1

Foremen not rank and file employees

[G.R. No. 157086. February 18, 2013.]

LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. THE LEPANTO CAPATAZ

UNION, respondent.

DECISION

BERSAMIN, J p:

Capatazes are not rank-and-file employees because they perform supervisory functions for the

management; hence, they may form their own union that is separate and distinct from the labor

organization of rank-and-file employees.

The Case

Lepanto Consolidated Mining Company (Lepanto) assails the Resolution promulgated on December 18,

2002, whereby the Court of Appeals (CA) dismissed its petition for certiorari on the ground of its failure to

first file a motion for reconsideration against the decision rendered by the Secretary of the Department of

Labor and Employment (DOLE); and the resolution promulgated on January 31, 2003, whereby the CA

denied Lepanto's motion for reconsideration.

Antecedents

As a domestic corporation authorized to engage in large-scale mining, Lepanto operated several mining

claims in Mankayan, Benguet. On May 27, 1998, respondent Lepanto Capataz Union (Union), a labor

organization duly registered with DOLE, filed a petition for consent election with the Industrial Relations

Division of the Cordillera Regional Office (CAR) of DOLE, thereby proposing to represent 139 capatazes of

Lepanto.

In due course, Lepanto opposed the petition, contending that the Union was in reality seeking a

certification election, not a consent election, and would be thereby competing with the Lepanto Employees

Union (LEU), the current collective bargaining agent. Lepanto pointed out that the capatazes were already

members of LEU, the exclusive representative of all rank-and-file employees of its Mine Division.

On May 2, 2000, Med-Arbiter Michaela A. Lontoc of DOLE-CAR issued a ruling to the effect that

the capatazes could form a separate bargaining unit due to their not being rank-and-file employees, viz.:

xxx xxx xxx

We agree with petitioner that its members perform a function totally different from the rank-and-file

employees. The word capataz is defined in Webster's Third International Dictionary, 1986 as "a boss",

"foreman" and "an overseer". The employer did not dispute during the hearing that the capatazes

indeed take charge of the implementation of the job orders by supervising and instructing the

miners, mackers and other rank-and-file workers under them, assess and evaluate their

performance, make regular reports and recommends (sic) new systems and procedure of

work, as well as guidelines for the discipline of employees. As testified to by petitioner's

president, the capatazes are neither rank-and-file nor supervisory and, more or less, fall in the

middle of their rank. In this respect, we can see that indeed the capatazes differ from the

rank-and-file and can by themselves constitute a separate bargaining unit.

While it is claimed by the employer that historically, the capatazes have been considered among the rank-

and-file and that it is only now that they seek a separate bargaining unit such history of affiliation with the

rank-and-file association of LEU cannot totally prevent the capatazes from disaffiliating and organizing

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themselves separately. The constitutional right of every worker to self-organization essentially gives him the

freedom to join or not to join an organization of his own choosing.

The fact that petitioner seeks to represent a separate bargaining unit from the rank-and-file employees

represented by the LEU renders the contract bar rule inapplicable. While the collective bargaining

agreement existing between the LEU and the employer covering the latter's rank-and-file employee covers

likewise the capatazes, it was testified to and undisputed by the employer that the capatazes did not

anymore participate in the renegotiation and ratification of the new CBA upon expiration of their old one on

16 November 1998. Their nonparticipation was apparently due to their formation of the new bargaining

unit. Thus, while the instant petition was filed on 27 May 1998, prior to the freedom period, in the interest

of justice and in consonance with the constitutional right of workers to self-organization, the petition can be

deemed to have been filed at the time the 60-day freedom period set in. After all, the petition was still

pending and unresolved during this period.

WHEREFORE, the petition is hereby granted and a certification election among the capataz employees of

the Lepanto Consolidated Mining Company is hereby ordered conducted, subject to the usual pre-election

and inclusion/exclusion proceedings, with the following choices:

1.Lepanto Capataz Union; and

2.No Union.

The employer is directed to submit to this office within ten (10) days from receipt hereof a copy of the

certified list of its capataz employees and the payroll covering the said bargaining unit for the last three (3)

months prior to the issuance hereof.

SO DECIDED.

Lepanto appealed to the DOLE Secretary.

On July 12, 2000, then DOLE Undersecretary Rosalinda Dimapilis-Baldoz (Baldoz), acting by authority of the

DOLE Secretary, affirmed the ruling of Med-Arbiter Lontoc, pertinently stating as follows:

xxx xxx xxx

The bargaining unit sought to be represented by the appellee are the capataz employees of the appellant.

There is no other labor organization of capatazes within the employer unit except herein appellant. Thus,

appellant is an unorganized establishment in so far as the bargaining unit of capatazes is concerned. In

accordance with the last paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in

a petition filed by a legitimate labor organization involving an unorganized establishment, the Med-Arbiter

shall, pursuant to Article 257 of the Code, automatically order the conduct of certification election after

determining that the petition has complied with all requirements under Sections 1, 2 and 4 of the same

rules and that none of the grounds for dismissal thereof exists", the order for the conduct of a certification

election is proper.

Finally, as to the issue of whether the Med-Arbiter exhibited ignorance of the law when she directed the

conduct of a certification election when appellee prays for the conduct of a consent election, let it be

stressed that appellee seeks to be recognized as the sole and exclusive bargaining representative of all

capataz employees of appellant. There are two modes by which this can be achieved, one is by voluntary

recognition and two, by consent or certification election. Voluntary recognition under Rule X, Department

Order No. 9 is a mode whereby the employer voluntarily recognizes the union as the bargaining

representative of all the members in the bargaining unit sought to be represented. Consent and certification

election under Rules XI and XII of Department Order No. 9 is a mode whereby the members of the

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bargaining unit decide whether they want a bargaining representative and if so, who they want it to be.

The difference between a consent election and a certification election is that the conduct of a consent

election is agreed upon by the parties to the petition while the conduct of a certification election is ordered

by the Med-Arbiter. In this case, the appellant withdrew its consent and opposed the conduct of the

election. Therefore, the petition necessarily becomes one of a petition for certification election and the

Med-Arbiter was correct in granting the same.

xxx xxx xxx

In the ensuing certification election held on November 28, 2000, the Union garnered 109 of the 111 total

valid votes cast.

On the day of the certification election, however, Lepanto presented an opposition/protest. Hence, on

February 8, 2001, a hearing was held on Lepanto's opposition/protest. Although the parties were required

in that hearing to submit their respective position papers, Lepanto later opted not to submit its position

paper, and contended that the issues identified during the hearing did not pose any legal issue to be

addressed in a position paper.

On April 26, 2001, Med-Arbiter Florence Marie A. Gacad-Ulep of DOLE-CAR rendered a decision certifying

the Union as the sole and exclusive bargaining agent of allcapatazes of Lepanto.

On May 18, 2001, Lepanto appealed the decision of Med-Arbiter Gacad-Ulep to the DOLE Secretary.

By her Resolution dated September 17, 2002, DOLE Secretary Patricia A. Sto. Tomas affirmed the decision

dated April 26, 2001, holding and disposing thus:

Appellant accused Med-Arbiter Ulep of grave abuse of discretion amounting to lack of jurisdiction based on

her failure to resolve appellant's motion to modify order to submit position papers and on rendering

judgment on the basis only of appellee's position paper.

We deny.

Section 5, Rule XXV of Department Order No. 9, otherwise known as the New Rules Implementing Book V

of the Labor Code, states that "in all proceedings at all levels, incidental motions shall not be given due

course, but shall remain as part of the records for whatever they may be worth when the case is decided

on the merits".

Further, the motion to modify order to submit position papers filed by appellant is without merit. Appellant

claimed that the issues over which Med-Arbiter Ulep directed the submission of position papers were: (1)

failure to challenge properly; (2) failure (especially of LEU) to participate actively in the proceedings before

the decision calling for the conduct of certification election; and (3) validity of earlier arguments. According

to appellant, the first issue was for appellee LCU to reply to in its position paper, the second issue was for

the LEU and the third issue for appellant company to explain in their respective position paper. It was the

position of appellant company that unless the parties filed their position paper on each of their respective

issues, the other parties cannot discuss the issues they did not raise in the same position papers and have

to await receipt of the others' position paper for their appropriate reply.

Section 9, Rule XI of Department Order No. 9, which is applied with equal force in the disposition of

protests on the conduct of election, states that "the Med-Arbiter shall in the same hearing direct all

concerned parties, including the employer, to simultaneously submit their respective position papers within

a non-extendible period of ten days". The issues as recorded in the minutes of 28 February 2001 hearing

before the Med-Arbiter are clear. The parties, including appellant company were required to submit their

respective positions on whether there was proper challenge of the voters, whether LEU failed to participate

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in the proceedings, if so, whether it should be allowed to participate at this belated stage and whether the

arguments raised during the pre-election conferences and in the protests are valid. The parties, including

appellant company were apprised of these issues and they agreed thereto. The minutes of the hearing

even contained the statement that "no order will issue" and that "the parties are informed accordingly". If

there is any matter that had to be clarified, appellant should have clarified the same during the said hearing

and refused to file its position paper simultaneously with LCU and LEU. It appears that appellant did not do

so and acquiesced to the filing of its position paper within fifteen days from the date of said hearing.

Neither is there merit in appellant's contention that the Med-Arbiter resolved the protest based solely on

appellee LCU's position paper. Not only did the Med-Arbiter discuss the demerits of appellant's motion to

modify order to submit position papers but likewise the demerits of its protest. We do not, however, agree

with the Med-Arbiter that the protest should be dismissed due to appellant's failure to challenge the

individual voters during the election. We take note of the minutes of the pre-election conference on 10

November 2000, thus:

"It was also agreed upon (by union and management's legal officer) that all those listed will be allowed to

vote during the certification election subject to challenge by management on ground that none of them

belongs to the bargaining unit". (Underscoring supplied)

It is therefore, not correct to say that there was no proper challenge made by appellant company. The

challenge was already manifested during the pre-election conference, specifying that all listed voters were

being challenged because they do not belong to the bargaining unit of capatazes. Likewise, the formal

protest filed by appellant company on the day of the election showed its protest to the conduct of the

election on the grounds that (1) none of the names submitted and included (with pay bracket 8 and 9) to

vote qualifies as capataz under the five-point characterization made in 02 May 2000 decision calling for the

conduct of certification election; (2) the characterization made in the 02 May 2000 decision pertains to shift

bosses who constitutes another union, the Lepanto Local Staff Union; and (3) the names listed in the

voters' list are members of another union, the Lepanto Employees Union. This constitutes proper challenge

to the eligibility of all the voters named in the list which includes all those who cast their votes. The election

officer should have not canvassed the ballots and allowed the Med-Arbiter to first determine their eligibility.

Notwithstanding the premature canvass of the votes, we note that appellant company failed to support its

grounds for challenge with sufficient evidence for us to determine the validity of its claim. No job

description of the challenged voters was submitted by appellant from which we can verify whether the said

voters are indeed disqualified from the alleged five-point characterization made in the 02 May 2000

decision, either before the Med-Arbiter or on appeal. Neither was the job description of the shift bosses

whom appellant company claims pertain to the alleged five-point characterization submitted for our perusal.

The challenge must perforce fail for lack of evidence.

As to the alleged membership of appellee LCU's member with another union LEU, the issue has been

resolved in the 02 May 200[0] decision of Med-Arbiter Lontoc which we affirmed on 12 July 2000.

WHEREFORE, the appeal is hereby DENIED for lack of merit and the decision of the Med-Arbiter dated

26 April 2001, certifying Lepanto Capataz Union as the sole and exclusive bargaining agent of all capataz

workers of Lepanto Consolidated Mining Company, is AFFIRMED. SO RESOLVED.

Ruling of the CA

Still dissatisfied with the result, but without first filing a motion for reconsideration, Lepanto challenged in

the CA the foregoing decision of the DOLE Secretary through a petition for certiorari.

On December 18, 2002, the CA dismissed Lepanto's petition for certiorari, stating in its first assailed

resolution:

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Considering that the petitioner failed to file a prior motion for reconsideration of the Decision of the public

respondent before instituting the present petition as mandated by Section 1 of Rule 65 of the 1997 Rules of

Civil Procedure, as amended, the instant "Petition for Certiorari Under Rule 65 with Prayer for Temporary

Restraining Order and Injunction" is hereby DISMISSED.

Well-settled is the rule that the "filing of a petition for certiorari under Rule 65 without first moving for

reconsideration of the assailed resolution generally warrants the petition's outright dismissal. As we

consistently held in numerous cases, a motion for reconsideration by a concerned party is indispensable for

it affords the NLRC an opportunity to rectify errors or mistakes it might have committed before resort to the

courts can be had.

It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy

in the ordinary course of law against acts of public respondents. Here, the plain and adequate remedy

expressly provided by law was a motion for reconsideration of the impugned resolution, based on palpable

or patent errors, to be made under oath and filed within ten (10) days from receipt of the questioned

resolution of the NLRC, a procedure which is jurisdictional. Further, it should be stressed that without a

motion for reconsideration seasonably filed within the ten-day reglementary period, the questioned order,

resolution or decision of NLRC, becomes final and executory after ten (10) calendar days from receipt

thereof." (Association of Trade Unions (ATU), Rodolfo Monteclaro and Edgar Juesan vs. Hon.

