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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

JULY 20, 2017 Estillore

Collective bargaining is not an ordinary contract. It is a sui juris contract. The two parties that agree in a collective bargaining agreement do not stand in equal footing.

Justice Enrique Fernando used to say that the right to self-organization enables the labor to stand toe-to-toe, in equal footing, with capital. But even with the right to self-organization, even if it is already a union, it still does not stand in equal footing.

Why? Because you are agreeing on something that already belongs to capital. So, the employer has managerial prerogative because he owns the business.

This is my disappointment with Chan’s 2017 book

because it says that managerial prerogative is a judicial

pronouncement. There is no managerial prerogatives in the Labor Code. Where does managerial prerogatives

Kay wa man ka mihatag, ang empleyado mag-mulo. Muingon siya “Pagkalain. Wa nakoy pagkaon, wa nakoy ibutang sa lamesa sa akong pamilya.” Maguol siya. Mao nang naay grievance. He grieves.

There is no breach of CBA because the employer has many remedies simply because he owns the business. So, it is not an ordinary contract. Timani ni ha. Walay breach of contract sa CBA. Muingon gani ka ug naay breach of CBA, ihagbong ka nako because you completely missed what is collective bargaining. There is only grievance. Di man maghulat ang employer sa CBA. He acts on his prerogatives because he has an asset that he’s trying to make profitable.

From this, you know that the employer in a CBA is the pro-active party. The employee is only the re-active party. Magpaabot ra siya kung unsa buhaton sa employer kay siya man tag-iya. Ang employee walay assets (?), masakitan man siya mao nang mag-mulo na siya he grieves. Mag file siya ug grievance.

come from? It says, “Because the Supreme Court says so!” As the manager, the employer has this array of

When does the duty to bargain begin? Because the employer is proactive and the employee is reactive, it is

rights over and above its role as a manager.


always the employee that asserts the right to bargain. It is always the employer who has the duty to bargain





Managerial Prerogatives is


because - number one - if there is no CBA, there is


It should be properly called “Ownership

individual contract. If the CBA is already expired, it is


In Civil Law, Managerial Prerogative is

the employee who has an interest that a new CBA be

merely is merely administrative. Managerial

concluded so that he will have more benefits more than









the preceding CBA. So it’s always in favor of the

includes the right to disposition which is ownership.


employer to delay or postpone collective bargaining as a

you are an administrator you cannot dispose.


process, to delay or postpone the conclusion of the CBA,

require a special power of attorney. What is the

because there is always another contract that can take

opposite of SPA?

That’s powers of administration?

the place of another contract which is supposed to be


Wrong question!)

It’s called special power of

the product of bargaining process. So ang mag-sige

attorney because you are disposing land(?). Managerial

pursige sa right to collective bargaining is the employee.

prerogatives arose from ownership, which you know in

The employer will have to respond to the duty to bargain.

Civil Law is

a bundle of


It is

not just one right.

Because you are an owner, you have the right to

When does the duty to bargain begin?

The decided

possess. That’s jus possedendi , jus fruendi (right to the fruits), jus utendi (right to use), jus disponendi, and jus

case is Kiok Loy (Swedish Ice Cream) vs. NLRC. Before, Swedish Ice Cream was made by this

abutendi (?). Those rights are all managerial

businessman called Kiok Loy.



where the SC








made pronouncement as to when the duty to bargain

enterprise of the employer.

Even if there is a CBA, he has the right to do what he can do with his enterprise.

Muingon ba diay ning tag-iya – “Kay late ka man, sige

kag ka late ug abot dinha, I protest under the CBA.” Dili siya muingon ana! Muingon siya “Ako may ga sweldo

nimo, kanang kwarta akoa man na, wa kay sweldo! Managerial prerogatives - kwarta na nako! Nganong

sweldoan pa man taka nga di man ka mutunga!”

begins. It is when

  • 1. Majority representation status is possessed by the labor organization

  • 2. There is proof of majority representation status

  • 3. The labor union that is the representative of the bargaining unit has submitted in writing the bargaining proposals.

In other words, Article 250 has begun. Now, it’s Article

  • 260. It says the following procedure shall be observed

in collective bargaining:

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

When a party desires to negotiate an


There is a bargaining proposal in writing submitted to the

is that party who desires to negotiate? It’s always the

management. The management responds in 10 days.

union and not the employer, because the employer, di

And then, the union asks for conciliation bargaining

man na mag sakit iyang tiyan kung walay CBA. It’s the

session. They will be bargaining until one or both give

union. But the law says that “when a party


up. They declare deadlock. Once there is a deadlock,

nalang na. If the union desires to negotiate an agreement, it shall serve written notice upon the other party with the statement of its proposal. The other party shall make a reply thereto not later than 10 calendar days rom receipt of such notice.

the NCMB comes in and tries to get them to agree. But if they cannot agree, then the NCMB will do (?) out of the picture because the next thing that will happen is their compulsory arbitration or voluntary arbitration.

So, submit ka bargaining proposals. In the 1930s, it was

called bargaining demands. Now it’s called bargaining

Compulsory Arbitration. One might say - “That there’s a deadlock so therefore, we declare a strike on the basis

of the deadlock to compel the other party to grant our

proposals. You submit it in writing and now the

demands.” So, when there is a strike, what can

employer has 10 days to make a reply. How does he




a hospital,






reply? He will say – “I accept all your proposals. I will

indispensable to the national interest, it’s possible that

grant all your proposals.”

Highly unlikely.

It’s possible

the Dpartment


Labor Secretary will assume

but it is improbable. So, after 10 days he has to give an

answer. Normally, he gives an answer by counter- proposals should differences arise. On the basis of such notice of reply, either party may request for a conference which shall begin not later than 10 calendar days from the date of the written notice.

If the dispute is not settled, the National Conciliation and Mediation Board (NCMB) shall intervene. It shall intervene upon request of either both parties or on its own initiative (motu proprio), and immediately call the parties to conciliation meetings. The Board shall have the power to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the parties to participate fully and promptly in the conciliation meeting the Board might call.

During the conciliation proceedings in the Board, the parties are prohibited from doing any act which may disrupt or impede the early settlement of the disputes. The Board shall exert all efforts to settle dispute amicable and encourage the parties to submit their case to voluntary arbitration.

You know, this is where you notice that the DOLE or the author of this big book (referring to Chan, I guess) is really schizophrenic. Why? The NCMB is conciliation and mediation. It must be the parties that should arrive at a resolution. But the NCMB has subpoena powers! Pugson niya. Unsaon man niya pagpugos na sila ra man kaha mag settle. Unsaon man na niya?

Then take a look at this the Board shall exert all efforts to settle the disputes. It cannot settle dispute. It’s the parties who settle the dispute, not the conciliator or mediator. This is the problem of our Labor Relations because voluntary arbitration is less than voluntary. It is actually disguised compulsory arbitration.

jurisdiction over the dispute. Wala na’y strike. Siya ang

mu-decide kung unsa na ang naa dinha. Or the Secretary will throw it to the NLRC. Then, the NLRC will decide.

The US Supreme Court paints a picture of what a CBA is. It says: Collective Bargaining is similar to someone bringing his h to the bank of the river and getting his horse to stretch out its neck, bow down, and drink from the river. Paimnon niya ang kabayo kay mulakaw na sila ug layo, wa na kay mainom! Now, the horseman can only bring the horse to the edge of the river but the horseman can never drink for the horse. It must be the horse. In the end, you must wrap (?) up the water and drink. Mao sad na ang collective bargaining. The law conspires to bring the parties to the table but they cannot be forced to agree. In the end, they must agree because anything more than that is no longer an agreement.

