Meralco Electric Co.
v Quisumbing RESOLUTION (AUGUST 2000) - Despite the silence of the law, the Court rules herein that CBA arbitral awards
August 1, 2000| Ynares-Santiago, J. |
Digester: Endaya, Ana Kristina R.
SUMMARY:The February 2000 resolution decreed 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. MERALCO filed a motion for partial reconsideration. (Date:
December 1, 1995 to November 30, 1997)
After balancing the 2 interests (1 – MERALCO in an industry imbued with public
interest and the consequences to the national economy; 2 – laws favor the labor), the SC
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 (from June 1, 1996 to
May 31, 1998). The rule in the February 2000 resolution is pro hac vice (on this occasion
only).Consonant with this rule, the two-year effectivity period must start from June 1,
1996 up to May 31, 1998. (The December 1, 1995 to November 30, 1997 was what was
inadvertently stated in the February 2000 Resolution)
DOCTRINE:
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 (from June 1, 1996 to May 31, 1998).
FACTS:
 January 27, 1999 Decision: The CBA should be effective for a term of two years
counted from December 28, 1996 (the date of the Secretary of Labors disputed
Order on the parties motion for reconsideration) up to December 27, 1998. – The
arbitral award was given prospective effect.
 February 22, 2000 Resolution: MR is partially granted.Decision is modified:
1. The arbitral award shall retroact from December 1, 1995 to
November 30, 1997; (Ratio for this decision is below italicized)
- Labor laws are silent as to when an arbitral award in a labor dispute where the
SOLE had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall
retroact.
o In general, a CBA negotiated within 6 months after the expiration of the existing
CBA retroacts to the day immediately following such date and if agreed thereafter,
the effectivity depends on the agreement of the parties.
o On the other hand, the law is silent as to the retroactivity of a CBA arbitral
award or that granted not by virtue of the mutual agreement of the parties but by
intervention of the government.
granted after 6 months from the expiration of the last CBA shall
retroact to such time agreed upon by both employer and the
employees or their union. Absent such an agreement as to
retroactivity, the award shall retroact to the first day after the 6-
month period following the expiration of the last day of the CBA
should there be one. In the absence of a CBA, the Secretarys
determination of the date of retroactivity as part of his discretionary
powers over arbitral awards shall control.
2. The award of wage is increased from the original amount of P1,900 to P2,000
for the years 1995 and 1996.
 This Resolution is subject to the monetary advances granted by petitioner
to its rank-and-file employees during the pendency of this case assuming
such advances had actually been distributed to them.
 MERALCO filed a Motion for Partial Reconsideration based on the following
grounds:
I. Court’s 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. Internally inconsistent.
II. Court’s 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.
 MEWA filed a comment
o The Motion for Partial Reconsideration was unauthorized since MERALCO’s
President (Lopez) has categorically stated in a memorandum to the rank-and-
file employees that management will comply with this Court’s ruling and will
not file any motion for reconsideration;
o The February Resolution should be modified to conform to the St. Luke
o s 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.
MERALCO’s Arguments: (with reference to the assailed resolution – the one
italicized)
I. Court’s ruling in the retroactivity issue is an error:
1. While it alludes to the Secretary’s discretionary powers only in the absence of a
CBA, Article 253-A of the Labor Code always presupposes the existence of a prior
or subsisting CBA; hence the exercise by the Secretary of his discretionary powers
will never come to pass.
2. The Resolution contravenes the jurisprudential rule laid down in the cases:
a. Union of Filipro Employees v. NLRC: Court upheld the NLRC’s act of giving
prospective effect to the CBA.
 b. Filipro applied in Pier 8 Arrastre and Stevedoring Services v. Roldan-Confesor: Court
upholds the pronouncement of the NLRC holding the CBA to be signed by
the parties effective upon the promulgation of the assailed resolution. It is
clear and explicit from Article 253-A that any agreement on such other
provisions of the CBA shall be given retroactive effect only when it is entered
into within six (6) months from its expiry date. If the agreement was entered
into outside the six (6) month period, then the parties shall agree on the
duration of the retroactivity thereof. But since no agreement to that effect was
made, public respondent did not abuse its discretion in giving the said CBA a
prospective effect. The action of the public respondent is within the ambit of
its authority vested by existing laws
 What MERALCO argues to be applied in this case in light of the rulings: That
the two-year arbitral award in the case at bar should likewise be applied
prospectively, counted from December 28, 1996 to December 27, 1998. There
is nothing in Article 253-A of the Labor Code which states that arbitral awards
or renewals of a collective bargaining agreement shall always have retroactive
effect.
2. Court erred in holding that the effectivity of CBA provisions are automatically
retroactive.
- MERALCO invokes SC’s ruling in January 27, 1999 (the 1st case), which
was modified in the assailed Resolution
o That in the absence of an agreement between the parties, an
arbitrated CBA takes on the nature of any judicial or quasi-judicial
award; it operates and may be executed only prospectively unless
there are legal justifications for its retroactive application.
3. Court erred in the interpretation of certain acts of MERALCO as consent to
the retroactive application of the arbitral award.
4. The Resolution is internally flawed because when it held that the award shall
retroact to the first day after the 6-month period following the expiration of
the last day of the CBA, the reckoning date should have been June 1, 1996, not
December 1, 1995, which is the last day of the 3-year lifetime of the economic
provisions of the CBA.
II. Court’s 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.
1. MERALCO prays that the 2-year term of CBA be fixed from December 28,
1996 to December 27, 1998.
2. MERALCO prays that the Court decrees that the award of P2,000 be paid to
the rank-and-file employees during this two-year period. In the alternative, that
the award of P2,000 be made to retroact to June 1, 1996 as the effectivity date
of the CBA.
MEWA’s Argument:
1. The arbitral award in this case should be made effective from December 1, 1995 to
November 30, 1997 as enunciated in St. Lukes Medical Center, Inc. v. Torres.
- St. Luke:The Secretary of Labor has plenary and discretionary powers to
determine the effectivity of arbitral awards
- St.Luke was reiterated in Manila Central Line Corp (1998): Art. 253-A refers to
collective bargaining agreements entered into by the parties as a result of their
mutual agreement. The CBA in this case, on the other hand, is part of an
arbitral award. As such, it may be made retroactive to the date of expiration of
the previous agreement.Iin 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, such as
herein involved, public respondent is deemed vested with plenary and
discretionary powers to determine the effectivity thereof
RULING: Motion for Partial Reconsideration is GRANTED. The February 2000
resolution is partially modified 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 P2,000 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 MERALCO
to said employees during the pendency of this case, assuming such
advances had actually been distributed to them.
What is the proper date for the retroactive effect of the arbitral award? –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 (not December 1, 1995 to November 30, 1997)
 SC took into account and balanced the 2 interests below:
1. The fact that MERALCO belongs to an industry imbued with public interest.
As such, it cannot ignore the enormous cost that MERALCO 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.
2. 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.
 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 (from June 1, 1996 to May 31, 1998).
 Therefore, the rule in the February 2000 resolution is pro hac vice (on this
occasion only).
o 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. (this was what was in the February
2000 resolution – check notes)
 During the interval 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:
o 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 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.

Whether MERALCO’s prayer that the award of P2,000 shall be paid to rank-and-
file employees during the two-year period? – YES, but this award does not extent
to MERALCO’s supervisory employees.

Notes:
 Court notes that both parties’ arguments were well supported by jurisprudence.
 In the dispositive portion of the February 2000 resolution, the SC now notes that
the period to which the award shall retroact was inadvertently stated as beginning
on December 1, 1995 up to November 30, 1997.
 ART. 253-A. Terms of a collective bargaining agreement.
Any Collective Bargaining Agreement that the parties may enter into shall, insofar
as the representation aspect is concerned, be for a term of five (5) years. No
petition questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately before the date
of expiry of such five year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution. Any agreement on such other provisions of
the Collective Bargaining Agreement entered into within six (6) months from the
date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date. If
any such agreement is entered into beyond six months, the parties shall agree on
the duration of retroactivity thereof. In case of a deadlock in the renegotiation of
the collective bargaining agreement, the parties may exercise their rights under this
Code.
 RIVERA v. ESPIRITU and LAGUESMA
January 23, 2002 | Quisumbing, J. | Contract Duration
Digester: Fausto, Jaime Manuel A.
