PART VI - COLLECTIVE BARGAINING: GENERAL CONCEPT, PROCEDURE AND ISSUES 1.

1. In a certification election, Pambansang Kilusang Paggawa (union) won and

A. General Concept
1. Policy Declaration
LC, Arts. 218(A) (a)
ART. 218. [211] Declaration of Policy- A. It is the policy of the State:
(a) To promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and conciliation, as modes
of settling labor or industrial disputes;
Art. 218(B)
B. To encourage a truly democratic method of regulating the relations between the
employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of work or other terms and conditions
of employment, except as otherwise provided under this Code.
CONST. Art. XIII, Sec. 3
SECTION 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by
law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance therewith to foster
industrial peace.
The State shall regulate the relations between workers and employers, recognizing
the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to expansion and growth.
2. Nature and Purpose
Kiok Loy v NLRC (1986)
FACTS:
was subsequently certified as the sole and exclusive bargaining agent of
rank and file employees of Sweden Ice Cream Plant (company).
2. The union furnished the company with 2 copies of its proposed CBA, and
requested the company for its counter proposals.
a. Eliciting no response to such, the union again wrote the company
for collective bargaining negotiations and for the company to
furnish them with its counter proposals.
b. Both requests were ignored and remained unacted upon by the
company.
3. The union thus filed a notice of strike with the Bureau of Legal Relations on
the ground of unresolved economic issues in collective bargaining.
4. Conciliation proceedings then followed during the 30day statutory cooling-
off period. But all attempts towards an amicable settlement failed,
prompting the BLR to certify the case to the NLRC for compulsory
arbitration
5. NLRC: company is guilty of unjustified refusal to bargain; draft proposal for
CBA, having been found reasonable, is declared to be the agreement
governing the relationship of the parties therein.
6. SC: NLRC did not commit GADLEJ; reconsidered and then gave due course
to petition.
ISSUE: WON the NLRC erred in finding petitioner guilty of unjustified refusal to
bargain- NO.
RULING:
1. Collective bargaining, defined as negotiations towards a collective
agreement, is designed to stabilize the relation between labor and
management and to create a climate of sound and stable industrial peace.
It is a mutual responsibility of the employer and the union, and is
characterized as a legal obligation.
2. Article 249 (g) of the LC makes it an unfair labor practice for an employer
to refuse "to meet and convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement with respect to wages, hours
of work, and all other terms and conditions of employment including
proposals for adjusting any grievance or question arising under such an
agreement and executing a contract incorporating such agreement, if
requested by either party.”

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 3. While it is a mutual obligation of the parties to bargain, the employer, ART. 263. [252] Meaning of Duty to Bargain Collectively. - The duty to bargain
however, is not under any legal duty to initiate contract negotiation. collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an
4. The mechanics of collective bargaining are set in motion only when the
agreement with respect to wages, hours of work and all other terms and conditions
following jurisdictional preconditions are present:
of employment including proposals for adjusting any grievances or questions arising
a. Possession of the status of majority representation of the under such agreement and executing a contract incorporating such agreements if
employees' representative in accordance with any of the means of requested by either party but such duty does not compel any party to agree to a
selection or designation provided for by the LC; proposal or to make any concession.
b. Proof of majority representation; and
c. A demand to bargain under Article 251 (a) of the LC.
5. All of the above preconditions are undisputedly present in this case.
Company is guilty of unfair labor practice.
6. Jurisprudence provides that while the law does not compel the parties to
reach an agreement, it does contemplate that both parties will approach
the negotiation with an open mind and make a reasonable effort to reach a
common ground of agreement.
7. From the overall conduct of the company in relation to the task of
negotiation, there can be no doubt that the union has a valid cause to
complain against its attitude, the totality of which is indicative of the
latter's disregard of, and failure to, bargain in good faith.
a. A company's refusal to make counter proposal may indicate bad
faith especially where the union's request for a counter proposal
is left unanswered.
b. Even during the period of compulsory arbitration, the company's
acts of stalling the negotiation by a series of postponements, non-
appearance at the hearing conducted, and undue delay in
submitting its financial statements, show its unwillingness to
negotiate and reach an agreement with the union.
8. The instant case being a certified one, it must be resolved by the NLRC
pursuant to the mandate of PD 873, which authorizes the said body to
determine the reasonableness of the terms and conditions of employment
embodied in any CBA. To that extent, utmost deference to its findings of
reasonableness of any CBA as the governing agreement by the employees
and management must be accorded due respect by this Court.
B. Bargainable Issues
LC, Art. 263

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100 MANILA FASHIONS v. NLRC [1996]  Also, as stated by the Labor Arbiter, it is only the Tripartite Wage Productivity
Board of the DOLE that could approve exemption of an establishment from
Bargainable Issues
coverage of a Wage Order.
1. Nagkakaisang Manggagawa ng Manila Fashions, through its president, Zamora,
 If Manila Fashions is a financially distressed company then it should have
files a complaint before the LA on behalf of its 150 members.
applied for a wage exemption so that it could meet its labor costs without
a. Charged Manila Fashions with non-compliance with the Wage Orders endangering its viability or its very existence upon which both management
mandating a P12 increase. and labor depend for a living.
2. Manila Fashions said that it failed to comply because of tremendous losses it  OSG emphasizes the point that parties to a CBA may not, by themselves, set a
suffered aggravated by the strike on account of non-adjustment of the basic wage lower than the minimum wage. To do so would render nugatory the
pay of the workers. purpose of a wage exemption, not to mention the possibility that employees
3. To forestall continuous suspension/closure, the strikers sent a notice that they may be duped or be unwittingly put in a position to accept a lower wage.
were willing to condone the implementation of the increase.
a. The condonation was distinctly stated in Sec. 3, Art. VIII, of the CBA
which was voluntarily entered into by the parties and represents a
reasonable settlement
4. The Union admitted the existence of the CBA provision but denied the validity
thereof inasmuch as it was not reached after due consultation with the
members.
5. LA: The CBA provision was void because it was unenforceable since the
agreement is null and void, it being contrary to law. It is only the Tripartite
Wage Productivity Board of DOLE what could approve exemption of an
establishment from coverage of Wage Order.
6. Manila Fashions was adjudged to be liable to the employees for underpayment
of salary, 13th month pay, vacation leave pay, legal holiday pay.
7. NLRC: Not persuaded by Manila Fashions’ assertion that the LA ruling was not
in accordance with facts and law.
ISSUE: Whether the condonation of the implementation of the Wage Orders in the
CBA provision is valid. NO.
 The condonation appearing in the CBA did not exempt the Company from
compliance with the Wage Orders.
 As in all other contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided they are
not contrary to law, morals, good customs, public order or public policy.
 Section 3, Art. VIII of the CBA (CBA provision) is a void provision because by
agreeing to condone the implementation of the Wage Order, the parties
thereby contravened its mandate on wage increase of P12.00.
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10 UNION OF FILIPRO EMPLOYEES-DFA-KMU v. NESTLE PHILIPPINES, INC. (2006)
1. Due to the impending expiration of the existing CBA between Nestle and the
Union, the Presidents of the Union informed Nestle of their intent to open their
new CB Negotiation for 2001-2004 as early as June 2001.
2. Nestle informed the Union that it was also preparing its own counter-proposal
and proposed ground rules that will govern the negotiations.
3. Nestle stressed that unilateral grants, one-time company grants, company
initiated policies (Retirement Plan) are not proper subjects of CBA negotiations
and shall be excluded.
4. Dialogue started and Nestle requested NCMB to conduct preventive mediation
proceedings because despite 15 meetings, no agreement was reached.
5. Conciliation proceedings were ineffective. Union filed a Notice of Strike.
6. Another Notice was filed predicated on Nestle’s alleged ULP (bargaining in bad
faith, refusing to include Retirement Plan in the negotiations).
7. DOLE: Discuss each party’s proposals before the NCMB. If no settlement, DOLE
shall define the issues and order the filing of position papers.
a. Injunction was issued but the employees still went on strike.
b. The employees were ordered to return to work within 24 hours;
Nestle to accept all returnees; cease and desist order; submit position
papers.
8. Several pleadings after, the acting Secretary of DOLE came out with an Order
ruling, among others, that:
a. The Retirement Plan is a unilateral grant that is not a mandatory
subject for bargaining.
9. Union filed a PetCer before the CA. CA annulled the previous orders and
directed CBA negotiations.
10. Nestle, MR:
a. After an SC Decision, there was obviously an agreement by the parties
that the Retirement Plan shall no longer be a negotiable item. In its
1998 Negotiation, Parties expressly recognized Nestle’s prerogative
to initiate unilateral grants which are not negotiable.
b. It was only before the CA and in the 2 nd PetCer that the ULP issue was
raised when it should have been raised in the proper tribunal.
11. Union:
a. Had it been the intention of the parties to consider it not a proper
subject for CB, then they would have indicated it in categorical terms
or deleted such in the CBA.
b. Refusal of Nestle to bargain on a very important CBA economic
provision constitutes ULP
ISSUE: Whether Nestle was guilty of ULP. NO.
1. A determination of the validity of the Nestlé’s proposition involves an appraisal
of the exercise of its management prerogative.
2. Employers are accorded rights and privileges to assure their self-determination
and independence and reasonable return of capital. This mass of privileges
comprises the so-called management prerogatives. In this connection, the rule
is that good faith is always presumed. As long as the company’s exercise of the
same is in good faith to advance its interest and not for purpose of defeating or
circumventing the rights of employees under the law or a valid agreement, such
exercise will be upheld.
3. Though Nestlé underscored its position that “unilateral grants, onetime
company grants, company- initiated policies and programs, which include, but
are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling
Pay Premium, are by their very nature not proper subjects of CBA negotiations
and therefore shall be excluded therefrom,” such attitude is not tantamount to
refusal to bargain.
a. This is especially true when it is viewed in the light of the fact that
eight out of nine bargaining units have allegedly agreed to treat the
Retirement Plan as a unilateral grant. Nestlé, therefore, cannot be
faulted for considering the same benefit as unilaterally granted.
4. By imputing bad faith unto the actuations of Nestlé, it was the Union,
therefore, who had the burden of proof to present substantial evidence to
support the allegation of unfair labor practice.
5. It failed to discharge said onus probandi as there is still a need for the
presentation of evidence other than its bare contention of unfair labor practice
in order to make certain the propriety or impropriety of the unfair labor
practice charge hurled against Nestlé.
6. Nestlé’s inclusion in its Position Paper of its proposals affecting other matters
covered by the CBA contradicts the claim of refusal to bargain or bargaining in
bad faith.
ISSUE: Whether it was Nestle’s prerogative not to include the Retirement Plan in
the negotiations. NO.
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 In an SC case involving the same parties, SC already held that the retirement
plan is consensual in nature.
 The characterization unilaterally imposed by Nestlé on the Retirement Plan
cannot operate to divest the employees of their “vested and demandable right
over existing benefits voluntarily granted by their employer.”
102 Samahang Manggagawa sa Top Form Manufacturing v NLRC [1998]
1. Samahang Manggagawa sa Top Form Manufacturing (SMTFM) was the
collective bargaining representative of all rank and file employees of Top Form.
2. According to the minutes of a collective bargaining negotiation, SMTFM
proposed an automatic across-the-board wage increase provision. However,
they agreed to drop the proposal on the strength of the representation of the
negotiating panel of Top Form, as in the past years, the company granted the
government mandated wag increases in an across-the-board basis.
3. RTWPB-NCR issued Wage Order 1, granting an increase of P17 per day. This was
followed by Wage Order 2, which provided a daily increase of P12/
4. SMTFM asked for the implementation of the Wage Orders, and for the same to
be done on an across-the-board basis. Top Form refused and implemented a
scheme of increases to avoid wage distortion, such that:
a. Employees with daily salary of P125 and below: + P17
b. Employees with daily salary of P140 and below: + P12
c. Employees with daily salaries higher than P125 or P140: escalated
increases ranging from P6.00 to P14.30 and P6.00 to P10.00,
respectively
5. Despite several conferences between the parties, Top Form adamantly
maintained its position on the salary increases.
6. SMTFM filed a complaint against Top Form for acts of unfair labor practices,
particularly bargaining in bad faith.
7. Top Form asserted that there was no agreement to the effect that future wage
increases mandated by the government should be implemented on an across-
theboard basis. Otherwise, that agreement would have been incorporated and
expressly stipulated in the CBA.
a. CBA further reflects the parties' intention to fully set forth therein all
their agreements that had been arrived at after negotiations.
b. The CBA also provided that during its effectivity, the parties voluntarily
and unqualifiedly waive the right, and each agrees that the other shall
not be obligated, to bargain collectively, with respect to any subject or
matter not specifically referred to or covered by the agreement.
8. LA: dismissed the ULP case. NLRC: affirmed.
ISSUE: WON employer committed an ULP by bargaining in bad faith and
discriminating against its employees.- NO
 The CBA is the law between the contracting parties, and compliance therewith
is mandated by the expressed policy to give protection to labor. Nevertheless,
only provisions embodied in the CBA should be so interpreted and complied
with. Where a proposal raised by a contracting party is not in the CBA, it is not
a part thereof and there can be no claim whatsoever to its implementation.
 If indeed there was a representation, as claimed by SMTFM in this case, Top
Form may not be considered in bad faith or at the very least, resorting to the
scheme of feigning to undertake the negotiation proceedings through empty
promises. SMTFM had, under the law, the right and the opportunity to insist on
the foreseeable fulfillment of Top Form’s promise by demanding its
incorporation in the CBA. But because the proposal was never embodied in the
CBA, the promise has remained just that, the implementation of which cannot
be validly demanded under the law.
 This case and Kiok Loy have different factual incidents. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one. The
duty to bargain does not include the obligation to reach an agreement. Further,
with the execution of the CBA, bad faith bargaining can no longer be imputed
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 upon any of the parties thereto as all provisions in the CBA are supposed to
have been jointly and voluntarily incorporated therein by the parties.
 The question as to what are mandatory and what are merely permissive
subjects of collective bargaining is of significance on the right of a party to insist
on his position to the point of stalemate.
o A party may refuse to enter into a collective bargaining contract unless
it includes a desired provision as to a matter which is a mandatory
subject of collective bargaining; but a refusal to contract unless the
agreement covers a matter which is not a mandatory subject is in
substance a refusal to bargain about matters which are mandatory
subjects of collective bargaining, and it is no answer to the charge of
refusal to bargain in good faith that the insistence on the disputed
clause was not the sole cause of the failure to agree or that agreement
was not reached with respect to other disputed clauses.
 On account of the importance of the economic issue proposed by SMTFM, it
could have refused to bargain and to enter into a CBA with Top Form. On the
other hand, Top Form's firm stand against the proposal did not mean that it
was bargaining in bad faith. It had the right to insist on its position to the point
of stalemate.
 On the part of SMTFM, the importance of its proposal dawned on it only after
the wage orders were issued after the CBA had been entered into. Indeed, from
the facts of this case, the charge of bad faith bargaining on the part of Top
Form was nothing but a belated reaction to the implementation of the wage
orders that Top Form made in accordance with law. In other words, SMTFM
harbored the notion that its members and the other employees could have had
a better deal in terms of wage increases had it relentlessly pursued the
incorporation in the CBA of its proposal.
 There is no established company practice of granting across-the-board wage
increases in this case.

