WAGE AND WAGE RATIONALIZATION ACT

25. Bankard vs NLRC

respondent Bankard Employees Union-AWATU (Union) filed before the National Conciliation and Mediation Board
(NCMB) its first Notice of Strike (NOS), alleging commission of unfair labor practices by petitioner Bankard, Inc.
(Bankard), to wit: 1) job contractualization; 2) outsourcing/contracting-out jobs; 3) manpower rationalizing
program; and 4) discrimination.
Union held its strike vote balloting where the members voted in favor of a strike. Bankard asked the Office of the
Secretary of Labor to assume jurisdiction over the labor dispute or to certify the same to the NLRC for compulsory
arbitration. The Union, despite the two certification orders issued by the Labor Secretary enjoining them from
conducting a strike or lockout and from committing any act that would exacerbate the situation, went on strike.
During the conciliatory conferences, the parties failed to amicably settle their dispute. Consequently, they were
asked to submit their respective position papers. Both agreed to the following issues:
1. Whether job contractualization or outsourcing or contracting-out is an unfair labor practice on the part
of the management.
2. Whether there was bad faith on the part of the management when it bargained with the Union.
10

NLRC - The act of management of reducing its number of employees thru application of the Manpower
Rationalization Program and subsequently contracting the same to other contractual employees defeats the
purpose or reason for streamlining the employees. The ultimate effect is to reduce the number of union members
and increasing the number of contractual employees who could never be members of the union for lack of
qualification. Consequently, the union was effectively restrained in their movements as a union on their rights to
self-organization. Management had successfully limited and prevented the growth of the Union and the acts are
clear violation of the provisions of the Labor Code and could be considered as Unfair Labor Practice in the light of
the provisions of Article 248 paragraph (c) of the Labor Code.
17

The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was rendered moot and
academic by virtue of the finalization and signing of the CBA between the management and the Union.
CA - agreed with Bankard that job contracting, outsourcing and/or contracting out of jobs did not per se constitute
ULP, especially when made in good faith and for valid purposes. Despite Bankard's claim of good faith in resorting
to job contractualization for purposes of cost-efficient operations and its non-interference with the employees'
right to self-organization, the CA agreed with the NLRC that Bankard's acts impaired the employees right to self-
organization and should be struck down as illegal and invalid pursuant to Article 248(c) of the Labor Code.
Issue: whether or not Bankard committed acts considered as Unfair Labor Practice
Held:
The Court finds merit in the petition.
The underlying concept of ULP is found in Article 247 of the Labor Code, to wit:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate
the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of
both labor and management, including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and
stable labor-management relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate to the workers right to self-organization and
to the observance of a CBA. It refers to "acts that violate the workers right to organize."
27
Without that element,
the acts, even if unfair, are not ULP.
28
Thus, an employer may only be held liable for unfair labor practice if it can
be shown that his acts affect in whatever manner the right of his employees to self-organize.
29

The general principle is that the one who makes an allegation has the burden of proving it. While there are
exceptions to this general rule, in ULP cases, the alleging party has the burden of proving the ULP; and in order to
show that the employer committed ULP under the Labor Code, substantial evidence is required to support the
claim. Aside from the allegations of the Union, nothing in the records strongly proves that Bankard intended its
program, the MRP, as a tool to drastically and deliberately reduce union membership. True, the program might
have affected the number of union membership because of the employees voluntary resignation and availment of
the package, but it does not necessarily follow that Bankard indeed purposely sought such result. It must be
recalled that the MRP was implemented as a valid cost-cutting measure, well within the ambit of the so-called
management prerogatives. Bankard contracted an independent agency to meet business exigencies. In the
absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at
interfering with its employees right to self-organize, it cannot be said to have committed an act of unfair labor
practice.
34

The Court has always respected a company's exercise of its prerogative to devise means to improve its operations.
Thus, we have held that management is free to regulate, according to its own discretion and judgment, all aspects
of employment, including hiring, work assignments, supervision and transfer of employees, working methods,
time, place and manner of work.
This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right
to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and
profitable operation of their business.
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VIOLATION OF WAGE ORDERS/WAGE ENFORCEMENT AND RECOVERY
44. St. Josephs College vs St. Josephs College Workers Association
"Petitioner is a non-stock, non-profit Catholic educational institution while respondent is a
legitimate labor organization which is currently the official bargaining representative of all
employees of petitioner except the faculty and consultants of the Graduate School, managerial
employees and those who occupy confidential positions. Respondent has an existing Collective
Bargaining Agreement (CBA) with petitioner.