SUMMARY:PAL suffered losses due to the ALPAP (pilot’s association) strike, and
thus the former downsized the labor force by 1/3. PALEA, the SEBA, went on strike
to protest the retrenchment measures, which affected 1899 union members. President
Estrada through AO 16 then created a Task Force to address PAL’s problems, and
served as the mediator in the conciliation between PAL and PALEA. PAL (through
Lucio Tan) offered that shares of stock were to be transferred to the employees and that
3 of the latter would be part of the BOD, with the request that a 10-year suspension of
the CBA be effected. In a referendum, the PALEA members rejected this. Thus PAL
had to cease operations and terminate the employees. The PALEA board, in trying to
prevent the closure, made another offer. This was rejected at first, but in yet another
offer, which included the same terms as PAL’s original offer, was accepted by PAL and
later by the PALEA members at another referendum. Then, some PALEA officers
assailed the validity of this agreement, alleging that the 10-year suspension of the CBA
abrogated their rights to self-organization and collective bargaining, invoking Article
265. The Court held that the agreement was valid because it was PALEA, as the
exclusive bargaining agent of PALs ground employees, which voluntarily entered into
the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year
suspension of the CBA. Either case was the union’s exercise of its right to collective
bargaining. The right to free collective bargaining, after all, includes the right to suspend
it.This was just an exercise of a voluntary mode in dispute settlement. There was also no
violation of the 5-year representation limit under Article 265, as this only applies when
there is an extant CBA in full force and effect. In the instant case, the parties agreed to
suspend the CBA and put in abeyance the limit on the representation period.
DOCTRINE: First see the periods concerning the CBA in Art. 265 (notes).
Article 265 has a two-fold purpose:
1. To promote industrial stability and predictability: in this case, the agreement sought to
promote industrial peace during PAL’s rehabilitation.
2. To assign specific timetables wherein the negotiations become a matter of right and
requirement: nothing in the provision prohibits waiving or suspending the mandatory
timetables and agreeing on the remedies to enforce the same.
Also, the right to free collective bargaining, after all, includes the right to suspend it.
FACTS:
 This case involves a dispute in the terms of the CBA between the company
Philippine Airlines (PAL) and PAL Employees Association (PALEA).
 Philippine Airlines’ (PAL) pilots affiliated with the Airline Pilots Association of the
Philippines (ALPAP) causing serious losses to the financially beleaguered flag
carrier. Facing bankruptcy, PAL adopted a rehabilitation plan and downsized its
labor force by more than one-third.
 Thus, PALEA went on strike to protest the retrenchment measures, which affected
1899 union members. The strike ended when the parties (PAL and PALEA) agreed
to a systematic reduction of workers and payment of separation benefits.
 Later, President Estrada issued AO 16, creating an Inter-Agency Task Force (Task
force) to address PAL’s problems. Respondent Espiritu was the chairman. The
Task Force was empowered to summon all parties concerned for conciliation,
mediation for the purpose of arriving at a total and complete solution of the
problem.
 PAL management then submitted an offer by respondent PAL CEO Lucio Tan,
wherein it planned to transfer shares of stock to the employees, with the ff. terms:
 60k shares at P5/share will be transferred to each employee
 3 of these employees will be allowed to be part of the PAL Board of Directors
 To attain normalcy while tackling the problem, a 10-year suspension fo the
CBA was requested
 Pressured by the union members, the PALEA BOD had to reject the offer.
 PAL later informed the Task Force that it was shutting down its operations
effective September 23, 1998, preparatory to liquidating its assets and paying off its
creditors. The airline claimed that given its labor problems, rehabilitation was no
longer feasible, and hence, the airline had no alternative but to close shop.
 Then, PALEA informed the DOLE that it had no objection to a referendum on
the Tan’s offer.
 2,799 out of 6,738 PALEA members cast their votes in the referendum. Of the
votes cast, 1,055 voted in favor of Tans offer while 1,371 rejected it.
 Thus, PAL ceased operations and sent notices of termination to the employees.
 The PALEA board, despite the unfavorable votes of its members, and in trying to
prevent the closure, wrote to President Estrada to intervene, and offered a 10-year
moratorium on strikes and similar actions, and a waiver of some of the
economic benefits of the existing CBA.
 Tan however rejected this counteroffer.
 The PALEA board made another offer, proposing the following terms:
 Employees are granted the earlier proposed shares of stock and the 3 BOD
seats, plus another seat from government shares
 PALEA be granted adequate representation in committees which deal with
terms and conditions of employment
 To assure investors and creditors of industrial peace, PALEA agrees, subject to
the ratification by the general membership, to the suspension of the PAL-
PALEA CBA for a period of ten (10) years, provided the following
safeguards are in place:
o PALEA shall continue as the SEBA of the rank and file employees
o The union shop/ maintenance of membership provision under the
existing CBA shall be respected
o No salary deduction, with full medical benefits
 PAL accepted this, and a referendum was scheduled where 61% of the union
members accepted it.
 PAL then resumed operations but then some PALEA officers (petitioners in this  In promoting unionism, the law has allowed stipulations for union shop and closed
case) filed a petition to annul the agreement PALEA proposed earlier. shop as means of encouraging workers to join and support the union of their
choice in the protection of their rights and interests vis--vis the employer.
RULING: Petition denied.  Neither was there a violation of the 5-year representation limit under Article 265, as
this only applies when there is an extant CBA in full force and effect. In the instant
Whether the PAL-PALEA agreement was void because it abrogated the right of case, the parties agreed to suspend the CBA and put in abeyance the limit on the
the workers to self-organization and collective bargaining – NO. representation period.
 Petitioners invoked Article 265 [253-A] (notes) arguing that there was a bar to
renegotiation or even forging a new CBA for over a decade. 10 years was beyond NOTES:
the statutory life of a CBA and agreeing to the 10-year suspension abdicated their  ART. 265 [253-A]. Terms of a Collective Bargaining Agreement. Any Collective
right to bargain for another CBA in the mandated time. Bargaining Agreement that the parties may enter into shall, insofar as the
 Under this provision, a CBA has a term of 5 years, while he other provisions, representation aspect is concerned, be for a term of five (5) years. No petition
except for representation, may be negotiated not later than three years after the questioning the majority status of the incumbent bargaining agent shall be
execution. entertained and no certification election shall be conducted by the Department of
 However, the Court disagreed with this argument. Labor and Employment outside of the sixty-day period immediately before the date
 A CBA is a contract executed upon request of either the employer or the exclusive of expiry of such five-year term of the Collective Bargaining Agreement. All other
bargaining representative incorporating the agreement reached after negotiations provisions of the Collective Bargaining Agreement shall be renegotiated not later
with respect to wages, hours of work and all other terms and conditions of than three (3) years after its execution. Any agreement on such other provisions of
employment, including proposals for adjusting any grievances or questions arising the Collective.
under such agreement. The primary purpose of a CBA is the stabilization of labor-  Bargaining Agreement entered into within six (6) months from the date of expiry of
management relations in order to create a climate of a sound and stable industrial the term of such other provisions as fixed in such Collective Bargaining
peace. Agreement, shall retroact to the day immediately following such date. If any such
 The assailed PAL-PALEA agreement was the result of voluntary collective agreement is entered into beyond six months, the parties shall agree on the duration
bargaining negotiations undertaken in the light of the severe financial situation of the retroactivity thereof. In case of a deadlock in the renegotiation of the
faced by the employer, with the peculiar and unique intention of not merely collective bargaining agreement, the parties may exercise their rights under this
promoting industrial peace at PAL, but preventing the latters closure. Code.
 Article 265 has a two-fold purpose:
 To promote industrial stability and predictability: in this case, the agreement
sought to promote industrial peace during PAL’s rehabilitation.
 To assign specific timetables wherein the negotiations become a matter of
right and requirement: nothing in the provision prohibits waiving or
suspending the mandatory timetables and agreeing on the remedies to
enforce the same.
 In the instant case, it was PALEA, as the exclusive bargaining agent of PALs
ground employees, which voluntarily entered into the CBA with PAL. It was also
PALEA that voluntarily opted for the 10-year suspension of the CBA. Either case
was the union’s exercise of its right to collective bargaining. The right to free
collective bargaining, after all, includes the right to suspend it.
 There was thus an exercise of the voluntary modes in settling disputes, including
conciliation to foster industrial peace.
 Petitioners then claimed that there was ULP as PALEA was virtually installed as a
company union. However, the agreement shows the intent of the parties to
maintain union security during the period of the suspension of the CBA.
