64.

(B)
MANILA ELECTRIC COMPANY, Petitioner, vs. HON. SECRETARY OF LABOR
LEONARDO QUISUMBING and MERALCO EMPLOYEES AND WORKERS
ASSOCIATION (MEWA), Respondents.
AUGUST 1, 2000
On February 22, 2000, this Court promulgated a Resolution with the decretal portion ( pls
read the previous decision):
Petitioner Manila Electric Company filed with this Court, on March 17, 2000, a "Motion for
Partial Modification (Re: Resolution Dated 22 February 2000)" anchored on the following
grounds:
I
With due respect, this Honorable Courts ruling on the retroactivity issue: (a) fails to
account for previous rulings of the Court on the same issue; (b) fails to indicate the
reasons for reversing the original ruling in this case on the retroactivity issue; and (c) is
internally inconsistent.
II
With due respect, the Honorable Courts ruling on the retroactivity issue does not take into
account the huge cost that this award imposes on petitioner, estimated at no less than
P800 Million.
Anent the second ground, petitioner alleges that the retroactive application of the arbitral
award will cost it no less than P800 Million. Thus, petitioner prays that the two-year term
of the CBA be fixed from December 28, 1996 to December 27, 1998. Petitioner also
seeks this Courts declaration that the award of P2,000.00 be paid to petitioners rank-andfile employees during this two-year period. In the alternative, petitioner prays that the
award of P2,000.00 be made to retroact to June 1, 1996 as the effectivity date of the
CBA.
Private respondent MEWA filed its Comment on May 19, 2000, contending that the
Motion for Partial Modification was unauthorized inasmuch as Mr. Manuel M. Lopez,
President of petitioner corporation, has categorically stated in a memorandum to the rankand-file employees that management will comply with this Courts ruling and will not file
any motion for reconsideration; and that the assailed Resolution should be modified to
conform to the St. Lukes ruling, to the effect that, in the absence of a specific provision of

law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary
of Labor pursuant to Article 263(g) of the Labor Code, he is deemed vested with plenary
and discretionary powers to determine the effectivity thereof.
ISSUE: WON the Honorable Court has erred in rendering the previous Feb. 22, 2000 decision.
RULING:
NO but the court modified its decision.
Upon a reconsideration of the Decision, this Court issued the assailed Resolution
which ruled that where an arbitral award granted beyond six months after the
expiration of the existing CBA, and there is no agreement between the parties as to
the date of effectivity thereof, the arbitral award shall retroact to the first day after
the six-month period following the expiration of the last day of the CBA. In the
dispositive portion, however, the period to which the award shall retroact was
inadvertently stated as beginning on December 1, 1995 up to November 30, 1997.
In resolving the motions for reconsideration in this case, this Court took into account the
fact that petitioner belongs to an industry imbued with public interest. As such, this Court
can not ignore the enormous cost that petitioner will have to bear as a consequence of the
full retroaction of the arbitral award to the date of expiry of the CBA, and the inevitable
effect that it would have on the national economy. On the other hand, under the policy of
social justice, the law bends over backward to accommodate the interests of the working
class on the humane justification that those with less privilege in life should have more in
law.15 Balancing these two contrasting interests, this Court turned to the dictates of
fairness and equitable justice and thus arrived at a formula that would address the
concerns of both sides. Hence, this Court held that the arbitral award in this case be made
to retroact to the first day after the six-month period following the expiration of the last
day of the CBA, i.e., from June 1, 1996 to May 31, 1998.
This Court, therefore, maintains the foregoing rule in the assailed Resolution pro
hac vice. It must be clarified, however, that consonant with this rule, the two-year
effectivity period must start from June 1, 1996 up to May 31, 1998, not December 1,
1995 to November 30, 1997.
During the interregnum between the expiration of the economic provisions of the CBA
and the date of effectivity of the arbitral award, it is understood that the hold-over
principle shall govern, viz:

"[I]t 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 freedom period
and/or until a new agreement is reached by the parties." Despite the lapse of the formal
effectivity of the CBA the law still considers the same as continuing in force and effect until a
new CBA shall have been validly executed.16
Finally, this Court finds that petitioners prayer, that the award of Two Thousand
Pesos shall be paid to rank-and-file employees during the two-year period, is welltaken. The award does not extend to supervisory employees of petitioner.
WHEREFORE , the Motion for Partial Modification is GRANTED. The Resolution of
February 22, 2000 is PARTIALLYMODIFIED as follows: (a) the arbitral award shall
retroact to the two-year period from June 1, 1996 to May 31, 1998; (b) the increased
wage award of Two Thousand Pesos (P2,000.00) shall be paid to the rank-and-file
employees during the said two-year period. This Resolution is subject to the monetary
advances granted by petitioner to said employees during the pendency of this case,
assuming such advances had actually been distributed to them.