After almost a decade of protracted litigation in the Department of Labor and Employment and the Court of Appeals, the

dispute between Cirtek Employees Labor UnionFederation of Free Workers and Cirtek Electronics Inc. over the proposed increase in the wages of rank and file employees eventually went up to the Supreme Court. In the November 15, 2010 decision of the SC penned by Associate Justice Conchita Carpio-Morales,1 the wage increase initially proposed by the Union during the 2003 renegotiation of the CBA was granted. The issue in the Supreme Court arose from the conflicting decisions of the Secretary of Labor and Employment and the court of Appeals. The Secretary of Labor in an order 2 dated March 16, 2006 awarded the union with a wage increase of P10.00/day effective 1 January 2004 and P15.00/day effective January 2005 of the existing CBA. In so ruling, the Secretary of Labor said that the company can tolerate the increase in the wages since its previous bargaining history has also shown increases in the workers wages and also, the financial status of the company is not as bleak as the CEI argued it to be. Moreover, the Memorandum of Agreement entered into by the CEI and the Union during the pendency of the case before the DOLE was brushed aside by the Secretary of Labor saying that the MOA was entered into by the employees without the authorized negotiators since the agreement was signed through the Labor Management Council and not through the Union which has the exclusive right to directly negotiate with CEI regarding CBA disputes. The Secretary of Labor place emphasis on the rule that a Labor Management Council should not be used as an avenue for bargaining, citing Department Order no. 40-03, Section 1 which provides: The Department shall promote the formation of labor-management councils in organized and unorganized establishments to enable the workers to participate in policy and decision-making processes in the establishment, insofar as said processes will directly affect their rights, benefits, and welfare, except those which are covered by collective bargaining agreements or are traditional areas of bargaining. (emphasis in the original) The award, however, was not implemented due to the timely appeal filed by CEI in the Court of Appeals which reversed the ruling of the Secretary of Labor. Premising its ruling on the MOA, the Court of Appeals reversed the decision of the Secretary of Labor. In the September 24, 2009 decision3 penned by Associate Justice Romeo Barza, he ruled that the Secretary of Labor committed grave abuse of discretion in promulgating the previously cited decision. Associate Justice Barza said that when the Secretary exercises the powers granted by Article 263(g) of the Labor Code, he is granted great breadth of discretion but such discretion must still be exercised within the confines of the law. Even though the CA agreed with the DOLE that CEI did not sufficiently proved its claim of substantial financial losses, it ruled that the Secretary was not correct to award a further wage increase despite the fact that a MOA stating the agreed wage increase and other benefits had
1 2

GR no. 190515, November 15, 2010 OS-AJ-016-05 3 CA-GR. SP no. 105078, September 24, 2009

already been entered into by the parties. Contrary to the ruling of the Secretary of Labor, the CA ruled that the MOA was signed by the remaining officers of the Union who were duly authorized to represent and negotiate in behalf of the Union and that it was ratified by the majority of the companys rank-and-file employees whom the union represents. Moreover, the CA ruled that the MOA executed by the parties is the contract between them and therefore constitutes the law between the parties. Having this nature, the Secretary of Labor and Employment cannot grant a higher wage increase than what is embodied in writing in the MOA. With this contrasting rulings, the issue before the SC is therefore not much of a finding fact, that is, whether or not the CEI is suffering financial losses so as to justify its refusal to award the proposed wage increase. The issue rests on the proper appreciation of the MOA executed between CEI and the Union and whether or not its terms should be considered as final between the parties in connection with the extent of the Secretary of Labors jurisdiction over the dispute. Corollary to this issue is the legitimacy of the representatives of the employees who signed the MOA and the propriety of concluding the agreement through the Labor Management Council. In upholding the award of the Secretary of Labor, the SC said that the signing of the MOA did not divest the Secretary of his jurisdiction nor restricted his leeway in deciding the labor dispute before him. The power given to the Secretary of Labor under Article 263(g) of the Labor Code is to such an extent that in computing for the arbitral award, he can go higher than the terms of the MOA and he can consider other pertinent documents and the parties bargaining history and CEIs financial outlook and improvements as stated in its website. To quote from the decision, the SC said that while an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the intervention and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties, hence, it has the force and effect of a valid contractual obligation. In its Motion for Reconsideration of the SCs aforecited decision, CEI insists on the impropriety of the award granted by the Secretary adding the argument that as early as February 5, 2010, there was already a resolution of disaffiliation signed by the members of the Union and filed before the Department of Labor from the Federation of Free Workers resulting in the latters lack of personality to represent the workers in the present case. In denying the motion, the SC reiterated its ruling, adding that the Labor Management Council should not be used as an avenue for bargaining for the purpose of affording workers to participate in policy and decision making. The SC also ruled that the alleged disaffiliation will not affect the propriety of the arbitral award granted by the Secretary. In analyzing the ruling of the SC, it is important to compare and contrast the decision with previous rulings of the SC especially those relating to the nature of the CBA as a contract between the employer and the employees, the extent of the Secretary of Labors power upon his assumption of jurisdiction of a labor dispute, and, for the purposes of this paper, the dynamics of CBA negotiation disputes within the context of a national union representing the a local union.