This is where Philippine jurisprudence departs from US jurisprudence. Because in Kiok Loy, a union presented bargaining proposals. Niabot nalang ang isa ka buwan, wa gyud mutubag ang management. So the workers left their factory floor, gathered, and went to the administration building of Kiok Loy. They demonstrated. When they did that, Kiok Loy instituted dismissal proceedings for the union leaders because according to Kiok Loy they have conducted an illegal strike without filing a notice of strike. They left work and demonstrated. He says there is work stoppage.

The union answered by saying that management has

violated the duty to bargain. “We sent the proposals

but were not answered. They did not even acknowledge

receipt of the proposals.”

In their answer, Kiok Loy invoked an affirmative defense but he did not defend himself against the charge that he did not answer the proposal. What is the affirmative defense? They are on strike. They have no right to

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

strike because they did not file a notice of strike. They did not observe cooling off period. So, they should be dismissed because they conducted an illegal strike, the leaders may be dismissed.

Now, it goes to the SC because the NLRC, in deciding, said that Kiok Loy did not even advert to the bargaining proposals. He has the duty to respond to the bargaining proposals thus violating the duty to bargain. When you do not bargain, and the proposals are reasonable taken in themselves, then the NLRC has the jurisdiction to order that the terms of the CBA will be the proposal. Tan-awa ra. According to the NLRC, the DOLE has the prerogative to order that the proposals, seen that they are reasonable in themselves, will become the CBA. Did Kiok Loy agree? No! They did not even advert to it. Does the DOLE have that power? SC said yes, it has that power. Naloko na. Where is the agreement? It is now collective order of the NLRC. It is no longer a CBA. That is what the SC says.

What happened to Kiok Loy? He declared bankruptcy and closed the same. Do you see Swedish Ice Cream for sale? No more. Wala na. Nawagtang na.



In a certification election, KILUSAN, a legitimate late labor federation, won and was subsequently certified in a resolution by the BLR as the sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant (Company).

Thereafter, the Union furnished the Company with copies of its proposed CBA. At the same time, it requested the Company for its counter proposals. The request were ignored and remained unacted upon by the Company.

Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union filed a

“Notice of Strike”, with the BLR on ground of unresolved

economic issues in collective bargaining.

The NLRC rendered its decision, the dispositive portion of which reads as follows:

WHEREFORE, the respondent [company] is hereby declared guilty of unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. xx











Collective bargaining which is defined as negotiations towards a collective agreement, is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So

much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to

refuse “to meet and convene promptly and expeditiously

in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms

and conditions of employment including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorporating such agreement, if requested by either party.

From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a valid cause to complain against its

(Company’s) attitude, the totality of which is indicative of the latter’s disregard of, and failure to live up to, what is

enjoined by the Labor Code to bargain in good faith.

NOTES: While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate contract negotiation. The mechanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present, namely,

(1) possession of the status of majority representation of

the employees’ representative in accordance with any of

the means of selection or designation provided for by the Labor Code;

(2) proof of majority representation; and

(3) a demand to bargain under Article 251, par. (a) of the

New Labor Code . … all of which preconditions are

undisputedly present in the instant case.

There is this amendment to the Labor Code which came after the decision of Kiok Loy. The amendment is found in Article 250 - rights of legitimate labor organization,

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letter c: To be furnished to the employer upon written request with the annual audited financial statements, including the balance sheet, and profit and loss statement within 30 calendar years from the date of receipt of the request.

Here, the SC said that it is not just a legitimate LO. This must be an exclusive bargaining agent who has the right to be furnished, upon written request, within 30 days the latest audited financial statements. The law is even more specific that it must include balance sheet and profit and loss statement within 30 days from the date of receipt after the union has been duly recognized by the employer or certified as the sole and exclusive bargaining representative of the employees in the BU. So there is statutory recognition of the right to recognize the exclusive bargaining unit agent. Or within 60 calendar days before the expiration of the existing CBA or during the collective bargaining negotiations. So, there are three instances when the exclusive bargaining agent can demand from the employer the latest audited financial statement:

  • 1. As soon as it is voluntarily recognized or it is certified as the exclusive bargaining agent after a certification election

  • 2. During the 60-day freedom period of a CBA

  • 3. During the collective bargaining negotiations


you have

not asked before


you are already

bargaining, you can demand. Remember, you must put

it into writing written request.

There is this latest case decided by the SC. It says that the duty to bargain begins with the bargaining proposal. According to the SC, this is a separate duty. If the employer does not give the latest audited financial statements, he can be charged with unfair labor practice. But this is not yet the beginning. This is just a duty. The SC said that for this duty to be activated, the request must be in writing. It is not enough that you make a request even during the bargaining sessions and request was recording in the minutes. That is not complying with the duty to make a written request.

There is this case of Restaurant Employees of Aristocrat

owned by the Reyeses.

The union of the restaurant

employees gave the owner bargaining proposal.


owner did not even acknowledge receipt. It was like Kiok Loy except that the union filed a notice of strike on the

ground that the management has refused to bargain. So, when the notice of strike was served on the employer, the old lady, Reyes, who was the owner, the patriarch of the family that owns Aristocrat, appeared in the conciliation mediation. She says -

“I’m sorry. I did not get a copy of your proposals. Where

is your proposal? Do you have a copy now?” They

gave her a copy and right then and there, she went through the bargaining proposals and made marginal notes and gave back the proposals. Is that enough? SC said that it is a substantial compliance of Article 260.

No violation of its duty to bargain because he made

marginal notes on the bargaining proposal. If you don’t advert to it, then that’s a refusal to bargain and if the

proposals are considered reasonable by the DOLE, the latter can order that the proposal be the standing proposal. There is no such rule in the US because it will only bring the parties back to the table because that would not be an agreement.

JULY 26, 2017

Berguia, Abad, Buhay

Let us go through the Collective Bargaining Duty provisions of the labor code. It begins with 260. We said, this is one of the elements of the beginning of the collective bargaining. What are those elements?

  • 1. Majority representation STATUS

  • 2. You must produce PROOF of the majority representation status.

  • 3. You must submit to the other party, management or employer, your BARGAINING PROPOSALS IN WRITING.

Art 260 (old 250). Procedure in Collective Bargaining. The following procedures shall be observed in collective
Bargaining. The following procedures shall be
observed in collective bargaining:
When the party desires to negotiate an
agreement, it shall serve a written notice
upon the other party with the statements of
its proposals. The other party shall make a
reply thereto not later than 10 calendar days
from receipt of such notice;

So Art 260, according to Justice Cuevas, citing the case of Kiok Loy- if the employer does not advert or do anything to the bargaining proposals and if it (bargaining proposals) seems reasonable he simply agrees to it.

That becomes their CBA. If he doesn’t acknowledge

receiving it, he prescinds from it. So, the department of

labor or the secretary of labor has discretion to

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

determine if the bargaining proposals are reasonable and if it is so, then that becomes the CBA of the management and the union.

Now, this is violative of the term AGREEMENT. When is there agreement? When there is meeting of the minds over a definite or determinable subject matter. Unsay meeting of the minds ato nga siya ra may ni-submit? Siya ra may nag buot-buot. Unya karon, nahimo na

dayon natong agreement kay ana ang Secretary of Labor na mao na ni atong CBA? I tell you this only happens in the Philippines.