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C. Bargaining Procedure (b) only employers with counterpart legitimate labor unions who are incumbent
bargaining agents may participate and negotiate in multi-employer bargaining; and
IR, Book V, Rule XVI
SEIDAC
RULE XVI
(c) only those legitimate labor unions who pertain to employer units who consent to
Collective Bargaining
multi-employer bargaining may participate in multi-employer bargaining.
SECTION 1.Policy. — It is the policy of the State to promote and emphasize the
SECTION 6. Procedure in Multi-Employer Bargaining. — Multi-employer bargaining
primacy of free and responsible exercise of the right to self- organization and
may be initiated by the labor unions or by the employers.
collective bargaining, either through single enterprise level negotiations or through
the creation of a mechanism by which different employers and recognized or (a)Legitimate labor unions who desire to negotiate with their employers collectively
certified labor unions in their establishments bargain collectively. shall execute a w ritten agreement among themselves, which shall contain the
following:
SECTION 2. Disclosure of Information. — In collective bargaining, the parties shall, at
the request of either of them, make available such up-to-date financial information 1) the names of the labor unions who desire to avail of multi- employer bargaining;
on the economic situation of the undertaking, which is normally submitted to
2) each labor union in the employer unit;
relevant government agencies, as is material and necessary for meaningful
negotiations. Where the disclosure of some of this information could be prejudicial 3) the fact that each of the labor unions are the incumbent exclusive bargaining
to the undertaking, its communication may be made condition upon a commitment agents for their respective employer units;
that it would be regarded as confidential to the extent required. The information to
4) the duration of the collective bargaining agreements, if any, entered into by each
be made available may be agreed upon between the parties to collective
labor union with their respective employers.
bargaining.
Legitimate labor unions who are members of the same registered federation,
SECTION 3.When Single Enterprise Bargaining Available. — Any voluntarily
national, or industry union are exempt from execution of this written agreement.
recognized or certified labor union may demand negotiations with its employer for
terms and conditions of work covering employees in the bargaining unit concerned. (b) The legitimate labor unions who desire to bargain with multi- employers shall
send a written notice to this effect to each employer concerned. The written
SECTION 4. Procedure in Single Enterprise Bargaining. — A recognized or certified
agreement stated in the preceding paragraph, or the certificates of registration of
labor union that desires to negotiate with its employer shall submit such intention
the federation, national, or industry union, shall accompany said notice.
in writing to the employer, together with its proposals for collective bargaining.
Employers who agree to group themselves or use their existing associations to
The recognized or certified labor union and its employer may adopt such
engage in multi-employer bargaining shall send a w ritten notice to each of their
procedures and processes they may deem appropriate and necessary for the early
counterpart legitimate labor unions indicating their desire to engage in multi-
termination of their negotiations. They shall name their respective representatives
employer bargaining. Said notice shall indicate the following:
to the negotiation, schedule the number and frequency of meetings, and agree on
wages, benefits and other terms and conditions of work for all employees covered 1) the names of the employers who desire to avail of multi- employer bargaining;
in the bargaining unit.
2) their corresponding legitimate labor organizations;
SECTION 5. When Multi-Employer Bargaining Available. — A legitimate labor
3) the fact that each corresponding legitimate union is any incumbent exclusive
union(s) and employers may agree in writing to come together for the purpose of
bargaining agent;
collective bargaining, provided:
4) the duration of the current collective bargaining agreement, if any, entered into
(a) only legitimate labor unions who are incumbent exclusive bargaining agents may
by each employer with the counterpart legitimate labor union.
participate and negotiate in multi- employer bargaining;
(c) Each employer or concerned labor union shall express its willingness or refusal to
participate in multi-employer bargaining in writing, addressed to its corresponding
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exclusive bargaining agent or employer. Negotiations may commence only with
regard to respective employers and labor unions who consent to participate in
multi-employer bargaining;
(d) During the course of negotiations, consenting employers and the corresponding
legitimate labor unions shall discuss and agree on the following:
1) the manner by which negotiations shall proceed;
2)the scope and coverage of the negotiations and the agreement; and
3) where appropriate, the effect of the negotiations on current agreements or
conditions of employment among the parties.
SECTION 7.Posting and Registration of Collective Bargaining Agreement. — Two (2)
signed copies of collective bargaining agreement reached through multi-employer
bargaining shall be posted for at least five (5) days in two conspicuous areas in each
workplace of the employer units concerned. Said collective bargaining agreement
shall aff ect only those employees in the bargaining units who have ratified it.
The same collective bargaining agreement shall be registered with the Department
in accordance with the following Rule.
1. Private Procedure
LC, Art. 262
ART. 262. [251] Duty to Bargain Collectively in the Absence of Collective Bargaining
Agreements. - In the absence of an agreement or other voluntary arrangement
providing for a more expeditious manner of collective bargaining, it shall be the
duty of employer and the representatives of the employees to bargain collectively
in accordance with the provisions of this Code.
2. Labor Code Procedure
LC, Arts. 261, 268, 238, 265
ART. 261. [250] Procedure in Collective Bargainlng.- The following procedures shall
be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice
upon the other party with a statement of its proposals. The other party shall make a
reply thereto not later than ten (10) calendar days from receipt of such notice;
(b) Should differences arise on the basis of such notice and reply, either party may
request for a conference which shall begin not later than ten (1 0) calendar days
from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of either or
both parties or at its own initiative and immediately call the parties to conciliation
meetings. The Board shall have the power to issue subpoenas requiring the
attendance of the parties to such meetings. It shall be the duty of the parties to
participate fully and promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are prohibited from
doing any act which may disrupt or impede the early settlement of the disputes;
and
(e) The Board shall exert all efforts to settle disputes amicably and encourage the
parties to submit their case to a voluntary arbitrator.
ART. 268. [256] Representation Issue In Organized Establishments. - In organized
establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed by any legitimate labor organization including a
national union or federation which has already issued a charter certificate to its
local chapter participating in the certification election or a local chapter which has
been issued a charter certificate by the national union or federation before the
Department of Labor and Employment within the sixty (60)-day period before the
expiration of the collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot when the verified petition is
supported by the written consent of at least twenty-five percent (25%) of all the
employees in the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a majority of all
eligible voters in the unit must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive bargaining agent of
all the workers in the unit. When an election which provides for three or more
choices results in no choice receiving a majority of the valid votes cast, a run-off
election shall be conducted between the labor unions receiving the two highest
number of votes: Provided, That the total number of votes for all contending unions
is at least fifty percent (50%) of the number of votes cast. In cases where the
petition was filed by a national union or federation, it shall not be required to
disclose the names of the local chapter's officers and members.
At the expiration of the freedom period, the employer shall continue to recognize
the majority status of the incumbent bargaining agent where no petition for
certification election is filed.
ART. 238. [232] Prohibition on Certification Electlon. - The Bureau shall not
entertain any petition for certification election or any other action which may
disturb the administration of duly registered existing collective bargaining
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agreements affecting the parties except under Articles 253, 253-A and 256 of this
Code.
ART. 265. [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.

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103 CALTEX REFINERY EMPLOYEES ASSOCIATION CREA v. BRILLANTES and CALTEX
(1997)
FACTS:
1. The CBA was about to expire so CREA and Caltex negotiated the terms and
conditions to be contained in a new CBA. The NCMB and Office of the SOLE
participated in the negotiations. 
2. 8 meetings between the parties were conducted. Failing to reach any
significant progress, CREA declared a deadlock. CREA filed a notice of strike. 6
conciliation meetings conducted by the NCMB failed to settle the parties’
differences. Parties held marathon meetings at the plant level, but also proved
unavailing.
3. During a strike vote, members of CREA opted for a walkout. Caltex then filed
with DOLE a petition for assumption of jurisdiction in accordance with Art. 263
(g) of the LC.
4. DOLE Acting Sec: Assumed jurisdiction over the entire labor dispute. Enjoined
any strike or lockout and ordered the parties to cease and desist from
committing any and all acts which might exacerbate the situation. Directed
parties to submit their position papers and evidence within 10 days from
receipt.
5. CREA began a strike and set up a picket in the premises Caltex. CREA defied
company notices directing return to work.
6. DOLE Undersec Laguesma conducted several conciliation meetings. Members
were convinced to return to work and to enter into a MOA with Caltex.  in September 1995, rose further in October, and is still a double-digit figure
7. Despite conciliation, they failed to come to any substantial agreement. They
stopped further negotiation and referred the problem to SOLE.
8. SOLE issued an Order, directing to execute a new CBA. It resolved:
a. The ff wage increaes are fair, reasonable and equitable: 1995 – 14%;
1996 – 14%; 1997 – 13%; meal subsidy – P15
b. The amendment of the union security clause sought by CREA is denied
as it tackles more on procedure. SOLE said it is not competent to
arbitrarily incorporate any modification. Any amendment should be a
product of mutual agreement.
c. Shorten the periods to process/resolve grievances based on existing
practice from 45 days to 30 days at the first step and 10 days to seven
7 days at the second step (VP for manufacturing). Further, the
establishment of a joint Council as an additional step in the grievance
procedure, will only protract the proceeding and, therefore, no longer
necessary. 
d. Instead, the unresolved grievance, if, not settled within 7 days by the
VP for Mfg, shall automatically be referred by both parties to voluntary
arbitration. As to the number of Arbitrators, it is best for both parties
to agree. 
9. The parties filed their respective MRs. DENIED and ruled:
a. No compelling reasons to alter wage increases. Inflation rate adverted
to by CREA is inaccurate. 
b. Retirement benefits: The concerned EEs were already granted in 1985
the option to choose between the old and the new plan. They chose to
be covered under the Old Plan. Hence, the new Plan does not apply to
the 40 EEs being sought by CREA to be covered thereunder.
c. The award of signing bonus existing under the old CBA is removed. It is
not covered by the maintenance of existing benefits clause as it is an
incentive & premium for peaceful negotiations and amicable
resolution of disputes.
ISSUE: W/N the SOLE committed GAD in resolving this labor dispute.
RULING: Overall, NO. But there was GAD as to union security clause issue.
1. Wage Increase
CREA belittles the awarded increases. It insists that the inflation rate rose to 11.8%
today. Therefore, the so-called improved benefits are in reality retrogressive.
CREA also tried showing Caltex’s immense financial capacity. It maintains that the
salaries of Shell Refinery EEs be used as a reference point because the 2 companies
are in the same industry and their refineries are both in Batangas. Thus, the wage
increase should be 15%/15%/15%. 
Caltex countered with a proposed 9% 7% 7% increase for the same period w/
automatic adjustment if the increase falls short of the inflation rate. 
 Inflation – adopted SOLE’s findings
 Financial capacity – The Banaba upgrading should not be construed as a
yardstick of its financial standing as it is not a benefit. 
o Banaba Upgrading is an integral part of an indispensable
requirement for smooth Plant operations and assurance of an
emergency response crew in times of calamities and
10
 accidents. EEs who are required to stay in the housing facility are
members of the Refinery’s emergency response
organization. Banaba is not a yardstick of the Company’s capacity
to pay, but rather, a demonstration of the Company’s will to
survive and remain globally competitive.
 Shell as yardstick – Caltex’s Refinery is not as productive as Shell’s or
Petron’s. To ask for relative parity is unreasonable and illogical.
 The wage increase of 14%, 14% and 13% will result in an average basic salary
of P23,510 at the end of the three-year cycle. This average salary will be
unreasonably high for the skills and qualifications needed for the job.
o Even prior to the awarded CBA increases, the monthly salary
of P16,010 plus overtime, holiday and other premiums are way
above those mandated by law. The Union members are already
the highest paid in the PH, in terms of gross income.
 2.  Union Security Clause (USC)
CREA: That leaving to the parties the decision on the USC issue is contrary to the
whole idea of assumption of jurisdiction. That despite the USC, it may expel a
member only on any of 3 grounds: non-payment of dues, subversion, or conviction
for a crime involving moral turpitude. Otherwise, the member would continue to be
employed by Caltex. Thus, the issue is not only procedural but also substantial.
 CREA is correct. The disagreement on the USC should have been definitively
resolved by SOLE.  on the issues is another. And it is best accomplished in a hearing conducted by 3
SOLE should take cognizance of an issue which is not merely incidental to but
essentially involved in the labor dispute itself, or which is otherwise submitted to
him for resolution.  composition of the grievance machinery as they find appropriate to a particular
 In this case, SOLE has given no valid reason for avoiding the said issue. He
merely points out that this issue is a procedural matter.   5. Signing Bonus
Without the USC, group solidarity becomes uncertain. In this security clause lies the
strength of the union during the enforcement of the collective bargaining
agreement. It is this clause that provides labor with substantial power in collective
bargaining. 
 SOLE assumed jurisdiction over this labor dispute in an industry indispensable
to national interest, precisely to settle once and for all the disputes over which
he has jurisdiction. In not performing his duty, SOLE committed GAD.
3. New Retirement Plan
CREA: That the exclusion of 40 EEs from the New Plan constitutes GAD.
 No GAD. Although the union has every right to represent its members in the
negotiation regarding the terms and conditions of their employment, it cannot
negate their wishes on matters which are purely personal and individual to
them. 
 In this case, the 40 EEs freely opted to be covered by the Old Plan. Their
decision should be respected. The company gave them every opportunity to
choose. CREA cannot impose its will on them.
4. Grievance Machinery and Arbitration (topic in the syllabus)
No particular setup for a grievance machinery is mandated by law. Rather, Art. 260
of the LC (check codal), as incorporated by RA 6715, provides for only a single
grievance machinery in the company to settle problems arising from interpretation
or implementation of their CBA and those arising from the interpretation or
enforcement of company personnel policies. 
 The procedure described by SOLE sufficiently complies with the minimum
requirement of the law. It even provided for 2 steps in hearing grievances prior
to their referral to arbitration. 
 The parties will decide on the number of arbitrators who may hear a dispute
only when the need for it arises. Even the law itself does not specify the
number of arbitrators. 
Their alternatives whether to have one or three arbitrators have their respective
advantages and disadvantages. Cost is not the only consideration. Full deliberation
arbitrators. 
 In effect, the parties are afforded the latitude to decide for themselves the
situation. The Court cannot impute GAD to SOLE on this issue.
CREA: That SOLE erred in removing the award of a signing bonus which is given not
only as an incentive but also as an extra award to the workers after the settlement
of a CBA dispute by whatever means. 
A signing bonus is not a benefit which may be demanded under the law. It may not
be demanded as a matter of right. If it is not agreed upon by the parties or
unilaterally offered as an additional incentive by the company, the condition for
awarding it must be duly satisfied. 
 In this case, the condition sine qua non  for its grant, a non strike, was not
complied with. 
11
Epilogue  "Sec. 22. National Conciliation and Mediation Board. A National Conciliation and
Mediation Board, herein referred to as the "Board", is hereby created and which
Other than his failure to rule on the issue of union security, the SOLE cannot be
shall absorb the conciliation mediation and voluntary arbitration functions of the
indicted for GADLEJ. CREA’s claim of GAD is anchored on the simple fact that SOLE
Bureau of Labor of Relations in accordance with Section 29 (c) hereof. The Board
adopted largely the proposals of Caltex. 
shall be composed of an Administrator and two (2) Deputy Administrators. It shall
It should be understood that bargaining is not equivalent to an adversarial be an attached agency under the administrative supervision of the Secretary of
litigation where rights and obligations are delineated and remedies applied. It is Labor and Employment.
simply a process of finding a reasonable solution to a conflict and harmonizing
The Administrators and the Deputy Administrators shall be appointed by the
opposite positions into a fair and reasonable compromise. When parties agree to
President upon recommendation of the Secretary of Labor and Employment. There
submit unresolved issues to the secretary of labor for his resolution, they should
shall be as many Conciliators-Mediators as the needs of the public service require,
not expect their positions to be adopted in toto. It is understood that they defer
who shall have at least three (3) years of experience in handling labor relations and
to his wisdom and objectivity in insuring industrial peace. 
who shall be appointed by the Secretary.
Unless they can clearly demonstrate bias, arbitrariness, capriciousness or personal
The Board shall have its main office in Metropolitan Manila and its Administrators
hostility on the part of such public officer, the Court will not interfere or substitute
shall exercise supervision over Conciliators-Mediators and all its personnel. It shall
the SOLE’s judgment with its own. This is particularly true in the resolution of
establish as many branches as there are administrative regions in the country, with
controversies in CBAs where the question is rarely one of legal right or wrong nay,
a many Conciliator-mediators as shall be necessary for its effective operation. Each
of black and white but one of wisdom, cogency and compromise as to what is
branch of the Board shall be headed by an Executive Conciliator-Mediator.
possible, fair and reasonable under the circumstances.
The Board shall have the following functions:
(a) Formulate policies, programs, standards, procedures, manuals of operation and
3.Conciliation/preventive mediation
guidelines pertaining to effective mediation and conciliation of labor disputes;
LC, Arts. 255 (c), (d), (e), 239
(b) Perform preventive mediation and conciliation functions;
ART. 255. [245] Ineligibility of Managerial Employees to Join any Labor Organization;
(c) Coordinate and maintain linkages with other sectors of institutions, and other
Right of Supervisory Employees. - Managerial employees are not eligible to join,
government authorities concerned with matters relative to the prevention and
assist or form any labor organization. Supervisory employees shall not be eligible for
settlement of labor disputes;
membership in the collective bargaining unit of the rank-and-file employees but
may join, assist or form separate collective bargaining units and/or legitimate labor (d) Formulate policies, plans, programs, standards, procedures, manuals of
organizations of their own. The rank and file union and the supervisors' union operation and guidelines pertaining to the promotion of cooperative and non-
operating within the same establishment may join the same federation or national adversarial schemes, grievance handling, voluntary arbitration and other voluntary
union. modes of dispute settlements;
[WALANG (c), (d), (e) (e) Administer the voluntary arbitration program; maintain/update a list of
voluntary arbitrations; compile arbitration awards and decisions;
ART. 239. [233] Privileged Communication. - Information and statements made at
conciliation proceedings shall be treated as privileged communication and shall not (f) Provide counselling and preventive mediation assistance particularly in the
be used as evidence in the Commission. Conciliators and similar officials shall not administration of collective agreement; awards and decisions;
testify in any court or body regarding any matters taken up at conciliation
(g) Monitor and exercise technical supervision over the Board programs being
proceedings conducted by them.
implemented in the regional offices; and
E.O. 251, Sec. 4
(h) Perform such other functions as may be provided by law or assigned by the
Sec. 4. Section 22 of Executive Order No. 126 is hereby amended to read as follows: Secretary.

