II. A. Constitutional Policy on Labor

1. Sec. 3, Art. XIII, 1987 Constitution2. Labor Code Policy

i) Art. 3ii) Art. 4iii) Art. 211 (a) and (e): free collective bargaining and negotiations,

including voluntary arbitration, mediation and conciliation; provide adequate machinery for dispute resolution

B. Non-Unionized Establishmentsa. Helplessness of unorganized laborb. Adversarial situationc. Denying worker participation does not promote healthy and

harmonious relationshipd. Labor-Management Council (LMC)

Articles 255, 273 (g) and 277 (g) Sections 1 and 2, Rule XXI, Book V, Rules and Regulations

Implementing the Labor Code Read Azucena, 8 PLG 44, No. 12 Read Foz Article in III PAVA Journal No.2 (2002)

Philippine Airlines v. NLRC, 225 SCRA 301 (1993)FACTS: On March 15, 1985, PAL completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately implemented, and some employees were subjected to the disciplinary measures.

The Philippine Airlines Employees Association (PALEA) filed a complaint before the NLRC contending that PAL, by its unilateral implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Art 249 and Art 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be held in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under the Code reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered to pay damages.

PAL filed a MTD, asserting its prerogative as an employer to prescribe rules and regulations regarding employees' conduct in carrying out their duties

and functions, and alleging that it had not violated the CBA or any provision of the Labor Code.ISSUE: WON the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employeesHELD: YES.Ratio Employees have a right to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto and one such matter is the formulation of a code of discipline.Reasoning It was only on March 2, 1989, with the approval of RA 6715, amending Art 211 of the Labor Code, that the law explicitly considered it a State policy "to ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare." However, even in the absence of said clear provision of law, the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina, it was held that management's prerogatives must be without abuse of discretion.

In San Miguel Brewery Sales Force Union vs. Ople, we upheld the company's right to implement a new system of distributing itsproducts, but gave the following caveat: So long as a company's management prerogatives are exercised in good faith for the advancement the employer's interest and not for the purpose of defeating or circumventing the rights of the employee, under special laws or under valid agreements, this Court will uphold them.

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by limitations found in law, a CBA, or the general principles of fair play and justice. Moreover, it must be duly established that the prerogative being invoked is clearly a managerial one.

Verily, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employees. In treating the latter, management should see to it that its employees are at least properly informed of its decisions or modes of action. PAL asserts that all its employees have been furnished copies of the Code, the LA and the NLRC found to the contrary, which finding, is entitled to great respect.

PALEA recognizes the right of the Company to determine matters of management policy and Company operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department to another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the functions of management. The exercise by

management of its prerogative shall be done in a just, reasonable, humane and/or lawful manner.

Such provision in the CBA may not be interpreted as cession of employees' rights to participate in the deliberation of matters which may affect their rights and the formulation of policies relative thereto. And one such matter is the formulation of a code of discipline. Industrial peace cannot be achieved if the employees are denied their just participation in the discussion of matters affecting their rights.Disposition Petition is DISMISSED.

San Miguel Brewery Sales Force Union v. Ople, 170 SCRA 25 (1989)

GTE Directories Corp. v. Sanchez, 197 SCRA 452 (1991)FACTS: Minister Sanchez decided the dispute in the exercise of the jurisdiction assumed by his predecessor in accordance with Article 263 (g) of the Labor Code.Even that assumption is open to question. The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be described as an industry affecting the national interest. GTE is a publishing firmchiefly dependent on the marketing and sale of advertising space for its not inconsiderable revenues.

Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented industries."

It cannot be regarded as playing as vital a role in communication as other mass media. The small number of employees involved in the dispute, the employer's payment of "P10 million in income tax alone to the Philippinegovernment," and the fact that the "top officers of the union were dismissed during the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national interest."

MERALCO v. Quisumbing, 302 SCRA 173 (1999)Facts: An arbitral award has been granted by the Secretary of Labor to the MERALCO Union.

Petition had its origin in the renegotiation of the parties' 1992-1997 CBA, insofar as the last two-year period thereof is concerned.

A letter from MERALCO’s Chairman of the Board and its President addressed to their stockholders, which states that the CBA "for the rank-and-file employees covering the period December 1, 1995 to November 30, 1997 is still with the Supreme Court," as indicative of petitioner's recognition that the CBA award covers the said period.

Issue:The parties dispute the reckoning period when retroaction of the arbitral awards by the Secretary of Labor should commence. Held: The period is herein set at two (2) years from 01 December 1995 to 30 November 1997.

The arbitral award can be considered as an approximation of a CBA which would otherwise have been entered into by the parties. The terms or periods set forth in Article 253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to an arbitral award by the Secretary considering the absence of an applicable law.

Despite the silence of the law, the Court ruled that CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union.If there is no such agreement, the award shall retroact to the first day after the six months following the last day of the CBA.In the absence of a CBA, the Secretary’s determination of the retroactivity date shall control.

Rule RE CBA retroactivity: (Art. 253-A)If a CBA is renewed within 6 months from its expiry, it will be retroactive from the day immediately following the expiry of the original CBA. For instance, a CBA expires on December 31 and its renegotiation is finished within 6 months, then the renewed CBA dates back to January 01.If there is no new CBA concluded within 6 months, then there will be no automatic retroaction; both the retroaction (if any) and the effectivity date of the new CBA will be left to the parties to agree on.

III. Types of Dispute and Different Modes of Dispute Settlement

1. Negotiation2. Collective Bargaining including grievance handling, mediation,

conciliation and voluntary arbitration.3. What is a labor dispute

Art. 212 (LC); Sec. 1 (s), Rule 1, Book V, Rules and Regulations Implementing the LC

SMC Employees Union v. Bersamira, 186 SCRA 496 (1990)FACTS: SMC entered into contracts for merchandising services with Lipercon and D'Rite (L&D), independent contractors duly licensed by DOLE. In said contracts, it was expressly understood and agreed that the EEs employed by the contractors were to be paid by the latter and that none of them were to be deemed EEs or agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SMC on the other.

Petitioner SMCEU-PTWGO (Union) is duly authorized representative of the monthly paid rank-and-file EEs of SMC. Their CBA provides that temporary, probationary, or contract EEs are excluded from the bargaining unit and outside scope of CBA.

Union advised SMC that some L&D workers had signed up for union membership and sought the regularization of their employment with SMC. Union alleged that this group of EEs, while appearing to be contractual workers of supposedly independent contractors, have been continuously working for SMC for a period of 6 months to 15 years and that their work is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or trade of SMC, and that there exists a "labor-only" contracting situation. It was then demanded that the employment status of these workers be regularized. This was not acted upon by SMC, and so Union filed a notice of strike, and then a second notice.

Series of pickets were staged by L&D workers in various SMC plants and offices. SMC RTC to enjoin the Union from: representing and or acting for and in behalf of the employees of L&D for the purposes of collective bargaining; calling for and holding a strike vote to compel plaintiff to hire the employees or workers of L&D, among others.

Union filed a Motion to Dismiss SMC's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SMC, which was denied by respondent Judge. And after several hearings, issued Injunction. RTC reasoned that the absence of ER-EE relationship negates the existence of labor dispute, so court has jurisdiction to take cognizance of SMC's grievance. Hence, this action.ISSUE: WON RTC correctly assumed jurisdiction over the controversy and properly issued the Writ of Preliminary Injunction.HELD: NORe: Definition of Labor Dispute (p4 of Outline)Ratio A labor dispute can nevertheless exist “regardless of whether the disputants stand in the proximate relationship of employer and employee, provided the controversy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof” The existence of a labor dispute is not negatived by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee. (A212 LC)Reasoning Crucial to the resolution of the question on jurisdiction, is the matter of whether or not the case at bar involves, or is inconnection with, or relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts. In this case, the matter re terms, tenure and conditions of EE’s employment and the arrangement of those terms as well as the matter of

representation bring these issues within the scope of a labor dispute. Hence it is the labor tribunals that have jurisdiction and not the regular courtsRe: ER Functions and ULP (p30 of Outline)

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. So, Labor Arbiters haveoriginal and exclusive jurisdiction to hear and decide the following cases involving all workers including: [a] unfair labor practice cases; [b] those that workers may file involving wages, hours of work and other terms and conditions of employment; and [c] cases arising from any violation of A265 LC, including questions involving the legality of striker and lockouts.

SMC’s claim that the action is for damages under A19, 20 and 21 of CC is not enough to keep the case within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice.

SC recognizes the proprietary right of SMC to exercise an inherent management prerogative and its best business judgment to determine whether it should contract out the performance of some of its work to independent contractors. However, the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law (S3, A13, 1987 Constitution)equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium.Disposition Petition is GRANTED.

Gold City Integrated Port Service v. NLRC, 245 SCRA 627 (1995)Note: A strike can only happen when there is a labor dispute.In this case a strike occurred. It was an illegal strike for not complying with formal requisites.

A STRIKE, considered as the most effective weapon of labor is defined as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute.

A labor dispute includes any controversy or matter concerning terms or conditions of employment of the association or representation of persons in negotiating, fixing, maintaining, changing or arrangingthe terms and conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employers and employees.

Private respondents and their co-workers stopped working and held the mass action to press for their wages and other benefits. What transpired then was clearly a strike, for the cessation of work by concerted action resulted from a labor dispute.

4. Types of labor disputea. rights disputea. interest dispute

Elgin, J. &. E. Ry. V. Burley, 65 S. Ct. 1282 (1945)

IV. Collective Bargaining

A. Nature and PurposeUnited Employees Union of Gelmart Industries Phils. V. Noriel, 67 SCRA 267 (1975)FACTS: The petition seeks to have the certification election declared null and void, for it was held under circumstances that manifested lack of fairness

It was alleged that the petitioner-union was included, but under another name, in the list of contending unions in the election, where the winning party had 63% of the votes, while the petitioner only had 4.5% (thus, the winner won by a landslide, even if the votes of all the other 7 contending unions were combined. Therefore, the mistake didn’t really affect the outcome of the election)ISSUE: WON the certification election is voidHELD: NORatio Considering what transpired, it is apparent that the grievance spoken of is more fancied than real, the assertion of confusion and demoralization based on conjecture rather than reality. At most, it was an honest mistakeReasoning The institution of collective bargaining is a prime manifestation of industrial democracy at work. The two parties to the relationship, labor and management, make their own rules by coming to terms. That is to govern themselves in matters that really count. As labor, however, is composed of a number of individuals, it is indispensable that they be represented by a labor organization of their choice. Thus may be discerned how crucial a certification election is.

There must be an opportunity to determine which labor organization shall act on their behalf.It is precisely because respect must be accorded to the will of labor thus ascertained that a general allegation of duress is not sufficient to invalidate a certification election; it must be shown by competent and credible proof. That is to give substance to the principle of majority rule, one of the basic concepts of a democratic polity. Disposition Petition dismissed.

National Union of Restaurant Workers v. CIR, 10 SCRA 843 (1964)FACTS: On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres Hermanas Restaurant, particularly Mrs. Felisa Herrera, on

the ground, among others, that respondents refused to bargain collectively with the complaining union; respondents made a counter-proposal in the sense that they would bargain with said union and would accept its demands if the same would become a company union, and one Martin Briones, an employee, was separated from the service because he was found to be the organizer and adviser of the complaining union.

Respondents denied the charges, and they were exonerated. The judge found that the charges were not proven and dismissed the complaint.ISSUES1. WON respondents refused to bargain collectively with the union and committed unfair labor practice 2. WON respondents interfered, coerced or restrained their employees in the exercise of their right to join the complaining union 3. WONrespondents dismissed said employee because he was found to be the organizer and adviser of the complaining union.HELD1. NO. Reasoning The court cited several instances that showed respondent’s willingness to bargain with the union. It is true that under Sec 14, RA 875 whenever a party serves a written notice upon the employer making some demands the latter shall reply thereto not later than 10 days from receipt thereof, but this condition is merely procedural, and as much its non-compliance cannot be deemed to be an act of unfair labor practice. The fact is respondents did not ignore the letter sent by the union so much so that they called a meeting to discuss its demands.

The court also pointed out the markings on the letter made by respondent in the meeting with the union on May 3, 1960 at their restaurant in Quezon City, indicating the willingness and actual bargaining made with the union. (Check for agreement, a cross for disapproval and a circle for demands left open for further discussion)

It is contended that respondents refused to bargain with the complaining union as such even if they called a meeting of its officers and employees hereby concluding that they did not desire to enter into a bargaining agreement with said union. It is belied by the fact that respondents did actually agree and bargain with the representatives of the union. Respondents were of the impression that before a union could have that capacity it must first be certified by the CIR as the duly authorized bargaining unit, which they also stated in their answer to the petition for certification filed by said union before the CIR. In that case, another union known as the International Labor and Marine Union of the Philippines claimed to represent the majority of the employees of respondent restaurant, and this is what it alleged in a letter sent to the manager of respondents dated May 25, 1962.

2. NO. Reasoning On this document certain notations were made by one Ernesto Tan which are indeed derogatory and which were allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation on which the union relies is one which states that respondent Herrera would be willing to recognize the union "if union would become company union", which would indeed show that Mrs. Herrera interfered with the employees' right to self-organization. But respondents denied that they ever authorized Ernesto Tan to make such notation or to represent them in the negotiations. Although Tan was the nephew of respondent Herrera, in the company, he was merely a bookkeeper whose duties were confined to the keeping and examination of their books of accounts and sales invoices. It appears that he was not even invited to the meeting but merely volunteered to be present and made those notations on his own account and initiative.3. NO. Reasoning. Respondents maintain that Briones was dismissed because of the “smouldering embers of hatred” that Briones had against Mrs. Herrera, the threats he made, and her fear for her own safety being always together with in her car driven by Briones during business routine. Petitioners maintain that Briones was dismissed because of his union activities. It appears in Briones’ testimony that he is not the only one who organized the union, yet the members who are more active in the union and serve as its officers are still employed at the restaurant. DispositionCIR decision AFFIRMED.

Philam Mgt. Co. Inc. v. Philam Employees Association, 51 SCRA 98 (1973)

Kiok Loy v. NLRC, 141 SCRA 179 (1986)FACTS: In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for short) was subsequently certified in a resolution dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's motion for reconsideration of the said resolution was denied on January 25, 1978.December 7, 1978, the Union furnished the Company with two copies of its proposed collective bargaining agreement. It also requested the Company for its counter proposals. Both requests were ignored and remained unacted upon by the Company.

The Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in collective bargaining.

Conciliation proceedings then followed during the thirty-day statutory cooling-off period.

The Bureau of Labor Relations to certify the case to the National Labor Relations Commission for compulsory arbitration.The labor arbiter set the initial hearing for April 29, 1979. For failure however, of the parties to submit their respective position papers as required, the said hearing was cancelled and reset to another date.

The Union submitted its position paper. On July 20, 1979, the National Labor Relations Commission rendered its

decision declaring the respondent guilty of unjustified refusal to bargain Petitioner contends that the National Labor Relations Commission acted without or in excess of its jurisdiction or with graveabuse of discretion amounting to lack of jurisdiction in rendering the challenged decision.Petitioner further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by law ISSUE/S: WON the respondent is guilty of unjustified refusal to bargainHELD: YES. Unfair labor practice is committed when it is shown that the respondent employer, after having been served with a written bargaining proposal by the petitioning Union, did not even bother to submit an answer or reply to the said proposalRatio Unfair labor practice is committed when it is shown that the respondent employer, after having been served with a written bargaining proposal by the petitioning Union, did not even bother to submit an answer or reply to the said proposalReasoning Collective bargaining which is defined as negotiations towards a collective agreement, is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work, and all other terms and conditions of employment including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorporating such agreement, if requested by either party.

