre operations. He emphasized a "seemingly minor but rather
crucial point" thus: "The present dispute crystallized not from a normal business
takeover, i.e., through sale or merger of a business enterprise, but from
cancellation of contract which was subsequently upheld valid by the Supreme
Court. The Agreement which now binds MARINA to assume obligations to the
workers is not between the two business enterprises but arose from the Permit to
Operate issued by the PPA to MARINA . . ."
Secretary Drilon rationalized that Paragraph 7 would only have been perceived
by the parties as applicable prospectively since "MARINA had then yet to start its
operations" and because Paragraph 14 of the same permit states that MARINA
shall be responsible for "all obligations, liabilites or claims arising out of any
transaction or undertakings in connection with their cargo handling operations as
of the actual date of transfer thereof." Accordingly, he opined that "the satisfaction
of any workers' claims is an undertaking connected with MARINA's actual cargo
handling operations" and, therefore, its obligations should commence only "as of
the actual takeover." Corollarily, he stated that "compensation for loss of
employment from the entity to whom past services have been rendered should
be forthcoming." He disposed of the case thus:
There appears to be no quarrel over the issue of whether or not separation pay
should be paid to the workers of ERI/MPSI. The controversy actually is: which of
the contending corporations, petitioner ERI/MPSI or private respondent MARINA,
should pay such benefit to the employees concerned.
The circumstances of this case, however, do not warrant the conclusion that, by
"absorbing" the ERI/MPSI employees, MARINA took the place of the ERI/MPSI
as an employer as if there had been no interruption in the employer-employee
relationship between ERI/MPSI and its employees and, therefore, MARINA
should assume all responsibilities of ERI/MPSI. For, while in Marina Port
Services, Inc. vs. NLRC (193 SCRA 420 [1991], the Court opined that by virtue of
Paragraph 7, security guards of the MPSI did become employees of MARINA,
the undeniable fact is that, by the termination of its management contract with the
PPA, ERI/MPSI ceased to be an employer. Admittedly, the consequent
separation from the employment of its employees was not of the ERI/MPSI's own
making. However, it may not validly lay such consequence on the lap of MARINA
which, like itself, had no hand in the termination of the management contract by
the PPA. The fact that a couple of days later, the PPA, without public bidding,
issued to MARINA, permit to operate, does not imply that MARINA stepped into
the shoes of ERI/MPSI as if there were absolute identity between them.
Parenthetically, the issue of the legality of the cancellation of MPSI's permit to
operate was laid to rest in E. Razon, Inc. vs. Philippine Ports Authority (151
SCRA 233 [1987]).
By absorbing ERI/MPSI employees and honoring the terms and conditions in the
collective bargaining agreement between ERI/MPSI and the employees, MARINA
did not assume the responsibility of ERI/MPSI to pay separation pay to its
employees. As correctly put by public respondent, Paragraph 7, insofar as it
refers to employees' benefits, should be applied prospectively with respect to
MARINA. This conclusion is supported by Paragraph 14 of Permit No. 104286
granted to MARINA which states:
MARINA might have been impelled not only by compassion for the employees
but also by their tested skills in hiring them back upon their separation from the
employment of ERI/MPSI. It should be recalled, however, there is no law that
requires the purchaser to absorb the employees of the selling corporation (San
Felipe Neri School of Mandaluyong, Inc. vs. NLRC, 201 SCRA 478 [1991], citing
MDII Supervisors and Confidential Employees Association (FFW) vs. Presidential
Assistant on Legal Affairs, 79 SCRA 40 [1977]). As such, when MARINA rehired
the ERI/MPSI employees, it had all the right to consider them as new ones. On
the other hand, ERI/MPSI, to whom years of service had been rendered by its
suddenly jobless employees, had the corresponding obligation to grant them
what is theirs under the law and the collective bargaining agreement. After all, a
collective bargaining agreement is the law between the parties (Plastic Town
Center Corporation vs. NLRC, 172 SCRA580 [1989]; Roche [Phil.] vs, NLRC,
178 SCRA 386 [1989]), and compliance therewith is mandated by the express
policy of the law (Meycauayan College vs. Drilon, 185 SCRA 50 [1990]).
The situation in this case is completely different from that obtaining in Filipinas
Port Services, Inc. vs. NLRC (200 SCRA 773 [1991]), where the petitioner was
obligated "not only to absorb the workers of the dissolved companies but also to
include the length of service earned by the absorbed employees with their former
employers as well" because said case involved a merger of different companies
into a single company as a result of the PPA's integration of stevedoring/arastre
services. On the other hand, in the case at bar, there is no privity of contract
between ERI/MPSI and MARINA so as to make the latter a common or even
substitute employer that it should be burdened with the obligations of the former.
SO ORDERED.
VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company Employees
Union-ALU-TUCP (MBTCEU) and its president, Antonio V. Balinang, raise the
issue of whether or not the implementation by the Metropolitan Bank and Trust
Company of Republic Act No. 6727, mandating an increase in pay of P25 per day
for certain employees in the private sector, created a distortion that would require
an adjustment under said law in the wages of the latter's other various groups of
employees.chanroblesvirtualawlibrarychanrobles virtual law library
On 25 May 1989, the bank entered into a collective bargaining agreement with
the MBTCEU, granting a monthly P900 wage increase effective 01 January
1989, P600 wage increase 01 January 1990, and P200 wage increase effective
01 January 1991. The MBTCEU had also bargained for the inclusion of
probationary employees in the list of employees who would benefit from the first
P900 increase but the bank had adamantly refused to accede thereto.
Consequently, only regular employees as of 01 January 1989 were given the
increase to the exclusion of probationary
employees.chanroblesvirtualawlibrarychanrobles virtual law library
Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to
rationalize wage policy determination be establishing the mechanism and proper
standards thereof, . . . fixing new wage rates, providing wage incentives for
industrial dispersal to the countryside, and for other purposes," took effect. Its
provisions, pertinent to this case, state:
Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all
workers and employees in the private sector, whether agricultural or non-
agricultural, shall be increased by twenty-five pesos (P25) per day, . . .: Provided,
That those already receiving above the minimum wage rates up to one hundred
pesos(P100.00) shall also receive an increase of twenty-five pesos (P25.00) per
day, . . .
(d) If expressly provided for and agreed upon in the collective bargaining
agreements, all increase in the daily basic wage rates granted by the employers
three (3) months before the effectivity of this Act shall be credited as compliance
with the increases in the wage rates prescribed herein, provided that, where such
increases are less than the prescribed increases in the wage rates under this Act,
the employer shall pay the difference. Such increase shall not include
anniversary wage increases, merit wage increase and those resulting from the
regularization or promotion of employees.chanroblesvirtualawlibrarychanrobles
virtual law library
Where the application of the increases in the wage rates under this Section
results in distortions as defined under existing laws in the wage structure within
an establishment and gives rise to a dispute therein, such dispute shall first be
settled voluntarily between the parties and in the event of a deadlock, the same
shall be finally resolved through compulsory arbitration by the regional branches
of the National Labor Relations Commission (NLRC) having jurisdiction over the
workplace.chanroblesvirtualawlibrarychanrobles virtual law library
It shall be mandatory for the NLRC to conduct continous hearings and decide
any dispute arising under this Section within twenty (20) calendar days from the
time said dispute is formally submitted to it for arbitration. The pendency of a
dispute arising from a wage distortion shall not in any way delay the applicability
of the increase in the wage rates prescribed under this Section.
Pursuant to the above provisions, the bank gave the P25 increase per day, or
P750 a month, to its probationary employees and to those who had been
promoted to regular or permanent status before 01 July 1989 but whose daily
rate was P100 and below. The bank refused to give the same increase to its
regular employees who were receiving more than P100 per day and recipients of
the P900 CBA increase.chanroblesvirtualawlibrarychanrobles virtual law library
Contending that the bank's implementation of Republic Act 6727 resulted in the
categorization of the employees into (a) the probationary employees as of 30
June 1989 and regular employees receiving P100 or less a day who had been
promoted to permanent or regular status before 01 July 1989, and (b) the regular
employees as of 01 July 1989, whose pay was over P100 a day, and that,
between the two groups, there emerged a substantially reduced salary gap, the
MBTCEU sought from the bank the correction of the alleged distortion in pay. In
order to avert an impeding strike, the bank petitioned the Secretary of Labor to
assume jurisdiction over the case or to certify the same to the National Labor
Relations Commission (NLRC) under Article 263 (g) of the Labor Code. 1The
parties ultimately agreed to refer the issue for compulsory arbitration to the
NLRC.chanroblesvirtualawlibrarychanrobles virtual law library
The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05
February 1991, the labor arbiter disregard with the bank's contention that the
increase in its implementation of Republic Act 6727 did not constitute a distortion
because "only 143 employees or 6.8% of the bank's population of a total of 2,108
regular employees" benefited. He stressed that "it is not necessary that a big
number of wage earners within a company be benefited by the mandatory
increase before a wage distortion may be considered to have taken place," it
being enough, he said, that such increase "result(s) in the severe contraction of
an intentional quantitative difference in wage between employee
groups."chanrobles virtual law library
The labor arbiter concluded that since the "intentional quantitative difference" in
wage or salary rates between and among groups of employees is not based
purely on skills or length of service but also on "other logical bases of
differentiation, a P900.00 wage gap intentionally provided in a collective
bargaining agreement as a quantitative difference in wage between those who
WERE regular employees as of January 1, 1989 and those who WERE NOT as
of that date, is definitely a logical basis of differentiation (that) deserves
protection from any distorting statutory wage increase." Otherwise, he added, "a
minimum wage statute that seek to uplift the economic condition of labor would
itself destroy the mechanism of collective bargaining which, with perceived
stability, has been labor's constitutional and regular source of wage increase for
so long a time now." Thus, since the "subjective quantitative difference" between
wage rates had been reduced from P900.00 to barely P150.00, correction of the
wage distortion pursuant to Section 4(c) of the Rules Implementing Republic Act
6727 should be made.chanroblesvirtualawlibrarychanrobles virtual law library
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division,
by a vote of 2 to 1, reversed the decision of the Labor Arbiter. Speaking, through
Commissioners Rustico L. Diokno and Domingo H. Zapanta, the NLRC said:
. . . a wage distortion can arise only in a situation where the salary structure is
characterized by intentional quantitative differences among employee groups
determined or fixed on the basis of skills, length of service, or other logical basis
of differentiation and such differences or distinction are obliterated (In Re: Labor
Dispute at the Bank of the Philippine Islands, NCMB-RB-7-11-096-89, Secretary
of Labor and Employment, February 18,
1991).chanroblesvirtualawlibrarychanrobles virtual law library
As applied in this case, We noted that in the new wage salary structure, the wage
gaps between Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were
maintained. While there is a noticeable decrease in the wage gap between levels
2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps
between said levels is not significant as to obliterate or result in severe
contraction of the intentional quantitative differences in salary rates between the
employees groups. For this reason, the basis requirement for a wage in this
case. Moreover, there is nothing in the law which would justify an across-the-
board adjustment of P750.00 as ordered by the labor
Arbiter.chanroblesvirtualawlibrarychanrobles virtual law library
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on
21 May 1991 by the Regional Tripartite Wages and Productivity Commission for
correction of pay scale structures in case of wage distortion as in the case at bar
which is:
would be the most equitable and fair under the circumstances obtaining in this
case.chanroblesvirtualawlibrarychanrobles virtual law library
For this very reason, I register my dissent from the majority opinion and opt for
the modification of the Labor Arbiter's decision as afore-discussed. 4chanrobles
virtual law library
The MBTCEU filed a motion for reconsideration of the decision of the NLRC;
having been denied, the MBTCEU and its president filed the instant petition
for certiorari, charging the NLRC with gave abuse of discretion by its refusal (a)
"to acknowledge the existence of a wage distortion in the wage or salary rates
between and among the employee groups of the respondent bank as a result of
the bank's partial implementation" of Republic Act 6727 and (b) to give due
course to its claim for an across-the-board P25 increase under Republic Act No.
6727. 5chanrobles virtual law library
We agree with the Solicitor General that the petition is impressed with
merit. 6chanrobles virtual law library
The term "wage distortion", under the Rules Implementing Republic Act 6727, is
defined, thus:
In this case, the majority of the members of the NLRC, as well as its dissenting
member, agree that there is a wage distortion arising from the bank's
implementation of the P25 wage increase; they do differ, however, on the extent
of the distortion that can warrant the adoption of corrective measures required by
law.chanroblesvirtualawlibrarychanrobles virtual law library
The definition of "wage distortion," 10 aforequoted, shows that such distortion can
so exist when, as a result of an increase in the prescribed wage rate, an
"elimination or severe contraction of intentional quantitative differences in wage
or salary rates" would occur "between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical bases of
differentiation." In mandating an adjustment, the law did not require that there be
an elimination or total abrogation of quantitative wage or salary differences; a
severe contraction thereof is enough. As has been aptly observed by Presiding
Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction
between personnel groupings comes close to eighty-three (83%), which cannot,
by any stretch of imagination, be considered less than
severe.chanroblesvirtualawlibrarychanrobles virtual law library
The "intentional quantitative differences" in wage among employees of the bank
has been set by the CBA to about P900 per month as of 01 January 1989. It is
intentional as it has been arrived at through the collective bargaining process to
which the parties are thereby concluded. 11 The Solicitor General, in
recommending the grant of due course to the petition, has correctly emphasized
that the intention of the parties, whether the benefits under a collective
bargaining agreement should be equated with those granted by law or not,
unless there are compelling reasons otherwise, must prevail and be given
effect. 12chanrobles virtual law library
In keeping then with the intendment of the law and the agreement of the parties
themselves, along with the often repeated rule that all doubts in the interpretation
and implementation of labor laws should be resolved in favor of labor, 13 we must
approximate an acceptable quantitative difference between and among the CBA
agreed work levels. We, however, do not subscribe to the labor arbiter's exacting
prescription in correcting the wage distortion. Like the majority of the members of
the NLRC, we are also of the view that giving the employees an across-the-board
increase of P750 may not be conducive to the policy of encouraging "employers
to grant wage and allowance increases to their employees higher than the
minimum rates of increases prescribed by statute or administrative regulation,"
particularly in this case where both Republic Act 6727 and the CBA allow a credit
for voluntary compliance. As the Court, through Associate Justice Florentino
Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC: 14
WHEREFORE, finding merit in the instant petition for certiorari, the same is
GRANTED DUE PROCESS, the questioned NLRC decision is hereby SET
ASIDE and the decision of the labor arbiter is REINSTATED subject to the
MODIFICATION that the wage distortion in question be corrected in accordance
with the formula expressed in the dissenting opinion of Presiding Commissioner
Edna Bonto-Perez. This decision is immediately
executory.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.
With respect to a change in exclusive bargaining agent -Substitutionary
Doctrine
On June 23, 1959, the Benguet-Balatoc Workers Union ("BBWU"), for and in
behalf of all BENGUET employees in its mines and milling establishment located
at Balatoc, Antamok and Acupan, Municipality of Itogon, Mt. Province, entered
into a Collective Bargaining Contract, Exh. "Z" ("CONTRACT") with BENGUET.
Pursuant to its very terms, said CONTRACT became effective for a period of four
and a half (4-½) years, or from June 23, 1959 to December 23, 1963. It likewise
embodied a No-Strike, No-Lockout clause. 1
About three years later, or on April 6, 1962, a certification election was conducted
by the Department of Labor among all the rank and file employees of BENGUET
in the same collective bargaining units. UNION obtained more than 50% of the
total number of votes, defeating BBWU, and accordingly, the Court of Industrial
Relations, on August 18, 1962, certified UNION as the sole and exclusive
collective bargaining agent of all BENGUET employees as regards rates of pay,
wages, hours of work and such other terms and conditions of employment
allowed them by law or contract.
The Notice of Strike 3 was filed on December 28, 1962. Three months later, in the
evening of March 2, 1963, UNION members who were BENGUET employees in
the mining camps at Acupan, Antamok and Balatoc, went on strike. Regarding
the conduct of the strike, the trial court reports: 4
... Picket lines were formed at strategic points within the premises of the
plaintiff. The picketers, by means of threats and intimidation, and in some
instances by the use of force and violence, prevented passage thru the
picket lines by personnel of the plaintiff who were reporting for work.
Human blocks were formed on points of entrance to working areas so that
even vehicles could not pass thru, while the officers of the plaintiff were
not allowed for sometime to leave the "staff" area.