 FVC Labor Union- Philippine Transport and General Workers Organization
(FVCLU-PTGWO) v Sama-Samang Nagkakaisang Manggagawa sa FVC
Solidarity of Independent and General Labor Organizations (SANAMA-FVC-
SIGLO)
Nov 27, 2009|Brion, J.|Collective Bargaining Agreement; Terms of Contract
Digester: Anna Mickaella Lingat
SUMMARY:FVCLU-PTGWO is the bargaining agent of the rank-and-file employees
of FVC Philippines Incorporated. It signed a five-year CBA, which was renegotiated
and hence, extended by 4 months. On January 21, 2003 or nine days before the
expiration of the original CBA term, SANAMA-SIGLO filed a PCE, but this was
opposed by FVCLU-PTGWO because it was outside the freedom period or 60 days
prior to the expiration of the renegotiated CBA, which is on May 31, 2003. Although
SANAMA-SIGLO eventually desisted from pursuing the case, the Court held that the
PCE was seasonably filed by SANAMA-SIGLO because the amendment of the CBA
did not extend the extension of the union’s exclusive bargaining status, which remained
effective only until January 31, 2003.
DOCTRINE:While the parties may agree to extend the CBAs original five-year term
together with all other CBA provisions, any such amendment or term in excess of five
years will not carry with it a change in the unions exclusive collective bargaining status.
By express provision of the Article 253-A, the exclusive bargaining status cannot go
beyond five years and the representation status is a legal matter not for the workplace
parties to agree upon. Despite an agreement for a CBA with a life of more than five
years, either as an original provision or by amendment, the bargaining unions exclusive
bargaining status is effective only for five years and can be challenged within sixty (60)
days prior to the expiration of the CBAs first five years.
FACTS:
 Petitioner FVCLU-PTGWO is the recognized bargaining agent of the rank-and-file
employees of the FVC Philippines Incorporated. It signed a five-year CBA with the
company (from February 1, 1998 to January 30, 2003).
 At the end of the third year of the five-year term and pursuant to the CBA,
FVCLU-PTGWO and the company entered into a renegotitation of the CBA and
modified the CBA’s duration.
o Art XXV, Sec 2 of the renegotiated CBA provides that this re-negotiation
agreement shall take effect beginning February 1, 2001 and until May 31, 2003,
extending the original five-year period of the CBA by 4 months.
 On January 21, 2003, 9 days before the January 30, 2003 expiration of the
originally-agreed CBA term, Sama-samang Nagkakaisang sa FVC-Solidarity of
Independent and General Labor Organizations (SANAMA-SIGLO) filed before
DOLE a petition for certification election for the same rank-and-file covered by
FVCLU-PTGWO.
o FVCLU-PTGWO moved to dismiss the petition on the ground that the
certification election petition was filed outside the freedom period or outside
the 60 days before the expiration of the CBA on May 31, 2003.
 Med-Arbiter: Dismissed PCE for being filed outside freedom period counted
from the May 31, 2003 expiry date of the amended CBA.
 DOLE Secretary Tomas: reversed Med-Arbiter and ordered the conduct of
certification election. FVCLU-PTGWO moved for the reconsideration.
 DOLE Acting Secretary Imson: granted MR; dismissed PCE.
o The amended CBA, which extended the representation aspect of the original
CBA by 4 months, had been ratified by members of the bargaining unit some
of whom later organized themselves as SANAMA-SIGLO.
o Since these SANAMA-SIGLO members fully accepted and in fact received the
benefits arising from the amendments, they also accepted the extended term of
the CBA and cannot now file a petition for certification election based on the
original CBA expiration date.
o MR denied.
 CA: ruled in favor of SANAMA-SIGLO; reversed DOLE’s order.
o While the parties may renegotiate the other provisions (economic and non-
economic) of the CBA, this should not affect the five-year representation
aspect of the original CBA.
o If the duration of the renegotiated agreement does not coincide with but rather
extends the original five-year term, the same will not adversely affect the right
of another union to challenge the majority status of the incumbent bargaining
agent within 60 days before the lapse of the original five-year term of the CBA.
o In the event that a new union wins in the certification election, such union is
required to honor and administer the renegotitated CBA throughout the excess
period.
RULING:Dismissed petition. Affirmed CA’s decision, but nevertheless declare that no
certification election can be enforced as this petition has effectively been abandoned.
Whether the amendment of the CBA extending its term carry with it an
extension of the union’s exclusive bargaining status? – NO
Whether a PCE may be filed within the freedom period of the original CBA? -
YES
 PETITIONER’S ARGUMENTS:
o The extension of the CBA term also changed the unions exclusive bargaining
representation status and effectively moved the reckoning point of the 60-day
freedom period from January 30 to May 30, 2003.
o Thus, when the term of the CBA was extended, its exclusive bargaining status
was similarly extended so that the freedom period for the filing of a PCE
should be counted back from the expiration of the amended CBA term.
o SANAMA-SIGLO is estopped from questioning the extension of the CBA
term under the amendments because its members are the very same ones who
approved the amendments, including the expiration date of the CBA, and who
benefited from these amendments.
o The representation petition had been rendered moot by a new CBA it entered
into with the company covering the period June 1, 2003 to May 31, 2008.
 SANAMA-SIGLO abandoned their desire to contest the representative status of  Despite an agreement for a CBA with a life of more than five years, either as an
FVCLU-PTGWO. original provision or by amendment, the bargaining unions exclusive
o Since the promulgation of the CA decision (three years after the PCE was bargaining status is effective only for five years and can be challenged within
filed), the local leaders of SANAMA-SIGLO had stopped reporting to the sixty (60) days prior to the expiration of the CBAs first five years.
federation office or attending meetings. The SANAMA-SIGLO counsel, who  San Miguel Corp Employees Union PTGWO v Confesor: In the event however, that the
is also the national president, is no longer in the position to pursue the present parties, by mutual agreement, enter into a renegotiated contract with a term of
case because the local union and its leadership had given up. three (3) years or one which does not coincide with the said five-year term and said
o A new CBA had already been signed up by FVCLU-PTGWO and the agreement is ratified by majority of the members in the bargaining unit, the subject
company. contract is valid and legal and therefore, binds the contracting parties. The same
 Nevertheless, the Court still deemed it necessary to resolve the question of law will however not adversely affect the right of another union to challenge the
raised since this exclusive representation status will inevitably recur in the future. majority status of the incumbent bargaining agent within sixty (60) days before the
lapse of the original five (5) year term of the CBA.
 Art 253-A of the Labor Code provides:
o Terms of a collective bargaining agreement. Any Collective Bargaining As applied in this case:
Agreement that the parties may enter into, shall, insofar as the representation  The CBA was originally signed for a period of five years (expires on January 30,
aspect is concerned, be for a term of five (5) years. No petition questioning the 2003), with a provision for a renegotiation of the CBAs other provisions at the end
majority status of the incumbent bargaining agent shall be entertained and no of the 3rd year. Thus, prior to January 30, 2001, the workplace parties sat down for
certification election shall be conducted by the Department of Labor and renegotiation but instead of confining themselves to the economic and non-
Employment outside of the sixty day period immediately before the date of economic CBA provisions, also extended the life of the CBA for another four
expiry of such five-year term of the Collective Bargaining Agreement. All other months.
provisions of the Collective Bargaining Agreement shall be renegotiated not  This negotiated extension of the CBA term has no legal effect on the FVCLU-
later than three (3) years after its execution. PTGWOs exclusive bargaining representation status which remained effective only
o Any agreement on such other provisions of the Collective Bargaining for 5 years ending on the original expiry date of January 30, 2003.
Agreement entered into within six (6) months from the date of expiry of the  Hence, sixty days prior to this date, or starting December 2, 2002, SANAMA-
term of such other provisions as fixed in such Collective Bargaining SIGLO could properly field a PCE.
Agreement, shall retroact to the day immediately following such date. If any  Its petition filed on January 21, 2003 or 9 days before the expiration of the CBA
such agreement is entered into beyond six months, the parties shall agree on was seasonable filed.
the duration of retroactivity thereof. In case of a deadlock in the renegotiation
of the collective bargaining agreement, the parties may exercise their rights
under this Code.
 This provision is implemented through Book V, Rule VIII, Sec 14(b):
o Sec. 14. Denial of the petition; grounds. The Med-Arbiter may dismiss the
petition on any of the following grounds: x x x x
o (b) the petition was filed before or after the freedom period of a duly
registered collective bargaining agreement; provided that the sixty-day period
based on the original collective bargaining agreement shall not be affected by
any amendment, extension or renewal of the collective bargaining agreement.
 While the parties may agree to extend the CBAs original five-year term
together with all other CBA provisions, any such amendment or term in
excess of five years will not carry with it a change in the unions exclusive
collective bargaining status.