Now, 261:

Art 261 (251). Duty to bargain collectively in the absence of CBA. In the absence of an agreement or other voluntary arrangement providing for a more expeditious manner of collective bargaining, it shall be the duty of the employer and the representatives of the employees to bargain collectively in accordance with the provisions of this Code.


Q: In your opinion, what is this provision all about?

A: *opinion -----

What does this provision tell you? It tells you nothing! Sige pangitaa daw sa Labor Code nang gina-ingon dira. Useless provision! Taas kayo nga sentence, unya kato diay, zero. Nada!

Article 262(252) Meaning of duty to bargain

collectively. The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession.


Q: When does this duty to bargain apply (because the next provision is [about] duty to bargain again)?

A: It applies in the negotiation stage.

Q: How many elements are there?

A: There are five elements.


First: to meet and convene promptly and expeditiously Second: in good faith Third: for the purpose of negotiating an agreement Fourth: does not compel any party to agree to a proposal Fifth: or to make any concession.

The FOURTH and FIFTH elements are negative -- does not compel any party to agree to a proposal or to make any concession.

First element-- to meet and convene promptly and expeditiously. That is binocular; you can observe it with your eyes.

Example 1: Nagsabot mo magbargaining session, 11:30 sa Davao Famous. 11:30, 12, 12:30 bugnaw na ang pancit, wa gihapon ka miabot. That is a violation of the first element to meet and convene promptly and expeditiously.

Second element- in good faith. When you say in good faith that is more difficult to determine because good faith is presumed.

Example 1.1: Nakigsabot ka, mayo inyong pagsabot. Nagsabot na gani mo sa inyong orderon sa restaurant. Gitawagan na daan ang management nagpareserve na daan didto ug lamisa. Dili ba na in good faith? The first two agreements? Isn’t that already good faith? Except when it is already the 99 th meeting. Unya pancit ra gihapon gi order. Mao ra gihapon na restaurant . Wa ghapon CBA. 99 times mo nagtagbo. Hapit na maupos ang certification- year-rule.

What is the Certification Year Rule? Within one year from the results of the certification election, no petition for certification election may be entertained.

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Hapit na maupos ang exclusive representation status of one of the parties in the CBA. Will you say it is in good faith? That is more difficult to prove. Good faith and bad faith are very difficult to prove. In him or her, who alleges the opposite, lies the burden of proof.

Like potency, impotency is very difficult to prove. Potency is presumed because you have to postulate that God is a very generous God that equips everyone generally with the same basics or necessary equipment. The subject is impotent but what happens when the triennial cohabitation rule applies under you Persons and Family Relations? When a married couple has cohabited for three years and the woman is still a virgin that is when the triennial cohabitation rule applies which means that the burden of proof shifts. The man must now prove that he is potent. You are in third year. You must be sensitive to the evidentiary implications.

Example 2: You are a cashier and you are in-charge with the money that comes in. A cashier subjected to a cash- count and found to be short of the receipts or the cash that got out in that day does not match. What happens? The burden of proof shifts. She must now prove that she has not absconded with the money that cannot be accounted for. Normally, it is the prosecution that proves na nangawat ka. If she does not present evidence explaining the difference, convicted siya of Estafa.

When is there bad faith bargaining?

The cases mentioned here (handouts) are illustrative to prove or disprove good faith.



General Vice-President Boulware, after receiving the bargaining proposals of the union, he draws up a counter-proposal and says this is the best deal that union can get, that management can stand up to, and the shareholders and owners those who have interest in the corporation can live with.

subjected to a cash count and was found to be short. The receipts that were issued does not match the cash and checks that she has. What happens? The burden of proof shifts. She must now prove that she has not absconded the money that cannot be accounted for. Normally it is the prosecution that proves. Cash count na gani, naan a dinha, it shifts. If she does not present any evidence, she would be convicted of estafa.

Good faith, bad faith.

When is there Bad faith bargaining? That is why the cases that are mentioned here, are illustrative by which you prove or disprove good faith.

BOULWARISM. General Electric Vice President Boulware, after receiving the bargaining proposals of the union, he draws up a counter proposal and says that this is the best deal that the union can get, and that the management can stand up to, and the share holders and the owners and those that have interest in the corporation can live with. There is no other, this is the best arrangement. So he goes over to the union members and say convince your union to agree to this because this is the best proposal.

What did the SC say?

You are in bad faith. You have to convince the Union, the representative of the workers, that this is the best deal. You do not bargain with the union by going to the workers. You bargain to the workers by going to the union.





bargaining representative.

Remember, the union is the exclusive bargaining agent. It is exclusive of anybody else, even the employees the principals, cannot bargain. It must be the representative the union. If you short circuit it and you go the principal. You are in bad faith.

Is it true in ordinary contract negotiations?

The man must now prove that he is potent. You have taken this up in Persons and Family Relations. This is a landmark case. This woman from Zamboanga, and JBL Reyes points out the Triennial Cohabitation Rule. You are already in 3 rd year and you must be sensitive already to the evidentiary implications.

Cashier ka, you are in-charge of the properties of the company, namely the money that comes in. A cashier is

Naay yuta nga baligya. Nay agent na mubaligya ana. Ang buyer muingon sa agent, “mahimo ba na makigsulti ko sa imong seller jud mismo.” As the agent, “dili mahimo nga makigstorya ka, ngari ka nako kay ako man ang gihatagan og authority.”

Kinsa man ang imong principal? Ahh secret.

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Nganong dili man niya itug-an ang iyang principal? Kay mamiligro ang iyang commission. Unya muingon siya nga, magpromise ka nga muhatag ka nako og commission nga 5%, paistoryahon tika sa akong principal, basta muhatag ka nako og 5%. Ha? Common baya na. That is illegal.

Nganong siya man ang imong pangayoan? Ang imong principal ang imong pangayoan, dili kanang other party. Unsa man ka, ha? Matud pa sa tinagalog, namamangka ng dalawang bangka or namugsay og duha ka sakayan.

Illegal na because



now at

the employ of




you receive something from

the seller


means you are working for his benefit. But if the agent says, okay I am secure with my commission with the principal, you can talk to him if you want, I will give you his number. Can he do it? Yes he can.

But even if

the union

will say that

you can talk

to the

workers, you cannot do it. It is exclusive. That is why it is called, exclusive bargaining agent. He excludes the


Suppose of his own volition, the principal says to the agent, can you step aside, I will take it from here. Can he do it? Yes he can do it. That is his right. And the contract of agency is basically confidential trust. If the principal no longer has confidence in the agent, he can make the agent step aside. In collective bargaining, that is not true. You have to deal with the agent, because he is exclusive. Exclusive of the principal, exclusive of anybody else who wants to be an agent.

So, that is why the US SC said, you cannot bargain with the union through the workers. You can only bargain with the workers through the union. That is how the SC explained Boulwarism as bad faith bargaining.

Alright, here is another case. 2 decisions. One is a main decision, and another is a resolution for the motion for reconsideration. It took 2 years for the MFR to be resolved. This MFR was resolved with other parties filing other motions. This is Union of Filipro Employees vs. Nestle, decided in 2006, and the MFR was decided in March 3, 2008.

What does this illustrate of the elements?

