Labor Relations
Case Digest Compilation
Ratification of the CBA
PLANTERS PRODUCTS v. NLRC
G.R. No. 78524 January 20, 1989
FACTS: This case involves about 440 retrenched
employees of the PLANTERS PRODUCT (PPI) from its
Bataan and Makati-based operations. It was filed by the
complainants as individuals, and jointly with their respective
unions, as a class suit on behalf of Bataan-based Planters
Products, Inc. employees similarly situated. The
intervenors, on June 20, 1986, in their behalf and in behalf
of similarly situated Makati-based employees, moved for
leave to intervene because they were similarly situated as
the complainants.
The complainants and Complainants-Intervenors were all
regular employees of the PLANTERS PRODUCTS until their
respective dates of retirement/retrenchment.
All the Complainants, except the Complainants-Intervenors,
are members of either one of the following Unions of
workers/employees of the Respondent:
a. Planters Product Employees Union ('PPEU' for
brevity);
b. First Line Association of Management Employees
('FLAME' for brevity); and
c. Super 21, and/or were represented by said
unions as their respective agents.
These Unions of former employees of PLANTERS PRODUCTS
have always had collective bargaining agreements
1. 1975-78 CBA which was formally ratified;
2. 1978-81 and -1981-84 CBAs which were not
formally submitted for ratification; and
3. the purported 1984-87 CBA which was not formally
submitted for ratification.
On October 11, 1982, the PLANTERS PRODUCTS instituted
a Retirement and Pension Plan (RPP) for all employees,
which was to be effective retroactive to March 31, 1982,.
This non-contributory RPP was funded exclusively by
PLANTERS PRODUCTS.
On February 23, 1984, PPI to institutionalize the RPP,
entered into a Trust Agreement with Philippine Trust Co.,
Inc. ('PTC' for brevity), under the terms of which, PTC shall
administer and manage the fund.
On September 28, 1984 a CBA for 1984-1987 was signed
between PLANTERS PRODUCTS and the directors and
principal officers of its unions, assisted by their lawyer,
Atty. Gabriel Manansala
It modified the provisions in the previous CBAs on
'termination allowance' or benefit, and limited its scope to
separation from the service of PPI by reason solely of
disability.
The 1984-87 CBA was never formally submitted to the
membership of the Unions for ratification.
In March 1984 the RPP was submitted to the Bureau of
Internal Revenue for qualification as an approved
Retirement and Pension Plan.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
On October 10, 1984, the RPP was approved by BIR. PPI
issued a circular to all employees announcing the funding of
the RPP and its approval by the BIR.
On September 15, 1985, without formally informing the PPI
employees-beneficiaries of the RPP, the RPP was unilaterally
amended by the company, particularly its Part IV,
paragraphs 3-5, pursuant to Section J, Part 7 of the RPP
and a copy was later submitted to the BIR for approval and
the amendments were approved by the BIR.
On September 26, 1985 a circular was issued to all
employees of RPI announcing that employees laid off from
its Bataan operations on July 8 and August 15, 1985, were
being terminated effective as of September 30, 1985; while
those laid off from its Makati office would be terminated
effective as of October 15, 1985. Between their lay-off
dates and their announced termination/retirement dates, all
of the concerned employees did not render service to PPI.
On September 27, 1985, individual letters were sent to
each employee notifying them of their formal termination
and the termination benefits that they would be granted.
On or about October 11, 1985, Mr. Roberto Orig, for PPI,
issued to the individual Complainants/Complainants-
Intervenors computer print-outs reflecting the respective
computations of their separation benefits for all employees
terminated during the said periods. It shows that the
separation pay granted to the Bataan-based and Makati-
based employees who were not retireable, was only one (1)
month of basic pay for each year of service with one- half
paid from the RPP and the balance from PPI operating
funds. As shown by the same Exhibits, all employees
entitled to optional or forced retirement, were granted
retirement benefits based on their basic pay. These benefits
ranged from 1.02 to 1.43 months of basic pay per year of
service as computed in accordance with the RPP. These
computations were used in paying the Complainants and
the Complainants-Intervenors the sums indicated on the
print outs.The RPP was managed by a Retirement and
Pension Committee of PPI.
Before the Complainants and Complainants-Intervenors
were retired/retrenched, the company amended PPI's RPP
particularly Part. IV, Par. D (4) and (5), pursuant to which
Complainants and Complainants- Intervenors were paid
their separation pay/benefits on the basis of their basic
salary.
Subsequent to the retirement/retrenchment of the
Complainants and Complainants-Intervenors, all the
remaining employees were paid their computed
retirement/retrenchment benefits from the RPP and the RPP
was liquidated on June 23, 1986
Some of the employees who were retired/retrenched
effective June 1, 1986, have been subsequently re-hired by
PPI under certain conditions.
The labor arbiter rendered judgment against Planters
Products, Inc., holding it guilty of unfair labor practice. This
was affirmed on appeal to the NLRC, with the modification
that it set aside the award for actual, exemplary and moral
damages, and attorney's fees.
PLANTER’S PRODUCTS CONTENTION:
Planters Products, Inc., (PPI) in its petition raised the
following assignments of errors:
In rendering the decision/resolution complained of, public
respondents acted without or in excess of jurisdiction
and/or grave abuse of discretion in that —
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Case Digest Compilation

 The NLRC, and before it, the Labor Arbiter acted

without jurisdiction in resolving this case,
jurisdiction over which is vested exclusively on
another judicial authority. (p. 10, Rollo- 78524)
 Assuming arguendo that public respondents have
jurisdiction, they miserably failed to make a
sufficient and valid findings of facts upon which
they could reasonably base their conclusions
 findings are clearly and manifestly erroneous and
absolutely devoid of evidentiary support.
 Total absence of evidence to support conclusion of
unfair labor practice.
 The finding of bad faith has no basis; Planters's
decision to amend its retirement plan was
prompted by its benevolent desire to give more
benefits to its employees.
 Under its express provision, the Retirement Plan
may be amended unilaterally and the validity and
enforceability of the amendment are not nullified
by a mere formal defect.
 Private respondents are estopped from questioning
the validity of the amendment to the Retirement
Plan.
 The rule on non-diminution of benefits does not
apply to a modification of a provision in the CBA
voluntarily negotiated and entered into by the
parties.
 Continued employment is a condition sine qua
non to entitlement to the liquidation proceeds of
the Retirement Fund; non-employees at the time
of liquidation are no longer participants in the
Retirement Plan and are, therefore, not entitled to
liquidation proceeds.
 Public respondents gravely abused their discretion
and denied Planters due process
ISSUE #1: Whether or not the NLRC and the Labor Arbiter
have jurisdiction over the present suit? YES
RULING #1: PPI contends that the public respondents
have no jurisdiction over the case as there is no longer an
existing employer-employee relationship between the
private parties. The relationship having been severed, it is
believed that the complainants should have sought
reinstatement for the present action to fall under said
respondents' jurisdiction.
The contention is without merit. An employee need not seek
reinstatement in order to file a complaint before the Labor
Arbiter. Money claims of workers as in the instant case, fall
within the original and exclusive jurisdiction of labor
arbiters when these claims have some reasonable causal
connection with the employer-employee relationship.
It is a fact that the complainants and complainants-
intervenors were all regular employees of PPI until their
respective dates of retirement/retrenchment. They now
seek to improve the terminal benefits granted to them on
the allegation that a different computation was used for the
other employees. Their claims clearly arose from the
employer-employee relationship.
PPI next contends that this should be a purely civil suit
against the duly designated corporate trustee because it is
specifically against the Retirement Fund which was
separately administered and managed by said trustee.
We disagree. It is stated in the stipulation of facts that the
Retirement and Pension Plan (RPP hereafter) was managed
by a Retirement and Pension Committee of Planters
Products, Inc. Moreover, the RPP was solely funded by PPI.
ISSUE #2: Whether or not PPI was denied due process?
NO.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
RULING #2: PPI alleges that it was denied due process
when public respondents deliberately ignored its evidence.
This is a misapprehension.
The essence of due process is simply an opportunity to be
heard. PPI was given this opportunity. The fact that the
public respondents gave credit to the other party's evidence
and not to the evidence of PPI is not a violation of due
process.
ISSUE #3: Whether or not PPI was guilty of unfair labor
practice? NO.
RULING #3: The Labor Arbiter ruled that PPI committed an
unfair labor practice by withdrawing the termination
allowance in the 1984-87 CBA.
Article 248 of the Labor Code provides inter alia that:
... Unfair labor practices of employers, It shall be unlawful
for an employer to commit any of the following unfair labor
practice.
xxx xxx xxx
(i) To violate a collective bargaining agreement.
The questioned provision in the 1984-87 Collective
Bargaining Agreement limited the application of the
termination allowance only to those separated from the
service due to disability. The prior CBAs from 1975 upwards
granted a termination allowance, upon the employee's
separation, of at least three (3) weeks to one (1) month's
pay for each year of service depending upon the total years
of service.
The provisions of the 1978-1984 CBAs uniformly read:
ARTICLE XVI. TERMINATION ALLOWANCE
Section 1. A regular employee who is
separated from the service of the
COMPANY shall be given a termination
pay which shall depend on the length of
his service and shall be computed as
follows:
Employees with: Amount of Allowance
1-5 years service 3 weeks pay for each
year of service
6-9 years service 4 months plus 1 month
for each year of service after the fifth year
10 or more years One month pay for each
year service of service
The termination pay shall be based upon
the employee's basic pay at the time of
his termination.
Section 2. An employee who is
temporarily laid off, discharged for cause,
resigns or retires from the service of the
COMPANY will not be entitled to any
termination pay.
If the prior CBA is applied, the complainants/complainants-
intervenors who do not fall under the above stated section
2 would be entitled to termination allowance under the CBA,
over and above the benefits extended under the RPP.
PPI computed their terminal benefits by considering the
1984-1987 CBA and the amended RPP. All employees
terminated effective as of September 30, 1985 (Bataan
Operations) and October 15, 1985 (Makati Office) who were
not retireable were granted a separation pay of one (1)
month of basic pay for each year of service with one-half
paid from the RPP and the balance from PPI operating
funds. All employees entitled to optional or forced
retirement were granted retirement benefits based on their
basic pay ranging from 1.02 to 1.43 months of basic pay
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Case Digest Compilation
per year of service as computed in accordance with the
RPP.
It is contended that the 1984-1987 CBA was not only
negotiated in bad faith but was also not formally ratified.
There was allegedly bad faith in limiting the application of
the termination allowance as the company already had
plans to retrench the workers.
We apply the established rule, that a CBA is the Law among
the parties, to the 1984-1987 CBA.
Bad faith in the negotiations was not present
considering that the provision on termination
allowance was made to apply to everybody including
those subsequently retrenched or retired after the
complainants' and complainants- intervenors'
retrenchment. There was no singling out of the
complainants and intervenors-complainants.
Under Article 231 of the Labor Code and Sec. 1, Rule IX,
Book V of the Implementing Rules, the parties to a
collective agreement are required to furnish copies to the
appropriate Regional Office with accompanying proof of
ratification by the majority of all the workers in the
bargaining unit. This was not done in the case at bar. But
we do not declare the 1984-1987 CBA invalid or void
considering that the employees have enjoyed benefits from
it. They cannot receive benefits under provisions favorable
to them and later insist that the CBA is void simply because
other provisions turn out not to the liking of certain
employees.
Moreover, the two CBAs prior to the 1984-1987 CBA were
not also formally ratified, yet the employees are basing
their present claims on these CBAs. It is inequitous to
receive benefits from a CBA and later on disclaim its
validity.
There is nothing in the records before us to show that PPI
was guilty of unfair labor practice.
However, PPI erred in not integrating the allowances with
the basic salary in the computation of the separation pay.
The salary base properly used in computing the separation
pay should include not just the basic salary but also the
regular allowances that an employee has been receiving.
The allowances of the remaining PPI employees were made
part of their basic pay. This increased the computation
bases for their terminal benefits. This should have been the
case also for the complainants/complainants-intervenors.
ON DEATH BENEFITS: We adopt the Solicitor General's
statement on the questioned death benefits that in any
case, the death benefits are payable only in the event of
the death of the employee. Since petitioners and
intervenors-petitioners are still alive, they obviously are not
entitled thereto.
Finally, the complainants/complainants-intervenors are not
entitled to share in the distribution of the RPP. Under
Section M, Part VII of the RPP only existing employees of
the Company have the right to participate in the distribution
of the assets of the fund.
Registration of the CBA
Liberty Employees v Liberty
Gr No 58768-70, December 29, 2989
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
DOCTRINE: The certification of the CBA by the Bureau of
Labor Relations is not required for its validity; Once a CBA
is duly entered and signed by the parties, it becomes
effective as between the parties whether or not the same
has been certified by the Bureau. Liberty Flour Mills
Employees vs. Liberty Flour Mills, Inc., 180 SCRA 668, G.R.
Nos. 58768-70 December 29, 1989
FACTS: On February 6, 1974, respondent Philippine Labor
Alliance Council (PLAC) and respondent Liberty Flour Mills,
Inc. entered into a three-year CBA effective January 1,
1974, providing for a daily wage increase of P2.00 for 1974,
P1.00 for 1975 and another P1.00 for 1976. Additionally,
the parties agreed to establish a union shop by imposing
"membership in good standing for the duration of the CBA
as a condition for continued employment" of workers.
On October 18, 1974, PLAC filed a complaint against the
respondent company for non-payment of the emergency
cost of living allowance under P.D. No. 525. A similar
complaint was filed on March 4, 1975, this time by the
petitioners, who apparently were already veering away from
PLAC.
On March 20, 1975, petitioners Evaristo and Biascan, after
organizing a union called the Federation of National
Democratic Labor Unions, filed with the Bureau of Labor
Relations a petition for certification election among the
rank-and-file employees of the respondent company. PLAC
then expelled the two for disloyalty and demanded their
dismissal by the respondent company, which complied on
May 20, 1975.
The objection of Evaristo and Biascan to their termination
were certified for compulsory arbitration and assigned to
Labor Arbiter Apolinario N. Lomabao, Jr. Meanwhile, the
claims for emergency allowance were referred for voluntary
arbitration to Edmundo Cabal, who eventually dismissed the
same on the ground that the allowances were already
absorbed by the wage increases.
Contention of the Company:
The position of the company is that the emergency
allowance required by P.D. No. 525 is already covered by
the wage increases prescribed in the said CBA.
Furthermore, pursuant to its Article VIII, such allowances
also include all other statutory minimum wage increases
that might be decreed during the lifetime of the said
agreement.
Section 2 provides:
Section 2. The wage increase in the amounts and during the
period above set forth shall, in the event of any statutory
increase of the minimum wage, either as allowance or as
basic wage, during the life of this Agreement, be considered
compliance and payment of such required statutory
increase as far as it will go and under no circumstances will
it be cumulative nor duplication to the differential amount
involved consequent to such statutory wage increase.
Contention of the Petitioners
Petitioners contend that the wage increases were the result
of negotiation undertaken long before the promulgation of
P.D. No. 525 and so should not be considered part of the
emergency allowance decreed. In support of this
contention, they cite Section 15 of the Rules implementing
P.D. No. 525, providing as follows:
Nothing herein shall prevent the employer and his
employees, from entering into any agreement with terms
more favorable to the employees than those provided
herein, or be construed to sanction the diminution of any
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 Labor Relations
Case Digest Compilation
benefits granted to the employees under existing laws,
agreements, and voluntary practice.
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.
ISSUE 1: WON the emergency allowance sought by the
petitioners are already absorbed in the stipulated wage
increases – YES.
RULING: The Court holds that such allowances are indeed
absorbed by the wage increases required under the
agreement. This is because Section 6 of the
Interpretative Bulletin on LOI No. 174 specifically
provides:
Sec. 6. Allowances under LOI. — -All allowances, bonuses,
wage adjustments and other benefits given by employers to
their employees shall be treated by the Department of
Labor as in substantial compliance with the minimum
standards set forth in LOI No. 174 if:
(a) they conform with at least the minimum allowances
scales specified in the immediately preceding Section; and
(b) they are given in response to the appeal of the
President in his speech on 4 January 1974, or to countervail
the quantum jump in the cost of living as a result of the
energy crisis starting in November 1973, or pursuant to
Presidential Decree No. 390; Provided, That the payment is
retroactive to 18 February 1974 or earlier.
The allowances and other benefits may be granted
unilaterally by the employer or through collective
bargaining, and may be paid at the same time as the
regular wages of the employees.
Allowances and other benefits which are not given in
substantial compliance with the LOI as interpreted herein
shall not be treated by the Department of Labor as
emergency allowances in the contemplation of the LOI
unless otherwise shown by sufficient proof. Thus, without
such proof, escalation clauses in collective bargaining
agreements concluded before the appeal of the President
providing for automatic or periodic wage increases shall not
be considered allowances for purposes of the LOI.
The "immediately preceding section" referred to above
states:
SEC. 5. Determination of Amount of Allowances. — In
determining the amount of allowances that should be given
by employers to meet the recommended minimum
standards, the LOI has classified employers into three
general categories. As an implementation policy, the
Department of Labor shall consider as sufficient compliance
with the scales of allowances recommended by the LOI if
the following monthly allowances are given by employers:
(a) P50.00 or higher where the authorized capital stock of
the corporation, or the total assets in the case of other
undertakings, exceeds P 1 million;
(b) P 30.00 or higher where the authorized capital stock of
the corporation, or the total assets in the case of other
undertakings, is not less than P100,000.00 but not more
than P1million; and
(c) P15.00 or higher where the authorized capital stock or
total assets, as the case may be, is less than P100,000.00.
It is not denied that the company falls under paragraph (a),
as it has a capitalization of more than P 1 million, 1 and so
must pay a minimum allowance of P50.00 a month. This
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
amount is clearly covered by the increases prescribed in the
CBA, which required a monthly increase (on the basis of 30
days) of P60.00 for 1974, to be increased by P30.00 in
1975 (to P90.00) and another P 30.00 in 1976 (to
P120.00). The first increase in 1974 was already above the
minimum allowance of P50.00, which was exceeded even
more with the increases of P1.00 for each of the next two
years.
Even if the basis used were 26 days a month (excluding
Sundays), the conclusion would remain unchanged as the
raise in wage would be P52.00 for 1974, which amount was
increased to P78.00 in 1975 and to P104.00 in 1976.
As to petitioners’ contention, the Court held that Section
15 of PD No. 525 should not be read in isolation but must
be related to the other sections above-quoted, to give effect
to the intent and spirit of the decree. The meaning of the
section simply is that any benefit over and above the
prescribed allowances may still be agreed upon by the
employees and the employer or, if already granted, may no
longer be withdrawn or diminished.
As to their allegation that Section 2 of the CBA is
invalid, the Court held that 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.
ISSUE 2: WON Evaristo and Biascan were illegally
dismissed – NO.
RULING: 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. 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, where 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
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Case Digest Compilation
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.
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, viz.:
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. 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.
Coverage of the CBA, Interpretation
MANILA HOTEL CORPORATION vs. ROSITA DE
LEON
July 23, 2018
Facts: Respondent Rosita began working for petitioner
Manila Hotel Corporation on September 1, 1976 as a
Restaurant and Bar Cashier. In March 2000, petitioner
turned over to her the functions of the General Cashier who
had resigned.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
On June 7, 2011, respondent received petitioner's June 6,
2011 letter, captioned as a Notice of Compulsory
Retirement (Notice):
Re: Notice of Compulsory Retirement
Dear Ms. De Leon:
Following your verbal conversation with the Vice
President of Human Resources and Security, P/SSupt
Felipe H. Buena Jr. (Ret), the undersigned would like to
formally inform you of the intention of the Management
to exercise its prerogative to compulsorily retire you
having been rendered 35 years in service from the Hotel
[sic] effective at the close of office hours of June 10,
2011. You shall, however, be paid your retirement pay
accordingly.
We thank you and wish you good luck in your future
endeavors. (Emphasis in the original)
At the time she received said Notice, respondent was 57
years old and held the position of Assistant Credit and
Collection Manager/Acting General Cashier. She had by
then rendered 34 years of service to petitioner.
Respondent subsequently filed against petitioner and
its Chairman, President, Vice President for Finance and
Human Resources Assistant Director (officers), a
Complaint for illegal dismissal, underpayment of salaries
and 13th month pay, non-payment of service charges,
transportation allowance and other related benefits, and
illegal deductions, with prayer for reinstatement without
loss of seniority rights, backwages, actual, moral and
exemplary damages and attorney's fees.
Respondent claimed that she had been forced to retire
without due process. She averred that petitioner gave no
rational basis for her retirement or dismissal and
merely relied on management prerogative which, she
stressed, could not be utilized to circumvent the law and
the public policy on labor and social justice.
Petitioners’ contentions:
 no dismissal because respondent voluntarily
accepted its offer to avail the compulsory
retirement program under the Collective
Bargaining Agreement (CBA) between
petitioner and its rank-and-file employees.
 Under the CBA, an employee's retirement is
compulsory when he or she reaches the age of 60
or has rendered 20 years of service, whichever
comes first.
 when respondent received the Notice, she went
directly to the Human Resources Director to inquire
about her retirement pay, and upon learning that the
same would amount to P1.5 Million, she graciously
accepted the retirement offer and even personally
and eagerly processed her Personnel Clearance.
o However, when notified that the release of her
retirement pay at P1,510,757.92 had been
approved, respondent refused to get her check
and instead maliciously sued petitioner for
illegal dismissal.
 respondent already rendered 14 years in excess of
the 20-year cut-off period for compulsory retirement,
thus, it allegedly had all the right to terminate her
services.
 respondent could be compulsorily retired under
the CBA, being a rank-and-file employee.
o It averred that respondent's work, the most
crucial aspect of which was merely to count
and keep petitioner's money, was routinary
5
 Labor Relations
Case Digest Compilation

and did not involve the exercise of any  held that respondent is a managerial employee,
discretion. as found by the LA and the NLRC - a finding "which
o respondent was not a supervisory petitioner never bothered to contest."
employee as she had no staff to supervise.  Because respondent is a managerial employee,
o respondent had supposedly been receiving petitioner's CBA with its rank-and-file
benefits under the CBA. employees does not apply to her. 
 there is nothing in petitioner's submissions
Respondent’s contentions: showing that respondent had assented to be
 petitioner's CBA with the rank-and-file covered by the CBA's retirement provisions.
employees did not apply to her because she  in the absence of an agreement to the contrary,
held a managerial or supervisory position as managerial employees cannot be allowed to
shown no less by her job title.  share in the concessions obtained by the labor
 To further prove that she was a managerial or union through collective negotiation.
supervisory employee, she averred that: o Otherwise, they would be exposed to the
o the Performance Appraisal Sheet for temptation of colluding with the union during
Supervisory Positions was used to rate her; the negotiations to the detriment of the
o she was awarded Model Supervisor in 1992; employer.
o as early as 1994, she was entitled to the  the fact that respondent had rendered more than 20
Officer's Check Privilege which was exclusively years of service to petitioner will not justify the
enjoyed by employees holding managerial and latter's act of compulsorily retiring her at age 57,
supervisory positions; and the 50% discount absent proof that she agreed to be covered by the
she enjoyed in all outlets/restaurants was a CBA's retirement clause.
privilege given only to petitioner's officers or  Undoubtedly, Article 287 of the Labor Code, the
managers. retirement age is primarily determined by the
existing agreement or employment contract."
Labor Arbiter found that:  "By its express language, the Labor Code permits
 respondent was a managerial employee, as employers and employees to fix the applicable
evinced by the Personnel Status Form and Appraisal retirement age at below 60 years."
Sheets she submitted and based on her  Absent such an agreement, the retirement age shall
responsibilities and duties and the benefits and be that fixed by law, and the above-cited law
privileges that came with her post. mandates that the compulsory retirement age is 65
 the CBA did not apply to respondent and her years, while the minimum age for optional retirement
compulsory retirement resultantly constituted is set at 60 years.
constructive dismissal.
 respondent was illegally dismissed and petitioner Petitioner’s Argument: Petitioner maintains that it had an
is hereby ordered to reinstate her to her former implied agreement with respondent for the latter's
position without loss of seniority rights and other compulsory retirement, which constitutes a retirement
privileges and to pay her backwages from the time of contract sanctioned under Article 287 of the Labor Code.
dismissal up to actual reinstatement, which is only up
to the retirable age of 60, for which a retirement pay Issues: Whether petitioner’s CBA with its rank-and-file
is hereby also ordered to be paid by the [petitioner]. employees applies to respondent. – NO.

NLRC: Ruling:
 granted the appeal interposed by petitioner
 dismissed the complaint for illegal dismissal Notice of Compulsory Retirement was NOT a notice to
 ordered petitioner to immediately pay respondent avail of the retirement provisions under the CBA
her retirement pay and benefits based on law
and the CBA A cursory reading of petitioner's June 6, 2011 letter will
 while managerial employees are ordinarily outside readily reveal that it was not an offer for compulsory
the scope of CBA, nothing prevents employers from retirement. The letter, to begin with, was a Notice, which
granting them benefits equal to or higher than those indicates that it merely served to notify respondent of a
given to union members. decision to retire her services. It was clearly not a notice
o in extending the retirement benefits to avail of the retirement provisions under the CBA.
under the CBA to respondent, petitioner As said caption suggests, the retirement was compulsory
was merely exercising a management and not optional as to give respondent the choice to
prerogative, and by immediately processing decline.
her retirement requirements, including the
Personnel Clearance, respondent accepted Indeed, the Notice gave respondent no opportunity to
petitioner's offer of retirement.  explore a mere possibility or option of retirement. In fact,
o petitioner's offer of retirement and there is nothing in the Notice asking respondent to express
her conformity to any retirement plan or offer or suggesting
respondent's acceptance thereof constituted a
that management was willing to discuss her retirement.
bilateral agreement the "applicable
Thus, contrary to petitioner's claim, the Notice was not a
employment contract" on retirement
proposal, but a management decision, to retire
sanctioned under Article 287 of the Labor
respondent who then had not yet reached the age of
Code, the existence of which rendered
compulsory retirement under Article 287 of the Labor Code.
unimportant the issue of whether respondent
was a managerial employee or not. 
By all indications, therefore, petitioner's June 6, 2011 letter
o having assented to her compulsory retirement,
was a notice of severance or termination of employment
respondent was already estopped from
through compulsory retirement. It was not, as petitioner
contesting the same.
would have this Court believe, an offer which respondent
was free to accept or decline. Petitioner had unilaterally
CA:
made a decision to retire respondent and by its Notice,
imposed such decision on her.
6
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 Labor Relations
Case Digest Compilation

Facts: Huliganga was hired by SITA in 1980. By 2008,

Respondent Questioned her coverage in the CBA
The conversations between respondent and petitioner's Vice
President of Human Resources and Security, P/SSupt Felipe
H. Buena Jr. (Ret) (Buena), also show that respondent had
no intention to quit her job or to retire, and that she
questioned petitioner's decision to compulsorily retire her:
(almost 28 years of service) he became the Country
Operating Officer, the highest accountable officer of SITA.
He retired and received his retirement benefits computed
at: 1.5 months of basic pay for each year of service or
a total of ₱7.4M in retirement and other benefits.

20. On June 4, 2011, P/SSupt. Felipe H. Buena asked
[respondent] to see him in his office. Right away he
informed [respondent] that management decided to
compulsory [sic] retire her. The same was manifested by
respondent Aurora Caday, Asst. Director to HR-Legal.
Huliganga filed a complaint against STIA, et. al. for unfair
labor practice, underpayment of salary/wages, moral and
exemplary damages, attorney’s fees, underpayment of sick
and vacation leave and retirement benefits.

21. [Respondent] asked him what was the reason and Huliganga alleges:
why? He said that management opted to apply what is [1] the coefficient/payment factor that applies to
stated in the CBA of the employees-"20 years of him should be 2 months and not 1.5 months for
service or 50 years old whichever comes first" and every year of service in accordance with the 2005-
he added that this applied to all". [Respondent] simply
2010 CBA.
commented that if its [sic] true that it applies to all, how
come that there are lots of rank & file employees,
supervisors and managers/officers who are older than her [2] Such factor embodied in 2005-2010 CBA is the
and working for more than 35 years of service, are [sic] applicable rate because it is a well-established
still with the company?54 (Emphasis in the original) company practice of SITA to adopt, update, and
apply the new and additional economic benefits
These conversations were never denied by petitioner. It
from the CBA as amendments to the
bears noting, too, that petitioner itself acknowledged in its
Employee’s Regulations Manual.
June 6, 2011 letter that Buena had discussed with
respondent her compulsory retirement, lending credence to
the above-cited exchanges. As the CA found, the June 4, SITA essentially counters that Huliganga has already
2011 exchange between respondent and Buena received the full amount of his retirement benefits.
establish that "the information regarding
respondent's retirement was not an offer at all, but Labor Arbiter: It dismissed the complaint. NLRC:
an order, and that respondent had questioned her
Affirmed the order of dismissal.
coverage in the CBA."

No Bilateral Agreement between Petitioner
Respondent for her Early REtirement
All told, an employee in the private sector who did not
expressly agree to an early retirement cannot be retired
from the service before he reaches the age of 65 years.
"Acceptance by the employee of an early retirement age
option must be explicit, voluntary, free and uncompelled."
"The law demanded more than a passive acquiescence on
the part of the employee, considering that his early
retirement age option involved conceding the constitutional
right to security of tenure." Thus, We held that
"[r]etirement is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age,
agrees to sever his or her employment with the former."
In the instant case, respondent's early retirement arose
not from a bilateral act but a unilateral decision on
the part of petitioner. Respondent's consent was neither
sought nor procured by petitioner in deciding to
prematurely retire her services. For this reason,
respondent's compulsory retirement, as imposed by
petitioner in its June 6, 2011 letter, constitutes illegal
dismissal. 
Societe Internationale De Telecommunications
aeronautiques (SITA), et. al. vs. Huliganga
August 20, 2018
and CA: Affirmed with modification. The CA ordered SITA to pay
Huliganga 2.6M representing the deficiency in his
retirement benefits plus legal interest.
The CA found that Huliganga was able to prove that the
new and additional economic benefits from the CBA were
amendments to the Employee Regulations Manual and has
ripened to company practice.
Hence, when Huliganga retired in 2008, the applicable CBA
was that concluded in 2006. It provided for a
coefficient/payment factor in computing retirement benefits
for employees who have served for more than 25 years or
more of service was 2 months for every year of service ,
not 1.5 months for every year of service.
SITA appealed the case before the Supreme Court and
argues that:
[1] the 2006 CBA provides that managerial employees, like
Huliganga, are excluded from coverage and
application.
[2] There is no evidence to show that it has been an
established company practice of SITA to amend its
employment regulations for personnel recruited by SITA by
adopting the improved economic benefits in the CBA.

Issues: Whether or not Huliganga is covered by the CBA –

Parties: NO.
Theodore Huliganga [Huliganga] – Employee
Societe Internationale De Telecommunications [SITA] - Ruling:
Employer

7
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 Labor Relations
Case Digest Compilation
[1] Being a managerial employee, Huliganga is not
entitled to the retirement benefits exclusively
granted to r&f employees under the CBA.
Under the LC, managerial employees are not eligible to join,
assist or form any labor organizations. To be entitled to the
benefits under the CBA, the employees must be members
of the BU, not necessarily the labor organization.
Although managerial employees are not eligible to join,
assist or form any labor organizations, an exception to this
is when the employer extends the CBA benefits to the
managerial employee as a matter of policy or
established practice.
[2] The economic provisions embodied in the CBA
amending the Employee Regulations Manual did not
ripen into company practice.
What is the test to
establish company practice
 the giving of the benefits should have been done
over a long period of time, and
 must be shown to have been consistent and
deliberate.
The test or rationale of this rule on long practice requires an
indubitable showing that the employer agreed to
continue giving the benefits knowing fully well that
said employees are not covered by the law requiring
payment thereof.
In the case at bar, Huliganga presented the Affidavit of
Beniza the Administrative Assistant to the Country
Manager/Representative. She stated that SITA had adopted
the formulation provided in the CBA to its managerial
employees.
The Supreme Court held that the affidavit deserves scant
considerations because Beniza lacked competency to
determine what is considered as a company practice
because:
1. The NLRC found that Beniza had been retired from
service since 1997 or 12 years ago. Hence, she
lacks the competency to determine with accuracy
what is considered a company practice.
2. Moreover, even if Ms. Beaniza's retirement was
based on the rate provided in the then prevailing
CBA, this does not convert the concession into a
company practice.
3. She also stated that company policies have been
implemented as early as the time when the Union
was formed in the 1970s, but she was employed
by SITA only in September 1980.
4. She also attested that she and other previous
retirees have availed of the company practice. But,
she failed to identify these employees. If indeed
she received more than the amount she is entitled
to, this could only be interpreted to be based
merely on the generosity on the part of SITA.
5. She retired in 1997. Hence, she has no knowledge
of circumstances that transpired after her
retirement to present.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
6. It was also stated that she was supposed to have
communicated to SITA’s Singapore office stating
that SITA's practice in the grant of retirement
benefits was lifted from the CBA provisions existing
at the time. But, even if such communication was
sent, it does not prove or establish that CBA
benefits were actually granted to managerial and
confidential employees.
Hence, Huliganga failed to establish that there is an
established company practice of extending CBA concessions
to managerial employees.
NORKIS UNION v NORKIS
G.R. NO. 157098 : June 30, 2005
FACTS: Norkis Free and Independent Workers Union
(Norkis Union) And Norkis Trading Company (Norkis),
entered into a Collective Bargaining Agreement (CBA)
effective from August 1, 1994 to July 31, 1999.
'Sec. 1. Salary Increase. The Company shall
grant a FIFTEEN (P15.00) PESOS per day
increase to all its regular or permanent
employees effective August 1, 1994.'
'Sec. 2. Minimum Wage Law Amendment. In
the event that a law is enacted increasing
minimum wage, an across-the-board increase
shall be granted by the company according to
the provisions of the law.'
On January 27, 1998, a re-negotiation of the CBA was
terminated and pursuant to which a Memorandum of
Agreement was forged between the parties. It was
therein stated that petitioner shall grant a salary
increase to all regular and permanent employees as
follows:
Ten (10) pesos per day increase effective August
1, 1997; Ten (10) pesos per day increase
effective August 1, 1998. '
Pursuant to said Memorandum of Agreement, the
employees received wage increases of P10.00 per day
effective August 1, 1997 and P10.00 per day effective
August 1, 1998. As a result, the agreed P10.00 re-
negotiated salary increase effectively raised the daily wage
of the employees to P165.00 retroactive August 1, 1997;
and another increase of P10.00, effective August 1, 1998,
raising the employees’ daily wage to P175.00.
On March 10, 1998, the RTWPB of Region VII issued
Wage Order ROVII-06 which established the
minimum wage of P165.00, by mandating a wage
increase of five (P5.00) pesos per day beginning April 1,
1998, thereby raising the daily minimum wage to P160.00
and another increase of five (P5.00) pesos per day
beginning October 1, 1998, thereby raising the daily
minimum wage to P165.00 per day.
In accordance with the Wage Order and Section 2, Article
XII of the CBA, Norkis Union demanded an across-the-
board increase.
Norkis Company however, refused to implement the
Wage Order, insisting that since it has been paying its
workers the new minimum wage of P165.00 even before
the issuance of the Wage Order, it cannot be made to
comply with said Wage Order.
On August 1, 1998, Norkis Company again granted an
increase from P165.00 per day to P175.00, so that at the
time of the effectivity of Wage Order No. 06 on October 1,
1998 prescribing the new minimum wage of P165.00 per
day, [respondent's] employees were already receiving
P175.00 per day.
8