The strikers forming picket lines bore placards with the letters BBWU-
PAFLU written thereon. As a general rule, the picketers were unruly,
aggressive and uttered threatening remarks to staff members and non-
strikers who desire to pass thru the picket lines. On some occasions, the
picketers resorted to violence by pushing back the car wherein staff
officers were riding who would like to enter the mine working area. The
picketers lifted one side of the vehicle and were in the act of overturning it
when they were prevented from doing so by the timely intervention of PC
soldiers, who threw tear gas bombs to make the crowd disperse. Many of
the picketers were apprehended by the PC soldiers and criminal charges
for grave coercion were filed against them before the Court of First
Instance of Baguio. Two of the strike leaders and twenty-two picketers,
however, were found guilty of light coercion while nineteen other accused
were acquitted.
There was a complete stoppage of work during the strike in all the mines.
After two weeks elapsed, repair and maintenance of the water pump was
allowed by the strikers and some of the staff members were permitted to
enter the mines, who inspected the premises in the company of PC
soldiers to ascertain the extent of the damage to the equipment and
losses of company property.
On May 2, 1963, the parties agreed to end the raging dispute. Accordingly,
BENGUET and UNION executed the AGREEMENT, Exh. 1. PAFLU placed its
conformity thereto and said agreement was attested to by the Director of the
Bureau of Labor Relations. About a year later or on January 29, 1964, a
collective bargaining contract was finally executed between UNION-PAFLU and
BENGUET. 5
Issues having been joined, trial commenced. On February 23, 1965, the trial
court rendered judgment dismissing the complaint on the ground that the
CONTRACT, particularly the No-Strike clause, did not bind defendants. The
latters' counterclaim was likewise denied. Failing to get a reconsideration of said
decision, BENGUET interposed the present appeal.
(2) Are defendants labor unions and their respective presidents liable for
the illegal acts committed during the course of the strike and picketing by
some union members?
(3) Are defendants liable to pay the damages claimed by BENGUET?
We also hold that where the bargaining contract is to run for more than
two years, the principle of substitution may well be adopted and enforced
by the CIR to the effect that after two years of the life of a bargaining
agreement, a certification election may be allowed by the CIR; that if a
bargaining agent other than the union or organization that executed the
contract, is elected, said new agent would have to respect said contract,
but that it may bargain with the management for the shortening of the life
of the contract if it considers it too long, or refuse to renew the contract
pursuant to an automatic renewal clause. (Emphasis supplied)
Stated otherwise, the "substitutionary" doctrine only provides that the employees
cannot revoke the validly executed collective bargaining contract with their
employer by the simple expedient of changing their bargaining agent. And it is in
the light of this that the phrase "said new agent would have to respect said
contract" must be understood. It only means that the employees, thru their new
bargaining agent, cannot renege on their collective bargaining contract, except of
course to negotiate with management for the shortening thereof.
BENGUET also alleges that UNION is now in estoppel to claim that it is not
contractually bound by the CONTRACT for having filed on September 28, 1962,
in Civil Case No. 1150 of the Court of First Instance of Baguio, entitled "Bobok
Lumber Jack Ass'n. vs. Benguet Consolidated, Inc. and BCI Employees Workers
Union-PAFLU" 12 a motion praying for the dissolution of the ex parte writ of
preliminary injunction issued therein, wherein the following appears:
In that case, the CIR transfered the contactual rights of the BBWU to the
defendant union. One of such rights transferred was the right to the
modified union-shop — checked off union dues arrangement now under
injunction.
There is no estoppel. UNION did not assert the above statement against
BENGUET to force it to rely upon the same to effect the union check-off in its
favor. UNION and BENGUET were together as co-defendants in said Civil Case
No. 1150. Rather, the statement was directed against Bobok Lumber Jack Ass'n.,
plaintiff therein, to weaken its cause of action. Moreover, BENGUET did not rely
upon said statement. What prompted Bobok Lumber Jack Ass'n. to file the
complaint for declaratory relief was the fact that "... the defendants [UNION and
BENGUET] are planning to agree to the continuation of a modified union shop in
the three camps mentioned above without giving the employees concerned the
opportunity to express their wishes on the matter ..." BENGUET even went
further in its answer filed on October 18, 1962, by asserting that "... defendants
have already agreed to the continuation of the modified union shop provision in
the collective bargaining agreement...." 13
The agent who acts as such is not personally liable to the party with whom
he contracts, unless he expressly binds himself or exceeds the limits of his
authority without giving such party sufficient notice of his powers.
(Emphasis supplied)1äwphï1.ñët
Here, it was the previous agent who expressly bound itself to the other party,
BENGUET. UNION, the new agent, did not assume this undertaking of BBWU.
In view of all the foregoing, We see no further necessity of delving further into the
other less important points raised by BENGUET in connection with the first
question.
On the second question, it suffices to consider, in answer thereto, that the rule of
vicarious liability has, since the passage of Republic Act 875, been expressly
legislated out. 15 The standing rule now is that for a labor union and/or its officials
and members to be liable, there must be clear proof of actual participation in, or
authorization or ratification of the illegal acts. 16 While the lower court found that
some strikers and picketers resorted to intimidation and actual violence, it also
found that defendants presented uncontradicted evidence that before and during
the strike, the strike leaders had time and again warned the strikers not to resort
to violence but to conduct peaceful picketing only. 17 Assuming that the strikers
did not heed these admonitions coming from their leaders, the failure of the union
officials to go against the erring union members pursuant to the UNION and
PAFLU constitutions and by-laws exposes, at the most, only a flaw or weakness
in the defense which, however, cannot be the basis for plaintiff BENGUET to
recover.
Since defendants were not contractually bound by the no-strike clause in the
CONTRACT, for the simple reason that they were not parties thereto, they could
not be liable for breach of contract to plaintiff. The lower court therefore correctly
absolved them from liability.
WHEREFORE, the judgment of the lower court appealed from is hereby affirmed.
No costs. So ordered.1äwphï1.ñët
5.Procedure in registration of CBA Art. 231, LC; B5 R9 S1, IRR; DO 9, Rule XVI,
Secs. 1-5
Within thirty (30) days from the execution of a Collective Bargaining Agreement,
the parties shall submit copies of the same directly to the Bureau or the Regional
Offices of the Department of Labor and Employment for registration,
accompanied with verified proofs of its posting in two conspicuous places in the
place of work and ratification by the majority of all the workers in the bargaining
unit. The Bureau or Regional Offices shall act upon the application for registration
of such Collective Bargaining Agreement within five (5) calendar days from
receipt thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.
The Bureau or Regional Office shall assess the employer for every Collective
Bargaining Agreement a registration fee of not less than one thousand pesos
(P1,000.00) or in any other amount as may be deemed appropriate and
necessary by the Secretary of Labor and Employment for the effective and
efficient administration of the Voluntary Arbitration Program. Any amount
collected under this provision shall accrue to the Special Voluntary Arbitration
Fund.
The Bureau shall also maintain a file and shall undertake or assist in the
publication of all final decisions, orders and awards of the Secretary of Labor and
Employment, Regional Directors and the Commission. (As amended by Section
15, Republic Act No. 6715, March 21, 1989)
RULE IX
Registration of Collective Bargaining Agreements
SECTION 1. Registration of collective bargaining agreement. — The parties to a
collective bargaining agreement shall submit to the Bureau or the appropriate
Regional Office five (5) duly signed up copies thereof within thirty (30) calendar
days from execution. Such copies of the agreement shall be accompanied by
verified proof of its posting in two conspicuous places in the workplace and of
ratification by the majority of all the workers in the bargaining unit.cralaw
Five (5) copies of the collective bargaining agreement executed pursuant to an
award by the appropriate government authority or by a voluntary arbitrator shall
likewise be submitted by the parties to the Bureau or Regional Office
accompanied by verified proof of its posting in two conspicuous places in the
workplace.cralaw
Such proof shall consist of copies of the following documents certified under oath
by the union secretary and attested to by the union president:
(a) Statement that the collective bargaining agreement was posted in at least two
conspicuous places in the establishment at least five (5) days before its
ratification, and
(b) Statement that the collective bargaining agreement was ratified by the
majority of the employees in the bargaining unit.cralaw
The posting required in the preceding paragraph shall be the responsibility of the
parties.cralaw
The Bureau or the Regional Office shall assess the employer for every collective
bargaining agreement a registration fee of one thousand (P1,000.00)
pesos.cralaw
The Regional Office shall transmit two (2) copies of the agreement to the Bureau
and one (1) to the Board within five (5) calendar days from its registration. Where
the agreement is registered with the Bureau, one (1) copy shall be sent to the
Board and two (2) copies to the Regional Office where the company has its
principal office.cralaw
The Bureau or the Regional Office shall issue a certificate of registration within
five (5) calendar days from receipt of the agreement.cralaw
RULEXVI
.
REGISTRATION OF COLLECTIVE BARGAINING AGREEMENTS
.
Section 1. Registration of collective bargaining agreement.- The parties to a
collectivebargainingagreementshallsubmittothe appropriate Regional
Office two (2) duly signed copies thereof within thirty (30) calendar days
from execution.Such copies of the agreement shall be accompanied with
verified proof of posting in two conspicuous places in the work place and
of ratification by the majority of all the workers in the bargaining unit.
.
Such proof shall consist of copies of the following documents certified
under oath by the union secretary and attested to by the union
president:chanroblesvirtuallawlibrary
.
(a) Statement that the collective bargaining agreement was posted in at
least two conspicuous places in the establishment at least five (5) days
before its ratification; and
.
(b) Statement that the collective bargaining agreement was ratified by the
majority of the employees in the bargaining unit.
.
The posting required in the preceding paragraph shall be the responsibility
of the parties.
.
The Regional Office shall assess the employer for every collective
bargaining agreement aregistration fee of one thousand pesos (P1,000.00).
.
The Regional Office shall retain one (1) copy of the agreement for its file
and transmit one (1) copy thereofto the Bureauwithin five (5) calendar days
from its registration. The Regional Office shall issue a certificate of
registration within five (5) calendar days from receipt of the agreement and
the proofs of posting and ratification as required herein.
.
Section 2. Registration of agreement resulting from awards by the
Secretary, the Commission, or the Voluntary Arbitrator. - Where the
agreement results from an arbitration award, the same shall be registered
in accordance with the immediately preceding section, except that the
requirement of ratification and proof thereof shall be dispensed with.
.
Section 3. Term of representation status of agreement; contract-bar rule. -
The representation status of the incumbent exclusive bargaining
representative which is a party to a duly registered collective bargaining
agreement shall be for a term of five (5) years.No petition questioning the
majority status of the incumbent exclusive bargaining representative shall
be entertained and no certification election shall be conducted by the
Department outside of the sixty-day period immediately before the date of
expiry of such five-year term.
.
All other provisions of said agreement shall, as a matter of right,be
renegotiated not later than three (3) years after its execution.Any
agreement on such other provisions entered into within six (6) months
from the date of expiry of such provisions shall retroact to the day
immediately following such date.If any such provisions are entered into
beyond six months, the parties shall agree on the duration of retroactivity.
In case of a deadlock in the renegotiation of the agreement, the parties may
exercise their rights under the Code.In case of renegotiation, all
requirements for registration prescribed under the two immediately
preceding sections shall be complied with, whichever is applicable, except
payment of the registration fee.
.
a)The agreement contains provisions lower than the standards fixed by
law; or
.
b)The documents supporting its registration are falsified, fraudulent or
tainted with misrepresentation.
Natl. Brewers and Allied Industries Labor Union vs. San Miguel Brewery
On November 25, 1960, the National Brewery and AlliedIndustries Labor Union
of the Philippines (PAFLU)filed before the Court of First Instance of Manila
againstthe San Miguel Brewery, Inc. a complaint alleging, amongothers, that said
union and the company entered into acollective bargaining agreement on
October 2, 1959 effectivefor a period of three years ending on June 30,
1962,Section 7, Article VII of which provides: "The Companyagrees to pay the
basic daily rates of those workerswithin the bargaining unit who may participate
in theLabor Day parade held on May 1st of every year; thatplaintiff's mother
union decided to hold its Labor Dayparade in the morning of May 1, 1960 at the
BalintawakMonument at Grace Park, Caloocan, Rizal; that about 600members of
the union joined and participated in saidparade whose total basic daily wage
amounts to P3,900.00;that the company knew that the members of the
unionparticipated in the parade and so the union demanded thepayment to said
members of their basic wages for thatday; that the company refused to honor its
obligation inbad faith and because of such refusal the union is entitledto collect
from the company actual or compensatory damages,as well as moral and
exemplary damages. Hence,the union prayed that judgment be rendered against
saidcompany for the payment of (a) the sum of P3,900.00, withlegal interest
thereon from May 1, 1961; (b) the sum ofP3,900.00 as actual and compensatory
damages; (c) the sum of P100,000.00 as moral damages; (d) exemplary or
correctivedamages in the discretion of the court; and (e) the sum of P6,000.00 as
attorney's fees.chanroblesvirtualawlibrarychanrobles virtual law library
The company in its answer set up special and affirmative defenses. Among the
latter, the company alleged that (a) the union has no cause of action against the
company, and (b) the court has no jurisdiction over the subject matter of the
action. With respect to the first ground, the companycontends that the union is
not the real party in interest but the individual members whose right to recover
the one day'swage is personal to them. As regards the question of jurisdiction,
the company argues that not one of the employeesto whom the cause of action
belongs receives a daily wage of more than P5,000.00, and hence the
jurisdictionof the case is determinable on the basis of the total claim of each
employee, which does not lie with the court of first instance. And on the basis of
the total amount P113,800.00 claimed in the complaint as damages, and on the
allegation that 600 union members had joined the parade,the amount pertaining
to each would be only about P189.66,which is still below the jurisdictional sum
cognizable by the lower court.chanroblesvirtualawlibrarychanrobles virtual law
library
The order of the court a quo dated April 13, 1961 which requires appellant to
amend its complaint by includingas parties plaintiffs each and every one of the
600 membersof the union to which they belong and to state the individual
amounts due each of them is predicated on the following finding:
On the other hand, the company is of the view that since the provision regarding
payment is of the basic daily wage to the members of the union contained in the
collective bargaining agreement runs to the benefit of the members concerned,
not to the union, said provision confers a right which is unique and personal to
the employees with the result that they are the ones who are the real parties in
interest with regard to the collection of their individual basic wages. And to bolster
up this contention, the company cites several cases decided in the United
States.chanroblesvirtualawlibrarychanrobles virtual law library
We are of the opinion that the complaint filed by the union comes under the
jurisdiction of the court a quo for the same is based upon the collective
bargaining agreementconcluded between the union and the company. Before the
conclusion of said agreement, the members of the union, and for that matter any
employee of the company,did not enjoy the benefit of payment of their basic daily
wage even if they should attend or participate in a Labor Day parade held on
Labor Day, since this right was only recognized when that agreement was
concluded. The basis of the right which is sought to be enforced is the
agreementitself and not the wages to be collected. The situationwould be
different if the purpose of the action were merely to collect wages that ordinarily
accrue to members of the union because of work or services rendered in
connection with their employment where the union to which the members belong
would have no personality to sue for said services in their behalf because in that
case the real parties in interest would be the laborers or employees
themselves.Not so when the wages accrue mainly on the strength of an
agreement entered into between the union and the company,as is the instant
case. The action then may be brought in the name of the union that has obliged
itself to secure those wages for this members. In this sense, the cases cited by
the company are inapplicable.chanroblesvirtualawlibrarychanrobles virtual law
library
In this respect, we find pertinent Section 3, Rule 3 of our Rules of Court, wherein
it is provided, among others, that a party with whom or in whose name a contract
has been made for the benefit of another may sue or besued without joining the
party for whose benefit the action is presented or defended even if the court may
at its discretion order such beneficiary to be made also a party.This provision
fittingly applies to this case. The union is the party with whom or in whose name
the collective bargaining agreement in question has been entered into for the
benefit of its members and, in line with the above rule, the union may sue
thereon without joining the members for whose benefit the action has been
presented. This is especially so when to join said members would be
cumbersome because they amount to more than 600. Verily, the court a
quo erred in ordering the dismissal of the complaint on the grounds invoked by
the company.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, the orders appealed from are set aside. The case is remanded to
the court a quo for further proceedings. No
costs.chanroblesvirtualawlibrarychanroble
FIRST DIVISION
DECISION
KAPUNAN, J.:
These are the issues at the heart of the instant petition for certiorari with prayer
for the issuance of preliminary injunction and/or temporary restraining order filed
by petitioner New Pacific Timber & Supply Company, Incorporated against the
National Labor Relations Commission (NLRC), et al. and the National Federation
of Labor, et al.