The elements say, negative elements, but the duty to bargain does not include the duty to agree to any proposal or to make any concession.

Now, what is at issue here. The issue is as to the retirement plan of Nestle. Nestle has something like 13 plants all over the Philippines. Then this particular plant, which is an affiliate of KMU, says we want to renegotiate the retirement plan. And management says, we do not want to renegotiate it. It is so much higher than what the law requires, it is non-contributory (meaning: dili na kuhaan ang imong sweldo aron imong contribution sa retirement plan, zero, walay contribution).

There is a compulsory retirement benefit for your compulsory retirement under the labor code which is ½ month salary plus 5 days service incentive leave for every year of service, plus 1/12 th of the13 th month pay for every year of service, a total of 23 days of salary per year of service, you have that without even contributing. So if your retirement in a contributory plan, taking into consideration your contribution, is not even in excess of that, it means that you are funding the obligation of the employer and that retirement plan is illegal.

(Note: Tax discussion re: retirement plans. This can be deleted depending upon the sound discretion of the chief editor )

Retirement plans under the NIRC may be tax exempt. In other words, the company, the employer, may set aside and put up a special retirement plan. The contributions are deductible from gross revenues, it can lower the taxable base, provided that you register the retirement fund with the BIR and provided that it is an irrevocable fund.

How do you know that a retirement fund is sufficient?

Who are accountants here? (lol

recitation time) How do

.. you compute the possible claims of the workers? How do you know when a retirement fund is sufficient for now? You get all the employees, the number of years of service, you get their salary now, and if the fund can take it if all of them retire now, that is the current value of the fund and that is the adequacy of the fund. That is how you determine.

What is the purpose of determining that? Kung ibaligya diay nimo ang kumpanya, if you are going into a merger, if the retirement fund is not adequately funded, the inadequacy should be deducted from the value of the company because in the end, the buyer of the company will have to put in more money into the retirement fund. (thank you, very good daw sa nagrecit. Hehe)

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Now this retirement benefit of





adequately funded. It offers better retirement benefits than what the law provides, it is more than double. Sa law 23 days lang. Ang ilang gihatag is 2 months and a

half for every year of service. Now they say, we do not want to discuss in the collective bargaining the retirement benefits, human na na. Dili mi gusto makig discuss ana. The union said no, you have to discuss it with is because that is part of collective bargaining.

So the first question that


raised to the




question of law is whether or not the retirement

benefits constitute a mandatory subject of

bargaining? The only thing covered by collective bargaining are terms and conditions of work, otherwise, it is not subject to collective bargaining. So is retirement benefits a mandatory subject of collective bargaining?

The decision penned by Justice Chico-Nazario says, it is a mandatory subject of bargaining.

But then the SC did not order Nestle to include in the

agenda of negotiations





benefits which the union were specifically asking for in

their prayer.

So there was a MFR: If it is true that it is a mandatory subject of collective bargaining, then Nestle is in contempt of court, because it continues to maintain that we will not discuss with you the retirement plan.

Pasaylo-a lang mi dili mi makigdiscuss ninyo. Human na nig discuss sa 12 ka planta unya kamo gusto ninyo

usbon. Paghuman ninyo usbon napod namo ang 12. So they are saying that the employer here is in contempt of court.

What did the SC say?

The SC says, in effect that, Nestle, by saying we are not going to bargain with you on the retirement benefit, that is a legitimate bargaining position, because the law does not require you to agree to any proposal or to make any concession. That is as valid as stance as you stance is, that we should discuss the retirement plan.

Si Kiok Loy unsa man diay tong deperensya nila? Wala man gud nakigstorya si Kiok Loy bahin sa ilang proposal. Ha. Si Kiok Loy, stonewalled them. That is refusal to bargain, that is bad faith bargaining. Kaning Nestle, sige man silag negotiate nga dili sila munegotiate. They are negotiating by saying na dili sila munegotiate. That is logic.


In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU. The corporation simply wanted to exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such was in the nature of a unilaterally granted benefit.

An employer’s steadfast insistence to exclude a

particular substantive provision is no different from a

bargaining representative’s perseverance to include

one that they deem of absolute necessity.

Indeed, an adamant insistence on a bargaining position to the point where the negotiations reach an

impasse does not establish bad faith. It is but natural that at negotiations, management and labor adopt positions or make demands and offer proposals and counter-proposals. On account of the importance of the economic issue proposed by UFE-DFA-KMU, Nestle could have refused to bargain with the former – but it did not. And the management’s firm stand

against the issue of the Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to the point of stalemate.

Pagsungag namo, nga wala nay makadvance, you have the right to reach tha point, why? Because you have no obligation to agree to any proposal or to make any concession. Very important that you remember that specially for the Bar exams.

Muingon ang Nestle, dili mi gusto magdiscuss, muingon dayon ang pikas, kinahanglan magdiscuss ta ana. Dili lagi. Magdiscuss ta. Dili lagi para namo human na. Sigeg

balik balik. That is negotiation according to the SC, so there is negotiation. Because negotiation does not require you to agree to any proposal or to make any concessions. Very fine distinction.

Article 263. Art. 253. Duty to bargain collectively



a collective bargaining



When there is a collective bargaining agreement, the











modify such




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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.


Q: So, when is this duty binding upon the parties?











Q: Is this still the duty when the collective bargaining agreement has expired?

A: The last clause – “until a new agreement is reached.”






only while the collective

bargaining agreement is in force and in effect according to its terms because this is an Automatic Hold-over

provision imposed by law.

A CBA is in force and in effect during its term, there will

be a provision there that says, “this CBA shall be in force and in effect from and after the ratification of 2/3 rd of the

bargaining unit and until



such and

such a

date.” The five years end. Even if the CBA says that, the

law says that it is in force and in effect until a new agreement is reached by the parties. That is an automatic hold over provision.

So what constitutes the duty?

  • - “neither party shall terminate nor modify such agreement during its lifetime” and “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.

Is it true to say that the employer cannot change the CBA? Is the employer prevented by such duty that neither party shall terminate? Outside the 60 day freedom period, can the employer not modify? Can you think of an instance where the employer can modify?

  • - The employer can modify if it is favourable to the worker.

The CBA just says, “The increase for the 1 st year is 10 pesos a day. Increase for the 2 nd year is P10 again, 3 rd year P10, 4 th year P10, 5 th year P10. Now suppose the employer will say, “Since we are doing very well, (in the 4 th year) we’ll have an increase of not only P10 but P15 a day increase. Unya mu-ingon diay mo ug “aww you are modifying. That is being violative of [Art.] 263”? haha.

You cannot terminate or modify if it is contrary to the welfare of the employee. But if it is for the good, bisan usbon pa nimo na tanan dinha mahimo.

Remember, when there is a conflict between the CBA and actual practice, which prevails? Whichever is favorable to the employee. You are guided by that. WHICHEVER IS FAVORABLE


Alright, so this is where the CBA exists. What is the bargaining that happens during the administration phase of the CBA? This is the Administration phase. You administer the CBA.

Who administers the CBA? It is supposed to be a union and the employer. Jointly they administer the CBA for the benefit of the bargaining unit.

Is there a chance to compromise; negotiate, even if the CBA is already there? There is. And that is precisely what is called grievance. You try to adjust grievances. You try to adjust grievance.

Let me explain. Suppose you have a disciplinary case. Here is a union member within the bargaining unit (so covered by the CBA) and the bargaining unit has one of its annexes agreed upon by the union: the rule book of the company. What does the rule book say? The rule book has a matrix.