While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate contract negotiation.The mechanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present, namely, (1) possession of the status of majority representation of the employees' representative in accordance with any of the means of selection or designation provided for by the Labor Code; (2)

proof of majority representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor Code .

From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor Code to bargain in good faith. DISPOSITION: Petition dismissed

Divine Word University v. Secretary of Labor, 213 SCRA 759 (1992)

General Milling Corp. v. Court of Appeals, 422 SCRA 514 (2004)FACTS: Gen. Milling employed 190 employees in its two plants in Cebu and Lapu-Lapu. They were all members of respondent Gen. Milling Corp. Independent Labor Union (union), a duly certified bargaining agent.

April 28, 1989: GMC and the union concluded a CBA which included the issue of representation effective for a term of three years. The CBA was effective for three years retroactive to December 1, 1988 (expiration: November 30, 1991).

A day before the expiration, the union to GMC a CBA, with a request for a counter-proposal to be returned within 10 days from receipt.

GMC received collective and individual letters from workers who stated that they had withdrawn from their union membership, due to religious affiliation and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC did not send any counter-proposal.

December 16, 1991: GMC wrote a letter to the union’s officers, stating that even if there was no longer a basis for negotiations (since there was no union already), management was still willing to enter a dialogue with the union. The union officers disclaimed the massive disaffiliation.

January 13, 1992: GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union protested and requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC, however, advised the union to ―refer to our letter dated December 16, 1991.‖

July 2, 1992: the union filed a complaint against GMC with the NLRC, Arbitration Division, Cebu City, alleging unfair labor practice. The labor arbiter dismissed the case with the recommendation that a petition for certification election be held to determine if the union still enjoyed the support of the workers.

The union appealed to the NLRC. The NLRC set aside the labor arbiter’s decision, and ordered GMC to abide by the CBA draft that the union proposed for a period of two (2) years. NLRC pointed out that upon the effectivity of Rep.

Act No. 6715, the duration of a CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union was from December 1, 1988 to November 30, 1993; the union remained as the exclusive bargaining agent.ISSUES1. WON GMC is guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with the right of its employees to self-organization;2. WON CA abused its discretion when it imposed upon GMC the draft CBA proposed by the union for two years to begin from the expiration of the original CBA.HELD1. YES Ratio Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor practice.Reasoning Article 253-A, Labor CodeTerms 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....

The representation provision of a CBA should last for five years. The relation between labor and management should be undisturbed until the last 60 days of the fifth year. It is indisputable that when the union requested for a renegotiation ofthe economic terms of the CBA on November 29, 1991, it was still the certified collective bargaining agent of the workers, because it was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on December 1, 1988.

For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company committed an unfair labor practice under Article 248 of the Labor Code:

ART. 248.Unfair labor practices of employers. –It shall be unlawful for an employer to commit any of the following unfair labor practice:(g) To violate the duty to bargain collectively as prescribed by this Code;

ART. 252. Meaning of duty to bargain collectively. –The duty to bargain collectively means the performance of a mutual obligation to meet and

convene promptly and expeditiously in good faith for the purpose of negotiating an agreement....

Good faith or bad faith is an inference to be drawn from the facts. The effect of an employer’s or a union’s actions individually is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole.

Under Article 252 both parties are required to perform their mutual obligation to meet and convene promptly and expeditiouslyin good faith for the purpose of negotiating an agreement. The union lived up to this obligation when it presented proposals fora new CBA to GMC. On the other hand, GMC failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the union and the status of its membership to prevent any negotiation. GMC’s failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in bargaining with the union.

The CA found that the letters between February to June 1993 by 13 union members signifying their resignation from the union clearly indicated that GMC exerted pressure on its employees. Yes, GMC interfered with the right of employees to self-organization.2. NO. Ratio The provision mandates the parties to keep the status quo while they are still in the process of working out their respectiveproposal and counter proposal. When one of the parties abuses this grace period by purposely delaying the bargaining process,a departure from the general rule is warranted, that is, the court may impose on the erring company the CBA proposed by its employees’ union -lock, stock and barrel.Reasoning By its acts, no less than its action which bespeak its insincerity, GMC has forfeited whatever rights it could have asserted as an employer.-Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning negotiations bygoing through empty gestures.DISPOSITION Petition is dismissed.

Suarez v. National Steel, 569 SCRA 331 (2008)Facts: Respondent National Steel Corporation was engaged in the business of manufacturing steel products needed for pipe making, shipbuilding, can-making and production of appliances. When respondent suffered substantial financial losses, it retrenched herein petitioners who received a separation package in accordance with the retrenchment program. After having been paid their separation benefits, petitioners executed and signed a release and quitclaim. Subsequently, respondent and the National Steel Labor Union-Federation of

Free Workers (NASLU-FFW), the certified collective bargaining agent of respondent’s rank-and-file employees, signed a new CBA. Pursuant thereto, petitioners were given their salary differentials, for which they executed and signed another release and quitclaim. Nothing was heard from petitioners, until about 2½ years after their separation from the company, they wrote respondent demanding payment of retirement benefits under the CBA. Petitioners’ prayer: To be paid retirement benefits in addition to the separation pay they received from respondent pursuant to Article XIV of the existing CBA providing for retirement benefitsRespondent’s prayer: To have the complaint dismissed on the ground that its retirement plan expressly prohibits the payment of retirement benefits to employees terminated for causeLabor Arbiter: Complaint dismissed for lack of merit. NLRC: Appeal granted, ruling of the Labor Arbiter reversed. CA: Petitioners were no longer entitled to retirement benefits after having received the separation pay, and were precluded from claiming such benefits because of their quitclaims. Issues: WON petitioners as retrenched employees who already received their separation pay can still recover retirement benefits.Ruling: NO. While the CBA, on its face, does not contain an express prohibition of payment of retirement benefits to retrenched employees, the parties may still prove it by means of contemporaneous and subsequent acts of the parties to the agreement, such as the execution of the affidavits by the NASLU-FFW officers and respondent’s managers. According to the officers of NASLU-FFW, the duly certified bargaining agent of respondent’s rank-and-file employees, the intent of the parties in drafting the CBA was to make payment of the separation package for retrenched employees exclusive of retirement benefits.Ratio: If the terms of the CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. However, if the CBA imports ambiguity, then the parties’ intention as shown by their conduct, words, actions and deeds – prior to, during, and after executing the agreement, must be ascertained.

Lepanto Mining v. Lepanto Local Union, 562 SCRA 495 (2008)Facts: Lepanto Consolidated Mining Company (petitioner) is a domestic mining corporation. Lepanto Local Staff Union (respondent) is the duly certified bargaining agent of petitioner's employees occupying staff positions. Petitioner and respondent entered into their 4th CBA, which provides: ‘ARTICLE VIII - NIGHT SHIFT DIFFERENTIAL Section 3. Night Differential pay. - The Company shall continue to pay night shift differential for work during the first (11:00 p.m. to 7:00 a.m.) and third (3:00 p.m. to 11:00 p.m.) shifts to all covered employees

within the bargaining unit. However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.), there will be no night differential pay added before the overtime pay is calculated.’ Petitioner’s prayer: To have the complaint dismissed due to a wrong interpretation of the CBARespondent’s prayer: To compel petitioner to pay employees in the second shift night shift differential as provided in the CBAVoluntary Arbiter: Petition granted; paragraph 3, Section 3, Article VIII of the 4 th

CBA, only meant that an employee who extends work beyond the second shift shall receive overtime pay which shall be computed before the night shift differential pay. In other words, it excludes the night shift differential in the computation of overtime pay. CA: Voluntary Arbitrator's decision affirmed; paragraph 3, Section 3, Article VIII was clear and unequivocal in granting night shift differential pay to employees of the second shift for work rendered beyond their regular day shift. However, the night shift differential was excluded in the computation of the overtime pay.Issues: WON, under the 4th CBA, employees in the second shift are entitled to night shift differential for work performed beyond the regular day shiftRuling: YES. The provision in question was contained in the 1st, 2nd, and 3rd CBAs between petitioner and respondent. During the effectivity of the first three CBAs, petitioner paid night shift differentials to other workers who were members of respondent for work performed beyond 3:00 p.m. Petitioner also paid night shift differential for work beyond 3:00 p.m. during the effectivity of the 4th CBA. In fact, even after the promulgation of the Voluntary Arbitrator's decision and while the case was pending appeal, petitioner still paid night shift differential for work performed beyond 3:00 p.m. All these affirm the intention of the parties to the CBA to grant night shift differential for work performed beyond 3:00 p.m.Ratio: To ascertain the intention of the contracting parties, their contemporaneous and subsequent acts as well as their negotiating and contractual history and evidence of past practices shall be considered.

Almario v. PAL, 532 SCRA 614 (2007)Facts: Almario was initially hired by PAL as a Boeing 747 Systems Engineer. He was eventually promoted to the position of Airbus 300 First Officer. In order to comply with the requirements of this higher position, Almario had to undergo more than five months of training which included ground schooling in Manila and flight simulation in Australia. PAL paid for Almario’s training.After the training, Alamario served PAL in his new rank as A-300 First Officer. However, after eight months of service, he tendered his resignation for “personal reasons.” In response to his resignation letter, PAL sent Almario a

letter reminding him that the company invested heavily on his personal training on the basis that he would continue to serve the company for at least three years. The letter also informed Almario that if he would choose to resign, he would have to reimburse the company an amount representing the cost of his training. Almario pushed through with his resignation.PAL filed a Complaint against Almario for reimbursement of training costs at the Makati RTC. The company contended that it had an innominate contract do ut facias (I give that you may do) with Almario—that the company spent for Almario’s training with the understanding that he would render service to PAL until the costs of said training were recovered in at least three years.Almario denied the existence of any agreement with PAL that he would have to render service to it for three years after his training failing which he would reimburse the training costs. He pointed out that the 1991-1994 CBA between PAL and ALPAP, of which he was a member, carried no such agreement.The RTC ruled in favor of Almario. The RTC found no provision in the CBA between PAL and ALPAP stipulating that a pilot who underwent training must serve PAL for at least three years failing which s/he should reimburse the training expenses. The CA reversed the RTC and ruled in favor of PAL. The CA found Almario liable under the CBA between PAL and ALPAP and under Art 22 of the Civil Code.Issue: Whether or not Almario should be ordered to reimburse the costs for his training as a consequence of resigning before the three-year period.Held: Almario is liable; he must reimburse.1. Almario is liable under the CBA (cf. Sec 1, Art XXIII). This provision of the CBA does not explicitly state the requirement that a pilot who has underwent training must render service to the company for at least three years, lest s/he reimburse the cost of the training. However, the Court held that this provision—and CBA provisions, in general—should 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. Sec 1, Art XXXIII was incorporated into the CBA taking into consideration the reality of prohibitive training costs and the need for PAL to have a return on the investment of spending for a pilot’s training. The Court also gave credence to the company’s testimony that it has been the policy or practice of PAL to underwrite the training costs of its pilots, with the expectation of benefiting therefrom in order to recover the costs of training.2. Almario is liable under Art 22 of the Civil Code. One may not enrich himself at the expense of another. PAL invested for the training of Almario to enable him to acquire a higher level of proficiency. PAL was justified in expecting to

recover the training costs by availing itself of Almario’s services for at least three years. This expectation of PAL was not fully realized because of Almario’s untimely resignation. He cannot refuse to reimburse; otherwise, he will be violating the principle of unjust enrichment

Colegio de San Juan de Letran v. Association of Employees and Faculty of Letran, 340 SCRA 587 (2000)FACTS: Letran and the labor union (AEFL) were in the process of negotiating a new CBA. However, the negotiations were suspended by Letran after it purportedly received information that a new group of employees ha filed a petition for certification election(there are other facts involved, but only these are relevant to the topic)ISSUE/S: WON Letran is guilty of ULP by refusing to bargain with the union when it unilaterally suspended the ongoing negotiations for a new CBA upon mere information that a petition for certification has been filed by another legitimate labor organizationHELD: YESRatio The filing of the petition for certification election was barred by the existence of a valid and existing CBA. Consequently, there is no legitimate representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the ongoing negotiation. There is no doubt that petitioner is guilty of ULP by its stern refusal to bargain in good faith with respondent union.Reasoning Art.252, LC: The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work andall other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession.

The parties have the mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. Undoubtedly, the union lived up to this requisite when it presented its proposals for the CBA to Letran. On theother hand, petitioner devised ways and means in order to prevent the negotiation.

Letran’s utter lack of interest in bargaining with the union is obvious in its failure to make a timely reply to the proposals presented by the latter. More than a month after the proposals were submitted by the union, petitioner still had not made any counter-proposals. This inaction on the part of Letran prompted the union to file its second notice of strike on March 13, 1996.

Petitioner could only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse forfailing to file its reply. This is a clear violation of Art.250, governing the procedure in collective bargaining[1]

Company's refusal to make counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargaincollectively. Here, Letran’s actuations show lack of sincere desire to negotiate (thus guilty of ULP).

The claim that the suspension of negotiation was proper since by the filing of the petition for certification election the issue on majority representation of the employees had arose is untenable. According to petitioner, the authority of the union to negotiate on behalf of the employees was challenged when a rival union filed a petition for certification election.

In order to allow the employer to validly suspend the bargaining process there must be a valid petitionfor certification election raising a legitimate representation issue. Hence, the mere filing of a petition for certification election does not ipso factojustify the suspension of negotiation by the employer. The petition must first comply with the provisions of the LC and its IRR. Foremostis that a petition for certification election must be filed during the 60-day freedom period. The “Contract Bar Rule” under Sec.3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor Code, provides that: “.… If a CBA has been duly registered in accordance with Article 231, a petition for certification election or a motion for intervention can only be entertained within 60 days prior to the expiry date of such agreement.” No petition for certification election for any representation issue may be filed after the lapse of the 60-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed. Hence, the contract bar rule still applies. The purpose is to ensure stability in the relationship of the workers and the company by preventing frequent modifications of any CBA earlier entered into by them in good faith and for the stipulated original period.

In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition for certification election by ACEC, allegedly a legitimate labor organization, was filed with DOLE only on May 1996. Clearly, the petition was filed outside the 60-day freedom period. Hence, the filing thereof was barred by the existence of a valid and existing CBA. Consequently, there is no legitimate representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the ongoing negotiation. Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo

Enterprises is misplaced since that case involved a legitimate representation issue which is not present in the case at bar.

Significantly, the same petition for certification election was dismissed by the Labor Secretary. Disposition Petition is dismissed.

B. Bargainable Issues

1. Arts. 252, 260 LCManila Fashions, Inc. v. NLRC, 264 SCRA 104 (1996)FACTS: Respondent Nagkakaisang Manggagawa ng Manila Fashions, Inc., through its president, respondent Nonito Zamora, filed a complaint before the Labor Arbiter on behalf of its one hundred and fifty (150) members who were regular employees of petitioner Manila Fashions, Inc. The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A mandating a P12-increase in wages effective 8 January 1991. As a result, complainants' basic pay, 13th month pay, service incentive leave pay, legal holiday pay, night shift differential and overtime pay were all underpaid

Petitioner countered that the failure to comply with the pertinent Wage Order was brought about by the tremendous losses suffered by it which were aggravated when the workers staged a strike on account of the non-adjustment of their basic pay. To forestall continuous suspension/closure of business operations, which petitioner did for three (3) months, the strikers sent a notice that they were willing to condone the implementation of the increase. The condonation was distinctly stated in Sec. 3, Art. VIII, of the Collective Bargaining Agreement (CBA) dated 4 February 1992, which was voluntarily entered into by the parties and representsa reasonable settlement “The Union realizes the company’s closeness to insolvency and, as such , sympathizes with the company’scondition. Therefore, the Union has agreed, as it hereby agrees, to condone the implementation of Wage Order o. NCR-02 and 02-A.

