CBA AND ADMINISTRATION OF AGREEMENT

134. TUCP V. LAGUESMA

We now resolved the legal issue. Petitioner points out that the subject CBA was filed beyond the 30-
day period prescribed under Article 231 of the Labor Code. It also insists that under Article 232 of
the Labor Code, the prohibition on the filing of a petition for certification election applies when the
CBA had been duly registered and, in this case, since the CBA was not registered in accordance
with the Art. 231, the prohibition will not apply. We disagree.

Article 231 an s232 of the Labor Code read:

Art. 231. — Registry of unions and file of collective agreements. - . . . .

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 Office
of the Department of Labor and Employment for registration accompanied with
verified proofs of its posting n 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 Office shall act upon the application for registration of such Collective
Bargaining Agreement within five (5) days from receipts thereof. The Regional Office
shall furnish the Bureau with a copy of the Collective Bargaining agreement within
five (5) days form its submission.

xxx xxx xxx

Art. 232. — Prohibition on Certification Election. — The Bureau shall not entertain
any petition for certification election or any other action which may disturb the
administration of duly registered existing collective bargaining agreement affecting
the parties except under Articles 253, 253-A and 256 of this Code.

Corollary thereto, Article 253-A of the same Code reads:

Art. 253-A. — Any Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a term of five (5)
years. No petition questioning agent shall be entertained and no certification election
shall be conducted by the Department of Labor and Employment outside the sixty-
day period immediately before the date of expiry of such five year term of the
Collective Bargaining Agreement. . . . .

It appears that the procedural requirement of filing the CBA within 30 days from date of execution
under Article 231 was not met. The subject CBA was executed on November 28, 1989. It was
ratified on December 8, 1989, and then filed with DOLE for registration purposes on March 14, 1990.
Be that as it may, the delay in the filing of the CBA was sufficiently explained, i.e., there was an inter-
union conflict on who would succeed to the presidency of ILO-PHILS. The CBA was registered by
the DOLE only on May 4, 1990. It would be injudicious for us to assume, as what petitioner did, that
the said CBA was filed only on April 30, 1990, or five (5) days before its registration, on the
unsupported surmise that it was done to suit the law that enjoins Regional Offices of Dole to act
upon an application for registration of a CBA within five (5) days from its receipt thereof. In the
absence of any substantial evidence that DOLE officials or personnel, in collusion with private
respondent, had antedated the filing date of the CBA, the presumption on regularity in the
performance of official functions hold.
More importantly, non-compliance with the cited procedural requirement should not adversely affect
the substantive validity of the CBA between ILO-PHILS and the Transunion Corporation-Glassware
Division covering the company's rank and file employees. A collective bargaining agreement is more
than a contract. It is highly impressed with public interest for it is an essential instrument to promote
industrial peace. Hence, it bears the blessings not only of the employer and employees concerned
but even the Department of Labor and Employment. To set it aside on technical grounds is not
conducive to the public good

135.Davao Integrated Port vs. Abarquez

A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a
contract executed upon request of either the employer or the exclusive bargaining representative
incorporating the agreement reached after negotiations 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.

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.

After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light
of the facts and circumstances attendant in the instant case, we find and so hold that the last
sentence of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does not bar the
regular intermittent workers from the privilege of commutation or conversion to cash of the
unenjoyed portion of their sick leave with pay benefits, if qualified. For 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. 8

We find the same to be a reasonable and practical distinction readily discernible in Section 1, in
relation to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the
company insofar as sick leave with pay benefits are concerned. Any other distinction would cause
discrimination on the part of intermittent workers contrary to the intention of the parties that mutually
agreed in incorporating the questioned provisions in the 1989 CBA.

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

Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the
commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in
his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the
herein public respondent is the necessary consequence of the exercise of his arbitral power as
Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining
Agreement." We, therefore, find that no grave abuse of discretion was committed by public
respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3, Article
VIII of the 1989 CBA cannot be faulted with and is absolutely correct.

136. E.razon Vs. Secretary

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:

WHEREFORE, IN VIEW OF THE FOREGOING, this Office hereby directs the Metro
Port Services, Inc. to pay the remaining balance due to the workers in full satisfaction
of their separation pay at the rate earlier agreed upon by the parties as embodied in
the Agreement of November 3, 1987.

SO ORDERED. (pp. 140-141, Rollo.)

MPSI and AWU move for the reconsideration of said order on the ground that certain vital facts on
record had not been considered. On November 21, 1988, however, Secretary Drilon denied said
motions (p. 159, Rollo). Hence, the instant petition for certiorari filed by E. Razon, Inc. which had
apparently renounced the use of the name MPSI.