12
A Tripartite Voluntary Arbitration Advisory Council is hereby created and attached
to the National Conciliation and Mediation Board. The Tripartite Voluntary
Arbitration Advisory Council shall advise the National Conciliation Board on matters
pertaining to the promotion of voluntary arbitration as the preferred mode of
dispute settlement.
The Tripartite Voluntary Arbitration Advisory Council shall consist of the
Administrator of the National Conciliation and Mediation Board as Chairman, one
other member from the government, two members representing labor, and two
other members representing management. The members shall be appointed by the
President to serve for a term of three (3) years. The Chairman and Members thereof
shall serve without compensation."

13
Tabigue vs. International Copra Export Corporation (INTERCO)
G.R. No. 183335. December 23, 2009.
PETITION for review on certiorari of a decision of the Court of Appeals.
HELD
CARPIO-MORALES, J.
NCMB not a quasi-judicial agency
FACTS
 Petitioner Juanito Tabigue and his 19 co-petitioners, all employees of
respondent International Copra Export Corp-oration (INTERCO), filed a
Notice of Preventive Mediation with the Department of Labor and
Employment—National Conciliation and Mediation Board (NCMB), against
respondent, for violation of Collective Bargaining Agreement (CBA) and
failure to sit on the grievance conference/meeting.
 As the parties failed to reach a settlement before the NCMB, petitioners
requested to elevate the case to voluntary arbitration. Before the parties
could finally meet, respondent presented before the NCMB a letter from
Tan, president of the INTERCO Employees/Laborers’ Union (the union),
stating that petitioners “are not duly authorized by [the] board or the
officers to represent the union, [hence] .  . . all actions, representations or
agreements made by these people with the management will not be
honored or recognized by the union.” Respondent thus moved to dismiss
petitioners’ complaint for lack of jurisdiction.
 The parties having failed to arrive at a settlement, NCMB Director wrote
petitioner Alex Bibat and respondent’s plant manager Tangente of the lack
of willingness of both parties to submit to voluntary arbitration, which
Voluntary Arbitration
willingness is a pre-requisite to submit the case thereto; and that under the
CBA forged by the parties, the union is an indispensable party to a
voluntary arbitration but that since Tan informed respondent that the
union had not authorized petitioners to represent it, it would be absurd to
bring the case to voluntary arbitration. He thus advised petitioners to avail
of the compulsory arbitration process to enforce their rights.
 Petitioners thus assailed the NCMB Director’s decision via Petition for
Review before the Court of Appeals which dismissed it:
o Considering that NCMB is not a quasi-judicial agency exercising
quasi-judicial functions but merely a conciliatory body for the
purpose of facilitating settlement of disputes between parties, its
decisions or that of its authorized officer cannot be appealed
either through a petition for review under Rule 43 or under Rule
65 of the Revised Rules of Court.
ISSUE
 Whether or not the NCMB should have gone on with the voluntary
arbitration. – NO.
 Under Section 9 (3) of the Judiciary Reorganization Act of 1980, the Court
of Appeals exercises exclusive appellate jurisdiction over all final
judgments, decisions, resolutions, orders or awards of Regional Trial Courts
and quasi-judicial agencies, instrumentalities, boards or commissions.
 Rule 43 of the Rules of Court under which petitioners filed their petition
before the Court of Appeals applies to awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of
its quasi-judicial functions.
 An agency is said to be exercising judicial function where it has the power
to determine what the law is and what the legal rights of the parties are,
and then undertakes to determine these questions and adjudicate upon
the rights of the parties. Quasi-judicial function is a term which applies to
the action, discretion, etc. of public administrative officers or bodies, who
are required to investigate facts or ascertain the existence of facts, hold
hearings, and draw conclusions from them as a basis for their official action
and to exercise discretion of a judicial nature.”
 Given NCMB’s functions, it cannot be considered a quasi-judicial agency.
 Respecting petitioners’ thesis that unsettled grievances should be referred
to voluntary arbitration as called for in the CBA, the same does not lie. The
pertinent portion of the CBA reads:
o “In case of any dispute arising from the interpretation or
implementation of this Agreement or any matter affecting the
relations of Labor and Management, the UNION and the
COMPANY agree to exhaust all possibilities of conciliation through
the grievance machinery. If the dispute or grievance cannot be
settled by the Committee, the UNION and the COMPANY agree to
submit the issue to Voluntary Arbitration. Selection of the
arbitrator shall be made within seven (7) days from the date of
notification by the aggrieved party. If the Company and the Union
representatives within ten (10) days fail to agree on the
Arbitrator, the NCMB shall name the Arbitrator.”
14
  Petitioners have not, however, been duly authorized to represent the agreement of the parties, treat a notice as a preventive mediation case. It shall also
union. Apropos is this Court’s pronouncement in Atlas Farms, Inc. v. encourage the parties to submit the dispute to voluntary arbitration.
National Labor Relations Commission,26 viz.:
During the proceedings, the parties shall not do any act which may disrupt or
o “x x x Pursuant to Article 260 of the Labor Code, the parties to a impede the early settlement of the dispute. They are obliged, as part of their duty
CBA shall name or designate their respective representatives to to bargain collectively in good faith and to participate fully and promptly in the
the grievance machinery and if the grievance is unsettled in that conciliation meetings called by the regional branch of the Board.
level, it shall automatically be referred to the voluntary arbitrators
A notice, upon agreement of the parties, may be referred to alternative modes of
designated in advance by parties to a CBA. Consequently only
dispute resolution, including voluntary arbitration.
disputes involving the union and the company shall be referred to
the grievance machinery or voluntary arbitrators.”
 Clutching at straws, petitioners invoke the first paragraph of Article 255 of
the Labor Code which states:
o “Art. 255. The labor organization designated or selected by the
majority of the employees in an appropriate collective bargaining
unit shall be the exclusive representative of the employees in such
unit for the purpose of collective bargaining. However, an
individual employee or group of employees shall have the right at
any time to present grievances to their employer. x x x x”
 To petitioners, the immediately quoted provision “is meant to be an
exception to the exclusiveness of the representative role of the labor
organization/union.” However, the right of any employee or group of
employees to, at any time, present grievances to the employer does not
imply the right to submit the same to voluntary arbitration.
WHEREFORE, the petition is DENIED.

IR, Book V, Rule XXII, Secs. 1 & 9

RULE XXII
Conciliation, Strikes and Lockouts
SECTION 1. Conciliation of Labor-Management Disputes. — The board may, upon
request of either of both parties or upon its own initiative, provide conciliation-
mediation services to labor disputes other than notices of strikes or lockouts.
Conciliation cases which are not subjects of notices of strike or lockout shall be
docketed as preventive mediation cases.
SECTION 9. Action on Notice. — Upon receipt of the notice, the regional branch of
the Board shall exert all efforts at mediation and conciliation to enable the parties
to settle the dispute amicably. The regional branch of the Board may, upon

15
NUWHRAIN-APL-IUF Dusit Hotel Nikko Chapter v. CA, G.R. No. 163942, November e. Illegal strike
11, 2008
f. Commission of illegal acts during illegal strike
facts:
14. Union filed with NCMB a second notice of strike on the ground of ULP and
1. The Union is the CBA of the rank and file employees of Dusit Hotel violation of the Labor Code on illegal lockout
a. A five star hotel located in Makati 15. Meanwhile, the union submitted their explanations to the charges alleged by
the hotel, they continued to stage a picket inside the hotel’s compound
b. Owned by Philippine Hoteliers, Inc.
16. Hotel terminated the services of:
2. Fujimoto (general manager) and Alves (director of human resources) were
impleaded in their official capacitates a. 29 union officers
3. Union submitted its CBA negotiation to the hotel b. 61 members
4. They failed to arrive at mutually acceptable terms and conditions – deadlock 17. Suspended 88 employees
5. Union filed notice of strike with National Conciliation and Mediation Board 18. Union declared a strike
(NCMB)
a. Engaged in picketing at the premises of the hotel
a. Conciliation hearings were unsuccessful
b. Unlawfully blocked the ingress and egress of the hotel
6. Strike vote was conducted – it was decided that the Union would strike
19. Union filed its third notice of strike with NCMB on the ground of ULP and
7. Union held a general assembly at its office basement union-busting
a. Some members sported closely cropped hair or cleanly shaven heads 20. SOLE assumed jurisdiction and certified the case to the NLRC for compulsory
arbitration
8. The next day, more male Union members came to work sporting the same
hairstyle a. Hotel to reinstate the workers (payroll reinstatement)
9. Hotel prevented theses workers from entering the hotel; they violated the 21. Hotel directed some to return to work while others were not but they were
Hotel’s grooming standards placed under payroll reinstatement
10. Union stages a picket outside the hotel premises 22. Unhappy with the SOLE’s order, the Union moved for reconsideration – denied
11. Later, other workers were also prevented from entering the hotel causing them 23. Union filed pet cert with CA
to join the picket
24. Meanwhile, NLRC ordered hotel and Union to execute CBA within 30 days from
12. Hotel experienced severe lack of manpower which forced them to temporarily receipt of decision
cease operations in three restaurants
a. There was an illegal strike in which illegal acts were committed
13. Hotel issued notices preventively suspending the union members BECAUSE IT FAILED TO COMPLY WITH THE MANDATORY 30-DAY
PERIOD AND THE SEVEN_DAY STRIKE BAN COOLING-OFF as the strike
a. Violation of duty to bargain
occurred only 29 days after submission of the notice of strike and only
b. Illegal picket 4 days after submission of the strike vote
c. ULP b. Strike violated the “no strike, no lockout” provision of the CBA
d. Violation of hotel’s grooming standard 25. Union filed MR with NLRC – denied