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(Father draws on board)




































OR - Oral Reprimand

WW - Written Warning

F - Fine

WW - Written Reprimand

S - Suspension

D - Dismissal



1 st

offense: oral warning… Dili!


dayon! Nangawat gud! Tanan tawo naa nay chance

mangawat! Hurot na imong properties. Dismissal na


Normally, the employer will bargain that these rules be

annexed to the CBA so that for the term of the CBA, the

rules are binding.

Now, suppose there is an employee who is caught with

theft. Nadakpan na siya’g theft. Ingon ang management,

Inyuha pa ba diay nang dependehan nga nangakawat

na man na.” Muingon ang union, “Mag-grievance ta. Dili

ba ninyo mahimo sa ngalan sa kaluoy Diyos nga

mupasaylo? Kaduha baya ni siya nga ma-employee of

the month. Unya, usa ni siya sa maayo kayo ug agi.

Unya karon pa gyud ni siya madakpan nga mangawat.

Lisod na man gyud kaayo ang kinabuhi. Ang iyang

asawa bag-o lang na caesarean [section], daghan siya

utang nga bayrunon. Unya ang iya pa gyud ugangan,

naka __

pa gyud! Dili ba nato ni ayu-ayuhon? Dose

anyos na [nagtrabaho]. Dili ba ka nga mahimo nga

madawat sa inyong kasing-kasing nga pasayluon na

lang siya? Ato nalang kini siyang i-fine, suspend. Ayaw

lang intawon palakawa.

Unsa may buhaton sa management? Grievance! Mao na

nang naay negotiation. Mao na na. The grievance


But mind you, before you go to grievance, you must

go through the investigation and proper procedure

for penalizing an erring employee.

There must be an investigation, diba? Under 291 (b) [I

think Father Gus meant 292, previously 277], let me

read this to you:

Article 292 [277]

(b) Subject to the constitutional right of workers to

security of tenure (Fr: which is erroneous) and their

right to be protected against dismissal except for a

just and authorized cause and without prejudice to

the requirement of notice under Article 283 of this

Code, the employer shall furnish the worker whose

employment is sought to be terminated a written

notice containing a statement or the causes for

termination and shall afford the latter ample

opportunity to be heard and to defend himself with

the assistance of his representative if he so desires

in accordance with company rules and regulations

promulgated pursuant to guidelines set by the

Department of Labor and Employment. Any decision

taken by the employer shall be without prejudice to

the right of the worker to contest the validity or

legality of his dismissal by filing a complaint with

the regional branch of the National Labor Relations

Commission. The burden of proving that the

termination was for a valid or authorized cause shall

rest on the employer. xxx

So there is a procedure. Does this become obsolete with

the CBA because there is already a grievance procedure

in the CBA? Which prevails: the grievance procedure or

this [Art. 292] procedure? First, you have to have this

procedure because if he is not found to be guilty, there is

no need for a grievance. But if he is found guilty here

[Art.292 procedure], now he is prejudiced. Now you bring

it to grievance.


So this

must be followed


and then




grievance. If the grievance fails, then the employee can










because under Article 219 [I think F.Gus meant 224,


Article 224 [217]. Jurisdiction of the Labor Arbiters

and the Commission. (a) Except as otherwise

provided under this Code, the Labor Arbiters shall

have original and exclusive jurisdiction to hear and

decide, within thirty (30) days after the submission

of the case by the parties for decision without

extension, even in the absence of stenographic

notes, the following cases involving all workers,

whether agricultural or non-agricultural:

  • 1. Unfair labor practice cases;

  • 2. Termination disputes;

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Illegal termination or dismissal is under the exclusive

and original jurisdiction of the Labor Arbiter. So that is

what will happen.

When is this procedure applicable? It is applicable when

an employee is in jeopardy of being dismissed or he is in

jeopardy of being suspended. He is entitled to a hearing.

Under the Renato Corona decision, the law says that

this particular requirement does not necessarily mean

that there must be a hearing. Something equivalent of a

hearing where the employee has ample opportunity to

argue his side and present evidence for and in his behalf

that is what is required.

So, because of this, there can still be negotiations while

the CBA is already fixed; where the CBA is already fixed.

That is why the SC has said that the duty to bargain

and negotiate does not end with a CBA. It continues

because there is grievance. There is a grievance

machinery. This was brought out by the SC in the

celebrated case of Republic Savings Bank v. CIR


“Collective bargaining












a continuous

process. The duty to bargain imposes on the parties









obligation to meet and confer promptly and

expeditiously and in good faith for the purpose of

adjusting any grievances or question arising under

such agreement. And the violation of this obligation

is an unfair labor practice.”

That is the reason why the SC says, “The duty to

bargain collectively is a never-ending process.” Wa

pay CBA, they negotiate. Naa nay CBA, mahimo man

gihapon magnegotiate, nu, to adjust grievances? It does

not end. Now, this is illustrated by the Republic Savings

Bank case. I suggest you read it. 721 SCRA 226.



The Bank employs Resuello et. al. In 1958, it then

discharged the private respondents for having written a

patently libelous letter tending to cause the dishonor,

discredit, or contempt not only of officers and employees

of this bank, but also of the bank itself.

The letter was actually a letter-charge, which Private

Respondents had written to the bank president,

demanding his resignation on the grounds of immorality,

nepotism in the appointment and favoritism as well as

discrimination to bank employees.

At the instance of respondents, Prosecutor A. Tirona

filed a complaint in the CIR alleging that the Bank

violated the Industrial Peace Act, which makes it an

unfair labor practice for an employer to discriminate

against an employee for having filed charges.

ISSUE: Whether or not the Bank conducted unfair labor


RULING: Yes. The action of the private respondents will

affect their labor organization.

Assuming that the private respondents acted in their

individual capacities when they wrote the letter-charge

they were nonetheless protected for they were engaged

in concerted activity, in the exercise of their right of self-

organization that includes concerted activity for mutual

aid and protection, interference with which constitutes an

unfair labor practice under section 4(a)(1). This is the

view of some members of this Court. For, as has been

aptly stated, the joining in protests or demands, even by

a small group of employees, if in furtherance of their

interests as such, is a concerted activity protected by the

Industrial Peace Act. It is not necessary that union

activity be involved or that collective bargaining be


Indeed, when the respondents complained against

nepotism, favoritism and other management practices,

they were acting within an area marked out by the Act as

a proper sphere of collective bargaining. Even the

reference to immorality was not irrelevant as it was

made to support the respondents' other charge that the

bank president had failed to provide wholesome working

conditions, let alone a good moral example, for the

employees by practicing discrimination and favoritism in

the appointment and promotion of certain employees on

the basis of illicit relations or blood relationship with


DISPOSITIVE: Private Respondents won. In final sum

and substance, this Court is in unanimity that the Bank's

conduct, identified as an interference with the

employees' right of self-organization, or as a retaliatory

action, and/or as a refusal to bargain collectively,

constituted an unfair labor practice within the meaning

and intendment of section 4(a) of the Industrial Peace


DOCTRINE: Assuming that the private respondents

acted in their individual capacities when they wrote the

letter-charge they were nonetheless protected for they

were engaged in concerted activity, in the exercise of

their right of self-organization that includes concerted

activity for mutual aid and protection, interference with

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which constitutes an unfair labor practice under section

4(a)(1). This is the view of some members of this Court.

