3G CBA Case Digest

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casE DIGEST IN LABOR RELATIONS

ATTY. FLORENCIO MAMAUAG JR.
COLLECTIVE BARGAINING CONCEPT AND PROCEDURE
1. Kiok Loy vs. NLRC (141 SCRA 179)

2. Lakas ng Manggagawang Makabayan vs. Marcelo Enterprises (118 SCRA 122)
3. Fernando vs. Angat Labor Union (5 SCRA 248)
4. Divine World University of Tacloban vs. Secretary of Labor & Employment (213 SCRA
759)
5. Manila Electric Company vs. Quisumbing (302 SCRA 173)
6. HSBC-Employees Union vs. NLRC (281 SCRA 509)
7. Colegio de San Juan de Letran vs. Association of Employees & Faculty (340 SCRA 587)
8. New Pacific Timber vs. NLRC (328 SCRA 404)
9. SMC-Employees Union-PTGWO vs. Confesor (262 SCRA 181)
10. St. Lukes vs. Torres, G.R. No. 99395. June 29, 1993
11. Rivera vs. Espiritu, G.R. No. 135547. January 23, 2002
12. PAL vs. NLRC (225 SCRA 301)
3G | CHRISTINE TAN UMALI CBA | Page 1 of 32

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KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT
V. NLRC and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN) 
G.R. No. L-54334, January 22, 1986 
Cuevas, J.
TOPIC: Article 260-271
Doctrine:
Management’s refusal to bargain is a waiver of the right to negotiate. This constitutes
unfair labor practice for which they are penalized. This doctrine covers outright refusal
and bargaining in bad faith.
Facts:
On December 7, 1978, the Pambansang Kilusang Paggawa (Union for short), the sole and
exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant
(Company for short), furnished the Company with two copies of its proposed collective
bargaining agreement. At the same time, it requested the Company for its
counterproposals. Eliciting no response, the Union reiterated their request for
negotiations and counter proposals. Both requests were ignored and remained unacted
upon by the Company.
The Union, on February 14, 1979, filed a “Notice of Strike” with the BLR on the ground of
unresolved economic issued in collective bargaining. Conciliation proceedings then
followed during the thirty-day statutory cooling-off period. All attempts towards an
amicable settlement having failed, the BLR certified the case to the NLRC for compulsory
arbitration. The Union was able to submit its position paper, but the Company did not,
and instead requested for a resetting, which was granted. The Company was directed
anew to submit its financial statements for the years 1976, 1977, and 1978.
After the withdrawal of the company’s counsel and the appearance of a new one, as well
as his postponement to reacquaint himself with the case, the Company’s representative,
Mr. Ching, who was supposed to be examined, failed to appear during the June 4, 1979
hearing. Atty. Fortunato Panganiban requested for another postponement which the labor
arbiter denied. He also ruled that the Company has waived its right to present further
evidence and, therefore, considered the case submitted for resolution.
NLRC Decision:
Held the Company guilty of unjustified refusal to bargain and ordered that the CBA
proposal sent by the Union to the Company be declared the collective agreement which
should govern the relationship between the parties herein.
Contention of the Company:

That its right to procedural due process has been violated when it was precluded from
presenting further evidence in support of its stand and when its request for further
postponement was denied. Petitioner further contends that it cannot be held liable for
unfair labor practice for refusal to bargain because it was only on May 24. 1979 when the
Union furnished them with a copy of the proposed Collective Bargaining Agreement and it
was only then that they came to know of the Union's demands; and finally, that the
Collective Bargaining Agreement approved and adopted by the National Labor Relations
Commission is unreasonable and lacks legal basis.
Issue:
Does the Company’s acts amount to unfair labor practice for refusal to bargain?

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Ruling of the SC:

YES, THE COMANY’S ACTS AMOUNT TO ULP.
Collective bargaining which is defined as negotiations towards a collective agreement, 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."
While it is a mutual obligation of the parties to bargain, the employer, however, is not
under any legal duty to initiate contract negotiation. 7 The mechanics of collective
bargaining is set in motion only when the following jurisdictional preconditions are
present:
(1) possession of the status of majority representation of the employees' representative
in 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
All of these preconditions are undisputedly present in the instant case.
It has been indubitably established that (1) respondent 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. Even during the period of compulsory
arbitration before the NLRC, petitioner 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. Petitioner 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.
Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining

Agreement which was approved and adopted by the NLRC is a total nullity for it lacks the
company's consent, much less its argument that once the Collective Bargaining
Agreement is implemented, the Company will face the prospect of closing down because
it has to pay a staggering amount of economic benefits to the Union that will equal if not
exceed its capital. Such a stand and the evidence in support thereof should have been
presented before the Labor Arbiter which is the proper forum for the purpose.

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We agree with the pronouncement that 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, as in the instant case, where the
intervention of the National Labor Relations Commission was properly sought for after
conciliation efforts undertaken by the BLR failed. The instant case being a certified one, it
must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, which
authorizes the said body to determine the reasonableness of the terms and conditions of
employment embodied in any Collective Bargaining Agreement. To that extent, utmost
deference to its findings of reasonableness of any Collective Bargaining Agreement as the
governing agreement by the employees and management must be accorded due respect
by this Court.

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LAKAS NG MANGGAGAWANG MAKABAYAN vs MARCELO ENTERPRISES

G.R. No. L-38258, November 19, 1982
Guerrero, J.
TOPIC: ARTICLE 260-271
Doctrine:
The employer has the right to demand of the asserted bargaining agent proof of its
representation of its employees. Having the right to demonstration of this fact, it is not
an 'unfair labor practice' for an employer to refuse to negotiate until the asserted
bargaining agent has presented reasonable proof of majority representation.
Facts:
The Marcelo Companies, composed of six independent enterprises and each represented
by local unions which were all affiliated with Philippine Social Security Labor Union
(PSSLU), received letters front their local unions and also from herein petitioner LAKAS
(which claimed that a local union was affiliated therewith) requesting for negotiation of
new collective bargaining agreements.
Confronted with the problem of whom to recognize as the bargaining unit, Marcelo
suggested to all to settle the question by filing a petition for certification election before
the Court of Industrial Relations. PSSLU and LAKAS, interpreting the same as refusal to
negotiate, filed notices of strike which were later withdrawn. Eventually, bargaining
negotiations were made but after LAKAS received a copy of management's draft of the
bargaining agreement, LAKAS, without filing the required notice, declared a strike
completely paralizing Marcelo.
A month later, after being informed that striking workers and employees will return to
work, Marcelo posted notices for them to return back to work and requested them to fill
up a form (Exh. 49) indicating therein the date of their availability for work for the
purpose of scheduling since some machine needed a team of workers to operate and the
absence of ones worker will be useless to start its operation, Several strikers filled up the
required form but the remaining others, led and supported by LAKAS, refused to do so on
the ground that such constituted "screening" and insisted that they be admitted back to
work without complying with the same. For Marcelo's refusal to forego the requirement,
LAKAS filed a complaint for unfair labor practice with the Industrial Court. After the trial
had commenced, three local unions, MUEVA, UNWU and MFWU, prayed for the dismissal
of the complaint filed in their behalf on the grounds that the same was filed without their
authority and that the latter two had disaffiliated from LAKAS.
Court of Industrial Relations’ Decision:

