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LMG CHEMICALS CORP v.

SOLE and CHEMICAL


WORKERS UNION
J. Sandoval-Gutierrez
356 SCRA 577
Digest by: E. Aaron Valdez

THE CASE IN 3 SENTENCES: LMG and CWU kept arriving at a deadlock in CBA negotiations
because LMG kept low-balling their offers for a daily wage increase. The SOLE assumed jurisdiction of
the labor dispute and LMG accused the SOLE of acting with GAD because the wage increase he ordered
has no basis in fact and law (NOPE) and that he cannot by an order determine the retroactivity and
effectivity of the CBA (HE CAN). The SC held that pursuant to Article 263(g) of the LC, the SOLE is
deemed vested with plenary powers to determine the effectivity of the CBA.

TOPIC: AWARDS and ORDERS; In the absence of the specific provision of law prohibiting retroactivity of
the effectivity of the arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the
Labor Code, the SOLE is deemed vested with plenary powers to determine the effectivity thereof.

1. LMG Chemicals Corp (LMG) is engaged in the sale of chemical substances such as aluminium
sulphate and technical grade sulphuric acid. It has three divisions: the Organic Division, the Inorganic
Division, and the Pinamucan Bulk Carriers. Private respondent Chemical Workers Union (CWU) is
the collective bargaining agent of the daily paid employees of the Inorganic Division.
2. In December 1995, LMG and CWU started bargaining for a new CBA. LMG proposed a P120 wage
increase (P40 increase/day per year for the first three years) while CWU wanted an increase of P500
(P350/day for the 1st 18 months and P150/day for the remaining 18). LMG countered with an offer for
P215 wage increase. The parties were at an impasse so CWU filed a Notice of Strike with the NCMB-
NCR.
3. Conciliation efforts of the designated conciliator-mediator failed so CWU staged a strike on April 16,
1996. In an attempt to end the strike early, LMG low-balled CWU with an offer of a P135 wage
increase. After another conciliation meeting, CWU rejected the offer.
4. The SOLE found the dispute impressed with national interest and assumed jurisdiction over the
dispute. LMG and CWU submitted position papers, and the former in its paper further low-balled the
offer to just a P50 wage increase, with no wage increases on the first year.
5. The SOLE released an order decreeing LMG and CWU to incorporate the following provisions in
their CBA:
a. That the wage increase be fixed at P135/day (SOLE ratiocinated that the supervisory
employees received an annual increase of P4,500 to their salary so there was no reason to
scrimp on other employees salaries)
b. That the CBA retroact to January 1, 1996
6. LWU appealed the SOLE order, imputing GAD because
a. The wage increase has no basis in fact and law, seeing that the SOLE failed to account for the
fact that LMG suffered losses in the first part of 1996 amounting to P15.61M and that it also
suffered substantial losses because of the strike; and
b. The SOLE can only exercise his discretion on the issue of the date of the effectivity of the
new CBA is limited to either (i) limiting the matter of the date of effectivity of the new CBA
agreement to the parties; or (ii) ordering the terms of the new CBA be prospectively applied
ISSUE(s):
Whether or not the SOLE gravely abused his discretion by ordering a wage increase without basis
in fact and law (NO)
In his Comment on the July 1, 1997 petition, it is clear the SOLE considered all the evidence and
arguments adduced by both parties. There are three valid reasons for ordering the wage increase:
a. Though the inorganic division suffered losses, other divisions earned income which amounted to
a profit for the entire corporation. It is sound business practice to collate income from all sources
to determine its true financial condition. The company realized a profit of around P10M for 1995;
b. The company made an offer of P135 daily wage increase, which implies that the Company took
into account its financial condition;
c. Its supervisory employees secured a P166 daily wage increase. To withhold such increase from
daily paid employees would be tantamount to discrimination
No whimsical and capricious exercise of power exists in this case so there is no GAD.

Whether or not the SOLE gravely abused his discretion by setting a date of retroactivity of the CBA
(NO)

Since LMG supplies the sulphate requirements of the MWSS, the dispute was laced with national interest.
It is well-settled in Phil Jurisprudence that the authority of the SOLE to assume jurisdiction over a labor
dispute causing or likely to cause a strike in an industry indispensable to national interest includes and
extends to all questions and controversies arising therefrom. The power is plenary and discretionary in
nature to enable him to effectively and efficiently dispose of the primary dispute.

In St. Lukes Medical Center, Inc. vs. Torres, a deadlock developed during the CBA negotiations between
the management and the union. The Secretary of Labor assumed jurisdiction and ordered their CBA shall
retroact to the date of the expiration of the previous CBA. The management claimed that the Secretary of
Labor committed GAD. The SC held:

xxx

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration
of the previous CBA, contrary to the position of the petitioner. Under the circumstances of the case,
Art. 253-A cannot be properly applied to herein case. As correctly stated by public respondent in
his assailed Order of April 12, 1991 -

Anent the alleged lack of basis for retroactivity provisions awarded, We would stress that
the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of
agreement by and between the parties, and not arbitral awards.

Therefore in the absence of the specific provision of law prohibiting retroactivity of the effectivity of
the arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code,
such as herein involved, public respondent is deemed vested with plenary powers to determine the
effectivity thereof.

To deprive respondent Secretary of such power and discretion would run counter to the well-established
rule that all doubts in the interpretation of labor laws should be resolved in favor of labor. In upholding
the assailed orders of respondent Secretary, the Court gives meaning to this rule. The Court should help
labor authorities in providing workers immediate benefits, without being hampered by arbitration or
litigation processes that prove to be not only nerve-wracking but financially burdensome in the long run.