16
26. Union filed pet cert with CA
27. CA dismissed the petition in fact no. 23
28. CA affirmed NLRC regarding fact no. 26
ISSUE: Whether or not the union conducted an illegal strike. YES.
RATIO:
 Payroll reinstatement was valid, It is obviously impracticable for the Hotel to
actually reinstate the employees who shaved their heads or cropped their hair
because this was exactly the reason they were prevented from working in the
first place
 In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. NLRC, we cited
the various categories of an illegal strike, to wit:
o When it is contrary to a specific prohibition of law, such as strike by
employees performing governmental functions; or
o When it violates a specific requirement of law[, such as Article 263 of
the Labor Code on the requisites of a valid strike]; or
o When it is declared for an unlawful purpose, such as inducing the
employer to commit an unfair labor practice against non-union
employees; or
o When it employs unlawful means in the pursuit of its objective, such
as a widespread terrorism of non-strikers [for example, prohibited acts
under Art. 264(e) of the Labor Code]; or
o When it is declared in violation of an existing injunction[, such as
injunction, prohibition, or order issued by the DOLE Secretary and the
NLRC under Art. 263 of the Labor Code]; or
o When it is contrary to an existing agreement, such as a no-strike clause
or conclusive arbitration clause
 The Union is liable for conducting illegal strike for the following reasons:
o Violation of hotel’s grooming standards
 Union's concerted violation of the Hotel's Grooming
Standards which resulted in the temporary cessation and
disruption of the Hotel's operations is an unprotected act and
should be considered as an illegal strike.
o Violated the CBA's "No Strike, No Lockout" provision
o Violated the Union's duty and responsibility to bargain in good faith
 Violated LC which prohibits the commission of any act which
will disrupt or impede the early settlement of the labor
disputes that are under conciliation
o Union failed to observe the mandatory 30-day cooling-off period and
the seven-day strike ban
o Union committed illegal acts in the conduct of its strike
 Formed human barricades and obstructed the driveway of
the Hotel. There is no merit in the Union's argument that it
was not its members but the Hotel's security guards and the
police officers who blocked the driveway (shown by pictures)
 Clearly, the 29 Union officers may be dismissed. LC - "any union officer who
knowingly participates in an illegal strike." We, however, are of the opinion that
there is room for leniency with respect to the Union members
o Hotel was able to prove that the strikers blocked the ingress to and
egress from the Hotel. But it is quite apparent that the Hotel failed to
specifically point out the participation of each of the Union members
Union members who participated in an illegal strike but were not identified to have
committed illegal acts are entitled to be reinstated to their former positions but
without backwages
4. Duty to Bargain
LC, Arts. 262-264
ART. 262. [251] Duty to Bargain Collectively in the Absence of Collective Bargaining
Agreements. - In the absence of an agreement or other voluntary arrangement
providing for a more expeditious manner of collective bargaining, it shall be the
duty of employer and the representatives of the employees to bargain collectively
in accordance with the provisions of this Code.
ART. 263. [252] Meaning of Duty to Bargain Collectively. - The duty to bargain
collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work and all other terms and conditions
of employment including proposals for adjusting any grievances or questions arising
under such agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.
17
ART. 264. [253] Duty to Bargain Collectively When There Exists a Collective
Bargaining Agreement - When there is a collective bargaining agreement, the duty
to bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior to its expiration
date. 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 period and/or until a new agreement is reached by the parties.
ART. 251. [242] Rights of Legitimate Labor Organizations. - A legitimate labor
organization shall have the right:
(c) To be furnished by the employer, upon written request, with its annual audited
financial statements, including the balance sheet and the profit and loss statement,
within thirty (30) calendar days from the date of receipt of the request, after the
union has been duly recognized by the employer or certified as the sole and
exclusive bargaining representative of the employees in the bargaining unit, or
within sixty (60) calendar days before the expiration of the existing collective
bargaining agreement, or during the collective bargaining negotiation;
ART. 259. [248] Unfair Labor Practices of Employers. - It shall be unlawful for an
employer to commit any of the following unfair labor practices:
(g) To violate the duty to bargain collectively as prescribed by this Code;
254(c) CORRECTION 259 (c)
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their right to
self-organization;

18
P.I. Mfg. Inc. v. P.I. Mfg. Supervisors’ and Foremen Association, 543 SCRA 613 a. The provisions of the CBA should be read in harmony with the wage
(2008) orders, whose benefits should be given only to those employees covered
thereby.
1. PI sells household appliances, while the association is an organization of
supervisors and foremen. b. The CA ruling that PI must pay 18.5% over the wage increases under the
CBA is highly unfair and oppressive to the company
2. Dec. 1987 R.A. 6640 provided for the increase in the statutory minimum wage
of employees in the private sector 3. a CBA constitutes the law between the parties when freely and voluntarily
entered into
a. Minimum wage increased by P10 (Metro Manila), P11 (outside Manila)
a. it has not been shown that the union or the employees were coerced or
b. Those receiving above the minimum wage up to P100 will be increased
forced by the company to sign the CBA
also by P10
b. 13 officers signed it with the assistance of the federation – willfully aware
3. PI and union entered into a CBA for an increase in the salary of the supervisors
of RA 6640
of P625/month, while the foremen, P475/month
c. The duty to bargain requires that the parties deal with each other with
a. The increases are retroactive to May 1987, and will last until July 1989
open and fair minds. A sincere endeavor to overcome obstacles and
4. Jan 1989, the union filed a complaint with the NLRC against PI for violation of difficulties that may arise, so that employer-employee relations may be
R.A. 6640 – that there was a wage distortion caused by RA 6640 stabilized and industrial strife eliminated, must be apparent
a. LA – ordered PI to give increases equivalent to 13.5% of the basic pay; the d. The union cannot claim the benefits of the CBA but disregard the
increase should be the same between supervisors and foremen concessions therein
b. NLRC – affirmed e. The goal of collective bargaining is the making of agreements that will
stabilize business conditions and fix fair standards of working conditions
c. CA – affirmed. PI must pay a wage increase of 18.5%. There was a wage
distortion because of the RA and the CBA could not have waived such
5. PI was arguing that there is no wage distortion; the R.A. does not provide for an
increase in the wages of the employees receiving more than P100; and the CBA
has already removed the wage distortion because of the increases made
WON the CBA has remedied the wage distortions YES
1. Wage distortion means the disappearance of pay differentials between lower
and higher positions in an enterprise because of compliance with a wage order
a. There was a wage distortion because of RA 6640, however, this was cured
by the CBA between PI and the union
b. The lowest paid supervisors because of the P10 increase, is paid more than
the other supervisors higher in rank
c. But, the CBA increased the monthly salaries of these employees and
broadened the gap between the foremen and supervisors
2. The CBA is more than a substantial compliance with RA 6640

