CASE NO. 1(ian pogi)- Bad faith;  inflexible demands; strike amid negotiationLakas ng Manggagawang Makabayan vs Marcelo Enterprises

G.R. No. L-38258    November 19, 1982Justice Guerrero

Prior to the labor dispute between Lakas and the management of Marcelo Companies, the latter had existing collective bargaining agreements (CBAs) with the local unions then existing within the appropriate bargaining units,. These existing CBAs were entered into by and between the parties while the aforestated local unions were then affiliated with a national federation, the Philippine Social Security Labor Union (PSSLU). When the aforestated CBAs of the said local unions were nearing their respective expiration dates, the general situation within the ranks of labor was far from united.

The management of respondent Marcelo Steel Corporation received letters and proposals requesting the negotiation of a new CBAs together with a draft thereof, from the local unions whose CBAs are about to expire.

The management of all the respondent Marcelo Companies also received a letter from LAKAS informing management of the affiliation of the Marcelo United Labor Union (MULU) with it. Included therein was a 17-points demand for purposes of the requested collective bargaining with management.

Confronted with a problem of whom to recognize as the bargaining representative of all its workers, the management of all the respondent Marcelo Companies understandably dealt with the problem by suggesting to all to settle the question by filing a petition for certification election before the Court of Industrial Relations, with an assurance that the management will abide by whatever orders the industrial court may issue thereon.

PSSLU demurred to management's stand and informed them of its intention to file an unfair labor practice case because of management's refusal to bargain with it, pointedly stating that it was with the PSSLU that the existing CBAs were entered into. PSSLU, MUEWA, and complainant LAKAS eventually submitted their respective Notices of Strike before the BLR alleging as reasons therefore harassment of union officers and members due to union affiliation and refusal to bargain.

MUEWA filed a petition for direct certification before the industrial court. There being no other union or interested person appearing before the court except the MUEWA, and finding that MUEWA represented more than the majority of the workers in respondent Marcelo Tire and Rubber Corporation, the court granted the petition and certified MUEWA of Paulino Lazaro as the sole and exclusive bargaining representative of all the regular workers in said respondent.

Letters of proposal for collective bargaining were sent by Prudencio Jalandoni of LAKAS to all the respondent Marcelo companies. The management replied expressing their conformity

to sit down in conference on the points to be negotiated as soon as LAKAS can present evidence of authority to represent the employees of respondent corporations in said conference. The records disclose that it was in the atmosphere of constant reservation on the part of management as to the question of representation recognition that complainant LAKAS and management sat down for CBA negotiations.

Four conferences were thereafter conducted but the Management's offers were not accepted by complainant LAKAS who insisted on the grant of all its economic demands and in all of the Marcelo Companies. Only the economic proposals of complainant LAKAS were the matters taken up in all these CBA conferences.

Less than a week after the fourth CBA conference, the complainant LAKAS declared a strike against all the respondent Marcelo Companies. Acts of violence and vandalism attended the picketing. Ingress and egress at the respondents' premises were successfully blocked. Respondent was able to secure an injunction. The following day, a "Return to Work Agreement" was executed. By virtue of this agreement, the respondent Marcelo Companies resumed operations and the strikers went back to work. After the resumption of normal business, the management of the respondent Marcelo Companies, the complainant LAKAS together with the local unions resumed their bargaining negotiations. Finally, the negotiations reached its final stage when the management of respondents Marcelo Rubber and Latex Products, Inc. and Marcelo Steel Corporation gave the complainant LAKAS a copy of management's drafts of the collective bargaining proposals for MFWU and UNWU, respectively.

Unexpectedly and without filing a notice of strike, complainant LAKAS declared another strike against the respondent Marcelo Companies resulting in the complete paralyzation of the business of said respondents. Because of this second strike, conciliation conferences were again set for which neither complainant LAKAS nor the local unions appeared.

These then constitute the factual background when the complainant LAKAS, filed before the respondent court a charge for unfair labor practice against the respondent Marcelo Companies, alleging non-readmission of the striking members

ISSUE: WON the employer (Marcelo Companies) is guilty of ULP. –No. (it’s the other way around)

HELD:No. On the contrary, it is the union which is guilty of ULP for not only is there no

evidence which shows that the respondent Marcelo Companies were seeking for an opportunity to discharge these employees for union activities, or to discriminate against them because of such activities, but there is affirmative evidence to establish the contrary conclusion.

Contrary to the pretensions of complainant LAKAS, the respondent Marcelo Companies did not ignore the demand for collective bargaining. Neither did the companies refuse to

bargain at all. What it did was to apprise LAKAS of the existing conflicting demands for recognition as the bargaining representative in the appropriate units involved, and suggested the settlement of the issue by means of the filing of a petition for certification election before the Court of Industrial Relations. This was not only the legally approved procedure but was dictated by the fact that there was indeed a legitimate representation issue.

In the face of these facts and in conformity with the existing jurisprudence, We hold that there existed no duty to bargain collectively with the complainant LAKAS on the part of said companies. And proceeding from this basis, it follows that all acts (the strikes) instigated by complainant LAKAS were calculated, designed and intended to compel the respondent Marcelo Companies to recognize or bargain with it notwithstanding that it was an uncertified union. These concerted activities executed and carried into effect at the instigation and motivation of LAKAS are all illegal and violative of the employer’s basic right to bargain collectively only with the representative supported by the majority of its employees in each of the bargaining units

It is also evident from the records that the charge of bargaining in bad faith imputed to the respondent companies, is hardly credible. In fact, such charge is valid as only against the complainant LAKAS. The parties had a total of five (5) conferences for purposes of collective bargaining. It is worth considering that the first strike was staged less than a week after the fourth CBA conference and without any benefit of any previous strike notice. In this connection, it must be stated that the notice of strike could not have been the strike notice for the first strike because it was already withdrawn. Thus, from these stated facts can be seen that the first strike was held while the parties were in the process of negotiating. Nor can it be sustained that the respondent Marcelo Companies bargained in bad faith since there were proposals offered by them, but the complainant LAKAS stood pat on its position that all of their economic demands should be met and that all of these demands should be granted in all of the respondent Marcelo Companies.

The companies’ refusal to accede to the demands of LAKAS appears to be justified since there is no showing that these companies were in the same state of financial and economic affairs. There is reason to believe that the first strike was staged only for the purpose of compelling the respondent Marcelo Companies to accede to the inflexible demands of the complainant LAKAS. The records further establish that after the resumption of normal operations following the first strike and the consequent Return-to-work Agreement, the striking unions led by complainant LAKAS and the management of the respondent Marcelo Companies resumed their bargaining negotiations.

