San Miguel Corporation v.

NLRC
GR. NO. 99266
MARCH 2,
FACTS:
In July 1990, San Miguel Corporation, alleging the
need to streamline its operations due to financial losses, shut
down some of its plants and declared 55 positions as redundant,
listed as follows: seventeen (17) employees in the Business
LogisticsDivision ("BLD"), seventeen (17) in the Ayala Operations
Center (AOC), andeighteen (18) in the Magnolia-Manila Buying
Station ("Magnolia-MBS").
Consequently, the private respondent union fi led
several grievance cases for the said retrenched employees,
praying for the redeployment of the said employees to the other
divisions of the company.
Grievance proceedings were conducted. However,
most of the employees were redeployed, while others accepted
early retirement. As a result only 17 employees remained when the
parties proceeded to the third level (Step 3) of the grievance
procedure.
In a meeting on October 26, 1990, petitioner
informed private respondent union that if by October 30,
1990, the remaining 17 employees could not yet be redeployed;
their services would be terminated on November 2, 1990. The said
meeting adjourned when Mr. Daniel S. L. Borbon II, a representative
of the union, declared that there was nothing more to discuss in
view of the deadlock.
ISSUE:
1.Whether or not San Miguel Corporation exercised a
management prerogative.
2.Whether or not San Miguel Corporation violated
the Collective BargainingAgreement.
HELD:
1.YES. Abolition
of
departments or
positions in
the company is one of the recognized management
prerogatives. Noteworthy is the fact that the private respondent
does not question the validity of the business move of petitioner. In
the absence of proof that the act of petitioner was ill-motivated, it
is presumed that petitioner San Miguel Corporation acted in good
faith. In fact, petitioner acceded to the demands of the private
respondent union by redeploying most of the employees involved;
such that from an original 17 excess employees in BLD, 15
were successfully redeployed. In AOC, out of the 17 original excess,

15 were redeployed. In the Magnolia Manila Buying Station, out of

18 employees, 6 were redeployed and only 12 were terminated
2.NO, alleged violation of the CBA, is chargeable against
the private respondent union. In abandoning the grievance
proceedings and stubbornly refusing to avail of the remedies under
the CBA, private respondent violated the mandatory provisions of
the collective bargaining agreement. Collective Bargaining
Deadlock is defined as "the situation between the labor and the
management of the company where there is failure in the collective
bargaining negotiations resulting in a stalemate" This situation, is
non-existent in the present case since there is a Board assigned on
the third level (Step 3), of the grievance machinery to resolve the
conflicting views of the parties. Instead of asking theConciliation
Board composed of five representatives each from the company
and the union, to decide the conflict, private respondent union
declared a deadlock, and thereafter, filed a notice of strike. The
main purpose of the parties in adopting a procedure in the
settlement of their disputes is to prevent a strike. This procedure
must be followed in its entirety if it is to achieve its objective. x x x
strikes held in violation of the terms contained in the 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.

UNION OF FILIPRO EMPLOYEES vs. NLRC and NESTLE

PHILIPPINES, INC.
G.R. No. 91025 :
December 19, 1990.
FACTS:
On June 22, 1988, the petitioner Union of the Filipro Employees, the
sole and exclusive bargaining agent of all rank-and-file employees
of Nestle Philippines, (private respondent) filed a Notice of Strike at
the DOLE raising the issues of CBA deadlock and unfair labor
practice. Private respondent assailed the legal personality of the
proponents of the said notice of strike to represent the Nestle
employees, before the NCMB. This notwithstanding, the 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.
Thereafter, Company terminated from employment all UFE Union
officers, 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. The union filed a complaint for illegal dismissal. LA
upheld the validity of the dismissal; NLRC en banc affirmed.
Subsequently, company concluded separate CBAs with the general
membership of the union at Cebu/Davao and Cagayan de Oro units;
Assailing the validity of these agreements, the union filed a case of
ULP against the company with the NLRC-NCR Arbitration Branch
Efforts to resolve the dispute amicably were taken by the NCMB but
yielded negative result. 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.. which
reads as follows: xxx 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. Second
Division of the NLRC promulgated a resolution granting wage
increase and other benefits to Nestles employees, ruling on noneconomic issues, as well as absolving the private respondent of the
Unfair Labor Practice charge. Petitioner finds said resolution to be
inadequate and accordingly, does not agree therewith. It filed a
motion for reconsideration, denied. Hence, this petition.

ISSUE: (relative to the topic)

WHETHER OR NOT THE RESPONDENT NLRC HAD ACTED WITH
GRAVE ABUSE OF DISCRETION AND COMMITTED SERIOUS ERRORS
IN FACT AND IN LAW WHEN IT RULED THAT THE CBA IS EFFECTIVE
ONLY UPON THE PROMULGATION OF THE ASSAILED RESOLUTION

HELD: No.
this Court finds the provisions of Article 253 and Article 253-A of
the Labor Code as amended by R.A. 6715 as the applicable laws,
thus:
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 agreement, the parties
may exercise their rights under this Code.