19
Colegio De San Juan De Letran v. Assoc. of Employees & Faculty of Letran and
Ambas
G.R. No. 141471. Sept. 18, 2000. Kapunan J.
FACTS:
1. Abtria, the former President of the Union, initiated the renegotiation of its
CBA with Letran.
2. Ambas, the newly elected President of the Union, wanted to continue the
renegotiation. However, Letran claimed that the CBA was already prepared
for signing by the parties.
3. When the disputed CBA was submitted for referendum, the union
members rejected the said CBA.
4. Letran accused the union officers of bargaining in bad faith before the
NLRC. The LA ruled in favor of Letran. However, the LA was reversed on
appeal before the NLRC.
5. The union notified the National Conciliation and Mediation Board (NCMB)
of its intention to strike because of refusal to bargain.
6. After several days, the parties agreed to disregard the unsigned CBA and to
start negotiations on a new CBA. The Union submitted its proposal to
Letran.
7. Meanwhile, Ambas was informed that her work schedule was changed
from “Mon. to Friday” to “Friday to Saturday.” Because of this, Ambas
protested and requested the management to submit the issue to a
grievance machinery under the old CBA.
8. Due to petitioner’s inaction, the union filed a notice of strike. However,
during the negotiations in the NCMB, Ambas was dismissed for alleged
insubordination. Hence, the union amended its notice of strike to include
Amber’s dismissal.
9. When the union finally stuck, the Sec. of Labor assumed jurisdiction and
ordered the EEs including Ambas to return to work and for Letran to accept
them back.
10. Letran readmitted the striking EEs except Ambas.
11. The Sec. of Labor issued an order declaring Letran guilty of ULP and
directed the reinstatement of Ambas.
12. The CA affirmed the findings of the Sec. of Labor.
Letran argues that the proposed CBA was already submitted the union's proposals
to the Board of Trustees and that the authority of the union to negotiate on behalf
of the employees was challenged when a rival union filed a petition for certification
election. 
ISSUE: 1. Whether Letran is guilty of ULP by refusing to bargain- YES, Letrain
guilty of unfair labor practice by its stern refusal to bargain in good faith with
respondent 
2. Whether the termination of the Union President amounts to an interference of
the EEs right to self organization- YES,
HELD:
1. Letran’s utter lack of interest in bargaining with the union is obvious in its
failure to make a timely reply to the proposals presented by the latter. More than a
month after the proposals were submitted by the union, petitioner still had not
made any counter-proposals. This is a clear violation of Article 250 of the Labor
Code governing the procedure in collective bargaining, to wit:
Art. 250. Procedure in collective bargaining. - The following procedures shall be
observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice
upon the other party with a statement of its proposals. The other party shall make a
reply  to the proposal not later than ten (10) calendar days from receipt of such
notice.
As held in Kiko Loy v. NLRC, he company's refusal to make counter-proposal to the
union's proposed CBA is an indication of its bad faith. Where the employer did not
even bother to submit an answer to the bargaining proposals of the union, there is
a clear evasion of the duty to bargain collectively. In the case at bar, petitioner's
actuation show a lack of sincere desire to negotiate rendering it guilty of unfair
labor practice.
In order to allow the employer to validly suspend the bargaining process there must
be a valid petition for certification election raising a legitimate representation issue.
Hence, the mere filing of a petition for certification election does not ipso
facto justify the suspension of negotiation by the employer. The petition must first
comply with the provisions of the Labor Code and its Implementing Rules. Foremost
is that a petition for certification election must be filed during the sixty-day
freedom period. The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the
Omnibus Rules Implementing the Labor Code, provides that: " . If a collective
bargaining agreement has been duly registered in accordance with Article 231 of
the Code, a petition for certification election or a motion for intervention can only
be entertained within sixty (60) days prior to the expiry date of such agreement."
20
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The
petition for certification election by ACEC, allegedly a legitimate labor organization,
was filed with the Department of Labor and Employment (DOLE) only on May 26,
1996. Clearly, the petition was filed outside the sixty-day freedom period. Hence,
the filing thereof was barred by the existence of a valid and existing collective
bargaining agreement. 
2. The factual backdrop of the termination of Ms. Ambas leads us to no other
conclusion that she was dismissed in order to strip the union of a leader who would
fight for the right of her co-workers at the bargaining table. Ms. Ambas, at the time
of her dismissal, had been working for the petitioner for ten (10) years already. In
fact, she was a recipient of a loyalty award. Moreover, for the past ten (10) years
her working schedule was from Monday to Friday. However, things began to change
when she was elected as union president and when she started negotiating for a
new CBA. Thus, it was when she was the union president and during the period of
tense and difficult negotiations when her work schedule was altered from Mondays
to Fridays to Tuesdays to Saturdays. When she did not budge, although her
schedule was changed, she was outrightly dismissed for alleged insubordination
Faculty Association of MAPUA v CA, 254 SCRA 709 (2007)
108 Faculty Association of Mapua Institute of Technology (FAMIT) vs. CA
G.R. No. 164060. June 15, 2007
TOPIC: Bargaining Procedure; Duty to Bargain
FACTS:
1. During the 5th CBA negotiation meeting, MAPUA Institute of Technology (MIT)
presented the new faculty ranking instrument system to petitioner FAMIT
(Faculty Association of MIT)
a. FAMIT agreed to adopt and implement the system with reservation
that there should be no diminution in rank and pay of the faculty
members
2. FAMIT and MIT entered into a new CBA, incorporating the new ranking system.
3. Thereafter, the VP for Academic Affairs issued a memo to all deans and subject
chairs to evaluate and re-rank the faculty under their supervision using the new
ranking instrument.
4. After a month, MIT called FAMIT’s attention to what it perceived to be flaws or
omissions in the CBA signed by the parties
5. MIT requested for an amendment of the following: (1) Faculty Ranking Sheet;
(2) College Faculty Rates for Permanent Faculty Only; (3) H.S. Faculty Rates for
Permanent Faculty Only
6. FAMIT rejected the proposal. It said that these changes would constitute a
violation of the ratified 2001 CBA and result in the diminution of rank and
benefits of FAMIT college faculty. 
a. It argued that the proposed amendment in the ranking system for the
college faculty revised the point ranges earlier agreed upon by the
parties and expands the 19 faculty ranks to 23.
7. Meanwhile, MIT adopted a new formula for determining the pay rates of the
high school faculty
8. FAMIT opposed the formula. It averred that unknown to FAMIT, MIT has not
been implementing the relevant provisions of the 2001 CBA. 
a. Sec 2: The INSTITUTE shall pay the following rate per load for high
school faculty according to corresponding faculty rank
9. FAMIT met with MIT to settle this second issue but to no avail. MIT maintained
that it was within its right to change the pay formula used.
10. Together with the issue pertaining to the ranking of the college faculty, FAMIT
brought the matter to the National Conciliation and Mediation Board for
mediation. 
PANEL OF ARBITRATOR (PA): ruled in favor of FAMIT
 ordered to implement the agreed upon point range system with the 19
faculty ranks and ordered MIT to use past practices or formula in
computing the pay of high school faculty based on rater per load
CA: reversed the ruling of the PA – approved petitioner’s proposal to include the
faculty point range sheet as well as the new formula
FAMIT: MIT’s new proposal on faculty ranking and evaluation for the college faculty
is an unlawful modification, alteration or amendment of the existing CBA without
approval of the contracting parties.
21
MIT unilaterally modified the CBA formula in determining the salary of a high school
faculty.  bound to keep the status quo and to continue in full force and effect the
MIT: argues that the new faculty ranking instrument was made in good faith and in
the exercise of its inherent prerogative to freely regulate according to its own
discretion and judgment all aspects of employment.
it is entitled to consider the actual number of teaching hours to arrive at a fair and
just salary of its high school faculty
ISSUES:
1. Is MIT’s new proposal, regarding faculty ranking and evaluation, lawful and
consistent with the ratified CBA? NO
2. Is MIT’s development of a new pay formula for the high school department,
without the knowledge of FAMIT, lawful and consistent with the ratified CBA?
NO
ISSUE #1: MIT’S PROPOSAL IS AN UNAUTHORIZED MODIFICATION OF THE 2001
CBA
 SC found that the new point range system proposed by MIT is an
unauthorized modification of the 2001 CBA.
 It is made up of a faculty classification that is substantially different from
the one originally incorporated in the current CBA between the parties.
 Thus, the proposed system contravenes the existing provisions of the CBA,
hence, violative of the law between the parties.
 As observed by Office of the Voluntary Arbitrators, the evaluation system
differs from past evaluation practices (e.g., those that give more weight to
tenure and faculty load) such that the system can lead to a demotion in
rank for a faculty member.
 ART. 253. Duty to bargain collectively when there exists a collective
bargaining agreement.—When there is a collective bargaining agreement,
the duty to bargain collectively shall also mean that neither party shall
terminate nor modify such agreement during its lifetime. However, either
party can serve a written notice to terminate or modify the agreement at
least sixty (60) days prior to its expiration date. 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 period
and/or until a new agreement is reached by the parties.
 Until a new CBA is executed by and between the parties, they are duty-
terms and conditions of the existing agreement.
 The law does not provide for any exception nor qualification on which
economic provisions of the existing agreement are to retain its force and effect.
Therefore, it must be understood as encompassing all the terms and conditions
in the said agreement.
 The CBA during its lifetime binds all the parties. The provisions of the CBA must
be respected since its terms and conditions “constitute the law between the
parties.”
 Those who are entitled to its benefits can invoke its provisions. In the event
that an obligation therein imposed is not fulfilled, the aggrieved party has the
right to go to court and ask redress.
 The CBA is the norm of conduct between petitioner and private respondent and
compliance therewith is mandated by the express policy of the law
ISSUE #2: MIT CANNOT ADOPT ITS UNILATERAL INTERPRETAION OF THE CBA
 It is clear from the provisions of the 2001 CBA that the salary of a high school
faculty member is based on a rate per load and not on a rate per hour basis.
 In our view, there is no room for unilateral change of the formula by MIT.
 Needless to stress, the Labor Code is specific in enunciating that in case of
doubt in the interpretation of any law or provision affecting labor, such should
be interpreted in favor of labor.
 The appellate court committed a grave error in the interpretation of the CBA
provision and the governing law.
D. The Collective Bargaining Agreement
1. Definition/Contents
IR, Book V, Rule I, Sec. 1(j)
(j) "Collective Bargaining Agreement" or "CBA" refers to the contract between a
legitimate labor union and the employer concerning wages, hours of work, and all
other terms and conditions of employment in a bargaining unit.
ART. 273. [260] Grievance Machinery and Voluntary Arbitration. - The parties to a
Collective Bargaining Agreement shall include therein provisions that will ensure the
mutual observance of its terms and conditions. They shall establish a machinery for
22
the adjustment and resolution of grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not settled within
seven (7) calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and
designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or
include in the agreement a procedure for the selection of such Voluntary Arbitrator
or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary
Arbitrators duly accredited by the Board. In case the parties fail to select a
Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the
Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary,
pursuant to the selection procedure agreed upon in the Collective Bargaining
Agreement, which shall act with the same force and effect as if the Arbitrator or
panel of Arbitrators have been selected by the parties as described above.
2. Registration
ART. 237. [231] Registry of Unions and File of Collective Bargaining Agreements. -
The Bureau shall keep a registry of legitimate labor organizations.
The Bureau shall also maintain a file of all collective bargaining agreements and
other related agreements and records of settlement of labor disputes and copies of
orders and decisions of voluntary arbitrators or panel of voluntary arbitrators. The
file shall be open and accessible to interested parties under conditions prescribed
by the Secretary of Labor and Employment, provided that no specific information
submitted in confidence shall be disclosed unless authorized by the Secretary, or
when it is at issue in any judicial litigation, or when public interest or national
security so requires.
Within thirty (30) days from the execution of a Collective Bargaining Agreement, the
parties shall submit copies of the same directly to the Bureau or the Regional
Offices of the Department of Labor and Employment for registration accompanied
with verified proofs of its posting in two conspicuous places in the place of work
and ratification by the majority of all the workers in the bargaining unit. The Bureau
or Regional Offices shall act upon the application for registration of such Collective
Bargaining Agreement within five (5) calendar days from receipt thereof. The
Regional Offices shall furnish the Bureau with a copy of the Collective Bargaining
Agreement within five {5) days from its submission.
The Bureau or Regional Office shall assess the employer for every Collective
Bargaining Agreement a registration fee of not less than one thousand pesos (P1 ,
000.00) or in any other amount as may be deemed appropriate and necessary by
the Secretary of Labor and Employment for the effective and efficient
administration of the Voluntary Arbitration Program. Any amount collected under
this provision shall accrue to the Special Voluntary Arbitration Fund.
The Bureau shall also maintain a file, and shall undertake or assist in the publication
of all final decisions, orders and awards of the Secretary of Labor and Employment,
Regional Directors and the Commission.
IR, Book V, Rule XVII, Secs. 1-3
RULE XVII
Registration of Collective Bargaining Agreements
SECTION 1. Where to File. — Within thirty (30) days from execution of a collective
bargaining agreement, the parties thereto shall submit two (2) duly signed copies of
the agreement to the Regional Office which issued the certificate of
registration/certificate of creation of chartered local of the labor union-party to the
agreement. W here the certificate of creation of the concerned chartered local was
issued by the Bureau, the agreement shall be filed with the Regional Office which
has jurisdiction over the place where it principally operates.
Multi-employer collective bargaining agreements shall be filed with the Bureau.
SECTION 2. Requirements for Registration. — The application for CBA registration
shall be accompanied by the original and two (2) duplicate copies of the following
documents which must be certified under oath by the representative(s) of the
employer(s) and labor union(s) concerned.
(a) The collective bargaining agreement;
(b) A statement that the collective bargaining agreement was posted in at least two
(2) conspicuous places in the establishment or establishments concerned for at
least five (5) days before its ratification; and
(c) A statement that the collective bargaining agreement was ratified by the
majority of the employees in the bargaining unit of the employer or employers
concerned.
No other document shall be required in the registration of collective bargaining
agreements.
23
SECTION 3.Payment of Registration Fee. — The certificate of registration of
collective bargaining agreement shall be issued by the Regional Office upon
payment of the prescribed registration fee.
3. Beneficiaries
ART. 267. [255] Exclusive Bargaining Re:Rresentatlon and Workers' Participation In
Polley and Decision-Making. - The labor organization designated or selected by the
majority of the employees in an appropriate collective bargaining unit shall be the
exclusive representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employees shall have the
right at any time to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the right,
subject to such rules and regulations as the Secretary of Labor and Employment
may promulgate, to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect
their rights, benefits and welfare. For this purpose, workers and employers may
form labor-management councils: Provided, That the representatives of the workers
in such labor-management councils shall be elected by at least the majority of all
employees in said establishment.
Mactan Workers Union v. Aboitiz
G.R. No. L-30241 June 30, 1972. Fernando, J.
Topic: Collective Bargaining Agreement; Beneficiaries
FACTS:
1. The employees of Cebu Shipyard & Engineering Works, Inc. belong to two
rival labor union. 72 EEs are from Mactan Workers Union (Mactan Union)
and the rest of the EEs are members of Associated Labor Union (ALU).
2. Cebu Shipyard and ALU entered into a CBA, Cebu Shipyard agreed to give a
profit-sharing bonus to its EEs and laborers to be taken from 10% of its net
income.
3. The bonus is payable in 2 installments (March and June), in proportion to
their salaries.
4. Cebu Shipyard will pay the profit sharing bonus to ALU. ALU has the duty to
deliver the bonus to the EEs and the laborers. If there are undistributed
bonus, ALU should return it to Cebu Shipyard.
5. The first and second installment for the year was delivered to ALU.
However, the members of Mactan Union failed to receive their shares in
the 2nd installment because they don't like to go to the office of ALU to
collect their share.
6. In accordance with the CBA, the uncollected shares of Mactan Union
Members were returned to Cebu Shipyard. At the same time, the Company
was advised by ALU not to deliver the amount to members of Mactan
Union unless ordered by the Court, otherwise ALU will take such step to
protect its members.
7. Because ofthe warning from ALU, the company deposited the amount of
P4,035.82 with the Labor Administrator.
8. Mactan filed a case with the lower court to recover the amount.
9. The lower court ordered the company to deliver the sum of money to ALU
for distribution to the members of MWU their corresponding shares.
10. ALU filed an appeal. According to ALU, the LC did nothing except to require
literal compliance with the terms of the CBA.
ISSUE:
1. Whether ALU and Cebu Shipyard violated the CBA- YES
2. Whether ALU represent only its members and not the entire workforce- NO
HELD:
 The terms and conditions of a collective bargaining contract constitute the
law between the parties. Those who are entitled to its benefits can invoke
its provisions. In the event that an obligation therein imposed is not
fulfilled, the aggrieved party has the right to go to court for redress.   
 It is a well-settled doctrine that the benefits of a collective bargaining
agreement extend to the laborers and employees in the collective
bargaining unit, including those who do not belong to the chosen
bargaining labor organization.  Any other view would be a discrimination
on which the law frowns. It is appropriate that such should be the case.
 The labor union that gets the majority vote as the exclusive bargaining
representative does not act for its members alone. It represents all the
employees in such a bargaining unit. It is not to be indulged in any attempt
on its part to disregard the rights of non-members. Yet that is what
intervenor labor union was guilty of, resulting in the complaint filed on
behalf of the laborers, who were in the ranks of plaintiff Mactan Labor
Union.
4. Minutes of Negotiation
24
Samahang Manggagawa sa Top Form Manufacturing v NLRC [1998]
9. Samahang Manggagawa sa Top Form Manufacturing (SMTFM) was the
collective bargaining representative of all rank and file employees of Top Form.
10. According to the minutes of a collective bargaining negotiation, SMTFM
proposed an automatic across-the-board wage increase provision. However,
they agreed to drop the proposal on the strength of the representation of the
negotiating panel of Top Form, as in the past years, the company granted the
government mandated wag increases in an across-the-board basis.
11. RTWPB-NCR issued Wage Order 1, granting an increase of P17 per day. This was
followed by Wage Order 2, which provided a daily increase of P12/
12. SMTFM asked for the implementation of the Wage Orders, and for the same to
be done on an across-the-board basis. Top Form refused and implemented a
scheme of increases to avoid wage distortion, such that:
a. Employees with daily salary of P125 and below: + P17
b. Employees with daily salary of P140 and below: + P12
c. Employees with daily salaries higher than P125 or P140: escalated
increases ranging from P6.00 to P14.30 and P6.00 to P10.00,
respectively
13. Despite several conferences between the parties, Top Form adamantly
maintained its position on the salary increases.
14. SMTFM filed a complaint against Top Form for acts of unfair labor practices,
particularly bargaining in bad faith.
15. Top Form asserted that there was no agreement to the effect that future wage
increases mandated by the government should be implemented on an across-
theboard basis. Otherwise, that agreement would have been incorporated and
expressly stipulated in the CBA.
a. CBA further reflects the parties' intention to fully set forth therein all
their agreements that had been arrived at after negotiations.
b. The CBA also provided that during its effectivity, the parties voluntarily
and unqualifiedly waive the right, and each agrees that the other shall
not be obligated, to bargain collectively, with respect to any subject or
matter not specifically referred to or covered by the agreement.
16. LA: dismissed the ULP case. NLRC: affirmed.
ISSUE: WON employer committed an ULP by bargaining in bad faith and
discriminating against its employees.- NO
 The CBA is the law between the contracting parties, and compliance therewith
is mandated by the expressed policy to give protection to labor. Nevertheless,
only provisions embodied in the CBA should be so interpreted and complied
with. Where a proposal raised by a contracting party is not in the CBA, it is not
a part thereof and there can be no claim whatsoever to its implementation.
 If indeed there was a representation, as claimed by SMTFM in this case, Top
Form may not be considered in bad faith or at the very least, resorting to the
scheme of feigning to undertake the negotiation proceedings through empty
promises. SMTFM had, under the law, the right and the opportunity to insist on
the foreseeable fulfillment of Top Form’s promise by demanding its
incorporation in the CBA. But because the proposal was never embodied in the
CBA, the promise has remained just that, the implementation of which cannot
be validly demanded under the law.
 This case and Kiok Loy have different factual incidents. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one. The
duty to bargain does not include the obligation to reach an agreement. Further,
with the execution of the CBA, bad faith bargaining can no longer be imputed
upon any of the parties thereto as all provisions in the CBA are supposed to
have been jointly and voluntarily incorporated therein by the parties.
 The question as to what are mandatory and what are merely permissive
subjects of collective bargaining is of significance on the right of a party to insist
on his position to the point of stalemate.
o A party may refuse to enter into a collective bargaining contract unless
it includes a desired provision as to a matter which is a mandatory
subject of collective bargaining; but a refusal to contract unless the
agreement covers a matter which is not a mandatory subject is in
substance a refusal to bargain about matters which are mandatory
subjects of collective bargaining, and it is no answer to the charge of
refusal to bargain in good faith that the insistence on the disputed
clause was not the sole cause of the failure to agree or that agreement
was not reached with respect to other disputed clauses.
 On account of the importance of the economic issue proposed by SMTFM, it
could have refused to bargain and to enter into a CBA with Top Form. On the
other hand, Top Form's firm stand against the proposal did not mean that it
was bargaining in bad faith. It had the right to insist on its position to the point
of stalemate.
 On the part of SMTFM, the importance of its proposal dawned on it only after
the wage orders were issued after the CBA had been entered into. Indeed, from
25
 the facts of this case, the charge of bad faith bargaining on the part of Top
Form was nothing but a belated reaction to the implementation of the wage
orders that Top Form made in accordance with law. In other words, SMTFM
harbored the notion that its members and the other employees could have had
a better deal in terms of wage increases had it relentlessly pursued the
incorporation in the CBA of its proposal.
 There is no established company practice of granting across-the-board wage
increases in this case.

