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PHILIPPINE SUPREME COURT DECISIONS

SPECIAL FIRST DIVISION

[G.R. No. 127598. August 1, 2000.]

MANILA ELECTRIC COMPANY, Petitioner, v. HON. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), Respondents.

R E S O L U T I O N


YNARES-SANTIAGO, J.:


On February 22, 2000, this Court promulgated a Resolution with the following decretal portion:chanrob1es virtual 1aw library

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision is MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995 to November 30, 1997; and (2) the award of wage is increased from the original amount of One Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 1995 and 1996. This Resolution is subject to the monetary advances granted by petitioner to its rank-and-file employees during the pendency of this case assuming such advances had actually been distributed to them. The assailed Decision is AFFIRMED in all other respects.

SO ORDERED.chanrob1es virtua1 1aw 1ibrary

Petitioner Manila Electric Company filed with this Court, on March 17, 2000, a "Motion for Partial Modification (Re: Resolution Dated 22 February 2000) anchored on the following grounds:chanrob1es virtual 1aw library

I


With due respect, this Honorable Court’s ruling on the retroactivity issue: (a) fails to account for previous rulings of the Court on the same issue; (b) fails to indicate the reasons for reversing the original ruling in this case on the retroactivity issue; and (c) is internally inconsistent.

II


With due respect, the Honorable Court’s ruling on the retroactivity issue does not take into account the huge cost that this award imposes on petitioner, estimated at no less than P800 Million.

In the assailed Resolution, it was held:chanrob1es virtual 1aw library

Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary (of Labor and Employment) had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual agreement of the parties but by intervention of the government. Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the Secretary’s determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall control.

Petitioner specifically assails the foregoing portion of the Resolution as being logically flawed, arguing, first, that while it alludes to the Secretary’s discretionary powers only in the absence of a CBA, Article 253-A of the Labor Code always presupposes the existence of a prior or subsisting CBA; hence the exercise by the Secretary of his discretionary powers will never come to pass. Second, petitioner claims that the Resolution contravenes the jurisprudential rule laid down in the cases of Union of Filipro Employees v. NLRC, 1 Pier 8 Arrastre and Stevedoring Services v. Roldan-Confesor 2 and St. Luke’ s Medical Center v. Torres. 3 Third, petitioner contends that this Court erred in holding that the effectivity of CBA provisions are automatically retroactive. Petitioner invokes, rather, this Court’s ruling in the Decision dated January 27, 1999, which was modified in the assailed Resolution, that in the absence of an agreement between the parties, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it operates and may be executed only prospectively unless there are legal justifications for its retroactive application. Fourth, petitioner assigns as error this Court’s interpretation of certain acts of petitioner as consent to the retroactive application of the arbitral award. Fifth, petitioner contends that the Resolution is internally flawed because when it held that the award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA, the reckoning date should have been June 1, 1996, not December 1, 1995, which is the last day of the three-year lifetime of the economic provisions of the CBA.

Anent the second ground, petitioner alleges that the retroactive application of the arbitral award will cost it no less than P800 Million. Thus, petitioner prays that the two-year term of the CBA be fixed from December 28, 1996 to December 27, 1998. Petitioner also seeks this Court’s declaration that the award of P2,000.00 be paid to petitioner’s rank-and-file employees during this two-year period. In the alternative, petitioner prays that the award of P2,000.00 be made to retroact to June 1, 1996 as the effectivity date of the CBA.chanrob1es virtua1 1aw 1ibrary

Private respondent MEWA filed its Comment on May 19, 2000, contending that the Motion for Partial Modification was unauthorized inasmuch as Mr. Manuel M. Lopez, President of petitioner corporation, has categorically stated in a memorandum to the rank-and-file employees that management will comply with this Court’s ruling and will not file any motion for reconsideration; and that the assailed Resolution should be modified to conform to the St. Luke’s ruling, to the effect that, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, he is deemed vested with plenary and discretionary powers to determine the effectivity thereof.

This Court has re-examined the assailed portion of the Resolution in this case vis-a-vis the rulings cited by petitioner. Invariably, these cases involve Articles 253-A in relation to Article 263 (g) 4 of the Labor Code. Article 253-A is hereunder reproduced for ready reference:chanrob1es virtual 1aw library

ARTICLE 253-A. Terms of a collective bargaining agreement. — Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining; Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such dates If any such agrees is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. 5

The parties’ respective positions are both well supported by jurisprudence. For its part, petitioner invokes the ruling in Union of Filipro Employees, 6 wherein this Court upheld the NLRC’s act of giving prospective effect to the CBA, and argues that the two-year arbitral award in the case at bar should likewise be applied prospectively, counted from December 28, 1996 to December 27, 1998. Petitioner maintains that there is nothing in Article 253-A of the Labor Code which states that arbitral awards or renewals of a collective bargaining agreement shall always have retroactive effect. The Filipro case was applied more recently in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-Confesor 7 thus:chanrob1es virtual 1aw library

In Union of Filipro Employees v NLRC, 192 SCRA 414 (1990), this Court interpreted the above law as follows:jgc:chanrobles.com.ph

"In light of the foregoing, this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity thereof.

