Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

 

G.R. No. L-35254 January 29, 1973

THE PHILIPPINE AMERICAN MANAGEMENT COMPANY, and PHILIPPINE AMERICAN LIFE INSURANCE COMPANY petitioners, vs.THE PHILIPPINE AMERICAN MANAGEMENT EMPLOYEES ASSOCIATION (PAMEA-FFW) and COURT OF INDUSTRIAL RELATIONS, respondent

Cacnio and Pablo and Angara, Abello, Concepcion, Regala and Cruz for petitioners.F. F. Bonifacio, Jr. for private respondent.Jose K. Manguiat, Jr. for respondent Court.

 

FERNANDO, J.:

This Court is confronted, in this certiorari and prohibition proceeding, with the question, "basic but as yet unresolved," in the language of the petition, of whether not the respondent Court of Industrial Relations, in a case certified to it by the Secretary of Labor pursuant to Minimum Wage Law, 1 could issue a return-to-work order pending the final outcome of the dispute before it. This the respondent Court did in a resolution now challenged in this suit. It is petitioner's contention that thereby it acted out jurisdiction or, at the very least, with grave abuse of discretion. The private respondent, the Philippine American Management Employees Association, the labor union to which the employees involved are affiliated, maintain the contrary and would uphold the action taken by respondent Court. It is thus obvious that implicit in this controversy is the scope of authority conferred on respondent Court. Had there been a presidential certification in a labor dispute in an industry indispensable to the national interest, such a power is undeniable. 2 This is so as the authority to be exercised by respondent Court is one of compulsory arbitration. An explicit provision in the law of its creation, Commonwealth Act No. 103 empowers it "pending award, or decision ... [to order an] employee, tenant, or laborer [not to] strike or walk out of his employment when so enjoined [by it] after hearing and when public interest so requires, and if he has already done so, that he shall forthwith return to it upon order of the court, which shall be issued only after hearing when public interest so requires or when the dispute cannot, in its opinion, be promptly decided or settled; and if he has already done so, that he shall forthwith return to it ... . 3 An order of such nature could likewise be issued by it when in accordance with the very same statute it was called upon Presidential directive "to investigate and study all pertinent facts related to [an] industry concerned or to ... industries established in a

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designated locality, with a view to determining the necessity and fairness of fixing and adopting for such industry or locality a minimum wage ... ." 4 That was so before the present Minimum Wage Law was enacted in 1951. Now the wage scale is specified. Nonetheless, where a labor dispute concerning the matter results in a strike, the Secretary of Labor, as indicated at the outset, in the event his efforts at conciliation fail, endorses such controversy to respondent Court. The Industrial Peace Act, which became a law in 1953, continues to recognize the arbitral power of respondent Court in this wise: "In order to prevent undue restriction of free enterprise for capital and labor and to encourage the truly democratic method of regulating the relations between the employer and employee by means of an agreement freely entered into in collective bargaining, no court of the Philippine shall have the power to set wages, rates of pay, hours of employment, or conditions of employment except, as in this Act is otherwise provided and except, as in this Act is otherwise provided and except as is provided in Republic Act Numbered Six hundred two and Commonwealth Act Numbered Four hundred forty-four as to hours of work." 5

In the perspective thus supplied by the history of the legislative response to the question of minimum wages and the role of respondent Court, it is rather apparent that it is not a light burden assumed by petitioners in maintaining the proposition that under the Industrial Peace Act, respondent Court may not issue a return-to-work order. Notwithstanding the pleadings submitted by their counsel, Messrs. Cacnio and Pablo as well as Messrs. Angara, Abello, Regala and Cruz, being notable for thoroughness and scholarly research, it cannot be concluded that they were successful. They did call attention to the adoption of the collective bargaining regime, with its stress on industrial democracy under the Industrial Peace Act 6 as constrasted with the former paternalistic policy embodied in the previous law, 7 to bolster their stand, but, as will be subsequently shown, that hardly suffices to carry the day. Lastly, their imputing to respondent Court grave abuse of discretion because of its failure to determine the legality of the strike before issuing the challenged order is equally fruitless. With the conclusion reached by us that the crucial issue posed should be answered in the negative and that respondent Court is not bereft of the power to issue a return-to-work order in a dispute over minimum wages submitted to it by the Secretary of Labor, the petition must fail.

The decisive facts are not in dispute. The then Secretary of Labor Adrian E. Cristobal, on January 6, 1972, as noted in the petition, "endorsed the dispute to respondent [Court]" informing its Presiding Judge: "The President has taken cognizance to the existing labor dispute involving minimum wage between the management of the Philippine American Management Company, Inc. (PAMCI) and the Philippine American Management Employees Association (PAMEA-FFW)." 8 His communication continued: "Pursuant to Section 16 (c) of Republic Act No. 602, otherwise known as Minimum Wage Law as amended by Republic Acts Nos. 4180, 4707 and 5388, and in accordance with the directive of the President of the Philippines, I have the honor to elevate to the Court the present labor dispute between the Philippine American Management Company, Inc. (PAMCI) and the Philippine American Management Employees Association (PAMEA-FFW)." 9 There was on the part of petitioner Philippine American Management Company an urgent motion to dismiss on the ground of lack of

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jurisdiction over the subject matter, alleging that the certification had no basis in fact since the dispute clearly involved no demand for minimum wage. 10 There was an opposition on the part of respondent Union asserting that the question of minimum wages was material. 11 Respondent Court deferred resolution on the motion to dismiss. Then came on March 17, 1972 an urgent motion by respondent Union for the issuance of a return-to-work order. 12 Notwithstanding an opposition on the part of petitioners, 13 the then Presiding Judge of respondent Court, Arsenio I. Martinez, granted respondent's motion in an order of April 19, 1972, the dispositive portion of which reads: "[Premises considered], pending the resolution of the legality of the strike, and while it is believed that Section 19 of C.A. 103, as amended, no longer obtains in all cases especially under Section 10 of Republic Act 875, in view of the special circumstances of this case, and pursuant to Section 19 of C.A. 103, as amended, the Philippine American Management Employees Association (PAMEA-FFW) and its officers and members are ordered to lift their strike and picket and to return to work immediately, with a warning that any striker who disobeys this order will mean his dismissal from employment. The Philippine American Management Company, Inc. (PAMCI), by its officers and agents, is hereby directed to accept the strikers, petitioners herein, back to work under the same terms and conditions of employment before the strike was declared. Petitioner Union and its officers and members are enjoined not to strike or cause any stoppage of work and the respondent PAMCI and agent are directed not to dismiss, lay-off or suspend any of the employees concerned without the prior approval of this Court. Without pronouncement as to that back-wages. [So ordered]." 14 There was a motion for reconsideration, 15 but it was denied in a resolution of June 26, 1972. 16

The issue was squarely joined in the answer submitted by respondents. They sought the dismissal of the petition as for them no serious question could be raised as to the jurisdiction of respondent Court. The stand taken by the contending parties was developed further in their respective memoranda, petitioners attempting, in the face of rather formidable odds, to prop up what is inherently a shaky position, with support from what they considered applicable doctrines. The effort was commendable, but the outcome was predictable. As stated at the outset, the petition cannot prosper. Now for the reasons.

1. It is not open to dispute that were it not for the Industrial Peace Act, 17 the Court of Industrial Relations could exercise to the full its powers as an arbitral tribunal, with the widest range of authority recognized by law. At present, however, it is bereft of such competence except where, as previously noted, there has been a Presidential certification to it of a labor dispute in industries indispensable to the national interest. 18 Or, as likewise made mention of, there is an indorsement to it by the Secretary of Labor of a minimum wage dispute. 19 The occasion for the exercise of such jurisdiction is thus limited, but, once invoked, the scope of what may legitimately be done has not been curtailed. So this Court has uniformly held in an impressive number of cases, where the effect of a certification of a labor dispute by the President was involved. In the first of such decisions, Philippine Marine Radio Officers Association v. Court of Industrial Relations, 20 Justice Labrador as ponente stated: "We agree with counsel for the Philippine Marine Radio Officers' Association that upon certification by the President

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under Section 10 of Republic Act 875, the case comes under the operation of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor disputes in industries indispensable to the national interest when that President certifies the case to the Court of Industrial Relations. The evident intention of the law is to empower the Court of Industrial Relations to act in such cases, not only in the manner prescribed under Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that Act. If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted. Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the employment." 21 Since then there has been no question, as explicitly affirmed by the same jurist in Hind Sugar Co. v. Court of Industrial Relations 22 promulgated three years later, as to the statutory authority of respondent Court being "broad enough to authorize [it] to order the return to work not only of the actual workers who were so at the time of the strike but all other regular workers of the company, even though not actually at work or working during the day of the strike because they are seasonal workers." 23 To erase any doubts as to the breadth of its authority, if any still existed, Justice Paredes, speaking for this Court, in Rizal Cement Workers Union v. Court of Industrial Relations, 24 declared: "Inasmuch as the present case has been certified by the President of the Philippines to the CIR, said Court is authorized to exercise its powers of arbitration under the provisions of Act No. 103, as amended, including the fixing of the terms and conditions of employment which embrace reinstatement of the strikers, with or without back wages." 25 Of similar import is this statement from Justice Zaldivar's opinion in Feati University vs. Bautista: 26 "To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court will not interfere in, much less curtail, the exercise of that prerogative. The jurisdiction of the CIR in a certified case is exclusive ... . Once the jurisdiction is acquired pursuant to the presidential certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor dispute and the employer-employee relationship may be threshed out before the CIR, and the ClR may issue such order as may be necessary to make effective the exercise of its jurisdiction." 27 He added: "Untenable also is the claim of the University that the CIR cannot issue a return-to-work order after strike has been declared, it being contended that under Section 10 of Republic Act No. 875 the CIR can only prevent a strike or a lockout - when either of this situation had not yet occurred." 28 "The overwhelming implication," as noted by Justice Sanchez in Bachrach Trans. Co., Inc. v. Rural Transit Shop Employees Association, "is that [the Court of Industrial Relations] is granted great breadth of discretion in its quest for a solution to a labor problem so certified." 29 In the latest case in point, Philippine Airline Employees Association v. Philippine Air Lines, Inc. 30 Justice Makalintal, with reference to the specific point at issue, quoted with approval an excerpt from the above Bachrach decision. Thus: " "The power to issue a return-to-work order is precisely given to the Court of Industrial Relations under Section 19 of Commonwealth

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Act 103 in a case certified thereto by the President, in which it acts under broad powers of compulsory arbitration ... ." " 31

The constant course of authoritative rulings lends itself to no other interpretation than that respondent Court, when discharging its functions as an arbitrator, is not to be cabined or confined within narrow bounds. The wide sweep of discretion enjoyed by it has thus been clearly and unmistakably recognized, the Industrial Peace Act notwithstanding. There is no justification to impose upon such competence a restriction for which there is no basis in the statutory language and against which the objective of such legislation stands as a warning and a reproach. To accept petitioner's main contention then as to the absence of the jurisdiction of respondent Court is not in conformity with either the dictates of reason or sound policy considerations. A failure to abide by the terms of the Minimum Wage Law after all these years, if shown, is not to be tolerated. A labor union goaded into declaring a strike by such inexcusable omission is entitled to all the protection that the Constitution guarantees. 32 In the first instance, the Secretary of Labor may come to its aid. His efforts failing, it is wisely provided that he should refer the dispute to respondent Court for compulsory arbitration. What cannot be ignored is that when such enactment was passed, the prevailing rule was for respondent Court to act as an arbitral tribunal. To assert then that it could not, even during the pendency of the controversy before it, issue a return-to-work order its basic charter 33 is clearly unpersuasive. It possesses the jurisdiction to do what it did.

2. Petitioners could not have been oblivious of the weakness of their principal contention. That must have accounted for their laying emphasis in their opening paragraphs with the assertion that the case before respondent Court was one of unfair labor practice, without a minimum wage aspect. 34 Such an allegation was denied. 35 Independently, however, of the truth, or lack of it, of the assertion thus made, intended to bolster the plea of lack of jurisdiction of respondent Court, what is undisputed, as mentioned in their very own petition, was that on January 6, 1972, the Secretary of Labor, pursuant to the Minimum Wage Law 36 endorsed the controversy on the precise question of whether or not petitioner Philippine American Management Commission Company was complying with its mandatory terms. What was done by him, as a department head, in the regular course of business and conformably to a statutory provision is, according to settled jurisprudence that dates back to an authoritative pronouncement by Justice Laurel in 1939 in Villena v. Secretary of the Interior, 37 presumptively the act of the President, who is the only dignitary who could, paraphrasing the language of the decisions, disapprove or reprobate it. 38 What other response could be legitimately expected from respondent Court then? It could not just simply fold its hands and refuse to pass on the dispute. "It is," as pointed out by Justice Laurel in the leading case of Ang Tibay v. Court of Industrial Relations 39 decided in 1940, "more an administrative board than a part of the integrated judicial system of the nation." 40 Only last August, there was a reiteration of such a view. 41 As a matter of law, the Industrial Peace Act is an even clearer manifestation of the legislative policy to expand its administrative role, as an executive agency admittedly discharging quasi-judicial functions. Included as it is in that branch entrusted with the enforcement of legal norms headed by the Executive called upon "to take care that the laws be faithfully

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executed," 42 how can respondent Court without an evasion of its clear duty and shirking of its responsibility, decline to pass upon the question of whether or not there is a failure to comply with the Minimum Wage Law? It does not stand to reason then to argue as did petitioners that the jurisdiction of respondent Court is open to challenge, even on the assumption that the case before it originated bereft of any imputed minimum wage law violation. Nothing said in Benguet Consolidated Mining Co. v. Coto Labor Union, 43 as to the jurisdictional requisites that must exist, calls for a contrary conclusion. The mere fact that the dispute may have started as an unfair labor practice controversy is no bar to this question being passed upon by respondent Court if necessary to its ultimate solution, once the Secretary of Labor had endorsed the matter to it in accordance with law.

3. Neither does it avail petitioners to argue that the basic question as to the jurisdiction of respondent Court to issue a return-to-work order is to be answered in the negative, in view of the alleged repugnancy between the basic philosophy underlying the Industrial Peace Act, in the main hostile to the concept of compulsory arbitration, and the Court of Industrial Relations Act. Such a contention, while possessing a semblance of plausibility, cannot prevail against a strict analysis. There is no need to repeat the Industrial Peace Act explicitly continues the jurisdiction of respondent Court with reference to a minimum wage controversy endorsed to it by the Secretary of Labor. The power to be exercised is necessarily one of compulsory arbitration. Should it be emasculated just because there is no explicit conferment of the authority which it did possess under the act of its creation, still in full force and effect at the time of the enactment of the Minimum Wage Law? For petitioners to take that stand is in effect to advance the view that there is an implied repeal. A recent decision, Villegas v. Subido, 44

cautions against such an approach. Thus: "It has been the constant holding of this Court that repeals by implication are not favored and will not be so declared unless it be manifest that the legislature so intended. Such a doctrine goes as far back as United States v. Reyes, a 1908 decision. It is necessary then before such a repeal is deemed to exist that it be shown that the statutes or statutory provisions deal with the same subject matter and that the latter be inconsistent with the former. There must be a showing of repugnancy clear and convincing in character. The language used in the latter statute must be such as to render it irreconcilable with what had been formerly enacted. An inconsistency that falls short of that standard does not suffice. What is needed is a manifest indication of the legislative purpose to repeal." 45 Moreover, there is a failure on the part of petitioners to accord the most careful appraisal of what is implicit in a regime of collective bargaining, the basic postulate of the present Industrial Peace Act. It thus enshrines industrial democracy in the sense that the parties, through the collective contract, could determine the rules that regulate labor management relations. 46 Even then, there is an area placed beyond the sphere of bargaining between the parties. Included therein is the question of minimum wages. It is understandable why it should be so. For legislation of that character proceeds on the premise that there is a floor below which the amount paid labor should not fall. That is to assure decent living conditions. Such an enactment is compulsory in nature; not even the consent of the employees themselves suffices to defeat its operation. More plainly put, the question of minimum wage is not negotiable. What the law decrees must be

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obeyed. It is as simple as that. That is why it is obvious that petitioners cannot successfully invoke the principles associated with the institution of collective bargaining. Nor is this all. The approach followed by petitioners ignores a relevant provision of the Industrial Peace Act. 47 There is thus set forth in categorical language an exception to the primordial concept underlying the Industrial Peace Act that working conditions are to be fixed not by respondent Court but by the parties themselves. With such an express recognition of the continuance of the role of respondent Court insofar as minimum wage is concerned, the argument that the crucial issue in this case, namely whether it is within the jurisdiction of respondent Court to issue a return-to-work order, deserves an answer in the negative, falls flat.

4. There is this final objection on the part of petitioners. As set forth in their petition: "The validity of the strike having been squarely raised, a return-to-work order was, we submit, a grave abuse of discretion since the determination of the validity of the strike was crucial under the circumstances of the case." 48 Petitioners would rely on the National Power Corporation v. National Power Corporation Employees and Workers Association 49 case. Such a reliance is misplaced. As set forth in the opinion in that decision: "No adverse effect would be entailed if the Court of Industrial Relations would pass upon squarely as to whether the strike was legal before deciding the other issues. There was no question as to the legality of its power in the meanwhile to order the strikers to go back to work and thus avoid the dire possibility foreseen in the certification of "huge economic losses, untold inconveniences and grave dangers to safety and human lives." The Court is of the opinion that while the doctrine of the Philippine Can Co. case had been relaxed where we felt that the legality of a strike need not be inquired into, the situation confronting the Court of Industrial Relations here was such that a determination of the validity of this strike is crucial to the proper disposition of the matter." 50 It is to disregard then the peculiar circumstances implicit in that case that call for the prior determination of whether or not the strike was valid. There was no thought on the part of this Court to consider such an inquiry as a prerequisite to the issuance of a return-to-work order. The company involved in the National Power Corporation case is an instrumentality of the government. Following the view of Justice Makalintal in his opinion in Agricultural Credit and Cooperative Financing Administration decision 51 that rendered obsolete the usual classification as to ministrant and constituent functions of government, 52 and considering that under the Industrial Peace Act the right to strike is denied employees in instrumentalities of the government unless discharging proprietary functions, this Court deemed it best to have such a question looked into prior to giving effect to a return-to-work order. For should the National Power Corporation be considered as performing governmental functions, then the right to strike is denied its employees. 53 Certainly, the situation before us is entirely different. This particular argument then is no more of an obstacle to the validity of the return-to-work order than the others previously advanced. There was thus no jurisdictional issue raised of sufficient consequence to call for the nullification of the challenged resolution of respondent Court. WHEREFORE, the petition for certiorari and prohibition is dismissed. With costs against petitioners.

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

 

G.R. No. 117878 November 13, 1996

MANILA FASHIONS, INC., petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG MANGGAGAWA NG MANILA FASHIONS, INC., respondents.

