MERALCO VS QUISUMBING

G.R. No. 127598, February 22, 2000

MARTINEZ, J.

Facts:

Members of the Private respondent union were dissatisfied with the terms of a CBA with petitioner. The parties in this
case were ordered by the Sec. of Labor to execute a collective bargaining agreement (CBA) wherein. The CBA allowed
for the increase in the wages of the employees concerned. The petitioner argues that if such increase were allowed, it
would pass off such to the consumers.

ISSUE:

Whether or not matters of salary are part of management prerogative.

HELD:

Yes. There is no need to consult the Secretary of Labor in cases involving contracting out for 6 months or more as it is
part of management prerogative. However, a line must be drawn with respect to management prerogatives on business
operations per se and those which affect the rights of the workers. Employers must see to it that that employees are
properly informed of its decisions to attain harmonious labor relations and enlighten the worker as to their rights.

The contracting out business or services is an exercise of business judgment if it is for the promotion of efficiency and
attainment of economy. Management must be motivated by good faith and contracting out should not be done to
circumvent the law. Provided there was no malice or that it was not done arbitrarily, the courts will not interfere with the
exercise of this judgment.

WHEREFORE, the petition is granted and the orders of public respondent Secretary of Labor dated August 19, 1996 and
December 28, 1996 are set aside to the extent set forth above. The parties are directed to execute a Collective Bargaining
Agreement incorporating the terms and conditions contained in the unaffected portion is 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.