Judgment was rendered denying the motions for dismissal or withdrawal of the complaint
on the ground that LAKAS filed the same for and in behalf of the individual employees
concerned as a class suit; declared the strike illegal for lack of the requisite notice; and
held that Marcelo was guilty of an unfair labor practice in finding that the scheduling
adopted was in effect a screening of those who were readmitted which constituted
discrimination. Both parties filed motions for reconsiderations. The same were denied,
hence, the present recourse.
Issues:
(1) Doest LAKAS have a legal standing to sue on behalf of the individual members of said
union prejudiced by Marcelo Companies notwithstanding the unions’ disaffiliation from it.
(2) Is Marcelo Company guilty of unfair labor practice.

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Ruling of the SC:

(1) NO, LAKAS HAS NO LEGAL STANDING IN THE PRESENT CASE.
Firstly, LAKAS cannot bring any action for and in behalf of the employees who were
members of MUEWA because, as intimated earlier in this Decision, the said local union
was never an affiliate of LAKAS. What appears clearly from the records is that it was
Augusto Carreon and his followers who joined LAKAS, but then Augusto Carreon was not
the recognized president of MUEWA and neither he nor his followers can claim any
legitimate representation of MUEWA. Apparently, it is this split faction of MUEWA, headed
by Augusta Carreon, who is being sought to be represented by LAKAS. However, it
cannot do so because the members constituting this split faction of MUEWA were still
members of MUEWA which was on its own right a duly registered labor union. Hence, any
suit to be brought for and in behalf of them can be made only by MUEWA, and not
LAKAS. It appearing then that Augusta Carreon and his cohorts did not disaffiliate from
MUEWA nor signed any individual affiliation with LAKAS, LAKAS bears no legal interest in
representing MUEWA or any of its members.
Nor will the lower court's opinion be availing with respect to the complaining employees
belonging to UNWU and MFWU. Although it is true, as alleged by LAKAS, that when it
filed the charge on December 26, 1967, the officers of the movant unions were not yet
then the officers thereof, nevertheless, the moment MFWU and UNWU separated from
and disaffiliated with 'LAKAS to again exercise its rights as independent local unions,
registered before as such, they are no longer affiliates of LAKAS, as what transpired
here. Naturally, there would no longer be any reason or occasion for LAKAS to continue
representing them. Notable is the fact that the members purportedly represented by
LAKAS constitute the mere minority of the movant unions, as may be inferred from the
allegations of the movant unions as well as the counter- allegations of LAKAS filed below.
As such, they cannot prevail or dictate upon the will of the greater majority of the unions
to which they still belong, it appearing that they never disaffiliated from their unions; or
stated in another way, they are bound by the action of the greater majority.
In NARIC Workers' Union vs. CIR, We ruled that, "(a) labor union would go beyond the
limits of its legitimate purposes if it is given the unrestrained liberty to prosecute any
case even for employees who are not members of any union at all. A suit brought by
another in representation of a real party in interest is defective." Under the
uncontroverted facts obtaining herein, the aforestated ruling is applicable, the only
difference being that, here, a labor federation seeks to represent members of a
registered local union never affiliated with it and members of registered local unions
which, in the course of the proceedings before the industrial court, disaffiliated from it.
This is not to say that the complaining employees were without any venue for redress.
Under the aforestated considerations, the respondent court should have directed the
amendment of the complaint by dropping LAKAS as the complainant and allowing the suit
to be further prosecuted in the individual names of those who had grievances. A class
suit under Rule 3, Section 12 of the Rules of Court is authorized and should suffice for
the purpose.
In fairness to the complaining employees, however, We treated their Motion for

Reconsideration of the Decision subject of appeal as curing the defect of the complaint as
the said motion expressly manifested their collective desire to pursue the complaint for
and in their own behalves and disauthorizing LAKAS' counsel from further representing
them. And We have also treated their petition before Us in the same manner,
disregarding the fact that LAKAS remained the petitioning party, as it appears from the
verification that the petition in L38258 was for and in behalf of the complaining
employees. The merits of their petition, however, fall short of substantiating the charge

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of unfair labor practice against the respondent Marcelo Companies. On the other hand,
the appeal of the Marcelo Companies in L-38260 must be upheld and sustained.
(2) NO, MARCELO COMPANIES ARE NOT GUILTY OF UNFAIR LABOR PRACTICE.
Contrary to the pretensions of complainant LAKAS, the respondent Marcelo Companies
did not ignore the demand for collective bargaining. Neither did the companies refuse to
bargain at all. What it did was to apprise LAKAS of the existing conflicting demands for
recognition as the bargaining representative in the appropriate units involved, and
suggested the settlement of the issue by means of the filing of a petition for certification
election before the Court of Industrial Relations. This was not only the legally approved
procedure but was dictated by the fact that there was indeed a legitimate representation
issue. PSSLU, with whom the existing CBAs were entered into, was demanding of
respondent companies to collectively bargain with it; so was Paulino Lazaro of MUEWA,
J.C. Espinas & Associates for MACATIFU and the MFWU, and the complainant LAKAS for
MULU which we understand is the aggrupation of MACATIFU, MFWU and UNWU. On top of
all of these, Jose Roque of UNWU disauthorized the PSSLU from representing his union;
and similarly, Augusta Carreon of MACATIFU itself informed management as late as July
11, 1967 or after the demand of LAKAS that no group representing his Union "is not
authorized and should not be entertained. "
Indeed, what We said in Philippine Association of Free Labor Unions (PAFLU) vs. The
Bureau of Labor Relations,69 SCRA 132, applies as well to this case.
..., in a situation like this where the issue of legitimate representation in dispute is
viewed for not only by one legitimate labor organization but two or more, there is every
equitable ground warranting the holding of a certification election. In this way, the issue
as to who is really the true bargaining representative of all the employees may be firmly
settled by the simple expedient of an election.
The above-cited case gives the reason for the need of determining once and for all the
true choice of membership as to who should be their bargaining representative, which is
that, "(E)xperience teaches us, one of the root causes of labor or industrial disputes is
the problem arising from a questionable bargaining representative entering into CBA
concerning terms and conditions of employment. " Respecting the issue of representation
and the right of the employer to demand reasonable proof of majority representation on
the part of the supposed or putative bargaining agent, the commentaries in Rothenberg
on Labor Relations, pp. 42943 1, are forceful and persuasive, thus:
It is essential to the right of a putative bargaining agent to represent the employees that
it be the delegate of a majority of the employees and, conversely, an employer is under
duty to bargain collectively only when the bargaining agent is representative of the
majority of the employees. A natural consequence of these principles is that the
employer has the right to demand of the asserted bargaining agent proof of its
representation of its employees. Having the right to demonstration of this fact, it is not
an 'unfair labor practice' for an employer to refuse to negotiate until the asserted
bargaining agent has presented reasonable proof of majority representation. It is
necessary however, that such demand be made in good faith and not merely as a pretext
or device for delay or evasion. The employer's right is however to reasonable proof. …
 