The complainants admitted the existence of the aforementioned provision in the CBA; however they denied the validity thereof inasmuch as it was not reached after due consultation with the members.

The Labor Arbiter sustained the claim that the subject provision of the CBA was void but based its conclusion on a different ground :. . . While it is true that both union officers/members and (petitioner) signed the agreement, however, the same is not enforceable since said agreement is null and void, it being contrary to law. It is only the Tripartite Wage Productivity Board of (the) Department of Labor and Employment (DOLE) that could approve exemption (of) an establishment from coverage of (a) Wage Order . . .

ISSUES: 1. WON the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec. 3, Art. VIII, of the CBA was validHELD: NOReasoning A Collective Bargaining Agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory provisions for grievances and arbitration machineries. As in all other contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. Section 3, Art. VIII, of the CBA is a void provision because by agreeing to condone the implementation of the Wage Order the parties thereby contravened its mandate on wage increase of P12.00 effective 8 January 1991. Also, as stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could approve exemption of an establishment from coverage of a Wage Order.If petitioner is a financially distressed company then it should have applied for a wage exemption so that it could meet its labor costs without endangering its viability or its very existence upon which both management and labor depend for a living. The Office of the Solicitor General emphasizes the point thatparties to a CBA may not by themselves, set a wage lower than the minimum wage. To do so would render nugatory the purpose of a wage exemption, not to mention the possibility that employees may be unwittinglyput in a position to accept a lower wage. The cases that petitioner relies on are simply inapplicable because, unlike the present case which involves a stipulation in the CBA in contravention of law, they are concerned with compromise settlements as a means to end labor disputes recognized by Art. 227 of the Labor Code and considered not against public policy by doctrinal rules established by this Court.Disposition Petition is dismissed.

Republic Savings Bank v. CIR, 21 SCRA 226 (1967)FACTS: Republic Savings Bank (now Republic Bank or RB) discharged/terminated private respondents Resuello, Jola et al, for having written and published "a patently libelous letter, tending to cause the dishonor, discredit or contempt not only of officers and employees of this bank, but also of your employer, the bank itself." Respondents had written to the bank president, Ramon Racelis, a letter-charge, demanding his resignation on the grounds of immorality, nepotism in the appointment and favoritism as well as discrimination in the promotion of RB employees.

CIR ruled that RB’s act of dismissing the 8 respondent employees constituted an unfair labor practice within the meaning and intendment of the

Industrial Peace Act (RA 875). RB appealed. It still maintains that the discharge was for cause.

RB’s defense: CIR should have dismissed the complaint because the discharge of the respondents had nothing to do with their union activities as the latter in fact admitted at the hearing that the writing of the letter-charge was not a "union action" but merely their "individual" act.ISSUE: WON the dismissal of the 8 employees by RB constituted unfair labor practice within the meaning and intendment of the Industrial Peace ActHELD:YES.Even assuming that respondents acted in their individual capacities when they wrote the letter-charge they were nonetheless protected for they were engaged in concerted activity, in the exercise of their right of self-organization that includes concerted activity for mutual aid and protection, interference with which constitutes an unfair labor practice. The joining in protestsor demands, even by a small group of employees, if in furtherance of their interests, is a concerted activity protected by the IndustrialPeace Act. It is not necessary that union activity be involved or that collective bargaining be contemplated.

NLRCv. Phoenix Mutual Life Insurance Co is case in point. Held: An insurance company was guilty of an unfair labor practice in interfering with this right of concerted activity by discharging two agents employed in a branch office. The agents acts of meeting and joining in a letter to the home office objecting to the transfer to their branch office of a cashier from another branch,for further discussion, approval and signature, is a concerted activity that is protected.Re Meaning of Duty to Bargain

What the RB should have done was to refer the letter-charge to the grievance committee. This was its duty, failing which it committed an unfair labor practice RA 875 which makes it an unfair labor practice for an employer "to dismiss, discharge or otherwise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony under this Act."

Collective bargaining does not end with the execution of an agreement. It is a continuous process. The duty to bargain imposes on the parties during the term of their agreement the mutual obligation “to meet and confer promptly and expeditiously and in good faith for the purpose of adjusting any grievances or question arising under such agreement” and a violation of this obligation is an unfair labor practice.

Instead of stifling criticism, RB should have allowed the respondents to air their grievances. Good faith bargaining requiredof the Bank an open mind and a sincere desire to negotiate over grievances. The grievance committee, created in the CBA, would have been an appropriate forum for such negotiation.

Indeed, the grievance procedure is a part of the continuous process of collective bargaining. It is intended to promote a friendly dialogue between labor and management as a means of maintaining industrial peace.Disposition Appealed decision is AFFIRMEDFERNANDO, CONCURRINGCollective bargaining presupposes the give-and-take of discussion. No party adopts, at least in its initial stages, a hard-line position, from which there can be no retreat. That was not the situation here. Respondents as labor leaders were quite certain that the President of RB had offended most grievously. They wanted him out. There was no room for discussion.

That for me is not bargaining as traditionally and commonly understood. It is for that reason that I find it difficult to agree fully with the view that their dismissal could be construed as a refusal to bargain collectively. Moreover, they did not as adverted to in the opinion of the Court, follow the procedure set forth for adjusting grievances. It is my view therefore that the dismissal amounted to "interference, restraint or coercion" as prohibited in the Industrial Peace Act, and not refusal to bargain collectively.

Nestle Phil. Inc. v. NLRC, 193 SCRA 504 (1991)FACTS: Four CBAs with Nestle Philippines (Nestle) expired on June 30, 1987. While the parties were negotiating, the employees resorted to a "slowdown" and walk-outs prompting Nestle to shut down the factory. Marathon collective bargaining negotiations between the parties ensued.

The UFE declared a bargaining deadlock. The Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the union struck, without notice. Nestle retaliated by dismissing the union officers and members of the negotiating panel who participated in the illegal strike. The NLRC affirmed the dismissals. UFE filed a notice of strike on the same ground of CBA deadlock and ULP.

After conciliation efforts of the NCMB yielded negative results, the dispute was certified to the NLRC by the Secretary of Labor. The NLRC issued a resolution regarding the union's demand for liberalization of the company's retirement plan for its workers. Both the parties’ MFR were denied.

Nestle filed this petition for certiorari alleging that since its retirement plan is non-contributory, it has the sole and exclusive prerogative to define the terms of the plan because the workers have no vested and demandable rights there under, the grant being not a contractual obligation but merely gratuitous. At most the company can only be directed to maintain the same but not to change its terms. It should be left to the discretion of the company on how to improve or modify the same.ISSUE: WON the Retirement Plan is a collective bargaining issue

HELD: YES.Ratio The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations.Reasoning Almost all of the benefits granted to its employees under the CBA (salary increases, rice allowances, midyear bonuses, 13th & 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves with pay) are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's demand to increase the benefits due the employees under said plan is a valid CBA issue.

The improvement of the existing Retirement Plan was one of the original CBA proposals submitted by the UFE to Nestle. The union's original proposal was to modify the existing plan by including a provision for early retirement. The company did not question the validity of that proposal as a collective bargaining issue but merely offered to maintain the existing noncontributory retirement plan which it believed to be still adequate for the needs of its employees and competitive with those existing in the industry. The union thereafter modified its proposal, but the company was adamant. Consequently, the impasse on the retirement plan became one of the issues certified to the NLRC for compulsory arbitration.

The inclusion of the retirement plan in the CBA as part of the package of economic benefits extended by the company to its employees gives it "a consensual character" so that it may not be terminated or modified at will by either party. Employees have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits.Disposition Petition is DISMISSED.

Luzon Development Bank v. Association of Luzon Development Bank Employees, 249 SCRA 162 (1995)NATURE: Petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing the sameFACTS: Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees (ALDBE) submitted to arbitration to resolve WON the company has violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated April 1994, on promotion.

The parties agreed to submit their respective Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position Paper.

On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision finding that the Bank has not adhered to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion. Hence, this petition ISSUE : WON the Voluntary Arbitrator erred in finding that the Bank has not adhered to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion.(the Court referred the case to the CA so the issue wasn’t resolved…it said that elevating a decision or award of a voluntary arbitrator to the Supreme Court on a petition for certiorari is in effect equating the voluntary arbitrator with the NLRC or the Court of Appeals, which in its view is illogical and imposes an unnecessary burden upon it)HELD (only obiter… pertaining to topic)

Art. 260. Grievance Machinery and Voluntary Arbitration. — The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies.

All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining Agreement.

For this purpose, parties to a collective bargaining agreement shall name and designate in advance a voluntary arbitrator or panel of voluntary arbitrators, or include in the agreement a procedure for the selection of such voluntary arbitrator or panel of voluntary arbitrators, preferably from the listing of qualified voluntary arbitrators duly accredited by the Board. In case the parties fail to select a voluntary arbitrator or panel of voluntary arbitrators, the Board shall designate the voluntary arbitrator or panel of voluntary arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the collective bargaining agreement, which shall act with the same force and effect as if the voluntary arbitrator or panel of voluntary arbitrators have been selected by the parties as described above

In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of evidence and arguments presented by such parties who have bound themselves to accept the decision of the arbitrator as final and binding.

Arbitration may either be compulsory or voluntary. Compulsory arbitration is a system whereby the parties to a dispute are compelled by the

government to forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a third party. Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution.

Ideally, arbitration awards are supposed to be complied with by both parties without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision.-In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein provisions for a machinery for the resolution of grievances arising from the interpretation or implementation of the CBA or company personnel policies.-For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection, preferably from those accredited by the National Conciliation and Mediation Board (NCMB).Disposition The Court resolved to REFER this case to the Court of Appeals

C. Procedure1. Arts. 2512. Arts. 250-251; 2333. Nature of Procedure

National Union of Restaurant Workers, supra.Kiok Loy, supra.Colegio de San Juan de Letran v. Association of Employees and Faculty of Letran, supra.Art. 242 (c), audited financial statements, including balance sheet and profit and loss statement

4. DOLE Conciliation Art. 250 (c, d and e) EO 251, Sec. 4 Art. 233 Rules and Regulations Implementing the LC, Rule 13, Sec. 6, Book V.

1. Duty to Bargain

Samahan sa Permex v. Secretary of Labor, 286 SCRA 692 (1998)Facts: On January 15, 1991, a certification election was conducted among employees of Permex Producter and Exporter Corp, where maximum vote was "No Union" (existing union then was National Federation of Labor). Subsequesnt to the CE, some employees formed a labor organization known as Samahang Manggagawa sa Permex, registered it with DOLE then later affiliated with Philipine Integrated Industries Labor Union. On August 16, 1991, Samahan wrote the company requesting recognition as the sole and exclusive bargaining representatives of its employees. Permex recognized Samahan and entered into a CBA with it, which was ratified by majority its employees and certified by DOLE.On Feb 25, 1992, NFL filed a petition for CE which was diemissed by Med-Arbiter. Upon appeal, SOLE Usec LAguesma set aside Med-Arbiter and ordered CE with the following choices: 1) NFL, 2) Samahan, 3) No Union. Samahan moved for reconsideration but was denied, hence the current petiton.Issue: 1) WON the order of holding a ceritifaction election is valid despite recognition by the company and it's entering into a CBA with Samahan.Held: Yes. CE is proper. Samaahan could not be the exclusive bargaining representative by virtue of employee recognition.Quoting Ilaw at Buklod ng Manggagawa v Ferrer-Calleja, "if a union asks the employer to voluntarily recognize it, it in efefct asks the employer to certify it as its bargaining representative of the employees - a certification which the employer has no authority to give for it is the employees' prerogative, not the employer's to determine whether they want a union to represent them. By EO 111, direct certification has been discontinued as the method for selecting the exclusive bargaining agent. Petitioner can neither invoke the contract-bar rule stating that petition for CE may only be entertained within 60 days prior to the expiration of an existing collective bargaining agreement. This case is exempted from contract bar rule notwithsatnding the existence of a CBA as Samahan entered into a CBA with Permex when its status as an exclusive bargaining agent was not yet established.

Associated Labor Unions v. Ferrer-Calleja, 173 SCRA 178 (1989)FACTS:May 7, 1986 – Associated Labor Union (ALU) informed GAW Trading that the majority of its employees have authorized ALU to be their sole and exclusive bargaining representative. It likewise requested for the execution of a CBA..

May 9, 1986 – Southern Phils. Federation of Labor (SPFL) and Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a strike when GAW did not accede to their own demands. GAW recognized ALU as exclusive bargaining representative. A conference for the execution of CBA was thereafter set on the same date.

May 13, 1986 – ALU presented copies of the proposed CBA for comment or signing.

May 15 1986 – the CBA was signed by ALU and GAWMay 19, 1986 – GAW Lumad Labor Union (GALLU) filed a Petition for

Certification Election which was dismissed for non-compliance with the subscription requirement.

May 27, 1986 – CBA between ALU and GAW was filed with the Ministry of Labor.

May 28, 1986 – SPFL filed a Petition for Direct Recognition where GALLU likewise participated as an intervenor.

Notwithstanding, the Med Arbiter ordered the holding of a Certification Election. ALU appealed. BLR Director Trajano reversed the Med Arbiter on the ground that the CBA had been effective and the contract bar rule was applicable.

BLR Director Calleja, who succeeded to the position, reversed and ordered the holding of a Certification Election on the following grounds: (1) Contract Bar Rule does not apply since the CBA was defective; (2) No proof that CBA had been posted in at least 2 conspicuous places in the establishment at least five days before its ratification and that it had been ratified by the majority of the employees in the bargaining unit.ISSUE: WON the CBA was valid such that it would constitute the bar to the holding of a Certification Election under the Contract Bar Rule?HELD/RATIO: No. It suffers from infirmities:

There was failure to post the CBA in at least 2 conspicuous places places in the establishment at least five days before its ratification. Petitioner's rationalization that the failure was due to the illegal strike staged by SPFL in all the stores of GAW Trading, Inc. which made it impossible to comply with the posting requirement in so far as the realization of its purpose is concerned as there were no impartial members of the unit who could be apprised of the CBA's contents is untenable.

The posting of the CBA is the employer’s responsibility which requires a mere mechanical act. That there were no impartial members is immaterial because precisely the purpose of posting is to inform the employees of the contents of the CBA such that they can intelligently decide whether or not to ratify it, regardless of whether they already have their own opinion regarding the same.

The assembly of the members of ALU wherein the agreement in question was allegedly explained does not cure the defect. The contract is intended for all the employees and not only for the members of the purported representative alone. It may even be said that the need to inform the non-members of the

terms thereof is more exigent and compelling since, in all likelihood, their contact with the persons who are supposed to represent them is limited.

This requirement becomes all the more important in this case where there was an apparent and suspicious hurry in the formulation and finalization of said CBA. In the aforementioned letter where GAW required petitioner union to present proof of its support by the employees, the company already suggested that petitioner ALU at the same time submit the proposals that it intended to embody in the projected agreement. This was on May 12, 1986, and promptly on the following day the negotiating panel furnished respondent company final copies of the desired agreement which, with equal dispatch, was signed on May 15, 1986.