"For the school year 2000-2001, petitioner increased its tuition fees for all its departments. Thus,
in accordance with Article VII, Section 1 of its CBA with respondent, which reads:

"Sec. 1. Tuition Fee Increases. The SCHOOL shall allocate eighty-five percent (85%) of
incremental proceeds from every tuition fee increase solely and expressly for adjustments in
employee salaries and benefits, including those that will be legally mandated during the lifetime
of this CBA.

In refutation, respondent claimed that for the past several school years (1996-1997; 1997-1998;
1998-1999; 1999-2000), petitioner has been using the formula it used in computing the
incremental proceeds for the year 2000-2001. To use a revised formula, as petitioner did, a sharp
reduction of the incremental proceeds would result. Moreover, respondent emphasized that if
the formula adopted by petitioner is used to compute the incremental proceeds whereby the
decrease in number of students enrolling in the current year is taken into consideration, the
same would run counter to the ruling of the Supreme Court in the case of Cebu Institute of
Technology v. Ople (156 SCRA 633) as it would[,] in effect[,] charge from the reserved
incremental proceeds for the wages and benefits of the employees the losses sustained by the
school in the current year.

CA - The CA, in effect, agreed with the computation presented by respondent. To determine the
meaning of incremental proceeds, the appellate court cited Section 5 of Republic Act 6728 (the
"Government Assistance to Students and Teachers in Private Education Act"), which states that
seventy percent (70%) of the proceeds from the tuition fee increase must be given to the
teaching and the nonteaching personnel of the school in the form of increases in salaries and
benefits.

Issue: whether or not there are incremental proceeds from a tuition fee increase to be
distributed as mandated by Republic Act No. 6728 when a school increases tuition fees for a
succeeding school year but actually ends up with a lower income than the previous school year
because some of its students can no longer afford the higher tuition and are forced to drop out
or transfer to another school, public or private, which charges a lower tuition fee they can afford.

Held:

"The bottom line in determining incremental proceeds is tuition fee income that takes into
account all relevant factors, such the rate of increase of tuition fees, the number of students, the
number of scholars (those who are exempted from paying the whole or part of the tuition fee),
the number of students who drop out during the year (and therefore do not pay the whole
tuition fee for the year, and the actual bad debts (the amount of tuition fee that some students
do not pay because of financial inability).
"And it is this net increase in tuition fee INCOME (not the rate or amount of increase in tuition
fees charged) that enables the school to DISTRIBUTE increase in salaries and benefits of the
employees. The law says the school must DISTRIBUTE. This means cash, not estimates, hopes
and dreams that have not been realized."

At the outset, let it be clear that this Court understands the plight of private schools and their
need to support their operation from tuition income. This Court sympathizes with the dilemma
of petitioner and other educational institutions similarly situated. In their desire to raise teacher
compensation and to expand school facilities, they resort to sometimes painful increases in
tuition fees, only to find out later that -- despite their good intentions -- their gross revenues
actually decrease because of the lesser number of enrollees who can afford the increases.
However, the Court cannot agree with their position on the present legal issue - the law plainly
states that 70 percent of the tuition fee increase shall be allotted for the teaching and the
nonteaching personnel; and that the payment of other costs of operation, together with the
improvement of the schools infrastructure, shall be taken only from the remaining 30 percent.
The law does not speak, directly or indirectly, of the contention of petitioner that in the event
that its total tuition income is lesser than that in the previous year, then the whole amount of
the increase in tuition fee, and not merely up to 30 percent as provided by law, may be used for
the improvement and modernization of infrastructure and for the payment of other costs of
operation.

The law allows an increase in school tuition fees on the condition that 70 percent of the increase
shall go to the payment of personnel benefits. Plainly unsupported by the law or jurisprudence
is petitioners contention that the payment of such benefits should be based not only on the
rate of tuition fee increases, but also on other factors like the decrease in the number of
enrollees; the number of those exempt from paying the fees, like scholars; the number of
dropouts who, as such, do not pay the whole fees; and the bad debts incurred by the school.
The financial dilemma of petitioner may deserve sympathy and support, but its remedy lies not
in the judiciary but in the lawmaking body.