The antecedent facts, as found by the NLRC, are as follows:
The National Federation of Labor (NFL, for brevity) was certified as the sole and
exclusive bargaining representative of all the regular rank-and-file employees of
New Pacific Timber & Supply Co., Inc. (hereinafter referred to as petitioner
Company).[1] As such, NFL started to negotiate for better terms and conditions of
employment for the employees in the bargaining unit which it represented.
However, the same was allegedly met with stiff resistance by petitioner Company,
so that the former was prompted to file a complaint for unfair labor practice (ULP)
against the latter on the ground of refusal to bargain collectively. [2]Misj uris
On March 31, 1987, then Executive Labor Arbiter Hakim S. Abdulwahid issued an
order declaring (a) herein petitioner Company guilty of ULP; and (b) the CBA
proposals submitted by the NFL as the CBA between the regular rank-and-file
employees in the bargaining unit and petitioner Company. [3]
Petitioner Company appealed the above order to the NLRC. On November 15,
1989, the NLRC rendered a decision dismissing the appeal for lack of merit. A
motion for reconsideration thereof was, likewise, denied in a Resolution, dated
November 12, 1990.[4]
Unsatisfied, petitioner Company filed a petition for certiorari with this Court. But
the Court dismissed said petition in a Resolution, dated January 21, 1991. [5]
Thereafter, the records of the case were remanded to the arbitration branch of
origin for the execution of Labor Arbiter Abdulwahid's Order, dated March 31,
1987, granting monetary benefits consisting of wage increases, housing
allowances, bonuses, etc. to the regular rank-and-file employees. Following a
series of conferences to thresh out the details of computation, Labor Arbiter
Reynaldo S. Villena issued an Order, dated October 18, 1993, directing petitioner
Company to pay the 142 employees entitled to the aforesaid benefits the
respective amounts due them under the CBA. Petitioner Company complied;
and, the corresponding quitclaims were executed. The case was considered
closed following NFL's manifestation that it will no longer appeal the October 18,
1993 Order of Labor Arbiter Villena.[6]Jj lex
Treating the petition for relief as an appeal, the NLRC entertained the same. On
August 4, 1994, said commission issued a resolution [8] declaring that the 186
excluded employees "form part and parcel of the then existing rank-and-file
bargaining unit" and were, therefore, entitled to the benefits under the CBA. The
NLRC held, thus:
SO ORDERED.[9]
On February 29, 1996, the NLRC issued a resolution, the dispositive portion of
which reads as follows:
SO ORDERED.[10]
Hence, the instant petition wherein petitioner Company raises the following
issues: Acct mis
II
III
IV
Petitioner Company contends that a "Petition for Relief" is not the proper mode of
seeking a review of a decision rendered by the arbitration branch of the NLRC.
[12]
According to the petitioner, nowhere in the Labor Code or in the NLRC Rules
of Procedure is there such a pleading. Rather, the remedy of a party aggrieved
by an unfavorable ruling of the labor arbiter is to appeal said judgment to the
NLRC.[13]
Petitioner asseverates that even assuming that the NLRC correctly treated the
petition for relief as an appeal, still, it should not have allowed the same to
prosper, because the petition was filed several months after the ten-day
reglementary period for filing an appeal had expired; and, therefore, it failed to
comply with the requirements of an appeal under the Labor Code and the NLRC
Rules of Procedure.
Petitioner Company further contends that in filing separate complaints and/or
money claims at the arbitration level in spite of their pending petition for relief and
in spite of the final order, dated October 18, 1993, in NLRC Case No.RAB-IX-
0334-82, the private respondents were in fact forum-shopping, an act which is
proscribed as trifling with the courts and abusing their practices. S djad
Anent the second issue, petitioner argues that the private respondents are not
entitled to the benefits under the CBA because employees hired after the term of
a CBA are not parties to the agreement, and therefore, may not claim benefits
thereunder, even if they subsequently become members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of the Labor
Code refers to the continuation in full force and effect of the previous CBA's
terms and conditions. By necessity, it could not possibly refer to terms and
conditions which, as expressly stipulated, ceased to have force and effect. [14]
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA
between petitioner Company and NFL provided for yearly wage increases.
Logically, these provisions ended in the year 1984 - the last year that the
economic provisions of the CBA were, pursuant to contract and law, effective.
Petitioner claims that there is no contractual basis for the grant of CBA benefits
such as wage increases in 1985 and subsequent years, since the CBA stipulates
only the increases for the years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs that no new CBA
was entered pending appeal of the decision in NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given the opportunity to
submit a counter-computation of the benefits supposedly due the private
respondents. Instead, the NLRC allegedly relied on the self-serving computations
of private respondents. Sppedsc
The Supreme Court has allowed appeals from decisions of the labor arbiter to
the NLRC, even if filed beyond the reglementary period, in the interest of justice.
[15]
Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the
exercise of its appellate powers, "correct, amend or waive any error, defect or
irregularity whether in substance or in form." Further, Article 221 of the same
provides that: "In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and
its members and the Labor Arbiters shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process. x x x" [16]
Anent the issue of whether or not the term of an existing CBA, particularly as to
its economic provisions, can be extended beyond the period stipulated therein,
and even beyond the three-year period prescribed by law, in the absence of a
new agreement, Article 253 of the Labor Code explicitly provides:
It is clear from the above provision of law that until a new Collective Bargaining
Agreement has been executed by and between the parties, they are duty-bound
to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement. The law does not provide for any exception
nor qualification as to which of the economic provisions of the existing agreement
are to retain force and effect; therefore, it must be understood as encompassing
all the terms and conditions in the said agreement. Sccal r
In the case at bar, no new agreement was entered into by and between petitioner
Company and NFL pending appeal of the decision in NLRC Case No. RAB-IX-
0334-82; nor were any of the economic provisions and/or terms and conditions
pertaining to monetary benefits in the existing agreement modified or altered.
Therefore, the existing CBA in its entirety, continues to have legal effect.
In a recent case, the Court had occassion to rule that Articles 253 and 253-
A[17] mandate the parties to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement during the 60-day
period prior to the expiration of the old CBA and/or until a new agreement is
reached by the parties. Consequently, the automatic renewal clause provided for
by the law, which is deemed incorporated in all CBA's, provides the reason why
the new CBA can only be given a prospective effect. [18]Calrsp ped
In the case of Lopez Sugar Corporation vs. Federation of Free Workers, et.al,
[19]
this Court reiterated the rule that although a CBA has expired, it continues to
have legal effects as between the parties until a new CBA has been entered into.
It is the duty of both parties to the CBA to keep the status quo, and to continue in
full force and effect the terms and conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties. [20]
To rule otherwise, i.e., that the economic provisions of the existing CBA in the
instant case ceased to have force and effect in the year 1984, would be to create
a gap during which no agreement would govern, from the time the old contract
expired to the time a new agreement shall have been entered into. For if, as
contended by the petitioner, the economic provisions of the existing CBA were to
have no legal effect, what agreement as to wage increases and other monetary
benefits would govern at all? None, it would seem, if we are to follow the logic of
petitioner Company. Consequently, the employees from the year 1985 onwards
would be deprived of a substantial amount of monetary benefits which they could
have enjoyed had the terms and conditions of the CBA remained in force and
effect. Such a situation runs contrary to the very intent and purpose of Articles
253 and 253-A of the Labor Code which is to curb labor unrest and to promote
industrial peace, as can be gleaned from the discussions of the legislators
leading to the passage of said laws, thus:
xxx
xxx.[21]
Having established that the CBA between petitioner Company and NFL remained
in full force and effect even beyond the stipulated term, in the absence of a new
agreement; and, therefore, that the economic provisions such as wage increases
continued to have legal effect, we are now faced with the question of who are
entitled to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired after the term
of the CBA inspite of their subsequent membership in the bargaining unit, are not
parties to the agreement, and certainly may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that when a
collective bargaining contract is entered into by the union representing the
employees and the employer, even the non-member employees are entitled to
the benefits of the contract. To accord its benefits only to members of the union
without any valid reason would constitute undue discrimination against
nonmembers.[22] It is even conceded, that a laborer can claim benefits from a
CBA entered into between the company and the union of which he is a member
at the time of the conclusion of the agreement, after he has resigned from said
union.[23]Edp sc
In the same vein, the benefits under the CBA in the instant case should be
extended to those employees who only became such after the year 1984. To
exclude them would constitute undue discrimination and deprive them of
monetary benefits they would otherwise be entitled to under a new collective
bargaining contract to which they would have been parties. Since in this
particular case, no new agreement had been entered into after the CBA's
stipulated term, it is only fair and just that the employees hired thereafter be
included in the existing CBA. This is in consonance with our ruling that the terms
and conditions of a collective bargaining agreement continue to have force and
effect beyond the stipulated term when no new agreement is executed by and
between the parties to avoid or prevent the situation where no collective
bargaining agreement at all would govern between the employer company and
its employees.
Anent the other issues raised by petitioner Company, the Court finds that these
pertain to questions of fact that have already been passed upon by the NLRC. It
is axiomatic that, the factual findings of the National Labor Relations
Commission, which have acquired expertise because its jurisdiction is confined
to specific matters, are accorded respect and finality by the Supreme Court,
when these are supported by substantial evidence. A perusal of the assailed
resolution reveals that the same was reached on the basis of the required
quantum of evidence.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is hereby
DISMISSED for lack of merit.
SO ORDERED.
x - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
PEREZ, J.:
Assailed in these petitions for review on certiorari filed pursuant to Rule 45 of the
1997 Rules of Civil Procedure are the Court of Appeals’(CA) resolution of the
separate petitions for certiorari questioning the 20 July 2006 Decision 1rendered
and the 23 August 2006 Resolution2 issued by the Fourth Division of the National
Labor Relations Commission (NLRC), Cebu City, in NLRC Case No. V-000632-
2005. In G.R. No. 183122, petitioner General Milling Corporation-Independent
Labor Union (the Union) seeks the reversal of the 10 October 2007 Decision
rendered by the Special Twentieth Division of the CA in CA-G.R. CEB-SP No.
02226,3 the dispositive portion of which states:
SO ORDERED.4
In G.R. No. 183889, petitioner General Milling Corporation (GMC) prays for the
setting aside of the 16 November 2007 Decision rendered by the Eighteenth
Division of the CA in CA-G.R. CEB-SP No. 02232,5 the decretal portion of which
states:
WHEREFORE, the Decision dated July 20, 2006 and the Resolution dated
August 23, 2006 of public respondent NLRC are hereby AFFIRMED IN TOTO
and the instant petition is DISMISSED.
SO ORDERED.6
The Facts
On 28 April 1989, GMC and the Union entered into a collective bargaining
agreement (CBA) which provided, among other terms, the latter’s representation
of the collective bargaining unit for a three-year term made to retroact to 1
December 1988. On 29 November 1991 or one day before the expiration of the
subject CBA, the Union sent a draft CBA proposal to GMC, with a request for
counter-proposals from the latter, for the purpose of renegotiating the existing
CBA between the parties. In view of GMC’s failure to comply with said request,
the Union commenced the complaint for unfair labor practice which, under docket
of RAB Case No. VII-06-0475-92, was dismissed for lack of merit in a decision
dated 21 December 1993 issued by the Regional Arbitration Branch-VII (RAB-
VII) of the National Labor Relations Commission (NLRC). 7 On appeal, however,
said dismissal was reversed and set aside in the 30 January 1998 decision
rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94, 8 the
dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED.
The Decision dated December 21, 1993 is hereby VACATED and SET ASIDE
and a new one issued ordering the imposition upon the respondent company of
the complainant union[‘s] draft CBA proposal for the remaining two years duration
of the original CBA which is from December 1, 1991 to November 30, 1993; and
for the respondent to pay attorney’s fees.
SO ORDERED.9
With the reconsideration and setting aside of the foregoing decision in the
NLRC’s resolution dated 6 October 1998,10 the Union filed the petitions for
certiorari docketed before the CA as CA-G.R. SP Nos. 50383 and 51763. In a
decision dated 19 July 2000, the then Fourteenth Division of the CA reversed and
set aside the NLRC’s 6 October 1998 resolution and reinstated the aforesaid 30
January 1998 decision, except with respect to the undetermined award of
attorney’s fees which was deleted for lack of statement of the basis therefor in
the assailed decision.11Aggrieved by the CA’s 26 October 2000 resolution
denying its motion for reconsideration, GMC elevated the case to this Court via
the petition for review on certiorari docketed before this Court as G.R. No.
146728. In a decision dated 11 February 2004 rendered by the Court’s then
Second Division, the CA’s 30 January 1998 decision and 26 October 2000
resolution were affirmed,12 upon the following findings and conclusions, to wit:
GMC’s failure to make a timely reply to the proposals presented by the union is
indicative of its utter lack of interest in bargaining with the union. Its excuse that it
felt the union no longer represented the worker, was mainly dilatory as it turned
out to be utterly baseless.
We hold that GMC’s refusal to make a counter proposal to the union’s proposal
for CBA negotiation is an indication of its bad faith. Where the employer did not
even bother to submit an answer to the bargaining proposals of the union, there
is a clear evasion of the duty to bargain collectively.
Failing to comply with the mandatory obligation to submit a reply to the union’s
proposals, GMC violated its duty to bargain collectively, making it liable for unfair
labor practice. Perforce, the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in finding that GMC is,
under the circumstances, guilty of unfair labor practice.
xxxx
x x x (I)t would be unfair to the union and its members if the terms and conditions
contained in the old CBA would continue to be imposed on GMC’s employees for
the remaining two (2) years of the CBA’s duration. We are not inclined to gratify
GMC with an extended term of the old CBA after it resorted to delaying tactics to
prevent negotiations. Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine World University of Tacloban, it had
lost its statutory right to negotiate or renegotiate the terms and conditions of the
draft CBA proposed by the union.
xxxx
With the ensuing finality of the foregoing decision, the Union filed a motion for
issuance of a writ of execution dated 21 March 2005, to enforce the claims of the
covered employees which it computed in the sum of ₱433,786,786.36 and to
require GMC to produce said employee’s time cards for the purpose of
computing their overtime pay, night shift differentials and labor standard benefits
for work rendered on rest days, legal holidays and special holidays. 14On 18 April
2005, however, GMC opposed said motion on the ground, among other matters,
that the bargaining unit no longer exist in view of the resignation, retrenchment,
retirement and separation from service of workers who have additionally
executed waivers and quitclaims acknowledging full settlement of their claims;
that the covered employees have already received salary increases and benefits
for the period 1991 to 1993; and, that aside from the aforesaid supervening
events which precluded the enforcement thereof, the decision rendered in the
case simply called for the execution of a CBA incorporating the Union’s proposal,
not the outright computation of benefits thereunder. 15
In a "Submission" dated 27 May 2005, GMC further manifested that the Union
membership in the bargaining unit did not exceed 286 and that following
employees should be excluded from the coverage of the decision sought to be
enforced: (a) 47 employees who were hired after 1992; (b) 234 employees who
had been separated from the service; (c) 37 employees who, as daily paid rank
and file employees, were represented by another union and covered by a
different CBA; and, (d) 41 workers holding managerial/supervisory/confidential
positions.16 In its comment to the foregoing "Submission", however, the Union
argued that the benefits derived from its proposed CBA extended to both union
members and non-members; that the newly hired employees were entitled to the
benefits accruing after their employment by GMC; that the employees who had,
in the meantime, been separated from service could not have validly waived the
benefits which were only determined with finality in the 11 February 2004
decision rendered in G.R. No. 146728; that the CBA benefits can be extended
the daily paid employees upon their re-classification as monthly paid employees
as well as to GMC’s managerial and supervisory employees, prior to their
promotion; and, that the imposition of its CBA proposals necessarily calls for the
computation of the benefits therein provided. 17
Based on all the foregoing, computations have been made, details of which are
prepared and reflected in separate pages but which still form part of this Order. By
way of summary, the grand total consists of the following:
SO ORDERED.20
Aggrieved, the Union filed a partial appeal dated 2 November 2005, on the
ground that the Executive Labor Arbiter abused her discretion in: (a) confining the
computation of the benefits from 1 December 1991 to 30 November 1993 in favor
of only 281 employees out of the 436 included in its list; (b) computing only 10
out of the 15 benefits provided under its CBA proposal; and (c) failing to direct
the GMC to produce the employees’ time cards and other pertinent documents
essential for the computation of the benefits due in the premises. 21 In turn, GMC
filed its 17 November 2005 "Objections" to the aforesaid 22 October 2005 order,
arguing that the Executive Labor Arbiter not only varied the dispositive portion of
the NLRC decision dated 30 January 1998 but also ignored the quitclaims
executed and the benefits actually paid in the premises. 22 Reiterating the
foregoing arguments in its 16 May 2006 opposition to the Union’s partial appeal,
GMC further maintained that its not being duly heard on the computation of the
award in the subject 27 October 2005 order rendered the Union’s partial appeal
premature; and, that its CBA with the Union had expired on 30 November 1993,
with the latter exerting no effort at all for its renewal. 23
On 20 July 2006, the NLRC rendered a decision in NLRC Case No. V-000632-
2005, affirming the aforesaid 27 October 2005 order of execution. Finding that
the duty to maintain the status quo and to continue in full force and effect the
terms of the existing agreement under Article 253 of the Labor Code of the
Philippines applies only when the parties agreed to the terms and conditions of
the CBA, the NLRC upheld the Executive Labor Arbiter’s computation on the
ground, among others, that the decision sought to be enforced covered only the
remaining two years of the duration of the original CBA, i.e., from 1 December
1991 to 30 November 1993; that like GMC’s supposed grant of additional
benefits during the remaining term of the original CBA, the Union’s claims for
payment of vacation leave salary differentials, sick leave salary rate differentials,
dislocation allowance, separation pay for voluntary resignation and separation
pay salary rate differentials were not sufficiently established; that required by law
to preserve its records for a period of five years, GMC cannot possibly be
expected to preserve employees’ records for the period 1 December 1991 to 30
November 1993; and, that the claimant has the burden of proving entitlement to
holiday pay, premium for holiday and rest day as well night shift differentials.
