Doubt or Ambiguity in the CBA
prerogative to demand that academic
13 Holy Cross of Davao College, Inc. v. Holy Cross
Faculty Union KAMAP
June 27, 2005 | Sandoval-Gutierrez, J. |
Petitioner/s: Holy Cross of Davao College, Inc.
Respondent/s: Holy Cross Faculty Union KAMAP
Doctrine: Any doubt or ambiguity in the contract (CBA)
between management and the union members should
be resolved in favor of the latter. a. The
provisions are very clear that there is no need for
interpretation. Contracts which are not ambiguous are
to be interpreted according to their literal meaning and
not beyond their obvious intendment.
Facts:
1. Petitioner Holy Cross of Davao College, Inc. is a
tertiary level educational institution at Sta. Ana Ave.,
Davao City.
2. June 1997: Petitioner and Respondent Holy Cross
Faculty Union KAMAP executed a collective
bargaining agreement (CBA), which provided for a
faculty development scholarship for academic
teaching personnel.
a. Section 1 of Article XIII of the CBA provided: “It
has always been the policy of the Holy Cross
of Davao College that academic teaching
personnel must develop within their areas of
competence and in so doing have exercised its
teaching personnel take the necessary
measure to effect their upgrading in acquiring
higher academic degree. In view thereof, the
Management shall grant to all academic
personnel a grant-in-aid program, where the
academic teaching personnel, whenever
scholarship opportunities should arise, be
afforded a leave of absence to further their
studies in Institutions of Higher Learning with
a grant-in- aid equivalent to their salary and
allowance (when there is a mandated wage
order) that the concerned academic teaching
personnel is receiving at the time of the
scholarship grant, under the following
conditions:
That whenever the school wishes to grant
faculty development scholarships, notice
to the entire faculty of the department
concerned shall be made through a public
announcement in the bulletin board. In
cases where there are two (2) or more
applicants, the Department Head shall set a
committee chosen from among the regular
and permanent faculty of the department
composed of at least three (3) but not more
than five (5) members.
 That the academic teaching personnel
grantee shall finish his/her scholarship
grant within time frame of the scholarship
grant unless prevented by some causes
over, above and beyond his/her control.
That the academic teaching personnel
grantee shall sign a contract with the Holy
Cross of Davao College to serve therein for
at least two (2) years for every year of
scholarship study.
That should he/she fail to comply with the
conditions of the scholarship grant,
she/she shall reimburse the Holy Cross of
Davao College with all the amount he/she
has received during the pendency of the
grant together with all interest thereon
allowed by law. No clearance shall be given
until full reimbursement plus interest would
have been made.
3. January 16, 1998: petitioner was invited for the 1999
Monbusho scholarship grant (In-Training for
Teachers) offered and sponsored by the Japanese
government, through the Japan Information Cultural
Center (JICC).
a. Jean Legaspi, a permanent English teacher
and member of respondent Union, submitted
her application.
b. March 31, 1999: petitioner issued Policy
Statement and Guidelines on Educational
Trips Abroad.
c. When Jean’s application was accepted by
JICC, she requested petitioner to allow her to
be on study leave with grant-in aid equivalent
to 18 months salary and allowance pursuant
to Section 1, Article XIII of the CBA.
d. Petitioner denied her request because she
was not entitled to grant in-aid under its policy
(see fact 3b), which required that
i. The course must be related to the area
of the teacher’s competence
ii. The course must be in the pursuit of a
higher degree.
e. Petitioner argued that these conditions were
not satisfied since the training will be
conducted in a foreign language and will only
lead to the grant of a certificate of completion
and not a masters or higher degree.
f. Petitioner only granted her 12 months study
leave without pay.
4. Before Jean left, she asked respondent Union to
submit the matter to the Grievance Committee,
which was not settled.
a. Respondent Union filed a complaint for
payment of grant-in aid before the National
Conciliation and Mediation Board (NCMB)
 against petitioner. Both agreed to submit the scholarship and it encouraged its
case for voluntary arbitration. faculty to apply for said scholarship.
b. Voluntary Arbitrator: ruled IFO respondent and This shows that the petitioner believed
ordered petitioner to pay Jean’s grant-in aid that availing of the training will
benefits. contribute not only to the professional
5. Petitioner’s MR was denied, so it appealed before advancement of its faculty, but also to
the Court of Appeals. the development of the quality
6. CA: IFO Respondent. It ruled that education in the school.
a. The terms of the CBA are clear and leave little iii. The fact that it would be conducted in
room for further interpretation. It is considered Japanese does not negate the
the law between the parties, since it contains program’s relevance to Jean’s work as
the agreed terms of employment of the EE an English teacher.
with his ER. Those unilaterally imposed orders iv. Lastly, while no degree, but only a
or rules qualifying the terms contained in the certificate will be conferred, does not
CBA, such as the Policy, are subordinate to the bar Jean from availing of the benefits
CBA. At most such Policy is merely suppletory under the CBA. The CBA only
and can neither contradict or undermine the mentioned “higher degree”, which is a
terms found in the CBA. broad term that can include programs
b. Re: petitioner’s arguments (see fact 3e) that grant certificates and not degree.
i. Jean’s foreign training is clearly related v. The construction of any ambiguity in
to her work with petitioner1 and will the CBA, such as which course would
lead to an advancement in her be relevant to Jean’s job, and whether
qualifications for her job. such course comprises “higher
ii. Furthermore, it was petitioner who studies” should be made in favor of the
advertised the availability of the employee.

1
The training program which focuses on areas such as (a) Educational Management
(e.g. Educational Administration and Finance, School Management), (b) Methods of
Education (e.g. Teaching-Learning Process System, Curriculum Development,
Educational Evaluation), (c) Study of Special Subjects (e.g. Mathematics, Physics,
Chemistry, Physical Education), and (d) Observation Study (e.g. Inspection of a Class
Participation in Special Extra-curricular Practice, Inspection of Various Educational
Research Services).
7. Petitioner’s MR was denied, so it filed a R45 petition.
It argued that
a. CA’ interpretation of their CBA restricted their
right to academic freedom;
b. It is not obliged to grant Jean a grant-in aid
since she failed to comply with the
substantive requirements of the CBA, which
are: the course is within Jean’s competence
and she will acquire higher academic degree.
i.
Ruling:
W/N Jean is entitled to the grant-in aid in light of the
CBA between the parties - YES. Any doubt or ambiguity
in the contract (CBA) between management and the
union members should be resolved in favor of the
latter.
2. These provisions state that academic teaching
1. Court’s basis
a. Article 1702 of the New Civil Code: “(I)n case
of doubt, all labor legislation and all labor
contracts shall be construed in favor of the
safety and decent living for the laborer.”
b. Article XIII, Section 1 of the CBA:”…
Management shall grant to all academic
personnel a grant-in-aid program, where the
academic teaching personnel, whenever
scholarship opportunities should arise, be
afforded a leave of absence to further their
studies in Institutions of Higher Learning with
a grant-in- aid equivalent to their salary and
allowance…”
c. Paragraph 2 of Petitioner’s Policy Statement
and Guidelines for Trips Abroad for
Professional Growth (SY 1998-1999): “The
school recognizes that educational trips
abroad promote both personal and
professional growth. Hence, employees may
travel abroad for study tours and to attend
seminars, conferences, and other related
academic pursuits. The school may provide
financial assistance subject to the following
guidelines: 2. That the employee is the official
representative of the school upon
recommendation of the office head. As such,
he/she receives regular salary.
personnel, like Jean, as recipient of a scholarship
grant are entitled to a leave of absence with a grant-
in-aid equivalent to their monthly salary and
allowance, provided such grant is to promote their
professional growth or to enhance their studies in
institutions of higher learning.
a. The provisions are very clear that there is no
need for interpretation. Contracts which are
not ambiguous are to be interpreted according
to their literal meaning and not beyond their
obvious intendment.
 b. Mactan Workers Union v. Aboitiz: terms and
conditions of a CBA constitute the law
between the parties. Those who are entitled to
its benefits can invoke its provisions.