Norkis Union filed a preventive mediation complaint
before the National Conciliation and Mediation Board,
questioning whether or not [respondent] has complied with
Wage Order No. ROVII-06, in relation to the CBA provision
mandating an across-the-board increase in case of the
issuance of a Wage Order."
Public respondent arbitrator’s decision:
Company did not comply with the wage order, through the
following dispositions:
'The CBA provision in question (providing for an
across-the-board increase in case of a wage
order) is worded and couched in a vague and
unclear manner.
'x x x In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered
(Art. 1371, New Civil Code).
Respondent in this case [has] failed to comply
with its contractual obligation of implementing
the increase under RTWPB Wage Order ROVII-06
in an across-the-board manner as provided in
Section 2, Article XII of its CBA with [petitioner].
Ruling of the Court of Appeal
CA sustained Norkis Company's explanation that the across-
the-board increases provided in the CBA was required only
when a minimum wage law caused a distortion in the wage
structure.
The grant of an across-the-board increase,
provided under Section 2 of Article XII of the
CBA, was qualified by the phrase "according to
the provisions of the law." It thus stressed the
necessity of determining the import of Wage
Order No. ROVII-06, the law involved in the
present controversy. Taking into consideration
the opinion of the RTWPB, Region VII, the
appellate court held that respondent had
sufficiently complied with Wage Order No. ROVII-
06. The Board had opined that "since
adjustments granted are only to raise the
minimum wage or the floor wage as a matter of
policy, x x x wages granted over the above
amount set by this Board is deemed a
compliance."
The appellate court said that the Wage Order
exempted from compliance those
enterprises already paying salaries equal to
or more than the prescribed minimum
wage; thus, the Order effectively made the
previous voluntary increases given by
respondent to its employees creditable
against the law-mandated increase.
Consequently, there was no need for the
Collective Bargaining Agreement (CBA) to
provide expressly for such creditability.
ISSUE: WON Norkis Company violated the CBA in its
refusal to grant its employees an across-the-board increase
as a result of the passage of Wage Order No. ROVII-06.
RULING: NO.
Petitioner insists that respondent should have granted to
the employees the increase stated in Wage Order No.
ROVII-06. In addition to the increases both parties had
mutually agreed upon, the CBA supposedly imposed upon
respondent the obligation to implement the increases
mandated by law without any condition or qualification. To
support its claim, petitioner repeatedly invokes Section 2 of
Article XII of the CBA, which reads:
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Labor Relations
Case Digest Compilation
"SECTION 2. Minimum Wage Law Amendment. In the
event that a law is enacted increasing minimum wage,
an across-the-board increase shall be granted by the
Company according to the provisions of the law."
Interestingly, petitioner disregards altogether in its
argument the qualifying phrase "according to the provisions
Norkis of the law" and merely focuses its attention on the "across-
the-board increase" clause. Given the entire sentence, it
is clear that the above-quoted CBA provision does not
support the unyielding view of petitioner that the
issuance of Wage Order No. ROVII-06 entitles its
members to an across-the-board increase, absolutely
and without any condition.
Stipulations in a contract must be read together, not
in isolation from one another. When the terms of its
clauses are clear and leave no room for doubt as to
the intention of the contracting parties, it would not
be necessary to interpret those terms, whose literal
meanings should prevail.
The CA correctly observed that the import of Wage Order
No. ROVII-06 should be considered in the implementation
of the government-decreed increase
Intent of the Wage Order No. ROVII-06
The issue here is not about creditability, but the
applicability of Wage Order No. ROVII-06 to respondent's
employees. The Wage Order was intended to fix a new
minimum wage only, not to grant across-the-board
wage increases to all employees in Region VII.
The intent of the Order is indicated in its title, "Establishing
New Minimum Wage Rates," as well as in its preamble: the
purpose, reason or justification for its enactment was "to
adjust the minimum wage of workers to cushion the impact
brought about by the latest economic crisis not only in the
Philippines but also in the Asian region."
In Cagayan Sugar Milling Company v. Secretary of Labor
and Employment 14 and Manila Mandarin Employees Union
v. NLRC, the Wage Orders that were the subjects of those
cases were substantially and similarly worded as Wage
Order No. ROVII-06. In those cases, this Court construed
the Orders along the same line that it follows now: as
providing for an increase in the prevailing statutory
minimum wage rates of workers. No across-the-board
increases were granted.
CBA not an ordinary contract
The CBA is no ordinary contract, but one impressed with
public interest. Therefore, it is subject to special orders on
wages, such as those issued by the RTWPB.
In Capitol Wireless v. Bate, the union in that case claimed
that all government-mandated increases in salaries should
be granted to all employees across-the-board without any
qualification whatsoever, pursuant to the CBA provision that
any government-mandated wage increases should be over
and above the benefits granted in the CBA.
The Court denied such claim and held that the provisions of
the Agreement should be read in harmony with the Wage
Orders. Applying that ruling to the present case, we hold
that the implementation of a wage increase for
respondent's employees should be controlled by the
stipulations of Wage Order No. ROVII-06.
The employees are not entitled to the claimed salary
increase, simply because they are not within the coverage
of the Wage Order, as they were already receiving salaries
greater than the minimum wage fixed by the Order.
Concededly, there is an increase necessarily resulting from
raising the minimum wage level, but not across-the-board.
9
 Labor Relations
Case Digest Compilation
Indeed, a "double burden" cannot be imposed upon an
employer except by clear provision of law. It would be
unjust, therefore, to interpret Wage Order No. ROVII-06 to
mean that respondent should grant an across-the-board
increase. Such interpretation of the Order is not sustained
by its text.
Two methods of adjusting the minimum wage
In Employers Confederation of the Phils. v. National Wages
and Productivity Commission, these were identified as the
"floor wage" and the "salary-ceiling" methods.
The "floor wage" method involves the fixing of a
determinate amount to be added to the prevailing statutory
minimum wage rates. On the other hand, in the "salary-
ceiling" method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling.
In other words, workers already being paid more than the
existing minimum wage (up to a certain amount stated in
the Wage Order) are also to be given a wage increase.
A cursory reading of the subject Wage Order convinces us
that the intention of the Regional Board of Region VII was
to prescribe a minimum or "floor wage"; not to determine a
"salary ceiling." Had the latter been its intention, the Board
would have expressly provided accordingly.
The provision in the wage order show that the prescribed
minimum wage after full implementation of the P10
increase in the Wage Order is P165 for Class A private non-
agriculture sectors. It would be reasonable and logical,
therefore, to infer that those employers already paying their
employees more than P165 at the time of the issuance of
the Order are sufficiently complying with the Order.
HONGKONG BANK INDEPENDENT LABOR UNION
(HBILU) vs HSBC
G.R. No. 218390 FEBRUARY 28, 2018
FACTS:In 2001, the Bangko Sentral ng Pilipinas (BSP)
issued the Manual of Regulations for Banks (MoRB).
Relevant to the instant case is Section X338 thereof which
reads:
Banks may provide financial assistance to their
officers and employees, as part of their fringe
benefits program, to meet housing,
transportation, household and personal needs of
their officers and employees. Financing plans and
amendments thereto shall be with prior approval
of the BSP. (emphasis added)
Pursuant to the above-cited provision, respondent
Hongkong and Shanghai Banking Corporation Limited
(HSBC), on March 12, 2003, submitted its Financial
Assistance Plan (Plan) to the BSP for approval, which
contained a credit checking proviso stating that
"[r]epayment defaults on existing loans and adverse
information on outside loans will be considered in the
evaluation of loan applications." The BSP approved the
Plan on May 5, 2003.2 Said Plan was later amended thrice,
all of which amendments were approved by the BSP.
Meanwhile, petitioner Hongkong Bank Independent
Labor Union (HBILU), the incumbent bargaining
agent of HSBC's rank-and-file employees, entered
into a CBA with the bank covering the period from
April 1, 2010 to March 31, 2012. Pertinent to the instant
petition is Article XI thereof, which reads:
Salary Loans
Section 1. Housing/house Improvement
Loan. The BANK, or other financial institution
when appropriate, shall extend housing loan to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
qualified employees with at least three (3) YEARS
OF SERVICE, UP TO One Million Five Hundred
Thousand Pesos (₱l,500,000.00) payable in
twenty-five (25) years or up to the retirement
date of the employee, whichever comes first.
Subject to BSP approval, an additional Five
Hundred Thousand Pesos (₱500,000.00) can be
availed subject to the terms above with interest
rate at the BLR less 3% but not less than six
percent (6%) per annum.
Section 2. Personal Loans. The BANK, or the
Retirement Trust Fund Inc. or other financial
institutions, when appropriate, shall extend
personal loan to qualified employees, with at
least 1 year service, up to six months basic pay
of the employees at six percent (6%) interest per
annum, payable in three years.
Section 3. Car Loans. The BANK, or the
Retirement Trust Fund Inc. or other financial
institutions when appropriate, shall extend a car
loan to qualified employees with at least 3 years
service up to Five Hundred Fifty Thousand Pesos
(PHP550,000.00) payable in seven (7) years.
Interest rate shall be six percent (6%) per
annum.
Section 4. Credit Ratio. The availment of any
of the foregoing loans shall be subject to the
BANK's credit ratio policy.
When the CBA was about to expire, the parties started
negotiations for a new one to cover the period from
April 1, 2012 to March 31, 2017. During the said
negotiations, HSBC proposed amendments to the above-
quoted Article XI allegedly to align the wordings of the CBA
with its BSP-approved Plan. Particularly, HSBC proposed
the deletion of Article XI, Section 4 (Credit Ratio) of
the CBA, and the amendment of Sections 1 to 3 of the
same Article to read as follows:
Salary Loans
Section 1. Housing/house Improvement
Loan. Based on the Financial Assistance Plan
duly approved by Bangko Sentral ng Pilipinas
(BSP), the BANK, or other financial institution
when appropriate, shall extend housing loan to
qualified employees with at least three (3) YEARS
OF SERVICE UP TO One Million Five Hundred
Thousand Pesos (₱l,500,000.00) payable in
twenty-five (25) years or up to the retirement
date of the employee, whichever comes first,
subject to employee's credit ratio. An additional
Five hundred thousand Pesos (₱500,000.00) can
be availed subject to the terms above with
interest rates at the BLR less 3% but not less
than six percent (6%) per annum.
Section 2. Personal Loans. Based on the
financial Assistance Plan duly approved by
Bangko Sentral ng Pilipinas (BSP), the BANK, or
other financial institutions when appropriate,
shall extend personal loan to qualified
employees, with at least 1 year service, up to six
months basic pay of the employees at six percent
(6%) interest per annum, payable in three (3)
years, subject to employee's credit ratio.
Section 3. Car loans. Based on the Financial
Assistance Plan duly approved by Bangko Sentral
ng Pilipinas (BSP), the BANK, or other financial
institutions when appropriate, shall extend a car
loan to qualified employees with at least three
years service, up to Five Hundred Fifty Thousand
Pesos (PHP550,000.00) payable in seven (7)
years. Interest rate shall be six percent (6%) per
annum. (emphasis added)
10
 Labor Relations
Case Digest Compilation
HBILU’s objections to the amendment
Their insertions would curtail its members' availment of
salary loans. This, according to the Union, violates the
existing exceptions set forth in BSP Circular 423,
Series of 2004, and Section X338.3 of the MoRB. In
view of HBILU's objection,
HSBC withdrew its proposed amendments and,
consequently, Article XI remained unchanged.
Despite the withdrawal of the proposal, HSBC sent an e-
mail to its employees on April 20, 2012 concerning the
enforcement of the Plan, including the Credit Checking
provisions thereof. The e-mail reads:
Dear All
We wish to reiterate the following provisions
included in the Financial Assistance Plan (F AP)
as approved by Bangko Sentral ng Pilipinas
(BSP). Note that the F AP is the official guideline
and policy governing Staff Loans and Credit
Cards.
>>>>CREDIT CHECKING
Below are the specific provisions included in the F
AP regarding credit checking.
Housing Loan, Car Loan, Personal Loan &
Computer/Club Membership/Medical Equipment
Loan Repayment defaults on existing
loans and adverse information considered in the
evaluation of loan applications.
Credit Card Repayment defaults on existing
loans and adverse information considered in the
evaluation of loan applications.
With the strict implementation of these
provisions, adverse credit findings may result to
disapproval of loan or credit card applications.
These findings will include the following:
(1) Frequency of confirmed ADA failure on
staff/commercial loans and credit cards (3
consecutive incidents within the past 6 months or
6 incidents within the past 12 months). Note that
applications with pending ADA for investigation
will only be processed upon confirmation of
status (Confirmed or Reprieved);
(2) Adverse findings on HSBC cards; or
(3) Adverse findings from external credit checks.
Thereafter, HBILU member Vince Mananghaya
(Mananghaya) applied for a loan under the provisions
of Article XI of the CBA. His first loan application in March
2012 was approved, but adverse findings from the external
checks on his credit background resulted in the denial of his
September application.
HBILU then raised the denial as a grievance issue with the
National Conciliation Mediation Board (NCMB). It argued
that the imposition of an additional requirement-the
external credit checking prior to approval of any loan
application under Article XI of the CBA-is not sanctioned
under the CBA. The Union emphasized that under the
terms of Article XI, there is no such requirement and
that it cannot, therefore, be unilaterally imposed by
HSBC.
HSBC’S JUSTIFICATION OF DENIAL
The external credit check conducted in line with
Mananghaya's loan application was merely an
implementation of the ESP-approved Plan. The adoption of
the Plan, HSBC stressed, is a condition sine qua non for any
loan grant under Section X338 of the MoRB. Moreover, the
Credit Check policy has been in place since 2003, and is a
sound practice in the banking industry to protect the
interests of the public and preserve confidence in banks.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
The issue was then submitted for resolution by the NCMB
Panel of Accredited Voluntary Arbitrators (the Panel). In the
interim, the parties, on September 29, 2012, inked a
new CBA for the period covering April 1, 2012 up to
March 31, 2017.
NCMB-PVA Decision
It held that herein respondent, as an employer, has the
right to issue and implement guidelines for the availment of
loan accommodations under the CBA as part of its
management prerogative. The repeated use of the term
"qualified employees" in Article XI of the CBA was deemed
indicative of room for the adoption of further guidelines in
the availment of the benefits thereunder. The Panel also
agreed that HSBC's Plan is not a new policy as it has
already been approved by the BSP as early as 2003. Thus,
the Panel ruled that the salary loan provisions under
Article XI of the CBA must be read in conjunction with
the provisions of the Plan.
The Panel further discussed that HSBC's adoption of the
Plan was not done for any whimsical or arbitrary reason,
but because the bank was constrained to comply with
Section X338 of the MoRB. As a banking institution, HSBC
cannot divorce itself from the regulatory powers of the BSP.
Observance of Section X338 of the MoRB was then
necessary before the bank could have been allowed to
extend loan accommodations to its officers and employees.
On the basis thereof, the Panel held that they are not
ready to rule that HSBC's Plan violates Article XI of
the CBA.
CA Decision
Sustained the findings and conclusions of the NCMB-PV A in
toto on the ratiocination that HSBC was merely
complying with Section X338 of the MoRB when it
submitted the Plan to BSP. When BSP, in turn, approved
the said Plan, HSBC became legally bound to enforce its
provisions, including the conduct of external credit checks
on its loan applicants. The appellate court further ruled that
the Plan should be deemed incorporated in the CBA because
it is a regulatory requirement of BSP without which the
salary loan provisions of the CBA are rendered inoperative.
Arguments of Petitioner
HBILU argues that HSBC failed to present in court the Plan
that was supposedly submitted to the BSP for approval, and
to show that the requirement of external credit checking
had already been included therein. Too, said Plan is not a
set of policies for salary loans that came from the BSP, but
was devised solely by HSBC.
Furthermore, HBILU claims that it is not privy to the Plan
and has not been consulted, much less informed, of the
impositions therein prior to its implementation. No proof
was offered that the Plan had been disseminated to the
employees prior to the April 20, 2012 e-mail blast.
Lastly, the implementation of the Plan, according to HBILU,
is tantamount to diminution of benefits16 and a unilateral
amendment of the existing CBA, which are both proscribed
under the Labor Code. Had the parties to the CBA intended
to include the external credit check as an additional
condition to the availment of employee salary loans, then it
should have been plainly provided in their agreement.
Arguments of Respondent
HSBC claims that the Plan is neither new nor was it issued
on a mere whim or caprice. On the contrary, the Plan was
established as early as 2003, way before Mananghaya's
application was denied, to conform to Section X338 of the
BSP MoRB. HSBC reminds the Court that the loan and credit
accommodations could have only formed part of the
employees' fringe benefit program if they were extended
11
 Labor Relations
Case Digest Compilation
through a financing scheme (i.e., the Plan) approved by the
BSP.
Moreover, HSBC argues that the dissemination of the Plan
via e-mail blast on April 20, 2012 was but a reiteration, as
opposed to a first publication. It contends that even prior to
the establishment and approval of the Plan in 2003, the
then-loan policy already included the requirement on
external credit checking. According to the bank, there was
already a provision that required the conduct of credit
checking in the processing and evaluation of loan
applications in their General Policies on Loans, cascaded
through the Intranet system to HSBC employees on October
24, 2002, viz:
CREDIT CHECKING
Repayment defaults on existing loans and
adverse information on outside loans will be
considered m the evaluation of loan applications.
The union members cannot then feign ignorance
of the external credit checking requirement in
staff loan applications, according to HSBC.
Consequently, petitioner's bare denial of any
knowledge about it cannot be given any
credence. Considering too that the Plan
reiterating the requirement has been approved
by the BSP in 2003, HBILU slept on its rights
when it questioned its strict imposition almost a
decade after its issuance.
Finally, HSBC postulates that the non-mention of the Plan in
the CBA is no justification for the bank to disregard the
same in processing employee loan applications. Provisions
of applicable laws, especially those relating to matters
affected with public policy, are deemed written into the
contract.
ISSUE: Whether or not HSBC could validly enforce the
credit-checking requirement under its BSP-approved Plan in
processing the salary loan applications of covered
employees even when the said requirement is not
recognized under the CBA.
RULING: NO.
The CBA is the law between the parties and they are
obliged to comply with its provisions.
Unilateral amendments to the CBA violate Article 253
(now Art 273) of the Labor Code
A collective bargaining agreement or CBA is the negotiated
contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit.
As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may
deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus,
where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance
therewith is mandated by the express policy of the
law.
In Faculty Association of Mapua Institute of Technology
(FAMJT) v. Court of Appeals, this Court was emphatic in its
pronouncement that the CBA during its lifetime binds all the
parties. The provisions of the CBA must be respected since
its terms and conditions constitute the law between the
parties. And until a new CBA is executed by and between
the parties, they are duty-bound to keep the status quo and
to continue in full force and effect the terms and conditions
of the existing agreement. This finds basis under Article 253
of the Labor Code, which states:
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
ARTICLE 253. Duty to bargain collectively when
there exists a collective bargaining agreement. -
When there is a collective bargaining agreement,
the duty to bargain collectively shall also mean
that neither party shall terminate nor modify
such agreement during its lifetime. x x x It shall
be the duty of both parties to keep the status
quo and to continue in full force and effect the
terms and conditions of the existing agreement
during the 60-day period and/or until a new
agreement is reached by the parties.
In the present controversy, it is clear from the
arguments and evidence submitted that the Plan was
never made part of the CBA. As a matter of fact,
HBILU vehemently rejected the Plan's incorporation
into the agreement. Due to this lack of consensus, the
bank withdrew its proposal and agreed to the
retention of the original provisions of the CBA. The
subsequent implementation of the Plan's external
credit check provisions in relation to employee loan
applications under Article XI of the CBA was then an
imposition solely by HSBC.
In this respect, this Court is of the view that tolerating
HSBC's conduct would be tantamount to allowing a
blatant circumvention of Article 253 of the Labor
Code. It would contravene the express prohibition
against the unilateral modification of a CBA during its
subsistence and even thereafter until a new
agreement is reached. It would unduly license HSBC
to add, modify, and ultimately further restrict the
grant of Salary Loans beyond the terms of the CBA by
simply adding stringent requirements in its Plan, and
having the said Plan approved by BSP in the guise of
compliance with the MoRB.
As to HSBC’s defense
HSBC' s defense, that there was no modification of the CBA
since the external credit check has been a long-standing
policy of the Bank applied to all of its employees, is
unconvincing. Noteworthy is that the bank failed to submit
in evidence the very Plan that was supposedly approved by
the BSP in 2003. Nevertheless, even if We were to rely on
the later versions of the Plan approved by the BSP, Our
ruling will not change.
The only provision relative to the credit checking
requirement under the 2006 and 2011 Plans is this and
nothing else:
CREDIT CHECKING
Repayment defaults on existing loans and adverse
information on outside loans will be considered in the
evaluation of loan applications
As for the manner in which said credit checking will be
done, as well as any additional requirements that will be
imposed for the purpose, the 2006 Plan and even its later
2011 version are silent thereon. Nowhere in these Plans can
We find the requirement for the submission of an "Authority
to Conduct Checks Form," as well as the details on adverse
credit finding, specifically:
With the strict implementation of these provisions, adverse
credit findings may result to disapproval of loan or credit
card applications. These findings will include the following:
(1) Frequency of confirmed ADA failure on staff/commercial
loans and credit cards (3 consecutive incidents within the
past 6 months or 6 incidents within the past 12 months).
Note that applications with pending ADA for investigation
will only be processed upon confirmation of status
(Confirmed or Reprieved);
(2) Adverse findings on HSBC cards; or
(3) Adverse findings from external credit checks.26
12
 Labor Relations
Case Digest Compilation
In fact, regrettably, HSBC's only documentary basis for
proving that the credit checking requirement and the
manner of its enforcement have been set in place much
earlier is the use of the term "reiterate" in its April 20, 2012
e-mail.
New Imposition By HSBC
The external credit check as well as the manner of its
enforcement is a new imposition by HSBC is the fact that
the bank made no attempt to rebut HBILU's evidence that
the former's requirements for the grant of salary loans
changed only after the April 20, 2012 email blast. HBILU
sufficiently proved that prior to the April 20, 2012 email,
members of the bargaining unit were using only four (4)
documents in applying for a loan, to wit: 1) Application for
Personal Loan Form; 2) Authority to Deduct Form; 3) Set-
Off of Retirement Fund Form; and 4) Promissory Note
Form.28 Thereafter, management imposed a new set of
requirements, which includes the "Authority to Conduct
Checks Form." As testified to by Mananghaya, he only
signed the first four (4) requirements for his March 2012
loan. However, for the September 2012 loan, he was asked
to complete a new set of documents which included the
Authority to Conduct Checks Form. Too, even the email
itself states that said credit checking requirement, among
others, is to be strictly enforced effective May 2012.
Though HSBC claims that credit checking has been
the bank's long-standing policy, it failed to show that
it indeed required such before its covered employees
could avail of a salary loan under the CBA prior to
April 20, 2012-the date of the email blast.
Thus, no other conclusion can be had in this factual milieu
other than the fact that HSBC's enforcement of credit
checking on salary loans under the CBA invalidly
modified the latter's provisions thereon through the
imposition of additional requirements which cannot
be found anywhere in the CBA.
If it were true that said credit checking under the Plan
covers salary loans under the CBA, then the bank should
have negotiated for its inclusion thereon as early as the
April 1, 2010 to March 31, 2012 CBA which it entered into
with HBILU. However, the express provisions of said CBA
inked by the parties clearly make no reference to the Plan.
And even in the enforcement thereof, credit checking was
not included as one of its requirements. This leads Us to
conclude that HSBC originally never intended the credit
checking requirement under the Plan to apply to
salary loans under the CBA. At most, its application
thereto is a mere afterthought, as evidenced by its
sudden, belated, and hurried enforcement on said
salary loans via the disputed email blast.
In other words, it appears that, based on its actuations,
HSBC never intended to apply the credit checking
item under the Plan to salary loans under the CBA.
Otherwise, it would have enforced such requirement from
the moment the salary loans provisions under the old CBA
were implemented, which it did not. It may be that said
requirement was being applied to other types of loans
under the Plan, but based on the evidence presented, We
cannot say the same for salary loans under the CBA.
The minority argues that primacy is being accorded to the
CBA over the Plan approved by the BSP. Such, however, is
not the case. We are not saying that the Plan should yield
to the CBA. The point that we are driving at in this lengthy
discussion is that on the basis of the evidence presented,
We are convinced that the credit checking provision
of the Plan was never intended to cover salary loans
under the CBA. Otherwise, HSBC would have
implemented such the moment said salary loans
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
under the previous CBA were made available to its
covered employees. Thus, HSBC cannot now insist on
its imposition on loan applications under the disputed
CBA provision without violating its duty to bargain
collectively.
Salary loans subject of this case are not covered by
the
credit checking requirement under the MORB
In maintaining that the credit checking requirement under
the MoRB should be deemed written into the CBA, the
minority makes reference to Sec. X304.1 of the 2011 MoRB
in maintaining that financial institutions must look into the
obligor' s repayment history, among other things, before
approving a loan application. Said provision reads:
§ X304. l General guidelines. Consistent with
safe and sound banking practices, a bank shall
grant loans or other credit accommodations only
in amounts and for the periods of time essential
for the effective completion of the operation to
be financed. Before granting loans or other credit
accommodations, a bank must ascertain that the
borrower, co-maker, endorser, surety, and/or
guarantor, if applicable, is/are financially capable
of fulfilling his/their commitments to the bank.
For this purpose, a bank shall obtain adequate
information on his/their credit standing and
financial capacities x x x.
At this point it is well to draw attention to the fact that said
provision is a general one as specifically indicated thereat.
It is also equally important to emphasize that Sec. X304.1
must be interpreted in conjunction with Section X338.3, the
provision which specifically applies to salary loans under the
fringe benefit program of the bank.
In specifying that "[a]ll loans or other credit
accommodations to bank officers and employees, except
those granted under the fringe benefit program of the bank,
shall be subject to the same terms and conditions imposed
on the regular lending operations of the bank," Sec. X338.3
clearly excluded loans and credit accommodations under
the bank's fringe benefits program from the operation of
Sec. X304.1. This fact is even recognized in the dissent. To
ignore this clear exception and insist on interpreting the
general guidelines under Section X304.1 would be to renege
from Our duty to apply a clear and unambiguous
provision.32
It may also be argued that HSBC, being a bank, is
statutorily required to conduct a credit check on all of its
borrowers, even though it be made under a loan
accommodation scheme, applying Section 4033 of Republic
Act No. (RA) 8791 (General Banking Law of 2000). A
reading of RA 8791, however, reveals that loan
accommodations to employees are not covered by said
statute. Nowhere in the law does it state that its provisions
shall apply to loans extended to bank employees which are
granted under the latter's fringe benefits program. Had the
law intended otherwise, it could have easily specified such,
similar to what was done for directors, officers, stockholders
and their related interests under Section 36 thereof. This
conclusion is supported by the very wording of Subsection
X338.3 of the MORE. To reiterate:
Notably, even though the provision covers loans
extended to both bank officers and employees,
paragraph 3 thereof singled out loans and credit
accommodations granted to officers when it provided
for the applicability of RA 8791.
We cannot subscribe to HSBC's position that its
imposition of the credit checking requirement on
salary loans granted under the CBA is valid. The
13
 Labor Relations
Case Digest Compilation
evidence presented convinces Us to hold that the
credit checking requirement imposed by HSBC under
the questioned Plan which effectively and
undoubtedly modified the CBA provisions on salary
loans was a unilateral imposition violative of HSBC's
duty to bargain collectively and, therefore, invalid.
HSBC miserably failed to present even an iota of
concrete documentary evidence that the credit
checking requirement has been imposed on salary
loans even before the signing of the CBA subject of
the instant dispute and that the Plan was sufficiently
disseminated to all concerned. In contrast, HBILU
sufficiently proved that HSBC violated its duty to
bargain collectively under Article 253 of the Labor
Code when it unilaterally restricted the availment of
salary loans under Article XI of the CBA on the excuse
of enforcing the Plan approved by the BSP.
As this Court emphasized in Philippine Airlines, Inc. v.
NLRC, industrial peace cannot be achieved if the employees
are denied their just participation in the discussion of
matters affecting their rights, more so in the case at bar
where the employees have been led to believe that they
were given the chance to participate in HSBC's policy-
formulation with respect to the subject benefit, only to find
out later that they would be deprived of the fruits of said
involvement.
On interpretation of CBAs
At this point, We deem it proper to recall the basics in
resolving issues relating to the provisions and enforcement
of CBAs. In United Kimberly-Clark Employees Union
Philippine Transport General Workers Organization (UKCEU-
PTGWO) v. Kimberly-Clark Philippines, Inc., this Court
emphasized that:
As a general proposition, an arbitrator is confined to the
interpretation and application of the collective
bargaining agreement. He does not sit to dispense his
own brand of industrial justice: his award is
legitimate only in so far as it draws its essence from
the CBA, i.e., when there is a rational nexus between
the award and the CBA under consideration
If the terms of a CBA are clear and [leave] no doubt
upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail.
However, if, in a CBA, the parties stipulate that the
hirees must be presumed of employment qualification
standards but fail to state such qualification
standards in said CBA, the VA may resort to evidence
extrinsic of the CBA to determine the full agreement
intended by the parties. When a CBA may be expected
to speak on a matter, but does not, its sentence
imports .ambiguity on that subject.
The VA is not merely to rely on the cold and cryptic words
on the face of the CBA but is mandated to discover the
intention of the parties. Recognizing the inability of the
parties to anticipate or address all future problems, gaps
may be left to be filled in by reference to the practices of
the industry, and the step which is equally a part of the CBA
although not expressed in it. In order to ascertain the
intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered The VA
may also consider and rely upon negotiating and
contractual history of the parties, evidence of past practices
interpreting ambiguous provisions. The VA has to examine
such practices to determine the scope of their agreement,
as where the provision of the CBA has been loosely
formulated. Moreover, the CBA must be construed liberally
rather than narrowly and technically and the Court must
place a practical and realistic construction upon it.36
(emphasis ours)
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Zuellig v. Sibal
July 15, 2013
Facts:
Petitioner Zuellig Pharma Corporation (Zuellig) is a
domestic corporation engaged in the manufacture and
distribution of pharmaceutical products. It also distributes
pharmaceutical products manufactured by other companies
like Syntex Pharmaceuticals (Syntex). Respondents (36 in
all), on the other hand, were the employees of Zuellig at
its Syntex Division.
In 1995, Roche Philippines, Inc. (Roche) purchased Syntex
and took over from Zuellig the distribution of Syntex
products. Consequently, Zuellig closed its Syntex Division
and terminated the services of respondents due to
redundancy. They were properly notified of their
termination and were paid their respective separation pay
in accordance with Section 3(b), Article XIV of the
March 21, 1995 Collective Bargaining Agreement
(CBA) for which, respondents individually signed Release
and Quitclaim in full settlement of all claims arising from
their employment with Zuellig.
Thereafter, respondents filed before  the Arbitration Branch
of the NLRC separate Complaints (which were later
consolidated) for payment of retirement gratuity and
monetary equivalent of their unused sick leave on top
of the separation pay already given them. Respondents
claimed that they are still entitled to retirement benefits
and that their receipt of separation pay and execution of
Release and Quitclaim do not preclude pursuing such claim.
Labor Arbiter’s Decision: denied respondents’ claims.
He opined that only employees whose separation from
employment was brought about by sickness, death,
compulsory or optional retirement, or resignation are
entitled to gratuity pay. However, employees whose
separation from employment was by reason of redundancy
are not entitled to the monetary equivalent of their unused
sick leave if cessation from employment was caused by
redundancy.
NLRC: affirmed the Decision of the Labor Arbiter.
The respondents filed a petition for certiorari before the
Court of Appeals.
CA’s Decision: granted respondents’ Petition and nullified
the Decisions of both the Labor Arbiter and the NLRC.
Relying on the case of Aquino v. National Labor
Relations Commission, the CA ruled that since there is
nothing in the CBA which expressly prohibits the grant of
both benefits, those who received separation pay are,
therefore, still entitled to retirement gratuity.
The CA also took note of Section 5, Article V of Zuellig’s
January 1, 1968 Retirement Gratuity Plan, which
provides that an employee who may be separated from the
service for any cause not attributable to his or her own fault
or misconduct shall be entitled to full retirement benefits.
Since the cause of respondents’ separation from work
was redundancy, the CA ordered Zuellig to pay
respondents retirement gratuity and the monetary
equivalent of their unused sick leave on top of the
redundancy pay previously granted to them. 
Zuellig moved for reconsideration, which was denied.
So, it filed a petition for review on certiorari before the
Supreme Court.
14
 Labor Relations
Case Digest Compilation
Zuellig’s contentions:
In the absence of contractual prohibition, payment of both
separation pay and retirement pay may be allowed as ruled
by this Court in Aquino. Nonetheless, it asserts that Aquino
is not applicable in this case.
It explains that in Aquino, the parties’ CBA incorporates by
reference a retirement plan agreed upon by the parties
prior to the execution of the CBA.
On the other hand, Zuellig insists that in this case, Section
2, Article XIV of the parties’ CBA prohibits the
recovery of both retirement gratuity and severance
pay.
In addition, Section 2, Article VII of the Retirement and
Gratuity Plan likewise expressly limits the benefits the
employees may receive to their choice between (i) the
benefits enumerated therein and (ii) separation pay or
other benefits that Zuellig may be required by law or
competent authority to pay them.
In any event, Zuellig further argues that respondents are
not qualified to receive early retirement benefits as none of
them resigned from the service, have reached the
retirement age of 60 or have been in the employ of Zuellig
for at least 25 years as required by Section 1(b), Article XIV
of the CBA.
Respondent’s contentions:
There is nothing in the CBA which categorically
prohibits the recovery of retirement benefits in
addition to separation pay.
They assert that Section 2, Article XIV of the CBA alluded to
by Zuellig does not constitute as an express prohibition that
would foreclose recovery of retirement gratuity after the
employees had received redundancy pay. Hence, following
the ruling of this Court in Aquino, they are entitled to said
retirement gratuity.
With regard to Zuellig’s contention that retirement benefits
can be extended only to those who resigned, respondents
echo the observation of the CA that since their separation
from employment was due to a cause beyond their control,
they cannot be considered to have exclusively chosen
separation pay and abandoned their right to retirement
gratuity. To bolster their point, respondents cite Section 5,
Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel,
who may be separated from the service of the
Company for any cause not attributable to his own
fault or misconduct shall be entitled to full benefits
as provided for under Article V, Sections 1 and 2
above, provided, however, that any employee,
executive or supervisory personnel separated for
cause shall not be entitled to any benefit as
provided for under said Article V, Sections 1, 2 and
3.
Zuellig’s counter-argument:
Nothing prevented respondents from resigning to make
them eligible to receive retirement gratuity. They had
ample time to decide whether to resign or to accept
redundancy pay. But they chose redundancy pay over early
retirement benefits because they knew they would be
getting more. As to respondents’ reliance on Section 5,
Article V, in relation to Sections 1 and 2, of the Retirement
Gratuity Plan, Zuellig posits that the same cannot prevail
over Section 2, Article XIV of the CBA.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Issue: Whether or not it was proper for the CA to rule that
the respondents could avail of both redundancy pay and
retirement benefits under the terms and conditions of the
CBA and the Retirement and Gratuity Plan. NO
Ruling: The CBA does not allow recovery of both separation
pay and retirement gratuity.
In Aquino, the petitioner employees were retrenched after
their employer Otis Elevator Company (Otis) adopted cost-
cutting measures and streamlined its operations. They were
thus given separation pay double the amount required by
the Labor Code. Subsequently, however, the employees
filed a claim for retirement benefits, alleging entitlement
thereto by virtue of the Retirement Plan. Otis denied the
claim by asserting that separation pay and retirement
benefits are mutually exclusive of each other; hence,
acceptance of one bars recovery of the other. When the
case reached its final review, this Court held that in the
absence of specific prohibition in the retirement plan or the
CBA, retirement benefits and separation pay are not
mutually exclusive of each other and the employees whose
services were terminated without cause are entitled to both
separation pay and retirement gratuity.
In the present case, the CBA contains specific
provisions which effectively bar the availment of
retirement benefits once the employees have chosen
separation pay or vice versa. 
Section 2 of Article XIV of the CBA: Employees who
were separated from the company cannot have both
retirement gratuity and separation pay as there is
only one fund from which said benefits would be
taken.
Section 2 of Article XIV of the CBA explicitly states that
any payment of retirement gratuity shall be chargeable
against separation pay. Clearly, respondents cannot
have both retirement gratuity and separation pay, as
selecting one will preclude recovery of the other.
To illustrate the mechanics of how Section 2 of Article XIV
bars double recovery, if the employees choose to retire,
whatever amount they will receive as retirement gratuity
will be charged against the separation pay they would have
received had their separation from employment been for a
cause which would entitle them to severance pay. These
causes are enumerated in Section 3, Article XIV of the CBA
(i.e., retrenchment, closure of business, merger,
redundancy, or installation of labor-saving device).
However, if the cause of the termination of their
employment was any of the causes enumerated in said
Section 3, they could no longer claim retirement gratuity as
the fund from which the same would be taken had already
been used in paying their separation pay.
Put differently, employees who were separated from
the company cannot have both retirement gratuity
and separation pay as there is only one fund from
which said benefits would be taken. Inarguably, Section
2 of Article XIV effectively disallows recovery of both
separation pay and retirement gratuity. Consequently,
respondents are entitled only to one. Since they have
already chosen and accepted redundancy pay and have
executed the corresponding Release and Quitclaim, they are
now barred from claiming retirement gratuity.
There is also nothing in the CBA which would indicate
that those employees whose services were
terminated by reason of redundancy are entitled to
retirement gratuity.
15
 Labor Relations
Case Digest Compilation
In Suarez, Jr. v. National Steel Corporation, the same
issue cropped up – whether the retrenched employees are
entitled to retirement gratuity even after they have
received their separation pay in accordance with the
retrenchment program of the company. In ruling in the
negative, this Court observed that Sections 1 and 3 of
Article XIV on Retirement Benefits of the CBA separately
provide for retirement benefits and severance pay for
retrenched employees.
A perusal of Article XIV of the parties’ 1994-1996 CBA
readily shows nowhere can it be deduced from the CBA that
those employees whose employment was terminated
through one of the authorized causes are entitled to
retirement benefits.
Similarly, in this case, there is also nothing in the CBA
which would indicate that those employees whose
services were terminated by reason of redundancy
are entitled to retirement gratuity. As in Suarez,
Sections 1 and 3 of Article XIV of the CBA of the parties
herein separately provide for the amount of benefits to be
received by retired employees on the one hand and those
who were terminated due to retrenchment, closure of
business, merger, redundancy, or installation of labor-
saving device on the other. In short, Sections 1 and 3
clearly spell out the difference in the treatment of
employees who retired as provided in Section 1 and those
who were constrained to leave the company due to any of
the causes enumerated in Section 3. Such difference in the
treatment, as well as in the corresponding pay or gratuity,
indicates the parties’ intention to exclude retired employees
from receiving separation pay and vice versa. A contrary
construction would distort the clear intent of the parties and
render useless the classification specifically spelled out in
the CBA.
The same ruling was arrived at in Salomon v. Associate
of International Shipping Lines, Incorporated.  This
Court held that, as prescribed by the CBA, the employees
are entitled only to either separation pay, if they are
terminated for cause, or optional retirement benefits, if
they rendered at least 15 years of continuous service. Since
they were separated from the service for cause, the
employees are entitled to separation pay only.
The Retirement Gratuity Plan Provides that
employees are entitled only either to separation pay
or retirement gratuity.
The CA opined that since respondents were not at fault and
had nothing to do with their separation from the company
by reason of redundancy, they are therefore entitled to full
retirement benefits. It anchored its conclusion on Section 5
of Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel,
who may be separated from the service of the
Company for any cause not attributable to his own
fault or misconduct shall be entitled to full benefits
as provided for under Article V, Sections 1 and 2
above, provided, however, that any employee,
executive or supervisory personnel separated for
cause shall not be entitled to any benefit as
provided for under said Article V, Sections 1, 2 and
3.
However, the same Retirement Gratuity Plan provides
that in case Zuellig is required by law or by lawful order to
pay separation pay, its employees shall not be entitled to
both separation pay and the benefits provided therein. The
employees are entitled only either to separation pay or
retirement gratuity, depending on their own choice. But
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
they cannot have both. Section 2, Article VII of the
Retirement Gratuity Plan on Effect of Social Legislation is
clear on the matter.
Having chosen and accepted redundancy pay,
respondents are thus precluded from seeking
payment of retirement pay.
Section 5, Article V of the 1968 Retirement Gratuity
Plan was already superseded by Section 2, Article XIV
of the 1995 CBA.
Moreover, as correctly pointed out by Zuellig, Section 5,
Article V of the 1968 Retirement Gratuity Plan was already
superseded by Section 2, Article XIV of the 1995 CBA, a
much later contract which reiterates the express prohibition
against "double recovery." In addition, unlike in Aquino
where the employees have served the company for at least
ten years making them eligible for retirement, none of the
respondents herein appear to be qualified for optional
retirement. Under Section 1[a] and [b], Article XIV of the
CBA earlier quoted, to be entitled to retirement gratuity,
the employee must have reached 60 years of age, resigned,
suffered illness, or opted to retire even before reaching the
age of 60 but has been in the employ of Zuellig for at least
25 years. None of the respondents who initiated the
complaints appear to have met the above requirements.
They never even bothered to controvert Zuellig’s contention
that they are not qualified for retirement.
ISSUE: Whether or not respondents are entitled to the
monetary equivalent of their unused sick leave credits. NO
Zuellig contends that the CA’s award of monetary
equivalent of respondents’ unused sick leave lacks basis. It
asserts that under Section 2(c) and (d), Article VIII of the
CBA, only employees who are due for compulsory
retirement and those availing of early retirement are
entitled to the cash equivalent of their unused sick leave.
Those separated from employment by reason of redundancy
like the respondents are not.
Respondents insist that since there is no specific provision
in the CBA prohibiting them from claiming the monetary
value of their unused sick leave, the same should be given
to them.
According to the CA, since "the enumerations under Article
VIII of the CBA fall short of providing in the instances of the
other causes of separation from service such as redundancy
as in the case of the petitioners, death, merger, installation
of labor cost-saving device, retrenchment or closure of
business, all of which are causes not attributable and
beyond the control of the employees,” the respondents
should be given the monetary equivalent of their unused
sick leave.
RULING: Respondents are not entitled to the monetary
equivalent of their unused sick leave credits.
The CA’s ruling in effect put something into the CBA that is
not written in it, contrary to the old and familiar Latin
maxim of expressio unius est exclusio alterius. The express
mention of one person, thing, act, or consequence excludes
all others. Put differently, where the terms are expressly
limited to certain matters, it may not, by interpretation or
construction, be extended to other matters.
The enumeration under Article VIII of the CBA cannot
be extended to include those who will be leaving the
company due to redundancy, death, merger,
installation of labor cost-saving device,
16
 Labor Relations
Case Digest Compilation
retrenchment, or closure of business as mistakenly
ruled by the CA.
In this case, Article VIII of the CBA covers only (1) an
employee who is 60 years old and due for compulsory
retirement; (2) an employee who retires prior to attaining
the compulsory retirement age but has served at least 25
years; and, (3) an employee who retires before attaining
compulsory retirement age due to illness or disability.
As the law between the parties, the CBA must be
strictly complied with.
In Honda Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda, this Court elucidated as follows:
A collective bargaining agreement [or CBA] refers
to the negotiated contract between a
legitimate labor organization and the
employer concerning wages, hours of work and
all other terms and conditions of employment in a
bargaining unit. As in all contracts, the parties in a
CBA may establish such stipulations, clauses,
terms and conditions as they may deem
convenient provided these are not contrary to law,
morals, good customs, public order or public
policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the
parties and compliance therewith is mandated by
the express policy of the law.
Here, and as discussed above, the parties’ CBA provides in
no uncertain terms that whatever amount of money the
employees will receive as retirement gratuity shall be
chargeable against separation pay. It is the unequivocal
manifestation of their agreement that acceptance of
retirement gratuity forecloses receipt of separation pay and
vice versa. The CBA likewise exclusively enumerates
departing employees who are entitled to the monetary
equivalent of their unused sick leave. These agreements
must prevail and be given full effect.
ISSUE: Whether or not the Release and Quitclaim executed
by each of the respondents remains valid. YES
Zuellig insists that the CA committed grave error in
invalidating the Release and Quitclaim voluntarily executed
by the respondents. Said quitclaims represent a fair
reasonable settlement of all the claims respondents had
against Zuellig. In fact, the amount of redundancy pay
given to respondents is substantially higher than the
retirement package received by those who resigned.
RULING: It is true that quitclaims executed by employees
are often frowned upon as contrary to public policy. But
that is not to say that all waivers and quitclaims are
invalid as against public policy.  because it granted free meals only to those who rendered
Quitclaims will be upheld as valid if the following requisites
are present: "(1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the
part of any of the parties; (3) the consideration of the
quitclaim is credible and reasonable; and, (4) the contract
is not contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a right
recognized by law."
In this case, there is no showing that Zuellig coerced
or forced respondents to sign the Release and
Quitclaim. In fact, there is no allegation that Zuellig
employed fraud or deceit in making respondents sign the
Release and Quitclaim. On the other hand, respondents
declared that they had received the separation pay in full
settlement of all claims arising from their employment with
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Zuellig. For which reason, they have remised, released and
discharged Zuellig.
Notably, the Release and Quitclaim represents a reasonable
and fair settlement of respondents’ claims. Under Article
283 of the Labor Code, the employers are required to pay
employees separated from employment by reason of
redundancy at least one (1) month pay or at least one (1)
month pay for every year of service, whichever is
higher. Here, respondents received 100% of their one (1)
month basic pay for every year of service, plus a premium
ranging from 20% to 85% of such basic pay for every year
of service (depending on the number of years in service),
as separation pay.
DOLE Philippines, Inc. vs Pawis ng Makabayang
Obrero
GR No. 146650, January 13, 2003
Doctrine: The disputed provision of the CBA is clear and
unambiguous. The terms are explicit and the language of
the CBA is not susceptible to any other interpretation.
Hence, the literal meaning of free meals after three (3)
hours of overtime work shall prevail, which is simply that
an employee shall be entitled to a free meal if he has
rendered exactly, or no less than, three hours of overtime
work, not after more than or in excess of three hours over
time work.
The exercise of management prerogative is not unlimited.
It is subject to the limitations found in law, a collective
bargaining agreement or the general principles of fair play
and justice. This situation constitutes one of the limitations.
The CBA is the norm of conduct between petitioner and
private respondent and compliance therewith is mandated
by the express policy of the law.
Facts: February 22, 1996, a new five-year Collective
Bargaining Agreement for the period starting February 1996
up to February 2001, was executed by petitioner DOLE
Philippines, Inc., and private respondent Pawis Ng
Makabayang Obrero – NFL (PAMAO-NFL). Among the
provisions of the new CBA is the disputed section on meal
allowance under Section 3 of Article XVIII on Bonuses and
Allowance.
Pursuant to Section 3, some departments of DOLE reverted
to the previous practice of granting free meals after exactly
three hours of actual overtime work. However, the other
departments continued the practice of granting free meals
only after more than three hours of overtime work. Thus,
PAMAO-NFL filed a complaint before the National
Conciliation and Mediation Board alleging that DOLE refused
to comply with the provisions of the 1996-2001 CBA
overtime work for more than three hours and not to those
who rendered exactly three hours overtime work. The
parties agreed to submit the dispute to voluntary
arbitration.
VOLUNTARY ARBITRATOR: Decided in favor of the
PAMAO-NFL. It issued an order directing petitioner DOLE to
extend the “free meal” benefit to those employees who
actually did overtime work even for exactly three hours
only.
DOLE sought a reconsideration of the Order but the same
was denied. Hence, DOLE elevated the matter to the Court
of Appeals by way of a petition for review on certiorari.
COURT OF APPEALS: Upheld the assailed order.
17
 Labor Relations
Case Digest Compilation
DOLE asserts that the phrase “after three hours of actual
overtime work” should be interpreted to mean after more
than three hours of actual overtime work.
On the other hand, PAMAO-NFL and the voluntary arbitrator
see it as meaning after exactly three hours of actual
overtime work.
HISTORY OF MEAL ALLOWANCE PROVISION IN THE
CBA
The “meal allowance” provision in the 1996-2001 CBA is not
new. It was also in the 1985-1988 CBA and the 1990-1995
CBA. The 1990-1995 CBA provision on meal allowance was
amended by the parties in the 1993-1995 CBA Supplement.
The clear changes in each CBA provision on meal allowance
were in the amount of the meal allowance and free meals,
and the use of the words “after” and “after more than” to
qualify the amount of overtime work to be performed by an
employee to entitle him to the free meal.
To arrive at a correct interpretation of the disputed
provision of the CBA, a review of the pertinent section of
past CBAs is in order.
The CBA covering the period 21 September 1985 to 20
September 1988 provided:
Section 3. Meal Allowance. The COMPANY agrees
to grant a MEAL ALLOWANCE of FOUR (P4.00)
PESOS to all employees who render at least TWO
(2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced,
after THREE (3) hours of actual overtime work.
The CBA for 14 January 1990 to 13 January 1995 likewise
provided:
Section 3. Meal Allowance. The COMPANY agrees
to grant a MEAL ALLOWANCE of EIGHT PESOS
(P8.00) to all employees who render at least TWO
(2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced,
not exceeding SIXTEEN PESOS (P16.00) after
THREE (3) hours of actual overtime work.
The provision above was later amended when the parties
renegotiated the economic provisions of the CBA pursuant
to Article 253-A of the Labor Code. Section 3 of Article XVIII
of the 14 January 1993 to 13 January 1995 Supplement to
the 1990-1995 CBA reads:
Section 3. Meal Allowance. The COMPANY agrees
to grant MEAL SUBSIDY of NINE PESOS (P9.00) to
all employees who render at least TWO (2) hours
or more of actual overtime work on a workday,
and FREE MEALS, as presently practiced, not
exceeding TWENTY ONE PESOS (P21.00) after
more than THREE (3) hours of actual overtime
work.
We note that the phrase “more than” was neither in the
1985-1988 CBA nor in the original 1990-1995 CBA. It was
inserted only in the 1993-1995 CBA Supplement. But said
phrase is again absent in Section 3 of Article XVIII of the
1996-2001 CBA, which reverted to the phrase “after three
(3) hours.”
DOLE: Asserts that the phrase “after three (3) hours of
work actual overtime work” does not mean after exactly
three hours of actual overtime work; it means after more
than three hours of actual overtime work. Petitioner insists
that this has been the interpretation and practice of DOLE
for the past thirteen years.
PAMAO-NFL: Maintains that “after three (3) hours of
actual overtime work” simply means after rendering
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
exactly, or no less than, three hours of actual overtime
work.
Issue: Whether or not “after three (3) hours of actual
overtime work” should be interpreted to mean after more
than three hours of actual overtime work. – NO.
Ruling: The Court find logic in PAMAO-NFL’s interpretation.
The omission of the phrase “more than” between “after”
and “three hours” in the present CBA spells a big difference.
No amount of legal semantics can convince the Court
that “after more than” means the same as “after.”
DOLE’S CONTENTION
DOLE asserts that the “more than” in the 1993-1995 CBA
Supplement was mere surplusage because, regardless of
the absence of said phrase in all the past CBAs, it had
always been the policy of DOLE to give the meal allowance
only after more than 3 hours of overtime work. However, it
this were true, why was it included only in the 1993-1995
CBA Supplement and the parties had to negotiate its
deletion in the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs
can only mean that the parties intended that free meals be
given to employees after exactly, or no less than, three
hours of actual overtime work.
The disputed provision of the CBA is clear and
unambiguous. The terms are explicit and the language of
the CBA is not susceptible to any other interpretation.
Hence, the literal meaning of “free meals after 3 hours
of overtime work” shall prevail, which is simply that an
employee shall be entitled to a free meal if he has rendered
exactly, or no less than, three hours of overtime work, not
“after more than” or “in excess of” three hours overtime
work.
PRINCIPLE OF MANAGEMENT PREROGATIVE
DOLE also invokes the well-entrenched principle of
management prerogative that “the power to grant benefits
over an beyond the minimum standards of law, or the Labor
Code for that matter, belongs to the employer.” According
to this principle, even if the law is solicitous of the welfare
of the employees, it must also protect the right of the
employer to exercise what clearly are management
prerogatives. DOLE claims that, being the employer, it has
the right to determine whether it will grant a “free meal”
benefit to its employees and, if so, under what conditions.
To see it otherwise would amount to an impairment of its
rights as an employer.
SC: The exercise of management prerogative is not
unlimited. It is subject to the limitation found in law, a
collective bargaining agreement or the general principles of
fair play and justice. This situation constitutes on of the
limitations. The CBA is the norm of conduct between DOLE
and PAMAO-NFL and compliance therewith is mandated by
the express policy of the law.
DOLE cannot assail the voluntary arbitrator’s interpretation
of the CBA for the supposed impairment of its management
prerogatives just because the same interpretation is
contrary to its own.
BPI v. BPI Union
G.R. No. 175678| August 22, 2012
Facts: Respondent: Bank of the Philippine Islands
Employees Union-Metro Manila (BPIEU-MM)
Petitioner: BPI in Metro Manila
18
 Labor Relations
Case Digest Compilation
BPIEU-MM is a legitimate labor organization and the sole
and exclusive bargaining representative of all the regular
rank-and-file employees of BPI in Metro Manila. They have
an existing CBA which took effect on April 1, 2001. The CBA
provides for loan benefits and relatively low interest rates.
Thereafter, BPI issued a "no negative data bank policy" for
the implementation/availment of the manpower loans which
the Union objected to, thus, resulting into labor-
management dialogues. Unsatisfied with the result of those
dialogues, Union brought the matter to the grievance
machinery and afterwards, the issue, not having been
resolved, the parties raised it to the Voluntary Arbitrator.
DECISIION OF THE VOLUNTARY ARBITRATOR
Ruled in favor of the Union, stating that:
1. That the imposition of the NO NEGATIVE DATA
BANK as a new condition for the implementation
and availment of the manpower loan benefits by
the employees evidently violates the CBA;
2. That all employees who were not allowed or
deprived of the manpower loan benefits due to the
NO NEGATIVE DATA BANK POLICY be immediately
granted in accordance with their respective loan
benefits applied for;
3. The bank is also ordered to pay 10% of the total
amount of all loans to be granted to all employees
concerned as Attorney's Fees; and
CA’s DECISION –AFFIRMED WITH MODIFICATION
Aggrieved, the bank appealed the case to the CA via Rule
43, but the latter affirmed the decision of the Voluntary
Arbitrator with the modification deleting the award of
attorney’s fees.
MR denied
BANK’s ARGUMENTS:
1. The "No NDB policy" is a valid and reasonable
requirement that is consistent with sound banking
practice and is meant to inculcate among officers
and employees of the bank the need for fiscal
responsibility and discipline, especially in an
industry where the element of trust is paramount.
2. The "No NDB policy" does not violate the parties'
Collective Bargaining Agreement.
3. The "No NDB policy" conforms to existing BSP
regulations and circulars, and to safe and sound
banking practices.
UNION’s ARGUMENTS:
1. The CA did not commit any reversible error in the
questioned judgment to warrant the exercise of its
discretionary appellate jurisdiction; and
2. that the Voluntary Arbitrator and the CA duly
passed upon the same issues raised in the instant
petition and their decisions are based on
substantial evidence and are in accordance with
law and jurisprudence.
ISSUE:
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
1. Whether or not the “No NDB Policy” violates
the parties’ CBA.
RULING:
A CBA refers to the negotiated contract between a
legitimate labor organization and the employer concerning
wages, hours of work and all other terms and conditions of
employment in a bargaining unit, including mandatory
provisions for grievances and arbitration machineries. As in
all other contracts, there must be clear indications that the
parties reached a meeting of the minds. Therefore, the
terms and conditions of a CBA constitute the law between
the parties.
The CBA in this case contains no provision on the "no
negative data bank policy" as a prerequisite in the
entitlement of the benefits it set forth for the
employees. In fact, a close reading of the CBA would show
that the terms and conditions contained therein relative
to the availment of the loans are plain and clear, thus,
all they need is the proper implementation in order to
reach their objective.
The CA was, therefore, correct when it ruled that, although
it can be said that the bank is authorized to issue
rules and regulations pertinent to the availment and
administration of the loans under the CBA, the
additional rules and regulations, however, must not
impose new conditions which are not contemplated in
the CBA and should be within the realm of
reasonableness.
NO NEGATIVE DATA BANK POLICY PROVIDES
The "no negative data bank policy" is a new condition
which is never contemplated in the CBA and at some
points, unreasonable to the employees because it provides
that before an employee or his/her spouse can avail of the
loan benefits under the CBA, the said employee or his/her
spouse must not be listed in the negative data bank, or if
previously listed therein, must obtain a clearance at least
one year or six months as the case may be, prior to a loan
application.
It must be remembered that negotiations between an
employer and a union transpire before they agree on
the terms and conditions contained in the CBA. If the
bank, indeed, intended to include a "no negative data
bank policy" in the CBA, it should have presented
such proposal to the union during the negotiations. To
include such policy after the effectivity of the CBA is
deceptive and goes beyond the original agreement between
the contracting parties.
The argument that the "no negative data bank policy" is
intended to exact a high standard of conduct from its
employees. However, the terms and conditions of the
CBA must prevail. REMEDY OF THE BANK: It can propose
the inclusion of the said policy upon the expiration of the
CBA, during the negotiations for a new CBA, but in the
meantime, it has to honor the provisions of the existing
CBA.
Article 1702 of the New Civil Code provides that, in case of
doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living of the
laborer. Thus, this Court has ruled that any doubt or
ambiguity in the contract between management and the
union members should be resolved in favor of the latter.
19
 Labor Relations
Case Digest Compilation
Therefore, there is no doubt, in this case, that the welfare
of the laborers stands supreme.
CBA:
Article VIII - Fringe Benefits
xxxx
Section 14. Multi-Purpose Loan, Real Estate Secured
Housing Loan and Car Loan. - The Bank agrees to continue
and maintain its present policy and practice, embodied in its
Collective Bargaining Agreement with the Union which
expired on 31 March 2001, extending to qualified regular
employees the multi-purpose and real estate secured
housing loans, subject to the increased limits and provisions
hereinbelow, to wit:
a) Multi-Purpose Loan not exceeding FORTY
THOUSAND PESOS (P40,000.00), payable within
the period not exceeding three (3) years via semi-
monthly salary deductions, with interest at the rate
of eight percent (8%) per annum computed on the
diminishing balance.
b) Real Estate-Secured Housing Loan not exceeding
FOUR HUNDRED FIFTY THOUSAND " PESOS
(P450,000.00), payable over a period not
exceeding fifteen (15) years via semi-monthly
salary deductions, with interest at the rate of nine
percent (9%) per annum computed on the
diminishing balance.
The rate of interest on real estate secured loans, however,
may be reduced to six percent (6%) per annum, subject to
the following conditions:
1. If the loan is accepted for coverage by the Home
Insurance and Guaranty Corporation (HIGC).
2. The HIGC premium shall be paid by the borrower.
3. The borrower procures a Mortgage Redemption
Insurance coverage from an insurance company
selected by the BANK.
4. The BANK may increase the six percent (6%)
interest if the HIGC or the Government imposes
new conditions or restrictions necessitating a
higher interest in order to maintain the BANK'S
position before such conditions or restrictions were
imposed.
5. Such other terms or conditions imposed or which
may be imposed by the HIGC.
6. It is distinctly understood that the rate of interest
shall automatically revert to nine percent (9%) per
annum upon cancellation of the HIGC coverage for
any cause.
The BANK shall make strong representations with the
Bangko Sentral ng Pilipinas for a second upgrade and/or
availment under the Housing Loan Program.
c) Car Loan. - The BANK shall submit a revised plan
for the approval of the Bangko Sentral ng Pilipinas
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
which shall incorporate a car loan program in its
existing Housing Loan Program. The said car loan
shall be a sub-limit under the program such that
any availment thereof shall operate to decrease
the available housing loan limit. Therefore, the
combined amount of both housing and car loans
that may be availed of shall not exceed FOUR
HUNDRED FIFTY THOUSAND PESOS
(P450,000.00). This supplemental revision of the
loan program shall be subject to the rules and
regulations {e.g., amount of sub-limit, credit ratio,
type and age of vehicle, interest rate, etc.) which
the BANK may promulgate, and to the terms of the
approval of the Bangko Sentral ng Pilipinas.
The multi-purpose and housing loans stated in the next
preceding paragraphs, as well as the car loan which shall be
incorporated in the housing loan program, shall be subject
further to the applicable provisions, guidelines and
restrictions set forth in the Central Bank Circular No. 561,
as amended by Central Bank Circular No. 689, and to the
rules, regulations and policies of the BANK on such loans
insofar as they do not violate the provisions, guidelines and
restrictions set forth in said Central Bank Circular No. 561,
as amended.
Section 15. Emergency Loans. - The BANK agrees to
increase the amount of emergency loans assistance, upon
approval by the Central Bank of the Philippines, from a
maximum amount of Ten Thousand Pesos (PI 0,000.00) to
a maximum amount of Fifteen Thousand Pesos
(P15,000.00) to qualified employees intended to cover
emergencies only, i.e., expenses incurred but could not be
foreseen such as those arising from natural calamities,
emergency medical treatment and/or hospitalization of an
employee and/or his immediate family and other genuine
emergency cases of serious hardship as the BANK may
determine. Hospital expenses for caesarian delivery of a
female employee or an employee's wife not covered by the
Group Hospitalization Insurance Plan shall qualify for the
emergency loan.
Emergency loans shall be playable in twenty-four (24)
months via semi-monthly salary deductions and shall be
charged interest at the minimal rate of Seven percent (7%)
per annum for the first P10,000.00 and Nine percent (9%)
for the additional P5.000.00 computed on the diminishing
balance. The emergency loan assistance program shall be
governed by the rules, regulations and policies of the BANK
and such amendments or modifications thereof which the
BANK may issue from time to time.
Son, Antiola & Pollarco v. UST
April 18, 2018
Facts: Respondent University of Santo Tomas (UST) is an
educational institution operating under the authority of the
Commission on Higher Education (CHED).
Petitioners Son, Antiola, and Pollarco are full-time
professors of the UST Colleges of Fine Arts and Design and
Philosophy and are members of the UST Faculty Union, with
which UST at the time had a Collective Bargaining
Agreement (CBA).
Son and Antiola were hired in June 2005, while Pollarco was
employed earlier, or in June 2004. Under their respective
appointment papers, petitioners were designated as "faculty
member[s] on PROBATIONARY status," whose "accession to
tenure status is conditioned by your meeting all the
20
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Case Digest Compilation
requirements provided under existing University rules and
regulations and other applicable laws including, among
others, possession of the (prerequisite] graduate degree
before the expiration of the probationary period and by your
satisfactory performance of the duties and responsibilities
set forth in the job description hereto attached."
The UST-UST Faculty Union CBA provided that –
ARTICLE XV
TENURE
Section 1.Tenured Faculty Member. - He is:
Teaching Faculty member, given a tenure track
appointment upon hiring who has rendered six (6)
consecutive semesters of satisfactory service on a full-time
basis, carrying fifteen-unit load (15) or more. Although a
master's degree is an entry requirement, a faculty member
admitted to serve the University without a master's degree
shall finish his master's degree in five (5) semesters. If he
does not finish his degree in five (5) semesters, he shall be
separated from service at the end of the fifth semester;
however, if he is made to serve the University further, in
spite of the lack of a master's degree, he shall be deemed
to have attained tenure.10
The CBA provision relative to the requirement of a Master's
degree in the faculty member's field of instruction is in line
with the requirement laid down in the 1992 Revised Manual
of Regulations for Private Schools issued by then
Department of Education, Culture, and Sports (DECS), and
the CHED's Memorandum Order No. 40-08 - or Manual of
Regulations for Private Higher Education of 2008 - stating
that:
Section 35. Minimum Faculty Qualifications. - The minimum
qualifications of a faculty in a higher education institution
shall be as follows:
1. For undergraduate program
a. Holder of a master's degree; to teach mainly in
his major field and where applicable, a holder of appropriate
professional license requiring at least a bachelor's degree
for the professional courses. However, in specific fields
where there is dearth of holders of Master's degree, or a
holder of a professional license requiring at least a
bachelor's degree may be qualified to teach. Any deviation
from this requirement will be subject to regulation by the
Commission.
Petitioners did not possess the required Master's degree,
but were nonetheless hired by UST on the condition that
they fulfill the requirement within the prescribed period.
Petitioners enrolled in the Master's program, but were
unable to finish the same. In spite of their failure to obtain
the required Master's degree, they continued to teach even
beyond the period given for completion thereof.
On March 3, 2010, then CHED Chairman Emmanuel Angeles
issued a Memorandum addressed to the Presidents of public
and private higher education institutions, directing the strict
implementation of the minimum qualification for faculty
members of undergraduate programs, particularly the
Master's degree and licensure requirements, as mandated
by Memorandum Order No. 40-08, "to ensure the highest
qualification of their faculty."
Thereafter, petitioners received termination/thank you
letters signed by respondent Dr. Cynthia Loza, Dean of the
College of Fine Arts and Design. The reason given for non-
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
renewal of their appointments is their failure to obtain the
required Master's degree.
Petitioners filed a labor case against the respondents for
unfair labor practice, illegal dismissal, and recovery of
money claims before the Labor Arbiter.
Respondent’s contention:
1. that a Master's degree in the undergraduate program
professor's field of instruction is a mandatory
requirement that may not be the subject of
agreement between the school and the professor;
2. that the CBA provision on tenure by default has been
superseded by CHED Memorandum Order No. 40-08,
which for all intents and purposes is deemed law to
which the CBA must yield as it conflicts with the
former;
3. that CHED Memorandum Order No. 40-08 is a police
power measure which may impair the CBA provision
on tenure by default for the protection of the public;
Petitioner’s contention:
1. that the CBA and its provision on tenure by default
prevail over CHED Memorandum Order No. 40-08, as
they constitute the law between the parties;
2. that since they acquired tenure by application of the
CBA provision, they may not be removed except for
cause;
3. that contrary to the provisions of said CHED
Memorandum, respondents were never prohibited
from maintaining faculty members without a master's
degree, as in fact they continued to hire such faculty
even after they were separated from UST;
Labor Arbiter: It ruled in favor of the petitioners. The
Labor Arbiter upheld the CBA provision granting tenure by
default to petitioners. Thus, they were illegally dismissed.
NLRC: ruled in favor of the petitioner. It held:
1. that the CBA superseded the CHED Memorandum;
2. that CHED Memorandum Order No. 40-08 requiring a
Master's degree of professors in the undergraduate
programs is merely directory, and did not provide that
the lack of a Master's degree was a ground to
terminate the professor's services;
3. that CHED Memorandum Order No. 40-08 was issued
only in 2008, while the CBA was concluded in 2006 -
thus, it may not be retroactively applied in the
absence of a specific provision authorizing
retroactivity; and
4. consequently, petitioners acquired tenure.
Respondents filed their Motion for Reconsideration but the
same was denied. Hence, they filed Petition for Certiorari
before the CA.
Court of Appeals: It ruled in favor of the respondents. It
further ruled that:
1. Private respondents' reliance on the collective
bargaining agreement is not tenable. While every
individual has autonomy to enter into any contract, the
contractual stipulations, however, must not be contrary
to law, morals, good customs, public order, or public
policy.
2. Nevertheless, the aforecited CBA provision must be
read in conjunction with statutory and administrative
regulations governing faculty qualifications. It is settled
that an existing law enters into and forms part of a
valid contract without the need for the parties
expressly making reference to it. Further, while
contracting parties may establish such stipulations,
clauses, terms and conditions as they may see fit, such
21
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Case Digest Compilation
right to contract is subject to limitation that the
agreement must not be contrary to law or public
policy."
3. Here, there is no doubt that private respondents failed
to meet the standards for regular employment provided
under Memorandum Order No. 040-08 issued by CHED.
Petitioners filed a Motion for Reconsideration, but the CA
denied the same. Hence, the instant Petition.
Issues: WON the disputed provision in the CBA is
valid. -No.
Ruling: The Court denies the Petition. The provision
relative to the acquisition of tenure by default in the CBA is
null and void.
CBA must be read in conjunction with statutory and
administrative regulations governing faculty qualifications.
Such regulations form part of a valid CBA without need for
the parties to make express reference to it. While the
contracting parties may establish such stipulations, clauses,
terms and conditions, as they may see fit, the right to
contract is still subject to the limitation that the agreement
must not be contrary to law or public policy.
As early as in 1992, the requirement of a Master's degree in
the undergraduate program professor's field of instruction
has been in place, through DECS Order 92 (series of 1992,
August 10, 1992) or the Revised Manual of Regulations for
Private Schools. Article IX, Section 44, paragraph 1 (a)
thereof provides that college faculty members must have a
master's degree in their field of instruction as a minimum
qualification for teaching in a private educational institution
and acquiring regular status therein. DECS Order 92, Series
of 1992 was promulgated by the DECS in the exercise of its
rule-making power as provided for under Section 70 of
Batas Pambansa Blg. 232, otherwise known as the
Education Act of 1982.29 As such, it has the force and effect
of law.
Thus, when the CBA was executed between the parties in
2006, they had no right to include therein the provision
relative to the acquisition of tenure by default, because it is
contrary to, and thus violative of the 1992 Revised Manual
of Regulations for Private Schools that was in effect at the
time.
As such, said CBA provision is null and void, and can have
no effect as between the parties. "A void contract is
equivalent to nothing; it produces no civil effect; and it
does not create, modify or extinguish a juridical relation.
When CHED Memorandum Order No. 40-08 came out, it
merely carried over the requirement of a masteral degree
for faculty members of undergraduate programs contained
in the 1992 Revised Manual of Regulations for Private
Schools. It cannot therefore be said that the requirement of
a master's degree was retroactively applied in petitioners'
case, because it was already the prevailing rule with the
issuance of the 1992 Revised Manual of Regulations for
Private Schools.
Thus, going by the requirements of law, it is plain to see
that petitioners are not qualified to teach in the
undergraduate programs of UST. And while they were given
ample time and opportunity to satisfy the requirements by
obtaining their respective master's degrees, they failed in
the endeavor. Petitioners knew this - that they cannot
continue to teach for failure to secure their master's
degrees - and needed no reminding of this fact; "those who
are seeking to be educators are presumed to know these
mandated qualifications."
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
VISAYAN ELECTRIC COMPANY EMPLOYEES UNION-
ALU-TUCP & MAHILUM v. VISAYAN ELECTRIC
COMPANY (VECO)
G.R. 205575 | July 22, 2015
PARTIES:
 Respondent Visayan Electric Company, Inc.
(VECO) – is a corporation engaged in the supply and
distribution of electricity in Cebu City and its
neighboring cities, municipalities, and barangays.
 Visayan Electric Company Employees Union-ALU-
TUCP (Union) – the exclusive bargaining agent of
VECO's rank and-file employees.
 Mahilum – the Union's president from October 2007
until his termination from employment on October 28,
2010.
FACTS:
It was claimed that before Mahilum was elected as union
officer, he was transferred from VECO's Public Relations
Section to its Administrative Services Section without
any specific work.
When he was elected as union secretary, he was
transferred to the Line Services Department as its
Customer Service Representative. 
At the time of his election as union president, VECO
management allegedly:
(a) terminated active union members without going
through the grievance machinery procedure
prescribed under the Collective Bargaining
Agreement  (CBA);
(b) refused to implement the profit-sharing scheme
provided under the same CBA;
(c) took back the motorbikes issued to active union
members; and
(d) revised the electricity privilege granted to VECO's
employees.
Thus, on May 1, 2009, union members marched on the
streets of Cebu City to protest VECO's refusal to comply
with the political and economic provisions of the CBA.
Mahilum and other union officers were interviewed by the
media, and they handed out a document containing their
grievances against VECO, the gist of which came out in
local newspapers.
Following said incident, Mahilum was allegedly demoted as
warehouse staff to isolate him and restrict his
movements. Other union officers were transferred to
positions that will keep them away from the general union
membership.
On May 8, 2009, Mahilum was issued a Notice to
Explain why he should not be terminated from service due
to loss of trust and confidence, as well as in violating the
Company Code of Discipline, for causing the publication of
what VECO deemed as a libelous article.
The other union officers likewise received similar
notices 16 for them to explain their actions, which they
justified 17 as merely an expression of their collective
sentiments against the treatment of VECO's management
towards them.
Investigation
On May 20, 2009, the union officers were notified of the
administrative investigation to be conducted relative to the
charges against them.
22
 Labor Relations
Case Digest Compilation
During the scheduled investigation, the Union's counsel
initially raised its objection to the proceedings and insisted
that the investigation should be conducted through the
grievance machinery procedure, as provided in the CBA.
However, upon the agreement to proceed with the
investigation of the Union Vice President, Renato Gregorio
M. Gimenez (Gimenez), through his own counsel, Mahilum
and the other union officers likewise agreed to proceed with
the aforesaid investigation, with Gimenez's counsel
representing the Union.
Prior to the said investigation, the Union filed on May 18,
2009, a Notice of Strike with the National Conciliation and
Mediation Board (NCMB) against VECO, which facilitated a
series of conferences that yielded a Memorandum of
Agreement (MOA) signed by the parties on August 7,
2009.
The parties likewise put to rest the critical issue of
electricity privilege and agreed before the NCMB on a
conversion rate of said privilege to basic pay. Moreover, the
administrative investigation on the alleged libelous
publication was deferred until after the CBA renegotiation.
However, even before the conclusion of the CBA
renegotiation on June 28, 2010, several complaints for libel
were filed against Mahilum and the other union officers by
VECO's Executive Vice President and Chief Operating Officer
Jaime Jose Y. Aboitiz.
Mahilum’s termination
The administrative hearing on the charges against Mahilum
resumed with due notice to the latter, but he protested the
same, referring to it as "moro-mord' or "kangaroo" and
insisting that the investigation should follow the grievance
machinery procedure under the CBA. Nonetheless, VECO's
management carried on with its investigation and, on the
basis of the findings thereof, issued a notice terminating
Mahilum from employment on October 28, 2010.
On even date, the Union filed another Notice of
Strike with the NCMB against VECO on the grounds of
unfair labor practice, specifically union busting - for the
dismissal and/or suspension of its union president and
officers, refusal to bargain collectively, as well as non-
observance of the grievance procedure in their CBA.
SOLE: To avert any work stoppage that will prejudice
VECO's power distribution activity, the Secretary of Labor
intervened and issued an Order certifying the labor dispute
to the NLRC for compulsory arbitration. Consequently,
the strike was enjoined; Mahilum was ordered reinstated
in the payroll; and the parties were directed to refrain from
committing any act that would exacerbate the situation.
NLRC: It dismissed the charge of unfair labor practice
against VECO for lack of merit, and declaring Mahilum's
dismissal from employment as legal.
It found VECO to have acted within the bounds of law when
it administratively investigated the suspended or terminated
employees and union officers/members, instead of
subjecting their respective cases to the grievance
machinery procedure provided in the CBA.
 In resolving apparently conflicting provisions in the
CBA – the NLRC applied the specific provision found in
Section 13 of Article XIV that disciplinary actions shall
be governed by the rules and regulations promulgated
by the company. Since the administrative
investigations conducted by VECO were found to have
complied with procedural due process requirements,
there was no unfair labor practice to speak of.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 On the matter of Mahilum's dismissal and the filing of
criminal cases against the union officers – the NLRC
found no substantial evidence to prove the imputation
of union busting. Similarly unsubstantiated were the
allegations of fraud and deceit in hiring and contracting
out services for functions performed by union
members, and declaring certain positions confidential
and transferring union members to other positions
without prior discussions, thereby allegedly interfering
with their right to self-organization and reducing union
membership.
 As to Mahilum’s termination – Mahilum was terminated
for a just and valid cause under Article 282 (c) of the
Labor Code, i.e., fraud or willful breach of trust by the
employee of the trust reposed in him by his employer
or duly authorized representative, when he, together
with some other union officers, caused the publication
of a document which was deemed to have dishonored
and blackened the memory of former corporate officer
Luis Alfonso Y. Aboitiz, besmirched VECO's name and
reputation, and exposed he latter to public hatred,
contempt, and ridicule.
CA: It dismissed the petition on a technicality [on account
of the one-day delay in its filing].
ISSUE:
Whether or not VECO’s refusal to follow the grievance
machinery under the CBA in the suspension and termination
from employment of the other union officers and members
constituted unfair labor practice. – NO.
RULING:
Petitioners failed to satisfactorily show that the refusal of
VECO to follow the grievance machinery procedure under
Section 4, Article XVII of the CBA in the suspension and
termination from employment of the other union officers
and members constituted unfair labor practice.
General rule: It is a fundamental doctrine in labor law that
the CBA is the law between the parties and they are obliged
to comply with its provisions.
If the provisions of the CBA seem clear and unambiguous,
the literal meaning of their stipulations shall control.
Exception: However, as in this case, when general and
specific provisions of the CBA are inconsistent, the
specific provision shall be paramount to and govern
the general provision.
In this case:
Section 4, Article XVII of the CBA states:
"(a)ny difference of opinion, controversy, dispute
problem or complaint arising from Company-Union
or Company-Worker relations concerning the
interpretation or application of this Agreement or
regarding any matter affecting Company-Union or
Company-Worker relations shall be considered a
grievance." 
On the other hand, under Section 13, Article XIV:
"(t)he Company agrees that henceforth there shall
be a fair and uniform application of its rules and
regulations. It is understood that disciplinary
actions imposed on employee or laborer shall be
governed by the rules and regulations promulgated
by the Company as well as those provided for by
existing laws on the matter.”
23
 Labor Relations
Case Digest Compilation
The Court is in accord with the ratiocination of the NLRC
that the sweeping statement "any matter affecting
Company-Union or Company-Worker relations shall be
considered a grievance" under Section 4, Article XVII is
general, as opposed to Section 13, Article XIV of the CBA,
which is specific, as it precisely refers to "what governs
employee disciplinary actions."  relationship between the company and its
Thus, the NLRC correctly ruled that VECO acted within the
bounds of law when it proceeded with its administrative
investigation of the charges against other union officers and
members.
Management prerogative
This is consistent with jurisprudential rulings supporting an
employer's free reign and "wide latitude of discretion
to regulate all aspects of employment, including the
prerogative to instill discipline in its employees and to
impose penalties, including dismissal, upon erring
employees.
This is management prerogative, where the free will of
management to conduct its own affairs to achieve its
purpose takes form.
Only criterion to guide the exercise of the employer’s
management prerogative: That the policies, rules, and
regulations on work-related activities of the employees
must always be fair and reasonable, and the corresponding
penalties, when prescribed, are commensurate to the
offense involved and to the degree of the infraction."
The Labor Code does not excuse employees from complying
with valid company policies and reasonable regulations for
their governance and guidance.
While it is the state's responsibility to afford
protection to labor, this policy should not be used as
an instrument to oppress management and capital. In
resolving disputes between labor and capital, fairness and
justice should always prevail. Social justice does not
mandate that every dispute should be automatically decided
in favor of labor. Justice is to be granted to the deserving
and dispensed in the light of the established facts and the
applicable law and doctrine.
ANCILLARY ISSUE
The merits of Mahilum's dismissal
ISSUE:
Whether or not Mahilum was validly dismissed. – YES.
RULING:
The Court holds that the two requisites for a valid dismissal
from employment have been met, namely:
(1) it must be for a just or authorized cause; and
(2) the employee must be afforded due process.
VECO anchored its termination of Mahilum on Article 282
(c) of the Labor Code and Articles 5.1 and 4.4 of VECO's
Company Code of Discipline, which read as follows:
Article 282. Termination by Employer. – An
employer may terminate an employment for any of
the following causes:
xxxx
(c) Fraud or willful breach of trust by the
employee of the trust reposed 'in him by
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
his employer or duly authorized
representative;
Company Code of Discipline
Article 5.1 Every employee shall uphold company
trust and confidence as well as the trust
customers/ suppliers.
Article 4.4 Every employee shall willfully respect
the honor or person of his immediate superior
and/or department head or company officers.
VECO found the following "Press Release", which Mahilum,
together with other union officers, caused to be published,
as libelous for dishonoring and blackening the memory of
then corporate officer Luis Alfonso Y. Aboitiz, as well as for
maliciously impeaching and besmirching the company's
name and reputation.
The Court has consistently held that "x x x loss of trust and
confidence must be based on willful breach of the trust
reposed in the employee by his employer. Such breach is
willful if it is done intentionally, knowingly, and purposely,
without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently.
Moreover, it must be based on substantial evidence and not
on the employer's whims or caprices or suspicions[,]
otherwise, the employee would eternally remain at the
mercy of the employer. x x x. And, in order to constitute a
just cause for dismissal, the act complained of must be
work-related and show that the employee concerned is unfit
to continue working for the employer.
In addition, loss of confidence x x x is premised on the fact
that the employee concerned holds a position of
responsibility, trust, and confidence or that the employee
concerned is entrusted with confidence with respect to
delicate matters, such as handling or care and protection of
the property and assets of the employer. The betrayal of
this trust is the essence of the offense for which an
employee is penalized."
Mahilum's attempt to rationalize his act as part of his
"moral, legal or social duty xx x to make known his
legitimate perception" against VECO does not, in any way,
detract from the indubitable fact that he intentionally,
knowingly, and purposely caused the aforequoted
"disparaging publication."
Neither can he hide behind the claim that the press release
was simply "an expression of a valid grievance.” As the
NLRC aptly pointed out, "(i)nstead of him and the rest
of the union officers bringing their sentiments and/or
grievances against the management to the proper
forum, they intentionally, knowingly and purposefully
breached their employer's trust, by issuing x x x
derogatory statements and causing their publication,
apparently, to incite public condemnation against the
latter."
It bears noting that, while petitioners harp on the refusal of
VECO to follow the grievance machinery procedure under
the CBA, they conveniently forgot that they themselves
shunned the very procedure to which they now hang by a
thread.
Moreover, the Court is unmoved by Mahilum's insistence
that there was nothing in his position which called for
management's trust and confidence in him.
The NLRC correctly held that, as Customer Service
Representative, Mahilum occupied a position of
responsibility especially in dealing with VECO's clients.
24
 Labor Relations
Case Digest Compilation
Mahilum was not an ordinary rank-and-file employee.
His job entailed the observance of proper company
procedures relating to processing and determination of
electrical service applications culminating in the signing of
service contracts, which constitutes the very lifeblood of
VECO's existence.
He was further entrusted with handling the accounts of
customers and accepting payments from them.
Not only that, it was his duty to address customer
complaints and requests. Being a front liner of VECO, with
the most consistent and direct interaction with customers,
Mahilum's job involved a high degree of responsibility
requiring a substantial amount of trust and confidence on
the part of his employer, i.e., VECO.
However, with the derogatory statements issued by
Mahilum that were intended to incite, not just public
condemnation of VECO, but antagonism and obstruction
against rate increases in electricity that it may be allowed,
by law, to fix, there can be no dispute that VECO, indeed,
had lost its trust and confidence in Mahilum and his ability
to perform his tasks with utmost efficiency and loyalty
expected of an employee entrusted to handle customers
and funds. Settled is the rule that an employer cannot be
compelled to retain an employee who is guilty of acts
inimical to the interests of the employer. A company has
the right to dismiss its employee if only as a measure of self
protection.
Thus, Mahilum was terminated for a just and valid cause.
Moreover, as declared by the NLRC, VECO complied with
the procedural due process requirements of furnishing
Mahilum with two written notices before the termination of
employment can be effected. On May 8, 2009, Mahilum was
apprised of the particular acts for which his termination was
sought; and, after due investigation, he was given a Notice
of Decision on October 28, 2010 informing him of his
dismissal from service.
The fact that Mahilum served the company for a
considerable period of time will not help his cause. It is well
to emphasize that the longer an employee stays in the
service of the company, the greater is his responsibility for
knowledge and compliance with the norms of conduct and
the code of discipline in the company.
Duration of the CBA, Retroactivity
San Miguel Employees Union-PTGWO v Confessor,
San Miguel
September 19, 1996
Facts: Petitioner-union San Miguel Corporation
Employees Union — PTGWO entered into a Collective
Bargaining Agreement (CBA) with private respondent
San Miguel Corporation (SMC) to take effect upon the
expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
SECTION 1. This Agreement which shall be
binding upon the parties hereto and their
respective successors-in-interest, shall become
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Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
effective and shall remain in force and effect until
June 30, 1992.
SEC. 2. In accordance with Article 253-A of the
Labor Code as amended, the term of this
Agreement insofar as the representation aspect is
concerned, shall be for five (5) years from July 1,
1989 to June 30, 1994. Hence, the freedom period
for purposes of such representation shall be sixty
(60) days prior to June 30, 1994.
SEC. 3. Sixty (60) days prior to June 30, 1992
either party may initiate negotiations of all
provisions of this Agreement, except insofar as the
representation aspect is concerned. If no
agreement is reached in such negotiations, this
Agreement shall nevertheless remain in force up to
the time a subsequent agreement is reached by
the parties.
SMC management informed the employees of the
restructuring which resulted to the spun-off of Magnolia and
Feeds and Livestock Division and became two separate and
distinct corporations: Corporation (Magnolia) and San
Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs,
the CBA remained in force and effect.
RENEGOTIATION OF THE CBA
After June 30, 1992, the CBA was renegotiated in
accordance with the terms of the CBA and Article 253-A of
the Labor Code. Negotiations started sometime in July,
1992 with the two parties submitting their respective
proposals and counter proposals.
Petitioners’ contentions: During the negotiations, the
petitioner-union insisted that the bargaining unit of SMC
should still include the employees of the spun-off
corporations: Magnolia and SMFI; and that the renegotiated
terms of the CBA shall be effective only for the remaining
period of two years or until June 30, 1994.
Respondent’s contentions: SMC, on the other hand,
contented that the members/employees who had moved to
Magnolia and SMFI, automatically ceased to be part of the
bargaining unit at the SMC. Furthermore, the CBA should be
effective for three years in accordance with Art. 253-A of
the Labor Code.
Unable to agree on these issues with respect to the
bargaining unit and duration of the CBA, petitioner-union
declared a deadlock on September 29, 1990. A Notice of
Strike was subsequently filed against SMC.
Sec of Labor: The renegotiated terms of the CBA shall be
effective for the period of three (3) years from June 30,
1992; and that such CBA shall cover only the employees of
SMC and not of Magnolia and SMFI
Issues: Whether or not the duration of the renegotiated
terms of the CBA is to be effective for three years or for
only two years – Should run for three years
25
 Labor Relations
Case Digest Compilation
Whether or not the bargaining unit of SMC includes also the
employees of Magnolia and SMFI. - NO
Ruling: The Court denies the petition.
[1] The renegotiated terms of the CBA at SMC should
run for a period of three (3) years.
Article 253-A is a new provision. This was incorporated by
Section 21 of Republic Act No. 6715 (the Herrera-Veloso
Law) which took effect on March 21, 1989. This new
provision states that the CBA has a term of five (5) years
instead of three years, before the amendment of the law as
far as the representation aspect is concerned. All other
provisions of the CBA shall be negotiated not later
than three (3) years after its execution. The
"representation aspect" refers to the identity and
majority status of the union that negotiated the CBA as the
exclusive bargaining representative of the appropriate
bargaining unit concerned. "All other provisions" simply
refers to the rest of the CBA, economic as well as
non-economic provisions, except representation.
As the Secretary of Labor herself observed in the instant
case, the law is clear and definite on the duration of the
CBA insofar as the representation aspect is concerned, but
is quite ambiguous with the terms of the other provisions of
the CBA. It is a cardinal principle of statutory construction
that the Court must ascertain the legislative intent for the
purpose of giving effect to any statute. The history of the
times and state of the things existing when the act was
framed or adopted must be followed and the conditions of
the things at the time of the enactment of the law should be
considered to determine the legislative intent
Based on the discussion leading to the passage of the law,
the legislators were more inclined to have the period of
effectivity for three (3) years insofar as the economic as
well as non-economic provisions are concerned, except
representation.
the framers of the law wanted to maintain industrial peace
and stability by having both management and labor work
harmoniously together without any disturbance. Thus, no
outside union can enter the establishment within five (5)
years and challenge the status of the incumbent union as
the exclusive bargaining agent. Likewise, the terms and
conditions of employment (economic and non-economic)
can not be questioned by the employers or employees
during the period of effectivity of the CBA. The CBA is a
contract between the parties and the parties must respect
the terms and conditions of the agreement. Notably, the
framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It
can be gleaned from their discussions that it was left to the
parties to fix the period.
In the instant case, it is not difficult to determine the period
of effectivity for the non-representation provisions of the
CBA. Taking it from the history of their CBAs, SMC intended
to have the terms of the CBA effective for three (3) years
reckoned from the expiration of the old or previous CBA
which was on June 30, 1989.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
The issue as to the term of the non-representation
provisions of the CBA need not belabored especially when
we take note of the Memorandum of the Secretary of Labor
dated February 24, 1994 which was mentioned in the
Resolution of Undersecretary Bienvenido Laguesma on
January 16, 1995 in the certification election case involving
the SMC employees. In said memorandum, the Secretary of
Labor had occasion to clarify the term of the
renegotiated terms of the CBA vis-a-vis the term of
the bargaining agent, to wit:
As a matter of policy the parties are encourages
(sic) to enter into a renegotiated CBA with a term
which would coincide (sic) with the aforesaid five
(5) year term of the bargaining representative.
In the event however, that the parties, by
mutual agreement, enter into a renegotiated
contract with a term of three (3) years or one
which does not coincide with the said 5-year
term, and said agreement is ratified by
majority of the members in the bargaining
unit, the subject contract is valid and legal
and therefore, binds the contracting parties.
The same will however not adversely affect
the right of another union to challenge the
majority status of the incumbent bargaining
agent within sixty (60) days before the lapse
of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the
part of the Secretary of Labor in ruling that the effectivity of
the renegotiated terms of the CBA shall be for three (3)
years.
[2] The employees of Magnolia and SMFI cannot be
considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct
companies on October 1, 1991. Undeniably, the
transformation of the companies was a management
prerogative and business judgment which the courts can
not look into unless it is contrary to law, public policy or
morals. Neither can we impute any bad faith on the part of
SMC so as to justify the application of the doctrine of
piercing the corporate veil.
Finally, we take note of the fact that the separate interests
of the employees of Magnolia and SMFI from those of SMC.
LMG Chemicals Corporation v. Secretary of Labor and
Chemical Workers Union
G.R. No. 127422, April 17, 2001
Facts: Respondent Union represents the daily paid workers
of Petitioner Company. There were series of negotiations for
a new CBA on December 1995 as the existing CBA was
about to expire. As both parties did not agree on particular
provisions, a deadlock ensued. Consequently, a Notice of
Strike was filed by respondent before the NCMB. Series of
conciliation and the parties still fail to agree on an amicable
settlement.
On 9 May 1996, another conciliation meeting was held
between the parties. In that meeting, petitioner reiterated
its improved offer of P135 per day which was again rejected
by the respondent union.
26
 Labor Relations
Case Digest Compilation
In its position paper, petitioner made a turn-around, stating
that it could no longer afford to grant its previous offer due
to serious financial losses during the early months of 1996.
It then made the following offer:
i. Zero increase in the first year;
ii. P30 per day increase in the second year; and
iii. P20 per day increase in the third year.
The Secretary of Labor assumed jurisdiction and rendered
the following decision:
Company's offer of P135 per day wage increase be further
increased to P140 per (day), which shall be incorporated in
the new CBA, as follows:
P90 per day for the first 18 months, and
P50 per day for the next 18 months.
xxx
3. Effectivity of the new CBA
Article 253-A of the Labor Code, as amended, provides that
when no new CBA is signed during a period of six months
from the expiry date of the old CBA, the retroactivity period
shall be according to the parties' agreement, Inasmuch as
the parties could not agree on this issue and since this
Office has assumed jurisdiction, then this matter now lies at
the discretion of the Secretary of labor and Employment.
Thus the new Collective Bargaining Agreement which the
parties will sign pursuant to this Order shall retroact to
January 1, 1996.
Petitioner’s Contention:
Questioning the order of the Secretary, among others, that
which refer to the effectivity of the CBA. Petitioner contends
that public respondent committed grave abuse of discretion
when he ordered that the new CBA which the parties will
sign shall retroact to January 1, 1996. Invoking the
provisions of Article 253-A of the Labor Code, petitioner
insists that public respondent's discretion on the issue of
the date of the effectivity of the new CBA is limited to
either: (1) leaving the matter of the date of effectivity of
the new CBA to the agreement of the parties or (2) ordering
that the terms of the new CBA be prospectively applied.
Issue: WON the Secretary of Labor could order that
the effectivity of the CBA apply retroactively.
Ruling: YES
It must be emphasized that respondent Secretary assumed
jurisdiction over the dispute because it is impressed with
national interest. As noted by the Secretary, the petitioner
corporation was then supplying the sulfate requirements of
MWSS as well as the sulfuric acid of NAPOCOR, and
consequently, the continuation of the strike would seriously
affect the water supply of Metro Manila and the power
supply of the Luzon Grid. Such authority of the Secretary to
assume jurisdiction carries with it the power to determine
the retroactivity of the parties' CBA.
It is well settled in our jurisprudence that the authority of
the Secretary of Labor to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout in an
industry indispensable to national interest includes and
extends to all questions and controversies arising
therefrom. The power is plenary and discretionary in nature
to enable him to effectively and efficiently dispose of the
primary dispute.
In St. Luke's Medical Center, Inc. vs. Torres, the
Secretary of Labor assumed jurisdiction and ordered that
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
their CBA shall retroact to the date of the expiration of the
previous CBA. The management claimed that the Secretary
of Labor gravely abused his discretion, but it was held that
the effectivity of the Order of January 28, 1991, must
retroact to the date of the expiration of the previous
CBA, contrary to the position of the petitioner. Under the
circumstances of the case, Art. 253-A cannot be properly
applied to herein case. The alleged lack of basis for
retroactivity provisions awarded, the Court stressed that
the provision of law invoked by the Hospital, Article 253-A
of the Labor Code, speaks of agreement by and between
the parties, and not arbitral awards.
Therefore in the absence of the specific provision of law
prohibiting retroactivity of the effectivity of the arbitral
awards issued by the Secretary of Labor pursuant to Article
263(g) of the Labor Code, such as herein involved, public
respondent is deemed vested with plenary powers to
determine the effectivity thereof.
Finally, to deprive respondent Secretary of such power and
discretion would run counter to the well-established rule
that all doubts in the interpretation of labor laws should be
resolved in favor of labor. In upholding the assailed orders
of respondent Secretary, this Court is only giving meaning
to this rule. Indeed, the Court should help labor authorities
in providing workers immediate benefits, without being
hampered by arbitration or litigation processes that prove
to be not only nerve-wracking but financially burdensome in
the long run.
Social Justice Legislation, to be truly meaningful and
rewarding to our workers, must not be hampered in its
application by long winded-arbitration and litigation. Rights
must be asserted and benefits received with the least
inconvenience. Labor laws are meant to promote, not to
defeat, social justice.
MANILA ELECTRIC COMPANY vs. THE HONORABLE
SECRETARY OF LABOR LEONARDO QUISUMBING
AND MERALCO EMPLOYEES AND WORKERS
ASSOCIATION (MEWA)
G.R. No. 127598 | January 27, 1999
Facts:
MEWA is the duly recognized labor organization of the rank-
and-file employees of MERALCO. On September 7, 1995,
MEWA informed MERALCO of its intention to re-negotiate
the terms and conditions of their existing 1992-1997
Collective Bargaining Agreement (CBA) covering the
remaining period of two years starting from December 1,
1995 to November 30, 1997.  MERALCO signified its
willingness to re-negotiate through its letter dated October
17, 1995 and formed a CBA negotiating panel for the
purpose. On November 10, 1995, MEWA submitted its
proposal to MERALCO, which, in turn, presented a counter-
proposal. Thereafter, collective bargaining negotiations
proceeded. However, despite the series of meetings
between the negotiating panels of MERALCO and MEWA, the
parties failed to arrive at "terms and conditions acceptable
to both of them."
MEWA filed a Notice of Strike with the National Capital
Region Branch of the National Conciliation and Mediation
Board (NCMB) of DOLE on the grounds of bargaining
deadlock and unfair labor practices. The NCMB then
conducted a series of conciliation meetings but the parties
failed to reach an amicable settlement.
Faced with the imminence of a strike, MERALCO filed an
Urgent Petition with the DOLE praying that the Secretary
assume jurisdiction over the labor dispute and to enjoin the
27
 Labor Relations
Case Digest Compilation
striking employees to go back to work. The Labor Secretary
granted the petition through its Order of May 8, 1996.
Thereafter, the parties submitted their respective
memoranda and on August 19, 1996, the Secretary
resolved the labor dispute through an Order, containing
various awards and benefits.
MERALCO filed a supplement motion for reconsideration on
September 18, 1995, alleging that the Secretary of Labor
did not properly appreciate the effect of the awarded wages
and benefits on MERALCO's financial viability.
MEWA likewise filed a motion asking the Secretary of Labor
to reconsider its Order on the wage increase, leaves,
decentralized filing of paternity and maternity leaves,
bonuses, retirement benefits, optional retirement, medical,
dental and hospitalization benefits, short swing and payroll
treatment. On its political demands, MEWA asked the
Secretary to rule on its proposal to institute a Code of
Discipline for its members and the union's representation in
the administration of the Pension Fund.
The Labor Secretary: finally granted an arbitral award on
December 28, 1996 where it provided for the retroactivity
of the CBA from December 1, 1995 to November 30, 1997.
Petitioner’s Contention: MERALCO assails the Secretary's
order that the effectivity of the new CBA shall retroact to
December 1, 1995, the date of the commencement of the
last two years of the effectivity of the existing CBA. This
retroactive date, MERALCO argues, is contrary to the ruling
of this Court in Pier 8 Arrastre and Stevedoring Services,
Inc. vs. Roldan-Confessor  which mandates that the
effective date of the new CBA should be the date the
Secretary of Labor has resolved the labor dispute.
Respondent’s Contention: MEWA (union) supports the
ruling of the Secretary on the theory that he has plenary
power and discretion to fix the date of effectivity of his
arbitral award citing our ruling in St. Lakes Medical Center,
Inc. vs.Torres.  MEWA also contends that if the arbitral
award takes effect on the date of the Secretary Labor's
ruling on the parties' motion for reconsideration (i.e., on
December 28, 1996), an anomaly situation will result when
CBA would be more than the 5-year term mandated by
Article 253-A of the Labor Code.
Issue: Whether or not retroactivity of arbitral awards
shall commence at such time as granted by
Secretary.
Ruling:
RETROACTIVITY OF THE CBA. Neither party took into
account the factors necessary for a proper resolution of this
aspect.  is MODIFIED as follows: (1) the arbitral award
Pier 8, for instance, does not involve a mid-term negotiation
similar to this case, while St. Lukes does not take the "hold
over" principle into account, i.e., the rule that although a
CBA has expired, it continues to have legal effects as
between the parties until a new CBA has been entered into.  1996. xxx
Art. 253-A serves as the guide in determining when
the effectivity of the CBA at bar is to take effect. It
provides that the representation aspect of the CBA is to be
for a term of 5 years, while . . . [A]ll other
provisions of the Collective Bargaining Agreement shall be
re-negotiated not later than 3 years after its execution. Any
agreement on such other provision of the Collective
Bargaining Agreement entered into within 6 months from
the date of expiry of the term of such other provisions as
fixed in such Collective Bargaining Agreement shall retroact
to the day immediately following such date. If such
agreement is entered into beyond 6 months, the parties
shall agree on the duration of the effectivity thereof. . . . .
Under these terms, it is clear that the 5-year term
requirement is specific to the representation aspect. What
the law additionally requires is that a CBA must be re-
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
negotiated within 3 years "after its execution." It is in this
re-negotiation that gives rise to the present CBA deadlock.
If no agreement is reached within 6 months from the expiry
date of the 3 years that follow the CBA execution, the law
expressly gives the parties — not anybody else — the
discretion to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the
situation where 6 months have elapsed but no agreement
has been reached with respect to effectivity. In this
eventuality, we hold that any provision of law should then
apply for the law abhors a vacuum. 
One such provision is the principle of “hold over”, i.e., that
in the absence of a new CBA, the parties must maintain
the  status quo  and must continue in full force and effect
the terms and conditions of the existing agreement until a
new agreement is reached.  In this manner, the law
prevents the existence of a gap in the relationship between
the collective bargaining parties. Another legal principle that
should apply is that in the absence of an agreement
between the parties, then, an arbitrated CBA takes on the
nature of any judicial or quasi-judicial award; it operates
and may be executed only respectively unless there
are legal justifications for its retroactive application
Consequently, we find no sufficient legal ground on the
other justification for the retroactive application of the
disputed CBA, and therefore hold that the CBA should be
effective for a term of 2 years counted from
December 28, 1996 (the date of the Secretary of
Labor's disputed order on the parties' motion for
reconsideration) up to December 27, 1999.
Dispositive portion: Petition is granted.
MANILA ELECTRIC COMPANY vs. HON.
SECRETARY OF LABOR LEONARDO
QUISUMBING and MERALCO EMPLOYEES AND
WORKERS ASSOCIATION (MEWA)
G.R. No. 127598 | August 1, 2000
RESOLUTION
Facts:
On February 22, 2000, this Court promulgated a
Resolution with the following decretal portion:
WHEREFORE, the motion for reconsideration
is PARTIALLY GRANTED and the assailed Decision
shall retroact from December 1, 1995 to
November 30, 1997; and (2) the award of wage
is increased from the original amount of
(P1,900.00) to (P2,000.00) for the years 1995 and
Petitioner Manila Electric Company filed with this Court, on
March 17, 2000, a "Motion for Partial Modification (Re:
Resolution Dated 22 February 2000)" anchored on the
following grounds:
I. With due respect, this Honorable Court’s
ruling on the retroactivity issue: (a) fails
to account for previous rulings of the
Court on the same issue; (b) fails to
indicate the reasons for reversing the
original ruling in this case on the
retroactivity issue; and (c) is internally
inconsistent.
28
 Labor Relations
Case Digest Compilation
II. With due respect, the Honorable Court’s
ruling on the retroactivity issue does not
take into account the huge cost that this
award imposes on petitioner, estimated at
no less than P800 Million.
In the assailed Resolution dated February 22, 2000, it was
held:
“Labor laws are silent as to when an arbitral award
in a labor dispute where the Secretary (of Labor
and Employment) had assumed jurisdiction by
virtue of Article 263 (g) of the Labor Code shall
retroact. In general, a CBA negotiated within six
months after the expiration of the existing CBA
retroacts to the day immediately following such
date and if agreed thereafter, the effectivity
depends on the agreement of the parties. On the
other hand, the law is silent as to the retroactivity
of a CBA arbitral award or that granted not by
virtue of the mutual agreement of the parties but
by intervention of the government. Despite the
silence of the law, the Court rules herein that CBA
arbitral awards granted after six months from the
expiration of the last CBA shall retroact to such
time agreed upon by both employer and the
employees or their union. Absent such an
agreement as to retroactivity, the award shall
retroact to the first day after the six-month period
following the expiration of the last day of the CBA
should there be one. In the absence of a CBA, the
Secretary’s determination of the date of
retroactivity as part of his discretionary powers
over arbitral awards shall control.”
Petitioner’s Contention:
I. The foregoing portion of the Resolution is
logically flawed.
First, that while it alludes to the Secretary’s discretionary
powers only in the absence of a CBA, Article 253-A of the
Labor Code always presupposes the existence of a prior or
subsisting CBA; hence the exercise by the Secretary of his
discretionary powers will never come to pass.
Second, petitioner claims that the Resolution contravenes
the jurisprudential rule laid down in the cases of Union of
Filipro Employees v. NLRC, Pier 8 Arrastre and Stevedoring
Services v. Roldan-Confesor and St. Luke’ s Medical Center
v. Torres.
Third, petitioner contends that this Court erred in holding
that the effectivity of CBA provisions are automatically
retroactive. Petitioner invokes, rather, this Court’s ruling in
the Decision dated January 27, 1999, which was modified in
the assailed Resolution, that in the absence of an
agreement between the parties, an arbitrated CBA takes on
the nature of any judicial or quasi-judicial award; it
operates and may be executed only prospectively unless
there are legal justifications for its retroactive application.
Fourth, petitioner assigns as error this Court’s
interpretation of certain acts of petitioner as consent to the
retroactive application of the arbitral award.
Fifth, petitioner contends that the Resolution is internally
flawed because when it held that the award shall retroact to
the first day after the six-month period following the
expiration of the last day of the CBA, the reckoning date
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
should have been June 1, 1996, not December 1, 1995,
which is the last day of the three-year lifetime of the
economic provisions of the CBA.
II. Anent the second ground, petitioner alleges
that the retroactive application of the arbitral
award will cost it no less than P800 Million.
Thus, petitioner prays that the two-year term
of the CBA be fixed from December 28, 1996
to December 27, 1998. Petitioner also seeks
this Court’s declaration that the award of
P2,000.00 be paid to petitioner’s rank-and-file
employees during this two-year period. In the
alternative, petitioner prays that the award of
P2,000.00 be made to retroact to June 1,
1996 as the effectivity date of the CBA.
Respondent’s Contention: The assailed Resolution should
be modified to conform to the St. Luke’s ruling, to the effect
that, in the absence of a specific provision of law prohibiting
retroactivity of the effectivity of arbitral awards issued by
the Secretary of Labor pursuant to Article 263(g) of the
Labor Code, he is deemed vested with plenary and
discretionary powers to determine the effectivity thereof.
Issue: Whether or not the Supreme Court has erred in
rendering the previous Feb. 22, 2000 decision.
Ruling: NO, but the court modified its decision.
Upon a reconsideration of the Decision, this Court issued
the assailed Resolution which ruled that where an arbitral
award granted beyond six months after the expiration of
the existing CBA, and there is no agreement between the
parties as to the date of effectivity thereof, the arbitral
award shall retroact to the first day after the six-month
period following the expiration of the last day of the CBA. In
the dispositive portion, however, the period to which the
award shall retroact was inadvertently stated as beginning
on December 1, 1995 up to November 30, 1997.
In resolving the motions for reconsideration in this case,
this Court took into account the fact that petitioner
belongs to an industry imbued with public interest. As
such, this Court can not ignore the enormous cost that
petitioner will have to bear as a consequence of the full
retroaction of the arbitral award to the date of expiry of the
CBA, and the inevitable effect that it would have on the
national economy. On the other hand, under the policy of
social justice, the law bends over backward to
accommodate the interests of the working class on the
humane justification that those with less privilege in life
should have more in law. Balancing these two contrasting
interests, this Court turned to the dictates of fairness and
equitable justice and thus arrived at a formula that would
address the concerns of both sides. Hence, this Court held
that the arbitral award in this case be made to
retroact to the first day after the six-month period
following the expiration of the last day of the
CBA, i.e., from June 1, 1996 to May 31, 1998.
This Court, therefore, maintains the foregoing rule in
the assailed Resolution pro hac vice. It must be
clarified, however, that consonant with this rule, the
two-year effectivity period must start from June 1,
1996 up to May 31, 1998, not December 1, 1995 to
November 30, 1997.
During the interregnum between the expiration of the
economic provisions of the CBA and the date of effectivity
of the arbitral award, it is understood that the hold-over
principle shall govern, viz:
"[I]t 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
freedom period and/or until a new agreement is reached by
29
 Labor Relations
Case Digest Compilation
the parties." Despite the lapse of the formal effectivity of
the CBA the law still considers the same as continuing in
force and effect until a new CBA shall have been validly
executed.
Finally, this Court finds that petitioners prayer, that
the award of Two Thousand Pesos shall be paid to
rank-and-file employees during the two-year period,
is well-taken. The award does not extend to
supervisory employees of petitioner.
Dispositive portion: the Motion for Partial Modification is
GRANTED. The Resolution of February 22, 2000 is
PARTIALLYMODIFIED as follows: (a) the arbitral award shall
retroact to the two-year period from June 1, 1996 to May
31, 1998; (b) the increased wage award of Two Thousand
Pesos (P2,000.00) shall be paid to the rank-and-file
employees during the said two-year period.
MECO v. SECRETARY AND MEWA
February 22, 2000
FACTS: This is a motion for reconsideration case from the
decision promulgated on January 27, 1999.
This Court disposed of the case as follows:
The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions
contained in the unaffected portions of the Secretary of
Labor’s orders of August 19, 1996 and December 28, 1996,
and the modifications set forth above. The retirement fund
issue is remanded to the Secretary of Labor for reception of
evidence and determination of the legal personality of the
MERALCO retirement fund."
Dissatisfied with the Decision, some alleged members of
MEWA(Union for brevity) filed a motion for intervention and
a motion for reconsideration of the said Decision. A
separate intervention was likewise made by the supervisor’s
union (FLAMES) of petitioner corporations alleging that it
has bona fide legal interest in the outcome of the case.
Certain matters will be considered herein particularly those
involving the amount of wages and the retroactivity of the
Collective Bargaining Agreement (CBA) arbitral awards.
On the retroactivity of the CBA arbitral award, it is well to
recall that this petition had its origin in the renegotiation of
the parties’ 1992-1997 CBA insofar as the last two-year
period thereof is concerned. When the Secretary of Labor
assumed jurisdiction and granted the arbitral awards, there
was no question that these arbitral awards were to be given
retroactive effect. However, the parties dispute the
reckoning period when retroaction shall commence.
MERALCO’S CLAIM: Petitioner claims that the award
should retroact only from such time that the Secretary
of Labor rendered the award, invoking the 1995 decision
in Pier case.
On the other hand, the Union argues that the award
should retroact to such time granted by the
Secretary, citing the 1993 decision of St. Luke’s.
In the 1997 case of Mindanao Terminal, the Court applied
the St. Luke’s doctrine and ruled that:
"Therefore, in the absence of a specific provision of law
prohibiting retroactive of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g)
of the Labor Code, such as herein involved, public
respondent is deemed vested with plenary and discretionary
powers to determine the effectivity thereof."
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
ISSUE: When should the arbitral award retroact?
RULING: The Court in the January 27, 1999 Decision,
stated that the CBA shall be "effective for a period of 2
years counted from December 28, 1996 up to December
27, 1999." Parenthetically, this actually covers a three-year
period. Labor laws are silent as to when an arbitral award in
a labor dispute where the Secretary had assumed
jurisdiction by virtue of Article 263 (9) of the Labor Code
shall retroact.
In general, a CBA negotiated within six months after the
expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter,
the effectivity depends on the agreement of the parties. On
the other hand, the law is silent as to the retroactivity
of a CBA arbitral award or that granted not by virtue
of the mutual agreement of the parties but by
intervention of the government. Despite the silence of
the law, the Court rules herein that CBA arbitral awards
granted after six months from the expiration of the last CBA
shall retroact to such time agreed upon by both
employer and the employees or their union.
Absent such an agreement as to retroactivity, the award
shall retroact to the first day after the six-month period
following the expiration of the last day of the CBA should
there be one. In the absence of a CBA, the Secretary’s
determination of the date of retroactivity as part of
his discretionary powers over arbitral awards shall
control.
It is true that an arbitral award cannot per se be
categorized as an agreement voluntarily entered into by the
parties because it requires the interference and imposing
power of the State thru the Secretary of Labor when he
assumes jurisdiction. However, the arbitral award can be
considered as an approximation of a collective bargaining
agreement which would otherwise have been entered into
by the parties. The terms or periods set forth in Article 253-
A pertains explicitly to a CBA. But there is nothing that
would prevent its application by analogy to an arbitral
award by the Secretary considering the absence of an
applicable law. Under Article 253-A:" (I)f any such
agreement is entered into beyond six months, the parties
shall agree on the duration of retroactivity thereof." In
other words, the law contemplates retroactivity whether the
agreement be entered into before or after the said six-
month period. The agreement of the parties need not be
categorically stated for their acts may be considered in
determining the duration of retroactivity.
In this connection, the Court considers the letter of
petitioner’s Chairman of the Board and its President
addressed to their stockholders, which states that the CBA
"for the rank-and-file employees covering the period
December 1, 1995 to November 30, 1997 is still with the
Supreme Court," as indicative of petitioner’s recognition
that the CBA award covers the said period. Earlier,
petitioner’s negotiating panel transmitted to the Union a
copy of its proposed CBA covering the same period
inclusive. In addition, petitioner does not dispute the
allegation that in the past CBA arbitral awards, the
Secretary granted retroactivity commencing from the period
immediately following the last day of the expired CBA.
Thus, by petitioner’s own actions, the Court sees no
reason to retroact the subject CBA awards to a
different date. The period is herein set at two (2)
years from December 1, 1995 to November 30, 1997.
WHEREFORE, the motion for reconsideration is PARTIALLY
GRANTED and the assailed Decision is MODIFIED as follows:
(1) the arbitral award shall retroact from December 1, 1995
30
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Case Digest Compilation
to November 30, 1997; and (2) the award of wage is
increased from the original amount of One Thousand Nine
Hundred Pesos (P1,900.00) to Two Thousand Pesos
(P2,000.00) for the years 1995 and 1996. This Resolution is
subject to the monetary advances granted by petitioner to
its rank-and-file employees during the pendency of this
case assuming such advances had actually been distributed
to them. The assailed Decision is AFFIRMED in all other
respects.
Rivera vs Espiritu
G.R. No. 78061, November 24, 1988
DOCTRINE: A CBA is “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.” The primary purpose of a CBA is
the stabilization of labor-management relations in order to
create a climate of a sound and stable industrial peace. In
construing a CBA, the courts must be practical and realistic
and give due consideration to the context in which it is
negotiated and the purpose which it is intended to serve.
FACTS: June 5, 1998 - PAL pilots affiliated with the Airline
Pilots Association of the Philippines (ALPAP) went on a
three-week strike, causing serious losses to the financially
beleaguered flag carrier.  As a result, PAL’s financial
situation went from bad to worse. Faced with bankruptcy,
PAL adopted a rehabilitation plan and downsized its labor
force by more than one-third.
July 22, 1998 - PALEA went on strike to protest the
retrenchment measures adopted by the airline, which
affected 1,899 union members.  The strike ended four days
later, when PAL and PALEA agreed to a more systematic
reduction in PAL’s work force and the payment of separation
benefits to all retrenched employees.
August 28, 1998 - then President Joseph E. Estrada issued
Administrative Order No. 16 creating an Inter-Agency Task
Force (Task Force) to address the problems of the ailing
flag carrier.  Public respondent Edgardo Espiritu, then the
Secretary of Finance, was designated chairman of the Task
Force.  It was “empowered to summon all parties concerned
for conciliation, mediation (for) the purpose of arriving at a
total and complete solution of the problem.” Conciliation
meetings were then held between PAL management and the
three unions representing the airline’s employees, with the
Task Force as mediator.
September 4, 1998 - PAL management submitted to the
Task Force an offer by private respondent Lucio Tan,
Chairman and Chief Executive Officer of PAL, of a plan to
transfer shares of stock to its employees.
September 10, 1998 - the Board of Directors of PALEA
voted to accept Tan’s offer and requested the Task Force’s
assistance in implementing the same. Union members,
however, rejected Tan’s offer.  Under intense pressure from
PALEA members, the union’s directors subsequently
resolved to reject Tan’s offer.
September 17, 1998 - PAL informed the Task Force that it
was shutting down its operations effective September 23,
1998, preparatory to liquidating its assets and paying off its
creditors. The airline claimed that given its labor problems,
rehabilitation was no longer feasible, and hence, the airline
had no alternative but to close shop.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
September 18, 1998 - PALEA sought the intervention of the
Office of the President in immediately convening the parties
to prevent the imminent closure of PAL.
September 19, 1998 - PALEA informed the Department of
Labor and Employment (DOLE) that it had no objection to a
referendum on the Tan’s offer. Of the votes cast, 1,055
voted in favor of Tan’s offer while 1,371 rejected it.
September 23, 1998 -PAL ceased its operations and sent
notices of termination to its employees.
Two days later, the PALEA board wrote President Estrada
anew, seeking his intervention.  PALEA offered a 10-year
moratorium on strikes and similar actions and a waiver of
some of the economic benefits in the existing CBA. Tan,
however, rejected this counter-offer.
September 27, 1998- the PALEA board again wrote the
President proposing the following terms and conditions,
subject to ratification by the general membership: XXX
4. To assure investors and creditors of industrial
peace, PALEA agrees, subject to the ratification
by the general membership, (to) the
suspension of the PAL-PALEA CBA for a period
of ten (10) years, provided the following
safeguards are in place:
a. PAL shall continue recognizing PALEA as the
duly certified bargaining agent of the regular
rank-and-file ground employees of the
Company;
b. The ‘union shop/maintenance of
membership’ provision under the PAL-PALEA
CBA shall be respected.
c. No salary deduction, with full medical
benefits.
Among the signatories to the letter were herein petitioners
Rivera, Ramiso, and Aranas, as officers and/or members of
the PALEA Board of Directors.  PAL management accepted
the PALEA proposal and the necessary referendum was
scheduled.
October 2, 1998 - 5,324 PALEA members cast their votes in
a DOLE-supervised referendum. Of the votes cast, 61%
were in favor of accepting the PAL-PALEA agreement, while
34% rejected it.
October 7, 1998 - PAL resumed domestic operations. On
the same date, seven officers and members of PALEA filed
this instant petition to annul the September 27, 1998
agreement entered into between PAL and PALEA.
ISSUES: Is an original action for certiorari and prohibition
the proper remedy to annul the PAL-PALEA agreement of
September 27, 1998- NO, but in the higher interest of
justice, the Court looked at the substance of the
petition
RULING: The essential requisites for a petition for certiorari
under Rule 65 are:
(1) the writ is directed against a tribunal, a board, or
an officer exercising judicial or quasi-judicial
functions;
(2) such tribunal, board, or officer has acted without
or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of
jurisdiction; and
(3) there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law.
For writs of prohibition, the requisites are:
(1) the impugned act must be that of a “tribunal,
corporation, board, officer, or person, whether
exercising judicial, quasi-judicial or ministerial
functions;” and
31
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Case Digest Compilation
(2) there is no plain, speedy, and adequate remedy in
the ordinary course of law.”
The assailed agreement is clearly not the act of a tribunal,
board, officer, or person exercising judicial, quasi-judicial,
or ministerial functions.  It is not the act of public
respondents Finance Secretary Edgardo Espiritu and Labor
Secretary Bienvenido Laguesma as functionaries of the Task
Force.  Neither is there a judgment, order, or resolution of
either public respondents involved.  Instead, what exists is
a contract between a private firm and one of its labor
unions, albeit entered into with the assistance of the Task
Force.  The first and second requisites for certiorari and
prohibition are therefore not present in this case.
Furthermore, there is available to petitioners a plain,
speedy, and adequate remedy in the ordinary course of
law.  While the petition is denominated as one for certiorari
and prohibition, its object is actually the nullification of the
PAL-PALEA agreement.  As such, petitioners’ proper remedy
is an ordinary civil action for annulment of contract, an
action which properly falls under the jurisdiction of the
regional trial courts. Neither certiorari nor prohibition is the
remedy in the present case.
Petitioners further assert that public respondents were
partial towards PAL management.  They allegedly pressured
the PALEA leaders into accepting the agreement.  collective bargaining.  The right to free collective
Petitioners ask this Court to examine the circumstances that
led to the signing of said agreement.  This would involve
review of the facts and factual issues raised in a special civil
action for certiorari which is not the function of this Court.
Nevertheless, considering the prayer of the parties
principally we shall look into the substance of the petition,
in the higher interest of justice and in view of the public
interest involved, inasmuch as what is at stake here is
industrial peace in the nation’s premier airline and flag
carrier, a national concern.
ISSUE: Whether the PAL-PALEA agreement of September
27, 1998, stipulating the suspension of the PAL-PALEA CBA,
unconstitutional and contrary to public policy- NO
RULING: Petitioners contend that the controverted PAL-
PALEA agreement is void because it abrogated the right of
workers to self-organization and their right to collective
bargaining. Petitioners claim that the agreement was not
meant merely to suspend the existing PAL-PALEA CBA,
which expires on September 30, 2000, but also to foreclose
any renegotiation or any possibility to forge a new CBA for
a decade or up to 2008.  It violates the “protection to labor”
policy laid down by the Constitution.
Under Article 253-A of the Labor Code, insofar as
representation is concerned, a CBA has a term of five years,
while the other provisions, except for representation, may
be negotiated not later than three years after the
execution. Petitioners submit that a 10-year CBA
suspension is inordinately long, way beyond the maximum
statutory life of a CBA, provided for in Article 253-A.  By
agreeing to a 10-year suspension, PALEA, in effect,
abdicated the workers’ constitutional right to bargain for
another CBA at the mandated time.
We find the argument devoid of merit.
A CBA is “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.”
The primary purpose of a CBA is the stabilization of labor-
management relations in order to create a climate of a
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
sound and stable industrial peace. In construing a CBA, the
courts must be practical and realistic and give due
consideration to the context in which it is negotiated and
the purpose which it is intended to serve.
The assailed PAL-PALEA agreement was the result of
voluntary collective bargaining negotiations undertaken in
the light of the severe financial situation faced by the
employer, with the peculiar and unique intention of not
merely promoting industrial peace at PAL, but preventing
the latter’s closure.  We find no conflict between said
agreement and Article 253-A of the Labor Code.  Article
253-A has a two-fold purpose.  One is to promote industrial
stability and predictability.  Inasmuch as the agreement
sought to promote industrial peace at PAL during its
rehabilitation, said agreement satisfies the first purpose of
Article 253-A.  The other is to assign specific timetables
wherein negotiations become a matter of right and
requirement. Nothing in Article 253-A, prohibits the parties
from waiving or suspending the mandatory timetables and
agreeing on the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive
bargaining agent of PAL’s ground employees, that
voluntarily entered into the CBA with PAL.  It was also
PALEA that voluntarily opted for the 10-year suspension of
the CBA.  Either case was the union’s exercise of its right to
bargaining, after all, includes the right to suspend it.
The acts of public respondents in sanctioning the 10-year
suspension of the PAL-PALEA CBA did not contravene the
“protection to labor” policy of the Constitution.  The
agreement afforded full protection to labor; promoted the
shared responsibility between workers and employers; and
the exercised voluntary modes in settling disputes,
including conciliation to foster industrial peace."
Petitioners further allege that the 10-year suspension of the
CBA under the PAL-PALEA agreement virtually installed
PALEA as a company union for said period, amounting to
unfair labor practice, in violation of Article 253-A of the
Labor Code mandating that an exclusive bargaining agent
serves for five years only.
The questioned proviso of the agreement reads:
a. PAL shall continue recognizing PALEA as the duly
certified-bargaining agent of the regular rank-and-
file ground employees of the Company;
Said proviso cannot be construed alone.  In construing an
instrument with several provisions, a construction must be
adopted as will give effect to all. The aforesaid provision
must be read within the context of the next clause, which
provides:
b. The ‘union shop/maintenance of membership’
provision under the PAL-PALEA CBA shall be
respected.
The aforesaid provisions, taken together, clearly show the
intent of the parties to maintain “union security” during the
period of the suspension of the CBA.  Its objective is to
assure the continued existence of PALEA during the said
period.  We are unable to declare the objective of union
security an unfair labor practice.  It is State policy to
promote unionism to enable workers to negotiate with
management on an even playing field and with more
persuasiveness than if they were to individually and
separately bargain with the employer.  For this reason, the
law has allowed stipulations for “union shop” and “closed
shop” as means of encouraging workers to join and support
the union of their choice in the protection of their rights and
interests vis-à-vis the employer.
32
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Case Digest Compilation
Petitioners’ contention that the agreement installs PALEA as
a virtual company union is also untenable.  Under Article
248 (d) of the Labor Code, a company union exists when
the employer acts “[t]o initiate, dominate, assist or
otherwise interfere with the formation or administration of
any labor organization, including the giving of financial or
other support to it or its organizers or supporters.” The case
records are bare of any showing of such acts by PAL.
We also do not agree that the agreement violates the five-
year representation limit mandated by Article 253-A.  Under
said article, the representation limit for the exclusive
bargaining agent applies only when there is an extant CBA
in full force and effect.  In the instant case, the parties
agreed to suspend the CBA and put in abeyance the limit on
the representation period.
In sum, we are of the view that the PAL-PALEA agreement
dated September 27, 1998, is a valid exercise of the
freedom to contract.  Under the principle of inviolability of
contracts guaranteed by the Constitution, the contract must
be upheld.
FVC vs  SAMA-SAMANG
November 27, 2009
Facts: On December 22, 1997, the petitioner FVCLU-
PTGWO — the recognized bargaining agent of the rank-
and-file employees of the FVC Philippines, Incorporated
(company) — signed a five-year collective bargaining
agreement (CBA) with the company. The five-year CBA
period was from February 1, 1998 to January 30, 2003.
At the end of the 3rd year of the five-year term and
pursuant to the CBA, FVCLU-PTGWO and the company
entered into the renegotiation of the CBA and modified,
among other provisions, the CBA's duration. Article XXV,
Section 2 of the renegotiated CBA provides that "this re-
negotiation agreement shall take effect beginning February
1, 2001 and until May 31, 2003" thus extending the
original five-year period of the CBA by four (4)
months (from January 30, 2003 to May 31, 2003).
On January 21, 2003, nine (9) days before the January
30, 2003 expiration of the originally-agreed five-year
CBA term (and four [4] months and nine [9] days away
from the expiration of the amended CBA period), the
respondent Sama-Samang Nagkakaisang
Manggagawa sa FVC-Solidarity of Independent and
General Labor Organizations (SANAMA-SIGLO) filed
before the Department of Labor and Employment (DOLE) a
petition for certification election for the same rank-and-
file unit covered by the FVCLU-PTGWO CBA.
FVCLU-PTGWO moved to dismiss the petition on the
ground that the certification election petition was filed
outside the freedom period or outside of the sixty (60) days
before the expiration of the CBA on May 31, 2003.  EHCDSI
Med-Arbiter Arturo V. Cosuco: dismissed the petition on
the ground that it was filed outside the 60-day period
counted from the May 31, 2003 expiry date of the
amended CBA.  because its members are the very same ones who
SANAMA-SIGLO appealed the Med-Arbiter's Order to the
DOLE Secretary, contending that the filing of the petition on
January 21, 2003 was within 60-days from the January 30,
2003 expiration of the original CBA term.
DOLE Secretary Patricia A. Sto. Tomas:
 sustained SANAMA-SIGLO's position, thereby setting
aside the decision of the Med-Arbiter.
 ordered the conduct of a certification election in the
company
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
FVCLU-PTGWO moved for the reconsideration of the
Secretary's decision.
DOLE Acting Secretary Manuel G. Imson:
 granted the motion;
 set aside the August 6, 2003 DOLE decision and
dismissed the petition as the Med-Arbiter's Order of
June 17, 2003 did.
 held that the amended CBA (which extended the
representation aspect of the original CBA by four [4]
months) had been ratified by members of the
bargaining unit some of whom later organized
themselves as SANAMA-SIGLO, the certification
election applicant.
o Since these SANAMA-SIGLO members fully
accepted and in fact received the benefits
arising from the amendments, the Acting
Secretary rationalized that they also
accepted the extended term of the CBA
and cannot now file a petition for certification
election based on the original CBA expiration
date.
CA:
 set aside the challenged DOLE Secretary decisions
and reinstated her earlier ruling calling for a
certification election.
 It is clear from the foregoing that while the parties
may renegotiate the other provisions (economic and
non-economic) of the CBA, this should not affect the
five-year representation aspect of the original CBA.
 If the duration of the renegotiated agreement does
not coincide with but rather exceeds the original five-
year term, the same will not adversely affect the
right of another union to challenge the majority
status of the incumbent bargaining agent within sixty
(60) days before the lapse of the original five (5)
year term of the CBA.
Petitioners’ contentions:
 It renegotiated economic and other provisions of
the February 1, 1998 to January 30, 2003 CBA
with the company.
o The renegotiated CBA changed the CBA's
remaining term from February 1, 2001 to
May 31, 2003.
o This extension of the CBA term also changed
the union's exclusive bargaining
representation status and effectively moved
the reckoning point of the 60-day
freedom period from January 30, 2003 to
May 30, 2003.
 FVCLU-PTGWO thus moved to dismiss the petition
for certification election filed on January 21, 2003 (9
days before the expiry date on January 30, 2003 of
the original CBA) by SANAMA-SIGLO on the ground
that the petition was filed outside the authorized 60-
day freedom period.
 SANAMA-SIGLO is estopped from questioning the
extension of the CBA term under the amendments
approved the amendments, including the expiration
date of the CBA, and who benefited from these
amendments.
 the representation petition had been rendered
moot by a new CBA it entered into with the
company covering the period June 1, 2003 to May
31, 2008. 
 its exclusive representation status should fully
be in step with the term of the CBA and that this
status can be challenged only within 60 days before
the expiration of this term.
33
 Labor Relations
Case Digest Compilation
o Thus, when the term of the CBA was
extended, its exclusive bargaining status
was similarly extended so that the
freedom period for the filing of a petition
for certification election should be
counted back from the expiration of the
amended CBA term.
Respondent’s contentions:
 the SANAMA-SIGLO counsel, who is also the SIGLO
national president, is no longer in the position to
pursue the present case because the local union and
its leadership, who are principals of SIGLO, had
given up and abandoned their desire to contest the
representative status of FVCLU-PTGWO; and
 a new CBA had already been signed by FVCLU-
PTGWO and the company.
 Under these circumstances, SANAMA-SIGLO
contends that pursuing the case has become futile,
and accordingly simply adopted the CA decision
of July 25, 2006 as its position
Issues: Whether a CBA extended beyond 5 years also
affects the representation status of the SEBA. NO
Ruling: The legal question before us centers on the effect
of the amended or extended term of the CBA on the
exclusive representation status of the collective bargaining
agent and the right of another union to ask for certification
as exclusive bargaining agent. The question arises because
the law allows a challenge to the exclusive representation
status of a collective bargaining agent through the filing of
a certification election petition only within 60 days from the
expiration of the five-year CBA.
Article 253-A of the Labor Code covers this situation and it
provides:
Terms of a collective bargaining agreement. — 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 the majority status of the incumbent
bargaining agent shall be entertained and no certification
election shall be conducted by the Department of Labor
and Employment outside of the sixty day period
immediately before the date of expiry of such five-year
term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its
execution.
Any agreement on such other provisions of the Collective
Bargaining Agreement entered into within six (6) months
from the date of expiry of the term of such other
provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately
following such date. If any such agreement is entered
into beyond six months, the parties shall agree on the
duration of retroactivity thereof. In case of a deadlock in
the renegotiation of the collective bargaining agreement,
the parties may exercise their rights under this Code.   Representation Status
This Labor Code provision is implemented through Book V,
Rule VIII of the Rules Implementing the Labor Code which
states:
Sec. 14. Denial of the petition; grounds. — The Med-
Arbiter may dismiss the petition on any of the following
grounds:
xxx xxx xxx
(b) the petition was filed before or after the freedom
period of a duly registered collective bargaining
agreement; provided that the sixty-day period based on
the original collective bargaining agreement shall not be
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
affected by any amendment, extension or renewal of the
collective bargaining agreement (underscoring supplied).
xxx xxx xxx
We hold this FVCLU-PTGWO position to be correct,
but only with respect to the original five-year term of
the CBA  which, by law, is also the effective period of
the union's exclusive bargaining representation
status.
While the parties may agree to extend the CBA's original
five-year term together with all other CBA provisions, any
such amendment or term in excess of five years will not
carry with it a change in the union's exclusive collective
bargaining status.
Representation Status CANNOT Go Beyond 5 years
(Can Be Challenged with 60 Day prior to the
expiration of the FIRST 5 Years)
By express provision of the above-quoted Article 253-A, the
exclusive bargaining status cannot go beyond five
years and the representation status is a legal matter not
for the workplace parties to agree upon. In other words,
despite an agreement for a CBA with a life of more
than five years, either as an original provision or by
amendment, the bargaining union's exclusive
bargaining status is effective only for five years and
can be challenged within sixty (60) days prior to the
expiration of the CBA's first five years.
As we said in San Miguel Corp. Employees Union-PTGWO,
et al.  v. Confesor, San Miguel Corp., Magnolia Corp. and
San Miguel Foods, Inc., 22 where we cited the
Memorandum of the Secretary of Labor and Employment
dated February 24, 1994:
In the event however, that the parties, by mutual
agreement, enter into a renegotiated contract with a
term of three (3) years or one which does not coincide
with the said five-year term and said agreement is
ratified by majority of the members in the bargaining
unit, the subject contract is valid and legal and therefore,
binds the contracting parties. The same will however
not adversely affect the right of another union to
challenge the majority status of the incumbent
bargaining agent within sixty (60) days before the
lapse of the original five (5) year term of the CBA.
In the present case, the CBA was originally signed for a
period of five years, i.e., from February 1, 1998 to January
30, 2003, with a provision for the renegotiation of the
CBA's other provisions at the end of the 3rd year of the
five-year CBA term. Thus, prior to January 30, 2001 the
workplace parties sat down for renegotiation but instead of
confining themselves to the economic and non-economic
CBA provisions, also extended the life of the CBA for
another four months, i.e., from the original expiry date on
January 30, 2003 to May 30, 2003.
Extended CBA has NO LEGAL EFFECT on
As discussed above, this negotiated extension of the
CBA term has no legal effect on the FVCLU-PTGWO's
exclusive bargaining representation status which
remained effective only for five years ending on the
original expiry date of January 30, 2003. Thus, sixty
days prior to this date, or starting December 2, 2002,
SANAMA-SIGLO could properly file a petition for
certification election. Its petition, filed on January 21, 2003
or nine (9) days before the expiration of the CBA and of
FVCLU-PTGWO's exclusive bargaining status, was
seasonably filed.
34
 Labor Relations
Case Digest Compilation

