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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 19051 November 15, 2010

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS, Petitioner,

vs.

CIRTEK ELECTRONICS, INC., Respondent.

DECISION

CARPIO MORALES, J.:

Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm situated inside the Laguna
Technopark, had an existing Collective Bargaining Agreement (CBA) with Cirtek Employees Labor Union-
Federation of Free Workers (petitioner) for the period January 1, 2001 up to December 31, 2005. Prior to
the 3rd year of the CBA, the parties renegotiated its economic provisions but failed to reach a
settlement, particularly on the issue of wage increases. Petitioner thereupon declared a bargaining
deadlock and filed a Notice of Strike with the National Conciliation and Mediation Board-Regional Office
No. IV (NCMB-RO IV) on April 26, 2004. Respondent, upon the other hand, filed a Notice of Lockout on
June 16, 2004.

While the conciliation proceedings were ongoing, respondent placed seven union officers including the
President, a Vice President, the Secretary and the Chairman of the Board of Directors under preventive
suspension for allegedly spearheading a boycott of overtime work. The officers were eventually
dismissed from employment, prompting petitioner to file another Notice of Strike which was, after
conciliation meetings, converted to a voluntary arbitration case. The dismissal of the officers was later
found to be legal, hence, petitioner appealed.

In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike on June
20, 2005. By Order1 dated June 23, 2005, the Secretary of Labor assumed jurisdiction over the
controversy and issued a Return to Work Order which was complied with.

Before the Secretary of Labor could rule on the controversy, respondent created a Labor Management
Council (LMC) through which it concluded with the remaining officers of petitioner a Memorandum of
Agreement (MOA)2 providing for daily wage increases of ₱6.00 per day effective January 1, 2004 and
₱9.00 per day effective January 1, 2005. Petitioner submitted the MOA via Motion and Manifestation3 to
the Secretary of Labor, alleging that the remaining officers signed the MOA under respondent’s
assurance that should the Secretary order a higher award of wage increase, respondent would comply.

By Order4 dated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by awarding a wage
increase of from ₱6.00 to ₱10.00 per day effective January 1, 2004 and from ₱9.00 to ₱15.00 per day
effective January 1, 2005, and adopting all other benefits as embodied in the MOA.

Respondent moved for a reconsideration of the Decision as petitioner’s vice-president submitted a

"Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan na may Petsang ika-4 ng Agosto 2005,"5 stating
that the union members were waiving their rights and benefits under the Secretary’s Decision.
Reconsideration of the Decision was denied by Resolution6 of August 12, 2008, hence, respondent filed
a petition for certiorari before the Court of Appeals.
By Decision7 of September 24, 2009, the appellate court ruled in favor of respondent and accordingly set
aside the Decision of the Secretary of Labor. It held that the Secretary of Labor gravely abused his
discretion in not respecting the MOA. It did not give credence to the minutes of the meeting8 that
attended the forging of the MOA as it was not verified, nor to the "Paliwanag"9 submitted by respondent
union members explaining why they signed the MOA as it was not notarized.

Petitioner’s motion for reconsideration having been denied by Resolution10 of December 2, 2009, the
present petition was filed, maintaining that the Secretary of Labor’s award is in order, being in accord
with the parties’ CBA history ─ respondent having already granted ₱15.00 per day for 2001, ₱10.00 per
day for 2002, and ₱10.00 per day for 2003, and that the Secretary has the power to grant awards higher
than what are stated in the CBA.

Respecting the MOA, petitioner posits that it was "surreptitiously entered into [in] bad faith," it having
been forged without the assistance of the Federation of Free Workers or counsel, adding that
respondent could have waited for the Secretary’s resolution of the pending CBA deadlock or that the
MOA could have been concluded before representatives of the Secretary of Labor.

The relevant issues for resolution are 1) whether the Secretary of Labor is authorized to give an award
higher than that agreed upon in the MOA, and 2) whether the MOA was entered into and ratified by the
remaining officers of petitioner under the condition, which was not incorporated in the MOA, that
respondent would honor the Secretary of Labor’s award in the event that it is higher.

The Court resolves both issues in the affirmative.