Another potent reason for annulling the disputed collective bargaining agreement is the finding of respondent director that one hundred eighty-one (181) of the two hundred eighty-one (281) workers who "ratified" the same now "strongly and vehemently deny and/or repudiate the alleged negotiation and ratification of the CBA.”

Citizens Labor Union v. CIR, 18 SCRA 624 (1966)FACTS: Malayang Manggagawa sa Esso (MME) filed a petition for certificaton election with the CIR to determine which union will administer the contract during the remainder of the term of the contract.

The Citizens Labor Union (CLU) and Esso Standard Eastern, Inc. (ESSO) opposed the said petition, one of the grounds is that the existing collective bargaining contract is a bar to the holding of a certification election.

The CIR denied the motion to dismiss the petition, holding that the existing collective bargaining contract is no bar to a certification election, and requested the Department of Labor to conduct the necessary election.

The results of the election shows that the MME obtained votes of more than one-half of the rank and file employees and laborers of the ESSO Pandacan Terminal unit eligible to vote.

Thereafter, CLU and ESSO filed separate motions to annul the certification election on the ground that the election was held illegally and irregularly as it was conducted on a holiday, and that it was had without participation of the CLU therein.

The motions were denied and MME was certified as the sole and exclusive bargaining agent of all the non-supervisory employees of the ESSO at its Pandacan Terminal unit.

CLU filed an urgent petition praying for issuance of a writ of preliminary injunction and a petition for review.

Pending the adjudication of these cases, a "Motion for Preliminary Injunction" was granted, refraining CLU and ESSO from negotiating and concluding a new CBA.ON EFFECT EXPIRY: No breaks. It is a sound and unassailable labor practice for labor and management to conclude a new contract before the expiry date of any CBA in order to avoid a hiatus in management-labor relations.The Industrial Peace Act was designed primarily to promote industrial peace through encouragement of collective bargaining. Any undue delay in the selection of a bargaining representative can hardly be said to contribute to that end.

National Congress of Unions v. Ferrer-Calleja, 205 SCRA 478 (1992)

Standard Chartered Bank Employees Union v. Confesor, 432 SCRA 304 (2004)Facts: Petitioner Union is the exclusive bargaining agent of the rank and file employees of Standard Chartered Bank (Bank). The Union and the Bank signed a 5 year CBA in 1990 with a provision to renegotiate its terms in its 3rd year.

In 1993, the Union initiated negotiations. It submitted its proposal to the Bank as well as a list containing the members of its negotiating panel. The Bank submitted its counter-proposal and the respective list of the members of its negotiating panel. Before negotiations can begin, the Union suggested that the Bank’s lawyers are to be excluded from its negotiating panel. The Bank agreed. The Bank however, suggested that Jose P. Umali, Jr., the President of NUBE be excluded from the Union’s negotiating panel. However, Umali remained a member of the Union’s panel.

During the preliminary negotiations, the parties laid down the ground rules. The Bank suggested that the negotiation be kept a “family affair”. The negotiations on the revisions on the CBA began on March 12, 1993. The proposed non-economic provisions were discussed first. The parties were not able to reach at an agreement leaving some of the provisions as DEFERRED/DEADLOCKED.

Afterwards, negotiations on the economic provisions began on May 18, 1993. Like before, the Union and the Bank could not reach an agreement. Umali chided the Bank for the insufficiency of its counter-proposal and reminded the Bank how they got what they wanted in 1987 and that they were willing to resort to such means if needed.

The negotiations resumed but even after the submission of counter-proposals from both parties, the impasse remained. Exasperated, Umali asserted that it would be easier to bargain if both parties trusted each other like before. The Bank requested the Union to refrain from involving personalities

and to focus on the negotiations. On June 21, 1993, the Union declared a deadlock and filed a Notice of Strike with the NCMB.

On its part, the Bank filed a complaint for unfair labor practices against the Union with the Labor Arbiter. The Bank claimed that the Union engaged in blue sky bargaining (unrealistic or unreasonable demands in negotiations where neither concedes anything or demands the impossible). The Bank also claimed that the Union violated the no strike-no lockout clause of the CBA.

Then Secretary of Labor Confesor assumed jurisdiction of the dispute and dismissed the ULP charges of both the Bank and Union. She also ordered the award of certain benefits. On March 22, 1994, the Bank and Union signed the CBA.

Claiming that the SOLE committed grave abuse of discretion when she dismissed the ULP charge filed by the Union, they filed a petition praying that her Order be set aside. In the petition, it was claimed that the Bank committed ULP when it asked that Umali be excluded from the panel and when it asked that the negotiations be kept a “family affair”. It also claimed that the Bank engaged in surface bargaining. For its part the bank reiterated its claims for ULP against the Union in its complaint before the Labor Arbiter.Held: No ULP committed by the Bank or Union.Article 248(a) considers it an ULP if the employer interferes, restrains or coerces employees in the exercise of their right to self organization or the right to form an association.

In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

The facts show that the suggestion to exclude Umali Jr., was not an anti-union conduct from which it can be inferred that the Bank adopted to undermine the free exercise of the right to self-organization and collective bargaining of the employees especially when it was requested after the Union requested the exclusion of the Bank’s lawyer from its negotiating panel.

Further, the ULP charge was merely an afterthought as the complaint was only made after a deadlock was declared by the Union.

There was no surface bargaining on the part of the Bank. Surface bargaining is defined as going through the motions of negotiating without any legal intent to reach an agreement. Such is a question of the intent of the party in question and usually such intent can be inferred from the totality of the challenged party’s conduct both at and away from the table.

The duty to bargain does not compel either party to agree to a proposal or require the making of a concession.

There was no grave abuse of discretion on the part of the Secretary of Labor. It cannot be said that she acted in a capricious and whimsical exercise of judgment. There was no showing that the public respondent exercised her power in an arbitrary and despotic manner by reason of passion or personal hostility.

Likewise, neither is the Union guilty of ULP for engaging in blue sky bargaining. The demands of the Union were not exaggerated or unreasonably but based on the data of rank and file employees and other prevailing economic benefits received by employees in the industry.

2. Deadlock

San Miguel Corp. v. NLRC, 304 SCRA 1 (1999)Facts: San Miguel Cooperation, alleging the need to streamline its operations due to financial loses, shut down some of its plants and declared 55 positions as redundant listed as follows: seventeen (17) employees in the Business Logistics Division ("BLD"), seventeen (17) in the Ayala Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-MBS")

Respondent union filed several grievance cases for the said retrenched employees, praying for the redeployment of the said employees to the other divisions of the company.

The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the parties' 1990 Collective Bargaining Agreement

During the grievance proceedings, however, most of the employees were redeployed, while others accepted early retirement. As a result only 17 employees remained when the parties proceeded to the third level (Step 3) of the grievance procedure. In a meeting on October 26, 1990, petitioner informed private respondent union that if by October 30, 1990, the remaining 17 employees could not yet be redeployed, their services would be terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was nothing more to discuss in view of the deadlock.

Union gave notice of strike based on: a) bargaining deadlock; b) union busting; c) gross violation of the Collective Bargaining Agreement (CBA), such as non-compliance with the grievance procedure; d) failure to provide private respondent with a list of vacant positions pursuant to the parties side agreement that was appended to the 1990 CBA; and e) defiance of voluntary arbitration award

SMC filed complaint with NLRC based on: : (1) the dismissal the notice of strike; (2) an order compelling the respondent union to submit to grievance and

arbitration the issue listed in the notice of strike; (3) the recovery of the expenses of litigation.

NLRC dismissed complaintSC: In the case under consideration, the grounds relied upon by the private

respondent union are non-strikeable. The issues which may lend substance to the notice of strike filed by the private respondent union are: collective bargaining deadlock and petitioner's alleged violation of the collective bargaining agreement. These grounds, however, appear more illusory than real.Collective Bargaining Deadlock is defined as "the situation between the labor and the management of the company where there is failure in the collective bargaining negotiations resulting in a stalemate" 11 This situation, is non-existent in the present case since there is a Board assigned on the third level (Step 3) of the grievance machinery to resolve the conflicting views of the parties. Instead of asking the Conciliation Board composed of five representatives each from the company and the union, to decide the conflict, petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing to exhaust all the steps in the grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings.

As regards the alleged violation of the CBA, we hold that such a violation is chargeable against the private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under the CBA. private respondent violated the mandatory provisions of the collective bargaining agreement.

Abolition of departments or positions in the company is one of the recognized management prerogatives.WHEREFORE, Petitioner San Miguel Corporation and private respondent San Miguel Corporation Employees Union — PTGWO are hereby directed to complete the third level (Step 3) of the Grievance Procedure and proceed with the Arbitration proceedings if necessary.

Divine Word University v. Secretary of Labor, supra.

Samahan sa Top Form v. NLRC, 295 SCRA 171 (1998)FACTS: The charge arose from the employer's refusal to grant across-the-board increases to its employees in implementing Wage Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact that prior to the issuance of said wage orders, the employer allegedly promised at the collective

bargaining conferences to implement any government-mandated wage increases on an across-the-board basis.

Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines (SMTFM) was the certified collective bargaining representative of all regular rank and file employees of private respondent Top Form Manufacturing Philippines, Inc.

At the collective bargaining negotiation, the parties agreed to discuss unresolved economic issues. According to the minutes of the meeting the Union proposed that any future wage increase given by the government should be implemented by the company across-the-board or non-conditional.

Management requested the union to retain this provision since their sincerity was already proven when the P25.00 wage increase was granted across-the-board. The union acknowledges management's sincerity but they are worried that in case there is a new set of management, they can just show their CBA. The union decided to defer this provision.

In their joint affidavit dated January 30, 1992, union members Salve L. Barnes, Eulisa Mendoza, Lourdes Barbero and Concesa Ibañez affirmed that at the subsequent collective bargaining negotiations, the union insisted on the incorporation in the collective bargaining agreement (CBA) of the union proposal on "automatic across-the-board wage increase."

On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00 per day in the salary of workers. This was followed by Wage Order No. 02 dated December 20, 1990 providing for a P12.00 daily increase in salary.

As expected, the union requested the implementation of said wage orders. However, they demanded that the increase be on an across-the-board basis. Private respondent refused to accede to that demand. Instead, it implemented a scheme of increases purportedly to avoid wage distortion.

On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter demanding that it should "fulfill its pledge of sincerity to the union by granting an across-the-board wage increase to all employees under the wage orders."

Several conferences between the parties notwithstanding, private respondent adamantly maintained its position on the salary increases it had granted that were purportedly designed to avoid wage distortion.

Consequently, the union filed a complaint with the NCR NLRC alleging that private respondent's act of "reneging on its undertaking/promise clearly constitutes act of unfair labor practice through bargaining in bad faith." It charged private respondent with acts of unfair labor practices or violation of Article 247 of the Labor Code, as amended, specifically "bargaining in bad faith," and prayed that it be awarded actual, moral and exemplary damages.

Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and 02, it had avoided "the existence of a wage distortion" that would arise from such implementation. It emphasized that only "after a reasonable length of time from the implementation" of the wage orders "that the union surprisingly raised the question that the company should have implemented said wage orders on an across-the-board basis." It asserted that there was no agreement to the effect that future wage increases mandated by the government should be implemented on an across-the-board basis. Otherwise, that agreement would have been incorporated and expressly stipulated in the CBA.

On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for lack of merit.

Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April 29, 1993 dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration which, however, was denied by the NLRC in the Resolution dated January 17, 1994.ISSUE: WON private respondent committed an unfair labor practiceHELD: NOReasoning: If there was indeed a promise or undertaking on the part of private respondent to obligate itself to grant an automatic across-the-board wage increase, petitioner union should have requested or demanded that such "promise or undertaking" be incorporated in the CBA. After all, petitioner union has the means under the law to compel private respondent to incorporate this specific economic proposal in the CBA. It could have invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes "executing a contract incorporating such agreements if requested by either party."

The CBA is the law between the contracting parties, the collective bargaining representative and the employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions should 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." This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation. Because the proposal was never embodied in the CBA, the promise has remained just that, a promise, the implementation of which cannot be validly demanded under the law.DISPOSITIVE: NLRC decision affirmed.

San Miguel Corp. v. NLRC, 403 SCRA 418 (2003)NATURE Petition for certiorari and prohibitionFACTS: SMC and Ilaw at Buklod ng Manggagawa (IBM) executed a CBA wherein they agreed to submit all disputes to grievance and arbitration proceedings, aside from no-strike, no-lockout agreement.

IBM, through its VP and subsequently through its president (which was opposed by the VP), filed with NCMB a notice of strike against SMC for allegedly committing: (1) illegal dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4) contracting out of jobs being performed by union members, (5) labor-only contracting, (6) harassment of union officers and members, (7) non-recognition of duly-elected union officers, and (8) other acts of unfair labor practice. SMC filed a Motion for Severance of Notices of Strike with Motion to Dismiss on the grounds that the notices raised non-strikeable issues and that they affected 4 corporations.

NCMB: issues are non-strikeable, as only SMC was impleaded when 4 different companies were involved. Notices of strike converted into preventive mediation.

While separate preventive mediation conferences were ongoing, the Union through its VP filed a notice of holding a strike vote. SMC opposed, invoking PAL v. Drilon (no strike could be legally declared during the pendency of preventive mediation). NCMB reiterated conversion of notice of strike into preventive mediation and grounds raised were only intra-union conflict – nonstrikeable (who between the 2 groups shall represent the workers for collective bargaining purposes, union leadership).

IBM President group filed 2nd notice of strike against SMC, NCMB found the additional grounds to be mere amplifications of issues alleged in the 1st

notice of strike. Ordered consolidation of the 2nd notice of strike with 1st notice of strike. Group informed SMC of its plan to hold a strike.

VP group notified the NCMB that their strike vote favored the holding of a strike. NCMB issued a letter reminding the group of the PAL v Drilon. IBM went on strike. Strike paralyzed the operations of SMC, which caused millions of loses.

SMC filed with NLRC a Petition for Injunction with Prayer for the Issuance of TRO, Free Ingress and Egress Order and Deputization Order, which was issued by NLRC, without prejudice to the union’s right to peaceful picketing and continuous hearings on the injunction case. SMC also entered into a Memorandum of Agreement with Union, calling for lifting of picket lines and resumption of work in exchange of “good faith talks” between the management and the labor management committees. The MOA also stated that cases filed in

relation to their dispute will continue and will not be affected in any manner whatsoever by the agreement. Work was then resumed.

NLRC reconsidered the issuance of TRO, and sought to dismiss the injunction case. SMC opposed, submitted copies of flyers wherein IBM expressed their threat to revive the strike. NLRC issued decision denying the petition for injunction for lack of factual basis, there being no circumstance to constitute an actual or threatened commission of unlawful acts. MFR denied ISSUES WON the strike held by IBM was illegal (therefore, NLRC committed grave abuse of discretion in denying the petition for injunction filed by SMC)

HELD YESa. Procedural aspect of the strike

For a strike to be valid, it must be pursued within legal bounds. One of the procedural requisites that A263 of the LC and its IRR prescribe is the filing of a valid notice of strike with the NCMB. Imposed for the purpose of encouraging the voluntary settlement of disputes, this requirement has been held to be mandatory, the lack of which shall render a strike illegal.

