LABOR RELATIONS TSN 2017

Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage

Ateneo de Davao University | 3 Manresa

JULY 20, 2017 Kay wa man ka mihatag, ang empleyado mag-mulo.

Estillore Muingon siya “Pagkalain. Wa nakoy pagkaon, wa nakoy
ibutang sa lamesa sa akong pamilya.” Maguol siya.
Collective bargaining is not an ordinary contract. It Mao nang naay grievance. He grieves.
is a sui juris contract. The two parties that agree in a
collective bargaining agreement do not stand in equal There is no breach of CBA because the employer has
footing. many remedies simply because he owns the business.
So, it is not an ordinary contract. Timani ni ha. Walay
Justice Enrique Fernando used to say that the right to breach of contract sa CBA. Muingon gani ka ug naay
self-organization enables the labor to stand toe-to-toe, in breach of CBA, ihagbong ka nako because you
equal footing, with capital. But even with the right to completely missed what is collective bargaining. There
self-organization, even if it is already a union, it still does is only grievance. Di man maghulat ang employer sa
not stand in equal footing. CBA. He acts on his prerogatives because he has an
asset that he’s trying to make profitable.
Why? Because you are agreeing on something that
already belongs to capital. So, the employer has From this, you know that the employer in a CBA is the
managerial prerogative because he owns the business. pro-active party. The employee is only the re-active
party. Magpaabot ra siya kung unsa buhaton sa
This is my disappointment with Chan’s 2017 book employer kay siya man tag-iya. Ang employee walay
because it says that managerial prerogative is a judicial assets (?), masakitan man siya mao nang mag-mulo na
pronouncement. There is no managerial prerogatives in siya – he grieves. Mag file siya ug grievance.
the Labor Code. Where does managerial prerogatives
come from? It says, “Because the Supreme Court says When does the duty to bargain begin? Because the
so!” As the manager, the employer has this array of employer is proactive and the employee is reactive, it is
rights over and above its role as a manager. always the employee that asserts the right to bargain. It
is always the employer who has the duty to bargain
That is the thing! Managerial Prerogatives is a because - number one - if there is no CBA, there is
misnomer. It should be properly called “Ownership individual contract. If the CBA is already expired, it is
Prerogatives”. In Civil Law, Managerial Prerogative is the employee who has an interest that a new CBA be
merely is merely administrative. Managerial concluded so that he will have more benefits more than
Prerogatives, when you go down to this, actually the preceding CBA. So it’s always in favor of the
includes the right to disposition which is ownership. If employer to delay or postpone collective bargaining as a
you are an administrator you cannot dispose. You process, to delay or postpone the conclusion of the CBA,
require a special power of attorney. What is the because there is always another contract that can take
opposite of SPA? That’s powers of administration? the place of another contract which is supposed to be
(Huh? Wrong question!) It’s called special power of the product of bargaining process. So ang mag-sige
attorney because you are disposing land(?). Managerial pursige sa right to collective bargaining is the employee.
prerogatives arose from ownership, which you know in The employer will have to respond to the duty to bargain.
Civil Law is a bundle of right. It is not just one right.
Because you are an owner, you have the right to When does the duty to bargain begin? The decided
possess. That’s jus possedendi , jus fruendi (right to the case is Kiok Loy (Swedish Ice Cream) vs. NLRC.
fruits), jus utendi (right to use), jus disponendi, and jus Before, Swedish Ice Cream was made by this
abutendi (?). Those rights are all managerial businessman called Kiok Loy. This is where the SC
prerogatives. The employee is co-opted into the made pronouncement as to when the duty to bargain
enterprise of the employer. begins. It is when
1. Majority representation status is possessed by
Even if there is a CBA, he has the right to do what he the labor organization
can do with his enterprise. 2. There is proof of majority representation status
3. The labor union that is the representative of the
Muingon ba diay ning tag-iya – “Kay late ka man, sige bargaining unit has submitted in writing the
kag ka late ug abot dinha, I protest under the CBA.” Dili bargaining proposals.
siya muingon ana! Muingon siya “Ako may ga sweldo
nimo, kanang kwarta akoa man na, wa kay sweldo! In other words, Article 250 has begun. Now, it’s Article
Managerial prerogatives - kwarta na nako! Nganong 260. It says – the following procedure shall be observed
sweldoan pa man taka nga di man ka mutunga!” in collective bargaining:

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

When a party desires to negotiate an agreement.. Who There is a bargaining proposal in writing submitted to the
is that party who desires to negotiate? It’s always the management. The management responds in 10 days.
union and not the employer, because the employer, di And then, the union asks for conciliation bargaining
man na mag sakit iyang tiyan kung walay CBA. It’s the session. They will be bargaining until one or both give
union. But the law says that “when a party..” kaduha up. They declare deadlock. Once there is a deadlock,
nalang na. If the union desires to negotiate an the NCMB comes in and tries to get them to agree. But
agreement, it shall serve written notice upon the other if they cannot agree, then the NCMB will do (?) out of the
party with the statement of its proposal. The other party picture because the next thing that will happen is their
shall make a reply thereto not later than 10 calendar compulsory arbitration or voluntary arbitration.
days rom receipt of such notice.
Compulsory Arbitration. One might say - “That there’s a
So, submit ka bargaining proposals. In the 1930s, it was deadlock so therefore, we declare a strike on the basis
called bargaining demands. Now it’s called bargaining of the deadlock to compel the other party to grant our
proposals. You submit it in writing and now the demands.” So, when there is a strike, what can
employer has 10 days to make a reply. How does he happen? If it’s a hospital, a bank, or an industry
reply? He will say – “I accept all your proposals. I will indispensable to the national interest, it’s possible that
grant all your proposals.” Highly unlikely. It’s possible the Dpartment of Labor Secretary will assume
but it is improbable. So, after 10 days he has to give an jurisdiction over the dispute. Wala na’y strike. Siya ang
answer. Normally, he gives an answer by counter- mu-decide kung unsa na ang naa dinha. Or the
proposals should differences arise. On the basis of Secretary will throw it to the NLRC. Then, the NLRC will
such notice of reply, either party may request for a decide.
conference which shall begin not later than 10 calendar
days from the date of the written notice. The US Supreme Court paints a picture of what a CBA
is. It says: Collective Bargaining is similar to someone
If the dispute is not settled, the National Conciliation and bringing his h to the bank of the river and getting his
Mediation Board (NCMB) shall intervene. It shall horse to stretch out its neck, bow down, and drink from
intervene upon request of either both parties or on its the river. Paimnon niya ang kabayo kay mulakaw na sila
own initiative (motu proprio), and immediately call the ug layo, wa na kay mainom! Now, the horseman can
parties to conciliation meetings. The Board shall have only bring the horse to the edge of the river but the
the power to issue subpoenas requiring the attendance horseman can never drink for the horse. It must be the
of the parties to such meetings. It shall be the duty of horse. In the end, you must wrap (?) up the water and
the parties to participate fully and promptly in the drink. Mao sad na ang collective bargaining. The law
conciliation meeting the Board might call. conspires to bring the parties to the table but they cannot
be forced to agree. In the end, they must agree because
During the conciliation proceedings in the Board, the anything more than that is no longer an agreement.
parties are prohibited from doing any act which may
disrupt or impede the early settlement of the disputes. This is where Philippine jurisprudence departs from US
The Board shall exert all efforts to settle dispute jurisprudence. Because in Kiok Loy, a union presented
amicable and encourage the parties to submit their case bargaining proposals. Niabot nalang ang isa ka buwan,
to voluntary arbitration. wa gyud mutubag ang management. So the workers left
their factory floor, gathered, and went to the
You know, this is where you notice that the DOLE or the administration building of Kiok Loy. They demonstrated.
author of this big book (referring to Chan, I guess) is When they did that, Kiok Loy instituted dismissal
really schizophrenic. Why? The NCMB is conciliation proceedings for the union leaders because according to
and mediation. It must be the parties that should arrive Kiok Loy they have conducted an illegal strike without
at a resolution. But the NCMB has subpoena powers! filing a notice of strike. They left work and
Pugson niya. Unsaon man niya pagpugos na sila ra demonstrated. He says there is work stoppage.
man kaha mag settle. Unsaon man na niya?
The union answered by saying that management has
Then take a look at this – the Board shall exert all efforts violated the duty to bargain. “We sent the proposals
to settle the disputes. It cannot settle dispute. It’s the but were not answered. They did not even acknowledge
parties who settle the dispute, not the conciliator or receipt of the proposals.”
mediator. This is the problem of our Labor Relations
because voluntary arbitration is less than voluntary. It is In their answer, Kiok Loy invoked an affirmative defense
actually disguised compulsory arbitration. but he did not defend himself against the charge that he
did not answer the proposal. What is the affirmative
defense? They are on strike. They have no right to