26
5. Interpretation, Administration and Enforcement
111 NORKIS FREE AND INDEPENDENT WORKERS UNION v. NORKIS TRADING
COMPANY, INC. [2005]
CBA; Interpretation, Administration, and Enforcement
1. The Union and the Company entered into a 5-year CBA, valid until July 1999.
a. Sec. 2: In the event that a law is enacted increasing minimum wage, an
across-the-board increase shall be granted by the company according
to the provisions of the law.
b. A re-negotiation of the CBA was terminated and pursuant to a MOA,
the Company shall grant an increase to all regular and permanent
employees. P10/day effective Aug. 1, 1997 and P10/day effective Aug.
1, 1998.
2. The salaries were increased based on the MOA.
3. Mar. 10, 1998: The RTWPB issued a wage order mandating a P5 increase for
those with minimum salary of P160 effective Oct. 1, 1998.
4. In accordance with the Wage Order and the CBA, the Union demanded an
across the board increase.
5. Company refused saying that since it has been paying its workers the new
minimum wage of P165 even before the issuance of the WO, it cannot be made
to comply with it.
a. Long before the passage of the WO, and by virtue of the MOA, the
Company is already paying the employees P165 retroactive on Aug. 1,
1997 while the min. salary was just P155.
b. On August 1, 1998, Company again granted an increase of P10.
c. At the time of the effectivity of the WO prescribing P165 as min wage,
Company’s min wage was already P175/day.
6. A preventive mediation complaint was filed by the Company before the NCMB.
7. Voluntary Arbitrator: Company did not comply with the wage order. The CBA
provision was worded and couched in a vague and unclear manner.
8. DOLE: Company failed to comply with its obligation of implementing the
increase under RTWPB WO in an across-the-board manner as provided in the
CBA.
9. CA: The grant of an across the board increase was qualified by the phrase
“according to the provisions of the law.”
a. Company sufficiently complied with the WO.
b. The intent of the WO was to cushion the impact of the regional
economic crisis upon the ee and er.
c. The WO exempted from compliance those enterprises already paying
salaries equal to or more than the prescribed min. wage
d. The Order effectively made the previous voluntary increases given by
the Company to its employees creditable against the law-mandated
increase.
ISSUE: Whether the Company violated the CBA in its refusal to grant its employees
an across-the-board increase as a result of the passage of the WO. NO.
 Given the entire sentence of the CBA provision, it is clear that it does not
support the view of the Union that the issuance of the WO entitles its members
to an across-the-board increase, absolutely and without any condition.
 Stipulations in a contract must be read together, not in isolation from one
another. When the terms of its clauses are clear and leave no room for doubt
as to the intention of the contracting parties, it would not be necessary to
interpret those terms, whose literal meanings should prevail.
 The CA correctly observed that the import of the WO should be considered in
the implementation of the government-decreed increase.
o The Wage Order was intended to fix a new minimum wage only, not to
grant across-the- board wage increases to all employees in Region VII.
The intent of the Order is indicated in its title, “Establishing New
Minimum Wage Rates.”
o A cursory reading of the subject Wage Order convinces us that the
intention of RTWPB was to prescribe a minimum or “floor wage”; not
to determine a “salary ceiling.” Had the latter been its intention, the
Board would have expressly provided accordingly.
 The prescribed minimum wage after full implementation of the P10 increase in
the Wage Order is P165 for Class A private non-agriculture sectors.
o It would be reasonable and logical, therefore, to infer that those
employers already paying their employees more than P165 at the time
of the issuance of the Order are sufficiently complying with the Order.
 In its letter-opinion the RTWPB gave a similar interpretation of the essence of
the Wage Order: to fix a new floor wage or to upgrade the wages of the
employees receiving lower than the minimum wage set by the Order.
27
 o RTWPB was interpreting only its own issuance, not a statutory the employees had nothing to do with, and they should not be made
provision. to bear or suffer from the burden.
6. CA sustained VA’s interpretation of the CBA but reversed its findings on the TIP
o RTWPB, like any other executive agency, has the authority to interpret
computation. CA held that is should be literally mean that 80% of the TIP or
its own rules and issuances.
1,500 whichever is higher, is to be allotted for the EE’s salary increases.
 The CBA is no ordinary contract, but one impressed with public interest. 7. Hence this petition.
Therefore, it is subject to special orders on wages, such as those issued by the a. USA maintained that the provision of the CBA, since RA 6728 only
RTWPB. mandates that 70% of the TIP of academic institution is to be set aside
for EE’s salaries, allowances, and other benefits, while at least 20% is
112 USA v USAEU-FFW
to go to the improvement, modernization of buildings equipment,
libraries and other school facilities.
1. The University entered into a CVA with respondent USAU-FFW effective for 5
b. That the interpretation of the provision that 80% of the TIP should go
years from July 2000-2005.
to salary increases alone is contrary to RA 6728
2. The parties agreed to include a provision on salary increases based on the
c. Hence the RA is the law between the parties and not the CBA
incremental tuition fee increases or tuition incremental proceeds (TIP) and
pursuant to RA 6728.
Issue: WON the 80% is allotted for the salary increase alone.- YES
a. SY 2000-2001·P2,000.00 per month, across the board.
b. SY 2001-2002·P1,500.00 per month or 80% of the TIP, whichever is
 It is a familiar and fundamental doctrine in labor law that the CBA is the law
higher, across the board.
between the parties and they are obliged to comply with its provisions. If the
c. SY 2002-2003·P1,500.00 per month or 80% of the TIP, whichever is
terms of a contract, in this case the CBA, are clear and leave no doubt upon the
higher, across the board.
intention of the contracting parties, the literal meaning of their stipulations
3. On SY 2001-2002, the parties disagreed on the computation of the salary
shall control.
increase.
 A reading of the pertinent provision of the CBA shows that the parties agreed
a. USA proposed across-the-board salary increase of P1,500 per month
that 80% of the TIP or at the least the amount of P1,500 is to be allocated for
and its subtraction from the computation of the TIP of the scholarships
individual salary increases.
and tuition fee discounts it grants to deserving students and its
 The CBA does not speak of any other benefits or increases which would be
employees and their dependents.
covered by the employees’ share in the TIP, except salary increases.
b. USA’s interpretation of the term “salary increases” as referring not
 In the present case, USA could have, during the CBA negotiations, opposed the
only to the increase in salary but also to corresponding increases in
inclusion of or renegotiated the provision allotting 80% of the TIP to salary
other benefits.
increases alone, as it was and is not under any obligation to accept
c. USAU-FFW argued that the provision in question referred to “salary
respondent’s demands hook, line and sinker.
increases” alone, hence, the phrase “P1,500.00 or 80% of the TIP,
 Art. 252 of the Labor Code is clear on the matter: The duty to bargain
whichever is higher,” should apply only to salary increases and should
collectively means the performance of a mutual obligation to meet and
not include the other increases in benefits received by employees.
convene promptly and expeditiously in good faith for the purpose of
4. Having failed to the existing grievance machinery, the parties agreed to submit
negotiating an agreement with respect to wages, hours, of work and all other
the case to voluntary arbitration (VA)
terms and conditions of employment including proposals for adjusting any
5. VA found for USAU-FFW, holding that the salary increase shall be paid out of
grievances or questions arising under such agreement and executing a contract
the 80% of the TIP should the same be higher than 1,500. Further, the CBA is
incorporating such agreements if requested by either party but such duty does
the law between the parties. Hence it should be respected.
not compel any party to agree to a proposal or to make any concession.
a. As to USA’s deduction of scholarship grants and tuition fee discounts
 The records are thus bereft of any showing that petitioner had made it clear
from the TIP, the VA ruled that it is invalid, USA having waived the
during the CBA negotiations that it intended to source not only the salary
collection thereof when it granted the same. It is thus a waiver which

28
 increases but also the increases in other employee benefits from the 80% of
the TIP. Absent any proof that petitioner’s consent was vitiated by fraud,
mistake or duress, it is presumed that it entered into the CBA voluntarily, had
full knowledge of the contents thereof, and was aware of its commitments
under the contract.
a. Nature
113 PANTRANCO NORTH EXPRESS, INC v. NLRC and URBANO SUIGA (1996)
FACTS:
1. Suiga was hired by Pantranco in 1964 as a bus conductor. He eventually joined
the PEA-PTGWO. He retired in 1989 at the age of 52 after having rendered 25
yrs of service. 
2. The basis of his retirement was the 25-year compulsory retirement (CR)
provision of the CBA between Pantranco and the union. Suiga received
P49,300 retirement pay.
3. In 1990, Suiga filed an illegal dismissal case against Pantranco with the Sub-
Regional Arbitration Branch of the NLRC.  
4. LA: Suiga illegally dismissed. Pantranco must reinstate to former or
substantially equivalent position w/o loss of seniority rights with full backwages
and other benefits amounting to P31,618.12.
a. Ruled that it has jurisdiction over the complaint because first, this is a
complaint of illegal dismissal of which original and exclusive
jurisdiction under Art. 217 has been conferred to the LAs. The
interpretation of the CBA or enforcement of the company policy is
only corollary to the complaint of illegal dismissal. Second, Pantranco
voluntarily submitted the case to its jurisdiction. It adduced arguments
to the legality of its act, whether such act may be retirement or
dismissal, and prayed for reliefs on the merits of the case. 
5. Pantranco appealed. NLRC affirmed. Hence, this petition.
6. Pantranco: That the LA had no jurisdiction because the dispute concerns a
provision of the CBA and its interpretation. That the case falls under the
jurisdiction of the voluntary arbitrator or panel of arbitrators under Article 261
of the LC. That the CR provision is valid and in consonance with Art. 287 of the
LC.
7. SolGen: Agrees with Pantranco’s contention that the law leaves to the ER and
EEs the fixing of the age of retirement. Claims that a CBA provision lowering
compulsory retirement age to less than 60 is not contrary to law because it
does not diminish the EE’s benefits, rather, it constitutes a reward of
employment.
ISSUES & RULING:
1. W/N the LA has jurisdiction over the case. YES.
Check codal! Now Art. 274 of the LC.
Only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.
Where the problem or dispute 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 grievance
machinery with members designated by the union and the company cannot be
expected to be impartial against the dismissed employees. Due process demands
that dismissed workers’ grievances be ventilated before an impartial body. If there
has already been an actual termination, the matter falls within the jurisdiction of
the LA.
In this case, it cannot be said that the "dispute" is between the union and
Pantranco because both have previously agreed upon the provision on
"compulsory retirement" as embodied in the CBA. It was only Suiga on his own
who questioned the compulsory retirement. Thus, the case is a "termination
dispute" which comes under the jurisdiction of LA.
2. W/N the CBA stipulation on compulsory retirement after 25 years of service is
legal and enforceable. 
a. Art. 287 of the Labor Code as worded permits employers and employees to fix the
applicable retirement age at below 60 y/o. 
“Art. 287. Retirement. - Any employee may be retired upon reaching the retirement
age established in the CBA or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining or
other agreement.”
Providing for early retirement does not constitute diminution of benefits. Early
retirement (before age 60) is considered a reward for services rendered since it
enables an EE to enjoy the retirement benefits at an earlier age, when said EE can
enjoy them better and longer. 
Retirement benefits can early on be put to productive and profitable uses by way of
income-generating investments, hence affording a more significant measure of
29
financial security and independence for the retiree. Thus there are now many CBAs
with such early retirement provisions. And the same cannot be considered a
diminution of employment benefits.
The Retirement Pay Law, w/c amended Art. 287 of the LC, makes clear the intention
and spirit of the law to give ERs and EEs a free hand to determine and agree upon
the terms and conditions of retirement. 
b. Being a union member, Suiga is bound by the CBA because its terms and
conditions constitute the law between the parties.  Bargaining Agreement (CBA) between petitioner Dole Philippines, Inc. and
The parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which according to their nature, may be
in keeping with good faith, usage and law. It binds not only the union but also its
members.
A CBA incorporates the agreement reached after negotiations between ER and
bargaining agent with respect to terms and conditions of employment. A CBA is not
an ordinary contract. 
As a labor contract within the contemplation of Art. 1700 of the Civil Code, it is
not merely contractual in nature but impressed with public interest, thus it must
yield to the common good. As such, it must be construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.
 Being a product of negotiation, the CBA between Pantranco and the union
intended the provision on compulsory retirement to be beneficial to the EEs-
union members, including Suiga.  
 When Suiga ratified the CBA with the union, he not only agreed to the CBA
but also agreed to conform to and abide by its provisions.  practice of granting free meals only after more than three hours of
 Thus, it cannot be said that he was illegally dismissed when the CBA provision
on compulsory retirement was applied to his case.
Providing in a CBA for compulsory retirement of EEs after 25 years of service is legal
and enforceable so long as the parties agree to be governed by such CBA. The law
presumes that employees know what they want and what is good for them absent
any showing that fraud or intimidation was employed to secure their consent
thereto.
Dole Philippines, Inc. vs. Pawis ng Makabayang Obrero
G.R. No. 146650. January 13, 2003.
PETITION for review on certiorari of the decision of the Court of Appeals.
CORONA, J.
TOPIC: Interpretation, Administration and Enforcement - Nature
FACTS
 The core of the present controversy is the interpretation of the provision
for “free meals” under Section 3 of Article XVIII of the 1996-2001 Collective
private respondent labor union PAMAO-NFL. Simply put, how many hours
of overtime work must a Dole employee render to be entitled to the free
meal under Section 3 of Article XVIII of the 1996-2001 CBA? Is it when he
has rendered (a) exactly, or no less than, three hours of actual overtime
work or (b) more than three hours of actual overtime work?
 On February 22, 1996, a new 5 year CBA was executed by petitioner Dole
Philippines, Inc., and private respondent Pawis Ng Makabayang Obrero-
NFL (PAMAO-NFL). Among the provisions of the new CBA is the disputed
section on meal allowance which reads:
o Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a
MEAL ALLOWANCE of TEN PESOS (P10.00) to all employees who
render at least TWO (2) hours or more of actual overtime work on
a workday, and FREE MEALS, as presently practiced, not exceeding
TWENTY FIVE PESOS (P25.00) after THREE (3) hours of actual
overtime work.
Pursuant to the above provision of the CBA, some departments of Dole
reverted to the previous practice of granting free meals after exactly three
hours of actual overtime work. However, other departments continued the
overtime work. Thus, private respondent filed a complaint before the
National Conciliation and Mediation Board (NCMB) alleging that petitioner
Dole refused to comply with the provisions of the CBA because it granted
free meals only to those who rendered overtime work for more than three
hours and not to those who rendered exactly three hours overtime work.
 The parties agreed to submit the dispute to voluntary arbitration.
Thereafter, the voluntary arbitrator, deciding in favor of the respondent,
issued an order directing petitioner Dole to extend the “free meal” benefit
to those employees who actually did overtime work even for exactly three
hours only.
30
  Petitioner sought a reconsideration of the above order but the same was
denied. Hence, petitioner elevated the matter to the Court of Appeals
which rendered its decision upholding the assailed order.
ISSUE
 Whether or not the meal allowance should be given exactly after three
hours or more than three hours. – EXACTLY AFTER THREE HOURS
HELD
 The “meal allowance” provision in the 1996-2001 CBA is not new. It was
also in the previous CBA. The clear changes in each CBA provision on meal
allowance were in the amount of the meal allowance and free meals, and
the use of the words “after” and “after more than” to qualify the amount
of overtime work to be performed by an employee to entitle him to the
free meal.
 The Court noted that the phrase “more than” was neither in the 1985-1988
CBA nor in the original 1990-1995 CBA. It was inserted only in the 1993-
1995 CBA Supplement. But said phrase is again absent in Section 3 of
Article XVIII of the 1996-2001 CBA, which reverted to the phrase “after
three (3) hours.”
 Petitioner asserts that the phrase “after three (3) hours of actual overtime
work” does not mean after exactly three hours of actual overtime work; it
means after more than three hours of actual overtime work. Respondent,
on the other hand, maintains that “after three (3) hours of actual overtime
work” simply means after rendering exactly, or no less than, three hours of
actual overtime work.
 The Court finds logic in private respondent’s interpretation. The omission
of the phrase “more than” in the present CBA spells a big difference. No
amount of legal semantics can convince the Court that “after more than”
means the same as “after.” Clearly then, the wording can only mean that
the parties intended that free meals be given to employees after exactly,
or no less than, three hours of actual overtime work.
 The disputed provision of the CBA is clear and unambiguous. The terms are
explicit and the language of the CBA is not susceptible to any other
interpretation.
 Petitioner Dole cannot assail the voluntary arbitrator’s interpretation of
the CBA for the supposed impairment of its management prerogatives just
because the same interpretation is contrary to its own.
WHEREFORE, petition is hereby denied.
b. Grievance Procedure
LC, Arts. 267 & 274
ART. 267. [255] Exclusive Bargaining Re:Rresentatlon and Workers' Participation In
Polley and Decision-Making. - The labor organization designated or selected by the
majority of the employees in an appropriate collective bargaining unit shall be the
exclusive representative of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of employees shall have the
right at any time to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the right,
subject to such rules and regulations as the Secretary of Labor and Employment
may promulgate, to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect
their rights, benefits and welfare. For this purpose, workers and employers may
form labor-management councils: Provided, That the representatives of the workers
in such labor-management councils shall be elected by at least the majority of all
employees in said establishment.
ART. 274. [261] Jurisdiction of Voluntary Arbitrators and Panel of Voluntary
Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of
Voluntary Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining
Agreement.
31
USAEU-FFW v. CA 2006 to receive such). Sheriff explained that even if she refuses to acknowledge
receipt it would still be considered as served.
facts:
11. Sheriff posted AJO at the main gate of the University, at the main entrance of
1. University of San Agustin
its buildings, and at the Union’s office. Sheriff also served the AJO on the
a. Educational institution University
b. Offers both basic and higher education courses 12. Notwithstanding sheriff’s advice as to the legal implication of the Union’s
refusal to be served, Union went ahead with the strike
2. Petitioner Union is the duly recognized CBU for teaching and non-teaching rank
and file personnel of the University while the other petitioners are its officers 13. President arrived and received the AJO
3. Parties entered into a 5 yr CBA 14. University filed Pet to Declare Illegal Strike and Loss of Employment Status –
was consolidated with the case pending before the SOLE
a. Economic provision
15. SOLE:
i. Salary increase for 3 years in the form of either lump sum or a
percentage of the tuition incremental proceeds (TIP) a. No illegal strike – want of legal and factual basis
b. “no strike, no lockout” clause b. No basis to declare loss of employment status
c. Grievance machinery procedure 16. The University moved for recon – denied
d. Arbitration in case grievance committee fail to settle the dispute 17. CA: there was illegal strike hence union officers lost their employment status.
parties filed MR
4. Parties commenced negotiations for the economic provision for the remaining
2 years 18. University served notices of termination
a. Parties could not agree 19. Union filed with NCMB 2nd notice of strike for union busting
b. Thus, they underwent preventive mediation proceedings before the 20. Parties tried to negotiate the new CBA but were unsuccessful
NCMB
21. Union went on strike
c. Computation of TIP was not yet resolved
22. CA:
5. Union declared deadlock
a. SOLE abused its discretion in resolving the issues considering that
6. Union filed notice of strike such were proper subject of the grievance machinery under the CBA
7. Opposed by the University, invoked the “no strike, no lockout” clause. NCMB b. Parties are directed to undergo voluntary arbitration
failed to resolve the motion
c. Affirmed that the strike was illegal
8. Parties made a request for the SOLE to assume jusrisdiction
ISSUE: Whether or not the strike was illegal. YES.
9. SOLE assumed jurisdiction and issued Assumption of Jurisdiction Order (AJO)
Ratio:
a. LC - any strike or lockout whether actual or intended, is hereby strictly
 When the SOLE assumes jurisdiction over a labor dispute or certifies the same
enjoined and the parties are directed to cease and desist from
to the NLRC for compulsory arbitration, such assumption or certification shall
committing any act that might exacerbate the situation
have the effect of automatically enjoining the intended or impending strike or
10. Union staged a strike. Sheriff served the SOLE’s AJO, after the Union VP read lockout. Moreover, if one had already taken place, all striking workers shall
such, it refused to receive the same (that the Pres is the only person authorized
32
 immediately return to work and the employer shall immediately readmit all arising from the interpretation or implementation of the CBA and those arising
workers from the interpretation or enforcement of company personnel policies," hence
"violations of a CBA, except those which are gross in character, shall no longer
 Union’s assertion of a well settled practice that the SOLE always gives twenty-
be treated as ULP and shall be resolved as grievances under the CBA." The
four hours (24) to the striking workers within which to return to work, offers no
same Article further states that the "Commission, its Regional Offices and the
refuge
Regional Directors of DOLE shall not entertain disputes, grievances or matters
o Has no basis in law and jurisprudence under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel
of Voluntary Arbitrators and shall immediately dispose and refer the same to
o “…if one had already taken place, all striking workers shall
the Grievance Machinery or Voluntary Arbitration provided in the CBA
immediately return to work…”
Issue: Whether or not parties should proceed with voluntary arbitration. YES.
RATIO:
 CBA provides for a grievance machinery to resolve any "complaint arising from
the CBA and those arising from the interpretation of policies." Also, CBA
provides that should the grievance machinery fail to resolve the grievance or
dispute, the same shall be "referred to a Voluntary Arbitrator for arbitration
and final resolution."
 However, through no fault of the University processes were not exhausted
 While undergoing preventive mediation proceedings before the NCMB, the
Union declared a bargaining deadlock, filed a notice of strike and thereafter,
went on strike. The University filed a Motion to Strike Out Notice of Strike and
to Refer the Dispute to Voluntary Arbitration but the motion was not acted
upon by the NCMB
 Failure or refusal of the NCMB and thereafter the SOLE to recognize, honor and
enforce the grievance machinery and voluntary arbitration provisions of the
parties’ CBA unwittingly rendered said provisions, as well as, Articles 261 and
262 of the Labor Code, useless and inoperative
 A union can easily circumvent the grievance machinery and a previous
agreement to resolve differences or conflicts through voluntary arbitration
through the simple expedient of filing a notice of strike. On the other hand,
management can avoid the grievance machinery and voluntary arbitration
provisions of its CBA by simply filing a notice of lockout
 Main purpose of management and labor in adopting a procedure in the
settlement of their disputes is to prevent a strike or lockout. Thus, this
procedure must be followed in its entirety if it is to achieve its objective
 Rule VI of the NCMB Manual refers to the jurisdiction of voluntary arbitrator or
panel of voluntary arbitrators "to hear and decide all unresolved grievances