"The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing laws."cralaw virtua1aw library

In the case of Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA 179 (1991), this Court reiterated the rule that although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep the status quo, and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day freedom period and/or until a new agreement is reached by the parties (National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer-Calleja, 205 SCRA 478 [1992]). Applied to the case at bench, the legal effects of the immediate past CBA between petitioner and private respondent terminated, and the effectivity of the new CBA began, only on March 4, 1993, when public respondent resolved their disputes. 8

On the other hand, Respondent. MEWA invokes the ruling in St. Luke’s Medical Center, Inc. v. Torres, 9 which held that the Secretary of Labor has plenary and discretionary powers to determine the effectivity of arbitral awards. 10 Thus, respondent maintains that the arbitral award in this case should be made effective from December 1, 1995 to November 30, 1997. The ruling in the St. Luke’s case was restated in the 1998 case of Manila Central Line Corporation v. Manila Central Line Free Workers Union-National Federation of Labor, Et Al., 11 where it was held that:chanrob1es virtual 1aw library

Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their mutual agreement. The CBA in this case, on the other hand, is part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement. As held in St. Luke’s Medical Centers Inc. v. Torres:chanrob1es virtual 1aw library

Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing petitioner’s Motion for Reconsideration —

Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the parties, and not arbitral awards . . . (p. 818 Rollo).

Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof (223 SCRA 779, 792-793 [1993]; reiterated in Philippine Airlines, Inc. v. Confessor 231 SCRA 41 [1994]).chanrob1es virtua1 1aw 1ibrary

Indeed, petitioner has not shown that the question of effectivity was not included in the general agreement of the parties to submit their dispute for arbitration.: To the contrary, as the order of the labor arbiter states, this question was among those submitted for arbitration by the parties:chanrob1es virtual 1aw library

As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining agreement shall take effect only upon its signing and shall remain in full force and effect for a period of five years. The union proposes that the agreement shall take effect retroactive to March 15, 1989, the expiration date of the old CBA.

And after an evaluation of the parties’ respective contention and argument thereof, it is believed that that of the union is fair and reasonable. It is the observation of this Arbitrator that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date when the immediately preceding CBA expires so as to give a semblance of continuity. Hence, for this particular case, it is believed that there is nothing wrong adopting the stand of the union, that is that this CBA be made retroactive effective March 15, 1989. 12

Parenthetically, the Decision rendered in the case at bar on January 27, 1999 13 ordered that the CBA should be effective for a term of two years counted from December 28, 1996 (the date of the Secretary of Labor’s disputed Order on the parties’ motion for reconsideration) up to December 27, 1998. 14 That is to say, the arbitral award was given prospective effect.

Upon a reconsideration of the Decision, this Court issued the assailed Resolution which ruled that where an arbitral award granted beyond six months after the expiration of the existing CBA, and there is no agreement between the parties as to the date of effectivity thereof, the arbitral award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA. In the dispositive portion, however, the period to which the award shall retroact was inadvertently stated as beginning on December 1, 1995 up to November 30, 1997.

In resolving the motions for reconsideration in this case, this Court took into account the fact that petitioner belongs to an industry imbued with public interest. As such, this Court can not ignore the enormous cost that petitioner will have to bear as a consequence of the full retroaction of the arbitral award to the date of expiry of the CBA, and the inevitable effect that it would have on the national economy. On the other hand, under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law. 15 Balancing these two contrasting interests, this Court turned to the dictates of fairness and equitable justice and thus arrived at a formula that would address the concerns of both sides. Hence, this Court held that the arbitral award in this case be made to retroact to the first day after the six-month period following the expiration of the last day of the CBA, i.e., from June 1, 1996 to May 31, 1998.

This Court, therefore, maintains the foregoing rule in the assailed Resolution pro hac vice. It must be clarified, however, that consonant with this rule, the two-year effectivity period must start from June 1, 1996 up to May 31, 1998, not December 1, 1995 to November 30, 1997.

During the interregnum between the expiration of the economic provisions of the CBA and the date of effectivity of the arbitral award, it is understood that the hold-over principle shall govern, viz:jgc:chanrobles.com.ph

" [I]t shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day freedom period and/or until a new agreement is reached by the parties." Despite the lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed. 16

Finally, this Court finds that petitioner’s prayer, that the award of Two Thousand Pesos shall be paid to rank-and-file employees during the two-year period, is well-taken. The award does not extend to supervisory employees of petitioner.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the Motion for Partial Modification is GRANTED. The Resolution of February 22, 2000 is PARTIALLY MODIFIED as follows: (a) the arbitral award shall retroact to the two-year period from June 1, 1996 to May 31, 1998; (b) the increased wage award of Two Thousand Pesos (P2,000.00) shall be paid to the rank-and-file employees during the said two-year period. This Resolution is subject to the monetary advances granted by petitioner to said employees during the pendency of this case, assuming such advances had actually been distributed to them.

SO ORDERED.

Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.

Endnotes:



1. 192 SCRA 414 (1990).

2. 241 SCRA 294 (1995).

3. 223 SCRA 779 (1993).

4. "When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. . . . ."cralaw virtua1aw library

5. Underscoring provided.

6. Op. cit., note 1.

7. 241 SCRA 294 (1995).

8. Ibid., at 307.

9. Op. Cit. note 3

10. Ibid., at 793.

11. 290 SCRA 690 (1998).

12. Ibid., at 702-703.

13. 302 SCRA 173 (1999).

14. Erroneously written in the Decision as "December 27 1999."

15. Felix Uy, Et. Al. v. Commission on Audit, G.R. No. 130685, March 21, 2000; citing Ditan v. POEA Administrator, 191 SCRA 823, 829 (1990).

16. National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer-Calleja, 205 SCRA 478, 485 (1992).

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