All of these facts show that it was complainant LAKAS, and not the respondent Marcelo Companies, which refused to negotiate in the pending collective bargaining process. All that the facts show is that the bargaining position of complainant LAKAS was inflexible and that it was in tine with this uncompromising attitude that the strikes were declared, significantly after notice that management did not or could not meet all of their 17-points demand.

Case No. 2: (Edu) unresolved petition for union cancellation

CAPITOL MEDICAL CENTER, INC. vs. HON. CRESENCIANO B. TRAJANOG.R. No. 155690 June 30, 2005SANDOVAL-GUTIERREZ, J.:

Capitol Medical Center, Inc., petitioner, is a hospital with address at Panay Avenue corner Scout Magbanua Street, Quezon City. Upon the other hand, Capitol Medical Center Employees Association-Alliance of Filipino Workers, respondent, is a duly registered labor union acting as the certified collective bargaining agent of the rank-and-file employees of petitioner hospital. Respondent union, through its president Jaime N. Ibabao, sent petitioner a letter requesting a negotiation of their Collective Bargaining Agreement (CBA). In its reply, petitioner, challenging the union’s legitimacy, refused to bargain with respondent. Subsequently, petitioner filed with the Bureau of Labor Relations (BLR) a petition for cancellation of respondent’s certificate of registration .

For its part, respondent filed with the National Conciliation and Mediation Board (NCMB), a notice of strike. Respondent alleged that petitioner’s refusal to bargain constitutes unfair labor practice. Despite several conferences and efforts of the designated conciliator-mediator, the parties failed to reach an amicable settlement. Respondent staged a strike.

Former Labor Secretary Leonardo A. Quisumbing issued an Order assuming jurisdiction over the labor dispute and ordering all striking workers to return to work and the management to resume normal operations. The parties were also directed to submit within 10 days from receipt of the Order proposals and counter-proposals leading to the conclusion of the collective bargaining agreement. Petitioner then filed a motion for reconsideration (MR) but was denied. The petitioner filed with the Supreme Court a petition for certiorari assailing the Labor Secretary’s Orders but was referred the petition to the Court of Appeals for its appropriate action and disposition. The Appellate Court rendered a Decision affirming the Orders of the Secretary of Labor. The petitioner’s motion for reconsideration was denied. Hence, this petition for review on certiorari. (SEC – CA – SC)

Meantime, the Regional Director issued an Order denying the petition for cancellation of respondent union’s certificate of registration which was affirmed by the Director of the Bureau of Labor Relations. (RD – BLR)

Issues:1.     Whether an employer is allowed to suspend or refuse to bargain during the pendency of a petition for the cancellation of the union’s registration. “NO.”

2.     Whether the Secretary of Labor can exercise his powers under Article 263 (g) of the Labor Code without observing the requirements of due process. “YES”

Ruling:

1. As aptly stated by the Solicitor General in his comment on the petition, the Secretary of Labor correctly ruled that the pendency of a petition for cancellation of union registration does not preclude collective bargaining. "That there is a pending cancellation proceedings against the respondent Union is not a bar to set in motion the mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition to cancel the union’s registration certificate more so should the collective bargaining process continue despite its pendency. The Court emphasized that the majority status of the respondent Union is not affected by the pendency of the Petition for Cancellation pending against it. Unless its certificate of registration and its status as the certified bargaining agent are revoked, the Hospital is, by express provision of the law, duty bound to collectively bargain with the Union.

2. In Magnolia Poultry Employees Union vs. Sanchez, the Court held that the discretion to assume jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity of prior notice or hearing given to any of the parties. The rationale for his primary assumption of jurisdiction can justifiably rest on his own consideration of the exigency of the situation in relation to the national interests.Article 263 (g) of the Labor Code, as amended, provides:"ART. 263. Strikes, Picketing and Lockouts. –x x x x x x(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.

x x x. In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout. In such cases, therefore, the Secretary of Labor and Employment is mandated to immediately assume, within twenty-four (24) hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the Commission for compulsory arbitration. For this purpose, the

contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against either or both of them.

3. JEN alleged interference in the selection of the union’s negotiating panel NO;Surface bargaining NO;blue-sky bargaining NO

STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE) vs.The Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND EMPLOYMENT; and the STANDARD CHARTERED BANKG.R. No. 114974             June 16, 2004

The Bank and the Union signed a 5-year CBA with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the 3-year period but within the 60 freedom period, the Union initiated the negotiations. Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Bank’s Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank lawyers should be excluded from the negotiating team. The Bank acceded.

Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Union’s negotiating panel. However, Umali was retained as a member thereof. Diokno suggested that the negotiation be kept a "family affair."

There were provisions on which the Union and the Bank could not agree. Temporarily, the notation "DEFERRED" was placed therein. Towards the end of the meeting, the Union manifested that the same should be changed to "DEADLOCKED". Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what it wanted to be included in the total economic package. Umali replied that it was impossible to do so because the Bank’s counter-proposal was unacceptable. He furthered asserted that it would have been easier to bargain if the atmosphere was the same as before, where both panels trusted each other.

Except for the provisions on signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic provisions of the CBA. The Union declared a deadlock and filed a Notice of Strike before the NCMB.

On the other hand, the Bank filed a complaint for ULP and Damages before the Arbitration Branch of the NLRC in Manila. The Bank alleged that the Union violated its duty to bargain, as it did not bargain in good faith. It contended that the Union demanded "sky high economic demands," indicative of blue-sky bargaining. Further, the Union violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that the filing of notice of strike was an illegal act, the Union officers should be dismissed.

Secretary of Labor and Employment (SOLE) Nieves R. Confesor: dismissed the charges of ULP of both the Union and the Bank, explaining that both parties failed to substantiate their claims. He stated that ULP charges would prosper only if shown to have directly prejudiced the public interest.

The Bank and the Union signed the CBA. Immediately thereafter, the wage increase was effected and the signing bonuses based on the increased wage were distributed to the employees covered by the CBA.

The Union:- It argued that, Diokno’s suggestion that the negotiation be limited as a "family affair" was tantamount to suggesting that Federation President Jose Umali, Jr. be excluded from the Union’s negotiating panel.- It further argued that contrary to the ruling of the public respondent, damage or injury to the public interest need not be present in order for unfair labor practice to prosper.- (Surface bargaining) The Union contended that the Bank merely went through the motions of collective bargaining without the intent to reach an agreement, and made bad faith proposals when it announced that the parties should begin from a clean slate. It explained that of the 34 economic provisions it made, the Bank only made 6 economic counterproposals.- The Union also accused the Bank of refusing to disclose material and necessary data, even after a request was made by the Union to validate its "guestimates."