 By express provision of the Article 253-A, the exclusive bargaining status cannot go
beyond five years and the representation status is a legal matter not for the
workplace parties to agree upon.
 PICOP RESOURCES v. TAÑECA
August 9, 2010 | Peralta, J. | Contract Renewal
Digester: Magtanong, Patch
SUMMARY:Several members of NAMAPRI-SPFL, which was the SEBA of the rank
and file employees of PRI, were terminated from employment due to a maintenance of
membership union security provision. NAMAPRI-SPFL demanded their termination
from PRI because the said employees campaigned for, supported and signed the PCE
of another union, FFW, after the expiration of the CBA. This was considered by the
union as an act of disloyalty and a valid basis for termination pursuant to the terms and
conditions of the CBA. The Court held that the provision for status quo is conditioned
on the fact that no certification election was filed during the freedom period. In this
case, 4 PCE’s have already been filed. Moreover, the last sentence of Article 253 which
provides for automatic renewal pertains only to the economic provisions of the CBA,
and does not include representational aspect of the CBA.
DOCTRINE: While it is incumbent for the employer to continue to recognize the
majority status of the incumbent bargaining agent even after the expiration of the
freedom period, they could only do so when no petition for certification election was
filed.An existing CBA cannot constitute a bar to a filing of a petition for certification
election. When there is a representational issue, the status quo provision in so far as the
need to await the creation of a new agreement will not apply.
FACTS:
 On February 13, 2001, respondents Tañeca and20 others filed a Complaint for
unfair labor practice, illegal dismissal and money claims against petitioner PICOP
Resources, Incorporated (PRI) and Atty. Proculo Fuentes, Jr.
 Respondents were regular rank-and-file employees of PRI and bona fide members
of NagkahiusangMamumuosa PRI Southern Philippines Federation of Labor
(NAMAPRI- SPFL), which is the collective bargaining agent for the rank-and-file
employees of petitioner PRI.
 PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a
period of five (5) years from May 22, 1995 until May 22, 2000.The CBA contained
a maintenance of membership union security provision, and a provision for
termination of the employees in case of breach.
 On May 16, 2000, Atty. Fuentes sent a letter to the management of PRI demanding
the termination of employees who allegedly campaigned for, supported and signed
the Petition for Certification Election of the Federation of Free Workers Union
(FFW) during the effectivity of the CBA. NAMAPRI- SPFL considered said act of
campaigning for and signing the petition for certification election of FFW as an act
of disloyalty and a valid basis for termination for a cause in accordance with its
Constitution and By-Laws, and the terms and conditions of the CBA.
 Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty.
Romero A. Boniel issued a memorandum addressed to the concerned employees to
explain in writing within 72 hours why their employment should not be terminated
due to acts of disloyalty as alleged by their Union.
 After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the
management of PRI that the Unionfound the member’s explanations to be
unsatisfactory. He reiterated the demand for termination, but only of 46
member-employees, including respondents.
 On October 16, 2000, PRI served notices of termination for causes to the 31 out of
the 46 employees whom NAMAPRIL-SPFL sought to be terminated on the
ground of “acts of disloyalty” committed against it when respondents allegedly
supported and signed the Petition for Certification Election of FFW before the
“freedom period” during the effectivity of the CBA.
 Respondents alleged that none of them ever withdrew their membership from
NAMAPRI-SPFL or submitted to PRI any union dues and
check-offdisauthorizations against NAMAPRI-SPFL. They claimed that they
continue to remain on record as bona fide members of NAMAPRI- SPFL. They
pointed out that a patent manifestation of one’s disloyalty would have been the
explicit resignation or withdrawal of membership from the Union accompanied by
an advice to management to discontinue union dues and check-off deductions.
They insisted that mere affixation ofsignature on such authorization to file a
petition for certification election was not per se an act of disloyalty. They claimed
that while it may be true that they signed the said authorization before the start of
the freedom period, the petition of FFW was only filed with the DOLE on May 18,
2000, or 58 days after the start of the freedom period.
 LA: illegal dismissal. NLRC: dismissal valid. MR: denied. CA: reversed NLRC
RULING: Petition denied. Respondent awarded full backwages and other allowances,
without qualifications and diminutions, computed from the time they were illegally
dismissed up tothe time they are actually reinstated. Remanded to the LA for proper
computation.
Whether an existing collective bargaining agreement can be given its full force
and effect in all its terms and conditions including its union security clause, even
beyond the 5-year period when no new CBA has yet been entered into – NO, if
there is a petition for certification already filed.
 In terminating the employment of an employee by enforcing the union security
clause, the employer needs to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient evidence to support the
decision of the union to expel the employee from the union.
o First and second requisites are present. No question as to the inclusion of a
maintenance of membership clause in the CBA and that NAMAPRI-SPFL, in 2
occasions, demanded from PRI the termination of the employment of
respondents.
o THIRD REQUISITE IS MISSING.
 The mere signing of the authorization in support of the Petition for Certification
Election of FFW on March 19, 20 and 21, or before the “freedom period,” is not
sufficient ground to terminate the employment ofrespondents inasmuch as the
petition itself was actually filed during the freedom period.
 Nothing in the records would show that respondents failed to maintain their  Moreover, the last sentence of Article 253 which provides for automatic
membership in good standing in the Union. Respondents did not resign or renewal pertains only to the economic provisions of the CBA, and does not
withdraw their membership from the Union to which they belong. Respondents includerepresentational aspect of the CBA.
continued to pay their union dues and never joined the FFW  An existing CBA cannot constitute a bar to a filing of a petition for certification
 An “authorization letter to file a petition for certification election” is different from election. When there is a representational issue, the status quo provision in so far as
an actual “Petition for Certification Election.” Likewise, as per records, it was clear the need to await the creation of a new agreement will not apply.
that the actual Petition for Certification Election of FFW was filed only on May 18, o Otherwise, it will create an absurd situation where the union members will be
2000. Thus, it was within the ambit of the freedom period which commenced from forced to maintain membership by virtue of the union security clause existing
March 21, 2000 until May 21, 2000. under the CBA and, thereafter, support another union when filing a petition for
 What is prohibited is the filing of a petition for certification election outside the certification election. If we apply it, there will always be an issue of disloyalty
60-day freedom period.This is not the situation in this case. If at all, the signing of whenever the employees exercise their right to self-organization. The holding of
the authorization to file a certification election was merely preparatory to the filing a certification election is a statutory policy that should not be circumvented, or
of the petition for certification election, or an exercise of respondents’ right to self­ compromised.
organization.  Time and again, we have ruled that we adhere to the policy of enhancing the
 PRI anchored their decision to terminate respondents’ employment on Article 253 welfare of the workers. Their freedom to choose who should be their bargaining
of the Labor Code which states that “it shall be the duty of both parties to keep representative is of paramount importance. The fact that there already exists a
the status quo and to continue in full force and effect the terms and conditions of bargaining representative in the unit concerned is of no moment as long as the
the existing agreement during the 60-day period and/or until a new agreement is petition for certification election was filed within the freedom period.
reached by the parties.” It claimed that they are still bound by the Union Security  The employer is bound to exercisecaution in terminating the services of his
Clause of the CBA even after the expiration of the CBA; hence, the need to employees especially so when it is made upon the request of a labor union pursuant
terminate the employment of respondents. to the Collective Bargaining Agreement. Dismissals must not be arbitrary and
 Petitioner’s reliance on Article 253 is misplaced. According to Article 256 of the capricious. Due process must be observed in dismissing an employee, because it
Labor Code, “At the expiration of the freedom period, the employer shall continue affects not only his position but also his means of livelihood. Employers should,
to recognize the majority status of the incumbent bargaining agent where no therefore, respect and protect the rights of their employees, which include the right
petition for certification election is filed.” to labor.
 While it is incumbent for the employer to continue to recognize the majority
status of the incumbent bargaining agent even after the expiration of the
freedom period, they could only do so when no petition for certification
election was filed.
o The reason is, with a pending petition for certification, any such agreement
entered into by management with a labor organization is fraught with the risk
that such a labor union may not be chosen thereafter as the collective
bargaining representative.
 The provision for status quo is conditioned on the fact that no certification
election was filed during the freedom period. Any other view would render
nugatory the clear statutory policy to favor certification election as the means of
ascertaining the true expression of the will of the workers as to which labor
organization would represent them.
 In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a
petition for certification election was already ordered by the Med-Arbiter of DOLE
Caraga Region on August 23, 2000. Therefore, following Article 256, at the
expiration of the freedom period, PRI’s obligation to recognize NAMAPRI­SPFL
as the incumbent bargaining agent does not hold true when petitions for
certification election were filed, as in this case.
