G.R. No.

91902

May 20, 1991

MANILA ELECTRIC COMPANY, petitioner,

vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, STAFF AND TECHNICAL EMPLOYEES ASSOCIATION OF
MERALCO, and FIRST LINE ASSOCIATION OF MERALCO SUPERVISORY EMPLOYEES, respondents.
Rolando R. Arbues, Atilano S. Guevarra, Jr. and Gil S. San Diego for petitioner.
The Solicitor General for public respondent.
Felipe Gojar for STEAM-PCWF.
Wakay & Wakay Legal Services for First Line Association of Meralco Supervisory Employees.

MEDIALDEA, J.:
This petition seeks to review the Resolution of respondent Secretary of Labor and Employment Franklin M. Drilon dated November 3,
1989 which affirmed an Order of Med-Arbiter Renato P. Parungo (Case No. NCR-O-D-M-1-70), directing the holding of a
certification election among certain employees of petitioner Manila Electric Company (hereafter "MERALCO") as well as the Order
dated January 16, 1990 which denied the Motion for Reconsideration of MERALCO.
The facts are as follows:
On November 22, 1988, the Staff and Technical Employees Association of MERALCO (hereafter "STEAM-PCWF") a labor
organization of staff and technical employees of MERALCO, filed a petition for certification election, seeking to represent regular
employees of MERALCO who are: (a) non-managerial employees with Pay Grades VII and above; (b) non-managerial employees in
the Patrol Division, Treasury Security Services Section, Secretaries who are automatically removed from the bargaining unit; and (c)
employees within the rank and file unit who are automatically disqualified from becoming union members of any organization within
the same bargaining unit.
Among others, the petition alleged that "while there exists a duly-organized union for rank and file employees in Pay Grade I-VI,
which is the MERALCO Employees and Worker's Association (MEWA) which holds a valid CBA for the rank and file employees, 1
there is no other labor organization except STEAM-PCWF claiming to represent the MERALCO employees.

The petition was premised on the exclusion/disqualification of certain MERALCO employees pursuant to Art. I, Secs. 2 and 3 of the
existing MEWA CBA as follows:
ARTICLE I
SCOPE
xxx

xxx

xxx

Sec. 2. Excluded from the appropriate bargaining unit and therefore outside the scope of this Agreement are:
(a) Employees in Patrol Division;
(b) Employees in Treasury Security Services Section;
(c) Managerial Employees; and
(d) Secretaries.
Any member of the Union who may now or hereafter be assigned or transferred to Patrol Division or Treasury Security
Services Section, or becomes Managerial Employee or a Secretary, shall be considered automatically removed from the
bargaining unit and excluded from the coverage of this agreement. He shall thereby likewise be deemed automatically to have
ceased to be member of the union, and shall desist from further engaging in union activity of any kind.
Sec. 3. Regular rank-and-file employees in the organization elements herein below listed shall be covered within the
bargaining unit, but shall be automatically disqualified from becoming union members:
1. Office of the Corporate Secretary
2. Corporate Staff Services Department
3. Managerial Payroll Office

4. Legal Service Department

5. Labor Relations Division
6. Personnel Administration Division
7. Manpower Planning & Research Division
8. Computer Services Department
9. Financial Planning & Control Department
10. Treasury Department, except Cash Section
11. General Accounting Section
xxx

xxx

xxx

(p. 19, Rollo)

MERALCO moved for the dismissal of the petition on the following grounds:
I
The employees sought to be represented by petitioner are either 1) managerial who are prohibited by law from forming or
joining supervisory union; 2) security services personnel who are prohibited from joining or assisting the rank-and-file union;
3) secretaries who do not consent to the petitioner's representation and whom petitioner can not represent; and 4) rank-and-file
employees represented by the certified or duly recognized bargaining representative of the only rank-and-file bargaining unit in
the company, the Meralco Employees Workers Association (MEWA), in accordance with the existing Collective Bargaining
Agreement with the latter.
II

The petition for certification election will disturb the administration of the existing Collective Bargaining Agreement in
violation of Art. 232 of the Labor Code.
III
The petition itself shows that it is not supported by the written consent of at least twenty percent (20%) of the alleged 2,500
employees sought to be represented. (Resolution, Sec. of Labor, pp. 223-224, Rollo)
Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay Grades VII and above are classified as managerial
employees who, under the law, are prohibited from forming, joining or assisting a labor organization of the rank and file. As regards
those in the Patrol Division and Treasury Security Service Section, MERALCO maintains that since these employees are tasked with
providing security to the company, they are not eligible to join the rank and file bargaining unit, pursuant to Sec. 2(c), Rule V, Book V
of the then Implementing Rules and Regulations of the Labor Code (1988) which reads as follows:
Sec. 2. Who may file petition. The employer or any legitimate labor organization may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among others:
xxx

xxx

xxx

(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require, and provided,
further: that the appropriate bargaining unit of the rank and file employees shall not include security guards (As amended by
Sec. 6, Implementing Rules of EO 111)
xxx

xxx

xxx

(p. 111, Labor Code, 1988 Ed.)

As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO contends that since they are already beneficiaries
of the MEWA-CBA, they may not be treated as a separate and distinct appropriate bargaining unit.
MERALCO raised the same argument with respect to employees sought to be represented by STEAM-PCWF, claiming that these
were already covered by the MEWA-CBA.

On March 15, 1989, the Med-Arbiter ruled that having been excluded from the existing Collective Bargaining Agreement for rank and
file employees, these employees have the right to form a union of their own, except those employees performing managerial functions.
With respect to those employees who had resented their alleged involuntary membership in the existing CBA, the Med-Arbiter stated
that the holding of a certification election would allow them to fully translate their sentiment on the matter, and thus directed the
holding of a certification election. The dispositive portion of the Resolution provides as follows:
WHEREFORE, premises considered, a certification election is hereby ordered conducted among the regular rank-and-file
employees of MERALCO to wit:
1. Non-managerial employees with Pay Grades VII and above;
2. Non-managerial employees of Patrol Division, Treasury Security Services Section and Secretaries; and
3. Employees prohibited from actively participating as members of the union.
within 20 days from receipt hereof, subject to the usual pre-election conference with the following choices:
1. Staff and Technical, Employees Association of MERALCO (STEAM-PCWF);
2. No Union.
SO ORDERED. (p. 222, Rollo)
On April 4, 1989, MERALCO appealed, contending that "until such time that a judicial finding is made to the effect that they are not
managerial employee, STEAM-PCWF cannot represent employees from Pay Grades VII and above, additionally reiterating the same
reasons they had advanced for disqualifying respondent STEAM-PCWF.
On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as follows:
A. The Order of the Med-Arbiter is null and void for being in violation of Article 245 of the Labor Code;
B. The Order of the Med-Arbiter violates Article 232 of the Labor Code; and