For, as has been aptly stated, the joining in protests or

demands, even by a small group of employees, if in

furtherance of their interests as such, is a concerted

activity protected by the Industrial Peace Act. It is not

necessary that union activity be involved or that

collective bargaining be contemplated.

have done the investigation required by Article 291


I think I’ll have to end here. I have two more hours to go

with the bar review. (Wawa naman si F.Gus)

AUGUST 9, 2017

Mortejo, Duco, Petallo

This has to do with a bank president. One day the bank

president received an open letter signed by the union

president, vice-president, treasurer, secretary, accusing

him of immorality and other irregular practices. Their

letter went on to state that, “You, Mr. Bank President and

Manager, are a no good executive. You are no good.

Your secretary is your mistress. That’s why you brought

her to a banking conference in California and not the

other co-officers of the bank.”

So what happened? When the president of the bank

received that, he got so mad. He filed a [de facto?] case

against the officers of the union. An in fact, he dismissed

them. But the officers of the union filed an illegal

dismissal case. They said that their letter was an

exercise of the right to self-organization. The SC agreed

with the officers of the union. The SC said [to the bank

president], you should have taken his [union’s] letter as a

grievance. And you should have promptly and

expeditiously met right away with the union to try and

adjust his grievance. That should have been what you

should have done. But because you didn’t, you must

reinstate [them].

The first part of Collective Bargaining is identification of

the duties that is prevailing in the 3 stages of

collective bargaining. What are these 3 stages?

  • 1. Negotiation (phase 1)

  • 2. Administration (phase 2) begins with the effectivity of the CBA

  • 3. Re-negotiation (phase 3)

  • 1. Negotiation

The characteristic and the content of the duty to bargain

in negotiation:

Positive part of the duty - “to meet promptly and

expeditiously in good faith for the purpose of arriving at a


Negative part of the duty

“but neither party has the

obligation to agree



proposal or

to make



What the bank should have done was to refer the letter

charged to the grievance committee. This was its duty.

Failing which it committed an ULP. Instead of stifling

criticism, the bank should have allowed respondents to

air their grievances. Good faith bargaining requires of

the bank an open mind and a sincere desire to negotiate

over grievances.



the case





with respect



possible conflict between 291 (b) the investigation

requirement; ample opportunity to be heard,








Standard Electric

Manufacturing, Corporation




Employees Union, 468 SCRA 316 (2005). This is

where the SC says that, “the investigation should

have preceded the grievance sessions. You have to

comply with these grievance sessions only after you








agreement. It’s a (maiden?) venture towards the

formation of a CBA.

  • 2. Administration

Once again, there are specific contents to the duty to

bargain once there is a CBA. The law says:

  • 1. Neither party should amend the agreement (exception: if it is in favor of the employee covered by the CBA) or terminate the agreement (exception: if by overwhelming majority, the bargaining unit decides to change the EBA. It is

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terminating the relationship of the EBA with the


Read: Benguet vs Benguet (digest at next page)

the substitutionary doctrine is applied. The old EBA is

replaced by a new one. Recall your “unions and right to

self-organization”, if you are an affiliate to a federation

then there is no problem. Why? Because an affiliate is

both a local and has his own independent registration.

Once it disaffiliates, it still has a personality. It can

continue administering the CBA. The federation is out of

the picture but the local can administer.

  • 2. Whenever there is a grievance, the parties should meet promptly and expeditiously for the purpose of adjusting this grievance.

  • 3. But in the last 60 days of the CBA, the parties may serve notice to the other party to begin negotiation of the next CBA that will take over the existing CBA (freedom period).

  • 4. Even after the end of the CBA, if there is still no agreement that has been arrived at that would dovetail the end of the existing CBA, this same CBA shall continue to remain in full force and effect.




the local


just a local chartered

by the

federation? It







disaffiliates, it has no more personality to administer the

CBA. There will be instances where the Bureau of Labor









registration. So there is a hiatus (a week or 2 weeks).

But then that is salvaged once they are issued that

independent registration.

The better way to arrange it is when they disaffiliate from

the federation, at the same time they affiliate with a new

federation. Now, the EBA has a new agent (remember,

the federation is the agent of the local and the local is

the agent of the bargaining unit). And the person who

actually sits in the negotiating table is the Bargaining

Representative or the agent of the agent of the EBA.

There is a natural person in the end that does the

negotiation who can be the agent of the federation. And

the federation, in turn, is the agent of the EBA which is

the local because the SC has said:

The labor organization at the workplace is the

real party-in-interest. The federation is just a


Benguet vs Benguet


On June 23, 1959, the Benguet-Balatoc Workers Union

(“BBWU”), for and in behalf of all Benguet Consolidated,

Inc (BENGUET) employees in its mines and milling

establishment located at Balatoc, Antamok and Acupan,

Mt. Province, entered into a Collective Bargaining

Contract (CONTRACT) with BENGUET. The

CONTRACT was stipulated to be effective for a period of

4-1/2 years, or from June 23, 1959 to December 23,

1963. It likewise embodied a No-Strike, No-Lockout


3 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. BCI EMPLOYEES &

WORKERS UNION (UNION) obtained more than 50% of

the total number of votes, defeating BBWU. The Court of

Industrial Relations certified the 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.

Later on, the UNION filed a notice of strike against

BENGUET. UNION members who were BENGUET

employees in the mining camps at Acupan, Antamok

and Balatoc, went on strike. The strike was attended by

violence, some of the workers and executives of the

BENGUET were prevented from entering the premises

and some of the properties of the BENGUET were

damaged as a result of the strike. Eventually, the parties

agreed to end the dispute. BENGUET and UNION

executed the AGREEMENT. PAFLU placed its

conformity thereto. About a year later or on January 29,

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1964, a collective bargaining contract was finally executed between UNION-PAFLU and BENGUET. Meanwhile, BENGUET sued UNION,
1964, a collective bargaining contract was finally
executed between UNION-PAFLU and BENGUET.
Meanwhile, BENGUET sued UNION, PAFLU and their
Presidents to recover the amount the former incurred for
the repair of the damaged properties resulting from the
strike. BENGUET also argued that the UNION violated
the CONTRACT which has a stipulation not to strike
during the effectivity thereof.
Defendants unions and their presidents defended that:
(1) they were not bound by the CONTRACT which
BBWU, the defeated union, had executed with
BENGUET; (2) the strike was due, among others, to
unfair labor practices of BENGUET; and (3) the strike
was lawful and in the exercise of the legitimate rights of
UNION-PAFLU under Republic Act 875.
WON the Collective Bargaining Contract executed
between Benguet and BBWU on 1959 and effective until
1963 automatically bind UNION-PAFLU upon its
certification, on August 18, 1962, as sole bargaining
representative of all BENGUET employees
NO. BENGUET erroneously invokes the so-called
“Doctrine of Substitution”.
This principle, formulated
compromise solution to the problem facing it when there
occurs a shift in employees’ union allegiance after the
execution of a bargaining contract with their employer,
merely states that even during the effectivity of a
collective bargaining agreement executed between
employer and employees thru their agent, the
employees can change said agent but the contract
continues to bind them up to its expiration date. They
may bargain however for the shortening of said
expiration date.
In formulating the “substitutionary” doctrine, the only
consideration involved was the employees‘ (principal)
interest in the existing bargaining agreement. The
agent’s (union) interest never entered the picture. The
majority of the employees, as an entity under the statute,
is the true party in interest to the contract, holding rights
through the agency of the union representative. Thus,
any exclusive interest claimed by the agent is defeasible
at the will of the principal.
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.