 

BELLOSILLO, J.:

On 15 March 1993 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 represents a reasonable settlement —

Sec. 3. The Union realizes the company's closeness to insolvency and, as such, sympathizes with the company's financial condition. Therefore, the Union has agreed, as it hereby agrees, to condone the implementation of Wage Order No. 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.

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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 . . . 1

Thus on 30 June 1993 petitioner was adjudged liable to each of the complainants for underpayment of salary, 13th month pay, vacation leave pay and legal holiday pay in the total amount of P900,012.00. All other claims were dismissed for lack of merit. 2

Both parties were unsatisfied with the decision, prompting them to seek relief from respondent National Labor Relations Commission (NLRC). The basis of petitioner's appeal was that the ruling was not in accordance with the facts and the law. On the part of the private respondents, they assailed the computation of the award erroneous.

Respondent NLRC was not persuaded by petitioner. On the other hand, the appeal of private respondents was no longer considered as it was filed beyond the reglementary period. Thus on 31 May 1994 the disputed decision was affirmed. 3

Was the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec. 3, Art. VIII, of the CBA valid?

Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by this Court applying the rule that if the agreement was voluntarily entered into and represents a reasonable settlement it is binding on the parties and may not be disowned simply because of a change of mind. 4 Granting the CBA provision is indeed void, petitioner offers the alternative argument that the computation of the award was erroneous and arbitrary.

We sustain the decision of the Labor Arbiter as affirmed by respondent NLRC that the condonation appearing in Sec. 3, Art. VIII, of the CBA did not exempt petitioner from compliance with Wage Order No. NCR-02 and 02-A..

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. 5 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. 6 Section 3, Art. VIII, of the CBA is a void provision because by agreeing to condone the

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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. 7 The Office of the Solicitor General emphasizes the point that parties 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 unwittingly put in a position to accept a lower wage. 8

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. 9

As regards the alternative argument of petitioner that the computation of the award was erroneous and arbitrary, it must be rejected outright as it was apparently never brought to the attention of respondent NLRC. Consequently, it cannot be raised for the first time before this Court since that would be offensive to the basic rule of fair play, justice and due process. 10 Moreover, the original end exclusive jurisdiction of this Court to review a decision of respondent NLRC in a petition for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation of the evidence but confined merely to issues of jurisdiction or grave abuse of discretion. 11

WHEREFORE, the petition is DISMISSED. The order of respondent National Labor Relations Commission which affirmed the decision of the Labor Arbiter awarding the total amount of P900,012.00 to the complainants is likewise AFFIRMED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-20303             September 27, 1967

REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner, vs.COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN JARA, FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S. MENDIOLA,

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TEODORO DE LA CRUZ, NARCISO MACARAEG and MAURO A. ROVILLOS, respondents.

Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.G. E. Fajardo for respondents.

 

CASTRO, J.:

          The vital issue in this case is whether the dismissal of the eight (8) respondent employees by the petitioner Republic Bank (hereinafter referred to as the Bank) constituted an unfair labor practice within the meaning and intendment of the Industrial Peace Act (Republic Act 875). The Court of Industrial Relations (CIR) found it did and its decision is now on appeal before us. The Bank maintains that the discharge was for cause.

          The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin Jara, Florencio Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la Cruz, Narciso Macaraeg and Mauro A. Rovillos. On July 12, 1958 it discharged Jola and, a few days after (July 18, 1958), the rest of respondents, 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."

          The letter referred to was a letter-charge which the respondents had written to the bank president, demanding his resignation on the grounds of immorality, nepotism in the appointment and favoritism as well as discrimination in the promotion of bank employees. The letter, dated July 9, 1958, is hereunder reproduced in full:

Mr. Ramon RacelisPresident, Republic Savings BankM a n i l a

"Dear Mr. President:

          We, the undersigned, on behalf of all our members and employees of the Republic Savings Bank, who have in our hearts only the most honest and sincere motive to conserve and protect the interest of the institution and its 200,000 depositors, do hereby, demand the much needed resignation of His Excellency, Mr. Ramon Racelis as President and Member of the Board of Directors of the Bank.

          Mr. President, you have already, in so many occasions, placed the Bank on the verge of danger, that now we deem it right and justifiable for you to leave this Bank and let other more capable presidents continue the work you have not well accomplished.

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          In the above instance, we are presenting charges which in our humble contention properly justifies incapacity on your part to continue and assume the position as top executive of the huge institution:

(1) That you Mr. President, have tolerated and practiced immorality in this Bank. We have been expecting you to do something about this malpractice which is very disgraceful and affects the morale of the hundreds of your employees. But so far, Mr. President, you have just let this thing passed through. As a matter of fact, you have even promoted these women like Misses Pacita Mato and Edita Castro. These women are of questionable characters, Mr. President, and should have had no place in the Bank as managers or even as mere employees. We know Mr. President, because it is an open secret in the Bank, that you have illicit relations with one of them — Miss Edita Castro. As top officer and as father of the employees of the Bank, you have shown this bad example to your employees. Mr. President, we are really ashamed of you.

(2) That you have allowed the practice of nepotism in this Bank. You have employed relatives of yours like Honorio Ravida; Bienvenido Ravida; Antonio Racelis; Jesus Antonio; and Argentina Racelis. Not only that Mr. President. You have also given those nieces and nephews of yours good positions at the expense of the more capable employees. Mr. President, if we have to mention all of them, one page will not be enough.

(3) With regards to promotion, you have given more preferences to your close relatives. When the Bank advocated the sending of pensionados to States, you have only limited your choice among your nieces, nephews, and querida, namely, Miss Argentina Racelis, Mr. Jesus Antonio, Miss Edita Castro, and her brother-in-law, Mr. Pedro Garcia, Jr. In doing this, Mr. President, you have only lowered the reputation and standing of the Republic Savings Bank. There is really no sense in sending high school and B.S.E. graduates to States to study advanced banking. Because of this silly decision, it took one pensionado six months and cost the Bank a total of P10,000.00 just to study Christmas savings. That subject is very simple; one need not go to States to study savings; that you know full well, Mr. President. The reason why you sent Miss Castro to States was because you were also there. Are we not right?

(4) That you Mr. President, tolerated and still tolerating grave dishonesty in this Bank as evidenced by the following irregularities and anomalies;

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(a) In one of our branches, around P200,000.00 was mulcted and embezzled by a certain Maximo Donado by doctoring the ledgers and records of that particular office. To the present, the amount is still increasing and some more are being dug up from the records everyday ever since its discovery in February 1957. In this case you dismissed Mr. M. Donado, immediately. But this was all that you did. If you have to go back to the history of the case, you will find out that your beloved nieces and nephews are also involved having been managers of that particular office. Another nephew, the Vice President-Operations, then Vice President, Personnel, was also involved for valid reasons that he did not even shift this particular employee to other branches or departments since the beginning when it has been the policy of the Bank to reshuffle its personnel. If you want to know why your good nephew did not transfer this employee, we will tell you. "Your good nephew has eaten too many baskets of delicious alimango." Mr. President, if there is someone to be blamed in this particular case, it is your good nephews and nieces for their gross negligence.

(b) Aside from the one mentioned above, we have also Mr. Rodolfo Francisco, who in April 1955, maliciously withdraw (sic) P970.00 in two withdrawal slips from the account of one depositor in one of our provincial offices, inserting his name as co-depositor in the savings account ledger.

(c) In January 1958, Mr. Jose de los Santos expended and approved representation expense in the amount of P300.00 in one of our provincial offices.

(d) Mr. Federico M. Dabu, the ex-cashier and now Personnel Manager, incurred a shortage in the amount of P1,240.00 in the course of the audit on August 3, 1954.

(e) Mr. Jose S. Guevara, Vice-President on Personnel have (sic) been accepting bribe moneys. One of these amounts to P4,000.00 which was delivered by a messenger sometime during the last quarter of 1957.

          Mr. President, the anomalies are only a partial list of the irregularities which so far you have not acted upon. This type of people should have been fired out from the Bank; yet on the contrary, you

13

promoted them to higher and responsible positions, thus, resulting in the demoralization of the more capable employees.

          Mr. President, we hope that you have still a little sense of decency and propriety left. So, for goodsake and for the welfare of the Bank, DO RESIGN NOW as President and as Member of the Board of Directors of the Republic Savings Bank.

Very respectfully yours,          

(Sgd.) Rosendo T. Resuello      President, RSB Supervisors' Union (FFW),

(Sgd.) Benjamin Jara      Vice-President RSB Supervisors' Union (FFW)

(Sgd.) Florencio Allasas      Treasurer, RSB Supervisors' Union (FFW)

(Sdg) Domingo B. Jola      Chairman, Executive Committee, RSB Employees' Union (FFW)

(Sgd.) Diosdado S. Mendiola      Vice-President, RSB Employees Union (FFW)

(Sgd.) Teodoro de la Cruz      Member, Executive Committee, RSB Employees' Union (FFW)

(Sgd.) Angelino Quiambao      President, RSB Security Guard Union (FFW)

(Sgd.) Narciso Macaraeg      Vice-President, RSB Security Guard Union (FFW)

(Sgd.) Alfredo Bautista      Treasurer, RSB Security Guard Union (FFW)

(Sgd.) Pacifico A. Argao      PRO, RSB Employees' Union (FFW)

(Sgd.) Toribio B. Garcia      Secretary, RSB Security Guard Union (FFW)

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(Sgd.) Mauro A. Rovillos      Member, Executive Committee, RSB Supervisors' Union (FFW)

          Copies of this letter were admittedly given to the chairman of the board of directors of the Bank, and the Governor of the Central Bank.

          At the instance of the respondents, prosecutor A. Tirona filed a complaint in the CIR on September 15, 1958, alleging that the Bank's conduct violated section 4(a) (5) of the Industrial Peace Act 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."

          The Bank moved for the dismissal of the complaint, contending that respondents were discharged not for union activities but for having written and published a libelous letter against the bank president. The court denied the motion on the basis of its decision in another case1 in which it ruled that section 4(a) (5) applies to cases in which an employee is dismissed or discriminated against for having filed "any charges against his employer." Whereupon the case was heard.

          In 1960, however, this Court overruled the decision of the CIR in the Royal Interocean case and held that "the charge, the filing of which is the cause of the dismissal of the employee, must be related to his right to self-organization in order to give rise to unfair labor practice on the part of the employer," because "under subsection 5 of section 4(a), the employee's (1) having filed charges or (2) having given testimony or (3) being about to give testimony, are modified by 'under this Act' appearing after the last item."2 The Bank therefore renewed its motion to dismiss, but the court held the motion in abeyance and proceeded with the hearing.

          On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair labor practice and ordering it to reinstate the respondents, with full back wages and without loss of seniority and other privileges. This decision was affirmed by the court en banc on August 9, 1962.

          Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter Paul v. CIR,4 the Bank argues that the court 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.

          It will avail the Bank none to gloat over this admission of the respondents. Assuming that the latter 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,5 interference with which constitutes an unfair labor practice under section 4(a)(1). This is the view of some members of this Court. For, as has been aptly stated, the joining in protests or demands, even by a small group of employees, if in furtherance of their interests as such, is a concerted activity

15

protected by the Industrial Peace Act. It is not necessary that union activity be involved or that collective bargaining be contemplated.6

          Indeed, when the respondents complained against nepotism, favoritism and other management practices, they were acting within an area marked out by the Act as a proper sphere of collective bargaining. Even the reference to immorality was not irrelevant as it was made to support the respondents' other charge that the bank president had failed to provide wholesome working conditions, let alone a good moral example, for the employees by practicing discrimination and favoritism in the appointment and promotion of certain employees on the basis of illicit relations or blood relationship with them.

          In many respects, the case at bar is similar to National Labor Relations Board v. Phoenix Mutual Life Insurance Co.7 The issue in that case was whether 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 cashier of that office had resigned. The ten agents employed there held a meeting and agreed to join in a letter to the home office objecting to the transfer to their branch office of a cashier from another branch office to fill the position. They discussed also the question whether to recommend the promotion of the assistant cashier of their office as the proper alternative. They then chose one of their number to compose a draft of the letter and submit it to them for further discussion, approval and signature. The agent selected to write the letter and another were discharged for their activities in this respect as being, so their notices stated, completely unpleasant and far beyond the periphery of their responsibility. In holding the company liable for unfair labor practice, the Circuit Court of Appeals said:

          A proper construction is that the employees shall have the right to engage in concerted activities for their mutual aid or protection even though no union activity be involved, for collective bargaining be contemplated. Here Davis and Johnson and other salesmen were properly concerned with the identity and capability of the new cashier. Conceding they had no authority to appoint a new cashier or even recommend anyone for the appointment, they had a legitimate interest in acting concertedly in making known their views to management without being discharged for that interest. The moderate conduct of Davis and Johnson and the others bore a reasonable relation to conditions of their employment. It was therefore an unfair labor practice for respondent to interfere with the exercise of the right of Davis and Johnson and the other salesmen to engage in concerted activities for their mutual aid or protection.

          Other members of this Court agreed with the CIR that the Bank's conduct violated section 4(a) (5) which makes it an unfair labor practice for an employer to dismiss an employee for having filed charges under the Act.

          Some other members of this Court believe, without necessarily expressing approval of the way the respondents expressed their grievances, that what the Bank 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 under section 4(a) (6). For 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

16

expeditiously and in good faith . . . for the purpose of adjusting any grievances or question arising under such agreement"8 and a violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair labor practice.9 As Professors Cox and Dunlop point out:

          Collective bargaining . . . normally takes the form of negotiations when major conditions of employment to be written into an agreement are under consideration and of grievance committee meetings and arbitration when questions arising in the administration of an agreement are at stake.10

          Instead of stifling criticism, the Bank should have allowed the respondents to air their grievances. Good faith bargaining required of the Bank an open mind and a sincere desire to negotiate over grievances.11 The grievance committee, created in the collective bargaining agreements, would have been an appropriate forum for such negotiation. Indeed, the grievance procedure is a part of the continuous process of collective bargaining.12 It is intended to promote, as it were, a friendly dialogue between labor and management as a means of maintaining industrial peace.

          The Bank defends its action by invoking its right to discipline for what it calls the respondents' libel in giving undue publicity to their letter-charge. To be sure, the right of self-organization of employees is not unlimited,13 as the right of an employer to discharge for cause14 is undenied. The Industrial Peace Act does not touch the normal exercise of the right of an employer to select his employees or to discharge them. It is directed solely against the abuse of that right by interfering with the countervailing right of self-organization.15 But the difficulty arises in determining whether in fact the discharges are made because of such a separable cause or because of some other activities engaged in by employees for the purpose of collective bargaining.16

          It is for the CIR, in the first instance, to make the determination, "to weigh the employer's expressed motive in determining the effect on the employees of management's otherwise equivocal act."17 For the Act does not undertake the impossible task of specifying in precise and unmistakable language each incident which constitutes an unfair labor practice. Rather, it leaves to the court the work of applying the Act's general prohibitory language in the light of infinite combinations of events which may be charged as violative of its terms.18 As the Circuit Court of Appeals puts it:

          Determining the legality of a dismissal necessarily involves an appraisal of the employer's motives. In these cases motivations are seldom expressly avowed and avowals are not always candid. There thus must be a measure of reliance on the administrative agency knowledgeable in labor-management relations and on the Trial Examiner who receives the evidence firsthand and is therefore in a unique position to determine the credibility of the witnesses. Where Examiner and Board are in agreement there is an increased presumption in favor of their resolution of the issue.19

          What we have just essayed underscores at once the difference between Royal Interocean and Lakas ng Pagkakaisa on the one hand and this case on the other. In Royal Interocean, the employee's letter to the home office, for writing which she was dismissed, complained of the

17

local manager's "inconsiderate and untactful attitude"20 — a grievance which, the court found, "had nothing to do with or did not arise from her union activities." Nor did the court find evidence of discriminatory discharge in Lakas ng Pagkakaisa as the letter, which the employee wrote to the mother company in violation of the local company's rule, denounced "wastage of company funds." In contrast, the express finding of the court in this case was that the dismissal of the respondents was made on account of the letter they had written, in which they demanded the resignation of the bank president for a number of reasons touching labor-management relations — reasons which not even the Bank's judgment that the respondents had committed libel could excuse it for making summary discharges21 in disregard of its duty to bargain collectively.

          In final sum and substance, this Court is in unanimity that the Bank's conduct, identified as an interference with the employees' right of self-organization, or as a retaliatory action, and/or as a refusal to bargain collectively, constituted an unfair labor practice within the meaning and intendment of section 4(a) of the Industrial Peace Act.

          ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962 of the Court of Industrial Relations are affirmed, at petitioner's cost.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ., concur.Bengzon, J.P., J., took no part.

Separate Opinions

FERNANDO, J., concurring:

          The opinion of the Court in this highly significant unfair labor practice case, one of first impression, easily commends itself for approval. The relevant facts are set forth in all fullness and with due care. The position of the Court united as it is on an unfair labor practice having been committed, but not quite fully agreed as to which particular subsection of the legal provision was violated, is delineated with precision. With the explicit acknowledgement there made that some members of the Court are of the belief that what was done by the Republic Bank here amounted to "interference" and with the writer being of the persuasion that it could be categorized in line with the statute as "interference, restraint or coercion," a few words as to why this view is entertained may not be inappropriate.

          No one can doubt that we are in the process of evolving an indigenous labor jurisprudence. Notwithstanding the clearly American background of the Industrial Peace Act, based as it is mainly on the Wagner Act,1 labor relations in the Philippines with their peculiar problems and the ingenuity of Filipino lawyers have resulted in a growing body of decisions notable for their suitability to local condition and their distinctly local flavor. This is as it should be.

18

          The present case affords one such instance. The wealth of adjudication by both judicial and administrative agencies in the United States notwithstanding the diligent and earnest search for a ruling based on a similar fact-situation yielded no case precisely in point. What does it signify? At the very least, it may indicate that while the problem posed could have arisen there, this particular response of labor was quite unique. On the assumption which I have here hypothetically made that there was indeed a valid cause for grievance, a more diplomatic approach could have been attempted. Or at the very least the procedure indicated for the adjustment of a grievance could have been followed. That was not done. What respondents did was to issue an ultimatum.

          Collective bargaining whether in its formative stage preparatory to a labor contract or in the adjustment of a labor problem in accordance with the procedure set forth in an existing agreement 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 appeared adamantine in their attitude to terminate the services of the then president of the Republic Savings Bank. Nor did they mince words in describing his alleged misdeeds. They were quite certain that he 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. Nor considering the explicit language of the Industrial Peace Act may such dismissal fall within the prohibition against dismissing employees for having filed charges or about to give testimony "under the Act." As a matter of fact, if the letter were indeed libelous, their dismissal would not have been unjustified. There was an admission as noted in the opinion "that the writing of the letter charged was not a 'union' action but merely their 'individual' act."