C. The Order is invalid because the bargaining unit it delineated is not an appropriated (sic) bargaining unit.
On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.
With the enactment of RA 6715 and the rules and regulations implementing the same, STEAM-PCWF renounced its representation of
the employees in Patrol Division, Treasury Security Services Section and rank-and-file employees in Pay Grades I-VI.
On September 13, 1989, the First Line Association of Meralco
Supervisory Employees. (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-731-89) seeking to represent those employees
with Pay Grades VII to XIV, since "there is no other supervisory union at MERALCO." (p. 266, Rollo). The petition was consolidated
with that of STEAM-PCWF.
On November 3, 1989, the Secretary of Labor affirmed with modification, the assailed order of the Med-Arbiter, disposing as follows:
WHEREFORE, premises considered, the Order appealed from is hereby affirmed but modified as far as the employees covered
by Section 3, Article I of the exist CBA in the Company are concerned. Said employees shall remain in the unit of the rankand-file already existing and may exercise their right to self organization as above enunciated.
Further, the First Line Association of Meralco Supervisory Employees (FLAMES) is included as among the choices in the
certification election.
Let, therefore, the pertinent records of the case be immediately forwarded to the Office of origin for the conduct of the
certification election.
SO ORDERED. (p. 7, Rollo)
MERALCO's motion for reconsideration was denied on January 16, 1990.
On February 9, 1990, MERALCO filed this petition, premised on the following ground:
RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF DISCRETION AND/OR IN EXCESS OF
JURISDICTION AMOUNTING TO LACK OF JURISDICTION IN RULING THAT:

I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE ESTABLISHED INDEPENDENT, DISTINCT AND

SEPARATE FROM THE EXISTING RANK-AND-FILE BARGAINING UNIT.
II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE RANK-AND-FILE EMPLOYEES.
III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED TOGETHER WITH THE RANK-AND-FILE UNION
AND/OR THE SUPERVISORY UNION. (p. 8, Rollo)
On February 26, 1990, We issued a temporary restraining order (TRO) against the implementation of the disputed resolution.
In its petition, MERALCO has relented and recognized respondents STEAM-PCWF and FLAMES' desired representation of
supervisory employees from Grades VII up. However, it believes that all that the Secretary of Labor has to do is to establish a
demarcation line between supervisory and managerial rank, and not to classify outright the group of employees represented by
STEAM-PCWF and FLAMES as rank and file employees.
In questioning the Secretary of Labor's directive allowing security guards (Treasury/Patrol Services Section) to be represented by
respondents, MERALCO contends that this contravenes the provisions of the recently passed RA 6715 and its implementing rules
(specifically par. 2, Sec. 1, Rule II, Book V) which disqualifies supervisory employees and security guards from membership in a
labor organization of the rank and file (p. 11, Rollo).
The Secretary of Labor's Resolution was obviously premised on the provisions of Art. 212, then par. (k), of the 1988 Labor Code
defining "managerial" and "rank and file" employees, the law then in force when the complaint was filed. At the time, only two groups
of employees were recognized, the managerial and rank and file. This explains the absence of evidence on job descriptions on who
would be classified managerial employees. It is perhaps also for this reason why the Secretary of Labor limited his classification of the
Meralco employees belonging to Pay Grades VII and up, to only two groups, the managerial and rank and file.
However, pursuant to the Department of Labor's goal of strenghthening the constitutional right of workers to self-organization, RA
6715 was subsequently passed which reorganized the employee-ranks by including a third group, or the supervisory employees, and
laying down the distinction between supervisory employees and those of managerial ranks in Art. 212, renumbered par. [m],
depending on whether the employee concerned has the power to lay down and execute management policies, in the case of managerial
employees, or merely to recommend them, in case of supervisory employees.

In this petition, MERALCO has admitted that the employees belonging to Pay Grades VII and up are supervisory (p. 10, Rollo). The
records also show that STEAM-PCWF had "renounced its representation of the employees in Patrol Division, Treasury Security
Service Section and rank and file employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on the other hand, had limited its
representation to employees belonging to Pay Grades VII-XIV, generally accepted as supervisory employees, as follows:
It must be emphasized that private respondent First Line Association of Meralco Supervisory Employees seeks to represent
only the Supervisory Employees with Pay Grades VII to XIV.
Supervisory Employees with Pay Grades VII to XIV are not managerial employees. In fact the petition itself of petitioner
Manila Electric Company on page 9, paragraph 3 of the petition stated as follows, to wit:
There was no need for petitioner to prove that these employees are not rank-and-file. As adverted to above, the private
respondents admit that these are not the rank-and-file but the supervisory employees, whom they seek to represent.
What needs to be established is the rank where supervisory ends and managerial begins.
and First Line Association of Meralco Supervisory Employees herein states that Pay Grades VII to XIV are not managerial
employees. In fact, although employees with Pay Grade XV carry the Rank of Department Managers, these employees only
enjoys (sic) the Rank Manager but their recommendatory powers are subject to evaluation, review and final action by the
department heads and other higher executives of the company. (FLAMES' Memorandum, p. 305, Rollo)
Based on the foregoing, it is clear that the employees from Pay Grades VII and up have been recognized and accepted as supervisory.
On the other hand, those employees who have been automatically disqualified have been directed by the Secretary of Labor to remain
in the existing labor organization for the rank and file, (the condition in the CBA deemed as not having been written into the contract,
as unduly restrictive of an employee's exercise of the right to self-organization). We shall discuss the rights of the excluded employees
(or those covered by Sec. 2, Art. I, MEWA-CBA later.
Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore represent supervisory employees only. In this
regard, the authority given by the Secretary of Labor for the establishment of two labor organizations for the rank and file will have to
be disregarded since We hereby uphold certification elections only for supervisory employees from Pay Grade VII and up, with
STEAM-PCWF and FLAMES as choices.

As to the alleged failure of the Secretary of Labor to establish a demarcation line for purposes of segregating the supervisory from the
managerial employees, the required parameter is really not necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA
6715) has already laid down the corresponding guidelines:
Art. 212. Definitions. . . .
(m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the
above definitions are considered rank-and-file employees for purposes of to Book.
In his resolution, the Secretary of Labor further elaborated:
. . . Thus, the determinative factor in classifying an employee as managerial, supervisory or rank-and-file is the nature of the
work of the employee concerned.
In National Waterworks and Sewerage Authority vs. National Waterworks and Sewerage Authority Consolidated Unions (11
SCRA 766) the Supreme Court had the occasion to come out with an enlightening dissertation of the nature of the work of a
managerial employees as follows:
. . . that the employee's primary duty consists of the management of the establishment or of a customarily recognized
department or subdivision thereof, that he customarily and regularly directs the work of other employees therein, that
he has the authority to hire or discharge other employees or that his suggestions and recommendations as to the hiring
and discharging and or to the advancement and promotion or any other change of status of other employees are given
particular weight, that he customarily and regularly exercises discretionary powers . . . (56 CJS, pp. 666-668. (p. 226,
Rollo)
We shall now discuss the rights of the security guards to self-organize. MERALCO has questioned the legality of allowing
them to join either the rank and file or the supervisory union, claiming that this is a violation of par. 2, Sec. 1, Rule II, Book V
of the Implementing Rules of RA 6715, which states as follows:
Sec 1. Who may join unions. . . .

xxx

xxx

xxx

Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rankand-file employees but may join, assist or form separate labor organizations of their own; . . .
xxx