... Although an employer has the undoubted right to bargain with a bargaining agent
whose authority has been established, without the requirement that the bargaining agent
be officially certified by the National Labor Relations Board as such, if the informally
presented evidence leaves a real doubt as to the issue, the employer has a right to

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demand a certification and to refuse to negotiate until such official certification is

presented."
Also, it is a settled jurisprudence that it is an unfair labor practice for an employer not to
reinstate, or refuse re-employment of members of union who abandon their strike and
make unconditional offer to return to work. It is true that upon their return, the strikers
were required to fill up a form wherein they were to indicate the date of their availability
for work. But We are more impressed and are persuaded to accept as true the contention
of the respondent Marcelo Companies that the aforestated requirement was only for
purposes of proper scheduling of the start of work for each returning striker. It must be
noted that as a consequence of the two strikes which were both attended by widespread
acts of violence and vandalism, the businesses of the respondent companies were
completely paralyzed. It would hardly be justiciable to demand of the respondent
companies to readmit all the returning workers in one big force or as each demanded
readmission. There were machines that were not in operating condition because of long
disuse during the strikes. Some of the machines needed more than one worker to
operate them so that in the absence of the needed team of workers, the start of work by
one without his teammates would necessarily be useless, and the company would be
paying for his time spent doing no work. Finally, We take judicial cognizance of the fact
that companies whose businesses were completely paralyzed by major strikes cannot
resume operations at once and in the same state or force as before the strikes.
The form was not meant to screen the strikers. Those who filled up the form were
scheduled for work and consequently started with their jobs. It is only those strikers who
refused or failed to fill-up the required form, like the herein complaining employees, who
were not scheduled for work and consequently have not been re- employed by the
respondent Marcelo Companies. Even if there was a sincere belief on their part that the
requirement of the signing of the form was a ruse at "screening" them, this fear would
have been dispelled upon notice of the fact that each and all of their co-strikers who rued
up the required form were in fact scheduled for work and started to work. The stoppage
of their work was not, therefore, the direct consequence of the respondent companies'
complained act, Hence, their economic loss should not be shifted to the employer.

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FERNANDO v. ANGAT LABOR UNION

G.R. No. L-17896, May 30, 1962
Reyes, J. B. L., J.
TOPIC: Article 260-271
Doctrine:
If an employer is guilty of unfair labor practice when he directly discharged 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 its unwilling to accept his employees.
Facts:
Petitioner Valentin Fernando is the operator of Angat-Manila Transportation; whereas
Angat Labor Union is composed of employees of Angat-Manila.
Angat Labor Union registered as a union and prepared written proposals to the company
for a collective bargaining agreement, but the company accountant, a relative of
Fernando, admonished the union 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 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.”
Villa-Rey officials informed the employees of the sale and then and there summarily
dismissed 12 union members.
Hence, a complaint was filed by the court prosecutor on behalf of certain members of the
Angat Labor Union charging Angat-Manila, its officers, and the Villa-Rey Transit, Inc., with
unfair labor practice for discharging complainants on account of labor activities. 
Angat’s Contention:
Claimed that the sale was forced by operational losses, and that that since the business
was sold to Villa-Rey Transit, Inc., on March 11, 1959, and the dismissal was made after
that date by officials of Villa-Rey, there was no employer-employee relation between him
and the complainants to give jurisdiction to the Industrial Court.
Court of Industrial Relations’ Decision:

Held Angat-Manila Transportation is responsible for the laborers' backpay, but considered
that 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.
Issues:
(1) Does the Court of Industrial Relations have jurisdiction over the case considering that
Angat-Manila is no longer the employer;
(2) Should Angat-Manila and Villa-Rey Transit pay back wages to the complaining
employees.
Ruling of the SC:

(1)YES, THE CIR STILL HAS JUSRISDICTION OVER ANGAT-MANINA.

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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. 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 the appellant'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.
(2) ONLY ANGAT-MANILA IS LIABLE TO PAY BACKWAGES.
With regard to the payment of back wages, the Supreme Court agreed with appellant
that to hold him liable for the back wages of the complainants until they are reinstated
by the Villa-Rey Transit, Inc., over which he has no control, may well result in the
appellant 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 appellant's bad faith in procuring their discharge.
All things considered, we believe it equitable to sentence appellant to the payment of six
(6) months' wages to the complainants, it being a reasonable expectancy that within that
period those improperly discharged will have found other suitable employment with the
exercise of due diligence.

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Divine Word University of Tacloban vs Secretary of Labor and Employment and

Divine Word University Employees Union-ALU 
GR No. 91915, September 11, 1992 
Romero, J.
TOPIC: Collective Bargaining
Doctrine:
While collective bargaining should be initiated by the union, there is a corresponding
responsibility on the part of the employer to respond in some manner to such acts.
Facts:
Divine Word University Employees Union (DWUEU) is the sole and bargaining agent of
the Divine Word University. Sometime in 1985, DWUEU submitted its collective
bargaining proposals. The University replied and requested a preliminary conference
which unfortunately did not take place due to the alleged withdrawal of the CBA
proposals.
Because of this, the union filed a notice of strike on the grounds of bargaining deadlock
and unfair labor practice.
Then, an agreement between the University and DWUEU- ALU were held after the filing
of the notice of strike.
DWUEU-ALU, consonant with the agreement, submitted its collective bargaining

proposals but were ignored by the University. Marathon conciliations were held to no
avail. The Sec of Labor assumed jurisdiction and directed that all striking workers to
report back to work within 24 hours.
Decision of the Med-Arbiter:

Issued an order directing the conduct of the certification election.
SOLE Decison:
Directed to hold in abeyance the conduct of Certification Election. The Sec of Labor
dismissed the cases of ULP filed by the parties.
Issue:
Did the University committed ULP?
Held:
A thorough study of the records reveals that there was no "reasonable effort at good
faith bargaining" specially on the part of the University. Its indifferent towards collective
bargaining inevitably resulted in the failure of the parties to arrive at an agreement. As it
was evident that unilateral moves were being undertaken only by the DWUEU-ALU, there
was no counteraction of forces or an impasse to speak of. While collective bargaining
should be initiated by the union,
there is a corresponding responsibility on the part of the employer to respond in some
manner to such acts.
This is a clear from the provisions of the Labor Code Art250(a) of which
states:
a.) when a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a reply
thereto not later than 10 calendar days from receipt of such notice. Hence, petitioner's