Dispositive
WHEREFORE, the petition is DENIED. The assailed
Decision dated June 5, 2002 and Resolution dated
October 18, 2002 of the Court of Appeals in CA-G.R. SP
No. 65507 are AFFIRMED. Costs against petitioner.
Notes
Insert notes
[Contract interpretation when general and specific
provisions are inconsistent]
14 Visayan Electric Company Employees Union-ALU-
TUCP V. Visayan Electric Company, Inc.
July 22, 2015 | Perlas-Bernabe J. |
Petitioner/s: Respondent Visayan Electric Company,
Inc. (VECO) - corporation engaged in the supply and
distribution of electricity in Cebu City and its
neighboring cities, municipalities, and barangays.
Respondent/s: Visayan Electric Company Employees
Union-ALU-TUCP - exclusive bargaining agent of
VECO's rank-and-file employees.
Casmero Mahilum - the Union's president from October
2007 until his termination from employment on
October 28, 2010.
Doctrine: the CBA is the law between the parties and
they are obliged to comply with its provisions. If the
provisions of the CBA seem clear and unambiguous,
the literal meaning of their stipulations shall control.
However, as in this case, when general and specific
provisions of the CBA are inconsistent, the specific
provision shall be paramount to and govern the general
provision.
Facts:
• Before Mahilum was elected as union officer, he
was transferred from VECO's Public Relations
Section to its Administrative Services Section
without any specific work. When he was elected
as union secretary, he was transferred to the
Line Services Department as its Customer
Service Representative.
• At the time of his election as union president,
VECO management allegedly:
• terminated active union members without
going through the grievance machinery
procedure prescribed under the Collective
Bargaining Agreement (CBA);
• refused to implement the profit-sharing
scheme provided under the same CBA;
• took back the motorbikes issued to active
union members; and
• revised the electricity privilege granted to
VECO's employees.
• Consequently, union members marched on the
streets of Cebu City to protest VECO's refusal to
comply with the CBA.
• Mahilum and other union officers were
interviewed by the media, and they handed
out a document containing their
grievances against VECO, the gist of which
came out in local newspapers.
• On May 8, 2009, Mahilum was issued a Notice to
Explain why he should not be terminated due to
 loss of trust and confidence, as well as in
violating the Company Code of Discipline, for
causing the publication of what VECO deemed
as a libelous article. The other union officers
likewise received similar notices for them to
explain their actions.
• On May 20, 2009, the union officers were
notified of the administrative investigation to be
conducted.
• During the investigation, the Union's counsel
initially raised its objection to the proceedings
and insisted that the investigation should be
conducted through the grievance machinery
procedure, as provided in the CBA. However,
they agreed to proceed with the investigation,
with Union VP Gimenez's counsel representing
the Union.
• Prior to the said investigation, the Union filed a
Notice of Strike with the NCMB which facilitated
a series of conferences that yielded a MOA. The
parties also resolved the issue of electricity
privilege and agreed before the NCMB on a
conversion rate of said privilege to basic pay.
Moreover, the administrative investigation on
the alleged libelous publication was deferred
until after the CBA renegotiation.
• However, even before the conclusion of the CBA
renegotiation, several complaints for libel were
filed against Mahilum and the other union
officers.
• The administrative hearing on the charges
against Mahilum resumed but he
protested referring to it as "moro-moro" or
"kangaroo" and insisting that the investigation
should follow the grievance machinery
procedure under the CBA.
• Nonetheless, VECO's management carried on
with its investigation and issued a notice
terminating Mahilum.
• The Union filed another Notice of Strike on the
grounds of unfair labor practice, specifically
union busting for the dismissal and/or
suspension of its union president and officers,
refusal to bargain collectively, as well as non-
observance of the grievance procedure in their
CBA.
• The SOLE intervened and issued an Order
certifying the labor dispute to the NLRC for
compulsory arbitration. Consequently, the strike
was enjoined; Mahilum was ordered reinstated
in the payroll; and the parties were directed to
refrain from committing any act that would
exacerbate the situation.
• NLRC
• VECO lawfully investigated the suspended
or terminated employees and union
officers/members, instead of subjecting
 their respective cases to the grievance
machinery procedure provided in the CBA.
• In resolving apparently conflicting
provisions in the CBA, the NLRC applied
the specific provision found in Section 13
of Article XIV that disciplinary actions
shall be governed by the rules and
regulations promulgated by the company.
Since the administrative investigations
conducted by VECO were found to have
complied with procedural due process
requirements, there was no unfair labor
practice to speak of.
• Mahilum was terminated for a just and
valid cause under Article 282 (c)when he
caused the publication of a document
which was deemed to have dishonored
and blackened the memory of former
corporate officer Luis Alfonso Y. Aboitiz,
besmirched VECO's name and reputation,
and exposed the latter to public hatred,
contempt, and ridicule.
Ruling:
WON the refusal of VECO to follow the grievance
machinery procedure under Section 4, Article XVII of
the CBA in the suspension and termination from
employment of the other union officers and members
constituted unfair labor practice. NO.
(see doctrine)
Section 4, Article XVII of the CBA states that "any
difference of opinion, controversy, dispute problem or
complaint arising from Company Union or Company-
Worker relations concerning the interpretation or
application of this Agreement or regarding any matter
affecting Company Union or Company-Worker relations
shall be considered a grievance.”
On the other hand, under Section 13, Article XIV, "the
Company agrees that henceforth there shall be a fair
and uniform application of its rules and regulations. It
is understood that disciplinary actions imposed on
employee or laborer shall be governed by the rules and
regulations promulgated by the Company as well as
those provided for by existing laws on the matter.
The sweeping statement "any matter affecting
Company-Union or Company Worker relations shall be
considered a grievance" under Section 4, Article XVII is
general, as opposed to Section 13, Article XIV of the
CBA, which is specific, as it precisely refers to "what
governs employee disciplinary actions."
So, the NLRC correctly ruled that VECO acted within the
bounds of law when it proceeded with its
administrative investigation of the charges against
other union officers and members.
This is consistent with jurisprudential rulings
supporting an employer's free reign and "wide latitude
of discretion to regulate all aspects of employment,
including the prerogative to instill discipline in its
employees and to impose penalties, including
dismissal, upon erring employees (management
prerogative). The Labor Code does not excuse
employees from complying with valid company
policies and reasonable regulations for their
governance and guidance.
WON Mahilum was validly dismissed - YES.
VECO anchored its termination of Mahilum on Article
282 (c) and Articles 5.1 and 4.4 of VECO's Company
Code of Discipline
VECO found the following "Press Release” as libelous
for dishonoring and blackening the memory of then
corporate officer Luis Alfonso Y. Aboitiz, as well as for
maliciously impeaching and besmirching the
company's name and reputation
As the NLRC aptly pointed out, "instead of him and the
rest of the union officers bringing their sentiments
and/or grievances against the management to the
proper forum, they intentionally, knowingly and
purposefully breached their employer's trust, by issuing
derogatory statements and causing their publication,
apparently, to incite public condemnation against the
latter.” It bears noting that, while petitioners harp on
the refusal of VECO to follow the grievance machinery
procedure under the CBA, they conveniently forgot that
they themselves shunned the very procedure to which
they now hang by a thread.
Mahilum was not an ordinary rank and-file employee.
His job entailed the observance of proper company
procedures relating to processing and determination of
electrical service applications culminating in the
signing of service contracts. He was further entrusted
with handling the accounts of customers and
accepting payments from them. Not only that, it was
his duty to address customer complaints and requests.
Being a frontliner of VECO, with the most consistent
and direct interaction with customers, Mahilum's job
involved a high degree of responsibility requiring a
substantial amount of trust and confidence on the part
of his employer.
However, with the derogatory statements issued by
Mahilum that were intended to incite, not just public
condemnation of VECO, but antagonism and
obstruction against rate increases in electricity that it
may be allowed, by law, to fix, there can be no dispute
that VECO had lost its trust and confidence in Mahilum
and his ability to perform his tasks with utmost
efficiency and loyalty expected of an employee
entrusted to handle customers and funds.
Mahilum was terminated for a just and valid cause.
Moreover, as declared by the NLRC, VECO complied
with the procedural due process requirements of
furnishing Mahilum with two written notices before the
termination of employment can be effected.
Dispositive
WHEREFORE, yada yada
Notes
PRESS RELEASE
VECEU-ALU President, Casmero A. Mahilum, said that
since 2004 up to present the new VECO Management
under the administration of the Aboitizes unceasingly
attack the local Union by continuously limit (sic) its
membership and diminish (sic) and/or abolish (sic)
worker's benefits and privileges stipulated in the CBA.
x x x. Through clever use of psychological warfare,
intimidation, deception, divide and rule tactic and
taking great advantage of the weakness of the Union
especially of the leadership during that time, the [new]
Management under the late Alfonso Y. Aboitiz was able
to secure a Memorandum of Agreement (MOA) signed
by the Union and Management representatives and
ratified by the General Membership that gave
Management more flexibility in dealing with labor.
The [l]ocal Union wrote a letter to Mr. Aboitiz
expressing full support of his campaign for energy
conservation x x x. But Mr. Aboitiz was too hard and too
arrogant to deal with. x x x.
x x x. We, therefore, ask the general public to
understand our plight and support our actions. We also
urge everyone to oppose any electricity rate increase
filed by VECO and NAPOCOR at the Energy Regulatory
Commission (ERC). Any rate increase in the electricity
will only worsen the already burdened public and
further increase profits for the Aboitizes. The entire
Union membership are one with you in condemning
such increase and brazen connivance of VECO and
NAPOCOR to justify increases in electricity rate
On Art 282 (c)
Loss of trust and confidence must be based on willful
breach of the trust reposed in the employee by his
employer. Such breach is willful if it is done
intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.
Moreover, it must be based on substantial evidence
and not on the employer's whims or caprices or
suspicions[,] otherwise, the employee would eternally
remain at the mercy of the employer. x x x. And, in order
to constitute a just cause for dismissal, the act
complained of must be work-related and show that the
employee concerned is unfit to continue working for
the employer. In addition, loss of confidence x x x is
premised on the fact that the employee concerned
holds a position of responsibility, trust, and confidence
or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as
handling or care and protection of the property and
assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is
penalized.
COLLECTIVE BARGAINING – CONTRACT DURATION
AND RENEWAL
15 MERALCO V. SEC. QUISIMBING and MERALCO
EMPLOYEES AND WORKERS ASSOCIATION (MEWA)
August 2001, | YNARES-SANTIAGO, J. | RESOLUTION
Petitioner/s: Manila Electric Company (MERALCO)
Respondent/s: Hon. Secretary of Labor Leonardo
Quisimbing and MERALCO Employees and Workers
Association (MEWA)
Facts:
● MERALCO and MEWA had a CBA-related dispute
and the same was brought to the NLRC; eventually
the case went up to the Secretary of Labor Leonardo
Quisimbing (SOLE)
● 28 December 1996 – the SOLE issued an order on
the parties' motion for reconsiderations. MERALCO
appealed the SOLE's decision to the Supreme Court.
● 27 January 1999 – the SC issued a Decision
ordering that the CBA should be effective for a term
of 2 years counted from 28 December 1996 up to 27
December 1998
● 22 February 2000 – the SC issued a Resolution,
modifying the aforementioned decision, and ruling
that where the arbitral award was granted six
months AFTER the expiration of the existing CBA,
AND there is no agreement between the parties as
to the date of effectivity thereof, then, the arbitral
award shall retroact to the 1st after the six-month
period following the expiration of the last day of the
CBA.
● Unfortunately, the dispositive portion of this SC
Resolution inadvertently stated that the arbitral
award shall retroact from 01 December 1995 up to
30 November 1997.
● In this Resolution the Court held:
○ Labor laws are silent as to when an arbitral
award in a labor dispute where the Secretary
(of Labor and Employment) had assumed
jurisdiction by virtue of Article 263 (g) of the
Labor Code shall retroact. In general, a CBA
negotiated within six months after the
expiration of the existing CBA retroacts to the
day immediately following such date and if
agreed thereafter, the effectivity depends on
the agreement of the parties. On the other
hand, the law is silent as to the retroactivity of a
CBA arbitral award or that granted not by virtue
of the mutual agreement of the parties but by
intervention of the government. Despite the
silence of the law, the Court rules herein that
CBA arbitral awards granted after six months
from the expiration of the last CBA shall
 retroact to such time agreed upon by both public interest) will face serious losses if the decision
employer and the employees or their union. is fully retroacted, the Court shortened the period.
Absent such an agreement as to retroactivity,
● Petitioner argues:
the award shall retroact to the first day after
○ Article 253-A of the Labor Code presupposes
the six-month period following the expiration
the existence of a prior or subsisting CBA,
of the last day of the CBA should there be one.
hence the exercise by the SOLE of his
In the absence of a CBA, the Secretary's
discretionary powers, as stated in the last
determination of the date of retroactivity as
sentence of the assailed resolution, will never
part of his discretionary powers over arbitral
come to pass.
awards shall control.
○ Resolution contravenes jurisprudence in Union
● Such award also stated that the amount of PHP
of Filipro Employees v. NLRC, Pier 8 Arrastre v.
2,000 will be paid to the workers for the years 1995
Roldan-Confesor and St. Lukes Medical Center v.
to 1996.
Torres
● Unsatisfied, MERALCO filed with the SC on March
○ Invokes the Court's ruling in the Decision
17, 2000 a Motion for Partial Modification Re:
(which was modified in the assailed the
Resolution Dated 22 February 2000)
Resolution) that in the absence of an
agreement between parties, an arbitrated CBA
Ruling: takes on the nature of any judicial/ quasi-
judicial award. It operates and may be
W/N the arbitral award should be applied retroactively
executed only prospectively unless there are
– YES, but not fully considering the circumstances in
legal justifications for is retroactive
this case. Where an arbitral award is granted BEYOND
application.
six months after the expiration of the existing CBA AND
○ Retroactive application of the arbitral award
there is no agreement between the parties as to the
will cost it at least PHP 800 Million, hence
date of effectivity thereof, the arbitral award shall
petitioner prays that the two-year term of the
retroact to the first day after the six-month period
CBA be fixed from 28 December 1996 to
following the expiration of the last day of the CBA. But,
December 27 1998, and that the PHP 2000
since MERALCO (which is in an industry imbued with
 award to the rank and file employees be paid
during the same two year period.
● Respondent posits:
○ MR is unauthorized since the president of the
petitioner corporation Manuel Lopez had
already categorically stated in a memo to the
rank and file employees that the management
will comply with the Court's ruling.
○ Assailed resolution should be amended to
comply with the St. Lukes ruling, i.e. in the
absence of a specific provision of law
prohibiting retroactivity, arbitral awards
issued by the SOLE pursuant to 263(g) of the
Code are subject to the plenary and
discretionary powers of the SOLE to determine
effectivity thereof.
○ From St. Lukes: in the absence of a specific
provision of law prohibiting retroactivity of the
effectivity of arbitral awards issued by the
SOLE.
● Supreme Court holds:
○ Our Decision, which was amended by the
assailed Resolution in this case, ordered that
the CBA should be effective for two years,
counted from the date of the SOLE's Order, i.e.
the award was given PROSPECTIVE effect.
[dates: 28 December 1996 to 27 December
1998]
○ Our Assailed Resolution (re Decision) ruled
that where an arbitral award granted BEYOND
six months after expiration of existing CBA
and there is no agreement between the parties
as to the date of effectivity, the arbitral award
shall RETROACT to the first day after the six-
month period following the expiration of the
last day of the CBA. Erroneously however, the
dates cited by this Resolution were the same
dates in the Decision (i.e. 28 Dec '96 to 27 Dec
98)