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xxx

(emphasis ours)
Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c), Rule V, also of Book V of the implementing rules of RA 6715:
Rule V.
REPRESENTATION CASES AND
INTERNAL-UNION CONFLICTS
Sec. 1. . . .
Sec. 2. Who may file.Any legitimate labor organization or the employer, when requested to bargain collectively, may
file the petition.
The petition, when filed by a legitimate labor-organization shall contain, among others:
(a) . . .
(b) . . .
(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and
provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards;
xxx
(emphasis ours)

xxx

xxx

Both rules, barring security guards from joining a rank and file organization, appear to have been carried over from the old rules which
implemented then Art. 245 of the Labor Code, and which provided thus:
Art. 245. Ineligibility of security personnel to join any labor organization.Security guards and other personnel employed for
the protection and security of the person, properties and premises of the employer shall not be eligible for membership in any
labor organization.
On December 24, 1986, Pres. Corazon C. Aquino issued E.O. No. 111 which eliminated the above-cited provision on the
disqualification of security guards. What was retained was the disqualification of managerial employees, renumbered as Art. 245
(previously Art. 246), as follows:
Art. 245. Ineligibility of managerial employees to joint any labor organization.Managerial employees are not eligible to
join, assist or form any labor organization.
With the elimination, security guards were thus free to join a rank and file organization.
On March 2, 1989, the present Congress passed RA 6715. 2 Section 18 thereof amended Art. 245, to read as follows:
Art. 245. Ineligibility of managerial employees to join any labor organization; right of supervisory employees.Managerial
employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join, assist, or form separate labor organizations of
their own. (emphasis ours)
As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory employees from membership in a
labor organization of the rank-and-file employees. It does not include security guards in the disqualification.
The implementing rules of RA 6715, therefore, insofar as they disqualify security guards from joining a rank and file organization are
null and void, for being not germane to the object and purposes of EO 111 and RA 6715 upon which such rules purportedly derive
statutory moorings. In Shell Philippines, Inc. vs. Central Bank, G.R. No. 51353, June 27, 1988, 162 SCRA 628, We stated:
The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as it has
been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not

covered by the statute. Rules that subvert the statute cannot be sanctioned. (citing University of Sto. Tomas vs. Board of Tax
Appeals, 93 Phil. 376).
While therefore under the old rules, security guards were barred from joining a labor organization of the rank and file, under RA 6715,
they may now freely join a labor organization of the rank and file or that of the supervisory union, depending on their rank. By
accommodating supervisory employees, the Secretary of Labor must likewise apply the provisions of RA 6715 to security guards by
favorably allowing them free access to a labor organization, whether rank and file or supervisory, in recognition of their constitutional
right to self-organization.
We are aware however of possible consequences in the implementation of the law in allowing security personnel to join labor unions
within the company they serve. The law is apt to produce divided loyalties in the faithful performance of their duties. Economic
reasons would present the employees concerned with the temptation to subordinate their duties to the allegiance they owe the union of
which they are members, aware as they are that it is usually union action that obtains for them increased pecuniary benefits.
Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly abandon their duties, such as
protection of property of their employer and the persons of its officials and employees, the control of access to the employer's
premises, and the maintenance of order in the event of emergencies and untoward incidents.
It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to avoid possible conflict of interest in
security personnel.1wphi1
ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the Resolution of the Secretary of Labor dated
November 3, 1989 upholding an employee's right to self-organization. A certification election is hereby ordered conducted among
supervisory employees of MERALCO, belonging to Pay Grades VII and above, using as guideliness an employee's power to either
recommend or execute management policies, pursuant to Art. 212 (m), of the Labor Code, as amended by Sec. 4 of RA 6715, with
respondents STEAM-PCWF and FLAMES as choices.
Employees of the Patrol Division, Treasury Security Services Section and Secretaries may freely join either the labor organization of
the rank and file or that of the supervisory union depending on their employee rank. Disqualified employees covered by Sec. 3, Art. I
of the MEWA-CBA, shall remain with the existing labor organization of the rank and file, pursuant to the Secretary of Labor's
directive:

By the parties' own agreement, they find the bargaining unit, which includes the positions enumerated in Section 3, Article I of
their CBA, appropriate for purposes of collective bargaining. The composition of the bargaining unit should be left to the
agreement of the parties, and unless there are legal infirmities in such agreement, this Office will not substitute its judgment for
that of the parties. Consistent with the story of collective bargaining in the company, the membership of said group of
employees in the existing rank-and-file unit should continue, for it will enhance stability in that unit already well establish.
However, we cannot approve of the condition set in Section 3, Article I of the CBA that the employees covered are
automatically disqualified from becoming union members. The condition unduly restricts the exercise of the right to self
organization by the employees in question. It is contrary to law and public policy and, therefore, should be considered to have
not been written into the contract. Accordingly, the option to join or not to join the union should be left entirely to the
employees themselves. (p. 229, Rollo)
The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby LIFTED. Costs against petitioner.
SO ORDERED.

G.R. No. 110854 February 13, 1995

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC., petitioner,
vs.
HON. MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of Labor and Employment, and GENERAL MARITIME & STEVEDORES UNION (GMSU), respondents.

PUNO, J.:
Petitioner corporation and private respondent labor union entered into a three-year Collective Bargaining Agreement (CBA) with expiry date on November 27, 1991. During the freedom period the
National Federation of Labor Unions (NAFLU) questioned the majority status of Private respondent through a petition for certification election. The election conducted on February 27, 1992 was
won by private respondent. On March 19, 1992, private respondent was certified as the sole and exclusive bargaining agent of petitioner's rank-and-file employees.
On June 22, 1992, private respondent's CBA proposals were received by petitioner. Counter-proposals were made by petitioner. Negotiations collapsed, and on August 24, 1992, privaterespondent filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB). The NCMB tried but failed to settle the parties' controversy.
On September 30, 1992, public respondent Secretary of Labor assumed jurisdiction over the dispute. She resolved the bargaining deadlock between the parties through an Order, dated March 4,
1993, which reads, in part:
xxx xxx xxx
A. The non-economic issues
1. Scope/coverage of the CBA. Article I of the 1988 CBA provides:
The Company recognizes the Union as the sole and exclusive collective bargaining representative of all the stevedores, dockworkers, gang bosses,
foremen, rank and file employees working at Pier 8, North Harbor and its offices and said positions are [sic] listed in ANNEX "A" hereof.
As such representative the UNION is designated as the collective bargaining agent with respect to and concerning the terms and conditions of
employment and the interpretations and implementation of the provisions and conditions of this Agreement.
Annex "A" of the CBA is the listing of positions covered thereby. These are:
1. Foremen;
2. Gang bosses;
3. Winchmen;
4. Signalmen;
5. Stevedores;
6. Dockworkers;
7. Tallymen;
8. Checkers;
9. Forklift and crane operators;
10. Sweepers;
11. Mechanics;
12. Utilitymen;
13. Carpenters; and
14. Other rank and file employees;
The company argues in the first instance that under Article 212(m) in relation to Article 245 of the Labor Code, supervisors are ineligible for. membership in a labor
organization of rank and file. Being supervisors, foremen should be excluded from the bargaining unit.