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

strike because they did not file a notice of strike. They ISSUE: Did the NLRC act with grave abuse of
did not observe cooling off period. So, they should be discretion?
dismissed because they conducted an illegal strike, the
leaders may be dismissed. HELD: NO

Now, it goes to the SC because the NLRC, in deciding, Collective bargaining which is defined as negotiations
said that Kiok Loy did not even advert to the bargaining towards a collective agreement, is one of the democratic
proposals. He has the duty to respond to the bargaining
frameworks under the New Labor Code, designed to
proposals thus violating the duty to bargain. When you
do not bargain, and the proposals are reasonable taken stabilize the relation between labor and management
in themselves, then the NLRC has the jurisdiction to and to create a climate of sound and stable industrial
order that the terms of the CBA will be the proposal. peace. It is a mutual responsibility of the employer and
Tan-awa ra. According to the NLRC, the DOLE has the the Union and is characterized as a legal obligation. So
prerogative to order that the proposals, seen that they much so that Article 249, par. (g) of the Labor Code
are reasonable in themselves, will become the CBA. Did
makes it an unfair labor practice for an employer to
Kiok Loy agree? No! They did not even advert to it.
Does the DOLE have that power? SC said yes, it has refuse “to meet and convene promptly and expeditiously
that power. Naloko na. Where is the agreement? It is in good faith for the purpose of negotiating an agreement
now collective order of the NLRC. It is no longer a CBA. with respect to wages, hours of work, and all other terms
That is what the SC says. and conditions of employment including proposals for
adjusting any grievance or question arising under such
What happened to Kiok Loy? He declared bankruptcy an agreement and executing a contract incorporating
and closed the same. Do you see Swedish Ice Cream
such agreement, if requested by either party.
for sale? No more. Wala na. Nawagtang na.
From the over-all conduct of petitioner company in
KIOK LOY vs. NLRC and PAMBANSANG KILUSAN
relation to the task of negotiation, there can be no doubt
NG PAGGAWA (KILUSAN)
that the Union has a valid cause to complain against its
FACTS: (Company’s) attitude, the totality of which is indicative of
the latter’s disregard of, and failure to live up to, what is
In a certification election, KILUSAN, a legitimate late enjoined by the Labor Code — to bargain in good faith.
labor federation, won and was subsequently certified in a
resolution by the BLR as the sole and exclusive NOTES: While it is a mutual obligation of the parties to
bargaining agent of the rank-and-file employees of bargain, the employer, however, is not under any legal
Sweden Ice Cream Plant (Company). duty to initiate contract negotiation. The mechanics of
collective bargaining is set in motion only when the
Thereafter, the Union furnished the Company with following jurisdictional preconditions are present,
copies of its proposed CBA. At the same time, it namely,
requested the Company for its counter proposals. The
request were ignored and remained unacted upon by the (1) possession of the status of majority representation of
Company. the employees’ representative in accordance with any of
the means of selection or designation provided for by the
Left with no other alternative in its attempt to bring the Labor Code;
Company to the bargaining table, the Union filed a
“Notice of Strike”, with the BLR on ground of unresolved (2) proof of majority representation; and
economic issues in collective bargaining.
(3) a demand to bargain under Article 251, par. (a) of the
The NLRC rendered its decision, the dispositive portion New Labor Code . … all of which preconditions are
of which reads as follows: undisputedly present in the instant case.

WHEREFORE, the respondent [company] is hereby

declared guilty of unjustified refusal to bargain, in
There is this amendment to the Labor Code which came
violation of Section (g) Article 248 (now Article 249), of
after the decision of Kiok Loy. The amendment is found
P.D. 442, as amended. xx in Article 250 - rights of legitimate labor organization,