SANAMA-SIGLO no longer interest

We thus find no error in the appellate court's ruling
reinstating the DOLE order for the conduct of a certification
election. If this ruling cannot now be given effect, the only
reason is SANAMA-SIGLO's own desistance; we cannot
disregard its manifestation that the members of
SANAMA themselves are no longer interested in
contesting the exclusive collective bargaining agent
status of FVCLU-PTGWO. This recognition is fully in
accord with the Labor Code's intent to foster industrial
peace and harmony in the workplace. 
St. Luke’s Medical Center, Inc. vs. Torres and St.
Luke’s Medical Center Association-Alliance of
Filipino Workers
June 29, 1993
Consolidation of Cases
The decision which upheld the legitimacy of Del Prado’s
status was appealed, as well as the decision for the
interpleader. Hence, the cases were consolidated.
Request to resume negotiation
Sep. 17, 1980, the Local union wrote to the Employer for
the resumption of their negotiations. The Employer
assented and negotiations were resumed.
However, a deadlock resulted as to the issues on the
across-the-board monthly and meal allowances. To pre-
empt the impending strike as voted by the local union’s
membership, the employer lodged this petition before
the Secretary of Labor.

Parties: Decision as to the Consolidated Cases

Employer - St. Luke’s Medical Center – On Jan. 22, 1991, it was upheld and declared that Gregorio
Local union - St. Luke’s Medical Center Association-Alliance del Prado and his group were the legitimate officials of
of Filipino Workers the AFW and the acknowledged group to represent
Federation to which the union is affiliated - Alliance of AFW.
Filipino Workers [AFW]
Decision by the Secretary of Labor
Facts: On Jan. 28, 1991, The SOL Torres issued an order which
Petition for legitimacy required the parties, both employer and Local union, to
When the CBA between the parties for 1987-1990 was finalize their 1990-1993 CBA to retroact to the expiration
forged, the President of AFW was Gregorio del Prado. of the anterior CBA (July 30, 1990). The parties were
And prior to that CBA, AFW was plagued by internal instructed to incorporate in the new CBA the
squabble splitting its leadership between Del Prado and disposition on economic and non-economic issues:
Purita Ramirez. Hence, the employer filed a petition
before the DOLE questioning the legitimacy of the 1. First Year – 510Php in compliance with the
leadership of Del Prado. government mandated daily salary increase of
P17.00; and P630.00 CBA across the board
On July 4, 1990, while the petition for legitimacy was monthly salary increase.
pending, the Local union sent a letter to the employer to 2. Second Year - P700.00 across the board monthly
inform the employer that the 1987-1990 CBA was about to salary increase.
expire. The local union manifested it’s intention to renew 3. Second Year - P700.00 across the board monthly
the CBA. salary increase.