The Company likewise seeks the exclusion on the ground of lack of community of interest and divergence in functions, mode of compensation and working conditions of the
following:
1. Accounting clerk;
2. Audit clerk;
3. Collector;
4. Payroll clerk;
5. Nurse;
6. Chief biller;
7. Biller;
8. Teller/biller;
9. Personnel clerk;
10. Timekeeper;
11. Asst. timekeeper;
12. Legal secretary;
13. Telephone operator;
14. Janitor/Utility; and
15. Clerk
These positions, the Company argues, cannot be lumped together with the stevedores or dockworkers who mostly comprise the bargaining unit. Further, notwithstanding the
check-off provisions of the CBA, the incumbents in these positions have never paid union dues. Finally, some of them occupy confidential positions and therefore ought to be
excluded from the bargaining unit.
The Union generally argues that the Company's proposed exclusions retrogressive. . . .
We see no compelling justification to order the modification of Article I of the 1988 CBA as worded. For by lumping together stevedores and other rank and file employees, the
obvious intent of the parties was to treat all employees not disqualified from union membership as members of one bargaining unit. This is regardless of working conditions,
mode of compensation, place of work, or other considerations. In the absence of mutual agreement of the parties or evidence that the present compositions of the bargaining
unit is detrimental to the individual and organizational rights either of the employees or of the Company, this expressed intent cannot be set aside.
It may well be that as a consequence of Republic Act No. 6715, foremen are ineligible to join the union of the rank and file. But this provision can be invoked only upon proof
that the foremen sought to be excluded from the bargaining unit are cloaked with effective recommendatory powers such as to qualify them under the legal definitions of
supervisors.
xxx xxx xxx
7. Effectivity of the CBA. The Union demands that the CBA should be fully retroactive to 28 November 1991. The Company is opposed on the ground that under Article 253-A
of the labor code, the six-month period within which the parties must come to an agreement so that the same will be automatically retroactive is long past.
The Union's demand for full retroactivity, we note, will result in undue financial burden to the Company. On the other hand, the Company's reliance on Article 253-A is
misplaced as this applies only to the renegotiated terms of an existing CBA. Here, the deadlock arose from negotiations for a new CBA.
These considered, the CBA shall be effective from the time we assumed jurisdiction over the dispute, that is, on 22 September 1992, and shall remain e effective for five (5)
years thereafter. It shall be understood that except for the representation aspect all other provisions thereof shall be renegotiated not later than three (3) years after its
effectivity, consistently with Article 253-A of the Labor Code.
B. The economic issues

The comparative positions of the parties are:

COMPANY

UNION

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5

. Vacation and sick leave

17 days vacation and sick leave

i) For all covered employees

17 days sick leave per year

for employment with at least
five years of service.

and 17 days sick than gang

gang bosses:
15 working days vacation and
15 working days sick leave
for those with at least 1 year
of service

20 working days vacation and

20 working days sick leave
for those with more than one
year of service up to 5 years
of service

25 working days vacation and

25 working days sick leave
for those with more than 5
years of service up to 10
years of service

30 working days vacation and

30 working days sick leave
for those with more than 10
years of service

Provided that in the case

Provided that in the case of a

of a rotation worker, he
must have work for at

rotation worker, he must have

worked for 140 days in a

least 160 days in a year

for availment

calendar year as a condition

for availment.
Provided, further that in the
event a rotation worker fails
to complete 140 days work in
a calendar year, he shall still
be entitled to vacation and
sick leave with pay, as follows:
139 - 120 days worked: 90%
119 - 110 days worked: 50%

ii) For Gang bosses:

Same as the above schedule
except that:

1) the condition that a gang

bosses must have worked for at
least 120 days in a calendar
year shall be reduced to 110
days; and

2) where the above number of

days worked is not met, the
gang boss shall still be entitled
to vacation and sick leave with
pay, as follows:
109 - 90 days worked: 90%
89 - 75 days worked: 50%
xxx xxx xxx
7

. Death aid

P1,500.00 to heirs

P10,000.00 to heirs of covered

of covered employees

employees

P5,000.00 assistance for death

of immediate member of
covered employee's family
xxx xxx xxx
12

. Emergency loan
a) amount of

P700.00 but damage

30 days salary payable through

entitlement

to dwelling by fire shall

be included

payroll deduction in twelve

monthly installments

b) cash bond

None

The company shall put up a cash

for loss, damage

or accident

bond of not less than P40,000.00

for winchmen, crane and forklift
operators.

xxx xxx xxx

Balancing the right of the Company to remain viable and to just returns to its investments with right of the Union members to just rewards for their labors, we find the following
award to be fair and reasonable:
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6

. Vacation and Sick Leave

a) Non-rotation workers

17 days vacation/17 days sick leave

for those with at least 1 year of service

b) Rotation workers other

17 days vacation/17 days sick leave,

than gang boss

provided that the covered worker

must have worked for at least 155 days
in a calendar year

c) Gang bosses

17 days vacation/17 days sick leave,

provided that the gang boss must have

worked for at least 115 days in a
calendar year

xxx xxx xxx

8. Death aid P3,000.00 to the heirs of each covered employee
xxx xxx xxx
12. Emergency loan 30 days pay, payable through payroll deductions of 1/12 of monthly salary
WHEREFORE, the Pier 8 Arrastre and Stevedoring Services and the General Maritime Services Union are hereby ordered to execute new collective bargaining agreement
the incorporating the dispositions herein contained. These shall be in addition to all other existing terms, conditions and benefits of employment, except those specifically
deleted herein, which have previously governed the relations of the parties. All other disputed items not specifically touched upon herein are deemed denied, without
prejudice to such other agreements as the parties may have reached in the meantime. The collective bargaining agreement so executed shall be effective from 22 September
1
1992 and up to five years thereafter, subject to renegotiation on the third year of its effectivity pursuant to Article 253-A of the Labor Code.

Petitioner sought partial reconsideration of the Order. On June 8, 1993, public respondent affirmed her findings, except for the date of effectivity of
the Collective Bargaining Agreement which was changed to September 30, 1992. This is the date when she assumed jurisdiction over the
deadlock.
Petitioner now assails the Order as follows:
I
THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF DISCRETION IN NOT EXCLUDING CERTAIN
POSITIONS FROM THE BARGAINING AGREEMENT UNIT
II
THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING THE CBA
EFFECTIVE ON SEPTEMBER 30, 1992 WHEN SHE ASSUMED JURISDICTION OVER THE LABOR DISPUTE AND NOT
MARCH 4, 1993 WHEN SHE RENDERED JUDGMENT OVER THE DISPUTE
III

THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF DISCRETION IN REDUCING THE NUMBER OF
DAYS AN EMPLOYEE SHOULD ACTUALLY WORK TO BE ENTITLED TO VACATION AND SICK LEAVE BENEFITS
IV
THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF DISCRETION IN INCREASING WITHOUT
FACTUAL BASIS THE DEATH AID AND EMERGENCY LOAN 2
The petition is partially meritorious.
Firstly, petitioner questions public respondent for not excluding four (4) foremen, a legal secretary, a timekeeper and an assistant timekeeper from
the bargaining unit composed of rank-and-file employees represented by private respondent. Petitioner argues that: (1) the failure of private
respondent to object when the foremen and legal secretary were prohibited from voting in the certification election constitutes an admission that
such employees hold supervisory/confidential positions; and (2) the primary duty and responsibility of the timekeeper and assistant timekeeper is "to enforce company rules and regulations
by reporting to petitioner . . . those workers who committed infractions, such as those caught abandoning their posts." and hence, they should not be considered as rank-and-file employees.
The applicable law governing the proper composition of bargaining unit is Article 245 of the labor Code, as amended, which provides as follows:
Art. 245. Ineligibility of managerial employees to join any labor organization; employees to join any labor organization; right of supervisory employees. Managerial
employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-andfile employees but may join, assist or form separate labor organizations of their own.
Article 212(m) of the same Code, as well as Book V, Rule 1, Section 1(o) of the Omnibus Rules Implementing the Labor Code, as amended by the Rules and Regulations Implementing R.A..
6715, differentiate managerial, supervisory, and rank-and-file employees, thus:
"Managerial Employee" is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, layoff recall,
discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above
definitions are considered rank-and-file employees for purposes of the Book.
This Court has ruled on numerous occasions that the test of supervisory or managerial status is whether an employee possesses authority to act in the interest of his employer which authority is
3
not merely routinary or clerical in nature but requires use of independent judgment. What governs the determination of the nature of employment is not the employee's