The Bank:- the Union was estopped, considering that it signed the CBA on.- It asserted that contrary to the Union’s allegations, it was the Union that committed ULP when negotiator Jose Umali, Jr. hurled invectives at the Bank’s head negotiator, Cielito Diokno, and demanded that she be excluded from the Bank’s negotiating team. - the Union engaged in blue-sky bargaining and isolated the no strike-no lockout clause of the existing CBA.

ISSUES:whether or not the Union was able to substantiate its claim of unfair labor practice against the Bank arising from the latter’s alleged "interference" with its choice of negotiator (umali part);surface bargaining; making bad faith non-economic proposals (not compelled to agree);and refusal to furnish the Union with copies of the relevant data (no written request) (NO)

HELD:

INTERFERENCE

If an employer interferes in the selection of its negotiators or coerces the Union to exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the employer adopted the said act to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed. In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

The circumstances that occurred during the negotiation do NOT show that the suggestion made by Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank consciously adopted such act to yield adverse effects on the free exercise of the right to self-organization and collective bargaining of the employees, especially considering that such was undertaken previous to the commencement of the negotiation and simultaneously with Divinagracia’s suggestion that the bank lawyers be excluded from its negotiating panel. The records show that after the initiation of the collective bargaining process, with the inclusion of Umali in the Union’s negotiating panel, the negotiations pushed through. It is clear that such ULP charge was merely an afterthought. The accusation occurred after the arguments and differences over the economic provisions became heated and the parties had become frustrated. It happened after the parties started to involve personalities. If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal relations and innocent communications, which are all part of the friendly relations between the Union and Bank.

SURFACE BARGAINING

Surface bargaining is defined as "going through the motions of negotiating" without any legal intent to reach an agreement. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table. It involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.

The minutes of meetings from do NOT show that the Bank had any intention of violating its duty to bargain with the Union. Records show that after the Union sent its proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The Union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the Union or to settle the differences between it and the Union. Admittedly, the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the duty to bargain "does not

compel either party to agree to a proposal or require the making of a concession." Hence, the parties’ failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.

Refusal to furnish informationThe Union failed to substantiate its claim that the Bank refused to furnish the information

it needed. While the refusal to furnish requested information is in itself an unfair labor practice, and also supports the inference of surface bargaining, Umali requested the Bank to validate its guestimates on the data of the rank and file. However, Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code. The Union, did NOT, as the Labor Code requires, send a written request for the issuance of a copy of the data about the Bank’s rank and file employees. Moreover, as alleged by the Union, the fact that the Bank made use of the aforesaid guestimates, amounts to a validation of the data it had used in its presentation.

Grave Abuse of DiscretionWhile it is true that a showing of prejudice to public interest is not a requisite for ULP

charges to prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public respondent exercised its power in an arbitrary and despotic manner by reason of passion or personal hostility.

EstoppelThe approval of the CBA and the release of signing bonus do not necessarily mean that

the Union waived its ULP claim against the Bank during the past negotiations. After all, the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its ULP charges against the Bank before the SOLE.

Blue-Sky BargainingThe Union is NOT guilty of ULP for engaging in blue-sky bargaining or making

exaggerated or unreasonable proposals. The Bank failed to show that the economic demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian region.

Case No. 4: (Edu) non reply to proposal is an indication of its bad faith;CBA imposed on employer

KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN)G.R. No. L-54334, January 22, 1986CUEVAS, J.:

The Pambansang Kilusang Paggawa (Union), a legitimate late labor federation, was certified in a resolution 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). The Union furnished the Company with two copies of its proposed collective bargaining agreement. At the same time, it requested the Company for its counter proposals. Eliciting no response to the aforesaid request, the Union again wrote the Company reiterating its request for collective bargaining negotiations and for the Company to furnish them with its counter proposals. Both requests were ignored and remained unacted upon by the Company.

The Union 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. But all attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, 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. Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for a resetting which was granted. The Company was directed anew to submit its financial statements for the years 1976, 1977, and 1978.

Bad faith: The case was further reset due to the withdrawal of the Company's counsel of record. On May 24, 1978, Atty. Fortunato Panganiban formally entered his appearance as counsel for the Company only to request for another postponement allegedly for the purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper on May 28, 1979. When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, Mr. Ching, who was supposed to be examined, failed to appear.

Atty. Panganiban then requested for another postponement which the labor arbiter denied. He also ruled that the Company has waived its right to present further evidence and, therefore, considered the case submitted for resolution. Labor arbiter Andres Fidelino submitted its report to the National Labor Relations Commission.

The NLRC rendered its decision declaring the respondent Sweden Ice Cream guilty of unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further, the draft proposal for a collective bargaining agreement sent by the Union to the respondent was declared to be the collective agreement which should govern the relationship between the parties. Petitioner assailed the aforesaid decision with the SC contending that the NLRC acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision which was dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of dismissal was reconsidered and the petition was given due course.

Issue:Whether the Company’s refusal to make counter-proposal to the union’s proposed collective bargaining agreement is an indication of its bad faith. “YES.”

Ruling:

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 . ... all of which preconditions are undisputedly present in the instant case.

The SC was in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of unfair labor practice. It has been indubitably established that (1) respondent Union was a duly certified bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of the proposed Collective Bargaining Agreement, to the Company not only once but twice which were left unanswered and unacted upon; and (3) the Company made no counter proposal whatsoever all of which conclusively indicate lack of a sincere desire to negotiate.

A Company's refusal to make counter proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is especially true where the Union's request for a counter proposal is left unanswered. Even during the period of compulsory arbitration before the NLRC, petitioner Company's approach and attitude-stalling the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in submitting its financial statements , lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its opposition thereto.

Case No. 5 (ian) same kiok – CBA imposed on employer

Divine Word University of Tacloban vs. Secretary of Labor and EmploymentG.R. No. 91915         September 11, 1992

Justice Romero

Divine Word University Employees Union (DWUEU) was certified as the sole and exclusive bargaining agent of the Divine Word University (University for brevity). DWUEU submitted its collective bargaining proposals. The University replied and requested a preliminary conference. However, two days before the scheduled conference, DWUEU’s resigned vice-president Mr. Brigido Urminita (or Urmeneta) wrote a letter addressed to the University unilaterally withdrawing the CBA proposals. Consequently, the preliminary conference was cancelled.

After almost 3 years, DWUEU, which had by then affiliated with the Associated Labor Union, requested a conference with the University for the purposes of continuing the collective bargaining negotiations. The University persisted in maintaining silence.

DWUEU-ALU filed with the NCMB of the DOLE a notice of strike on the grounds of bargaining deadlock and unfair labor practice acts, specifically, refusal to bargain, discrimination and coercion on (sic) employees. The conferences which were held after the filing of the notice of strike led to the conclusion of an agreement between the University and DWUEU-ALU.  However, it turned out that an hour before the agreement was concluded, the University had filed a petition for certification election with the Region VIII office of the Department of Labor and Employment.