When the negotiations transpired, the employer proposed Both parties filed an MR, which were both denied by
that a maximum across-the-board monthly salary SOL Torres.
increase of P375.00 per employee.
Issues: Whether or not the ruling of SOL Torres committed
While the local union demanded a P1,500.00 hike or grave abuse of discretion amounting to lack or excess of
50% increase based on the latest salary rate of each jurisdiction. – NO.
employee, whichever is higher.
Ruling:
Case for Interpleader [1] The order as to the dispositions on the economic
In the meantime, a case for interpleader was filed by the issues were valid.
Employer seeking to settle the question as to who between
Del Prado and Diwa was authorized to collect dues assessed First, Employer argues that the economic provisions
from the employees. The Med-Arbiter recognised Del adopted were unreasonable and baseless.
Prado’s right to collect federation dues. This order was
elevated to the Labor Secretary. Rule: In resolving the economic issues, SOL Torres merely
adopted in toto the Employers proposals.
Continuation of Negotiations Consequently, the Employer cannot now claim that the
The negotiations again were disturbed due by the other awards are unreasonable and baseless.
wing, lead by Ramirez’. They expressed objections to the
on-going negotiations and to a petition for CE filed by [2] The local union has a separate and distinct
another Labor Organization of the Employer. personality from its affiliate. Hence, the local union,
being the SEBA, can enter into collective bargaining
However, the local union won the CE, a ndw as certified as negotiations to represent the bargaining unit.
the SEBA for the r&f employees.

35
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 Labor Relations
Case Digest Compilation

Second, Employer denies negotiating with the local January 1-28, 1991 = 28 days
union since the “talks” were merely infomal —————————
negotiations due to the representation issue of AFW. TOTAL = 182 days (6 months and 2 days)
Absence of formal negotiations, no collective bargaining
On the other hand, the local union argues that Art [265]
could have taken place. SOL should have ordered the
does not apply to arbitral awards such as those involved in
conducting of negotiations, rather than the order.
the instant case.
Rule: It is immaterial whether the representation issue
Rule: the effectivity of the Order of January 28, 1991, must
within AFW has been resolved with finality or not. The
retroact to the date of the expiration of the previous CBA.
squabble could not possibly serve as a bar to any collective
bargaining since AFW is not the real party-in-interest to the
The provision of law invoked by the the Employer, Article
talks; rather, the negotiations were confined to
[265], speak of agreements by and between the
Employer and the local union which is affiliated to AFW.
parties, and not arbitral awards.
Only the SEBA, which is the local union, possesses legal
Hence, absence of a specific provision of law prohibiting
standing to negotiate with Employer. The personality of the
retroactivity of the effectivity of arbitral awards issued by
federation is distinct from that of it’s affiliates.
the Secretary of Labor pursuant to Article 263 (g) of the
Labor Code, such as herein involved, SOL Torres is
The Employer cannot pretend to be unaware of such
deemed vested with plenary and discretionary
legal principles as it enjoys legal advice from their
powers to determine the effectivity thereof.
counsel. Hence, the SC ruled that it conveniently used the
representation issue within AFW to skirt entering into
bargaining negotiations with the Local Union.

[3] The Employer’s act of filing of a petition before

the SOL effectively recognized the SOL’s jurisdiction
over the case.

Third, the Employer argues that the awards were granted
prematurely.
Rule: Immediately, after the deadlock in the talks, it was
the Employer which filed a petition with the SOL for the
latter to assume jurisdiction over the labor dispute. In
effect, the Employer submitted itself to the SOL’s
authority and recognized the latter's power to settle
the labor dispute.
Hence, the SOL’s Order cannot be said to be “premature,
pre-emptive of the right of the parties to collectively
bargain” just because it is unfavorable to one or other.
[4] As to Retroactivity
Lastly, the Employer argues that under Art. [265], it
provides that the: “Bargaining Agreement entered into
within six (6) months from the date of expiry of the term of
such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following
such date. If any such agreement is entered into beyond
six months, the parties shall agree on the duration of
retroactivity thereof.”
UNION OF FILIPRO EMPLOYEES v. NLRC and
NESTLE
G.R. No. 91025. December 19, 1990
FACTS: June 22, 1988, the petitioner Union of the Filipro
Employees (UFE), the sole and exclusive bargaining agent
of all rank-and-file employees of Nestle Philippines, (private
respondent) filed a Notice of Strike at the Department of
Labor raising the issues of CBA deadlock and unfair labor
practice.
The private respondent assailed the legal personality of the
proponents of the said notice of strike to represent the
Nestle employees. This notwithstanding, the National
Conciliation and Mediation Board (NCMB) proceeded to
invite the parties to attend the conciliation meetings and to
which private respondent failed to attend contending that it
will deal only with a negotiating panel duly constituted and
mandated in accordance with the UFE Constitution and By-
laws.
The records show that before the filing of said notice of
strike, or on June 30, 1987 (expiry date of the CBA),
the respective CBAs in the four (4) units of Nestle, in
Alabang-Cabuyao, Makati, Cagayan de Oro and Cebu/Davao
work locations had all expired.

Under the said CBAs, Alabang/Cabuyao and Makati units

Moreover, under Art 13. of the CC, provides that there are were represented by the UFE; the Cagayan de Oro unit was
30 days in one month. Applying such, the questioned represented by WATU; while the Cebu-Davao was
Order of January 28, 1991 was issued beyond the six- represented by TUPAS.
month period, graphically shown thus: Prior to the expiration of the CBAs for Makati and
Alabang/Cabuyao, UFE submitted to the company a list of
July 30, 1990 Expiration CBA proposals. The company expressed its readiness to
negotiate a new CBA for Makati and Alabang/Cabuyao units
July 31 = 1 day but reserved the negotiation for Cagayan de Oro and Cebu-
August 1-31, 1990 = 31 days Davao considering that the issue of representation for the
September 1-30, 1990 = 30 days latter units was not yet settled.
October 1-31, 1990 = 31 days
November 1-30, 1990 = 30 days
December 1-31, 1990 = 31 days
36
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 Labor Relations
Case Digest Compilation
On June 10, 1987 and July 28, 1987, UFE was certified as
the sole and exclusive bargaining representative of Cagayan
de Oro and Cebu/Davao units, respectively.
On September 14, 1987, the Company terminated from
employment all UFE Union officers, headed by its president,
Mr. Manuel Sarmiento, and all the members of the
negotiating panel for instigating and knowingly participating
in a strike staged at the Makati, Alabang, Cabuyao and
Cagayan de Oro on September 11, 1987 without any notice
of strike filed and a strike vote obtained for the purpose.
On September 21, 1987, the union filed a complaint for
illegal dismissal.
Labor Arbiter Decision
upheld the validity of the dismissal of said union officers.
The decision was later on affirmed by the respondent NLRC
en banc,
Respondent company contentions
"with the dismissal of UFE officers including all the members
of the union negotiating panel as later on confirmed by the
NLRC en banc, said union negotiating panel thus ceased to
exist and its former members divested of any legal
personality, standing and capacity to act as such or
represent the union in any manner whatsoever."
Union contentions
The union officers asserted their authority to represent the
regular rank-and-file employees of Nestle, Philippines, being
the duly elected officers of the union.
In the meantime, private respondent sought guidelines
from the Department of Labor on how it should treat letters
from several splinter groups claiming to have possessed
authority to negotiate in behalf of the UFE.
It is noteworthy that aside from the names of the
negotiating panel submitted by one UFE officials, three (3)
other groups in the Nestle plant in Cabuyao and two groups
in the Makati office have expressed a desire to bargain with
management professing alleged authorization from and by
the general membership. These groups however, it must be
noted, belong to just one (1) union, the UFE.
"Any attempt on the part of management to
directly deal with any of the factions claiming to
have the imprimatur of the majority of the
employees, or to recognize any act by a
particular group to adopt the deadlock counter
proposal of the management, at this stage,
would be most unwise. It may only fan the fire."
On March 20, 1988 and August 5, 1988, the company
concluded separate CBAs with the general
membership of the union at Cebu/Davao and Cagayan
de Oro units, respectively. The workers thereat likewise
conducted separate elections of their officers.
Assailing the validity of these agreements, the union filed
a case of ULP against the company with the NLRC-
NCR Arbitration Branch on November 16, 1988.
On October 18, 1988, petitioner filed a motion asking
the Secretary of Labor to assume jurisdiction over the
dispute of deadlock in collective bargaining between
the parties.
On October 28, 1988, Labor Secretary Franklin Drilon
certified to the NLRC the said dispute between the UFE and
Nestle, Philippines, the relevant portion of which reads as
follows:
"WHEREFORE, above premises considered, this
office hereby certifies the sole issue of deadlock
in CBA negotiations affecting the Makati, Alabang
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
and Cabuyao units to the National Labor
Relations Commission for compulsory arbitration.
"The NLRC is further directed to call all the
parties immediately and resolve the CBA
deadlock within twenty (20) days from
submission of the case for resolution." (Rollo, p.
225)
On June 5, 1989, the Second Division of the NLRC
promulgated a resolution granting wage increase and
other benefits to Nestle’s employees, ruling on non-
economic issues, as well as absolving the private
respondent of the Unfair Labor Practice charge. The
dispositive portion states as follows
"WHEREFORE, as aforestated, the parties are
hereby ordered to execute and implement
through their duly authorized
representatives a collective bargaining
agreement for a duration of five (5) years
from promulgation of this Resolution.
ISSUE: whether or not the respondent NLRC had acted with
grave abuse of discretion and committed serious errors
when it ruled that the CBA is effective only upon the
promulgation of the assailed resolution (giving it only a
prospective effect
RULING: NO.
The Court finds the provisions of Article 253 and Article
253-A (now 264 and 265)of the Labor Code as
amended by R.A. 6715 as the applicable laws,
"Art. 253. Duty to bargain collectively when there
exists a collective bargaining agreement. —
When there is a collective bargaining agreement,
the duty to bargain collectively shall also mean
that neither party shall terminate nor modify
such agreement during its lifetime. However,
either party can serve a written notice to
terminate or modify the agreement at least sixty
(60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo
and to continue in full force and effect the terms
and conditions of the existing agreement during
the 60-day period and/or until a new agreement
is reached by the parties.
Art. 253-A. Terms of a collective bargaining
agreement. — 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 the majority status of the
incumbent bargaining agent shall be entertained
and no certification election shall be conducted
by the Department of Labor and Employment
outside of the sixty-day period immediately
before the date of expiry of such five year term
of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining
Agreement shall be renegotiated not later than
three (3) years after its execution. Any
agreement on such other provisions of the
Collective Bargaining Agreement entered into
within six (6) months from the date of expiry of
the term of such other provisions as fixed in the
Collective Bargaining Agreement, shall retroact
to the day immediately following such date. If
any such agreement is entered into beyond six
months, the parties shall agree on the duration
of retroactivity thereof . In case of a deadlock in
the renegotiation of the collective bargaining
37
 Labor Relations
Case Digest Compilation
agreement, the parties may exercise their rights
under this Code." (Emphasis supplied)
In the light of the foregoing, this Court upholds the
pronouncement of the NLRC holding the CBA to be
signed by the parties effective upon the promulgation
of the assailed resolution. It is clear and explicit from
Article 253-A that any agreement on such other
provisions of the CBA shall be given retroactive effect
only when it is entered into within six (6) months
from its expiry date. If the agreement was entered
into outside the six (6) month period, then the
parties shall agree on the duration of the retroactivity
thereof.
The assailed resolution which incorporated the CBA to
be signed by the parties was promulgated June 5,
1989, and hence, outside the 6 month period from
June 30, 1987, the expiry date of the past CBA. Based
on the provision of Section 253-A, its retroactivity
should be agreed upon by the parties. But since no
agreement to that effect was made, public
respondent did not abuse its discretion in giving the
said CBA a prospective effect. The action of the public
respondent is within the ambit of its authority vested
by existing laws.
In assailing the public respondent’s actuation, the Union
cited the case of Villar v. Inciong (121 SCRA 444) where
this Court ruled:
". . . While petitioners were charged for alleged commission
of acts of disloyalty inimical to the interests of the Amigo
Employees Union-PAFLU in the Resolution of February 14,
1977 of the Amigo-Employees Union-PAFLU and on
February 15, 1977, PAFLU and the company entered into
and concluded a new collective bargaining agreement,
petitioners may not escape the effects of the security clause
under either the old CBA or the new CBA by claiming that
the old CBA had expired and that the new CBA cannot be
given retroactive enforcement. To do so would be to create
a gap during which no agreement would govern, from the
time the old contract expired to the time a new agreement
shall have been entered into with the union . . ."
In the aforecited case, the Court only pointed out that, it is
not right for union members to argue that they cannot be
covered by the past and the new CBAs both containing the
same closed-shop agreement for acts committed during the
interregnum. What was emphasized by this Court is that in
no case should there be a period in which no
agreement would govern at all. But nowhere in the
said pronouncement did We rule that every CBA
contracted after the expiry date of the previous CBA
must retroact to the day following such date. Hence,
it is proper to rule that in the case at bar, the clear
and unmistakable terms of Articles 253 and 253-A
must be deemed controlling.
Articles 253 and 253-A mandate the parties to keep the
status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day
period prior to the expiration of the old CBA and/or until a
new agreement is reached by the parties. Consequently,
there being no new agreement reached, the
automatic renewal clause provided for by the law
which is deemed incorporated in all CBAs, provides
the reason why the new CBA can only be given a
prospective effect.
As to the Union’s claims that they were deprived of
monetary benefits
Petitioner claims that because of the prospective effect of
the CBA, union members were deprived of substantial
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
amount of monetary benefits which they could have
enjoyed had the CBA be given retroactive effect. This would
include backwages, the immediate effects of the mandated
wage increase on the fringe benefits such as the 13th and
14th month pay, overtime premium, and right to differential
pay, leaves, etc. This Court, is not unmindful of these.
Nevertheless, We are convinced that the CBA formulated
by public respondent is fair, reasonable and just.
Even if prospective in effect, said CBA still entitles the
Nestle workers and employees reasonable
compensation and benefits which, in the opinion of
this Court, is one of the highest, if not the highest in
the industry. Petitioner did not succeed in
overcoming the presumption of regularity in the
performance of the public respondent’s functions.
Even if the resolution fell short of meeting the
numerous demands of the union, the petitioner failed
to establish that public respondent committed grave
abuse of discretion in not giving the CBA a
retrospective effect.
As to the inadequacy of the terms of and conditions
According to petitioner, the terms and conditions thereof
are inadequate, unreasonable, incompetitive and thus,
prejudicial to the workers. It further decries public
respondent’s alleged taking side with the private
Respondent. Petitioner contends that in issuing the assailed
resolutions, public respondent considered only the position
of the private respondent and totally disregarded that of the
petitioner. It further avers that the awards are bereft of any
factual and legal basis.
Petitioner made so many claims and statements which were
adopted and asserted without good ground. It fails to
substantiate why, in not granting its demands for the
inclusion in the CBA of a "Contract Signing Bonus" and a
"Modified Union Shop Agreement," the assailed resolutions
were erroneous and were drawn up arbitrarily and
whimsically.
In the case of Palencia v. National Labor Relations
Commission, G.R. No. 75763, August 21, 1987, 153 SCRA
247, We ruled that the findings of fact of the then Court of
Industrial Relations (now NLRC), are conclusive and will not
be disturbed.
"Following a long line of decisions this Court has
consistently declined to disturb the findings of fact of the
then Court of Industrial Relations whose functions the NLRC
now performs. [Pambusco Employees Union Inc. v. Court of
Industrial Relations, 68 Phil. 591 (1939); Manila Electric Co.
v. National Labor Union, 70 Phil. 617 (1940); San Carlos
Milling Co. v. Court of Industrial Relations, 111 Phil. 323
(1961),1 SCRA 734; Philippine Educational Institution v.
MLQSEA Faculty Assn., 135 Phil. 282 (1968), 26 SCRA 272;
University of Pangasinan Faculty Union v. University of
Pangasinan and NLRC, G.R. No. L-63122, February 20,
1984, 127 SCRA 691]. The findings of fact are conclusive
and will not be disturbed in the absence of a showing that
there has been grave abuse of discretion. [Philippine
Educational Institution v. MLQSEA Faculty Association, 26
SCRA 272, 276] and there being no indication that the
findings are unsubstantiated by evidence [University of
Pangasinan Faculty Union v. University of Pangasinan and
NLRC, G.R. No. 63122, February 20, 1984, 127 SCRA 694,
704]."cralaw virtua1aw library
Moreover, the NLRC is in the best position to formulate a
CBA which is equitable to all concerned. Because of its
expertise in settling labor disputes, it is imbued with
competence to appraise and evaluate the evidence and
positions presented by the parties. In the absence of a clear
showing of grave abuse of discretion, the findings of the
38
 Labor Relations
Case Digest Compilation
respondent NLRC on the terms of the CBA should not be
disturbed.
Taken as a whole, the assailed resolutions are after all
responsive to the call of compassionate justice observed in
labor law and the dictates of reason which is considered
supreme in every adjudication.
Mindanao v Confesor in her capacity as Sec. of
Labor & Association of Labor Unions
May 15, 1997
Facts: Petitioner Mindanao Terminal and Brokerage
Service, Inc., (hereafter referred to as the Company) and
respondent Associated Labor Unions, (hereafter referred to
as the Union) entered into a collective bargaining
agreement for a period of five (5) years, starting on August
1, 1989, and ending July 31, 1994.
On the third year of the CBA on August 1, 1992, the
Company and the Union met to renegotiate the
provisions of the CBA for the fourth and fifth years.
The parties, however, failed to resolve some of their
differences, as a result of which a deadlock developed.
On November 12, 1992, a formal notice of deadlock was
sent to the Company on the following issues: wages,
vacation leave, sick leave, hospitalization, optional
retirement, 13th month pay and signing bonus.
On November 18, 1992, the Company announced a
cost-cutting or retrenchment program.
Charging unfair labor practice and citing the deadlock in the
negotiations, the Union filed, on December 3, 1992, a
notice of strike with the National Conciliation and Mediation
Board (NCMB).
On December 18, 1992, as a result of a conference called
by the NCMB, the Union and the Company went back to
the bargaining table and agreed to some provisions.
The agreement left only one issue for resolution of the
parties, namely, retirement. Even this issue was soon
settled as the parties met before the NCMB on January 14,
1993 and then agreed on an improved Optional Retirement
Clause. Thus, as the Med-Arbiter noted in the record of
the January 14, 1993 conference, "the issues raised
by the notice of strike had been settled and said
notice is thus terminated."
Company’s contention: But no sooner had he stated this
than the Company claimed that the wage increases which
it had agreed to give to the employees should be
creditable as compliance with future mandated wage
increases. In addition, it maintained that such increases
should not be retroactive.
Reacting to this development, the Union again filed a Notice
of Strike on January 28, 1993, with the NCMB. On March 7,
1993, the Union staged a strike.
The NCMB tried to settle the issues calling for this purpose
a conciliation conference on March 9, 1993. As conciliation
proved futile, the Company petitioned respondent Secretary
of Labor and Employment to assume jurisdiction over the
dispute.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Sec of Labor order: After submission by the parties of
their position papers, the Secretary of Labor issued an
Order dated May 14, 1993, ordering the Company and the
Union to incorporate into their existing collective bargaining
agreement all improvements reached by them in the course
of renegotiations. The Secretary of Labor held that the
wage increases for the fourth and fifth years of the
CBA were not to be credited as compliance with
future mandated increases. In addition, the fourth
year wage increase was to be retroactive to August
1992 and was to be implemented until July 31, 1993, while
the fifth year wage increase was to take effect on August 1,
1993 until the expiration of the CBA. 
On May 31, 1993, the Company filed an MR but it was
denied.
Company’s contention: The petitioner contends that
respondent erred in making the fourth year wage increase
retroactive to August 1, 1992. It denies the power of the
Secretary of Labor to decree retroaction of the wage
increases, as the respondent herself had stated in her order
subject of this petition, that it had been more than six
(6) months since the expiration of the third
anniversary of the CBA and, therefore, the automatic
renewal clause of Art. 253-A of the Labor Code had no
application. Although petitioner originally opposed giving
retroactive effect to their agreement, it subsequently
modified its stand and agreed that the fourth year wage
increase and the other provisions of the CBA be made
retroactive to the date the Secretary of Labor assumed
jurisdiction of the dispute on March 10, 1993.
Issue: W/n it was proper for the Sec of Labor to rule that
the fourth year wage increase be retroactive? –YES
Art. 253-A of the Labor Code reads:Terms of a collective
bargaining agreement. — 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 the majority status
of the incumbent bargaining agent shall be entertained and
no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-
day period immediately before the date of expiry of such
five year term of the Collective Bargaining Agreement. All
other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three
(3) years after its execution.
Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within
six (6) months from the date of expiry of the term of
such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day
immediately following such date.
If any such agreement is entered into beyond six
months, the parties shall agree on the duration of
retroactivity thereof. In case of a deadlock in the
renegotiation of the collective bargaining agreement, the
parties may exercise their rights under this Code.
The respondent indeed stated in her order of May 14, 1993
that "this case is clearly beyond the scope of the automatic
renewal clause," but she also stated in the same order that
"the parties have reached an agreement on all the
renegotiated provisions of the CBA" on January 14,
1993, i.e., within six (6) months of the expiration of
the third year of the CBA.
39
 Labor Relations
Case Digest Compilation
The signing of the CBA is not determinative of the
question whether "the agreement was entered into
within six months from the date of expiry of the term of
such other provisions as fixed in such collective bargaining
agreement" within the contemplation of Art. 253-A..
As already stated, on November 12, 1992, the Union
sent the Company a notice of deadlock in view of
their inability to reconcile their positions on the main
issues, particularly on wages. The Union filed a notice of
strike. However, on December 18, 1992, in a
conference called by the NCMB, the Union and the
Company agreed on a number of provisions of the
CBA, including the provision on wage increase, leaving
only the issue of retirement to be threshed out. In time,
this, too, was settled, so that in his record of the January
14, 1993 conference, the Med-Arbiter noted that "the issues
raised by the notice of strike had been settled and said
notice is thus terminated." It would therefore seem that
at that point, there was already a meeting of the
minds of the parties, which was before the February
1993 end of the six-month period provided in Art.
253-A.
The fact that no agreement was then signed is of no
moment.
Art. 253-A refers merely to an "agreement" which,
according to Black's Law Dictionary is "a coming together of
minds; the coming together in accord of two minds on a
given proposition." This is similar to Art. 1305 of the Civil
Code's definition of "contract" as "a meeting of minds
between two persons."
The two terms, "agreement" and "contract," are
indeed similar, although the former is broader than
the latter because an agreement may not have all the
elements of a contract. As in the case of contracts,
however, agreements may be oral or written.  Hence, even
without any written evidence of the Collective Bargaining
Agreement made by the parties, a valid agreement existed
in this case from the moment the minds of the parties met
on all matters they set out to discuss. As Art. 1315 of the
Civil Code states:
Contracts are perfected by mere consent, and from that
moment, the parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in
keeping with good faith, usage and law.
The Secretary of Labor found that "as early as
January 14, 1993, well within the six (6) month
period provided by law, the Company and the Union
have perfected their agreement."  The claim of
petitioner to the contrary notwithstanding, this is a finding
of an administrative agency which, in the absence of
evidence to the contrary, must be affirmed.
Moreover, the order of the Secretary of Labor may be
considered in the nature of an arbitral award,
pursuant to Art. 263(g) of the Labor Code, and,
therefore, binding on the parties.
In St.  Luke's Medical Center, Inc.  v. Torres,  a
deadlock also developed during the CBA negotiations
between management and the union. The Secretary of
Labor assumed jurisdiction and ordered the retroaction of
their CBA to the date of expiration of the previous CBA. As
in this case, it was alleged that the Secretary of Labor
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
gravely abused his discretion in making his award
retroactive. In dismissing this contention this Court held:
Therefore, in the absence of a specific provision of law
prohibiting retroactivity of the effectivity of arbitral awards
issued by the Secretary of Labor pursuant to Article 263(g)
of the Labor Code, such as herein involved, public
respondent is deemed vested with plenary and
discretionary powers to determine the effectivity thereof.
This case is controlled by the ruling in that case.
With respect to the issue of the creditability of the
fourth and fifth year wage increases,
The Court takes cognizance of the fact that the question
was raised by the Company only when the six-month period
was almost over and all that was left to be done by the
parties was to sign their agreement. Before that, the
Company did not qualify its position. It should have
known that crediting of wage increases in the CBA as
compliance with future mandated increases is the
exception rather than the rule. For the general rule is
that such increases are over and above any increase that
may be granted by law or wage order. As held
in Meycauayan College v. Drilon: 
Increments to the laborers' financial gratification, be they in
the form of salary increases or changes in the salary scale
are aimed at one thing — improvement of the economic
predicament of the laborers. As such they should be viewed
in the light of the States avowed policy to protect labor.
Thus, having entered into an agreement with its
employees, an employer may not be allowed to renege
on its obligation under a collective bargaining
agreement should, at the same time, the law grant
the employees the same or better terms and
conditions of employment. Employee benefits derived
from law are exclusive of benefits arrived at through
negotiation and agreement unless otherwise provided by
the agreement itself or by law.
For making a belated issue of "creditability,"
petitioner is correctly said to have "delay[ed] the
agreement beyond the six (6) month period so as to
minimize its expenses to the detriment of its
workers" and its conduct to smack of "bad faith and
[to run counter] to the good faith required in
Collective Bargaining." 
If petitioner wanted to be given credit for the wage
increases in the event of future mandated wage increases,
it should have expressly stated its reservation during the
early part of the CBA negotiations.
Cruz v. Calleja
August 13, 1990
Facts: In 1984, the Allied Bank Employees Union (ABEU),
which was then a mere chapter of the National Union of
Bank Employees (NUBE), elected its officers, whose term of
office would expire on February 10, 1987.
Before the expiration of the old CBA between the ABEU and
Allied Bank on June 30, 1984, the ABEU negotiated for a
new CBA. However, because the Union and the Bank could
not agree on major economic proposals, a bargaining
deadlock ensued.
40