title, but his job description. If the nature of the employee's job does not fall under the definition of "managerial" or "supervisory" in the Labor Code,
he is eligible to be a member of the rank-and-file bargaining unit. 4
Foremen are chief and often especially-trained workmen who work with and commonly are in charge of a group of employees in an industrial plant
or in construction work. 5 They are the persons designated by the employer-management to direct the work of employees and to superintend and
oversee them. 6 They are representatives of the employer-management with authority over particular groups of workers, processes, operations, or
sections of a plant or an entire organization. In the modern industrial plant, they are at once a link in the chain of command and the bridge between
the management and labor. 7 In the performance their work, foremen definitely use their independent judgment and are empowered to make

recommendations for managerial action with respect to those employees under their control. Foremen fall squarely under the category of
supervisory employees, and cannot be part of rank-and-file unions.
Upon the other hand, legal secretaries are neither managers nor supervisors. Their work is basically routinary and clerical. However, they should
be differentiated from rank-and-file employees because they, are tasked with, among others, the typing of legal documents, memoranda and
correspondence, the keeping of records and files, the giving of and receiving notices and such other duties as required by the legal personnel of
the corporation. 8 Legal secretaries therefore fall under the category of confidential employees. Thus, to them applies our holding in the case of
Philips Industrial Development, Inv., v. NLRC, 210 SCRA 339 (1992), that:
. . . By the very functions, they assist confidential capacity to, or have access to confidential. matters of, persons to, exercise
managerial functions in the field of labor relations. As such, the rationale behind the ineligibility of managerial employees to form,
assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc., vs. Hon. Augusto Sanchez, this Court elaborated on this rationale, thus:
. . . The rationale, for this inhibition has been stated to be, because if these managerial employees would belong
to or be affiliated with Union the latter might not, be assured of their loyalty to the Union in view of evident conflict
of interests. The Union can also become company-dominated with the presence of managerial employees in
Union membership.
In Golden Farms, Inc., vs. Ferrer-Calleja, 9 this court explicitly made this rationale applicable to confidential employees:
This rationale holds true also for confidential employees . . ., who having access to confidential information, may
become the source of undue advantage. Said employee(s) may act as a spy or spies of either party to a collective
bargaining agreement. . . .
We thus hold that public respondent acted with grave abuse of discretion in not excluding the four foremen and legal secretary from the bargaining
unit composed of rank-and-file employees.
As for the timekeeper and assistant timekeeper it is clear from petitioner's own pleadings that they are, neither managerial nor supervisory
employees. They are merely tasked to report those who commit infractions against company rules and regulations. This reportorial function is
routinary and clerical. They do not determine the fate of those who violate company policy rules and regulations function. It follows that they
cannot be excluded from the subject bargaining unit.
The next issue is the date when the new CBA of the parties should be given effect. Public respondent fixed the effectivity date on September 30,
1992. when she assumed jurisdiction over the dispute. Petitioner maintains it should be March 4. 1993, when public respondent rendered
judgment over the dispute.

The applicable laws are Articles 253 and 253- A of the Labor Code, thus:
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.
and;
Art. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into
shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status
of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor
and Employment outside 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 collective bargaining agreement, the parties may exercise their rights under this Code.
In Union of Filipino Employees v. NLRC, 192 SCRA 414 (1990), this court interpreted the above law as follows:
In light of the foregoing, this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective
upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other
provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the
agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity
thereof.
The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, the expiry date of
the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon. by the parties. But since no
agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The
action of the public respondent is within the ambit of its authority vested by existing law.
In the case of Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA 179 (1991), this Court reiterated the rule that although a CBA
has expired, it continues to have legal effects as between the parties until a new CBA has been entered into. It is the duty of both parties to the 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. 10 Applied to the case at bench, the legal effects of the immediate past CBA between
petitioner and private respondent terminated, and the effectivity of the new CBA began, only on March 4, 1993 when public respondent resolved
their dispute.

Finally, we find no need to discuss at length the merits of the third and fourth assignments of error. The questioned Order relevantly states:
In the resolution of the economic issues, the Company urges us to consider among others, present costs of living, its financial
capacity, the present wages being paid by the other cargo handlers at the North Harbor, and the fact that the present average
wage of its workers is P127.75 a day, which is higher than the statutory minimum wage of P118.00 a day. The Company's
evidence, consisting of its financial statements for the past three years, shows that its net income was P743,423.45 for 1989,
P2,108,569.03 for 1990, and P1,479,671.84 for 1991, or an average of P1,443,885.10 over the three-year period. It argues that
for just the first year of effectivity of the CBA, the Company's proposals on wages, effect thereof on overtime, 13th month pay, and
vacation and sick leave commutation, will cost about P520,723,44, or 35.19% of its net income for 1991. The Company likewise
urges us to consider the multiplier effect of its proposals on the second and third years of the CBA. As additional argument, the
Company manifests that a portion of its pier will undergo a six-month to one-year renovation starting January 1993.
On the other hand, the Union's main line of argument that is, aside from being within the financial capacity of the Company to
grant, its demands are fair and reasonable is not supported by evidence controverting the Company's own presentation of its
financial capacity. The Union in fact uses statements of the Company for 1989-1991, although it interprets these data as sufficient
justification for its own proposals. It also draws our attention to the bargaining history of the parties, particularly the 1988
negotiations during which the company was able to grant wage increases despite operational losses.
Balancing the right of the Company to remain viable and to just returns to its investments with right of the Union members to just
rewards for their labors, we find the following award to be fair and reasonable . . . . 11
It is evident that the above portion of the impugned Order is based on well-studied evidence. The conclusions reached by public respondent in the
discharge of her statutory duty as compulsory arbitrator, demand the high respect of this Court. The study and settlement of these disputes fall
within public respondent's distinct administrative expertise. She is especially trained for this delicate task, and she has within her cognizance such
data and information as will assist her in striking the equitable balance between the needs of management, labor and the public. Unless there is
clear showing of grave abuse of discretion, this Court cannot and will not interfere with the labor expertise of public respondent Secretary of Labor.
IN VIEW WHEREOF, public respondents Order, dated March 4, 1993, and Resolution, dated June 8, 1993, are hereby MODIFIED to exclude
foremen and legal secretaries from the rank-and-file bargaining unit represented by private respondent union, and to fix the date of effectivity of
the five-year collective bargaining agreement between petitioner corporation and private respondent union on March 4, 1993. No costs.
SO ORDERED.

G.R. No. L-54334 January 22, 1986

KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN),
respondents.
Ablan and Associates for petitioner.

Abdulcadir T. Ibrahim for private respondent.

CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC) dated July 20, 1979 which found petitioner
Sweden Ice Cream guilty of unfair labor practice for unjustified refusal to bargain, in violation of par. (g) of Article 249 2 of the New Labor Code, 3
and declared the draft proposal of the Union for a collective bargaining agreement as the governing collective bargaining agreement between the
employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for short), a legitimate late labor federation, won
and was subsequently certified in a resolution dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining
agent of the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's motion for reconsideration of the said
resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two copies of its proposed collective bargaining
agreement. At the same time, it requested the Company for its counter proposals. Eliciting no response to the aforesaid request, the Union again
wrote the Company reiterating its request for collective bargaining negotiations and for the Company to furnish them with its counter proposals.
Both requests were ignored and remained unacted upon by the Company.
Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on February 14, 1979, filed a "Notice of Strike",
with the Bureau of Labor Relations (BLR) on ground of unresolved economic issues in collective bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all attempts towards an amicable settlement failed,
prompting the Bureau of Labor Relations to certify the case to the National Labor Relations Commission (NLRC) for compulsory arbitration
pursuant to Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, set the initial hearing
for April 29, 1979. For failure however, of the parties to submit their respective position papers as required, the said hearing was cancelled and
reset to another date. Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for a resetting which was
granted. The Company was directed anew to submit its financial statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978,
Atty. Fortunato Panganiban formally entered his appearance as counsel for the Company only to request for another postponement allegedly for
the purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper on May 28, 1979.

When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, Mr. Ching, who was supposed to be
examined, failed to appear. Atty. Panganiban then requested for another postponement which the labor arbiter denied. He also ruled that the
Company has waived its right to present further evidence and, therefore, considered the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations Commission. On July 20, 1979, the National
Labor Relations Commission rendered its decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to bargain, in violation of Section
(g) Article 248 (now Article 249), of P.D. 442, as amended. Further, the draft proposal for a collective bargaining agreement (Exh.
"E ") hereto attached and made an integral part of this decision, sent by the Union (Private respondent) to the respondent
(petitioner herein) and which is hereby found to be reasonable under the premises, is hereby declared to be the collective
agreement which should govern the relationship between the parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor Relations Commission acted without or in
excess of its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision. On August 4, 1980,
this Court dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of dismissal was reconsidered and the
petition was given due course in a Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to procedural due process has been violated when it was precluded from presenting further
evidence in support of its stand and when its request for further postponement was denied. Petitioner further contends that the National Labor
Relations Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the evidence considering that it was only
on May 24, 1979 when the Union furnished them with a copy of the proposed Collective Bargaining Agreement and it was only then that they came
to know of the Union's demands; and finally, that the Collective Bargaining Agreement approved and adopted by the National Labor Relations
Commission is unreasonable and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of the democratic frameworks under the New Labor
Code, 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. So much so that Article 249, par. (g) of the Labor Code
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.
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty to initiate contract negotiation. 7 The
mechanics of collective bargaining is set in motion only when the following jurisdictional preconditions are present, namely, (1) possession of the

status of majority representation of the employees' representative in accordance with any of the means of selection or designation provided for by
the Labor Code; (2) proof of majority representation; and (3) a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of
which preconditions are undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a valid cause to
complain against its (Company's) attitude, the totality of which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by
the Labor Code to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of unfair labor practice. It has been
indubitably established that (1) respondent Union was a duly certified bargaining agent; (2) it made a definite request to bargain, accompanied with
a copy of the proposed Collective Bargaining Agreement, to the Company not only once but twice which were left unanswered and unacted upon;
and (3) the Company made no counter proposal whatsoever all of which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's
refusal to make counter proposal if considered in relation to the entire bargaining process, may indicate bad faith and this is specially true where
the Union's request for a counter proposal is left unanswered. 9 Even during the period of compulsory arbitration before the NLRC, petitioner
Company's approach and attitude-stalling the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue
delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the
Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the
Union much less justify its opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs. Herald Publications 11 the rule had been laid
down that "unfair labor practice is committed when it is shown that the respondent employer, after having been served with a written bargaining
proposal by the petitioning Union, did not even bother to submit an answer or reply to the said proposal This doctrine was reiterated anew in
Bradman vs. Court of Industrial Relations 12 wherein it was further ruled 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
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner capitalizes on the issue of due process claiming, that it
was denied the right to be heard and present its side when the Labor Arbiter denied the Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted in its behalf, the claimed denial of due
process appeared totally bereft of any legal and factual support. As herein earlier stated, petitioner had not even honored respondent Union with
any reply to the latter's successive letters, all geared towards bringing the Company to the bargaining table. It did not even bother to furnish or
serve the Union with its counter proposal despite persistent requests made therefor. Certainly, the moves and overall behavior of petitionercompany were in total derogation of the policy enshrined in the New Labor Code which is aimed towards expediting settlement of economic
disputes. Hence, this Court is not prepared to affix its imprimatur to such an illegal scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement which was approved and adopted by the
NLRC is a total nullity for it lacks the company's consent, much less its argument that once the Collective Bargaining Agreement is implemented,
the Company will face the prospect of closing down because it has to pay a staggering amount of economic benefits to the Union that will equal if

not exceed its capital. Such a stand and the evidence in support thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals
of the other. But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning negotiations by going through
empty gestures. 13 More so, as in the instant case, where the intervention of the National Labor Relations Commission was properly sought for
after conciliation efforts undertaken by the BLR failed. The instant case being a certified one, it must be resolved by the NLRC pursuant to the
mandate of P.D. 873, as amended, which authorizes the said body to determine the reasonableness of the terms and conditions of employment
embodied in any Collective Bargaining Agreement. To that extent, utmost deference to its findings of reasonableness of any Collective Bargaining
Agreement as the governing agreement by the employees and management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August 27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE PHILIPPINES (SMTFMUWP), its officers and members, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and
TOP FORM MANUFACTURING PHIL., INC., respondents.
DECISION
ROMERO, J.:
The issue in this petition for certiorari is whether or not an employer committed an unfair labor practice by bargaining in bad faith and
discriminating against its employees. The charge arose from the employers refusal to grant across-the-board increases to its employees
in implementing Wage Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National Capital Region
(RTWPB-NCR). Such refusal was aggravated by the fact that prior to the issuance of said wage orders, the employer allegedly
promised at the collective bargaining conferences to implement any government-mandated wage increases on an across-the-board
basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines (SMTFM) was the certified
collective bargaining representative of all regular rank and file employees of private respondent Top Form Manufacturing Philippines,
Inc. At the collective bargaining negotiation held at the Milky Way Restaurant in Makati, Metro Manila on February 27, 1990, the
parties agreed to discuss unresolved economic issues. According to the minutes of the meeting, Article VII of the collective bargaining
agreement was discussed. The following appear in said Minutes:
ARTICLE VII. Wages
Section 1. Defer
Section 2. Status quo
Section 3. Union proposed that any future wage increase given by the government should be implemented by the company across-theboard or non-conditional.
Management requested the union to retain this provision since their sincerity was already proven when the P25.00 wage increase was
granted across-the-board. The union acknowledges managements sincerity but they are worried that in case there is a new set of
management, they can just show their CBA. The union decided to defer this provision.i[1]