Giving short shrift to GMC’s objections as aforesaid, the NLRC likewise ruled that
computation of the monetary award was necessary for the enforcement of this
Court’s 11 February 2004 decision and avoidance of multiplicity of suits. 24
Dissatisfied with the NLRC’s 23 August 2006 denial of their motions for
reconsideration of the foregoing decision,25GMC and the Union filed separate
Rule 65 petitions for certiorari before the CA. Docketed as CA-G.R. CEB-SP No.
02226 before the CA’s Special Twentieth Division, the Union’s petition was
partially granted in the 10 October 2007 decision rendered in the case, 26 upon
the finding that the parties’ old CBA was superseded by the imposed CBA which
provided a term of five years from 1 December 1991 and remained in force until
a new CBA is concluded between the parties. Brushing aside the Executive
Labor Arbiter’s computation of the benefits as "too sweeping" and "inaccurate",
the CA ruled that: (a) employees hired after the effectivity of the imposed CBA
are entitled to its benefits on their first day of work; (b) daily paid employees are
entitled to said benefits from the first day they became regular monthly paid
employees; (c) managerial and supervisory employees are entitled to the same
benefits until their promotion as such; (d) employees for whom no information as
to salary rate were submitted are entitled to the CBA benefits upon submission of
proof in respect thereto; and, (e) employees who signed Deeds of waiver, release
and quitclaim are no longer entitled to said benefits. 27
Rejecting the argument that the NLRC erred in upholding the Executive Labor
Arbiter’s computation of only 10 out of the 15 benefits provided under the
imposed CBA, the CA went on to take appropriate note of the fact that no proof
was submitted by the Union to justify the grant of said benefits. While ruling that
the imposed CBA had the same force and effect as a negotiated CBA, the CA,
however, faulted the Union for its "hasty" and "premature" filing of its motion for
issuance of a writ of execution, instead of first demanding the enforcement of the
imposed CBA from GMC and, failing the same, referring the matter to the
grievance machinery or voluntary arbitration provided under the imposed CBA, in
accordance with Articles 260 and 261 of the Labor Code. Acknowledging the
difficulty of computing the benefits demanded by the Union in the absence of
evidence upon which to base the same, the CA referred the case to the
Grievance Machinery under the imposed CBA and directed the exclusion of the
following items from said computation: (a) the Union’s claims for vacation leave
salary rate differentials and sick leave salary rate differentials; (b) the benefits in
favor of the employees who have already executed quitclaims in favor of GMC;
and (c) the salary increases and other employment benefits GMC had, in the
meantime, extended its employees.28Discontented with the CA’s 14 May 2008
resolution denying its motion for reconsideration of the foregoing decision, 29 the
Union filed its Rule 45 petition currently docketed before this Court as G.R. No.
183122.30
On the other hand, GMC’s petition for certiorari assailing the NLRC’s 20 July
2006 decision was docketed as CA-G.R. SP No. CEB-SP No. 02232 before the
CA’s Eighteenth Division31 which subsequently rendered the decision dated on 16
November 2007, dismissing the same for lack of merit. Finding that both parties
were given an opportunity to present their respective positions during the pre-
execution conference conducted a quo, the CA ruled that the Executive Labor
Arbiter’s 27 October 2005 order had attained finality insofar as GMC is
concerned, in view of its failure to perfect an appeal therefrom by paying the
required appeal fee and posting the cash or surety bond in an amount equivalent
to the benefits computed. In addition to rejecting GMC’s argument that the
quitclaims executed by its employees were in the nature of a supervening event
which rendered execution proceedings impossible, the CA held that said
quitclaims did not extend to the benefits provided under the imposed CBA and
that the additional benefits supposedly received by GMC’s employees should not
be deducted therefrom, for lack of sufficient evidence to prove the
same.32 Aggrieved by the denial of its motion for reconsideration of the foregoing
decision in the CA’s resolution dated 10 July, 2008, 33 GMC filed the petition for
review on certiorari docketed before us as G.R. No. 183889. 34
The Issues
In G.R. No. 183122, the Union proffers the following grounds for the grant of its
petition, to wit:
In G.R. No. 183889, GMC prays for the setting aside of the CA’s 16 November
2007 decision in CA-G.R. CEB-SP No. 02232, on the following grounds, to wit:
As may be gleaned from the grounds GMC and the Union interpose in support of
their respective petitions, it is evident that we are called upon to determine the
following matters: (a) the period of effectivity of the imposed CBA; (b) the
employees covered by the imposed CBA; and, (c) the benefits to be included in
the execution of the 11 February 2004 decision rendered in G.R. No. 146728.
Preliminary to the foregoing considerations is the effect of the rendition of
diametrically opposed decisions in CA-G.R. CEB. SP Nos. 02226 and 02232 by
the CA’s Special Twentieth and Eighteenth Divisions on the parties’ conflicting
claims.
Both GMC and the Union call our attention to the fact that the 10 October 2007
decision rendered by the CA’s Special Twentieth Division in CA-G.R. CEB-SP
No. 02226 is in conflict with the 16 November 2007 decision rendered by the
same court’s Eighteenth Division in CA-G.R. CEB-SP No. 02232. In G.R. No.
183122, the Union argues that, given the identity of parties and issues raised in
said cases, the 16 November 2007 decision in CA-G.R. CEB-SP No. 02232
should have been taken considered and adopted by the CA’s Special Twentieth
Division in resolving its motion for reconsideration of the 10 October 2007
decision in CA-G.R. CEB-SP No. 02226.37 In G.R. No. 183889, on the other
hand, GMC maintains that, having been rendered ahead of the 16 November
2007 decision in CA-G.R. CEB-SP No. 02232, the CA’s Special Twentieth
Division’s 10 October 2007 in CA-G.R. CEB-SP No. 02226 is the law of the case
which the Eighteenth Division erroneously contravened when it dismissed its
petition for certiorari.38
The conflicting decisions in CA-G.R. CEB-SP Nos. 02226 and 02232 would have
been, in the first place, avoided had the CA consolidated said cases pursuant to
Section 3, Rule III of its 2002 Internal Rules (IRCA). 39 Being intimately and
substantially related cases, their consolidation should have been ordered to avert
the possibility of conflicting decisions in the two cases. 40 Although rendered on
the merits by a court of competent jurisdiction acting within its authority, neither
one of said decisions can, however, be invoked as law of the case insofar as the
other case is concerned. The doctrine of "law of the case" means that whatever
is once irrevocably established as the controlling legal rule or decision between
the same parties in the same case continues to be the law of the case, whether
correct on general principles or not, 41 so long as the facts on which such decision
was predicated continue to be the facts of the case before the
court.42 Considering that a decision becomes the law of the case once it attains
finality,43 it is evident that, without having achieved said status, the herein
assailed decisions cannot be invoked as the law of the case by either GMC or
the Union.
Anent its period of effectivity, Article XIV of the imposed CBA provides that "(t)his
Agreement shall be in full force and effect for a period of five (5) years from 1
December 1991, provided that sixty (60) days prior to the lapse of the third year
of effectivity hereof, the parties shall open negotiations on economic aspect for
the fourth and fifth years effectivity of this Agreement." 44 Considering that no new
CBA had been, in the meantime, agreed upon by GMC and the Union, we find
that the CA’s Special Twentieth Division correctly ruled in CA-G.R. CEB-SP No.
02226 that, pursuant to Article 253 of the Labor Code, 45 the provisions of the
imposed CBA continues to have full force and effect until a new CBA has been
entered into by the parties. Article 253 mandates the parties to keep the status
quoand to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period prior to the expiration of the old CBA and/or
until a new agreement is reached by the parties. 46 In the same manner that it
does not provide for any exception nor qualification on which economic
provisions of the existing agreement are to retain its force and effect, 47 the law
does not distinguish between a CBA duly agreed upon by the parties and an
imposed CBA like the one under consideration.
Article XII
GRIEVANCE PROCEDURE
STEP I. The employee, through the UNION Steward, shall present the alleged
grievance in writing to the immediate superior and they shall endeavor to settle
the grievance within ten (10) days.
STEP II. Failing the settlement in Step I, the UNION President and the Personnel
Officer shall meet and adjust the grievance within fifteen (15) days.
STEP III. Any unresolved grievance shall be referred to the Arbitration Committee
provided hereunder.
Article II of the imposed CBA, relatedly, provides that "(t)he employees covered
by this Agreement are those employed as regular monthly paid employees at the
[GMC] offices in Cebu City and Lapulapu City, including cadet engineers,
salesmen, veterinarians, field and laboratory workers, with the exception of
managerial employees, supervisory employees, executive and confidential
secretaries, probationary employees and the employees covered by a separate
Collective Bargaining Agreement at the Company’s Mill in Lapulapu
City."55 Gauged from the express language of the foregoing provision, we find
that Executive Labor Arbiter Violeta Ortiz-Bantug correctly excluded the following
employees from the list of 436 employees submitted by the Union 56 and the
computation of the benefits for the period 1 December 1991 to 30 November
1993, to wit: (a) 77 employees who were hired or regularized after 30 November
1993; (b) 36 daily paid rank and file employees who were covered by a separate
CBA; (c) 41 managerial/supervisory employees; and, (d) 1 employee for whom
no salary-rate information was submitted in the premises. 57 However, we find that
the 234 employees who had already been separated from GMC’s employ by the
time of the rendition of the 11 February 2004 decision in G.R. No. 146728 should
further be added to these excluded employees.
The record shows that said 234 employees were union members whose
employment with GMC ceased as a consequence of death, termination due to
redundancy, termination due to closure of plant, termination for cause, voluntary
resignation, separation or dismissal from service as well as retirement. 58 Upon
compliance with GMC’s clearance requirements59 and in consideration of sums
ranging from ₱38,980.12 to ₱631,898.72, due payment and receipt of which
were duly acknowledged, it appears that said employees executed deeds of
waiver, release and quitclaim60 which uniformly stated as follows:
THAT, for and in consideration of the said payment, I have remised, released and
do hereby discharge, and by these presents do for myself, my heirs, executors
and administrators, remise, release and forever discharge said GENERAL
MILLING CORPORATION, its successors and assigns, and/or any of its officers
or employees of and from any and all manner of actions, cause or causes of
actions, sum or sums of money, account damages, claims and demands
whatsoever by way of separation pay, benefits, bonuses, and all other rights to
compensation, salary, wage, emolument, reimbursement, or monetary benefits,
which I ever had, now have or which my heirs , executors and administrators
hereafter can, shall or may have, upon or by reason of any matter, cause or
things whatsoever in connection with my former employment in and retirement
from the said GENERAL MILLING CORPORATION.1avvphi1
THAT, I have signed this Deed of Waiver, Release and Quitclaim after I have
read the contents thereof and understood the same and its legal effects.
In its assailed 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the
CA’s then Eighteenth Division brushed aside said deeds of waiver, release and
quitclaim on the ground, among other matters, that the same only covered the
employees’ separation pay and retirement benefits but did not extend to the
benefits which had accrued in their favor under the imposed CBA; and, that to be
valid, the waiver "should be couched in clear and unequivocal terms leaving no
doubt as to the intention of those giving up a right or a benefit that legally
pertains to them."61 In so doing, however, the CA’s Eighteenth Division
egregiously disregarded the clear intent on the part of the employees who
executed said deeds of waiver, release and quitclaim to relinquish all present and
future claims arising out of their employment with GMC. Although generally
looked upon with disfavor,62 it cannot be gainsaid that legitimate waivers that
represent a voluntary and reasonable settlement of laborers' claims should be so
respected by the Court as the law between the parties. 63 It is only where there is
clear proof that the waiver was wangled from an unsuspecting or gullible person,
or the terms of settlement are unconscionable on its face, that the law will step in
to annul the questionable transaction.64 The absence of showing of these factors
in the case at bench impels us to uphold the validity of said deeds of waiver,
release and quitclaim and, to exclude the employees who executed the same
from those still entitled to the benefits under the imposed CBA both before and
after the remaining term of the original CBA. The waiver was all inclusive. There
was not even a hint of a limitation of coverage.
Inasmuch as mere allegation is not evidence, the basic evidentiary rule is to the
effect that the burden of evidence lies with the party who asserts the affirmative
of an issue has the burden of proving the same 65 with such quantum of evidence
required by law. In administrative or quasi-judicial proceedings like those
conducted before the NLRC, the standard of proof is substantial evidence which
is understood to be more than just a scintilla or such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a
conclusion.66 Since it does not mean just any evidence in the record of the case
for, otherwise, no finding of fact would be wanting in basis, the test to be applied
is whether a reasonable mind, after considering all the relevant evidence in the
record of a case, would accept the findings of fact as adequate. 67 Viewed in the
light of Union’s failure to prove the factual bases for the computation of the same,
we find that the NLRC correctly affirmed Executive Labor Arbiter Violeta Ortiz-
Bantug’s exclusion of the following benefits from the order dated 27 October,
2005, to wit: (a) vacation leave salary rate differentials; (b) sick leave salary rate
differentials; (c) dislocation allowance; (d) separation pay for voluntary
resignation; and (e) separation pay salary rate differentials. 68 For want of
substantial evidence to prove the same, the CA’s Eighteenth Division also
correctly brushed aside GMC’s insistence on the deduction of the additional
benefits it purportedly extended to its employees from 1 December 1991 to 30
November 1993.69
As for the benefits after the expiration of the term of the parties’ original CBA, we
find that the extent thereof as well as identity of the employees entitled thereto
will be better and more thoroughly threshed out by the parties themselves in
accordance with the grievance procedure outlined in Article XII of the imposed
CBA. Aside from being already beyond the scope of the decision sought to be
enforced, these matters will not be accurately ascertained from the summaries of
claims the parties have been wont to submit at the pre-execution conference
conducted a quo. Taking into consideration such factors as hiring of new
employees, personnel movement and/or promotions as well as separations from
employment which may have, in the meantime, occurred after the expiration of
the remaining term of the original CBA, the identity of the covered employees as
well as the extent of the benefits due them should clearly be reckoned from
acquisition and/or until loss of their status as regular monthly paid GMC
employees. Since the computation must likewise necessarily take into
consideration the increases in salaries and benefits that may have been given in
the intervening period, both GMC and the Union are enjoined to make the
pertinent employment and company records available to each other, to facilitate
the expeditious and accurate determination of said benefits.
SO ORDERED.
7.2 Representation question: 5 years - contract bar rule, DO 9 Rule XVI, Sec. 4
.
a)The agreement contains provisions lower than the standards fixed by
law; or
.
b)The documents supporting its registration are falsified, fraudulent or
tainted with misrepresentation.