Claiming that it is a sequestered corporation as ownership of 60% of its shares of stock is still in
litigation at the Sandiganbayan and that, should said court rule that the shares of stock mentioned
belong to the government, "it would not be the petitioner that would lose the millions of pesos paid to
the workers" (p. 20, Rollo), petitioner charges the then Secretary of Labor and Employment with
grave abuse of discretion amounting to excess of jurisdiction in: (a) refusing to hold that MARINA
became its successor-employer on July 20, 1986 and, therefore, bound itself to honor the worker's
rights to security of tenure and seniority priviledges, despite the provision of Paragraph 7 of the
permit to operate; (b) making a "strained interpretation" of said permit to absolve MARINA from
paying separation pay; (c) refusing to hold that employment of the workers when it absorbed them
as new employees; (d) holding petitioner liable for separation pay notwithstanding the fact that it
never dismissed or separated said workers, and (e) failing to hold MARINA liable for separation pay
and to order MARINA to reimburse petitioner the amounts paid from its assets and funds (pp. 12-13,
Petition; pp. 31-32, Rollo).

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.

Separation or severance pay is an allowance usually based on length or service that is payable to an
employee on severance except usually in case of disciplinary discharge, or as compensation due an
employee upon the severance of his employment status with the employer (Marcopper Mining
Corporation vs. NLRC, 200 SCRA 167 [1991]). Under Article 283 of the Labor Code, separation pay
is required where the termination of employment relationship is occasioned by the "cessation of
operations" of an establishment. The said article, therefore, puts the burden of paying separation pay
on ERI/MPSI, the employer for whom services had been rendered by the employees who were
separated from employment in view of the cessation of its business operations by the cancellation of
its management contract with the PPA. Petitioner, however, argues otherwise and would shift liability
for separation pay to MARINA on the strength of Paragraph 7 of the additional terms and conditions
appended to the permit to operate granted to MARINA.

Paragraph 7 aforequoted provides that the employees of the "previous operator", meaning
ERI/MPSI, shall be "absorbed" by the permit "grantee", meaning MARINA, and the benefits given the
same employees under the "existing CBA" shall be "honored". A key in the interpretation of this
paragraph is the word "absord" which is synonymous with the words "assimilate" or "incorporate"
and which, in business parlance, means "to take over" (Webster's Third New International
Dictionary, 1966 Ed., p. 7). As such, it appears at first blush, that an "absorbing" employer shall be
responsible for all the benefits accruing to the "absorbed" employees.

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:

14. Grantee shall be responsible for all obligations, liabilities or claims arising out of
any transactions or undertakings in connections with their cargo handling
operations as of the actual date of transfer thereof to grantee. (Emphasis supplied.)

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.

137. Liberty Flour Mills EA v. Liberty Flour Mills

The petitioners also maintain that the above-quoted Section 2 of CBA is invalid because it
constitutes a waiver by the laborers of future benefits that may be granted them by law. They
contend this cannot be done because it is contrary to public policy.

While the principle is correct, the application is not, for there are no benefits being waived under the
provision. The benefits are already included in the wage increases. It is the law itself that considers
these increases, under the conditions prescribed in LOI No. 174, as equivalent to, or in lieu of, the
emergency allowance granted by P.D. No. 525.

In fact, the company agreed to grant the emergency allowance even before the obligation was
imposed by the government. What the petitioners claim they are being made to waive is the
additional P50.00 allowance but the truth is that they are not entitled to this because they are already
enjoying the stipulated increases. There is no waiver of these increases.
Moreover, Section 2 provides that the wage increase shall be considered payment of any statutory
increase of the minimum wage "as far as it will go," which means that any amount not covered by
such wage increase will have to be made good by the company. In short, the difference between the
stipulated wage increase and the statutory minimum wage will have to be paid by the company
notwithstanding and, indeed, pursuant to the said article. There is no waiver as to this.

Curiously, Article 2 was produced verbatim in the collective bargaining agreement concluded by the
petitioners with the company in 1977 after PLAC had been replaced by the new labor union formed
by petitioners Evaristo and Biascan. 11 It is difficult to understand the petitioners' position when they
blow hot and cold like this.

Coming now to the second issue, we find that it must also be resolved against the petitioners.

Evaristo and Biascan claim they were illegally dismissed for organizing another labor union opposed
to PLAC, which they describe as a company union. Arguing that they were only exercising the right
to self organization as guaranteed by the Constitution, they insist they are entitled to the back wages
which the NLRC disallowed while affirming their reinstatement.