In accordance with the Implementing Rules of the Labor Code, the conversion of the notice of strike to preventive mediation has the effect of dismissing the notices of strike filed by respondent. A case in point is PAL v. Drilon, where we declared a strike illegal for lack of a valid notice of strike, in view of the NCMB’s conversion of the notice therein into a preventive mediation case. During the pendency of preventive mediation proceedings no strike could be legally declared.

Therefore, since the notice of strike filed by the union was converted into preventive mediation proceedings, the union had lost the notices of strike required under A263. However, the union defiantly proceeded with the strike while mediation was ongoing. Such disregard of the mediation proceedings was a blatant violation of theImplementing Rules, which explicitly oblige the parties to bargain collectively in good faith and prohibit them from impeding or disrupting the proceedings.b. on ruling of NLRC that there was lack of factual basis (no circumstance to constitute an actual or threatened commission of unlawful acts)

At the time the injunction was being sought, there existed a threat to revive the unlawful strike as evidenced by the flyers then being circulated by the IBM, which were not denied by the respondent union. Moreover, a declaration of strike without first having filed the required notice is a prohibited activity (A264(a)), which may be prevented through an injunction in accordance with A254. c. on IBM’s failure to observe the CBA provisions on grievance and arbitration

Strikes held in violation of the terms contained in a collective bargaining agreement are illegal especially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.

“We cannot sanction the respondent-union’s brazen disregard of legal requirements imposed purposely to carry out the state policy of promoting voluntary modes of settling disputes. The state’s commitment to enforce mutual compliance therewith to foster industrial peace is affirmed by no less than our Constitution. Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But misuse of these instruments can be the subject of judicial intervention to forestall grave injury to a business enterprise.”Disposition. WHEREFORE, the instant petition is hereby GRANTED. The decision and resolution of the NLRC in Injunction Case No. 00468-94 are REVERSED and SET ASIDE. Petitioner and private respondent are hereby directed to submit the issues raised in the dismissed notices of strike to grievance procedure and proceed with arbitration proceedings as prescribed in their CBA, if necessary. No pronouncement as to costs. SO ORDERED.

D. CBA Proper

1. Definition, Rule 1, Book V, Sec. 1 (jj) Rules and Regulations Implementing the LC

2. Sub-standard CBA – Art. 239 (f)

3. Duration and re-negotiationa. Art. 253-A

Rivera v. Espiritu, 374 SCRA 351 (2002)Facts: As a result of a three week strike staged by PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) PAL which was already financially beleaguered suffered serious losses, PAL’s financial situation went from bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation plan and downsized its labor force by more than one-third. In protest to such action PALEA went on strike which when PAL and PALEA agreed to a more systematic reduction in PAL’s work force and the payment of separation benefits to all retrenched employees. President Estrada thru AO 16 created an Inter-Agency Task Force to address the problems of PAL.

PAL management submitted to the Task Force an offer by Lucio Tan, Chairman a plan to transfer shares of stock to its employees which has a

provision regarding the suspension of the Collective Bargaining Agreements (CBAs) for 10 years. PALEA Members rejected the offer.Subsequently, PAL informed the Task Force that it was shutting down its operations because given its labor problems, rehabilitation was no longer feasible, and hence, the airline had no alternative but to close shop. PALEA sought the intervention of the Office of the President in immediately convening the parties, the PAL management, PALEA, ALPAP, and FASAP, including the SEC under the direction of the Inter-Agency Task Force, to prevent the imminent closure of PAL.After several negotiations a the questioned PAL- PALEA Agreement which provided for among others the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided the certain safeguards are in place.Issue WON the PAL-PALEA agreement stipulating the suspension of the PAL-PALEA CBA unconstitutional and contrary to public policyHeld: No. 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.” The primary purpose of a CBA is the stabilization of labor-management relations in order to create a climate of a sound and stable industrial peace. In construing a CBA, the courts must be practical and realistic and give due consideration to the context in which it is negotiated and the purpose which it is intended to serve.

The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing the latter’s closure. We find no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same.

In the instant case, it was PALEA, as the exclusive bargaining agent of PAL’s ground employees, that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case was the union’s exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it.

The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did not contravene the “protection to labor” policy of the

Constitution. 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."Disposition petition is DISMISSED.

New Pacific Timber and Supply Co., Inc. v. NLRC, 328 SCRA 404 (2000)FACTS: The National Federation of Labor (NFL) was certified as the sole and exclusive bargaining representative of all the regular rank-and-file employees of petitioner Company. As such, NFL started to negotiate for better terms and conditions of employment but the same was allegedly rejected by Petitioner Company, so that the former was prompted to file a complaint for ULP.

The LA issued an order declaring (a) petitioner Company guilty of ULP; and (b) the CBA proposals submitted by the NFL as the CBA. Petitioner’s appeal—and later certiorari—were both dismissed. Petitioner Company complied with the LA’s order; and, the case was considered closed following NFL's manifestation that it will no longer appeal said order.

However, notwithstanding such manifestation, a "Petition for Relief" was filed in behalf of 186 of the private respondents who claimed that they were wrongfully excluded from enjoying said benefits since the agreement with NFL and petitioner Company limited the CBA's implementation to only the 142 rank-and-file employees enumerated. They claimed that NFL's misrepresentations had precluded them from appealing their exclusion.NLRC issued a resolution declaring that the 186 excluded employees as part of the existing rank-and-file bargaining unit and were, therefore, entitled to the benefits under the CBA.

Meanwhile, the private respondents, including the original 186 filed individual money claims but LA Villena dismissed these cases. The NLRC set aside the dismissal orders for lack of legal basis. It sustained the earlier NLRC resolution IFO the respondents. Hence the instant petition.ISSUES: 1) Procedural – WON the Petition for Relief is proper (even if treated as an appeal, WON it’s proper for being filed several months after allowable period). 2) A) Substantive - May the term of a CBA as to its economic provisions be extended beyond the term expressly stipulated therein, and, in the absence of a new CBA, even beyond the three-year period provided by law? B) Are employees hired after the stipulated term of a CBA entitled to the benefits provided thereunder?HELD: 1) YES. No grave abuse of discretion on the part of the NLRC, when it entertained the petition for relief. A careful scrutiny of the facts and

circumstances of the instant case warrants liberality in the application of technical rules and procedure.

2) A) YES. It is clear from Article 253 that until a new CBA has been executed, the parties are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. In the case at bar, the existing CBA in its entirety, continued to have legal effect. The automatic renewal clause provided for by the law, which is deemed incorporated in all CBA's, provides the reason why the new CBA can only be given a prospective effect.

To rule otherwise would be to create a gap during which no agreement would govern, from the time the old contract expired to the time a new agreement shall have been entered into. Consequently, the employees from the year 1985 onwards would be deprived of a substantial amount of monetary benefits which runs contrary to the very intent and purpose of Articles 253 and 253-A of the Labor Code which is to curb labor unrest and to promote industrial peace,

B) YES. In a long line of cases, this Court has held that when a collective bargaining contract is entered into by the union and the employer, even the non-member employees are entitled to the benefits of the contract. In the same vein, the benefits under the CBA in the instant case should be extended to those employees who only became such after 1984. To exclude them would constitute undue discrimination and deprive them of monetary benefits they would otherwise be entitled to under a new CBA to which they would have been parties. Since in this particular case, no new agreement had been entered into after the CBA's stipulated term, it is only fair and just that the employees hired thereafter be included in the existing CBA.

Interphil Laboratories Employees Union v. Interphil Laboratories, 372 SCRA 658 (2001)

SMC Employees Union v. Confesor, 262 SCRA 81 (1996)Facts: 28 June 1990: SMCEU-PTGWO entered into a CBA with SMC to take effect upon the expiration of the previous CBA or on 30 June 1989, for which the duration shall be for a term of 3 years or until 30 June 1992.

The terms of the CBA also provided that insofar as the representation aspect is concerned, the term of the CBA shall be for five years: from 1 July 1989 to 30 June 1994.

13 August 1991: In a letter, SMC management informed its employees that the company would undergo a restructuring

1 October 1991 – the Magnolia and the Feeds & Livestocks Divisions were spun-off and became two separate and distinct corporations: Magnolia Corporation and San Miguel Foods, Inc.

The CBA was renegotiated after 30 June 1992. SMCEU-PTGWO (petitioner-union) insisted that the bargaining unit of SMC

should still include the employees of the spun-off corporations, and that the renegotiated terms of the CBA shall be effective only for the remaining period of two years or until 30 June 1994.

SMC contended that the members/employees who had moved to Magnolia and SMFI automatically ceased to be part of the bargaining unit at the SMC, and the renegotiated terms should be effective for three years in accordance with Article 253-A of the Labor Code.

Petitioner-union declared a deadlock on 29 September 1990. On 2 October 1992, a Notice of Strike was filed against SMC. The NCMB conducted preventive mediation upon the request of SMC, but no settlement was arrived at. A strike vote was conducted which resulted in a “yes vote.” The Secretary of Labor assumed jurisdiction over the labor dispute, after which several conciliation meetings were held, but still no settlement was reached.

Secretary of Labor issued the assailed order directing that the renegotiated terms of the CBA shall be effective for a period of three years from 30 June 1992, and that such CBA shall over only the employees of SMC and not of Magnolia and SMFI.Issues: W/N the duration of the renegotiated terms of the CBA is to be effective for three years or for only two years

W/N the bargaining unit of SMC includes also the employees of the Magnolia and SMFI. (RE CORPORATE ENTITIES)Held: The duration of the renegotiated terms of the CBS shall be effective for three years, based on Article 253-A of the Labor Code.

Under this provision, a CBA has a term of five years as far as the representation aspect is concerned, and all other provisions of the CBA shall be negotiated not later than three years after its execution.

Representation aspect: refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned.

The framers of the law wanted to maintain industrial peace and stability, and thus no outside union could enter the establishment within five years and challenge the status of the incumbent union as the exclusive bargaining agent.

This way, the last year of the RENEGOTIATED terms,which is technically the year after the five-year period of the representation aspect - ASSUMING THE BARGAINING AGENT IS CHANGED AFTER THE FIVE-YEAR PERIOD – becomes a sort of adjustment period of “industrial peace” so as to let the management and

the new agent to get to know each other, negotiate, etc. - gist of the quoted deliberations. :)

No, the bargaining unit of SMC excludes the employees of Magnolia and SMFI.

The transformation of the companies was a management prerogative and business judgments which the courts cannot look into unless it is contrary to law, public policy or morals.

Magnolia and SMFI became distinct entities with separate juridical personalities

In determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of interests. The employees sought to be represented must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they performed. Considering the spin-offs, the companies would consequently have their respective and distinctive concerns in terms of the nature of work, wages, hours of work and other conditions of employment. The nature of their products and scales of business may require different skills which must necessarily be commensurated by different compensation packages. PETITION WAS DISMISSED.

4. Grievance procedure

Navaro III v. Damaso, 246 SCRA 260 (1995)Petitioner molested a female coworker. After investigating the incident, it was recommended that he be dismissed. The case was submitted for decision by the voluntary arbiter who agreed with the recommendation of dismissal. He was dismissed by the company for violating the Company Code of Conduct. Petitioner contends that the grievance procedure provided for in the CBA was not followed; hence, the Voluntary Arbitrator exceeded his authority when he took cognizance of the labor case. Section 2, Article X of the CBA specifies the instances when the grievance machinery may be availed of, thus: Any protest or misunderstanding concerning any ruling, practice or working conditions in the Company, or any dispute arising as to the meaning, application or claim of violation of any provision of this Agreement or any complaint that any employee may have against the COMPANY shall constitute a grievance The instant case is not a grievance that must be submitted to the grievance machinery. What are subject of the grievance procedure for adjustment and resolution are grievances arising from the interpretation or implementation of the collective bargaining agreement.

The acts of petitioner involved a violation of the Code of Employee Discipline, particularly the provision penalizing the immoral conduct of employees. Consequently, there was no justification for petitioner to invoke the grievance machinery provisions of the Collective Bargaining Agreement. However as the case of the petitioner was voluntarily submitted for voluntary arbitration by the union and the employer with the petitioners consent, the decision of the voluntary arbitrator was sustained.

Republic Savings Bank v. CIR, supra.

1. Contract Administration

Davao Integrated Port Stevedoring Services v. Abarquez, 220 SCRA 197 (1993)

Kimberly Clark Phil. v. Lorredo, 226 SCRA 639 (1993)

United Kimberly Clark Employees Union-PTGWO v. Kimberly Clark Phil., G.R. No. 162957, March 6, 2006FACTS: Petitioner is the labor union representing rank and file employees of respondent. Way back in 1980, the parties agreed to include in their CBA a provision which states that the company agrees to employ immediate relative of an employee who had retired, resigned, died provided that the employee had rendered at least ten years service. There were no other standards set with regard the acceptance of the said recommendees and as a matter of fact, even high school graduates were accepted.

In 1991, a case was filed against the company for refusing to employ a nephew of a retiring employee (Kimberly Clark vs Lorredo) as apparently the retiring employee had children who he did not recommend and the company was questioning this. In any case, the company lost in this case but as part of the ruling of the Court, it was stated that Kimberly was not obliged to unconditionally accept the recommendee since the latter must still meet the required employment standard theretofore set by it. Even a qualified recommendee would be hired only on a “probationary status.” As such, KCPI was not left without its own safeguards under the agreement.

In 1995, the company issued the now questioned guidelines which among others required that such recommendees must be at least 18 years of age but not more than 30 years old at the time of the hiring, and (b) have completed, after graduating from high school, at least a two-year technical/vocational course or a third year level of college education. Moreover, where both husband and wife are employees of the company, they

shall be treated as one family; hence, only one of the spouses would be allowed to avail of the benefit.

The Union and the company agreed to postpone the implementation of said guidelines until January 1, 1997 but only with respect to the educational qualification. And the guidelines were in fact implemented in the second half of 1998. A voluntary arbitrator ruled on the controversy saying that the company cannot upgrade the educational qualification as this is contrary to what has been in existence and what had been a practice.

Appeal was filed with the CA which reversed the resolution of the voluntary arbitrator with regard the upgrade of the qualification of the recommendee. Hence this appeal.ISSUE: WON the CA erred in ruling that, under Article XX, Section 1 of the 1997 CBA, respondent is required to hire only those recommendees of retired/resigned, deceased or disabled members of petitioner who had completed at least a two-year technical/vocational course or a third-year level of college educationHELD: NO. In the present case, the parties are in agreement that, on its face, Article XX, Section 1 of their 1997 CBA does not contain any provision relative to the employment qualification standards of recommendees of retired/resigned, deceased or disabled employees of respondent who are members of petitioner. However, in determining the employment qualification standards for said recommendees, the VA should have relied on the November 7, 1995 Guidelines issued by respondent, which reads:D. Definition of the phrase “immediate member of the family of an employee”1. The phrase “immediate member of the family of an employee” shall refer to the employee’s legitimate children and in default thereof to the employee’s collateral relatives within the third civil degree.2. A resigned/retired employee may be allowed to recommend a collateral relative within the third civil degree (e.g., brother, sister, nephew or niece) as his/her replacement only in the following cases:a. Where the retired/resigned employee is single or if married has no legitimate children.b. Where the retired/resigned employee’s children are still minors (below 18 years old) at the time of his/her separation from the company. (Emphasis added)E. General Provisions1. The privilege to recommend a replacement can be exercised by the employee concerned only once. Thus, in the following cases, a recommendee who has been hired on probationary status can no longer be substituted with another recommendee.a. where the recommendee fails to pass in his performance evaluation.

b. where the recommendee resigns without completing his probationary period.c. where the recommendee is dismissed for cause.d. where the recommendee dies during his probationary period.1[48]

Respondent issued said Guidelines in light of the ruling of this Court in Kimberly Clark Philippines v. Lorredo. Respondent saw it imperative to do away with its practice of accommodating recommendees who were mere high school graduates, and to require higher employment standards for them.