FVC Labor Union – Phil Transport and General Workers Org. (FVCLU- PTGWO)
vs Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent
and General Labor Organization (SANAMA-FVC-SIGLO), GR 176249, 27 Nov
2009.
SECOND DIVISION
SAMA-SAMANG NAGKAKAISANG
MANGGAGAWA SA FVC-SOLIDARITY
OF INDEPENDENT AND GENERAL
LABOR ORGANIZATIONS (SANAMA-
FVC-SIGLO), Promulgated:
Respondent.
November 27, 2009
x-------------------------------------------------------------------------------------- x
DECISION
BRION, J.:
We pass upon the petition for review on certiorari under Rule 45 of the Rules of
Court[1] filed by FVC Labor UnionPhilippine Transport and General Workers
Organization (FVCLU-PTGWO) to challenge the Court of Appeals (CA) decision
of July 25, 2006[2] and its resolution rendered on January 15, 2007 [3] in C.A. G.R.
SP No. 83292.[4]
THE ANTECEDENTS
On January 21, 2003, nine (9) days before the January 30, 2003 expiration of the
originally-agreed five-year CBA term (and four [4] months and nine [9] days away
from the expiration of the amended CBA period), the respondent Sama-Samang
Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General
Labor Organizations (SANAMA-SIGLO) filed before the Department of Labor and
Employment (DOLE) a petition for certification election for the same rank-and-file
unit covered by the FVCLU-PTGWO CBA. FVCLU-PTGWO moved to dismiss
the petition on the ground that the certification election petition was filed outside
the freedom period or outside of the sixty (60) days before the expiration of the
CBA on May 31, 2003.
On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the petition on the
ground that it was filed outside the 60-day period counted from the May 31, 2003
expiry date of the amended CBA.[6] SANAMA-SIGLO appealed the Med-Arbiters
Order to the DOLE Secretary, contending that the filing of the petition on January
21, 2003 was within 60-days from the January 30, 2003 expiration of the original
CBA term.
THE CA DECISION
The CA found SANAMA-SIGLOs petition meritorious on the basis of the
applicable law[10] and the rules,[11] as interpreted in the congressional debates. It
set aside the challenged DOLE Secretary decisions and reinstated her earlier
ruling calling for a certification election. The appellate court declared:
It is clear from the foregoing that while the parties may renegotiate
coincide with but rather exceeds the original five-year term, the
within sixty (60) days before the lapse of the original five (5) year
term of the CBA. In the event a new union wins in the certification
Required to comment by the Court[16] and to show cause for its failure to
comply,[17] SANAMA-SIGLO manifested on October 10, 2007 that: since the
promulgation of the CA decision on July 25, 2006 or three years after the petition
for certification election was filed, the local leaders of SANAMA-SIGLO had
stopped reporting to the federation office or attending meetings of the council of
local leaders; the SANAMA-SIGLO counsel, who is also the SIGLO national
president, is no longer in the position to pursue the present case because the
local union and its leadership, who are principals of SIGLO, had given up and
abandoned their desire to contest the representative status of FVCLU-PTGWO;
and a new CBA had already been signed by FVCLU-PTGWO and the company.
[18]
Under these circumstances, SANAMA-SIGLO contends that pursuing the case
has become futile, and accordingly simply adopted the CA decision of July 25,
2006 as its position; its counsel likewise asked to be relieved from filing a
comment in the case. We granted the request for relief and dispensed with the
filing of a comment.[19]
Article 253-A of the Labor Code covers this situation and it provides:
Bargaining Agreement that the parties may enter into, shall, insofar
as the representation aspect is concerned, be for a term of five (5)
outside of the sixty day period immediately before the date of expiry
renegotiated not later than three (3) years after its execution.
Bargaining Agreement entered into within six (6) months from the
into beyond six months, the parties shall agree on the duration of
This Labor Code provision is implemented through Book V, Rule VIII of the
Rules Implementing the Labor Code[21] which states:
Sec. 14. Denial of the petition; grounds. The Med-Arbiter
xxxx
(b) the petition was filed before or after the freedom period of
xxxx
one which does not coincide with the said five-year term and said
unit, the subject contract is valid and legal and therefore, binds the
contracting parties. The same will however not adversely affect the
incumbent bargaining agent within sixty (60) days before the lapse
We thus find no error in the appellate courts ruling reinstating the DOLE
order for the conduct of a certification election. If this ruling cannot now be given
effect, the only reason is SANAMA-SIGLOs own desistance; we cannot
disregard its manifestation that the members of SANAMA themselves are no
longer interested in contesting the exclusive collective bargaining agent status of
FVCLU-PTGWO. This recognition is fully in accord with the Labor Codes intent
to foster industrial peace and harmony in the workplace.
WHEREFORE, premises considered, we AFFIRM the correctness of the
challenged Decision and Resolution of the Court of Appeals and
accordingly DISMISS the petition, but nevertheless DECLARE that no
certification election, pursuant to the underlying petition for certification election
filed with the Department of Labor and Employment, can be enforced as this
petition has effectively been abandoned.
SO ORDERED.
7.3 Retroactivity –
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for Petitioner.
RESOLUTION
MEDIALDEA, J.:
This special civil action of certiorari assails the resolution (dated June 5, 1989) of
the National Labor Relations Commission (NLRC) relative to Certified Case No.
0522, and the resolution denying the motion for reconsideration (dated August 8,
1989).
On June 22, 1988, the petitioner Union of the Filipro Employees, the sole and
exclusive bargaining agent of all rank-and-file employees of Nestle Philippines,
(private respondent) filed a Notice of Strike at the Department of Labor raising
the issues of CBA deadlock and unfair labor practice.
The National Conciliation and Mediation Board (NCMB) invited the parties for a
conference on February 4, 1988 for the purpose of settling the dispute. The
private respondent however, assailed the legal personality of the proponents of
the said notice of strike to represent the Nestle employees. This notwithstanding,
the NCMB proceeded to invite the parties to attend the conciliation meetings and
to which private respondent failed to attend contending that it will deal only with a
negotiating panel duly constituted and mandated in accordance with the UFE
Constitution and By-laws.chanrobles law library : red
The records show that before the filing of said notice of strike, or on June 30,
1987, the respective CBAs in the four (4) units of Nestle, in Alabang-Cabuyao,
Makati, Cagayan de Oro and Cebu/Davao work locations had all expired. Under
the said CBAs, Alabang/Cabuyao and Makati units were represented by the UFE;
the Cagayan de Oro unit was represented by WATU; while the Cebu-Davao was
represented by TUPAS. Prior to the expiration of the CBAs for Makati and
Alabang/Cabuyao, UFE submitted to the company a list of CBA proposals. The
company, on the other hand, expressed its readiness to negotiate a new CBA for
Makati and Alabang/Cabuyao units but reserved the negotiation for Cagayan de
Oro and Cebu-Davao considering that the issue of representation for the latter
units was not yet settled. On June 10, 1987 and July 28, 1987, UFE was certified
as the sole and exclusive bargaining representative of Cagayan de Oro and
Cebu/Davao units, respectively.
On September 14, 1987, the Company terminated from employment all UFE
Union officers, headed by its president, Mr. Manuel Sarmiento, and all the
members of the negotiating panel for instigating and knowingly participating in a
strike staged at the Makati, Alabang, Cabuyao and Cagayan de Oro on
September 11, 1987 without any notice of strike filed and a strike vote obtained
for the purpose.
On September 21, 1987, the union filed a complaint for illegal dismissal. The
Labor Arbiter, in a decision dated January 12, 1988, upheld the validity of the
dismissal of said union officers. The decision was later on affirmed by the
respondent NLRC en banc, on November 2, 1988.
Respondent company contends that, "with the dismissal of UFE officers including
all the members of the union negotiating panel as later on confirmed by the
NLRC en banc, said union negotiating panel thus ceased to exist and its former
members divested of any legal personality, standing and capacity to act as such
or represent the union in any manner whatsoever."cralaw virtua1aw library
The union officers, on the other hand, asserted their authority to represent the
regular rank-and-file employees of Nestle, Philippines, being the duly elected
officers of the union.
On March 20, 1988 and August 5, 1988, the company concluded separate CBAs
with the general membership of the union at Cebu/Davao and Cagayan de Oro
units, respectively. The workers thereat likewise conducted separate elections of
their officers.
Assailing the validity of these agreements, the union filed a case of ULP against
the company with the NLRC-NCR Arbitration Branch on November 16, 1988.
Efforts to resolve the dispute amicably were taken by the NCMB but yielded
negative result because of the irreconcilable conflicts of the parties on the matter
of who should represent and negotiate for the workers.chanroblesvirtualawlibrary
On October 18, 1988, petitioner filed a motion asking the Secretary of Labor to
assume jurisdiction over the dispute of deadlock in collective bargaining between
the parties. On October 28, 1988, Labor Secretary Franklin Drilon certified to the
NLRC the said dispute between the UFE and Nestle, Philippines, the relevant
portion of which reads as follows:jgc:chanrobles.com.ph
"WHEREFORE, above premises considered, this office hereby certifies the sole
issue of deadlock in CBA negotiations affecting the Makati, Alabang and
Cabuyao units to the National Labor Relations Commission for compulsory
arbitration.
"The NLRC is further directed to call all the parties immediately and resolve the
CBA deadlock within twenty (20) days from submission of the case for
resolution." (Rollo, p. 225)
Petitioner finds said resolution to be inadequate and accordingly, does not agree
therewith. It filed a motion for reconsideration, which was, however, denied on
August 8, 1989.
Counsel for the private respondent company filed a motion for leave of court to
oppose the aforesaid urgent manifestation and motion. It appearing that the
allowance of said opposition would necessarily delay the early disposition of this
case, the Court Resolved to DISPENSE with the filing of the same.chanrobles
virtual lawlibrary
We affirm the public respondent’s findings and rule as regards the issue of
jurisdiction.
This case was certified on October 28, 1988 when existing rules prescribed that,
it is incumbent upon the Commission en banc to decide or resolve a certified
dispute. However, R.A. 6715 took effect during the pendency of this case. Aside
from vesting upon each division the power to adjudicate cases filed before the
Commission, said Act further provides that the divisions of the Commission shall
have exclusive appellate jurisdiction over cases within their respective territorial
jurisdiction.
Five (5) members each shall be chosen from among the nominees of the workers
and employers organization, respectively. The Chairman and the four (4)
remaining members shall come from the public sector, with the latter to be
chosen from among the recommendees of the Secretary of Labor and
Employment.
Upon assumption into office, the members nominated by the workers and
employers organizations shall divest themselves of any affiliation with or interest
in the federation or association to which they belong.
The Commission may sit en banc or in five (5) divisions, each composed of three
(3) members. The Commission shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing and disposition of
cases before any of its divisions and regional branches and formulating policies
affecting its administration and operations. The Commission shall exercise its
adjudicatory and all other powers, functions and duties through its divisions. Of
the five (5) divisions, the first and second divisions shall handle cases coming
from the National Capital Region and the third, fourth and fifth divisions, cases
from other parts of Luzon, from the Visayas and Mindanao, respectively. The
divisions of the Commission shall have exclusive appellate jurisdiction over
cases within their respective territorial jurisdiction.
The concurrence of two (2) Commissioners of a division shall be necessary for
the pronouncement of a judgment or resolution. Whenever the required
membership in a division is not complete and the concurrence of two (2)
commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the
other divisions as may be necessary.
The Chairman shall be the Presiding Commissioner of the first division, and the
four (4) other members from the public sector shall be the Presiding
Commissioners of the second, third, fourth and fifth divisions, respectively. In
case of the effective absence or incapacity of the Chairman, the Presiding
Commissioner of the second division shall be the Acting Chairman.
The Chairman, aided by the Executive Clerk of the Commission, shall have
administrative supervision over the Commission and its regional branches and all
its personnel, including the Executive Labor Arbiters and Labor Arbiters.
The Commission when sitting en banc, shall be assisted by the same Executive
Clerk, and, when acting thru its Divisions, by said Executive Clerk for its First
Division and four (4) other Deputy Executive Clerks for the Second, Third,
Fourth, and Fifth Divisions, respectively, in the performance of such similar or
equivalent functions and duties as are discharged by the Clerk of Court and
Deputy Clerks of Court of the Court of Appeals." (Emphasis supplied)
"2. Effective March 21, 1989, the date of the effectivity of Republic Act 6715, the
Commission shall cease holding en banc sessions for purposes of adjudicating
cases and shall discharge their adjudicatory functions and powers through their
respective Divisions."cralaw virtua1aw library
As to the second issue, the Court is convinced that the public respondent
committed no grave abuse of discretion in resolving only the sole issue certified
to by the Secretary and formulating a CBA which covers the bargaining units
consisting of all regular rank-and-file employees of the respondent company at
Makati, Alabang and Cabuyao only.
"A perusal of the records and proceedings of this case reveals that after the
issuance by the Secretary of Labor of his Order dated 28 October 1988 certifying
the dispute to Us, the Union filed an Urgent Manifestation seeking the
modification of the certification order to include the Cebu Davao and Cagayan de
Oro divisions, the employees/workers therein being all bonafide members of the
Union which is the sole and exclusive bargaining representative of all the regular
rank-and-file workers of the company nationwide. Their non-inclusion in the
certification order, the union argues, would give premium to the alleged unlawful
act of the Company in entering into separate ‘Collective Bargaining Agreements’
directly with the workers thereat.
"In the same vein, the union manifested its intention to file a complaint for ULP
against the company and its officers responsible for such act, which it eventually
did.
"Considering that the Union had reserved the right to prosecute the Company
and its officers responsible for the alleged unlawful execution of the CBA directly
with the union members in Cagayan de Oro and Cebu/Davao units, as it has in
fact filed a case which is now pending with our Arbitration Branch, the issue as to
whether such acts constitute ULP is best heard and decided separately from the
certified case, not only because of the evidentiary need to resolve the issue, but
also because of the delay that may ensue in the resolution of the present conflict.
"Furthermore, the consolidation of the issue with the instant case poses
complicated questions regarding venue and joinder of parties. We feel that each
of the issues propounded by the parties shall be better dealt with separately
according to its own merits.
"Thus, We rule to resolve the sole issue in dispute certified to this Commission,
i.e., the deadlock in the collective bargaining negotiations in Cabuyao/Alabang
and Makati units." (Rollo, pp. 174-176)
We agree. Public respondent’s resolution is proper and in full compliance with the
order of the Secretary of Labor. The concomittant delay that will result in
resolving petitioner’s motion for the modification of the certification order to
determine whether to include Cebu/Davao and Cagayan de Oro Divisions or not
will defeat the very purpose of the Secretary of Labor’s assumption of jurisdiction
and his subsequent certification order for compulsory arbitration.
Corollarily, the NLRC was thereby charged with the task of implementing the
certification order for compulsory arbitration. As the implementing body, its
authority did not include the power to amend the Secretary’s order (University of
Santo Tomas v. National Labor Relations Commission, UST Faculty Union, G.R.
No. 89920, October 18, 1990).cralawnad
For the same reason, We rule that the prayer to declare the respondent company
guilty of acts of unfair labor practice when it allegedly resorted to practices
designed to delay the collective bargaining negotiations cannot be subsumed in
this petition, it being beyond the scope of the certification order.
Petitioner argues that because of the public respondent’s actuation in this regard,
it committed grave abuse of discretion as it allowed multiplicity of suits and
splitting causes of action which are barred by procedural rule.
"When the consent of one of the parties is enforced by statutory provisions, the
proceeding is referred to as compulsory arbitration In labor cases, compulsory
arbitration is the process of settlement of labor disputes by a government agency
which has the authority to investigate and to make an award which is binding on
all the parties. (G.R. No. 55159, 22 Dec. 89)."cralaw virtua1aw library
(g) When in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute
and decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoining
the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or
certification, all striking or lockout employees shall immediately return to work
and the employer shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout. The
Secretary of Labor and Employment or the Commission may seek the assistance
of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same. (Emphasis supplied)
As regards the third issue raised by petitioner, this Court finds the provisions of
Article 253 and Article 253-A of the Labor Code as amended by R.A. 6715 as the
applicable laws, thus:jgc:chanrobles.com.ph
"Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. — When there is a collective bargaining agreement, the duty to
bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written
notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new agreement is reached by
the parties.