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contention that the DWUEU-ALU's proposals may not be unilaterally imposed on it on the
ground that a collective bargaining agreement is a contract wherein the consent of both
parties is indispensable is devoid of merit.
A similar argument had already been disregarded in the case of Kiok Loy v. NLRC, where
we upheld the order of the NLRC declaring the unions draft CBA proposal as the collective
agreement which should govern the relationship between the parties. Kiok Loy vs. NLRC
is applicable in the instant case, considering that the fact therein have also been
indubitably established in this case. These factors are: (a) the union is the duly certified
bargaining agent; (b) it made a definite request to bargain submitted its collective
bargaining proposals, and (c) the University made no further proposal whatsoever. As we
said in Kiok Loy v. NLRC 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.
"Moreover, the Court added in the same case that "it is not obligatory upon either side of
a labor controversy to precipitately accept or agree to the proposal 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. 

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MANILA ELECTRIC COMPAN V. .THE HONORABLE SECRETARY OF LABOR

LEONARDO QUISUMBING and MERALCO EMPLOYEES AND WORKERS
ASSOCIATION (MEWA) 
G.R. No. 127598. January 27, 1999 
Martinez, J.
Doctrine:
The secretary of labor acts in excess of its jurisdiction when he orders the inclusion of
benefits, terms and conditions that the law and the parties did not intend to be reflected
in the CBA.
Facts:
MEWA,the duly recognized labor organization of the rank-and-file employees of
MERALCO, 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 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 the 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 striking employees
to go back to work.
The Labor Secretary granted the petition through its Order.
SOLE Decision:
Ordered the grant of a P4,500.00 wage increase, as well as a new and improved fringe
benefits, under the remaining two (2) years of the CBA for the rank-and-file employees.
Issues:
(1) Did the Secretary of Labor acted with grave abuse of discretion when it determined
the issue on wage increase? 
(2) Did the Secretary of Labor acted with grave abuse of discretion when it allowed the
retroactive application of the CBA?
Ruling of the SC:

(1) Yes.
We find 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 MERALCOs evidence at all, he apparently misappreciated this evidence in
favor of claims that do not have evidentiary support. To our mind, 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

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fact, as against the unions 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. 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
MERALCOs 10-year income stream, no data or computation of this 10-year stream
appear in the record.
While the Secretary is not expected to accept the company-offered figures wholesale in
determining a wage award, we find it a grave abuse of discretion to completely disregard
data that is based on actual and undisputed record of financial performance in favor of
the third-hand and unfounded claims the Secretary eventually relied upon. At the very
least, the Secretary should have properly justified his disregard of the company figures.
The Secretary should have also reasonably insured that the figure that served as the
starting point for his computation had some substantial basis.
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 companys 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; MERALCOs 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 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.
After considering the various factors the parties cited, we believe that the interests of
both labor and management are best served by a wage increase of P1,900.00 per month
for the first year and another P1,900.00 per month for the second year of the two-year
CBA term. Our reason for this is that these increases sufficiently protects the interest of
the worker as they are roughly 15% of the monthly average salary of P11,600.00. They
likewise sufficiently consider the employers costs and its overall wage structure, while at
the same time, being within the range that will not disrupt the wage trends in Philippine
industries.

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The records shows that MERALCO, throughout its long years of existence, was never
remiss in its obligation towards its employees. In fact, as a manifestation of its strong
commitment to the promotion of the welfare and well-being of its employees, it has
consistently improved their compensation package.For instance, MERALCO has granted
salary increases through the collective bargaining agreement the amount of which since
1980 for both rank-and-file and supervisory employees.
(2) On Retroactivity Of The CBA 

Finally, MERALCO also assails the Secretarys 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 disputes.
On the other hand, MEWA 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. Lukes Medical Center, Inc. vs. Torres. MEWA also contends that if the arbitral
award takes effect on the date of the Secretary Labors 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.
However, neither party took into account the factors necessary for a proper resolution of
this aspect. 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.
Article 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 x x x [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
provisions 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. x x x.
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-
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.

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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 Labors disputed order on the parties motion for reconsideration) up to
December 27, 1999.
*NOTE:
In the 2000 case:

Meralco and its union MEWA renegotiated its 1992-1997 CBA insofar as the last two-year
period was concerned. 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 claims that the award should retroact only from such time that
the Secretary of Labor rendered the award. The union argues that the awards should
retroact to such time granted by the Secretary who has plenary and discretionary power
to determine the effectivity of the arbitral award. The union cited the case of St. Luke’s
and Mindanao Terminal where the Secretary ordered the retroaction of the CBA to the
date of expiration of the previous CBA. When should the arbitral award retroact?
Ruling of the SC:

Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary
has assumed jurisdiction by virtue of Art. 263 (g) shall retroact. Despite the silence of
the law, the Court ruled that the CBA arbitral awards granted after six months from the
expiration of the last CBA shall retroact to such time agreed upon by both the employer
and the employees or their union. Absent such 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 effectivity as part of his discretionary powers over arbitral
awards shall control. (Manila Electric Company v. Secretary of Labor, G.R. No.
127598, February 22, 2000)

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HSBC EMPLOYEES UNION V. NATIONAL LABOR RELATIONS COMMISSION AND

HSBC, LTD. G.R. No. 125038. November 6, 1997 
Regalado, J. 
TOPIC: Management Prerogative v. Collective Bargaining Agreement
Doctrine:
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.
Facts:
A non-executive job evaluation program (JEP) lowering the starting salaries of future
employees was issued by the respondent Bank. Respondent Union engaged in concerted
activities to protest the implementation of the JEP. During the period of renegotiation for
the non-representational provisions of the new CBA, that issue was raised. The Union did
not stop its concerted activities because the Bank did not suspend the implementation of
the JEP. A complaint for unfair labor practice against the Union was filed by the Bank. The
Union moved to dismiss, claiming that the unilateral implementation of the JEP
contravenes the prohibition against the diminution of existing rights, privileges and
benefits granted and enjoyed by the employees. The Labor Arbiter dismissed the
complaint with prejudice and ordered the parties to continue with the CBA negotiations
there having been no showing that the Union acted with criminal intent in refusing to
comply with its duty to bargain and that it is not evident that the concerted activities
caused damage to the Bank. On appeal, the NLRC ordered the remand of the case for
further proceedings and held that the Labor Arbiter exceeded his authority when he
ordered the parties to return to the negotiating table. Hence, the petition.
Contenton of the Union:

It alleged that its united activities were actually being waged to protest the Banks
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.
The Unions objections
are premised on the erroneous belief that the salary rates for future employees is a
matter which must be subject of collective bargaining negotiation.
Bank’s contention:
The Unions actions 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 Unions 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 Unions duty
to bargain collectively under Articles 249 (c) and 252 of the Labor Code. Further, the
Bank believes that the implementation of the JEP and the resultant lowering of the
starting salaries of future employees, as long as there is no diminution of existing
benefits and privileges being accorded to existing rank and file staff, is entirely a
management prerogative.
Labor Arbiter’s ruling: The 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

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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’s Ruling: On appeal, respondent NLRC declared that based on the facts obtaining
in this case, it becomes necessary to resolve whether or not the Unions objections to the
implementation of the JEP are valid. It held that the labor arbiter exceeded his authority
when he ordered the parties to return to the bargaining table and continue with CBA and
that its 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. Hence, the present petition.
Issues:
(1) Can courts order the employer to “bargain” with the bargaining agent?
(2) Is the fixing of salaries of future employees pursuant to a job evaluation program an
exclusive management prerogative or should it be subject of collective bargaining
negotiation?
Ruling of the SC:

(1)YES.
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's holding that the labor arbiter exceeded his authority when he ordered
the parties to return to the bargaining table and continue with CBA negotiation stands to
be reversed.
(2) It is management prerogative.

A determination of the validity of the Banks unilateral implementation of the JEP or the
Unions act of engaging in concerted activities involves an appraisal of their motives. 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. The effect of an employers or a unions 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.
Moreover, it is a well-settled rule that labor laws do not authorize interference with the
employers’ 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 employers’
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.

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In upholding managements’ prerogative to implement the JEP, the Court held 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.

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COLEGIO DE SAN JUAN DE LETRAN V. ASSOCIATION OF EMPLOYEES AND

FACULTY OF LETRAN AND ELEONOR AMBAS 
G.R. No. 141471, September 18, 2000 
Kapunan, J.
TOPIC: Article 260 – 271 – Collective Bargaining and Procedure
Doctrine:
Lack of sincere desire or interest on the part of the employer in bargaining with the union
constitute unfair labor practice. Mere filing of a petition for certification election does not
ipso facto justify the suspension of negotiation by the employer.
Facts:
Salvador Abtria, then President of respondent union, Association of Employees and
Faculty of Letran, initiated the renegotiation of its Collective Bargaining Agreement with
petitioner Colegio de San Juan de Letran for the last two (2) years of the CBA's five (5)
year lifetime from 1989-1994. In the same year, the union elected a new set of officers
wherein private respondent Eleanor Ambas emerged as the newly elected President. On
January 18, 1996, the parties agreed to disregard the unsigned CBA and to start
negotiation on a new five-year CBA starting 1994-1999. On February 7, 1996, the union
submitted its proposals to petitioner, which notified the union six days later, or on
February 13, 1996, that the same had been submitted to its Board of Trustees. In the
meantime, Ambas was informed through a letter dated February 15, 1996 from her
superior that her work schedule was being changed from Monday to Friday to Tuesday to
Saturday. Ambas protested and requested management to submit the issue to a
grievance machinery under the old CBA. On March 29, 1996, the union received
petitioner's letter dismissing Ambas for alleged insubordination. Hence, the union
amended its notice of strike to include Ambas' dismissal. On April 20, 1996, both parties
again discussed the ground rules for the CBA renegotiation. However, petitioner stopped
the negotiations after it purportedly received information that a new group of employees
had filed a petition for certification election. On June 18, 1996, the union finally struck.
On July 2, 1996, public respondent Secretary of Labor and Employment assumed
jurisdiction and ordered all striking employees, including the union president, to return to
work, and for petitioner to accept them back under the same terms and conditions before
the actual strike. Petitioner readmitted the striking members except Ambas. Public
respondent issued an order declaring petitioner guilty of unfair labor practice on two
counts and directing the reinstatement of private respondent Ambas with backwages.
Petitioner filed a motion for reconsideration which was denied. Petitioner sought a review
of the order of the Secretary of Labor and Employment before the Court of Appeals. The
appellate court dismissed the petition and affirmed the findings of the Secretary of Labor
and Employment. Hence, the present petition. The issue to be resolved by the Court are
(1) whether petitioner is guilty of unfair labor practice by refusing to bargain with the
union when it unilaterally suspended the ongoing negotiations for a new Collective
Bargaining Agreement (CBA) upon mere information that a petition for certification has
been filed by another legitimate labor organization; (2) whether the termination of the
union president amounts to an interference of the employees' right to self-organization.
Issue:
Is Colegio de San Juan de Letran guilty of unfair labor practice by refusing to bargain
with the union and when it unilaterally suspended the ongoing negotiations for the new
CBA upon information that a petition for certification has been filed by another legitimate
labor organization?
Held:

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Yes, Colegio de San Juan de Letran is guilty of unfair labor practice.

According to the Court, petitioner's actuation showed a lack of sincere desire to negotiate
rendering it guilty of unfair labor practice. Petitioner's utter lack of interest in bargaining
with the union is obvious in its failure to make a timely reply to the proposals presented
by the latter. More than a month after the proposals were submitted by the union,
petitioner still had not made any counter-proposals. Said inaction on the part of
petitioner prompted the union to file its second notice of strike on March 13, 1996.
Petitioner could only offer a feeble explanation that the Board of Trustees had not yet
convened to discuss the matter as its excuse for failing to file its reply. Petitioner clearly
violated Article 250 of the Labor Code governing the procedure in collective bargaining.
Concerning the issue on the validity of the termination of the union president, the Court
ruled that the dismissal was effected in violation of the employees' right to self-
organization. The factual backdrop of the termination of Ms. Ambas led to no other
conclusion that she was dismissed in order to strip the union of a leader who would fight
for the right of her co-workers at the bargaining table. The record showed that it was
when Ms. Ambas was the union president and during the period of tense and difficult
negotiations when her work schedule was altered from Mondays to Fridays to Tuesdays to
Saturdays. When she did not budge, although her schedule was changed, she was
outrightly dismissed for alleged insubordination.