By agreement of the parties, the implementation of the Guidelines was deferred until January 1, 1997, unless revoked or amended by the 1997 CBA. Petitioner proposed that the practice of hiring recommendees of retired/resigned, deceased or disabled employees who were union members, who were at least high school graduates, be included in their CBA, but respondent did not agree. Hence, Article XX, Section 1 of the 1997 CBA of the parties remained intact. There was thus no more legal bar for respondent to implement the November 7, 1995 Guidelines. By executing the 1997 CBA, in its present form, petitioner is bound by the terms and conditions therein set forth.

The Court has recognized in numerous instances the undoubted right of the employer to regulate, according to his own discretion and best judgment, all aspects of employment, including but not limited to, work assignments and supervision, working methods and regulations, time, place and manner of work, processes to be followed, and hiring, supervision, transfer, discipline, lay off, dismissal and recall of workers. Encompassing though it could be, the exercise of this right is not absolute. Management prerogative must be exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws, valid agreements such as the individual contract of employment and the collective bargaining agreement, and general principles of justice and fair play.2

[49] In this case, the Court finds that respondent acted in accord with the CBA and the November 7, 1995 Guidelines, which, by agreement of the parties, may be implemented by respondent after January 1, 1997.Disposition Petition is denied.

Manalang v. Artex, 21 SCRA 561 (1967)

TSPI Corporation v. TSPI Employers Union, 545 SCRA 216 (2008)Facts: TSPIC is engaged in the business of designing, manufacturing and marketing integrated circuits to serve the communication, automotive, data

12

processing and aerospace industries. TSPIC Employees Union is the registered bargaining agent of the rank-and-file employees of TSPIC.

TSPIC and the Union entered into a CBA for the years 2000 to 2004, which included a provision on yearly salary increases starting January 2000 until January 2002 for regular employees within the bargaining unit as such: 10% on 1 January 2000, 12% 1 January 2001 and 11% on 1 January 2002.

The same provision also states that the wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future Wage Orders that may be issued after Wage Order No. 7, and shall be considered as correction of any wage distortion that may have been brought about by the said future Wage Orders.

The CBA also provided that employees who acquire regular employment status within the year but after the effectivity of a particular salary increase shall receive a proportionate part of the increase: (1st quarter: 100%; 2nd quarter: 75%; 3rd quarter: 50%; 4th quarter: 25%)

1 January 2000 – all regular rank-and-file employees received a 10% increase in their salary, including nine of the respondents.

6 October 2000 – Wage Order No. 8 was issued raising the daily minimum wage from 223.50 to 250 effective 1 November 2000.

The wages of 17 probationary employees were increased according to the WO. On various dates during the last quarter of 2000, these 17 employees attained regular employment and received 25% of 10% of their salaries.

January 2001 – TSPIC implemented the CBA-mandated salary increase. As a result, nine regular employees (respondents) received less wages.

TSPIC's HR Department notified 24 employees that due to an error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries in a staggered basis, starting February 2001. TSPIC explained that the correction of the erroneous computation was based on the crediting provision of the CBA.

The Union asserted that this constituted diminution of pay.TSPIC and the Union agreed to undergo voluntary arbitration on the solitary

issue of whether or not the acts of the management in making deductions from the salaries of the affected employees constituted diminution of pay.

Arbitrator Jimenez held that the unilateral deduction made by TSPIC violated Art. 100 of the Labor Code. The CA affirmed this decision.Issue: Does the TSPIC's decision to deduct the alleged overpayment from the salaries of the affected members of the Union constitute diminution of benefits in violation of the Labor Code?Held: No. The CBA is the law between the parties and they are obliged to comply with its provisions. If the terms of a contract, as in a CBA, are clear and

leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.

Sometimes, though the provisions of the CBA seem clear and unambiguous, the parties sometimes arrive at conflicting interpretations. Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase granted under the CBA. The Union, on the other hand, insists that the “crediting” provision finds no application in the present case, since at the time WO No. 8 was issued, the probationary employees were not yet covered by the CBA, particularly by its crediting provision.

The CBA states the specific condition that the wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future wage orders that may be issued after WO No. 7, and shall be considered as correction of the wage distortions that may be brought about by the said future wage orders. Thus, the wage/salary increases in 2001 and 2002 shall be deemed as compliance to future wage orders after WO No. 7.

The intention of the parties is clear: As long as an employee is qualified to receive the 12% increase in salary, the employee shall be granted the 12% increase; and as long as an employee is granted the 12% increase, the amount shall be credited against any wage order issued after WO No. 7.

Respondents should not be allowed to receive benefits from the CBA while avoiding the counterpart crediting provision.

Babcock v. Union, 453 SCRA 156 (2005)FACTS: Some employees of Babcock-Hitachi Phils were transferred from Makati to Bauan Batnagas, in line with the company’s plan to transfer its Design Department in order to improve the operating efficiency and coordination among its various departments.

The said employees demanded relocation allowance as provided for in their CBA. However, the company refused saying that under Policy Statement No. BHPI-G-044A, they are not entitled to it considering that they are residents of Bauan or its adjacent towns.ISSUE: WON union members are entitled to relocation allowance in light of the CBA between the parties.HELD: YES.Ratio: Any doubt or ambiguity in the contract between management and the union members should be resolved in favor of the latter (Article 1702 of the Civil Code). Contracts which are not ambiguous are to be interpreted according to their literal meaning and not beyond their obvious intendment. “the terms and conditions of a collective bargaining contract constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the

aggrieved party has the right to go to court for redress.” (Mactan Workers Union vs. Aboitiz)DISPOSITION Petition is DENIED.

2. Grievance settlement and issues: Arts. 255, 260

Caltex Refinery Employees Association v. Brillantes, 279 SCRA 218 (1997)FACTS: Anticipating the expiration of their Collective Bargaining Agreement on July 31, 1995, petitioner CALTEX EMPLOYEES ASSOC and CALTEX PHIL. negotiated the terms and conditions of employment to be contained in a new CBA. The negotiation between the two parties was participated in by the National Conciliation and Mediation Board (NCMB) and the Office of the Secretary of Labor and Employment. Some items in the new CBA were amicably arrived at and agreed upon, but others were unresolved.

To settle the unresolved issues, eight meetings between the parties were conducted. Because the parties failed to reach any significant progress in these meetings, petitioner declared a deadlock. On July 24, 1995, petitioner filed a notice of strike. Six (6) conciliation meetings conducted by the NCMB failed to settle the parties' differences. Then, the parties held marathon meetings at the plant level, but this remedy proved also unavailing.

During a strike vote on August 16, 1995, the members of petitioner opted for a walkout. Private respondent then filed with the Department of Labor and Employment (DOLE) a petition for assumption of jurisdiction in accordance with Article 263 (g) of the Labor Code. Sec. Brillantes assumed jurisdiction. He enjoined any strike or lockout, whether actual or intended. The parties were further directed to cease and desist from committing any and all acts which might exacerbate the situation.

Several issues on benefits were raised. One of the issues which stood out however was the grievance procedure of the parties under the CBA. The Secretary ordered that the periods to process/resolve grievances based on existing practice be reduced from (45) days to (30) days at the first step and (10) days to seven (7) days at the second step which is the level of the VP for Manufacturing. The Secretary further reviewed the steps through which a grievance may be processed and in line with the principle to expedite the early resolution of grievances, and found that the establishment of a joint Council as an additional step in the grievance procedure, may only serve to protract the proceeding and, therefore, no longer necessary. Instead, the unresolved grievance, if, not settled within (7) days at the level of the VP for Manufacturing, shall automatically be referred by both parties to voluntary arbitration in accordance with R.A. 6715.

As to the number of Arbitrators for which the Union proposes to employ only one instead of a panel of three Arbitrators, the Secretary deemed it best to leave the matter to the agreement of both parties. Finally, the Secretary advised the parties that the list of accredited voluntary arbitrators is now being maintained and disseminated by the National Conciliation and Mediation Board and no longer by the Bureau of Labor Relations.ISSUE: WON the Honorable Secretary committed grave abuse of discretion in modifying the grievance machineryHELD: NO.No particular setup for a grievance machinery is mandated by law. Rather, Article 260 of the Labor Code, as incorporated by RA 6715, provides for only a single grievance machinery in the company to settle problems arising from "interpretation or implementation of their collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies."

Article 260, as amended, reads: Grievance Machinery and Voluntary Arbitration. The parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies.

All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining Agreement. For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as described above.

We believe that the procedure described by public respondent sufficiently complies with the minimum requirement of the law. Public respondent even provided for two steps in hearing grievances prior to their referral to arbitration. The parties will decide on the number of arbitrators who may hear a dispute only when the need for it arises. Even the law itself does not specify the number of arbitrators. Their alternatives whether to have one or

three arbitrators have their respective advantages and disadvantages. In this matter, cost is not the only consideration; full deliberation on the issues is another, and it is best accomplished in a hearing conducted by three arbitrators. In effect, the parties are afforded the latitude to decide for themselves the composition of the grievance machinery as they find appropriate to a particular situation. At bottom, we cannot really impute grave abuse of discretion to public respondent on this issue.

Master Iron Labor Union v. NLRC, 219 SCRA 47 (1993)NATURE Petition for review on certiorari to annul and set aside decision of NLRCFACTS:Master Iron (MI) and its labor union (MILU) entered into a CBA in Feb 1987. It provided that “there shall be no strike and no lookout, stoppage or shutdown of work, or any other interference with any of the operation of MI during the term of this CBA, unless allowed and permitted by law.”

Right after signing the CBA, MI subcontracted outside workers to do the usual jobs done by its regular workers including those done outside of the company plant. Thus, regular workers were scheduled by management to work on a rotation basis allegedly to prevent financial losses thereby allowing the workers only 10 working days/month. MILU requested implementation of the grievance procedure which had also been agreed upon in the CBA, but MI ignored the request.

MILU filed a notice of strike, and upon intervention of DOLE, it was agreed upon that MI would give back the usual work to its regular employees who were members of MILU

Notwithstanding the agreement, MI continued the practice of hiring outside workers. MILU again went on a strike. MI sought to have the strike declared illegal while MILU filed complaint for unfair labor practice.

LA and NLRC decided for MI (strike was illegal for failure to exhaust the provision in the CBA on grievance procedure), hence this petitionISSUE 1. WON the strike was illegal for failure to exhaust grievance procedureHELD 1. NORatio MI’s refusal to heed MILU’s request to undergo the grievance procedure clearly demonstrated its lack of intent to abide by the terms of the CBA, thus committing an unfair labor practiceReasoning MI’s failure to traverse MILU’s allegation that NLRC abused its discretion in holding that the provision on grievance procedure had not been exhausted clearly sustains such allegation and upholds the MILU’s contention that MI refused to undergo said procedure. It should be remembered that a grievance procedure is part of the continuous process of collective bargaining. It is intended to promote a friendly dialogue between labor and management as a means of maintaining industrial peace.

On nature of the strike:MILU contend that notwithstanding the CBA’s non-strike provision, the

strike was legal because the reasons therefor are non-economic in nature. On the other hand, in holding that the strike was illegal, NLRC relied solely on the no-strike no-lockout provision of the CBA. As the SC has held, a no-strike clause in a CBA is applicable only to economic strikes. Corollarily, if the strike is founded on an unfair labor practice of the employer, a strike declared by the union cannot be considered a violation of the no-strike clause.

An economic strike is defined as one which is to force wage or other concessions from the employer which he is not required by law to grant. Here, MILU enumerated in their notice of strike the ff grounds: violation of CBA or MI’s practice of subcontracting workers; discrimination; coercion of employees; unreasonable suspension of union officials, and unreasonable refusal to entertain grievance.

MILU is not asking for an economic benefit not already agreed upon, but is merely asking for the implementation of the same.

Prof. Perfecto Fernandez: economic strike involves issues relating to demands for higher wages, higher pension or overtime rates, pensions, profit sharing, shorter working hours, fewer work days for the same pay, elimination of night work, lower retirement age, more healthful working conditions, better health services, sanitation and more safety appliances. The demands were within the power of MI to grant and therefore the strike was not an economic strike.Disposition Petition is granted.

Philippine Airlines, Inc. v. Santos, 218 SCRA 415 (1993)Facts: Respondents are Port Stewards of Catering Sub-Department, Passenger Services Department of PAL who have the following duties and responsibilities:Prepare meal orders and check-lists, setting up standard equipment in accordance with the requirements of the type of service for each flight; skiing, binning and inventorying of Commissary supplies and equipment.

On various occasions, several deductions were made from their salary representing losses of inventoried items charged to them for mishandling of company properties.

Respondents, represented by the union, made a formal notice regarding the deductions to petitioner thru Mr. Reynaldo Abad, Manager for Catering. PAL did not act on it thus respondents filed a formal grievance pursuant to the grievance machinery Step I of the CBA regarding the illegal/questionable salary deductions and inventory of bonded goods and merchandise being done by catering service personnel which they believed should not be their duty.

The grievance was submitted to the office of Mr. Reynaldo Abad who at the time was on vacation leave.

The grievants thru the shop steward wrote a letter on December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that inasmuch as no reply was made to their grievance which 'was duly received by your secretary' and considering that petitioner had only five days to resolve the grievance as provided for in the CBA,

Section 2, Article IV of the PAL-PALEA Collective Bargaining Agreement (hereinafter, CBA), to wit:

"Section 2-Processing of Grievances xxx STEP 1-Any employee who believes that he has a justifiable grievance shall take the matter up with his shop steward. If the shop steward feels there is justification for taking the matter up with the Company, be shall record the grievance on the grievance form heretofore agreed upon by the parties. Two (2) copies of the grievance form properly filled, accepted, and signed shall then be presented to and discussed by the shop steward with the division head. The division head shall answer the grievance within five (5) days from the date of presentation by inserting his decision on the grievance form, signing and dating same, and returning one copy to the shop steward. If the division head fails to act within the five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party. If the division head's decision is not appealed to Step 11, the grievance shall be considered settled on the basis of the decision made, and shall not be eligible for further appeal

Said grievance as believed by them was deemed resolved in their favor.When Mr Abad returned he immediately scheduled a meeting with the grievants. Thereafter, the individual respondents refused to conduct inventory works.

Mr. Abad resolved the grievance by denying the petition of individual respondents and adopted the position that inventory of bonded good is part of their duty as catering service personnel and that it was only proper that employees are charged for the amount due to mishandling of company property which resulted to losses. They were also suspended for not conducting inventory work.

Held It is clear that the grievance was filed with Mr. Abad's secretary during his absence. Under Section 2 of the CBA aforequoted, the division head shall act on the grievance within five (5) days from the date of presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved party." It is not disputed that the grievants knew that division head Reynaldo Abad was then "on leave" when they filed their grievance which was received by Abad's secretary.This knowledge, however, should not prevent the application of the CBA.

On this score, respondent NLRC aptly ruled:"x x x Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of complainants within five days from 21 November 1984. Therefore, when Reynaldo Abad failed to act within the reglementary period, complainants, believing in good faith that the effect of the CBA had already set in, cannot be blamed if they did not conduct ramp inventory for the days thereafter xxx it is hard to believe that everything under Abad's authority would have to stand still during his absence from office. To be sure, it is to be expected that someone has to be left to attend to Abad's duties.

