MERALCO v.

SOLE and MERALCO EMPLOYEES AND WORKERS ASSOCIATION [MEWA] RESOLUTION [1 Aug 2000] / Ynares-Santiago / Contract duration and renewal 27 January 1999 DECISION MEWA informed MERALCO of its intention to renegotiate the terms and conditions of their existing CBA covering the remaining period of 2 years (from 1 Dec 1995 - 30 Nov 1997). MERALCO signified its willingness, and so a CBA negotiating panel was formed. Collective bargaining negotiations proceeded, but the parties failed to arrive at terms acceptable to both of them. MEWA filed a Notice of Strike with the NCMB-NCR Branch on the grounds of bargaining deadlock and ULP. Parties failed to reach an amicable settlement. MERALCO filed an Urgent Petition praying that SOLE assume jurisdiction over the labor dispute and to enjoin the striking employees to go back to work--this was GRANTED. After the parties submitted their respective memoranda, the SOLE resolved the labor dispute through an order resolving particular issues in ECONOMIC DEMANDS (like sick leave, vacation leave, etc.). MERALCO filed an MfR: SOLE committed GAD in ordering the CBA to be effective Dec 1995 (start of the remaining 2 years period), instead of 19 Aug 1996 when SOLE resolved the dispute. SC ruling re: CBA retroactivity LC 253-A1 provides that the CBA's representation aspect is for a term of 5 years. What the law additionally requires is that the CBA must be renegotiated within 3 years after its execution. If no agreement is reached within 6 months from the expiry date of the 3 years that follow the CBA execution, the law gives the parties the discretion to fix the agreement's effectivity. SC noted that the law does not specifically cover the situation where 6 months have elapsed but no agreement has been reached re: effectivity. o ONE PROVISION: Principle of hold over. In the absence of a new CBA, the parties must maintain status quo and must continue in full force and effect the terms and conditions of the existing agreement until a new one is reached. o ANOTHER PROVISION: In the absence of an agreement, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award. It operates and may be executed only respectively unless there are legal justifications for its retroactive application. There is no sufficient legal ground for the justification for the retroactive application of the CBA, so it should be effective for a term of 2 years counted from 28 Dec 1996 (date of SOLE's order on the parties' MfR) - 27 Dec 1999 22 February 2000 RESOLUTION SC quoted the 1999 Decision [see paragraph above] and said that it actually covers a three-year period. It noted that labor laws are silent as to when an arbitral award [in a labor dispute where the SOLE assumed jurisdiction] shall retroact. GENERALLY: 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. THE LAW IS SILENT, HOWEVER, as regards the retroactivity of a CBA arbitral award / grant by intervention of the government. SO WHAT HAPPENS? Three situations: o CBA arbitral awards granted after 6 months from the expiration of the last CBA shall retroact to such time agreed upon by the employer and the employees. o ABSENT SUCH AGREEMENT, the award shall retroact to the 1st day after the 6-month period following the expiration of the last day of the CBA IF THERE IS A CBA. o IF THERE IS NO CBA, the SOLE's determination of the date of retroactivity shall control (as part of his discretionary powers). SC held that the arbitral award shall retroact from 1 Dec 1995 - 30 Nov 1997 (this is the remaining 2 years of the validity of the CBA) While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties [because it requires the interference and imposing power of the State thru the SOLE when he assumes jurisdiction], the arbitral award can be considered as an approximation of a CBA which would otherwise have been entered into by the parties. MERALCO does not dispute that in the past CBA arbitral awards, SOLE granted retroactivity commencing from the period immediately following the last day of the expired CBA 01 August 2000 RESOLUTION

1 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.

MERALCO 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 01 Jun 1996, not 01 Dec 1995, which is the last day of the 3-year lifetime of the CBA economic provisions. LC 253-A presupposes the existence of a prior or subsisting CBA; hence the exercise by the SOLE of his discretionary powers will never come to pass. Union of Filipro Employees v. NLRC 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. "The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. 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." MEWA

The arbitral award should be made effective from December 1, 1995 to November 30, 1997. St. Lukes Medical Center v. Torres In the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the SOLE pursuant to LC 263(g), SOLE is deemed vested with plenary and discretionary powers to determine the effectivity thereof. Manila Central Line Corporation v. Manila Central Line Free Workers Union-National Federation of Labor In almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date when the immediately preceding CBA expires so as to give a semblance of continuity.

ISSUE & HOLDING The arbitral award shall retroact to the 2-year period from 01 Jun 1996 to 31 May 1998 (retroact to the first day after the 6month period following the expiration of the last day of the CBA) RATIO In resolving the motions for reconsideration in this case, SC took into account the fact that MERALCO belongs to an industry imbued with public interest. As such, SC 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. 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, SC turned to the dictates of fairness and equitable justice and thus arrived at a formula that would address the concerns of both sides. SC held that the arbitral award shall retroact to the 2-year period from 01 Jun 1996 to 31 May 1998 (retroact to the first day after the 6-month period following the expiration of the last day of the CBA) SC maintains the foregoing rule in the Feb 2000 Resolution pro hac vice. It must be clarified, however, that consonant with this rule, the two-year effectivity period must start from 01 Jun 1996 up to 31 May 1998. During the interregnum between the expiration of the economic provisions of the CBA and the date of effectivity of the arbitral award, it is understood that the hold-over principle shall govern.

Motion for Partial Modification GRANTED.