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NEW PACIFIC TIMBER v. NLRC

G.R. No. 124224. March 17, 2000
Kapunan, J.
TOPIC: Article 253
Doctrine:
The collective bargaining agreement remains in full force and effect even beyond the
stipulated term in the absence of a new agreement; article 253 of the labor code does
not provide for any exception nor qualification to which of the economic provisions of the
existing agreement are to retain force and effect, therefore, it must be understood as
encompassing all the terms and conditions of said agreement.
Facts:
Executive Labor Arbiter Hakim S. Abdulwahid in an order granted monetary benefits
consisting of wage increases, housing allowances, bonuses, etc. to the regular rank-and-
file employees of petitioner company. Petitioner company complied; and the
corresponding quitclaims were executed. The case was considered closed following the
manifestation of respondent National Federation of Labor (NFL) that it will no longer
appeal the October 18, 1993 Order of Labor Arbiter Villena. However, notwithstanding
such manifestation, a "Petition for Relief'' was filed in behalf of 186 of the private
respondents "Mariano J. Akilit and 350 others" on May 12, 1994. In their petition, they
claimed that they were wrongfully excluded from enjoying the benefits under the CBA
since the agreement with NFL and petitioner Company limited the CBA's implementation
to only the 142 rank-and-file employees enumerated therein. They claimed that NFL's
misrepresentations had precluded them from appealing their exclusion. Treating the
petition for relief as an appeal, the National Labor Relations Commission (NLRC)
entertained the same. Thereafter, said Commission issued a resolution declaring that the
186 excluded employees "form part and parcel of the then existing rank-and-file
bargaining unit" and were, therefore, entitled to the benefits under the CBA. Petitioner
Company filed a motion for reconsideration but was denied for lack of merit. Hence, the
present petition.
Contention of New Pacific Timber:

Petitioner argued that the private respondents are not entitled to the benefits under the
CBA because employees hired after the term of a CBA are not parties to the agreement,
and, therefore, may not claim benefits thereunder, even if they subsequently become
members of the bargaining unit. As for the term of the CBA, petitioner maintains that
Article 253 of the Labor Code refers to the continuation in full force and effect of the
previous CBA's terms and conditions. By necessity, it could not possibly refer to terms
and conditions which, as expressly stipulated, ceased to have force and effect.
Issues: 
(1) Are the private respondents, hired after the stipulated term, entitled to the benefits
under CBA?
(2) Should the economic provisions be extended beyond the term stipulated in the
absence of new CBA?
Ruling of the SC: 

(1) YES.
The Court ruled that the benefits under the CBA in the instant case should be extended
to those employees who only became such after the year 1984. To exclude them would
constitute undue discrimination and deprive them of monetary benefits they would

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otherwise be entitled to under a new collective bargaining contract to which they would
have been parties. Since in this particular case, no new agreement had been entered into
after the CBA's stipulated term, it is only fair and just that the employees hired
thereafter be included in the existing CBA.
(2) YES.
It is clear from the above provision of law that until a new CBA has been 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. The law does not
provide for any exception nor qualification as to which of the economic provisions of the
existing agreement are to retain force and effect, therefore, it must be understood as
encompassing all the terms and conditions in the said agreement.
In the case, no new agreement was entered into by the petitioner and NFL pending
appeal of the decision of NLRC Case No. RAB-IX-0334-82 nor were any of the economic
provisions pertaining to monetary benefits in the existing agreement were modified or
altered. Therefore, the existing CBA in its entirety continues to have legal effect.
The Court has held that when a collective bargaining contract is entered into by the union
representing the employees and the employer, even non-member employees are entitled
to the benefits of the contract. To accord its benefits only to members of the union
without valid ground would constitute undue discrimination against non-members. It is
conceded, that a laborer can claim benefits from the CBA entered into between the
company and the union of which he is a member at the time of the conclusion of the
agreement even after he has resigned from the said union.

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SMCEU-PTGWO V. Confesor
G.R. No. 111262, September 19, 1996
Kapunan, J.
TOPIC: Article 253-A
Doctrine:
Article 253-A 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.
Facts:
Petitioner-union entered into a CBA with SMC to take effect upon the expiration of the
previous CBA or on June 30, 1989 until June 30, 1992. The CBA also stated that the term
of the Agreement insofar as the representation aspect is concerned, shall be for 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.
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 counterproposals. 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.
SMC, on the other hand, contended 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.
Issues:
(1) Is the duration of the renegotiated terms of the CBA to be effective for three years or
for only two years; and
(2) Does the bargaining unit of SMC also include the employees of the Magnolia and
SMFI.
Held:
(1) The renegotiated terms of the CBA shall be for three (3) years. Article 253-A
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 noneconomic provisions, except representation.
From the congressional discussions, 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. Obviously, the framers of the law

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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) cannot 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. As a matter of policy the
parties are encouraged to enter into a renegotiated CBA with a term which would
coincide 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.volving all workers.
(2) No. As a result of the spin-offs: 1. Each of the companies are run by, supervised and
controlled by different management teams including separate human resource/personnel
managers. 2. Each Company enforces its own administrative and operational rules and
policies and are not dependent on each other in their operations. 3. Each entity maintains
separate financial statements and are audited separately from each other.
Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit. There are various
factors which must be satisfied and considered in determining the proper constituency of
a bargaining unit. (1) will of the employees (Globe Doctrine); (2) affinity and unit of
employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions; (3) prior collective bargaining history; and (4)
employment status, such as temporary, seasonal and probationary employees. Even
assuming in gratia argumenti that at the time of the election they were regular
employees of San Miguel, nonetheless, these workers are no By RICKY BOY CABATU/ 3B/
L-100355 longer connected with San Miguel Corporation in any manner because Magnolia
has ceased to be a division of San Miguel Corporation and has been formed into a
separate corporation with a personality of its own. This development, which was brought
to our attention by private respondents, necessarily renders moot and academic any
further discourse on the propriety of the elections which petitioners impugn via the
recourse.

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ST. LUKE’S MEDICAL CENTER, INC. v, HON. RUBEN O. TORRES and ST. LUKE’S
MEDICAL CENTER ASSOCIATION-ALLIANCE OF FILIPINO WORKERS (“SLMCEA-
AFW”) 
G.R. No. 99395. June 29, 1993 
Melo, J.
Doctrine:
Article 253-A of the Labor Code, speaks of agreements by and between the parties, and
not arbitral awards . . . 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.
Facts:
Private respondent SLMCEA-AFW brought to the attention of petitioner via a letter dated
July 4, 1990 that the 1987-1990 was about to expire, and manifested in the process that
private respondent wanted to renew the CBA. This development triggered round-table
talks on which occasions petitioner proposed, among other items, a maximum across-
the-board monthly salary increase of P375.00 per employee, to which proposal private
respondent demanded a P1,500.00 hike or 50% increase based on the latest salary rate
of each employee, whichever is higher.
A deadlock on issues, especially that bearing on across-the-board monthly and meal
allowances followed and to pre-empt the impending strike as voted upon by a majority of
private respondent's membership, petitioner lodged the petition below. The Secretary of
Labor immediately assumed jurisdiction and the parties submitted their respective
pleadings.
On January 28, 1991, public respondent Secretary of Labor issued the Order now under
challenge. Said Order contained a disposition on both the economic and non-economic
issues raised in the petition. One of the rulings in the order is the granting of the
retroactive effect to the enforceability of the CBA.
Petitioner argues that the Order of January 28, 1991 is violative of Article 253-A of the
Labor Code, particularly its provisions on retroactivity. Said Article pertinently provides:
xxx xxx xxx
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.
Petitioner argues that in granting retroactive effect to the enforceability of the CBA,
public respondent committed an act contrary to the above provision of law, pointing out
that the old CBA expired on July 30, 1990 and the questioned order was issued on
January 28, 1991. Petitioner theorizes that following Article 13 of the Civil Code which
provides that there are 30 days in one month, the questioned Order of January 28, 1991
was issued beyond the six-month period, graphically shown thus:
July 30, 1990 Expiration