Commissioners Oscar N. Abella, Musib N. Buat, Leon Gonzaga, Jr., Algon Engineering

Construction Corp., Alex Gonzales and Editha Yap. 323 SCRA 50).

SO ORDERED.

Lepanto moved to reconsider the dismissal, but the CA denied its motion for reconsideration through the

second assailed resolution.

Issues

Hence, this appeal by Lepanto based on the following errors, namely:

I

THE COURT OF APPEALS ERRED IN SUMMARILY DISMISSING THE PETITION FOR CERTIORARI ON THE

GROUND THAT NO PRIOR MOTION FOR RECONSIDERATION WAS FILED. THE DECISION OF THE

SECRETARY BEING FINAL AND EXECUTORY, A MOTION FOR RECONSIDERATION WAS NOT AN AVAILABLE

REMEDY FOR PETITIONER.

II

ON THE MERITS, THE SECRETARY OF LABOR ACTED WITHOUT OR IN EXCESS OF JURISDICTION, [O]R

WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING

THE DECISION DATED SEPTEMBER 17, 2002, WHEN SHE DELIBERATELY IGNORED THE FACTS AND

RULED IN FAVOR OF THE RESPONDENT UNION, DESPITE HER OWN FINDING THAT THERE HAD BEEN A

PREMATURE CANVASS OF VOTES.

Lepanto argues that a motion for reconsideration was not an available remedy due to the decision of the

DOLE Secretary being already classified as final and executory under Section 15, Rule XI, Book V of

Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9, series of

1997; that the Union's petition for consent election was really a certification election; that the Union failed

to give a definite description of the bargaining unit sought to be represented; and that thecapatazes should

be considered as rank-and-file employees.

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The issues to be resolved are, firstly, whether a motion for reconsideration was a pre-requisite in the filing

of its petition for certiorari; and, secondly, whether thecapatazes could form their own union independently

of the rank-and-file employees.

Ruling

The petition for review has no merit.

I.

The filing of the motion for reconsideration

is a pre-requisite to the filing of a petition for

certiorari to assail the decision of the DOLE Secretary

We hold to be untenable and not well taken Lepanto's submissions that: (1) a motion for reconsideration

was not an available remedy from the decision of the DOLE Secretary because of Section 15, Rule XI, Book

V of the Omnibus Rules Implementing the Labor Code, as amended; and (2) the ruling in National

Federation of Labor v. Laguesma (recognizing the remedy of certiorari against the decision of the DOLE

Secretary to be filed initially in the CA) actually affirms its position that an immediate recourse to the CA

on certiorari is proper even without the prior filing of a motion for reconsideration.

To start with, the requirement of the timely filing of a motion for reconsideration as a precondition to the

filing of a petition for certiorari accords with the principle of exhausting administrative remedies as a means

to afford every opportunity to the respondent agency to resolve the matter and correct itself if need be.

And, secondly, the ruling in National Federation of Labor v. Laguesma reiterates St. Martin's Funeral Home

v. National Labor Relations Commission, where the Court has pronounced that the special civil action

of certiorari is the appropriate remedy from the decision of the National Labor Relations Commission

(NLRC) in view of the lack of any appellate remedy provided by the Labor Code to a party aggrieved by the

decision of the NLRC. Accordingly, any decision, resolution or ruling of the DOLE Secretary from which

the Labor Code affords no remedy to the aggrieved party may be reviewed through a petition

for certiorari initiated only in the CA in deference to the principle of the hierarchy of courts.

Yet, it is also significant to note that National Federation of Labor v. Laguesma also reaffirmed the dictum

issued in St. Martin's Funeral Homes v. National Labor Relations Commission to the effect that "the remedy

of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or

subsequent remedy, and then seasonably avail of the special civil action of certiorari under Rule 65 . . . ."

Indeed, the Court has consistently stressed the importance of the seasonable filing of a motion for

reconsideration prior to filing the certiorari petition. In SMC Quarry 2 Workers Union-February Six

Movement (FSM) Local Chapter No. 1564 v. Titan Megabags Industrial Corporation and Manila Pearl

Corporation v. Manila Pearl Independent Workers Union, the Court has even warned that a failure to file

the motion for reconsideration would be fatal to the cause of the petitioner. Due to its extraordinary nature

as a remedy, certiorari is to be availed of only when there is no appeal, or any plain, speedy or adequate

remedy in the ordinary course of law. There is no question that a motion for reconsideration timely filed by

Lepanto was an adequate remedy in the ordinary course of law in view of the possibility of the Secretary of

Justice reconsidering her disposition of the matter, thereby according the relief Lepanto was seeking.

Under the circumstances, Lepanto's failure to timely file a motion for reconsideration prior to filing its

petition for certiorari in the CA rendered the September 17, 2002 resolution of the DOLE Secretary beyond

challenge.

II.

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Capatazes are not rank-and-file employees;

hence, they could form their own union

Anent the second issue, we note that Med-Arbiter Lontoc found in her Decision issued on May 2, 2000 that

the capatazes were performing functions totally different from those performed by the rank-and-file

employees, and that the capatazes were "supervising and instructing the miners, mackers and other rank-

and-file workers under them, assess[ing] and evaluat[ing] their performance, mak[ing] regular reports and

recommend[ing] new systems and procedure of work, as well as guidelines for the discipline of

employees." Hence, Med-Arbiter Lontoc concluded, the capatazes "differ[ed] from the rank-and-file and

[could] by themselves constitute a separate bargaining unit."

Agreeing with Med-Arbiter Lontoc's findings, then DOLE Undersecretary Baldoz, acting by authority of the

DOLE Secretary, observed in the resolution dated July 12, 2000, thus:

The bargaining unit sought to be represented by the appellee are the capataz employees of the appellant.

There is no other labor organization of capatazes within the employer unit except herein appellant. Thus,

appellant is an unorganized establishment in so far as the bargaining unit of capatazes is concerned. In

accordance with the last paragraph of Section 11, Rule XI, Department Order No. 9 which provides that "in

a petition filed by a legitimate labor organization involving an unorganized establishment, the Med-Arbiter

shall, pursuant to Article 257 of the Code, automatically order the conduct of certification election after

determining that the petition has complied with all requirements under Sections 1, 2 and 4 of the same

rules and that none of the grounds for dismissal thereof exists", the order for the conduct of a certification

election is proper.

We cannot undo the affirmance by the DOLE Secretary of the correct findings of her subordinates in the

DOLE, an office that was undeniably possessed of the requisite expertise on the matter in issue. In dealing

with the matter, her subordinates in the DOLE fairly and objectively resolved whether the Union could

lawfully seek to be the exclusive representative of the bargaining unit of capatazes in the company. Their

factual findings, being supported by substantial evidence, are hereby accorded great respect and finality.

Such findings cannot be made the subject of our judicial review by petition under Rule 45 of the Rules of

Court, because:

. . . [T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court requires that it

shall raise only questions of law. The factual findings by quasi-judicial agencies, such as the Department of

Labor and Employment, when supported by substantial evidence, are entitled to great respect in view of

their expertise in their respective field. Judicial review of labor cases does not go far as to evaluate the

sufficiency of evidence on which the labor official's findings rest. It is not our function to assess and

evaluate all over again the evidence, testimonial and documentary, adduced by the parties to an appeal,

particularly where the findings of both the trial court (here, the DOLE Secretary) and the appellate court on

the matter coincide, as in this case at bar. The Rule limits that function of the Court to review or revision of

errors of law and not to a second analysis of the evidence. Here, petitioners would have us re-calibrate all

over again the factual basis and the probative value of the pieces of evidence submitted by the Company to

the DOLE, contrary to the provisions of Rule 45. Thus, absent any showing of whimsical or capricious

exercise of judgment, and unless lack of any basis for the conclusions made by the appellate court may be

amply demonstrated, we may not disturb such factual findings.

In any event, we affirm that capatazes or foremen are not rank-and-file employees because they are an

extension of the management, and as such they may influence the rank-and-file workers under them to

engage in slowdowns or similar activities detrimental to the policies, interests or business objectives of the

employers.

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WHEREFORE, the Court DENIES the petition for review for lack of merit, and AFFIRMS the resolutions

the Court of Appeals promulgated on December 18, 2002 and January 31, 2003.

Petitioner to pay the costs of suit. SO ORDERED.

||| (Lepanto Consolidated Mining Co. v. Lepanto Capataz Union, G.R. No. 157086, [February 18, 2013])

Nature of Collective Bargaining

[G.R. No. 175492. February 27, 2013.]

CARLOS L. OCTAVIO, petitioner, vs. PHILIPPINE LONG DISTANCE TELEPHONE

COMPANY, respondent.

DECISION

DEL CASTILLO, J p:

Every Collective Bargaining Agreement (CBA) shall provide a grievance machinery to which all disputes

arising from its implementation or interpretation will be subjected to compulsory negotiations. This essential

feature of a CBA provides the parties with a simple, inexpensive and expedient system of finding

reasonable and acceptable solutions to disputes and helps in the attainment of a sound and stable

industrial peace.

Before us is a Petition for Review on Certiorari assailing the August 31, 2006 Decision of the Court of

Appeals (CA) in CA-G.R. SP No. 93578, which dismissed petitioner Carlos L. Octavio's (Octavio) Petition

for Certiorari assailing the September 30, 2005 Resolution of the National Labor Relations Commission

(NLRC). Said NLRC Resolution affirmed the August 30, 2004 Decision of the Labor Arbiter which dismissed

Octavio's Complaint for payment of salary increases against respondent Philippine Long Distance Company

(PLDT). Likewise assailed in this Petition is the November 15, 2006 Resolution which denied Octavio's

Motion for Reconsideration.

Factual Antecedents

On May 28, 1999, PLDT and Gabay ng Unyon sa Telekomunikasyon ng mga Superbisor (GUTS) entered into

a CBA covering the period January 1, 1999 to December 31, 2001 (CBA of 1999-2001). Article VI, Section I

thereof provides:

Section 1.The COMPANY agrees to grant the following across-the-board salary increase during the three

years covered by this Agreement to all employees covered by the bargaining unit as of the given

dates: ICcaST

Effective January 1, 1999 — 10% of basic wage or P2,000.00 whichever is higher;

Effective January 1, 2000 — 11% of basic wage or P2,250.00 whichever is higher;

Effective January 1, 2001 — 12% of basic wage or P2,500.00 whichever is higher.

On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status. He became a

member of GUTS. When Octavio was regularized on January 1, 2001, he was receiving a monthly basic

salary of P10,000.00. On February 1, 2002, he was promoted to the position of Sales System Analyst 2 and

his salary was increased to P13,730.00.

On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1, 2002 to

December 31, 2004 (CBA of 2002-2004) which provided for the following salary increases: 8% of basic

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wage or P2,000.00 whichever is higher for the first year (2002); 10% of basic wage or P2,700.00 whichever

is higher for the second year (2003); and, 10% of basic wage or P2,400.00 whichever is higher for the third

year (2004).

Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 and P2,000.00

effective January 1, 2002, Octavio wrote the President of GUTS, Adolfo Fajardo (Fajardo). Acting thereon

and on similar grievances from other GUTS members, Fajardo wrote the PLDT Human Resource Head to

inform management of the GUTS members' claim for entitlement to the across-the-board salary increases.

Accordingly, the Grievance Committee convened on October 7, 2002 consisting of representatives from

PLDT and GUTS. The Grievance Committee, however, failed to reach an agreement. In effect, it denied

Octavio's demand for salary increases. The Resolution (Committee Resolution), reads as follows:

October 7, 2002

UNION ISSUE:

1.Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database, was promoted to S2 from S1 last February

01, 2002. He claimed that the whole P2,000 (1st yr. GUTS-CBA increase) was not given to him. ITScAE

2.He was hired as a probationary employee on October 01, 2000 and was regularized on January 01, 2001.

He claimed that Management failed to grant him the GUTS-CBA increase last January 2001.

MANAGEMENT POSITION:

Issue # 1:

A)Promotional Policy: adjustment of basic monthly salary to the minimum salary of the new position.

B)Mr. Octavio's salary at the time of his promotion and before the conclusion of the GUTS CBA was

P10,000.00.

C)Upon the effectivity of his promotion on February 1, 2002, his basic monthly salary was adjusted to

P13,730.00, the minimum salary of the new position.

D)In June 2002, the GUTS-CBA was concluded and Mr. Octavio's basic salary was recomputed to include

the P2,000.00 1st year increase retroactive January 2002. The resulting basic salary was P12,000.00.

E)Applying the above-mentioned policy, Mr. Octavio's basic salary was adjusted to the minimum salary of

the new position, which is P13,730.00.

Issue # 2:

All regularized supervisory employees as of January 1 are not entitled to the GUTS CBA increase. However,

as agreed with GUTS in the grievance case of 18 personnel of International & Luzon Core Network

Management Center, probationary employees who were hired outside of PLDT and regularized as

supervisors/management personnel on January 1, 2002 shall be entitled to GUTS CBA. This decision shall

be applied prospectively and all previous similar cases are not covered.