 ASSOCIATED LABOR UNIONS-VIMCONTU v. NLRC
December 20, 1991|Davide, Jr., J. | CBA – Third Parties
Digester: Roa, Annamhel Monique
SUMMARY:Petitioner Unions filed a ULP case against their common employer, Mobil
Philippines for bad faith in terminating them, without the notice required by the CBA
and without informing them that it will continue its operations under the same
corporate name, notwithstanding that the reason for such termination was purportedly
because Mobil Philippines was dissolved and acquired by Caltex. The Unions also
impleaded Caltex as the assignee of the CBA, being the purchaser of the assets of Mobil
Philippines. The Court ruled that the termination was valid for having complied with
the provisions of the Labor Code on closure and cessation of business. Precisely for
that reason, Caltex may also not be impleaded.
DOCTRINE: Unless expressly assumed, labor contracts are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only between
the parties.As a general rule, there is no law requiring a bona fide purchaser of the assets
of an on-going concern to absorb in its employ the employees of the latter. However,
although the purchaser of the assets or enterprise is not legally bound to absorb in its
employ the employees of the seller of such assets or enterprise, the parties are liable to
the employees if the transaction between the parties is colored or clothed with bad faith.
The sale or disposition must be motivated by good faith as an element of exemption
from liability.
FACTS:
 This is a consolidated case, from two petitions:
1) Filed by the Associated Labor Unions-VIMCONTU, the Cebu Oil
Employees Association represented by its president Aliviado, and
2) Filed by the Associated Labor Unions-VIMCONTU, the Cebu Oil
Employees Association ALU Local 15 represented by its president, Suarez,
both against Mobil Oil Philippines, Inc. et al.
 Both Unions entered into a CBA with Mobil Oil Philippines, Inc. (MOPI) for a
period of 3yrs – April 1, 1982 to March 31, 1985.
 August 5, 1983 – Bailiux, President of MOPI, sent letters to the employees,
notifying them of the termination of their services effective August 31 because of
the sale of MOPI (bought by Caltex Philippines, Inc.). Employees in both Unions
accepted their checks for separation pay and signed quit-claims under protest and
subject to the outcome of this case.
 Note about the sale: Caltex Philippines, Inc. (Caltex) purchased Mobil Petroleum
USA’s (Mobil USA’s) shareholdings in MOPI.
 Caltex was impleaded as additional respondent because of its acquisition of the
entire marketing and distribution assets of MOPI.
 The new Mobil Philippines, Inc. (MPI, for differentiation) was also made a respondent
when the Union learned through a newspaper announcement that MOPIwill
continue to do business under the same corporate name.
 Unions charged both MOPI and Bailiux with ULP for violating their CBA.
o CBA states: "this Agreement shall be binding upon the parties hereto and their
successors and assigns, and may be assigned by the company without the previous
approval of the Union. However, the latter will be notified of such assignment
when it occurs."
 Unions allege they were not notified officially of such assignment to Caltex, nor
personally of MOPI continuing to operate under the same corporate name.
 Records disclose that upon consummation of the sale, MOPI filed an amended
articles of incorporation which provided that its corporate term would cease on
December 31, 1983, but by September 5, 1983, MOPI had actually closed and
ceased operations.
 LA – Dismissed petitions.
o The alleged sale by Mobil USA to Caltex, the former being a principal
stockholder of MOPI, was in fact made by MOPI to Caltex, and
whatever CBA entered into by MOPI binds its stockholders.
However, Section I of Article XX of the CBA was not violated by
respondent MOPI as the record and the Unions admissions show
that the latter had knowledge of the impending sales and closure of
the firm in a series of negotiations/meetings.
o As between the Unions and MOPI, the situation is one of closure
and not redundancy, and therefore, Sec. 3 of Article XI (CBA) is not
applicable.
o Since this instant complaint of ULP takes the nature of a criminal
case, the same must be established by clear and convincing evidence
which the Unions failed to do.
o RE: WON Caltex and MOPI are bound by the provisions of the
CBA, the Commission finds that although Caltex is bound by the said
agreement under Section I thereof, the rights and interests or benefits
that may have been earned during the remaining term of the CBA
have been satisfied by MOPI when the Union employees accepted
their respective checks and executed quitclaim from and in favor of
the firm.The office took note of the fact that although acceptance of
payment was under protest, there have been previous long
negotiations/meetings for settlement between herein parties, and the
benefits granted by MOPI, were far above the benefits provided for
by law.
o There is no concrete evidence to establish or porve complainant's
allegation that MOPI will continue its business.
 NLRC 1st Division - Dismissed.
 MFR denied.
RULING:Both petitions for certiorari are dismissed for lack of merit.
Whether Caltex was rightfully impleaded/made to be involved in the case as the
assignee of the CBA – NO.
 Caltex may not be said to have stepped into the picture as an assignee of the CBA
because of the very fact of the valid closure of MOPI’s business. (SEE: 2nd issue
and ratio as to validity of closure)
 Sundowner Development Corp. vs. Drilon– The rule: Unless expressly assumed, labor
contracts… are not enforceable against a transferee of an enterprise, labor
contracts being in personam, thus binding only between the parties.As a general rule,
there is no law requiring a bona fide purchaser of the assets of an on-going concern
to absorb in its employ the employees of the latter. However, although the
purchaser of the assets or enterprise is not legally bound to absorb in its employ the
employees of the seller of such assets or enterprise, the parties are liable to the
employees if the transaction between the parties is colored or clothed with bad
faith. The sale or disposition must be motivated by good faith as an element of
exemption from liability.
 This flows from the well-recognized principle that is within the employer's
legitimate sphere of management control of the business to adopt economic
policies or make some changes or adjustments in their organization or operations
that would insure profit to itself or protect the investment of its stockholders. As in
the exercise of such management prerogative, the employer may merge or
consolidate its business with another, or sell or dispose all or substantially all of its
assets and properties which may bring about the dismissal or termination of its
employees in the process.
 This also disposes of the allegation that there was termination due to redundancy;
such could not be the case as all the employees were terminated as a result of the
closure. Redundancy contemplates a situation where employees are dismissed
because of duplicitous functions.
Whether MOPI is guilty of ULP for its act of terminating the Union employees –
NO.
 The issues presently raised have already been passed upon and resolved by this
Court in another almost identical case, Mobil Employees Association, et al. vs. NLRC, et
al –
o What is involved in instant Petition is not the termination of the CBA
itself (which, as mandated by the terms, require the giving of prior notice to the
employees), considering that the sale by Mobil USA of its wholly owned
subsidiary MOPI to Caltex took place in 1983, in the middle of the
original period of the CBA's. It appears to the Court that the
applicable provision is Article II, Section 1 of the CBA. Under this, in
cases of termination of services of employees, the company is
required to comply with the provisions of the Labor Code and its
IRR and, "time and circumstances permitting" and "whenever
possible," management should enlist the support of the unions in
actions affecting the vital interest of the bargainable (i.e., member)
employees.
o Even so, it may be well to add that, since actual notice was given to
all of MOPI's employees, including the employees who were
members of the Unions, such notice may also be regarded as
effectively the notice to the unions contemplated by the CBA
provision on CBA termination.
o Requirements of the Labor Code (then Art. 284, on Closure of
establishment and reduction of personnel) for cessation of business
operations of an employer company not due to business reverses,
are:(a) service of a written notice to the employees and to the MOLE
at least one 1 month before the intended date thereof;(b) the
cessation of or withdrawal from business operation must be bona
fide in character; and(c) payment to the employees of termination pay
amounting to at least 1/2 month pay for each year of service, or 1
month pay, which is higher.
o (A) is complied with. MOPI's employees and the MOLE were
notified in writing on August 5, 1983 that the employees' service
would cease on August 31, 1983, but that employees would
nonetheless be paid their salaries and other benefits until or as of
September 5, 1983 --More than substantial compliance with the
notice requirements of the Labor Code.
o (C) complied. The package given by MOPI to all its employees far
exceeded the minimum requirement of 1/2 month pay for every year
of service.
o It is very difficult for this Court to believe that MOPI would be
dissolved and all its employees separated with generous separation
pay benefits, for the sole purpose of circumventing the requirements
of MOPI's CBA with petitioner unions.
o The establishment of the new firm with the same Directors who had
served as such in MOPI and the hiring of some former MOPI
employees for the purpose of settling and winding up the affairs of
MOPI, does not detract from the bona fide character of MOPI's
dissolution and withdrawal from business. Same with respect to the
nature of MPI’s business.
o Net effect of the reorganization = liquidation by Mobil USA of the
great bulk of its former business in the Philippines, the dissolution of
the corporate entity of MOPI and the transfer of its physical assets
and business to some other Philippine entity owned and controlled
by Caltex.