On the other hand, DWUEU-ALU, consonant with the agreement, submitted its collective bargaining proposals. These were ignored by the University. Thereafter, through the (NCMB) of Region VIII, marathon conciliation conferences were conducted but to no avail. Hence, the Secretary of Labor Franklin Drilon issued an Order assuming jurisdiction over the labor dispute and directing all striking workers to report back to work within twenty-four (24) hours and the management to accept them back under the same terms and conditions prevailing prior to the work stoppage.

ISSUE: WON the complaint for ULP filed by the Union is with merit.

HELD:Petitioner’s undue interest in the resolution of the DWU-IFEU’s motion for intervention

becomes significant since a certification election is the sole concern of employees except where the employer itself has to file a petition for certification election. But once an employer has filed said petition, as the petitioner did in this case, its active role ceases and it becomes a mere bystander. Any uncalled-for concern on the part of the employer may give rise to the suspicion that it is batting for a company union.

An employer who is requested to bargain collectively may file a petition for certification election any time except upon a clear showing that one of these two instances exists: (a) the petition is filed within one year from the date of issuance of a final certification election result or (b) when a bargaining deadlock had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout.While there is no question that the petition for certification election was filed by the herein petitioner after almost four years from the time of the certification election and, therefore, there is no question as to the timeliness of the petition, the problem appears to lie in the fact that the Secretary of Labor had found that a bargaining deadlock exists.

A “deadlock” is defined as the “counteraction of things producing entire stoppage: a state of inaction or of neutralization caused by the opposition of persons or of factions (as in government or a voting body): standstill.” There is a deadlock when there is a “complete blocking or stoppage resulting from the action of equal and opposed forces; as, the deadlock of a jury or legislature.” The word is synonymous with the word impasse which, within the meaning of the American federal labor laws, “presupposes reasonable effort at good faith bargaining which, despite noble intentions, does not conclude in agreement between the parties.”

A thorough study of the records reveals that there was no “reasonable effort at good faith bargaining” specially on the part of the University. Its indifferent attitude towards collective bargaining inevitably resulted in the failure of the parties to arrive at an agreement. As it was evident that unilateral moves were being undertaken only by the DWUEU-ALU, there was no “counteraction” of forces or an impasse to speak of. While collective bargaining should be initiated by the union, there is a corresponding responsibility on the part of the employer to respond in some manner to such acts. This is a clear from the provisions of the Labor Code Article 250(a) which states: a.) when a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than 10 calendar days from receipt of such notice.

Hence, petitioner's contention that the DWUEU-ALU's proposals may not be unilaterally imposed on it on the ground that a collective bargaining agreement is a contract wherein the consent of both parties is indispensable is devoid of merit.

A similar argument had already been disregarded in the case of Kiok Loy v. NLRC, where we upheld the order of the NLRC declaring the unions draft CBA proposal as the collective agreement which should govern the relationship between the parties. Kiok Loy vs. NLRC is applicable in the instant case, considering that the fact therein have also been indubitably established in this case. These factors are: (a) the union is the duly certified bargaining agent; (b) it made a definite request to bargain submitted its collective bargaining proposals, and

(c) the University made no further proposal whatsoever. As we said in Kiok Loy v. NLRC, a company's refusal to make counter proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is especially true where the Union's request for a counter proposal is left unanswered

6. JEN – solomonic; union discipline clause

MANILA ELECTRIC COMPANY vs. THE HONORABLE SECRETARY OF LABOR LEONARDO QUISUMBING AND MERALCO EMPLOYEES AND WORKERS

ASSOCIATION (MEWA)G.R. No. 127598 January 27, 1999

MEWA informed MERALCO of its intention to re-negotiate the terms and conditions of their existing 1992-1997 CBA covering the remaining period of two years. MERALCO signified its willingness to re-negotiate and formed a CBA negotiating panel for the purpose. Thereafter, collective bargaining negotiations proceeded. However, despite the series of meetings between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at "terms and conditions acceptable to both of them." MEWA filed a Notice of Strike with the NCR Branch of the NCMB of the DOLE on the grounds of bargaining deadlock and ULP. The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement. Faced with the imminence of a strike, MERALCO filed an Urgent Petition with the DOLE praying that the Secretary assume jurisdiction over the labor dispute and to enjoin the striking employees to go back to work. The Labor Secretary granted the petition.

ISSUE: whether the Secretary's actions have been reasonable in light of the parties positions and the evidence they presented

HELD:The Secretary of Labor's statutory power under Art. 263 (g) of the Labor Code to assume

jurisdiction over a labor dispute in an industry indispensable to the national interest, and, to render an award on compulsory arbitration, does not exempt the exercise of this power from the judicial review.

We find, based on our consideration of the parties' positions and the evidence on record, that the Secretary of Labor disregarded and misappreciated evidence, particularly with respect to the wage award. The Secretary of Labor apparently also acted arbitrarily and even whimsically in considering a number of legal points; even the Solicitor General himself considered that the Secretary gravely abused his discretion on at least three major points: (a) on the signing bonus issue; (b) on the inclusion of confidential employees in the rank and file bargaining unit, and (c) in mandating a union security "closed-shop" regime in the bargaining unit.

Wages

We find after considering the records that the Secretary gravely abused his discretion in making this wage award because he disregarded evidence on record. Where he considered MERALCO's evidence at all, he apparently misappreciated this evidence in favor of claims that do not have evidentiary support. To our mind, the MERALCO projection had every reason to be reliable because it was based on actual and undisputed figures for the first six months of 1996. On the other hand, the union projection was based on a speculation of Yuletide consumption that the union failed to substantiate. In fact, as against the union's unsubstantiated Yuletide consumption claim, MERALCO adduced evidence in the form of historical consumption data showing that a lengthy consumption does not tend to rise during the Christmas period.

While We do not seek to enumerate in this decision the factors that should affect wage determination, we must emphasize that a collective bargaining dispute such as this one requires due consideration and proper balancing of the interests of the parties to the dispute and of those who might be affected by the dispute. To our mind, the best way in approaching this task holistically is to consider the available objective facts, including, where applicable, factors such as the bargaining history of the company, the trends and amounts of arbitrated and agreed wage awards and the company's previous CBAs, and industry trends in general. As a rule, affordability or capacity to pay should be taken into account but cannot be the sole yardstick in determining the wage award, especially in a public utility like MERALCO. In considering a public utility, the decision maker must always take into account the "public interest" aspects of the case; MERALCO's income and the amount of money available for operating expenses — including labor costs — are subject to State regulation. We must also keep in mind that high operating costs will certainly and eventually be passed on to the consuming public as MERALCO has bluntly warned in its pleadings.