■ In deciding this resolution, the Court
took into account the following facts:
● MERALCO belongs to an industry
imbued with public interest thus
the SC cannot ignore the
enormous cost that petitioner will
bear as a consequence of the full
retroaction of the arbitral award to
the date of expiry of the CBA.
● This will have a drastic effect on
the national economy.
● The policy of social justice should
be upheld and the interests of the
working class should be
accommodated
 ○ The Court balanced the contrasting interests
of social justice and the importance of
protecting an industry imbued with public
interest and arrived at a formula that would
address the concerns of both sides.
○ The Court maintained the rule in the assailed
Resolution, pro hac vice.
○ Thus, the arbitral award would retroact to the
first day after the six-month period following
the expiration of the last day of the CBA.
Consonant with this rule, the two-year
effectivity must start from 01 June 1996 to 31
May 1998 and NOT 01 Dec. '95 to 30 Nov. '97.
○ During the interregnum between expiration of
the economic provisions of the CBA and the
date of effectivity of the arbitral award, the
hold-over principle shall govern.
■ Both parties of the CBA are to keep the
status quo and to continue in full force
and effect during the 60-day period
and/OR until a new CBA is agreed upon.
■ Despite lapse of the formal effectivity of
the old CBA, the law still considers the
same as continuing in force and effect.
Dispositive
WHEREFORE, the Motion for Partial Modification is
GRANTED. The Resolution of
February 22, 2000 is PARTIALLY MODIFIED as follows:
(a) the arbitral award shall retroact to the two-year
period from June 1, 1996 to May 31, 1998; (b) the
increased wage award of Two Thousand Pesos
(P2,000.00) shall be paid to the rank-and-file
employees during the said two-year period. This
Resolution is subject to the monetary advances
granted by petitioner to said employees during the
pendency of this case, assuming such advances had
actually been distributed to them.
Notes
Article 265 [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 such Collective
Bargaining Agreement, shall retroact to the day
immediately following such date. If any such
agreement is entered into beyond six months, the
parties shall agree on the duration of retroactivity
thereof. In case of a deadlock in the renegotiation of
the collective bargaining agreement, the parties may
exercise their rights under this Code.
[Contract duration and renewal – hold over principle]
16 Rivera v. Hon. Espiritu
January 23, 2002 | Quisumbing, J. |
Petitioner/s: GERARDO F. RIVERA, ALFRED A. RAMISO,
AMBROCIO PALAD, DENNIS R. ARANAS, DAVID
SORIMA, JR., JORGE P. DELA ROSA, and ISAGANI
ALDEA
Respondent/s: HON. EDGARDO ESPIRITU in his
capacity as Chairman of the PAL InterAgency Task
Force created under Administrative Order No. 16; HON.
BIENVENIDO LAGUESMA in his capacity as Secretary
of Labor and Employment; PHILIPPINE AIRLINES
(PAL), LUCIO TAN, HENRY SO UY, ANTONIO V.
OCAMPO, MANOLO E. AQUINO, JAIME J. BAUTISTA,
and ALEXANDER O. BARRIENTOS
Doctrine:
Article 253-A has a two-fold purpose - to promote
industrial stability and predictability and 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 right to free collective
bargaining, after all, includes the right to suspend it.
Facts:
• PAL pilots affiliated with the Airline Pilots
Association of the Philippines (ALPAP) went on a
three-week strike, causing serious losses to PAL.
• PAL’s financial situation went from bad to worse.
Facing bankruptcy, it adopted a rehabilitation plan
and downsized its labor force by more than one-
third.
• PALEA went on strike to protest the retrenchment
measures adopted by PAL, which affected 1,899
union members.
• When PAL and PALEA agreed to a more systematic
reduction he payment of separation benefits to all
retrenched employees, the strike ended.
• Then President Estrada issued Administrative Order
No. 16 creating an Inter-Agency Task Force to
address the problems of PAL.
o TheTask Force was composed of the
Departments of Finance, Labor and Employment,
Foreign Affairs, Transportation and
Communication, and Tourism, together with the
Securities and Exchange Commission (SEC).
o Espiritu, then Secretary of Finance, was
designated chairman of the Task Force.
 o It was “empowered to summon all parties
concerned for conciliation, mediation (for) the
purpose of arriving at a total and complete
solution of the problem.”
o Conciliation meetings were held between PAL
management and three unions, with the Task
Force as mediator.
• PAL management submitted to the Task Force an
offer by Lucio Tan (CEO of PAL) of a plan to transfer
shares of stock to its employees.
o 60,000 fully paid shares of stock worth
P5.00/share will be transferred to each employee
of PAL in the active payroll as of September 15,
1998; should any share-owning employee leaves,
he/she can either keep the shares or sell them to
his/her union or other PAL employees
o The aggregate shares of stock transferred to PAL
employees will allow them three members to the
PAL Board of Directors.
o For PAL to attain a degree of normalcy while
tackling its problems, it would request for a
suspension of the CBA for 10 years.
• The Board of Directors of PALEA voted to accept
Tan’s offer and requested the Task Force’s
assistance in implementing it. But since the union
members rejected the offer, PALEA Board of
Directors was pressured to reject Tan’s offer.
• PAL informed the Task Force that it was shutting
down its operations effective September 23, 1998,
preparatory to liquidating its assets and paying off
its creditors. According to PAL, given its labor
problems, rehabilitation was no longer feasible and
it had no alternative but to close.
• PALEA sought the intervention of the Office of the
President in convening the parties (PAL
management, PALEA, ALPAP, and FASAP, including
the SEC under the direction of the Inter-Agency Task
Force) to prevent PAL’s imminent closure.
• PALEA informed the DOLE that it had no objection
to a referendum on the Tan’s offer.
o 2,799 out of 6,738 PALEA members cast their
votes in the referendum under DOLE supervision
held on September 21-22, 1998.
o 1,055 voted in favor of Tan’s offer while 1,371
rejected it.
• PAL ceased its operations and sent notices of
termination to its employees.
• Two days later, PALEA wrote President Estrada
again seeking his intervention. PALEA offered a 10-
year moratorium on strikes and similar actions and
a waiver of some of the economic benefits in the
CBA. However, Tan rejected the counter-offer.
• On September 27, 1998, PALEA board again wrote
the President proposing new terms and conditions,
 subject to the ratification of the general
membership.2
• Among the signatories were Rivera etal, as officers
and/or members of the PALEA Board of Directors.
PAL accepted the proposal and referendum was
scheduled.
• 5,324 PALEA members cast their votes in a DOLE-
supervised referendum.
o 61% were in favor of accepting the PAL-PALEA
agreement, while 34% rejected it.
• PAL resumed domestic operations.
• Seven officers and members of PALEA filed this
instant petition to annul the September 27, 1998
agreement entered into between PAL and PALEA.
Ruling:
2
1. Each PAL employee shall be granted 60,000 shares of stock with a par value of
P5.00, from Mr. Lucio Tan’s shareholdings, with three (3) seats in the PAL Board and
an additional seat from government shares as indicated by His Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate representation
in committees or bodies which deal with matters affecting terms and conditions of
employment;
3. To enhance and strengthen labor-management relations, the existing Labor-
Management Coordinating Council shall be reorganized and revitalized, with
adequate representation from both PAL management and PALEA;
4. To assure investors and creditors of industrial peace, PALEA agrees, subject to
the ratification by the general membership, (to) the suspension of the PAL-PALEA
CBA for a period of ten (10) years, provided the following safeguards are in place:
W/N the agreement (September 27, 1998) between PAL
and PALEA stipulating the suspension of the CBA void
- NO
Rivera etal: the PAL-PALEA agreement is void because it
abrogated the right of workers to self-organization and
their right to collective bargaining; the agreement was not
meant merely to suspend the existing PAL-PALEA CBA but
also to foreclose any renegotiation or any possibility to
forge a new CBA for a decade or up to 2008; it violates the
“protection to labor” policy laid down by the Constitution
• Under Art. 253-A of the Labor Code, insofar as
representation is concerned, a CBA has a term of
five years, while the other provisions, except
forrepresentation, may be negotiated not later than
three years after the execution.
a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the
regular rank-and-file ground employees of the Company;
b. The ‘union shop/maintenance of membership’ provision under the PAL-PALEA
CBA shall be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement
forged by and between PAL and PALEA, to those employees who may opt to retire or
be separated from the company.
6. PALEA members who have been retrenched but have not received separation
benefits shall be granted priority in the hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the provisions of the
Labor Code shall apply
• A CBA is “a contract executed upon request of
either the employer or the exclusive bargaining
representative incorporating the agreement
reached after negotiations with respect to wages,
hours of work and all other terms and conditions of
employment, including proposals for adjusting any
grievances or questions arising under such
agreement.”
o Primary purpose: stabilization of labor-
management relations in order to create a
climate of a sound and stable industrial peace
• The 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.
• There is no conflict between said agreement and
Article 253-A of the Labor Code.
• Article 253-A has a two-fold purpose.
o To promote industrial stability and predictability
o To assign specific timetables wherein
negotiations become a matter of right and
requirement
• Nothing in Article 253-A, prohibits the parties from
waiving or suspending the mandatory timetables
and agreeing on the remedies to enforce the same.
• IN THE CASE AT BAR, it was PALEA, as the
exclusive bargaining agent of PAL’s ground
employees, that voluntarily entered into the CBA
with PAL. It was also the union that voluntarily
opted for the 10-year suspension of the CBA.
• It was the PALEA’s exercise of its right to collective
bargaining.
• The right to free collective bargaining, after all,
includes the right to suspend it.
• The act of Espiritu etal in sanctioning the 10-year
CBA suspension did not contravene the protection
to labor policy of the Constitution.
o The agreement afforded full protection to labor;
promoted the shared responsibility between
workers and employers; and the exercised
voluntary modes in settling disputes, including
conciliation to foster industrial peace.
• Rivera etal also alleged that the 10-year suspension
of the CBA under the PAL-PALEA agreement
virtually installed PALEA as a company union for
said period, amounting to unfair labor practice, in
violation of Article 253-A of the Labor Code. The
questioned proviso is as follows:
PAL shall continue recognizing PALEA as the duly
certified-bargaining agent of the regular rank-and-
file ground employees of the Company.
• However, this proviso cannot be construed alone.
Under Article 1374 of the Civil Code, contracts
 cannot be construed by parts, but clauses must be
interpreted in relation to one another to give effect
to the whole.
• The aforesaid provision must be read within the
context of the next clause, which provides:
The ‘union shop/maintenance of membership’
provision under the PALPALEA 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. It cannot be declared as unfair labor practice.
• The law has allowed stipulations “union shop” and
“closed shop” as means of encouraging workers to
join and support the union of their choice in the
protection of their rights and interests vis-à-vis the
employer.
• The contention of Rivera etal that the agreement
installs PALEA as a virtual company union is also
untenable.
o Under Article 248 (d) of the Labor Code, a
company union exists when the employer acts
“[t]o initiate, dominate, assist or otherwise
interfere with the formation or administration of
any labor organization, including the giving of
financial or other support to it or organizers or
supporters.”
o The records of the case do not show such acts
by PAL.
• The agreement also does not violate the five-year
representation limit under Art. 253-A. In the present
case, the parties agreed to suspend the CBA and
put in abeyance the limit on the representation
period.
Dispositive
WHEREFORE, there being no grave abuse of discretion
shown, the instant petition is DISMISSED. No
pronouncement as to costs.
Notes
On whether or not an action for certiorari and prohibition
is the appropriate remedy
• The assailed agreement is clearly not the act of a
tribunal, board, officer, or person exercising judicial,
quasi-judicial, or ministerial functions.
• It involves a contract between a private firm and one
of its labor unions, albeit entered into with the
assistance of the Task Force.
• The first and second requisites for certiorari and
prohibition are therefore not present in this case.
[CONTRACT DURATION AND RENEWAL – Trugillo (in his capacity as Local President of
EMPLOYER’S RIGHT TO CONDUCT DISCIPLINARY Nagkahiusang Mamumuo sa PICOP Resources,
PROCEEDINGS] Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo
Fuentes, Jr. (in his capacity as National President
17 PPICOP RESOURCES, INCORPORATED v.
of SPFL).
ANACLETO L. TANECA, GEREMIAS S. TATO, JAIME N.
● Respondents were regular rank-and-file
CAMPOS, MARTINIANO A. MAGAYON, JOSEPH B.
employees of PRI and bona fide members of
BALGOA, MANUEL G. ABUCAY, MOISES M. ALBARAN,
Nagkahiusang Mamumuo sa PRI Southern
MARGARITO G. ALICANTE, JERRY ROMEO T. AVILA,
Philippines Federation of Labor (NAMAPRI-
LORENZO D. CANON, RAUL P. DUERO, DANILO Y. ILAN,
SPFL), which is the collective bargaining agent
MANUEL M. MATURAN, JR., LUISITO R. POPERA,
for the rank-and-file employees of petitioner PRI.
CLEMENTINO C. QUIMAN, ROBERTO Q. SILOT,
● PRI has a CBA with NAMAPRI-SPFL for a period
CHARLITO D. SINDAY, REMBERT B. SUZON ALLAN J.
of 5 years from May 22, 1995 until May 22, 2000.
TRIMIDAL, and NAMAPRI-SPFL
● The CBA contained the following union security
August 9, 2010 | Peralta, J. | provisions:
Article II- Union Security and Check-Off
Section 6. Maintenance of membership.
Facts: 6.1 All employees within the appropriate
● On February 13, 2001, respondents filed a bargaining unit who are members of the UNION at
Complaint for unfair labor practice, illegal the time of the signing of this AGREEMENT shall,
dismissal and money claims against petitioner as a condition of continued employment by the
PICOP Resources, Incorporated (PRI), Wilfredo COMPANY, maintain their membership in the
Fuentes (in his capacity as PRI's Vice UNION in good standing during the effectivity of
President/Resident Manager), Atty. Romero this AGREEMENT.
Boniel (in his capacity as PRI's Manager of 6.3 The COMPANY, upon the written request of
Legal/Labor), Southern Philippines Federation of the UNION and after compliance with the
Labor (SPFL), Atty. Wilbur T. Fuentes (in his requirements of the New Labor Code, shall give
capacity as Secretary General of SPFL), Pascasio notice of termination of services of any employee
 who shall fail to fulfill the condition provided in
Section 6.1 and 6.2 of this Article
● On May 16, 2000, Atty. Fuentes Atty. Fuentes
sent a letter to the management of PRI
demanding the termination of employees who
allegedly campaigned for, supported and signed
the Petition for Certification Election of the
Federation of Free Workers Union (FFW) during
the effectivity of the CBA.
○ NAMAPRI-SPFL considered said act of
campaigning for and signing the petition as
an act of disloyalty and a valid basis for
termination for a cause in accordance with
its Constitution and By-Laws, and the terms
and conditions of the CBA.
● Mr. Pascasio Trugillo requested the management
of PRI to investigate those union members who
signed the Petition during the existence of their
CBA.
○ NAMAPRI-SPFL, likewise, furnished PRI
with machine copy of the authorization
letters which contained the names and
signatures of employees.
● Atty. Romero A. Boniel issued a memorandum
addressed to the concerned employees to
explain in writing within 72 hours why their
employment should not be terminated due to
acts of disloyalty as alleged by their Union.
○ A number of employees who were served
explanation memorandum submitted their
explanation, while some did not.
● Atty. Boniel endorsed the explanation letters of
the employees to Atty. Fuentes for evaluation
and final disposition in accordance with the CBA.
● After evaluation, Atty. Fuentes advised the
management of PRI that the Union found the
member's explanations to be unsatisfactory. He
reiterated the demand for termination, but only of
46 member-employees, including respondents.
● PRI served notices of termination for causes to
the 31 out of the 46 employees whom
NAMAPRIL-SPFL sought to be terminated on the
ground of acts of disloyalty committed against it
when respondents allegedly supported and
signed the Petition for Certification Election of
FFW before the freedom period during the
effectivity of the CBA.
○ A Notice was also served on the DOLE.
● Respondents then accused PRI of ULP
punishable under Article 248 (a), (b), (c), (d) and
(e), while Atty. Fuentes and Wilbur T. Fuentes and
Pascasio Trujillo were accused of violating
Article 248 (a) and (b).
● Respondents allege that:
○ none of them ever withdrew their
membership from NAMAPRI-SPFL or
submitted to PRI any union dues and
 check-off disauthorizations against
NAMAPRI-SPFL. They continue to remain
on record as bona fide members of
NAMAPRI-SPFL.
○ a patent manifestation of one’s disloyalty
would have been the explicit resignation or