In its challenged decision, the public respondent held that in demanding the dismissal of Evaristo
and Biascan, PLAC had acted prematurely because the 1974 CBA providing for union shop and
pursuant to which the two petitioners were dismissed had not yet been certified. 12 The implication is
that it was not yet in effect and so could not be the basis of the action taken against the two
petitioners. This conclusion is erroneous. It disregards the ruling of this Court in Tanduay Distillery
Labor Union v. NLRC, 13 were we held:

The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act
on TDLU's request for certification of the CBA in question is of no moment to the
resolution of the issues presented in this case. The BLR itself found in its order of
July 8, 1982, that the (un)certified CBA was duly filed and submitted on October 29,
1980, to last until June 30, 1982 is certifiable for having complied with all the
requirements for certification. (Emphasis supplied.)

The CBA concluded in 1974 was certifiable and was in fact certified on April 11, 1975, It bears
stressing that Evaristo and Biascan were dismissed only on May 20, 1975, more than a month after
the said certification.

The correct view is that expressed by Commissioner Cecilio P. Seno in his concurring and
dissenting opinion, 14viz.:

I cannot however subscribe to the majority view that the 'dismissal of complainants
Biascan and Evaristo, ... was, to say the least, a premature action on the part of the
respondents because at the time they were expelled by PLAC the contract containing
the union security clause upon which the action was based was yet to be certified
and the representation status of the contracting union was still in question.

Evidence on record show that after the cancellation of the registration certificate of
the Federation of Democratic Labor Unions, no other union contested the exclusive
representation of the Philippine Labor Alliance Council (PLAC), consequently, there
was no more legal impediment that stood on the way as to the validity and
enforceability of the provisions of the collective bargaining agreement entered into by
and between respondent corporation and respondent union. The certification of the
collective bargaining agreement by the Bureau of Labor Relations is not required to
 put a stamp of validity to such contract. Once it is duly entered into and signed by the
parties, a collective bargaining agreement becomes effective as between the parties
regardless of whether or not the same has been certified by the BLR.

To be fair, it must be mentioned that in the certification election held at the Liberty Flour Mills, Inc. on
December 27, 1976, the Ilaw at Buklod ng Manggagawa, with which the union organized by Biascan
and Evaristo was affiliated, won overwhelmingly with 441 votes as against the 5 votes cast for
PLAC. 15 However, this does not excuse the fact that the two disaffiliated from PLAC as early as
March 1975 and thus rendered themselves subject to dismissal under the union shop clause in the
CBA.

The petitioners say that the reinstatement issue of Evaristo and Biascan has become academic
because the former has been readmitted and the latter has chosen to await the resolution of this
case. However, they still insist on the payment of their back wages on the ground that their dismissal
was illegal. This claim must be denied for the reasons already given. The union shop clause was
validly enforced against them and justified the termination of their services.

It is the policy of the State to promote unionism to enable the workers to negotiate with management
on the same level and with more persuasiveness than if they were to individually and independently
bargain for the improvement of their respective conditions. To this end, the Constitution guarantees
to them the rights "to self-organization, collective bargaining and negotiations and peaceful
concerted actions including the right to strike in accordance with law." There is no question that
these purposes could be thwarted if every worker were to choose to go his own separate way
instead of joining his co-employees in planning collective action and presenting a united front when
they sit down to bargain with their employers. It is for this reason that the law has sanctioned
stipulations for the union shop and the closed shop as a means of encouraging the workers to join
and support the labor union of their own choice as their representative in the negotiation of their
demands and the protection of their interest vis-a-vis the employer.

The Court would have preferred to resolve this case in favor of the petitioners, but the law and the
facts are against them. For all the concern of the State, for the well-being of the worker, we must at
all times conform to the requirements of the law as long as such law has not been shown to be
violative of the Constitution. No such violation has been shown here.

138. Metrobank union vs. Nlrc

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC.7 Judicial review of labor cases, we may add, does not go
beyond the evaluation of the sufficiency of the evidence upon which the labor official's findings
rest.8 As such, factual findings of the NLRC are generally accorded not only respect but also finality
provided that its decision are supported by substantial evidence and devoid of any taint of unfairness
of arbitrariness.9 When, however, the members of the same labor tribunal are not in accord on those
aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing
upon the sufficiency of the evidence, let alone the conclusions derived therefrom.

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.
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.

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. 12

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

. . . . (T)o compel employers simply to add on legislated increases in salaries or

allowances without regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutorily prescribed minimum
rates of increases. Clearly, this would be counter-productive so far as securing the
interests of labor is concerned. . . .