In their joint affidavit dated January 30, 1992,ii[2] union members Salve L. Barnes, Eulisa Mendoza, Lourdes Barbero and Concesa
Ibaez affirmed that at the subsequent collective bargaining negotiations, the union insisted on the incorporation in the collective
bargaining agreement (CBA) of the union proposal on automatic across-the-board wage increase. They added that:
11.
On the strength of the representation of the negotiating panel of the company and the above undertaking/promise made by its
negotiating panel, our union agreed to drop said proposal relying on the undertakings made by the officials of the company who
negotiated with us, namely, Mr. William Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo. Also, in the past years, the
company has granted to us government mandated wage increases on across-the-board basis.
On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00 per day in the salary of workers.
This was followed by Wage Order No. 02 dated December 20, 1990 providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they demanded that the increase be on an acrossthe-board basis. Private respondent refused to accede to that demand. Instead, it implemented a scheme of increases purportedly to
avoid wage distortion. Thus, private respondent granted the P17.00 increase under Wage Order No. 01 to workers/employees receiving
salary of P125.00 per day and below. The P12.00 increase mandated by Wage Order No. 02 was granted to those receiving the salary
of P140.00 per day and below. For employees receiving salary higher than P125.00 or P140.00 per day, private respondent granted an
escalated increase ranging from P6.99 to P14.30 and from P6.00 to P10.00, respectively.iii[3]
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter demanding that it should fulfill its pledge
of sincerity to the union by granting an across-the-board wage increases (sic) to all employees under the wage orders. The union
reiterated that it had agreed to retain the old provision of CBA on the strength of private respondents promise and assurance of an
across-the-board salary increase should the government mandate salary increases.iv[4] Several conferences between the parties
notwithstanding, private respondent adamantly maintained its position on the salary increases it had granted that were purportedly
designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC alleging that private respondents act of reneging on its
undertaking/promise clearly constitutes an act of unfair labor practice through bargaining in bad faith. It charged private respondent
with acts of unfair labor practices or violation of Article 247 of the Labor Code, as amended, specifically bargaining in bad faith, and
prayed that it be awarded actual, moral and exemplary damages.v[5] In its position paper, the union added that it was charging private
respondent with violation of Article 100 of the Labor Code.vi[6]

Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and 02, it had avoided the existence of a
wage distortion that would arise from such implementation. It emphasized that only after a reasonable length of time from the
implementation of the wage orders that the union surprisingly raised the question that the company should have implemented said
wage orders on an across-the-board basis. It asserted that there was no agreement to the effect that future wage increases mandated by
the government should be implemented on an across-the-board basis. Otherwise, that agreement would have been incorporated and
expressly stipulated in the CBA. It quoted the provision of the CBA that reflects the parties intention to fully set forth therein all their
agreements that had been arrived at after negotiations that gave the parties unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by law from the area of collective bargaining. The same CBA provided
that during its effectivity, the parties each voluntarily and unqualifiedly waives 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 this Agreement, even
though such subject or matter may not have been within the knowledge or contemplation of either or both of the parties at the time
they negotiated or signed this Agreement.vii[7]
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for lack of merit. viii[8] He considered
two main issues in the case: (a) whether or not respondents are guilty of unfair labor practice, and (b) whether or not the respondents
are liable to implement Wage Orders Nos. 01 and 02 on an across-the-board basis. Finding no basis to rule in the affirmative on both
issues, he explained as follows:
The charge of bargaining in bad faith that the complainant union attributes to the respondents is bereft of any certitude inasmuch as
based on the complainant unions own admission, the latter vacillated on its own proposal to adopt an across-the-board stand or future
wage increases. In fact, the union acknowledges the managements sincerity when the latter allegedly implemented Republic Act 6727
on an across-the-board basis. That such union proposal was not adopted in the existing CBA was due to the fact that it was the union
itself which decided for its deferment. It is, therefore, misleading to claim that the management undertook/promised to implement
future wage increases on an across-the-board basis when as the evidence shows it was the union who asked for the deferment of its
own proposal to that effect.
The alleged discrimination in the implementation of the subject wage orders does not inspire belief at all where the wage orders
themselves do not allow the grant of wage increases on an across-the-board basis. That there were employees who were granted the
full extent of the increase authorized and some others who received less and still others who did not receive any increase at all, would
not ripen into what the complainants termed as discrimination. That the implementation of the subject wage orders resulted into an
uneven implementation of wage increases is justified under the law to prevent any wage distortion. What the respondents did under the
circumstances in order to deter an eventual wage distortion without any arbitral proceedings is certainly commendable.

The alleged violation of Article 100 of the Labor Code, as amended, as well as Article XVII, Section 7 of the existing CBA as herein
earlier quoted is likewise found by this Branch to have no basis in fact and in law. No benefits or privileges previously enjoyed by the
employees were withdrawn as a result of the implementation of the subject orders. Likewise, the alleged company practice of
implementing wage increases declared by the government on an across-the-board basis has not been duly established by the
complainants evidence. The complainants asserted that the company implemented Republic Act No. 6727 which granted a wage
increase of P25.00 effective July 1, 1989 on an across-the-board basis. Granting that the same is true, such isolated single act that
respondents adopted would definitely not ripen into a company practice. It has been said that `a sparrow or two returning to Capistrano
does not a summer make.
Finally, on the second issue of whether or not the employees of the respondents are entitled to an across-the-board wage increase
pursuant to Wage Orders Nos. 01 and 02, in the face of the above discussion as well as our finding that the respondents correctly
applied the law on wage increases, this Branch rules in the negative.
Likewise, for want of factual basis and under the circumstances where our findings above are adverse to the complainants, their prayer
for moral and exemplary damages and attorneys fees may not be granted.
Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April 29, 1993ix[9] dismissing the
appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration which, however, was denied by the NLRC in the
Resolution dated January 17, 1994. Hence, the instant petition for certiorari contending that:
-ATHE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS
GUILTY OF ACTS OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE LATTER HAS BARGAINED IN
BAD FAITH WITH THE UNION AND HAS VIOLATED THE CBA WHICH IT EXECUTED WITH THE HEREIN
PETITIONER UNION.
-BTHE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS
GUILTY OF ACTS OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR WAGE ORDER NOS. 01 AND
02.

-CTHE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE RESPONDENTS GUILTY
OF HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING CBA.
-DTHE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE RESPONDENTS
GUILTY OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE PHILIPPINES, AS AMENDED.
-EASSUMING, WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY RULED THAT
THE PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR PRACTICES, THEY COMMITTED
SERIOUS ERROR IN NOT FINDING THAT THERE IS A SIGNIFICANT DISTORTION IN THE WAGE
STRUCTURE OF THE RESPONDENT COMPANY.
-FTHE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN ACTUAL,
MORAL, AND EXEMPLARY DAMAGES AND ATTORNEYS FEES.
As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a) whether or not private respondent committed
an unfair labor practice in its refusal to grant across-the-board wage increases in implementing Wage Orders Nos. 01 and 02, and (b)
whether or not there was a significant wage distortion of the wage structure in private respondent as a result of the manner by which
said wage orders were implemented.
With respect to the first issue, petitioner union anchors its arguments on the alleged commitment of private respondent to grant an
automatic across-the-board wage increase in the event that a statutory or legislated wage increase is promulgated. It cites as basis
therefor, the aforequoted portion of the Minutes of the collective bargaining negotiation on February 27, 1990 regarding wages,
arguing additionally that said Minutes forms part of the entire agreement between the parties.