Case Digest Compilation
ABEU filed a Notice of Strike on November 26, 1984.
Labor Minister Blas Ople assumed jurisdiction over the labor
dispute on December 19, 1984.
In defiance of the Minister’s return-to-work order, the
Union declared a strike on January 3, 1985 and
established picket lines at the Bank’s Head Office and
Binondo Branch.
Labor Minister Ople’s Order: On January 31, 1985,
Minister Ople issued an Order resolving the deadlock
issues in the collective bargaining and in effect drew
up a new CBA for the parties. The 3-year term of the
new CBA would expire on January 31, 1988.
The union asked for reconsideration, and on February
11, 1985, continued its strike. Two hundred seventy (270)
striking officers and employees of ABEU (among them were
the private respondents) were dismissed by the Bank for
abandonment of work and commission of illegal acts.
On March 4, 1985, the Bank filed in the Arbitration Branch,
of the NLRC, a petition to declare the strike
illegal.chanrobles lawlibrary : rednad
Upon receipt of the Resolution dated March 7, 1985
modifying Minister Ople’s order dated January 31, 1985, the
ABEU on March 8, 1985 lifted its picket lines and
announced its intention to return to work.
However, the Bank refused to admit the
On March 19, 1985, a referendum was conducted by
the ABEU to ratify the 1985-1988 CBA incorporating the
additional benefits awarded in the March 7, 1985 resolution.
A majority voted for ratification.
On July 15, 1985, the Bank filed a motion praying for the
issuance of an order directing the Union to hold a general
membership meeting for the purpose of designating union
representatives who would sign the CBA inasmuch as the
Union’s officers had already been dismissed by the Bank.
On November 11, 1985, the NUBE issued a special
resolution creating an ABEU Interim Board tasked to sign
the new CBA with the Bank in lieu of the union officers who
had been dismissed by the Bank.
In January, 1987, the Interim Board commenced
negotiations with the Bank for a one-year extension
of the CBA which was expiring on January 31, 1988. A
drive for the extension of the CBA began in March 1987 for
the referendum would take place on June 23, 1987.
However, the Interim Board also submitted to the
referendum the matter of extending for one year the term
of office of the Interim Board, in effect, postponing for
one year the election of the regular officers of the
Union. The overwhelming majority of the union members
voted yes in the referendum. The postponement of the
election did not sit well with the ousted officers led by
private respondent Rolando Ocampo. On June 23, 1987,
they filed in the Office of Labor Secretary Franklin Drilon a
letter-petition against the postponement of the election of
the officers of the Union and to nullify the one-year
extension of the CBA.
After the referendum result was announced on July 3, 1987,
the Bank granted a P600 "signing bonus" to all the
employees. Private respondents and other employees
stationed in the Strata Building in Pasig, Metro Manila,
collected the signing bonus but, in protest, they deposited it
in the Equitable Banking Corporation, payable to Allied Bank
through Secretary Drilon.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Labor Relations
The Office of the Secretary of Labor forwarded the letter-
petition of respondent Rolando Ocampo to the National
Capital Region, DOLE, Manila, which subsequently treated it
as a formal petition.
wlibrary
Med-Arbiter’s Order: directing the Union to call a general
membership meeting where the manner of conducting the
election could be discussed before fixing the date of the
election. The order declared null and void the one-year
extension of the CBA from February 1, 1988 to January
31, 1989.
Petitioners filed a motion for reconsideration (which
was treated as an appeal) of the order of the Med-Arbiter.
In a resolution dated January 6, 1988, the Interim Board
appointed a Comelec which, on January 8, 1988, issued a
resolution setting the election of officers on February 10,
1988.
On motion of Ocampo, et al, the Bureau of Labor
Relations issued on February 9, 1988, a temporary
restraining order enjoining petitioners, including the
Union’s Comelec, from proceeding with the election
on February 10, 1988. However, despite the restraining
order, the Union held the election on February 10, 1988
as scheduled. Petitioners were declared the winners in the
election.
strikers. The private respondents filed a motion to cite respondents
(petitioners herein) for contempt.chanrobles.com.ph :
virtual law library
Director Pura Calleja of the BLR’s resolution: m.ph
"WHEREFORE, premises considered, the election
conducted in Allied Bank Employees Union on February 10,
1988 is hereby declared null and void.
"Another election is hereby ordered conducted in
accordance with the express tenor of the Med-Arbiter’s
Order dated 4 January 1988, that a general membership
meeting shall first be held where the mechanics of the
election shall be fully threshed out.
"In the meantime, the officers who were elected on 10
February 1988 and whose election to office we now declare
null and void are hereby temporarily charged with the
safekeeping of the union funds subject to accounting
before the new set of officers which shall be elected in
accordance with this Order.
"The respondent Bank is likewise enjoined to observe
absolute neutrality during these activities, they being purely
an internal affair of the union."
ISSUE: Whether or not the extension of the CBA was valid.
YES
RULING: The issue regarding the validity of the one-year
extension of the CBA, as observed by the BLR, has become
moot and academic.
The public respondent’s view that the one-year extension
was also null and void is not quite correct for the extension
was approved by the Union in a referendum which was
properly supervised by the Department of Labor. It was
accepted by the Bank which gave a "signing bonus" to the
employees who voted for it. Since the holding of the
referendum was within the authority of the Interim Board
"to administer the CBA and operate the union," and the
extension was acceptable to both of the parties to the
41
 Labor Relations
Case Digest Compilation
agreement, and did not violate any law, it is valid and
binding on them.
Issue: Whether or not the public respondent erred in
declaring null and void the election held on February 10,
1988. NO
Ruling: There is no merit in the petitioners’ contention that
the public respondent gravely abused her discretion in
annulling the February 10, 1988 election of officers.
The public respondent correctly noted that in ordering the
postponement of the election for one year (in effect
extending their term of office for one year), the ABEU
Interim Board "overstepped its bounds" for it was
constituted and authorized only "to sign for and in behalf of
the union the Collective Bargaining Agreement with the
Bank and administer the CBA and the operation of the
union."
"Instead of calling a regular election of officers of ABEU on
11 February 1987, as mandated by the Union’s Constitution
and by-laws, respondents submitted in a ‘referendum’ the
extension of their term of office for yet another year, from
11 February 1987 to 10 February 1988.
"From the very inception the referendum process initiated
by the Interim Board was improper. The results therefrom
are therefore, invalid. It may be true, that the task of
administering the operation of the union was given to the
ABEU-Interim Board at the time it was constituted, to fill in
the vacuum in the local union’s leadership during that time.
Nonetheless said task could not be exercised beyond the
regular term of the regular officers. Stated simply, the
exercise of said task is only coterminous with the term of
the regular officers, in whose shoes, the members of the
ABEU-Interim Board merely stepped into.
"When the term of the union’s regular officers expired on
February 11, 1987 the election of officers should have been
held, in accordance with the provision of the union
constitution and by laws. With the expiration of the term of
the regular officers, the term of the ABEU-Interim Board,
expired too. In calling the referendum therefore, the ABEU-
Interim Board clearly overstepped its bounds."
Deadlock
Caltex Refinery vs Hon. Jose Brillantes
GR No. 123782, September 16, 1997
Doctrine: Unless shown to be clearly whimsical, capricious
or arbitrary, the orders or resolutions of the secretary of
labor and employment resolving conflicts on what should be
the contents of a CBA will be respected by this Court.
Oftentimes, such orders and resolutions are grounded
largely on what is possible, fair and reasonable under the
peculiar circumstances of each case.
No particular setup for a grievance machinery is mandated
by law. Article 260 of the Labor Code, as incorporated by
RA 6715, provides for only a single grievance machinery in
the company to settle problems arising from interpretation
or implementation of their collective bargaining agreement
and those arising from the interpretation of enforcement of
company personnel policies.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Facts: Anticipating the expiration of their CBA on July 31,
1995, petitioner Caltex Refinery Employees Association
(CREA) and private respondent Caltex Philippines, Inc.
negotiated, with the participation of the NCMB and the
Office of the SOLE, the terms and conditions of employment
to be contained in a new CBA. Some items were amicably
arrived upon, others were left unresolved.
To settle the unresolved issues, eight meetings were held,
but none were successful, prompting the CREA to declare a
deadlock and file a notice of strike. Six (6) further
conciliation meetings conducted by the NCMB were likewise
unavailing, as were various meetings at the plant level.
During a strike vote on Aug. 16, 1995, the members of
CREA opted for a walkout. Caltex thus filed with the DOLE a
petition for assumption of jurisdiction pursuant to Art.
263(g) of the Labor Code.
DOLE: Assumed jurisdiction “over the entire labor dispute
at Caltex Philippines Inc.,” and ordered “Accordingly, any
strike or lockout, whether actual or intended, is hereby
enjoined.” The parties are further directed to cease and
desist from committeing any and all acts which might
exacerbate the situation.
CREA defied the Order and began to strike and picket the
premises of Caltex. Thereafter, several company notices
directing the employees to return to work were issued, but
likewise it was defied.
During the course of the strike, DOLE Undersecretary
Bienvenido Laguesma interceded and conducted several
conciliation meetings, during which he was able to convince
the CREA members to return to work and enter into a
memorandum of agreement with Caltex. The picket lines
were finally lifted on September 9, 1995, though both
parties filed position papers on unresolved issues.
Because of the strike, Caltex terminated the employment of
some officers of CREA. The legality of these dismissals
brought additional contentious issues.
Again, the parties tried to resolve their differences throught
conciliation. Failing to come to any substantial agreement,
the parties stopped further negotiation and, on September
13, 1995, decided to refer the problem to the secretary of
labor and employment.
SOLE: Issued three orders disposing of the motions for
reconsideration/clarification of both parties.
Dissatisfied with these Orders, CREA sought remedy from
this Court.
Issue: Whether or not the procedure described by the
SOLE sufficiently complies with the minimum requirement
of the law . – YES.
SOLE’S CONTESTED RESOLUTION ON “GRIEVANCE
AND ARBITRATION MACHINERIES”
Seventh, we are constrained to take a closer look
at the existing procedure concerning grievance in
relation to the modifications being proposed by the
Union. In this regard, we affirm our resolution to
shorten the periods to process/resolve grievances
based on existing practice from (45) days to (30)
days at the first step and (10) days to seven (7)
days at the second step which is the level of the VP
for Manufacturing. We further reviewed the steps
through which a grievance may be processed and
in line with the principle to expedite the early
resolution of grievances, we find that the
establishment of a joint Council as an additional
42
 Labor Relations
Case Digest Compilation
step in the grievance procedure, may only serve to
protract the proceeding and, therefore, no longer
necessary. Instead, the unresolved grievance, if,
not settled within (7) days at the level of the VP
for Manufacturing, shall automatically be referred
by both parties to voluntary arbitration in
accordance with R.A. 6715. As to the number of
Arbitrators for which the Union proposes to employ
only one instead of a panel of three Arbitrators, we
find it best to leave the matter to the agreement of
both parties. Finally, we hereby advise the parties
that the list of accredited voluntary arbitrators is
now being maintained and disseminated by the
National Conciliation and Mediation Board and no
longer by the Bureau of Labor Relations.
CREA’S CONTENTION
Petitioner contends that public respondent "derailed the
grievance and arbitration scheme proposed by the Union."
Petitioner argues that the proposed "Grievance Settlement
Council" is intended to "supplement the effort of the Vice
President for Manufacturing in reviewing the grievance
elevated to him, so that instead of acting alone . . . he will
be obliged to convoke a conference of the Council to afford
the grievant a thorough hearing." Petitioner's
recommendation for a "single arbitrator is based on the
proposition that if voluntary arbitration should be resorted
to at all, this recourse should entail the least possible
expense."
CALTEX PHILS.’ CONTENTION
Private respondent counters that the disposition on the
grievance machinery is likewise "fair and reasonable under
the circumstances and in fact was merely a reiteration of
the (u)nion's position during the conciliation meetings
conducted by Undersecretary Bienvenido Laguesma."
Ruling: No particular setup for a grievance machinery is
mandated by law. Rather, Article 260 of the Labor Code, as
incorporated by RA 6715, provides for only a single
grievance machinery in the company to settle problems
arising from "interpretation or implementation of their
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel
policies." Article 260, as amended, reads:
Art. 260.Grievance Machinery and Voluntary
Arbitration. The parties to a Collective Bargaining
Agreement shall include therein provisions that will
ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising
from the interpretation or implementation of their
Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company
personnel policies.
All grievances submitted to the grievance
machinery which are not settled within seven (7)
calendar days from the date of its submission shall
automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining
Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, or include in the agreement a
procedure for the selection of such Voluntary
Arbitrator or panel of Voluntary Arbitrators,
preferably from the listing of qualified Voluntary
Arbitrators duly accredited by the Board. In case
the parties fail to select a Voluntary Arbitrator or
panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Voluntary Arbitrators, as may be necessary,
pursuant to the selection procedure agreed upon in
the Collective Bargaining Agreement, which shall
act with same force and effect as if the Arbitrator
or panel of Arbitrators has been selected by the
parties as described above.
We believe that the procedure described by public
respondent sufficiently complies with the minimum
requirement of the law. Public respondent even provided
for two steps in hearing grievances prior to their referral to
arbitration. The parties will decide on the number of
arbitrators who may hear a dispute only when the need for
it arises. Even the law itself does not specify the number of
arbitrators. Their alternatives — whether to have one or
three arbitrators — have their respective advantages and
disadvantages. In this matter, cost is not the only
consideration; full deliberation on the issues is another, and
it is best accomplished in a hearing conducted by three
arbitrators. In effect, the parties are afforded the latitude to
decide for themselves the composition of the grievance
machinery as they find appropriate to a particular situation.
At bottom, we cannot really impute grave abuse of
discretion to public respondent on this issue.
OTHER ISSUES IN THE CASE
AS TO WAGE INCREASE:
SOLE’S RESOLUTION:
First, on the matter of wages, we find no
compelling reasons to alter or modify our award
after having sufficiently passed upon the same
arguments raised by both parties in our previous
Order. The subsequent agreement on a package of
wage increases at Shell Company, adverted to by
the Union as the usual yardstick for purposes of
developing its own package of improved wage
increases, would not be sufficient basis to grant
the same increases to the Union members herein
considering that other factors, among which is
employment size, were carefully taken into
account. While it is true that inflation has direct
impact on wage increases, it is not quite accurate
to state that inflation "as of September 1995" is
already registered at 11.8%. The truth of the
matter is that the average inflation for the first ten
(10) months was only 7.496% and Central Bank
projections indicate that it will take a 13.5%
inflation for November and December to record an
average inflation of 8.5% for the year. We,
therefore, maintain the reasonableness of the
package of wage increases that we awarded.
CREA’S CONTENTION:
Petitioner belittles the awarded increases. It insists that the
increase should be ruled on the basis of four factors: "(a)
the economic needs of the [u]nion's members; (b) the
[c]ompany's financial capacity; (c) the bargaining history
between the [u]nion and the [c]ompany; and (d) the
traditional parity in wages between Caltex and Shell
Refinery Employees."
Petitioner contends that the "inflation rate rose to 11.8% in
September [1995], rose further in October, and is still a
double-digit figure at the time of this writing." Therefore,
public respondent's so-called "improved benefits" are in
reality "retrogressive."
Petitioner tries to show private respondent's "immense
financial capacity" by citing Caltex's "Banaba Housing Up-
grading" which would cost "not less than P200,000,000.00"
Petitioner does "not begrudge" private respondent's
"pampering of its [r]efinery [m]anagers and supervisors,"
43
 Labor Relations
Case Digest Compilation
but asks that the rank and file employees be "not left too
far behind."
Petitioner maintains that the salaries of Shell Refinery
employees be used as a "reference point" in upgrading the
compensation of private respondent's employees because
these two companies are in the "same industry and their
refineries are both in Batangas." Thus, the wage increase of
petitioner's members should be "15%/15%/15%."
CALTEX PHILS.’ CONTENTION:
Private respondent counters with a "proposed 9% 7% 7%
increase for the same period with automatic adjustment
should the increase fall short of the inflation rate." Hence,
the Secretary's award of "14% 14% 13%" increase really
comes "closer to the Union's position."
SUPREME COURT:
Petitioner's arguments fail to impress us. First, the matter
of inflation rate was clearly addressed in public respondent's
Order dated November 21, 1995. Contrary to petitioners
undocumented claim of 11.8% inflation in September of
1995, the "truth of the matter is that the average inflation
for the first ten (10) months was only 7.496%, and Central
Bank projections indicate that it will take a 13.5% inflation
for November and December to record an average inflation
of 8.5% for the year." Second, private respondent's
financial capacity has been insufficiently explained in its
Comment dated April 16, 1996 in which it stated that the
Banaba "upgrading" should not be construed as a yardstick
of its financial standing.
Such reasoning convinces us that such upgrading should
not be equated with private respondent's financial capacity
to pay the proposed wage increase, but should be evaluated
as a business judgment "to survive and remain globally
competitive." We believe that the standard proof of a
company's financial standing is its financial statements duly
audited by independent and credible external auditors.
Third, the traditional parity in wages used by petitioner to
justify its proposal is flimsy and trivial. Aside from its bare
allegation of "similarity" in salaries and locations, petitioner
did not proffer any substantial reason to impute grave
abuse of discretion on the part of the public respondent. On
the other hand, we find private respondent's discussion of
this matter reasonable.
The alleged "similarity" in the situation of Caltex and Shell
cannot be considered a valid ground for a demand of wage
increase, in the absence of a showing that the two
companies are also similar in "substantial aspects," as
discussed above. Private respondent is merely asking that
an employee should be paid on the basis of work done. If
such employee is absent on a certain day, he should not, as
a rule, be paid wages for that day. And if the employee has
worked only for a portion of a day, he is not entitled to the
pay corresponding to a full day. A contrary precept would
ultimately result in the financial ruin of the employer. The
age-old general rule governing relations between labor and
capital, or management and employee, is "a fair day's wage
for a fair day's work." If no work is performed by the
employee, there can be no wage or pay unless, of course,
the laborer was ready, willing and able to work but was
locked out, dismissed, suspended or otherwise illegally
prevented from working. True, union members have the
right to demand wage increases through their collective
force; but it is equally cogent that they should also be able
to justify an appreciable increase in wages. We observe that
private respondent's detailed allegations on productivity are
unrebutted. It is noteworthy that petitioner ignored this
argument of private respondent and based its demand for
wage increase not on the ground that they were as
productive as the Shell employees. Thus, we cannot
attribute grave abuse of discretion to public respondent.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
AS TO UNION SECURITY CLAUSE:
SOLE’S RESOLUTION:
(Sections 1 and 2 of Article III of the CBA, which provide
for the union security clause, are sought to be amended by
the Union)
The proposed amendment of the Union gives the same
substantial effect as the existing provision. Rather, the
same tackles more on procedure which, to our belief, is
already sufficiently provided under its constitution and by-
laws. Insofar as Union security is concerned, this is
sufficiently addressed by the present provisions in the CBA.
Hence, we find we are not competent to arbitrarily
incorporate any modification thereof. We are convinced that
any amendment on this matter should be a product of
mutual concern and agreement.
CREA’S CONTENTION:
Petitioner contends that the foregoing disposition leaving to
the parties the decision on the union security clause issue is
"contrary to the whole idea of assumption of jurisdiction."
Petitioner argues that in spite of the provisions on the
"union security clause," it may expel a member only on any
of three grounds: non-payment of dues, subversion, or
conviction for a crime involving moral turpitude. If the
employee's act does not constitute any of these three
grounds, the member would continue to be employed by
private respondent. Thus, the disagreement between
petitioner and private respondent on this issue is not only
"procedural" but also "substantial."
CALTEX PHILS.’ CONTENTION:
Private respondent argues that nothing prevents petitioner
from expelling its members; however, termination of
employment should be based only on these three grounds
agreed upon in the existing CBA. Further, private
respondent explains that petitioner's citation of Article 249
(a) of the Labor Code is out of context. It adds that the
cited section provides only for the right of a union to
prescribe its own rules with respect to the acquisition and
retention of membership, and that upholding the arguments
of petitioner would make the private respondent a
policeman of the union.
SUPREME COURT:
We agree with petitioner. The disagreement between
petitioner and private respondent on the union security
clause should have been definitively resolved by public
respondent. The labor secretary should take cognizance of
an issue which is not merely incidental to but essentially
involved in the labor dispute itself, or which is otherwise
submitted to him for resolution. In this case, the parties
have submitted the issue of the union security clause for
public respondent's disposition. But the secretary of labor
has given no valid reason for avoiding the said issue; he
merely points out that this issue is a procedural matter.
Such vacillation clearly sidesteps the nature of the union
security clause as one intended to strengthen the
contracting union and to protect it from the fickleness or
perfidy of its own members. Without such safeguard, group
solidarity becomes uncertain; the union becomes gradually
weakened and increasingly vulnerable to company
machinations. In this security clause lies the strength of the
union during the enforcement of the collective bargaining
agreement. It is this clause that provides labor with
substantial power in collective bargaining. The secretary of
labor assumed jurisdiction over this labor dispute in an
industry indispensable to national interest, precisely to
settle once and for all the disputes over which he has
jurisdiction at his level. In not performing his duty, the
secretary of labor committed a grave abuse of discretion.
AS TO NEW RETIREMENT PLAN
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Case Digest Compilation
SOLE’S RESOLUTION:
Third, the matter of retirement benefits deserves a second
look considering that the concerned employees were
already previously granted the option to choose between
the old and the new plan at the time the latter was initiated
and they chose to be covered under the Old Plan. To accede
to the Union's demand to cover them under the new plan
entails a different arrangement under a new scheme and
likewise requires the approval of a Board of Trustees. It is,
therefore, understood that the new Retirement Plan does
not apply to the more or less 40 employees being sought by
the Union to be covered under the New Plan.
CREA’S CONTENTION:
Petitioner contends that "40 of its members who are still
covered by the Old Retirement Plan because they were not
able to exercise the option to shift to the New Retirement
Plan, for one reason or another, when such option was
given in the past" are included in the New Retirement Plan.
Petitioner argues that the exclusion of forty employees from
the New Plan constitutes grave abuse of discretion for three
reasons. First, "it is a case of the left hand taking away, so
to speak, what the right hand had given." Second, the
change "was done for a very shallow reason." The new
scheme was no longer new, "as the New Retirement Plan
had been in place for at least two years." Third, in not
applying the New Retirement Plan to the 40 employees,
public respondent was perpetrating his department's
discriminatory practice.
CALTEX PHILS.’ CONTENTION:
Private respondent counters that "these 40 or so employees
have opted to remain covered by the old plan despite
opportunities given them in 1985 to shift to the New Plan."
SUPREME COURT:
We hold that public respondent did not commit grave abuse
of discretion in respecting the free and voluntary decision of
the employees in regard to the Provident Plan and the
irrevocable one-time option provided for in the New
Retirement Plan. Although the union has every right to
represent its members in the negotiation regarding the
terms and conditions of their employment, it cannot negate
their wishes on matters which are purely personal and
individual to them. In this case, the forty employees freely
opted to be covered by the Old Plan; their decision should
be respected. The company gave them every opportunity to
choose, and they voluntarily exercised their choice. The
union cannot pretend to know better; it cannot impose its
will on them.
AS TO THE SIGNING BONUS
SOLE’S CONTENTION:
Fifth, specifically on the issue of whether the signing bonus
is covered under the "maintenance of existing benefits"
clause, we find that a clarification is indeed imperative.
Despite the expressed provision for a signing bonus in the
previous CBA, we uphold the principle that the award for a
signing bonus should partake the nature of an incentive and
premium for peaceful negotiations and amicable resolution
of disputes which apparently are not present in the instant
case. Thus, we are constrained to rule that the award of
signing bonus is not covered by the "maintenance of
existing benefits" clause.
CREA’S CONTENTION:
Petitioner asseverates that the "signing bonus is an existing
benefit embodied in the old CBA." It explains that public
respondent erred in removing the award of a signing bonus
which is "given not only as an incentive for peaceful
negotiations and amicable settlement of disputes but also
as an extra award to the workers following the settlement
of a CBA dispute by whatever means."
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
CALTEX PHILS.’:
Private respondent disagrees, contending that a signing
bonus is not awarded when CBA negotiations "result in a
strike." There are two reasons therefor: First, "the grant of
a signing bonus is a matter of discretion and cannot be
demanded as a matter of right;" and second the signing
bonus is meant as an incentive for a peaceful negotiation.
Once these negotiations result in a strike, an illegal one at
that, the basis or rationale for such an award is lost."
SUPREME COURT:
A signing bonus is not a benefit which may be demanded
under the law. Rather, it is now claimed by petitioner under
the principle of "maintenance of existing benefits" of the old
CBA. However, as clearly explained by private respondent,
a signing bonus may not be demanded as a matter of right.
If it is not agreed upon by the parties or unilaterally offered
as an additional incentive by private respondent, the
condition for awarding it must be duly satisfied. In the
present case, the condition sine qua non for its grant — a
non-strike — was not complied with. In fact, private
respondent categorically sated in its counter-proposal — to
the exclusion of those agreed upon before — that the new
collective bargaining agreement would constitute the only
agreement between the parties, as follows:
Sec. 4. Scope of Agreement. — The terms and
conditions of employment of the employees within
the appropriate bargaining unit are embodied in
this Agreement. On the other hand, all such
benefits which are not expressly provided for in
this Agreement, but which are now being
accorded, may in the future be accorded, or might
have been previously accorded to employees, by
the COMPANY shall be deemed as purely
discretionary or pure acts of grace and
magnanimity on the part of the COMPANY in each
particular case, and the continuance or repetition
thereof now or in the future, no matter how long
or how often, shall not be construed as
establishing a right for the employee and/or
obligation on the part of the COMPANY.
This provision on the scope of the agreement is further
buttressed by the clause on waiver:
The parties acknowledge that during the
negotiations which resulted in the execution of this
Agreement, each of them had the unlimited
opportunity to make demands and proposals with
respect to any and all subjects and matters proper
for collective bargaining and not prohibited by law;
and the parties further acknowledge that the
understandings and agreements arrived at by
them after the exercise of that right and unlimited
opportunity are fully set forth in this Agreement.
Therefore, the COMPANY and the UNION during
the life of this Agreement, each voluntarily and
unqualifiedly waives the right and each agrees that
the other shall not be obligated to bargain
collectively with respect to any subject or matter
referred to or covered in this Agreement or with
respect to any subject or matter not specifically
referred to or covered in this Agreement even
though such subject or matter may not have been
within the knowledge or contemplation of either or
both parties at the time they negotiated or signed
this Agreement.
AS TO GRAVE ABUSE OF DISCRETION BY THE SOLE
SUPREME COURT:
Other than his failure to rule on the issue of union security,
the secretary of labor cannot be indicted for grave abuse of
discretion amounting to want or excess of jurisdiction.
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Case Digest Compilation
Basically, there is grave abuse of discretion
amounting to lack of jurisdiction where the
respondent board, tribunal or officer exercising
judicial functions exercised its judgment in a
capricious, whimsical, arbitrary or despotic
manner. However, it has also been said that grave
abuse is committed when "the lower court acted
capriciously, and whimsically or the petitioner's
contention appears td be clearly tenable or the
broader interest of justice or public policy [so]
require . . . ." Also, grave abuse of discretion is
committed when the board, tribunal or officer
exercising judicial function fails to consider
evidence adduced by the parties.
In Saballa vs. National Labor Relations Commission, we
ruled on how a decision of an administrative body must be
drawn:
The Court has previously held that judges and
arbiters should draw up their decisions and
resolutions with due care, and make certain that
they truly and accurately reflect their conclusions
and their final dispositions. . . . The same thing
goes for the findings of fact made by the NLRC, as
it is a settled rule that such findings are entitled to
great respect and even finality when supported by
substantial evidence, otherwise, they shall be
struck down for being whimsical and capricious and
arrived at with grave abuse of discretion. It is a
requirement of due process and fair play that the
parties to a litigation be informed of how it was
decided, with an explanation of the factual and
legal reasons that led to the conclusions of the
court. A decision that does not clearly and
distinctly state the facts and the law of which it is
based leaves the parties in the dark as to how it
was reached and is especially prejudicial to the
losing party, who is unable to pinpoint the possible
errors of the court for review by a higher tribunal.
In the present case, the foregoing requirement has been
sufficiently met. Petitioner's claim of grave abuse of
discretion is anchored on the simple fact that public
respondent adopted largely the proposals of private
respondent. It should be understood that bargaining is not
equivalent to an adversarial litigation where rights and
obligations are delineated and remedies applied. It is simply
a process of finding a reasonable solution to a conflict and
harmonizing opposite positions into a fair and reasonable
compromise. When parties agree to submit unresolved
issues to the secretary of labor for his resolution, they
should not expect their positions to be adopted in toto.
It is understood that they defer to his wisdom and
objectivity in insuring industrial peace. And unless they can
clearly demonstrate bias, arbitrariness, capriciousness or
personal hostility on the part of such public officer, the
Court will not interfere or substitute the said officer's
judgment with its own. In this case, it is possible that this
Court, or some its members at least, may even agree with
the wisdom of petitioner's claims.
But unless grave abuse of discretion is cogently shown, this
Court will refrain from using its extraordinary power of
certiorari to strike down decisions and orders of quasi-
judicial officers specially tasked by law to settle
administrative questions and disputes. This is particularly
true in the resolution of controversies in collective
bargaining agreements where the question is rarely one of
legal right or wrong — nay, of black and white — but one of
wisdom, cogency and compromise as to what is possible,
fair and reasonable under the circumstances.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Violation of Duty to Bargain
a. Failure/refusal to meet and convene
Fernando v. Angat Labor Union
G.R. No. L- 17896| May 30, 1962
Petitioner: Valentin Fernando
Respondent: Angat Labor Union (Union)
Facts: The Union, composed of employees of Angat,
prepared a written proposals to the company for a CBA, but
the company accountant, a relative of the operator,
Valentin Fernando, admonished its officers not to course
said proposals, promising that the company would buy
more buses to accommodate all unionists; that to induce
complainants to dissolve the Union, the company manager,
Gorgonio Cruz, invited them to eat at a hotel and told them
that his father-in-law (Fernando) was worried, and if the
union was not discontinued, they would sell the business;
and that effectively, to avoid union demands, Angat sold
the business to Villa-Rey Transit by written contract,
stipulating that:
5. — It is hereby understood and agreed between
the SELLER and the BUYER that the BUYER
assumes absolutely no obligation with reference to
employees of the SELLER in employing them or in
paying them any amount for salary, wages, or
indemnity because of their loss of employment.
Thereafter, one of the Villa-Rey officials informed the
employees of the sale and then and there summarily
dismissed union members.
Thus, a complaint was filed by the court prosecutor on
behalf of certain members of the Angat Labot Union
(Union), charging the Angat-Manila Transportation (Angat),
its officers, and the Villa-Rey Transit, Inc., with unfair labor
practice for discharging complainants on account of labor
activities.
DECISION OF THE INDUSTRIAL COURT
The Villa-Rey Transit, as buyer, had a right to rely on the
quoted stipulation, and merely ordered it to give priority in
reemployment to the unionists, but held the Angat-Manila
Transportation responsible for the laborers' backpay.
1. Angat argued that the sale was forced by
operational losses, the Court of Industrial Relations
discounted this assertion, because the company
failed to produce its books of account in support of
its claim; because from the testimony it appeared
that the business was picking up in 1959, so that
the alleged loss for the first quarter of 1959 was
unnatural and incredible; and because of the
promise made to the unionists that if their
demands were withheld the company would buy
additional buses, indicating that the financial
situation of the company enabled it to contemplate
such purchase.
Angat’s Argument
1. that since the business was sold to Villa-Rey
Transit, Inc., and the dismissal was made after
that date by officials of Villa-Rey, there was no
46
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Case Digest Compilation
employer-employee relation between him and the
complainants.
ISSUE:
1. Whether or not Angat is guilding of ULP.
RULING: YES.
The employer-employee relation is not necessarily
terminated by a severance that was illegal and in violation
of section 4(a) (1) of the Industrial Peace Act, and such
illegal severance does not toll the jurisdiction of the
Industrial Court. If an employer is guilty of unfair labor
practice when he directly discharges his employees to
forestall a demand for collective bargaining, he
certainly should not be allowed to evade
responsibility if he indirectly causes that discharge by
selling to a company that he knows is unwilling to
accept his employees.
In this case, Angat does not challenge the court's rejection
of its claim of operational losses, and the only motivation
of record for the sale of its business and assets is the
desire to avoid a collective bargaining negotiation,
which is in violation of the law. Having indirectly
procured the discharge of its employees, Angat cannot
evade responsibility on the plea that it is no longer in a
position to reinstate them. Such a case remains a labor
conflict within the jurisdiction of the Industrial Court,
specially since Angat's maneuvers to block collective
bargaining started even before the sale of its
business, when the manager attempted to induce the
unionists to dissolve the union.
ISSUE:
2. Whether or not Villa-Ret is liable for payment
of backwages
Ruling:
No. The Supreme Court cited its decision in Visayan
Transportation vs. Java, et al., that unless expressly
assumed, labor contracts are not enforceable against a
transferee of an enterprise, labor contracts being in
personam. AND in the case of Majestic Employees
Association vs. Court of Industrial Relations the court held
that a transferor in bad faith may be held responsible to
employees discharged in violation of the Industrial Peace
Act.
ISSUE:
3. Whether or not Angat is liable for payment
backwages。
RULING:
No. To hold it liable for the back wages of the complainants
until they are reinstated by the Villa-Rey Transit, Inc., over
which it has no control, may well result in the it becoming
obligated to make the monthly wage payments indefinitely.
Yet justice would not be satisfied with the mere payment of
severance pay to those employees, because of the Angat's
bad faith in procuring their discharge.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
LVN PICTURES EMPLOYEES AND WORKERS
ASSOCIATION (NLU).  v.
LVN PICTURES, INC.,
LVN PICTURES CHECKERS UNION (NLU), v.
LVN PICTURES, INC. and/or DALISAY PICTURES INC.,
and the COURT OF INDUSTRIAL RELATIONS,
September 30, 1970
Facts:
The LVN Pictures, Inc. (LVN) was a corporation engaged in
the business of producing Tagalog movies.
Among its employees were the members of the LVN
Pictures Employees and Workers Association (NLU)
(hereinafter referred to as the EWA) with which it executed
on April 23, 1959 a collective bargaining agreement to
expire on December 31, 1960.
During their employment with LVN, the members of the
EWA served in various capacities in the LVN, such as
cameramen and their assistants, soundmen and their
assistants, sound technicians, carpenters, electricians,
drivers, laboratory personnel and laborers doing odd jobs.
Previous to the year 1957, the LVN was realizing profits
from its business. However, from 1957 to 1961, it suffered
heavy losses in its movie production due to causes beyond
its control.
Notwithstanding the foregoing adverse financial posture,
the LVN continued to operate its movie production with the
expectation that it would recoup part of its losses and
investments. And in order to avoid immediate closure of
business, as well as lay-off of employees, the management
of the LVN, by letter dated March 14, 1960, proposed to the
EWA a change in the payment of salaries and wages of the
employees from salary or wage basis to the "pakiao"
system per picture. This proposal was however rejected in
the union in its letter of March 31, 1960.
On April 8, 1960 the LVN asked the EWA to reconsider its
decision on the "pakiao" system, to no avail.
Again, on January 25, 1961, the LVN proposed to reduce
the monthly compensation of all its employees and laborers
regardless of whether or not they were union members.
This proposal was approved by the board of directors of the
LVN as a measure to stave off the mounting losses in the
operation of its Tagalog movie production. But it was also
rejected by the EWA in its letter of February 15, 1961.
After the expiration of the term of the collective bargaining
contract, the EWA proposed negotiations for a contract on
February 24, 1961. In a letter-reply dated March 2, 1961,
the LVN informed the EWA that on March 15, 1961 the LVN
stockholders would hold a meeting at which one of the
matters to be discussed was whether because of the
financial losses of the corporation, it would still continue to
make pictures. The LVN therefore advised the union that it
would answer neither yes nor no to the proposed
negotiations but would await the outcome of the
stockholders' meeting.
By letter dated March 20, 1961, the LVN informed the EWA
that, because of huge losses incurred and the many
obligations of the former which could not be met, the
stockholders had agreed not to invest additional capital and
to stop producing new moving pictures, and to finish only
the pictures that were then under production. Moreover, in
view of the refusal of the EWA to consider the LVN's
47
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Case Digest Compilation
proposals and because of the mounting losses, the LVN's
board of directors decided to close its movie production as
of May 31, 1961.
As a necessary consequence of the stoppage of its movie
production after May 31, 1961, the LVN was compelled to
dismiss all its personnel employed in the said movie
production, among them the 84 employees and/or workers
of the EWA.
On July 18, 1961 the EWA filed a complaint charging the
LVN liable of unfair labor practice.
CIR: decided in favor of the LVN, holding the latter not
guilty of unfair labor practices in dismissing the employees-
members of the EWA and the LPCU. The motions for
reconsideration filed by the respective complainants were
denied by the CIR.
Issue: Is the LVN guilty of unfair labor practice in:
1. dismissing its employees who are members of the
EWA and the LPCU – No
2. refusing to bargain with EWA and LPCU - No
Ruling:
1. No.
One of the just causes for terminating an employment
without a definite period by the employer, is the closing or
cessation of operations of the establishment or enterprise,
unless the closing is for the purpose of defeating the
intention of the said law.
The evidence in both appealed cases is clear that the LVN
incurred losses from 1957 to 1961, reducing it to a state of
practical bankruptcy. It is clear that when the LVN
completely stopped its movie production business on May
31, 1961, it was not only insolvent but was also without any
operating capital.
It is to the credit of the LVN, however, that it did not decide
to stop producing movies immediately. Notwithstanding its
insolvency and before it finally closed its business on May
31, 1961, it had in good faith attempted to avail of all
possible arrangements with its employees to avoid the
complete closure of its business. It proposed various
remedial measures, e.g., the payment of wages or salaries
on the pakiao system per picture, and the gradual reduction
of the employees' salaries. Unfortunately, these proposals
were flatly rejected.
To avoid total bankruptcy, the LVN had no alternative but to
close and stop its movie production business. The
employees, by their refusal to meet the LVN halfway, in
effect "killed the goose that laid the golden eggs." It is not
therefore correct to say that when the LVN proposed the
"pakiao" system and the reduction of wages for both union
and non-union members, it was committing an unfair labor
practice. It was merely trying, understandably and
justifiably, to stave off eventual bankruptcy and the
ultimate folding-up of its movie production business.
Neither can the LVN be accused of being anti-labor when it
gradually reduced the working hours of the checkers and
finally laid them off. The members of the LPCU were
theater-checkers of the LVN. Their services were needed
only in the exhibition of new pictures which were shown on
percentage basis, in order that the LVN might receive its
lawful share in the gross gate receipts. However, since the
LVN stopped its movie production business on May 31,
1961, and its second or old pictures were being exhibited
on flat-rate rental basis, there was no longer any need to
employ checkers.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Under the Termination Pay Law (R.A. 1052, sec. 1, as
amended by R.A. 1787), one of the just causes for
terminating an employment without a definite period by the
employer, is the closing or cessation of operations of the
establishment or enterprise, unless the closing is for the
purpose of defeating the intention of the said law. Since the
LVN in good faith stopped its movie production business on
May 31, 1961, it could therefore legally dismiss its
employees. But before doing so, it gave them sufficient
notice and an ample period within which to look for other
employments. Therefore, contrary to the petitioners'
allegation, the Termination Pay Law applies.
2. No.
The argument is advanced that the LVN refused to bargain
when it put off answering the proposals of the EWA and the
LPCU pending the stockholders' meeting. We do not
agree.
It was entirely reasonable for the LVN to hold in abeyance
its answers to the proposals because whether or not it
would still enter into a collective bargaining agreement with
the EWA and the LPCU would depend on the consensus that
would be arrived at by the stockholders. There would be
neither rhyme nor reason for a collective bargaining
agreement if the company would decide — as it did decide
— to stop producing moving pictures, because the resultant
ultimate effect would be the dismissal or separation of
employees. In fact, subsequent events proved the prudence
of the action taken by the LVN. When the stockholders
decided to stop movie production as of May 31, 1961, the
LVN was compelled to dismiss its employees because there
was no more work for them. Had the LVN agreed to enter
into collective bargaining agreements with the two unions
without awaiting the result of the stockholders' meeting,
the contracts would have become inutile anyway because it
was closing shop.
Kiok Loy vs. NLRC
January 22, 1986
Facts: Union: Pambansang Kilusang Paggawa
Company: Sweden Ice Cream Plant
Employer/Owner of Company: Kiok Loy
Employees: r&f employees
[Dec 7 1989] The union, after being certified as the SEBA of
the employees, furnished the company with two copies of
its proposed CBA. It also requested the company’s counter
proposals. This was reiterated by the union. But both
requests were ignored and remained unacted by the
Company.
[Feb 14 1979] The union filed a notice of strike with the
BLR on the ground of unresolved economic issues in
collective bargaining. Conciliation proceedings followed
during the 30-day cooling-off period. But, the proceedings
failed. BLR certified the case to the NLRC for compulsory
arbitration with the Labor Arbiter (LA).
[Apr 29 1979] The CA was set for initial hearing. The Union
submitted its position paper while the company did not.
Instead, the company requested for another postponement
to acquaint himself with the case.
[May 11 1979] The case was again reset due to the
withdrawal of the Company’s counsel of record. It was
found that the previous counsel only entered his
48
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Case Digest Compilation
appearance merely to request for the postponement to
allegedly acquaint himself of the case.
[May 28 1979] The company finally submitted it’s position
paper.
[Jun 4 1989] The case was called for hearing. The
Company’s representative who was supposed to be
examined, failed to appear. The Company requested
another postponement. But the LA denied the
postponement ruling that the company has waived it’s right
to present evidence. The case was submitted for resolution.
[Jul 18 1979] LA rendered a decision finding the Company
guilty of unjustified refusal to bargain (which is an Unfair
Labor Practice). The draft proposal for a CBA sent by the
Union to the company is found to be reasonable and is
hereby declared to be the CBA which shall govern the
relationship between the parties.
The company argues that: (1) there was no ULP for
refusal to bargain considering that it was only on May 24
1979 when the Union furnished them with a copy of the
drafted CBA and it was only then that they came to know of
the Union’s demands, (2) the adoption of the draft CBA was
unreasonable and lacks legal basis.
Issues: Whether or not there was ULP committed by the
Company – Yes.
Ruling: The Court denies the petition.
[1] Duty to bargain collectively is a mutual
responsibility of the employer and the Union
Collective bargaining is the negotiations towards a collective
agreement. It 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.
[2] Employer is not under any legal duty to initiate
contract negotiation
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 only when the
following jurisdictional preconditions are present,
(1) possession of the status of majority
representation of the employees' representative in
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
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.
In the case at bar, all of the mechanics of collective
bargaining are present.
From the over-all conduct of 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.
[3] Refusal to make counter proposal is indicative of
bad faith.
The Company is guilty of unfair labor practice. It has been
established that:
(1) Union was a duly certified bargaining agent;
(2) it made a definite request to bargain, accompanied with
a copy of the proposed Collective Bargaining Agreement, to
the Company not only once but twice which were left
unanswered and unacted upon; and
(3) the Company made no counter proposal whatsoever all
of which conclusively indicate lack of a sincere desire to
negotiate.
A Company's 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 Union's
request for a counter proposal is left unanswered. 
Unwillingness to bargain is
manifested by the following scenarios
Even during the period of compulsory arbitration before the
NLRC, Company's approach and attitude-stalling the
negotiation by a series of postponements, non-appearance
at the hearing conducted, and undue delay in submitting its
financial statements, lead to no other conclusion except
that it is unwilling to negotiate and reach an agreement
with the Union.
The company has not at any instance, evinced good faith or
willingness to discuss freely and fully the claims and
demands set forth by the Union much less justify its
opposition thereto.
In Bradman vs. CIR, the Supreme Court held that "while
the law does not compel the parties to reach an agreement,
it does contemplate that both parties will approach the
negotiation with an open mind and make a reasonable
effort to reach a common ground of agreement.
Conclusion
It is not obligatory upon either side of a labor controversy
to precipitately accept or agree to the proposals of the
other. But an erring party should not be tolerated and
allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures. More so
where the intervention of the NLRC was properly sought for
after conciliation efforts undertaken by the BLR failed.
Hence, it must be resolved by the NLRC to determine the
reasonableness of the terms and conditions of employment
in the CBA. Its findings of reasonableness of any CBA as the
governing agreement by the employees and management
must be accorded due respect by this Court.
49
 Labor Relations
Case Digest Compilation
Violation of Duty to Bargain
b. Evasion of mandatory subjects
MERALCO v Sec. of Labor
January 27, 1999
Facts: Petitioner Manila Electric Company (MERALCO)
seeks to annul the orders of the Secretary of Labor dated
August 19, 1996 and December 28, 1996, wherein the
Secretary required MERALCO and its rank and file
union — the Meralco Workers Association (MEWA) the
duly recognized labor organization of the rank-and-file
employees of MERALCO — to execute a collective
bargaining agreement (CBA) for the remainder of the
parties' 1992-1997 CBA cycle, and to incorporate in this
new CBA the Secretary's dispositions on the disputed
economic and non-economic issues.
On September 7, 1995, MEWA informed MERALCO of its
intention to re-negotiate the terms and conditions of their
existing 1992-1997 Collective Bargaining Agreement (CBA)
covering the remaining period of two years starting from
December 1, 1995 to November 30, 1997. MERALCO
signified its willingness to re-negotiate through its letter
dated October 17, 1995 and formed a CBA negotiating
panel for the purpose. On November 10, 1995, MEWA
submitted its proposal to MERALCO, which, in turn,
presented a counter-proposal. Thereafter, collective
bargaining negotiations proceeded. However, despite the
series of meetings between the negotiating panels of
MERALCO and MEWA, the parties failed to arrive at "terms
and conditions acceptable to both of them."
Filing of Notice of Strike
On April 23, 1996, MEWA filed a Notice of Strike with the
National Capital Region Branch of the National Conciliation
and Mediation Board (NCMB) of the Department of Labor
and Employment (DOLE) which was docketed as NCMB-
NCR-NS-04-152-96, on the grounds of bargaining deadlock
and unfair labor practices. The NCMB then conducted a
series of conciliation meetings but the parties failed to reach
an amicable settlement. Faced with the imminence of a
strike, MERALCO on May 2, 1996, filed an Urgent Petition
with the Department of Labor and Employment praying that
the Secretary assume jurisdiction over the labor dispute
and to enjoin the striking employees to go back to work.
Sec of Labor: Assumes jurisdiction over the labor dispute.
Thereafter, resolved the labor dispute through an Order
containing the following awards:
ECONOMIC DEMANDS
1. Wage increase
P2,300.00 for the first year covering the period from
December 1, 1995 to November 30, 1996
P2,200.00 for the second year covering the period
December 1, 1996 to November 30, 1997.
2. Christmas Bonus and Special Christmas Grant
3. Rice Subsidy and Retirement Benefits for Retirees
4. GHSIP, HMP Benefits for Dependents and Housing
Equity Loan
5. Signing Bonus
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
6. Red-Circle-Rate Allowance
7. Sick Leave Reserve of 15 Days
POLITICAL DEMANDS (non-economic issues)
1. Scope of Bargaining Unit
2. Union Security Clause
3. Contracting Out Issue
Petitioners’ contentions:
The Sec of labor committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it included
in the CBA benefits, terms and conditions that the law and
the parties did not intend to be reflected. Even the Solicitor
General himself considered that the Secretary gravely
abused his discretion on at least three major points: (a) on
the signing bonus; (b) on the inclusion of confidential
employees in the rank and file bargaining unit; and (c) in
mandating a union security "closed shop" regime in the
bargaining agreement.
Respondent’s Contention:
First, no reviewable abuse of discretion could have attended
the Secretary's arbitral award because the Secretary
complied with constitutional norms in rendering the
disputed award. The union posits that the yardstick for
comparison and for the determination of the validity of the
Secretary's actions should be the specific standards laid
down by the Constitution itself. To the union, these
standards include the State policy on the promotion of
workers' welfare, the principle of distributive justice, the
right of the State to regulate the use of property, the
obligation of the State to protect workers, both organized
and unorganized, and insure their enjoyment of "humane
conditions of work" and a "living wage," and the right of
labor to a just share in the fruits of production.
Second, no reversible abuse of discretion attended the
Secretary's decision because the Secretary took all the
relevant evidence into account, judiciously weighed them,
and rendered a decision based on the facts and law. Also,
the arbitral award should not be reversed given the
Secretary's expertise in his field and the general rule that
findings of fact based on such expertise is generally binding
on this Court.
[NOTE: Please read first the issues that were in BOLD]
Issues: [1] Whether the inclusion of the wage award by
the Secretary of Labor is valid. – NO.
[2] Whether Sec of Labor erred the inclusion of Christmas
Bonus when it recognized it as an“established practice”? –
NO.
[3] Whether the Sec can issue an order that binds the
retirement fund. – Determine who control over these
funds.
[4] Whether Meralco can be compelled to provide loan to
the bargaining unit as seed money for employees’
cooperative?- NO
[5] Whether Meralco can be bound to bargain GHSIP, HMP
benefits for dependents and the housing equity loan.- YES
[6] Whether the signing bonus be included in the
CBA- NO
[7] Whether the Red-Circle-Rate Allowance be integrated in
the basic salary in accordance with the CBA? -YES
50
 Labor Relations
Case Digest Compilation
[8] Whether the sick leave can be reduced to 15 days?-
YES
[9] Whether the sec of labor can include the
confidential employees to the collective bargaining
unit? – NO
[10] Whether the Sec of Labor can rule on the union
security demand?
[11] Whether the Sec of Labor acted in excess of
discretion allowed by him when he ordered inclusion
of benefits, terms, and conditions not intended to be
reflected in their CBA?- YES
Ruling:
[1] The Secretary gravely abused his discretion in
making this wage award
After considering the records that the Secretary gravely
abused his discretion in making this wage award because
he disregarded evidence on record. Where he considered
MERALCO's evidence at all, he apparently misappreciated
this evidence in favor of claims that do not have evidentiary
support.
The MERALCO projection had every reason to be reliable
because it was based on actual and undisputed figures for
the first six months of 1996.
On the other hand, the union projection was based on a
speculation of Yuletide consumption that the union failed to
substantiate. In fact, as against the union's unsubstantiated
Yuletide consumption claim, MERALCO adduced evidence in
the form of historical consumption data showing that a
lengthy consumption does not tend to rise during the
Christmas period. 24 Additionally, the All-Asia Capital
Report was nothing more than a newspaper report that did
not show any specific breakdown or computations. While
the union claimed that its cited figure is based on
MERALCO's 10-year income stream, no data or computation
of this 10-year stream appear in the record.
Both parties extensely discussed the factors that the
decision maker should consider in making a wage award.
While We do not seek to enumerate in this decision the
factors that should affect wage determination, we must
emphasize that a collective bargaining dispute such as
this one requires due consideration and proper
balancing of the interests of the parties to the dispute
and of those who might be affected by the dispute. To
our mind, the best way in approaching this task holistically
is to consider the available objective facts, including, where
applicable, factors such as the bargaining history of the
company, the trends and amounts of arbitrated and agreed
wage awards and the company's previous CBAs, and
industry trends in general. As a rule, affordability or
capacity to pay should be taken into account but
cannot be the sole yardstick in determining the wage
award, especially in a public utility like MERALCO. In
considering a public utility, the decision maker must always
take into account the "public interest" aspects of the case;
MERALCO's income and the amount of money available for
operating expenses — including labor costs — are subject to
State regulation. We must also keep in mind that high
operating costs will certainly and eventually be passed on to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
the consuming public as MERALCO has bluntly warned in its
pleadings.
We take note of the "middle ground" approach
employed by the Secretary in this case which we do not
necessarily find to be the best method of resolving a
wage dispute. Merely finding the midway point between
the demands of the company and the union, and "splitting
the difference" is a simplistic solution that fails to recognize
that the parties may already be at the limits of the wage
levels they can afford. It may lead to the danger too that
neither of the parties will engage in principled bargaining;
the company may keep its position artificially low while the
union presents an artificially high position, on the fear that
a "Solomonic" solution cannot be avoided. Thus, rather than
encourage agreement, a "middle ground approach" instead
promotes a "play safe" attitude that leads to more
deadlocks than to successfully negotiated CBAs.
Where the total wage increase of P3,800.00 for 1996 to
1997 which we are granting in the instant case is
significantly higher than the total increases given in 1992 to
1994, or a span of three (3) years, which is only P3,900.00
a month. Thus, the Secretary's grant of P2,200.00 monthly
wage increase in the assailed order is unreasonably high a
burden for MERALCO to shoulder.
[2] Bonus as a rule is not demandable and
enforceable obligation but record shows MERALCO
has been giving such since 1988
To be considered a "regular practice," the giving of the
bonus should have been done over a long period of time,
and must be shown to have been consistent and deliberate.
In the case at bar, the record shows that MERALCO, aside
from complying with the regular 13th month bonus, has
further been giving its employees an additional Christmas
bonus at the tail-end of the year since 1988. While the
special bonuses differed in amount and bore different titles,
it can not be denied that these were given voluntarily and
continuously on or about Christmas time. The considerable
length of time MERALCO has been giving the special grants
to its employees indicates a unilateral and voluntary act on
its part, to continue giving said benefits knowing that such
act was not required by law. 
Indeed, a company practice favorable to the employees has
been established and the payments made
by MERALCO pursuant thereto ripened into benefits enjoyed
by the employees. Consequently, the giving of the special
bonus can no longer be withdrawn by the company as this
would amount to a diminution of the employee's existing
benefits
[3] This issue requires a finding of fact on the legal
personality of the retirement fund
In the absence of any evidence on record indicating the
nature of the retirement fund's legal personality, we rule
that the issue should be remanded to the Secretary for
reception of evidence as whether or not the MERALCO
retirement fund is a separate and independent trust fund.
The existence of a separate and independent juridical entity
51
 Labor Relations
Case Digest Compilation
which controls an irrevocable retirement trust fund means
that these retirement funds are beyond the scope of
collective bargaining: they are administered by an entity
not a party to the collective bargaining and the funds may
not be touched without the trustee's conformity.
On the other hand, MERALCO control over these funds
means that MERALCO may be compelled in the compulsory
arbitration of a CBA deadlock where it is the employer, to
improve retirement benefits since retirement is a term or
condition of employment that is a mandatory subject of
bargaining.
[4] Nothing in the law that requires employers to
provide funds, by loan or otherwise, that employees
can use to form a cooperative
The formation of a cooperative is a purely voluntary act
under this law, and no party in any context or relationship
is required by law to set up a cooperative or to provide the
funds therefor. In the absence of such legal requirement,
the Secretary has no basis to order the grant of a 1.5
million loan to MERALCO employees for the formation of a
cooperative. Furthermore, we do not see the formation of
an employees cooperative, in the absence of an agreement
by the collective bargaining parties that this is a
bargainable term or condition of employment, to be a term
or condition of employment that can be imposed on the
parties on compulsory arbitration.
[5] GHSIP, HMP benefits for dependents and the
housing equity loan have been the subject of
bargaining and arbitral awards in the past
MERALCO have long been extending these benefits to the
employees and their dependents that they now become part
of the terms and conditions of employment. In fact,
MERALCO even pledged to continue giving these benefits.
Hence, these benefits should be incorporated in the new
CBA.
[6] Signing bonus is a grant motivated by the
goodwill generated when a CBA is successfully
negotiated and signed between the employer and the
union.
In the present case, this goodwill does not exist. When
negotiations for the last two years of the 1992-1997 CBA
broke down and the parties sought the assistance of the
NCMB, but which failed to reconcile their differences, and
when petitioner MERALCO bluntly invoked the jurisdiction of
the Secretary of Labor in the resolution of the labor dispute,
whatever goodwill existed between petitioner MERALCO and
respondent union disappeared.
[7] The integration of the RCR allowance in the basic
salary of the employees had consistently been raised
in the past CBAs (1989 and 1992)
An RCR allowance is an amount, not included in the basic
salary, that is granted by the company to an employee who
is promoted to a higher position grade but whose actual
basic salary at the time of the promotion already exceeds
the maximum salary for the position to which he or she is
promoted. As an allowance, it applies only to specific
individuals whose salary levels are unique with respect to
their new and higher positions.
The integration of the RCR allowance in the basic salary of
the employees had consistently been raised in the past
CBAs (1989 and 1992) and in those cases, the Secretary
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
decreed the integration of the RCR allowance in the basic
salary. We do not see any reason why it should not be
included in the present CBA.
[8] The employee has the option to avail of this cash
conversion or to accumulate his sick leave credits up
to 25 days for conversion to cash at his retirement or
separation from the service
This arrangement is, in fact, beneficial to MERALCO. The
latter admits that "the diminution of this reserve does not
seriously affect MERALCO because whatever is in reserve
are sick leave credits that are payable to the employee
upon separation from service. In fact, it may be to
MERALCO's financial interest to pay these leave credits now
under present salary levels than pay them at future higher
salary levels."
[9] Employees holding a confidential position are
prohibited from joining the union of the rank and file
employees.
In Pier Arrastre vs. Confesor and General Maritime and
Stevedores Union, the court ruled that:
"Put another way, the confidential employee does
not share in the same "community of interests"
that might otherwise make him eligible to join his
rank and file co-workers, precisely because of a
conflict in those interests."
Thus, in Metrolab Industries vs. Roldan-Confesor, the court
ruled:
"...that the Secretary's order should exclude the
confidential employees from the regular rank and
file employees qualified to become members of the
MEWA bargaining unit."
From the foregoing disquisition, it is clear that employees
holding a confidential position are prohibited from joining
the union of the rank and file employees.
[10] The union did not ask for a closed shop security
regime
An examination of the records of the case shows that the
union did not ask for a closed shop security regime; the
Secretary in the first instance expressly stated that a
maintenance of membership clause should govern; neither
MERALCO nor MEWA raised the issue of union security in
their respective motions for reconsideration of the
Secretary's first disputed order; and that despite the parties
clear acceptance of the Secretary's first ruling, the
Secretary motu proprio reconsidered his maintenance of
membership ruling in favor of the more stringent union
shop regime.
Under these circumstances, it is indubitably clear that the
Secretary gravely abused his discretion when he ordered a
union shop in his order of December 28, 1996. The
distinctions between a maintenance of membership regime
from a closed shop and their consequences in the
relationship between the union and the company are well
established and need no further elaboration.
Consequently, the maintenance of membership regime
should govern at MERALCO in accordance with the
Secretary's order of August 19, 1996 which neither party
disputed.
[11] The Secretary acted in excess of the discretion
allowed him by law when he ordered the inclusion of
benefits, terms and conditions that the law and the
parties did not intend to be reflected in their CBA.
52
 Labor Relations
Case Digest Compilation
To avoid the possible problems that the disputed orders
may bring, we are constrained to rule that only the terms
and conditions already existing in the current CBA and was
granted by the Secretary (subject to the modifications
decreed in this decision) should be incorporated in the CBA,
and that the Secretary's dispute orders should accordingly
be modified.
SAMAHANG MANGGAGAWA SA TOP FARM
MANUFACTURING UNITED WORKERS v. NLRC and
TOP FARM MANUFACTURING PHIL, INC.
G.R. No. 113856, September 7, 1998
Facts: The conflict arose when respondent Company
refused to grant across-the-board increases to its
employees in implementing Wage Orders Nos. 01 and 02 of
the Regional Tripartite Wages and Productivity Board. Such
refusal was aggravated by the fact that prior to the
issuance of said wage orders, the employer allegedly
promised at the collective bargaining conferences to
implement any government-mandated wage increases on
an across-the-board basis.
The union requested the implementation of said wage
orders. However, they demanded that the increase be on an
across-the-board basis. It cites as basis therefor, the
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. Private respondent refused
to accede to that demand. Instead, it implemented a
scheme of increases purportedly to avoid wage distortion.
Thus, private respondent granted the P17.00 increase
under Wage Order No. 01 to workers/employees receiving
salary of P125.00 per day and below. The P12.00 increase
mandated by Wage Order No. 02 was granted to those
receiving the salary of P140.00 per day and below. For
employees receiving salary higher than P125.00 or P140.00
per day, private respondent granted an escalated increase
ranging from P6.99 to P14.30 and from P6.00 to P10.00,
respectively.
The union wrote private respondent a letter demanding that
it should fulfill its pledge of sincerity to the union by
granting an across-the-board wage increases to all
employees under the wage orders. The union reiterated
that it had agreed to retain the old provision of CBA on the
strength of private respondent's promise and assurance of
an across-the-board salary increase should the government
mandate salary increases.
Hence, the union filed a complaint alleging that private
respondent's act of reneging on its undertaking/promise
clearly constitutes act of unfair labor practice through
bargaining in bad faith.
Respondent’s Contention:
There was no agreement to the effect that future wage
increases mandated by the government should be
implemented on an across-the-board basis. Otherwise, that
agreement would have been incorporated and expressly
stipulated in the CBA. It quoted the provision of the CBA
that reflects the parties' intention to fully set forth therein
all their agreements that had been arrived at after
negotiations that gave the parties unlimited right and
opportunity to make demands and proposals with respect to
any subject or matter not removed by law from the area of
collective bargaining.
The same CBA provided that during its effectivity, the
parties each voluntarily and unqualifiedly waives the right,
and each agrees that the other shall not be obligated, to
bargain collectively, with respect to any subject or matter
not specifically referred to or covered by this Agreement,
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
even though such subject or matter may not have been
within the knowledge or contemplation of either or both of
the parties at the time they negotiated or signed this
Agreement.
Issue: WON the Company committed ULP in its
refusal to implement across-the-board increase
Ruling: NO
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.
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 — the
collective bargaining representative and the employer-
company. Compliance with a CBA is mandated by the
expressed policy to give protection to labor.
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. This is
founded on the dictum that a CBA is not an ordinary
contract but one impressed with public interest. 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, it is not a part thereof and the proponent has
no claim whatsoever to its implementation.
Hence, petitioner union's 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.
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 management's usual negotiation strategies is
to agree tentatively as you go along with the understanding
that nothing is binding until the entire agreement is
reached. 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 respondent's promise by demanding its
incorporation in the CBA. Because the proposal was never
53
 Labor Relations
Case Digest Compilation
embodied in the CBA, the promise has remained just that, a
promise, the implementation of which cannot be validly
demanded under the law.
Petitioner's reliance on this Court's pronouncements in Kiok
Loy v. NLRC 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 Company's refusal to make counter-proposal, if
considered in relation to the entire bargaining process, may
indicate bad faith and this is especially true where the
Union's 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.
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. 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. 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.
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.
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
party's insistence on the inclusion of a particular
substantive provision unless it concerns trivial matters or is
obviously intolerable.
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.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
On account of the importance of the economic issue
proposed by petitioner union, it could have refused to
bargain and to entered into a CBA with private respondent.
On the other hand, private respondent's 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 union's
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:
Sec. 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.
Art. 100 of the Labor Code on prohibition against
elimination or diminution of benefits provides that nothing
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 union's 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.
CAPITOL MEDICAL CENTER OF CONCERNED
EMPLOYEES-UNIFIED FILIPINO SERVICE
WORKERS, (CMC-ACE-UFSW) vs. HON.
BIENVENIDO E. LAGUESMA, Undersecretary
of the Department of Labor and Employment;
G.R. No. 118915 | February 4, 1997
Facts:
On February 17, 1992, Med-Arbiter Rasidali C. Abdullah
issued an Order which granted respondent union's petition
for certification election among the rank-and-file employees
of the Capitol Medical Center. Respondent CMC appealed
the Order to the Office of the Secretary by questioning the
legal status of respondent union's affiliation with the
Alliance of Filipino Workers (AFW). To correct any supposed
infirmity in its legal status, respondent union registered
54
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Case Digest Compilation
itself independently and withdrew the petition which had
earlier been granted. Thereafter, it filed another petition for
certification election.
Med-Arbiter Manases T. Cruz issued an order granting the
petition for certification election, and after the election, Med
Arbiter Cruz issued an Order certifying respondent union as
the sole and exclusive bargaining representative of the rank
and file employees at CMC.  right of the workers to freely choose their sole and
Respondent CMC contends that petition for cancellation of
respondent union's certificate of registration is still pending.
In the said case, Med-Arbiter Paterno Adap issued an Order
dated February 4, 1993 which declared respondent union's
certificate of registration as null and void.
Respondent union, after being declared as the certified
bargaining agent of the rank-and-file employees of
respondent CMC by Med-Arbiter Cruz, presented economic
proposals for the negotiation of a collective bargaining
agreement (CBA). However, respondent CMC contended
that CBA negotiations should be suspended in view of the
Order issued on February 4, 1993 by Med-Arbiter Adap
declaring the registration of respondent union as null and
void. In spite of the refusal of respondent CMC, respondent
union still persisted in its demand for CBA negotiations,
claiming that it has already been declared as the sole and
exclusive bargaining agent of the rank-and-file employees
of the hospital.
Due to respondent CMC's refusal to bargain collectively,
respondent union filed a notice of strike on March 1, 1993.
After complying with the other legal requirements,
respondent union staged a strike on April 15, 1993. On April
16, 1993, the Secretary of Labor assumed jurisdiction over
the case and issued an order certifying the same to the
National Labor Relations Commission for compulsory
arbitration where the said case is still pending.  the legal status of respondent union should have left CMC
On March 24, 1994, petitioner union filed a petition for
certification election among the regular rank-and-file
employees of the Capitol Medical Center Inc.
Med-Arbiter Brigida Fadrigon: issued an Order granting
the petition for certification election among the rank and
fileemployees. It ruled that the issue was the majority
status of respondent union. Since no certification election
was held within one year from the date of issuance of a
final certification election result and there was no
bargaining deadlock between respondent union and the
employees that had been submitted to conciliation or had
become the subject of a valid notice of strike or lock out,
there is no bar to the holding of a certification election.  for certification election, which had been submitted to
Respondent union’s contention: appealed from the said
Order, alleging that the Med-Arbiter erred in granting the
petition for certification election and in holding that this
case falls under Section 3, Rule V Book V of the Rules
Implementing the Labor Code.  It also prayed that the said
provision must not be applied strictly in view of the facts in
this case.
Labor Secretary Laguesma: Rendered a Resolution dated
November 18, 1994 granting the appeal.  He ratiocinated
that while the petition was indeed filed after the lapse of
one year form the time of declaration of a final certification
result, and that no bargaining deadlock had been submitted
for conciliation or arbitration, respondent union was not
remiss on its right to enter into a CBA for it was the CMC
which refused to bargain collectively.  no "counteraction" of forces present in this case nor
CMC and petitioner union separately filed motions for
reconsideration of the said Order.
Respondent CMC’s contention: In certification election
proceedings, the employer cannot be ordered to bargain
collectively with a union since the only issue involved is the
determination of the bargaining agent of the employees.
Petitioner union’s contentions: Petitioner insists that the
circumstances prescribed in Section 3, Rule V, Book V Of
the Rules Implementing the Labor Code where a
certification election should be conducted, viz: (1) that one
year had lapsed since the issuance of a final certification
result; and (2) that there is no bargaining deadlock to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
which the incumbent or certified bargaining agent is a party
has been submitted to conciliation or arbitration, or had
become the subject of a valid notice of strike or lockout, are
present in this case. It further claims that since there is no
evidence on record that there exists a CBA deadlock, the
law allowing the conduct of a certification election after
twelve months must be given effect in the interest of the
exclusive bargaining agent.
On January 11, 1995, public respondent issued a Resolution
which denied the two motions for reconsideration hence this
petition. 
Issue: Whether or not Secretary Laguesma committed
grave abuse of discretion in dismissing the petition for
certification election, and in directing the hospital to
negotiate a collective bargaining agreement with the said
respondent union.
Ruling: No.
While it is true that, in the case at bench, one year had
lapsed since the time of declaration of a final certification
result, and that there is no collective bargaining deadlock,
public respondent did not commit grave abuse of discretion
when it ruled in respondent union's favor since the delay in
the forging of the CBA could not be attributed to the fault of
the latter.
A scrutiny of the records will further reveal that after
respondent union was certified as the bargaining agent of
CMC, it invited the employer hospital to the bargaining table
by submitting its economic proposal for a CBA. However,
CMC refused to negotiate with respondent union and
instead challenged the latter's legal personality through a
petition for cancellation of the certificate of registration
which eventually reached this Court. The decision affirming
with no other recourse but to bargain collectively; but still it
did not. Respondent union was left with no other recourse
but to file a notice of strike against CMC for unfair labor
practice with the National Conciliation and Mediation Board.
This eventually led to a strike on April 15, 1993.
Petitioner union on the other hand, after this Court issued
an entry of judgment on March 23, 1994, filed the subject
petition for certification election on March 24, 1994,
claiming that twelve months had lapsed since the last
certification election.
Was there a bargaining deadlock between CMC and
respondent union, before the filing of petitioner of a petition
conciliation or had become the subject of a valid notice of
strike or lockout?
In the case of Divine Word University of Tacloban
v. Secretary of Labor and Employment,  we had the
occasion to define what a deadlock is, viz:\
A "deadlock" is . . . the counteraction of things producing
entire stoppage; . . . . There is a deadlock when there is a
complete blocking or stoppage resulting from the action of
equal and opposed forces . . . . The word is synonymous
with the word impasse, which . . "presupposes reasonable
effort at good faith bargaining which, despite noble
intentions, does not conclude in agreement between the
parties."
Although there is no "deadlock" in its strict sense as there is
"reasonable effort at good faith bargaining," such can be
attributed to CMC's fault as the bargaining proposals of
respondent union were never answered by CMC. In fact,
what happened in this case is worse than a bargaining
deadlock for CMC employed all legal means to block the
certification of respondent union as the bargaining agent of
the rank-and-file; and use it as its leverage for its failure to
bargain with respondent union. Thus, we can only conclude
that CMC was unwilling to negotiate and reach an
agreement with respondent union. CMC has not at any
instance shown willingness to discuss the economic
proposals given by respondent union. 
55
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Case Digest Compilation
As correctly ratiocinated by public respondent, to wit:
“For herein petitioner to capitalize on the ensuing delay
which was caused by the hospital and which resulted in the
non-conclusion of a CBA within the certification year, would
be to negate and render a mockery of the proceedings
undertaken before this Department and to put an
unjustified premium on the failure of the respondent
hospital to perform its duty to bargain collectively as
mandated in Article 252 of the Labor Code.
The duly certified bargaining agent, CMCEA-AFW, should
not be made to further bear the brunt flowing from the
respondent hospital's reluctance and thinly disguised refusal
to bargain.”
If the law proscribes the conduct of a certification
election when there is a bargaining deadlock
submitted to conciliation or arbitration, with more
reason should it not be conducted if, despite attempts
to bring an employer to the negotiation table by the
"no reasonable effort in good faith" on the employer
certified bargaining agent, there was to bargain
collectively.
In the case of Kaisahan ng Manggagawang Pilipino
vs. Trajano 201 SCRA 453 (1991), penned by Chief Justice
Andres R. Narvasa, the factual milieu of which is similar to
this case, this Court allowed the holding of a certification
election and ruled that the one year period known as the
"certification year" has long since expired. We also ruled,
that:
“. . . prior to the filing of the petition for election in this
case, there was no such "bargaining deadlock . . (which)
had been submitted to conciliation or arbitration or had
become the subject of a valid notice of strike or lockout." To
be sure, there are in the record assertions by NAFLU that its
attempts to bring VIRON to the negotiation table had been
unsuccessful because of the latter's recalcitrance, and
unfulfilled promises to bargain collectively; but there is no
proof that it had taken tiny action to legally coerce VIRON
to comply with its statutory duty to bargain collectively. It
could have charged VIRON with unfair labor practice; but it
did not. It could have gone on a legitimate strike in protest
against VIRON's refusal to bargain collectively and compel
it to do so; but it did not. There are assertions by NAFLU,
too, that its attempts to bargain collectively had been
delayed by continuing challenges to the resolution
pronouncing it the sole bargaining representative in VIRON;
but there is no adequate substantiation thereof, or of how it
did in fact prevent initiation of the bargaining process
between it and VIRON. “
Although the statements pertinent to this case are merely
obiter, still the fact remains that in the Kaisahan case,
NAFLU was counselled by this Court on the steps that it
should have undertaken to protect its interest, but which it
failed to do so.
This is what is strikingly different between
the Kaisahan case and the case at bench for in the latter
case, there was proof that the certified bargaining
agent, respondent union, had taken an action to
legally coerce the employer to comply with its
statutory duty to bargain collectively, i.e., charging
the employer with unfair labor practice and
conducting a strike in protest against the employer's
refusal to bargain.  It is only just and equitable that the
circumstances in this case should be considered as similar
in nature to a "bargaining deadlock" when no certification
election could be held. This is also to make sure that no
floodgates will be opened for the circumvention of the law
by unscrupulous employers to prevent any certified
bargaining agent from negotiating a CBA. Thus, Section 3,
Rule V, Book V of the Implement Rules should be
interpreted liberally so as to include a circumstance,  e.g.
where a CBA could not be concluded due to the failure of
one party to willingly perform its duty to bargain
collectively.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
The order for the hospital to bargain is based on its failure
to bargain collectively with respondent union.
Dispositive portion: the Resolution dated November 18,
1994 of public respondent Laguesma is AFFIRMED and the
instant petition is hereby DISMISSED.
Union of Filipinos vs. Nestlé
August 22, 2006
Facts: In consideration of the impending expiration of the
CBA between Union of Filipino Employees—Drug, Food and
Allied Industries Unions— Kilusang Mayo Uno (Union) and
Nestlé Philippines, Incorporated (Nestlé), the Presidents of
the Alabang and Cabuyao Divisions of UFE-DFA-KMU, thru a
letter of intent, informed Nestlé of their intent to open new
Collective Bargaining Negotiation.
Nestlé acknowledged receipt of the aforementioned letter. It
also informed the Union that it was preparing its own
counter-proposal and proposed ground rules that shall
govern the conduct of the collective bargaining
negotiations.
Nestlé informed the Cabuyao Division its position that
“unilateral grants, one-time company grants,
company-initiated policies and programs, which
include, but are not limited to the Retirement
Plan, Incidental Straight Duty Pay and Calling Pay
Premium, are by their very nature not proper
subjects of CBA negotiations and therefore
shall be excluded therefrom.”
In addition, it clarified that with the closure of the Alabang
Plant, the CBA negotiations will only be applicable to the
covered employees of the Cabuyao Plant; hence, the
Cabuyao Division of UFE-DFA-KMU became the sole
bargaining unit involved in the subject CBA negotiations.
Dialogue between the company and the union ensued.
Nestlé, claiming to have reached an impasse in said
dialogue, requested the National Conciliation and Mediation
Board (NCMB) to conduct preventive mediation
proceedings. Conciliation proceedings nevertheless proved
ineffective.
The Union filed two Notices of Strike:
1. First on the ground of bargaining deadlock—
pertaining to economic issues, i.e., “retirement
(plan), panel composition, costs and attendance,
and CBA.
2. Second, this time predicated on Nestlé’s alleged
unfair labor practices i.e., bargaining in bad
faith in that it was setting preconditions in the
ground rules by refusing to include the issue of the
Retirement Plan in the CBA negotiations.
DOLE Sec. Hon. Sto. Tomas assume jurisdiction over the
current labor dispute and ordered that any strike or lockout
be enjoined. Despite the injunction, the Union went on
strike. Sec. Sto. Tomas issued a return-to-work order but
the union continued with their strike and refused to go back
to work as instructed.
At the hearing called, Nestlé addressed several issues
allegedly pertaining to the current labor dispute, i.e.,
economic provisions of the CBA as well as the non-inclusion
of the issue of the Retirement Plan in the collective
bargaining negotiations. The Union, in contrast, limited
itself to tackling the solitary issue of whether or not the
retirement plan was a mandatory subject in its CBA
negotiations with the company on the contention “that the
56
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Case Digest Compilation
Order of Assumption of Jurisdiction covers only the issue of
Retirement Plan.”
Meanwhile, in an attempt to finally resolve the crippling
labor dispute between the parties, DOLE Sec. Brion ruled
that:
1. The present Retirement Plan at the Nestlé Cabuyao
Plant is a unilateral grant that the parties have
expressly so recognized subsequent to the SC’s
ruling in Nestlé, Phils. Inc. vs. NLRC, February 4,
1991 and is therefore not a mandatory subject for
bargaining;
2. charge of ULP is dismissed for lack of merit;
CA: DOLE Sec. gravely abused her discretion when she
ruled that the Retirement Plan is not a valid issue for
collective bargaining negotiations. Nestlé is not guilty of
ULP.
Petitioner Union’s Contentions:
Nestlé’s “refusal to bargain on a very important CBA
economic provision constitutes unfair labor practice.”
 Nestlé set as a precondition for the holding of
collective bargaining negotiations that the Union
should first agree that the retirement plan is not a
bargaining issue before Nestlé would agree to
discuss other issues in the CBA.
Respondent Nestlé Contentions:
 It was only before the Court of Appeals, and in the
second Petition for Certiorari at that, did the Union
raise the matter of unfair labor practice.
 It reasoned that the subject of unfair labor practice
should have been threshed out with the
appropriate labor tribunal.
 there was no way for the Court of Appeals to make
a ruling on the issues of unfair labor practice and
damages, simply because there was nothing to
support or justify such action. Although the Union
was afforded by the Secretary the opportunity to
be heard and more, it simply chose to omit the
said issues in the proceedings
Issues: Whether or not the Nestlé was guilty of ULP for
setting a pre-condition to bargaining – the non-inclusion of
the Retirement Plan as an issue in the collective bargaining
negotiations – NO
Ruling:
[1]
Nestlé is not guilty of unfair labor practice
ULP, defined:
ART. 247 [now 258]. CONCEPT OF UNFAIR
LABOR PRACTICE AND PROCEDURE FOR
PROSECUTION THEREOF.—Unfair labor practices
violate the constitutional right of workers and
employees to self-organization, are inimical to the
legitimate interests of both labor and
management, including their right to bargain
collectively and otherwise deal with each other in
an atmosphere of freedom and mutual respect,
disrupt industrial peace and hinder the promotion
of healthy and stable labor-management relations.
x x x x.
The same code likewise provides the acts constituting unfair
labor practices committed by employers, to wit:
ART. 248 [now 259]. UNFAIR LABOR
PRACTICES OF EMPLOYERS.—
It shall be unlawful for an employer to commit any
of the following unfair labor practices:
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
xxx
(g) To violate the duty to bargain collectively
as prescribed by this Code;
Records show that it was only on the second notice of strike
that the ground of unfair labor practice was alleged. Worse,
the second Notice of Strike merely contained a general
allegation that Nestlé committed unfair labor practice by
bargaining in bad faith for supposedly “setting precondition
in the ground rules (Retirement issue).” On the contrary,
Nestlé, in its Position Paper, did not confine itself to the
issue of the non-inclusion of the Retirement Plan but
extensively discussed its stance on other economic matters
pertaining to the CBA.
[2]
Union failed to discharge said onus probandi as there
is still a need for the presentation of evidence other
than its bare contention of unfair labor practice
Basic is the principle that good faith is presumed and he
who alleges bad faith has the duty to prove the same. By
imputing bad faith unto the actuations of Nestlé, it was the
Union, therefore, who had the burden of proof to present
substantial evidence to support the allegation of unfair labor
practice.
A perusal of the allegations and arguments raised by Union
will readily disclose that it failed to discharge said onus
probandi as there is still a need for the presentation of
evidence other than its bare contention of unfair labor
practice in order to make certain the propriety or
impropriety of the unfair labor practice charge hurled
against Nestlé. Under Rule XIII, Sec. 4, Book V of the
Implementing Rules of the Labor Code:
x x x. In cases of unfair labor practices, the
notice of strike shall as far as practicable,
state the acts complained of and the efforts to
resolve the dispute amicably.”
Except for the assertion put forth by UFE-DFA-KMU, neither
the second Notice of Strike nor the records of these cases
substantiate a finding of unfair labor practice. It is not
enough that the union believed that the employer
committed acts of unfair labor practice when the
circumstances clearly negate even a prima facie showing to
warrant such a belief.
In its letter to the Union, though Nestlé underscored its
position that “unilateral grants, onetime company grants,
company-initiated policies and programs, which include, but
are not limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature
not proper subjects of CBA negotiations and therefore shall
be excluded therefrom,” such attitude is not tantamount
to refusal to bargain. This is especially true when it is
viewed in the light of the fact that eight out of nine
bargaining units have allegedly agreed to treat the
Retirement Plan as a unilateral grant. Nestlé, therefore,
cannot be faulted for considering the same benefit as
unilaterally granted.
To be sure, it must be shown that Nestlé was motivated by
ill will, “bad faith, or fraud, or was oppressive to labor, or
done in a manner contrary to morals, good customs, or
public policy, and, of course, that social humiliation,
wounded feelings, or grave anxiety resulted x x x” in
disclaiming unilateral grants as proper subjects in their
collective bargaining negotiations.
[3]
Nestlé’s inclusion in its Position Paper of its
proposals affecting other matters covered by the CBA
57
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Case Digest Compilation
contradicts the claim of refusal to bargain or
bargaining in bad faith.
There is no per se test of good faith in bargaining. Good
faith or bad faith is an inference to be drawn from the facts,
to be precise, the crucial question of whether or not a party
has met his statutory duty to bargain in good faith typically
turns on the facts of the individual case. Necessarily, a
determination of the validity of the Nestlé’s proposition
involves an appraisal of the exercise of its management
prerogative.
Employers are accorded rights and privileges to assure their
self-determination and independence and reasonable return
of capital. This mass of privileges comprises the so called
management prerogatives. In this connection, the rule is
that good faith is always presumed. As long as the
company’s exercise of the same is in good faith to advance
its interest and not for purpose of defeating or
circumventing the rights of employees under the law or a
valid agreement, such exercise will be upheld.
Construing arguendo that the content of the letter laid down
a pre-condition to its agreement to bargain with UFE-DFA-
KMU, Nestlé’s inclusion in its Position Paper of its proposals
affecting other matters covered by the CBA contradicts the
claim of refusal to bargain or bargaining in bad faith.
Accordingly, since UFE-DFA-KMU failed to proffer
substantial evidence that would overcome the legal
presumption of good faith on the part of Nestlé, the award
of moral and exemplary damages is unavailing.
[4]
The Retirement Plan is a valid issue for parties’
collective bargaining negotiations
In Nestlé Philippines, Inc vs NLRC,
Court has had the occasion to affirm that a
retirement plan is consensual in nature that it
may not be terminated or modified at will by either
party.
The fact that the retirement plan is non-
contributory, i.e., that the employees contribute
nothing to the operation of the plan, does not
make it a non-issue in the CBA negotiations.
Since the retirement plan has been an
integral part of the CBA since 1972, the
Union’s demand to increase the benefits due
the employees under said plan, is a valid CBA
issue. x x x
Employees do have a vested and demandable
right over existing benefits voluntarily
granted to them by their employer. The latter
may not unilaterally withdraw, eliminate or
diminish such benefits.
IN THIS CASE, the Retirement Plan was already subject of
the existing CBA, the members of UFEDFA-KMU were only
exercising their prerogative to bargain or renegotiate for
the improvement of the terms of the Retirement Plan just
like they would for all the other economic, as well as non-
economic benefits previously enjoyed by them.
PURPOSE OF COLLECTIVE BARGAINING
The purpose of collective bargaining is the acquisition or
attainment of the best possible covenants or terms relating
to economic and noneconomic benefits granted by
employers and due the employees.
The Labor Code has actually imposed as a mutual obligation
of both parties, this duty to bargain collectively. The duty to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
bargain collectively is categorically prescribed by Article 252
[now 263].
ART. 252 [now 263]. MEANING OF DUTY TO
BARGAIN COLLECTIVELY.—The duty to bargain
collectively means the performance of a mutual
obligation to meet and confer promptly and
expeditiously and 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 agreement if requested by either party, but
such duty does not compel any party to agree to a
proposal or to make any concession.
Further, Article 253 [now 264], also of the Labor Code,
defines the parameter of said obligation when there already
exists a
CBA, viz.:
ART. 253 [now 264]. DUTY TO BARGAIN
COLLECTIVELY WHEN THERE EXISTS A
COLLECTIVE BARGAINING AGREEMENT.—The
duty to bargain collectively shall also mean that
either party shall not terminate nor modify such
agreement during its lifetime. However, either
party can serve a written notice to terminate or
modify the agreement at least sixty (60) days prior
to its expiration date. It shall be the duty of both
parties to keep the status quo and to continue in
full force and effect the terms and conditions of the
existing agreement during the sixty day period
and/or until a new agreement is reached by the
parties.
And, in demanding that the terms of the Retirement Plan be
opened for renegotiation, the members of UFE-DFAKMU are
acting well within their rights as the Retirement Plan is
consensual in character; and so, negotiable.
The Court is not persuaded that that the members of the
Union have agreed to treat the Retirement Plan as a benefit
the terms of which are solely dependent on the inclination
of the Nestlé and remove the subject benefit from the ambit
of the CBA upon reading the Paragraph 6 and 6.2 of the
said agreement:
6. Additionally, the COMPANY agree to extend the
following unilateral grants which shall not form
part of the Collective Bargaining Agreement (CBA):
xxx
6.2. Review for improvement of the
COMPANY’s Retirement Plan and the
reference on the Retirement Plan in the
Collective Bargaining Agreement signed
on 4 July 1995 shall be maintained.
The characterization unilaterally imposed by Nestlé
on the Retirement Plan cannot operate to divest the
employees of their “vested and demandable right
over existing benefits voluntarily granted by their
employer.”
Worth noting, that the aforequoted paragraph 6 and
subparagraph 6.2, highlights an undeniable fact—that
Nestlé recognizes that the Retirement Plan is part of the
existing Collective Bargaining Agreement.
Nestlé further rationalizes that declaring the Retirement
Plan a valid CBA negotiation issue will inspire other
bargaining units to demand for greater benefits. Suffice it
to say that the consensual nature of the Retirement
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Case Digest Compilation
Plan neither gives the union members the unfettered
right nor the unbridled prerogative to demand more
than what the company can viably give.
Violation of Duty to Bargain
c. Bargaining in bad faith
STANDARD CHARTERED BANK EMPLOYEES UNION
V. CONFESOR
G.R. NO. 114974 : June 16, 2004
FACTS: Standard Chartered Bank (the Bank, for brevity) is
a foreign banking corporation doing business in the
Philippines. The exclusive bargaining agent of the rank and
file employees of the Bank is the Standard Chartered Bank
Employees Union (the Union, for brevity).
In August of 1990, the Bank and the Union signed a five-
year (CBA) with a provision to renegotiate the terms
thereof on the third year. Prior to the expiration of the
three-year period but within the sixty-day freedom period,
the Union initiated the negotiations. On February 18, 1993,
the Union, through its President, Eddie L. Divinagracia, sent
a letter containing its proposals covering political
provisions and thirty-four (34) economic provisions.
Included therein was a list of the names of the members of
the Unions negotiating panel.
In a Letter dated February 24, 1993, the Bank took note of
the Unions proposals. The Bank attached its counter-
proposal to the non-economic provisions proposed by the
Union. The Bank posited that it would be in a better position
to present its counter-proposals on the economic items
after the Union had presented its justifications for the
economic proposals. The Bank, likewise, listed the members
of its negotiating panel. The parties agreed to set meetings
to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union,
through Divinagracia, suggested to the Banks Human
Resource Manager and head of the negotiating panel, Cielito
Diokno, that the bank lawyers should be excluded from the
negotiating team. The Bank acceded. Meanwhile, Diokno
suggested to Divinagracia that Jose P. Umali, Jr., the
President of the National Union of Bank Employees (NUBE),
the federation to which the Union was affiliated, be
excluded from the Unions negotiating panel. However,
Umali was retained as a member thereof.
On March 12, 1993, the parties met and set the ground
rules for the negotiation. Diokno suggested that the
negotiation be kept a family affair. The proposed non-
economic provisions of the CBA were discussed first. Even
during the final reading of the non-economic provisions on
May 4, 1993, there were still provisions on which the Union
and the Bank could not agree. Temporarily, the notation
DEFERRED was placed therein. Towards the end of the
meeting, the Union manifested that the same should be
changed to DEADLOCKED to indicate that such items
remained unresolved. Both parties agreed to place the
notation DEFERRED/DEADLOCKED.
On May 18, 1993, the negotiation for economic provisions
commenced. A presentation of the basis of the Unions
economic proposals was made. The next meeting, the Bank
made a similar presentation. Towards the end of the Banks
presentation, Umali requested the Bank to validate the
Unions guestimates, especially the figures for the rank and
file staff. In the succeeding meetings, Umali chided the
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Bank for the insufficiency of its counter-proposal on the
provisions on salary increase, group hospitalization, death
assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if
need be, the Union would go through the same route to get
what it wanted.
Upon the Banks insistence, the parties agreed to tackle the
economic package item by item. Upon the Unions
suggestion, the Bank indicated which provisions it would
accept, reject, retain and agree to discuss. The Bank
suggested that the Union prioritize its economic proposals,
considering that many of such economic provisions
remained unresolved. The Union, however, demanded that
the Bank make a revised itemized proposal.
In the morning of the June 15, 1993 meeting, the Union
suggested that if the Bank would not make the necessary
revisions on its counter-proposal, it would be best to seek a
third party assistance. After the break, the Bank presented
its revised counter-proposal.
Diokno stated that, in order for the Bank to make a better
offer, the Union should clearly identify what it wanted to be
included in the total economic package. Umali replied that it
was impossible to do so because the Banks counter-
proposal was unacceptable. He furthered asserted that it
would have been easier to bargain if the atmosphere was
the same as before, where both panels trusted each
other.Diokno requested the Union panel to refrain from
involving personalities and to instead focus on the
negotiations. He suggested that in order to break the
impasse, the Union should prioritize the items it wanted to
iron out. Divinagracia stated that the Bank should make the
first move and make a list of items it wanted to be included
in the economic package. Except for the provisions on
signing bonus and uniforms, the Union and the Bank
failed to agree on the remaining economic provisions
of the CBA. The Union declared a deadlock and filed a
Notice of Strike before the National Conciliation and
Mediation Board (NCMB) on June 21, 1993,
On the other hand, the Bank filed a complaint for Unfair
Labor Practice (ULP) and Damages before the Arbitration
Branch of the National Labor Relations Commission (NLRC)
in Manila, against the Union.
The Bank alleged that the Union violated its duty to
bargain, as it did not bargain in good faith. It contended
that the Union demanded sky high economic
demands, indicative of blue-sky bargaining. Further, the
Union violated its no strike- no lockout clause by filing a
notice of strike before the NCMB. Considering that the filing
of notice of strike was an illegal act, the Union officers
should be dismissed. Finally, the Bank alleged that as a
consequence of the illegal act, the Bank suffered nominal
and actual damages and was forced to litigate and hire the
services of the lawyer.
On July 21, 1993, then Secretary of Labor and Employment
(SOLE) Nieves R. Confesor assumed jurisdiction over the
labor dispute at the Bank.
The SOLE ordered the Standard Chartered Bank and the
Standard Chartered Bank Employees Union NUBE to
execute a CBA incorporating the dispositions contained
herein. The CBA shall be retroactive to 01 April 1993 and
shall remain effective for two years thereafter, or until such
time as a new CBA has superseded it. All provisions in the
expired CBA not expressly modified or not passed upon
herein are deemed retained while all new provisions which
59
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Case Digest Compilation
are being demanded by either party are deemed denied,
but without prejudice to such agreements as the parties
may have arrived at in the meantime.
The Banks charge for unfair labor practice which it originally
filed with the NLRC is dismissed for lack of merit. On the
other hand, the Unions charge for unfair labor practice is
similarly dismissed.
The SOLE dismissed the charges of ULP of both the Union
and the Bank, explaining that both parties failed to
substantiate their claims.
On March 22, 1994, the Bank and the Union signed the
CBA. Immediately thereafter, the wage increase was
effected and the signing bonuses based on the increased
wage were distributed to the employees covered by the
CBA.
THE PETITION: On April 28, 1994, the Union filed this
petition for certiorari.
THE UNION’S CONTENTIONS: The Union alleges that the
SOLE acted with grave abuse of discretion amounting to
lack or excess of jurisdiction when it found that the Bank
did not commit unfair labor practice when it interfered with
the Unions choice of negotiator. It argued that, Dioknos
suggestion that the negotiation be limited as a family affair
was tantamount to suggesting that Federation President
Jose Umali, Jr. be excluded from the Unions negotiating
panel. It further argued that contrary to the ruling of the
public respondent, damage or injury to the public interest
need not be present in order for unfair labor practice to
prosper.
The Union, likewise, pointed out that the public respondent
failed to rule on the ULP charges arising from the Banks
surface bargaining. The Union contended that the Bank
merely went through the motions of collective bargaining
without the intent to reach an agreement and made bad
faith proposals when it announced that the parties should
begin from a clean slate. It argued that the Bank opened
the political provisions up for grabs, which had the effect of
diminishing or obliterating the gains that the Union had
made.
The Union also accused the Bank of refusing to disclose
material and necessary data, even after a request was
made by the Union to validate its guestimates.
THE BANK’S CONTENTIONS: The Bank prayed that the
petition be dismissed as the Union was estopped,
considering that it signed the Collective Bargaining
Agreement (CBA) on April 22, 1994. It asserted that
contrary to the Unions allegations, it was the Union that
committed ULP when negotiator Jose Umali, Jr. hurled
invectives at the Banks head negotiator, Cielito Diokno, and
demanded that she be excluded from the Banks negotiating
team. Moreover, the Union engaged in blue-sky
bargaining and isolated the no strike-no lockout clause of
the existing CBA.
ISSUES:
1. Whether or not the Union was able to substantiate
its claim of unfair labor practice against the Bank?
NO.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
2. Whether or not the SOLE Confesor acted with
grave abuse of discretion amounting to lack or
excess of jurisdiction? NO.
3. Whether or not the petitioner is estopped from
filing the instant action. NO.
RULING:
Interference under Article 248 (a) of the Labor Code
The petitioner asserts that the private respondent
committed ULP, i.e., interference in the selection of the
Unions negotiating panel, when Cielito Diokno, the Banks
Human Resource Manager, suggested to the Unions
President Eddie L. Divinagracia that Jose P. Umali, Jr.,
President of the NUBE, be excluded from the Unions
negotiating panel.In support of its claim, Divinagracia
executed an affidavit, stating that prior to the
commencement of the negotiation, Diokno approached him
and suggested the exclusion of Umali from the Unions
negotiating panel, and that during the first meeting, Diokno
stated that the negotiation be kept a family affair.
Citing the cases of U.S. Postal Service and Harley Davidson
Motor Co., Inc., AMF, the Union claims that interference in
the choice of the Unions bargaining panel is tantamount to
ULP.
In the aforecited cases, the alleged ULP was based on the
employers violation of Section 8(a) (1) and (5) of the
National Labor Relations Act (NLRA), which pertain to the
interference, restraint or coercion of the employer in the
employees exercise of their rights to self-organization and
to bargain collectively through representatives of their own
choosing; and the refusal of the employer to bargain
collectively with the employees representatives. In both
cases, the National Labor Relations Board held that upon
the employers refusal to engage in negotiations with the
Union for collective-bargaining contract when the Union
includes a person who is not an employee, or one who is a
member or an official of other labor organizations, such
employer is engaged in unfair labor practice under Section
8(a) (1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance
Co., Ltd. Employees Association NATU v. Insular Life
Assurance Co., Ltd., wherein this Court said that the test of
whether an employer has interfered with and coerced
employees in the exercise of their right to self-organization
within the meaning of subsection (a) (1) is whether the
employer has engaged in conduct which it may reasonably
be said, tends to interfere with the free exercise of
employees rights under Section 3 of the Act. Further, it is
not necessary that there be direct evidence that any
employee was in fact intimidated or coerced by statements
of threats of the employer if there is a reasonable inference
that anti-union conduct of the employer does have an
adverse effect on self-organization and collective
bargaining.
Under the International Labor Organization Convention
(ILO) No. 87 FREEDOM OF ASSOCIATION AND PROTECTION
OF THE RIGHT TO ORGANIZE to which the Philippines is a
signatory, workers and employers, without distinction
whatsoever, shall have the right to establish and, subject
only to the rules of the organization concerned, to job
organizations of their own choosing without previous
authorization. Workers and employers organizations shall
have the right to draw up their constitutions and rules, to
elect their representatives in full freedom to organize their
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Case Digest Compilation
administration and activities and to formulate their
programs. Article 2 of ILO Convention No. 98 pertaining to
the Right to Organize and Collective Bargaining,
Article 248(a) of the Labor Code, considers it an unfair labor
practice when an employer interferes, restrains or coerces
employees in the exercise of their right to self-organization
or the right to form association. The right to self-
organization necessarily includes the right to collective
bargaining.
Parenthetically, if an employer interferes in the selection of
its negotiators or coerces the Union to exclude from its
panel of negotiators a representative of the Union, and if it
can be inferred that the employer adopted the said act to
yield adverse effects on the free exercise to right to self-
organization or on the right to collective bargaining of the
employees, ULP under Article 248(a) in connection with
Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under
the Labor Code, substantial evidence is required to
support the claim. Substantial evidence has been defined
as such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion. In the case at
bar, the Union bases its claim of interference on the alleged
suggestions of Diokno to exclude Umali from the Unions
negotiating panel.
IN THIS CASE: The circumstances that occurred during
the negotiation do not show that the suggestion made by
Diokno to Divinagracia is an anti-union conduct from which
it can be inferred that the Bank consciously adopted such
act to yield adverse effects on the free exercise of the right
to self-organization and collective bargaining of the
employees, especially considering that such was undertaken
previous to the commencement of the negotiation and
simultaneously with Divinagracias suggestion that the bank
lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective
bargaining process, with the inclusion of Umali in the
Unions negotiating panel, the negotiations pushed through.
The complaint was made only on August 16, 1993 after a
deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an
afterthought. The accusation occurred after the
arguments and differences over the economic provisions
became heated and the parties had become frustrated. It
happened after the parties started to involve personalities.
As the public respondent noted, passions may rise, and as a
result, suggestions given under less adversarial situations
may be colored with unintended meanings. Such is what
appears to have happened in this case.
The Duty to Bargain Collectively
If at all, the suggestion made by Diokno to Divinagracia
should be construed as part of the normal relations and
innocent communications, which are all part of the friendly
relations between the Union and Bank.
Surface bargaining is defined as going through the motions
of negotiating without any legal intent to reach an
agreement. The resolution of surface bargaining allegations
never presents an easy issue. The determination of whether
a party has engaged in unlawful surface bargaining is
usually a difficult one because it involves, at bottom, a
question of the intent of the party in question, and usually
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
such intent can only be inferred from the totality of the
challenged partys conduct both at and away from the
bargaining table. It involves the question of whether an
employers conduct demonstrates an unwillingness to
bargain in good faith or is merely hard bargaining.
The minutes of meetings from March 12, 1993 to June 15,
1993 do not show that the Bank had any intention of
violating its duty to bargain with the Union. The minutes of
the meetings show that both the Bank and the Union
exchanged economic and non-economic proposals and
counter-proposals.
The Union has not been able to show that the Bank had
done acts, both at and away from the bargaining table,
which tend to show that it did not want to reach an
agreement with the Union or to settle the differences
between it and the Union. Admittedly, the parties were not
able to agree and reached a deadlock.However, it is herein
emphasized that the duty to bargain does not compel either
party to agree to a proposal or require the making of a
concession. Hence, the parties failure to agree did not
amount to ULP under Article 248(g) for violation of the duty
to bargain.
ACCUSATION OF BAD FAITH HAS NO LEG TO STAND
ON.
In view of the finding of lack of ULP based on Article
248(g), the accusation that the Bank made bad faith
provisions has no leg to stand on. The records show that
the Banks counter-proposals on the non-economic
provisions or political provisions did not put up for grabs the
entire work of the Union and its predecessors. As can be
gleaned from the Banks counter-proposal, there were many
provisions which it proposed to be retained.The revisions on
the other provisions were made after the parties had come
to an agreement. Far from buttressing the Unions claim
that the Bank made bad-faith proposals on the non-
economic provisions, all these, on the contrary, disprove
such allegations.
No Grave Abuse of Discretion On the Part of the
Public Respondent
While it is true that a showing of prejudice to public interest
is not a requisite for ULP charges to prosper, it cannot be
said that the public respondent acted in capricious and
whimsical exercise of judgment, equivalent to lack of
jurisdiction or excess thereof. Neither was it shown that the
public respondent exercised its power in an arbitrary and
despotic manner by reason of passion or personal hostility.
Estoppel not Applicable In the Case at Bar
In the case, however, the approval of the CBA and the
release of signing bonus do not necessarily mean that the
Union waived its ULP claim against the Bank during the past
negotiations. After all, the conclusion of the CBA was
included in the order of the SOLE, while the signing bonus
was included in the CBA itself. Moreover, the Union twice
filed a motion for reconsideration respecting its ULP charges
against the Bank before the SOLE.
The  Union Did Not Engage In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP
for engaging in blue-sky bargaining or making exaggerated
or unreasonable proposals. The Bank failed to show that the
economic demands made by the Union were exaggerated or
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Case Digest Compilation
unreasonable. The minutes of the meeting show that the
Union based its economic proposals on data of rank and file
employees and the prevailing economic benefits received by
bank employees from other foreign banks doing business in
the Philippines and other branches of the Bank in the Asian
region.
In sum, we find that the public respondent did not act with
grave abuse of discretion amounting to lack or excess of
jurisdiction when it issued the questioned order and
resolutions. While the approval of the CBA and the release
of the signing bonus did not estop the Union from pursuing
its claims of ULP against the Bank, we find that the latter
did not engage in ULP.We, likewise, hold that the Union is
not guilty of ULP.
In light of the foregoing, the October 29, 1993 Order and
December 16, 1993 and February 10, 1994 Resolutions of
then Secretary of Labor Nieves R. Confesor are AFFIRMED.
The Petition is hereby DISMISSED.
SO ORDERED.
The Hongkong and Shanghai Banking Corporation
Employees Union vs NLRC
G.R. No. 125038, November 06, 1997
DOCTRINE: It has been held that the crucial question
whether or not a party has met his statutory duty to
bargain in good faith typically turns on the facts of the
individual case. There is no per se test of good faith in
bargaining. Good faith or bad faith is an inference to be
drawn from the facts. To some degree, the question of good
faith may be a question of credibility. The effect of an
employer’s or a union’s actions individually is not the test of
good-faith bargaining, but the impact of all such occasions
or actions, considered as a whole, and the inferences fairly
drawn therefrom collectively may offer a basis for the
finding of the NLRC.
FACTS: The case at bar arose from the issuance of a non-
executive job evaluation program (JEP) lowering the
starting salaries of future employees, resulting from the
changes made in the job grades and structures, which was
unilaterally implemented by the Bank retroactive to January
1, 1993. The program in question was announced by the
Bank on January 18, 1993.
The Union, through its President, Peter Paul Gamelo,
reiterated its previous verbal objections to the Bank’s
unilateral decision to devise and put into effect the said
program because it allegedly was in violation of the existing
collective bargaining agreement (CBA) between the parties
and thus constituted unfair labor practice. The Union
demanded the suspension of the implementation of the JEP
and proposed that the same be instead taken up or included
in their upcoming CBA negotiations.
The Bank replied in a letter dated January 25, 1993 that the
JEP was issued in compliance with its obligation under the
CBA, apparently referring to Article III, Section 18 thereof
which provides that:
“Within the lifetime of this Agreement the BANK shall
conduct a job evaluation of employee positions. The
implementation timetable of the said exercise shall be
furnished the UNION by the BANK within two (2) months
from the signing of this Agreement.”
This prompted the Union to undertake concerted activities
to protest the implementation of the JEP, such as whistle
blowing during office hours starting on March 15, 1993 up
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
to the 23rd day, and writing to clients of the Bank allegedly
to inform them of the real situation then obtaining and of
an imminent disastrous showdown between the Bank and
the Union.
The Union engaged in said activities despite the fact that as
early as February 11, 1993, it had already initiated the
renegotiation of the non-representational provisions of the
CBA by submitting their proposal to the Bank, to which the
latter submitted a reply. As a matter of fact, negotiations on
the CBA commenced on March 5, 1993 and continued
through March 24, 1993 when the Bank was forced to
declare a “recess” to last for as long as the Union kept up
with its concerted activities. The Union refused to concede
to the demand of the Bank unless the latter agreed to
suspend the implementation of the JEP.
The Bank filed on April 5, 1993 with the Arbitration Branch
of the NLRC a complaint for unfair labor practice against the
Union allegedly for engaging in the contrived activities
against the ongoing CBA negotiations between the Bank
and the Union in an attempt to unduly coerce and pressure
the Bank into agreeing to the Union’s demand for the
suspension of the implementation of the JEP. It averred that
such concerted activities, despite the ongoing CBA
negotiations, constitute unfair labor practice (ULP) and a
violation of the Union’s duty to bargain collectively under
Articles 249 (c) and 252 of the Labor Code.
The Union filed a Motion to Dismiss on the ground that the
complaint states no cause of action. It alleged that its
united activities were actually being waged to protest the
Bank’s arbitrary imposition of a job evaluation program and
its unjustifiable refusal to suspend the implementation
thereof. It further claimed that the unilateral
implementation of the JEP was in violation of Article I,
Section 3 of the CBA which prohibits a diminution of
existing rights, privileges and benefits already granted and
enjoyed by the employees.
Labor Arbiter: Dismissed the complaint with prejudice and
ordered the parties to continue with the collective
bargaining negotiations, there having been no showing that
the Union acted with criminal intent in refusing to comply
with its duty to bargain but was motivated by the refusal of
management to suspend the implementation of its job
evaluation program, and that it is not evident that the
concerted activities caused damage to the Bank. It
concluded that, at any rate, the Bank is not left without
recourse, in case more aggressive and serious acts be
committed in the future by the Union, since it could
institute a petition to declare illegal such acts which may
constitute a strike or picketing.
NLRC- declared that based on the facts obtaining in this
case, it becomes necessary to resolve whether or not the
Union’s objections to the implementation of the JEP are
valid and, if it is without basis, whether or not the
concerted activities conducted by the Union constitute
unfair labor practice. It held that the labor arbiter exceeded
his authority when he ordered the parties to return to the
bargaining table and continue with CBA negotiations,
considering that his jurisdiction is limited only to labor
disputes arising from those cases provided for under Article
217 of the Labor Code, and that the labor arbiter’s
participation in this instance only begins when the
appropriate complaint for unfair labor practice due to a
party’s refusal to bargain collectively is filed. Consequently,
the case was ordered remanded to the arbitration branch of
origin for further proceedings in accordance with the
guidelines provided for therein.
ISSUE: Whether or not the concerted activities were
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committed in violation of the Union’s duty to bargain
collectively and would therefore constitute unfair labor
practice. - Not answered, the case was remanded
RULING: The labor arbiter, in finding that the Union was
not motivated by any criminal intent in resorting to said
concerted activities, merely gave a sweeping statement
without bothering to explain the factual and evidentiary
bases therefor. The declaration that there was no damage
caused to the Bank by reason of such Union activities
remains unsubstantiated. Nowhere is there any showing in
the labor arbiter’s order of dismissal from which it can be
fairly inferred that such a statement is supported by even a
preponderance of evidence. What purportedly is an
adjudication on the merits is in truth and in fact a short
discourse devoid of evidentiary value but very liberal with
generalities and hasty conclusions.
Necessarily, a determination of the validity of the Bank’s
unilateral implementation of the JEP or the Union’s act of
engaging in concerted activities involves an appraisal of
their motives. In cases of this nature, motivations are
seldom expressly avowed, and avowals are not always
candid. There must thus be a measure of reliance on the
administrative agency. It was incumbent upon the labor
arbiter, in the first instance, to weigh such expressed
motives in determining the effect of an otherwise equivocal
act. The Labor Code does not undertake the impossible task
of specifying in precise and unmistakable language each
incident which constitutes an unfair labor practice. Rather,
it leaves to the court the work of applying the law’s general
prohibitory language in light of infinite combinations of
events which may be charged as violative of its terms.
It has been held that the crucial question whether or not a
party has met his statutory duty to bargain in good faith
typically turns on the facts of the individual case. There is
no per se test of good faith in bargaining. Good faith or bad
faith is an inference to be drawn from the facts. To some
degree, the question of good faith may be a question of
credibility. The effect of an employer’s or a union’s actions
individually is not the test of good-faith bargaining, but the
impact of all such occasions or actions, considered as a
whole, and the inferences fairly drawn therefrom
collectively may offer a basis for the finding of the NLRC.
It is a well-settled rule that labor laws do not authorize
interference with the employer’s judgment in the conduct of
his business. The Labor Code and its implementing rules do
not vest in the labor arbiters nor in the different divisions of
the NLRC nor in the courts managerial authority. The hiring,
firing, transfer, demotion, and promotion of employees has
been traditionally identified as a management prerogative
subject to limitations found in the law, a collective
bargaining agreement, or in general principles of fair play
and justice. This is a function associated with the
employer’s inherent right to control and manage effectively
its enterprise. Even as the law is solicitous of the welfare of
employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The
free will of management to conduct its own business affairs
to achieve its purpose cannot be denied.
Accordingly, this Court, in a number of cases, has
recognized and affirmed the prerogative of management to
implement a job evaluation program or a reorganization for
as long as it is not contrary to law, morals or public policy.
Batongbacal vs. Associated Bank, et al.
Involving the dismissal of an assistant vice-president for
refusing to tender his courtesy resignation which the bank
required in line with its reorganization plan, the Court held,
among others, that it is not prepared to preempt the
employer’s prerogative to grant salary increases to its
employees by virtue of the implementation of the
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
reorganization plan which thereby caused a distortion in
salaries, notwithstanding that there is a semblance of
discrimination in this aspect of the bank’s organizational
setup.
National Sugar Refineries Corporation vs. National
Labor Relations Commission, et al.
In upholding management’s prerogative to implement the
JEP, the Court held therein that:
“In the case at bar, private respondent union has miserably
failed to convince this Court that the petitioner acted in bad
faith in implementing the JE Program. There is no showing
that the JE Program was intended to circumvent the law
and deprive the members of respondent union of the
benefits they used to receive.
It is the prerogative of management to regulate, according
to its discretion and judgment, all aspects of employment.
This flows from the established rule that labor law does not
authorize the substitution of the judgment of the employer
in the conduct of its business. Such management
prerogative may be availed of without fear of any liability so
long as it is exercised in good faith for the advancement of
the employers’ interest and not for the purpose of defeating
or circumventing the rights of employees under special laws
or valid agreement and are not exercised in a malicious,
harsh, oppressive, vindictive or wanton manner or out of
malice or spite.”
Just recently, this Court had the occasion to reiterate
and uphold the established and unequivocal right of
an employer to implement a reorganization in the
valid exercise of its management prerogative, thus:
“In recognition of the right of management to conduct its
own business affairs in achieving its purpose, we declared
that management is at liberty, absent any malice on its
part, to abolish positions which it deems no longer
necessary. This Court, absent any finding of bad faith on
the part of management, will not deny it the right to such
initiative simply to protect the person holding that office. In
other words, where there is nothing that would indicate that
an employee’s position was abolished to ease him out of
employment, the deletion of that position should be
accepted as a valid exercise of management prerogative.
No ill will can be ascribed to private respondents as all the
positions specified in the old plantilla were abolished and all
other employees were given new appointments.
Based on the qualifications and aptitude of petitioner, the
committee and, subsequently, private respondents, deemed
it best to appoint petitioner as Secretary of the Engineering
Department. We cannot meddle in such a decision lest we
interfere with the private respondents’ right to
independently control and manage their operations absent
any unfair or inequitable acts. If the purpose of a
reorganization is to be achieved, changes in positions and
ranking of employees should be expected. To insist on one’s
old position and ranking after a reorganization would render
such endeavor ineffectual. Here, to compel private
respondents to give petitioner her old ranking would
deprive them of their right to adopt changes in the
cooperative’s personnel structure as proposed by the
Steering Committee. As we have held, security of tenure,
while constitutionally guaranteed, cannot be used to deprive
an employer of its prerogatives under the law. Even if the
law is solicitous of the welfare of the employees, it must
also protect the right of an employer to exercise what are
clearly management prerogatives.”
Notwithstanding the relevance of the foregoing
disquisition, considering however the factual
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Case Digest Compilation
antecedents in this case, or the lack of a complete
presentation thereof, we are constrained to refrain
from ruling outright in favor of the Bank. While it
would appear that remanding the case would mean a
further delay in its disposition, we are not inclined to
sacrifice equity and justice for procedural
technicalities or expediency. The order dismissing the
complaint for ULP with prejudice, to say the least,
leaves much to be desired.
Whether or not the labor arbiter has jurisdiction to order
the parties to return to and continue with the collective
bargaining negotiations, there is a commentary to the effect
that, as one of the reliefs which may be granted in ULP
cases, the Court may, in addition to the usual cease and
desist orders, issue an affirmative order to the employer to
“bargain” with the bargaining agent, as the exclusive
representative of its employees, with respect to the rate of
pay, hours of work, and other conditions of employment. On
this aspect, respondent NLRC stands to be reversed.
Nevertheless, its directive on this point is deemed vacated
and ineffectual by our decision to remand the case for
further proceedings.
Violation of Duty to Bargain
d. Gross violation of the contract
Goya Inc. vs Goya Inc Employees
January 21, 2003
Facts: Petitioner Goya, Inc. (Company), a domestic
corporation engaged in the manufacture, importation, and
wholesale of top quality food products, hired contractual
employees from PESO Resources Development
Corporation (PESO) to perform temporary and occasional
services in its factory in Parang, Marikina City.
This prompted respondent Goya, Inc. Employees
Union–FFW (Union) to request for a grievance
conference on the ground that the contractual workers do
not belong to the categories of employees stipulated in the
existing Collective Bargaining Agreement (CBA).
When the matter remained unresolved, the grievance was
referred to the National Conciliation and Mediation Board
(NCMB) for voluntary arbitration.
Respondent’s contentions:
 the hiring of contractual employees from PESO is
not a management prerogative and in gross
violation of the CBA tantamount to unfair labor
practice (ULP).
 It noted that the contractual workers engaged have
been assigned to work in positions previously
handled by regular workers and Union members, in
effect violating Section 4, Article I of the CBA,
which provides for three categories of employees in
the Company, to wit:
Section 4. Categories of Employees.– The parties
agree on the following categories of employees:
(a) Probationary Employee. – One hired to occupy a
regular rank-and-file position in the Company
and is serving a probationary period. If the
probationary employee is hired or comes from
outside the Company (non-Goya, Inc.
employee), he shall be required to undergo a
probationary period of six (6) months, which
period, in the sole judgment of management,
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
may be shortened if the employee has already
acquired the knowledge or skills required of the
job. If the employee is hired from the casual
pool and has worked in the same position at any
time during the past two (2) years, the
probationary period shall be three (3) months.
(b) Regular Employee. – An employee who has
satisfactorily completed his probationary period
and automatically granted regular employment
status in the Company.
(c) Casual Employee, – One hired by the Company
to perform occasional or seasonal work directly
connected with the regular operations of the
Company, or one hired for specific projects of
limited duration not connected directly with the
regular operations of the Company.
 It was averred that the categories of employees had
been a part of the CBA since the 1970s and that due
to this provision, a pool of casual employees
had been maintained by the Company from
which it hired workers who then became regular
workers when urgently necessary to employ them for
more than a year.
 Likewise, the Company sometimes hired
probationary employees who also later became
regular workers after passing the probationary
period.
 With the hiring of contractual employees, the
Union contended that it would no longer have
probationary and casual employees from which
it could obtain additional Union members; thus,
rendering inutile Section 1, Article III (Union
Security) of the CBA, which states:
Section 1. Condition of Employment. – As a condition
of continued employment in the Company, all regular
rank-and-file employees shall remain members of
the Union in good standing and that new employees
covered by the appropriate bargaining unit shall
automatically become regular employees of the
Company and shall remain members of the Union in
good standing as a condition of continued
employment.
Petitioners’ contentions:
(a) the law expressly allows contracting and
subcontracting arrangements through Department of
Labor and Employment (DOLE) Order No. 18-02;
(b) the engagement of contractual employees did not, in
any way, prejudice the Union, since not a single
employee was terminated and neither did it result in
a reduction of working hours nor a reduction or
splitting of the bargaining unit; and
(c) Section 4, Article I of the CBA merely provides for
the definition of the categories of employees and
does not put a limitation on the Company’s right to
engage the services of job contractors or its
management prerogative to address
temporary/occasional needs in its operation.
VA Laguesma:
 dismissed the Union’s charge of ULP but the
Company was directed to onbserve the terms of
the CBA
 While the CBA between the parties did eliminate
management’s prerogative of outsourcing parts of its
operations, it serves as a limitation on such
prerogative particularly if it involves functions or
duties specified under the aforequoted agreement.
 It is clear that the parties agreed that in the
event that the Company needs to engage the
services of additional workers who will perform
"occasional or seasonal work directly
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Case Digest Compilation
connected with the regular operations of the
COMPANY," or "specific projects of limited
duration not connected directly with the
regular operations of the COMPANY", the
Company can hire casual employees which is
akin to contractual employees.
 If we note the Company’s own declaration that PESO
was engaged to perform "temporary or occasional
services" (See the Company’s Position Paper, at p.
1), then it should have directly hired the
services of casual employees rather than do it
through PESO.
 It is evident, therefore, that the engagement of
PESO is not in keeping with the intent and spirit
of the CBA provision in question.
 It must, however, be stressed that the right of
management to outsource parts of its operations is
not totally eliminated but is merely limited by the
CBA.
 Given the foregoing, the Company’s engagement
of PESO for the given purpose is indubitably a
violation of the CBA
The Company filed a petition for review before the CA.
CA:
 Dismissed the petition
 did not find it arbitrary on the part of the Hon.
Voluntary Arbitrator in ruling that "the engagement
of PESO is not in keeping with the intent and spirit of
the CBA." 
 The ruling of the VA is interrelated and intertwined
with the sole issue to be resolved that is, "Whether
or not the Company is guilty of unfair labor practice
in engaging the services of PESO, a third party
service provider, under existing CBA, laws, and
jurisprudence."
 Both issues concern the engagement of PESO by
the Company which is perceived as a violation
of the CBA and which constitutes as unfair
labor practice on the part of the Company. This
is easily discernible in the decision of the Hon.
Voluntary Arbitrator when it held:
x x x x While the engagement of PESO is in
violation of Section 4, Article I of the CBA, it
does not constitute unfair labor practice as it
(sic) not characterized under the law as a
gross violation of the CBA. Violations of a CBA,
except those which are gross in character, shall no
longer be treated as unfair labor practice. Gross
violations of a CBA means flagrant and/or
malicious refusal to comply with the economic
provisions of such agreement. x x x
Issues: Whether there was gross violation of the CBA by
the Company – NO.
Ruling: The Company kept on harping that both the VA
and the CA conceded that its engagement of contractual
workers from PESO was a valid exercise of management
prerogative.
It is confused.
Outsourcing done by the Company is within the
purview of management prerogative but not a valid
exercise thereof in view of the CBA
To emphasize, declaring that a particular act falls within the
concept of management prerogative is significantly different
from acknowledging that such act is a valid exercise
thereof.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
What the VA and the CA correctly ruled was that the
Company’s act of contracting out/outsourcing is
within the purview of management prerogative. Both
did not say, however, that such act is a valid exercise
thereof.
Obviously, this is due to the recognition that the CBA
provisions agreed upon by the Company and the
Union delimit the free exercise of management
prerogative pertaining to the hiring of contractual
employees.
Indeed, the VA opined that "the right of the
management to outsource parts of its operations is
not totally eliminated but is merely limited by the
CBA," while the CA held that "this management
prerogative of contracting out services, however, is not
without limitation. x x x These categories of employees
particularly with respect to casual employees serve as
limitation to the Company’s prerogative to outsource parts
of its operations especially when hiring contractual
employees."
A collective bargaining agreement is the law between the
parties:
It is familiar and fundamental doctrine in labor law that
the CBA is the law between the parties and they are
obliged to comply with its provisions. We said so in
Honda Phils., Inc. v. Samahan ng Malayang Manggagawa
sa Honda:
A collective bargaining agreement or CBA refers to the
negotiated contract between a legitimate labor
organization and the employer concerning wages, hours
of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses,
terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good
customs, public order or public policy. Thus, where the
CBA is clear and unambiguous, it becomes the law
between the parties and compliance therewith is
mandated by the express policy of the law.
Moreover, if the terms of a contract, as in a CBA, are
clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of their
stipulations shall control. x x x.
In this case, Section 4, Article I (on categories of
employees) of the CBA between the Company and the
Union must be read in conjunction with its Section 1,
Article III (on union security). Both are interconnected
and must be given full force and effect.
Also, these provisions are clear and unambiguous. The
terms are explicit and the language of the CBA is not
susceptible to any other interpretation. Hence, the literal
meaning should prevail.
As repeatedly held, the exercise of management
prerogative is not unlimited; it is subject to the limitations
found in law, collective bargaining agreement or the
general principles of fair play and justice. Evidently, this
case has one of the restrictions- the presence of specific
CBA provisions-unlike in San Miguel Corporation Employees
Union-PTGWO v. Bersamira, De Ocampo v. NLRC, Asian
Alcohol Corporation v. NLRC, and Serrano v. NLRC cited by
the Company. To reiterate, the CBA is the norm of conduct
between the parties and compliance therewith is mandated
by the express policy of the law.
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Case Digest Compilation
Miscallaneous Rules regarding the CBA
A. Law is deemed written/incorporated in the CBA
Lakas ng Manggagawang Makabayan (LLM) vs.
Abiera, et. al.
December 19, 1970, EN BANC
Parties:
Lakas ng Manggagawang Makabayan [LLM] – Union
Marinduque Mining and Industrial Corporation – Employer
Tinambacan, et. al. (Respodnents) – Employees
Facts: In 1961, Congress amended the provision in the
Industrial Peace Act [IPA] by exempting from the operation
of a closed shop or a union security shop agreement
“members of any religious sects which prohibit affiliation of
their members in any such labor organization.”
Due to this exemption, union was able to prevail on the
employer the termination of services of employee-
respondents.
Employees herein were members of Iglesia ni Cristo, and
being so, it prohibits membership in any labor organization.
To regain their status as such employees, they filed a
petition for mandamus before the CFI Negros
Occidental.
The Union argues that:
1. under the CBA with the employer, it required
members of such Union and those who become
such thereafter to continue and remain with that
status "in good standing on a condition of
continued employment.
2. Employees were members of the Union even prior
to the CBA. But due to the effectivity of the
amendment under the IPA, they tendered their
irrevocable resignations as members and
disauthorized the Union to withdraw check-off of
union dues.
3. The union recommended to the Employer their
dismissal. Being a dismissal by reason of and
[pursuant] to the particular provisions of the
existing CBA, the petition should be
dismissed.
4. That the CFI Negros Occidental does not have
jurisdiction over the case filed.
Issues: Whether or not the employer validly dismissed the
closed-shop provision in the CBA despite the exemption of
such employees from the coverage of a closed-shop
provision – No.
Ruling:
[1] The law must be deemed written or incorporated
in the CBA.
It does not admit of doubt that the 1967 CBA contract
between the Union and the Employer must be deemed to
have incorporated within its terms the 1961 amendment of
the IPA exempting from the operation of a closed shop or a
union security shop agreement "members of any religious
sects which prohibit affiliation of their members in any such
labor organization."
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
If it were not so, then the CBA itself could be properly
assailed as the freedom of contract recognized by the Civil
Code while it empowers the parties to establish such
stipulations, clauses, terms and conditions as they may
deem convenient is limited by the requirement that they
should not be "contrary to law."
The principle is thus well-settled that an existing law
enters into and forms part of a valid contract without
the need for the parties expressly making reference
to it.
Only thus could its validity insofar as some of its provisions
are concerned be assured.
[2] There is unfair labor practice for a union to cause
or attempt to discriminate against an employee with
respect to whom membership in such organization
has been denied or terminated.
Under the IPA, it is made an unfair labor practice for a
labor organization [t]o cause or attempt to cause an
employer to discriminate against an employee in violation
or to discriminate against an employee with respect to
whom membership in such organization has been denied or
terminated on some ground other than the usual terms and
conditions under which membership or continuation of
membership is made available to other members."
Moreover, it is also unfair labor practice for an employer to
discriminate in regard to hire or tenure of employment or
any term or condition of employment to encourage or
discourage membership in any labor organization.
[3] The jurisdiction over an unfair labor practice case,
whether on the part of management or of a labor
union, is vested with the Court of Industrial
Relations.
The SC held that ever since the effectivity of IPA, it has no
choice but to adhere to the view that the Court of Industrial
Relations and not a court of first instance, is vested with
jurisdiction over every kind of an unfair labor practice case.
[4] Principle of Freedom of Contracts in executing a
CBA is subordinate statutory exemptions.
Unless the legislative act granting the exemption to certain
religious sects remains unmodified and no challenge is
hurled against its validity resulting in its nullification, the
parties to any contract must live up faithfully to its terms.
It is a fundamental postulate that however broad the
freedom of contracting parties may be, it does not go
so far as to countenance disrespect for or failure to observe
a legal prescription. The statute takes precedence; a
stipulation in a collective bargaining must yield to it.
That is to adhere to the rule of law.
WHEREFORE, the CFI judge is prohibited from proceeding
further with the petition filed which is ordered dismissed.
HONGKONG BANK INDEPENDENT LABOR UNION
(HBILU) vs HSBC
G.R. No. 218390 FEBRUARY 28, 2018
FACTS:In 2001, the Bangko Sentral ng Pilipinas (BSP)
issued the Manual of Regulations for Banks (MoRB).
Relevant to the instant case is Section X338 thereof which
reads:
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Case Digest Compilation
Banks may provide financial assistance to their
officers and employees, as part of their fringe
benefits program, to meet housing,
transportation, household and personal needs of
their officers and employees. Financing plans and
amendments thereto shall be with prior approval
of the BSP. (emphasis added)
Pursuant to the above-cited provision, respondent
Hongkong and Shanghai Banking Corporation Limited
(HSBC), on March 12, 2003, submitted its Financial
Assistance Plan (Plan) to the BSP for approval, which
contained a credit checking proviso stating that
"[r]epayment defaults on existing loans and adverse
information on outside loans will be considered in the
evaluation of loan applications." The BSP approved the
Plan on May 5, 2003.2 Said Plan was later amended thrice,
all of which amendments were approved by the BSP.
Meanwhile, petitioner Hongkong Bank Independent
Labor Union (HBILU), the incumbent bargaining
agent of HSBC's rank-and-file employees, entered
into a CBA with the bank covering the period from
April 1, 2010 to March 31, 2012. Pertinent to the instant
petition is Article XI thereof, which reads:
Salary Loans
Section 1. Housing/house Improvement
Loan. The BANK, or other financial institution
when appropriate, shall extend housing loan to
qualified employees with at least three (3) YEARS
OF SERVICE, UP TO One Million Five Hundred
Thousand Pesos (₱l,500,000.00) payable in
twenty-five (25) years or up to the retirement
date of the employee, whichever comes first.
Subject to BSP approval, an additional Five
Hundred Thousand Pesos (₱500,000.00) can be
availed subject to the terms above with interest
rate at the BLR less 3% but not less than six
percent (6%) per annum.
Section 2. Personal Loans. The BANK, or the
Retirement Trust Fund Inc. or other financial
institutions, when appropriate, shall extend
personal loan to qualified employees, with at
least 1 year service, up to six months basic pay
of the employees at six percent (6%) interest per
annum, payable in three years.
Section 3. Car Loans. The BANK, or the
Retirement Trust Fund Inc. or other financial
institutions when appropriate, shall extend a car
loan to qualified employees with at least 3 years
service up to Five Hundred Fifty Thousand Pesos
(PHP550,000.00) payable in seven (7) years.
Interest rate shall be six percent (6%) per
annum.
Section 4. Credit Ratio. The availment of any
of the foregoing loans shall be subject to the
BANK's credit ratio policy.
When the CBA was about to expire, the parties started
negotiations for a new one to cover the period from
April 1, 2012 to March 31, 2017. During the said
negotiations, HSBC proposed amendments to the above-
quoted Article XI allegedly to align the wordings of the CBA
with its BSP-approved Plan. Particularly, HSBC proposed
the deletion of Article XI, Section 4 (Credit Ratio) of
the CBA, and the amendment of Sections 1 to 3 of the
same Article to read as follows:
Salary Loans
Section 1. Housing/house Improvement
Loan. Based on the Financial Assistance Plan
duly approved by Bangko Sentral ng Pilipinas
(BSP), the BANK, or other financial institution
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
when appropriate, shall extend housing loan to
qualified employees with at least three (3) YEARS
OF SERVICE UP TO One Million Five Hundred
Thousand Pesos (₱l,500,000.00) payable in
twenty-five (25) years or up to the retirement
date of the employee, whichever comes first,
subject to employee's credit ratio. An additional
Five hundred thousand Pesos (₱500,000.00) can
be availed subject to the terms above with
interest rates at the BLR less 3% but not less
than six percent (6%) per annum.
Section 2. Personal Loans. Based on the
financial Assistance Plan duly approved by
Bangko Sentral ng Pilipinas (BSP), the BANK, or
other financial institutions when appropriate,
shall extend personal loan to qualified
employees, with at least 1 year service, up to six
months basic pay of the employees at six percent
(6%) interest per annum, payable in three (3)
years, subject to employee's credit ratio.
Section 3. Car loans. Based on the Financial
Assistance Plan duly approved by Bangko Sentral
ng Pilipinas (BSP), the BANK, or other financial
institutions when appropriate, shall extend a car
loan to qualified employees with at least three
years service, up to Five Hundred Fifty Thousand
Pesos (PHP550,000.00) payable in seven (7)
years. Interest rate shall be six percent (6%) per
annum. (emphasis added)
HBILU’s objections to the amendment
Their insertions would curtail its members' availment of
salary loans. This, according to the Union, violates the
existing exceptions set forth in BSP Circular 423,
Series of 2004, and Section X338.3 of the MoRB. In
view of HBILU's objection,
HSBC withdrew its proposed amendments and,
consequently, Article XI remained unchanged.
Despite the withdrawal of the proposal, HSBC sent an e-
mail to its employees on April 20, 2012 concerning the
enforcement of the Plan, including the Credit Checking
provisions thereof. The e-mail reads:
Dear All
We wish to reiterate the following provisions
included in the Financial Assistance Plan (F AP)
as approved by Bangko Sentral ng Pilipinas
(BSP). Note that the F AP is the official guideline
and policy governing Staff Loans and Credit
Cards.
>>>>CREDIT CHECKING
Below are the specific provisions included in the F
AP regarding credit checking.
Housing Loan, Car Loan, Personal Loan &
Computer/Club Membership/Medical Equipment
Loan Repayment defaults on existing
loans and adverse information considered in the
evaluation of loan applications.
Credit Card Repayment defaults on existing
loans and adverse information considered in the
evaluation of loan applications.
With the strict implementation of these
provisions, adverse credit findings may result to
disapproval of loan or credit card applications.
These findings will include the following:
(1) Frequency of confirmed ADA failure on
staff/commercial loans and credit cards (3
consecutive incidents within the past 6 months or
6 incidents within the past 12 months). Note that
applications with pending ADA for investigation
will only be processed upon confirmation of
status (Confirmed or Reprieved);
67
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Case Digest Compilation
(2) Adverse findings on HSBC cards; or
(3) Adverse findings from external credit checks.
Thereafter, HBILU member Vince Mananghaya
(Mananghaya) applied for a loan under the provisions
of Article XI of the CBA. His first loan application in March
2012 was approved, but adverse findings from the external
checks on his credit background resulted in the denial of his
September application.
HBILU then raised the denial as a grievance issue with the
National Conciliation Mediation Board (NCMB). It argued
that the imposition of an additional requirement-the
external credit checking prior to approval of any loan
application under Article XI of the CBA-is not sanctioned
under the CBA. The Union emphasized that under the
terms of Article XI, there is no such requirement and
that it cannot, therefore, be unilaterally imposed by
HSBC.
HSBC’S JUSTIFICATION OF DENIAL
The external credit check conducted in line with
Mananghaya's loan application was merely an
implementation of the ESP-approved Plan. The adoption of
the Plan, HSBC stressed, is a condition sine qua non for any
loan grant under Section X338 of the MoRB. Moreover, the
Credit Check policy has been in place since 2003, and is a
sound practice in the banking industry to protect the
interests of the public and preserve confidence in banks.
The issue was then submitted for resolution by the NCMB
Panel of Accredited Voluntary Arbitrators (the Panel). In the
interim, the parties, on September 29, 2012, inked a
new CBA for the period covering April 1, 2012 up to
March 31, 2017.
NCMB-PVA Decision
It held that herein respondent, as an employer, has the
right to issue and implement guidelines for the availment of
loan accommodations under the CBA as part of its
management prerogative. The repeated use of the term
"qualified employees" in Article XI of the CBA was deemed
indicative of room for the adoption of further guidelines in
the availment of the benefits thereunder. The Panel also
agreed that HSBC's Plan is not a new policy as it has
already been approved by the BSP as early as 2003. Thus,
the Panel ruled that the salary loan provisions under
Article XI of the CBA must be read in conjunction with
the provisions of the Plan.
The Panel further discussed that HSBC's adoption of the
Plan was not done for any whimsical or arbitrary reason,
but because the bank was constrained to comply with
Section X338 of the MoRB. As a banking institution, HSBC
cannot divorce itself from the regulatory powers of the BSP.
Observance of Section X338 of the MoRB was then
necessary before the bank could have been allowed to
extend loan accommodations to its officers and employees.
On the basis thereof, the Panel held that they are not
ready to rule that HSBC's Plan violates Article XI of
the CBA.
CA Decision
Sustained the findings and conclusions of the NCMB-PV A in
toto on the ratiocination that HSBC was merely
complying with Section X338 of the MoRB when it
submitted the Plan to BSP. When BSP, in turn, approved
the said Plan, HSBC became legally bound to enforce its
provisions, including the conduct of external credit checks
on its loan applicants. The appellate court further ruled that
the Plan should be deemed incorporated in the CBA because
it is a regulatory requirement of BSP without which the
salary loan provisions of the CBA are rendered inoperative.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Arguments of Petitioner
HBILU argues that HSBC failed to present in court the Plan
that was supposedly submitted to the BSP for approval, and
to show that the requirement of external credit checking
had already been included therein. Too, said Plan is not a
set of policies for salary loans that came from the BSP, but
was devised solely by HSBC.
Furthermore, HBILU claims that it is not privy to the Plan
and has not been consulted, much less informed, of the
impositions therein prior to its implementation. No proof
was offered that the Plan had been disseminated to the
employees prior to the April 20, 2012 e-mail blast.
Lastly, the implementation of the Plan, according to HBILU,
is tantamount to diminution of benefits16 and a unilateral
amendment of the existing CBA, which are both proscribed
under the Labor Code. Had the parties to the CBA intended
to include the external credit check as an additional
condition to the availment of employee salary loans, then it
should have been plainly provided in their agreement.
Arguments of Respondent
HSBC claims that the Plan is neither new nor was it issued
on a mere whim or caprice. On the contrary, the Plan was
established as early as 2003, way before Mananghaya's
application was denied, to conform to Section X338 of the
BSP MoRB. HSBC reminds the Court that the loan and credit
accommodations could have only formed part of the
employees' fringe benefit program if they were extended
through a financing scheme (i.e., the Plan) approved by the
BSP.
Moreover, HSBC argues that the dissemination of the Plan
via e-mail blast on April 20, 2012 was but a reiteration, as
opposed to a first publication. It contends that even prior to
the establishment and approval of the Plan in 2003, the
then-loan policy already included the requirement on
external credit checking. According to the bank, there was
already a provision that required the conduct of credit
checking in the processing and evaluation of loan
applications in their General Policies on Loans, cascaded
through the Intranet system to HSBC employees on October
24, 2002, viz:
CREDIT CHECKING
Repayment defaults on existing loans and
adverse information on outside loans will be
considered m the evaluation of loan applications.
The union members cannot then feign ignorance
of the external credit checking requirement in
staff loan applications, according to HSBC.
Consequently, petitioner's bare denial of any
knowledge about it cannot be given any
credence. Considering too that the Plan
reiterating the requirement has been approved
by the BSP in 2003, HBILU slept on its rights
when it questioned its strict imposition almost a
decade after its issuance.
Finally, HSBC postulates that the non-mention of the Plan in
the CBA is no justification for the bank to disregard the
same in processing employee loan applications. Provisions
of applicable laws, especially those relating to matters
affected with public policy, are deemed written into the
contract.
ISSUE: Whether or not HSBC could validly enforce the
credit-checking requirement under its BSP-approved Plan in
processing the salary loan applications of covered
employees even when the said requirement is not
recognized under the CBA.
RULING: NO.
68
 Labor Relations
Case Digest Compilation
The CBA is the law between the parties and they are
obliged to comply with its provisions.
Unilateral amendments to the CBA violate Article 253
(now Art 273) of the Labor Code
A collective bargaining agreement or CBA is the negotiated
contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit.
As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may
deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus,
where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance
therewith is mandated by the express policy of the
law.
In Faculty Association of Mapua Institute of Technology
(FAMJT) v. Court of Appeals, this Court was emphatic in its
pronouncement that the CBA during its lifetime binds all the
parties. The provisions of the CBA must be respected since
its terms and conditions constitute the law between the
parties. And until a new CBA is executed by and between
the parties, they are duty-bound to keep the status quo and
to continue in full force and effect the terms and conditions
of the existing agreement. This finds basis under Article 253
of the Labor Code, which states:
ARTICLE 253. Duty to bargain collectively when
there exists a collective bargaining agreement. -
When there is a collective bargaining agreement,
the duty to bargain collectively shall also mean
that neither party shall terminate nor modify
such agreement during its lifetime. x x x It shall
be the duty of both parties to keep the status
quo and to continue in full force and effect the
terms and conditions of the existing agreement
during the 60-day period and/or until a new
agreement is reached by the parties.
In the present controversy, it is clear from the
arguments and evidence submitted that the Plan was
never made part of the CBA. As a matter of fact,
HBILU vehemently rejected the Plan's incorporation
into the agreement. Due to this lack of consensus, the
bank withdrew its proposal and agreed to the
retention of the original provisions of the CBA. The
subsequent implementation of the Plan's external
credit check provisions in relation to employee loan
applications under Article XI of the CBA was then an
imposition solely by HSBC.
In this respect, this Court is of the view that tolerating
HSBC's conduct would be tantamount to allowing a
blatant circumvention of Article 253 of the Labor
Code. It would contravene the express prohibition
against the unilateral modification of a CBA during its
subsistence and even thereafter until a new
agreement is reached. It would unduly license HSBC
to add, modify, and ultimately further restrict the
grant of Salary Loans beyond the terms of the CBA by
simply adding stringent requirements in its Plan, and
having the said Plan approved by BSP in the guise of
compliance with the MoRB.
As to HSBC’s defense
HSBC' s defense, that there was no modification of the CBA
since the external credit check has been a long-standing
policy of the Bank applied to all of its employees, is
unconvincing. Noteworthy is that the bank failed to submit
in evidence the very Plan that was supposedly approved by
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
the BSP in 2003. Nevertheless, even if We were to rely on
the later versions of the Plan approved by the BSP, Our
ruling will not change.
The only provision relative to the credit checking
requirement under the 2006 and 2011 Plans is this and
nothing else:
CREDIT CHECKING
Repayment defaults on existing loans and adverse
information on outside loans will be considered in the
evaluation of loan applications
As for the manner in which said credit checking will be
done, as well as any additional requirements that will be
imposed for the purpose, the 2006 Plan and even its later
2011 version are silent thereon. Nowhere in these Plans can
We find the requirement for the submission of an "Authority
to Conduct Checks Form," as well as the details on adverse
credit finding, specifically:
With the strict implementation of these provisions, adverse
credit findings may result to disapproval of loan or credit
card applications. These findings will include the following:
(1) Frequency of confirmed ADA failure on staff/commercial
loans and credit cards (3 consecutive incidents within the
past 6 months or 6 incidents within the past 12 months).
Note that applications with pending ADA for investigation
will only be processed upon confirmation of status
(Confirmed or Reprieved);
(2) Adverse findings on HSBC cards; or
(3) Adverse findings from external credit checks.26
In fact, regrettably, HSBC's only documentary basis for
proving that the credit checking requirement and the
manner of its enforcement have been set in place much
earlier is the use of the term "reiterate" in its April 20, 2012
e-mail.
New Imposition By HSBC
The external credit check as well as the manner of its
enforcement is a new imposition by HSBC is the fact that
the bank made no attempt to rebut HBILU's evidence that
the former's requirements for the grant of salary loans
changed only after the April 20, 2012 email blast. HBILU
sufficiently proved that prior to the April 20, 2012 email,
members of the bargaining unit were using only four (4)
documents in applying for a loan, to wit: 1) Application for
Personal Loan Form; 2) Authority to Deduct Form; 3) Set-
Off of Retirement Fund Form; and 4) Promissory Note
Form.28 Thereafter, management imposed a new set of
requirements, which includes the "Authority to Conduct
Checks Form." As testified to by Mananghaya, he only
signed the first four (4) requirements for his March 2012
loan. However, for the September 2012 loan, he was asked
to complete a new set of documents which included the
Authority to Conduct Checks Form. Too, even the email
itself states that said credit checking requirement, among
others, is to be strictly enforced effective May 2012.
Though HSBC claims that credit checking has been
the bank's long-standing policy, it failed to show that
it indeed required such before its covered employees
could avail of a salary loan under the CBA prior to
April 20, 2012-the date of the email blast.
Thus, no other conclusion can be had in this factual milieu
other than the fact that HSBC's enforcement of credit
checking on salary loans under the CBA invalidly
modified the latter's provisions thereon through the
imposition of additional requirements which cannot
be found anywhere in the CBA.
If it were true that said credit checking under the Plan
covers salary loans under the CBA, then the bank should
have negotiated for its inclusion thereon as early as the
April 1, 2010 to March 31, 2012 CBA which it entered into
69
 Labor Relations
Case Digest Compilation
with HBILU. However, the express provisions of said CBA
inked by the parties clearly make no reference to the Plan.
And even in the enforcement thereof, credit checking was
not included as one of its requirements. This leads Us to
conclude that HSBC originally never intended the credit
checking requirement under the Plan to apply to
salary loans under the CBA. At most, its application
thereto is a mere afterthought, as evidenced by its
sudden, belated, and hurried enforcement on said
salary loans via the disputed email blast.
In other words, it appears that, based on its actuations,
HSBC never intended to apply the credit checking
item under the Plan to salary loans under the CBA.
Otherwise, it would have enforced such requirement from
the moment the salary loans provisions under the old CBA
were implemented, which it did not. It may be that said
requirement was being applied to other types of loans
under the Plan, but based on the evidence presented, We
cannot say the same for salary loans under the CBA.
The minority argues that primacy is being accorded to the
CBA over the Plan approved by the BSP. Such, however, is
not the case. We are not saying that the Plan should yield
to the CBA. The point that we are driving at in this lengthy
discussion is that on the basis of the evidence presented,
We are convinced that the credit checking provision
of the Plan was never intended to cover salary loans
under the CBA. Otherwise, HSBC would have
implemented such the moment said salary loans
under the previous CBA were made available to its
covered employees. Thus, HSBC cannot now insist on
its imposition on loan applications under the disputed
CBA provision without violating its duty to bargain
collectively.
Salary loans subject of this case are not covered by
the
credit checking requirement under the MORB
In maintaining that the credit checking requirement under
the MoRB should be deemed written into the CBA, the
minority makes reference to Sec. X304.1 of the 2011 MoRB
in maintaining that financial institutions must look into the
obligor' s repayment history, among other things, before
approving a loan application. Said provision reads:
§ X304. l General guidelines. Consistent with
safe and sound banking practices, a bank shall
grant loans or other credit accommodations only
in amounts and for the periods of time essential
for the effective completion of the operation to
be financed. Before granting loans or other credit
accommodations, a bank must ascertain that the
borrower, co-maker, endorser, surety, and/or
guarantor, if applicable, is/are financially capable
of fulfilling his/their commitments to the bank.
For this purpose, a bank shall obtain adequate
information on his/their credit standing and
financial capacities x x x.
At this point it is well to draw attention to the fact that said
provision is a general one as specifically indicated thereat.
It is also equally important to emphasize that Sec. X304.1
must be interpreted in conjunction with Section X338.3, the
provision which specifically applies to salary loans under the
fringe benefit program of the bank.
In specifying that "[a]ll loans or other credit
accommodations to bank officers and employees, except
those granted under the fringe benefit program of the bank,
shall be subject to the same terms and conditions imposed
on the regular lending operations of the bank," Sec. X338.3
clearly excluded loans and credit accommodations under
the bank's fringe benefits program from the operation of
Sec. X304.1. This fact is even recognized in the dissent. To
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
ignore this clear exception and insist on interpreting the
general guidelines under Section X304.1 would be to renege
from Our duty to apply a clear and unambiguous
provision.32
It may also be argued that HSBC, being a bank, is
statutorily required to conduct a credit check on all of its
borrowers, even though it be made under a loan
accommodation scheme, applying Section 4033 of Republic
Act No. (RA) 8791 (General Banking Law of 2000). A
reading of RA 8791, however, reveals that loan
accommodations to employees are not covered by said
statute. Nowhere in the law does it state that its provisions
shall apply to loans extended to bank employees which are
granted under the latter's fringe benefits program. Had the
law intended otherwise, it could have easily specified such,
similar to what was done for directors, officers, stockholders
and their related interests under Section 36 thereof. This
conclusion is supported by the very wording of Subsection
X338.3 of the MORE. To reiterate:
Notably, even though the provision covers loans
extended to both bank officers and employees,
paragraph 3 thereof singled out loans and credit
accommodations granted to officers when it provided
for the applicability of RA 8791.
We cannot subscribe to HSBC's position that its
imposition of the credit checking requirement on
salary loans granted under the CBA is valid. The
evidence presented convinces Us to hold that the
credit checking requirement imposed by HSBC under
the questioned Plan which effectively and
undoubtedly modified the CBA provisions on salary
loans was a unilateral imposition violative of HSBC's
duty to bargain collectively and, therefore, invalid.
HSBC miserably failed to present even an iota of
concrete documentary evidence that the credit
checking requirement has been imposed on salary
loans even before the signing of the CBA subject of
the instant dispute and that the Plan was sufficiently
disseminated to all concerned. In contrast, HBILU
sufficiently proved that HSBC violated its duty to
bargain collectively under Article 253 of the Labor
Code when it unilaterally restricted the availment of
salary loans under Article XI of the CBA on the excuse
of enforcing the Plan approved by the BSP.
As this Court emphasized in Philippine Airlines, Inc. v.
NLRC, industrial peace cannot be achieved if the employees
are denied their just participation in the discussion of
matters affecting their rights, more so in the case at bar
where the employees have been led to believe that they
were given the chance to participate in HSBC's policy-
formulation with respect to the subject benefit, only to find
out later that they would be deprived of the fruits of said
involvement.
On interpretation of CBAs
At this point, We deem it proper to recall the basics in
resolving issues relating to the provisions and enforcement
of CBAs. In United Kimberly-Clark Employees Union
Philippine Transport General Workers Organization (UKCEU-
PTGWO) v. Kimberly-Clark Philippines, Inc., this Court
emphasized that:
As a general proposition, an arbitrator is confined to the
interpretation and application of the collective
bargaining agreement. He does not sit to dispense his
own brand of industrial justice: his award is
legitimate only in so far as it draws its essence from
the CBA, i.e., when there is a rational nexus between
the award and the CBA under consideration
70
 Labor Relations
Case Digest Compilation
If the terms of a CBA are clear and [leave] no doubt
upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail.
However, if, in a CBA, the parties stipulate that the
hirees must be presumed of employment qualification
standards but fail to state such qualification
standards in said CBA, the VA may resort to evidence
extrinsic of the CBA to determine the full agreement
intended by the parties. When a CBA may be expected
to speak on a matter, but does not, its sentence
imports .ambiguity on that subject.
The VA is not merely to rely on the cold and cryptic words
on the face of the CBA but is mandated to discover the
intention of the parties. Recognizing the inability of the
parties to anticipate or address all future problems, gaps
may be left to be filled in by reference to the practices of
the industry, and the step which is equally a part of the CBA
although not expressed in it. In order to ascertain the
intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered The VA
may also consider and rely upon negotiating and
contractual history of the parties, evidence of past practices
interpreting ambiguous provisions. The VA has to examine
such practices to determine the scope of their agreement,
as where the provision of the CBA has been loosely
formulated. Moreover, the CBA must be construed liberally
rather than narrowly and technically and the Court must
place a practical and realistic construction upon it.36
(emphasis ours)
Miscallaneous Rules regarding the CBA
B. Entitlement to Benefits
Rivera v San Miguel
January 23, 2002
Facts: On June 18, 1964 Adelo C. Rivera — litigating as
pauper — filed with the municipal court of Cagayan de Oro
a complaint against the San Miguel Brewery
Corporation, Inc. for collection of separation pay and
recovery of a sum of money, including actual, moral
and exemplary damages and attorney's fees.
On July 25, 1964 Rivera filed a request for admission
of, inter alia, the fact that the plaintiff (Rivera), like the
other security guards of the Company, is not and was
never a member of any labor union with which the
Company has or had a collective bargaining
agreement.
CDO Court Judgment: On November 25, 1964 the city of
Cagayan de Oro rendered judgment, as follows:  holding that section 9 of the Social Security Act
This Court, after a careful consideration of the
documentary evidence, oral and written arguments
of the parties as well, finds that the defendant
has already paid its obligation to the plaintiff
in accordance with law; hence, for lack of merit,
this case is hereby dismissed with costs against
the plaintiff.
Rivera appealed to the Court of First Instance of Misamis
Oriental.
On August 6, 1965, when the case was called for a pre-trial
conference, the parties submitted a stipulation of facts,
quoted verbatim as follows:
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
ON THE FIRST CAUSE OF ACTION
1. For the first cause of action, the plaintiff is of legal age, resident of Corrales Avenue,
Cagayan de Oro City and the defendant is a domestic corporation with principal office at
Manila, Philippines and a plant at Cagayan de Oro City; .
2. Plaintiff was employed by the defendant Corporation on December 8, 1952 as
a security guard up to and including September 16, 1963, approximately 10 years and
9 months;.
3. On September 16, 1963 plaintiff was separated for physical disability due to
illness as shown by a letter of termination dated September 17, 1963 from the
employer signed by Mr. Vicente Pardo, Manager of the Cagayan Coca-Cola Plant which is
already marked in the records of this case as Exhibit C for the plaintiff; .
4. At the time of plaintiff's separation from the service he was receiving a daily
wage of P5.90 and in accordance with the Health, Welfare and Retirement Plan,
plaintiff was paid a total of P930.35 as retirement.
ON THE SECOND CAUSE OF ACTION
For the second cause of action paragraph 1 as submitted in
the first cause of action, the employer-employee relation is
likewise admitted. As also stated in the first cause of action
the statement of accounts embodied in Exhibits A and B for
the plaintiff are likewise admitted; and as also admitted in
the first cause of action the cause of termination of the
employee is as stated in Exhibit C for the plaintiff, the letter
termination; that the employee was not a member of
the labor union.
That the amount of P331.40 representing the
Defendant's contribution to the Social Security
System during the period from September 1957 to
March 1963 was deducted from Plaintiff's retirement
benefits in accordance with Article 15 (Exhibit 1-B) of the
Defendant's Health, Welfare and Retirement Plan (Exhibit 1
for the Defendant); and that the Health, Welfare and
Retirement Plan Exhibit 1 of the defendant is fully
company financed, no contribution whatsoever from
plaintiff was ever required.
CFI Judgment: On December 10, 1965 the Court of First
Instance of Misamis Oriental rendered judgment, as follows:
WHEREFORE, after a careful evaluation of the facts
and the law respecting the matter, judgment is
hereby rendered in favor of the defendant
Company and against the plaintiff dismissing the
latter's complaint with costs against him.
Petitioner’s allegation: (1) The lower court erred in
authorizes the employer to deduct from its
employee's separation pay and/or retirement pay
whatever it contributed to the Social Security System
insofar as the coverage of the said employee is concerned.
(2) The lower court erred in giving force and validity
to Article XV of the Company's private plan,
notwithstanding the provisions of section 19 of
Republic Act 1161 as amended by Republic Acts 1792 and
2658.
Issue: W/n the Company had the right to deduct the
amount of P331.40 from his retirement benefits and/or
separation pay?—YES
71
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Case Digest Compilation
Ruling: For unmistakable is the import of section 9 of the
Social Security Act which expressly provides, inter alia, that
. . . [P]rivate plans which are existing and in force
at the time of compulsory coverage shall be
integrated with the plan of the System in such a
way that where the employer's contributions to his
private plan is [sic] more than that required of
him in this Act, he shall pay to the System only
the contribution required of him and he shall
continue his contributions to such private plan less
his contribution to the System so that the
employer's total contribution to his private benefit
plan and to the Social Security System shall be the
same as his contribution to his private plan before
the compulsory coverage; Provided, further, That
any changes, adjustments, modifications,
eliminations or improvements in the benefits to be
available under the remaining private plan, which
may be necessary to adopt by reason of the
reduced contribution thereto as a result of the
integration, shall be subject to agreements
between the employers and employees concerned .
..
The Company has a private benefit plan — its Health,
Welfare and Retirement Plan —
which is wholly company financed because the
employees do not contribute to its maintenance. The
Company has integrated its private plan with that of the
Social Security System. It remitted to the latter the
contributions required of it for and in behalf of its
employees — including the appellant Rivera — but at the
same time it has maintained its own private plan. It is not
controverted that the Company's contributions to its
private benefit plan are greater than that required of
it under the Social Security Act. It has, therefore, the
right to deduct its contributions to the System from
the benefits accruing to its employees under its
private plan.
In the case at bar, the total of the retirement benefits
due to Rivera under the private plan of the Company
was P1,261.75.
But since the Company had paid the amount of
P331.40 as its contribution to the Social Security
System for and in behalf of Rivera, it has therefore the
right to deduct the latter amount from the total amount of
the retirement benefits, leaving a balance of P930.35, which
latter sum was paid to Rivera.
Otherwise, the Company would be paying to the
System and to its private plan, both for the benefit of
Rivera, the total amount of P1,593.15 — a fact situation
not envisaged by the afore quoted section 9 (of the Social
Security Act) which emphatically stresses "that the
employer's total contribution to his private benefit plan and
to the Social Security System  shall be the same as his
contribution to his private plan before the compulsory
coverage."
Besides, the authority of the Company to effect the
said deduction is neither unilateral nor without basis.
In compliance with the directive set forth in section 9,
supra, that "any changes, adjustments, modifications,
eliminations or improvements in the benefits to be available
under the remaining private benefit plan, which may be
necessary to adopt by reason of the reduced contribution
thereto as a result of the integration, shall be subject to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
agreements between the employers and employees",
the Company incorporated into its private plan Article
XV which provides:
The benefits provided in these Rules shall be
reduced by such amounts as would be sufficient to
compensate the company for its (i.e., employer's)
contribution for the account of each employee to
the Social Security System. However, beginning
with the Company's contributions corresponding to
the month of April, 1963 the Company's
contribution to the Social Security System shall no
longer be deducted from the benefits provided in
these rules.
The private plan was set up by the Company pursuant
to a collective bargaining agreement it entered into
with the union which represents the majority of its
employees. It can therefore be considered as an integral
part of the said collective bargaining agreement, or in the
very least, as an independent collective bargaining
agreement dealing exclusively with the health, welfare and
retirement of the employees.
As such, it is binding on all employees of the
Company — whether or not union members —
because a collective bargaining agreement is the law
of the plant. Statutory law firmly supports this holding
because the labor organization designated or selected by a
majority of the employees in an appropriate bargaining unit
is the exclusive representative of all the employees in such
unit for the purpose of collective bargaining."3
The appellant stresses the fact that he is not a
member of the labor union, and in the process
impliedly argues that Article XV of the private plan is
not binding on him. Assuming that he is correct, that is,
he is not bound by the terms of the private plan, then it is
only just and logical that its benefits be withheld likewise
from him. But decisional law frowns upon this, the cases
being unanimous that.
When a collective bargaining contract is
entered into by the union representing the
employees and the employer, even the non-
member employees are entitled to the
benefits of the contract. To accord its benefits
only to members of the union without any valid
reason would constitute undue discrimination
against non-members.
The rationale behind the extension of the benefits of
a collective bargaining agreement even to non-union
members — as underscored by the above cited
jurisprudential touchstone — is to preclude undue
discrimination against them. This same ruling does not
and should not in turn justify any discriminatory treatment
against union members, a result which is certain to follow if
the appellant were to receive the benefits flowing from the
private plan of the Company, sans the burden imposed on
the recipient by the afore quoted Article XV. His readiness
to receive the benefits accruing to him under the said
private plan should be matched by his willingness to bear
the burdens concomitant thereto, one of which is the
reduction of the benefits owing to him up to the amount
sufficient to compensate the Company for its (employer's)
contributions (for his account) to the Social Security
System.
72
 Labor Relations
Case Digest Compilation
Issue: W/n Article XV of the Company's private plan
flies in the teeth of section 19 of the Social Security
Act?—NO
This section expressly provides:
Employer's contribution. — Beginning as of the
last day of the month when an employee's
compulsory coverage takes effect and every month
thereafter during his employment, his employer
shall pay, with respect to such covered employee,
the employer's contribution in accordance with the
schedule indicated in Section eighteen of this Act.
Notwithstanding any contract to the contrary, an
employer shall not deduct, directly or indirectly,
from the compensation of his employees covered
by the System or otherwise recover from them the
employer's contribution with respect to such
employees.
What is prohibited is the deduction of the employer's
contribution from the compensation
It is clear, from a close scrutiny of the last sentence of the
above cited section, that what is prohibited is the deduction
of the employer's contribution from the compensation of his
employees, or the recovery from said employees of the
employer's contribution to the System with respect to their
coverage.
Stated otherwise, what is enjoined is any employer's
scheme to make his employees shoulder his burden of
paying to the System the employer's contribution required
by the Social Security Act.
Retirement pay is not within the category
compensation
There is no such scheme, in the case at bar, of passing the
employee's burden because the retirement pay of the
appellant is not in the category of a compensation, but is
a fringe benefit proceeding from the Company's private
plan. Moreover, the Company does not seek to recover from
the appellant the former's contribution with respect to the
latter. It is merely deducting the same from what it pays to
the private plan which it has set up and is, singlehandedly
maintaining, and which it has integrated with the System.
For, indeed, to allow the appellant to enjoy the full amount
of retirement pay under the private plan and all the benefits
due to him under the Social Security Act without spending
any single centavo — and conversely, to prohibit the
Company from making the corresponding deduction from
such benefits of its contributions to the Social Security
System in behalf of the appellant — is to sanction an
inequitable situation that runs roughshod over the
universally accepted maxim against unjust
enrichment: "nemo cum alterius, detrimenti locupletari
potest."
Martinez v NATIONAL LABOR RELATIONS
COMMISSION, GMCR, INC. (Formerly GLOBE
MACKAY CABLE & RADIO CORP.), and MARK
ANTHONY JAVIER October 12, 1998
On June 10, 1977, respondent GMCR, Inc. employed
petitioner as assistant credit and collection manager. At the
inception of petitioner's employment, respondent company
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
made it clear that employees who were not eligible for
membership in the bargaining unit and, therefore, not
entitled to the benefits under the collective bargaining
agreement, would be paid benefits which were at least
equivalent to, if not higher than, those provided in
the collective bargaining agreement.
On September 22, 1981, respondent company promoted
petitioner to credit and collection manager, a position he
held until the day of his retirement.
In the course of his employment, petitioner received annual
salary increases based on merit and/or performance.
Although the annual salary increases were not given on
the exact due dates, they were retroactively applied
to the start of the evaluation period.
However, much to his surprise, petitioner received no
salary increase for the period immediately prior to his
retirement. While two (2) of his subordinates were given
salary increases of twenty-two percent (22%) and twenty-
one percent (21%) for the period from September 16, 1990
to September 16, 1991, he was not given a performance
evaluation and consequently not granted any salary
increase.
Petitioner was examined by Dr. Florencio A. Chavez,
the company physician and a pulmonary and cardiology
specialist, and found to be suffering from a "severe
restrictive and obstructive pulmonary defect with no
reversible component." He was advised to rest for 120
days. Petitioner took the physician's advice and went on
sick leave from March 1 until July 15, 1992.
Petitioner applied for optional retirement benefits. In
a letter, dated April 10, 1992, to respondent Mark Anthony
of
Javier, president of respondent company, petitioner applied
for optional retirement benefits under the collective
bargaining agreement. He stated that since he would have
been in the service of the company for fifteen years on June
10, 1992, he wished to retire effective July 16, 1992, on
which date "the long term sick leave availment as per
advice by the company's physician shall have expired."
On April 22, 1992, petitioner asked for the advance
payment of his salary for the period April 16, 1992 to July
15, 1992. And he also asked for an advance payment of
his retirement benefits in the amount of P100,000.00.
On April 27, 1992, Flaviano L. Ramos informed
petitioner that respondent company was having
financial difficulties and could only grant petitioner's
request if he changed the effective date of his
retirement from July 16, 1992 to April 30, 1992.
Being in urgent financial need, petitioner agreed and thus
crossed out the date, July 16, 1992, on a photocopy
of his letter, changing it to April 30, 1992.
Respondent company issued to petitioner four (4)
checks in the aggregate amount of P351,375.00,
broken down as follows: P13,260.20 as salary advance;
P21,994.91 as salary advance; P100,000.00 as partial
advance payment of retirement benefits; and P216,119.89
as full payment for the outstanding balance of his
retirement benefits.
Labor Arbiter Decision: On July 26, 1993, Labor Arbiter
Arthur L. Amansec rendered a decision ordering respondent
company to pay to the complainant the following:
73
 Labor Relations
Case Digest Compilation
P425,663.42 in unpaid salaries; underpayment of
retirement benefits; other fringe benefits and additional
economic benefits;P25,000.00 as moral damages;Ten
percent (10%) attorney's fees.
NLRC Decision: The awards of merit increase, retirement
pay differential are hereby REDUCED respectively, to
P29,515.50, P63,247.50 and P6,826.82. The awards of
unpaid salaries and other fringe benefits are hereby SET
ASID
First. Petitioner contends that under the collective
bargaining agreement, the option to retire is granted to
retiring employees and not to the company and, therefore,
private respondents cannot vary the effective date of his
retirement.
On the other hand, private respondents deny that
petitioner can claim the benefits of the collective
bargaining agreement considering that he is a
managerial employee.
Issue: Whether petitioner, who is a managerial employee,
can claim retirement benefits under the collective
bargaining agreement?—YES. There is nothing to
prevent the employer from granting benefits to
managerial employees equal to or higher than those
afforded to union members.
Art. XXIX of which provides:
Sec. 1. An employee shall be entitled to a retirement
benefit plan under the following conditions:
(a) an employee may retire at his option any time after
such employee shall have attained the age of Fifty Years
(50) and whose term of service is ten (10) years or more,
and an employee may retire at his option upon completing
twenty-five (25) years of service.
(b) The employee must retire under this plan at the time
such employee attains the age of Sixty-Five (65).
The Labor Code provides:
Art. 245. Ineligibility of managerial employees to join
any labor organization; right of supervisory
employees. — Managerial employees are not eligible to
join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own.
As we recently held in United Pepsi-Cola Supervisory
Union (UPSU) v. Laguesma: 
. . . [T]here is a rational basis for prohibiting managerial
employees from forming or joining labor organizations. By
the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in
the field of labor relations.
In Bulletin Publishing Co., Inc. v. Hon. Augusto
Sanchez, this Court elaborated on this rationale, thus:
. . . The rationale for this inhibition has been stated to be,
because if these managerial employees would belong to or
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
be affiliated with a Union, the latter might not be assured of
their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated
with the presence of managerial employees in Union
membership.
Accordingly, managerial employees cannot, in the
absence of an agreement to the contrary, be allowed
to share in the concessions obtained by the labor
union through collective negotiation. Otherwise, they
would be exposed to the temptation of colluding with the
union during the negotiations to the detriment of the
employer.
However, there is nothing to prevent the employer
from granting benefits to managerial employees
equal to or higher than those afforded to union
members.
There can be no conflict of interest where the
employer himself voluntarily agrees to grant such
benefits to managerial employees. In the case at bar, at
the beginning of petitioner's employment, he was told that
those who are not covered by the CBA would nevertheless
be entitled to benefits which would be, if not higher, at least
equivalent to those provided in the CBA. That private
respondents made such a promise to petitioner is not
denied by them.
Now Art. 287 of the Labor Code, as amended by R.A.
No. 7641,provides:
Art. 287. Retirement. — Any employee may be retired
upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled
to receive such retirement benefits as he may have
earned under existing laws and any collective
bargaining agreement and other
agreements: Provided, however, That an employee's
retirement benefit under any collective bargaining and other
agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement, providing
for retirement benefits of employees in the establishment,
an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one
whole year.
Unless the parties provide far broader inclusions, the term
"one-half (1/2) month salary" shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service
incentive leaves.
Retail, service and agricultural establishments or operations
employing not more than ten (10) employees or workers
are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and
subject to the penal provisions under Article 288 of this
Code.
74
 Labor Relations
Case Digest Compilation