As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to petitioner's inadvertance, but it is clearly too much of an injustice if the employees be made to bear the dire effects thereof. Much as the latter were willing to discuss their grievance with their employer, the latter closed the door to this possibility by not assigning someone else to look into "the matter during Abad's absence. Thus, private respondents should not be faulted for believing that the effect of the C13A in their favor had already stepped into the controversy.Disposition petition denied, assailed decision of NLRC is affirmed

SMC v. NLRC, 304 SCRA 1 (1999) supra.

3. Extension/renewal

Seno v. Mendoza, 21 SCRA 1124 (1967)

Lopez Sugar v. Federation of Free Workers, 189 SCRA 179 (1990)

Meralco v. Quisumbing, supra.Facts: An arbitral award has been granted by the Secretary of Labor to the MERALCO Union.

Petition had its origin in the renegotiation of the parties' 1992-1997 CBA, insofar as the last two-year period thereof is concerned.

A letter from MERALCO’s Chairman of the Board and its President addressed to their stockholders, which states that the CBA "for the rank-and-file employees covering the period December 1, 1995 to November 30, 1997 is still with the Supreme Court," as indicative of petitioner's recognition that the CBA award covers the said period. Issue: The parties dispute the reckoning period when retroaction of the arbitral awards by the Secretary of Labor should commence. Held: The period is herein set at two (2) years from 01 December 1995 to 30 November 1997.

The arbitral award can be considered as an approximation of a CBA which would otherwise have been entered into by the parties. The terms or periods set forth in Article 253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to an arbitral award by the Secretary considering the absence of an applicable law.

Despite the silence of the law, the Court ruled that CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union.If there is no such agreement, the award shall retroact to the first day after the six months following the last day of the CBA.In the absence of a CBA, the Secretary’s determination of the retroactivity date shall control.Rule RE CBA retroactivity: (Art. 253-A)

If a CBA is renewed within 6 months from its expiry, it will be retroactive from the day immediately following the expiry of the original CBA. For instance, a CBA expires on December 31 and its renegotiation is finished within 6 months, then the renewed CBA dates back to January 01.If there is no new CBA concluded within 6 months, then there will be no automatic retroaction; both the retroaction (if any) and the effectivity date of the new CBA will be left to the parties to agree on.

Manila Central Line v. Manila Central Line Free Workers Union, 290 SCRA 690 (1998)Facts: Bargaining agreement had expired on March 15, 1989. As the parties failed to reach a new agreement, the Union sought the aid of the National Conciliation and Mediation Board on October 30, 1989, but the deadlock remained unresolved.

Parties submitted the case for compulsory arbitration.Issues:

1. WON the Labor Arbiter had authority to act as voluntary arbitrator.2. Disputed effectivity date of the new CBA.

Held: 1. Manila Central Line Corporation must be deemed to be estopped from

questioning the authority of Labor Arbiter Donato G. Quinto, Jr. to act as voluntary arbitrator and render a decision in this case. Petitioner agreed, together with the union, to refer their dispute for arbitration to him.

2. The CBA in this case is part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement.

In the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article

263(g) of the Labor Code, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof.

Rule RE CBA retroactivity: (Art. 253-A)If a CBA is renewed within 6 months from its expiry, it will be

retroactive from the day immediately following the expiry of the original CBA. For instance, a CBA expires on December 31 and its renegotiation is finished within 6 months, then the renewed CBA dates back to January 01.If there is no new CBA concluded within 6 months, then there will be no automatic retroaction; both the retroaction (if any) and the effectivity date of the new CBA will be left to the parties to agree on.

4. CBA and 3rd party applicability

Sundowner Development Corporation v. Drilon, 180 SCRA 14 (1989)NATURE: Petition for certiorari to review the orders of the Secretary of the Department of Labor and EmploymentFACTS: Hotel Mabuhay, Inc. leased the premises belonging to Santiago Syjuco, Inc. in Ermita, Manila.

Due to non-payment of rentals, a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. Mabuhay offered to amicably settle the case by surrendering the premises to Syjuco and to sell its assets and personal property to any interested party.

Syjuco offered the said premises for lease to Sundowner. April 16, 1987 – The lease agreement was finalized and was agreed to

commence on May 1, 1987 and to expire on April 30, 1992.May 4, 1987 - National Union of Workers in Hotel, Restaurant and

Allied Services (NUWHRAIN for short) picketed the leased premises, barricaded the entrance to the leased premises and denied petitioner's officers, employees and guests free access to and egress from said premises. This prompted Sundowner to write a letter of complaint to Syjuco.

May 7, 1987 - A complaint for damages with preliminary injunction and/or temporary restraining order was filed by Sundowner. The Executive Judge of the court issued a restraining order against respondent NUWHRAIN and its officers and members. NUWHRAIN nevertheless maintained their strike but filed an answer to the complaint.

May 14, 1987 - An order was issued by public respondent Secretary of Labor assuming jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code. It required the 91 striking employees to return to work and for Mabuhay to accept all returning employees pending final determination of the issue of the absorption of the former employees of Mabuhay.

Mabuhay submitted its position paper alleging: That it had sold all its assets and personal properties to Sundowner and that there was no sale or transfer of its shares whatsoever.

Mabuhay completely ceased operation effective April 28,1987 and surrendered the premises to Sundowner so that there exists a legal and physical impossibility on its part to comply with the return to work order specifically on absorption.

June 26, 1987 - In order to commence its operation, Sundowner signed a tripartite agreement so the workers may lift their strike. In this agreement among Sundowner, NUWHRAIN and Mabuhay, the latter paid to respondent NUWHRAIN the sum of P638,000.00 in addition to the first payment in the sum of P386,447.11, for which reason respondent NUWHRAIN agreed to lift the picket.

July 13, 1987 - NUWHRAIN filed its position paper alleging connivance between Mabuhay and Sundowner in selling the assets and closing the hotel to escape its obligations to the employees of Mabuhay. NUWHRAIN prays that petitioner accept the workforce of Mabuhay and pay backwages from April 16, 1986 to April 28, 1987, the day Mabuhay stopped operation.

January 20, 1988 – Drilon, as DOLE secretary, issued an order requiring Sundowner to absorb the members of the union and to pay backwages from the time it started operations up to the date of the order.

January 27, 1988 – Sundowner filed a motion for reconsideration of the order, alleging that the theory of implied acceptance and assumption of statutory wrong does not apply in the instant case and that there is no law requiring bona fide purchasers of the assets of an on-going concern to absorb in its employ the employees of the latter.

Drilon denied the MFR. ISSUE: WON the purchaser of the assets of an employer corporation can be considered a successor employer of the latter's employeesHELD NO. Ratio The rule is that 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.Reasoning As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter.

However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employers 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.

In the case at bar, contrary to the claim of the public respondent that the transaction between petitioner and Mabuhay was attended with bad faith, the court finds no cogent basis for such contention. Thus, the absorption of the employees of Mabuhay may not be imposed on petitioner.

It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees, it was Syjuco who found petitioner and persuaded petitioner to lease said premises. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between petitioner and Syjuco.

In the tri-partite agreement that was entered into by petitioner with respondents NUWHRAIN and Mabuhay, it is clearly stipulated that immediately after the execution of the agreement, Mabuhay shall give a list of its members to Sundowner that it desires to recommend for employment so that the latter can consider them for employment, with no commitment whatsoever on the part of Sundowner to hire them in the business that it will operate in the premises formerly occupied by the Hotel Mabuhay.

There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them.

The court does not subscribe to the theory of Drilon that petitioner should have informed NUWHRAIN of its lease of the premises and its purchase of the assets and personal properties of Mabuhay so that said employees could have taken steps to protect their interest. The court finds no such duty on the part of petitioner and its failure to notify said employees cannot be an indicium of bad faith.

While it is true that petitioner is using the leased property for the same type of business as that of respondent Mabuhay, there can be no continuity of the business operations of the predecessor employer by the successor employer as respondent Mabuhay had not retained control of the business.Disposition Petition granted. Orders reversed and set aside.

Manlimos v. NLRC, 242 SCRA 145 (1995)FACTS:The petitioners were among the regular employees of the Super Mahogany Plywood Corporation

A new owner/management group acquired complete ownership of the corporation. The petitioners were advised of such change of ownership; however, the petitioners continued to work for the new owner and were considered terminated, with their conformity, only when they received their separation pay, 13th month pay, and all other benefits due them.

Each of them then executed a Release and Waiver which they acknowledged before the Hearing Officer of the Butuan City District Office of the DOLE

The new owner caused the publication of a notice for the hiring of workers, indicating therein who of the separated employees could be accepted on probationary basis. The petitioners then filed their applications for employment. Except for Rosario Cuarto, they were hired on probationary basis for six months as patchers or tapers, but were compensated on piece-rate or task basis.

For their alleged absence without leave, Perla Cumpay and Virginia Etic were considered, to have abandoned their work. The rest were dismissed because they allegedly committed acts prejudicial to the interest of the new management.

Petitioners then filed against the respondent a complaint. The petitioners maintained that they remained regular employees

regardless of the change of management and their execution of the Release and Waiver.

Respondent contended that the petitioners were deemed legally terminated from their previous employment; that the new owner was well within its legal right or prerogative in considering as terminated the petitioners' probationary/temporary appointment; and that the petitioners were not illegally dismissed; hence, they are not entitled to the reliefs prayed for.

Labor Arbiter ruled for the petitioners. The Labor Arbiter, however, ruled that there was no "cessation of operations which would lead to the dismissal of the employees."

Respondent appealed to the NLRC which reversed the judgment of the Labor Arbiter, subject, however, to recomputation based on the actual services of the petitioners under the new owner up to the actual date of their separation from the service. It found that the change of ownership in this case was made in good faith since there was no evidence on record that "the former owners conspired with the new owners to insulate the former management of any liability to its workers."

Their motion to reconsider the resolution having been denied by the NLRC, the petitioners filed a special civil action for certiorari. ISSUE: WON the NLRC acted with grave abuse of discretion when it reversed the decision of the Labor Arbiter.HELD: NO. There was only a change of ownership of Super Mahogany Plywood Corporation which resulted in a change of ownership. In short, the corporation itself, as a distinct and separate juridical entity, continues to exist. The issue of whether there was a closing or cessation of business operations which could

have operated as just cause for the termination of employment was not material.

The change in ownership of the management was done bona fide and the petitioners did not for any moment before the filing of their complaints raise any doubt on the motive for the change. On the contrary, upon being informed thereof and of their eventual termination from employment, they freely and voluntarily accepted their separation pay and other benefits and individually executed the Release or Waiver which they acknowledged before no less than a hearing officer of the DOLE.

A change of ownership in a business concern is not proscribed by law. Central Azaucarera del Danao vs. CA: It is a principle well-recognized,

that it is within the employer's legitimate sphere of management control of the business to adopt economic policies or make some changes or adjustments in their organization or operations that would insure profit to itself or protect the investment of its stockholders. As in the exercise of such 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. Such dismissal or termination should not however be interpreted in such a manner as to permit the employer to escape payment of termination pay. For such a situation is not envisioned in the law. It strikes at the very concept of social justice.

In a number of cases on this point, the rule has been laid down that the sale or disposition must be motivated by good faith as an element of exemption from liability.

Indeed, an innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them. Nor is the transferee liable for past unfair labor practices of the previous owner, except, when the liability therefor is assumed by the new employer under the contract of sale, or when liability arises because of the new owner's participation in thwarting or defeating the rights of the employees.

Where such transfer of ownership is in good faith, the transferee is under no legal duty to absorb the transferor's employees as there is no law compelling such absorption. The most that the transferee may do, for reasons of public policy and social justice, is to give preference to the qualified separated employees in the filling of vacancies in the facilities of the purchaser.

Since the petitioners were effectively separated from work due to a bona fide change of ownership and they were accordingly paid their separation pay, which they freely and voluntarily accepted, the private respondent corporation was under no obligation to employ them; it may, however, give them preference in the hiring. The private respondent in fact hired, but on

probationary basis, all the petitioners, except Rosario Cuarto. The non-hiring of Cuarto was legally permissible.Disposition Petition waspartly GRANTED. The challenged resolutions of NLRC were MODIFIED; respondent was ordered to pay petitioners Perla Cumpay and Virginia Etic their backwages up to the expiration of their probationary employment contracts.

5. Substitutionary doctrine

Benguet Consolidated v. BCI Employees & Workers Union, 23 SCRA 465

Elisco-Elirol Labor Union v. Noriel, 80 SCRA 682 (1977)Facts: In Feburary 1974, Elisco-Elirol Labor Union (Union) negotiated and concluded a CBA with Elizalde Steel Consolidated (Company).

Since the Union was not yet registered with the BLR, the Union members resolved to register their union to preserve the integrity of the CBA in its meeting on May 20, 1975. A Certificate of Registration was issued in favour of the Union on May 28, 1975.

The Union then sought the implementation of the CBA. On June 10, 1975, the Union members decided to disaffiliate from NAFLU. The Union president then wrote to the Company informing it of its disaffiliation from NAFLU and demanded that it be recognized as the sole and exclusive bargaining representative of the Company’s employees however the Company refused.

Thus, a petition was filed with the BLR to cite the Company as guilty of ULP and to prevent NAFLU from representing itself as the sole and exclusive bargaining representative of the employees of the Company. The Med-Arbiter dismissed the petition for lack of merit and was affirmed by the BLR Director.Issue: WON the Union is the sole and exclusive bargaining representative of the employees of the Company.Held: YES. The respondent Director erred when he ruled that when the Union members disaffiliated from NAFLU, their employment status with the Company was terminated.

The employees did not form a new union but merely registered the local union which was their right under the law.

In a CBA, the local union is the principal party to the agreement while a “mother union” is merely an agent of the local union which remained the basic unit of association to act for the interests of the employees which includes the freedom to affiliate or disaffiliate. Such ruling was enunciated in the case of Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.

Further, the substitutionary doctrine fully supports the petitioner’s stand. Petitioner union to whom the employees owe their allegiance has from the beginning expressly avowed that it "does not intend to change and/or amend the provisions of the present collective bargaining agreement 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 respondent company.

Even during the effectivity of a collective bargaining agreement executed between employer and employees thru their agent, the employees can change said agent but the contract continues to bind then up to its expiration date. They may bargain however for the shortening of said expiration date.

In formulating the "substitutionary" doctrine, the only consideration involved as the employees' interest in the existing bargaining agreement. The agent's interest never entered the picture.

6. Expiration of Contract

Pier 8 Arrastre v. Roldan-Confesor, 241 SCRA 294 (1995)

New Pacific Timber v. NLRC, supra.

Faculty Association of Mapua v. Court of Appeals, 523 SCRA 709 (2007)Facts: MIT hired Arthur Andersen to develop a faculty ranking and compensation system. In the 5th CBA negotiation meeting, MIT presented the new faculty ranking instrument to FAMIT, who agreed to the adoption and implementation of the instrument, with the reservation that there should be no diminution in rank and pay of the faculty members.

FAMIT and MIT entered into a new CBA effective 1 June 2001, which incorporated the new ranking for the college faculty. The faculty ranking sheet (Annex B) was annexed to the CBA, as well as the college faculty rates sheet (Annex C) for permanent faculty which included the point ranges and corresponding pay rates per faculty level.