We find the formula suggested then by Commissioner Bonto-Perez, which has also been the
standard considered by the regional Tripartite Wages and Productivity Commission for the correction
of pay scale structures in cases of wage distortion, 15 to well be the appropriate measure to balance
the respective contentions of the parties in this instance. We also view it as being just and equitable.

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.

139. SMTF-UWP VS . NLRC

 As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a)
whether or not private respondent committed an unfair labor practice in its refusal to grant across-
the-board wage increases in implementing Wage Orders Nos. 01 and 02, and (b) whether or not
there was a significant wage distortion of the wage structure in private respondent as a result of
the manner by which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its arguments on the alleged
commitment of private respondent to grant an automatic across-the-board wage increase in the
event that a statutory or legislated wage increase is promulgated. It cites as basis therefor, the
aforequoted portion of the Minutes of the collective bargaining negotiation on February 27, 1990
regarding wages, arguing additionally that said Minutes forms part of the entire agreement between
the parties.
The basic premise of this argument is definitely untenable. To start with, if there was indeed
a promise or undertaking on the part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have requested or demanded that such
promise or undertaking be incorporated in the CBA. After all, petitioner union has the means under
the law to compel private respondent to incorporate this specific economic proposal in the CBA. It
could have invoked Article 252 of the Labor Code defining duty to bargain, thus, the duty includes
executing a contract incorporating such agreements if requested by either party. Petitioner unions
assertion that it had insisted on the incorporation of the same proposal may have a factual basis
considering the allegations in the aforementioned joint affidavit of its members. However, Article
252 also states that the duty to bargain does not compel any party to agree to a proposal or make
any concession. Thus, petitioner union may not validly claim that the proposal embodied in the
Minutes of the negotiation forms part of the CBA that it finally entered into with private
respondent.
The CBA is the law between the contracting parties[10] the collective bargaining representative
and the employer-company. Compliance with a CBA is mandated by the expressed policy to give
protection to labor.[11]In the same vein, CBA provisions should 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."[12] This is founded on the dictum that a CBA is not an ordinary contract but one impressed
with public interest.[13] It goes without saying, however, that only provisions embodied in the CBA
should be so interpreted and complied with. Where a proposal raised by a contracting party does
not find print in the CBA,[14] it is not a part thereof and the proponent has no claim whatsoever to
its implementation.
Hence, petitioner unions contention that the Minutes of the collective bargaining negotiation
meeting forms part of the entire agreement is pointless. The Minutes reflects the proceedings and
discussions undertaken in the process of bargaining for worker benefits in the same way that the
minutes of court proceedings show what transpired therein.[15] At the negotiations, it is but natural
for both management and labor to adopt positions or make demands and offer proposals and
counter-proposals. However, nothing is considered final until the parties have reached an
agreement. In fact, one of managements usual negotiation strategies is to x x x agree tentatively as
you go along with the understanding that nothing is binding until the entire agreement is
reached.[16] If indeed private respondent promised to continue with the practice of granting across-
the-board salary increases ordered by the government, such promise could only be demandable in
law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith or
at the very least, resorting to the scheme of feigning to undertake the negotiation proceedings
through empty promises. As earlier stated, petitioner union had, under the law, the right and the
opportunity to insist on the foreseeable fulfillment of the private respondents promise by
demanding its incorporation in the CBA. Because the proposal was never embodied in the CBA,
the promise has remained just that, a promise, the implementation of which cannot be validly
demanded under the law.
Petitioners reliance on this Courts pronouncements[17] in Kiok Loy v. NLRC[18] is, therefore,
misplaced. In that case, the employer refused to bargain with the collective bargaining
representative, ignoring all notices for negotiations and requests for counter proposals that the
union had to resort to conciliation proceedings. In that case, the Court opined that (a) Companys
refusal to make counter-proposal, if considered in relation to the entire bargaining process, may
indicate bad faith and this is specially true where the Unions request for a counter-proposal is left
unanswered. Considering the facts of that case, the Court concluded that the company was
unwilling to negotiate and reach an agreement with the Union.[19]
In the case at bench, however, petitioner union does not deny that discussion on its proposal
that all government-mandated salary increases should be on an across-the-board basis was
deferred, purportedly because it relied upon the undertaking of the negotiating panel of private
respondent.[20] Neither does petitioner union deny the fact that there is no provision of the 1990
CBA containing a stipulation that the company will grant across-the-board to its employees the
mandated wage increase. They simply assert that private respondent committed acts of unfair labor
practices by virtue of its contractual commitment made during the collective bargaining
process.[21] The mere fact, however, that the proposal in question was not included in the CBA
indicates that no contractual commitment thereon was ever made by private respondent as no
agreement had been arrived at by the parties. Thus:

Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a

contract binding on the parties; but the failure to reach an agreement after negotiations continued
for a reasonable period does not establish a lack of good faith. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one. The duty to bargain
does not include the obligation to reach an agreement. x x x.[22]

With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of
the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where private respondent exhibited an
indifferent attitude towards collective bargaining because the negotiations were not the unilateral
activity of petitioner union. The CBA is proof enough that private respondent exerted reasonable
effort at good faith bargaining.[23]
Indeed, the adamant insistence on a bargaining position to the point where the negotiations
reach an impasse does not establish bad faith. Neither can bad faith be inferred from a partys
insistence on the inclusion of a particular substantive provision unless it concerns trivial matters
or is obviously intolerable.[24]
The question as to what are mandatory and what are merely permissive subjects of collective
bargaining is of significance on the right of a party to insist on his position to the point of
stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a
desired provision as to a matter which is a mandatory subject of collective bargaining; but a
refusal to contract unless the agreement covers a matter which is not a mandatory subject is in
substance a refusal to bargain about matters which are mandatory subjects of collective
bargaining; and it is no answer to the charge of refusal to bargain in good faith that the insistence
on the disputed clause was not the sole cause of the failure to agree or that agreement was not
reached with respect to other disputed clauses."[25]

On account of the importance of the economic issue proposed by petitioner union, it could
have refused to bargain and to enter into a CBA with private respondent. On the other hand, private
respondents firm stand against the proposal did not mean that it was bargaining in bad faith. It had
the right to insist on (its) position to the point of stalemate. On the part of petitioner union, the
importance of its proposal dawned on it only after the wage orders were issued after the CBA had
been entered into. Indeed, from the facts of this case, the charge of bad faith bargaining on the part
of private respondent was nothing but a belated reaction to the implementation of the wage orders
that private respondent made in accordance with law. In other words, petitioner union harbored
the notion that its members and the other employees could have had a better deal in terms of wage
increases had it relentlessly pursued the incorporation in the CBA of its proposal. The inevitable
conclusion is that private respondent did not commit the unfair labor practices of bargaining in bad
faith and discriminating against its employees for implementing the wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner unions contention that by its failure to grant
across-the-board wage increases, private respondent violated the provisions of Section 5, Article
VII of the existing CBA[26] as well as Article 100 of the Labor Code. The CBA provision states:

Section 5. The COMPANY agrees to comply with all the applicable provisions of the
Labor Code of the Philippines, as amended, and all other laws, decrees, orders,
instructions, jurisprudence, rules and regulations affecting labor.

Article 100 of the Labor Code on prohibition against elimination or diminution of benefits provides
that (n)othing in this Book shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of this Code.
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously
enjoyed by petitioner union and the other employees were withdrawn as a result of the manner by
which private respondent implemented the wage orders. Granted that private respondent had
granted an across-the-board increase pursuant to Republic Act No. 6727, that single instance may
not be considered an established company practice.Petitioner unions argument in this regard is
actually tied up with its claim that the implementation of Wage Orders Nos. 01 and 02 by private
respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a question of fact[27] that is within the
jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative agencies are
accorded respect and even finality in this Court if they are supported by substantial
evidence.[28] Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said:
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC. Judicial review of labor cases, we may add, does
not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials
findings rest. As such, the factual findings of the NLRC are generally accorded not only respect
but also finality provided that its decisions are supported by substantial evidence and devoid of
any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal
are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be
as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived
therefrom.[29]

Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC
Decision in this case which was penned by the dissenter in that case, Presiding Commissioner
Edna Bonto-Perez, unanimously ruled that no wage distortions marred private respondents
implementation of the wage orders. The NLRC said:

On the issue of wage distortion, we are satisfied that there was a meaningful implementation of
Wage Orders Nos. 01 and 02. This debunks the claim that there was wage distortion as could be
shown by the itemized wages implementation quoted above. It should be noted that this
itemization has not been successfully traversed by the appellants. x x x.[30]

The NLRC then quoted the labor arbiters ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It
is apropos to note, moreover, that petitioners contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondents employees are anchored on
its dubious position that private respondents promise to grant an across-the-board increase in
government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable
part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy
enshrined in the Constitution that the rights of workers and the promotion of their welfare shall be
protected.[31] The Court is likewise guided by the goal of attaining industrial peace by the proper
application of the law. It cannot favor one party, be it labor or management, in arriving at a just
solution to a controversy if the party has no valid support to its claims. It is not within this Courts
power to rule beyond the ambit of the law.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned
Resolutions of the NLRC AFFIRMED. No costs.
SO ORDERED.