33
Atlas Farm, Inc. v. NLRC, G.R. No. 142244, November 18, 2002 d. Termination disputes do not fall within the phrase grievances arising from
the interpretation or implementation of the collective bargaining
1. Dela Pea was employed as veterinary aid in Atlas Farms
agreement and those arising from the interpretation or enforcement of
a. He was caught urinating and defacating on company premises not company personnel policies
intended for that purpose
e. Thus, the LA has jurisdiction in this case
2. Another employee, Abion was a carpenter/ mason
3. it was Atlas who failed to show proof that it took steps to convene the
a. He was caught caused the clogging of the fishpond drainage resulting to grievance machinery after the labor arbiter first dismissed the complaints for
damages because he improperly disposed of cut grass and waste materials illegal dismissal and directed the parties to avail of the grievance procedure
under Article VII of the existing CBA
3. They worked 7 days a week including holidays without holiday/ rest day pay/
Service incentive leave
4. They were given formal notices to explain but they refused to receive the
notice and did not explain. They were given notices of termination with
payment of separation pay
5. Pea and Abion filed complaints for illegal dismissal. Their termination as due to
the suspicion of Atlas that they planned to form a union
a. LA dismissed their complaint because they failed to exhaust the grievance
machinery in the CBA
b. NLRC reversed. CA affirmed NLRC
WON the case must be dismissed for failure to comply with the grievance
machinery NO
1. The dismissal was illegal as correctly ruled by the NLRC and CA
a. Employer has the burden of proving the validity of dismissal – they failed
to prove such
b. No proof they refused to receive the notices
c. Factual findings of the agencies are afforded great weight
2. As to the grievance machinery
a. GR: the LA has original and exclusive jurisdiction over termination disputes
b. EXC: Art. 261, where a voluntary arbitrator or a panel has jurisdiction to
hear grievances arising from the interpretation or implementation of a
CBA, or company policies, and violations of the CBA
i. EXC: CBA violations which are gross in character
c. Art. 261 only applies if there is an express agreement between the parties

34
c. Contract Ambiguity
117. Holy Cross of Davao College, Inc. vs. Holy Cross of Davao Faculty Union-
KAMAPI G.R. No. 156098. June 27, 2005
TOPIC: CBA – Contract Ambiguity
FACTS:
1. Holy Cross of Davao College, Inc (Holy Cross)., petitioner, is a tertiary level
educational institution in Davao
2. Holy Cross and Holy Cross of Davao College Faculty Union-KAMAPI (Union)
entered into a CBA providing a faculty development scholarship for academic
teaching personnel
3. Holy Cross received a letter of invitation for the 1999 Monbusho scholarship
grant (In-Service Training for Teachers) offered and sponsored by the Japanese
Government, through the Japan Information and Cultural Center (JICC).
4. Jean Legaspi, an English teacher at Holy Cross, submitted her application
5. Meanwhile, the petitioner issued a policy statement and guidelines on
educational trips abroad for school year 1988 to 1999
6. JICC informed Legaspi that she is a recipient of the scholarship. Consequently,
she requested petitioner to allow her to be on study leave with grant-in
aid equivalent to her 18 months salary and allowance, pursuant to the CBA
7. Holy Cross denied her request, claiming that she is not entitled to grant-in aid
under its “Policy Statement and Guidelines for Trips Abroad for Professional
Growth.”
a. Nevertheless, Holy Cross granted her 12 months study leave without
pay from October 1999 to September 2000.
8. Before she left for Japan, she asked respondent union to submit to the
Grievance Committee petitioner’s refusal to grant her claim for grant-in aid, but
the same was not settled.
9. The union filed with the NCMB a complaint for payment of grant-in aid against
Holy Cross.
10. VOLUNTARY ARBITRATOR (VA): ordered Holy Cross to pay Legaspi her grant-in
aid benefits
CA: affirmed the VA; terms of the CBA are clear and leave little room for further
interpretation.
 While no degree but only a certificate will be conferred on Legaspi, she should
not be barred from availing of the benefits under the CBA.
 Indeed, the CBA merely states ‘higher studies’ and did not specify to which
trainings the benefit will apply.
 If the CBA intended that such trainings be confined to those which will
formally grant degrees as petitioner contends, the agreement should have so
stated.
 Contrary thereto, however, the CBA provides the award of grant-in aid benefits
to faculty members who will pursue ‘higher studies.’
 The term is so broad as to include programs that would grant certificates and
not degrees.
 In any event, the construction of any ambiguity in the CBA, such as which
course would be relevant to Legaspi’s job, and whether such course comprises
‘higher studies’ should be made in favor of the employee, Legaspi, in
consonance with the rule that labor laws and agreements should be construed
in favor of the working man.
HOLY CROSS: claims that it is not obliged to grant Jean Legaspi a grant-in aid
considering that she failed to comply with the substantive requirements set forth in
their CBA, such as: (1) that the course is within her area of competence; and (2) that
she will acquire higher academic degree; and that the Monbusho scholarship is a
non-degree program outside her area of competence (English).
ISSUE: Whether Jean Legaspi is entitled to grant-in aid benefits in light of the CBA
between the parties. YES
HELD:
 To begin with, any doubt or ambiguity in the contract (CBA) between
management and the union members should be resolved in favor of the latter.
o This is pursuant to Article 1702 of the Civil Code which provides: “(I)n
case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.”
 CBA: Management shall grant to all academic personnel a grant-in-aid
program, where the academic teaching personnel, whenever scholarship
opportunities should arise, be afforded a leave of absence to further their
studies in Institutions of Higher Learning with a grant-in-aid equivalent to
their salary and allowance 
o Policy Statement and Guidelines for Trips Abroad for Professional
Growth (SY 1998-1999): Employees may travel abroad for study tours
and to attend seminars, conferences, and other related academic
pursuits. The school may provide financial assistance subject to the
following guidelines: “That the receives regular salary.”
 The above provisions state that academic teaching personnel, like Jean Legaspi,
as recipient of a scholarship grant are entitled to a leave of absence with a
grant-in-aid equivalent to their monthly salary and allowance, provided such
35
 grant is to promote their professional growth or to enhance their studies in
institutions of higher learning. Such provisions need no interpretation for they
are clear. Contracts which are not ambiguous are to be interpreted according
to their literal meaning and not beyond their obvious intendment
 In Mactan Workers Union vs. Aboitiz, we held that “the terms and conditions of
a collective bargaining contract constitute the law between the parties. Those
who are entitled to its benefits can invoke its provisions. In the event that an
obligation therein imposed is not fulfilled, the aggrieved party has the right to
go to court for redress.”
d. Contract Duration and Renewal
LC, Arts. 265 & 264
ART. 265. [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.
ART. 264. [253] Duty to Bargain Collectively When There Exists a Collective
Bargaining Agreement - When there is a collective bargaining agreement, the duty
to bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior to its expiration
date. 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 period and/or until a new agreement is reached by the parties.
IR, Book V, Rule XVII, Sec. 7 & 8
SECTION 7. Term of Representation Status; Contract Bar Rule. — The representation
status of the incumbent exclusive bargaining agent which is a party to a duly
registered collective bargaining agreement shall be for a term of five (5) years from
the date of the effectivity of the collective bargaining agreement. No petition
questioning the majority status of the incumbent exclusive bargaining agent or
petition for certification election filed outside of the sixty-day period immediately
preceding the expiry date of such five-year term shall be entertained by the
Department.
The five-year representation status acquired by an incumbent bargaining agent
either through single enterprise collective bargaining or multi-employer bargaining
shall not be aff ected by a subsequent collective bargaining agreement executed
between the same bargaining agent and the employer during the same five-year
period.
SECTION 8. Re-negotiation of Collective Bargaining Agreements. — All provisions of
a collective bargaining agreement, except the representation status of the
incumbent bargaining agent shall, as a matter of right, be renegotiated not later
than three (3) years after its execution.
The re-negotiated collective bargaining agreement shall be ratified and registered
with the same Regional Office where the preceding agreement was registered. The
same requirements and procedure in the registration of collective bargaining
agreements prescribed in the preceding rules shall be applied.
New Pacific Timber & Supply Co. v. NLRC
G.R. No. 124224. March 17, 2000. Kapunan J.
TOPIC: CBA; Contract Duration and Renewal
FACTS:
1. National Federation of Labor (NFL) was certified as the sole and exclusive
bargaining representative of all rank and file EEs of New Pacific.
2. New Pacific resisted the negotiations with NFL. Hence, a case for ULP was
filed against the company.
3. The LA, NLRC and SC held that New Pacific was guilty of ULP.
4. When the case was remanded to the arbitration branch, an Order was
issued to pay the 142 EEs entitled to receive benefits under the CBA.
5. The case was considered closed. However, a “Petition for Relief” was filed
in behalf of the 186 private respondents. In their petition, they claimed
that they wrongfully excluded from enjoying the benefits under the CBA
36
 since the agreement with NFL and New Pacific limited the the CBA’s which he is a member at the time of the conclusion of the agreement, after he has
implementation to only 142 rand and file EEs. resigned from said union
6. The NLRC entertained the petition, treating it as an appeal. It issued a
resolution declaring the excluded EEs “form part and parcel of the the
existing bargaining unit” and were, therefore, entitled to the benefits
under the CBA.
7. Meanwhile, 4 separate groups of the private respondent, filed individual
money claims with the NLRC. However, it was denied. The NLRC ordered
New Pacific to pay the aggregate amount of P13,559,510.37.
8. Hence, the instant petition.
9. New Pacific: private respondents are not entitled to the benefits under the
CBA because employees hired after the term of a CBA are not parties to
the agreement and therefore, may not claim under it, even if they
subsequently become members of the bargaining unit.

ISSUE: Whether the term of an existing CBA, particularly as to is economic

provisions, can be extended beyond the period stipulated, and even beyond the 3
year period prescribed by law, in the absence of a new agreement- YES

HELD:
sART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. - When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration
date.  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 period and/or until a new agreement is reached by the parties. 
It is clear from the above provision of law that until a new Collective Bargaining
Agreement has been executed by and between the parties, they are duty-bound to
keep the status quo and to continue in full force and effect the terms and conditions
of the existing agreement. The law does not provide for any exception nor
qualification as to which of the economic provisions of the existing agreement are
to retain force and effect; therefore, it must be understood as encompassing all the
terms and conditions in the said agreement.
In a long line of cases, this Court has held that when a collective bargaining contract
is entered into by the union representing the employees and the employer, even
the non-member employees are entitled to the benefits of the contract. To accord
its benefits only to members of the union without any valid reason would constitute
undue discrimination against nonmembers. [22] It is even conceded, that a laborer
can claim benefits from a CBA entered into between the company and the union of

37
Rivera v. Espiritu, G.R. No. 135547, January 23, 2002 14. Seven officers and members of PALEA filed a petition for certiorari and
prohibition before the SC to annul the agreement alleging there was GAD and
Contract Duration and Renewal
exceeded jurisdiction in pursuing the conclusion of the PAL-PALEA Agreement.
1. PAL pilots affiliated with the Airline Pilots Association of the Phil (ALPAP) went
a. Right to self-organization and CB may not be waived.
on a 3-week strike, causing serious losses to PAL.
b. GAD in presiding over the agreement because PAL’s management
2. Faced with bankruptcy, PAL adopted a rehabilitation plan and downsized its
prerogative to close business was just used as a front re: union
labor force by more than 1/3.
busting.
3. PALEA went on strike to protest the retrenchment measures adopted by the
ISSUE: Whether the Agreement suspending the CBA unconstitutional and contrary
airline.
to public policy. NO.
4. The strike ended when PAL and PALEA agreed to a more systematic reduction
 In construing a CBA, the courts must be practical and realistic and give due
on PAL’s workforce and payment of separation pay.
consideration to the context in which it is negotiated and the purpose which it
5. Pres. Estrada issued an Order creating a Task Force to address the problem of is intended to serve.
PAL.
 The assailed agreement was the result of voluntary collective bargaining
a. Espiritu, Sec of Finance, was the chariman. negotiations undertaken in the light of the severe financial situation faced by
PAL, with the peculiar and unique intention of preventing its closure.
b. The Task Force was empowered to summon all parties concerned for
conciliation and mediation.  Under Art. 253-A insofar as representation is concerned, a CBA has a term of
6. PAL submitted to the TF an offer by Tan, to transfer shares of stock to its five years, while the other provisions, except for representation, may be
employees. negotiated not later than three years after the execution.

