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 rankand-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
1

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
2

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
3

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:
4

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.

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.
6

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 rankand-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.
7

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
8

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

(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.
10

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
11

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
12

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.
13

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.
14

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
15

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.
16

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 CAG.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.
DECISION
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.
17

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:
18

 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
19

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.

20

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.
21

DECISION
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
22

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
23

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%
24

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.
25

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

26

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
27


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
28

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.
29

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
30

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.
RESOLUTION
CARPIO, J p:
The Case
31

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
32

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:
33

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 HALAGUEA, 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

34

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 renegotiations 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,
35

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 PALFASAP 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
36

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:
37

(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 employeremployee 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
38

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
39

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.
40

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.
||| (Halaguea v. PAL, Inc., G.R. No. 172013, [October 2, 2009], 617 PHIL 502-521)

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