RESOLUTION:

After protracted deliberation of these issues, the committee failed to reach an agreement. Hence,

Management position deemed adopted.

MANAGEMENT UNION

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(signed) (signed)

——————————————————————— ——————————————————————

WILFREDO A. GUADIA ADOLFO L. FAJARDO

(signed) (signed)

————————————————————— ————————————————————————

ROSALINDA S. RUIZ CONFESOR A. ESPIRITU

(signed) (signed)

———————————————————————— ————————————————————————

ALEJANDRO C. FABIAN CHARLITO A. AREVALO

Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment of said salary

increases.

Ruling of the Labor Arbiter

Octavio claimed entitlement to salary increases per the CBAs of 1999-2001 and 2002-2004. He insisted that

when he was regularized as a supervisory employee on January 1, 2001, he became entitled to receive the

across-the-board increase of P2,500.00 as provided for under the CBA of 1999-2001 which took effect on

January 1, 1999. Then pursuant to the CBA of 2002-2004, he should have received an additional increase

of P2,000.00 apart from the merit increase of P3,730.00 which was given him due to his promotion on

February 1, 2002. However, PLDT unilaterally decided to deem as included in the said P3,730.00 the

P2,000.00 across-the-board increase for 2002 as stipulated in the CBA of 2002-2004. This, according to

Octavio, amounts to diminution of benefits. Moreover, Octavio averred that the CBA cannot be the subject

of further negotiation as it has the force of law between the parties. Finally, Octavio claimed that PLDT

committed an act of unfair labor practice because, while it granted the claim for salary increase of 18

supervisory employees who were regularized on January 1, 2002 and onwards, it discriminated against him

by refusing to grant him the same salary increase. He thus prayed for an additional award of damages and

attorney's fees.

PLDT countered that the issues advanced by Octavio had already been resolved by the Union-Management

Grievance Committee when it denied his claims through the Committee Resolution. Moreover, the grant of

across-the-board salary increase for those who were regularized starting January 1, 2002 and the exclusion

thereto of those who were regularized on January 1, 2001, do not constitute an act of unfair labor practice

as would result in any discrimination or encourage or discourage membership in a labor organization. In

fact, when the Union-Management Grievance Committee came up with the Committee Resolution, they

considered the same as the most practicable and reasonable solution for both management and union. At

any rate, the said Committee Resolution had already become final and conclusive between the parties for

failure of Octavio to elevate the same to the proper forum. In addition, PLDT claimed that the NLRC has no

jurisdiction to hear and decide Octavio's claims.

11

In a Decision dated August 30, 2004, the Labor Arbiter dismissed the Complaint of Octavio and upheld the

Committee Resolution.

Ruling of the National Labor Relations Commission

Upon Octavio's appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor Arbiter's

Decision. It upheld the Labor Arbiter's finding that Octavio's salary had already been adjusted in accordance

with the provisions of the CBA. The NLRC further ruled that it has no jurisdiction to decide the issues

presented by Octavio, as the same involved the interpretation and implementation of the CBA. According to

it, Octavio should have brought his claim before the proper body as provided in the 2002-2004 CBA's

provision on grievance machinery and procedure.

Octavio's Motion for Reconsideration was likewise dismissed by the NLRC in its November 21, 2005

Resolution.

Ruling of the Court of Appeals

Octavio thus filed a Petition for Certiorari which the CA found to be without merit. In its August 31, 2006

Decision, the CA declared the Committee Resolution to be binding on Octavio, he being a member of

GUTS, and because he failed to question its validity and enforceability.

In his Motion for Reconsideration, Octavio disclaimed his alleged failure to question the Committee

Resolution by emphasizing that he filed a Complaint before the NLRC against PLDT. However, the CA

denied Octavio's Motion for Reconsideration in its November 15, 2006 Resolution.

Issues

Hence, Octavio filed this Petition raising the following issues for our consideration:

a.Whether . . . the employer and bargaining representative may amend the provisions of the collective

bargaining agreement without the consent and approval of the employees;

b.If so, whether the said agreement is binding [on] the employees;

c.Whether . . . merit increases may be awarded simultaneously with increases given in the Collective

Bargaining Agreement;

d.Whether . . . damages may be awarded to the employee for violation by the employer of its commitment

under its existing collective bargaining agreement.

Octavio submits that the CA erred in upholding the Committee Resolution which denied his claim for salary

increases but granted the same request of 18 other similarly situated employees. He likewise asserts that

both PLDT and GUTS had the duty to strictly implement the CBA salary increases; hence, the Committee

Resolution, which effectively resulted in the modification of the CBAs' provision on salary increases, is void.

Octavio also insists that PLDT is bound to grant him the salary increase of P2,000.00 for the year 2002 on

top of the merit increase given to him by reason of his promotion. It is his stance that merit increases are

distinct and separate from across-the-board salary increases provided for under the CBA.

Our Ruling

The Petition has no merit.

Under Article 260 of the Labor Code, grievances arising from the interpretation or implementation of the

parties' CBA should be resolved in accordance with the grievance procedure embodied therein. It also

12

provides that all unsettled grievances shall be automatically referred for voluntary arbitration as prescribed

in the CBA.

In its Memorandum, PLDT set forth the grievance machinery and procedure provided under Article X of the

CBA of 2002-2004, viz.:

Section 1.GRIEVANCE MACHINERY. — there shall be a Union-Management Grievance Committee composed

of three (3) Union representatives designated by the UNION Board of Directors and three (3) Management

representatives designated by the company President. The committee shall act upon any grievance properly

processed in accordance with the prescribed procedure. The Union representatives to the Committee shall

not lose pay for attending meetings where Management representatives are in attendance.

Section 2.GRIEVANCE PROCEDURE. — The parties agree that all disputes between labor and management

may be settled through friendly negotiations; that the parties have the same interest in the continuity of

work until all points in dispute shall have been discussed and settled; that an open conflict in any form

involves losses to the parties; and that therefore, every effort shall be exerted to avoid such an open

conflict. In furtherance of these principles, the parties agree to observe the following grievance procedures.

Step 1.Any employee (or group of employees) who believes that he has a justifiable grievance shall present

the matter initially to his division head, or if the division is involved in the grievance, to the company official

next higher to the division head (the local manager in the provincial exchanges) not later that fifteen (15)

days after the occurrence of the incident giving rise to the grievance. The initial presentation shall be made

to the division head either by the aggrieved party himself or by the Union Steward or by any Executive

Officer of the Union who is not a member of the grievance panel. The initial presentation may be made

orally or in writing.

Step 2.Any party who is not satisfied with the resolution of the grievance at Step 1 may appeal in writing to

the Union-Management Grievance Committee within seven (7) days from the date of receipt of the

department head's decision.

Step 3.If the grievance is not settled either because of deadlock or the failure of the committee

to decide the matter, the grievance shall be transferred to a Board of Arbitrators for the final

decision. The Board shall be composed of three (3) arbitrators, one to be nominated by the Union,

another to be nominated by the Management, and the third to be selected by the management and union

nominees. The decision of the board shall be final and binding both the company and the Union in

accordance with law. Expenses of arbitration shall be divided equally between the Company and the

Union. (Emphasis supplied)

Indisputably, the present controversy involves the determination of an employee's salary increases as

provided in the CBAs. When Octavio's claim for salary increases was referred to the Union-Management

Grievance Committee, the clear intention of the parties was to resolve their differences on the proper

interpretation and implementation of the pertinent provisions of the CBAs. And in accordance with the

procedure prescribed therein, the said committee made up of representatives of both the union and the

management convened. Unfortunately, it failed to reach an agreement. Octavio's recourse pursuant to the

CBA was to elevate his grievance to the Board of Arbitrators for final decision. Instead, nine months later,

Octavio filed a Complaint before the NLRC.

It is settled that "when parties have validly agreed on a procedure for resolving grievances and to submit a

dispute to voluntary arbitration then that procedure should be strictly observed." Moreover, we have held

time and again that "before a party is allowed to seek the intervention of the court, it is a precondition that

he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within

the administrative machinery can still be resorted to by giving the administrative officer concerned every

13

opportunity to decide on a matter that comes within his jurisdiction[, then] such remedy should be

exhausted first before the court's judicial power can be sought. The premature invocation of [the] court's

judicial intervention is fatal to one's cause of action." "The underlying principle of the rule on exhaustion of

administrative remedies rests on the presumption that when the administrative body, or grievance

machinery, is afforded a chance to pass upon the matter, it will decide the same correctly."

By failing to question the Committee Resolution through the proper procedure prescribed in the CBA, that

is, by raising the same before a Board of Arbitrators, Octavio is deemed to have waived his right to

question the same. Clearly, he departed from the grievance procedure mandated in the CBA and denied the

Board of Arbitrators the opportunity to pass upon a matter over which it has jurisdiction. Hence, and as

correctly held by the CA, Octavio's failure to assail the validity and enforceability of the Committee

Resolution makes the same binding upon him. On this score alone, Octavio's recourse to the labor tribunals

below, as well as to the CA, and, finally, to this Court, must therefore fail.

At any rate, Octavio cannot claim that the Committee Resolution is not valid, binding and conclusive as to

him for being a modification of the CBA in violation of Article 253 of the Labor Code. It bears to stress that

the said resolution is a product of the grievance procedure outlined in the CBA itself. It was arrived at after

the management and the union through their respective representatives conducted negotiations in

accordance with the CBA. On the other hand, Octavio never assailed the competence of the grievance

committee to take cognizance of his case. Neither did he question the authority or credibility of the union

representatives; hence, the latter are deemed to have properly bargained on his behalf since "unions are

the agent of its members for the purpose of securing just and fair wages and good working conditions." In

fine, it cannot be gainsaid that the Committee Resolution is a modification of the CBA. Rather, it only

provides for the proper implementation of the CBA provision respecting salary increases.

Finally, Octavio's argument that the denial of his claim for salary increases constitutes a violation of Article

100 of the Labor Code is devoid of merit. Even assuming that there has been a diminution of benefits on

his part, Article 100 does not prohibit a union from offering and agreeing to reduce wages and benefits of

the employees as the right to free collective bargaining includes the right to suspend it. PLDT averred that

one of the reasons why Octavio's salary was recomputed as to include in his salary of P13,730.00 the

P2,000.00 increase for 2002 is to avoid salary distortion. At this point, it is well to emphasize that

bargaining should not be equated to an "adversarial litigation where rights and obligations are delineated

and remedies applied." Instead, it covers a process of finding a reasonable and acceptable solution to

stabilize labor-management relations to promote stable industrial peace. Clearly, the Committee Resolution

was arrived at after considering the intention of both PLDT and GUTS to foster industrial peace.

All told, we find no error on the part of the Labor Arbiter, the NLRC and the CA in unanimously upholding

the validity and enforceability of the Grievance Committee Resolution dated October 7, 2002.

WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and November 15, 2006 Resolution

of the Court of Appeals in CA-G.R. SP No. 93578 are AFFIRMED. SO ORDERED.

||| (Octavio v. Philippine Long Distance Telephone Co., G.R. No. 175492, [February 27, 2013])

Limitation on the right to collective bargaining

[G.R. No. 193897. January 23, 2013.]

UNIVERSITY OF THE EAST, DEAN ELEANOR JAVIER, RONNIE GILLEGO and DR. JOSE C.

BENEDICTO, petitioners, vs. ANALIZA F. PEPANIO and MARITI D. BUENO, respondents.

14

DECISION

ABAD, J p:

This case is about the employment status of college teachers with no postgraduate degrees who have been

repeatedly extended semester-to-semester appointments as such.

The Facts and the Case

In 1992, the Department of Education, Culture and Sports (DECS) issued the Revised Manual of Regulations

for Private Schools, Article IX, Section 44, paragraph 1 (a), of which requires college faculty members to

have a master's degree as a minimum educational qualification for acquiring regular status.

In 1994 petitioner University of the East (UE) and the UE Faculty Association executed a five-year Collective

Bargaining Agreement (CBA) with effect up to 1999 which provided, among others, that UE shall extend

only semester-to-semester appointments to college faculty staffs who did not possess the minimum

qualifications. Those with such qualifications shall be given probationary appointments and their

performance on a full-time or full-load basis shall be reviewed for four semesters.

Meantime, on February 7, 1996 several concerned government agencies issued DECS-CHED-TESDA-DOLE

Joint Order 1 which reiterated the policy embodied in the Manual of Regulations that "teaching or

academic personnel who do not meet the minimum academic qualifications shall not acquire tenure or

regular status." In consonance with this, the UE President issued a University Policy stating that, beginning

the School Year 1996-1997, it would hire those who have no postgraduate units or master's degree for its

college teaching staffs, in the absence of qualified applicants, only on a semester-to-semester basis.

UE hired respondent Mariti D. Bueno in 1997 and respondent Analiza F. Pepanio in 2000, both on a

semester-to-semester basis to teach in its college. They could not qualify for probationary or regular status

because they lacked postgraduate degrees. Bueno enrolled in six postgraduate subjects at the Philippine

Normal University's graduate school but there is no evidence that she finished her course. Pepanio earned

27 units in her graduate studies at the Gregorio Araneta University Foundation but these could no longer be

credited to her because she failed to continue with her studies within five years.