In the light of the foregoing, this Court upholds the pronouncement of the NLRC
holding the CBA to be signed by the parties effective upon the promulgation of
the assailed resolution. It is clear and explicit from Article 253-A that any
agreement on such other provisions of the CBA shall be given retroactive effect
only when it is entered into within six (6) months from its expiry date. If the
agreement was entered into outside the six (6) month period, then the parties
shall agree on the duration of the retroactivity thereof.chanrobles lawlibrary :
rednad
The assailed resolution which incorporated the CBA to be signed by the parties
was promulgated June 5, 1989, and hence, outside the 6 month period from
June 30, 1987, the expiry date of the past CBA. Based on the provision of
Section 253-A, its retroactivity should be agreed upon by the parties. But since
no agreement to that effect was made, public respondent did not abuse its
discretion in giving the said CBA a prospective effect. The action of the public
respondent is within the ambit of its authority vested by existing laws.
In assailing the public respondent’s actuation, the Union cited the case of Villar v.
Inciong (121 SCRA 444) where this Court ruled:jgc:chanrobles.com.ph
". . . While petitioners were charged for alleged commission of acts of disloyalty
inimical to the interests of the Amigo Employees Union-PAFLU in the Resolution
of February 14, 1977 of the Amigo-Employees Union-PAFLU and on February
15, 1977, PAFLU and the company entered into and concluded a new collective
bargaining agreement, petitioners may not escape the effects of the security
clause under either the old CBA or the new CBA by claiming that the old CBA
had expired and that the new CBA cannot be given retroactive enforcement. To
do so would be to create a gap during which no agreement would govern, from
the time the old contract expired to the time a new agreement shall have been
entered into with the union . . ."cralaw virtua1aw library
In the aforecited case, the Court only pointed out that, it is not right for union
members to argue that they cannot be covered by the past and the new CBAs
both containing the same closed-shop agreement for acts committed during the
interregnum. What was emphasized by this Court is that in no case should there
be a period in which no agreement would govern at all. But nowhere in the said
pronouncement did We rule that every CBA contracted after the expiry date of
the previous CBA must retroact to the day following such date. Hence, it is proper
to rule that in the case at bar, the clear and unmistakable terms of Articles 253
and 253-A must be deemed controlling.
Articles 253 and 253-A mandate the parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period prior to the expiration of the old CBA and/or
until a new agreement is reached by the parties. Consequently, there being no
new agreement reached, the automatic renewal clause provided for by the law
which is deemed incorporated in all CBAs, provides the reason why the new CBA
can only be given a prospective effect.
Petitioner claims that because of the prospective effect of the CBA, union
members were deprived of substantial amount of monetary benefits which they
could have enjoyed had the CBA be given retroactive effect. This would include
backwages, the immediate effects of the mandated wage increase on the fringe
benefits such as the 13th and 14th month pay, overtime premium, and right to
differential pay, leaves, etc. This Court, is not unmindful of these. Nevertheless,
We are convinced that the CBA formulated by public respondent is fair,
reasonable and just. Even if prospective in effect, said CBA still entitles the
Nestle workers and employees reasonable compensation and benefits which, in
the opinion of this Court, is one of the highest, if not the highest in the industry.
Petitioner did not succeed in overcoming the presumption of regularity in the
performance of the public respondent’s functions. Even if the resolution fell short
of meeting the numerous demands of the union, the petitioner failed to establish
that public respondent committed grave abuse of discretion in not giving the CBA
a retrospective effect.
The fourth and fifth assignment of errors should be resolved jointly considering
that they are the terms and conditions of the CBA.
Petitioner made so many claims and statements which were adopted and
asserted without good ground. It fails to substantiate why, in not granting its
demands for the inclusion in the CBA of a "Contract Signing Bonus" and a
"Modified Union Shop Agreement," the assailed resolutions were erroneous and
were drawn up arbitrarily and whimsically.chanrobles.com:cralaw:red
In the case of Palencia v. National Labor Relations Commission, G.R. No. 75763,
August 21, 1987, 153 SCRA 247, We ruled that the findings of fact of the then
Court of Industrial Relations (now NLRC), are conclusive and will not be
disturbed. Thus:jgc:chanrobles.com.ph
"Following a long line of decisions this Court has consistently declined to disturb
the findings of fact of the then Court of Industrial Relations whose functions the
NLRC now performs. [Pambusco Employees Union Inc. v. Court of Industrial
Relations, 68 Phil. 591 (1939); Manila Electric Co. v. National Labor Union, 70
Phil. 617 (1940); San Carlos Milling Co. v. Court of Industrial Relations, 111 Phil.
323 (1961),1 SCRA 734; Philippine Educational Institution v. MLQSEA Faculty
Assn., 135 Phil. 282 (1968), 26 SCRA 272; University of Pangasinan Faculty
Union v. University of Pangasinan and NLRC, G.R. No. L-63122, February 20,
1984, 127 SCRA 691]. The findings of fact are conclusive and will not be
disturbed in the absence of a showing that there has been grave abuse of
discretion. [Philippine Educational Institution v. MLQSEA Faculty Association, 26
SCRA 272, 276] and there being no indication that the findings are
unsubstantiated by evidence [University of Pangasinan Faculty Union v.
University of Pangasinan and NLRC, G.R. No. 63122, February 20, 1984, 127
SCRA 694, 704]."cralaw virtua1aw library
Moreover, the NLRC is in the best position to formulate a CBA which is equitable
to all concerned. Because of its expertise in settling labor disputes, it is imbued
with competence to appraise and evaluate the evidence and positions presented
by the parties. In the absence of a clear showing of grave abuse of discretion, the
findings of the respondent NLRC on the terms of the CBA should not be
disturbed.
Taken as a whole, the assailed resolutions are after all responsive to the call of
compassionate justice observed in labor law and the dictates of reason which is
considered supreme in every adjudication.
SO ORDERED.
FIRST DIVISION
DECISION
MARTINEZ, J.:
In this petition for certiorari, the Manila Electric Company (MERALCO) seeks
to annul the orders of the Secretary of labor dated August 19, 1996 and
December 28, 1996, wherein the Secretary required MERALCO and its rank and
file union- the Meralco Workers Association (MEWA) to execute a collective
bargaining agreement (CBA) for the remainder of the parties 1992-1997 CBA
cycle, and to incorporate in this new CBA the Secretarys dispositions on the
disputed economic and non-economic issues.
MEWA is the duly recognized labor organization of the rank-and-file
employees of MERALCO.
On September 7, 1995, MEWA informed MERALCO of its intention to re-
negotiate the terms and conditions of their existing 1992-1997 Collective
Bargaining Agreement (CBA) covering the remaining period of two years starting
from December 1, 1995 to November 30, 1997. [1] MERALCO signified its
willingness to re-negotiate through its letter dated October 17, 1995 [2] and formed
a CBA negotiating panel for the purpose. On November 10, 1995, MEWA
submitted its proposal[3] to MERALCO, which, in turn, presented a counter-
proposal. Thereafter, collective bargaining negotiations proceeded.However,
despite the series of meetings between the negotiating panels of MERALCO and
MEWA, the parties failed to arrive at terms and conditions acceptable to both of
them.
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital
Region Branch of the National Conciliation and Mediation Board (NCMB) of the
Department of Labor and Employment (DOLE) which was docketed as NCMB-
NCR-NS-04-152-96, on the grounds of bargaining deadlock and unfair labor
practices. The NCMB then conducted a series of conciliation meetings but the
parties failed to reach an amicable settlement. Faced with the imminence of a
strike, MERALCO on May 2, 1996, filed an Urgent Petition [4] with the Department
of Labor and Employment which was docketed as OS-AJ No. 0503[1]96 praying
that the Secretary assume jurisdiction over the labor dispute and to enjoin the
striking employees to go back to work.
The Labor Secretary granted the petition through its Order [5] of May 8, 1996,
the dispositive portion of which reads:
SO ORDERED.
ECONOMIC DEMANDS
Red Circle Rate (RCR) Allowance- all RCR allowances (promotional increases
that go beyond the maximum range of a job classification salary) shall be
integrated into the basic salary of employees effective December 1, 1995.
Longevity Allowance- the integration of the longevity allowance into the basic
wage is denied; the present policy is maintained.
Longevity Increase- the present longevity bonus is maintained but the bonus
shall be incorporated into the new CBA.
Sick Leave- MEWAs demand for upgrading is denied; the companys present
policy is maintained. However, those who have not used the sick leave benefit
during a particular year shall be entitled to a one-day sick leave incentive.
Sick leave reserve- the present reserve of 25 days shall be reduced to 15 days;
the employee has the option either to convert the excess of 10 days to cash or let
it remain as long as he wants. In case he opts to let it remain, he may later on
convert it to cash at his retirement or separation.
Vacation Leave - MEWAs demand for upgrading denied & the companys present
policy is maintained which must be incorporated into the new CBA but scheduled
vacation leave may be rounded off to one full day at a time in case of a benefit
involving a fraction of a day.
Longevity Bonus- is increased from P140.00 to P200.00 for every year of service
to be received by the employee after serving the Company for 5 years.
Christmas Bonus and Special Christmas Grant- MEWAs demand of one month
salary as Christmas Bonus and two months salary as Special Christmas Grant is
granted and to be incorporated in the new CBA.
Christmas Gift Certificate - company has the discretion as to whether it will give it
to its employees.
Retirement Benefits:
Night work- union demand is denied but present policy must be incorporated in
CBA.
Shortswing- work in another shift within the same day shall be considered as the
employees work for the following day and the employee shall be given additional
four (4) hours straight time and the applicable excess time premium if he works
beyond 8 hours in the other shift.
Towing Allowance- where stockmen drive tow trailers with long poles and
equipment on board, they shall be entitled to a towing allowance of P20.00
whether they perform the job on regular shift or on overtime.
Holdup Allowance- the union demand is denied; the present policy shall be
maintained.
Payroll Treatment for Accident while on Duty- an employee shall be paid his
salary and allowance if any is due plus average excess time for the past 12
months from the time of the accident up to the time of full recovery and placing of
the employee back to normal duty or an allowance of P2,000.00, whichever is
higher.
Political Demands:
ii. The union shall meet with the newly regularized employees for a
period not to exceed four (4) hours, on company time, to acquaint
the new regular employees of the rights, duties and benefits of
Union membership.
iii. The right of all rank-and-file employees to join the union shall be
recognized in accordance with the maintenance of membership
principle as a form of union security.
d. Check off Union Dues- where the union increases its dues as
approved by the Board of Directors, the Company shall check off
such increase from the salaries of union members after the union
submits check off authorizations signed by majority of the
members. The Company shall honor only those individual
authorizations signed by the majority of the union members and
collectively submitted by the union to the Companys Salary
Administration.
Signing Bonus- P4,000.00 per member of the bargaining unit for the conclusion
of the CBA
Existing benefits already granted by the Company but which are not expressly or
impliedly repealed in the new agreement shall remain subsisting and shall be
included in the new agreement to be signed by the parties effective December 1,
1995.
On August 30, 1996, MERALCO filed a motion for reconsideration [7] alleging
that the Secretary of Labor committed grave abuse of discretion amounting to
lack or excess of jurisdiction:
3. in ordering the incorporation into the CBA of all existing employee benefits,
on the one hand, and those that MERALCO has unilaterally granted to its
employees by virtue of voluntary company policy or practice, on the other
hand.
Economic Demands
2) Wage Increase:
3) Integration of Red Circle Rate (RCR) and Longevity Allowance into Basic
Salary -the RCR allowance shall be integrated into the basic salary of employees
as of August 19, 1996 (the date of the disputed Order).
6) Sick Leave Reserve - is reduced to 15 days, with any excess payable at the
end of the year. The employee has the option to avail of this cash conversion or
to accumulate his sick leave credits up to 25 days for conversion to cash at
retirement or separation from the service.
7) Birthday Leave - the grant of a day off when an employees birthday falls
on a non-working day is deleted.
One sack of rice per quarter of the year shall be given to those retiring
between August 19, 1996 and November 30, 1997.
On HMP Coverage for Retirees- The parties maintain the status quo, that is, with
the Company complying with the present arrangement and the obligations to
retirees as is.
13) Payroll Treatment for Accident on Duty - Company ordered to continue its
present practice on payroll treatment for accident on duty without need to pay the
excess time the Union demanded.
Political Demands:
14) Scope of the collective bargaining unit - The bargaining unit shall be
composed of all rank and file employees hired by the Company in accordance
with the original Order.
17) Contracting Out - The Company has the prerogative to contract out services
provided that this move is based on valid business reasons in accordance with
law, is made in good faith, is reasonably exercised and, provided further that if
the contracting out involves more than six months, the Union must be consulted
before its implementation.
In any increase of union dues or contributions for mandatory activities, the union
must submit to the Company a copy of its board resolution increasing the union
dues or authorizing such contributions;
If a board resolution is submitted, the Company shall deduct union dues from all
union members after a majority of the union members have submitted their
individual written authorizations. Only those check-off authorizations submitted
by the union shall be honored by the Company.
1). . . in awarding wage increases of P2,200.00 for 1996 and P2,200.00 for 1997;
3) . . . in expanding the scope of the bargaining unit to all regular rank and file
employees hired by the company in all its offices and operating centers and
those it may employ by reason of expansion, reorganization or as a result of
operational exigencies;
4) . . . in ordering for a closed shop when his original order for a maintenance of
membership arrangement was not questioned by the parties;
5) . . . in ordering that Meralco should consult the union before any contracting
out for more than six months;
7) . . . in ruling for the inclusion of all terms and conditions of employment in the
collective bargaining agreement;
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and
to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the government.
Under this constitutional mandate, every legal power of the Secretary of
Labor under the Labor Code, or, for that matter, any act of the Executive, that is
attended by grave abuse of discretion is subject to review by this Court in an
appropriate proceeding. To be sure, the existence of an executive power alone -
whether granted by statute or by the Constitution - cannot exempt the executive
action from judicial oversight, interference or reversal when grave abuse of
discretion is, or is alleged to be, present. This is particularly true when
constitutional norms are cited as the applicable yardsticks since this Court is the
final interpreter of the meaning and intent of the Constitution. [13]
The extent of judicial review over the Secretary of Labors arbitral award is
not limited to a determination of grave abuse in the manner of the secretarys
exercise of his statutory powers. This Court is entitled to, and must - in the
exercise of its judicial power - review the substance of the Secretarys award
when grave abuse of discretion is alleged to exist in the award, i.e., in the
appreciation of and the conclusions the Secretary drew from the evidence
presented.
The natural and ever present limitation on the Secretarys acts is, of course,
the Constitution. And we recognize that indeed the constitutional provisions the
union cited are State policies on labor and social justice that can serve as
standards in assessing the validity of a Secretary of Labors actions. However, we
note that these provisions do not provide clear, precise and objective standards
of conduct that lend themselves to easy application. We likewise recognize that
the Constitution is not a lopsided document that only recognizes the interests of
the working man; it too protects the interests of the property owner and employer
as well.[14]
For these reasons - and more importantly because a ruling on the breadth
and scope of the suggested constitutional yardsticks is not absolutely necessary
in the disposition of this case - we shall not use these yardsticks in accordance
with the time-honored practice of avoiding constitutional interpretations when a
decision can be reached using non-constitutional standards. We have repeatedly
held that one of the essential requisites for a successful judicial inquiry into
constitutional questions is that the resolution of the constitutional question must
be necessary in deciding the case.[15]
In this case we believe that the more appropriate and available standard -
and one does not require a constitutional interpretation - is simply the standard of
reasonableness. In laymans terms, reasonableness implies the absence of
arbitrariness;[16] in legal parlance, this translates into the exercise of proper
discretion and to the observance of due process. Thus, the question we have to
answer in deciding this case is whether the Secretarys actions have been
reasonable in light of the parties positions and the evidence they presented.
MEWAs second premise - i.e., that the Secretary duly considered the
evidence presented - is the main issue that we shall discuss at length
below. Additionally, MEWA implied that we should take great care before reading
an abuse of discretion on the part of the Secretary because of his expertise on
labor issues and because his findings of fact deserve the highest respect from
this Court.
This Court has recognized the Secretary of Labors distinct expertise in the
study and settlement of labor disputes falling under his power of compulsory
arbitration.[17] It is also well-settled that factual findings of labor administrative
officials, if supported by substantial evidence, are entitled not only to great
respect but even to finality. [18] We, therefore, have no difficulty in accepting the
unions caveat on how to handle a Secretary of Labors arbitral award.
