Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No.

190515 November 15, 2010

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS, Petitioner, vs. CIRTEK ELECTRONICS, INC., Respondent. DECISION CARPIO MORALES, J.: Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm situated inside the Laguna Technopark, had an existing Collective Bargaining Agreement (CBA) with Cirtek Employees Labor Union-Federation of Free Workers (petitioner) for the period January 1, 2001 up to December 31, 2005. Prior to the 3rd year of the CBA, the parties renegotiated its economic provisions but failed to reach a settlement, particularly on the issue of wage increases. Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike with the National Conciliation and Mediation Board-Regional Office No. IV (NCMB-RO IV) on April 26, 2004. Respondent, upon the other hand, filed a Notice of Lockout on June 16, 2004. While the conciliation proceedings were ongoing, respondent placed seven union officers including the President, a Vice President, the Secretary and the Chairman of the Board of Directors under preventive suspension for allegedly spearheading a boycott of overtime work. The officers were eventually dismissed from employment, prompting petitioner to file another Notice of Strike which was, after conciliation meetings, converted to a voluntary arbitration case. The dismissal of the officers was later found to be legal, hence, petitioner appealed. In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike on June 20, 2005. By Order1 dated June 23, 2005, the Secretary of Labor assumed jurisdiction over the controversy and issued a Return to Work Order which was complied with. Before the Secretary of Labor could rule on the controversy, respondent created a Labor Management Council (LMC) through which it concluded with the remaining officers of petitioner a Memorandum of Agreement (MOA)2 providing for daily wage increases of P6.00 per day effective January 1, 2004 and P9.00 per day effective January 1, 2005. Petitioner submitted the MOA via Motion and Manifestation3 to the Secretary of Labor,

alleging that the remaining officers signed the MOA under respondents assurance that should the Secretary order a higher award of wage increase, respondent would comply. By Order4 dated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by awarding a wage increase of from P6.00 to P10.00 per day effective January 1, 2004 and from P9.00 to P15.00 per day effective January 1, 2005, and adopting all other benefits as embodied in the MOA. Respondent moved for a reconsideration of the Decision as petitioners vice-president submitted a "Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan na may Petsang ika-4 ng Agosto 2005,"5 stating that the union members were waiving their rights and benefits under the Secretarys Decision. Reconsideration of the Decision was denied by Resolution6 of August 12, 2008, hence, respondent filed a petition for certiorari before the Court of Appeals. By Decision7 of September 24, 2009, the appellate court ruled in favor of respondent and accordingly set aside the Decision of the Secretary of Labor. It held that the Secretary of Labor gravely abused his discretion in not respecting the MOA. It did not give credence to the minutes of the meeting8 that attended the forging of the MOA as it was not verified, nor to the "Paliwanag"9 submitted by respondent union members explaining why they signed the MOA as it was not notarized. Petitioners motion for reconsideration having been denied by Resolution10 of December 2, 2009, the present petition was filed, maintaining that the Secretary of Labors award is in order, being in accord with the parties CBA history respondent having already granted P15.00 per day for 2001, P10.00 per day for 2002, and P10.00 per day for 2003, and that the Secretary has the power to grant awards higher than what are stated in the CBA. Respecting the MOA, petitioner posits that it was "surreptitiously entered into [in] bad faith," it having been forged without the assistance of the Federation of Free Workers or counsel, adding that respondent could have waited for the Secretarys resolution of the pending CBA deadlock or that the MOA could have been concluded before representatives of the Secretary of Labor. The relevant issues for resolution are 1) whether the Secretary of Labor is authorized to give an award higher than that agreed upon in the MOA, and 2) whether the MOA was entered into and ratified by the remaining officers of petitioner under the condition, which was not incorporated in the MOA, that respondent would honor the Secretary of Labors award in the event that it is higher. The Court resolves both issues in the affirmative. It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction under Art. 263 (g)11 of the Labor Code, may resolve all issues involved in the controversy including the award of wage increases and benefits.12 While an arbitral award

cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the intervention and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties, hence, it has the force and effect of a valid contract obligation.13 That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no moment. For the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents14 submitted by respondent as well as the parties bargaining history and respondents financial outlook and improvements as stated in its website.15 It bears noting that since the filing and submission of the MOA did not have the effect of divesting the Secretary of his jurisdiction, or of automatically disposing the controversy, then neither should the provisions of the MOA restrict the Secretarys leeway in deciding the matters before him.1avvphi1 The appellate courts brushing aside of the "Paliwanag" and the minutes of the meeting that resulted in the conclusion of the MOA because they were not verified and notarized, thus violating, so the appellate court reasoned, the rules on parol evidence, does not lie. Like any other rule on evidence, parol evidence should not be strictly applied in labor cases. The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA.16 (emphasis supplied) While a contract constitutes the law between the parties, this is so in the present case with respect to the CBA, not to the MOA in which even the unions signatories had expressed reservations thereto. But even assuming arguendo that the MOA is treated as a new CBA, since it is imbued with public interest, it must be construed liberally and yield to the common good. While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction

upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.17 (emphasis and underscoring supplied) WHEREFORE, the petition is GRANTED. The Decision dated September 24, 2009 and the Resolution dated December 2, 2009 of the Court of Appeals are REVERSED and SET ASIDE and the Order dated March 16, 2006 and Resolution dated August 12, 2008 of the Secretary of Labor are REINSTATED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: TERESITA J. LEONARDO-DE CASTRO* Associate Justice LUCAS P. BERSAMIN Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice

MARIA LOURDES P.A. SERENO Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONCHITA CARPIO MORALES Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

Footnotes

Additional member per Raffle dated November 15, 2010 in lieu of Associate Justice Arturo D. Brion.
1

DOLE records, pp. 20-22. Penned by Secretary Patricia A. Sto. Tomas. Id. at 251-289. Id. at 290-293. CA rollo, pp. 47-51. DOLE records, p. 383. Id. at. 393-403. Penned by Undersecretary Romeo C. Lagman.

CA rollo, pp. 312-323. Penned by Associate Justice Romeo F. Barza and concurred in by Associate Justices Remedios A. Salazar-Fernando and Isaias P. Dicdican.
8

Id. at 340. Id. at 216-222. Id. at 368-369. Ibid.

10

11

(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-towork 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 compliance with this provision as well as with such orders as he may issue to enforce the same. x x x x (emphasis supplied)
12

International Pharmaceutical, Inc. v. Hon. Secretary of Labor and Associated Labor Union, G.R. Nos. 92981-83, January 8, 1992, 205 SCRA 59.

13

Vide Manila Electric Company v. Quisumbing, G.R. No. 127598, February 22, 2000, citing Mindanao Terminal and Brokerage Service, Inc. v. Confesor, 338 Phil. 671.
14

DOLE records, pp. 303-305; 129-250; 32-48. Id. at 306-307.

15

16

Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc., G.R. No. 142824, December 19, 2001, 372 SCRA 658.
17

Davao Integrated Port Stevedoring v. Abarquez, G.R. No. 102132. March 19, 1993, 220 SCRA 197-198. The Lawphil Project - Arellano Law Foundation