Thus, respondent company's agreement to extend the which he claims was yet to expire on July 16, 1992 a reason
benefits of the CBA to petitioner constitutes the for holding the new date of his retirement invalid. By
"applicable employment contract" under this provision changing the date of his retirement from July 16,
of the Labor Code, pursuant to which petitioner may claim 1992 to April 30, 1992 in exchange for an advance of
retirement benefits. P100,000.00 on his retirement pay, petitioner waived
his right to insist on July 16, 1992 as the effective
date of his retirement.
Issue: Whether respondent company had a right to insist
that the effectivity date of his retirement be not July 16 but
April 30? YES Issue: Whether petitioner is barred from instituting this
action on the ground of estoppel, having signed a document
entitled "Release, Waiver and Quitclaim" in favor of
LABOR COMMISSION: In ruling that respondent company
respondent company? –NO
could vary the effective date of petitioner's retirement, the
LABOR COMMISSION EXPLAINED:
This document states that in consideration of the release of
retirement benefits to petitioner, he was discharging the
[T]he respondent company had a right to insist that
company, its stockholders, directors, agents, or employees
the effectivity date of his retirement be, not July 16,
from liability for any sum of money or other obligations.
1992, which was advantageous for him, but April 30,
1992, which was more advantageous for it.
This document is an invalid waiver and cannot bar
petitioner from bringing the present action. Unlike
The fact that it imposed, as a condition for the
petitioner's waiver of the original date of his retirement, the
advance partial payment of the complainant's
consideration for which is the advance on his retirement
retirement benefit, that the effectivity date of his
benefits, the "Release, Waiver and Quitclaim" does not
retirement be changed to April 30, 1992, and that the
purport to have been made by petitioner for valuable
complainant agreed to the condition because of his urgent
consideration. Petitioner was, as a matter of right, entitled
need for money, does not affect the validity of their
to his retirement benefits. Private respondents cannot
agreement in the absence of mistake, violence,
condition their release to a quitclaim executed by petitioner.
intimidation, undue influence or fraud (Article 1330,
For this reason, we affirm the general rule against
Civil Code).
quitclaims of laborers' benefits:

The mere fact that an agreement was

Even if voluntarily executed, agreements are invalid if
disadvantageous to one of the parties does not avoid
they are contrary to public policy. This is elementary.
it. Moreover, the release to the complainant, of the
The protection of labor is one of the policies laid down by
check for P13,260.92 in response to his request for the
the Constitution not only by specific provision but also as
advance payment of his salaries from May 1, 1992 to July
part of social justice. . . .
16, 1992 does not signify the approval of his request
because, as stated in the note of FL Ramos to "Susan",
such request was still subject to "certain approvals". The subordinate position of the individual employees vis-á-
Thus, the complainant is not entitled to salaries and vis management renders him especially vulnerable to its
fringe benefits from May 1, 1992 to July 16, 1992.  blandishments and importunings, and even intimidations,
that may result in his improvidently if reluctantly signing
over benefits to, which he is clearly entitled. Recognizing
SUPREME COURT RULING: We agree with this ruling.
this danger, we have consistently held that quitclaims of
Petitioner assented to change the date of his
the workers' benefits will not estop them from
retirement from July 16, 1992 to April 30, 1992 in
asserting them just the same on the ground that
consideration of obtaining an advance payment of
public policy prohibits such waivers. 
P100,000.00 on his retirement pay. Such agreement is
valid. As has been held:
On petitioner's claim for salary increase
Not all waiver and quitclaims are invalid as against
public policy. If the agreement was voluntarily NLRC RULING: The complainant's allegations relative
entered into and represents a reasonable settlement, it is to his right to a salary or merit increase from 1991 to
binding on the parties and may not later be disowned 1992 were not successfully refuted by the
simply because of a change of mind. respondents, whose contention that his performance
during the year in question was evaluated and that he was
found undeserving of a salary or merit increase is not
It is only where there is clear proof that the waiver
supported by any evidence. Thus, it appears that there
was wangled from an unsuspecting or gullible person,
was unlawful discrimination on the part of the
or the terms of settlement are unconscionable on its face,
respondents in not giving the complainant a salary or
that the law will step in to annul the questionable
merit increase in the year in question, which justifies
transaction. But where it is shown that the person
the award of salary or merit increase. However, the
making the waiver did so voluntarily, with full
award of merit increase should be, not 20%, but 18%,
understanding of what he was doing, and the
which is the average of the merit increase the complainant
consideration for the quitclaim is credible and
received from 1988 to 1990, or the amount of P4,216. 50
reasonable, the transaction must be recognized as a
monthly. 
valid and binding undertaking. 