In 2001 UE and the UE Faculty Association entered into a new CBA that would have the school extend

probationary full-time appointments to full-time faculty members who did not yet have the required

postgraduate degrees provided that the latter comply with such requirement within their probationary

period. The CBA granted UE, however, the option to replace these appointees during their probationary

period if a qualified teacher becomes available at the end of the semester.

Pursuant to the new CBA, UE extended probationary appointments to respondents Bueno and Pepanio. Two

years later in October 2003, the Dean of the UE College of Arts and Sciences, petitioner Eleanor Javier, sent

notices to probationary faculty members, reminding them of the expiration of the probationary status of

those lacking in postgraduate qualification by the end of the first semester of the School Year 2003-2004.

Pepanio replied that she was enrolled at the Polytechnic University of the Philippines Graduate School.

Bueno, on the other hand, replied that she was not interested in acquiring tenure as she was returning to

her province.

In any event, Dean Javier subsequently issued a memorandum, stating that she would recommend the

extension of the probationary appointees for two more semesters for those who want it based on the

wishes of the University President. Respondent Pepanio requested a three-semester extension but Dean

Javier denied this request and directed Pepanio to ask for just a two-semester extension. The records do

not show if Bueno submitted a request for extension. At any rate, the school eventually wrote respondents,

extending their probationary period but neither Pepanio nor Bueno reported for work.

15

Bueno later wrote UE, demanding that it consider her a regular employee based on her six-and-a-half-year

service on a full-load basis, given that UE hired her in 1997 when what was in force was still the 1994 CBA.

Pepanio made the same demand, citing her three-and-a-half years of service on a full-load basis. When UE

did not heed their demands, respondents filed cases of illegal dismissal against the school before the Labor

Arbiter's (LA) office.

For its defense, UE countered that it never regarded respondents as regular employees since they did not

hold the required master's degree that government rules required as minimum educational qualification for

their kind of work.

On March 10, 2005 the LA held that Bueno and Pepanio were regular employees, given that they taught at

UE for at least four semesters under the old CBA. The new CBA, said the LA, could not deprive them of the

employment benefits they already enjoyed. Since UE enjoined Pepanio from attending her classes and since

it did not give Bueno any teaching load, they were dismissed without just cause. The LA directed UE to

reinstate respondents with backwages. Dissatisfied, UE appealed to the National Labor Relations

Commission (NLRC).

Bueno and Pepanio questioned the timeliness of the appeal to the NLRC. They pointed to the postmaster's

certification that its office received the mail containing the LA's Decision on March 17, 2005 and "informed

the Office of Atty. Mison right away but they only got the letter on April 4, 2005." Bueno and Pepanio claim

that the 10-day period for appeal should be counted from March 22, 2005, five days after the postmaster's

first notice to Atty. Mison to claim his mail.

On September 27, 2006 the NLRC Third Division set aside the LA Decision. It rejected the technical

objection and ruled that the four-semester probationary period provided under the old CBA did not

automatically confer permanent status to Bueno and Pepanio. They still had to meet the standards for

permanent employment provided under the Manual of Regulations and the Joint Order mentioned above.

The non-renewal of their contract was based on their failure to obtain the required postgraduate degrees

and cannot, therefore, be regarded as illegal.

On petition for certiorari, the Court of Appeals (CA) rendered a Decision on July 9, 2010, reinstating the

LA's Decision by reason of technicality. It held that the 10-day period for appeal already lapsed when UE

filed it on April 14, 2005 since the reckoning period should be counted five days from March 17, when the

postmaster gave notice to UE's legal counsel to claim his mail or from March 22, 2005. This prompted UE to

file the present petition.

Respondents point out, however, that the petition should be denied since it failed to enclose a certification

from the UE Board of Trustees, authorizing petitioner Dean Javier to sign the verification and certification of

non-forum shopping.

The Issues

The following issues are presented for the Court's resolution:

1.Whether or not UE filed a timely appeal to the NLRC from the Decision of the LA;

2.Whether or not UE's petition before this Court can be given due course given its failure to enclose a

certification from the UE Board of Trustees' empowering petitioner Dean Javier to execute the verification

and certification of non-forum shopping; and

3.Whether or not UE illegally dismissed Bueno and Pepanio.

The Court's Rulings

16

One. Respondents Bueno and Pepanio contend that UE filed its appeal to the NLRC beyond the required

10-day period. They point out that the postmaster gave notice to Atty. Mison on March 17, 2005 to claim

his mail that contained the LA Decision. He was deemed in receipt of that decision five days after the notice

or on March 22, 2005. UE had 10 days from the latter date or until April 1, 2005 within which to file its

appeal from that decision. UE contends, on the other hand, that the period of appeal should be counted

from April 4, 2005, the date appearing on the registry return receipt of the mail addressed to its counsel.

For completeness of service by registered mail, the reckoning period starts either (a) from the date of

actual receipt of the mail by the addressee or (b) after five daysfrom the date he received the first notice

from the postmaster. There must be a conclusive proof, however, that the registry notice was received by

or at least served on the addressee before the five-day period begins to run.

Here, the records fail to show that Atty. Mison in fact received the alleged registry notice from the post

office on March 22, 2005 that required him to claim his mail. Respondents have not presented a copy of the

receipt evidencing that notice. The Court has no choice but to consider the registry return receipt bearing

the date April 4, 2005 which showed the date of Atty. Mison's receipt of a copy of the LA Decision a

conclusive proof of service on that date. Reckoned from April 4, UE filed its appeal to the NLRC on time.

Two. Respondents alleged that UE failed to attach to its petition a Secretary's Certificate evidencing the

resolution from its Board of Trustees, authorizing a representative or agent to sign the verification and

certification of non-forum shopping.

As a general rule, the Board of Directors or Board of Trustees of a corporation must authorize the person

who signs the verification and certification against non-forum shopping of its petition. But the Court has

held that such authorization is not necessary when it is self-evident that the signatory is in a position to

verify the truthfulness and correctness of the allegations in the petition. Here the verification and

certification were signed by petitioner Dean Javier who, based on the given facts of the case, was "in a

position to verify the truthfulness and correctness of the allegations in the petition."

Three. Respondents argue that UE hired them in 1997 and 2000, when what was in force was the 1994

CBA between UE and the faculty union. Since that CBA did not yet require a master's degree for acquiring a

regular status and since respondents had already complied with the three requirements of the CBA, namely,

(a) that they served full-time; (b) that they rendered three consecutive years of service; and (c) that their

services were satisfactory, they should be regarded as having attained permanent or regular status.

But the policy requiring postgraduate degrees of college teachers was provided in the Manual of

Regulations as early as 1992. Indeed, recognizing this, the 1994 CBA provided even then that UE was to

extend only semester-to-semester appointments to college faculty staffs, like respondents, who did not

possess the minimum qualifications for their positions.

Besides, as the Court held in Escorpizo v. University of Baguio, a school CBA must be read in conjunction

with statutory and administrative regulations governing faculty qualifications. Such regulations form part of

a valid CBA without need for the parties to make express reference to it. While the contracting parties may

establish such stipulations, clauses, terms and conditions, as they may see fit, the right to contract is still

subject to the limitation that the agreement must not be contrary to law or public policy.

The State through Batas Pambansa Bilang 232 (The Education Act of 1982) delegated the administration of

the education system and the supervision and regulation of educational institutions to the Ministry of

Education, Culture and Sports (now Department of Education). Accordingly, in promulgating the Manual of

Regulations, DECS was exercising its power of regulation over educational institutions, which includes

prescribing the minimum academic qualifications for teaching personnel.

17

In 1994 the legislature transferred the power to prescribe such qualifications to the Commission on Higher

Education (CHED). CHED's charter authorized it to set minimum standards for programs and institutions of

higher learning. The Manual of Regulations continued to apply to colleges and universities and suppletorily

the Joint Order until 2010 when CHED issued a Revised Manual of Regulations which specifically applies

only to institutions involved in tertiary education.

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The operation of

educational institutions involves public interest. The government has a right to ensure that only qualified

persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in such

institutions. Government regulation in this field of human activity is desirable for protecting, not only the

students, but the public as well from ill-prepared teachers, who are lacking in the required scientific or

technical knowledge. They may be required to take an examination or to possess postgraduate degrees as

prerequisite to employment.

Respondents were each given only semester-to-semester appointments from the beginning of their

employment with UE precisely because they lacked the required master's degree. It was only when UE and

the faculty union signed their 2001 CBA that the school extended petitioners a conditional probationary

status subject to their obtaining a master's degree within their probationary period. It is clear, therefore,

that the parties intended to subject respondents' permanent status appointments to the standards set by

the law and the university.

Here, UE gave respondents Bueno and Pepanio more than ample opportunities to acquire the postgraduate

degree required of them. But they did not take advantage of such opportunities. Justice, fairness, and due

process demand that an employer should not be penalized for situations where it had little or no

participation or control.

WHEREFORE, the Court GRANTS the petition and REVERSES the Decision of the Court of Appeals in CA-

G.R. SP 98872 dated July 9, 2010 and REINSTATES the Decision of the National Labor Relations

Commission dated September 27, 2006 as well as its Resolutions dated December 29, 2006 and February

27, 2007 that dismissed the complaints of respondents Analiza F. Pepanio and Mariti D. Bueno.

SO ORDERED.

||| (University of the East v. Pepanio, G.R. No. 193897, [January 23, 2013])

Interpretation of CBA

[G.R. No. 164060. June 15, 2007.]

FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY (FAMIT), petitioner, vs. HON.

COURT OF APPEALS, and MAPUA INSTITUTE OF TECHNOLOGY, respondents.

D E C I S I O N

QUISUMBING, J p:

This is an appeal to reverse and set aside the Decision dated August 21, 2003 and the Resolution dated

June 3, 2004 of the Court of Appeals in CA-G.R. SP No. 71479. The appellate court had reversed the

Decision of the Office of the Voluntary Arbitrators. It held that the incorporation of the new faculty ranking

to the 2001 Collective Bargaining Agreement (CBA) between petitioner and private respondent has been

the intention of the parties to the CBA.

The facts in this case are undisputed.

18

In July 2000, private respondent Mapua Institute of Technology (MIT) hired Arthur Andersen to develop a

faculty ranking and compensation system. On January 29, 2001, in the 5th CBA negotiation meeting, MIT

presented the new faculty ranking instrument to petitioner Faculty Association of Mapua Institute of

Technology (FAMIT). The latter agreed to the adoption and implementation of the instrument, with the

reservation that there should be no diminution in rank and pay of the faculty members.

On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1, 2001. It incorporated the new

ranking for the college faculty in Section 8 of Article V which states that, "A new faculty ranking shall be

implemented in June 2001. However, there shall be no diminution in the existing rank and the policy 'same

rank, same pay' shall apply."

The faculty ranking sheet was annexed to the CBA as Annex "B," while the college faculty rates sheet for

permanent faculty and which included the point ranges and corresponding pay rates per faculty level was

added as Annex "C."

When the CBA took effect, the Vice President for Academic Affairs issued a memorandum to all deans and

subject chairs to evaluate and re-rank the faculty under their supervision using the new ranking instrument.

Eight factors were to be considered and given their corresponding weights/points according to levels

attained per factor. Among these were: (1) educational attainment; (2) professional honors received; (3)

relevant training; (4) relevant professional experience; (5) scholarly work and creative efforts; (6) award

winning works; (7) officership in relevant technical and professional organizations; and (8) administrative

positions held at MIT.

After a month, MIT called FAMIT's attention to what it perceived to be flaws or omissions in the CBA signed

by the parties. In a letter dated July 5, 2001 to FAMIT, MIT requested for an amendment of the following

CBA annexes — Annex "B" (Faculty Ranking Sheet); Annex "C" (College Faculty Rates for Permanent

Faculty Only); and Annex "D" (H.S. Faculty Rates for Permanent Faculty Only). MIT claimed that with

respect to Annexes "C" and "D," these contained data under the heading "TOTAL POINTS" that were not

germane to the two other columns in both annexes. With regard to the Faculty Ranking Point Range sheet

of the new faculty ranking instrument, MIT avers that this was inadvertently not attached to the CBA.

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. 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.

Meanwhile, MIT instituted some changes in the curriculum during the school year 2000-2001 which resulted

in changes in the number of hours for certain subjects. Thus, MIT adopted a new formula for determining

the pay rates of the high school faculty: Rate/Load x Total Teaching Load = Salary where total teaching

load equals number of classes multiplied by hours of service per week divided by 3 hours (as practiced, one

unit subject is equal to 3 hours service).

Upon learning of the changes, FAMIT opposed the formula. It averred that unknown to FAMIT, MIT has not

been implementing the relevant provisions of the 2001 CBA. In particular, FAMIT cites Section 2 of Article

VI, which states as follows:

ARTICLE VI

General Wage Clause

xxx xxx xxx

Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to

corresponding faculty rank, to wit:

19

• 25% increase in per rate/load for all high school faculty members effective November 2000;

• 10% increase in per rate/load for all permanent high school faculty members effective June

2001. (Emphasis supplied.)

On July 20, 2001, 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.