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

letter c: To be furnished to the employer upon written gave her a copy and right then and there, she went
request with the annual audited financial statements, through the bargaining proposals and made marginal
including the balance sheet, and profit and loss notes and gave back the proposals. Is that enough? SC
statement within 30 calendar years from the date of said that it is a substantial compliance of Article 260.
receipt of the request.
No violation of its duty to bargain because he made
Here, the SC said that it is not just a legitimate LO. This marginal notes on the bargaining proposal. If you don’t
must be an exclusive bargaining agent who has the right advert to it, then that’s a refusal to bargain and if the
to be furnished, upon written request, within 30 days the proposals are considered reasonable by the DOLE, the
latest audited financial statements. The law is even latter can order that the proposal be the standing
more specific that it must include balance sheet and proposal. There is no such rule in the US because it will
profit and loss statement within 30 days from the date of only bring the parties back to the table because that
receipt after the union has been duly recognized by the would not be an agreement.
employer or certified as the sole and exclusive
bargaining representative of the employees in the BU. JULY 26, 2017
So there is statutory recognition of the right to recognize Berguia, Abad, Buhay
the exclusive bargaining unit agent. Or within 60
calendar days before the expiration of the existing CBA
or during the collective bargaining negotiations. So, Let us go through the Collective Bargaining Duty
there are three instances when the exclusive bargaining provisions of the labor code. It begins with 260. We
agent can demand from the employer the latest audited said, this is one of the elements of the beginning of the
financial statement:
collective bargaining. What are those elements?
1. As soon as it is voluntarily recognized or it is
1. Majority representation STATUS
certified as the exclusive bargaining agent after
a certification election 2. You must produce PROOF of the majority
2. During the 60-day freedom period of a CBA representation status.
3. During the collective bargaining negotiations 3. You must submit to the other party,
management or employer, your BARGAINING
If you have not asked before and you are already PROPOSALS IN WRITING.
bargaining, you can demand. Remember, you must put
it into writing – written request.

There is this latest case decided by the SC. It says that Art 260 (old 250). Procedure in Collective
the duty to bargain begins with the bargaining proposal. Bargaining. The following procedures shall be
According to the SC, this is a separate duty. If the observed in collective bargaining:
employer does not give the latest audited financial
statements, he can be charged with unfair labor practice. a) When the party desires to negotiate an
But this is not yet the beginning. This is just a duty. The agreement, it shall serve a written notice
SC said that for this duty to be activated, the request upon the other party with the statements of
must be in writing. It is not enough that you make a
its proposals. The other party shall make a
request even during the bargaining sessions and request
was recording in the minutes. That is not complying with reply thereto not later than 10 calendar days
the duty to make a written request. from receipt of such notice;

There is this case of Restaurant Employees of Aristocrat Xxxxxx

owned by the Reyeses. The union of the restaurant
employees gave the owner bargaining proposal. The
owner did not even acknowledge receipt. It was like Kiok
Loy except that the union filed a notice of strike on the So Art 260, according to Justice Cuevas, citing the case
ground that the management has refused to bargain. of Kiok Loy- if the employer does not advert or do
So, when the notice of strike was served on the anything to the bargaining proposals and if it (bargaining
employer, the old lady, Reyes, who was the owner, the proposals) seems reasonable he simply agrees to it.
patriarch of the family that owns Aristocrat, appeared in
That becomes their CBA. If he doesn’t acknowledge
the conciliation mediation. She says -
“I’m sorry. I did not get a copy of your proposals. Where receiving it, he prescinds from it. So, the department of
is your proposal? Do you have a copy now?” They labor or the secretary of labor has discretion to

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

determine if the bargaining proposals are reasonable RECITATION:

and if it is so, then that becomes the CBA of the
management and the union. Q: When does this duty to bargain apply (because the
next provision is [about] duty to bargain again)?
Now, this is violative of the term AGREEMENT. When is
there agreement? When there is meeting of the minds A: It applies in the negotiation stage.
over a definite or determinable subject matter. Unsay
Q: How many elements are there?
meeting of the minds ato nga siya ra may ni-submit?
Siya ra may nag buot-buot. Unya karon, nahimo na A: There are five elements.
dayon natong agreement kay ana ang Secretary of
Labor na mao na ni atong CBA? I tell you this only The five elements: (MEMORIZE THE ELEMENTS AS
happens in the Philippines. PER FATHER)

Now, 261: First: to meet and convene promptly and expeditiously

Second: in good faith
Art 261 (251). Duty to bargain collectively in the Third: for the purpose of negotiating an agreement
absence of CBA. In the absence of an agreement or Fourth: does not compel any party to agree to a
proposal
other voluntary arrangement providing for a more
Fifth: or to make any concession.
expeditious manner of collective bargaining, it shall
be the duty of the employer and the representatives The FOURTH and FIFTH elements are negative -- does
of the employees to bargain collectively in not compel any party to agree to a proposal or to make
accordance with the provisions of this Code. any concession.