But at the same time, we also recognize the possibility that abuse of
discretion may attend the exercise of the Secretarys arbitral functions; his
findings in an arbitration case are usually based on position papers and their
supporting documents (as they are in the present case), and not on the thorough
examination of the parties contending claims that may be present in a court trial
and in the face-to-face adversarial process that better insures the proper
presentation and appreciation of evidence. [19] There may also be grave abuse of
discretion where the board, tribunal or officer exercising judicial function fails to
consider evidence adduced by the parties. [20] Given the parties positions on the
justiciability of the issues before us, the question we have to answer is one that
goes into the substance of the Secretarys disputed orders: Did the Secretary
properly consider and appreciate the evidence presented before him?
We find, based on our consideration of the parties positions and the evidence
on record, that the Secretary of Labor disregarded and misappreciated evidence,
particularly with respect to the wage award.The Secretary of Labor apparently
also acted arbitrarily and even whimsically in considering a number of legal
points; even the Solicitor General himself considered that the Secretary gravely
abused his discretion on at least three major points: (a) on the signing bonus
issue; (b) on the inclusion of confidential employees in the rank and file
bargaining unit, and (c) in mandating a union security closed-shop regime in the
bargaining unit.
We begin with a discussion on the wages issue. The focal point in the
consideration of the wage award is the projected net income for 1996 which
became the basis for the 1996 wage award, which in turn - by extrapolation -
became the basis for the (2nd Year) 1997 award. MERALCO projected that the
net operating income for 1996 was 14.7% above the 1999 level or a total net
operating income of 4.171 Billion, while the union placed the 1996 net operating
income at 5.795 Billion.
MERALCO based its projection on the increase of the income for the first 6
months of 1996 over the same period in 1995. The union, on the other hand,
projected that the 1996 income would increase by 29% to 35% because the
consumption of electric power is at its highest during the last two quarters with
the advent of the Yuletide season. The union likewise relied heavily on a
newspaper report citing an estimate by an all Asia capital financial analyst that
the net operating income would amount to 5.795 Billion. [21]
Based essentially on these considerations, the Secretary made the following
computations and ordered his disputed wage award:
Projected net operating
Income for 1996 5,795,000,000
Principals and interests 1,426,571,703
Dividends at 1995 rate 1,636,949,000
Net amount left with the Company 2,729,479,297
Add: Tax credit equivalent to 35% of labor cost 231,804,940
Companys net operating income 2,961,284,237
For 1997, the projected income is P7,613,612 which can easily absorb the
incremental increase of P2,200 per month or a total of P4,500 during the last
year of the CBA period.
xxxxxxxxx
An overriding aim is to estimate the amount that is left with the Company after
the awarded wages and benefits and the companys customary obligations are
paid. This amount can be the source of an item not found in the above
computations but which the Company must provide for, that is - the amount the
company can use for expansion.
Considering the expansion plans stated in the Companys Supplement that calls
for capital expenditures of 6 billion, 6.263 billion and 5.802 billion for 1996, 1997
and 1998 respectively, We conclude that our original award of P2,300 per month
for the first year and P2,200 for the second year will still leave much by way of
retained income that can be used for expansion.[22] (Underscoring ours.)
We find after considering the records that the Secretary gravely abused his
discretion in making this wage award because he disregarded evidence on
record. Where he considered MERALCOs evidence at all, he apparently
misappreciated this evidence in favor of claims that do not have evidentiary
support. To our mind, the MERALCO projection had every reason to be reliable
because it was based on actual and undisputed figures for the first six months of
1996.[23] On the other hand, the union projection was based on a speculation of
Yuletide consumption that the union failed to substantiate. In fact, as against the
unions unsubstantiated Yuletide consumption claim, MERALCO adduced
evidence in the form of historical consumption data showing that a lengthy
consumption does not tend to rise during the Christmas period. [24] Additionally,
the All-Asia Capital Report was nothing more than a newspaper report that did
not show any specific breakdown or computations. While the union claimed that
its cited figure is based on MERALCOs 10-year income stream, [25] no data or
computation of this 10-year stream appear in the record.
While the Secretary is not expected to accept the company-offered figures
wholesale in determining a wage award, we find it a grave abuse of discretion to
completely disregard data that is based on actual and undisputed record of
financial performance in favor of the third-hand and unfounded claims the
Secretary eventually relied upon. At the very least, the Secretary should have
properly justified his disregard of the company figures. The Secretary should
have also reasonably insured that the figure that served as the starting point for
his computation had some substantial basis.
Both parties extensely discussed the factors that the decision maker should
consider in making a wage award. While We do not seek to enumerate in this
decision the factors that should affect wage determination, we must emphasize
that a collective bargaining dispute such as this one requires due consideration
and proper balancing of the interests of the parties to the dispute and of
those who might be affected by the dispute. To our mind, the best way in
approaching this task holistically is to consider the available objective facts,
including, where applicable, factors such as the bargaining history of the
company, the trends and amounts of arbitrated and agreed wage awards and the
companys previous CBAs, and industry trends in general. As a rule, affordability
or capacity to pay should be taken into account but cannot be the sole yardstick
in determining the wage award, especially in a public utility like MERALCO. In
considering a public utility, the decision maker must always take into account the
public interest aspects of the case; MERALCOs income and the amount of
money available for operating expenses - including labor costs - are subject to
State regulation. We must also keep in mind that high operating costs will
certainly and eventually be passed on to the consuming public as MERALCO has
bluntly warned in its pleadings.
We take note of the middle ground approach employed by the Secretary in
this case which we do not necessarily find to be the best method of resolving a
wage dispute. Merely finding the midway point between the demands of the
company and the union, and splitting the difference is a simplistic solution that
fails to recognize that the parties may already be at the limits of the wage levels
they can afford. It may lead to the danger too that neither of the parties will
engage in principled bargaining; the company may keep its position artificially low
while the union presents an artificially high position, on the fear that a Solomonic
solution cannot be avoided. Thus, rather than encourage agreement, a middle
ground approach instead promotes a play safe attitude that leads to more
deadlocks than to successfully negotiated CBAs.
After considering the various factors the parties cited, we believe that the
interests of both labor and management are best served by a wage increase
of P1,900.00 per month for the first year and another P1,900.00 per month for
the second year of the two-year CBA term. Our reason for this is that these
increases sufficiently protects the interest of the worker as they are roughly 15%
of the monthly average salary of P11,600.00.[26] They likewise sufficiently
consider the employers costs and its overall wage structure, while at the same
time, being within the range that will not disrupt the wage trends in Philippine
industries.
The records shows that MERALCO, throughout its long years of existence,
was never remiss in its obligation towards its employees. In fact, as a
manifestation of its strong commitment to the promotion of the welfare and well-
being of its employees, it has consistently improved their compensation
package. For instance, MERALCO has granted salary increases [27] through the
collective bargaining agreement the amount of which since 1980 for both rank-and-
file and supervisory employees were as follows:
AMOUNT OF CBA INCREASES DIFFERENCE
CBA COVERA RANK-AND- SUPERVISORY AMOUNT PERCENT
GE FILE
1980 230.00 342.50 112.50 48.91%
1981 210.00 322.50 112.50 53.57
1982 200.00 312.50 112.50 56.25
TOTAL 640.00 977.50 337.50 52.73
1983 320.00 432.50 112.50 35.16
1984 350.00 462.50 112.50 32.14
1985 370.00 482.50 112.50 30.41
TOTAL 1,040.00 1,377.50 337.50 32.45
1986 860.00 972.50 112.50 13.08
1987 640.00 752.50 112.50 17.58
1988 600.00 712.50 112.50 18.75
TOTAL 2,100.00 2,437.50 337.50 16.07
1989 1,100.00 1,212.50 112.50 10.23
1990 1,200.00 1,312.50 112.50 9.38
1991 1,300.00 1,412.50 112.50 8.65
TOTAL 3,600.00 3,937.50 337.50 9.38
1992 1,400.00 1,742.50 342.50 24.46
1993 1,350.00 1,682.50 332.50 24.63
1994 1,150.00 1,442.50 292.50 25.43
TOTAL 3,900.00 4,867.50 967.50 24.81
Based on the above-quoted table, specifically under the column RANK-AND-
FILE, it is easily discernible that the total wage increase of P3,800.00 for 1996 to
1997 which we are granting in the instant case is significantly higher than the
total increases given in 1992 to 1994, or a span of three (3) years, which is
only P3,900.00 a month. Thus, the Secretarys grant of P2,200.00 monthly wage
increase in the assailed order is unreasonably high a burden for MERALCO to
shoulder.
We now go to the economic issues.
1. CHRISTMAS BONUS
MERALCO questions the Secretarys award of Christmas bonuses on the
ground that what it had given its employees were special bonuses to mark or
celebrate special occasions, such as when the Asia Money Magazine recognized
MERALCO as the best managed company in Asia. These grants were given on
or about Christmas time, and the timing of the grant apparently led the Secretary
to the conclusion that what were given were Christmas bonuses given by way of
a company practice on top of the legally required 13 th month pay.
The Secretary in granting the two-month bonus, considered the following
factual finding, to wit:
We note that each of the grant mentioned in the commonly adopted table of
grants has a special description. Christmas bonuses were given in 1988 and
1989. However, the amounts of bonuses given differed.In 1988, it was P1,500. In
1989, it was month salary. The use of Christmas bonus title stopped after
1989. In 1990, what was given was a cash gift of months salary. The grants
thereafter bore different titles and were for varying amounts. Significantly, the
Company explained the reason for the 1995 bonuses and this explanation was
not substantially contradicted by the Union.
What comes out from all these is that while the Company has consistently given
some amount by way of bonuses since 1988, these awards were not given
uniformly as Christmas bonuses or special Christmas grants although they may
have been given at or about Christmas time.
xxxxxxxxx
The Company is not therefore correct in its position that there is not established
practice of giving Christmas bonuses that has ripened to the status of being a
term and condition of employment. Regardless of its nomenclature and purpose,
the act of giving this bonus in the spirit of Christmas has ripened into a Company
practice.[28]
The test or rationale of this rule on long practice requires an indubitable showing
that the employer agreed to continue giving the benefits knowing fully well that
said employees are not covered by the law requiring payment thereof.
In the case at bar, the record shows the MERALCO, aside from complying
with the regular 13th month bonus, has further been giving its employees an
additional Christmas bonus at the tail-end of the year since 1988. While the
special bonuses differed in amount and bore different titles, it can not be denied
that these were given voluntarily and continuously on or about Christmas
time. The considerable length of time MERALCO has been giving the special
grants to its employees indicates a unilateral and voluntary act on its part, to
continue giving said benefits knowing that such act was not required by law.
Indeed, a company practice favorable to the employees has been
established and the payments made by MERALCO pursuant thereto ripened into
benefits enjoyed by the employees. Consequently, the giving of the special
bonus can no longer be withdrawn by the company as this would amount to a
diminution of the employees existing benefits. [34]
We can not, however, affirm the Secretarys award of a two-month special
Christmas bonus to the employees since there was no recognized company
practice of giving a two-month special grant. The two-month special bonus was
given only in 1995 in recognition of the employees prompt and efficient response
during the calamities. Instead, a one-month special bonus, We believe, is
sufficient, this being merely a generous act on the part of MERALCO.
2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES
It appears that the Secretary of Labor originally ordered the increase of the
retirement pay, rice subsidy and medical benefits of MERALCO retirees. This
ruling was reconsidered based on the position that retirees are no longer
employees of the company and therefore are no longer bargaining members who
can benefit from a compulsory arbitration award. The Secretary, however, ruled
that all members of the bargaining unit who retire between August 19, 1996 and
November 30, 1997 (i.e., the term of the disputed CBA under the Secretarys
disputed orders) are entitled to receive an additional rice subsidy.
The question squarely brought in this petition is whether the Secretary can
issue an order that binds the retirement fund. The company alleges that a
separate and independent trust fund is the source of retirement benefits for
MERALCO retirees, while the union maintains that MERALCO controls these
funds and may therefore be compelled to improve this benefit in an arbitral
award.
The issue requires a finding of fact on the legal personality of the retirement
fund. In the absence of any evidence on record indicating the nature of the
retirement funds legal personality, we rule that the issue should be remanded to
the Secretary for reception of evidence as whether or not the MERALCO
retirement fund is a separate and independent trust fund. The existence of a
separate and independent juridical entity which controls an irrevocable retirement
trust fund means that these retirement funds are beyond the scope of collective
bargaining: they are administered by an entity not a party to the collective
bargaining and the funds may not be touched without the trustees conformity.
On the other hand, MERALCO control over these funds means that
MERALCO may be compelled in the compulsory arbitration of a CBA deadlock
where it is the employer, to improve retirement benefits since retirement is a term
or condition of employment that is a mandatory subject of bargaining.
3. EMPLOYEES COOPERATIVE
The Secretarys disputed ruling requires MERALCO to provide the employees
covered by the bargaining unit with a loan of 1.5 Million as seed money for the
employees formation of a cooperative under the Cooperative Law, R.A. 6938. We
see nothing in this law - whether expressed or implied - that requires employers
to provide funds, by loan or otherwise, that employees can use to form a
cooperative. The formation of a cooperative is a purely voluntary act under this
law, and no party in any context or relationship is required by law to set up a
cooperative or to provide the funds therefor. In the absence of such legal
requirement, the Secretary has no basis to order the grant of a 1.5 million loan to
MERALCO employees for the formation of a cooperative. Furthermore, we do not
see the formation of an employees cooperative, in the absence of an agreement
by the collective bargaining parties that this is a bargainable term or condition of
employment, to be a term or condition of employment that can be imposed on the
parties on compulsory arbitration.
4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING
EQUITY LOAN
MERALCO contends that it is not bound to bargain on these benefits
because these do not relate to wages, hours of work and other terms and
conditions of employment hence, the denial of these demands cannot result in a
bargaining impasse.
The GHSIP, HMP benefits for dependents and the housing equity loan have
been the subject of bargaining and arbitral awards in the past. We do not see any
reason why MERALCO should not now bargain on these benefits. Thus, we
agree with the Secretarys ruling:
x x x Additionally and more importantly, GHSIP and HMP, aside from being
contributory plans, have been the subject of previous rulings from this Office as
bargainable matters. At this point, we cannot do any less and must recognize
that GHSIP and HMP are matters where the union can demand and negotiate for
improvements within the framework of the collective bargaining system. [35]
Moreover, MERALCO have long been extending these benefits to the
employees and their dependents that they now become part of the terms and
conditions of employment. In fact, MERALCO even pledged to continue giving
these benefits. Hence, these benefits should be incorporated in the new CBA.
With regard to the increase of the housing equity grant, we find P60,000.00
reasonable considering the prevailing economic crisis.
5. SIGNING BONUS
On the signing bonus issue, we agree with the positions commonly taken by
MERALCO and by the Office of the Solicitor General that the signing bonus is a
grant motivated by the goodwill generated when a CBA is successfully negotiated
and signed between the employer and the union. In the present case, this
goodwill does not exist. In the words of the Solicitor General:
When negotiations for the last two years of the 1992-1997 CBA broke down and
the parties sought the assistance of the NCMB, but which failed to reconcile their
differences, and when petitioner MERALCO bluntly invoked the jurisdiction of the
Secretary of Labor in the resolution of the labor dispute, whatever goodwill
existed between petitioner MERALCO and respondent union disappeared. xxx.[36]
(a) Reduction of quota and MAPL when the collector is on sick leave
because the previous CBA has already provided for a reduction of this
demand. There is no need to further reduce this.
a. Scope of the collective bargaining unit. The union is demanding that the
collective bargaining unit shall be composed of all regular rank and file
employees hired by the company in all its offices and operating centers through
its franchise and those it may employ by reason of expansion, reorganization or
as a result of operational exigencies. The law is that only managerial employees
are excluded from any collective bargaining unit and supervisors are now allowed
to form their own union (Art. 254 of the Labor Code as amended by R.A.
6715). We grant the union demand.
Both MERALCO and the Office of the Solicitor General dispute this ruling
because if disregards the rule We have established on the exclusion
of confidential employee from the rank and file bargaining unit.
In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores
Union,[40] we ruled that:
Put another way, the confidential employee does not share in the same
community of interest that might otherwise make him eligible to join his rank and
file co-workers, precisely because of a conflict in those interests.
..that the Secretarys order should exclude the confidential employees from the
regular rank and file employees qualified to become members of the MEWA
bargaining unit.
Additionally, the Union is demanding that the right of all rank and file employees
to join the Union shall be recognized by the Company. Accordingly, all rank and
file employees shall join the union.
xxxxxxxxx
These demands are fairly reasonable. We grant the same in accordance with the
maintenance of membership principle as a form of union security."