Middle Ground approachWe do not necessarily find to be the best method of resolving a wage dispute. Merely

finding the midway point between the demands of the company and the union, and "splitting the difference" is a simplistic solution that fails to recognize that the parties may already be at the limits of the wage levels they can afford. It may lead to the danger too that neither of the parties will engage in principled bargaining; the company may keep its position artificially low while the union presents an artificially high position, on the fear that a "Solomonic" solution cannot be avoided. Thus, rather than encourage agreement, a "middle ground approach" instead promotes a "play safe" attitude that leads to more deadlocks than to successfully negotiated CBAs.

The record shows that MERALCO, throughout its long years of existence, was never remiss in its obligation towards its employees. In fact, as a manifestation of its strong commitment to the promotion of the welfare and well-being of its employees, it has consistently improved their compensation package.

Economic Issues.

1. CHRISTMAS BONUSAs a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless be

granted on equitable considerations as when the giving of such bonus has been the company's long and regular practice. To be considered a "regular practice," the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The record shows that MERALCO, aside from complying with the regular 13th month bonus, has further been giving its employees an additional Christmas bonus at the tail-end of the year since 1988. The considerable length of time MERALCO has been giving the special grants to its employees indicates a unilateral and voluntary act on its part, to continue giving said benefits knowing that such act was not required by law. Indeed, a company practice favorable to the employees has been established and the payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the employees. Consequently, the giving of the special bonus can no longer be withdrawn by the company as this would amount to a diminution of the employee's existing benefits. A one-month special bonus is sufficient, this being merely a generous act on the part of MERALCO.

2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREESThe issue requires a finding of fact on the legal personality of the retirement fund. In the

absence of any evidence on record indicating the nature of the retirement fund's legal personality, we rule that the issue should be remanded to the Secretary for reception of evidence as whether or not the MERALCO retirement fund is a separate and independent trust fund. The existence of a separate and independent juridical entity which controls an irrevocable retirement trust fund means that these retirement funds are beyond the scope of collective bargaining: they are administered by an entity not a party to the collective bargaining and the funds may not be touched without the trustee's conformity.

3. EMPLOYEES' COOPERATIVEThe formation of a cooperative is a purely voluntary act under this law, and no party in

any context or relationship is required by law to set up a cooperative or to provide the funds therefor.

4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING EQUITY LOANThe GHSIP, HMP benefits for dependents and the housing equity loan have been the

subject of bargaining and arbitral awards in the past. We do not see any reason why MERALCO should not now bargain on these benefits. MERALCO have long been extending these benefits to the employees and their dependents that they now become part of the terms and conditions of employment.

5. SIGNING BONUSThe signing bonus is a grant motivated by the goodwill generated when a CBA is

successfully negotiated and signed between the employer and the union. In the present case, this goodwill does not exist. Without the goodwill, the payment of a signing bonus cannot be justified and any order for such payment, to our mind, constitutes grave abuse of discretion.

6. RED-CIRCLE-RATE ALLOWANCEAn RCR allowance is an amount, not included in the basic salary, that is granted by the company to an employee who is promoted to a higher position grade but whose actual basic salary at the time of the promotion already exceeds the maximum salary for the position to which he or she is promoted. As an allowance, it applies only to specific individuals whose salary levels are unique with respect to their new and higher positions. The integration of the RCR allowance in the basic salary of the employees had consistently been raised in the past CBAs (1989 and 1992) We do not see any reason why it should not be included in the present CBA. For purposes of uniformity, we affirm the Secretary's order on the integration of the RCR allowance in the basic salary of the employees.

7. SICK LEAVE RESERVE OF 15 DAYSThe sick leave reserve is reduced to 15 days, with any excess convertible to cash at the

end of the year. The employee has the option to avail of this cash conversion or to accumulate his sick leave credits up to 25 days for conversion to cash at his retirement or separation from the service. This arrangement is, in fact, beneficial to MERALCO.

8. 40-DAY UNION LEAVEThe thirty (30) days union leave granted by the Secretary constitute sufficient time within

which the union can carry out its union activities such as but not limited to the election of union officers, selection or election of appropriate bargaining agents, conduct referendum on union matters and other union-related matters in furtherance of union objectives.

9. HIGH VOLTAGE/HIGH POLE/TOWING ALLOWANCEThe increase in the high-voltage allowance (from P45.00 to P55.00), high-pole allowance

(from P30.00 to P40.00), and towing allowance is justified considering the heavy risk the employees concerned are exposed to. The high-voltage allowance is granted to an employee who is authorized by the company to actually perform work on or near energized bare lines and bus, while the high-pole allowance is given to those authorized to climb poles on a height of at least 60 feet from the ground to work thereat. The towing allowance, on the other hand, is granted to the stockman drivers who tow trailers with long poles and equipment on board.

10. BENEFITS FOR COLLECTORSThe Secretary's ruling on the (a) lunch allowance; (b) disconnection fee for delinquent

accounts; (c) voluntary performance of other work at the instance of the Company; (d) bobcat belt bags; and (e) reduction of quota and MAPL during typhoons and other force majeure events, reasonable considering the risks taken by the company personnel involved, the nature of the employees' functions and responsibilities and the prevailing standard of living.

Non-economic issues.

1. SCOPE OF THE BARGAINING UNITEmployees holding a confidential position are prohibited from joining the union of the

rank and file employees.

2. ISSUE OF UNION SECURITYThe Secretary gravely abused his discretion when he ordered a union shop. The

maintenance of membership regime should govern at MERALCO.

3. THE CONTRACTING OUT ISSUEIt is a prerogative that management enjoys subject to well-defined legal limitations. As

we have previously held, the company can determine in its best business judgment whether it should contract out the performance of some of its work for as long as the employer is motivated by good faith, and the contracting out must not have been resorted to circumvent the law or must not have been the result of malicious or arbitrary action. Hence, we rule that the Secretary's added requirement, being unreasonable, restrictive and potentially disruptive should be struck down.

4. UNION REPRESENTATION IN COMMITTEESIt is worthwhile to note that all the Union demands and what the Secretary's order granted is that the Union be allowed to participate in policy formulation and decision-making process on matters affecting the Union members' rights, duties and welfare as required in Article 211 (A) (g) of the Labor Code. And this can only be done when the Union is allowed to have representatives in the Safety Committee, Uniform Committee and other committees of a similar nature. Certainly, such participation by the Union in the said committees is not in the nature of a co-management control of the business of MERALCO. What is granted by the Secretary is participation and representation. Thus, there is no impairment of management prerogatives.