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 190515 June 6, 2011

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS Petitioner, vs. CIRTEK ELECTRONICS, INC., Respondent. RESOLUTION CARPIO MORALES, J.: This resolves the motion for reconsideration and supplemental motion for reconsideration filed by respondent, Cirtek Electronics, Inc., of the Courts Decision dated November 15, 2010. Respondent-movant avers that petitioner, in filing the petition for certiorari under Rule 65, availed of the wrong remedy, hence, the Court should have dismissed the petition outright. It goes on to aver that the Court erred in resolving a factual issue whether the August 24, 2005 Memorandum of Agreement (MOA) was validly entered into , which is not the office of a petition for certiorari. Respondent-movant further avers that the MOA1 signed by the remaining officers of petitioner Union and allegedly ratified by its members should have been given credence by the Court. Furthermore, respondent-movant maintains that the Secretary of Labor cannot insist on a ruling beyond the compromise agreement entered into by the parties; and that, as early as February 5, 2010, petitioner Union had already filed with the Department of Labor and Employment (DOLE) a resolution of disaffiliation from the Federation of Free Workers resulting in the latters lack of personality to represent the workers in the present case. The motion is bereft of merit. Respondent indeed availed of the wrong remedy of certiorari under Rule 65. Due, however, to the nature of the case, one involving workers wages and benefits, and the fact that whether the petition was filed under Rule 65 or appeal by certiorari under Rule 45 it was filed within 15 days (the reglementary period under Rule 45) from petitioners receipt of the resolution of the Court of Appeals Resolution denying its motion for reconsideration, the Court resolved to give it due course. As Almelor v. RTC of Las Pias, et al. 2 restates:

Generally, an appeal taken either to the Supreme Court or the CA by the wrong or inappropriate mode shall be dismissed. This is to prevent the party from benefiting from ones neglect and mistakes. However, like most rules, it carries certain exceptions. After all, the ultimate purpose of all rules of procedures is to achieve substantial justice as expeditiously as possible. (emphasis and underscoring supplied) Respecting the attribution of error to the Court in ruling on a question of fact, it bears recalling that a QUESTION OF FACT arises when the doubt or difference arises as to the truth or falsehood of alleged facts,3 while a QUESTION OF LAW exists when the doubt or difference arises as to what the law is on a certain set of facts. The present case presents the primordial issue of whether the Secretary of Labor is empowered to give arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes. Ineluctably, the issue involves a determination and application of existing law, the provisions of the Labor Code, and prevailing jurisprudence. Intertwined with the issue, however, is the question of validity of the MOA and its ratification which, as movant correctly points out, is a question of fact and one which is not appropriate for a petition for review on certiorari under Rule 45. The rule, however, is not without exceptions, viz: This rule provides that the parties may raise only questions of law, because the Supreme Court is not a trier of facts. Generally, we are not duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals below. When supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the parties and are not reviewable by this Court, unless the case falls under any of the following recognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) When the findings are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based;

(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents; and (10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record. (emphasis and underscoring supplied) In the present case, the findings of the Secretary of Labor and the appellate court on whether the MOA is valid and binding are conflicting, the former giving scant consideration thereon, and the latter affording it more weight. As found by the Secretary of Labor, the MOA came about as a result of the constitution, at respondents behest, of the Labor-Management Council (LMC) which, he reminded the parties, should not be used as an avenue for bargaining but for the purpose of affording workers to participate in policy and decision-making. Hence, the agreements embodied in the MOA were not the proper subject of the LMC deliberation or procedure but of CBA negotiations and, therefore, deserving little weight. The appellate court, held, however, that the Secretary did not have the authority to give an arbitral award higher than what was stated in the MOA. The conflicting views drew the Court to re-evaluate the facts as borne by the records, an exception to the rule that only questions of law may be dealt with in an appeal by certiorari under Rule 45. As discussed in the Decision under reconsideration, the then Acting Secretary of Labor Manuel G. Imson acted well within his jurisdiction in ruling that the wage increases to be given are P10 per day effective January 1, 2004 and P15 per day effective January 1, 2005, pursuant to his power to assume jurisdiction under Art. 263 (g)4 of the Labor Code. While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the award can be considered as an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties. Hence, it has the force and effect of a valid contract obligation between the parties.5 In determining arbitral awards then, aside from the MOA, courts considered other factors and documents including, as in this case, the financial documents6 submitted by respondent as well as its previous bargaining history and financial outlook and improvements as stated in its own website.7 The appellate courts ruling that giving credence to the "Pahayag" and the minutes of the meeting which were not verified and notarized would violate the rule on parol evidence is erroneous. The parol evidence rule, like other rules on evidence, should not be strictly applied in labor cases. Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc. 8 teaches:

[R]eliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA. (emphasis and underscoring supplied) On the contention that the MOA should have been given credence because it was validly entered into by the parties, the Court notes that even those who signed it expressed reservations thereto. A CBA (assuming in this case that the MOA can be treated as one) is a contract imbued with public interest. It must thus be given a liberal, practical and realistic, rather than a narrow and technical construction, with due consideration to the context in which it is negotiated and the purpose for which it is intended.9 As for the contention that the alleged disaffiliation of the Union from the FFW during the pendency of the case resulted in the FFW losing its personality to represent the Union, the same does not affect the Courts upholding of the authority of the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the MOA. Contrary to respondents assertion, the "unavoidable issue of disaffiliation" bears no significant legal repercussions to warrant the reversal of the Courts Decision. En passant, whether there was a valid disaffiliation is a factual issue. Besides, the alleged disaffiliation of the Union from the FFW was by virtue of a Resolution signed on February 23, 2010 and submitted to the DOLE Laguna Field Office on March 5, 2010 two months after the present petition was filed on December 22, 2009, hence, it did not affect FFW and its Legal Centers standing to file the petition nor this Courts jurisdiction to resolve the same. At all events, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at the instance of either or both the FFW and the Union or a rival labor organization, not the employer. An intra-union dispute refers to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes, viz: RULE XI INTER/INTRA-UNION DISPUTES AND OTHER RELATED LABOR RELATIONS DISPUTES Section 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its members or by another labor organization; (b) conduct of election of union and workers association officers/nullification of election of union and workers association officers; (c) audit/accounts examination of union or workers association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation; (f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers association constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective bargaining agreements; (l) violations of the rights and conditions of union or workers association membership; (m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining (1) between and among legitimate labor organizations; (2) between and among members of a union or workers association. Section 2. Coverage. Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader.10 (emphasis supplied)

Indeed, as respondent-movant itself argues, a local union may disaffiliate at any time from its mother federation, absent any showing that the same is prohibited under its constitution or rule. Such, however, does not result in it losing its legal personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga Manggagawang Nagkakaisa Sa Manila Bay Spinning Mills At J.P. Coats11 enlightens: A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of bargaining power between the employer and their employeemembers. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. (emphasis and underscoring supplied)1avvphi1 Whether then, as respondent claims, FFW "went against the will and wishes of its principal" (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent relationship. WHEREFORE, the motion for reconsideration of this Courts Decision of November 15, 2010 is DENIED. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: TERESITA J. LEONARDO-DE CASTRO Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice LUCAS P. BERSAMIN Associate Justice MARIA LOURDES P. A. SERENO Associate Justice

ATTESTATION I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. CONCHITA CARPIO MORALES Chairperson

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

Footnotes
1

DOLE records, pp. 251-289. G.R. No. 179620, August 26, 2008. Vide Philippine Veterans Bank v. Monillas, G.R. No. 167098, March 28, 2008.

(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-towork 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 compliance with this provision as well as with such orders as he may issue to enforce the same. xxx
5

Vide Manila Electric Company v. Quisumbing, G.R. No. 127598, February 22, 2000, citing Mindanao Terminal and Brokerage Service, Inc. v. Confesor, 338 Phil. 671.
6

DOLE records, pp. 303-305; 129-250; 32-48. DOLE records, pp. 306-307. G.R. No. 142824, December 19, 2001.

Davao Integrated Port Services v. Abarquez, G.R. No. 102132. March 19, 1993.

10

Employees Union of Bayer Philippines, et. al v. Bayer Philippines, et. al., G.R. No. 162943, December 6, 2010.
11

G.R. No. 118562 July 5, 1996.

The Lawphil Project - Arellano Law Foundation