The Secretary reconsidered this portion of his original order when he said in
his December 28, 1996 order that:
x x x. when we decreed that all rank and file employees shall join the Union, we
were actually decreeing the incorporation of a closed shop form of union security
in the CBA between the parties. In Ferrer v. NLRC, 224 SCRA 410, the Supreme
Court ruled that a CBA provision for a closed shop is a valid form of union
security and is not a restriction on the right or freedom of association guaranteed
by the Constitution, citing Lirag v. Blanco, 109 SCRA 87.
MERALCO objected to this ruling on the grounds that: (a) it was never
questioned by the parties; (b) there is no evidence presented that would justify
the restriction on employee's union membership; and (c) the Secretary cannot
rule on the union security demand because this is not a mandatory subject for
collective bargaining agreement.
We agree with MERALCOs contention.
An examination of the records of the case shows that the union did not ask
for a closed shop security regime; the Secretary in the first instance expressly
stated that a maintenance of membership clause should govern; neither
MERALCO nor MEWA raised the issue of union security in their respective
motions for reconsideration of the Secretarys first disputed order; and that
despite the parties clear acceptance of the Secretarys first ruling, the
Secretary motu proprio reconsidered his maintenance of membership ruling in
favor of the more stringent union shop regime.
Under these circumstances, it is indubitably clear that the Secretary gravely
abused his discretion when he ordered a union shop in his order of December
28, 1996. The distinctions between a maintenance of membership regime from a
closed shop and their consequences in the relationship between the union and
the company are well established and need no further elaboration.
Consequently, We rule that the maintenance of membership regime should
govern at MERALCO in accordance with the Secretarys order of August 19, 1996
which neither party disputed.
3. THE CONTRACTING OUT ISSUE
This issue is limited to the validity of the requirement that the union be
consulted before the implementation of any contracting out that would last for 6
months or more. Proceeding from our ruling in San Miguel Employees Union-
PTGWO vs Bersamina,[43] (where we recognized that contracting out of work is a
proprietary right of the employer in the exercise of an inherent management
prerogative) the issue we see is whether the Secretarys consultation requirement
is reasonable or unduly restrictive of the companys management prerogative. We
note that the Secretary himself has considered that management should not be
hampered in the operations of its business when he said that:
We feel that the limitations imposed by the union advocates are too specific and
may not be applicable to the situations that the company and the union may face
in the future. To our mind, the greater risk with this type of limitation is that it will
tend to curtail rather than allow the business growth that the company and the
union must aspire for. Hence, we are for the general limitations we have stated
above because they will allow a calibrated response to specific future situations
the company and the union may face. [44]
All other benefits being enjoyed by the companys employees but which are not
expressly or impliedly repealed in this new agreement shall remain subsisting
and shall likewise be included in the new collective bargaining agreement to be
signed by the parties effective December 1, 1995.[46]
claiming that the above-quoted ruling intruded into the employers freedom to
contract by ordering the inclusion in the new CBA all other benefits presently
enjoyed by the employees even if they are not incorporated in the new CBA. This
matter of inclusion, MERALCO argues, was never discussed and agreed upon in
the negotiations; nor presented as issues before the Secretary; nor were part of
the previous CBAs between the parties.
We agree with MERALCO.
The Secretary acted in excess of the discretion allowed him by law when he
ordered the inclusion of benefits, terms and conditions that the law and the
parties did not intend to be reflected in their CBA.
To avoid the possible problems that the disputed orders may bring, we are
constrained to rule that only the terms and conditions already existing in the
current CBA and was granted by the Secretary (subject to the modifications
decreed in this decision) should be incorporated in the CBA, and that the
Secretarys disputed orders should accordingly be modified.
6. RETROACTIVITY OF THE CBA
Finally, MERALCO also assails the Secretarys order that the effectivity of the
new CBA shall retroact to December 1, 1995, the date of the commencement of
the last two years of the effectivity of the existing CBA. This retroactive date,
MERALCO argues, is contrary to the ruling of this Court in Pier 8 Arrastre and
Stevedoring Services, Inc. vs. Roldan-Confessor [47] which mandates that the
effective date of the new CBA should be the date the Secretary of Labor has
resolved the labor disputes.
On the other hand, MEWA supports the ruling of the Secretary on the theory
that he has plenary power and discretion to fix the date of effectivity of his arbitral
award citing our ruling in St. Lukes Medical Center, Inc. vs. Torres.[48] MEWA
also contends that if the arbitral award takes effect on the date of the Secretary
Labors ruling on the parties motion for reconsideration (i.e., on December 28,
1996), an anomaly situation will result when CBA would be more than the 5-year
term mandated by Article 253-A of the Labor Code.
However, neither party took into account the factors necessary for a proper
resolution of this aspect. Pier 8, for instance, does not involve a mid-term
negotiation similar to this case, while St. Lukes does not take the hold over
principle into account, i.e., the rule that although a CBA has expired, it continues
to have legal effects as between the parties until a new CBA has been entered
into.[49]
Article 253-A serves as the guide in determining when the effectivity of the
CBA at bar is to take effect. It provides that the representation aspect of the CBA
is to be for a term of 5 years, while
Under these terms, it is clear that the 5-year term requirement is specific to
the representation aspect. What the law additionally requires is that a CBA must
be re-negotiated within 3 years after its execution. It is in this re-negotiation that
gives rise to the present CBA deadlock.
If no agreement is reached within 6 months from the expiry date of the 3
years that follow the CBA execution, the law expressly gives the parties - not
anybody else - the discretion to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the situation where 6 months
have elapsed but no agreement has been reached with respect to effectivity. In
this eventuality, we hold that any provision of law should then apply for the law
abhors a vacuum.[50]
One such provision is the principle of hold over, i.e., that in the absence of a
new CBA, the parties must maintain the status quo and must continue in full
force and effect the terms and conditions of the existing agreement until a new
agreement is reached.[51] In this manner, the law prevents the existence of a gap
in the relationship between the collective bargaining parties. Another legal
principle that should apply is that in the absence of an agreement between the
parties, then, an arbitrated CBA takes on the nature of any judicial or quasi-
judicial award; it operates and may be executed only respectively unless there
are legal justifications for its retroactive application.
Consequently, we find no sufficient legal ground on the other justification for
the retroactive application of the disputed CBA, and therefore hold that the CBA
should be effective for a term of 2 years counted from December 28, 1996 (the
date of the Secretary of Labors disputed order on the parties motion for
reconsideration) up to December 27, 1999.
WHEREFORE, the petition is granted and the orders of public respondent
Secretary of Labor dated August 19, 1996 and December 28, 1996 are set aside
to the extent set forth above. The parties are directed to execute a Collective
Bargaining Agreement incorporating the terms and conditions contained in the
unaffected portions of the Secretary of Labors order of August 19, 1996 and
December 28, 1996, and the modifications set forth above. The retirement fund
issue is remanded to the Secretary of Labor for reception of evidence and
determination of the legal personality of the MERALCO retirement fund.
SO ORDERED.
Davide, Jr., C.J. (Chairman), Melo, Kapunan, and Pardo, JJ., concur.
RESOLUTION
YNARES_SANTIAGO, J.:
In the Decision promulgated on January 27, 1999, the Court disposed of the case
as follows:
GHSIP, HMP
The issues raised in the motions for reconsideration had already been passed
upon by the Court in the January 27, 1999 decision. No new arguments were
presented for consideration of the Court. Nonetheless, certain matters will be
considered herein, particularly those involving the amount of wages and the
retroactivity of the Collective Bargaining Agreement (CBA) arbitral awards.
Petitioner warns that if the wage increase of P2,200.00 per month as ordered by
the Secretary is allowed, it would simply pass the cost covering such increase to
the consumers through an increase in the rate of electricity. This is a non
sequitur. The Court cannot be threatened with such a misleading argument. An
increase in the prices of electric current needs the approval of the appropriate
regulatory government agency and does not automatically result from a mere
increase in the wages of petitioners employees. Besides, this argument
presupposes that petitioner is capable of meeting a wage increase. The All Asia
Capital report upon which the Union relies to support its position regarding the
wage issue can not be an accurate basis and conclusive determinant of the rate
of wage increase. Section 45 of Rule 130 Rules of Evidence provides:
"Commercial lists and the like. - Evidence of statements of matters
of interest to persons engaged in an occupation contained in a list,
register, periodical, or other published compilation is admissible as
tending to prove the truth of any relevant matter so stated if that
compilation is published for use by persons engaged in that
occupation and is generally used and relied upon by them therein."
Nonetheless, by petitioners own allegations, its actual total net income for 1996
was P5.1 billion.[8] An estimate by the All Asia financial analyst stated that
petitioners net operating income for the same year was about P5.7 billion, a
figure which the Union relies on to support its claim. Assuming without admitting
the truth thereof, the figure is higher than the P4.171 billion allegedly suggested
by petitioner as its projected net operating income. The P5.7 billion which was
the Secretarys basis for granting the P2,200.00 is higher than the actual net
income of P5.1 billion admitted by petitioner. It would be proper then to increase
this Courts award of P1,900.00 to P2,000.00 for the two years of the CBA award.
For 1992, the agreed CBA wage increase for rank-and-file was P1,400.00 and
was reduced to P1,350.00, for 1993; further reduced to P1,150.00 for 1994. For
supervisory employees, the agreed wage increase for the years 1992-1994 are
P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the foregoing
figures, the P2,000.00 increase for the two-year period awarded to the rank-and-
file is much higher than the highest increase granted to supervisory employees.
[9]
As mentioned in the January 27, 1999 Decision, the Court does "not seek to
enumerate in this decision the factors that should affect wage determination"
because collective bargaining disputes particularly those affecting the national
interest and public service "requires due consideration and proper balancing of
the interests of the parties to the dispute and of those who might be affected by
the dispute."[10] The Court takes judicial notice that the new amounts granted
herein are significantly higher than the weighted average salary currently enjoyed
by other rank-and-file employees within the community. It should be noted that
the relations between labor and capital is impressed with public interest which
must yield to the common good.[11] Neither party should act oppressively against
the other or impair the interest or convenience of the public. [12]Besides, matters of
salary increases are part of management prerogative. [13]
On the retroactivity of the CBA arbitral award, it is well to recall that this petition
had its origin in the renegotiation of the parties 1992-1997 CBA insofar as the last
two-year period thereof is concerned. When the Secretary of Labor assumed
jurisdiction and granted the arbitral awards, there was no question that these
arbitral awards were to be given retroactive effect. However, the parties dispute
the reckoning period when retroaction shall commence. Petitioner claims that the
award should retroact only from such time that the Secretary of Labor rendered
the award, invoking the 1995 decision in Pier 8 case[14] where the Court,
citing Union of Filipino Employees v. NLRC,[15] said:
On the other hand, the Union argues that the award should retroact to such time
granted by the Secretary, citing the 1993 decision of St Lukes.[16]
In the 1997 case of Mindanao Terminal,[17] the Court applied the St.
Lukes doctrine and ruled that:
The Court in the January 27, 1999 Decision, stated that the CBA shall be
"effective for a period of 2 years counted from December 28, 1996 up to
December 27, 1999." Parenthetically, this actually covers a three-year period.
Labor laws are silent as to when an arbitral award in a labor dispute where the
Secretary had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code
shall retroact. In general, a CBA negotiated within six months after the expiration
of the existing CBA retroacts to the day immediately following such date and if
agreed thereafter, the effectivity depends on the agreement of the parties. [18] On
the other hand, the law is silent as to the retroactivity of a CBA arbitral award or
that granted not by virtue of the mutual agreement of the parties but by
intervention of the government. Despite the silence of the law, the Court rules
herein that CBA arbitral awards granted after six months from the expiration of
the last CBA shall retroact to such time agreed upon by both employer and the
employees or their union. Absent such an agreement as to retroactivity, the
award shall retroact to the first day after the six-month period following the
expiration of the last day of the CBA should there be one. In the absence of a
CBA, the Secretarys determination of the date of retroactivity as part of his
discretionary powers over arbitral awards shall control.
Anent the 40-day union leave, the Court finds that the same is a typographical
error. In order to avoid any confusion, it is herein declared that the union leave is
only thirty (30) days as granted by the Secretary of Labor and affirmed in the
Decision of this Court.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Melo, Kapunan, and Pardo, JJ., concur.
[1]
Decision promulgated January 27, 1999, G. R. No. 127598 penned by Justice
Antonio Martinez (now retired) with Chief Justice Hilario Davide, Jr. and Justices
Jose Melo, Santiago Kapunan and Bernardo Pardo, concurring.
[2]
First Line Association of Meralco Supervisory Employees.
[3]
Motion for Leave to Intervene and to treat this as Movants Intervention filed by
FLAMES, p. 4; Rollo, p. 2476.
[4]
Solicitor-Generals Manifestation and Motion dated August 10, 1999, p. 2; Rollo,
p. 2506.
[5]
Rollo, p. 2495.
[6]
20 Am. Jur. 819.
[7]
20 Am. Jr. 819-820.
[8]
Petitioners Comment to Motions for Reconsideration and Motion for
Intervention, p. 6; Rollo, p. 2514.
[9]
See the January 27, 1999 Decision.
[10]
Manila Electric Company v. Quisumbing, 302 SCRA 173, 196 (1999).
[11]
Article 1700, New Civil Code (NCC).
[12]
Article 1701, NCC.
[13]
See National Federation of Labor Unions v. NLRC, 202 SCRA 346 (1991).
[14]
Pier 8 Arrastre and Stevedoring Services, Inc. v. Roldan-Confesor, (2nd Div),
311 Phil. 311 penned by Justice Puno with Chief Justice Narvasa (ret.) and
Justices Bidin (ret.), Regalado (ret.) and Mendoza, concurring, p. 329.
[15]
192 SCRA 414 (1990).
[16]
St. Lukes Medical Center v. Torres, (3rd Div), 223 SCRA 779 (1993), penned
by Justice Melo with Justices Feliciano (ret.), Bidin (ret.), Davide (now Chief
Justice) and Romero (ret.), concurring, pp. 792-793.
[17]
In Mindanao Terminal and Brokerage Service, Inc. v. Confesor, (2nd Div), 338
Phil. 671 penned by Justice Mendoza with Justices Regalado (ret.), Romero,
(ret.), Puno and Torres (ret.), concurring, p. 679.
[18]
Article 253-A, Labor Code, as amended..
[19]
Mindanao Terminal and Brokerage Service, Inc. v. Confesor, 338 Phil. 671.
[20]
Rollo, p. 2347.
[21]
Annex "C" of the Petition.
[22]
See Section 2, R.A. No. 6838 (Cooperative Code of the Philippines) which
provides: "It is the declared policy of the State to foster the creation and growth of
cooperative as a practical vehicle for promoting self-reliance and harnessing
people power towards the attainment of economic development and social
justice. The State shall encourage the private sector to undertake the actual
formation of cooperatives and shall create an atmosphere that is conducive to
the organizational growth and development of the cooperatives.
Towards this end, the Government and all its branches, subsidiaries,
instrumentalities, and agencies shall ensure the provision of technical
guidelines, financial assistance, and other services to enable said cooperative to
development into viable and responsive economic enterprises and thereby bring
about a strong cooperative movement that is free from any conditions that might
infringe upon the autonomy or organizational integrity of cooperatives.
[23]
Philippine Airlines v. NLRC, 225 SCRA 259 (1993).
[24]
Tierra International Construction Corporation v. NLRC, 256 SCRA 36 (1996);
Business Day Information Systems v. NLRC, 221 SCRA 9 (1993); Philtread
Tire v. NLRC, 218 SCRA 805 (1993); San Miguel Corporation v. Ubaldo, 218
SCRA 293 (1993); San Miguel Brewery Sales Force Union v. Ople, 170 SCRA 25
(1989).
[25]
Shell Oil Workers Union v. Shell Company of the Philippines, Ltd., 39 SCRA
276 (1971).
[26]
De Ocampo v. NLRC, 213 SCRA 652 (1992).
[27]
Asian Alcohol Corporation v. NLRC, G.R. No. 131108, March 25, 1999 cited in
Serrano v. NLRC, G.R. No. 117040, January 27, 2000.
[28]
See also Metrolab Industries v. Roldan-Confesor, 254 SCRA 182 (1996).
[29]
Manila Electric Company v. Quisumbing, 302 SCRA 173, 196 (1999) citing De
Ocampo v. NLRC, 213 SCRA 652 (1992).