The set of duties (in administration phase) are carried

over. Why? Because you are negotiating a new CBA, at

the same time you are administering an existing CBA.

What is that that you are administering? The old CBA

that has a statutory hold-over provision. Parties shall

continue to observe and respect the CBA that has

expired. That is still the law of the parties here.

There is a long treatment of cases where there is


violation or






duty to

bargain. What is the “duty to bargain” precisely? Know

the Nestle case (UFE-DFA-KMU vs Nestle) and the

role that tentative agreements play because you agree

on an item-per-item basis. That is the way negotiations

are arrived at.

e.g. Increases in the salary

Suppose you come to an agreement on the 1 st , 2 nd , 3 rd ,

4 th and 5 th year of increases, what is the nature of that

agreement? The SC has said that that agreement is

really temporary. For purposes of reckoning when the

agreement has really been concluded, you always refer

to that point in time when the CBA as a whole, already

signed by the parties, and the bargaining unit has ratified

the CBA. That is the point in time when the agreement

really comes into effect. This has been ruled by the SC

in the case of Samahang Manggagawa vs NLRC (295

SCRA 171, 1998).

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Remember that case






negotiations. While they were negotiating, there was a

wage order issued by the RTWPB-NCR. The union

brings up to management during negotiation that even if

only a few in the bargaining unit are benefitted by the

wage order, can the management find it in its heart to

apply the wage order to the entire bargaining unit and

apply it over and above what is agreed in the CBA as

anniversary increases. The management said “YES, we

agree”. The union said, do you agree to also put that in

the CBA so it becomes a CBA benefit? The

management said “Yes, we agree that we should put it in

the CBA”. So, they put it down in the minutes that they

have agreed about it.

What happens? In the end, they forgot to put it in the

CBA. Later on when the union remembers, the union

asks from management “What happened to your



evidence that it

should be there inside and

therefore it should obligate?” The SC says that since it is

not in the contract, it is considered outside. It does not


Why did the SC put it that way? The reason of the SC is

the very reason of the parol evidence rule. The moment

you admit of extraneous evidence other than what is

within the contract, you will never end anymore.

Everybody will start bringing out things that is not within

the contract. So, why else did you put it in writing kung

mangita pakag ebidensya gawas anang kasulatan? It

will never end. It is therefore a rule based on necessity,

convenience and the end of litigation as to the content of

that agreement.

One of the charges of union is that the management

cannot claim that it has no obligation because if it is true

promise?” The management said





that it has no obligation, then management all along is

comply. Though we said

yes, we have difficulties


engaged in “bad faith bargaining”. The SC says that it

complying with it. Anyway, it’s not

in the CBA.” Union

said, “But you agreed to put it in the CBA”. Management

said, “Yes we agreed but it is not in the CBA.” So the


went to

the court.

How did



decide this

particular controversy?

The SC says this is where the maxim in the Rules of

Court applies. What is that? The Parol Evidence Rule -

When the terms of an agreement have been reduced

into writing, there shall be no other evidence as to the

contents of what has been agreed upon, that shall be

accepted or admitted except those contained in the four

corners of the agreement.

The SC says, since what you are claiming as a source of

right is not in the CBA, then it cannot be a source of

right. Now, the unions says “But we have evidence in

writing that management agreed to put



writing, is

is not bad faith bargaining. The existence of the CBA

negates the charge of bad faith bargaining.

Kung nakig-sabot ka na porma-porma ra ug wa gyud

diay kay katuyuan na magkasabot, nganong naa may

gipirmahan? Edi nagkasabot gyud diay kay naa may

gipirmahan, naa may kasulatan. How can you say there

is bad faith bargaining when they resulted in a CBA?

What is the rule then? If a CBA is concluded, then all

charges of bad faith bargaining are negated because of

the existence of the CBA.

There is also another case, KNITJOY VS NLRC. Knitjoy

is a garments factory. It should be distinguished from a

textile factory. In textile factory, what is the end-product?

The end-product is cloth. In garments factory, the end-

product is actually clothes RTW (ready-to-wear)

clothes. (Fr. Gus remarks about gloves, sweaters, and

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

basketball shorts) Those are garments. Kining Knitjoy,

knitting. The raw materials are all imported. They are not

made here. It is just the labor. Gloves, bonnets,


So, what happened? There was a wage order. All the

workers are covered because they are just minimum-

wage. The workers said: “We must implement the wage

order”. Knitjoy says: “You cannot. We just close,

because we cannot implement that.” So they closed.

And the union went on strike. Because in the beginning,

the union thought this is just posturing. Sira-sira sila pero

ganahan ra gyud diay sila muabri. Unya mga 6 ka

buwan, wa paman niabri ang Knitjoy. Ang union nay

niadto sa Knitjoy, ingon sila abrihi na lang intawon na

kay dugay na kaayo mi diri sa gawas. Wa nami kwarta,

abrihi nalang” Ingon ang Management, unya abrihan

nato ni, di man ta ka-afford sa wage order increase. We

cannot pay you the adjustment, pasayloa na lang mi. Di

namo ma-implement ang wage order.And then the

Union replies that they will just sign the CBA.

So, they signed a CBA that does not even grant the

minimum benefits. Specifically the Union says: We waive

our right under the NCR Wage Order No. such and such.

And it was ratified by 100%. Not just 2/3 of the

bargaining unit but 100%.

The issue is: What is the validity of the clause excusing

the employer from its obligation under a wage order.

This time, it is the Union signing and the entire CBA that

ratified it. So everybody asked for it. And it was given an

imprimatur by the DOLE because the DOLE registered

the CBA. Bayad ug P1,000 ang Union, rehistro na. It is a

certified CBA even if the benefits therein are below

minimum wage. What is the validity?

SC says: INVALID. A CBA cannot excuse the employer

from complying with minimum wage provisions. Once

again, labor standards cannot be the object of a waiver

in the forward direction. Cannot agree forward the

minimum wage. So, void. Illegal. The Labor Arbiter has

authority to witness and certify an agreement even lower

than the minimum wage. Where is that found? It used to

be 227, but now renumbered as 233.


Any compromise settlement, including those

involving labor standard laws, voluntarily agreed upon by

the parties with the assistance of the Bureau or the

regional office of the Department of Labor, shall be final

and binding upon the parties. The National Labor

Relations Commission or any court shall not assume

jurisdiction over issues involved therein except in case of

noncompliance thereof or if there is prima facie evidence

that the settlement was obtained through fraud,

misrepresentation, or coercion.

So labor standards benefits may be compromised the

moment when it is filed as a case. But it cannot be

compromised in the CBA because that is in the forward

direction. Once it’s history, it can be compromised.

Muingon ang Union, sige di na nako ipahatag ni ninyo.

Subayon nato. Sugod sa sinugdanan sa CBA. Duha na

ka tuig, iphon na. Ang underpayment sa minimum wage

kada trabahante ila nang […] Unya miingon ang Knitjoy:

Pila na ka milyon? Mao ni 20 milyon ni. Kay 2 milyon

man ning trabahante. Hala. Inyuha na na. You execute

in the machineries kining tanan. Kay wa namay mupalit

ani. Manguhag gloves? Kinsa pa man? Kinsa may

mupalit? Muingon ka ibaligya na ngadto sa Bangladesh.