It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction under Art.
263 (g)11 of the Labor Code, may resolve all issues involved in the controversy including the award of
wage increases and benefits.12 While an arbitral award cannot per se be categorized as an agreement
voluntarily entered into by the parties because it requires the intervention and imposing power of the
State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an
approximation of a collective bargaining agreement which would otherwise have been entered into by
the parties, hence, it has the force and effect of a valid contract obligation.13

That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no
moment. For the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis
in computing the wage increases. He could, as he did, consider the financial documents14 submitted by
respondent as well as the parties’ bargaining history and respondent’s financial outlook and
improvements as stated in its website.15

It bears noting that since the filing and submission of the MOA did not have the effect of divesting the
Secretary of his jurisdiction, or of automatically disposing the controversy, then neither should the
provisions of the MOA restrict the Secretary’s leeway in deciding the matters before him.1avvphi1

The appellate court’s brushing aside of the "Paliwanag" and the minutes of the meeting that resulted in
the conclusion of the MOA because they were not verified and notarized, thus violating, so the appellate
court reasoned, the rules on parol evidence, does not lie. Like any other rule on evidence, parol evidence
should not be strictly applied in labor cases.

The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or
the Labor Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of
procedure and evidence are not applied in a very rigid and technical sense in labor cases. Hence, the
Labor Arbiter is not precluded from accepting and evaluating evidence other than, and even contrary to,
what is stated in the CBA.16 (emphasis supplied)

While a contract constitutes the law between the parties, this is so in the present case with respect to
the CBA, not to the MOA in which even the union’s signatories had expressed reservations thereto. But
even assuming arguendo that the MOA is treated as a new CBA, since it is imbued with public interest, it
must be construed liberally and yield to the common good.

While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an
ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor
contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely contractual in nature but impressed with public
interest, thus, it must yield to the common good. As such, it must be construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic construction upon it, giving
due consideration to the context in which it is negotiated and purpose which it is intended to serve.17
(emphasis and underscoring supplied)
WHEREFORE, the petition is GRANTED. The Decision dated September 24, 2009 and the Resolution
dated December 2, 2009 of the Court of Appeals are REVERSED and SET ASIDE and the Order dated
March 16, 2006 and Resolution dated August 12, 2008 of the Secretary of Labor are REINSTATED.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO*

Associate Justice

LUCAS P. BERSAMIN

Associate Justice MARTIN S. VILLARAMA, JR.

Associate Justice

MARIA LOURDES P.A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

CONCHITA CARPIO MORALES

Chairperson
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
certify that the conclusions in the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

Footnotes

* Additional member per Raffle dated November 15, 2010 in lieu of Associate Justice Arturo D. Brion.

1 DOLE records, pp. 20-22. Penned by Secretary Patricia A. Sto. Tomas.

2 Id. at 251-289.

3 Id. at 290-293.

4 CA rollo, pp. 47-51.

5 DOLE records, p. 383.

6 Id. at. 393-403. Penned by Undersecretary Romeo C. Lagman.

7 CA rollo, pp. 312-323. Penned by Associate Justice Romeo F. Barza and concurred in by Associate
Justices Remedios A. Salazar-Fernando and Isaias P. Dicdican.

8 Id. at 340.

9 Id. at 216-222.

10 Id. at 368-369. Ibid.

11 (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the assumption or certification order. If one has already
taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return-to-work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of
Labor and Employment or the Commission may seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with such orders as he may issue to enforce the same.

x x x x (emphasis supplied)

12 International Pharmaceutical, Inc. v. Hon. Secretary of Labor and Associated Labor Union, G.R. Nos.
92981-83, January 8, 1992, 205 SCRA 59.

13 Vide Manila Electric Company v. Quisumbing, G.R. No. 127598, February 22, 2000, citing Mindanao
Terminal and Brokerage Service, Inc. v. Confesor, 338 Phil. 671.

14 DOLE records, pp. 303-305; 129-250; 32-48.

15 Id. at 306-307.

16 Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc., G.R. No. 142824,
December 19, 2001, 372 SCRA 658.

17 Davao Integrated Port Stevedoring v. Abarquez, G.R. No. 102132. March 19, 1993, 220 SCRA 197-198.

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