Hence, 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. Proceedings culminated in the submission of

the case to the Panel of Voluntary Arbitrators for resolution.

The Panel of Voluntary Arbitrators ruled in favor of the petitioner. It ordered the private respondent to:

1. Implement the agreed upon point range system with 19 faculty ranks, along with the

corresponding pay levels for the college faculty, consistent with the provisions of Article V,

Section 8 of the 2001 CB[A] and Annex C of the said CBA, and

2. Comply with the provisions of Article VI, Section 2 of the existing CBA, using past practices

or formula in computing the pay of high school faculty based on rate per load and to pay the

faculty their corresponding rates on this basis,

Both actions of which (sic) should be made concurrent with the effectivity of the current CBA.

SO ORDERED.

On appeal, the Court of Appeals reversed the ruling of the Panel of Voluntary Arbitrators and decreed as

follows:

WHEREFORE, the petition is hereby GRANTED. The assailed decision of the voluntary arbitrators

is REVERSED. Accordingly, petitioner's proposal to include the faculty point range sheet in Annex "B" of

the 2001 CBA, as well as to replace Annex "C" with the document on the 23-level faculty ranking

instrument and replace the column containing the heading "Total Points" which is attached in Annexes "C"

and "D" of the 2001 CBA with the correct data is also GRANTED.

SO ORDERED.

Hence, the instant petition.

The petitioner enumerated issues for resolution, to wit:

I

WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY ALTER, CHANGE AND/OR

MODIFY UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE [BARGAINING] AGREEMENT (CBA) IT HAD

NEGOTIATED, ENTERED INTO AND SIGNED WITH THE PETITIONER AND SUBSEQUENTLY RATIFIED AND

ENFORCED BY THE PARTIES; AND EHTIDA

II

WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY CHANGE[,] ALTER AND/OR

REPLACE UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A PERFECTED, EXISTING AND

ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE SPECIFICALLY TO THE DIMINUTION OF

SALARY/BENEFITS AND DOWNGRADING OF RANKS, OF ITS COLLEGE AND HIGH SCHOOL FACULTY.

Simply put, the issues for our determination are: (1) Is MIT's new proposal, regarding faculty ranking and

evaluation, lawful and consistent with the ratified CBA? and (2) Is MIT's development of a new pay formula

20

for the high school department, without the knowledge of FAMIT, lawful and consistent with the ratified

CBA?

On the first issue, FAMIT avers that 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.

On the other hand, 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.

Considering the submissions of the parties, in the light of the existing CBA, we find that the new point

range system proposed by MIT is an unauthorized modification of Annex "C" 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. A perfect example of this scenario was cited by FAMIT in its

Memorandum:

xxx xxx xxx

Take the case of a faculty member with 17 years of teaching experience who has a Phd. Degree. For school

year 2000-2001 his corresponding rank is Professor 3 with 4001-4500 points using the previous CBA. If the

college faculty member is ranked based on the ratified 2001 CBA, his/her corresponding rank would

increase to Professor 5 with 5001-5500 points.

But if the proposal of private respondent is used, the professor, would be ranked as Associate Professor 5

with 5001-5749 points, instead of Professor 5 as recognized by the 2001 CBA. True, there may be an

increase in points but there is also a resulting diminution in rank from Professor 3 based on the previous

CBA to Associate Professor 5. This would translate to a reduction of the salary increase he is entitled to

under the 2001 CBA.

According to FAMIT, this patently is a violation of Section 8, Article V of the 2001 CBA.

Noteworthy, Article 253 of the Labor Code states:

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-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 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.

21

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.

On the second issue, FAMIT avers that MIT unilaterally modified the CBA formula in determining the salary

of a high school faculty. MIT counters that it is entitled to consider the actual number of teaching hours to

arrive at a fair and just salary of its high school faculty.

Again, we are in agreement with FAMIT's submission. We rule that MIT cannot adopt its unilateral

interpretation of terms in 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. Section 2, Article VI of

the 2001 CBA provides:

xxx xxx xxx

Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to

corresponding faculty rank, to wit:

• 25% increase in per rate/load for all high school faculty members effective November 2000.

• 10% increase in per rate/load for all permanent high school faculty members effective June

2001. (Emphasis supplied.)

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.

WHEREFORE, the instant petition is GRANTED. The Decision dated August 21, 2003 and the Resolution

dated June 3, 2004 of the Court of Appeals denying the motion for reconsideration are REVERSED and SET

ASIDE. The decision of the Office of the Voluntary Arbitrators is REINSTATED. MIT's unilateral change in

the ranking of college faculty from 19 levels to 23 levels, and the computation of high school faculty salary

from rate per load to rate per hour basis is DECLARED NULL AND VOID for being violative of the parties'

CBA and the applicable law.

Costs against private respondent MIT.

SO ORDERED.

||| (Faculty Association of Mapua Institute of Technology v. Court of Appeals, G.R. No. 164060, [June 15,

2007], 552 PHIL 77-86)

[G.R. No. 163419. February 13, 2008.]

TSPIC CORPORATION, petitioner, vs. TSPIC EMPLOYEES UNION (FFW), representing MARIA FE

FLORES, FE CAPISTRANO, AMY DURIAS, CLAIRE EVELYN VELEZ, JANICE OLAGUIR, JERICO

ALIPIT, GLEN BATULA, SER JOHN HERNANDEZ, RACHEL NOVILLAS, NIMFA ANILAO, ROSE

SUBARDIAGA, VALERIE CARBON, OLIVIA EDROSO, MARICRIS DONAIRE, ANALYN AZARCON,

ROSALIE RAMIREZ, JULIETA ROSETE, JANICE NEBRE, NIA ANDRADE, CATHERINE YABA,

DIOMEDISA ERNI, MARIO SALMORIN, LOIDA COMULLO, MARIE ANN DELOS

SANTOS, JUANITA YANA, and SUZETTE DULAY,respondents.

22

D E C I S I O N

VELASCO, JR., J p:

The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should

always govern dealings between labor and management. Seemingly conflicting provisions should be

harmonized to arrive at an interpretation that is within the parameters of the law, compassionate to labor,

yet, fair to management.

In this Petition for Review on Certiorari under Rule 45, petitioner TSPIC Corporation (TSPIC) seeks to annul

and set aside the October 22, 2003 Decision and April 23, 2004 Resolution of the Court of Appeals (CA) in

CA-G.R. SP No. 68616, which affirmed the September 13, 2001 Decision of Accredited Voluntary Arbitrator

Josephus B. Jimenez in National Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57.

TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve

the communication, automotive, data processing, and aerospace industries. Respondent TSPIC Employees

Union (FFW) (Union), on the other hand, is the registered bargaining agent of the rank-and-file employees

of TSPIC. The respondents, Maria Fe Flores, Fe Capistrano, Amy Durias, Claire Evelyn Velez, Janice Olaguir,

Jerico Alipit, Glen Batula, Ser John Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie

Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia

Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita

Yana, and Suzette Dulay, are all members of the Union.

In 1999, TSPIC and the Union entered into a Collective Bargaining Agreement (CBA) for the years 2000 to

2004. The CBA included a provision on yearly salary increases starting January 2000 until January 2002.

Section 1, Article X of the CBA provides, as follows:

Section 1. Salary/Wage Increases. — Employees covered by this Agreement shall be granted salary/wage

increases as follows:

a) Effective January 1, 2000, all employees on regular status and within the bargaining unit on or before

said date shall be granted a salary increase equivalent to ten percent (10%) of their basic monthly salary as

of December 31, 1999.

b) Effective January 1, 2001, all employees on regular status and within the bargaining unit on or before

said date shall be granted a salary increase equivalent to twelve (12%) of their basic monthly salary as of

December 31, 2000.

c) Effective January 1, 2002, all employees on regular status and within the bargaining unit on or before

said date shall be granted a salary increase equivalent to eleven percent (11%) of their basic monthly

salary as of December 31, 2001.

The wage salary increase of the first year of this Agreement shall be over and above the wage/salary

increase, including the wage distortion adjustment, granted by the COMPANY on November 1, 1999 as per

Wage Order No. NCR-07.

The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated

minimum wage increases under future Wage Orders, that may be issued after Wage Order No. NCR-07,

and shall be considered as correction of any wage distortion that may have been brought about by the said

future Wage Orders. Thus the wage/salary increases in 2001 and 2002 shall be deemed as compliance to

future wage orders after Wage Order No. NCR-07.

Consequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10%

increase in their salary. Accordingly, the following nine (9) respondents (first group) who were already

23

regular employees received the said increase in their salary: Maria Fe Flores, Fe Capistrano, Amy Durias,

Claire Evelyn Velez, Janice Olaguir, Jerico Alipit, Glen Batula, Ser John Hernandez, and Rachel Novillas.

The CBA also provided that employees who acquire regular employment status within the year but after the

effectivity of a particular salary increase shall receive a proportionate part of the increase upon attainment

of their regular status. Sec. 2 of the CBA provides:

SECTION 2. Regularization Increase. — A covered daily paid employee who acquires regular status within

the year subsequent to the effectivity of a particular salary/wage increase mentioned in Section 1 above

shall be granted a salary/wage increase in proportionate basis as follows:

Regularization Period Equivalent Increase

- 1st Quarter 100%

- 2nd Quarter 75%

- 3rd Quarter 50%

- 4th Quarter 25%

Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on May 1,

2000, i.e., during the second quarter and subsequent to the January 1, 2000 wage increase under this

Agreement, will be entitled to a wage increase equivalent to seventy-five percent (75%) of ten percent

(10%) of his basic pay. In the same manner, an employee who acquires regular status on December 1,

2000 will be entitled to a salary increase equivalent to twenty-five percent (25%) of ten percent (10%) of

his last basic pay.

On the other hand, any monthly-paid employee who acquires regular status within the term of the

Agreement shall be granted regularization increase equivalent to 10% of his regular basic salary.

Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National Capital Region,

issued Wage Order No. NCR-08 (WO No. 8) which raised the daily minimum wage from PhP223.50 to

PhP250 effective November 1, 2000. Conformably, the wages of 17 probationary employees, namely: Nimfa

Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez,

Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo,

Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay (second group), were increased to PhP250.00

effective November 1, 2000.

On various dates during the last quarter of 2000, the above named 17 employees attained regular

employment and received 25% of 10% of their salaries as granted under the provision on regularization

increase under Article X, Sec. 2 of the CBA.

In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine

employees (first group), who were senior to the above-listed recently regularized employees, received less

wages.

On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPIC's

Human Resources Department notified 24 employees, namely: Maria Fe Flores, Janice Olaguir, Rachel

Novillas, Fe Capistrano, Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John Hernandez,

Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie

Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine Yaba, Diomedisa Erni, Mario Salmorin, Loida

Comullo, and Marie Ann Delos Santos, that due to an error in the automated payroll system, they were

overpaid and the overpayment would be deducted from their salaries in a staggered basis, starting

24

February 2001. TSPIC explained that the correction of the erroneous computation was based on the

crediting provision of Sec. 1, Art. X of the CBA.

The Union, on the other hand, asserted that there was no error and the deduction of the alleged

overpayment from employees constituted diminution of pay. The issue was brought to the grievance

machinery, but TSPIC and the Union failed to reach an agreement.

Consequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of

whether or not the acts of the management in making deductions from the salaries of the affected

employees constituted diminution of pay.

On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made

by TSPIC violated Art. 100 of the Labor Code. The falloreads:

WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment is

hereby rendered in favor of the Union and the named individual employees and against the company,

thereby ordering the [TSPIC] to pay as follows:

1) to the sixteen (16) newly regularized employees named above, the amount of P12,642.24 a month or a

total of P113,780.16 for nine (9) months or P7,111.26 for each of them as well as an additional P12,642.24

(for all), or P790.14 (for each), for every month after 30 September 2001, until full payment, with legal

interests for every month of delay;

2) to the nine (9) who were hired earlier than the sixteen (16); also named above, their respective amount

of entitlements, according to the Union's correct computation, ranging from P110.22 per month (or P991.98

for nine months) to P450.58 a month (or P4,055.22 for nine months), as well as corresponding monthly

entitlements after 30 September 2001, plus legal interests until full payment,

3) to Suzette Dulay, the amount of P608.14 a month (or P5,473.26), as well as corresponding monthly

entitlements after 30 September 2001, plus legal interest until full payment,

4) Attorney's fees equal to 10% of all the above monetary awards.

The claim for exemplary damages is denied for want of factual basis.

The parties are hereby directed to comply with their joint voluntary commitment to abide by this Award and

thus, submit to this Office jointly, a written proof of voluntary compliance with this DECISION within ten

(10) days after the finality hereof.

SO ORDERED.

TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.

Aggrieved, TSPIC filed before the CA a petition for review under Rule 43 docketed as CA-G.R. SP No.

68616. The appellate court, through its October 22, 2003 Decision, dismissed the petition and affirmed in

toto the decision of the voluntary arbitrator. The CA declared TSPIC's computation allowing PhP287 as daily

wages to the newly regularized employees to be correct, noting that the computation conformed to WO No.