          Nonetheless, concurrence with the decision arrived at by the Court is called for in view of their mass dismissal. Under the circumstances, the supervisors union, the Republic Savings Bank employees union, the Republic Savings Bank security guards union, and the Republic Savings Bank supervisors union were left leaderless. For collective bargaining to be meaningful, there must be two parties, one representing management and the other representing the union. Nor could management select who would represent the latter or with whom to deal, otherwise in effect there would be only one party. Obviously there would then be no bargaining.1awphîl.nèt

          It is my view therefore that the dismissal amounted to "interference, restraint or coercion" as prohibited in the Industrial Peace Act. To repeat, this Section 4(a), with the exception of subsection (2), was taken from the Wagner Act. There is as stated by Bufford in his treatise for the Wagner Act "an overlap" as this particular subsection deals "with additional labor practice besides containing incidental provisions concerning related matters."2 As noted further by such commentator: "As expressed by the Senate Committee: 'The four succeeding unfair labor practices are designed not to impose limitations or restrictions upon the general guarantees of the first, but rather to spell out with particularity some of the practices that have been most prevalent and most troublesome.'"

19

          Teller is in agreement. This subsection according to him "involves the widest varieties of activities." The other unfair labor practices condemned fall within its terms. Thus: "That the Board has taken this position is evidenced both by the Board decisions and by express statement to such effect contained in its first annual report, the language of which in this connection is as follows: 'At the outset it should be explained that the Board has held that a violation by an employer of any of the other four subdivisions of Section 8 of the act is, by the same token, a violation of Section 8(1). Such a conclusion is too obvious to require explanation. In fact, almost all of the cases in which the Board has found a violation of Section 8(1) are cases in which the principal offense charged fell within some other subdivision of Section 8. The explanation for this is, apparently, that even though an employer may be engaging in anti-union activities in violation of Section 8(1), unions do not seek protection of the act until such activities take such drastic form as bring them within the provisions of some other subdivisions, as, for example, the discriminatory discharge of union members (which comes within subdivision [3]), the domination of or interference with the formation or administration of a labor organization (which comes within subdivision [2]). or a refusal to bargain collectively (which comes within subdivision [5]."3

          In the Philippines as in the United States then, the first subsection on "interference, restraint or coercion" covering as it does such a broad range of undesirable practices on the part of employers could easily be seized upon, where a borderline case, inimical to the right of self-organization or to collective bargaining, presents itself as justifying a finding of an unfair labor practice.1awphîl.nèt

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 169940               September 14, 2009

UNIVERSITY OF SANTO TOMAS, Petitioner, vs.SAMAHANG MANGGAGAWA NG UST (SM-UST), Respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari is the January 31, 2005 Decision1 of the Court of Appeals in CA-G.R. SP No. 72965, which affirmed the May 31, 2002 Order of the Secretary of the Department of Labor and Employment (DOLE) directing the parties to execute a Collective Bargaining Agreement incorporating the terms in said Order with modification that the signing bonus is increased to P18,000.00. Also assailed is the September 23, 2005 Resolution2 denying the motion for reconsideration.

20

Respondent Samahang Manggagawa ng U.S.T. (SM-UST) was the authorized bargaining agent of the non-academic/non-teaching rank-and-file daily- and monthly-paid employees (numbering about 619) of petitioner, the Pontifical and Royal University of Santo Tomas, The Catholic University of the Philippines (or UST), a private university in the City of Manila run by the Order of Preachers. In October 2001, during formal negotiations for a new collective bargaining agreement (CBA) for the academic year 2001 through 2006, petitioner submitted its "2001-2006 CBA Proposals" which, among others, contained the following economic provisions:

A. ACADEMIC YEAR 2001-2002

1. Salary increase of P800.00 per month

2. Signing bonus of P10,000.00

3. Additional Christmas bonus of P2,000.00

B. ACADEMIC YEAR 2002-2003

1. Salary increase of P1,500.00 per month

2. Additional Christmas bonus of P2,000.00

3. P6,000,000.00 for salary restructuring

C. ACADEMIC YEAR 2003-2004

1. Salary increase of P1,700.00 per month

2. Additional Christmas bonus of P2,000.00

In November 2001, the parties agreed in principle on all non-economic provisions of the proposed CBA, except those pertaining to Agency Contract or contractualization (Art. III, Sec. 3 of the proposed CBA), Union Leave of the SM-UST President (No. 4 of the Addendum to the proposed CBA), and hiring preference.

In December 2001, petitioner submitted its final offer on the economic provisions, thus:

A. ACADEMIC YEAR 2001-2002

1. Salary increase of P1,000.00 per month

2. Signing bonus of P10,000.00

3. Additional Christmas bonus of P2,000.00

B. ACADEMIC YEAR 2002-2003

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1. Salary increase of P1,700.00 per month

2. Additional Christmas bonus of P2,000.00

3. P6,190,000.00 to be distributed in the form of salary restructuring

C. ACADEMIC YEAR 2003-2004

1. Salary increase of P2,000.00 per month

2. Additional Christmas bonus of P2,000.00

On the other hand, respondent reduced its demands for the first year from P8,000.00 monthly salary increase per employee to P7,000.00, and from P75,000.00 signing bonus to P60,000.00 for each employee, but petitioner insisted on its final offer. As a result, respondent declared a deadlock and filed a notice of strike with the National Conciliation and Mediation Board -National Capital Region (NCMB-NCR).

Conciliation and mediation proved to be futile, such that in January 2002, majority of respondent’s members voted to stage a strike. However, the DOLE Secretary timely assumed jurisdiction over the dispute, and the parties were summoned and heard on their respective claims, and were required to submit their respective position papers.

On May 31, 2002, the DOLE Secretary issued an Order,3 the pertinent portions of which read, as follows:

x x x In arguing on the reasonableness of its demands, it cites the income of the school from tuition fee increases and the allocation of this amount to the faculty and non-teaching employees of the School x x x. According to the Union, the School’s estimate of the tuition fee increase for the school year 2003-2004 at P76,410,000.00 is erroneous. The Union argues that the total income of the School from tuition fee increases for school year 2003-2004 is P101,000,000.00 more or less, or a net of P98,252,187.36, after deducting adjustments for additional charges, allowances and discounts. This is based on the computation of the School’s Assistant Chief Accountant x x x.

x x x x

The Union feels that the members of the bargaining unit are the least favored. On the wage increases alone, the Union points out that a comparison of the average monthly salary of the non-academic personnel from school year 1995-1996 up to school year 1999-2000 shows a declining relative percentage. For this period, the bargaining unit enjoyed an average monthly salary increase of 14.234%, the lowest being 8.9% in school year 1998-1999 and the highest being 15.38% in school year 1995-1996. The School’s offer for this CBA cycle translates to an increase of only 8.23%, specified as follows: (1) 5.69% increase in school year 2000-2001 (P1,000.00); (2) 9.15% increase in school year 2001-2002 (P1,700.00); and (3) 9.86% increase in 2002-2003 (P2,000.00).

22

The Union also submits a comparative chart of the allocation to non-academic personnel of the 70% increase in tuition fees from school year 1996-1997 to 1999-2000 x x x. The average percentage allocation to non-academic personnel during this period is 32.8% of the total 70% of total tuition fee increases, the lowest being 20.83% for the school year 1999-2000 and the highest being 43.11% of the total allocation in 1997-1998. Using P101,036,330.37 as the estimated increase in tuition fee, 70% of this amount, net of adjustment, is P68,775,831.15 x x x. The Union argues that it is entitled to at least the average percentage of allocation to it for the past four (4) school years which is at 32.85%, or P22,592,860.53 of the total allocation of P68,775,831.15.

It maintains, however, that it is entitled to more than the average percentage of its allocation of the total 70% because it is School practice to allocate more than 70% of the total tuition fee increases for the salaries and benefits of School employees. Comparing the employees’ share in the tuition fee increases from school year 1996-1997 to 1999-2000, the School allocated an average percentage of 76.75% for the benefits and salaries of its personnel, or from a low of 72% in 1998-1999 to a high of 84.4% in 1996-1997 x x x. If the average is applied this year, the Union argues that the available amount is P75,407,786.29. Because of this practice, the Union maintains that the School is already estopped from arguing that the allocation for employee wages and benefits should not exceed 70% of tuition fee increases.

Aside from this amount, the Union maintains that it is entitled to an additional P15,475,000.00, sourced from other income, for the signing bonus or one-time grant of P25,000.00 per member x x x. The Union alleges that it is school practice to appropriate other funds for the wages and benefits of its employees. For the school year 1996-1997, the School used funds from other sources to fund the P2,000,000.00 hospitalization fund and 50% of the signing bonus for the academic personnel; in 1997-1998 and 1998-1999, it used additional funds for the P1,000,000.00 hospitalization fund of the academic personnel; and in 1999-2000, it used other funds to finance the one-time grant of P10,000.00 each to the non-academic personnel and additional P4,000,000.00 for the hospitalization fund of the academic employees or a total of P17,592,500.00 for the past four (4) academic years x x x.

The School cannot claim that the funds are insufficient to cover the expenses for the CBA because for the fiscal year 2000-2001 alone, the accumulated excess of revenues over expenses at the end of the year totaled P148,881,678.00 x x x. The Statement of Revenues and Expenses from School Operations collated from the audited Financial Statements of the School for the school years 1996-1997 up to 2000-2001 shows that except for school years 1996-1997 and 2000-2001, the School posted a net income from school operations. Its average annual net income from school operations alone is P7,956,187.00 and the net loss in 2000-2001 was a result of the revaluation of the Main Building as part of the assets from its fully depreciated value so that a new depreciation cost was reported and charged to general expenses.

From the foregoing arguments, the Union demands that an amount should be allocated to it annually to finance its demands as follows:

1st Year – P38,067,860.00 distributed as follows: P22,592,860.53 (share from tuition fee increases) for the economic benefits with sliding effect on the succeeding years; plus

23

P15,475,000.00 for the one-time signing bonus of P25,000.00 for each employee sourced from other funds.

2nd Year – P33,568,970.00 to apply to its demand for salary increase, Christmas bonus, rice subsidy and clothing/uniform allowance.

3rd Year – P46,653,295.37 to apply to its demand for salary increase, Christmas bonus, medicine allowance, mid-year bonus allowance and meal allowance.

Based on the Union’s computation, its demands will cost the School a total of P133,765,125.37 for the entire three (3) year period.

x x x x

Given all the foregoing, we cannot follow the Union’s formula and in effect disregard the School’s two other bargaining units; to do so is a distortion of economic reality that will not bring about long term industrial peace. We cannot simply adopt the School’s proposal in light of the parties’ bargaining history, particularly the pattern of increases in the last cycle. Considering all these, we believe the following to be a fair and reasonable resolution of the wage issue.

1st Year – P1,000.00/month

2nd Year – P2,000.00/month

3rd Year – P2,200.00/month

These increases, at a three-year total of P68,337,600, are less than the three (3)-year increases in the last CBA cycle to accommodate the School’s proven lack of capacity to afford a higher increase, but are still substantial enough to accommodate the workers’ needs while taking into account the symmetry that must be maintained with the wages of the other bargaining units. On a straight line aggregate of P5,200.00, the non-academic personnel will receive P498.48 less than an Instructor I (member of the faculty union) who received an aggregate of P5,698.48, thus maintaining the gap between the teaching and non-teaching personnel. The salary difference will as well be maintained over the three (3)-year period of the CBA. An RFI employee (member of the union’s bargaining unit) will receive a monthly salary of P21,695.95 while an Instructor I (faculty union member) will have a salary of P22,948.00; while an RF5-5/A (member of the union’s bargaining unit) will receive a salary of P23,462.97 compared to an Asst. Prof. 1 (faculty) who will receive P29,250.96. From a total cost of salary increases for the first year at P7,428,000, these costs will escalate to P22,284,000 in the second year, and to P38,625,000 at the third year. Given these figures, the amounts available for distribution and the member of groups sharing these amounts, these increases are by no means minimal.

Signing Bonus

A review of the past bargaining history of the parties shows that the School as a matter of course grants a signing bonus. This ranged from P8,000.00 during the first three (3) years of the last

24

CBA to P10,000.00 during the remaining two (2) years of the re-negotiated term. In this instance, the School’s offer of P10,000.00 signing bonus is already reasonable considering that the School could have taken the position that no signing bonus is due on compulsory arbitration in line with the ruling in Meralco v. Quisumbing et al., G.R. No. 127598, 27 January 1999.

Christmas Bonus

We note that the members of the bargaining unit receive a P6,500.00 Christmas bonus. Considering this current level, we believe that the School’s offer of P2,000.00 for each of the next three (3) years of the CBA is already reasonable. Under this grant, the workers’ Christmas bonus will stand at a total of P12,500 at the end of the third year.

Hospitalization Benefit

We believe that the current practice is already reasonable and should be maintained.

Meal Allowance

The Union failed to show any justification for its demand on this item, hence its demand on the increase of meal allowance is denied.

Rice Allowance

We believe an additional 2 sacks of rice on top of the existing 6 sacks of rice is reasonable and is hereby granted, effective on the second year.

Medical Allowance

In the absence of any clear justification for an improvement of this benefit, we find the existing practice to be already reasonable and should be maintained.

Uniform/Clothing

The Union has not established why the School should grant the benefit; hence this demand is denied.

Mid-year Bonus

The P3,000.00 bonus is already fair and should be maintained.

Hazard Pay

There is no basis to increase this benefit, the current level being fair and reasonable.

Educational Benefit

25

The existing provision is already generous and should be maintained.

Retirement Plan

We are convinced that the 100% of basic salary per year of service is already reasonable and should be maintained.

Hiring Preference

Based on the Minutes of Meeting on 18 October 2001 and 8 November 2001, the parties agreed to retain the existing provision; hence, our ruling on this matter is no longer called for.

Contractualization

The Union’s proposed amendments are legal prohibitions which need not be incorporated in the CBA. The Union has alternative remedies if it desires to assail the School’s contracts with agencies.

Full-time Union Leave of Union President

The Union failed to provide convincing reasons why this demand should be favorably granted; hence, the same is denied.

Other Demands

All other demands not included in the defined deadlock issues are deemed abandoned, except for existing benefits which the School shall continue to grant at their current levels consistent with the principle of non-diminution of benefits.

WHEREFORE, premises considered, the parties are hereby directed to execute within ten (10) days from receipt of this Order a Collective Bargaining Agreement incorporating the terms and conditions of this Order as well as other agreements made in the course of negotiations and on conciliation.4

Respondent filed a motion for reconsideration but it was denied by the Secretary of Labor. Thus, respondent filed an original petition for certiorari with the Court of Appeals, claiming that the awards made by the DOLE Secretary are not supported by the evidence on record and are contrary to law and jurisprudence.

On January 31, 2005, the appellate court rendered the assailed Decision, the dispositive portion of which reads, as follows:

WHEREFORE, premises considered, the petition is partially GRANTED. The assailed Order of May 31, 2002 of Secretary Patricia Sto. Tomas is hereby AFFIRMED with the modification that the P10,000.00 signing bonus awarded is increased to P18,000.00.

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SO ORDERED.5

In arriving at the foregoing disposition, the appellate court noted that:

Based on UST Chief Accountant Antonio J. Dayag’s Certification, the tuition fee increment for the SY 2001-2002 amounted to P101,036,330.37. From this amount, the tuition fee adjustment amounting to P2,785,143.00 was deducted leaving a net tuition fee increment of P98,251,189.36.

Pursuant to Section 5 (2) RA 6728, seventy percent (70%) of P98,251,187.36 or P68,775,831.15 is the amount UST has to allocate for salaries, wages, allowances and other benefits of its 2,290 employees, categorized as follows: 619 non-teaching personnel represented by herein petitioner SM-UST; 1,452 faculty members represented by UST-Faculty Union (UST-FU) and 219 academic/administrative officials. The last group of employees is excluded from the coverage of the two bargaining units.

Public respondent, taking into consideration the bargaining history of the parties, the needs of the members of Union in relation to the capability of its employer, UST, to grant its demands, the impact of the award on the UST-Faculty Union members (UST-FU), and how the present salary and benefits of the non-academic personnel compare with the compensation of the employees of other learning institutions, arrived at the following "fair and reasonable" resolution to the wage issue:

1st year – P1,000.00/month

2nd year – P2,000.00/month

3rd year – P2,000.00/month

Based on public respondent’s arbitral award for the first year (AY 2001-2002), We determine the allocation that SM-UST would get from the 70% of the tuition fee increment for AY 2001-2002 by approximating UST’s expense on the increment of salaries/wages, allowances and benefits of the non-teaching personnel:

1. Increment on Salaries/Wages + 13th month pay (P1,000 x 13 months x 619 employees)

P 8,047,000.00

2. Signing Bonus(P10,000/employee)

6,190,000.00

3. P2,000 Christmas Bonus 1,238,000.00

Total P15,475,000.00=============

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The amount of P15,475,000.00 represents 22.50% of the allocated P68,775,831.00 (70% of the tuition fee increment for AY 2001-2002). UST has allocated P45 million or 65.43% of the P68,775,831 to UST-Faculty Union.

Is the distribution equitable? If the share from the allocated P68,775,831.00 for each bargaining unit would be based on the union’s membership, then the distribution appears fair and reasonable:

x x x x

Academic 1,452 employees awarded P45 million

Non-academic 619 employees awarded P15.475 million

Academic &Administrative 219 employees awarded P8 million

Total awarded P68,475,000.00

The difference between P68,775,831 (70% of incremental tuition fee proceeds) and P68,475,000 (total actual allocation or award to the two bargaining units and the school officials) is P300,831.00, which is only .437% of the 70% mandatory allocation (P68,775,831.00).

The Supreme Court in the case of Cebu Institute of Medicine v. Cebu Institute of Medicine Employees’ Union National Federation of Labor held that SSS, Medicare and Pag-Ibig employer’s share may be charged against the "seventy percent (70%) incremental tuition fee increase (sic)" as they are, after all, for the benefit of the University’s teaching and non-teaching personnel. The High Court further ruled that "the private educational institution concerned has the discretion on the disposition of the seventy percent (70%) incremental tuition fee increase (sic). It enjoys the privilege of determining how much increase in salaries to grant and the kind and amount of allowances and other benefits to give. The only precondition is that seventy percent (70%) of the incremental tuition fee increase (sic) goes to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel."a1f

In the (sic) light of the foregoing jurisprudence, the University, in order to comply with R.A. 6728, must fully allocate the 70% of the tuition fee increases to salaries, wages, allowances and other benefits of the teaching and non-teaching personnel. The amount of P300,831.00 must therefore be allocated either as salary increment or fringe benefits of the non-teaching personnel.

We noted that UST’s non-teaching employees enjoy several fringe benefits.