After a month, MIT requested for an amendment of Annexes B, C and D (HS faculty rates for permanent faculty only), claiming that C and D contained data under the heading “TOTAL POINTS” that were not germane to the two other columns in both annexes, and that B was inadvertently not attached to the CBA.

FAMIT rejected the proposal, saying that these changes would constitute a violation of the ratified 2001 CBA and result in the diminution of rank and benefits of FAMIT college faculty. (the proposed amendment in the ranking system for the college faculty expands the 19 faculty ranks to 23)

MIT instituted some changes in the curriculum for the school year 2000-2001 which resulted in changes in the number of hours for certain subjects.

Thus, MIT adopted a new formula for determining the pay rates of the HS faculty: [Rate/Load x Total Teaching Load = Salary] where total teaching load equals number of classes multiplied by hours of service per week divided by 3 hours (as practiced, one unit subject is equal to 3 hours of service.)

FAMIT opposed the formula, saying that MIT has not been implementing the relevant provisions of the 2001 CBA (25% increase in per rate/load for all high school faculty members effective Nov 2000; 10% increase in per rate/load for all permanent high school faculty members effective June 2001)

Together with the issue viz. college faculty, FAMIT brought the matter to the National Conciliation and Mediation Board for mediation. The case was submitted to the Panel of Voluntary Arbitrators for resolution. They ruled for FAMIT regarding both issues.

The CA reversed the PVA ruling. FAMIT appealed to the SC.Issues: 1) Is MIT’s new proposal, regarding faculty ranking and evaluation, lawful and consistent with the ratified CBA?

2) Is MIT’s development of a new pay formula for the high school department, without the knowledge of FAMIT, lawful and consistent with the ratified CBA?Held: 1) No. In the light of the existing CBA, the new point range system proposed by MIT is an unauthorized modification of Annex "C" of the 2001 CBA. It is made up of a faculty classification that is substantially different from the one originally incorporated in the current CBA between the parties. Thus, the proposed system contravenes the existing provisions of the CBA, hence, violative of the law between the parties.

Until a new CBA is executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Therefore, it must be understood as encompassing all the terms and conditions in the said agreement. The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the express policy of the law.2)No. MIT cannot adopt its unilateral interpretation of terms in the CBA. It is clear from the provisions of the 2001 CBA that the salary of a high school faculty member is based on a rate per load and not on a rate per hour basis.PETITION GRANTED.

E. Conciliationa. Art. 211 (e)b. Conciliation as part of collective bargaining:

Arts. 233, 250 (c), (d), (e), 261, 263 (e) and (h)

Philcom Employees Union v. Phil. Global Telecommunications, 495 SCRA 214 (2006)FACTS: Upon the expiration of the CBA between petitioner Philcom union (PEU) and respondent employer (Philcom, Inc.), the parties started negotiations for its renewal. While negotiations were ongoing, PEU filed with the National Conciliation and Mediation Board (NCMB) NCR, a Notice of Strike, due to perceived unfair labor practice committed by the company. In view of the filing of said Notice of Strike, the company suspended negotiations on the CBA. This moved the union to file another Notice of Strike on the ground of bargaining deadlock.

At a conciliation conference held at the NCMB-NCR office, the parties agreed to consolidate the two Notices of Strike filed by the union and to maintain the status quo during the pendency of the proceedings. However, while the union and the company officers and representatives were meeting, the remaining union officers and members staged a strike at the company premises, barricading the entrances and egresses thereof and setting up a stationary picket at the main entrance of the building. The following day, the company immediately filed a petition for the Secretary of Labor and Employment to assume jurisdiction over the labor dispute in accordance with Article 263(g) of the Labor Code.

Then Acting Labor Sec Cresenciano Trajano issued an Order assuming jurisdiction over the dispute, enjoining any strike or lockout, whether threatened or actual, directing the parties to cease and desist from committing any act that may exacerbate the situation, directing the striking workers to return to work within 24hours from receipt of the Secretary’s Order and for management to resume normal operations, as well as accept the workers back under the same terms and conditions prior to the strike. The parties were likewise required to submit their respective position papers and evidence within 10days from receipt of said order. A few days later, a second order was issued reiterating the previous directive to all striking employees to return to work immediately.

The union filed MFR assailing, among others, the authority of then Acting Secretary Trajano to assume jurisdiction over the labor dispute. Said motion was denied and as directed, the parties submitted their respective position papers. In its position paper, the union raised the issue of the alleged ULP of the company. The company, on the other hand, raised in its position paper the sole issue of the illegality of the strike staged by the union.

On the premise that the Labor Secretary cannot rule on the issue of the strike since there was no petition to declare the same illegal, petitioner union filed a Manifestation/ Motion to Strike Out Portions of & Attachments in

Philcom’s Position Paper for being irrelevant, immaterial and impertinent to the issues assumed for resolution. In opposition, the company argued that it was precisely due to the strike suddenly staged by the union that the dispute was assumed by the Labor Secretary. Hence, the case would necessarily include the issue of the legality of the strike.

The Secretary issued the first assailed order. Said order directed the issuance of summons to Philcom Corporation to appear before any hearing that may thereafter be scheduled and to submit its position paper as may be required. It however dismissed the union’s charges of ULP against the Company. It further issued a return-to-work order and directed the parties to cease and desist from committing any acts that may aggravate the situation.

Philcom filed MFR and Motion to Certify Labor Dispute to the NLRC for Compulsory Arbitration. PEU also filed MFR insofar as the Order dismissed the ULP charges against Philcom and included the illegal strike issue in the labor dispute. The Secretary denied both MFRs.

PEU filed with CA a petition for certiorari and prohibition under Rule 65. CA denied the petition and affirmed the orders of the DOLE Sec. Hence, this petition.ISSUES 1. WON CA erred when it affirmed the order/resolution of the DOLE Sec including the issue of illegal strike notwithstanding the absence of any petition to declare the strike illegal.2. WON CA erred when it affirmed the order/resolution of the Secretary of Labor dismissing the Union’s charges of unfair labor practices.3. WON CA erred when it failed to issue such order mandating/directing the issuance of a writ of execution directing the Company to unconditionally accept back to work the Union officers and members under the same terms and conditions prior to the strike and as well as to pay their salaries/backwages and the monetary equivalent of their other benefits.HELD 1. NO. The Secretary properly took cognizance of the issue on the legality of the strike. Since the very reason of the Secretary’s assumption of jurisdiction was PEU’s declaration of the strike, any issue regarding the strike is not merely incidental to, but is essentially involved in, the labor dispute itself.

The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as an exercise of the police power of the State, with the aim of promoting public good. When the Secretary exercises these powers, he is granted "great breadth of discretion" in order to find a solution to a labor dispute. The most obvious of these powers is the automatic enjoining of an impending strike or lockout or its lifting if one has already taken place. In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry indispensable to the national interest: the telecommunications industry.

The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and controversies arising from such labor dispute. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the dispute. Besides, it was upon Philcom’s petition that the Secretary immediately assumed jurisdiction over the labor dispute. Moreover, a careful study of all the facts alleged, issues raised, and arguments presented in the position paper leads us to hold that the portions PEU seek to expunge are necessary in the resolution of the present case.

2. NO. -Unfair labor practice refers to acts that violate the workers’ right to organize. The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices. The only exception is Article 248(f), which in any case is not one of the acts specified in PEU’s charge of unfair labor practice.

A review of the acts complained of as ULP of Philcom convinces us that they do not fall under any of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The issues of misimplementation or non-implementation of employee benefits, non-payment of overtime and other monetary claims, inadequate transportation allowance, water, and other facilities, are all a matter of implementation or interpretation of the economic provisions of the CBA between Philcom and PEU subject to the grievance procedure. All the charges were adequately rebutted by the employer.

The Court has always respected a company’s exercise of its prerogative to devise means to improve its operations. Management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, supervision and transfer of employees, working methods, time, place and manner of work. This is so because the law on ULP is not intended to deprive employers of their fundamental right to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable operation of their business.

Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no showing that the same was a flagrant or malicious refusal to comply with its economic provisions. The law mandates that such violations should not be treated as unfair labor practices.

3. NO. -SC ruled on the legality of the strike if only to put an end to this protracted labor dispute. The facts necessary to resolve the legality of the strike are not in dispute. The strike and the strike activities that PEU had undertaken were patently illegal for the following reasons:

1. Philcom is engaged in a vital industry protected by PD 823, as amended by PD 849, from strikes and lockouts. It is therefore clear that the striking employees violated the no-strike policy of the State in regard to vital industries.

2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the return-to-work orders, the striking employees failed to return to work and continued with their strike.

A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. While the workers may choose not to obey, they do so at the risk of severing their relationship with their employer. see Art.264 of the Labor Code.

A strike undertaken despite the Secretary’s issuance of an assumption or certification order becomes a prohibited activity, and thus, illegal, under Article 264(a) of the Labor Code. The union officers who knowingly participate in the illegal strike are deemed to have lost their employment status. The union members, including union officers, who commit specific illegal acts or who knowingly defy a return-to-work order are also deemed to have lost their employment status. Otherwise, the workers will simply refuse to return to their work and cause a standstill in the company operations while retaining the positions they refuse to discharge and preventing management to fill up their positions.

3. PEU staged the strike using unlawful means and methods.e.g., human barricades at all entrances to and egresses from the company premises; use of coercive methods to prevent company officials and other personnel from leaving the company premises; prohibiting other tenants at the Philcom building from entering and leaving the premises. see Art. 264(e) of the Labor Code.

The sanction provided in Article 264(a) is so severe that any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. By insisting on staging the prohibited strike and defiantly picketing Philcom’s premises to prevent the resumption of company operations, the striking employees have forfeited their right to be readmitted.

4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB.

see Art264(a), LC. Section 6, Book V, Rule XXII of the IRR: “During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of dispute. They are obliged, as part of their duty, to bargain collectively in good faith, to participate fully and promptly in the conciliation meetings called by the regional branch of the Board.”

5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA.

PEU should have immediately resorted to the grievance machinery provided for in the CBA. In disregarding this procedure, the union leaders who knowingly participated in the strike have acted unreasonably. The law cannot interpose its hand to protect them from the consequences of their illegal acts.

A strike declared on the basis of grievances which have not been submitted to the grievance committee as stipulated in the CBA of the parties is premature and illegal. Having held the strike illegal and having found that PEU’s officers and members have committed illegal acts during the strike, we hold that no writ of execution should issue for the return to work of PEU officers who participated in the illegal strike, and PEU members who committed illegal acts or who defied the return-to-work orders that the Secretary issued. The issue of who participated in the illegal strike, committed illegal acts, or defied the return-to-work orders is a question of fact that must be resolved in the appropriate proceedings before the Secretary of Labor.

Disposition Petition dismissed. CA decision affirmed with the modification that the DOLE Sec is directed to determine who among the PEU officers participated in the illegal strike, and who among the union members committed illegal acts or defied the return-to-work orders.

Nissan Motors v. Secretary, 491 SCRA 605 (2006)FACTS: The labor dispute was triggered by a collective bargaining deadlock between Nissan Motor and the Union resulting in the filing of four notices of strike with the NCMB.

DOLE issued an Order consolidating the 4th notice of strike with the first three (3) notices and reiterating the injunction contained in the assumption of jurisdiction

The Company filed a Motion to Deputize PNP Laguna to Secure, Maintain and Preserve Free Ingress and Egress of NMPI, alleging that despite the injunctions against any slowdown and strike, the Union went on actual strike, picketed and blocked the company offices, and plant premises; unlawfully blocked and obstructed all entrances and exits points.

The Secretary of Labor issued an Order deputizing the [PNP] DOLE issued the assailed Decision which affirmed the suspension of the

140 employees which is the subject of the first notice of strike and sustained the dismissal of the Union officers but recalled the dismissal of the Union members and reinstated to their former positions without back wages. It also directed BANAL-NMPI-OLALIA-KMU and Nissan Motor Philippines, Inc. to conclude a Collective Bargaining Agreement

The Company and the Union each sought partial reconsideration, but their corresponding motions were denied

Therefrom, both the Company and the Union went to the CA The CA, denied the parties’ separate petitions and affirmed the respondent’s resolution ISSUES 1. WON the CA acted within the bounds of the law when it spared the striking workers or union members from the penalty of dismissal. 2. WON the award of salary increases made by SOLE in the disposition of economic aspects of the CBA which was based on revelations sourced from the confidential position given to the NCMB Administrator is proper. HELD 1. YES. The Union engaged in work slowdown which under the circumstances in which they were undertaken constitutes illegal strike. The Company is therefore right in dismissing the subject Union officers in accordance with Article 264 (a) of the Labor Code, for participating in illegal strike in defiance of the assumption of jurisdiction order by the Labor Secretary.

While the employer is authorized to declare a union officer who participated in an illegal strike as having lost his employment, his/its option is not as wide with respect to union members or workers for the law itself draws a line and makes a distinction between union officers and members/ordinary workers. An ordinary striking worker or union member cannot, as a rule, be terminated for mere participation in an illegal strike; there must be proof that he committed illegal acts during the strike.

The law invests the Secretary of Labor and Employment the prerogative of tempering the consequence of the defiance to the assumption order. The Secretary may thus merely suspend rather than dismiss the employee involved.

Chief, Justice Artemio V. Panganiban in Solvic Industrial Corporation vs. NLRC: “Except for the most serious causes affecting the business of the employer, our labor laws frown upon dismissal. Where a penalty less punitive would suffice, an employee should not be sanctioned with a consequence so severe.” This disposition takes stock of the following circumstances justifying a less drastic penalty for ordinary striking workers: a) the employees who engaged in slowdown actually reported for work and continued to occupy their respective posts, or, in fine, did not abandon their jobs; b) they were only following orders of their leaders; and c) no evidence has been presented to prove their participation in the commission of illegal activities during the strike.

Not to be overlooked is a factor which the CA, regarded as justifying the leniency assumed by the public respondent Secretary towards the members of the Union. It is the fact that Nissan Motor appeared to have also exacerbated, the emerging volatile atmosphere among which is the en masse termination of most of the Union members.

Any worker who participates in a strike or otherwise engages in any prohibited act in defiance of the assumption order may be meted the penalty of loss of employment status. However, the law itself authorizes the graduation of

penalties, Article 264 of the Labor Code making, as it were, a distinction between union officers and its members or any other workers, the main differing line contextually being that the latter do not necessarily lose their job by mere participation in an illegal strike absent proof that they committed illegal acts.

Association of Independent Union in the Philippines vs. NLRC: the responsibility of union officers, as main players in an illegal strike, is greater than that of the members and, therefore, limiting the penalty of dismissal only for the former for participation in an illegal strike is in order. 2. NO. The disposition made by the public respondent Secretary relating to the economic aspects of the CBA, such as, but not limited, transportation allowance, 14th month pay, seniority pay, separation pay and the effectivity of the new CBA, appears to be proper.

However, there is a need to modify some of the awards among which is the annual salary increases. In this regard, the Court cannot sanction the award made by the public respondent Secretary based ostensibly on the revelation of NCMB Administrator Olalia that was sourced from the confidential position given him by the Company. The reason for this is simple. Article 233 of the Labor Code prohibits the use in evidence of confidential information given during conciliation proceedings. NCMB Administrator Olalia clearly breached this provision of law. Moreover, as correctly pointed out by the Company, this confidential information given to Administrator Olalia was made prior to the Union’s slowdown and defiance of the Assumption Order of August 22, 2001 causing it additional losses. Disposition Decision and Resolution of the CA AFFIRMED , with modifications

Pentagon Steel v. Court of Appeals, G. R. No. 174141, June 26, 2009