7. PALEA’s BOD voted to accept his offer at first. However, Union members
rejected the offer. Under the intense pressure from the members, the BOD
resolved to reject the offer.
8. PAL informed the Task Force that it was shutting down. Given the labor
problems, rehabilitation was no longer feasible.
9. PALEA sought the intervention of the Office of the President to prevent closure.
o SC: No conflict between said agreement and Article 253-A of LC.
o Article 253-A has a two-fold purpose. One is to promote industrial
stability and predictability.
 Inasmuch as the agreement sought to promote industrial
peace at PAL during its rehabilitation, said agreement satisfies
the first purpose of Article 253-A.

10. PAL ceased its operations.
11. PALEA proposed terms and conditions regarding their employment and labor
management (among others, a suspension of the CBA for 10 years) which was
accepted by the PAL Management, subject to a referendum. (PAL-PALEA
Agreement)
o The other is to assign specific timetables wherein negotiations become
a matter of right and requirement.
 Nothing in Article 253-A, prohibits the parties from waiving or
suspending the mandatory timetables and agreeing on the
remedies to enforce the same.

12. In a referendum, 61% of the members were in favor of accepting the  It was PALEA, as the exclusive bargaining agent of PAL’s ground employees,
agreement. that 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
13. PAL resumed domestic operations. union’s exercise of its right to collective bargaining. The right to free collective
bargaining, after all, includes the right to suspend it.

38
 Petitioners: 10-year suspension of the CBA under the agreement installed
PALEA as a company union for said period, amounting to ULP, in violation of
Article 253-A of LC mandating that an exclusive bargaining agent serves for five
years only.
o SC: Said proviso cannot be construed alone. In construing an
instrument with several provisions, a construction must be adopted as
will give effect to all.
o The aforesaid provision must be read within the context of the next
clause, which provides: The union shop/maintenance of membership
provision under the PAL-PALEA CBA shall be respected.
o Taken together, clearly show the intent of the parties to maintain
“union security” during the period of the suspension of the CBA. Its
objective is to assure the continued existence of PALEA during the said
period.
 We also do not agree that the agreement violates the 5-year representation
limit mandated by Article 253-A. Under said article, the representation limit for
the exclusive bargaining agent applies only when there is an extant CBA in full
force and effect.
o In the instant case, the parties agreed to suspend the CBA and put in
abeyance the limit on the representation period.
o The agreement was a valid exercise of the freedom to contract.
Manila Electric Company [MERALCO] vs. SOLE Quisimbing [Aug. 1, 2000]
Facts:
Previously, the SC promulgated a Resolution w/c partially granted the union’s MR,
and held that –
- (1) the arbitral award shall retroact from Dec. 1, 1995 to Nov. 30, 1997;
and
- (2) the award of wage is increased from the original amount of P1,9kto P2k
for the years 1995 and 1996
Hence, this another MR by pet MERALCO
Pet contends that SC –
- fails to account for previous rulings of the Court on the same issue;
- fails to indicate the reasons for reversing the original ruling in this case on
the retroactivity issue; and
- does not take into account the huge cost that this award imposes on pet,
estimated at no less than P800M
Issue: to which date should the arbitral award be given retroactive effect?
Held: to the first day after the 6-month period following the expiration of the last
day of the CBA, i.e., from June 1, 1996 to May 31, 1998.
SC cited various jurisprudence on this
ART. 253-A. Terms of a collective bargaining agreement. – x x x Any agreement on
such other provisions of the CBA entered into w/in 6 mos. from the date of expiry of
the term of such other provisions as fixed in such CBA, shall retroact to the day
immediately following such date. If any such agreement is entered into beyond 6
mos., the parties shall agree on the duration of retroactivity thereof.
The article refers to CBAs 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.
- The effectivity of the Order must retroact to the date of the expiration of
the previous CBA
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 Art. 263(g)
LC, such as herein involved, public resp is deemed vested w/ plenary and
discretionary powers to determine the effectivity thereof
The observation of the Arbitrator is that 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.
However, in resolving the motions for reconsideration in this case, the SC took into
account the fact that pet belongs to an industry imbued w/ public interest. As such,
it cannot ignore the enormous cost that pet 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.
39
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.  successors and assigns, and may be assigned by the company without the
Balancing these 2 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, SC held that the arbitral award in this case be made to
retroact to the first day after the 6-month period following the expiration of the last
day of the CBA, i.e., from June 1, 1996 to May 31, 1998, not Dec. 1, 1995 to Nov. 30,
1997, as inadvertently stated in the assailed Resolution.
During the interregnum b/w the expiration of the economic provisions of the CBA
and the date of effectivity of the arbitral award, it is understood that the hold-over
principle shall govern, viz:
"[I]t shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60-
day freedom period and/or until a new agreement is reached by the parties."
- Despite the lapse of the formal effectivity of the CBA the law still considers
the same as continuing in force and effect until a new CBA shall have been
validly executed
e. CBA and 3rd Party Liability
ASSOCIATED LABOR UNIONS, THE CEBU OIL EMPLOYEES ASSOCIATION, and THE
MOBIL DAVAO/COTABATO CHAPTER-ALU v. NLRC, MOBIL OIL PHILS INC, BAILLEUX,
CALTEX PHILS INC., and MOBIL PHILS INC (1991)
FACTS:
1. A CBA was entered into between the complainant-unions and Mobil Oil Phils
(MOPI) for a period of 3 years from April 1, 1982.
2. In 1983, Bailiux, President of MOPI, sent letters to the EEs, notifying them of
the termination of their services effective August 31, 1983 because of the sale
of MOPI.
3. The EEs accepted their checks for separation pay and signed quit-claims under
protest and subject to the outcome of the ULP case it filed against Bailleux,
MOPI, and Caltex.
4. Caltex was impleaded because of its acquisition of the entire marketing and
distribution assets of MOPI.
5. Complainants charge MOPI and Bailiux with ULP for violating their CBA which
states that "this Agreement shall be binding upon the parties and their
previous approval of the Union. However, the latter will be notified of such
assignment when it occurs."
a. The complainant unions were not notified officially of such assignment to
Caltex and MOPI made announcement in major dailies that the company
shall continue to operate its business. 
6. What Caltex purchased was Mobil Petroleum USA's (Mobil Pet) shareholdings
in MOPI for US$40M. Upon consummation of the sale, MOPI filed an amended
articles of incorporation which provided that its corporate term would cease on
Dec 31, 1983. By Sept 5, 1983, MOPI actually ceased operations.
7. LA: The alleged sale by Mobil Pet to Caltex was in fact made by MOPI to Caltex,
and whatever CBA entered into by MOPI binds its stockholders. However, the
CBA was NOT violated by MOPI as the complainants-union has knowledge of
the impending sales and closure. Although Caltex is bound by the CBA, 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 EEs accepted
their respective checks and executed quitclaims.
8. The unions appealed. NLRC dismissed. MR denied.
9. Hence, the instant consolidated petitions whereby the unions contend that the
NLRC committed serious errors of law and GAD.
ISSUE: W/N the CBA provisions were violated.
RULING: NO.
The issues presently raised have already been passed upon and resolved in another
almost identical case, Mobil Employees Association v. NLRC, a petition w/c
challenged the NLRC decision upholding LA’s finding that MOPI was not guilty of
ULP and illegal dismissal and that the termination was accused by cessation of
MOPI's business operations in the country. It ruled that NLRC did not commit
GADLEJ and found that:
 The CBA provisions show that the written notice to terminate that is required
to be given by either party to the other, relates to notice to terminate the CBA
at the end of the original 3-year period or any subsequent year thereafter, in
the absence of which written notice, the duration of the CBA would be
automatically extended for one (1) year periods.
 What is involved in instant Petition is not, however, the termination of the CBA
itself, considering that the sale by Mobil Pet to Caltex took place in the middle
of original period of the CBA.
40
 What is applicable is Art. II, Sec. 1, whereby, in cases of termination of services
of EEs, the company is required to comply with the provisions of the LC 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 member-EEs.
 Since actual notice was given to all of MOPI's EEs, including members of
petitioner-unions, such notice may also be regarded as effectively the notice
to the union’s contemplated by the CBA.
 Under Article 284 of the LC, 3 requirements is established with respect to
cessation of business operations of an employer company not due to business
reverses:
1. service of a written notice to the EEs and to the MOLE at least one month
before the intended date thereof;
 MOPI's EEs and the MOLE were notified in writing that the EEs’ service
would cease on August 31, 1983, but they would nonetheless be paid their
salaries and other benefits until Sept 5, 1983. This is more than substantial
compliance with the notice requirements of the Labor Code.
2. cessation of or withdrawal from business operation must be bona fide in
character
 The very generosity of the termination pay package given to EEs argues
strongly that the cessation of business operations by MOPI was a bona
fide one. 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 the unions.
 The establishment of MPI with the same Directors and the hiring of some
former MOPI EEs for the purpose of settling and winding up the affairs,
does not detract from the bona fide character of MOPI’s dissolution and
withdrawal from business.
entity of MOPI and the transfer of its physical assets and business to some
other PH entity owned and controlled by Caltex.
This decision forecloses any further attempt at reversing the NLRC decision. Thus,
with such pronouncement in Mobil Employees Association v. NLRC, the allegations
that both MOPI and Caltex merely intended to evade the provisions of the CBA
cannot be sustained. There was nothing irregular in the closure by MOPI of its
business operation. Caltex may not be said to have stepped into the picture as an
assignee of the CBA because of the very fact of such closure.
Unless expressly assumed, labor contracts such as employment contracts and
CBAs 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 assets of an on-going concern to absorb
in its employ the EEs of the latter. However, although the purchaser of the assets
or enterprise is not legally bound to absorb in its employ the EEs 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.
It is within the ER’s management prerogative 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 MP, the ER 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.

3. payment to the EEs of termination pay amounting to at least ½ month pay

for each year of service, or 1 month pay, whichever is higher.
 The termination pay package given by MOPI to all its EEs far exceeded the
minimum requirement of 1/2 month pay for every year of service laid
down in Article 284. (2.25 months pay for every yr of service)
 Indeed, petitioners have not suggested any reason why MOPI should have
undertaken such a fundamental and non-reversible business
reorganization merely to evade its obligations under the CBA.
 The net effect of the reorganization was the liquidation by Mobil Pet of the
great bulk of its former business in the PH, the dissolution of the corporate
41
f. CBA and Disaffiliation
Elisco-Elirol Labor Union (NAFLU) vs. Noriel
No. L-41955. December 29, 1977.
APPEAL from a resolution of the Director of the Bureau of Labor Relations. Noriel,
Director.
TEEHANKEE, J.:
TOPIC: Interpretation, Administration and Enforcement - CBA and Disaffiliation
FACTS
 Petitioner-Elisco Elirol Labor Union (NAFLU), negotiated and executed a
CBA with respondent-Elizalde Steel Consolidated, Inc. That upon
verification by individual petitioners, Elisco Elirol Labor Union (NAFLU) was
not then registered. Thus, the union applied for registration and was issued
a Certificate of Registration. It then took steps to enforce the CBA.
 Later on, the general membership of petitioner union decided that their
mother union, NAFLU, can no longer safeguard the rights of its members,
hence, the general membership adopted a resolution to disaffiliate.
 Therefore, through its President, the union informed respondents of said
disaffiliation by means of a letter, but Elizalde Steel Consolidated, Inc.
without any justifiable reason refused and continues to refuse to recognize
petitioner as the sole and exclusive bargaining representative of its
employees, and, now actually dismissed the petitioner union’s officers and
board members.
 As such, a complaint for unfair labor practice was filed by petitioners
against Elizalde Steel Consolidated, Inc. for the latter’s refusal to bargain
collectively with petitioner.
 The petitioners then filed a petition before the Bureau of Labor Relations
against respondents Elizalde Steel Consolidated, Inc. and the NAFLU to be
ordered to stop from presenting itself as the collective bargaining agent.
 Med-Arbiter: dismissed for lack of merit.
 Director of the Bureau of Labor Relations: affirming the dismissal:
o to grant to the former mother union (NAFLU) the authority to
administer and enforce their CBA without presumably any
members in the bargaining unit is quite absurd. But to transfer
also the authority to the newly formed union is also in violation of
the CBA particularly 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. As such they could not therefore absolutely and
legally claim that they still comprise the majority of the bargaining
unit. (ANG GAGO POTA)
ISSUE
 Whether or not the union can represent the union even after it disaffiliated
from NAFLU. – YES.
HELD
 The employees and members of the local union did not form a new union
but 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.
 Corollarily, the “substitutionary” doctrine likewise fully supports
petitioner’s stand. As was stressed by the Court in Benguet Consolidated
Inc. vs. BCI Employees & Workers Union-PAFLU5—
o 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.
o the majority of the employees 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.
 The maintenance of membership clause cannot be distorted as “intended
for the security of the union rather than the security of tenure for the
workers.” What is paramount, is the security of tenure of the workers, not
the security of the union. To impress, therefore, such ‘maintenance of
membership’—which is intended for the security of the union rather than
42
 the security of tenure of the workers—as a bar to employees’ changing ART. 224. [217] Jurisdiction of the Labor Arbiters and the Commission.
their affiliation is not only to infringe on the constitutional right of freedom
(c) Cases arising from the interpretation or implementation of collective bargaining
of association, but also to trample upon the constitutional right of workers
agreements and those arising from the interpretation or enforcement of company
to security of tenure.
personnel policies shall be disposed of by the Labor Arbiter by referring the same to
 It is expected that with this decision, any suspension or lay-off of the the grievance machinery and voluntary arbitration as may be provided in said
complainants officers and board members or employees of petitioner agreements.
union arising from the respondents’ misconception will be forthwith
rectified and set aside.
ACCORDINGLY, the petition is granted and the appealed resolution is set aside and
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.

g. Jurisdiction of Voluntary Arbitrators

LC, Arts. 274, 275, 224(c)
ART. 274. [261] Jurisdiction of Voluntary Arbitrators and Panel of Voluntary
Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of
Voluntary Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining
Agreement.
ART. 275. [262] Jurisdiction over other Labor Disputes. - The Voluntary Arbitrator or
panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and
decide all other labor disputes including unfair labor practices and bargaining
deadlocks.

43