We listed them down and estimated their costs for AY 2001-2002:

1. P3,000.00 mid-year bonus P1,857,000.00

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2. 6 sacks of rice/employee @ P1,000.00/sack 3,714,000.00

3. Hospitalization benefit 2,476,000.00

4. Meal allowance(P600/month/employee) 4,456,800.00

5. Hazard pay (P200/month for198 entitled employees) 8,430,780.00

6. Medicine Allowance(P1,000/month/employee) 7,428,000.00 20,407,000.00

7. SSS (P910.00 employer’sshare per employee) 6,759,480.00

8. Pag-Ibig (2% of the basic pay) 742,800.00

9. Phil Health (P125.00/employee) 928,500.00  

TotalP28,837,780.00=============

The allocation for salary increases, 13th month pay, signing bonus and Christmas bonus for UST’s teaching and non-teaching employees, as well as the school officials, amount to P68.475 million. This represents almost 70% of the UST incremental tuition fee proceeds for AY 2001-2002. Considering the fringe benefits being extended to UST employees, it is safe to assume that the funds for such benefits need to be sourced from the University’s other revenues. We looked into UST’s financial statements to determine its financial standing. The financial statements duly audited by independent and credible external auditors constitute the normal method of proof of profit and loss performance of a company. We examined UST audited financial statements from 1997 to 2001 and found that the University’s "other incomes" come from parking fees, rent income and interest income. It, likewise, derives income from school operations:

1999 2000 2001

Income fromOperations P19,874,937.00 (24,222,602) (40,905,598)

Other Income 85,995,039.00 77,335,032.00 78,358,303

Excess of Revenues OverExpenses BeforeIncome Tax 96,869,976.00 53,112,480.00 (29,726,651)

Provision forIncome Tax 2,122,518.00 2,602,305.00

Excess of Revenues 94,747,458.00 50,510,175.00 (32,115,272)

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Over Expenses

ACCUMULATEDEXCESS OFREVENUES OVEREXPENSES ATEND OF YEAR P180,996,950.00 P130,486,775.00 P148,881,678

Thus, if We charge the employees’ other benefits from the accumulated excess of revenues, We will come up with the following:

Accumulated Excess of RevenuesOver Expenses (2001) P148,881,678.00

Less:Other Benefits of Non-Teaching Personnel 28,837,780.00

Balance P120,043,898.00

Even if the other benefits of the faculty members were to be charged from the remaining balance of the Accumulated Excess of Revenues Over Expenses, there would still be sufficient amount to fund the other benefits of the non-teaching personnel.

x x x x

However, while We subscribe to UST’s position on "salary distortion", Our earlier findings support the petitioner’s contention that the UST has substantial accumulated income and thus, We deem it proper to award an increase, not in salary, to prevent any salary distortion, but in signing bonus. The arbitral award of P10,000 signing bonus per employee awarded by public respondent is hereby increased to P18,000.00.

We are well aware of the need for the University to maintain a sound and viable financial condition in the light of the decreasing number of its enrollees and the increasing costs of construction of buildings and modernization of equipment, libraries, laboratories and other similar facilities. To balance this concern of the University with the need of its non-academic employees, the additional award, which We deem reasonable, and to be funded from the University’s accumulated income, is thus limited to the increase in signing bonus.6

Petitioner filed a motion for reconsideration, which the appellate court denied in its September 23, 2005 Resolution. Hence, the instant petition which raises the following issues:

I.

THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE WHEN IT RULED THAT THE MEMBERS OF PRIVATE RESPONDENT DID

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NOT VOLUNTARILY AND KNOWINGLY ACCEPT THE ARBITRAL AWARD OF THE SECRETARY OF DOLE.

II.

THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT INCREASED THE SIGNING BONUS AWARDED BY THE SECRETARY OF DOLE TO EACH OF THE MEMBERS OF PRIVATE RESPONDENT FROM P10,000.00 TO P18,000.00.

III.

THE HONORABLE COURT OF APPEALS HAS COMPLETELY IGNORED THE CLEAR MANDATE AND INTENTION OF R.A. 6728 OTHERWISE KNOWN AS THE GOVERNMENT ASSISTANCE TO STUDENTS AND TEACHERS IN PRIVATE EDUCATION ACT.

IV.

THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT RULED THAT THE FRINGE BENEFITS BEING ENJOYED BY THE ACADEMIC AND NON-ACADEMIC EMPLOYEES OF PETITIONER WERE SOURCED OUT FROM ITS OTHER INCOME.

V.

THE HONORABLE COURT OF APPEALS COMMITTED PALPABLE ERROR OF SUBSTANCE AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT IGNORED THE TIME HONORED PRINCIPLES GOVERNING PETITION FOR CERTIORARI INVOLVING LABOR CASES.7

Petitioner alleges that, as of December 11, 2002, 526 regular non-academic employees – out of a total of 619 respondent’s members – have decided to unconditionally abide by the May 31, 2002 Order of the DOLE Secretary.8 A letter signed by the 526 non-academic employees allegedly reads:

December 3, 2002

TO: REV. FR. TAMERLANE R. LANA, O.P.Rector

REV. FR. JUAN V. PONCE, O.P.Vice-Rector

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KAMI NA NAKALAGDA SA IBABA AY NAGPAPAABOT NG AMING TAHASANG PAGTANGGAP SA AWARD NG SECRETARY OF LABOR SA AMING (CBA) DEADLOCK CASE.

SANA PO AY MA-RELEASE ANG AMING MGA WAGE ADJUSTMENTS AT IBA PANG BENEPISYO BAGO MAG DECEMBER 15, 2002.

x x x x9

Petitioner claims that it began paying the wage adjustment and other benefits pursuant to the May 31, 2002 Order of the DOLE Secretary; and that to date, 572 out of the 619 members of respondent have been paid. It now argues that by their acceptance of the award and the resulting payments made to them, the said union members have ratified its offer and thus rendered moot the case before the Court of Appeals (CA-G.R. SP No. 72965).

Petitioner also argues that the Court of Appeals erred in ordering it to source part of its judgment award from the school’s other income, claiming that Republic Act 672810 does not compel or require schools to allocate more than 70% of the incremental tuition fee increase for the salaries and benefits of its employees. Citing an authority in education law, it stresses that –

Clearly, only 70% may be used for the "payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel," since 20% "shall go to the improvement or modernization of buildings, equipment, libraries, laboratories, gymnasia and similar facilities and the payment of other costs of operation."

A school does not exist solely for the benefit of its teachers and non-teaching personnel. A school is principally established to deliver quality education at all levels, as the Constitution requires. Therefore, any tuition fee increase authorized by either the DepEd Secretary, the CHED or the Director General of the TESDA for private schools should not solely benefit the teaching and non-teaching personnel but should rather be used for the welfare of the entire school community, particularly the students. The students are entitled as a matter of right to the improvement and modernization of the school "buildings, equipment," as this is fundamental to the maintenance or improvement of the quality of education they receive.

Thus, if schools use any part of the 20% reserved for the upgrading of school facilities to supplement the salaries of their academic and non-academic personnel, they would not only be violating the students’ constitutional right to quality education through "improvement and modernization" but also committing a serious infraction of the mandatory provisions of RA 6728.

The law is silent, however, on the remaining ten percent of the tuition fee increase. The DepEd has referred to it as the "return of investment" for proprietary schools and the "free portion" for non-stock, non-profit educational institutions. This ten percent (10%) is the only portion of the tuition fee increase which schools may use as they wish.11

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Petitioner thus concedes liability only up to P300,831.00, which is the remaining balance of the undistributed amount of P68,775,831.00, which represents 70% of the incremental tuition fee proceeds for the period in question.

Petitioner contends further that the appellate court’s award of additional signing bonus (from P10,000.00 to P18,000.00) is contrary to the nature and principle behind the grant of such benefit, which is one given as a matter of discretion and cannot be demanded by right,12 a consideration paid for the goodwill that existed in the negotiations, which culminate in the signing of a CBA.13 Petitioner claims that since this condition is absent in the parties’ case, it was erroneous to have rewarded respondent with an increased signing bonus.

Finally, petitioner endorses the original award of the DOLE Secretary, calling her disposition of the case "fair and equitable"14 and deserving of our attention, in light of the principle that –

The conclusions reached by public respondent (Secretary of Labor) in the discharge of her statutory duty as compulsory arbitrator, demand the high respect of this Court. The study and settlement of these disputes fall within public respondent's distinct administrative expertise. She is especially trained for this delicate task, and she has within her cognizance such data and information as will assist her in striking the equitable balance between the needs of management, labor, and the public. Unless there is clear showing of grave abuse of discretion, this Court cannot and will not interfere with the labor expertise of public respondent x x x.15

On the other hand, respondent seeks to sustain the appellate court’s disposition, echoing its ruling that even though majority of the non-teaching employees agreed to petitioner’s offer and accepted payment thereupon, they are not precluded from receiving additional benefits that the courts may award later on, bearing in mind that –

the employer and the employee do not stand on the same footing. Considering the country’s prevailing economic conditions, the employee oftentimes finds himself in no position to resist money proffered, thus, his case becomes one of adherence and not of choice. This being the case, they are deemed not to have waived any of their rights.16

As regards petitioner’s assertion that the funds to cover for the cost of the other benefits awarded by the DOLE Secretary may not be sourced from its other income pursuant to R.A. 6728 as these benefits should only be paid out from the 70% tuition fee increment, respondent argues that R.A. 6728 –

does not provide that the increase or improvement of the salaries and fringe benefits of the employees should be exclusively funded from the income of the University which is derived from the increase in tuition fees. In fact, the statute has no application with respect to the manner of disposition of the other incomes (as distinguished from income derived from tuition fee increases) of the University, nor does it preclude or exempt the latter from using its other income or part thereof to fund the cost of increases or improvements in the salaries and benefits of its employees. x x x

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15. Contrary to the assertion of Petitioner, it is very clear that the funds used by the University to cover the cost of other fringe benefits (under the existing CBA) granted to the non-academic employees for AY 2001-2002 in the amount of P28,837,780.00 as observed by the Court of Appeals, came from the other income of the University and not from the share of the said employees in the income derived from the tuition fee increases during the same period. Logically, the grant of the said fringe benefits could not have come from the amount of P15,475,000.00 which was already allocated by the University to cover the total cost of the increases in the salaries, grant of signing bonus, and increase in the Christmas bonus to the non-academic employees for AY 2001-2002.17

On the appellate court’s award of additional signing bonus, respondent argues that since no strike or any untoward incident occurred, goodwill between the parties remained, which entitles respondent’s members to receive their signing bonus. Besides, respondent asserts that since petitioner did not appeal the DOLE Secretary’s award, it may not now argue against its grant, the issue remaining being the propriety of the awarded amount; that is, whether or not it was proper for the appellate court to have raised it from P10,000.00 to P18,000.00.

We resolve to PARTIALLY GRANT the petition.

To put matters in their proper context, we must first simplify the facts.

Although the parties were negotiating on the CBA for academic years 2001 through 2006 (2001-2006 CBA Proposals), we are here concerned only with the economic provisions for the academic year (AY) 2001-2002, specifically the appellate court’s increased award of signing bonus, from P10,000.00 as originally granted by the DOLE Secretary, to P18,000.00; the parties do not appear to question any other disposition made by the DOLE Secretary.

Thus, it has been determined that from the tuition fees for the academic year in question, petitioner earned an increment of P101,036,330.37. Under R.A. 6728, 70% of that amount – or the net18 amount of P68,775,831.15 – should be allotted for payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel except administrators who are principal stockholders of the school.

Of this amount (P68,775,831.15), an aggregate of P15,475,000.00 (or 22.5 %) was allocated to the university’s non-teaching or non-academic personnel, by way of the following:

Increment on Salaries/Wagesplus 13th month pay(P1,000 x 13 months x 619non-academic personnel)

P 8,047,000.00

Signing Bonus(P10,000 per employee)

6,190,000.00

P2,000 Christmas Bonus 1,238,000.00

TOTAL

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15,475,000.00

On the other hand, the amount of P45 million (or 65.43% of P68,775,831.15) was allocated to the teaching personnel.

After distribution of the respective shares of the teaching and non-teaching personnel, there remained a balance of P300,831.00 from the P68,775,831.15.

In addition to the salary increase, signing and Christmas bonuses, the Court of Appeals extended to respondent’s members the following fringe benefits for AY 2001-2002, which benefits petitioner has been giving its non-teaching employees in the past, and which are included in the DOLE Secretary’s award – an award which petitioner prays for this Court to affirm in toto:

1. P3,000.00 mid-year bonus P1,857,000.00

2. 6 sacks of rice/employee @ P1,000/sack 3,714,000.00

3. Hospitalization benefit 2,476,000.00

4. Meal allowance(P600/month/employee)

4,456,800.00

5. Hazard pay (P200/month for198 entitled employees)

8,430,780.00

6. Medicine Allowance(P1,000/month/employee) 7,428,000.00 20,407,000.00

7. SSS (P910.00 employer’sshare per employee)

6,759,480.00

8. Pag-Ibig (2% of the basic pay) 742,800.00

9. Philhealth (P125.00/employee) 928,500.00

Total P28,837,780.00

Clearly, these fringe benefits would have to be obtained from sources other than the incremental tuition fee proceeds (P68,775,831.15), since only P15,475,000.00 thereof was set aside for the non-teaching personnel; the rest was allocated to the teaching personnel.

The appellate court, moreover, granted an increase in the signing bonus, that is, from the DOLE Secretary’s award of P10,000.00, to P18,000.00. This, exactly, is the parties’ point of contention.

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Going now to the question of whether respondent’s members’ individual acceptance of the award and the resulting payments made by petitioner operate as a ratification of the DOLE Secretary’s award which renders CA-G.R. SP No. 72965 moot, we find that such do not operate as a ratification of the DOLE Secretary’s award; nor a waiver of their right to receive further benefits, or what they may be entitled to under the law. The appellate court correctly ruled that the respondent’s members were merely constrained to accept payment at the time. Christmas was then just around the corner, and the union members were in no position to resist the temptation to accept much-needed cash for use during the most auspicious occasion of the year. Time and again, we have held that necessitous men are not, truly speaking, free men; but to answer a present emergency, will submit to any terms that the crafty may impose upon them.19

Besides, as individual components of a union possessed of a distinct and separate corporate personality, respondent’s members should realize that in joining the organization, they have surrendered a portion of their individual freedom for the benefit of all the other members; they submit to the will of the majority of the members in order that they may derive the advantages to be gained from the concerted action of all.20 Since the will of the members is personified by its board of directors or trustees, the decisions it makes should accordingly bind them. Precisely, a labor union exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.21 What the individual employee may not do alone, as for example obtain more favorable terms and conditions of work, the labor organization, through persuasive and coercive power gained as a group, can accomplish better.1avvphi1

Regarding petitioner’s assertion that it was unlawful for the Court of Appeals to have required it to source the award of fringe benefits (in the amount of P28,837,780.00) from the school’s other income, since R.A. 6728 does not compel or require schools to allocate more than 70% of the incremental tuition fee increase for the salaries and benefits of its employees, we find it unnecessary to rule on this matter. These fringe benefits are included in the DOLE Secretary’s award – an award which petitioner seeks to affirm in toto; this being so, it cannot now argue otherwise. Since it abides by the DOLE Secretary’s award, which it finds "fair and equitable," it must raise the said amount through sources other than incremental tuition fee proceeds.

Finally, we come to the appellate court’s award of additional signing bonus, which we find to be unwarranted under the circumstances. A signing bonus is a grant motivated by the goodwill generated when a CBA is successfully negotiated and signed between the employer and the union.22 In the instant case, no CBA was successfully negotiated by the parties. It is only because petitioner prays for this Court to affirm in toto the DOLE Secretary’s May 31, 2002 Order that we shall allow an award of signing bonus. There would have been no other basis to grant it if petitioner had not so prayed. We shall take it as a manifestation of petitioner’s liberality, which we cannot now allow it to withdraw. A bonus is a gratuity or act of liberality of the giver;23 when petitioner filed the instant petition seeking the affirmance of the DOLE Secretary’s Order in its entirety, assailing only the increased amount of the signing bonus awarded, it is considered to have unqualifiedly agreed to grant the original award to the respondent union’s members.

WHEREFORE, the petition is PARTIALLY GRANTED. The signing bonus of EIGHTEEN THOUSAND PESOS (P18,000.00) per member of respondent Samahang Manggagawa ng

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U.S.T. as awarded by the Court of Appeals is REDUCED to TEN THOUSAND PESOS (P10,000.00). All other findings and dispositions made by the Court of Appeals in its January 31, 2005 Decision and September 23, 2005 Resolution in CA-G.R. SP No. 72965 are AFFIRMED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 186965               December 23, 2009

TEMIC AUTOMOTIVE PHILIPPINES, INC., Petitioner, vs.TEMIC AUTOMOTIVE PHILIPPINES, INC. EMPLOYEES UNION-FFW, Respondent.

D E C I S I O N

BRION, J.:

We resolve the present petition for review on certiorari[1] filed by Temic Automotive Philippines Inc. (petitioner) to challenge the decision2 and resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 99029.4

The Antecedents

The petitioner is a corporation engaged in the manufacture of electronic brake systems and comfort body electronics for automotive vehicles. Respondent Temic Automotive Philippines, Inc. Employees Union-FFW (union) is the exclusive bargaining agent of the petitioner's rank-and-file employees. On May 6, 2005, the petitioner and the union executed a collective bargaining agreement (CBA) for the period January 1, 2005 to December 31, 2009.

The petitioner is composed of several departments, one of which is the warehouse department consisting of two warehouses - the electronic braking system and the comfort body electronics. These warehouses are further divided into four sections - receiving section, raw materials warehouse section, indirect warehouse section and finished goods section. The union members are regular rank-and-file employees working in these sections as clerks, material handlers, system encoders and general clerks. Their functions are interrelated and include: receiving and recording of incoming deliveries, raw materials and spare parts; checking and booking-in deliveries, raw materials and spare parts with the use of the petitioner's system application processing; generating bar codes and sticking these on boxes and automotive parts; and issuing or releasing spare parts and materials as may be needed at the production area, and piling them up by means of the company's equipment (forklift or jacklift).

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By practice established since 1998, the petitioner contracts out some of the work in the warehouse department, specifically those in the receiving and finished goods sections, to three independent service providers or forwarders (forwarders), namely: Diversified Cargo Services, Inc. (Diversified), Airfreight 2100 (Airfreight) and Kuehne & Nagel, Inc. (KNI). These forwarders also have their own employees who hold the positions of clerk, material handler, system encoder and general clerk. The regular employees of the petitioner and those of the forwarders share the same work area and use the same equipment, tools and computers all belonging to the petitioner.

This outsourcing arrangement gave rise to a union grievance on the issue of the scope and coverage of the collective bargaining unit, specifically to the question of "whether or not the functions of the forwarders’ employees are functions being performed by the regular rank-and-file employees covered by the bargaining unit."5 The union thus demanded that the forwarders' employees be absorbed into the petitioner's regular employee force and be given positions within the bargaining unit. The petitioner, on the other hand, on the premise that the contracting arrangement with the forwarders is a valid exercise of its management prerogative, posited that the union's position is a violation of its management prerogative to determine who to hire and what to contract out, and that the regular rank-and-file employees and their forwarders’ employees serving as its clerks, material handlers, system encoders and general clerks do not have the same functions as regular company employees.