 ELISCO-ELIROL LABOR UNION (NAFLU) and
its OFFICERS AND MEMBERS OF THE BOARD OF DIRECTORS vs.
BLR Director CARMELO NORIEL, ELIZALDE STEEL CONSOLIDATED,
INC. and NATIONAL FEDERATION OF LABOR UNIONS (NAFLU)
Decmber 29, 1977 | Teehankee., J. | CBA and Disaffiliation
Digester: Santiago, Angelo
SUMMARY:The members of the petitioner union who were then yet affiliated with
NAFLU negotiated and executed with the respondent company a CBA.After the same
members (by valid resolution of the Board of directors and approved by the general
membership) have formed themselves into an independent organization and applied for
registration as a union, a certificate of registration was issued. Finally, again by a valid
resolution, the same members disaffiliated with NAFLU. Thus they filed a petition with
the BLR to order NAFLU to desist from representing them and that they themselves be
recognized as the SEBA. The SC overturns the Med-Arbiter and the BLR Director’s
decision and holds that pursuant to the substitutionary doctrine, the locals, being
separate and distinct from their mother unions, can validly substitute their agents during
the subsistence of the CBA.
DOCTRINE: Even during the effectivity of a CBA executed between employer
and employees thru their agent, the employees can change said agent but the
contract continues to bind them up to its expiration date.
In formulating the ‘substitutionary’ doctrine, the only consideration involved as
the employees’ interest in the existing bargaining agreement. Themajority of the
employees, as an entity under the statute, is the true party in interest to the contract,
holding rights through the agency of the union representative. Thus, any exclusive
interest claimed by the agent is defeasible at the will of the principal.
FACTS:
Negotiation of CBA and subsequent registration
 1974. Februrary. Petitioner Elisco-Elirol Labor Union (NAFLU) negotiated and
executed a CBA (expiring in Nov. 1976) with respondent Elizalde Steel
Consolidated, Inc.
 However, it was found out that the union was not then registered and as such
were not entitled to the benefits in the CBA.
 1975. March 3: In a resolution succeeding a general membership meeting, the union
decides to register their union.
 May 20: The Board of Directors of the Union approves Resolution No. 6,
requesting the Acting Directors, and the Registration Division of the BLR to
register the union.
 May 28: The BLR issues a Certificate of Registration for the union.
 Steps were taken by the union to enforce the CBA as the principal party to the
same representing the workers covered by such agreement immediately after
the issuance of the certificate of registration. 

The union disaffiliates and seeks to be recognized as the SEBA.
 June 10: At a special meeting called for the purpose, the general membership of
petitioner union(about 700 in number) decided that the mother union NAFLU can
no longer safeguard the rights of its members insofar as working conditions and
other terms of employment are concerned and that the interest and welfare of
petitioner can be served best if it will stay independent & disaffiliated from NAFLU
 Thus, the general membership adopted a resolution to disaffiliate.
 June 11: Petitioner, acting through its President Hilario Riza informed respondents
of said disaffiliation by means of a letter, and subsequently requested respondents
to recognize petitioner as the SEBA of the EEs thereof.
 However, the companyrefused to recognize petitioner as the SEBR and actually
dismissed the union’s officers and board members.
 For this, a ULP case was filed for refusal to bargain collectivelywith petitioner.
 The union moreover filed a petition before the BLRto order NAFLU to stop
presenting itself as the collective bargaining agent.
 Med-arbiter dismissed the petition.
 Appeal to the BLR: petition dismissed.Held:
 Setting aside jurisprudence and the CBA of the parties, the appellant is correct.
 For to grant to the former mother union (NAFLU) the authority to administer
and enforce their collective bargaining agreement without presumably any
members in the bargaining unit is quite absurd.
 But to transferalso the authority to the newly formed union although the
members of the same were the same members who composed then the local
chapter of the mother union is also in violation of the CBAxxx the union
security clause, wherein it is a condition for a continued employment in the
company to maintain membership in the Union.
 Theoretically therefore, when the employees disaffiliated from the mother
union and formed themselves into a new union, their status as employees was
also terminated. [The SC says that this point is wrong.]
o As such they could not therefore absolutely and legally claim that
they still comprise the majority of the bargaining unit.
 Secondly, to vest, upon the new union the authority to bargain is in violation
of the whole CBA, under the theory that when the mother union (NAFLU)
entered and executed the same in its separate and distinct personality
aside from the people composing the same.
 In fine, the CBA then was executed by and between the company and the
(NAFLU) with the latter as an entity having its own capacity and personality
different from the members composing the same.
RULING:Petition GRANTED. Petitioner local union is declared to be the sole and
exclusive bargaining representative of the employees of respondent corporation entitled
to administer and enforce any subsisting collective bargaining agreement with said
employer corporation.
Which of the two unions should be recognized as the SEBR of the employees
and ultimately recognized to administer and supervise the enforcement of the
collective bargaining agreement. – The now-disaffiliated union is.
 Respondent director correctly perceived in his Resolution that “to grant to the
former mother union (NAFLU) the authority to administer and enforce their
collective bargaining agreement without presumably any members in the bargaining
unit is quite absurd”.
 He was wrong, however in holding that “when the employees disaffiliated
from the mother union and formed themselves into a new union, their status
as employees was also terminated.”
The employees and members of the local union did not form a new union; they merely registered the local
union as was their right.
 Petitioner Elisco-Elirol Labor Union-NAFLU, consisting of employees and
members of the local union, was the principal party to the agreement.
 NAFLU as the “mother union”, in participating in the execution of the bargaining
agreement with respondent company, acted merely as agent of the local union,
which remained the basic unit of the association existing principally and
freely to serve the common interest of all its members, including the freedom
to disaffiliate when the circumstances so warranted as in the present case.
The locals are separate and distinct units from the mother union.
 Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.:(T)he locals are
separate and distinct units primarily designed to secure and maintain an
equality of bargaining power between the employer and their employee-
members in the economic struggle for the fruits of the joint productive effort of
labor and capital; and the association of the locals into the national union (as
PAFLU) was in furtherance of the same end. These associations are consensual
entities capable of entering into such legal relations with their members. The
essential purpose was the affiliation of the local unions into a common enterprise
to increase by collective action the common bargaining power in respect of the
terms and conditions of labor. Yet the locals remained the basic units of
association, free to serve their own and the common interest of all, subject to
the restraints imposed by the Constitution and By-Laws of the Association,
and free also to renounce the affiliation for mutual welfare upon the terms
laid down in the agreement which brought it into existence.”
The substitutionary doctrine allows the change in agent during the subsistence of a CBA.
 Corollarily, the “substitutionary” doctrine likewise fully supports petitioner’s stand.
 Petitioner union to whom the employees owe their allegiance has from the
beginning expressly avowed that it “does not intend to change and/or amend
the provisions of the present collective bargaining agreement but only to be
given the chance to enforce the same since there is a shift of allegiance in
the majority of the employees at respondent company.”
 Benguet Consolidated Inc. vs. BCI Employees & Workers Union-PAFLU: x x x This
principle, formulated by the NLRB as its initial compromise solution to the
problem facing it when there occurs a shift in employees’ union allegiance after the
execution of a bargaining contract with their employer, merely states that even
during the effectivity of a collective bargaining agreement executed between
employer and employees thru their agent, the employees can change said
agent but the contract continues to bind them up to its expiration date. They
may bargain however for the shortening of said expiration date.
 In formulating the ‘substitutionary’ doctrine, the only consideration involved
as the employees’ interest in the existing bargaining agreement. The agent’s
interest never entered the picture. In fact, the justification for said doctrine was:
 ‘x x x that the majority of the employees, as an entity under the statute, is the
true party in interest to the contract, holding rights through the agency of the
union representative. Thus, any exclusive interest claimed by the agent is
defeasible at the will of the principal.’
NAFLU discriminated against the union.
 In the sister ULP case, the SoL in his decision denying the reconsideration and
ordering respondent corporation to immediately lift the suspension and reinstate
the complainant officers and board members of petitioner unionhas likewise
adhered to the foregoing basic principles and settled jurisprudence.
 “(G)ranting arguendo that the disaffiliation from the NAFLU is a legal cause
for expulsion and dismissal, it could not detract from the fact that only 13
individual complainants out of almost 700 members who disaffiliated,
were singled out for expulsion and recommended for dismissal. The
actuation of NAFLU conclusively constitute discrimination. Since the
suspension of the complainants was effected at the instance of NAFLU, it
should be held liable to the payment of back wages.”