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.

intermittent, are entitled to the commutation of sick leave

privilege.A proviso not found in Sec. 3. This caused the new
assistant manager to discontinue the commutation of the
unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash.
The Union objected and brought the matter for voluntary
arbitration before the National Conciliation and Mediation
Board with respondent Abarquez acting as voluntary
arbitrator who later issued an award in favor of the Union.
Hence, the instant petition.

ISSUE:
WON intermittent (irregular) workers are entitled to
commutation of their unenjoyed sick leave with pay benefits.
HELD:
Yes.

DAVAO INTEGRATED PORT STEVEDORING SERVICES vs.

RUBEN V. ABARQUEZ
FACTS:
Petitioner and private respondent, THE ASSOCIATION OF
TRADE UNIONS (ATU-TUCP), entered into a CBA providing for
2 sections on sick leave with pay benefits which apply to
both the regular non- intermittent workers or those workers
who render a daily eight-hour service to the company as
governed by Section 1, Article VIII of the 1989 CBA, and the
intermittent field workers who are members of the regular
labor pool and the present regular extra labor pool, as
governed by Sec. 3 thereof.
Sec. 1, however, of said CBA had a proviso that only those
regular workers of the company whose work are not

A collective bargaining agreement (CBA), as used in Article

252 of the Labor Code, refers to a contract executed upon
request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after
negotiations with respect to wages, hours of work and all
other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising
under such agreement. While the terms and conditions of a
CBA constitute the law between the parties, it is not,
however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a
labor contract within the contemplation of Article 1700 of the
Civil Code of the Philippines which governs the relations
between labor and capital, is not merely contractual in nature
but impressed with public interest, thus, it must yield to the
common good. As such, it must be construed liberally rather

than narrowly and technically, and the courts must place a

practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and
purpose which it is intended to serve.
The CBA has two (2) sections on sick leave with pay benefits
which apply to two (2) distinct classes of workers in
petitioners company, namely: (1) the regular nonintermittent workers or those workers who render a daily
eight-hour service to the company and (2) intermittent field
workers who are members of the regular labor pool and the
present regular extra labor pool.
Sick leave benefits, like other economic benefits stipulated in
the CBA such as maternity leave and vacation leave benefits,
among others, are by their nature, intended to be
replacements for regular income which otherwise would not
be earned because an employee is not working during the
period of said leaves. They are non-contributory in nature, in
the sense that the employees contribute nothing to the
operation of the benefits. By their nature, upon agreement of
the parties, they are intended to alleviate the economic
condition of the workers.
NATIONAL BREWERY & ALLIED INDUSTRIES LABOR
UNION OF THE PHILIPPINES vs. SAN MIGUEL BREWERY,
INC.
FACTS:
Appellant National Brewery & Allied Industries Labor Union of
the Philippines is the bargaining representative of all regular
workers paid on the daily basis and of route helpers of San
Miguel Brewery, Inc.
It signed a collective bargaining agreement with the
company, which provided, among other things, that

The COMPANY will deduct the UNION agency fee from the
wages of workers who are not members of the UNION,
provided the aforesaid workers authorized the COMPANY to
make such deductions in writing or if no such authorization is
given, if a competent court direct the COMPANY to make such
deduction. (Art. II, Sec. 4)
Alleging that it had obtained benefits for all workers in the
company and that "defendant Independent S.M.B. Workers'
Association refused and still refuses to pay UNION AGENCY
FEE to the plaintiff UNION and defendant COMPANY also
refuses and still refuses to deduct the UNION AGENCY FEE
from the wages of workers who are not members of the
plaintiff UNION and remit the same to the latter," the union
brought suit for the collection of union agency fees under the
bargaining contract.
ISSUE:
Whether such an agreement is a permissible form of union
security under Section 4(a) (4) as contended by the union.

HELD:
Although closed-shop agreement may validly be entered into
under Section 4 (a) (4) of the Industrial Peace Act (National
Labor Union v. Aguinaldo's Echague, Inc., 51 O.G. p. 2899),
We held that the same cannot be made to apply to
employees who, like the employees in this case, are already
in the service and are members of another union. (Freeman
Shirt Mfg. Co. v. Court of Industrial Relations, G.R. No. L16561, January 28, 1961.) Hence, if a closed shop agreement
cannot be applied to these employees, neither may an
agency fee, as a lesser form of union security, be imposed
upon them.

It is true, as the union claims, that whatever benefits the

majority union obtains from the employer accrue to its
members as well as to non-members. But this alone does not
justify the collection of agency fee from non-members. For
the benefits of a collective bargaining agreement are
extended to all employees regardless of their membership in
the union because to withhold the same from the nonmembers would be to discriminate against them.
(International Oil Factory Worke+rs Union (FFW) v. Martinez,
et al., G.R. No. L-15560, Dec. 31, 1960).
Moreover, when a union bids to be the bargaining agent, it
voluntarily assumes the responsibility of representing all the
employees in the appropriate bargaining unit. That is why

Section 12 of the law states that "The labor organization

designated or selected for the purpose of collective
bargaining by the majority of the employees in an
appropriate collective bargaining unit shall be the exclusive
representative of all employees in such unit for the purpose
of collective bargaining in respect to rates of pay, wages,
hours of employment, or other conditions of employment."