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July 31 = 1 day 
August 1-31, 1990 = 31 days 
September 1-30, 1990 = 30 days 
October 1-31, 1990 = 31 days 
November 1-30, 1990 = 30 days 
December 1-31, 1990 = 31 days 
January 1-28, 1991 = 28 days 
————————— 
TOTAL = 182 days
(6 months and 2 days)
Private respondent agrees with the Labor Secretary's view that Article 253-A of the Labor
Code does not apply to arbitral awards such as those involved in the instant case.
According to private respondent, Article 253-A of the Labor Code is clear and plain on its
face as referring only to collective bargaining agreements entered into by management
and the certified exclusive bargaining agent of all rank-and-file employees therein within
six (6) months from the expiry of the old CBA.
Issues:
(1) Do petitioner's evidence and arguments provide adequate basis for the charge of
alleged grave abuse of discretion committed by public respondent in his Order of
January 28, 1991 as to warrant its annulment by this Court?
(2) Should the CBA be given retroactive effect?
Ruling of the SC:

(1) NO. There is no grave abuse of discretion.
We rule that the Order, particularly in its disposition on the economic issues, was not
arbitrarily imposed by public respondent. A perusal of the Order shows that public
respondent took into consideration the parties' respective contentions, a clear indication
that he was keenly aware of their contrary positions. Both sides having been heard, they
were allowed to present their respective evidence. The due process requirement was thus
clearly observed. Considering public respondent's expertise on the subject and his
observance of the cardinal principles of due process, the assailed Order deserves to be
accorded great respect by this Court. Equally worth mentioning is the fact that in
resolving the economic issues, public respondent merely adopted in toto petitioner's
proposals. Consequently, petitioner cannot now claim that the awards are unreasonable
and baseless. Neither can it deny having made such proposals, as it attempted to do in
its Motion for Reconsideration of the challenged Order before public respondent and
which it continues to pursue in the instant petition. It is too late in the day for such
pretense, especially so because petitioner failed to controvert private respondent's
allegation contained in its Comment to the petition before the Labor Secretary that
petitioner had offered as its last proposal said salary and meal allowance increases. As
correctly pointed out by public respondent, petitioner failed, when it had the chance, to
rebut the same in its Reply to said Comment, considering that the resolution of the labor
dispute at that time was still pending. Any objection on this point is thus deemed waived.
We do not see merit in petitioner's theory that the awards were granted prematurely. In
its effort to persuade this Court along this point, petitioner denies having negotiated with
private respondent SLMCEA-AFW. Petitioner collectively refers to all the talks conducted
with private respondent as mere informal negotiations due to the representation issue
involving AFW. Petitioner thus argues that in the absence of any formal negotiations, no
collective bargaining could have taken place. Public respondent, petitioner avers, should
have required the parties instead to negotiate rather than prematurely issuing his order.

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(2)
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 petitioner. Under the
circumstances of the case, Article 253-A cannot be properly applied to herein case. As
correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing
petitioner's Motion for Reconsideration — Anent the alleged lack of basis for the
retroactivity provisions awarded, we would stress that the provision of law invoked by the
Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the
parties, and not arbitral awards . . . 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. 

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GERARDO RIVERA v. HON. EDGARDO ESPIRITU

G.R. No. 135547, January 23, 2002
Quisumbing, J.
Doctrine:
Nothing prohibits the parties from waiving or suspending the mandatory timetables and
agreeing on the remedies to enforce the same. Right to free collective bargaining
includes the right to suspend it.
Facts:
To address the problems of the ailing flag carrier, on September 23, 1998, Philippine
Airlines (PAL) ceased operations and sent notices of termination to its employees.
Consequently, on September 27, 1998, the Philippine Airlines Employees Association
(PALEA) board wrote again to the Office of the President and submitted a proposal. The
PAL management accepted the said PALEA proposal. During the DOLE-supervised
referendum, majority of the union members accepted the PAL-PALEA agreement. As a
result, on October 7, 1998, PAL resumed domestic operations. However, on the same
date, seven officers and members of PALEA filed this petition to annul the September 27,
1998 agreement on the ground, among others, that the suspension of the PAL-PALEA
CBA for a period of 10 years as provided therein was unconstitutional and contrary to
public policy.
The Court ruled that 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. This Court found 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 satisfied the first purpose of Article 253-A. The other purpose is to assign
specific timetables wherein negotiations become a matter of right and requirement.
Nothing in Article 253-A of the Labor Code prohibits the parties from waiving or
suspending the mandatory timetables and agreeing on the remedies to enforce the same.
The PAL-PALEA agreement 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.
Issue:
Is the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of the
PAL-PALEA CBA unconstitutional and contrary to public policy?
Ruling of the SC:

No. 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, and 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.
Article 253-A of the Labor Code has a two-fold purpose—one is to promote industrial
stability and predictability, and 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. The assailed PAL-PALEA agreement was the result

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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.
The right to free collective bargaining, after all, includes the right to suspend it. 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 collective
bargaining. The right to free collective bargaining, after all, includes the right to suspend
it.
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. 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. 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.

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PHILIPPINE AIRLINES, INC. (PAL) vs. NATIONAL LABOR RELATIONS

COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA, and PHILIPPINE
AIRLINES EMPLOYEES ASSOCIATION (PALEA)
GR No. 85985, August 13, 1993 
Melo, J. 
TOPIC: Employees’ right to participate in policy-making
Doctrine:
Employees have a right to participate in the deliberation of matters which may affect
their rights and the formulation of policies relative thereto and one such matter is the
formulation of a code of discipline.
Facts:
On March 15, 1985, PAL completely revised its 1966 Code of Discipline (Code). The Code
was circulated among the employees and was immediately implemented, and some
employees were subjected to the disciplinary measures.
The PALEA filed a complaint before the NLRC contending that PAL, by its unilateral
implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E
and G of Art 249 (*260) and Art 253 (*264) of the Labor Code. PALEA alleged that copies
of the Code had been circulated in limited numbers; that being penal in nature the Code
must conform with the requirements of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss the substance
of the Code with PALEA; that employees dismissed under the Code reinstated and their
cases subjected to further hearing; and that PAL be declared guilty of unfair labor
practice and be ordered to pay damages.
PAL asserted its prerogative as an employer to prescribe rules and regulations regarding
employees' conduct in carrying out their duties and functions, and alleging that it had not
violated the CBA or any provision of the Labor Code.
Decision of the Labor Arbiter:

Found no ULP. However, ordered PAL to furnish all employees with the Code and discuss
with PALEA the objectionable provisions of such Code.
Decision of the NLRC:

Affirmed dismissal of ULP charge but ordered that the Code be reviewed and discussed
with PALEA.
Issue:
May the management be compelled to share with the union or its employees its
prerogative of formulating a code of discipline?
Ruling of the SC:

Yes. Employees have a right to participate in the deliberation of matters which may
affect their rights and the formulation of policies relative thereto and one such matter is
the formulation of a code of discipline.
The Constitution has recognized the principle of “shared responsibility” between

employers and workers and has likewise recognized the right of workers to participate in
“policy and decision-making process affecting their rights . . .” The latter provision was
interpreted by the Constitutional Commissioners to mean participation in “management.”

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It was only on March 2, 1989, with the approval of RA 6715, amending Art 211 of the
Labor Code, that the law explicitly considered it a State policy "to ensure the
participation of workers in decision and policy-making processes affecting their rights,
duties and welfare." However, even in the absence of said clear provision of law, the
exercise of management prerogatives was never considered boundless.
Management's prerogatives must be without abuse of discretion. It is circumscribed by
limitations found in law, a CBA, or the general principles of fair play and justice.
Moreover, it must be duly established that the prerogative being invoked is clearly a
managerial one.
Verily, a line must be drawn between management prerogatives regarding business

operations per se and those which affect the rights of the employees. In treating the
latter, management should see to it that its employees are at least properly informed of
its decisions or modes of action. PAL asserts that all its employees have been furnished
copies of the Code, the LA and the NLRC found to the contrary, which finding, is entitled
to great respect.
In the subsequent CBA entered into by the parties, PALEA “recognizes the right of the
Company to determine matters of management policy and Company operations and to
direct its manpower. Management of the Company includes the right to organize, plan,
direct and control operations, to hire, assign employees to work, transfer employees from
one department to another, to promote, demote, discipline, suspend or discharge
employees for just cause; to lay-off employees for valid and legal causes, to introduce
new or improved methods or facilities or to change existing methods or facilities and the
right to make and enforce Company rules and regulations to carry out the functions of
management. The exercise by management of its prerogative shall be done in a just,
reasonable, humane and/or lawful manner.”
Such provision in the CBA may not be interpreted as cession of employees' rights to
participate in the deliberation of matters which may affect their rights and the
formulation of policies relative thereto. And one such matter is the formulation of a code
of discipline. Industrial peace cannot be achieved if the employees are denied their just
participation in the discussion of matters affecting their rights.

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casE DIGEST IN LABOR RELATIONS

COLLECTIVE BARGAINING CONCEPT AND PROCEDURE

1. Kiok Loy vs. NLRC (141 SCRA 179)

3G | CHRISTINE TAN UMALI CBA | Page 1 of 32

Contention of the Company:

3G | CHRISTINE TAN UMALI CBA | Page 2 of 32

Ruling of the SC:

Collective bargaining which is defined as negotiations towards a collective agreement, is

All of these preconditions are undisputedly present in the instant case.

A Company's refusal to make counter proposal if considered in relation to the entire

Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining

3G | CHRISTINE TAN UMALI CBA | Page 3 of 32

3G | CHRISTINE TAN UMALI CBA | Page 4 of 32

LAKAS NG MANGGAGAWANG MAKABAYAN vs MARCELO ENTERPRISES

Court of Industrial Relations’ Decision:

3G | CHRISTINE TAN UMALI CBA | Page 5 of 32

Ruling of the SC:

In fairness to the complaining employees, however, We treated their Motion for

3G | CHRISTINE TAN UMALI CBA | Page 6 of 32

3G | CHRISTINE TAN UMALI CBA | Page 7 of 32

demand a certification and to refuse to negotiate until such official certification is

3G | CHRISTINE TAN UMALI CBA | Page 8 of 32

FERNANDO v. ANGAT LABOR UNION

Court of Industrial Relations’ Decision:

Ruling of the SC:

3G | CHRISTINE TAN UMALI CBA | Page 9 of 32

The employer-employee relation is not necessarily terminated by a severance that was

(2) ONLY ANGAT-MANILA IS LIABLE TO PAY BACKWAGES.

3G | CHRISTINE TAN UMALI CBA | Page 10 of 32

Divine Word University of Tacloban vs Secretary of Labor and Employment and

DWUEU-ALU, consonant with the agreement, submitted its collective bargaining

Decision of the Med-Arbiter:

3G | CHRISTINE TAN UMALI CBA | Page 11 of 32

3G | CHRISTINE TAN UMALI CBA | Page 12 of 32

MANILA ELECTRIC COMPAN V. .THE HONORABLE SECRETARY OF LABOR

The Labor Secretary granted the petition through its Order.

Ruling of the SC:

3G | CHRISTINE TAN UMALI CBA | Page 13 of 32

fact, as against the unions unsubstantiated Yuletide consumption claim, MERALCO

3G | CHRISTINE TAN UMALI CBA | Page 14 of 32

(2) On Retroactivity Of The CBA

3G | CHRISTINE TAN UMALI CBA | Page 15 of 32

In the 2000 case:

Ruling of the SC:

3G | CHRISTINE TAN UMALI CBA | Page 16 of 32

HSBC EMPLOYEES UNION V. NATIONAL LABOR RELATIONS COMMISSION AND

Contenton of the Union:

3G | CHRISTINE TAN UMALI CBA | Page 17 of 32

Ruling of the SC:

(2) It is management prerogative.

3G | CHRISTINE TAN UMALI CBA | Page 18 of 32

It is the prerogative of management to regulate, according to its discretion and

3G | CHRISTINE TAN UMALI CBA | Page 19 of 32

COLEGIO DE SAN JUAN DE LETRAN V. ASSOCIATION OF EMPLOYEES AND

3G | CHRISTINE TAN UMALI CBA | Page 20 of 32

Yes, Colegio de San Juan de Letran is guilty of unfair labor practice.

3G | CHRISTINE TAN UMALI CBA | Page 21 of 32

NEW PACIFIC TIMBER v. NLRC

Contention of New Pacific Timber:

Ruling of the SC:

3G | CHRISTINE TAN UMALI CBA | Page 22 of 32

3G | CHRISTINE TAN UMALI CBA | Page 23 of 32

3G | CHRISTINE TAN UMALI CBA | Page 24 of 32

(2) On Retroactivity Of The CBA 

Ruling of the SC: 