SUPREME COURT RULING: We agree with this ruling. The

Petitioner waived his right to insist on July 16, 1992
amount of P4,216.50 should, however, be multiplied by
as the effective date of his retirement. The fact that
seven and one-half months considering that the period
respondent company still paid petitioner salaries after July
covered is from September 16, 1991 to April 30, 1992. This
16, 1992 does not detract from the fact that petitioner
would entitle petitioner to the amount of P31,623.75 as
voluntarily agreed to advance the date of his retirement.
merit increase, and not P29,515.50, as computed by the
Neither is petitioner's entitlement to a long term sick leave
NLRC.
75
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 Labor Relations
Case Digest Compilation
We likewise affirm the ruling of the NLRC denying
petitioner's claim for P168,660.00 representing
salaries which he would have allegedly earned had he
been rehired by respondent company as a contractual
employee. There is no evidence to show that
respondent promised to rehire petitioner. The mere
fact that another employee was rehired by
respondent company after he had retired due to
physical disability is not proof that petitioner was
likewise given the same offer.
Miscallaneous Rules regarding the CBA
C.In case of change of ownership of establishment
Sundowner Development Corp. vs Hon. Franklin
Drilon
GR No. 123782, September 16, 1997
Facts: Hotel Mabuhay, Inc. leased the premises belonging
to Santiago Syjuco Inc. located at 1430 A. Mabini St.,
Ermita, Manila. However, due to non-payment of rentals, a
case for ejectment was filed by Syjuco against Mabuhay in
the MeTC of Manila. Hotel Mabuhay offered to amicably
settle the case by surrendering the premises to Syjuco and
to sell its assets and property to any interested party.
Syjuco offered the said premises for lease to Sundowner.
The negotiation culminated with the execution of the lease
aggreement on April 16, 1987 to commence on May 1,
1987 and to expire on April 30, 1992. Mabuhay offered to
sell its assets and personal properties in the premises to
Sundowner to which Sundowner agreed. A deed of
assignment of said assignment of said assets and personal
properties was executed by Mabuhay on April 29, 1987 in
favor of Sundowner.
On the same date, Syjuco formally turned over the
possession of the leased premises to Sundowner who
actually took possession and occupied the same on May 1,
1987.
On May 4, 1987, respondent National Union of Workers in
Hotel, Restaurant and Allied Servies (NUWHRAIN)
picketed the leased premises, barricaded the entrance to
the leased premises and denied Sundowner’s officers,
emplouees and guests free access to and egress from said
premises. Thus, Sundowner, wrote a letter-complaint to
Syjuco.
A complaint for damages with preliminary injunction and/or
temporary restraining order was filed by Sundowner with
the RTC of Manila. On the same day, the Executive Judge of
said court issued a restraining order against NUWHRAIN
and its officers and members as prayed for in the petition.
Nevertheless, NUWHRAIN maintained their strike on the
subject premises but filed an answer to the complaint.
SOLE: An order was issued by the Secretary of Labor
assuming jurisdication over the labor dispute pursuant to
Article 263(g) of the Labor Code as amended and in the
interim requiring all striking employees to return to work
and for Mabuhay to accept all returning employees pending
final determination of the issue of the absorption of the
former employees of Mabuhay. The parties were also
directed to submit their respective position papers within
ten (10) days from receipt of the order.
HOTEL MABUHAY: Mabuhay submitted it position paper
alleging among others that it had sold all its assets and
personal properties to Sundowner and that there was no
sale or transfer of its shares whatsoever and that Mabuhay
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
completely ceaed operation effective April 28, 1987 and
surrendered the premises to Sundowner so that there exists
a legal and physical impossibility on its part to comply with
the return to work order specifically on absorption.
Sundowner, in order to commence its operation, signed a
tri-partite agreement so the workers may lift their strike, by
and amoung Sundowner, NUWHRAIN and Mabuhay
whereby the latter paid to NUWHRAIN the sum of
P638,000.00 in addition to the first payment in the sum of
P386,447.11, for which reason NUWHRAIN agreed to lift the
picket.
NUWHRAIN on July 13, 1987 filed its position paper alleging
connivance between Mabuhay and Sundowner in selling the
assets and closeing the hotel to escape its obligations to the
employees of Mabuhay and so it prays that Sundowner
accept the workforce of Mabuhay and pay backwages from
April 15, 1986 to April 28, 1987, the day Mabuhay stopped
operation.
SUNDOWNER: Filed a “Partial Motion for Reconsideration
and Position Paper,” alleging that it was denied due
process; that there were serious errors in the findings of
fact which would cause grave and irreparable damage to its
interest; as well as on questions of law.
On January 20, 1988, the SOLE issued an order requiring
Sundowner to absorb the members of the union and to pay
backwages from the time it started operations up to the
date of the order.
Sundowner filed a motion for reconsideration of the
aforesaid order alleging that the theory of implied
acceptance and assumption of statutory wrong does not
appply in the instant case; that the prevailing doctrine that
there is no law requiring bona fide purchasers of the assets
od an on-going concern to absorb in its employ the
employees of the latter should be applied in this case; that
the order for absorption of the employees of Mabuhay as
well as the payment of their backwages is contrary to law.
NUWHRAIN also filed a motion for clarification of the
aforesaid order.
Public respondent denied the motion for reconsideration and
motion for clarification for lack of merit.
Issue: Whether or not the purchaser of the assets of an
employer corporation can be considered a successor
employer of the latter’s employees. – NO.
Ruling: The absorption of the employees of Hotel Mabuhay
may not be imposed on Sundowner, who has no liability
whatsoever to the employees of Hotel Mabuhay and its
responsibility if at all, is only to consider them for re-
employment in the operation of the business in the same
premises. There can be no implied acceptance of the
employees of Hotel Mabuhay by Sundowner as it is
expressly provided in the agreement that Sundowner
has no commitment or duty to absorb them.
The rule is that unless expressly assumed, labor contract
such as employment contract and CBAs are not enforceable
against a transferee of an enterprise, labor contracts being
in personam, thus, binding only between the parties. A
labor contract merely creates an action in personam and
does not create a real right which should be respected by
third parties. This conclusion draws its force from the right
of an employer to select his employees and to decide when
to engage them as protected under our Constitution and the
same can only be restricted by law through the exercise of
police power.
76
 Labor Relations
Case Digest Compilation
As a general rule, there is no law requiring a bona fide
purchases of assets of an on-going concern to absorb in its
employ the employees of the latter.
However, although the purchaser of the assets or enterprise
is not legally bound to absorb in its employ the employees
of the seller of such assets or enterprise, the parties are
liable to the employees if the transaction between is clothed
with bad faith.
IN THE CASE AT BAR:
Contrary to the claim to the claim of the public respondent
that the transaction between Sundowner and Mabuhay was
attended with bad faith, the court finds no cogent basisi for
such contention. Thus, the absorpotion of the
employees of Mabuhay may not be imposed on
Sundowner.
It is undisputed that when Mabuhay surrendered the leased
premises to Syjuco and asked Syjuco to offer the same to
toher lessees it was Syjuco who found sundowner and
persuaded Sundowner to lease said premises, Mabuhay had
nothing to do with the negotiation and consummation of the
lease contract between Sundowner and Syjuco.
It was only when Mabuhay offered to sell its assets and
personal properties in the premises to Sundowner that they
came to deal with each other. It appears that Sundowner
agreed to purchase said assets of Mabuhay to enable
Mabuhay to pay its obligations to its striking employees and
to Syjuco. Indeed, in the deed of assignment that was
executed by Mabuhay in favor of Sundowner in
consideration of P2,500,000.00, it is specifically provided
therein that the same is “purely for and in consideration of
the sale/transfer and assignment of the personal properties
and assets of Hotel Mabuhay, Inc. listed” and “in no way
involves any assumption or undertaking on the part of
Sundowner of any debts or liabilities whatsoever of Hotel
Mabuhay, Inc.” The liabilities alluded in this agreement
should be interpreted to mean not only any monetary
liability of Mabuhay but any other liability or
obligation arising from the operation of its business
including its liability to its employees.
Moreover, in the tripartite agreement entered into by
Sundowner with NUWHRAIN and Mabuhya, it is clearly
stipulated that Sundowner has no laibility whatsoever to the
employees of Mabuhay and its responsibility is only to
consider them for re-employment in the operation of
the business in the same premises. There can be no
implied acceptance of the employees of Mabuhay by
Sundowner and acceptance of statutory wrong as it is
expressly provided in the agreement that Sundowner has
no commitment or duty to absorb them.
Moreover, the court does not subscribe to the theory of
public respondent that Sundowner should have informed
NUWHRAIN of its lease of the premises and its purchase of
the assets and personal properties of Mabuhay therein so
that said employees could have taken steps to protect their
interest. The court finds no such duty on the part of
petitioner and its failure to notify said employees cannot be
an indicium of bad faith.
Much less is there any evidence that petitioner and
respondent Mabuhay are joint tortfeasors as found by public
respondent. While it is true that petitioner is using the
leased property for the same type of business as that of
respondent Mabuhay, there can be no continuity of the
business operations of the predecessor employer by the
successor employer as respondent Mabuhay had not
retained control of the business. Petitioner is a corporation
entirely different from Mabuhay. It has no controlling
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
interest whatever in respondent Mabuhay. Petitioner and
Mabuhay have no privity and are strangers to each other.
What is obvious is that the petitioner, by purchasing the
assets of respondent Mabuhay in the hotel premises,
enabled Mabuhay to pay its obligations to its employees.
There being no employer-employee relationship between
the petitioner and the Mabuhay employees, the petition
must fail. Petitioner can not be compelled to absorb the
employees of Mabuhay and to pay them backwages.
Miscallaneous Rules regarding the CBA
D. Effectivity in case of merger/ consolidation
BPI V BPI EMPLOYEES
Miscallaneous Rules regarding the CBA
E. Effect of change in bargaining agent;
Substitutionary Doctrine
BENGUET CONSOLIDATED, INC.,  v.BCI EMPLOYEES
and WORKERS UNION-PAFLU, PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS, CIPRIANO CID
and JUANITO GARCIA
April 04, 1968
Facts: The Benguet-Balatoc Workers Union (BBWU)
entered into a Collective Bargaining Contract with Benguet
Consolidated, Inc (BENGUET). It became effective for a
period of 4-½ years, and itembodied a No-Strike, No-
Lockout clause. 3 years later, a certification election was
conducted among all the rank and file employees of
BENGUET. BCI Employees & Workers Union (UNION)
defeated BBWU. CIR certified UNION as the sole and
exclusive collective bargaining agent of all BENGUET
employees.
A Notice of Strike was filed, and the UNION members who
were BENGUET employees went on strike. Picket lines were
formed, and the picketers, resorted to threats and
intimidation, and use of force and violence. Some of the
properties of BENGUET were also damaged. Eventually, the
parties agreed to end the dispute. BENGUET and UNION
executed an agreement. PAFLU placed its conformity
thereto and said agreement was attested to by the Director
of the BLR. A collective bargaining contract was executed
between UNION-PAFLU and BENGUET.
As a result of the strike staged by UNION and its members,
BENGUET had to incur expenses for the repair of the
damaged properties. BENGUET sued UNION, PAFLU and
their Presidents before the CFI on the sole premise that said
defendants breached their undertaking in the existing
contract not to strike. The unions and their presidents put
up the following defenses: (1) they were not bound by the
contract which BBWU, the defeated union, had executed
with BENGUET; (2) the strike was due to unfair labor
practices of BENGUET; and (3) the strike was lawful and in
the exercise of the legitimate rights of UNION-PAFLU.
CFI - dismissed the complaint on the ground that the
contract did not bind defendants.
Issue: WON the contract executed between BENGUET and
BBWU automatically bind UNION-PAFLU upon its
certification as sole bargaining representative of all
BENGUET employees - No
77
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Ruling: BENGUET invoked the "Doctrine of Substitution"
referred to in General Maritime Stevedores' Union v. South
Sea
Shipping Lines where it stated that, if bargaining agent
other than the union or organization that executed the
contract, is elected, said the agent should respect the said
contract. The statement was obiter dictum. BENGUET's
reliance upon the Principle of Substitution is totally
misplaced.
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 doctrine cannot be invoked to
support the contention that a newly certified collective
bargaining agent automatically assumes all the personal
undertakings in the collective bargaining agreement made
by the deposed union.
When BBWU bound itself and its officers not to strike, it
could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the
agent of the employees, not of the other unions which
possess distinct personalities. The UNION could always
voluntarily assume all the personal undertakings made by
the displaced agent. But as the lower court found, there
was no showing at all that, prior to the strike, UNION
formally adopted the existing contract as its own and
assumed all the liability ties imposed by the same upon
BBWU.
Everything binding on a duly authorized agent is binding on
the principal; not vice-versa, unless there is a mutual
agency, or unless the agent expressly binds himself to the
party with whom he contracts. In the case at bar, it was
BBWU who expressly bound itself to BENGUET.
UNION, the new agent, did not assume this undertaking of
BBWU. Since defendants were not contractually bound by
the no-strike clause, for the simple reason that they were
not parties thereto, they could not be liable for breach of
contract to plaintiff.
Miscallaneous Rules regarding the CBA
F. Automatic incorporation clause
UNIVERSITY OF THE EAST (UE), DEAN JAVIER,
GILLEGO, & BENEDICTO v. PEPANIO & BUENO
G.R. 193897 | January 23, 2013
FACTS:
This case is about the employment status of college
teachers with no postgraduate degrees who have been
repeatedly extended semester-to-semester appointments
as such.
Revised Manual of Regulations for Private Schools
In 1992, the Department of Education, Culture and Sports
(DECS) issued the Revised Manual of Regulations for Private
Schools, Article IX, Section 44, paragraph 1 (a) of
which requires college faculty members to have a
master's degree as a minimum educational qualification
for acquiring regular status.
1994 CBA
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
In 1994 petitioner UE and the UE Faculty Association
executed a five-year Collective Bargaining Agreement
(CBA) with effect up to 1999 which provided, among others,
that UE shall extend only semester-to-semester
appointments to college faculty staff who did not
possess the minimum qualifications.
Those with such qualifications shall be given probationary
appointments and their performance on a full-time or full-
load basis shall be reviewed for four semesters.
DECS-CHED-TESDA-DOLE Joint Order 1
Meantime, on February 7, 1996 several concerned
government agencies issued DECS-CHED-TESDA-DOLE
Joint Order 1 which reiterated the policy embodied in the
Manual of Regulations that "teaching or academic personnel
who do not meet the minimum academic qualifications shall
not acquire tenure or regular status."
UE University Policy
In consonance with this, the UE President issued a
University Policy stating that, beginning the School Year
1996-1997, it would hire those who have no postgraduate
units or master’s degree for its college teaching staff, in
the absence of qualified applicants, only on a semester-to-
semester basis.
UE hired respondent Mariti D. Bueno in 1997 and
respondent Analiza F. Pepanio in 2000, both on a
semester-to-semester basis to teach in its college. They
could not qualify for probationary or regular status because
they lacked postgraduate degrees.
[Bueno enrolled in six postgraduate subjects at the
Philippine Normal University’s graduate school but there is
no evidence that she finished her course. Pepanio earned
27 units in her graduate studies at the Gregorio Araneta
University Foundation but these could no longer be credited
to her because she failed to continue with her studies within
five years.]
2001 CBA
In 2001 UE and the UE Faculty Association entered into a
new CBA that would have the school extend
probationary full-time appointments to full-time faculty
members who did not yet have the required postgraduate
degrees provided that the latter comply with such
requirement within their probationary period.
The CBA granted UE, however, the option to replace
these appointees during their probationary period if a
qualified teacher becomes available at the end of the
semester.
Pursuant to the new CBA, UE extended probationary
appointments to respondents Bueno and Pepanio. Two
years later in October 2003, the Dean of the UE College of
Arts and Sciences, petitioner Eleanor Javier, sent
notices to probationary faculty members, reminding them
of the expiration of the probationary status of those lacking
in postgraduate qualification by the end of the first
semester of the School Year 2003-2004.
Pepanio replied that she was enrolled at the Polytechnic
University of the Philippines Graduate School. Bueno, on the
other hand, replied that she was not interested in acquiring
tenure as she was returning to her province.
Dean Javier’s Memorandum
In any event, Dean Javier subsequently issued a
memorandum, stating that she would recommend the
extension of the probationary appointees for two more
semesters for those who want it based on the wishes of the
University President. Respondent Pepanio requested a
78
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Case Digest Compilation
three-semester extension but Dean Javier denied this
request and directed Pepanio to ask for just a two-semester
extension. The records do not show if Bueno submitted a
request for extension. At any rate, the school eventually
wrote respondents, extending their probationary period but
neither Pepanio nor Bueno reported for work.
Bueno and Pepanio’s demand
Bueno later wrote UE, demanding that it consider her a
regular employee based on her six-and-a-half-year service
on a full-load basis, given that UE hired her in 1997 when
what was in force was still the 1994 CBA. Pepanio made the
same demand, citing her three-and-a-half years of service
on a full-load basis.
Case for illegal dismissal
When UE did not heed their demands, respondents filed
cases of illegal dismissal against the school before the
Labor Arbiter’s office.
UE’s contention: It countered that it never regarded
respondents as regular employees since they did not hold
the required master’s degree that government rules
required as minimum educational qualification for their kind
of work.
Labor Arbiter: It held that Bueno and Pepanio were
regular employees, given that they taught at UE for at least
four semesters under the old CBA.
The new CBA, said the LA, could not deprive them of the
employment benefits they already enjoyed. Since UE
enjoined Pepanio from attending her classes and since it did
not give Bueno any teaching load, they were dismissed
without just cause.
The LA directed UE to reinstate respondents
backwages.
NLRC: It set aside the LA Decision. It rejected the technical
objection and ruled that the four-semester probationary
period provided under the old CBA did not automatically
confer permanent status to Bueno and Pepanio. They still
had to meet the standards for permanent employment
provided under the Manual of Regulations and the Joint
Order mentioned above. The non-renewal of their contract
was based on their failure to obtain the required
postgraduate degrees and cannot, therefore, be regarded
as illegal.
CA: It rendered a Decision on July 9, 2010, reinstating the
LA’s Decision by reason of technicality.
Respondents’ contention:
Respondents argue that UE hired them in 1997 and 2000,
when what was in force was the 1994 CBA between UE and
the faculty union.
Since that CBA did not yet require a master’s degree for
acquiring a regular status and since respondents had
already complied with the three requirements of the CBA,
namely,
(a) that they served full-time;
(b) that they rendered three consecutive years of
service; and
(c) that their services were satisfactory, they should
be regarded as having attained permanent or
regular status.
ISSUE:
Whether or not UE illegally dismissed Bueno and Pepanio. –
NO.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
RULING:
The policy requiring postgraduate degrees of college
teachers was provided in the Manual of Regulations as early
as 1992.
Indeed, recognizing this, the 1994 CBA provided even then
that UE was to extend only semester-to-semester
appointments to college faculty staff, like respondents, who
did not possess the minimum qualifications for their
positions.
Automatic incorporation clause
Besides, as the Court held in Escorpizo v. University of
Baguio, a school CBA must be read in conjunction
with statutory and administrative regulations
governing faculty qualifications. Such regulations
form part of a valid CBA without need for the parties
to make express reference to it. While the contracting
parties may establish such stipulations, clauses, terms and
conditions, as they may see fit, the right to contract is
still subject to the limitation that the agreement must
not be contrary to law or public policy.
The State through Batas Pambansa Bilang 232 (The
Education Act of 1982) delegated the administration of the
education system and the supervision and regulation of
educational institutions to the Ministry of Education, Culture
and Sports (now Department of Education). Accordingly, in
promulgating the Manual of Regulations, DECS was
exercising its power of regulation over educational
institutions, which includes prescribing the minimum
academic qualifications for teaching personnel.
In 1994 the legislature transferred the power to prescribe
such qualifications to the Commission on Higher Education
(CHED). CHED’s charter authorized it to set minimum
with standards for programs and institutions of higher learning.
The Manual of Regulations continued to apply to colleges
and universities and suppletorily the Joint Order until 2010
when CHED issued a Revised Manual of Regulations which
specifically applies only to institutions involved in tertiary
education.
The requirement of a masteral degree for tertiary
education teachers is not unreasonable. The operation
of educational institutions involves public interest. The
government has a right to ensure that only qualified
persons, in possession of sufficient academic
knowledge and teaching skills, are allowed to teach in
such institutions. Government regulation in this field of
human activity is desirable for protecting, not only the
students, but the public as well from ill-prepared teachers,
who are lacking in the required scientific or technical
knowledge. They may be required to take an examination
or to possess postgraduate degrees as prerequisite to
employment.
Respondents were each given only semester-to-semester
appointments from the beginning of their employment with
UE precisely because they lacked the required master's
degree. It was only when UE and the faculty union signed
their 2001 CBA that the school extended petitioners a
conditional probationary status subject to their obtaining a
master's degree within their probationary period. It is clear,
therefore, that the parties intended to subject
respondents' permanent status appointments to the
standards set by the law and the university.
Here, UE gave respondents Bueno and Pepanio more than
ample opportunities to acquire the postgraduate degree
required of them. But they did not take advantage of such
opportunities. Justice, fairness, and due process demand
that an employer should not be penalized for situations
where it had little or no participation or control.
79
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Miscallaneous Rules regarding the CBA
G. The Grievance Machinery
Viviero v CA
October 24, 2000
Facts: Petitioner Viviero, a licensed seaman, is a
member of the Associated Marine Officers and
Seamen's Union of the Philippines (AMOSUP). The
Collective Bargaining Agreement entered into by AMOSUP
and private respondents- HAMMONIA MARINE SERVICES
and HANSEATIC SHIPPING CO., which provides for a
grievance procedure.
ARTICLE XII
GRIEVANCE PROCEDURE
xxxx
Sec. 6. Any grievance, dispute or misunderstanding
concerning any ruling, practice, wages or working
conditions in the COMPANY, or any breach of the
Employment Contract, or any dispute arising from the
meaning or the application of the provision of this
Agreement or a claim of violation thereof or any
complaint that any such crewmembers may have
against the COMPANY, as well as complaint which the
COMPANY may have against such crewmembers shall
be brought to the attention of the GRIEVANCE
COMMITTEE before either party takes any action, legal
or otherwise.
Sec. 7. The COMMITTEE shall resolve any dispute
within seven (7) days from and after the same is
submitted to it for resolution and if the same cannot be
settled by the COMMITTEE or if the COMMITTEE fails to
act on the dispute within the 7-day period herein
provided, the same shall be referred to a VOLUNTARY
ARBITRATION COMMITTEE.
An "impartial arbitrator" will be appointed by mutual
choice and consent of the UNION and the COMPANY
who shall hear and decide the dispute or issue
presented to him and his decision shall be final and
unappealable x x x x
On 01 August 1994, Viviero filed a complaint for
illegal dismissal at AMOSUP. Pursuant to Article XII of
the Collective Bargaining Agreement, grievance proceedings
were conducted; however, parties failed to reach and settle
the dispute amicably, thus, on 28 November 1994, Viviero
then filed [a] complaint with the Philippine Overseas
Employment Administration (POEA).
While the case was pending before the POEA, private
respondents filed a Motion to Dismiss on the ground that
the POEA had no jurisdiction over the case considering
petitioner Vivero's failure to refer it to a Voluntary
Arbitration Committee in accordance with the CBA between
the parties. Upon the enactment of RA 8042, the Migrant
Workers and Overseas Filipinos Act of 1995, the case was
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
transferred to the Adjudication Branch of the National Labor
Relations Commission.
Labor Arbiter: Dismissed the complaint for want of
jurisdiction. The CBA of the parties provided for the referral
to a Voluntary Arbitration Committee should the Grievance
Committee fail to settle the dispute, and considering the
mandate of Art. 261 of the Labor Code on the original and
exclusive jurisdiction of Voluntary Arbitrators, the Labor
Arbiter clearly had no jurisdiction over the case.
NLRC: Set aside the decision of the Labor Arbiter on the
ground that the record was clear that petitioner had
exhausted his remedy by submitting his case to the
Grievance Committee of AMOSUP. Considering however that
he could not obtain any settlement he had to ventilate his
case before the proper forum, i.e., the Philippine Overseas
Employment Administration.
The NLRC further held that the contested portion in the CBA
providing for the intercession of a Voluntary Arbitrator was
not binding upon petitioner since both petitioner and private
respondents had to agree voluntarily to submit the case
before a Voluntary Arbitrator or Panel of Voluntary
Arbitrators. This would entail expenses as the Voluntary
Arbitrator chosen by the parties had to be paid. Inasmuch
however as petitioner chose to file his Complaint originally
with POEA, then the Labor Arbiter to whom the case was
transferred would have to take cognizance of the case.
CA: Held that the CBA "is the law between the parties and
compliance therewith is mandated by the express policy of
the law." Hence, petitioner should have followed the
provision in the CBA requiring the submission of the
dispute to the Voluntary Arbitration Committee once
the Grievance Committee failed to settle the
controversy. According to the Court of Appeals, the parties
did not have the choice to "volunteer" to refer the dispute
to the Voluntary Arbitrator or a Panel of Arbitrators when
there was already an agreement requiring them to do so.
"Voluntary Arbitration" means that it is binding because
of a prior agreement or contract, while "Compulsory
Arbitration" is when the law declares the dispute subject
to arbitration, regardless of the consent or desire of the
parties.
Petitioner’s Contention
Alleges that the CA committed grave abuse of discretion in
holding that a Voluntary Arbitrator or Panel of Voluntary
Arbitrators, and not the Adjudication Branch of the NLRC,
has jurisdiction over his complaint for illegal dismissal.
Further, that his complaint for illegal dismissal was
undeniably a termination dispute and did not, in any
way, involve an "interpretation or implementation of
collective bargaining agreement" or "interpretation"
or "enforcement" of company personnel policies.
Thus, it should fall within the original and exclusive
jurisdiction of the NLRC and its Labor Arbiter, and not with
a Voluntary Arbitrator, in accordance with Art. 217 of the
Labor Code.
Respondent’s Contention
The case is one "involving the proper interpretation and
implementation of the Grievance Procedure found in the
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Case Digest Compilation
Collective Bargaining Agreement (CBA) between
parties" because of petitioner's allegation in
claim/assistance request form submitted to the Union.
Further, the fact that petitioner sought the assistance of his
Union evidently shows that he himself was convinced that
his Complaint was within the ambit of the jurisdiction of the
grievance machinery and subsequently by a Panel of
Voluntary Arbitrators as provided for in their CBA, and as
explicitly mandated by Art. 261 of the Labor Code
Issues: Does the dismissal of an employee constitute a
"grievance between the parties," as defined under the
provisions of the CBA? - NO.
Ruling:
[1] The case is primarily a termination dispute.
It is clear from the claim/assistance request form submitted
by petitioner to AMOSUP that he was challenging the
legality of his dismissal for lack of cause and lack of due
process. The issue of whether there was proper
interpretation and implementation of the CBA
provisions comes into play only because the
grievance procedure provided for in the CBA was not
observed after he sought his Union's assistance in
contesting his termination. Thus, the question to be
resolved necessarily springs from the primary issue of
whether there was a valid termination; without this, then
there would be no reason to invoke the need to interpret
and implement the CBA provisions properly.
San Miguel Corp v NLRC
The Court held that the phrase "all other labor
disputes" may include termination disputes provided
that the agreement between the Union and the
Company states "in unequivocal language that [the
parties] conform to the submission of termination
disputes and unfair labor practices to voluntary
arbitration." Ergo, it is not sufficient to merely say that
parties to the CBA agree on the principle that "all
disputes" should first be submitted to a Voluntary
Arbitrator. There is a need for an express
stipulation in the CBA that illegal termination
disputes should be resolved by a Voluntary
Arbitrator or Panel of Voluntary Arbitrators, since
the same fall within a special class of disputes that are
generally within the exclusive original jurisdiction of
Labor Arbiters by express provision of law. Absent such
express stipulation, the phrase "all disputes" should be
construed as limited to the areas of conflict traditionally
within the jurisdiction of Voluntary Arbitrators, i.e.,
disputes relating to contract-interpretation, contract-
implementation, or interpretation or enforcement of
company personnel policies. Illegal termination
disputes - not falling within any of these categories -
should then be considered as a special area of interest
governed by a specific provision of law.
In this case, however, while the parties did agree to make
termination disputes the proper subject of voluntary
arbitration, such submission remains discretionary upon the
parties. A perusal of the CBA provisions shows that Sec.
6, Art. XII (Grievance Procedure) of the CBA is the
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
the general agreement of the parties to refer grievances,
his disputes or misunderstandings to a grievance committee,
and henceforth, to a voluntary arbitration committee. The
requirement of specificity is fulfilled by Art. XVII (Job
Security) where the parties agreed -
Sec. 1. Promotion, demotion, suspension, dismissal or
disciplinary action of the seaman shall be left to the
discretion of the Master, upon consultation with the
Company and notification to the Union. This
notwithstanding, any and all disciplinary action taken
on board the vessel shall be provided for in Appendix
"B" of this Agreement x x x x [23]
Sec. 4. x x x x Transfer, lay-off or discipline of seamen
for incompetence, inefficiency, neglect of work, bad
behavior, perpetration of crime, drunkenness,
insubordination, desertion, violation of x x x regulations
of any port touched by the Company's vessel/s and
other just and proper causes shall be at Master's
discretion x x x in the high seas or foreign ports. The
Master shall refer the case/dispute upon reaching
port and if not satisfactorily settled, the
case/dispute may be referred to the grievance
machinery or procedure hereinafter provided
(emphasis supplied)
The use of the word "may" shows the intention of the
parties to reserve the right to submit the illegal
termination dispute to the jurisdiction of the Labor
Arbiter, rather than to a Voluntary Arbitrator.
Petitioner validly exercised his option to submit his case to
a Labor Arbiter when he filed his Complaint before the
proper government agency.
In other words, the Court of Appeals is correct in holding
that Voluntary Arbitration is mandatory in character if there
is a specific agreement between the parties to that effect.
It must be stressed however that, in the case at bar,
the use of the word "may" shows the intention of the
parties to reserve the right of recourse to Labor
Arbiters.
The CBA clarifies the proper procedure to be followed
in situations where the parties expressly stipulate to
submit termination disputes to the jurisdiction of a
Voluntary Arbitrator or Panel of Voluntary
Arbitrators. For when the parties have validly agreed on a
procedure for resolving grievances and to submit a dispute
to voluntary arbitration then that procedure should be
strictly observed. Non-compliance therewith cannot be
excused, as petitioner suggests, by the fact that he is not
well-versed with the "fine prints" of the CBA. It was his
responsibility to find out, through his Union, what the
provisions of the CBA were and how they could affect his
rights.
WHAT SHOULD HAVE BEEN DONE
After the grievance proceedings have failed to bring about a
resolution, AMOSUP, as agent of petitioner, should have
informed him of his option to settle the case through
voluntary arbitration. Private respondents, on their part,
should have timely invoked the provision of their CBA
requiring the referral of their unresolved disputes to a
81
 Labor Relations
Case Digest Compilation
Voluntary Arbitrator once it became apparent that the
grievance machinery failed to resolve it prior to the filing of
the case before the proper tribunal. The private
respondents should not have waited for nine (9) months
from the filing of their Position Paper with the POEA before
it moved to dismiss the case purportedly for lack of
jurisdiction. As it is, private respondents are deemed to
have waived their right to question the procedure followed
by petitioner, assuming that they have the right to do so.
Under their CBA, both Union and respondent companies are
responsible for selecting an impartial arbitrator or for
convening an arbitration committee;yet, it is apparent that
neither made a move towards this end. Consequently,
petitioner should not be deprived of his legitimate recourse
because of the refusal of both Union and respondent
companies to follow the grievance procedure.
NOTE THE POLICY INSTRUCTION NO. 56 OF THE
SECRETARY OF LABOR
Dated 6 April 1993, "Clarifying the Jurisdiction Between
Voluntary Arbitrators and Labor Arbiters Over Termination
Cases and Providing Guidelines for the Referral of Said
Cases Originally Filed with the NLRC to the NCMB,"
termination cases arising in or resulting from the
interpretation and implementation of collective bargaining
agreements and interpretation and enforcement of
company personnel policies which were initially processed
at the various steps of the plant-level Grievance Procedures
under the parties' collective bargaining agreements fall
within the original and exclusive jurisdiction of the
voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of
the Labor Code; and, if filed before the Labor Arbiter, these
cases shall be dismissed by the Labor Arbiter for lack of
jurisdiction and referred to the concerned NCMB Regional
Branch for appropriate action towards an expeditious
selection by the parties of a Voluntary Arbitrator or Panel of
Arbitrators based on the procedures agreed upon in the
CBA.
As earlier stated, the instant case is a termination dispute
falling under the original and exclusive jurisdiction of the
Labor Arbiter, and does not specifically involve the
application, implementation or enforcement of company
personnel policies contemplated in Policy Instruction No. 56.
Consequently, Policy Instruction No. 56 does not apply in
the case at bar. In any case, private respondents never
invoked the application of Policy Instruction No. 56 in their
Position Papers, neither did they raise the question in their
Motion to Dismiss which they filed nine (9) months after the
filing of their Position Papers. At this late stage of the
proceedings, it would not serve the ends of justice if this
case is referred back to a Voluntary Arbitrator considering
that both the AMOSUP and private respondents have
submitted to the jurisdiction of the Labor Arbiter by filing
their respective Position Papers and ignoring the grievance
procedure set forth in their CBA.
Metro Drug Distribution v. Metro Drug Distribution
Employees Association
G.R. No. 142666, September 26, 2005
Facts: 11 February 1997, petitioner and respondent union
entered into a CBA which includes the following provision:
ARTICLE XIX
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
GRIEVANCE MACHINERY
Section 1. Definition – A grievance is a dispute by and
between the COMPANY and the UNION or any complaint or
expressed dissatisfaction by an employee as may arise from
any of the following:
a) The interpretation, violation, non-implementation, or
manner of implementation of any provision of this
Agreement;
b) The violation, non-implementation or manner of
implementation of any provision of labor laws, decrees,
social legislation, including their implementing rules and
regulations;
c) Dismissal, termination, and/or suspension of employees;
d) Any matter concerning labor-management relations and
specifically covered by the collective bargaining agreement.
Section 2. Preliminary Steps – Before resorting to the
grievance procedure, the employee or employees who have
cause for complaint or grievance shall give their respective
immediate supervisors the opportunity to adjust the same.
Section 3. Steps – The grievance shall be processed as
expeditiously as possible through the following procedures:
Step 1. The complainant, assisted by his shop steward,
shall discuss the dispute with his department head or
branch manager, as the case may be. If there is no
settlement in two (2) days, the next grievance may be
brought up to the next higher step within three (3) days in
writing and signed by the employee concerned. If no such
action is taken, the grievance shall be considered withdrawn
or decided to the satisfaction of the complainant.
Step 2. Unless settled or withdrawn in step 1, the complaint
shall be filed with the Vice-President, Human Resources
Division. This corporate official or his authorized
representatives shall take up the matter with the President
of the UNION or the latter’s authorized representative.
Decision at this step must be made within three (3) days
from date of last deliberation. If there is no settlement
made within five (5) days, the grievance may be taken up
to the next higher step within three (3) days in writing and
signed by the President of the UNION or his authorized
representatives. If no such appeal is made, the grievance
shall be considered withdrawn or decided to the satisfaction
of the complainant.
Step 3. If no decision is reached in step 2, the grievance
may be filed in writing by the employee concerned with the
President of the COMPANY or his authorized representative
who shall take up the matter with the President of the
UNION or the latter’s authorized representative. Decision at
this step must be made within three (3) days from the date
of the last deliberation.
xxx
SECTION 5. Voluntary Arbitration. – All disputes,
grievances, or matters not settled through the grievance
procedure aforementioned shall be referred to and decided,
or settled through voluntary arbitration except termination,
dismissal, suspension and unfair labor practice (ULP) cases
which, unless otherwise agreed upon by the parties, shall
be referred to compulsory arbitration.
SECTION 6. Arbitrators.- The party desiring to submit to
any dispute or controversy to arbitration shall submit a
notice in writing to the other party which shall contain the
names of the three (3) NCMB accredited arbitrators of his
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Case Digest Compilation
choice, declaring intent to submit the matter to arbitration.
Within five (5) days from receipt of the written notice, the
other party shall also submit its three (3) NCMB-accredited
arbitrators and inform in writing the opposing side of such
choice.
SECTION 7. Selection. – From the list submitted by both
parties, each party shall strike out two (2) names. The two
remaining names shall be raffled to select one who shall act
as the arbitrator.
xxx
Respondent union’s president requested for a discussion of
particular grievable issues including that involving the
health insurance provider and the issue pertaining to the
amendment to the salesmen’s incentive scheme which was
implemented by petitioner. This, grievance meetings were
conducted, however, petitioner and respondent union were
not able to reach an agreement.
According to respondent union, it expressed its desire to
submit the issues for voluntary arbitration and it even went
as far as submitting the names of three voluntary
arbitrators as provided for in the CBA. Despite this notice,
petitioner failed to submit its own nominees of voluntary
arbitrators prompting respondent union to protest such
inaction. Subsequently, respondent union instituted a
complaint for unfair labor practice before the arbitration
branch of the NLRC.
Specifically, respondent union charged petitioner with gross
violation of their CBA economic provisions stemming from
petitioner’s introduction of unilateral changes on the
salesmen’s incentive scheme and health insurance provider.
Respondent union also accused petitioner of violations of
the duty to bargain and non-observance of the CBA
provision on grievance machinery.
PETITIONER’s CONTENTION
Petitioner filed a motion to dismiss the complaint on the
sole ground of lack of jurisdiction over the subject matter.
Petitioner insisted that the issues raised by respondent
union – salesmen’s incentive scheme and the health
insurance provider - are exclusively cognizable by the
voluntary arbitrator based on Articles 217, 260, and 261 of
the Labor Code which provide:
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE
COMMISSION
(c) Cases arising from the interpretation of collective
bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies
shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitration
as may be provided in said agreements.
ART. 260. GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION
The parties to a Collective Bargaining Agreement shall
include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish
a machinery for the adjustment and resolution of
grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement
and those arising from the interpretation or enforcement of
company personnel policies.
All grievances submitted to the grievance machinery which
are not settled within seven (7) calendar days from the date
of its submission shall automatically be referred to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
voluntary arbitration prescribed in the Collective Bargaining
Agreement.
For this purpose, parties to a Collective Bargaining
Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary Arbitrators, or
include in the agreement a procedure for the selection of
such Voluntary Arbitrator or panel of Voluntary Arbitrators,
preferably from the listing of qualified Voluntary Arbitrators
duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary
Arbitrators, the Board shall designate the Voluntary
Arbitrator or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection procedure agreed upon
in the Collective Bargaining Agreement, which shall act with
the same force and effect as if the Arbitrator or panel of
Arbitrators has been selected by the parties as described
above.
ART. 261. JURISDICTION OF VOLUNTARY ARBITRATORS OR
PANEL OF VOLUNTARY ARBITRATORS
The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the
interpretation or implementation of the Collective
Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies
referred to in the immediately preceding article.
Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character, shall
no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining
Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of
such agreement.
RESPONDENT’s CONTENTION
Respondent union opposed petitioner’s motion to dismiss
arguing that as petitioner’s non-compliance with the CBA
provision on grievance procedure is raised as an issue
before the labor arbiter, it would be premature to dismiss
the case for lack of jurisdiction and that resort to labor
arbiter is permitted if recourse to the grievance machinery
would be futile. In this case, as petitioner obstinately
refused to comply with its responsibility under the CBA,
substantive justice requires the intervention of the labor
arbiter.
LABOR ARBITER
Denied petitioner’s Motion to Dismiss.
COURT OF APPEALS
Dismissed the appeal on Certiorari under Rule 65.
Issue: WON it was proper for petitioner to file an
appeal on certiorari under Rule 65 before the Court of
Appeals
Ruling: NO
Under Rule 65 of the Revised Rules of Civil Procedure, for a
certiorari proceeding to prosper, there should be a
concurrence of the essential requisites, to wit:
(a) the tribunal, board or officer exercising judicial functions
has acted without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or in excess of
jurisdiction; and
(b) there is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of law for the purpose of
annulling or modifying the proceeding.
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Case Digest Compilation
In the present case, it is undisputed that under the NLRC
rules, no appeal may be taken from an order denying a
motion to dismiss. The NLRC rule proscribing appeal from a
denial of a motion to dismiss is similar to the general rule
observed in civil procedure that an order denying a
motion to dismiss is interlocutory and, hence, not
appealable until final judgment or order is rendered.
The remedy of the aggrieved party in case of denial of the
motion to dismiss is to file an answer and interpose, as a
defense or defenses, the ground or grounds relied upon in
the motion to dismiss, proceed to trial and, in case of
adverse judgment, to elevate the entire case by appeal in
due course. In order to avail of the extraordinary writ of
certiorari, it is incumbent upon petitioner to establish that
the denial of the motion to dismiss was tainted with grave
abuse of discretion.
In labor cases, Article 223 on Appeal states:
Decisions, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter;
In Air Services Cooperative, et al. v. The Court of Appeals,
et al., a case where the jurisdiction of the labor arbiter was
put in issue and was assailed through a petition for
certiorari, prohibition and annulment of judgment before a
regional trial court, this Court had the opportunity to
expound on the nature of appeal as embodied in Article 223
of the Labor Code, thus:
While the title of the Article 223 seems to provide only for
the remedy of appeal as that term is understood in
procedural law and as distinguished from the office of
certiorari, nonetheless, a closer reading thereof reveals that
it is not as limited as understood by the petitioners. Abuse
of discretion is admittedly within the ambit of certiorari and
its grant of review thereof to the NLRC indicates the
lawmakers’ intention to broaden the meaning of appeal as
that term is used in the Code. For this reason, petitioners
cannot argue now that the NLRC is devoid of any corrective
power to rectify a supposed erroneous assumption of
jurisdiction by the Labor Arbiter.
Since the legislature had clothed the NLRC with the
appellate authority to correct a claimed erroneous
assumption of jurisdiction on the part of the labor
arbiter – a case of grave abuse of discretion - the
remedy availed of by petitioner in this case is
patently erroneous as recourse in this case is lodged,
under the law, with the NLRC.
Before a party is allowed to seek the intervention of the
court, it is a pre-condition that he should have availed of all
the means of administrative processes afforded him. Hence,
if a remedy within the administrative machinery can still be
resorted to by giving the administrative officer concerned
every opportunity to decide on a matter that comes within
his jurisdiction, then such remedy should be exhausted first
before the court’s judicial power can be sought. The
premature invocation of court’s judicial intervention is fatal
to one’s cause of action.
The underlying principle of the rule on exhaustion of
administrative remedies rests on the presumption that the
administrative agency, if afforded a complete chance to
pass upon the matter, will decide the same correctly. There
are both legal and practical reasons for the principle. The
administrative process is intended to provide less expensive
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
and more speedy solutions to disputes. Where the enabling
statute indicates a procedure for administrative review and
provides a system of administrative appeal or
reconsideration, the courts – for reasons of law, comity and
convenience – will not entertain a case unless the available
administrative remedies have been resorted to and the
appropriate authorities have been given an opportunity to
act and correct the errors committed in the administrative
forum.
Hence, the remedy then of petitioner from the order of
denial of its motion to dismiss was to submit its
position paper as ordered by the labor arbiter and
raise therein the question of supposed lack of
jurisdiction. In the event of unfavorable judgment,
petitioner could thereafter raise the case, including the
issue of jurisdiction, via appeal to the NLRC as provided for
in the Labor Code on the ground of grave abuse of
discretion amounting to lack or excess of jurisdiction.
Republic vs CIR
21 SCRA 226, September 27, 1967
Facts: The respondents were employees of the Republic
Bank (Bank) who were discharged for having written and
published “a patently libelous letter xxx tending to cause
the dishonor, discredit or contempt not only of officers and
employees of this bank, but also of your employer, the bank
itself.”
The letter referred to was a letter-charge which the
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 in
the promotion of bank employees.
[The letter is produced in full at the end of this digest]
Copies of this letter were admittedly given to the chairman
of the board of directors of the Bank, and the Governor of
the Central Bank.
Respondents filed a complaint in the Court of Industrial
Relations (CIR) alleging that the Bank's conduct violated
section 4 (a) (5) of the Industrial Peace Act which makes it
an unfair labor practice for an employer “to dismiss,
discharge or otherwise prejudice or discriminate against an
employee for having filed charges or for having given or
being about to give testimony under this Act.”
CIR: Bank is guilty of ULP. This decision was affirmed by
the court en banc.
Petitioner Bank’s Contention: Respondents were
discharged not for union activities but for having written
and published a libelous letter against the bank president.
The discharge of the respondents had nothing to do with
their union activities as the respondents in fact admitted at
the hearing that the writing of the letter-charge was not a
“union action” but merely their “individual” act.
Issues: Whether or not the dismissal of the respondents
constituted an unfair labor practice – YES
Ruling:
[1]
When the employees wrote the letter, they were
engaged in a concerted activity and interference with
which constitutes ULP
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Case Digest Compilation
In the case at bar, respondents wrote and published a letter
to the bank president, demanding his resignation on the
grounds of immorality, nepotism, favoritism and
discrimination in the appointment and promotion of bank
employees.
Assuming that they acted in their individual capacities when
they wrote the letter, they were nonetheless protected, for
they were engaged in a concerted activity, in their right of
self-organization that includes concerted activity for mutual
aid and protection, interference with which constitutes
unfair labor practice under Section 4(a)(l) of Republic Act
No. 875. The joining in protests or demands by even 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.
[2]
Complaint against nepotism, favoritism, and other
management practices is within the area of collective
bargaining
When respondents complained against nepotism,
favoritism, and other management practices, they were
acting within an area marked out by the Industrial Peace
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 them.
[3]
What the bank should have done was to refer the
letter-charge to the grievance committee
What the bank should have done was to refer the letter-
charge to the grievance committee. This was its duty,
failing which it committed an unfair labor practice under
Section 4(a)(6) of the Industrial Peace Act.
Nature of Collective Bargaining
For collective bargaining does not end with the execution of
an agreement. It is a continuous process. The duty to
bargain imposes on the parties during the term of their
agreement the mutual obligation “to meet and confer
promptly and expeditiously and in good faith x x x for the
purpose of adjusting any grievances or question arising
under such agreement” (Sec. 13, Rep. Act No. 875) and a
violation of this obligation is, by Section 4(a)(6) and (b)(3),
an unfair labor practice.
Instead of stifling criticism, the bank should have allowed
respondents to air their grievance. Good faith bargaining
required of the bank an open mind and a sincere desire to
negotiate over grievances. The grievance committee,
created in the collective bargaining agreements, would have
been an appropriate forum for such negotiation.
Nature of Grievance Procedure
The grievance procedure is a part of the continuous process
of collective bargaining. It is intended to promote, as it
were, a friendly dialogue between labor and management
as a means of maintaining industrial peace.
[4]
The right of self-organization of employees is not
unlimited
The Bank defends its action by invoking its right to
discipline for what it calls the respondents’ libel in giving
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
undue publicity to their letter-charge. To be sure, the right
of self-organization of employees is not unlimited, as the
right of an employer to discharge for a cause is undenied.
Purpose of the Industrial Peace Act
The Industrial Peace Act does not ouch the normal exercise
of the right of an employer to select his employees or to
discharge them. It is directed solely against the abuse of
that right by interfering with the countervailing right of self-
organization. But the difficulty arises in determining
whether in fact the discharges are made because of such a
separable cause or because of some other activities
engaged in by employees for the purpose of collective
bargaining.
Duty of the CIR to weigh employer’s motive
It is for the Court of Industrial Relations, in the first
instance, to make the determination, “to weigh the
employer's expressed motive in determining the effect on
the employees of management's otherwise equivocal act.”
Act does not undertake the impossible task of specifying in
precise and unmistakable language each incident which
constitutes an unfair labor practice. Rather, it leaves to the
court the work of applying its general prohibitory language
in the light of infinite combinations of events which may be
charged as violative of its terms.
[5]
Difference between the case of Royal Interocean and
Lakas ng Pagkakaisa on the one hand and this case
on the other
In Royal Interocean, the employee’s letter to the home
office, for writing which she was dismissed, complained of
the local manager’s “inconsiderate and untactful attitude”—
a grievance which, the court found, “had nothing to do with
or did not arise from her union activities.” Nor did the court
find evidence of discriminatory discharge in Lakas ng
Pagkakaisa as the letter, which the employee wrote to the
mother company in violation of the local company’s rule,
denounced “wastage of company funds.”
In contrast, the express finding of the court in this case was
that the dismissal of the respondents was made on account
of the letter they had written, in which they demanded the
resignation of the bank president for a number of reasons
touching labor-management relations—reasons which
not even the Bank’s judgment that the respondents had
committed libel could excuse it for making summary
discharges in disregard of its duty to bargain collectively.
Letter
Mr. Ramon Racelis
President, Republic S avings Bank
Manila
Dear Mr. President:
We, the undersigned, on behalf of all our members and
employees of the Republic Savings Bank, who have in
our hearts only the most Honest and sincere motive to
conserve and protect the interest of the institution and
its 200,000 depositors, do hereby, demand the much
needed resignation of His Excellency, Mr. Ramon Racelis
as President and Member of the Board of Directors of the
Bank.
Mr. President, you have already, in so many occasions,
placed the Bank on the verge of danger, that now we
deem it right and justifiable for you to leave this Bank
and let other more capable presidents continue the work
you have not well accomplished.
In the above instance, we are presenting charges which
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Case Digest Compilation
in our humble contention properly justifies incapacity on
your part to continue and assume the position as top
executive of the huge institution:
1. That you Mr. President, have tolerated and
practiced immorality in this Bank. We have been
expecting you to do something about this
malpractice which is very disgraceful and affects
the morale of the hundreds of your employees.
But so far, Mr. President, you have just let this
thing passed through. As a matter of fact, you
have even promoted these women like Misses
Pacita Mato and Edita Castro. These women are
of questionable characters, Mr. President, and
should have had no place in the Bank as
managers or even as mere employees. We know
Mr. President, because it is an open secret in
the Bank, that you have illicit relations with one
of them—Miss Edita Castro. As top officer and
as father of the employees of the Bank, you
have shown this bad example to your
employees. Mr. President, we are really
ashamed of you.
2. That you have allowed the practice of nepotism
in this Bank. You have employed relatives of
yours like Honorio Ravida; Bienvenido Ravida;
Antonio Racelis; Jesus Antonio; and Argentina
Racelis. Not only that Mr. President. You have
also given those nieces and nephews of yours
good positions at the expense of the more
capable employees. Mr. President, if we have to
mention all of them, one page will not be
enough.
3. With regards to promotion, you have given
more preferences to your close relatives. When
the Bank advocated the sending of pensionados
to States, you have only limited your choice
among your nieces, nephews, and querida,
namely, Miss Argentina Racelis, Mr. Jesus
Antonio, Miss Edita Castro, and her brother-
inlaw, Mr. Pedro Garcia, Jr. In doing this, Mr.
President, you have only lowered the reputation
and standing of the Republic Savings Bank.
There is really no sense in sending high school
and B.S.E. graduates to States to study
advanced banking. Because of this silly decision,
it took one pensionado six months and cost the
Bank a total of P10,000.00 just to study
Christmas savings. That subject is very simple;
one need not go to States to study savings; that
you know full well, Mr. President. The reason
why you sent Miss Castro to States was because
you were also there. Are we not right?
4. That you Mr. President, tolerated and still
tolerating grave dishonesty in this Bank as
evidenced by the following irregularities and
anomalies;
a. In one of our branches, around
P200,000.00 was mulcted and embezzled
by a certain Maximo Donado by doctoring
the ledgers and records of that particular
office. To the present, the amount is still
increasing and some more are being dug
up from the records everyday ever since
its discovery in February 1957. In this case
you dismissed Mr. M. Donado,
immediately. But this was all that you did.
If you have to go back to the history of the
case, you will find out that your beloved
nieces and nephews are also involved
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
having been managers of that particular
office. Another nephew, the Vice President-
Operations, then Vice President, Personnel,
was also involved for valid reasons that he
did not even shift this particular employee
to other branches or departments since the
beginning when it has been the policy of
the Bank to reshuffle its personnel. If you
want to know why your good nephew did
not transfer this employee, we will tell you.
'Your good nephew has eaten too many
baskets of delicious alimango.' Mr.
President, if there is someone to be
blamed in this particular case, it is your
good nephews and nieces for their gross
negligence.
b. Aside from the one mentioned above, we
have also Mr. Rodolfo Francisco, who in
April 1955, maliciously withdraw (sic)
P970.00 in two withdrawal slips from the
account of one depositor in one of our
provincial offices, inserting his name as co-
depositor in the savings account ledger.
c. In January 1958, Mr. Jose de los Santos
expended and approved representation
expense in the amount of P300.00 in one
of our provincial offices,
d. Mr. Federico M. Dabu, the ex-cashier and
now Personnel Manager, incurred a
shortage in the amount of Pl,240.00 in the
course of the audit on August 3, 1954.
e. Mr. Jose S. Guevara, Vice-President on
Personnel have (sic) been accepting bribe
moneys. One of these amounts to
P4,000.00 which was delivered by a
messenger sometime during the last
quarter of 1957.
Mr. President, the anomalies are only a partial list of the
irregularities which so far you have not acted upon. This
type of people should have been fired out from the Bank;
yet on the contrary, you promoted them to higher and
responsible positions, thus, resulting in the
demoralization of the more capable employees.
Mr. President, we hope that you have still a little sense of
decency and propriety left. So, for goodsake and for the
welfare of the Bank, DO RESIGN NOW as President and
as Member of the Board of Directors of the Republic
Savings Bank.
Very respectfully yours,
(Sgd.) Respodents
Caltex Refinery vs Hon. Jose Brillantes
GR No. 123782, September 16, 1997
Doctrine: Unless shown to be clearly whimsical, capricious
or arbitrary, the orders or resolutions of the secretary of
labor and employment resolving conflicts on what should be
the contents of a CBA will be respected by this Court.
Oftentimes, such orders and resolutions are grounded
largely on what is possible, fair and reasonable under the
peculiar circumstances of each case.
No particular setup for a grievance machinery is mandated
by law. Article 260 of the Labor Code, as incorporated by
RA 6715, provides for only a single grievance machinery in
86
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Case Digest Compilation
the company to settle problems arising from interpretation
or implementation of their collective bargaining agreement
and those arising from the interpretation of enforcement of
company personnel policies.
Facts: Anticipating the expiration of their CBA on July 31,
1995, petitioner Caltex Refinery Employees Association
(CREA) and private respondent Caltex Philippines, Inc.
negotiated, with the participation of the NCMB and the
Office of the SOLE, the terms and conditions of employment
to be contained in a new CBA. Some items were amicably
arrived upon, others were left unresolved.
To settle the unresolved issues, eight meetings were held,
but none were successful, prompting the CREA to declare a
deadlock and file a notice of strike. Six (6) further
conciliation meetings conducted by the NCMB were likewise
unavailing, as were various meetings at the plant level.
During a strike vote on Aug. 16, 1995, the members of
CREA opted for a walkout. Caltex thus filed with the DOLE a
petition for assumption of jurisdiction pursuant to Art.
263(g) of the Labor Code.
DOLE: Assumed jurisdiction “over the entire labor dispute
at Caltex Philippines Inc.,” and ordered “Accordingly, any
strike or lockout, whether actual or intended, is hereby
enjoined.” The parties are further directed to cease and
desist from committeing any and all acts which might
exacerbate the situation.
CREA defied the Order and began to strike and picket the
premises of Caltex. Thereafter, several company notices
directing the employees to return to work were issued, but
likewise it was defied.
During the course of the strike, DOLE Undersecretary
Bienvenido Laguesma interceded and conducted several
conciliation meetings, during which he was able to convince
the CREA members to return to work and enter into a
memorandum of agreement with Caltex. The picket lines
were finally lifted on September 9, 1995, though both
parties filed position papers on unresolved issues.
Because of the strike, Caltex terminated the employment of
some officers of CREA. The legality of these dismissals
brought additional contentious issues.
Again, the parties tried to resolve their differences throught
conciliation. Failing to come to any substantial agreement,
the parties stopped further negotiation and, on September
13, 1995, decided to refer the problem to the secretary of
labor and employment.
SOLE: Issued three orders disposing of the motions for
reconsideration/clarification of both parties.
Dissatisfied with these Orders, CREA sought remedy from
this Court.
Issue: Whether or not the procedure described by the
SOLE sufficiently complies with the minimum requirement
of the law . – YES.
SOLE’S CONTESTED RESOLUTION ON “GRIEVANCE
AND ARBITRATION MACHINERIES”
Seventh, we are constrained to take a closer look
at the existing procedure concerning grievance in
relation to the modifications being proposed by the
Union. In this regard, we affirm our resolution to
shorten the periods to process/resolve grievances
based on existing practice from (45) days to (30)
days at the first step and (10) days to seven (7)
days at the second step which is the level of the VP
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
for Manufacturing. We further reviewed the steps
through which a grievance may be processed and
in line with the principle to expedite the early
resolution of grievances, we find that the
establishment of a joint Council as an additional
step in the grievance procedure, may only serve to
protract the proceeding and, therefore, no longer
necessary. Instead, the unresolved grievance, if,
not settled within (7) days at the level of the VP
for Manufacturing, shall automatically be referred
by both parties to voluntary arbitration in
accordance with R.A. 6715. As to the number of
Arbitrators for which the Union proposes to employ
only one instead of a panel of three Arbitrators, we
find it best to leave the matter to the agreement of
both parties. Finally, we hereby advise the parties
that the list of accredited voluntary arbitrators is
now being maintained and disseminated by the
National Conciliation and Mediation Board and no
longer by the Bureau of Labor Relations.
CREA’S CONTENTION
Petitioner contends that public respondent "derailed the
grievance and arbitration scheme proposed by the Union."
Petitioner argues that the proposed "Grievance Settlement
Council" is intended to "supplement the effort of the Vice
President for Manufacturing in reviewing the grievance
elevated to him, so that instead of acting alone . . . he will
be obliged to convoke a conference of the Council to afford
the grievant a thorough hearing." Petitioner's
recommendation for a "single arbitrator is based on the
proposition that if voluntary arbitration should be resorted
to at all, this recourse should entail the least possible
expense."
CALTEX PHILS.’ CONTENTION
Private respondent counters that the disposition on the
grievance machinery is likewise "fair and reasonable under
the circumstances and in fact was merely a reiteration of
the (u)nion's position during the conciliation meetings
conducted by Undersecretary Bienvenido Laguesma."
Ruling: No particular setup for a grievance machinery is
mandated by law. Rather, Article 260 of the Labor Code, as
incorporated by RA 6715, provides for only a single
grievance machinery in the company to settle problems
arising from "interpretation or implementation of their
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel
policies." Article 260, as amended, reads:
Art. 260.Grievance Machinery and Voluntary
Arbitration. The parties to a Collective Bargaining
Agreement shall include therein provisions that will
ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising
from the interpretation or implementation of their
Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company
personnel policies.
All grievances submitted to the grievance
machinery which are not settled within seven (7)
calendar days from the date of its submission shall
automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining
Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, or include in the agreement a
procedure for the selection of such Voluntary
Arbitrator or panel of Voluntary Arbitrators,
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Case Digest Compilation
preferably from the listing of qualified Voluntary
Arbitrators duly accredited by the Board. In case
the parties fail to select a Voluntary Arbitrator or
panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of
Voluntary Arbitrators, as may be necessary,
pursuant to the selection procedure agreed upon in
the Collective Bargaining Agreement, which shall
act with same force and effect as if the Arbitrator
or panel of Arbitrators has been selected by the
parties as described above.
We believe that the procedure described by public
respondent sufficiently complies with the minimum
requirement of the law. Public respondent even provided
for two steps in hearing grievances prior to their referral to
arbitration. The parties will decide on the number of
arbitrators who may hear a dispute only when the need for
it arises. Even the law itself does not specify the number of
arbitrators. Their alternatives — whether to have one or
three arbitrators — have their respective advantages and
disadvantages. In this matter, cost is not the only
consideration; full deliberation on the issues is another, and
it is best accomplished in a hearing conducted by three
arbitrators. In effect, the parties are afforded the latitude to
decide for themselves the composition of the grievance
machinery as they find appropriate to a particular situation.
At bottom, we cannot really impute grave abuse of
discretion to public respondent on this issue.
OTHER ISSUES IN THE CASE
AS TO WAGE INCREASE:
SOLE’S RESOLUTION:
First, on the matter of wages, we find no
compelling reasons to alter or modify our award
after having sufficiently passed upon the same
arguments raised by both parties in our previous
Order. The subsequent agreement on a package of
wage increases at Shell Company, adverted to by
the Union as the usual yardstick for purposes of
developing its own package of improved wage
increases, would not be sufficient basis to grant
the same increases to the Union members herein
considering that other factors, among which is
employment size, were carefully taken into
account. While it is true that inflation has direct
impact on wage increases, it is not quite accurate
to state that inflation "as of September 1995" is
already registered at 11.8%. The truth of the
matter is that the average inflation for the first ten
(10) months was only 7.496% and Central Bank
projections indicate that it will take a 13.5%
inflation for November and December to record an
average inflation of 8.5% for the year. We,
therefore, maintain the reasonableness of the
package of wage increases that we awarded.
CREA’S CONTENTION:
Petitioner belittles the awarded increases. It insists that the
increase should be ruled on the basis of four factors: "(a)
the economic needs of the [u]nion's members; (b) the
[c]ompany's financial capacity; (c) the bargaining history
between the [u]nion and the [c]ompany; and (d) the
traditional parity in wages between Caltex and Shell
Refinery Employees."
Petitioner contends that the "inflation rate rose to 11.8% in
September [1995], rose further in October, and is still a
double-digit figure at the time of this writing." Therefore,
public respondent's so-called "improved benefits" are in
reality "retrogressive."
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
Petitioner tries to show private respondent's "immense
financial capacity" by citing Caltex's "Banaba Housing Up-
grading" which would cost "not less than P200,000,000.00"
Petitioner does "not begrudge" private respondent's
"pampering of its [r]efinery [m]anagers and supervisors,"
but asks that the rank and file employees be "not left too
far behind."
Petitioner maintains that the salaries of Shell Refinery
employees be used as a "reference point" in upgrading the
compensation of private respondent's employees because
these two companies are in the "same industry and their
refineries are both in Batangas." Thus, the wage increase of
petitioner's members should be "15%/15%/15%."
CALTEX PHILS.’ CONTENTION:
Private respondent counters with a "proposed 9% 7% 7%
increase for the same period with automatic adjustment
should the increase fall short of the inflation rate." Hence,
the Secretary's award of "14% 14% 13%" increase really
comes "closer to the Union's position."
SUPREME COURT:
Petitioner's arguments fail to impress us. First, the matter
of inflation rate was clearly addressed in public respondent's
Order dated November 21, 1995. Contrary to petitioners
undocumented claim of 11.8% inflation in September of
1995, the "truth of the matter is that the average inflation
for the first ten (10) months was only 7.496%, and Central
Bank projections indicate that it will take a 13.5% inflation
for November and December to record an average inflation
of 8.5% for the year." Second, private respondent's
financial capacity has been insufficiently explained in its
Comment dated April 16, 1996 in which it stated that the
Banaba "upgrading" should not be construed as a yardstick
of its financial standing.
Such reasoning convinces us that such upgrading should
not be equated with private respondent's financial capacity
to pay the proposed wage increase, but should be evaluated
as a business judgment "to survive and remain globally
competitive." We believe that the standard proof of a
company's financial standing is its financial statements duly
audited by independent and credible external auditors.
Third, the traditional parity in wages used by petitioner to
justify its proposal is flimsy and trivial. Aside from its bare
allegation of "similarity" in salaries and locations, petitioner
did not proffer any substantial reason to impute grave
abuse of discretion on the part of the public respondent. On
the other hand, we find private respondent's discussion of
this matter reasonable.
The alleged "similarity" in the situation of Caltex and Shell
cannot be considered a valid ground for a demand of wage
increase, in the absence of a showing that the two
companies are also similar in "substantial aspects," as
discussed above. Private respondent is merely asking that
an employee should be paid on the basis of work done. If
such employee is absent on a certain day, he should not, as
a rule, be paid wages for that day. And if the employee has
worked only for a portion of a day, he is not entitled to the
pay corresponding to a full day. A contrary precept would
ultimately result in the financial ruin of the employer. The
age-old general rule governing relations between labor and
capital, or management and employee, is "a fair day's wage
for a fair day's work." If no work is performed by the
employee, there can be no wage or pay unless, of course,
the laborer was ready, willing and able to work but was
locked out, dismissed, suspended or otherwise illegally
prevented from working. True, union members have the
right to demand wage increases through their collective
force; but it is equally cogent that they should also be able
to justify an appreciable increase in wages. We observe that
private respondent's detailed allegations on productivity are
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Case Digest Compilation
unrebutted. It is noteworthy that petitioner ignored this
argument of private respondent and based its demand for
wage increase not on the ground that they were as
productive as the Shell employees. Thus, we cannot
attribute grave abuse of discretion to public respondent.
AS TO UNION SECURITY CLAUSE:
SOLE’S RESOLUTION:
(Sections 1 and 2 of Article III of the CBA, which provide
for the union security clause, are sought to be amended by
the Union)
The proposed amendment of the Union gives the same
substantial effect as the existing provision. Rather, the
same tackles more on procedure which, to our belief, is
already sufficiently provided under its constitution and by-
laws. Insofar as Union security is concerned, this is
sufficiently addressed by the present provisions in the CBA.
Hence, we find we are not competent to arbitrarily
incorporate any modification thereof. We are convinced that
any amendment on this matter should be a product of
mutual concern and agreement.
CREA’S CONTENTION:
Petitioner contends that the foregoing disposition leaving to
the parties the decision on the union security clause issue is
"contrary to the whole idea of assumption of jurisdiction."
Petitioner argues that in spite of the provisions on the
"union security clause," it may expel a member only on any
of three grounds: non-payment of dues, subversion, or
conviction for a crime involving moral turpitude. If the
employee's act does not constitute any of these three
grounds, the member would continue to be employed by
private respondent. Thus, the disagreement between
petitioner and private respondent on this issue is not only
"procedural" but also "substantial."
CALTEX PHILS.’ CONTENTION:
Private respondent argues that nothing prevents petitioner
from expelling its members; however, termination of
employment should be based only on these three grounds
agreed upon in the existing CBA. Further, private
respondent explains that petitioner's citation of Article 249
(a) of the Labor Code is out of context. It adds that the
cited section provides only for the right of a union to
prescribe its own rules with respect to the acquisition and
retention of membership, and that upholding the arguments
of petitioner would make the private respondent a
policeman of the union.
SUPREME COURT:
We agree with petitioner. The disagreement between
petitioner and private respondent on the union security
clause should have been definitively resolved by public
respondent. The labor secretary should take cognizance of
an issue which is not merely incidental to but essentially
involved in the labor dispute itself, or which is otherwise
submitted to him for resolution. In this case, the parties
have submitted the issue of the union security clause for
public respondent's disposition. But the secretary of labor
has given no valid reason for avoiding the said issue; he
merely points out that this issue is a procedural matter.
Such vacillation clearly sidesteps the nature of the union
security clause as one intended to strengthen the
contracting union and to protect it from the fickleness or
perfidy of its own members. Without such safeguard, group
solidarity becomes uncertain; the union becomes gradually
weakened and increasingly vulnerable to company
machinations. In this security clause lies the strength of the
union during the enforcement of the collective bargaining
agreement. It is this clause that provides labor with
substantial power in collective bargaining. The secretary of
labor assumed jurisdiction over this labor dispute in an
industry indispensable to national interest, precisely to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
settle once and for all the disputes over which he has
jurisdiction at his level. In not performing his duty, the
secretary of labor committed a grave abuse of discretion.
AS TO NEW RETIREMENT PLAN
SOLE’S RESOLUTION:
Third, the matter of retirement benefits deserves a second
look considering that the concerned employees were
already previously granted the option to choose between
the old and the new plan at the time the latter was initiated
and they chose to be covered under the Old Plan. To accede
to the Union's demand to cover them under the new plan
entails a different arrangement under a new scheme and
likewise requires the approval of a Board of Trustees. It is,
therefore, understood that the new Retirement Plan does
not apply to the more or less 40 employees being sought by
the Union to be covered under the New Plan.
CREA’S CONTENTION:
Petitioner contends that "40 of its members who are still
covered by the Old Retirement Plan because they were not
able to exercise the option to shift to the New Retirement
Plan, for one reason or another, when such option was
given in the past" are included in the New Retirement Plan.
Petitioner argues that the exclusion of forty employees from
the New Plan constitutes grave abuse of discretion for three
reasons. First, "it is a case of the left hand taking away, so
to speak, what the right hand had given." Second, the
change "was done for a very shallow reason." The new
scheme was no longer new, "as the New Retirement Plan
had been in place for at least two years." Third, in not
applying the New Retirement Plan to the 40 employees,
public respondent was perpetrating his department's
discriminatory practice.
CALTEX PHILS.’ CONTENTION:
Private respondent counters that "these 40 or so employees
have opted to remain covered by the old plan despite
opportunities given them in 1985 to shift to the New Plan."
SUPREME COURT:
We hold that public respondent did not commit grave abuse
of discretion in respecting the free and voluntary decision of
the employees in regard to the Provident Plan and the
irrevocable one-time option provided for in the New
Retirement Plan. Although the union has every right to
represent its members in the negotiation regarding the
terms and conditions of their employment, it cannot negate
their wishes on matters which are purely personal and
individual to them. In this case, the forty employees freely
opted to be covered by the Old Plan; their decision should
be respected. The company gave them every opportunity to
choose, and they voluntarily exercised their choice. The
union cannot pretend to know better; it cannot impose its
will on them.
AS TO THE SIGNING BONUS
SOLE’S CONTENTION:
Fifth, specifically on the issue of whether the signing bonus
is covered under the "maintenance of existing benefits"
clause, we find that a clarification is indeed imperative.
Despite the expressed provision for a signing bonus in the
previous CBA, we uphold the principle that the award for a
signing bonus should partake the nature of an incentive and
premium for peaceful negotiations and amicable resolution
of disputes which apparently are not present in the instant
case. Thus, we are constrained to rule that the award of
signing bonus is not covered by the "maintenance of
existing benefits" clause.
CREA’S CONTENTION:
Petitioner asseverates that the "signing bonus is an existing
benefit embodied in the old CBA." It explains that public
respondent erred in removing the award of a signing bonus
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Case Digest Compilation
which is "given not only as an incentive for peaceful
negotiations and amicable settlement of disputes but also
as an extra award to the workers following the settlement
of a CBA dispute by whatever means."
CALTEX PHILS.’:
Private respondent disagrees, contending that a signing
bonus is not awarded when CBA negotiations "result in a
strike." There are two reasons therefor: First, "the grant of
a signing bonus is a matter of discretion and cannot be
demanded as a matter of right;" and second the signing
bonus is meant as an incentive for a peaceful negotiation.
Once these negotiations result in a strike, an illegal one at
that, the basis or rationale for such an award is lost."
SUPREME COURT:
A signing bonus is not a benefit which may be demanded
under the law. Rather, it is now claimed by petitioner under
the principle of "maintenance of existing benefits" of the old
CBA. However, as clearly explained by private respondent,
a signing bonus may not be demanded as a matter of right.
If it is not agreed upon by the parties or unilaterally offered
as an additional incentive by private respondent, the
condition for awarding it must be duly satisfied. In the
present case, the condition sine qua non for its grant — a
non-strike — was not complied with. In fact, private
respondent categorically sated in its counter-proposal — to
the exclusion of those agreed upon before — that the new
collective bargaining agreement would constitute the only
agreement between the parties, as follows:
Sec. 4. Scope of Agreement. — The terms and
conditions of employment of the employees within
the appropriate bargaining unit are embodied in
this Agreement. On the other hand, all such
benefits which are not expressly provided for in
this Agreement, but which are now being
accorded, may in the future be accorded, or might
have been previously accorded to employees, by
the COMPANY shall be deemed as purely
discretionary or pure acts of grace and
magnanimity on the part of the COMPANY in each
particular case, and the continuance or repetition
thereof now or in the future, no matter how long
or how often, shall not be construed as
establishing a right for the employee and/or
obligation on the part of the COMPANY.
This provision on the scope of the agreement is further
buttressed by the clause on waiver:
The parties acknowledge that during the
negotiations which resulted in the execution of this
Agreement, each of them had the unlimited
opportunity to make demands and proposals with
respect to any and all subjects and matters proper
for collective bargaining and not prohibited by law;
and the parties further acknowledge that the
understandings and agreements arrived at by
them after the exercise of that right and unlimited
opportunity are fully set forth in this Agreement.
Therefore, the COMPANY and the UNION during
the life of this Agreement, each voluntarily and
unqualifiedly waives the right and each agrees that
the other shall not be obligated to bargain
collectively with respect to any subject or matter
referred to or covered in this Agreement or with
respect to any subject or matter not specifically
referred to or covered in this Agreement even
though such subject or matter may not have been
within the knowledge or contemplation of either or
both parties at the time they negotiated or signed
this Agreement.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
AS TO GRAVE ABUSE OF DISCRETION BY THE SOLE
SUPREME COURT:
Other than his failure to rule on the issue of union security,
the secretary of labor cannot be indicted for grave abuse of
discretion amounting to want or excess of jurisdiction.
Basically, there is grave abuse of discretion
amounting to lack of jurisdiction where the
respondent board, tribunal or officer exercising
judicial functions exercised its judgment in a
capricious, whimsical, arbitrary or despotic
manner. However, it has also been said that grave
abuse is committed when "the lower court acted
capriciously, and whimsically or the petitioner's
contention appears td be clearly tenable or the
broader interest of justice or public policy [so]
require . . . ." Also, grave abuse of discretion is
committed when the board, tribunal or officer
exercising judicial function fails to consider
evidence adduced by the parties.
In Saballa vs. National Labor Relations Commission, we
ruled on how a decision of an administrative body must be
drawn:
The Court has previously held that judges and
arbiters should draw up their decisions and
resolutions with due care, and make certain that
they truly and accurately reflect their conclusions
and their final dispositions. . . . The same thing
goes for the findings of fact made by the NLRC, as
it is a settled rule that such findings are entitled to
great respect and even finality when supported by
substantial evidence, otherwise, they shall be
struck down for being whimsical and capricious and
arrived at with grave abuse of discretion. It is a
requirement of due process and fair play that the
parties to a litigation be informed of how it was
decided, with an explanation of the factual and
legal reasons that led to the conclusions of the
court. A decision that does not clearly and
distinctly state the facts and the law of which it is
based leaves the parties in the dark as to how it
was reached and is especially prejudicial to the
losing party, who is unable to pinpoint the possible
errors of the court for review by a higher tribunal.
In the present case, the foregoing requirement has been
sufficiently met. Petitioner's claim of grave abuse of
discretion is anchored on the simple fact that public
respondent adopted largely the proposals of private
respondent. It should be understood that bargaining is not
equivalent to an adversarial litigation where rights and
obligations are delineated and remedies applied. It is simply
a process of finding a reasonable solution to a conflict and
harmonizing opposite positions into a fair and reasonable
compromise. When parties agree to submit unresolved
issues to the secretary of labor for his resolution, they
should not expect their positions to be adopted in toto. It is
understood that they defer to his wisdom and objectivity in
insuring industrial peace. And unless they can clearly
demonstrate bias, arbitrariness, capriciousness or personal
hostility on the part of such public officer, the Court will not
interfere or substitute the said officer's judgment with its
own. In this case, it is possible that this Court, or some its
members at least, may even agree with the wisdom of
petitioner's claims. But unless grave abuse of discretion is
cogently shown, this Court will refrain from using its
extraordinary power of certiorari to strike down decisions
and orders of quasi-judicial officers specially tasked by law
to settle administrative questions and disputes. This is
particularly true in the resolution of controversies in
collective bargaining agreements where the question is
rarely one of legal right or wrong — nay, of black and white
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Case Digest Compilation

— but one of wisdom, cogency and compromise as to what petition with the Court of Industrial Relations for
is possible, fair and reasonable under the circumstances. certification election to determine the issue of
union representation of the Shipowners’ workers,
and if we, the USUP, will be the one certified, we
UNITED SEAMEN’S UNION OF THE PHILIPPINES v. will commence to bargain with Shipowner’s
DAVAO SHIPOWNERS ASSOCIATION, et. al. Association after the said contract shall be expired;
G.R. L-18778 & L-18779 | August 31, 1967
"E. We, the Davao Shipowner’s Association gladly
FACTS: give our conformity to the agreement of both
On August 4, 1959, petitioner United Seamen’s Union parties to observe and preserve the status quo on
of the Philippines (USUP) presented a set of demands to the above mentioned contract’s operation and the
respondent Davao Shipowners Association (Shipowners) commitment of the USUP to have the CIR
representing respondent shipping companies, for union determine the issue of union representation."
recognition, union security, standardization of wages, and
USUP’s petition for CE
other benefits.
As stipulated, USUP filed with the Court of Industrial
Relations a petition for certification election to
In its answer, the shipowners invited USUP’s attention to
determine the sole collective bargaining representative of
the existence of a collective bargaining agreement with
all the workers and employees of respondent shipping
the Davao Marine Association (Association), to which all
companies.
the crewmen of their launches belonged.
Notices of termination and strike
Since the Shipowners were bound by said collective
Meanwhile, subsequent to the covenant of August 20, the
bargaining agreement until the end of that year (1959), it
respondent shipping companies separately served notices
suggested that USUP first take the necessary steps to be
of termination of service upon sixty-four (64)
certified as the collective bargaining agent of the employees
employees, effective December 31, 1959, for reasons
before they could negotiate in connection with its proposals.
ranging from stoppage of operations due to the death of a
partner to business losses and reversals.
However, even before receiving the Shipowners’ answer to
its set of demands, USUP had filed with Regional Office No.
Because of these notices of termination of service upon
8 of the Department of Labor of Davao City a notice of
USUP members (who, admittedly, were also members of
strike against all the individual shipowners. The Chief of
the Association), USUP reported the matter to Regional
the Labor Operations Section of the Davao Regional Office
Office No. 8 of the Department of Labor in Davao City and
requested USUP and the Shipowners to a conference with a
requested at the same time the assistance of said office.
view to settling the conflict.
The Regional Office thereupon called the parties to a
Agreement/Covenant
conference, but apparently it did not do much good, for in a
On August 20, 1959 the USUP, the Shipowners, and the
letter dated December 29, 1959 USUP formally notified the
Association reached an agreement and executed the
Regional Office, Department of Labor, the City Mayor of
following covenant:
Davao, the Chief of Police, the Philippine Constabulary, the
Bureau of Customs and the general public that they would
"A. We, the undersigned representatives of the
declare a strike on January 1, 1960.
United Seamen’s Union of the Philippines
(USUP) hereby withdraw the notice to strike
On February 11, 1960 the respondent shipping companies
against any and all members of the group
filed a petition for a writ of injunction (Case No. 3-INJ-DB)
known as the Davao Shipowners Association
with the court a quo, alleging that a restraining order was
that we filed on or about August 6, 1959;
necessary "to forestall substantial and irreparable damage
to now respondents’ properties and public weal," citing
"B. We, the USUP, further undertake to preserve
specific acts of coercion, violence and illegal picketing being
and observe the status quo with reference to the
committed by now petitioners.
normal and original operation practices of loading,
unloading, departures, manning and the
On February 24, 1960 USUP filed an unfair labor practice
performance of any and/or all jobs incident to the
case against herein respondents (Case No. 49-ULP-DB).
businesses of the members of the said Shipowners’
Association here in Davao City and in the outports
USUP’s contention: It alleges that "while its petition for
of Davao province which are their ports of call or
certification election is still pending consideration before
may travel to and conduct their businesses;
this Honorable Court, respondents herein by their
respective officers interfered with and have been
"C. We, the Davao Marine Association, hereby
interfering with their employees’ guaranteed right to
undertake to cooperate with the Davao
self-organization and discriminated and have been
Shipowners’ Association and the USUP in the
discriminating against the respective employees, who
observation and preservation of such practices and
are members of the complainant, in regard to hire or tenure
conduct of the Shipowners’ businesses, and in view
of office or condition of employment in order to deter
of this covenant will with draw our complaint
organizational activity amongst employees, to induce those
against the USUP, its officers, agents and other
already organized to drop from the rank, disrupt union
representatives which is now Civil Case No. 3106
morale and ultimately to break up the complainant union . .
before Branch 1 of the Davao Court of First
."
Instance;
The unfair labor case was apparently predicated upon
"D. That the USUP hereby announces and
the dismissal of the USUP members from
binds itself that it will respect the contract
employment. The petition then proceeded to enumerate
between the Davao Shipowner’s Association
the various acts of respondents which were claimed to be
and the Davao Marine Association until its
violations of section 4(a), sub-sections (1), (2) and (4) of
expiry date and will not in any manner cause the
Republic Act 875.
same to be impaired or disturbed, but will file a
91
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
 Labor Relations
Case Digest Compilation
After the respondent companies had filed their respective
answers, the petition for injunction filed by the Shipowners
and the unfair labor case filed by the USUP were heard and
tried jointly.
CIR: It dismissed the USUP complaint for unfair labor
practice against the respondent Shipowners (Case No. 49-
ULP-DB).
The strike declared on December 31, 1959 is held illegal
and unjustified, thus dismissal of all the active participants
thereof is hereby decreed. And as a consequence thereof,
permanent injunction is hereby granted.
ISSUE:
Whether or not the strike staged by the members of the
USUP was unjustified and illegal. – YES.
RULING:
The court aquo found that the strike staged by the USUP
and the subsequent unfair labor practice case it filed
against the respondent companies were the culmination of
a series of drastic moves designed to compel
respondents to recognize USUP as the employees’
collective bargaining agent to the exclusion of the
Association with whom the Shipowners had an existing
collective bargaining agreement.
In other words, they were the direct offshoot of a losing
effort to have the USUP recognized as the sole
collective bargaining agent of the employees, an effort
which suffered legal infirmities from its inception.
Circumstances that support the finding
A number of circumstances strongly support this finding:
[1]
It must be noted that USUP filed its Notice of Strike
even before it received the Shipowners’ answer to its
set of demands. It seems that regardless of whether the
Shipowners would be willing to negotiate with USUP or not,
USUP was already predisposed to go on with the strike.
There could only be one reason for USUP to anticipate the
Shipowners’ negative stand: USUP was aware of the
existence of a valid collective bargaining agreement
between the Shipowners and the Association which would
operate as a legal bar for the Shipowners to entertain
USUP’s demands.
Knowing as it did that its demands could not be entertained
by the Shipowners, USUP at that early stage could not have
had any legitimate excuse for seeking recognition as the
sole collective bargaining agent of the employees.
[2]
In open contravention of the August 20 covenant, USUP
completely disturbed and impaired the status quo by
going on strike pending resolution of its petition for
certification election. That status quo referred expressly
"to the normal and original operating practices of loading,
unloading departures, manning, and the performance of
any and/or all jobs incident to the businesses of the
members of the said Shipowners Association."
By striking, USUP had impaired or disturbed the
existing collective bargaining agreement between the
Shipowners and the Association which recognized "the
right of the Employer to hire, promote and transfer and for
legal cause suspend, lay-off or discharge employees subject
to the right of the union (referring to the association) to
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
notification and to ask reconsideration of any action of the
Employer in the premises."
It should be remembered in this connection that those who
took part in the strike and picketing were also members of
the Association and hence were bound by the collective
bargaining agreement.
Contention: In seeking to justify their action, USUP asserts
that the strike it staged was a matter of "self-defense"
and/or "union survival," claiming that the respondent
shipping companies were the first to violate the covenant to
preserve and observe the status quo by a concerted action
in sending out notices of dismissal or separation, all
effective December 31, 1959 to the 64 USUP members.
It is at least doubtful that the Shipowners could have
violated the covenant of August 20 for the simple
reason that it was not an active nor a principal party
thereto. As the court a quo observed:
"Perusal of the covenant of August 20, 1959
evidently shows that the fulfillment of all the
commitments and faithful observance of all the
terms thereof fall upon the United Seamen’s Union
of the Philippines (USUP) and the Davao Marine
Association, who are the active and principal
parties thereto .. the Davao Shipowners
Association never made any specific and
categorical commitment except to, in the language
of the covenant, ‘gladly give our conformity to the
agreement of both parties to observe and preserve
the status quo on the above-mentioned contract’s
operation and the commitment of the USUP to
have the CIR determine the issue of union
representation,’ In effect, the covenant is bilateral
and not tripartite. It imposes no definite
binding obligation to the Shipowners. The
burden lies heavily upon the USUP . . ."
Even assuming arguendo that the shipping companies were
also bound by the covenant, still the termination of
services of the affected employees could not be
considered a violation of the covenant. Sustained by
the court a quo, in specific cases, was the companies’
contention that the dismissals made were predicated on
legitimate reasons. [See end of this digest]
[3] ★
The existence of a collective bargaining agreement
should have been sufficient to deter USUP from acts
tending to force the issue of union recognition.
The pertinent provisions of said agreement read:
"VI — GRIEVANCE AND HEARING COMMITTEE
"A ‘Grievance Committee’ shall be created,
composed of three (3) members of the UNION, one
of whom shall be in the service of the EMPLOYER,
the names of whom shall be furnished to the said
employer. All grievance of UNION members in the
service of the EMPLOYER shall be coursed through
the aforementioned grievance committee, which
shall take up the same with a ‘Hearing Committee’
composed of three members to be chosen by the
EMPLOYER.
"Any grievance or dispute which cannot be settled
by a conference of both grievance and hearing
committees, shall be referred to the Court of
Industrial Relations or any other Court of
competent jurisdiction for final determination.
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Case Digest Compilation
Pending such determination it is agreed by the
parties that no strike, slow down of work or
lockout shall be declared by either the UNION or
the EMPLOYER."
Undoubtedly, the parties adopted a graduated
procedure in the settlement of their labor disputes
because of their desire to maintain harmonious
relations and prevent as much as possible as possible
the declaration of a strike, which in the last analysis
works adversely to both capital and labor.
The employees concerned who after all were bound
by the collective bargaining agreement, as members
of the Association, totally disregarded the procedure
laid down therein by immediately going on strike
without coursing their complaints through the
grievance committee for possible settlement.
Having failed to take advantage of a legal right granted
them under the agreement, they are in no position to
demand relief from the consequences of their own
impulsive acts.
Rule: "The authorities are numerous which hold that strikes
held in violation of the terms contained in a collective
bargaining agreement are illegal, especially when they
provide for conclusive arbitration clauses. These
agreements must be strictly adhered to and respected if
their ends have to be achieved." (Liberal Labor Union v.
Phil. Can. Co., 91 Phil. 72, 78).
In this case: The unlicensed crew-members contravened
the collective bargaining agreement not because they
affiliated with the USUP but because they were remiss in
complying with their obligations and duties as members of
the Association, the employees’ collective bargaining
representative.
[Fourth]
Even assuming again that the purpose for which the
strike was staged was valid, still the fact remains that
the means employed were far from legitimate.
There were several acts of threats, intimidation, coercion
and invasion of shipowners’ property rights. To cite some:
 Some 300 strikers formed a human cordon
alongside the Sta. Ana wharf and blocked all ways
and approaches to the launches and vessels of
Petitioners.
 The loading and unloading of some boats of the
Petitioners, then docked at the Sta. Ana wharf,
were obstructed by the strikers, not only by the
employment of human fence but also by acts of
violence and coercion. At the inception of the
strike, some boats were already loaded with
punishable commodities destined for the gulf and
coastal towns of Davao, which departure was also
rendered impossible due to the impregnability of
the human wall placed by the strikers blocking the
egress and ingress to the said vessels.
 The strikers, thru force and coercion, took
possession of the Shipowners’ vessels on several
occasions.
 The strikers not only shouted slanderous and
scurrilous words against the owner of the vessels
but also hurled threatening remarks at the non-
strikers. Fear was instilled in the minds of non-
strikers and owners of the vessels.
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva
The foregoing findings are supported by substantial
evidence in the record, and petitioner itself does not
question their veracity.
Legality or illegality of a strike
"In cases not falling within the prohibition against strikes,
the legality or illegality of a strike depends:
1. first, upon the purpose for which it is maintained,
and,
2. second, upon the means employed in carrying it
on.
Thus,
 if the purpose which laborers intend to accomplish by
means of a strike is trivial, unreasonable or unjust, or
 if in carrying on the strike the strikers should commit
violence or cause injuries to persons or damage to
property,
the strike, although not prohibited by injunction, may be
declared by the court illegal, with the adverse consequences
to the strikers."
Where, "in carrying out the strike, coercion, force,
intimidation, violence with physical injuries, sabotage and
the use of unnecessary and obscene language or epithets
were committed by the top officials and members of the
union in an attempt to prevent the other willing laborers to
go to work," it was held that "a strike held under those
circumstances cannot be justified in a regime of law for that
would encourage abuses and terrorism and would subvert
the very purpose of the law which provides for arbitration
and peaceful settlement of labor disputes." (Liberal Labor v.
Phil. Can, supra).
A labor organization is wholesome if it serves its legitimate
purpose of promoting the interests of labor without
unnecessary labor disputes. That is why it is given
personality and recognition in concluding collective
bargaining agreements. But if it is made use of a
subterfuge, or as a means to subvert valid commitments, it
defeats its own purpose, for it tends to undermine the
harmonious relations between management and labor. The
situation does not deserve any approving sanction from the
Court.
Legitimate reasons for the dismissals
The lower court ruled: [Put these here in case ma’am asks]
As to Angtiong Sons: It is completely established
by the evidence that, with the exception of the
crewmen of the vessel MERCURY who received
their termination notices on November 12, 1959
due to sustained losses in the operating of the
same, no tying up of the other vessels nor
dismissal of their respective crews were effected
by respondent Antiong Sons.
The decommissioning of the MERCURY followed by
the announcement of its sale and finally its
disposal by purchase, fully negate complainant’s
charge of unfair labor practice against respondent.
It can be construed as a legitimate exercise of its
rights and prerogative under the ‘Management of
Labor Force’ provision of the collective bargaining
agreement dated December 28, 1957 between the
Shipowners and the Association;
With respect to Southern Navigation
Company: The court a quo found that the strike
declared against it was a sympathy strike; that the
crew and officers of the EMPRESS OF DAVAO and
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Case Digest Compilation

the ANHA I were given termination notices because

the company was dissolved after the death of
one of its principal partners; and that the cessation
of the operation of the two vessels was not
motivated by any anti-union feeling. The notice of
termination was addressed not to the USUP but to
the Association, by virtue of the collective
bargaining agreement with it.

As to Vicente Yu Water Transportation: the

court a quo observed that "the contents of said
termination notices clearly state that the planned
cessation of operation (of the M/L WATSON and
M/L RIZAL) . . . is but temporary in character,
aside from the fact that said notices were
addressed to all the crewmen and officers as
members of the Association and not of USUP."

With respect to Joyce Enterprises, Anglionto

Sons & Co., Garcia Water Transportation and
Garcia Navigation: "If it was really true that
respondents had any abiding hostility against the
USUP or any intention to bust the same by
dismissing or locking-out their respective
personnel who joined said union, investigation
should have been done after USUP sent its demand
letter on August 4, 1959 manifesting its majority
representation and requesting for recognition and
bargaining rights to negotiate for its items of
demand contained therein, or after it filed its
Notice of Strike with the Regional Office of the
Department of Labor in Davao on August 6, 1959,
or, by natural reaction the Shipowners should have
dismissed all Association members (who were also
USUP members) who refused to work on their
vessels from August 13, 1959, through the
instigation of USUP, which was charged of
contempt of court for violating the Injunction order
dated August 16, 1959. That was the most
opportune moment for the Shipowners to rightly
charge Association members of violations violating
their contractual duties and obligations under the
Collective Bargaining Agreement of December 28,
1957 and of dismissing them without notice and
without recourse in the exercise of its managerial
powers and prerogatives under said contract and
under the law. In spite of such affront and clear
violation of their rights, none such retaliatory acts
were done by any of the respondent Shipowners . .
."

94
Based on the syllabus of Atty. Maria Christina S. Sagmit
Ateneo De Davao University S.Y. 2020-2021
3rd Year Sanchez Roman
Digested by: Ampatuan,Ampog,Banosan,Esmael,Frias,Mahusay,Malicay,Paclibar,Peῆamante,Picot,Sinsuat,Sosoban,Teng, Viva