5. INCLUSION OF ALL TERMS AND CONDITIONS IN THE CBAThe Secretary acted in excess of the discretion allowed him by law when he ordered the

inclusion of benefits, terms and conditions that the law and the parties did not intend to be reflected in their CBA.

6. RETROACTIVITY OF THE CBAIf no agreement is reached within 6 months from the expiry date of the 3 years that

follow the CBA execution, the law expressly gives the parties — not anybody else — the discretion to fix the effectivity of the agreement. Significantly, the law does not specifically cover the situation where 6 months have elapsed but no agreement has been reached with respect to effectivity. In this eventuality, we hold that any provision of law should then apply for the law abhors a vacuum. One such provision is the principle of hold over, i.e., that in the absence of a new CBA, the parties must maintain the status quo and must continue in full force and effect the terms and conditions of the existing agreement until a new agreement is reached. In this manner, the law prevents the existence of a gap in the relationship between the collective bargaining parties. Another legal principle that should apply is that in the absence of an agreement between the parties, then, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it operates and may be executed only respectively unless there are legal justifications for its retroactive application.

Consequently, we find no sufficient legal ground on the other justification for the retroactive application of the disputed CBA, and therefore hold that the CBA should be effective for a term of 2 years counted from December 28, 1996 (the date of the Secretary of Labor's disputed order on the parties' motion for reconsideration) up to December 27, 1999.

Case No. 7: (Edu) Collective Bargaining Agreements; A CBA which is part of an arbitral award may be made retroactive to the date of expiration of the previous agreement since Art. 253-A of the Labor Code refers to CBAs entered into by the parties as a result of their mutual agreement, not to arbitral awards.

MANILA CENTRAL LINE CORPORATION vs. MANILA CENTRAL LINE FREE WORKERS UNION-NATIONAL FEDERATION OF LABOR and the NATIONAL

LABOR RELATIONS COMMISSIONG.R. No. 109383, June 15, 1998

MENDOZA, J.:

FACTS:

This case arose out of a collective bargaining deadlock between petitioner and private respondent Manila Central Line Free Workers Union-National Federation of Labor. The parties' collective bargaining agreement had expired on March 15, 1989. As the parties failed to reach a new agreement, private respondent sought the aid of the National Conciliation and Mediation Board on October 30, 1989, but the deadlock remained unresolved.

On February 9, 1990, private respondent filed a "Petition for Compulsory Arbitration" in the Arbitration Branch for the National Capital Region of the National Labor Relations Commission. At the initial hearing before the labor arbiter, the parties declared that conciliation efforts before the NCMB had terminated and it was their desire to submit the case for compulsory arbitration.On September 28, 1990, the labor arbiter rendered a decision directing the petitioner UNION and the respondent COMPANY to execute and formalize their new five-year collective bargaining agreement (CBA) retroactive to the date of expiry of the 1986-1989 CBA.

Petitioner appealed, but its appeal was denied by the NLRC. The NLRC denied petitioner's motion for reconsideration.

ISSUE:Whether NLRC erred in affirming the Labor Arbiter's decision holding that the effectivity of the renegotiated CBA shall be retroactive to March 15, 1989, the expiry date of the old CBA.

RULING:“NO.”

Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their mutual agreement. The CBA in this case, on the other hand, is part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement.

Indeed, petitioner has not shown that the question of effectivity was not included in the general agreement of the parties to submit their dispute for arbitration. To the contrary, as the order of the labor arbiter states, this question was among those submitted for arbitration by the parties.

As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining agreement shall take effect only upon its signing and shall remain in full force and effect for a period of five years. The union proposes that the agreement shall take effect retroactive to March 15, 1989, the expiration date of the old CBA.

And after an evaluation of the parties' respective contention and argument thereof, it is believed that of the union is fair and reasonable. It is the observation of this Arbitrator that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date when the immediately proceeding CBA expires so as to give a semblance of continuity. Hence, for this particular case, it is believed that there is nothing wrong adopting the stand of the union, that is that this CBA be made retroactive effective March 15, 1989.

Case No. 8 (ian)NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC. vs NLRC

G.R. No. 124224             March 17, 2000Justice Kapunan

FACTS

The National Federation of Labor (NFL, for brevity) was certified as the sole and exclusive bargaining representative of all the regular rank-and-file employees of New Pacific Timber & Supply Co., Inc. NFL started to negotiate for better terms and conditions of employment for the employees in the bargaining unit which it represented. However, the same was allegedly met with stiff resistance by petitioner Company, so that the former was prompted to file a complaint for unfair labor practice (ULP) against the latter on the ground of refusal to bargain collectively.

LA: Company is guilty of ULP.Company appealed to NLRC.NLRC dismissed the appeal for lack of merit.Unsatisfied, petitioner Company filed a petition for certiorari with SC. But the Court dismissed said petition Records remanded to arbitration branch of origin of the execution of Labor Arbiter Abdulwahid's Order.

LA: directing petitioner Company to pay the 142 employees entitled to the aforesaid benefits the respective amounts due them under the CBA. Petitioner Company complied; and the corresponding quitclaims were executed.Notwithstanding such manifestation, a "Petition for Relief" was filed in behalf of 186 of the private respondents "Mariano J. Akilit and 350 others"Arguments of private respondents:  they were wrongfully excluded from enjoying the benefits under the CBA since the agreement with NFL and petitioner Company limited the CBA's implementation to only the 142 rank-and-file employees enumerated. They claimed that NFL's misrepresentations had precluded them from appealing their exclusion.

NLRC: the 186 excluded employees "form part and parcel of the then existing rank-and-file bargaining unit" and were, therefore, entitled to the benefits under the CBA. MR was filed by petitioner but to no avail.Hence the instant petition.

ISSUE:(1)  May the term of a Collective Bargaining Agreement (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? -YES(2)  Are employees hired after the stipulated term of a CBA entitled to the benefits provided thereunder? -YES

HELD:

1.    It is clear from the above provision of law that until a new Collective Bargaining Agreement has been executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception nor qualification as to which of the economic provisions of the existing agreement are to retain force and effect; therefore, it must be understood as encompassing all the terms and conditions in the said agreement. To rule otherwise would be to create a gap during which no agreement would govern.

2.    In a long line of cases, this Court has held that when a collective bargaining contract is entered into by the union representing the employees and the employer, even the non-member employees are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against nonmembers. It is even conceded, that a laborer can claim benefits from a CBA entered into between the company and the union of which he is a member at the time of the conclusion of the agreement, after he has resigned from said union.

9. JENSAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its

President RAYMUNDO HIPOLITO, JR. vs. HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN MIGUEL CORPORATION,

MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-Meg Plant)

G.R. No. 111262 September 19, 1996

FACTS:San Miguel Corporation Employees Union — PTGWO entered into a Collective

Bargaining Agreement (CBA) with private respondent San Miguel Corporation (SMC). The company which was composed of four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and Agri-business would undergo a restructuring. Magnolia and Feeds and Livestock Division were spun-off and became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect.