The union and the petitioner failed to resolve the dispute at the grievance machinery level, thus necessitating recourse to voluntary arbitration. The parties chose Atty. Roberto A. Padilla as their voluntary arbitrator. Their voluntary arbitration submission agreement delineated the issues to be resolved as follows:

1. Whether or not the company validly contracted out or outsourced the services involving forwarding, packing, loading and clerical activities related thereto; and

2. Whether or not the functions of the forwarders' employees are functions being performed by regular rank-and-file employees covered by the bargaining unit.6

To support its position, the union submitted in evidence a copy of the complete manpower complement of the petitioner's warehouse department as of January 3, 20077 showing that there were at the time 19 regular company employees and 26 forwarder employees. It also presented the affidavits8 of Edgardo P. Usog, Antonio A. Muzones, Endrico B. Dumolong, Salvador R. Vargas and Harley J. Noval, regular employees of the petitioner, who deposed that they and the forwarders’ employees assigned at the warehouse department were performing the same functions. The union also presented the affidavits of Ramil V. Barit9 (Barit), Jonathan G. Prevendido10 (Prevendido) and Eduardo H. Enano11 (Enano), employees of forwarder KNI, who described their work at the warehouse department.

In its submission,12 the petitioner invoked the exercise of its management prerogative and its authority under this prerogative to contract out to independent service providers the forwarding, packing, loading of raw materials and/or finished goods and all support and ancillary services (such as clerical activities) for greater economy and efficiency in its operations. It argued that in

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Meralco v. Quisumbing13 this Court explicitly recognized that the contracting out of work is an employer proprietary right in the exercise of its inherent management prerogative.

The forwarders, the petitioners alleged, are all highly reputable freight forwarding companies providing total logistics services such as customs brokerage that includes the preparation and processing of import and export documentation, cargo handling, transport (air, land or sea), delivery and trucking; and they have substantial capital and are fully equipped with the technical knowledge, facilities, equipment, materials, tools and manpower to service the company's forwarding, packing and loading requirements. Additionally, the petitioner argued that the union is not in a position to question its business judgment, for even their CBA expressly recognizes its prerogative to have exclusive control of the management of all functions and facilities in the company, including the exclusive right to plan or control operations and introduce new or improved systems, procedures and methods.

The petitioner maintained that the services rendered by the forwarders’ employees are not the same as the functions undertaken by regular rank-and-file employees covered by the bargaining unit; therefore, the union’s demand that the forwarders’ employees be assimilated as regular company employees and absorbed by the collective bargaining unit has no basis; what the union asks constitutes an unlawful interference in the company's prerogative to choose who to hire as employees. It pointed out that the union could not, and never did, assert that the contracting-out of work to the service providers was in violation of the CBA or prohibited by law.

The petitioner explained that its regular employees' clerical and material handling tasks are not identical with those done by the service providers; the clerical work rendered by the contractors are recording and documentation tasks ancillary to or supportive of the contracted services of forwarding, packing and loading; on the other hand, the company employees assigned as general clerks prepare inventory reports relating to its shipments in general to ensure that the recording of inventory is consistent with the company's general system; company employees assigned as material handlers essentially assist in counter-checking and reporting activities to ensure that the contractors' services comply with company standards.

The petitioner submitted in evidence the affidavits of Antonio Gregorio14 (Gregorio), its warehouse manager, and Ma. Maja Bawar15 (Bawar), its section head.

The Voluntary Arbitration Decision

In his decision of May 1, 2007,16 the voluntary arbitrator defined forwarding as a universally accepted and normal business practice or activity, and ruled that the company validly contracted out its forwarding services. The voluntary arbitrator observed that exporters, in utilizing forwarders as travel agents of cargo, mitigate the confusion and delays associated with international trade logistics; the company need not deal with many of the details involved in the export of goods; and given the years of experience and constant attention to detail provided by the forwarders, it may be a good investment for the company. He found that the outsourcing of forwarding work is expressly allowed by the rules implementing the Labor Code.17

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At the same time, however, the voluntary arbitrator found that the petitioner went beyond the limits of the legally allowable contracting out because the forwarders' employees encroached upon the functions of the petitioner's regular rank-and-file workers. He opined that the forwarders' personnel serving as clerks, material handlers, system encoders and general clerks perform "functions [that] are being performed by regular rank-and-file employees covered by the bargaining unit." He also noted that the forwarders' employees perform their jobs in the company warehouse together with the petitioner's employees, use the same company tools and equipment and work under the same company supervisors – indicators that the petitioner exercises supervision and control over all the employees in the warehouse department. For these reasons, he declared the forwarders’ employees serving as clerks, material handlers, system encoders and general clerks to be "employees of the company who are entitled to all the rights and privileges of regular employees of the company including security of tenure."18

The petitioner sought relief from the CA through a petition for review under Rule 43 of the Rules of Court invoking questions of facts and law.19 It specifically questioned the ruling that the company did not validly contract out the services performed by the forwarders’ clerks, material handlers, system encoders and general clerks, and claimed that the voluntary arbitrator acted in excess of his authority when he ruled that they should be considered regular employees of the company.

The CA Decision

In its decision of October 28, 2008,20 the CA fully affirmed the voluntary arbitrator’s decision and dismissed the petition for lack of merit. The discussion essentially focused on three points. First, that decisions of voluntary arbitrators on matters of fact and law, acting within the scope of their authority, are conclusive and constitute res adjudicata on the theory that the parties agreed that the voluntary arbitrator’s decision shall be final. Second, that the petitioner has the right to enter into the forwarding agreements, but these agreements should be limited to forwarding services; the petitioner failed to present clear and convincing proof of the delineation of functions and duties between company and forwarder employees engaged as clerks, material handlers, system encoders and general clerks; thus, they should be considered regular company employees. Third, on the extent of the voluntary arbitrator's authority, the CA acknowledged that the arbitrator can only decide questions agreed upon and submitted by the parties, but maintained that the arbitrator also has the power to rule on consequential issues that would finally settle the dispute. On this basis, the CA justified the ruling on the employment status of the forwarders' clerks, material handlers, system encoders and general clerks as a necessary consequence that ties up the loose ends of the submitted issues for a final settlement of the dispute.

The CA denied the petitioner’s motion for reconsideration, giving way to the present petition.

The Petition

The petition questions as a preliminary issue the CA ruling that decisions of voluntary arbitrators are conclusive and constitute res adjudicata on the facts and law ruled upon.

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Expectedly, it cites as error the voluntary arbitrator’s and the CA’s rulings that: (a) the forwarders’ employees undertaking the functions of clerks, material handlers, system encoders and general clerks exercise the functions of regular company employees and are subject to the company’s control; and (b) the functions of the forwarders’ employees are beyond the limits of what the law allows for a forwarding agreement.

The petitioner reiterates that there are distinctions between the work of the forwarders’ employees and that of the regular company employees. The receiving, unloading, recording or documenting of materials the forwarders’ employees undertake form part of the contracted forwarding services. The similarity of these activities to those performed by the company's regular employees does not necessarily lead to the conclusion that the forwarders’ employees should be absorbed by the company as its regular employees. No proof was ever presented by the union that the company exercised supervision and control over the forwarders' employees. The contracted services and even the work performed by the regular employees in the warehouse department are also not usually necessary and desirable in the manufacture of automotive electronics which is the company’s main business. It adds that as held in Philippine Global Communications, Inc. v. De Vera,[21] management can contract out even services that are usually necessary or desirable in the employer's business.

On the issue of jurisdiction, the petitioner argues that the voluntary arbitrator neither had jurisdiction nor basis to declare the forwarders' personnel as regular employees of the company because the matter was not among the issues submitted by the parties for arbitration; in voluntary arbitration, it is the parties’ submission of the issues that confers jurisdiction on the voluntary arbitrator. The petitioner finally argues that the forwarders and their employees were not parties to the voluntary arbitration case and thus cannot be bound by the voluntary arbitrator’s decision.

The Case for the Union

In its comment,22 the union takes exception to the petitioner's position that the contracting out of services involving forwarding and ancillary activities is a valid exercise of management

prerogative. It posits that the exercise of management prerogative is not an absolute right, but is subject to the limitation provided for by law, contract, existing practice, as well as the general

principles of justice and fair play. It submits that both the law and the parties' CBA prohibit the petitioner from contracting out to forwarders the functions of regular employees, especially when

the contracting out will amount to a violation of the employees' security of tenure, of the CBA provision on the coverage of the bargaining unit, or of the law on regular employment.

The union disputes the petitioner's claim that there is a distinction between the work being performed by the regular employees and that of the forwarders' employees. It insists that the functions being assigned, delegated to and performed by employees of the forwarders are also those assigned, delegated to and being performed by the regular rank-and-file employees covered by the bargaining unit.

On the jurisdictional issue, the union submits that while the submitted issue is "whether or not the functions of the forwarders' employees are functions being performed by the regular rank-and-file employees covered by the bargaining unit," the ruling of the voluntary arbitrator was a

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necessary consequence of his finding that the forwarders' employees were performing functions similar to those being performed by the regular employees of the petitioner. It maintains that it is within the power of the voluntary arbitrator to rule on the issue since it is inherently connected to, or a consequence of, the main issues resolved in the case.

The Court's Ruling

We find the petition meritorious.

Underlying Jurisdictional Issues

As submitted by the parties, the first issue is "whether or not the company validly contracted out or outsourced the services involving forwarding, packing, loading and clerical activities related thereto." However, the forwarders, with whom the petitioner had written contracts for these services, were never made parties (and could not have been parties to the voluntary arbitration except with their consent) so that the various forwarders’ agreements could not have been validly impugned through voluntary arbitration and declared invalid as against the forwarders.

The second submitted issue is "whether or not the functions of the forwarders’ employees are functions being performed by regular rank-and-file employees covered by the bargaining unit." While this submission is couched in general terms, the issue as discussed by the parties is limited to the forwarders’ employees undertaking services as clerks, material handlers, system encoders and general clerks, which functions are allegedly the same functions undertaken by regular rank-and-file company employees covered by the bargaining unit. Either way, however, the issue poses jurisdictional problems as the forwarders’ employees are not parties to the case and the union has no authority to speak for them.

From this perspective, the voluntary arbitration submission covers matters affecting third parties who are not parties to the voluntary arbitration and over whom the voluntary arbitrator has no jurisdiction; thus, the voluntary arbitration ruling cannot bind them.23 While they may voluntarily join the voluntary arbitration process as parties, no such voluntary submission appears in the record and we cannot presume that one exists. Thus, the voluntary arbitration process and ruling can only be recognized as valid between its immediate parties as a case arising from their collective bargaining agreement. This limited scope, of course, poses no problem as the forwarders and their employees are not indispensable parties and the case is not mooted by their absence. Our ruling will fully bind the immediate parties and shall fully apply to, and clarify the terms of, their relationship, particularly the interpretation and enforcement of the CBA provisions pertinent to the arbitrated issues.

Validity of the Contracting Out

The voluntary arbitration decision itself established, without objection from the parties, the description of the work of forwarding as a basic premise for its ruling. We similarly find the description acceptable and thus adopt it as our own starting point in considering the nature of the service contracted out when the petitioner entered into its forwarding agreements with Diversified, Airfreight and KNI. To quote the voluntary arbitration decision:

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As forwarders they act as travel agents for cargo. They specialize in arranging transport and completing required shipping documentation of respondent's company's finished products. They provide custom crating and packing designed for specific needs of respondent company. These freight forwarders are actually acting as agents for the company in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations, the methods of shipping, and the documents related to foreign trade. They recommend the packing methods that will protect the merchandise during transit. Freight forwarders can also reserve for the company the necessary space on a vessel, aircraft, train or truck.

They also prepare the bill of lading and any special required documentation. Freight forwarders can also make arrangement with customs brokers overseas that the goods comply with customs export documentation regulations. They have the expertise that allows them to prepare and process the documentation and perform related activities pertaining to international shipments. As an analogy, freight forwarders have been called travel agents for freight.24

Significantly, both the voluntary arbitrator and the CA recognized that the petitioner was within its right in entering the forwarding agreements with the forwarders as an exercise of its management prerogative. The petitioner's declared objective for the arrangement is to achieve greater economy and efficiency in its operations – a universally accepted business objective and standard that the union has never questioned. In Meralco v. Quisumbing,25 we joined this universal recognition of outsourcing as a legitimate activity when we held that a company can determine in its best judgment whether it should contract out a part of its work for as long as the employer is motivated by good faith; the contracting is not for purposes of circumventing the law; and does not involve or be the result of malicious or arbitrary action.

While the voluntary arbitrator and the CA saw nothing irregular in the contracting out as a whole, they held otherwise for the ancillary or support services involving clerical work, materials handling and documentation. They held these to be the same as the workplace activities undertaken by regular company rank-and-file employees covered by the bargaining unit who work under company control; hence, they concluded that the forwarders’ employees should be considered as regular company employees.

Our own examination of the agreement shows that the forwarding arrangement complies with the requirements of Article 10626 of the Labor Code and its implementing rules.27 To reiterate, no evidence or argument questions the company’s basic objective of achieving "greater economy and efficiency of operations." This, to our mind, goes a long way to negate the presence of bad faith. The forwarding arrangement has been in place since 1998 and no evidence has been presented showing that any regular employee has been dismissed or displaced by the forwarders’ employees since then. No evidence likewise stands before us showing that the outsourcing has resulted in a reduction of work hours or the splitting of the bargaining unit – effects that under the implementing rules of Article 106 of the Labor Code can make a contracting arrangement illegal. The other requirements of Article 106, on the other hand, are simply not material to the present petition. Thus, on the whole, we see no evidence or argument effectively showing that the outsourcing of the forwarding activities violate our labor laws, regulations, and the parties’ CBA, specifically that it interfered with, restrained or coerced employees in the exercise of their rights to self-organization as provided in Section 6, par. (f) of the implementing rules. The only

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exception, of course, is what the union now submits as a voluntary arbitration issue – i.e., the failure to recognize certain forwarder employees as regular company employees and the effect of this failure on the CBA’s scope of coverage – which issue we fully discuss below.

The job of forwarding, as we earlier described, consists not only of a single activity but of several services that complement one another and can best be viewed as one whole process involving a package of services. These services include packing, loading, materials handling and support clerical activities, all of which are directed at the transport of company goods, usually to foreign destinations.

It is in the appreciation of these forwarder services as one whole package of inter-related services that we discern a basic misunderstanding that results in the error of equating the functions of the forwarders’ employees with those of regular rank-and-file employees of the company. A clerical job, for example, may similarly involve typing and paper pushing activities and may be done on the same company products that the forwarders’ employees and company employees may work on, but these similarities do not necessarily mean that all these employees work for the company. The regular company employees, to be sure, work for the company under its supervision and control, but forwarder employees work for the forwarder in the forwarder’s own operation that is itself a contracted work from the company. The company controls its employees in the means, method and results of their work, in the same manner that the forwarder controls its own employees in the means, manner and results of their work. Complications and confusion result because the company at the same time controls the forwarder in the results of the latter’s work, without controlling however the means and manner of the forwarder employees’ work. This interaction is best exemplified by the adduced evidence, particularly the affidavits of petitioner’s warehouse manager Gregorio28 and Section Head Bawar29 discussed below.

From the perspective of the union in the present case, we note that the forwarding agreements were already in place when the current CBA was signed.30 In this sense, the union accepted the forwarding arrangement, albeit implicitly, when it signed the CBA with the company. Thereby, the union agreed, again implicitly by its silence and acceptance, that jobs related to the contracted forwarding activities are not regular company activities and are not to be undertaken by regular employees falling within the scope of the bargaining unit but by the forwarders’ employees. Thus, the skills requirements and job content between forwarders’ jobs and bargaining unit jobs may be the same, and they may even work on the same company products, but their work for different purposes and for different entities completely distinguish and separate forwarder and company employees from one another. A clerical job, therefore, if undertaken by a forwarders’ employee in support of forwarding activities, is not a CBA-covered undertaking or a regular company activity.

The best evidence supporting this conclusion can be found in the CBA itself, Article 1, Sections 1, 2, 3 and 4 (VII) of which provide:

Section 1. Recognition and Bargaining Unit. – Upon the union’s representation and showing of continued majority status among the employees covered by the bargaining unit as already appropriately constituted, the company recognizes the union as the sole and exclusive collective bargaining representative of all its regular rank-and-file employees, except those excluded from

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the bargaining unit as hereinafter enumerated in Sections 2 and 3 of this Article, for purposes of collective bargaining in respect to their rates of pay and other terms and condition of employment for the duration of this Agreement.

Section 2. Exclusions. The following employment categories are expressly excluded from the bargaining unit and from the scope of this Agreement: executives, managers, supervisors and those employees exercising any of the attributes of a managerial employee; Accounting Department, Controlling Department, Human Resources Department and IT Department employees, department secretaries, the drivers and personnel assigned to the Office of the General Manager and the Office of the Commercial Affairs and Treasury, probationary, temporary and casual employees, security guards, and other categories of employees declared by law to be eligible for union membership.

Section 3. Additional Exclusions. Employees within the bargaining unit heretofore defined, who are promoted or transferred to an excluded employment category as herein before enumerated, shall automatically be considered as resigned and/or disqualified from membership in the UNION and automatically removed from the bargaining unit.

Section 4. Definitions – x x x

VII. A regular employee is one who having satisfactorily undergone the probationary period of employment and passed the company’s full requirement for regular employees, such as, but not limited to physical fitness, proficiency, acceptable conduct and good moral character, received an appointment as a regular employee duly signed by the authorized official of the COMPANY.

[Emphasis supplied.]

When these CBA provisions were put in place, the forwarding agreements had been in place so that the forwarders’ employees were never considered as company employees who would be part of the bargaining unit. To be precise, the forwarders’ employees and their positions were not part of the appropriate bargaining unit "as already constituted." In fact, even now, the union implicitly recognizes forwarding as a whole as a legitimate non-company activity by simply claiming as part of their unit the forwarders’ employees undertaking allied support activities.

At this point, the union cannot simply turn around and claim through voluntary arbitration the contrary position that some forwarder employees should be regular employees and should be part of its bargaining unit because they undertake regular company functions. What the union wants is a function of negotiations, or perhaps an appropriate action before the National Labor Relations Commission impleading the proper parties, but not a voluntary arbitration that does not implead the affected parties. The union must not forget, too, that before the inclusion of the forwarders’ employees in the bargaining unit can be considered, these employees must first be proven to be regular company employees. As already mentioned, the union does not even have the personality to make this claim for these forwarders’ employees. This is the impenetrable wall that the union cannot, for now, pass through using the voluntary arbitration proceedings now before us on appeal.

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Significantly, the evidence presented does not also prove the union’s point that forwarder employees undertake company rather than the forwarders' activities. We say this mindful that forwarding includes a whole range of activities that may duplicate company activities in terms of the exact character and content of the job done and even of the skills required, but cannot be legitimately labeled as company activities because they properly pertain to forwarding that the company has contracted out.