8 and the provisions of the CBA. According to the CA, TSPIC failed to convince the appellate court that the

deduction was a result of a system error in the automated payroll system. The CA explained that when WO

No. 8 took effect on November 1, 2000, the concerned employees were still probationary employees who

were receiving the minimum wage of PhP223.50. The CA said that effective November 1, 2000, said

employees should have received the minimum wage of PhP250. The CA held that when respondents

became regular employees on November 29, 2000, they should be allowed the salary increase granted

them under the CBA at the rate of 25% of 10% of their basic salary for the year 2000; thereafter, the 12%

25

increase for the year 2001 and the 10% increase for the year 2002 should also be made applicable to

them.

TSPIC filed a Motion for Reconsideration which was denied by the CA in its April 23, 2004 Resolution.

TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPIC's decision to

deduct the alleged overpayment from the salaries of the affected members of the Union constitute

diminution of benefits in violation of the Labor Code?

TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the CA,

was flawed, inasmuch as it completely disregarded the "crediting provision" contained in the last paragraph

of Sec. 1, Art. X of the CBA.

We find TSPIC's contention meritorious.

A Collective Bargaining Agreement is the law between the parties

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they

are obliged to comply with its provisions. We said so inHonda Phils., Inc. v. Samahan ng Malayang

Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor

organization and the employer concerning wages, hours of work and all other terms and conditions of

employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,

clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals,

good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the

law between the parties and compliance therewith is mandated by the express policy of the law.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the

contracting parties, the literal meaning of their stipulations shall control. However, sometimes, as in this

case, though the provisions of the CBA seem clear and unambiguous, the parties sometimes arrive at

conflicting interpretations. Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase

granted under the CBA. According to TSPIC, it is specifically provided in the CBA that "the salary/wage

increase for the year 2001 shall be deemed inclusive of the mandated minimum wage increases under

future wage orders that may be issued after Wage Order No. 7." The Union, on the other hand, insists that

the "crediting" provision of the CBA finds no application in the present case, since at the time WO No. 8

was issued, the probationary employees (second group) were not yet covered by the CBA, particularly by

its crediting provision.

As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued. Littera

necat spiritus vivificat. An instrument must be interpreted according to the intention of the parties. It is the

duty of the courts to place a practical and realistic construction upon it, giving due consideration to the

context in which it is negotiated and the purpose which it is intended to serve. Absurd and illogical

interpretations should also be avoided. Considering that the parties have unequivocally agreed to substitute

the benefits granted under the CBA with those granted under wage orders, the agreement must prevail and

be given full effect.

Paragraph (b) of Sec. 1 of Art. X of the CBA provides for the general agreement that, effective January 1,

2001, all employees on regular status and within the bargaining unit on or before said date shall be granted

a salary increase equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000. The

12% salary increase is granted to all employees who (1) are regular employees and (2) are within the

bargaining unit.

26

Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in

salary granted under WO No. 7 and the correction of the wage distortion for November 1999.

The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the

years 2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future

wage orders, that may be issued after WO No. 7, and shall be considered as correction of the wage

distortions that may be brought about by the said future wage orders. Thus, the wage/salary increases in

2001 and 2002 shall be deemed as compliance to future wage orders after WO No. 7.

Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It,

however, clashes with the last paragraph which specifically states that the salary increases for the years

2001 and 2002 shall be deemed inclusive of wage increases subsequent to those granted under WO No. 7.

It is a familiar rule in interpretation of contracts that conflicting provisions should be harmonized to give

effect to all. Likewise, when general and specific provisions are inconsistent, the specific provision shall be

paramount to and govern the general provision. Thus, it may be reasonably concluded that TSPIC granted

the salary increases under the condition that any wage order that may be subsequently issued shall be

credited against the previously granted increase. The intention of the parties is clear: As long as an

employee is qualified to receive the 12% increase in salary, the employee shall be granted the increase;

and as long as an employee is granted the 12% increase, the amount shall be credited against any wage

order issued after WO No. 7.

Respondents should not be allowed to receive benefits from the CBA while avoiding the counterpart

crediting provision. They have received their regularization increases under Art. X, Sec. 2 of the CBA and

the yearly increase for the year 2001. They should not then be allowed to avoid the crediting provision

which is an accompanying condition.

Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the

minimum wage, was issued after WO No. 7. Thus, respondents rightfully received the 12% salary increase

for the year 2001 granted in the CBA; and consequently, TSPIC rightfully credited that 12% increase

against the increase granted by WO No. 8.

Proper formula for computing the salaries for the year 2001

Thus, the proper computation of the salaries of individual respondents is as follows:

(1) With regard to the first group of respondents who attained regular employment status before the

effectivity of WO No. 8, the computation is as follows:

For respondents Jerico Alipit and Glen Batula:

Wage rate before WO No. 8 PhP234.67

Increase due to WO No. 8

setting the minimum wage at PhP250 15.33

—————

Total Salary upon effectivity of WO No. 8 PhP250.00

Increase for 2001 (12% of 2000 salary) PhP30.00

Less the wage increase under WO No. 8 15.33

—————

27

Total difference between the wage increase

for 2001 and the increase granted under WO No. 8 PhP14.67

Wage rate by December 2000 PhP250.00

Plus total difference between the wage increase for 2001

and the increase granted under WO No. 8 14.67

—————

Total (Wage rate range beginning January 1, 2001) PhP264.67

For respondents Ser John Hernandez and Rachel Novillas:

Wage rate range before WO No. 8 PhP234.68

Increase due to WO No. 8

setting the minimum wage at PhP250 15.32

—————

Total Salary upon effectivity of WO No. 8 PhP250.00

Increase for 2001 (12% of 2000 salary) PhP30.00

Less the wage increase under WO No. 8 15.32

—————

Total difference between the wage increase

for 2001 and the increase granted under WO No. 8 PhP14.68

Wage rate by December 2000 PhP250.00

Plus total difference between the wage increase for 2001

and the increase granted under WO No. 8 14.68

—————

Total (Wage rate range beginning January 1, 2001) PhP264.68

For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:

Wage rate range before WO No. 8 PhP240.26

Increase due to WO No. 8

setting the minimum wage at PhP250 9.74

—————

Total Salary upon effectivity of WO No. 8 PhP250.00

Increase for 2001 (12% of 2000 salary) PhP30.00

Less the wage increase under WO No. 8 9.74

28

—————

Total difference between the wage increase for 2001

and the increase granted under WO No. 8 PhP20.26

Wage rate by December 2000 PhP250.00

Plus total difference between the wage increase for 2001

and the increase granted under WO No. 8 20.26

—————

Total (Wage rate range beginning January 1, 2001) PhP270.26

For respondents Ma. Fe Flores and Fe Capistrano:

Wage rate range before WO No. 8 PhP245.85

Increase due to WO No. 8

setting the minimum wage at PhP250 4.15

—————

Total Salary upon effectivity of WO No. 8 PhP250.00

Increase for 2001 (12% of 2000 salary) PhP30.00

Less the wage increase under WO No. 8 4.15

––––––––––

Total difference between the wage increase for 2001

and the increase granted under WO No. 8 PhP25.85

Wage rate by December 2000 PhP250.00

Plus total difference between the wage increase for 2001

and the increase granted under WO No. 8 25.85

—————

Total (Wage rate range beginning January 1, 2001) PhP275.85

(2) With regard to the second group of employees, who attained regular employment status after the

implementation of WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso,

Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, Catherine

Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann Delos Santos, Juanita Yana, and Suzette

Dulay, the proper computation of the salaries for the year 2001, in accordance with the CBA, is as follows:

Compute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage

before WO No. 8 from the minimum wage per the wage order to arrive at the wage increase, thus:

Minimum Wage per Wage Order PhP250.00

29

Wage rate before Wage Order 223.50

—————

Wage Increase PhP26.50

Upon attainment of regular employment status, the employees' salaries were increased by 25% of 10% of

their basic salaries, as provided for in Sec. 2, Art. X of the CBA, thus resulting in a further increase of

PhP6.25, for a total of PhP256.25, computed as follows:

Wage rate after WO No. 8 PhP250.00

Regularization increase (25% of 10% of basic salary) 6.25

—————

Total (Salary for the end of year 2000) PhP256.25

To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employees'

salaries as of December 31, 2000; then subtract from that amount, the amount increased in salaries as

granted under WO No. 8 in accordance with the crediting provision of the CBA, to arrive at the increase in

salaries for the year 2001 of the recently regularized employees. Add the result to their salaries as of

December 31, 2000 to get the proper salary beginning January 1, 2001, thus:

Increase for 2001 (12% of 2000 salary) PhP30.75

Less the wage increase under WO No. 8 26.50

—————

Difference between the wage increase

for 2001 and the increase granted under WO No. 8 PhP4.25

Wage rate after regularization increase PhP256.25

Plus total difference between the wage increase and

the increase granted under WO No. 8 4.25

—————

Total (Wage rate beginning January 1, 2001) PhP260.50

With these computations, the crediting provision of the CBA is put in effect, and the wage distortion

between the first and second group of employees is cured. The first group of employees who attained

regular employment status before the implementation of WO No. 8 is entitled to receive, starting January 1,

2001, a daily wage rate within the range of PhP264.67 to PhP275.85, depending on their wage rate before

the implementation of WO No. 8. The second group that attained regular employment status after the

implementation of WO No. 8 is entitled to receive a daily wage rate of PhP260.50 starting January 1, 2001.

Diminution of benefits

TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered

deductions from their salaries does not constitute diminution of benefits.

We agree with TSPIC.

30

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the

employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a

policy or has ripened into a practice over a long period; (2) the practice is consistent and deliberate; (3) the

practice is not due to error in the construction or application of a doubtful or difficult question of law; and

(4) the diminution or discontinuance is done unilaterally by the employer.

As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error

was immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted

benefit may be withdrawn without violating the prohibition against non-diminution of benefits. We ruled

in Globe-Mackay Cable and Radio Corp. v. NLRC:

Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of

the law. Payment may be said to have been made by reason of a mistake in the construction or application

of a "doubtful or difficult question of law". (Article 2155, in relation to Article 2154 of the Civil Code). Since

it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of

benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the correction.

Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the

salary increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance

with the CBA.

Hence, any amount given to the employees in excess of what they were entitled to, as computed above,

may be legally deducted by TSPIC from the employees' salaries. It was also compassionate and fair that

TSPIC deducted the overpayment in installments over a period of 12 months starting from the date of the

initial deduction to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to individual

respondents any amount deducted from their salaries which was in excess of what TSPIC is legally allowed

to deduct from the salaries based on the computations discussed in this Decision.

As a last word, it should be reiterated that though it is the state's responsibility to afford protection to labor,

this policy should not be used as an instrument to oppress management and capital. In resolving disputes

between labor and capital, fairness and justice should always prevail. We ruled in Norkis Union v. Norkis

Trading that in the resolution of labor cases, we have always been guided by the State policy enshrined in

the Constitution: social justice and protection of the working class. Social justice does not, however,

mandate that every dispute should be automatically decided in favor of labor. In any case, justice is to be

granted to the deserving and dispensed in the light of the established facts and the applicable law and

doctrine.

WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National

Conciliation and Mediation Board Case No. JBJ-AVA-2001-07-57 and the October 22, 2003 CA Decision in

CA-G.R. SP No. 68616 are hereby AFFIRMED with MODIFICATION. TSPIC is hereby ORDERED to pay

respondents their salary increases in accordance with this Decision, as follows:

No. of No. of

Name of Employee Daily Wage Working Months in Total Salary

Rate Days in a a Year for 2001

Month

Nimfa Anilao 260.5 26 12 81,276.00

Rose Subardiaga 260.5 26 12 81,276.00

Valerie Carbon 260.5 26 12 81,276.00

31

Olivia Edroso 260.5 26 12 81,276.00

Maricris Donaire 260.5 26 12 81,276.00

Analyn Azarcon 260.5 26 12 81,276.00

Rosalie Ramirez 260.5 26 12 81,276.00

Julieta Rosete 260.5 26 12 81,276.00

Janice Nebre 260.5 26 12 81,276.00

Nia Andrade 260.5 26 12 81,276.00

Catherine Yaba 260.5 26 12 81,276.00

Diomedisa Erni 260.5 26 12 81,276.00

Mario Salmorin 260.5 26 12 81,276.00

Loida Camullo 260.5 26 12 81,276.00

Marie Ann Delos Santos 260.5 26 12 81,276.00

Juanita Yana 260.5 26 12 81,276.00

Suzette Dulay 260.5 26 12 81,276.00

Jerico Alipit 264.67 26 12 82,577.04

Glen Batula 264.67 26 12 82,577.04

Ser John Hernandez 264.68 26 12 82,580.16

Rachel Novillas 264.68 26 12 82,580.16

Amy Durias 270.26 26 12 84,321.12

Claire Evelyn Velez 270.26 26 12 84,321.12

Janice Olaguir 270.26 26 12 84,321.12

Maria Fe Flores 275.85 26 12 86,065.20

Fe Capistrano 275.85 26 12 86,065.20

The award for attorney's fees of ten percent (10%) of the total award is MAINTAINED. SO ORDERED.

||| (TSPIC Corp. v. TSPIC Employees Union, G.R. No. 163419, [February 13, 2008], 568 PHIL 774-792)

[G.R. No. 161713. August 20, 2008.]

LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. LEPANTO LOCAL STAFF

UNION, respondent.

R E S O L U T I O N

CARPIO, J p:

The Case

32

Before the Court is a petition for review assailing the 22 July 2003 Decision and 20 January 2004

Resolution of the Court of Appeals in CA-G.R. SP No. 60644.

The Antecedent Facts

Lepanto Consolidated Mining Company (petitioner) is a domestic mining corporation. Lepanto Local Staff

Union (respondent) is the duly certified bargaining agent of petitioner's employees occupying staff

positions.

On 28 November 1998, petitioner and respondent entered into their fourth Collective Bargaining Agreement

(4th CBA) for the period from 1 July 1998 to 30 June 2000. The 4th CBA provides:

ARTICLE VIII — NIGHT SHIFT DIFFERENTIAL

Section 3. Night Differential pay. — The Company shall continue to pay nightshift differential for work

during the first and third shifts to all covered employees within the bargaining unit as follows:

For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate. For the Third

Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate.

However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.), there

[will] be no night differential pay added before the overtime pay is calculated.

ARTICLE XII — RIGHTS, PRIVILEGES AND OTHER BENEFITS

Section 9. Longevity pay. — The company shall grant longevity pay of P30.00 per month effective July 1,

1998 and every year thereafter.

On 23 April 2000, respondent filed a complaint with the National Conciliation and Mediation Board,

Cordillera Administrative Region (NCMB-CAR) alleging that petitioner failed to pay the night shift differential

and longevity pay of respondent's members as provided in the 4th CBA. Petitioner and respondent failed to

amicably settle the dispute. They agreed to submit the issues to Voluntary Arbitrator Norma B. Advincula

(Voluntary Arbitrator) for resolution.

The Ruling of the Voluntary Arbitrator

In a Decision dated 26 May 2000, the Voluntary Arbitrator ruled in favor of respondent as follows:

WHEREFORE, foregoing considered, this Office holds and so orders respondent Lepanto Consolidated

Mining Corporation (LCMC) to grant complainant Lepanto Local Staff Union (LLSU) the following benefits:

Longevity pay of P30.00 per month which shall be reckoned form July 1, 1998 and every year thereafter in

consonance with their contract; and

Night shift differential pay of 15% of the basic rate for hours of work rendered beyond 3:00 p.m. for the

following shifts: 7:00 A.M. to 4:00 P.M., 7:30 A.M. to 4:30 P.M. and 8:00 A.M. to 5:00 P.M. to be reckoned

from the date of the effectivity of the 4th CBA which was on July 1, 1998.

SO ORDERED.

The Voluntary Arbitrator ruled that petitioner had the legal obligation to pay longevity pay of P30 per month

effective 1 July 1998. The Voluntary Arbitrator rejected petitioner's contention that "effective" should be

understood as the reckoning period from which the employees start earning their right to longevity pay,

and that the longevity pay should be paid only on 1 July 1999. The Voluntary Arbitrator ruled that 1 July

1998 was the reckoning date that indicated when the amounts due were to be given. THCSAE

33

The Voluntary Arbitrator agreed with respondent that surface workers on the second shift who performed

work after 3:00 p.m. should be given an additional night shift differential pay equivalent to 15% of their

basic rate. Interpreting paragraph 3, Section 3, Article VIII of the 4th CBA, the Voluntary Arbitrator ruled

that it only meant that an employee who extends work beyond the second shift shall receive overtime pay

which shall be computed before the night shift differential pay. In other words, it excludes the night shift

differential in the computation of overtime pay.

The Voluntary Arbitrator ruled that the inclusion of paragraph 3, Section 3, Article VIII of the 4th CBA

disclosed the intent of the parties to grant night shift differential benefits to employees who rendered work

beyond the regular day shift. The Voluntary Arbitrator ruled that if the intention were otherwise, paragraph

3 would have been deleted.

Finally, the Voluntary Arbitrator ruled that the respondent's claim for night shift differential arising from the

1st, 2nd, and 3rd CBAs had already prescribed.

Petitioner filed a motion for reconsideration. In her Resolution dated 5 August 2000, the Voluntary

Arbitrator denied the motion for reconsideration for lack of merit.

Petitioner filed a petition for review before the Court of Appeals.

The Ruling of the Court of Appeals

In its 22 July 2003 Decision, the Court of Appeals affirmed the Voluntary Arbitrator's Decision.

The Court of Appeals ruled that paragraph 3, Section 3, Article VIII was clear and unequivocal. It grants

night shift differential pay to employees of the second shift for work rendered beyond their regular day

shift. However, the night shift differential was excluded in the computation of the overtime pay.

The Court of Appeals further ruled that the records of the case revealed that during the effectivity of the

4th CBA, petitioner voluntarily complied with paragraph 3, Section 3, Article VIII by paying night shift

differential to employees for hours worked beyond 3:00 p.m. Petitioner's act disclosed the parties' intent to

include employees in the second shift in the payment of night shift differential. The Court of Appeals

rejected petitioner's claim that the payment was due to error and mere inadvertence on the part of

petitioner's accounting employees. The Court of Appeals noted that the records revealed that petitioner still

continued to pay night shift differential for hours worked beyond 3:00 p.m. after the Voluntary Arbitrator

rendered the 26 May 2000 Decision. Thus, petitioner is estopped from claiming erroneous payment.

Petitioner filed a motion for reconsideration. In its 20 January 2004 Resolution, the Court of Appeals denied

the motion for lack of merit.

Hence, the petition before this Court.

The Issue

The sole issue in this case is whether the Court of Appeals erred in affirming the Voluntary Arbitrator's

interpretation of the 4th CBA that the employees in the second shift are entitled to night shift differential.

The Ruling of this Court

The petition has no merit.

The terms and conditions of a collective bargaining contract constitute the law between the parties. If the

terms of the CBA are clear and have no doubt upon the intention of the contracting parties, the literal

meaning of its stipulation shall prevail.

The disputed provision of the 4th CBA provides:

34

ARTICLE VIII — NIGHT SHIFT DIFFERENTIAL

Section 3. Night Differential pay. — The Company shall continue to pay nightshift differential for work

during the first and third shifts to all covered employees within the bargaining unit as follows:

For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic rate. For the Third

Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the basic rate.

However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00 p.m.), there

[will] be no night differential pay added before the overtime pay is calculated.

There is no question that workers are entitled to night shift differential of 20% of the basic rate for work

performed during the first shift from 11:00 p.m. to 7:00 a.m. Workers are also entitled to night shift

differential of 15% of the basic rate for work performed during the third shift from 3:00 p.m. to 11:00 p.m.

The issue is whether workers are entitled to night shift differential for work performed beyond the regular

day shift, from 7:00 a.m. to 3:00 p.m.

We sustain the interpretation of both the Voluntary Arbitrator and the Court of Appeals. The first paragraph

of Section 3 provides that petitioner shall continue to pay night shift differential to workers of the first and

third shifts. It does not provide that workers who performed work beyond the second shift shall not be

entitled to night shift differential. The inclusion of the third paragraph is not intended to exclude the regular

day shift workers from receiving night shift differential for work performed beyond 3:00 p.m. It only

provides that the night shift differential pay shall be excluded in the computation of the overtime pay.

It is settled that in order to ascertain the intention of the contracting parties, the Voluntary Arbitrator shall

principally consider their contemporaneous and subsequent acts as well as their negotiating and contractual

history and evidence of past practices. In this case, the Voluntary Arbitrator and the Court of Appeals both

found that the provision in question was contained in the 1st, 2nd, and 3rd CBAs between petitioner and

respondent. During the effectivity of the first three CBAs, petitioner paid night shift differentials to other

workers who were members of respondent for work performed beyond 3:00 p.m. Petitioner also paid night

shift differential for work beyond 3:00 p.m. during the effectivity of the 4th CBA. Petitioner alleges that the

payment of night shift differential for work performed beyond 3:00 p.m. during the 4th CBA was a mistake

on the part of its accounting department. However, the Court of Appeals correctly ruled that petitioner

failed to present any convincing evidence to prove that the payment was erroneous. In fact, the Court of

Appeals found that even after the promulgation of the Voluntary Arbitrator's decision and while the case

was pending appeal, petitioner still paid night shift differential for work performed beyond 3:00 p.m. It

affirms the intention of the parties to the CBA to grant night shift differential for work performed beyond

3:00 p.m.

WHEREFORE, we DENY the petition. We AFFIRM the 22 July 2003 Decision and 20 January 2004 Resolution

of the Court of Appeals in CA-G.R. SP No. 60644. Costs against petitioner. SO ORDERED.

||| (Lepanto Consolidated Mining Company v. Lepanto Local Staff Union, G.R. No. 161713, [August 20,

2008], 584 PHIL 472-480)

[G.R. No. 172013. October 2, 2009.]

PATRICIA HALAGUEÑA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO, MARIANNE V.

KATINDIG, BERNADETTE A. CABALQUINTO, LORNA B. TUGAS, MARY CHRISTINE A.

VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R. CRESENCIO, and other

35

flight attendants of PHILIPPINE AIRLINES, petitioners, vs. PHILIPPINE AIRLINES

INCORPORATED, respondent.

DECISION

PERALTA, J. p:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul

and set aside the Decision and the Resolution of the Court of Appeals (CA) in CA-G.R. SP. No. 86813.

Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different

dates prior to November 22, 1996. They are members of the Flight Attendants and Stewards Association of

the Philippines (FASAP), a labor organization certified as the sole and exclusive certified as the sole and

exclusive bargaining representative of the flight attendants, flight stewards and pursers of respondent.

On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement incorporating the

terms and conditions of their agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP

CBA.

Section 144, Part A of the PAL-FASAP CBA, provides that:

A.For the Cabin Attendants hired before 22 November 1996:

xxx xxx xxx

3.Compulsory Retirement

Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fifty-five

(55) for females and sixty (60) for males. . . . .

In a letter dated July 22, 2003, petitioners and several female cabin crews manifested that the

aforementioned CBA provision on compulsory retirement is discriminatory, and demanded for an equal

treatment with their male counterparts. This demand was reiterated in a letter by petitioners' counsel

addressed to respondent demanding the removal of gender discrimination provisions in the coming re-

negotiations of the PAL-FASAP CBA.

On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA proposals and

manifested their willingness to commence the collective bargaining negotiations between the management

and the association, at the soonest possible time.

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance

of Temporary Restraining Order and Writ of Preliminary Injunction with the Regional Trial Court (RTC) of

Makati City, Branch 147, docketed as Civil Case No. 04-886, against respondent for the invalidity of Section

144, Part A of the PAL-FASAP CBA. The RTC set a hearing on petitioners' application for a TRO and,

thereafter, required the parties to submit their respective memoranda.

On August 9, 2004, the RTC issued an Order upholding its jurisdiction over the present case. The RTC

reasoned that:

In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly

discriminatory as it discriminates against female flight attendants, in violation of the Constitution, the Labor

Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising from

employer-employee relationship as none is shown to exist. This case is not directed specifically against

respondent arising from any act of the latter, nor does it involve a claim against the respondent. Rather,

36

this case seeks a declaration of the nullity of the questioned provision of the CBA, which is within the

Court's competence, with the allegations in the Petition constituting the bases for such relief sought.

The RTC issued a TRO on August 10, 2004, enjoining the respondent for implementing Section 144, Part A

of the PAL-FASAP CBA.

The respondent filed an omnibus motion seeking reconsideration of the order overruling its objection to

the jurisdiction of the RTC the lifting of the TRO. It further prayed that the (1) petitioners' application for

the issuance of a writ of preliminary injunction be denied; and (2) the petition be dismissed or the

proceedings in this case be suspended.

On September 27, 2004, the RTC issued an Order directing the issuance of a writ of preliminary injunction

enjoining the respondent or any of its agents and representatives from further implementing Sec. 144, Part

A of the PAL-FASAP CBA pending the resolution of the case.

Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and Prohibition with Prayer for a

Temporary Restraining Order and Writ of Preliminary Injunction with the Court of Appeals (CA) praying

that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set aside for having

been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction.

The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled that:

WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW

and, consequently, all the proceedings, orders and processes it has so far issued therein are ANNULED and

SET ASIDE. Respondent court is ordered to DISMISS its Civil Case No. 04-886.

SO ORDERED.

Petitioner filed a motion for reconsideration, which was denied by the CA in its Resolution dated March 7,

2006.

Hence, the instant petition assigning the following error:

THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A LABOR DISPUTE OR

GRIEVANCE IS CONTRARY TO LAW AND JURISPRUDENCE.

The main issue in this case is whether the RTC has jurisdiction over the petitioners' action challenging the

legality or constitutionality of the provisions on the compulsory retirement age contained in the CBA

between respondent PAL and FASAP.

Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation is

incapable of pecuniary estimation and in all cases not within the exclusive jurisdiction of any court, tribunal,

person or body exercising judicial or quasi-judicial functions. The RTC has the power to adjudicate all

controversies except those expressly witheld from the plenary powers of the court. Accordingly, it has the

power to decide issues of constitutionality or legality of the provisions of Section 144, Part A of the PAL-

FASAP CBA. As the issue involved is constitutional in character, the labor arbiter or the National Labor

Relations Commission (NLRC) has no jurisdiction over the case and, thus, the petitioners pray that

judgment be rendered on the merits declaring Section 144, Part A of the PAL-FASAP CBA null and void.

Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present case, as

the controversy partakes of a labor dispute. The dispute concerns the terms and conditions of petitioners'

employment in PAL, specifically their retirement age. The RTC has no jurisdiction over the subject matter of

petitioners' petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators

have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the

37

interpretation or implementation of the CBA. Regular courts have no power to set and fix the terms and

conditions of employment. Finally, respondent alleged that petitioners' prayer before this Court to resolve

their petition for declaratory relief on the merits is procedurally improper and baseless.

The petition is meritorious.

Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the

character of the relief prayed for irrespective of whether plaintiff is entitled to such relief.

In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of

action is the annulment of Section 144, Part A of the PAL-FASAP CBA. The pertinent portion of the petition

recites:

CAUSE OF ACTION

24.Petitioners have the constitutional right to fundamental equality with men under Section 14, Article II,

1987 of the Constitution and, within the specific context of this case, with the male cabin attendants of

Philippine Airlines.

26.Petitioners have the statutory right to equal work and employment opportunities with men under Article

3, Presidential Decree No. 442, The Labor Code and, within the specific context of this case, with the male

cabin attendants of Philippine Airlines.

27.It is unlawful, even criminal, for an employer to discriminate against women employees with respect to

terms and conditions of employment solely on account of their sex under Article 135 of the Labor Code as

amended by Republic Act No. 6725 or the Act Strengthening Prohibition on Discrimination Against Women.

28.This discrimination against Petitioners is likewise against the Convention on the Elimination of All Forms

of Discrimination Against Women (hereafter, "CEDAW"), a multilateral convention that the Philippines

ratified in 1981. The Government and its agents, including our courts, not only must condemn all forms of

discrimination against women, but must also implement measures towards its elimination.

29.This case is a matter of public interest not only because of Philippine Airlines' violation of the

Constitution and existing laws, but also because it highlights the fact that twenty-three years after the

Philippine Senate ratified the CEDAW, discrimination against women continues.

31.Section 114, Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from service is

invidiously discriminatory against and manifestly prejudicial to Petitioners because, they are compelled to

retire at a lower age (fifty-five (55) relative to their male counterparts (sixty (60)).

33.There is no reasonable, much less lawful, basis for Philippine Airlines to distinguish, differentiate or

classify cabin attendants on the basis of sex and thereby arbitrarily set a lower compulsory retirement age

of 55 for Petitioners for the sole reason that they are women.

37.For being patently unconstitutional and unlawful, Section 114, Part A of the PAL-FASAP 2000-2005 CBA

must be declared invalid and stricken down to the extent that it discriminates against petitioner.

38.Accordingly, consistent with the constitutional and statutory guarantee of equality between men and

women, Petitioners should be adjudged and declared entitled, like their male counterparts, to work until

they are sixty (60) years old.

PRAYER

WHEREFORE, it is most respectfully prayed that the Honorable Court:

c.after trial on the merits:

38

(I)declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA INVALID, NULL and VOID to the extent

that it discriminates against Petitioners; . . . .

From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is

whether Section 144, Part A of the PAL-FASAP CBA is unlawful and unconstitutional. Here, the petitioners'

primary relief in Civil Case No. 04-886 is the annulment of Section 144, Part A of the PAL-FASAP CBA, which

allegedly discriminates against them for being female flight attendants. The subject of litigation is incapable

of pecuniary estimation, exclusively cognizable by the RTC, pursuant to Section 19 (1) of Batas Pambansa

Blg. 129, as amended. Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.

The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of

the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of

Discrimination Against Women, and the power to apply and interpret the constitution and CEDAW is within

the jurisdiction of trial courts, a court of general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani, this

Court held that not every dispute between an employer and employee involves matters that only labor

arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The

jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising

from an employer-employee relationship which can only be resolved by reference to the Labor Code, other

labor statutes, or their collective bargaining agreement.

Not every controversy or money claim by an employee against the employer or vice-versa is within the

exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the employer-

employee relationship is merely incidental and the cause of action precedes from a different source of

obligation is within the exclusive jurisdiction of the regular court. Here, the employer-employee relationship

between the parties is merely incidental and the cause of action ultimately arose from different sources of

obligation, i.e., the Constitution and CEDAW.

Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other labor

relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the

dispute belongs to the regular courts of justice and not to the labor arbiter and the NLRC. In such

situations, resolution of the dispute requires expertise, not in labor management relations nor in wage

structures and other terms and conditions of employment, but rather in the application of the general civil

law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to labor

arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies

disappears.

If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall determine

the constitutionality or legality of the assailed CBA provision?

This Court holds that the grievance machinery and voluntary arbitrators do not have the power to

determine and settle the issues at hand. They have no jurisdiction and competence to decide constitutional

issues relative to the questioned compulsory retirement age. Their exercise of jurisdiction is futile, as it is

like vesting power to someone who cannot wield it.

In Gonzales v. Climax Mining Ltd., this Court affirmed the jurisdiction of courts over questions on

constitutionality of contracts, as the same involves the exercise of judicial power. The Court said:

Whether the case involves void or voidable contracts is still a judicial question. It may, in some instances,

involve questions of fact especially with regard to the determination of the circumstances of the execution

of the contracts. But the resolution of the validity or voidness of the contracts remains a legal or judicial

question as it requires the exercise of judicial function. It requires the ascertainment of what laws are

applicable to the dispute, the interpretation and application of those laws, and the rendering of a judgment

39

based thereon. Clearly, the dispute is not a mining conflict. It is essentially judicial. The complaint was not

merely for the determination of rights under the mining contracts since the very validity of those contracts

is put in issue.

In Saura v. Saura, Jr., this Court emphasized the primacy of the regular court's judicial power enshrined in

the Constitution that is true that the trend is towards vesting administrative bodies like the SEC with the

power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable

solution of the problems submitted to them. This would also relieve the regular courts of a substantial

number of cases that would otherwise swell their already clogged dockets.But as expedient as this

policy may be, it should not deprive the courts of justice of their power to decide ordinary

cases in accordance with the general laws that do not require any particular expertise or

training to interpret and apply. Otherwise, the creeping take-over by the administrative

agencies of the judicial power vested in the courts would render the judiciary virtually

impotent in the discharge of the duties assigned to it by the Constitution.

To be sure, in Rivera v. Espiritu, after Philippine Airlines (PAL) and PAL Employees Association (PALEA)

entered into an agreement, which includes the provision to suspend the PAL-PALEA CBA for 10 years,

several employees questioned its validity via a petition for certiorari directly to the Supreme Court. They

said that the suspension was unconstitutional and contrary to public policy. Petitioners submit that the

suspension was inordinately long, way beyond the maximum statutory life of 5 years for a CBA provided for

in Article 253-A of the Labor Code. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the

workers' constitutional right to bargain for another CBA at the mandated time.

In that case, this Court denied the petition for certiorari, ruling that there is available to petitioners a plain,

speedy, and adequate remedy in the ordinary course of law. The Court said that while the petition was

denominated as one for certiorari and prohibition, its object was actually the nullification of the PAL-PALEA

agreement. As such, petitioners' proper remedy is an ordinary civil action for annulment of contract, an

action which properly falls under the jurisdiction of the regional trial courts.

The change in the terms and conditions of employment, should Section 144 of the CBA be held invalid, is

but a necessary and unavoidable consequence of the principal relief sought, i.e., nullification of the alleged

discriminatory provision in the CBA. Thus, it does not necessarily follow that a resolution of controversy that

would bring about a change in the terms and conditions of employment is a labor dispute, cognizable by

labor tribunals. It is unfair to preclude petitioners from invoking the trial court's jurisdiction merely because

it may eventually result into a change of the terms and conditions of employment. Along that line, the trial

court is not asked to set and fix the terms and conditions of employment, but is called upon to determine

whether CBA is consistent with the laws.

Although the CBA provides for a procedure for the adjustment of grievances, such referral to the grievance

machinery and thereafter to voluntary arbitration would be inappropriate to the petitioners, because the

union and the management have unanimously agreed to the terms of the CBA and their interest is unified.

In Pantranco North Express, Inc., v. NLRC, this Court held that:

. . . Hence, only disputes involving the union and the company shall be referred to the grievance machinery

or voluntary arbitrators.

In the instant case, both the union and the company are united or have come to an agreement regarding

the dismissal of private respondents. No grievance between them exists which could be brought to a

grievance machinery. The problem or dispute in the present case is between the union and the company on

the one hand and some union and non-union members who were dismissed, on the other hand. The

dispute has to be settled before an impartial body. The grievance machinery with members designated by

40

the union and the company cannot be expected to be impartial against the dismissed employees. Due

process demands that the dismissed workers' grievances be ventilated before an impartial body. . . . .

Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union

and petitioner company because both have previously agreed upon the provision on "compulsory

retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the

compulsory retirement. . . . .

In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both

previously agreed upon the provision on the compulsory retirement of female flight attendants as embodied

in the CBA. The dispute is between respondent PAL and several female flight attendants who questioned

the provision on compulsory retirement of female flight attendants. Thus, applying the principle in the

aforementioned case cited, referral to the grievance machinery and voluntary arbitration would not serve

the interest of the petitioners.

Besides, a referral of the case to the grievance machinery and to the voluntary arbitrator under the CBA

would be futile because respondent already implemented Section 114, Part A of PAL-FASAP CBA when

several of its female flight attendants reached the compulsory retirement age of 55.

Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted its association's bargaining

proposal for the remaining period of 2004-2005 of the PAL-FASAP CBA, which includes the renegotiation of

the subject Section 144. However, FASAP's attempt to change the questioned provision was shallow and

superficial, to say the least, because it exerted no further efforts to pursue its proposal. When petitioners in

their individual capacities questioned the legality of the compulsory retirement in the CBA before the trial

court, there was no showing that FASAP, as their representative, endeavored to adjust, settle or negotiate

with PAL for the removal of the difference in compulsory age retirement between its female and male flight

attendants, particularly those employed before November 22, 1996. Without FASAP's active participation on

behalf of its female flight attendants, the utilization of the grievance machinery or voluntary arbitration

would be pointless.

The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA.

Interpretation, as defined in Black's Law Dictionary, is the art of or process of discovering and ascertaining

the meaning of a statute, will, contract, or other written document. The provision regarding the

compulsory retirement of flight attendants is not ambiguous and does not require interpretation. Neither is

there any question regarding the implementation of the subject CBA provision, because the manner of

implementing the same is clear in itself. The only controversy lies in its intrinsic validity.

Although it is a rule that a contract freely entered between the parties should be respected, since a contract

is the law between the parties, said rule is not absolute.

In Pakistan International Airlines Corporation v. Ople, this Court held that:

The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306,

of our Civil Code is that the contracting parties may establish such stipulations as they may deem

convenient, "provided they are not contrary to law, morals, good customs, public order or public policy".

Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that

provisions of applicable law, especially provisions relating to matters affected with public policy, are

deemed written into the contract. Put a little differently, the governing principle is that parties may not

contract away applicable provisions of law especially peremptory provisions dealing with matters heavily

impressed with public interest. The law relating to labor and employment is clearly such an area and parties

are not at liberty to insulate themselves and their relationships from the impact of labor laws and

regulations by simply contracting with each other.

41

Moreover, the relations between capital and labor are not merely contractual. They are so impressed with

public interest that labor contracts must yield to the common good. . . . The supremacy of the law over

contracts is explained by the fact that labor contracts are not ordinary contracts; these are imbued with

public interest and therefore are subject to the police power of the state. It should not be taken to mean

that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and

nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public

interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such

provisions may very well be voided.

Finally, the issue in the petition for certiorari brought before the CA by the respondent was the alleged

exercise of grave abuse of discretion of the RTC in taking cognizance of the case for declaratory relief.

When the CA annuled and set aside the RTC's order, petitioners sought relief before this Court through the

instant petition for review under Rule 45. A perusal of the petition before Us, petitioners pray for the

declaration of the alleged discriminatory provision in the CBA against its female flight attendants.

This Court is not persuaded. The rule is settled that pure questions of fact may not be the proper subject of

an appeal by certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal is generally

limited only to questions of law which must be distinctly set forth in the petition. The Supreme Court is not

a trier of facts.

The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a

question of fact. This would require the presentation and reception of evidence by the parties in order for

the trial court to ascertain the facts of the case and whether said provision violates the Constitution,

statutes and treaties. A full-blown trial is necessary, which jurisdiction to hear the same is properly lodged

with the the RTC. Therefore, a remand of this case to the RTC for the proper determination of the merits

of the petition for declaratory relief is just and proper.

WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of Appeals,

dated August 31, 2005 and March 7, 2006, respectively, in CA-G.R. SP. No. 86813 are REVERSED and SET

ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED to continue the proceedings in

Civil Case No. 04-886 with deliberate dispatch. SO ORDERED.

||| (Halagueña v. PAL, Inc., G.R. No. 172013, [October 2, 2009], 617 PHIL 502-521)