The basic premise of this argument is definitely untenable. To start with, if there was indeed a promise or undertaking on the part of
private respondent to obligate itself to grant an automatic across-the-board wage increase, petitioner union should have requested or
demanded that such promise or undertaking be incorporated in the CBA. After all, petitioner union has the means under the law to
compel private respondent to incorporate this specific economic proposal in the CBA. It could have invoked Article 252 of the Labor
Code defining duty to bargain, thus, the duty includes executing a contract incorporating such agreements if requested by either party.
Petitioner unions assertion that it had insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that the duty to bargain does not
compel any party to agree to a proposal or make any concession. Thus, petitioner union may not validly claim that the proposal
embodied in the Minutes of the negotiation forms part of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting partiesx[10] the collective bargaining representative and the employer-company.
Compliance with a CBA is mandated by the expressed policy to give protection to labor.xi[11] In the same vein, CBA provisions
should 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."xii[12] This is founded on
the dictum that a CBA is not an ordinary contract but one impressed with public interest.xiii[13] It goes without saying, however, that
only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does
not find print in the CBA,xiv[14] it is not a part thereof and the proponent has no claim whatsoever to its implementation.
Hence, petitioner unions contention that the Minutes of the collective bargaining negotiation meeting forms part of the entire
agreement is pointless. The Minutes reflects the proceedings and discussions undertaken in the process of bargaining for worker
benefits in the same way that the minutes of court proceedings show what transpired therein.xv[15] At the negotiations, it is but natural
for both management and labor to adopt positions or make demands and offer proposals and counter-proposals. However, nothing is
considered final until the parties have reached an agreement. In fact, one of managements usual negotiation strategies is to x x x agree
tentatively as you go along with the understanding that nothing is binding until the entire agreement is reached.xvi[16] If indeed private
respondent promised to continue with the practice of granting across-the-board salary increases ordered by the government, such
promise could only be demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent 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. As earlier stated, petitioner union had, under the law,
the right and the opportunity to insist on the foreseeable fulfillment of the private respondents promise by demanding its incorporation
in the CBA. Because the proposal was never embodied in the CBA, the promise has remained just that, a promise, the implementation
of which cannot be validly demanded under the law.

Petitioners reliance on this Courts pronouncementsxvii[17] in Kiok Loy v. NLRCxviii[18] is, therefore, misplaced. In that case, the
employer refused to bargain with the collective bargaining representative, ignoring all notices for negotiations and requests for counter
proposals that the union had to resort to conciliation proceedings. In that case, the Court opined that (a) Companys refusal to make
counter-proposal, if considered in relation to the entire bargaining process, may indicate bad faith and this is specially true where the
Unions request for a counter-proposal is left unanswered. Considering the facts of that case, the Court concluded that the company
was unwilling to negotiate and reach an agreement with the Union.xix[19]
In the case at bench, however, petitioner union does not deny that discussion on its proposal that all government-mandated salary
increases should be on an across-the-board basis was deferred, purportedly because it relied upon the undertaking of the negotiating
panel of private respondent.xx[20] Neither does petitioner union deny the fact that there is no provision of the 1990 CBA containing a
stipulation that the company will grant across-the-board to its employees the mandated wage increase. They simply assert that private
respondent committed acts of unfair labor practices by virtue of its contractual commitment made during the collective bargaining
process.xxi[21] The mere fact, however, that the proposal in question was not included in the CBA indicates that no contractual
commitment thereon was ever made by private respondent as no agreement had been arrived at by the parties. Thus:
Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the
failure to reach an agreement after negotiations continued for a reasonable period does not establish a lack of good faith. 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. x x x.xxii[22]
With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the parties thereto. All provisions in the
CBA are supposed to have been jointly and voluntarily incorporated therein by the parties. This is not a case where private respondent
exhibited an indifferent attitude towards collective bargaining because the negotiations were not the unilateral activity of petitioner
union. The CBA is proof enough that private respondent exerted reasonable effort at good faith bargaining.xxiii[23]
Indeed, the adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad
faith. Neither can bad faith be inferred from a partys insistence on the inclusion of a particular substantive provision unless it concerns
trivial matters or is obviously intolerable.xxiv[24]
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. 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."xxv[25]
On account of the importance of the economic issue proposed by petitioner union, it could have refused to bargain and to enter into a
CBA with private respondent. On the other hand, private respondents 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 petitioner union, 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 private respondent was nothing but a belated reaction to the
implementation of the wage orders that private respondent made in accordance with law. In other words, petitioner union 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. The inevitable conclusion is that private respondent did not commit the unfair labor practices
of bargaining in bad faith and discriminating against its employees for implementing the wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner unions contention that by its failure to grant across-the-board wage increases,
private respondent violated the provisions of Section 5, Article VII of the existing CBAxxvi[26] as well as Article 100 of the Labor
Code. The CBA provision states:
Section 5. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the Philippines, as amended, and
all other laws, decrees, orders, instructions, jurisprudence, rules and regulations affecting labor.
Article 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that (n)othing in this Book shall
be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation
of this Code.
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by petitioner union and the other
employees were withdrawn as a result of the manner by which private respondent implemented the wage orders. Granted that private
respondent had granted an across-the-board increase pursuant to Republic Act No. 6727, that single instance may not be considered an
established company practice. Petitioner unions argument in this regard is actually tied up with its claim that the implementation of
Wage Orders Nos. 01 and 02 by private respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a question of factxxvii[27] that is within the jurisdiction of the quasi-judicial
tribunals below. Factual findings of administrative agencies are accorded respect and even finality in this Court if they are supported
by substantial evidence.xxviii[28] Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said:

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree,
is, by and large, a question of fact the determination of which is the statutory function of the NLRC. Judicial review of labor cases, we
may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials findings rest. As such,
the factual findings of the NLRC are generally accorded not only respect but also finality provided that its decisions are supported by
substantial evidence and devoid of any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal are
not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the
sufficiency of the evidence, let alone the conclusions derived therefrom.xxix[29]
Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision in this case which was penned
by the dissenter in that case, Presiding Commissioner Edna Bonto-Perez, unanimously ruled that no wage distortions marred private
respondents implementation of the wage orders. The NLRC said:
On the issue of wage distortion, we are satisfied that there was a meaningful implementation of Wage Orders Nos. 01 and 02. This
debunks the claim that there was wage distortion as could be shown by the itemized wages implementation quoted above. It should be
noted that this itemization has not been successfully traversed by the appellants. x x x.xxx[30]
The NLRC then quoted the labor arbiters ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It is apropos to note, moreover, that
petitioners contention on the issue of wage distortion and the resulting allegation of discrimination against the private respondents
employees are anchored on its dubious position that private respondents promise to grant an across-the-board increase in governmentmandated salary benefits reflected in the Minutes of the negotiation is an enforceable part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution that the rights of
workers and the promotion of their welfare shall be protected.xxxi[31] The Court is likewise guided by the goal of attaining industrial
peace by the proper application of the law. It cannot favor one party, be it labor or management, in arriving at a just solution to a
controversy if the party has no valid support to its claims. It is not within this Courts power to rule beyond the ambit of the law.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned Resolutions of the NLRC AFFIRMED.
No costs.
SO ORDERED.

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