withdrawal of membership from the Union
accompanied by an advice to management
to discontinue union dues and check-off
deductions. Mere affixation of signature on
such authorization to file a petition for
certification election was not per se an act
of disloyalty.
○ While it may be true that they signed the
said authorization before the start of the
freedom period, the petition of FFW was
only filed with the DOLE on May 18, 2000, or
58 days after the start of the freedom
period.
○ their acts of signing the authorization
signifying support to the filing of the
Petition was merely prompted by their
desire to have a certification election
among the rank-and-file employees of PRI
with hopes of a CBA negotiation in due
time; and not to cause the downfall of
NAMAPRI-SPFL.
○ there was lack of procedural due process.
Both the letter of Atty. Fuentes and the
follow-up letter 2000 of Trujillo addressed
to PRI did not mention their names.
NAMAPRI-SPFL merely requested PRI to
investigate union members who supported
the Petition for Certification Election of
FFW. They should have been summoned
individually, confronted with the
accusation and investigated accordingly
and from where the Union may base its
findings of disloyalty and, thereafter,
recommend to management the
termination for causes.
○ at the time NAMAPRI-SPFL demanded their
termination, it was no longer the bargaining
representative of the rank-and-file workers
of PRI, because the CBA had already
expired. Hence, there could be no
justification in PRIs act of dismissing
respondents due to acts of disloyalty.
○ Respondents asserted that the act of PRI,
Wilfredo Fuentes and Atty. Boniel in giving
in to the wishes of the Union in discharging
them on the ground of disloyalty to the
Union amounted to interference with,
restraint or coercion of respondents
exercise of their right to self-organization.
The act indirectly required petitioners to
support and maintain their membership
 with NAMAPRI-SPFL as a condition for
their continued employment.
● The LA declared the respondents’ dismissal to be
illegal and ordered for their reinstatement.
● NLRC reversed.
● CA reinstated the LA decision.
● Union security – a generic term, which is applied
Issue:
W/N an existing CBA can be given its full force and
effect in all its terms and conditions including its union
security clause, even beyond the 5-year period when no
new CBA has yet been entered into.
Held:
NO. Under Art. 256, while it is incumbent for the
employer to continue to recognize the majority status
of the incumbent bargaining agent even after the
expiration of the freedom period, they could only do so
when no petition for certification election was filed.
● Petitioner:
○ the dismissal of the respondents was valid
and legal.
○ It acted in good faith at the instance of the
incumbent union pursuant to the Union
Security Clause of the CBA.
○ as parties to the CBA, they are enjoined by
Art. 253 to keep the status quo and
continue in full force and effect the terms
and conditions of the existing CBA during
the 60-day period and/or until a new
agreement is reached by the parties.
to and comprehends "closed shop," union shop,"
"maintenance of membership," or any other form
of agreement which imposes upon employees
the obligation to acquire or retain union
membership as a condition affecting
employment.
○ There is union shop when all new regular
employees are required to join the union
within a certain period as a condition for
their continued employment.
○ There is maintenance of membership shop
when employees, who are union members
as of the effective date of the agreement, or
who thereafter become members, must
maintain union membership as a condition
for continued employment until they are
promoted or transferred out of the
bargaining unit, or the agreement is
terminated.
○ A closed shop, on the other hand, may be
defined as an enterprise in which, by
agreement between the employer and his
 employees or their representatives, no
person may be employed in any or certain
agreed departments of the enterprise
unless he or she is, becomes, and, for the
duration of the agreement, remains a
member in good standing of a union
entirely comprised of or of which the
employees in interest are a part.
● However, in terminating the employment of an
employee by enforcing the union security clause,
the employer needs to determine and prove that:
(1) the union security clause is applicable; (2) the
union is requesting for the enforcement of the
union security provision in the CBA; and (3) there
is sufficient evidence to support the decision of
the union to expel the employee from the union.
○ These requisites constitute just cause for
terminating an employee based on the
union security provision of the CBA.
● First requisite: no question that the CBA between
PRI and respondents included a union security
clause, specifically, a maintenance of
membership as stipulated in Sec. 6 of Article II,
Union Security and Check-Off.
○ Following the same provision, PRI, upon
written request from the Union, can indeed
terminate the employment of the employee
who failed to maintain its good standing as
a union member.
● Second requisite: undisputed that NAMAPRI-
SPFL, in two occasions demanded from PRI to
terminate the employment of respondents due to
their acts of disloyalty to the Union.
● Third requisite: no sufficient evidence to support
the decision of PRI to terminate the employment
of the respondents.
○ PRI: respondents were terminated from
employment based on the alleged acts of
disloyalty they committed when they
signed an authorization for FFW to file a
Petition for Certification Election among all
rank-and-file employees of PRI. The acts of
respondents are a violation of the Union
Security Clause, as provided in their
Collective Bargaining Agreement.
○ SC: The mere signing of the authorization in
support of the Petition before the freedom
period, is not sufficient ground to terminate
the employment of respondents inasmuch
as the petition itself was actually filed
during the freedom period. Nothing in the
records would show that respondents
failed to maintain their membership in good
standing in the Union. Respondents did not
resign or withdraw their membership from
the Union to which they belong.
Respondents continued to pay their union
dues and never joined the FFW.
● An authorization letter to file a petition for
certification election is different from an actual
Petition for Certification Election. It was clear
that the actual Petition for Certification Election
of FFW was filed within the freedom period.
○ Strictly speaking, what is prohibited is the
filing of a petition for certification election
outside the 60-day freedom period.
○ This is not the situation in this case. If at all,
the signing of the authorization to file a
certification election was merely
preparatory to the filing of the petition for
certification election, or an exercise of
respondents right to self-organization.
● PRI anchored their decision to terminate
respondents’ employment on Art. 253 which
states that 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.
○ It claimed that they are still bound by the
Union Security Clause of the CBA even after
the expiration of the CBA; hence, the need
to terminate the employment of
respondents.
● SC, however, applied Art. 256 and said that while
it is incumbent for the employer to continue to
recognize the majority status of the incumbent
bargaining agent even after the expiration of the
freedom period, they could only do so when no
petition for certification election was filed.
○ The reason is, with a pending petition for
certification, any such agreement entered
into by management with a labor
organization is fraught with the risk that
such a labor union may not be chosen
thereafter as the collective bargaining
representative. The provision for status quo
is conditioned on the fact that no
certification election was filed during the
freedom period.
● In this case, four petitions were filed. In fact, a
petition for certification election was already
ordered by the Med-Arbiter of DOLE Caraga
Region. Therefore, following Art. 256, at the
expiration of the freedom period, PRI's obligation
to recognize NAMAPRI-SPFL as the incumbent
bargaining agent does not hold true when
petitions for certification election were filed, as in
this case.
○ Moreover, the last sentence of Art. 253
which provides for automatic renewal
pertains only to the economic provisions of
the CBA and does not include
representational aspect of the CBA.
 ○ An existing CBA cannot constitute a bar to
a filing of a petition for certification
election. When there is a representational
issue, the status quo provision in so far as
the need to await the creation of a new
agreement will not apply. Otherwise, it will
create an absurd situation where the union
members will be forced to maintain
membership by virtue of the union security
clause existing under the CBA and,
thereafter, support another union when
filing a petition for certification election. If
we apply it, there will always be an issue of
disloyalty whenever the employees
exercise their right to self-organization.
● The fact that there already exists a bargaining
representative in the unit concerned is of no
moment as long as the petition for certification
election was filed within the freedom period.
○ What is imperative is that by such a petition
for certification election the employees are
given the opportunity to make known of
who shall have the right to represent them
thereafter. Not only some, but all of them
should have the right to do so. What is
equally important is that everyone be given
a democratic space in the bargaining unit
concerned.
● The power to dismiss is a normal prerogative of
the employer. This, however, is not without
limitations. The employer is bound to exercise
caution in terminating the services of his
employees especially so when it is made upon
the request of a labor union pursuant to the CBA.
Dismissals must not be arbitrary and capricious.
Due process must be observed.
Dispositive
WHEREFORE, the petition is DENIED. The Decision
dated July 25, 2003 and the Resolution dated October
23, 2003 of the Court of Appeals in CA-G.R. SP No.
71760, which set aside the Resolutions dated October
8, 2001 and April 29, 2002 of the National Labor
Relations Commission in NLRC CA No. M-006309-
2001, are AFFIRMED accordingly. Respondents are
hereby awarded full backwages and other allowances,
without qualifications and diminutions, computed from
the time they were illegally dismissed up to the time
they are actually reinstated. Let this case be remanded
to the Labor Arbiter for proper computation of the full
backwages due respondents, in accordance with
Article 279 of the Labor Code, as expeditiously as
possible.
[CBA and THIRD PARTY LIABILITY]
18 ASSOCIATED LABOR UNIONS-VIMCONTU v. NLRC
Dec. 20, 1991 | Davide, Jr., J. |
ASSOCIATED LABOR UNIONS-VIMCONTU, THE CEBU
OIL EMPLOYEES ASSOCIATION, represented by its
Acting President, MIGUEL C. ALIVIADO, and THE MOBIL
DAVAO/COTABATO CHAPTER-ALU, represented by its
President, MIGUEL C. ALIVIADO, and THE MOVIL
DAVAO/COTABATO CHAPTER-ALU, represented by its
President, DAVID C. ONDEVILLA, petitioners, vs. THE
NATIONAL LABOR RELATIONS COMMISSION (NLRC),
MOBIL OIL PHILIPPINES, INC., JEAN PIERRE
BAILLEUX, CALTEX PHILIPPINES, INC., and MOBIL
PHILIPPINES, INC., respondents
Doctrine: Unless expressly assumed, labor contracts
such as employment contracts and collective
bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in
personam, thus binding only between the parties.
(Sundowner Development Corp v. Drilon)
Facts:
• Complainants entered into a CBA with Mobil Oil
Philippines, Inc. for a period of three years starting
from April 1, 1982 to March 31, 1985
• August 5, 1983 — respondent J.P. Bailiux, President of
Mobil Oil Philippines, Inc. sent letters to the
employees, notifying them of the termination of their
services effective August 31, 1983 because of the
sale of the firm
• September 13, 1983 — complainant employees
accepted their checks for separation pay and signed
quitclaims under protest and subject to the outcome
of this case
RESPONDENTS
• Caltex Philippines, Inc. was impleaded as additional
respondent because of its acquisition of the entire
marketing and distribution assets of Mobil Oil
Philippines.
• Mobil Philippines, Inc. was also made a respondent in
view of a metropolitan daily newspaper
announcement that Mobil Oil Philippines, Inc. will
continue to do business under the corporate name of
Mobil Philippines, Inc and that this newly formed
company will market chemicals and special products
such as solvents, process products, waxes and
industrial asphalt fuels and lubricants for the
international marine and aviation industries.
• Complainants charge respondents Mobil Oil
Philippines, Inc. and J.P. Bailiux with unfair labor
practice for violating their collective bargaining
agreement which, among others, states that 'this
Agreement shall be binding upon the parties hereto
and their successors and assigns, and may be
 assigned by the Company without the previous
approval of the Union. However, the latter will be
notified of such assignment when it occurs.'
• In this case, the complainant unions were not notified
officially of such assignment to Caltex Philippines
and respondent Mobil Oil Philippines made
announcements in major dailies that the company
shall continue to operate its business."
• What Caltex Phils. purchased was Mobil Petroleum's
USA (Mobil Pet) share holdings in Mobil Oil
Philippines, Inc. (MOPI) for US$40,000,000.00.
• Upon consummation of the sale, MOPI filed an
amended articles of incorporation which provided
that its corporate term would cease on 31 December
1983. By 5 September 1983, MOPI actually closed and
ceased operations.
• The complaint for unfair labor practice and breach of
contract against Jean Pierre Bailleux was filed on
September 8, 1983 which was amended on October 5,
1983 to implead additional respondents MOPI, Caltex
Phils., Inc. and Mobil Phils., Inc.
LA: dismissed complaint
• The alleged sale by Mobil Petroleum, USA to Caltex,
the former being a principal stockholder of MOPI, was
in fact made by MOPI to Caltex, and whatever CBA
entered into by MOPI binds its stockholders. However,
Section I of Article XX of the CBA was not violated by
respondent MOPI as the record shows and from the
admission of complainants-union that the latter has
knowledge of the impending sales and closure of the
firm in a series of negotiations/meetings
• Although Caltex is bound by the said agreement under
Section I thereof, the rights and interests or benefits
that may have been earned during the remaining term
of the CBA have been satis􏰀ed by MOPI when herein
complainants accepted their respective checks and
executed quitclaim from and in favor of the firm.
NLRC: dismissed petitioners’ appeal
Issue:
W/N MOPI is guilty of ULP — NO
Held:
• Issues raised had already been resolved in another
almost identical case, Mobile Employees Association
et al. v. NLRC: MOPI was not guilty of unfair labor
practice and illegal dismissal and that the termination
was caused by cessation of MOPI's business
operations in the country
◦ Examination of the CBA provisions entitled
'Effectivity' shows that the written notice to
terminate that is required to be given by either party
to the other relates to notice to terminate the CBA at
the end of the original three-year period or any
subsequent year thereafter
 ◦ What is involved in the instant Petition is not the
termination of the CBA itself, considering that the
sale by Mobil Petroleum of its wholly owned
subsidiary MOPI to Caltex Pet took place in 1983, in
the middle of original period of the CBAs
◦ MOPI's employees and the MOLE were notified in
writing on 5 August 1983 that the employees'
services would cease on 31 August 1983, but that
employees would nonetheless be paid their salaries
and other benefits until or as of 5 September 1983.
This is more than substantial compliance with
notice requirements of Art 284, LC.3
PARALLELS IN THE 2 CASES:
(a) Both cases sprung from the same sale
negotiations between Mobil Petroleum and Caltex
Petroleum
(b) Un both, MOPI's President, J.P. Bailleux, informed
all employees in a letter dated 5 August 1983 that on
31 August 1983, their employment would cease as a
result of MOPI's withdrawal from business;
(c) All employees were paid compensation up to or
until 5 September 1983 and were given separation
3
ARTICLE 284. Closure of establishment and reduction of personnel. — The
employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or
the closing or cessation of operation of the establishment or undertaking, unless the
closing is for the purpose of circumventing the provisions of this title by serving a
written notice on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall
pay equivalent to 2.25 months basic salary as of 31
August 1983 for every year of service and their
unused vacation leave for the current year were paid
in cash; and
(d) In both, complaints for ULP, based on similarly
worded CBAs (particularly on the notice
requirements), were filed with different branches of
the NLRC which promulgated the two decisions
appealed from within six days from each other.
• The only difference, albeit insignificant, between the
two (2) cases is that in the Mobil Employees
Association case, the CBA with different regions of
MOPI
INSTANT CASE:
• What was effected was a cessation of business and
the requirement of due notice was substantially
complied with.
• The allegations that both MOPI and Caltex merely
intended to evade the provisions of the CBA cannot be
sustained. There was nothing irregular in the closure
by MOPI of its business operation.
be entitled to a separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations
of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-
half (1/2) month pay for every year of service, whichever is higher. A fraction of at
least six (6) months shall be considered one (1) whole year.
• Caltex may not be said to have stepped into the
picture as an assignee of the CBA because of the very
fact of such closure.
◦ Although the purchaser of the assets or enterprise is