Union: insisted that the bargaining unit of SMC should still include the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated terms of the CBA shall be effective only for the remaining period of two years or until June 30, 1994.

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

Unable to agree on these issues with respect to the bargaining unit and duration of the CBA, petitioner-union declared a deadlock. A Notice of Strike was filed against SMC. In order to avert a strike, SMC requested the NCMB to conduct preventive mediation. No settlement was arrived at despite several meetings held between the parties. SMC, Magnolia and SMFI filed a petition with the Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital industry. The Secretary of Labor issued the assailed Order directing, among others, that the renegotiated terms of the CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA shall cover only the employees of SMC and not of Magnolia and SMFI.

[An urgent motion for leave to intervene in the case was filed by the Samahan ng Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW) through its authorized representative, Elmer S. Armando, alleging that it is one of the contending parties adversely affected by the temporary restraining order. It then prayed for the lifting of the temporary restraining order. Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the withdrawal/dismissal of the petition considering that the TRO jeopardized the employees' right to conclude a new CBA. At the same time, he challenged the legal personality of Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter was already officially dismissed from the company.]

Issues:1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for 3 years of for only 2 years (3 YEARS)

2) Whether or not the bargaining unit of SMC includes also the employees of the Magnolia and SMFI (NO)

1. Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA has a term of five (5) years instead of three years, before the amendment of the law as far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than three (3) years after its execution. The "representation aspect" refers to the identity and majority status of the union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. "All other provisions" simply refers to the rest of the CBA, economic as well as non-economic provisions, except representation.

The framers of the law wanted to maintain industrial peace and stability by having both management and labor work harmoniously together without any disturbance. Thus, no outside union can enter the establishment within five (5) years and challenge the status of the incumbent union as the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and non-economic) can not be questioned by the employers or employees during the period of effectivity of the CBA. The CBA is a contract between the parties and the parties must respect the terms and conditions of the agreement.

Taking it from the history of their CBAs, SMC intended to have the terms of the CBA effective for three (3) years reckoned from the expiration of the old or previous CBA

2. Magnolia and SMFI were spun-off to operate as distinct companies. The transformation of the companies was a management prerogative and business judgment which the courts cannot look into unless it is contrary to law, public policy or morals. Neither can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing the corporate veil. Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities. Thus, they cannot belong to a single bargaining unit.

Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective bargaining agent 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. Interests of employees in the different companies perforce differ. The nature of their products and scales of business may require different skills which must necessarily be commensurated by different compensation packages. The different companies may have different volumes of work and different working conditions. For such reason, the employees of the different companies see the need to group themselves together and organize themselves into distinctive and different groups. It would then be best to have separate bargaining units for the different companies where the employees can bargain separately according to their needs and according to their own working conditions.

Case No. 10: (Edu) Article 253-A of the Labor Code has a two-fold purpose—one is to promote industrial stability and predictability, and the other is to assign specific timetables wherein negotiations become a matter of right and requirement; Nothing in Article 253-A prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same

GERARDO F. RIVERA, et al. vs. HON. EDGARDO ESPIRITUG.R. No. 135547, January 23, 2002

QUISUMBING, J.:FACTS:

PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) went on a three-week strike, causing serious losses to the financially beleaguered flag carrier. As a result, 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.

PAL Employees Association (PALEA) went on strike to protest the retrenchment measures adopted by the airline, which affected 1,899 union members. The strike ended four days later, 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.

Public respondent Edgardo Espiritu, then the Secretary of Finance, was designated chairman of the Task Force. It was "empowered to summon all parties concerned for conciliation, mediation (for) the purpose of arriving at a total and complete solution of the problem." Conciliation meetings were then held between PAL management and the three unions representing the airline’s employees, with the Task Force as mediator.

PAL management submitted to the Task Force an offer by private respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a plan to transfer shares of stock to its employees.

Under intense pressure from PALEA members, the union’s directors subsequently resolved to reject Tan’s offer.PAL ceased its operations and sent notices of termination to its employees.PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. Tan, however, rejected this counter-offer .

The PALEA board proposed terms and conditions, subject to ratification by the general membership, including the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided that PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground employees of the Company.

PAL management accepted the PALEA proposal and the necessary referendum was scheduled. Of the votes cast, 61% were in favor of accepting the PAL-PALEA agreement, while 34% rejected it.Five days later, PAL resumed domestic operations. On the same date, seven officers and members of PALEA filed this instant petition to annul the agreement entered into between PAL and PALEA.

Petitioner’s claims:·         Petitioners contended that the controverted PAL-PALEA agreement is void because it abrogated the right of workers to self-organization and their right to collective bargaining. Petitioners claim that the agreement was not meant merely to suspend the existing PAL-PALEA CBA, which expires on September 30, 2000, but also to foreclose any renegotiation or any possibility to forge a new CBA for a decade or up to 2008. It violates the "protection to labor" policy laid down by the Constitution.·         Petitioners submitted that a 10-year CBA suspension is inordinately long, way beyond the maximum statutory life of a CBA, provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers’ constitutional right to bargain for another CBA at the mandated time.

ISSUE:Is the PAL-PALEA agreement stipulating the suspension of the PAL-PALEA CBA unconstitutional and contrary to public policy?

RULING:“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.

The Court found no conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its rehabilitation, said agreement 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.

The Court did not agree that the agreement violates the five-year representation limit mandated by Article 253-A. Under said article, the representation limit for the exclusive bargaining agent applies only when there is an extant CBA in full force and effect. In the instant case, the parties agreed to suspend the CBA and put in abeyance the limit on the representation period.

In sum, the PAL-PALEA agreement is a valid exercise of the freedom to contract. Under the principle of inviolability of contracts guaranteed by the Constitution, the contract must be upheld.

CASE NO. 11 (ian)Knitjoy Manufacturing vs Pura Ferrer-Calleja

G.R. No. 81883. September 23, 1992Justice Davide, Jr.

FACTS:

Petitioner KNITJOY had a collective bargaining agreement (CBA) with the Federation of Filipino Workers (FFW). The bargaining unit covered only the regular rank-and-file employees of KNITJOY paid on a daily or piece-rate basis. It did not include regular rank-and-file office and production employees paid on a monthly basis. The CBA expired on 15 June 1987. Prior to its expiration, the FFW was split into two (2) factions—the Johnny Tan and the Aranzamendez factions. The latter eventually became the Confederation of Filipino Workers (CFW).