What is paramount is the security of tenure of the workers, not the security of the union
 The Presidential Assistant for Legal Affairs Ronaldo B. Zamora has likewise
dismissed in a similar case as untenable the view that “such maintenance of
membership” clause be distorted as “intended for the security of the union
rather than the security of tenure for the workers”
 To impress, therefore, such ‘maintenanceof membership’—which is
intended for the security of the union rather than the security of tenure of the
workers—as a bar to employees’ changing their affiliation is not only to
infringe on the constitutional right of freedom of association, but also to
trample upon the constitutional right of workers to security of tenure and to
render meaningless whatever ‘adequate social services’ the State may establish
or maintain in the field of employment ‘to guarantee the enjoyment by the
people of a decent standard of living.’ ”
 GOYA INC. v. GOYA INC. EU-FFW
Aug 13, 2013 | Peralta, J. | Voluntary Arbitration
Digester: Bea, Alexis
SUMMARY:Goya (Company) hired contractual employees from PESO. The Union
requested for a grievance conference because said EEs from PESO are not part of the
categories of EEs stipulated in their CBA. Matter was then referred to the NCMB for
voluntary arbitration. Amicable settlement was not possible thus they submitted for
resolution the sole issue of whether or not the company is guilty of ULP. VA decided
that the Company is not guilty of ULP but nevertheless ordered it to comply with the
provisions of the CBA regarding the categories of employees that they are to acquire
from the pool of casual employees for such services. Company filed an appeal to the CA
and it dismissed it because the ruling of the VA is interrelated with the issue submitted
for resolution. Company filed a petition for certiorari (this case became moot and
academic because the Company was dissolved by the time of this decision). However,
SC ruled that the ruling of the VA is valid and it has the power to adjudicate on the
issue even though it was not expressly submitted for resolution.
DOCTRINE:The arbitrator is expected to decide only those questions expressly
delineated by the submission agreement. Nevertheless, the arbitrator can assume that he
has the necessary power to make a final settlement since arbitration is the final resort for
the adjudication of disputes
FACTS:
 Petitioner Goya Inc. (Company) hired contractual employees from PESO to
perfrom temporary and occasional services in its factory in Marikina
 Goya Inc. EU-FFW (Union) requested for a grievance conference on the ground
that the contractual workers do not belong to the categories of employees
stipulated in the CBA
 Matter was unresolved so the grievance was referred to the NCMB for voluntary
arbitration
 During the hearing, the Company and Union manifested before VA Laguesma that
amicable settlement was not possible; thus, they agreed to submit for resolution the
issue of whether or not the company is guilty of unfair labor acts in engaging the services of
PESO under the existing CBA, laws and jurisprudence
 Union: hiring of contractual employees from PESO is not a management
prerogative and violates the CBA tantamount to ULP
o The contractual workers engaged have been assigned to work in
positions previously handled by regular workers and Union members
o According to their CBA there are 3 types of employees (probationary,
regular, casual)
 Due to this provision a pool of casual employees had been
maintained by the company from which it hired workers
who then became regular workers when urgently necessary
to employ them for more than a year (same goes with
probationary employees who eventually became regulars)
 With the hiring of contractual employees, the Union
contended that it would no longer have probationary and
casual employees from which it could obtain additional
Union members: thus, rendering inutile the Union Security
provision of the CBA
o Sustaining the Company’s position would easily weaken and
ultimately destroy the Union with the retrenchment and/or
retirement of employees and not filling up the vacant regular
positions through the hiring of contractual workers from PESO and
a possible scenario could also be created by the Company wherein it
could “import” workers from PESO during an actual strike
 Company: the law expressly allows contracting and subcontracting; the
engagement of contractual employees did not prejudice the Union since not a
single employee was terminated and neither did it result in a reduction of
working hours nor a reduction or splitting of the BU; the CBA (re:
probationary/regular/casual employees) merely provides for the definition of
the categories of employees and does not put a limitation on the Company’s
right to engage the services of job contractors
 VA Laguesma: dismissed charge of ULP for being speculative but directed
Company to comply with its commitment under CBA and ruled that the
provision of the CBA did indeed serve as a limitation on the management
prerogative particularly if it involves the functions or duties specified under the
aforequoted agreement
 CA filed a petition for review before CA under Rule 43 and professing that the
order of the VA (regarding the limitation on the management prerogative) was
not covered by the sole issue submitted submitted for VA
 CA dismissed: ruling of VA interrelated and intertwined with the sole issue to
be resolved (W/N Company is guilty of ULP)
 Company moved for MR which was DENIED
 Hence, this petition for certiorari
 (Incidentally, Company filed a Manifestation informing this Court that its
stockholders and directors unanimously voted to shorten the Company’s
corporate existence and that the 3 year period allowed by law for liquidation
already expired but the Company still urged the Court to resolve the issue)
RULING: Petition DENIED
Whether or not the VA is empowered to rule on a matter not covered by the issue
submitted for arbitration—YES
 The Court ruled that the VA ruled on a matter covered by the sole issue submitted
for voluntary arbitration. Thus, CA did not commit serious error when it sustained
the ruling that the hiring of contractual employees from PESO was not in keeping
with the intent and spirit of the CBA
 The opinion of the VA is germane to the sole issue submitted for resolution by the
parties

Ludo v. Saornido
 Generally: arbitrator is expected to decide only those questions expressly delineated
by the submission agreement. Nevertheless, the arbitrator can assume that he has
the necessary power to make a final settlement since arbitration is the final resort
for the adjudication of disputes
 Logic: Since arbitration is the final resort for adjudication of disputes arbitrator can
assume that he has the power to make a final settlement

 Ludo fortifies the soundness of the questioned VA Decision and reaffirms the
plenary jurisdiction and authority of the VA to interpret the CBA and to determine
the scope of his/her own authority
 Subject to judicial review, the leeway of authority as well as adequate prerogative is
aimed at accomplishing the rationale of the law on voluntary arbitration—speedy
labor justice
 In this case, a complete and final adjudication of the dispute between the parties
necessarily called for the resolution of the related and incidental issue of whether
the Company still violated the CBA but without being guilty of ULP

Whether or not the engagement of contractual workers from PESO was a valid
exercise of management prerogative—NO
 VA correctly ruled that contracting and outsourcing is within the purview of
management prerogative but did not say that the act is a valid exercise thereof
 This is due to the recognition that the CBA provisions agreed upon delimit the free
exercise of management prerogative pertaining to the hiring of contractual
employees
 In this case, the exercise of management prerogative is not unlimited, it is subject to
the limitations found in the CBA which provides for the categories of employees
 HALAGUEÑA, et al. v. PAL
October 2, 2009| Peralta, J. | Plenary Jurisdiction of VA vis-à-vis LA
Digester: Aspi, Maria Margarita
SUMMARY:Petitioners claim that Section 144, Part A of the PAL-FASAP CBA is
unconstitutional for being discriminatory. Petitioners filed a petition for declaratory
relief against PAL in the RTC. PAL averred that the RTC has no jurisdiction over the
subject matter of petitioners’ petition because the Voluntary Arbitrator or panel of
Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the
CBA.The SC held that RTC has jurisdiction. Petitioners’ primary relief is the annulment
of Section 144, Part A of the PAL-FASAP CBA, which allegedly discriminates against
them for being female flight attendants. The subject of litigation is incapable of
pecuniary estimation, exclusively cognizable by the RTC. Being an ordinary civil action,
the same is beyond the jurisdiction of labor tribunals.
DOCTRINE:Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions
between employees and employer where the employer-employee relationship is merely
incidental and the cause of action precedes from a different source of obligation is
within the exclusive jurisdiction of the regular court
FACTS:
 Petitioners were employed as female flight attendants of respondent Philippine
Airlines (PAL) on different dates prior to November 22, 1996. They are members
of the Flight Attendants and Stewards Association of the Philippines (FASAP), a
labor organization certified as the SEBR of the flight attendants, flight stewards and
pursers of respondent.
 PAL and FASAP entered into a CBA incorporating the terms and conditions of
their agreement for the years 2000-2005 (PAL-FASAP CBA).
 Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November 1996:
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be
55 for females and 60 for males.
 Petitioners and several female cabin crews manifested that the CBA provision on
compulsory retirement is discriminatory, and demanded for an equal treatment with
their male counterparts.
 Petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the
Issuance of Temporary Restraining Order and Writ of Preliminary Injunction with
the RTC of Makati City (Civil Case No. 04-886) against PAL for the invalidity of
Section 144, Part A of the PAL-FASAP CBA.
 RTC issued an Order upholding its jurisdiction over the present case. The RTC
reasoned that: “The thrust of the Petition is Sec. 144 of the subject CBA which is
allegedly discriminatory as it discriminates against female flight attendants, in
violation of the Constitution, the Labor Code, and the CEDAW. The allegations in
the Petition do not make out a labor dispute arising from ER-EErelationship as
none is shown to exist. This case seeks a declaration of the nullity of the questioned
provision of the CBA, which is within the Court’s competence, with the allegations
in the Petition constituting the bases for such relief sought.”
 RTC issued a TRO enjoining the respondent for implementing Section 144, Part A
of the PAL-FASAP CBA.
 PAL filed an omnibus motion seeking reconsideration of the order overruling its
objection to the jurisdiction of the RTC the lifting of the TRO.
 RTC issued an Orderdirecting the issuance of a writ of preliminary injunction
enjoining PAL or any of its agents and representatives from further implementing
Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case.
 PALfiled a Petition for Certiorari and Prohibition with Prayer for a Temporary
Restraining Order and Writ of Preliminary Injunction with the CA praying that the
order of the RTC, which denied its objection to its jurisdiction, be annuled and set
aside for having been issued without and/or with grave abuse of discretion
amounting to lack of jurisdiction.
 CA: granted the PAL’s petition. Petitioners’ MR denied.
RULING:WHEREFORE, the petition is PARTLY GRANTED. The Decision and
Resolution of the Court of Appeals, are REVERSED and SET ASIDE. The Regional
Trial Court of Makati City, Branch 147 is DIRECTED to continue the proceedings in
Civil Case No. 04-886 with deliberate dispatch.
Whether the RTC has jurisdiction over the petitioners’ action challenging the
legality or constitutionality of the provisions on the compulsory retirement age
contained in the CBA between respondent PAL and FASAP – YES.
 Petitioners:RTC has jurisdiction in all civil actions in which the subject of the
litigation is incapable of pecuniary estimation and in all cases not within the
exclusive jurisdiction of any court, tribunal, person or body exercising judicial or
quasi-judicial functions. It has the power to decide issues of constitutionality or
legality of the provisions of Section 144, Part A of the PAL-FASAP CBA. As the
issue involved is constitutional in character, the LA or the NLRC has no
jurisdiction over the case.
 Respondent:Labor tribunals have jurisdiction over the present case, as the
controversy partakes of a labor dispute. The dispute concerns the terms and
conditions of petitioners’ employment in PAL, specifically their retirement age. The
RTC has no jurisdiction over the subject matter of petitioners’ petition for
declaratory relief because the VA or panel of VAs have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the CBA. Regular courts have no power to set
and fix the terms and conditions of employment.
 Court:Jurisdiction of the court is determined on the basis of the material allegations
of the complaint and the character of the relief prayed for irrespective of whether
plaintiff is entitled to such relief. In the case at bar, the allegations in the petition
for declaratory relief plainly show that petitioners’ cause of action is the annulment
of Section 144, Part A of the PAL- FASAP CBA.
 The issue raised is whether Section 144, Part A of the PAL-FASAP CBA is
unlawful and unconstitutional. Petitioners’ primary relief is the annulment of
Section 144, Part A of the PAL-FASAP CBA, which allegedly discriminates against
them for being female flight attendants. The subject of litigation is incapable of
pecuniary estimation, exclusively cognizable by the RTC. Being an ordinary civil
action, the same is beyond the jurisdiction of labor tribunals. The said issue cannot
be resolved solely by applying the Labor Code. Rather, it requires the application of
the Constitution, labor statutes, law on contracts and the CEDAW, and the power
to apply and interpret the constitution and CEDAW is within the jurisdiction of
trial courts, a court of general jurisdiction.
 Georg Grotjahn GMBH & Co. v. Isnani: Not every dispute between an employer and
employee involves matters that only LAs and the NLRC can resolve in the exercise
of their adjudicatory or quasi-judicial powers. The jurisdiction of LAs and the
NLRC is limited to disputes arising from an ER-EE relationship which can only be
resolved by reference to the Labor Code, other labor statutes, or their CBA.
 Not every controversy or money claim by an employee against the employer or
vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions between
employees and employer where the ER-EE relationship is merely incidental and the
cause of action precedes from a different source of obligation is within the
exclusive jurisdiction of the regular court. Here, the ER-EE relationship between
the parties is merely incidental and the cause of action ultimately arose from
different sources of obligation (Constitution and CEDAW). Where the principal
relief sought is to be resolved not by reference to the Labor Code or other labor
relations statute or a CBA but by the general civil law, the jurisdiction over the
dispute belongs to the regular courts of justice.
 This Court holds that the grievance machinery and voluntary arbitrators do not
have the power to determine and settle the issues at hand. They have no
jurisdiction and competence to decide constitutional issues relative to the
questioned compulsory retirement age.
 Gonzales v. Climax Mining Ltd.: But the resolution of the validity or voidness of the
contracts remains a legal or judicial question as it requires the exercise of judicial
function.
 Saura v. Saura, Jr.: xxx is true that the trend is towards vesting administrative bodies
with the power to adjudicate matters coming under their particular specialization
xxx But as expedient as this policy may be, it should not deprive the courts of
justice of their power to decide ordinary cases in accordance with the general laws
that do not require any particular expertise or training to interpret and apply.
Otherwise, the creeping take-over by the administrative agencies of the judicial
power vested in the courts would render the judiciary virtually impotent in the
discharge of the duties assigned to it by the Constitution.
 The change in the terms and conditions of employment, should Section 144 of the
CBA be held invalid, is but a necessary and unavoidable consequence of the
principal relief sought (nullification of the alleged discriminatory provision in the
CBA). It does not necessarily follow that a resolution of controversy that would
bring about a change in the terms and conditions of employment is a labor dispute,
cognizable by labor tribunals. The trial court is not asked to set and fix the terms
and conditions of employment, but is called upon to determine whether CBA is
consistent with the laws.
 Although the CBA provides for a procedure for the adjustment of grievances, such
referral to the grievance machinery and thereafter to voluntary arbitration would be
inappropriate to the petitioners, because the union and the management have
unanimously agreed to the terms of the CBA and their interest is unified.
 Pantranco North Express, Inc., v. NLRC: Only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators. In
the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between
them exists which could be brought to a grievance machinery. The problem or
dispute in the present case is between the union and the company on the one hand
and some union and non-union members who were dismissed, on the other hand.
The dispute has to be settled before an impartial body.
 The dispute in the case at bar is not between FASAP and PAL. The dispute is
between PAL and several female flight attendants who questioned the provision on
compulsory retirement of female flight attendants. Applying the principle in the
Pantranco, referral to the grievance machinery and voluntary arbitration would not
serve the interest of the petitioners. Besides, a referral of the case to the grievance
machinery and to the VA under the CBA would be futile because PAL already
implemented Section 114, Part A of PAL-FASAP CBA when several of its female
flight attendants reached the compulsory retirement age of 55.
 Further, FASAP, in a letter addressed to PAL, submitted its association’s
bargaining proposal for the remaining period of 2004-2005 of the PAL-FASAP
CBA, which includes the renegotiation of the subject Section 144. However,
FASAP’s attempt to change the questioned provision was shallow and superficial,
because it exerted no further efforts to pursue its proposal. When petitioners in
their individual capacities questioned the legality of the compulsory retirement in
the CBA before the trial court, there was no showing that FASAP, as their
representative, endeavored to adjust, settle or negotiate with PAL for the removal
of the difference in compulsory age retirement between its female and male flight
attendants, particularly those employed before November 22, 1996. Without
FASAP’s active participation on behalf of its female flight attendants, the utilization
of the grievance machinery or voluntary arbitration would be pointless.
 The trial court in this case is not asked to interpret Section 144, Part A of the
PAL-FASAP CBA. The only controversy lies in its intrinsic validity. Although it is a
rule that a contract freely entered between the parties should be respected, since a
contract is the law between the parties, said rule is not absolute.
 Pakistan International Airlines Corporation v. Ople: The contracting parties may establish
such stipulations as they may deem convenient, “provided they are not contrary to
law, morals, good customs, public order or public policy.
 A CBA, as a labor contract, is not merely contractual in nature but impressed with
public interest. If the retirement provisions in the CBA run contrary to law, public
morals, or public policy, such provisions may very well be voided.