not legally bound to absorb in its employ the

employees of the seller of such assets or enterprise,
the parties are liable to the employees if the
transaction between the parties is colored or clothed
with bad faith The sale or disposition must be
motivated by good faith as an element of exemption
from liability.
• In the exercise of management prerogative, the
employer may merge or consolidate its business with
another, or sell or dispose all or substantially all of its
assets and properties which may bring about the
dismissal or termination of its employees in the
process.
• This disposes of the allegation that there was
termination due to redundancy; such could not be the
case as all the employees were terminated as a result
of the closure. Redundancy contemplates a situation
where employees are dismissed because of
duplicitous functions.

Dispositive
WHEREFORE, both Petitions for certiorari are
DISMISSED for lack of merit.
[CBA AND DISAFFILIATION/SUBSTITUTIONARY
DOCTRINE]
19 ELISCO-ELIROL V. NORIEL
29 December 1977 | Teehankee, J. | PMCA
Petitioner/s: ELISCO-ELIROL LABOR UNION – NAFLU
and its OFFICERS AND MEMBERS OF THE BOARD OF
DIRECTORS
Respondent/s: CARMELO NORIEL, in his capacity as
Director of the Bureau of Labor Relations, ELIZALDE
STEEL CONSOLIDATED, INC. and NATIONAL
FEDERATION OF LABOR UNIONS (NAFLU)
Facts:
● February 1974: Elisco Elirol Labor Union - NAFLU,
negotiated and executed a CBA with Elizalde Steel
Consolidated, Inc. (ESCI)
● Upon verification by the officers at the Registration
division, BLR, Elisco-Elirol Labor Union - NAFLU, the
contracting party in said CBA, was not then
registered and therefore not entitled to the benefits
and privileges embodied in said CBA
● March 3, 1975: the members of Elisco-Elirol Union in
a general membership meeting decided in a
resolution to register their union to protect and
preserve the integrity and inviolability of the CBA
between them and ESCI
● May 20, 1975: The resolution of the members of
Elisco-Elirol Union was passed upon by the officers
and members of the Board of Directors at a special
meeting called for the purpose. It was approved
requesting the Acting Directors, Registration
Division, BLR, to register the Elisco Elirol Labor Union
– NAFLU.
○ By virtue of this resolution, Elisco-Elirol applied for
registration with the BLR and a Certificate of
Registration was issued.
■ With the issuance of the certificate of
registration, Elisco-Elirol acquired a personality
separate and distinct from any other labor
union.
● Steps were taken by Elisco-Elirol - NAFLU to enforce
the CBA immediately after the issuance of the
certificate of registration.
● June 10, 1975: at a special meeting called for the
purpose, the general membership of Elisco-Elirol –
NAFLU decided that their mother union, NAFLU, can
no longer safeguard the rights of its members
insofar as working conditions and other terms of
employment are concerned and that the interest and
welfare of Elisco-Elirol can be served best if it will
stay independent and disaffiliated from said mother
union, hence, the general membership adopted a
resolution to disaffiliate from NAFLU
● June 11, 1975: Elisco-Elirol – NAFLU, acting through W/N the dismissal of the employees as well as ESCI’s
its President Hilario Riza informed ESCI and NAFLU refusal to recognize Elisco-Elirol as the sole and
of the disaffiliation via letter, and subsequently exclusive bargaining representative is correct – NO.
requested ESCI to recognize it as the sole and
● The employees and members of the local union did
exclusive bargaining representative of the
not form a new union but merely registered the local
employees.
union as was their right.
● ESCI, without any justifiable reason, refused and
● Elisco-Elirol Labor Union – NAFLU, consisting of
continues to refuse to recognize Elisco-Elirol as the
employees and members of the local union was the
sole and exclusive bargaining representative of its
principal party to the agreement.
employees, and actually dismissed several of Elisco-
○ NAFLU as the “mother union” in participating in the
Elirol’s officers and board members.
execution of the CBA with ESCI acted merely as
● Petitioners filed (1) a complaint for ULP against ESCI
agent of the local union, which remained the basic
for refusal to bargain collectively, and (2) a petition
unit of the association existing principally and
before the BLR against ESCI and NAFLU for NAFLU
freely to serve the common interest of all its
to refrain from presenting itself as the collective
members, including the freedom to disaffiliate
bargaining agent of ESCI
● Liberty Cotton Mills Workers Union vs. Liberty Cotton
● Med-Arbiter: dismissed the petitions for lack of merit
Mills, Inc: The locals are separate and distinct units
● BLR: Affirmed the dismissal.
primarily designed to secure and maintain an
○ When the employees disaffiliated from the mother
equality of bargaining power between the employer
union (NAFLU) and formed themselves into a new
and their employee-members in the economic
union, their status as employees was also
struggle for the fruits of the joint productive effort of
terminated. It was an act of disloyalty. As such
labor and capital; and the association of the locals into
they could not therefore absolutely and legally
the national union was in furtherance of the same end.
claim that they still comprise the majority of the
The essential purpose was the affiliation of the local
bargaining unit.
unions into a common enterprise to increase by
● Secretary of Labor: Reversed
collective action the common bargaining power in
respect of the terms and conditions of labor. Yet the
Ruling: locals remained the basic units of association, free to
 serve their own and the common interest of all, subject
to the restraints imposed by the Constitution and By-
Laws of the Association, and free also to renounce the
affiliation for mutual welfare upon the terms laid down
in the agreement which brought it into existence.
● Substitutionary doctrine also supports petitioner’s
stand.
○ Elisco-Elirol – NAFLU said that it does not intend
to change and/or amend the provisions of the
present CBA but only to be given the chance to
enforce the same since there is a shift of
allegiance in the majority of the employees at
ESCI.
○ Substitutionary Doctrine, as discussed in Benguet
Consolidated Inc. vs. BCI Employees & Workers Union
– PAFLU: When there occurs a shift in employees’
union allegiance after the execution of a
bargaining contract with their employer, even
during the effectivity of a CBA executed between
employer and employees thru their agent, the
employees can change said agent but the contract
continues to bind them up to its expiration date. They
may bargain however for the shortening of said
expiration date.
■ Here, the only consideration is the employees’
interest in the existing bargaining agreement.
Justification: the majority of the employees, as an
entity under the statute, is the true party in
interest to the contract, holding rights through
the agency of the union representative. Thus,
any exclusive interest claimed by the agent is
defeasible at the will of the principal.
● Secretary of Labor was correct in ruling that “Even if
the disaffiliation from NAFLU is a legal cause for
expulsion and dismissal, it could not detract from the
fact that only 13 individual complainants out of
almost 700 members who disaffiliated, were singled
out for expulsion and recommended for dismissal.
This was discrimination. Thus, NAFLU should be
held liable for back wages.
● Presidential Assistant for Legal Affairs Ronaldo B.
Zamora: What is paramount is the security of tenure
of the workers, not the security of the union. To
impress such ‘maintenance of membership’—which
is intended for the security of the union rather than
the security of tenure of the workers—as a bar to
employees’ changing their affiliation is not only to
infringe on the constitutional right of freedom of
association, but also to trample upon the
constitutional right of workers to security of tenure
and to render meaningless whatever ‘adequate
social services’ the State may establish or maintain
in the field of employment ‘to guarantee the
enjoyment by the people of a decent standard of
living.’
Dispositive
ACCORDINGLY, the petition is granted and the
appealed resolution is set aside and petitioner local
union is declared to be the sole and exclusive
bargaining representative of the employees of
respondent corporation entitled to administer and
enforce any subsisting collective bargaining
agreement with said employer corporation. This
decision shall be immediately executory upon its
promulgation.
G.R. No. 170054 January 21, 2013
GOYA, INC., Petitioner,
vs.
GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of
the Rules of Civil Procedure seeks to reverse and set
aside the June 16, 2005 Decision1 and October 12,
2005 Resolution2 of the Court of Appeals in CA-G.R.
SP No. 87335, which sustained the October 26, 2004
Decision3 of Voluntary Arbitrator Bienvenido E.
Laguesma, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring
that the Company is NOT guilty of unfair labor
practice in engaging the services of PESO.
The company is, however, directed to observe and
comply with its commitment as it pertains to the
hiring of casual employees when necessitated by
business circumstances.4
The facts are simple and appear to be undisputed.
Sometime in January 2004, petitioner Goya, Inc.
(Company), a domestic corporation engaged in the
manufacture, importation, and wholesale of top
quality food products, hired contractual employees
from PESO Resources Development Corporation
(PESO) to perform temporary and occasional services
in its factory in Parang, Marikina City. This prompted
respondent Goya, Inc. Employees Union–FFW (Union)
to request for a grievance conference on the ground
that the contractual workers do not belong to the
categories of employees stipulated in the existing
Collective Bargaining Agreement (CBA).5 When the
matter remained unresolved, the grievance was
referred to the National Conciliation and Mediation
Board (NCMB) for voluntary arbitration.
During the hearing on July 1, 2004, the Company and
the Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement
was no longer possible; hence, they agreed to submit
for resolution the solitary issue of "[w]hether or not the
Company is guilty of unfair labor acts in engaging the
services of PESO, a third party service provider, under
the existing CBA, laws, and jurisprudence."6 Both
parties thereafter filed their respective pleadings.
The Union asserted that the hiring of contractual
employees from PESO is not a management
prerogative and in gross violation of the CBA
tantamount to unfair labor practice (ULP). It noted
that the contractual workers engaged have been
assigned to work in positions previously handled by
regular workers and Union members, in effect
violating Section 4, Article I of the CBA, which
provides for three categories of employees in the
Company, to wit:
Section 4. Categories of Employees.– The parties
agree on the following categories of employees:
(a) Probationary Employee. – One hired to occupy a
regular rank-and-file position in the Company and is
serving a probationary period. If the probationary
employee is hired or comes from outside the
Company (non-Goya, Inc. employee), he shall be
required to undergo a probationary period of six (6)
months, which period, in the sole judgment of
management, may be shortened if the employee has
already acquired the knowledge or skills required of
the job. If the employee is hired from the casual pool
and has worked in the same position at any time
during the past two (2) years, the probationary period
shall be three (3) months.
(b) Regular Employee. – An employee who has
satisfactorily completed his probationary period and
automatically granted regular employment status in
the Company.
(c) Casual Employee, – One hired by the Company to
perform occasional or seasonal work directly
connected with the regular operations of the
Company, or one hired for specific projects of limited
duration not connected directly with the regular
operations of the Company.
It was averred that the categories of employees had
been a part of the CBA since the 1970s and that due
to this provision, a pool of casual employees had been
maintained by the Company from which it hired
workers who then became regular workers when
urgently necessary to employ them for more than a
year. Likewise, the Company sometimes hired
probationary employees who also later became
regular workers after passing the probationary period.
With the hiring of contractual employees, the Union
contended that it would no longer have probationary
and casual employees from which it could obtain
additional Union members; thus, rendering inutile
Section 1, Article III (Union Security) of the CBA, which
states:
Section 1. Condition of Employment. – As a condition
of continued employment in the Company, all regular
rank-and-file employees shall remain members of the
Union in good standing and that new employees
covered by the appropriate bargaining unit shall
automatically become regular employees of the
Company and shall remain members of the Union in
good standing as a condition of continued
employment.
The Union moreover advanced that sustaining the
Company’s position would easily weaken and
ultimately destroy the former with the latter’s resort to
retrenchment and/or retirement of employees and not
filling up the vacant regular positions through the
hiring of contractual workers from PESO, and that a
possible scenario could also be created by the
Company wherein it could "import" workers from
PESO during an actual strike.
In countering the Union’s allegations, the Company
argued that: (a) the law expressly allows contracting
and subcontracting arrangements through
Department of Labor and Employment (DOLE) Order
No. 18-02; (b) the engagement of contractual
employees did not, in any way, prejudice the Union,
since not a single employee was terminated and
neither did it result in a reduction of working hours nor
a reduction or splitting of the bargaining unit; and (c)
Section 4, Article I of the CBA merely provides for the
definition of the categories of employees and does
not put a limitation on the Company’s right to engage
the services of job contractors or its management
prerogative to address temporary/occasional needs in
its operation.
On October 26, 2004, VA Laguesma dismissed the
Union’s charge of ULP for being purely speculative
and for lacking in factual basis, but the Company was
directed to observe and comply with its commitment
under the CBA. The VA opined:
We examined the CBA provision Section 4, Article I of
the CBAallegedly violated by the Company and indeed
the agreement prescribes three (3) categories of
employees in the Company and provides for the
definition, functions and duties of each. Material to
the case at hand is the definition as regards the
functions of a casual employee described as follows:
Casual Employee – One hired by the COMPANY to
perform occasional or seasonal work directly
connected with the regular operations of the
COMPANY, or one hired for specific projects of limited
duration not connected directly with the regular
operations of the COMPANY.
While the foregoing agreement between the parties
did eliminate management’s prerogative of
outsourcing parts of its operations, it serves as a
limitation on such prerogative particularly if it involves
functions or duties specified under the aforequoted
agreement. It is clear that the parties agreed that in
the event that the Company needs to engage the