Also prior to the expiration of the CBA, the Trade Union of the Philippines and Allied Services (TUPAS) filed a petition for the holding of a certification election among KNITJOY’s regular rank-and-file employees paid on a daily and piece-rate basis. Excluded were the regular rank-and-file employees paid on a monthly basis. In the certification election conducted on 10 June 1987, CFW emerged as the winner; thereafter, negotiations for a new CBA between CFW and KNITJOY commenced.

During pendency of negotiations, private respondent KMEU filed a petition for certification election among KNITJOY’s regular rank-and-file monthly paid employees  The Knitjoy Monthly Employees Association and Confederation of Citizens Labor Union (KMEA-CCLU), another union existing in the said company, and petitioner CFW intervened therein.

The petition was dismissed by the Med Arbiter. KMEU appealed. Public respondent reversed the order of the Med Arbiter. Knitjoy and CFW filed separate MRs but public respondent denied on the principal

ground that although the monthly-paid rank-and-file employees were allegedly included within the scope of the new CBA, they are not barred from forming a separate bargaining unit.

Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed the instant petitions.  

ISSUES:1.    Whether or not petitioner KNITJOY’s monthly-paid regular rank-and-file employees can constitute an appropriate bargaining unit separate and distinct from the existing unit composed of daily or piece-rate paid regular rank-and-file employee -YES2.    Whether or not the inclusion in the coverage of the new CBA between KNITJOY and CFW of the monthly-paid rank-and-file employees bars the holding of certification election among the said monthly paid employees. -NO

HELD:The present Article 245 of the Labor Code expressly allows supervisory employees

who are not performing managerial functions to join, assist or form their separate union but bars them from membership in a labor organization of the rank-and-file employees.

It reads: “ART. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees.—Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own.”

This provision obviously allows more than one union in a company. Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the Labor Code, which seeks to implement the policy, also recognizes exceptions. It reads: “SEC. 2. Who may file.—Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization shall contain, among others: x x x (c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; x x x.”

The usual exception, of course, is where the employer unit has to give way to the other units like the craft unit, plant unit, or a subdivision thereof; the recognition of these exceptions

takes into account the policy to assure employees of the fullest freedom in exercising their rights. Otherwise stated, the one company-one union policy must yield to the right of the employees to form unions or associations for purposes not contrary to law, to self- organization and to enter into collective bargaining negotiations, among others, which the Constitution guarantees.

Furthermore, it is not denied that in the bargaining history of KNITJOY, the CBA has been consistently limited to the regular rank-and-file employees paid on a daily or piece-rate basis. On the other hand, the rank-and-file employees paid on a monthly basis were never included within its scope. Respondent KMEU’s membership is limited to the latter class of employees; KMEU does not seek to dislodge CFW as the exclusive bargaining representative for the former. The records further disclose that in the certification solicited by TUPAS and during the elections which followed thereafter, resulting in the certification of CFW as the exclusive bargaining representative, the monthly-paid employees were expressly excluded. Thus, the negotiations between CFW and KNITJOY following such a certification could only logically refer to the rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly-paid employees are concerned, the latter’s constituting a separate bargaining unit with the appropriate union as sole bargaining representative, can neither be prevented nor avoided without infringing on these employees’ rights to form a union and to enter into collective bargaining negotiations. Stated differently, KNITJOY and CFW recognize the fact that the existing bargaining unit in the former is not—and has never been—the employer unit. Given this historical and factual setting, KMEU had the unquestioned and undisputed right to seek certification as the exclusive bargaining representative for the monthly-paid rank-and-file employees .

12. JENINDOPHIL TEXTILE MILL WORKERS UNION-PTGWO vs. VOLUNTARY

ARBITRATOR TEODORICO P. CALICA and INDOPHIL TEXTILE MILLS, INC.G.R. No. 96490 February 3, 1992

FACTS:Indophil Textile Mill Workers Union-PTGWO and private respondent Indophil Textile Mills, Inc. executed a CBA. In 1990 or a year after the workers of Acrylic have been unionized and a CBA executed, the petitioner union claimed that the plant facilities built and set up by Acrylic should be considered as an extension or expansion of the facilities of private respondent Company pursuant to the CBA.

Petitioner's contentions: Acrylic is part of the Indophil bargaining unit. It was a devise of respondent Company to evade the application of the CBA between petitioner Union and respondent Company. The articles of incorporation of the two corporations establish that the two entities are engaged in the same kind of business, which is the manufacture and sale of yarns of various counts and kinds and of other materials of kindred character or nature. The two corporations have practically the same incorporators, directors and officers. In fact, of the total

stock subscription of Indophil Acrylic, 70% of the total subscription as subscribed to by respondent Company.

Respondent: submits that it is a juridical entity separate and distinct from Acrylic. The existence of a bonafide business relationship between Acrylic and private respondent is not a proof of being a single corporate entity because the services which are supposedly provided by it to Acrylic are auxiliary services or activities which are not really essential in the actual production of Acrylic. It also pointed out that the essential services are discharged exclusively by Acrylic personnel under the control and supervision of Acrylic managers and supervisors.

The parties jointly requested the public respondent to act as voluntary arbitrator in the resolution of the pending labor dispute pertaining to the proper interpretation of the CBA provision.

ISSUE: whether or not the operations in Indophil Acrylic Corporation are an extension or expansion of private respondent Company andwhether or not the rank-and-file employees working at Indophil Acrylic should be recognized as part of, and/or within the scope of the bargaining unit

HELD: Decisions of voluntary arbitrators are to be given the highest respect and a certain measure of finality, but this is not a hard and fast rule, it does not preclude judicial review thereof where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law were brought to our attention.

It should be emphasized that in rendering the subject arbitral award, the voluntary arbitrator Teodorico Calica, a professor of the U.P. Asian Labor Education Center, now the Institute for Industrial Relations, found that the existing law and jurisprudence on the matter, supported the private respondent's contentions. Contrary to petitioner's assertion, public respondent cited facts and the law upon which he based the award. Hence, public respondent did not abuse his discretion.

Under the doctrine of piercing the veil of corporate entity, when valid grounds therefore exist, the legal fiction that a corporation is an entity with a juridical personality separate and distinct from its members or stockholders may be disregarded. In such cases, the corporation will be considered as a mere association of persons. The members or stockholders of the corporation will be considered as the corporation, that is liability will attach directly to the officers and stockholders. The doctrine applies when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.

While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for auxilliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic. The legal corporate entity is disregarded only if it is sought to hold the officers and stockholders directly liable for a corporate debt or obligation. In this case, petitioner does not seek to impose a claim against the members of the Acrylic.

Hence, the Acrylic not being an extension or expansion of private respondent, the rank-and-file employees working at Acrylic should not be recognized as part of, and/or within the scope of the petitioner, as the bargaining representative of private respondent.