The union’s own evidence, in fact, speaks against the point the union wishes to prove. Specifically, the affidavits of forwarder KNI employees Barit, Prevendido, and Enano, submitted in evidence by the union, confirm that the work they were doing was predominantly related to forwarding or the shipment or transport of the petitioner’s finished goods to overseas destinations, particularly to Germany and the United States of America (USA).lavvphil

Barit31 deposed that on August 2, 2004 he started working at the petitioner's CBE finished goods area as an employee of forwarder Emery Transnational Air Cargo Group; on the same date, he was absorbed by KNI and was assigned the same task of a loader; his actual work involved: making of inventories of CBE finished products in the warehouse; double checking of the finished products he inventoried and those received by the other personnel of KNI; securing from his superior the delivery note and print-out indicating the model and the quantity of products to be exported to Germany; and preparing the loading form and then referring it to his co-workers from the forwarders who gather the goods to be transported to Germany based on the model and quantity needed; with the use of the computer, printing the airway bill which serves as cargo ticket for the airline and posted on every box of finished products before loading on the van of goods bound for Germany; preparing the gate pass for the van. He explained that other products to be shipped to the USA, via sea transport, are picked up by the other forwarders and brought to their warehouse in Parañaque.

Prevendido,32 also a loader, stated that his actual work involved loading into the container van finished CBE products bound for Germany; when there is a build up for the E.K. Express (Emirates Airlines), he is sent by the petitioner to the airlines to load the finished products and check if they are in good condition; although the inspection and checking of loaded finished products should be done by a company supervisor or clerk, he is asked to do them because he is already there in the area; he also conducts an inventory of finished goods in the finished goods area, prepares loading form schedule and generates the airway bill and is asked by his supervisor to call up KNI for the airway bill number.

Enano,33 for his part, stated that on November 11, 1998, he was absorbed by KNI after initially working in 1996 for a janitorial service agency which had a contract with the petitioner, he was also a loader and assigned at the finished goods section in the warehouse department; his actual work involved preparing the gate pass for finished products of the petitioner to be released; loading the finished products on the truck and calling up KNI (Air Freight Department) to check on the volume of the petitioner's products for export; making inventories of the remaining finished products and doing other tasks related to the export of the petitioner's products, which he claimed are supposed to be done by the company's finished goods supervisor; and monitoring of KNI's trucking sub-contractor who handled the transport component of KNI's arrangement with the petitioner.

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The essential nature of the outsourced services is not substantially altered by the claim of the three KNI employees that they occasionally do work that pertains to the company’s finished goods supervisor or a company employee such as the inspection of goods to be shipped and inventory of finished goods. This was clarified by petitioner’s warehouse manager Gregorio34 and Section Head Bawar35 in their respective affidavits. They explained that the three KNI employees do not conduct inventory of finished goods; rather, as part of the contract, KNI personnel have to count the boxes of finished products they load into the trucks to ensure that the quantity corresponds with the entries made in the loading form; included in the contracted service is the preparation of transport documents like the airway bill; the airway bill is prepared in the office and a KNI employee calls for the airway bill number, a sticker label is then printed; and that the use of the company forklift is necessary for the loading of the finished goods into the truck.

Thus, even on the evidentiary side, the union’s case must fail.

In light of these conclusions, we see no need to dwell on the issue of the voluntary arbitrator’s authority to rule on issues not expressly submitted but which arise as a consequence of the voluntary arbitrator’s findings on the submitted issues.

WHEREFORE, premises considered, we hereby NULLIFY and SET ASIDE the assailed Court of Appeals Decision in CA-G.R. SP No. 99029 dated October 28, 2008, together with the Voluntary Arbitrator’s Decision of May 1, 2007 declaring the employees of forwarders Diversified Cargo Services, Inc., Airfreight 2100 and Kuehne & Nagel, Inc., presently designated and functioning as clerks, material handlers, system or data encoders and general clerks, to be regular company employees. No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 164060             June 15, 2007

FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY (FAMIT), petitioner, vs.HON. COURT OF APPEALS, and MAPUA INSTITUTE OF TECHNOLOGY, respondents.

D E C I S I O N

QUISUMBING, J.:

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This is an appeal to reverse and set aside the Decision1 dated August 21, 2003 and the Resolution2 dated June 3, 2004 of the Court of Appeals in CA-G.R. SP No. 71479. The appellate court had reversed the Decision of the Office of the Voluntary Arbitrators. It held that the incorporation of the new faculty ranking to the 2001 Collective Bargaining Agreement (CBA) between petitioner and private respondent has been the intention of the parties to the CBA.

The facts in this case are undisputed.

In July 2000, private respondent Mapua Institute of Technology (MIT) hired Arthur Andersen to develop a faculty ranking and compensation system. On January 29, 2001, in the 5th CBA negotiation meeting, MIT presented the new faculty ranking instrument to petitioner Faculty Association of Mapua Institute of Technology (FAMIT).3 The latter 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.

On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1, 2001.4 It incorporated the new ranking for the college faculty in Section 8 of Article V which states that, "A new faculty ranking shall be implemented in June 2001. However, there shall be no diminution in the existing rank and the policy ‘same rank, same pay’ shall apply."5

The faculty ranking sheet was annexed to the CBA as Annex "B," while the college faculty rates sheet for permanent faculty and which included the point ranges and corresponding pay rates per faculty level was added as Annex "C."

When the CBA took effect, the Vice President for Academic Affairs issued a memorandum to all deans and subject chairs to evaluate and re-rank the faculty under their supervision using the new ranking instrument. Eight factors were to be considered and given their corresponding weights/points according to levels attained per factor. Among these were: (1) educational attainment; (2) professional honors received; (3) relevant training; (4) relevant professional experience; (5) scholarly work and creative efforts; (6) award winning works; (7) officership in relevant technical and professional organizations; and (8) administrative positions held at MIT.6

After a month, MIT called FAMIT’s attention to what it perceived to be flaws or omissions in the CBA signed by the parties. In a letter7 dated July 5, 2001 to FAMIT, MIT requested for an amendment of the following CBA annexes – Annex "B" (Faculty Ranking Sheet); Annex "C" (College Faculty Rates for Permanent Faculty Only); and Annex "D" (H.S. Faculty Rates for Permanent Faculty Only). MIT claimed that with respect to Annexes "C" and "D," these contained data under the heading "TOTAL POINTS" that were not germane to the two other columns in both annexes. With regard to the Faculty Ranking Point Range sheet of the new faculty ranking instrument, MIT avers that this was inadvertently not attached to the CBA.

FAMIT rejected the proposal. It said 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. It argued that the proposed amendment in the ranking system for the college faculty revised the point ranges earlier agreed upon by the parties and expands the 19 faculty ranks to 23.

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Meanwhile, MIT instituted some changes in the curriculum during 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 high school 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 service).

Upon learning of the changes, FAMIT opposed the formula. It averred that unknown to FAMIT, MIT has not been implementing the relevant provisions of the 2001 CBA. In particular, FAMIT cites Section 2 of Article VI, which states as follows:

ARTICLE VI

General Wage Clause

x x x x

Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to corresponding faculty rank, to wit:

· 25% increase in per rate/load for all high school faculty members effective November 2000;

· 10% increase in per rate/load for all permanent high school faculty members effective June 2001.8 (Emphasis supplied.)

On July 20, 2001, FAMIT met with MIT to settle this second issue but to no avail. MIT maintained that it was within its right to change the pay formula used.

Hence, together with the issue pertaining to the ranking of the college faculty, FAMIT brought the matter to the National Conciliation and Mediation Board for mediation. Proceedings culminated in the submission of the case to the Panel of Voluntary Arbitrators for resolution.

The Panel of Voluntary Arbitrators ruled in favor of the petitioner. It ordered the private respondent to:

1. Implement the agreed upon point range system with 19 faculty ranks, along with the corresponding pay levels for the college faculty, consistent with the provisions of Article V, Section 8 of the 2001 CB[A] and Annex C of the said CBA, and

2. Comply with the provisions of Article VI, Section 2 of the existing CBA, using past practices or formula in computing the pay of high school faculty based on rate per load and to pay the faculty their corresponding rates on this basis,

Both actions of which (sic) should be made concurrent with the effectivity of the current CBA.

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SO ORDERED.9

On appeal, the Court of Appeals reversed the ruling of the Panel of Voluntary Arbitrators and decreed as follows:

WHEREFORE, the petition is hereby GRANTED. The assailed decision of the voluntary arbitrators is REVERSED. Accordingly, petitioner’s proposal to include the faculty point range sheet in Annex "B" of the 2001 CBA, as well as to replace Annex "C" with the document on the 23-level faculty ranking instrument and replace the column containing the heading "Total Points" which is attached in Annexes "C" and "D" of the 2001 CBA with the correct data is also GRANTED.

SO ORDERED.10

Hence, the instant petition.

The petitioner enumerated issues for resolution, to wit:

I

WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY ALTER, CHANGE AND/OR MODIFY UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE [BARGAINING] AGREEMENT (CBA) IT HAD NEGOTIATED, ENTERED INTO AND SIGNED WITH THE PETITIONER AND SUBSEQUENTLY RATIFIED AND ENFORCED BY THE PARTIES; AND

II

WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY CHANGE[,] ALTER AND/OR REPLACE UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A PERFECTED, EXISTING AND ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE SPECIFICALLY TO THE DIMINUTION OF SALARY/BENEFITS AND DOWNGRADING OF RANKS, OF ITS COLLEGE AND HIGH SCHOOL FACULTY.11

Simply put, the issues for our determination are: (1) Is MIT’s new proposal, regarding faculty ranking and evaluation, lawful and consistent with the ratified CBA? and (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?

On the first issue, FAMIT avers that MIT’s new proposal on faculty ranking and evaluation for the college faculty is an unlawful modification, alteration or amendment of the existing CBA without approval of the contracting parties.

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On the other hand, MIT argues that the new faculty ranking instrument was made in good faith and in the exercise of its inherent prerogative to freely regulate according to its own discretion and judgment all aspects of employment.

Considering the submissions of the parties, in the light of the existing CBA, we find that 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.

As observed by Office of the Voluntary Arbitrators, the evaluation system differs from past evaluation practices (e.g., those that give more weight to tenure and faculty load) such that the system can lead to a demotion in rank for a faculty member. A perfect example of this scenario was cited by FAMIT in its Memorandum:

x x x x

Take the case of a faculty member with 17 years of teaching experience who has a Phd. Degree. For school year 2000-2001 his corresponding rank is Professor 3 with 4001-4500 points using the previous CBA. If the college faculty member is ranked based on the ratified 2001 CBA, his/her corresponding rank would increase to Professor 5 with 5001-5500 points.

But if the proposal of private respondent is used, the professor, would be ranked as Associate Professor 5 with 5001-5749 points, instead of Professor 5 as recognized by the 2001 CBA. True, there may be an increase in points but there is also a resulting diminution in rank from Professor 3 based on the previous CBA to Associate Professor 5. This would translate to a reduction of the salary increase he is entitled to under the 2001 CBA.12

According to FAMIT, this patently is a violation of Section 8, Article V of the 2001 CBA.

Noteworthy, Article 253 of the Labor Code states:

ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement.–When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

REVISED PAGE

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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.13

The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its terms and conditions "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 and ask redress.14 The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the express policy of the law.15

On the second issue, FAMIT avers that MIT unilaterally modified the CBA formula in determining the salary of a high school faculty. MIT counters that it is entitled to consider the actual number of teaching hours to arrive at a fair and just salary of its high school faculty.

Again, we are in agreement with FAMIT’s submission. We rule that 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. Section 2, Article VI of the 2001 CBA provides:

x x x x

Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to corresponding faculty rank, to wit:

· 25% increase in per rate/load for all high school faculty members effective November 2000.

· 10% increase in per rate/load for all permanent high school faculty members effective June 2001.16 (Emphasis supplied.)

In our view, there is no room for unilateral change of the formula by MIT. Needless to stress, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor.17 The appellate court committed a grave error in the interpretation of the CBA provision and the governing law.

WHEREFORE, the instant petition is GRANTED. The Decision dated August 21, 2003 and the Resolution dated June 3, 2004 of the Court of Appeals denying the motion for reconsideration are REVERSED and SET ASIDE. The decision of the Office of the Voluntary Arbitrators is REINSTATED. MIT’s unilateral change in the ranking of college faculty from 19 levels to 23 levels, and the computation of high school faculty salary from rate per load to rate per hour basis is DECLARED NULL AND VOID for being violative of the parties’ CBA and the applicable law.

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Costs against private respondent MIT.

SO ORDERED.

Carpio, Tinga, Velasco, JJ., con

  

Faculty Association of Mapua Insitute (FAMIT) v CA and MIT

15 June 2007 | QuisumbingMapua Institute of Technology (MIT) hired Arthur Andresen to develop a faculty ranking andcompensation system. MIT presented a new faculty ranking instrument to Faculty Association of MapuaInstitute of Technology (FAMIT). FAMIT and MIT entered into a new CBA with the condition that thereshould be no diminution in rnark and pay of faculty members.After a month, MIT requested for an amendment of the CBA regarding certain annexes, butFAMIT rejected the proposal because the changes would constitute a violation of the CBA because it willresult in the diminution of rank and benefits of the faculty. MIT still instituted some changes; hence FAMIT

complained before the National Conciliation and Mediation Board which ruled in FAMIT’s favor. CA

reversed the decision,

but the SC upheld the Board’s ruling in favor of FAMIT.

 

MIT’s new proposal is an unlawful modification, alteration or amendment of the existing CBA

without approval of the contracting parties. Until a new CBA is executed by and between the parties, theyare duty-bound to keep the status quo and to continue in full force and effect the terms and conditions ofthe existing agreement. The law does not provide for any exception nor qualification on which economicprovisions of the existing agreement are to retain its force and effect. Therefore, it must be understood asencompassing all terms and conditions in the said agreement.The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected

since its terms and conditions “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, theaggrieved party has the right to go to court and ask redress. The CBA is the norm of 

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conduct betweenMIT and FAMIT and compliance therewith is mandated by the express policy of the law.

TSPI, INCORPORATION VS. TSPIC EMPLOYEES UNION Case Digest

TSPI, INCORPORATION VS. TSPIC EMPLOYEES UNION G.R No. 163419. February 13, 2008 

FACTS: TSPI Corporation entered into a Collective Bargaining Agreement with the corporation Union for the increase of salary for the latter’s members for the year 2000 to 2002 starting from January 2000. thus, the increased in salary was materialized on January 1, 2000. However, on October 6, 2000, the Regional Tripartite Wage and production Board raised daily minimum wage from P 223.50 to P 250.00 starting November 1, 2000. Conformably, the wages of the 17 probationary employees were increased to P250.00 and became regular employees therefore receiving another 10% increase in salary. In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees who were senior to the 17 recently regularized employees, received less wages. On January 19, 2001, TSPIC’s HRD notified the 24 employees who are private respondents, that due to an error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries starting February 2001. The Union on the other hand, asserted that there was no error and the deduction of the alleged overpayment constituted diminution of pay. 

ISSUE: Whether the alleged overpayment constitutes diminution of pay as alleged by the Union. 

RULING: Yes, because it is considered that Collective Bargaining Agreement entered into by unions and their employers are binding upon the parties and be acted in strict compliance therewith. Thus, the CBA in this case is the law between the employers and their employees. 

Therefore, there was no overpayment when there was an increase of salary for the members of the union simultaneous with the increasing of minimum wage for workers in the National Capital Region. The CBA should be followed thus, the senior employees who were first promoted as regular employees shall be entitled for the increase in their salaries and the same with lower rank workers.

HONDA PHILS V SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA

Facts: Honda Phils, Inc (company) and Samahan ng Malayang Manggagawa sa Honda (union) started renegotiations of their CBA. When there was a bargaining deadlock, the union filed a notice of strike. The company likewise filed a notice of lockout. SOLE assumed jurisdiction and ordered both parties to desist from their strike and lockout. 

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However, the union subsequently filed a second notice of strike on the ground of unfair labor practice, alleging that the company illegally contracted out work to the detriment of the workers. The union went on strike. SOLE assumed jurisdiction and certified the case to NLRC for compulsory arbitration. The striking employees were ordered to return to work and management accepted them back. 

Honda then issued a memorandum announcing its new computation of the 13th and 14th month pay whereby the 31-day strike shall be considered unworked days for the purpose of computing said benefits. The amount equivalent to 1/12 of the employees’ basic salary shall be deducted from the bonuses (because they did not work for 1 month). Furthermore, Honda wanted a pro-rata payment of the 13th month pay. 

The union opposed said computation because it was contrary to the Sections 3 and 6 in their current CBA which mandates that “the company shall maintain the present practice in the implementation of the 13th month pay” and that the 14th month pay shall be computed in the same way as the former. 

The Bureau of Working Conditions (BWC) sided with the company. But the issue was unresolved by the grievance machinery, so it was submitted for voluntary arbitration. The Voluntary Arbiter invalidated Honda’s computation and ordered the computation of the benefits based on the full month basic pay. 

CA affirmed, hence this petition. 

Issues:

(1) Whether or not there is ambiguity in the CBA provisions concerning the 13th and 14th month pay 

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(2) Whether or not the proposed computation of Honda deducting 1/12 of the employee’s basic salary from the 13th and 14th month pay and its pro-rata payment are valid

Held:

(1) YES. 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. The parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient as long as they are not contrary to law, morals, good customs, public order or public policy. Where the CBA is clear and unambiguous, it becomes the law between the parties. 

However, there are times when the CBA provisions may become contentious. In this case, Honda wanted to implement a pro-rated computation based on the “no work, no pay” rule. Honda argues that the phrase “present practice” in the CBA refers to the manner of payment of the bonuses (50% in May and 50% in December). The union, on the other hand, insists that the CBA provisions necessarily relate to the computation of the benefits. 

As the voluntary arbitrator has correctly observed, there is ambiguity in the assailed CBA provisions because they did not categorically state whether the computation of the 13th and 14th month pay would be based on a one full month’s basic salary of the employees, or pro-rated based on the compensation actually received. 

(2) NO. The ambiguity in the CBA provisions was correctly resolved by the arbitrator by relying on Article 1702 of the Civil Code, which provides that “in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer.” CA is also correct in ruling that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. 

PD 851 or the 13th Month Pay Law was issued to protect the level of wages of workers from worldwide inflation. Under the IRR of said law, the minimum 13th month pay shall not be less than 1/12 of the total basic salary earned by an employee within a calendar year. The Court has interpreted “basic salary” to mean, NOT the amount actually received by an employee, but 

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1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. 

The IRR also provide for a pro-ration of this benefit ONLY in cases of resignation or separation from work. In the present case, there being no resignation/separation, the computation of the 13th month pay should not be pro-rated but should be given in full. 

Moreover, it has not been proven that Honda has been implementing pro-rating of the 13th month pay before the present case. It is not a company practice. In fact, there was an implicit acceptance that prior to the strike, a full month basic pay computation was the “present practice” intended in the CBA. It was the second strike that prompted the company to adopt the pro-rata computation.

Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 146291            January 23, 2002

UNIVERSITY OF THE IMMACULATE CONCEPCION, INC., petitioner, vs.THE HON. SECRETARY OF LABOR AND EMPLOYMENT, UNIVERSITY OF THE IMMACULATE CONCEPCION TEACHING AND NON-TEACHING EMPLOYEES UNION-FFW, respondents.

PARDO, J.:

The Case

In this appeal via certiorari, petitioner seeks to set aside the decision of the Court of Appeals,1 which dismissed the University's petition and affirmed the orders of the Secretary of Labor and Employment2 directing the parties to execute a collective bargaining agreement embodying the dispositions therein and all items agreed upon by the parties, and ruling that the strike declared by the union on 20 January 1995 was valid.

The Facts

The facts, as found by the Court of Appeals, are as follows:

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"Petitioner (University of the Immaculate Concepcion, Inc.) is a non-stock, non-profit educational institution with campuses at Fr. Selga St., and Bonifacio St., Davao City. On two (2) occasions, specifically on May 14, 1994 and May 28, 1994, petitioner and the Union, through the auspices of the National Conciliation and Mediation Board (NCMB), met to negotiate a CBA.

"On June 20, 1994, the Union filed with the NCMB a Notice of Strike, the first in a series of three (3) notices of strike, alleging deadlock in the CBA negotiations and unfair labor practices on the part of the petition in the form of "mass termination of teaching and non-teaching employees, interference with union activities, discrimination, and harassments." (Annex "8" of Annex "A", Petition). Petitioner denied the allegations in its Motion to Strike Out Notice of Strike (Annex "9" of Annex "A", Petition).

"During the parties' conciliation conference before the NCMB on July 20, 1994, petitioner and the Union reached an agreement on some issues. The salient portion of the minutes of the proceedings reads:

'I. ECONOMIC ISSUE

'The parties agree to the economic package to be granted to the workers as increase in the amount equivalent to:

'1st year: 75% of increment increase of Tuition Fees

'2nd year: 80%             ---do----

'3rd year: 80%             ---do----

'This settles the economic issue of this notice of strike.

'II. NON-ECONOMIC ISSUES:

'A. UNION RECOGNITION and SECURITY

'Agreement: Both Parties agreed on the following:

'1. That future employees hired after the signing of this CBA shall become members of the Union after having become regular employees.

'2. That provisions providing sanction will be removed.

'B. WORKING SCHEDULE

'Agreement: Both parties agree as follows:

'1. Item (b) is removed.

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'2. Item (c) is adopted/agreed by the parties.

'C. SALARIES and WAGES:

'Agreement: Both parties agree as follows:

'1. There will be Rank and Tenure Committee which management will establish by department. In every committee, the union will be represented by 2-members who will be chosen by the union.

'On the coverage of the bargaining unit, further consultations will be made on the proposed exclusion of secretaries, registrar, accounting employees, guidance counselor.

'The parties agree to set another conference on July 26, 1994 at 9:00 A.M.' (Annex "16" of Annex "A", petition).

"In a subsequent conciliation conference of July 26, 1994, petitioner and the Union agreed to submit to voluntary arbitration the issue concerning the exclusion of confidential employees from the collective bargaining unit. The minutes of that conference state:

'As a resolution to the issue left of the case, the parties agree that the positions which management sought to be excluded from the bargaining unit be submitted to Voluntary Arbitration.

'This case is deemed settled and closed' (Annex "17" of Annex "A", Petition).

"On November 8, 1994, the panel of voluntary arbitrators rendered a decision excluding the secretaries, registrars, cashiers, guidance counselors and the chief of the accounting department of the petitioner from the coverage of the bargaining unit (Annex "41" of Annex "A", Petition).

"Twenty (20) days later, or on November 28, 1994, petitioner presented to the Union a draft of the CBA. After a study thereof, the Union rejected the draft on the ground that the manner of computing the net incremental proceeds has yet to be agreed upon by the parties (Annexes "23", "23-A" and "24" of Annex "A", Petition).

"In its letter to the Union dated December 12, 1994, petitioner insists that the Union was bound to comply with the terms contained in the draft-CBA since said draft allegedly embodies all the items agreed upon by the parties during the conciliation sessions held by the NCMB (Annex "25" of Annex "A", Petition).

"On December 9, 1994, the Union filed its Second Notice of Strike with the NCMB, therein alleging bargaining deadlock on "allocation of 5% (CBA) and distribution/computation of 70% incremental proceeds (RA6728)", and unfair labor

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practice by the petitioner in the form of "harassments, union busting and correct implementation of COLA," (Annex "26-A" of Annex "A", Petition).

"On December 12, 1994, or barely three (3) days after the Union's filing of its Second Notice of Strike, petitioner terminated the employment of union member Gloria Bautista. Later, or on December 27, 1994, petitioner likewise terminated the employment of union board member Corazon Fernandez. (Comment, p. 8). As a consequence, Bautista and Fernandez filed their complaints for illegal dismissal before the Regional Arbitration Branch No. XI of the National Labor Relations Commission based in Davao City (Annex "28" of Annex "A", Petition; p. 5 of Annex "B", Petition).

"On January 4, 1995, petitioner filed with the NLRC Regional Arbitration Branch No. XI in Davao City a complaint against the Union and its officers for unfair labor practices based on the following grounds:

'(a) refusing to answer in writing, and within ten days required by law, [petitioner's] cba proposals;

'(b) refusing to bargain in good faith, by declaring a deadlock in the cba negotiations after just two days of negotiations, even if there were so many issues unresolved and still to be discussed at the bargaining table;

'(c) refusing to comply with its promise to submit the final draft of the CBA agreed upon in the NCMB, and when presented by the draft prepared by the [petitioner], refusing to sign the same, on the ground that there was still a deadlock in the CBA negotiations, even if its notice of strike by reason of the CBA deadlock had already been 'settled and closed;

'(d) blatantly violating the aforesaid CBA, by resorting to another notice of strike, even if the aforesaid CBA includes a no strike, no lockout clause, a grievance procedure and voluntary arbitration of any grievance the union may have, thus directly circumventing the aforesaid procedures as regards the interpretation of the CBA and RA 6728 provisions on the net incremental proceeds of a tuition fee increase; and

'(e) blatantly violating the aforesaid CBA, by filing a complaint for illegal dismissal of Ms. Gloria Bautista in the Regional Arbitration Branch without resorting to the grievance procedure and voluntary arbitration in the CBA.' (Annex 29 of Annex "A" of Petition).

"The complaint, docketed as NLRC Case No. RAB-XI-01, was elevated by the NLRC Regional Arbitration Branch to the Secretary of Labor (Annex "29" of Annex "A", Petition).

"The conciliation conference called by the NCMB on January 4, 1995 failed to bridge the differences between the parties. Thereafter, the NCMB in Region XI conducted a strike-

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vote balloting, the outcome of which reveals that majority of the union members voted in favor of the holding of a strike. True enough, on January 20, 1995, the Union went on strike.

"Three days later, or on January 23, 1995, the Secretary of Labor issued an order assuming jurisdiction over the labor dispute which was docketed as OS-AJ-003-95. Dispositively, the order reads:

'WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this Office hereby assumes jurisdiction over the entire labor dispute at University of the Immaculate Concepcion College.

'Accordingly, all workers are directed to return to work within twenty-four (24) hours upon receipt of this Order and for management to accept them back under the same terms and conditions prior to the strike.

'Parties are further directed to cease and desist from committing any or all acts that might exacerbate the situation.

'Finally, the parties are hereby directed to submit their respective position papers within ten (10) days from receipt hereof.

'SO ORDERED.' (Annex "G" to private respondent's COMMENT.)

"In time, the Union filed a Motion for Reconsideration of the aforementioned order to seek a categorical declaration from the Secretary that the return-to-work order also covered Bautista and Fernandez inasmuch as the two (2) were dismissed during the pendency of the notice of strike.

"Before the Labor Secretary could act on the motion, petitioner suspended five (5) union members for failing to report to work within the period specified by the Secretary of Labor. Petitioner, invoking the ruling of the voluntary arbitrators that certain classes of employees cannot be a part of the bargaining unit, also terminated the employment of twelve union members – supposedly holders of confidential positions – for refusing to resign from the Union.

"On March 10, 1995, the Union filed its Third Notice of Strike, therein alleging mass termination of employees, continuous intimidation of union members and defiance by the petitioner of the January 23, 1995 Order of the Secretary of Labor.

"On March 28, 1995, the respondent Secretary of Labor issued an order resolving the issues raised by the Union in its Motion for Reconsideration and Notice of Strike. Dispositively, the order reads:

'WHEREFORE, THE ABOVE-PREMISES CONSIDERED, the directives contained in the order dated 23 January 1995 is hereby reiterated.

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'The notice of strike filed on 10 March 1995, is hereby consolidated with the dispute subject of the above Order.

'The effects of the suspension and termination of the following union members:

1. Agapito Renomeron 8. Jovita Mamburan

2. Rodolfo Andon 9. Alma Villacarlos

3. Delfa Diapuez 10. Josie Boston

4. Melanie de la Rosa 11. Paulina Palma Gil

5. Angelina Abadilla 12. Gemma Galope

6. Leilan Concon 13. Leah Cruza

7. Mary Ann de Ramos 14. Zenaida Canoy

are hereby suspended pending determination of the legality thereof by this Office. Accordingly, they should likewise be accepted back to work under the same terms and conditions prevailing prior to the work stoppage.

'SO ORDERED.' (see pp. 5-6 of Annex "B", Petition)

"Petitioner filed three (3) successive Motions for Partial Reconsideration, all of which were denied by the same public respondent. Dissatisfied, petitioner went to the Supreme Court on a petition for certiorari, which was referred to another Division of this Court.

"The assailed order of October 8, 1998 of the Secretary of Labor narrated the succeeding events, thus:

'On 27 February 1997, Conciliator-Mediators Mario F. Santos and Leodegario M. Teodoro went to Davao City to help the parties to come up with a settlement regarding their labor dispute. During the conciliation held in the afternoon of the same day, the Union stated that there was no CBA to speak of because what were agreed upon during the conciliation conference on 26 July 1994, did not reflect the true intention of the parties and there was misunderstanding on the economic package. The Union manifested to reopen the negotiation of all the proposals including those that were previously agreed upon. The Union proposed to negotiate for the following items:

'Economic Issues

'1. Salary;

SY 94-95 – P 800.00

SY 95-96 - 900.00

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SY 96-97 – 1,000.00

'2. Substitution pay;

'3. Honorarium pay;

'4. Retirement pay;

'5. Promotion and lay-off;

'6. Staff development;

'7. Health and insurance coverage; and

'8. Hospital assistance

'Non-Economic Issues

'1. Dismissal of Gloria Bautista and Corazon Fernandez;

'2. Dismissal of Helen Jinon and Roselier Saga;

'3. Suspension of seven (7) union members for 7 days; and

'4. Union security

'During the conciliation held in the morning of 28 February 1997, the University contended that an agreement was reached during the conciliation conferences on 20 and 26 July 1994. Nevertheless, the University presented two (2) options for negotiation namely:

'1. Negotiate a new five (5) year CBA effective SY 97-98; or

'2. Sign and implement the CBA for three (3) years and re-open for the last two (2) years the economic provisions.

'The parties failed to reach an agreement in any of their respective proposals. They therefore requested this Office to resolve the instant labor dispute. On 26 February 1998, the Union filed an Urgent Motion to Resolve the Above-Entitled Case. This Office received the said Motion on 09 March 1998.' (Annex "B", Petition).

"Finding the strike staged by the Union to be legal, the Secretary of Labor resolved the labor dispute between the petitioner and the Union by directing the parties to execute a collective bargaining agreement. The pertinent portion of the challenged order reads:

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'We cannot grant the Union's proposal to re-open the negotiation. Guided by the agreements reached by the parties, this Office finds the following dispositions just and equitable.

'COLLECTIVE BARGAINING DEADLOCK

'Salary Increases

'1st year –75% of increment increase of tuition fee

'2nd year –80% of increment increase of tuition fee

'3rd year –80% of increment increase of tuition fee

'To avoid differences of opinion in the distribution of these salary increases to the covered employees, the same shall be distributed in accordance with DECS Order No. 15, Series of 1992.

'LEGALITY/ILLEGALITY OF THE STRIKE

'The strike undertaken by the Union on January 1995, was a valid exercise of the workers' rights under the Labor Code. The Union observed the mandatory requirements/procedures for a valid strike and the issues raised in the Notice of Strike i.e., bargaining deadlock and ULP are strikeable issues specifically provided under Article 263 (c) of the Labor Code.

'WHEREFORE, premises considered, the University and the Union are directed to execute a collective bargaining agreement (CBA) embodying the dispositions contained herein as well as all items agreed upon by the parties. The CBA shall be effective for five (5) years starting SY 1995-96, subject to renegotiation of the economic provisions for the last two (2) years. Further, we rule that the strike declared by the Union on 20 January 1995, is in accordance with the mandatory requirements of the law, hence, valid.

'SO ORDERED.' (Annex "B", Petition).

"Petitioner filed a Manifestation and Motion for Partial Reconsideration (Annex "C", Petition). The Union also filed its motion for partial reconsideration, arguing that the issue of the legality of the termination of employment of two (2) employees, namely, Roseller Saga and Helen Jinon, was not resolved in the order sought to be reconsidered. Both motions for reconsideration were denied by the Secretary of Labor in his Resolution of September 10, 1999 (Annex "D", Petition)."3

Subsequently, petitioner filed with the Court of Appeals a petition for review assailing the ruling of the Secretary of Labor and Employment.

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On October 11, 2000, the Court of Appeals promulgated a decision affirming the orders of the Secretary of Labor and Employment.4

Hence, this appeal.5

The Issue

The issue raised is whether the Court of Appeals erred in affirming the orders of the Secretary of Labor and Employment.

The Court's Ruling

We deny the petition.

The issue raised involves a re-examination of the factual findings of the Court of Appeals. In an appeal via certiorari, we may not review the findings of fact of the Court of Appeals.6 When supported by substantial evidence, the findings of fact of the Court of Appeals are conclusive and binding on the parties and are not reviewable by this Court,7 unless the case falls under any of the exceptions to the rule.8

Petitioner failed to prove that the case falls within the exceptions.9 It is not our function to review, examine and evaluate or weigh the probative value of the evidence presented.10 A question of fact would arise in such event.11 Questions of fact cannot be raised in an appeal via certiorari before the Supreme Court and are not proper for its consideration.12

Nevertheless, we find that the Court of Appeals did not err in finding that there was still no new collective bargaining agreement because the parties had not reached a meeting of the minds.

A collective bargaining agreement (CBA) 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.13 As in all other contracts, there must be clear indications that the parties reached a meeting of the minds.

In this case, no CBA could be concluded because of what the union perceived as illegal deductions from the 70% employees' share in the tuition fee increase from which the salary increases shall be charged. Also, the manner of computing the net incremental proceeds was yet to be agreed upon by the parties.

Petitioner insisted that a new collective bargaining agreement was concluded through the conciliation proceeding before the NCMB on all issues specified in the notice of strike. Although it is true that the university and the union may have reached an agreement on the issues raised during the collective bargaining negotiations, still no agreement was concluded by them because, among other reasons, the DOLE Secretary, who assumed jurisdiction on January 23, 1995 only was set to resolve the distribution of the salary increase of the covered employees. The Court of

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Appeals found that "there are many items in the draft-CBA that were not even mentioned in the minutes of the July 20, 1994 conference."14

Considering the parties failed to reach an agreement regarding certain items of the CBA, they still have the duty to negotiate a new collective bargaining agreement in good faith, pursuant to the applicable provisions of the Labor Code.

The Fallo

WHEREFORE, the Court DENIES the petition and enjoins the parties to comply with the directive of the Secretary of Labor and Employment to negotiate a collective bargaining agreement in good faith.

No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 149464               October 19, 2004

NATIONAL FEDERATION OF LABOR (NFL), CENON BANGA, ROGELIO VILLACORTE, NAZARIO HATAM, JULIO CUGAL, JUANITO GAVIOLA, BONIFACIO MANLAPAZ, TOMAS FABILLAR, BERNARD SIASON, WILFREDO SANTOS, MARCIANO NAPAL, FIDEL ABALOS, PEDRO INANA, SIMPLICIO QUIMSON, HERMINIGILDO DELOS SANTOS, FRANCISCO MANONGONG, RODRIGO DOMINGO, MARCELINO GUILLANO, JR., VALERIANO BRIONES, RAMON PUNTOD, SIMON MORO, ROLANDO BANGA, PABLO NUEZ, ALBERTO LADERO, BENEDICTO SUMALINOG, ISMAEL MOLAS, FIDEL CONSTANCIA, CASIANO PLAD, MARCELO SUMALINOG, NESTOR GARCIA, FELICIANO LOZANO, CORNELIO TUMAMBUS, ANASTACIO RODRIGUEZ GIPUNAN UNDING, CRESENCIO LASIT, FEDERICO BASILIO, LEONARDO BARREDO, ABELARDO GARCIA, ESTANISLAO PUREZA, RAUL LINIANG, LEONCIO PALAR, NICASIO CABANERO, LEONARDO PULGAR, ROMUALDO BACTONG, ABDUL BORJAL, MAGDINO ANSOG, JACARIA ASSANUDDIN, HERCULANO DAGOY, MARIO TULABING, ROBERTO MAHUSAY, BENGAY MAJID, ZOSIMO TUGAHAN, SALVADOR LUBIANO, ABDULMAJID ALIMUDDIN, POLICARPIO WAHING, EFREN CRUZ, MELCHOR LOMONGGO, ASPALON CUEVAS, MARCIAL SERUNDO, GENER MARTALLA, FRANCISCO BUHIAN, ROMULO GANGE, RICARDO CRUZ, ODITO TARROZA, CATALINO MOLEJON, EUSTACIO MANLAPAZ, BIENVENIDO ALBURO, DIOSCORO MOLOS, JUAN SIMAURIO, LUCIANO BASACA, ROMANTICO SAN LUIS, PERPITO REVILLA, SERVANDO

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SINGSON, WILFREDO DEMCO, JIBRON GARCIA, JOSE SACRISTAN, MANUEL SAYSON, GAUDIOSO DUMAYO, FELIX PLAZA, NESTOR GARCIA, ANDRES GAMUTAN, VALERIANO LUBIANO, WILFREDO MAHUSAY, DIONESIO SALISIG, ANTONIO SUMALINOG, PATRICIO RUALES, LEODEGARIO MANONGONG DONATO LADERO, WILFREDO BASILIO, EMMANUEL EVANGELISTA, BIENVENIDO CRUZ, CELESTINO BACOR, HENRY GARCIA, CRISTINO ESCUDERO, CECILIO MANAHAN, REYNALDO LOPEZ, ROGELIO AMPATIN,ALEXANDER REMILLETE, AURELIO CACHUELA, EUTIQUIO FRONTAL, FABIAN DURAN, EXPEDITO BARRERA, CENISO BUENO JOVENCIO VELITA, VICENTE ELEMIA, ROGELIO MIRONTOS, CESAR ALAJAS, ANTONIO FORASTEROS, RESTITUTO DAMILES, WILFREDO ORTIZ, GERUNDIO TORINO, TEOFISTO CALUNOD, ROGELIO CUEVAS, CASMIRO BASILIO, ELMO PEDLO, RAFAEL LAURENO, AGAPITO CARINO, EDUARDO TUGAHAN, ANASTACIO TORINO, REIMBERTO ACOSTA, CESAR MALALIS, WINEFREDA SARENO, FILADELFO RABINA, ANGEL YU, VICENCIO SACRISTAN, JR., CESAR AWYAN, QUIRINO RAMOS, ELEUTERIO INFANTE, JOSE MAGONCIA, JESUS GAROTE, GODOFREDO UYAO, EXEQUIEL GREGANA, SALUSTIANO FLORES, ADALAIDA PORLARES, SOFRIANO EDIM, ALFREDO CERIALES, GODOFREDO DEMCO, CIPRIANO PIOQUINTO, ANTONIO JOSE FORASTEROS, FILOMENO MOLAS, SOLIG TOTO, FRANCISCO SOLON, AMADO ENRIQUEZ, AMADO BUCOY, ARTURO AJON, FORTIBILLAR NABI, JUAN BAYOCA, WILFREDO ORPIANA, VICTORIANO IMBO and SABDURANI MABLIA, Petitioners vs.THE HON. COURT OF APPEALS (8th DIV.), NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER RHETT JULIUS J. PLAGATA, SIME DARBY PILIPINAS, INC., AMERICAN RUBBER COMPANY, INC., SEAN O'KELLEY and/or EXPEDITO DOQUILLO, SR., Respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. SP No. 56230, holding that the petitioners were properly paid their separation pay after the closure of the rubber plantation of Sime Darby Pilipinas, Inc. (SDPI) in Latuan, Isabela, Basilan.