services of additional workers who will perform
"occasional or seasonal work directly connected with
the regular operations of the COMPANY," or "specific
projects of limited duration not connected directly
with the regular operations of the COMPANY", the
Company can hire casual employees which is akin to
contractual employees. If we note the Company’s own
declaration that PESO was engaged to perform
"temporary or occasional services" (See the
Company’s Position Paper, at p. 1), then it should have
directly hired the services of casual employees rather
than do it through PESO.
It is evident, therefore, that the engagement of PESO
is not in keeping with the intent and spirit of the CBA
provision in question. It must, however, be stressed
that the right of management to outsource parts of its
operations is not totally eliminated but is merely
limited by the CBA. Given the foregoing, the
Company’s engagement of PESO for the given
purpose is indubitably a violation of the CBA. 7
While the Union moved for partial reconsideration of
the VA Decision,8 the Company immediately filed a
petition for review9 before the Court of Appeals (CA)
under Rule 43 of the Revised Rules of Civil Procedure
to set aside the directive to observe and comply with
the CBA commitment pertaining to the hiring of
casual employees when necessitated by business
circumstances. Professing that such order was not
covered by the sole issue submitted for voluntary
arbitration, the Company assigned the following
errors:
THE HONORABLE VOLUNTARY ARBITRATOR
EXCEEDED HIS POWER WHICH WAS EXPRESSLY
GRANTED AND LIMITED BY BOTH PARTIES IN
RULING THAT THE ENGAGEMENT OF PESO IS NOT IN
KEEPING WITH THE INTENT AND SPIRIT OF THE
CBA.10
THE HONORABLE VOLUNTARY ARBITRATOR
COMMITTED A PATENT AND PALPABLE ERROR IN
DECLARING THAT THE ENGAGEMENT OF PESO IS
NOT IN KEEPING WITH THE INTENT AND SPIRIT OF
THE CBA.11
On June 16, 2005, the CA dismissed the petition. In
dispensing with the merits of the controversy, it held:
This Court does not find it arbitrary on the part of the
Hon. Voluntary Arbitrator in ruling that "the
engagement of PESO is not in keeping with the intent
and spirit of the CBA." The said ruling is interrelated
and intertwined with the sole issue to be resolved that
is, "Whether or not the Company is guilty of unfair
labor practice in engaging the services of PESO, a
third party service provider, under existing CBA, laws,
and jurisprudence." Both issues concern the
engagement of PESO by the Company which is
perceived as a violation of the CBA and which
constitutes as unfair labor practice on the part of the
Company. This is easily discernible in the decision of
the Hon. Voluntary Arbitrator when it held:
x x x x While the engagement of PESO is in violation of
Section 4, Article I of the CBA, it does not constitute
unfair labor practice as it (sic) not characterized under
the law as a gross violation of the CBA. Violations of a
CBA, except those which are gross in character, shall
no longer be treated as unfair labor practice. Gross
violations of a CBA means flagrant and/or malicious
refusal to comply with the economic provisions of
such agreement. x x x
Anent the second assigned error, the Company
contends that the Hon. Voluntary Arbitrator erred in
declaring that the engagement of PESO is not in
keeping with the intent and spirit of the CBA. The
Company justified its engagement of contractual
employees through PESO as a management
prerogative, which is not prohibited by law. Also, it
further alleged that no provision under the CBA limits
or prohibits its right to contract out certain services in
the exercise of management prerogatives.
Germane to the resolution of the above issue is the
provision in their CBA with respect to the categories
of the employees:
xxxx
A careful reading of the above-enumerated categories
of employees reveals that the PESO contractual
employees do not fall within the enumerated
categories of employees stated in the CBA of the
parties. Following the said categories, the Company
should have observed and complied with the provision
of their CBA. Since the Company had admitted that it
engaged the services of PESO to perform temporary
or occasional services which is akin to those
performed by casual employees, the Company should
have tapped the services of casual employees instead
of engaging PESO.
In justifying its act, the Company posits that its
engagement of PESO was a management prerogative.
It bears stressing that a management prerogative
refers to the right of the employer to regulate all
aspects of employment, such as the freedom to
prescribe work assignments, working methods,
processes to be followed, regulation regarding
transfer of employees, supervision of their work, lay-
off and discipline, and dismissal and recall of work,
presupposing the existence of employer-employee
relationship. On the basis of the foregoing definition,
the Company’s engagement of PESO was indeed a
management prerogative. This is in consonance with
the pronouncement of the Supreme Court in the case
of Manila Electric Company vs. Quisumbing where it
ruled that contracting out of services is an exercise of
business judgment or management prerogative.
This management prerogative of contracting out
services, however, is not without limitation. In
contracting out services, the management must be
motivated by good faith and the contracting out
should not be resorted to circumvent the law or must
not have been the result of malicious arbitrary
actions. In the case at bench, the CBA of the parties
has already provided for the categories of the
employees in the Company’sestablishment. These
categories of employees particularly with respect to
casual employees serve as limitation to the
Company’s prerogative to outsource parts of its
operations especially when hiring contractual
employees. As stated earlier, the work to be
performed by PESO was similar to that of the casual
employees. With the provision on casual employees,
the hiring of PESO contractual employees, therefore,
is not in keeping with the spirit and intent of their CBA.
(Citations omitted)12
The Company moved to reconsider the CA
Decision,13 but it was denied;14 hence, this petition.
Incidentally, on July 16, 2009, the Company filed a
Manifestation15 informing this Court that its
stockholders and directors unanimously voted to
shorten the Company’s corporate existence only until
June 30, 2006, and that the three-year period allowed
by law for liquidation of the Company’s affairs already
expired on June 30, 2009. Referring to Gelano v. Court
of Appeals,16 Public Interest Center, Inc. v. Elma,17 and
Atienza v. Villarosa,18 it urged Us, however, to still
resolve the case for future guidance of the bench and
the bar as the issue raised herein allegedly calls for a
clarification of a legal principle, specifically, whether
the VA is empowered to rule on a matter not covered
by the issue submitted for arbitration.
Even if this Court would brush aside technicality by
ignoring the supervening event that renders this case
moot and academic19 due to the permanent cessation
of the Company’s business operation on June 30,
2009, the arguments raised in this petition still fail to
convince Us.
We confirm that the VA ruled on a matter that is
covered by the sole issue submitted for voluntary
arbitration. Resultantly, the CA did not commit serious
error when it sustained the ruling that the hiring of
contractual employees from PESO was not in keeping
with the intent and spirit of the CBA. Indeed, the
opinion of the VA is germane to, or, in the words of the
CA, "interrelated and intertwined with," the sole issue
submitted for resolution by the parties. This being
said, the Company’s invocation of Sections 4 and 5,
Rule IV20 and Section 5, Rule VI21 of the Revised
Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings dated October 15, 2004
issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited
case of Ludo & Luym Corporation v. Saornido.22 In
Ludo, the company was engaged in the manufacture
of coconut oil, corn starch, glucose and related
products. In the course of its business operations, it
engaged the arrastre services of CLAS for the loading
and unloading of its finished products at the wharf.
The arrastre workers deployed by CLAS to perform the
services needed were subsequently hired, on different
dates, as Ludo’s regular rank-and-file employees.
Thereafter, said employees joined LEU, which acted as
the exclusive bargaining agent of the rank-and-file
employees. When LEU entered into a CBA with Ludo,
providing for certain benefits to the employees (the
amount of which vary according to the length of
service rendered), it requested to include in its
members’ period of service the time during which they
rendered arrastre services so that they could get
higher benefits. The matter was submitted for
voluntary arbitration when Ludo failed to act. Per
submission agreement executed by both parties, the
sole issue for resolution was the date of regularization
of the workers. The VA Decision ruled that: (1) the
subject employees were engaged in activities
necessary and desirable to the business of Ludo, and
(2) CLAS is a labor-only contractor of Ludo. It then
disposed as follows: (a) the complainants were
considered regular employees six months from the
first day of service at CLAS; (b) the complainants,
being entitled to the CBA benefits during the regular
employment, were awarded sick leave, vacation leave,
and annual wage and salary increases during such
period; (c) respondents shall pay attorney’s fees of
10% of the total award; and (d) an interest of 12% per
annum or 1% per month shall be imposed on the
award from the date of promulgation until fully paid.
The VA added that all separation and/or retirement
benefits shall be construed from the date of
regularization subject only to the appropriate
government laws and other social legislation. Ludo
filed a motion for reconsideration, but the VA denied
it. On appeal, the CA affirmed in toto the assailed
decision; hence, a petition was brought before this
Court raising the issue, among others, of whether a
voluntary arbitrator can award benefits not claimed in
the submission agreement. In denying the petition, We
ruled:
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to make
a final settlement since arbitration is the final resort
for the adjudication of disputes. The succinct
reasoning enunciated by the CA in support of its
holding, that the Voluntary Arbitrator in a labor
controversy has jurisdiction to render the questioned
arbitral awards, deserves our concurrence, thus:
In general, the arbitrator is expected to decide those
questions expressly stated and limited in the
submission agreement. However, since arbitration is
the final resort for the adjudication of disputes, the
arbitrator can assume that he has the power to make
a final settlement. Thus, assuming that the
submission empowers the arbitrator to decide
whether an employee was discharged for just cause,
the arbitrator in this instance can reasonably assume
that his powers extended beyond giving a yes-or-no
answer and included the power to reinstate him with
or without back pay.
In one case, the Supreme Court stressed that "xxx the
Voluntary Arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to
determine the scope of his own authority subject only,
in a proper case, to the certiorari jurisdiction of this
Court. The Arbitrator, as already indicated, viewed his
authority as embracing not merely the determination
of the abstract question of whether or not a
performance bonus was to be granted but also, in the
affirmative case, the amount thereof.
By the same token, the issue of regularization should
be viewed as two-tiered issue. While the submission
agreement mentioned only the determination of the
date or regularization, law and jurisprudence give the
voluntary arbitrator enough leeway of authority as
well as adequate prerogative to accomplish the
reason for which the law on voluntary arbitration was
created – speedy labor justice. It bears stressing that
the underlying reason why this case arose is to settle,
once and for all, the ultimate question of whether
respondent employees are entitled to higher benefits.
To require them to file another action for payment of
such benefits would certainly undermine labor
proceedings and contravene the constitutional
mandate providing full protection to labor. 23
Indubitably, Ludo fortifies, not diminishes, the
soundness of the questioned VA Decision. Said case
reaffirms the plenary jurisdiction and authority of the
voluntary arbitrator to interpret the CBA and to
determine the scope of his/her own authority. Subject
to judicial review, the leeway of authority as well as
adequate prerogative is aimed at accomplishing the
rationale of the law on voluntary arbitration – speedy
labor justice. In this case, a complete and final
adjudication of the dispute between the parties
necessarily called for the resolution of the related and employees serve as limitation to the Company’s
incidental issue of whether the Company still violated prerogative to outsource parts of its operations
the CBA but without being guilty of ULP as, needless especially when hiring contractual employees."
to state, ULP is committed only if there is gross
violation of the agreement. A collective bargaining agreement is the law between
the parties:
Lastly, the Company kept on harping that both the VA
and the CA conceded that its engagement of It is familiar and fundamental doctrine in labor law
contractual workers from PESO was a valid exercise that the CBA is the law between the parties and they
of management prerogative. It is confused. To are obliged to comply with its provisions. We said so
emphasize, declaring that a particular act falls within in Honda Phils., Inc. v. Samahan ng Malayang
the concept of management prerogative is Manggagawa sa Honda:
significantly different from acknowledging that such
A collective bargaining agreement or CBA refers to the
act is a valid exercise thereof. What the VA and the CA
negotiated contract between a legitimate labor
correctly ruled was that the Company’s act of
organization and the employer concerning wages,
contracting out/outsourcing is within the purview of
hours of work and all other terms and conditions of
management prerogative. Both did not say, however,
employment in a bargaining unit.1âwphi1 As in all
that such act is a valid exercise thereof. Obviously,
contracts, the parties in a CBA may establish such
this is due to the recognition that the CBA provisions
stipulations, clauses, terms and conditions as they
agreed upon by the Company and the Union delimit
may deem convenient provided these are not contrary
the free exercise of management prerogative
to law, morals, good customs, public order or public
pertaining to the hiring of contractual employees.
policy. Thus, where the CBA is clear and
Indeed, the VA opined that "the right of the
unambiguous, it becomes the law between the parties
management to outsource parts of its operations is
and compliance therewith is mandated by the express
not totally eliminated but is merely limited by the
policy of the law.
CBA," while the CA held that "this management
prerogative of contracting out services, however, is Moreover, if the terms of a contract, as in a CBA, are
not without limitation. x x x These categories of clear and leave no doubt upon the intention of the
employees particularly with respect to casual
contracting parties, the literal meaning of their sustained the October 26, 2004 Decision of the
stipulations shall control. x x x.24 Voluntary Arbitrator, are hereby AFFIRMED.