Ang pasahe pa lang ana, wa na. So wa gihapon kay

makuha kung i-execute nimo.

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

The worst thing is parehas sa nahitabo sa faculty union

sa Alma Mater ni Imelda Romualdez Marcos. Divine

Word University Tacloban. Pildi ang University

Administration, bad faith bargaining. What is their bad

faith? Their bad faith they told the Union their

sentiment with the bargaining proposals. Okay, let’s

bargain. You schedule the meeting. Our first meeting is

next week. First meeting. We proceed. In the same day,

they filed a petition for certification election. SC says that

is bad faith. Gidawat na nimo sila nga they are

representing the bargaining unit. You already have

scheduled, and yet, on the other hand, you filed a

procedure to determine who the representative is. That

is bad faith bargaining.

So, according to the SC: Guilty of bad faith bargaining.

These proposals had long been postponed. You are now

liable under these proposals and the wage order. In

peso terms, that reached around P40 million. They had

been adjudged as such. Affirmed by the SC. Divine

Mandatory Provisions in the CBA - means

that every CBA must contain that provision.

Mandatory Subjects of Bargaining - means

that if brought

up by either party, that subject


be negotiated;





table for


What constitutes




Bargaining”? It is terms and conditions of work. Not just

terms and conditions of work anywhere but terms and

conditions of work within the bargaining unit that is being


So, suppose in the CBA there is this provision:

“xxx…Management hereby agrees that should there be

a closure of any product line or any manufacturing

process which involves the sale or disposal of a part, a

portion, or certain machineries of the company, then the

same shall be offered first to the union who represents

Word University under the SDV Fathers, they said

the bargaining unit


What is that called? Right of

“Okay, take what you can from the school”. The school

first refusal.

does not have money. It has been closed. So they asked

Right of

first refusal


the Civil


is called what?

the sheriff to execute. They went to the ROD, lo and

behold, the land does not belong to the Divine Word


Who owns the land? The owner of the land is the

Archdiocese of Leyte. The Bishop owns the land. Ila na

unta tong pang-ibton ang ceilings ug atop. Unsaon man

na nimo? As taught in Property, Civil law, improvements

of the land belongs to the owner of the land, because

they are accessories.

We talked about “Mandatory Subjects of Bargaining” and

“Mandatory Provisions in the CBA”:

That is an option to buy. When is an option to buy

binding? If there is a distinct separate consideration for

that option. How do you settle that controversy? You

go to the regular courts. That is precisely the issue of

mandatory subject of bargaining. The CBA should

contain only mandatory subjects of bargaining because

that is only the jurisdiction of the labor tribunals.

Outside the mandatory subjects of bargaining, there are

other fora of justice that has jurisdiction. There is this old

Meralco v. NLRC case where Meralco says violation of

the CBA on the part of Meralco according to the union

because in the * of the CBA it says ‘Management agrees

to put up a seed fund that shall constitute, to the course

of time with contributions from the union and other

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

contributions, seed fund to loan out to employees

bargaining unit






covered by the bargaining unit, to enable them to obtain

Probationary workers






a loan to construct their first house.’

negotiations but time and again,


will see




So management will put up a fund, a seed fund so that

this fund will be jointly managed by the union and

Health benefits are a mandatory subject


management that will lend out money to the workers in

order for them to construct their first house. Wa man

mucontribute ang Meralco. Gipugos na sa agent, wa

man. So they were sued for violating an economic

provision of the CBA.

bargaining even if they are for the retirees already.

According to the SC yes because that is a future benefit

in view of which you cannot earn the same while being

regular. But you negotiate it during your work and

continued inclusion in the bargaining unit.

This is where the SC said that is not mandatory subject

of bargaining because they are talking about putting up a

loan fund. You are not talking about end benefit. If it said

‘Management agrees to make available to all those

covered in the bargaining unit a loan equivalent to 10%

of their basic pay, everyone who has served at least 10

years with the company.’ That’s a benefit. But if you’re

talking about putting up a fund, according to the SC, that

is not a mandatory subject of bargaining, and you cannot

compel parties to sit down and negotiate on mandatory

subject of bargaining.

Now, what are the jurisdictions of the voluntary

arbitrator? You have the mandatory jurisdiction and you

have permissive jurisdiction.

Mandatory jurisdiction, there are at least 3:

  • 1. Implementation and interpretation of company personnel policies;

  • 2. Controversies arising from interpretation and implementation of the CBA; and

  • 3. Wage distortions as the same is provided for under Article 124.

So, daghan musipyat anang provision sa CBA, union

security clause “xxx….The company is open to hire

applicants whether or not they are members of the

union, but those who are not members of any union

must, after being made regular in the workforce, they will

have 6 months to become members of the union and

continued membership with the union is a requirement

for continued employment. Should any member of the

union be expelled from the union, then the union can

compel management to terminate this expelled

member…xxx’ Then there’s a paragraph it says

“xxx…Management agrees to provide the union a list of

its probationary” That is not a

mandatory subject of bargaining. Why? Because the

Now, permissive jurisdiction: All other


submitted by the parties including ULP, Labor Standards


When you say all other issues, does it mean all? In other

words, can you include their non-mandatory subjects of

bargaining? It is my submission that you cannot include

non-mandatory subjects of bargaining. Why? Parties

have already agreed, why can you not include? Let’s say

right of first refusal, if the parties agree to submit it to

grievance, should not it be submitted to grievance

because the parties have already agreed: union,

management, and the complainants.

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Fr. Agustin Nazareno’s Lecture – 3 rd Exam Coverage Ateneo de Davao University | 3 Manresa

You cannot submit to the labor tribunals because

jurisdiction is determined by law. Contracts, like the

contracts of sale, are delegated by law as belonging to

the jurisdiction of the regular courts. Are you amending

the law? Do you have a license to amend the law just

because you can expand the permissive jurisdiction of

the voluntary arbitrator? You cannot. In other words, the

qualifier ‘all’ cannot embrace non-mandatory subjects of

bargaining without doing violence to the law creating the

jurisdiction of the regular courts.

Alright, kinds of controversies, there are:

  • 1. Interests disputes; and

  • 2. Rights disputes.

Rights disputes, example is a disciplinary case. The

discretion of the voluntary arbitrator


limited to


application of







findings point to who is right and who is wrong. All that

the voluntary arbitrator has to do is


has the

evidence and the favour of the law and then he has to

act accordingly.

What is the correct decision? Very difficult. The

discretion is so wide. Very difficult to determine what is

the liveable decision something which the employer can

live with, the worker can live with for the long term and

the other stakeholders: the stockholders, the creditors.

So, interests dispute, there is no such thing as definite

correct answer.

---End of 3 rd Exam Coverage---

But when you come to an interest dispute like

bargaining deadlock, the discretion of the voluntary

arbitrator is directed towards arriving at what many have

called a labor code decision by all parties. There is a

deadlock. Management says they are only willing to give

an increase of 10 pesos a day increase in the daily paid

over those covered in the bargaining unit. The union

says we want 300 pesos daily increase. Why? You look

at the findings of the UN, how much a decent living

requires. It is not just food, shelter, health, it also

requires something for education, leisure, etc. and so

this is the figure against which you are to be measured.

This is the benchmark. So 300. Management says 10.

So finally deadlock. Now, they go to voluntary arbitration

on the deadlock.

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