The Antecedents

American Rubber Company, Inc. (ARCI) is a domestic corporation existing in and incorporated under the laws of the Philippines. It was the registered and beneficial owner of a 1, 024-hectare rubber plantation in Latuan, Isabela, Basila. On July 21, 1986, ARCI also had another rubber plantation in Tumajubong and Ito-ito. ACI entered into a Farm Management Agreement (FMA) with SDPI, another domestic corporation, involving the 1,024-hectare rubber plantation in Latuan and other rubber plantations. SDPI was given the right to manage, administer, develop, cultivate, and improve the rubber plantations as an agro-industrial development project,

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specifically designed for planting rubber trees, processing of and marketing of its products and providing technical expertise for a period of twenty-five years, or up to the year 2011.2

National Federation of Labor (NFL) was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in the Latuan rubber plantation.3 SDPI and NFL executed a collective bargaining agreement (CBA) in which they agreed that in case of permanent or temporary lay-off, workers affected would be entitled to termination pay as provided by the Labor Code. The 150 petitioners were daily-and-monthly paid employees of SDPI in the Latuan plantation and were, likewise, members of NFL.

On June 15, 1988, during the effectivity of the FMA between ARCI and SDPI, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect.4 Section 8 thereof mandated that all lands of public domain leased, held or possessed by multinational corporations or association or private non-governmental corporations, devoted to agro-industrial enterprises shall be subjected to immediate compulsory acquisition and distribution upon the applicable lease, management, grower or service contracts in effects as of August 29, 1987 or otherwise upon its valid termination, whichever comes sooner but not later than after ten years following the effectivity of Rep. Act No. 6657.

Prior to the expiration of the June 30, 1998 deadline, SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation in Latuan, Isabela, Basilan, effective January 17, 1998. On December 17, 1997, SDPI served formal notices of termination to all the employees of the plantation effective January 17, 1998.5 Simultaneously, a letter to the Department of Labor of Employment (DOLE) of Region IX, Zamboanga City, respecting the terminations was sent by SDPI. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL, in relation to the Labor Code of the Philippines.

Meanwhile, when the 150 daily-and-monthly-paid rank-and-file employees received their individual termination letters, the members of the NFL met, on January 10, 1998, and approved Resolution No. 1, Series of 1998, requesting SDPI that the separation pay benefits for its members be segregated from regular workdays, vacation leave, unused sick leave and other benefits.6 Cenon S. Banga, the union president of the daily-paid-rank-and-file employees, wrote Emmanuel A. Tamayo, the Senior Vice President of SDPI, requesting the segregation of separation pay benefits from the other receivables.7 He also sent, on the same date, a letter to SDPI seeking the clarification on the basis of computation of their separation pay. He pointed out that separation pay should be computed pursuant to the company policy of thirty days per year of service. He stressed that the union members would refuse to receive the computed separation pay if less than that previously given to employees whose employment had been terminated by SDPI on prior dates pursuant to the company policy,8 more specifically separation pay equivalent to one month for every year of employment of the employees.

On January 17, 1998, each of the petitioners received his separation pay equivalent to one-half month pay for every year of service, and other benefits which were all lumped in one Metrobank check.9 The petitioners simultaneously executed individual "Released and Quitclaim"10 following the explanation to them by Executive Labor Arbiter (ELA) Rhett Julius J. Plagata of the nature

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and legal effects of the said quitclaims.11 The Labor Arbiter also assured that each of the petitioners executed his respected deed of quitclaim voluntarily.

However, on April 2, 1998, the petitioners filed a complaint for illegal dismissal, deficiency in separation pay, backwages, reinstatement, legal interest, moral damages, exemplary damages, attorney’s fees, and cost of litigation before the Regional Arbitration Branch of Zamboanga City of the National Labor Relations Commission (NLRC), docketed as NLRC case No. RAB-09-04-00125-98.12 The complainants raised the following issues:

…(1) whether or not the complainants were illegally dismissed; and (2) whether or not they are entitled to their claims for separation pay differentials ("non-payment of the exact computation of separation pay"), legal interest, moral and exemplary damages, and attorney’s fees and costs of litigation.

A matter also put is the effect of the quitclaim and releases executed by the complaints before the undersigned on 15 and 16 January 1998 in consideration of payment to them by SDPI of separation pay computed at one-half (1/2) month pay for every years of service.13

On November 24, 1998, the ELA rendered a decision dismissing the complaints for lack of merit.14 He ruled the termination of the petitioners’ employment was based on authorized cause, namely, the closure of SDPI, Latuan rubber plantation, as a consequence of the implementation of CARL, which set the deadline for the compulsory distribution of agricultural, including agro-industrial lands ten years after the effectivity of the law or June 30, 1998. Consequently, pursuant to the CBA between the SDPI and NFL in relation to Article 283 of the Labor Code, the dismissed employees should receive separation pay at the rate of one-half month pay per year of service instead of a rate equivalent to one month for every year of service. He also held that the petitioners had no right to invoke company policy of paying separation pay equivalent to one month pay for every year of employment granted by SDPI for its retrenched employees in its plantations. He also ruled that the petitioners were estopped from demanding for separation pay differentials because they voluntarily and willingly executed their respective deeds of quitclaim.

Aggrieved, the petitioners appealed to the NLRC, which issued a Resolution on May 19, 1999 affirming the decision of the ELA.15 The NLRC ruled that payment of separation pay in check did not violate Article 102 of the Labor Code which required payment of wages in legal tender because (a) the check is a legal tender; and (b) the statement allows payment of wages in check in special circumstances, as in the present case where the individual complaints were paid large amounts of monetary benefits.

Dissatisfied, the petitioners filed a motion for reconsideration of the resolution, contending that the NLRC denied the said motion for lack of merit. In the absence of any provision in the CBA, the existing company policy or practice should have been applied in the computation of the separation pay of the monthly-paid employees. Thee noted that in several instances, SDPI had paid separation pay computed at one month per year of service. The NLRC denied the motion in a Resolution dated August 23, 1999.16

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Distressed, the petitioners filed a petition for certiorari under Rule 65 of the 1997 Rules of Procedure before the Court of Appeals (CA) docketed as CA-G.R. SP No. 56230. The petitioners alleged that:

(I)

THE RESPONDENT NLRC COMMITED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, MORE SPECIFICALLY, IN NOT RULING THAT THE ELIMINATION OR DIMINUTION OF EMPLOYEE BENEFITS IS PROHIBITED UNDER ARTICLE 100 OF THE LABOR CODE, AS AMENDED.

(II)

THE RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, MORE SPECIFICALLY, WHEN IT RULED THAT PETITIONER-WORKERS WERE ESTOPED FROM CLAIMING THE BALANCE OF THEIR SEPARATION PAY OR BENEFITS.

(III)

THE RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, MORE SPECIFICALLY, WHEN IT RULED THAT CHECK IS LEGAL TENDER.17

In its Manifestation and Motion, the Office of the Solicitor General (OSG) agreed that the petitioners were dismissed based on authorized cause. However, it asserted that they were entitled to separation pay equivalent to one-month pay for every year of service. Citing the case of Robles v. Zambales Chromite Mining Co., 18 the OSG opined that to hold that payment of separation pay equivalent to one-month pay applies only in cases of retrenchment and not when the termination is due to cessation of business operations not due to serious business losses, would create a distinction which was not contemplated under the law. According to the OSG, Section 9, Implementing Rules of Book VI, which provides that in case of terminations based on business closures, separation pay shall be computed at one-half month pay per year of service, cannot prevail over the provisions of the law.

The OSG furthered that the petitioners were not barred from recovering the balance of their separation pay because they were compelled to sign the quitclaims prepared by the respondent SDPI. The signing was made a condition to enable the petitioners to receive their separation pay and other monetary benefits without undue delay.

On May 7, 2001, the CA rendered a decision affirming the decision of the NLRC and dismissing the petition.1âwphi1

Applying Article 283 of the Labor Code, the CA ruled that separation pay due to business closures not due to business losses shall be equivalent to one-month pay or atleast one-half

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month pay for every year of service, whichever is higher. Citing the cases of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC 19 and Naguiat v. NLRC,20 the CA held that separation pay of employees dismissed based on business closures should be one half their respective monthly wage, multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year.

The threshold issue is whether or not the CA erred in holding that the petitioners are entitled to separation pay equivalent to one-half month pay for every year of employment with the private respondent.

The petitioners contend that the private respondent is bound by its policy of granting separation pay equivalent to one-month pay for every year of service to its retrenched employees in the Tumajubong and Latuan plantations prior to the closure of Latuan rubber plantation where they were employed. They aver that the separation pay equivalent to one-half month pay for every year of service with the private respondent is proscribed by Article 100 of the Labor Code of the Philippines, to wit:

ART. 100. Prohibition against elimination or diminution of benefits.- Nothing in this book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

The petitioners posit that Article 100 of the Labor Code of the Philippines should prevail over any provisions of the CBA between the NFL and the private respondent. They assert that they believed in good faith that the private respondent would follow and implement its policy which had been in effect even before the private respondent and the NFL executed their CBA. They contend that had the NFL and/or its members been informed, before the execution of the said CBA, that the private respondent would not follow its policy when the plantation stopped its operation, for sure, NFL and/or its members would have insisted in the inclusion in the CBA of a provision granting each of them separation pay equivalent to one month pay for every year of service. On the other hand, the CA ruled that:

We agree with respondent SDPI that its past payment of separation pay at one (1) month pay for every year of service cannot be taken as "precedent or company practice" applicable to individual complaints herein due to different factual setting. Firstly, there was no provision in the CBA between the respondent SDPI and the rank-and-file employees in Tumajubong Rubber Plantation fixing the rate of separation pay for any worker who was terminated for authorized cause. Secondly, the Tumajubong Rubber Plantation and Latuan Rubber Plantation where individual complaints herein were assigned were two entities, separate and distinct from each other. Thirdly, the workers in the Latuan Rubber Plantation alluded to have been terminated from employment on April 1, 1994 in pursuance of the staff reduction program were actually separated from the service due to redundancy, and, as such, they were entitled to separation pay equivalent to one (1) month pay for every year of service under Article 283 of the Labor Code. Fourthly, Rustom Democrito and other complaining workers in the early NLRC Case No. M-001457-93 (RAB 09-11-00297-90) were paid of their separation pay at one (1) month pay per year of service by virtue of a compromise settlement.

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If-at-all, respondent SDPI, through Mr. Ortalla and other representatives in the CBA negotiations, have intended to uniformly grant separation pay at one (1) month pay per year of service to all workers who were terminated from employment due to authorized cause as what complainants would want to make it appear, the parties to the CBA could have expressly made a provision to that effect to erase any doubt to the contrary.21

We agree with the NLRC and the CA.

Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business insolvency should be paid separation pay equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year, thus:

ART. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to at least his one (1) month pay or to at least (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Patently, in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay of employees shall be equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher.22 In no case will an employee get less than one-month separation pay if the separation from the service is due to the above stated causes, provided that he has already served for at least six months. Thus, if an employee had been in the service for at least six months, he is entitled to a full month’s pay as his termination pay if his separation from the job is due to any of the causes enumerated above. However, if he has to his credit ten years of service, he is entitled to five months pay, this being higher than one-month pay. Stated differently, the computation of termination pay should be based on either one-month or one-half month pay, whichever will yield to the employees’ higher separation pay, taking into consideration his length of service.23

In this case, the petitioners had served the respondent SDPI for a period longer than six months. Hence, their separation pay computed at one-half pay per year of service is more than the minimum one-month pay.

Pursuant to the 1995 CBA between the SDPI and its Latuan daily-paid rank-and-file employees, permanent or temporary lay-off workers affected would be entitled to termination pay as by the Labor Code.24 The parties did not incorporate in the CBA a specific provision providing that

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employees terminated from employment due to the closure of business operations would be entitled to separation pay equivalent to one-month pay for every year of service. The parties opted to be bound by the provisions of the Labor Code and not by company policy. The employees of the private respondent who were members of the NFL ratified the CBA which had been in force and effect for three years before the closure of the plantation, without the NFL initiating the revision thereof.

It bears stressing that a collective bargaining agreement refers to the negotiated contract between the legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in the bargaining unit.25 During the negotiations, the parties, management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.26 Had the daily-paid rank-and-file employees deemed the same to be a diminution of their benefits, they should have rejected the CBA. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. Unless annulled, the CBA, as a contract governing the employer and the employees respecting the terms of employment, should prevail.

The records reveal that there is no substantial evidence to support the claim that a similar practice had been made in the case of monthly-paid employees. Neither is there any evidence that a CBA exist between monthly-paid rank-and-file employees and the SDPI. Consequently, Article 283 of the Labor Code, which grants separation pay equivalent to one-month pay or one-half month pay for every year of service, whichever is higher, to the employees retrenched due to business closures, should apply.

We find that the petitioners’ contention, that they were impelled to execute the deed of quitclaim and receive their separation pay and monetary benefits because, otherwise, they and their families would have starved, is implausible. We agree with the following ratiocination of the ELA:

Beforehand, however, it must be stressed that when the complainants were paid separation benefits and executed their quitclaims and releases before the undersigned on 15 and 16 January 1998, the undersigned verified and confirmed that they did so voluntarily and willingly, after having been made to understand the consequences thereof. And they received their separation benefits and executed their quitclaims and releases despite the fact that they had asked for but were not granted a higher rate of separation pay; that their union officers were present at that time; that they were made to understand the consequences of their receiving the separation benefits proffered to them and their execution of quitclaims and releases.

Their voluntary acceptance of separation benefits and execution of quitclaims and releases, to the mind of the undersigned, now bars the complainants from asking for more. If they were not amenable to the computation or amount thereof, they should have accepted the same. But by so accepting the separation benefits, they thereby entered into a compromise thereon with SDPI. This is so, even if the existence of company policy or practice on the basis of which the complainants ask for separation pay differentials, is assumed to be true.

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While it is true that quitclaims are frowned upon the in labor claims, this holds true only when the consideration therefor is unconscionably low. Where, however, the consideration is substantial, the efficacy and validity thereof has been upheld, more so, where the quitclaim was voluntarily and willingly executed, as in the instant case.

The amount of separation pay paid to and received by the complainants, was one-half of what they wanted. To the mind of the undersigned, that constituted substantial consideration for the quitclaims the complainants voluntarily executed. This is particularly so, considering that the separation pay the complainants received (one-half month pay for every year of service) was the minimum prescribed by law, as embodied in Article 283 of the Labor Code, as amended.

As held in Periquet vs. National Labor Relations Commission, 186 SCRA 724 (1990):

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not be disowned simply because of a changed of mind. It is only where there is a clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must recognized as a valid and binding undertaking.

This ruling was subsequently reiterated and applied in Samaniego vs. National Labor Relations Commission, 198 SCRA (1991) and Veloso vs. Department of Labor and Employment, 200 SCRA 201 (1991).

Accordingly, the complainants are not entitled to, and cannot anymore be granted separation pay differentials.

It bears stressing anew that the complainants were paid substantial amounts of separation pay in the presence of the undersigned, before whom they executed and corresponding quitclaims and releases and to whom they affirmed the voluntariness and their willingness as to the execution thereof and receipt of separation benefits proffered to them by SDPI at that time, with understanding as to the contents of the quitclaims and releases and the consequences of their said acts.

In the light of the foregoing discussion, the other money claims of the complainants must also be set aside.27

We do not agree with the claim of the petitioners that the payment of separation pay and other benefits in check is in violation of Article 102 of the Labor Code, which provides:

Art. 102.- Forms of Payment. – No employers shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly requested by the employee.

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Payment of wages by check or money order shall be allowed when such payment is customary on the date of effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor or a stipulation in a collective bargaining agreement.

…

Payment by check- payment of wages by bank checks, postal checks or money orders is allowed where such manner of wage payment is customary on the date of the effectivity of the Code, where it is stipulated in a collective bargaining agreement, or where all of the following conditions are met:

1. There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;

2. The employer, or any of his agents or representatives, does not receive any pecuniary benefit directly or indirectly from the arrangement;

3. The employee are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during the working hours; and

4. The payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing the payment of wages by bank checks.28

The term "wage" was defined in Article 97(f) of the Labor Code as "the remuneration or earnings, however, designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.29 Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

In the present case, the petitioners’ separation pay, other benefits, and the wages from January 1 to 17 were paid in check. Strictly speaking, SDPI violated the Labor Code when it included wages from January 1 to 17, 1998 in the check. Considering, however, the amount of other monetary benefits to be paid, payment in check was the most convenient form for both the petitioners and the respondent. Further, as pointed out by the respondents, the petitioners are deemed estopped from questioning the legality of payment of wages from January 1 to 17, 1998 in check because the same was raised for the first time only in their appeal before the NLRC.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision and resolution of the Court of Appeals in CA-G.R. SP No. 56230 are AFFIRMED.

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SO ORDERED.

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