In this case, Section 4, Article I (on categories of SO ORDERED.

employees) of the CBA between the Company and the
Union must be read in conjunction with its Section 1,
Article III (on union security). Both are interconnected
and must be given full force and effect. Also, these
provisions are clear and unambiguous. The terms are
explicit and the language of the CBA is not
susceptible to any other interpretation. Hence, the
literal meaning should prevail. As repeatedly held, the
exercise of management prerogative is not unlimited;
it is subject to the limitations found in law, collective
bargaining agreement or the general principles of fair
play and justice25 Evidently, this case has one of the
restrictions- the presence of specific CBA provisions-
unlike in San Miguel Corporation Employees Union-
PTGWO v. Bersamira,26 De Ocampo v. NLRC,27 Asian
Alcohol Corporation v. NLRC,28 and Serrano v.
NLRC29cited by the Company. To reiterate, the CBA is
the norm of conduct between the parties and
compliance therewith is mandated by the express
policy of the law.30

WHEREFORE, the petition is DENIED. The assailed

June 16, 2005 Decision, as well as the October 12,
2005 Resolution of the Court of Appeals, which
[JURISDICTION OF LABOR ARBITERS] ● Instead of a position paper, Company submitted
a Manifestation saying that LA had no
21 NEGROS METAL CORP. V. ARMELO J. LAMAYO
jurisdiction over it since under their CBA such
August 25, 2010 | Carpio-Morales, J. | matters should first be brought before the
company’s grievance machinery
Petitioner/s: NEGROS METAL CORP.
Respondent/s: ARMELO J. LAMAYO
LA: Held that Armelo Lamayo was illegally dismissed
Facts:
● Armelo J. Lamayo began working for Negros
NLRC: Set aside LA ruling and remanded the case to LA
Metal Corp in Sept. 1999 as a machinist when in
for disposition based on the company’s grievance
2002, as Armelo was using the company’s
procedure
foundry grinding some tools he was using,
William Uy Sr. the company manager, asked him • Based on letter of company union president
why he was using the grinder to which Lamayo Arturo Ronquillo, Lamayo invoked the CBA
replied that since the machine was bigger he provision on grievance procedure.
could finish his work faster.
○ Lamayo was warned by the company
CA: Set aside NLRC Resolutions and reinstated the
through a memorandum and charged of
LA’s decision.
loitering
● Lamayo took the warning as a 3-day suspension • LA has jurisdiction to hear complaint
and after coming back to work after the 3 days, o Since Armelo Lamayo’s illegal dismissal
he was suspended for 10 days for allegedly did not proceed from from the parties’
failing to sign a memorandum suspending him interpretation of or implementation of the
earlier CBA, it is not covered by the grievance
○ When he came back after 10 days, he was machinery procedure; that the laws and
informed of his termination, which led rules governing illegal dismissal are not to
Lamayo to file a complaint for illegal be found in the parties’ CBA but in the labor
dismissal
 statutes, hence, the Labor Arbiter had
jurisdiction
o The option to go through the grievance
machinery was stated in Ronquillo’s letter
to the company, Lamayo denied having
made that option as he had ceased to be a
member of the union, as evidenced by a
March 20, 2001 Certification of the union’s
past president Alex Sanio that he had
resigned effective March 18, 2001.
o At that point, it was too late to direct the
parties to go through the grievance
machinery.
• Company argued that grievance machinery
procedure should be followed first before
complaint for illegal dismissal can go through
Ruling:
W/N LA has jurisdiction - YES
● Articles 217, 261, and 262 of the Labor Code
outline the jurisdiction of labor arbiters and
voluntary arbitrators as follows:
● Art. 217. Jurisdiction of the Labor Arbiters and
the Commission. - (a) Except as otherwise
provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after
the submission of the case by the parties for
decision without extension, even in the absence
of stenographic notes, the following cases
involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving
wages, rates of pay, hours of work and other
terms and conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264
of this Code, including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee
relations, including those of persons in domestic
or household service, involving an amount
exceeding five thousand pesos (₱5,000.00)
regardless of whether accompanied with a claim
for reinstatement.
(b) The Commission shall have exclusive
appellate jurisdiction over all cases decided by
Labor Arbiters.
(c) Cases arising from the interpretation or
implementation of collective bargaining
agreements and those arising from the
interpretation or enforcement of company
personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as
may be provided in said agreements. (emphasis
and underscoring supplied)
xxxx
● Art. 261. Jurisdiction of Voluntary Arbitrators or
panel of Voluntary Arbitrators. - The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall
have original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from
the interpretation or implementation of the
Collective Bargaining Agreement and those
arising from the interpretation or enforcement of
company personnel policies referred to in the
immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement,
except those which are gross in character, shall
no longer be treated as unfair labor practice and
shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes
of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant
and/or malicious refusal to comply with the
economic provisions of such agreement.
The Commission, its Regional Offices and the
Regional Directors of the Department of Labor
and Employment shall not entertain disputes,
grievances or matters under the exclusive and
original jurisdiction of the Voluntary Arbitrator or
panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the
 Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement.
ART. 262. Jurisdiction over other labor disputes.
- The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall
also hear and decide all other labor disputes
including unfair labor practices and bargaining
deadlocks. (emphasis and underscoring
supplied)
● Under Art. 217, it is clear that a labor arbiter has
original and exclusive jurisdiction over
termination disputes. On the other hand, under
Article 261, a voluntary arbitrator has original and
exclusive jurisdiction over grievances arising
from the interpretation or enforcement of
company policies.
As a general rule then, termination disputes
should be brought before a labor arbiter, except
4 Provision in parties’ CBA:
GRIEVANCE MACHINERY
Section 1. The parties hereto agree on principle that all disputes between labor and management
may be settled through friendly negotiations that the parties have the same interest in the
when the parties, under Art. 262, unmistakably
express that they agree to submit the same to
voluntary arbitration.
● In the present case, the CBA provision4 on
grievance machinery being invoked by petitioner
does not expressly state that termination
disputes are included in the ambit of what may
be brought before the company’s grievance
machinery.
● Even assuming, however, that the suspension of
an employee may be considered as a
"disagreement" which bears on the "application
and interpretation of any of the provisions" of the
CBA, respondent could not have bound himself to
bring the matter of his suspension to grievance
procedure or voluntary arbitration in light of the
documented fact that he had resigned from the
union more than a year before his suspension,
not to mention the fact that he denied having a
hand in the preparation of the union president
continuity of work until all points in dispute shall have been discussed and settled. x x x For this
purpose, a grievance is defined as any disagreement between the UNION and the EMPLOYER or
between a worker or group of workers on one hand and the EMPLOYER on the one hand as to
the application and interpretation of any of the provisions of this contract. Other matters subject
of collective bargaining or regulated by existing labor laws shall not be considered as grievances.
(emphasis and underscoring supplied)
 Ronquillo’s letter invoking the grievance
procedure.1avvphi1 In fine, the labor tribunal had
original and exclusive jurisdiction over
respondent’s complaint for illegal dismissal.

● On the merits, as did the appellate court, the

Court sustains the Labor Arbiter’s ruling that
respondent was illegally dismissed absent a
showing that he was accorded due process when
he was summarily terminated.
Dispositive
WHEREFORE, the petition is DENIED. SO ORDERED.
Notes
[VII. Collective Bargaining: General Concept – D. The
CBA – 5. Interpretation, administration, and
enforcement]
22 Asia Brewery vs Tunay na Pagkakaisa
September 18, 2013 | DEL CASTILLO, J. |
Petitioner/s : ASIA BREWERY, INC.
Respondent/s : TUNAY NA PAGKAKAISA NG MGA
MANGGAGAWA SA ASIA (TPMA)
Facts:
• Respondent union Tunay Na Pagkakaisa ng mga
Manggagawa sa Asia (TPMA) is a legitimate labor
organization, certified as the sole and exclusive
bargaining agent of all regular rank and file
employees of petitioner corporation Asia Brewery,
Incorporated (ABI)
• Petitioner ABI is a company engaged in the
manufacture, sale, and distribution of beer, shandy,
glass and bottled water products. It employs about
1,500 workers
• TPMA and ABI had been negotiating for a new CBA
for the years 2003-2006 since the old CBA expired in
July 2003. However, they were unable to reconcile
their differences, particularly on wages and other
economic benefits.
• October 21, 2003 - TPMA declared a deadlock
• October 27, 2003 - TPMA filed a notice of strike with
NCMB.
• The parties did not come to terms.
• November 18, 2003 - TPMA conducted a strike vote.
768 of 840 union members voted in favor of holding
a strike
• November 20, 2003 - ABI petitioned the DOLE
Secretary Patricia Sto. Tomas to assume
jurisdiction over the parties’ labor dispute, invoking
LC 263(g).
o LC 263(g): When, in his opinion, there exists a
labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the
national interest, the Secretary of Labor and
Employment may assume jurisdiction over the
dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such
assumption or certification shall have the
effect of automatically enjoining the intended
or impending strike or lockout as specified in
the assumption or certification order. If one
has already taken place at the time of
assumption or certification, all striking or
locked out employees shall immediately
return to work and the employer shall
immediately resume operations and readmit
all workers under the same terms and
conditions prevailing before the strike or
lockout. The Secretary of Labor and
Employment or the Commission may seek the
assistance of law enforcement agencies to
 ensure the compliance with this provision as
well as with such orders as he may issue to
enforce the same.
• TPMA opposed: business of ABI is not
indispensable to the national interest
• December 2, 2003 - TPMA filed before CA a petition
for injunction to enjoin the DOLE Secretary from
assuming jurisdiction over the labor dispute, or in
the alternative, to issue a TRO
• December 19, 2003 - DOLE Secretary issued an order
assuming jurisdiction over the labor dispute
o labor dispute is likely to adversely affect
national interest
o any strike or lockout was enjoined
o ABI was required to provide
▪ Complete Audited Financial Statements
for the past 5 years
▪ Projected Financial Statements for the
next 3 years;
▪ CBA history as to economic issues
▪ Average monthly salary of the
employees in this bargaining unit
o TPMA was required to provide an itemized
summary of their CBA demands with financial
costing and sample CBA’s (if any) in similarly
situated or comparable bargaining units
• January 19, 2004
o TPMA filed another petition for certiorari with
CA imputing bad faith and grave abuse of
discretion to the DOLE Secretary
o In the meantime, the DOLE Secretary resolved
the deadlock between the parties and granted
the following arbitral awards:
▪ WAGE INCREASES:
 First Year = P18.00; Second Year =
15.00; Third Year = 12.00; Total =
P45.00
▪ HEALTH CARE (HMO)
 P1,300 premium to be shouldered
by ABI for each covered employee
 P1,800 contribution for each Union
member-dependent
• February 9, 2004 - parties executed and signed the
CBA with a term from August 1, 2003 to July 31,
2006
• April 1, 2004 - TPMA filed another petition for
certiorari before CA assailing the arbitral award and
imputing grave abuse of discretion upon the DOLE
Secretary
• CA affirming the arbitral award with modification
o then present CBA is declared effective as of
August 1, 2003
▪ this is the date agreed upon by the
parties and not January 1, 2004
 o employees are entitled to the arbitral awards
from August 1, 2003 on top of the P2,500.00
signing bonus
o computation of the wage increase was
remanded to DOLE Secretary
▪ computation was based on ABI's
unaudited financial statements, which
have no probative value
▪ computation was done in contravention
of DOLE Advisory No. 1, Series of 2004,
which contained the guidelines in
resolving bargaining deadlocks
o health benefit of the employees shall be
P1,390.00
▪ minutes of the October 17, 2003
collective bargaining negotiations
showed that ABI had previously agreed
to ₱1,390.00 as premium payment for
each covered employee
• TPMA filed MR and ABI filed partial MR. MR denied.
Partial MR granted
o deleted signing bonus
▪ pursuant to the CBA, the signing bonus
is over and beyond what the parties
agreed upon
o decision with respect to the issue on salary
increases was remanded to DOLE Secretary
• Hence, PP
Ruling:
W/N CA erred when it failed to dismiss the petition
questioning the propriety of the arbitral award despite
the lack of authority of those who instituted it. NO
• ABI: Rodrigo Perez, the person who verified the
Petition was without authority to represent TPMA
o While there was attached to the Petition a
Secretary's Certificate stating that the union's
board of directors held a special meeting and
passed a resolution authorizing Perez, there
was no showing that the union president, Jose
Manuel Miranda, called for and presided over
the meeting as required by the union's
constitution and by-laws
o Resolution was adopted on March 23, 2004
while the Petition was filed on April 1, 2004.
Under the union's constitution and by-laws
(Article VIII, Section 2), the decision of the
board of directors becomes effective only
after 2 weeks from its issuance.
o There were 2 labor cases divesting Perez of
authority to represent TPMA in the case before
CA
• The authority of Rodrigo Perez was not sufficiently
refuted
o ABI presented no proof to establish that the
proper procedure for calling such a meeting
was not followed
o ABI’s claim that the resolution was still
ineffective at the time of the filing of the
Petition is unsubstantiated
▪ Provisions ABI cited refer to decisions of
the board of directors regarding the laws
or rules that would govern the union.
These provisions have not been shown
to apply to resolutions granting
authority to individuals to represent the
union
▪ The continuing silence of TPMA would
indicate that such defect, if at all
present, in the authority of Perez was
impliedly ratified
o The 2 labor cases had no bearing on the legal
capacity of Perez to represent the
union because (1) they did not nullify the
authority granted to Perez in the March 23,
2004 resolution and (2) the material facts of
these cases occurred and the Decisions were
rendered after the subject Petition was
filed with CA
▪ 1st case: Perez and other union members
moved to amend the union's
Constitution and By-Laws in order to
include a provision on recall elections
and to conduct a recall elections on
June 26, 2004. Med-Arbiter ruled that the
amendment sought to be introduced
was not validly ratified. The recall
elections held on June 26, 2004 was
annulled
▪ 2nd case: Perez and other union
members staged a strike on October 4,
2004. NLRC ruled that the strike was
illegal. Perez et al were declared to have
lost their employment status
W/N CA erred when it remanded to the DOLE Secretary
the issue on wage increase. NO
• ABI:
o The financial statements, though unaudited,
were duly signed and certified by its chief
financial officer. They have also been
allegedly submitted to various government
agencies
o TPMA did not object to the subject financial
statements in the proceedings before the
DOLE Secretary and even used the same in
formulating TPMA’s arguments in said
proceedings
o Decision of the DOLE Secretary was not solely
based on the subject financial statements
o Demands of TPMA on wage increase are
unrealistic and will cause the former to close
shop.
• Restaurante Las Conchas v. Llego and Uichico
v. NLRC: unaudited financial statements showing
 alleged business losses are mere self-serving
declarations and inadmissible in evidence
o It is true that administrative and quasi-judicial
bodies like the NLRC are not bound by the
technical rules of procedure. However, this
procedural rule should not be construed as a
license to disregard certain fundamental
evidentiary rules
o Reports, without the accompanying signature
of a CPA or audited by an independent auditor,
are nothing but self-serving documents which
ought to be treated as a mere scrap of paper
devoid of probative value
o While these cases involve proof necessary to
establish losses in cases of business
closure/retrenchment, there is no reason why
this rule should not equally apply to the
determination of the proper level of wage
award in cases where the Secretary assumes
jurisdiction in a labor dispute pursuant to LC
263(g)
• MERALCO v. Sec. Quisumbing:
o The extent of judicial review over the
Secretary's arbitral award is not limited to a
determination of grave abuse in the manner of
the secretary's exercise of his statutory
powers. This Court is entitled to review the
substance of the Secretary's award when
grave abuse of discretion is alleged to exist in
the award
o The more appropriate and available standard
is the standard of reasonableness: Whether
the Secretary's actions have been reasonable
in light of the parties’ positions and the
evidence they presented.
▪ In layman's terms, reasonableness
implies the absence of arbitrariness. In
legal parlance, it translates into the
exercise of proper discretion and to the
observance of due process
o A collective bargaining dispute 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. The best way in approaching this
task is to consider the available objective
facts, including factors such as the bargaining
history of the company, the trends and
amounts of arbitrated and agreed wage
awards and the company's previous CBAs, and
industry trends in general.
o The "middle ground" approach, or finding the
midway point between the demands of the
company and the union, and "splitting the
difference", is not the best method of resolving
a wage dispute. It is simplistic and fails to
recognize that the parties may already be at
 the limits of the wage levels they can afford. decision-maker to adjudicate the rights of the
Rather than encourage agreement, it instead parties in such a manner that they can know
promotes a "play safe" attitude that leads to the various issues involved and the reasons
more deadlocks than to successfully for the decision rendered.
negotiated CBAs o Note: TPMA’s demands vs ABI’s offer vs
• In this case, the DOLE Secretary gravely abused her Secretary’s award
discretion when she relied on the unaudited TPMA’s Secretary’s
ABI’s offer
financial statements of ABI in determining the wage demands award
award because such evidence is self-serving and First 18
inadmissible 1st year - P36 months – 1st year – P18
o violated her December 19, 2003 Order to ABI to P18
submit its complete audited financial Second 18
statements 2nd year - P36 months – 2nd year – P15
o may have resulted to an award that is based P18
on an inaccurate and biased picture of ABI's 3 year - P36
rd
3rd year – P12
capacity to pay Total - ₱36
o ABI offered no reason why it failed and/or
Total - P108 Total – P 45
for 36
refused to submit its audited financial for 3 years for 3 years
months
statements
• Also, the DOLE Secretary failed to indicate W/N CA erred when it awarded ₱1,390.00 as premium
the actual data upon which the wage award was payment for each covered employee. NO
based. It even appears that she utilized the "middle • According to the minutes:
ground" approach o issue of premium payments underwent
o Actual and projected net operating income, several proposals and counter-proposals
impact of the wage increase on net operating o last proposal of ABI was to allot ₱1,390.00 as
income, ABI's previous CBAs, and industry premium payment per covered employee
trends were not discussed provided that ABI would not shoulder the
o Falls short of the requirement of premium payments of the employee’s
administrative due process obligating the dependents
 o TPMA accepted the proposal provided that the
premium payment would be renegotiated on
the second and third years of the CBA
o Consequently, both parties agreed at the
minimum that the premium payment shall be
₱1,390.00 per covered employee and the
remaining point of contention was whether
the premium payment could be renegotiated
on the second and third years of the CBA
• It was, thus, grave abuse of discretion on the part of
the DOLE Secretary to reduce the award to
₱1,300.00 which is below the minimum of ₱1,390.00
agreed upon by the parties.
• In the proceedings before the CA, TPMA only
pleaded for the award of the ₱1,390.00 premium
payment per covered employee thereby effectively
waiving its proposal on the renegotiation of the
premium payment on the 2nd and 3rd years of the
CBA

Dispositive
Petition DENIED. CA decision AFFIRMED
[RTC Jurisdiction]
23 HALAGUENA V. PAL
Oct. 2, 2009 | Peralta, J. |
Petitioner/s: PATRICIA HALAGUEA, MA. ANGELITA L.
PULIDO, MA. TERESITA P. SANTIAGO, MARIANNE V.
KATINDIG, BERNADETTE A. CABALQUINTO, LORNA B.
TUGAS, MARY CHRISTINE A. VILLARETE, CYNTHIA A.
STEHMEIER, ROSE ANNA G. VICTA, NOEMI R.
CRESENCIO, and other flight attendants of PHILIPPINE
AIRLINES
Respondent/s: PHILIPPINE AIRLINES INCORPORATED
Doctrine: Where the principal relief sought is to be
resolved not by reference to the Labor Code or other
labor relations statute or a collective bargaining
agreement but by the general civil law, the jurisdiction
over the dispute belongs to the regular courts of justice
and not to the labor arbiter and the NLRC.
Facts:
● PAL and the Flight Attendants and Stewards
Association of the Philippines (FASAP), a labor
organization certified as the sole and exclusive
bargaining representative of the flight
attendants, entered into a CBA covering the years
2000-2005.
○ Sec. 144 of the CBA provides for
Compulsory Retirement at 55 for females
and 60 for males.
● Petitioners (female flight attendants) manifested
that the provision is discriminatory and
demanded for equal treatment for female cabin
crews.
○ FASAP President Robert Anduiza
manifested their willingness to commence
the collective bargaining negotiations.
● Petitioners filed a Special Civil Action for
Declaratory Relief with Prayer for the Issuance of
Temporary Restraining Order and Writ of
Preliminary Injunction with the RTC of Makati
City.
● On Aug. 9, 2004, RTC issued an Order upholding
its jurisdiction over the case.
○ It held that the allegations do not make out
a labor dispute arising from employer-
employee relations. It seeks a declaration
of nullity of a CBA provision.
○ TRO was issued for Sec. 144.
● On Sept 27, 2004, RTC directed the issuance of a
writ of preliminary injunction on the
implementation of Sec. 144 pending the
resolution of the case.
 ● PAL filed a petition for certiorari with the CA,
alleging that the RTC issued the order with
GADALEJ.
● CA annulled and set aside the order of the RTC
and declared that it had no jurisdiction over the
case.
● Petitioners contend that RTC has jurisdiction in
all civil actions in which the subject of the
litigation is incapable of pecuniary estimation
and in all cases not within the exclusive
jurisdiction of any court. Accordingly, it has the
power to decide issues of constitutionality or
legality of the provisions of Section 144 of the
CBA. As the issue involved is constitutional in
character, the LA or NLRC has no jurisdiction over
the case.
● Respondent argues that since the dispute
concerns the terms and conditions of petitioners'
employment in PAL, the labor tribunals have
jurisdiction.
Ruling:
W/N the RTC has jurisdiction over a challenge on the
legality or constitutionality of a CBA provision. - YES.
● The allegations in the petition for declaratory
relief plainly show that petitioners' cause of
action (notes) is the annulment of Section 144.
● The subject of litigation is incapable of pecuniary
estimation, exclusively cognizable by the RTC,
pursuant to Section 19 (1) of Batas Pambansa
Blg. 129, as amended. Being an ordinary civil
action, the same is beyond the jurisdiction of
labor tribunals.
● The issue cannot be resolved solely by applying
the Labor Code. Rather, it requires the application
of the Constitution, labor statutes, law on
contracts and the Convention on the Elimination
of All Forms of Discrimination Against Women,
and the power to apply and interpret the
constitution and CEDAW is within the jurisdiction
of trial courts, a court of general jurisdiction.
○ The jurisdiction of labor arbiters and the
NLRC under Article 217 of the Labor Code
is limited to disputes arising from an
employer-employee relationship which can
only be resolved by reference to the Labor
Code, other labor statutes, or their
collective bargaining agreement.
○ Here, the employer-employee relationship
between the parties is merely incidental
and the cause of action ultimately arose
from different sources of obligation, i.e., the
Constitution and CEDAW.
● Where the principal relief sought is to be resolved
not by reference to the Labor Code or other labor
relations statute or a collective bargaining
 agreement but by the general civil law, the
jurisdiction over the dispute belongs to the
regular courts of justice and not to the labor
arbiter and the NLRC.
● The change in the terms and conditions of
employment, should Section 144 of the CBA be
held invalid, is but a necessary and unavoidable
consequence of the principal relief sought, i.e.,
nullification of the alleged discriminatory
provision in the CBA.
● Although the CBA provides for a procedure for the
adjustment of grievances, such referral to the
grievance machinery and thereafter to voluntary
arbitration would be inappropriate to the
petitioners, because the union and the
management have unanimously agreed to the
terms of the CBA and their interest is unified.
○ In the same vein, the dispute in the case at
bar is not between FASAP and respondent
PAL. It is between PAL and several female
flight attendants.
● A CBA, as a labor contract, is not merely
contractual in nature but impressed with public
interest. If the retirement provisions in the CBA
run contrary to law, public morals, or public
policy, such provisions may very well be voided.
Dispositive
WHEREFORE, the petition is PARTLY GRANTED. The
Decision and Resolution of the Court of Appeals, dated
August 31, 2005 and March 7, 2006, respectively, in CA-
G.R. SP. No. 86813 are REVERSED and SET ASIDE. The
Regional Trial Court of Makati City, Branch 147 is
DIRECTED to continue the proceedings in Civil Case
No. 04-886 with deliberate dispatch.
Notes
CAUSE OF ACTION
24. Petitioners have the constitutional right to
fundamental equality with men under Section 14,
Article II, 1987 of the Constitution and, within the
specific context of this case, with the male cabin
attendants of Philippine Airlines.
26. Petitioners have the statutory right to equal work
and employment opportunities with men under Article
3, Presidential Decree No. 442, The Labor Code and,
within the specific context of this case, with the male
cabin attendants of Philippine Airlines.
27. It is unlawful, even criminal, for an employer to
discriminate against women employees with respect to
terms and conditions of employment solely on account
of their sex under Article 135 of the Labor Code as
amended by Republic Act No. 6725 or the Act
Strengthening Prohibition on Discrimination Against
Women.
28. This discrimination against Petitioners is likewise
against the Convention on the Elimination of All Forms
of Discrimination Against Women (hereafter, CEDAW),
a multilateral convention that the Philippines ratified in
1981. The Government and its agents, including our
courts, not only must condemn all forms of
discrimination against women, but must also
implement measures towards its elimination.
29. This case is a matter of public interest not only
because of Philippine Airlines' violation of the
Constitution and existing laws, but also because it
highlights the fact that twenty-three years after the
Philippine Senate ratified the CEDAW, discrimination
against women continues.
31. Section 114, Part A of the PAL-FASAP 2000-20005
CBA on compulsory retirement from service is
invidiously discriminatory against and manifestly
prejudicial to Petitioners because, they are compelled
to retire at a lower age (fifty-five (55) relative to their
male counterparts (sixty (60).
33. There is no reasonable, much less lawful, basis for
Philippine Airlines to distinguish, differentiate or
classify cabin attendants on the basis of sex and
thereby arbitrarily set a lower compulsory retirement
age of 55 for Petitioners for the sole reason that they
are women.
37. For being patently unconstitutional and unlawful,
Section 114, Part A of the PAL-FASAP 2000-2005 CBA
must be declared invalid and stricken down to the
extent that it discriminates against petitioner.
38. Accordingly, consistent with the constitutional and
statutory guarantee of equality between men and
women, Petitioners should be adjudged and declared
entitled, like their male counterparts, to work until they
are sixty (60) years old.
PRAYER
WHEREFORE, it is most respectfully prayed that the
Honorable Court:

c. after trial on the merits:

(I) declare Section 114, Part A of the PAL-FASAP

2000-2005 CBA INVALID, NULL and VOID to the extent
that it discriminates against Petitioners; x x x x