First element-- to meet and convene promptly and

expeditiously. That is binocular; you can observe it with
RECITATION:
your eyes.
Q: In your opinion, what is this provision all about? Example 1: Nagsabot mo magbargaining session, 11:30
sa Davao Famous. 11:30, 12, 12:30 bugnaw na ang
A: *opinion -----
pancit, wa gihapon ka miabot. That is a violation of the
What does this provision tell you? It tells you nothing! first element to meet and convene promptly and
Sige pangitaa daw sa Labor Code nang gina-ingon dira. expeditiously.
Useless provision! Taas kayo nga sentence, unya kato
Second element- in good faith. When you say in good
diay, zero. Nada!
faith that is more difficult to determine because good
Article 262(252) Meaning of duty to bargain faith is presumed.
collectively. The duty to bargain collectively means the
Example 1.1: Nakigsabot ka, mayo inyong pagsabot.
performance of a mutual obligation to meet and convene
Nagsabot na gani mo sa inyong orderon sa restaurant.
promptly and expeditiously in good faith for the purpose
Gitawagan na daan ang management nagpareserve na
of negotiating an agreement with respect to wages,
daan didto ug lamisa. Dili ba na in good faith? The first
hours of work and all other terms and conditions of
two agreements? Isn’t that already good faith? Except
employment including proposals for adjusting any th
when it is already the 99 meeting. Unya pancit ra
grievances or questions arising under such agreement
gihapon gi order. Mao ra gihapon na restaurant . Wa
and executing a contract incorporating such agreements
ghapon CBA. 99 times mo nagtagbo. Hapit na maupos
if requested by either party but such duty does not
ang certification- year-rule.
compel any party to agree to a proposal or to make any
concession. What is the Certification Year Rule? Within one year
from the results of the certification election, no petition
for certification election may be entertained.

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

Hapit na maupos ang exclusive representation status of subjected to a cash count and was found to be short.
one of the parties in the CBA. Will you say it is in good The receipts that were issued does not match the cash
faith? That is more difficult to prove. Good faith and bad and checks that she has. What happens? The burden of
faith are very difficult to prove. In him or her, who proof shifts. She must now prove that she has not
alleges the opposite, lies the burden of proof. absconded the money that cannot be accounted for.
Normally it is the prosecution that proves. Cash count na
Like potency, impotency is very difficult to prove. gani, naan a dinha, it shifts. If she does not present any
Potency is presumed because you have to postulate that evidence, she would be convicted of estafa.
God is a very generous God that equips everyone
generally with the same basics or necessary equipment. Good faith, bad faith.
The subject is impotent but what happens when the
triennial cohabitation rule applies under you Persons When is there Bad faith bargaining? That is why the
and Family Relations? When a married couple has cases that are mentioned here, are illustrative by which
cohabited for three years and the woman is still a virgin you prove or disprove good faith.
that is when the triennial cohabitation rule applies which
BOULWARISM. General Electric Vice President
means that the burden of proof shifts. The man must
Boulware, after receiving the bargaining proposals of the
now prove that he is potent. You are in third year. You
union, he draws up a counter proposal and says that this
must be sensitive to the evidentiary implications.
is the best deal that the union can get, and that the
Example 2: You are a cashier and you are in-charge with management can stand up to, and the share holders and
the money that comes in. A cashier subjected to a cash- the owners and those that have interest in the
count and found to be short of the receipts or the cash corporation can live with. There is no other, this is the
that got out in that day does not match. What happens? best arrangement. So he goes over to the union
The burden of proof shifts. She must now prove that she members and say convince your union to agree to this
has not absconded with the money that cannot be because this is the best proposal.
accounted for. Normally, it is the prosecution that proves
What did the SC say?
na nangawat ka. If she does not present evidence
explaining the difference, convicted siya of Estafa. You are in bad faith. You have to convince the Union,
the representative of the workers, that this is the best
When is there bad faith bargaining?
deal. You do not bargain with the union by going to
The cases mentioned here (handouts) are illustrative to the workers. You bargain to the workers by going to
prove or disprove good faith. the union.

1. Boulwarism Do not negate the bargaining representative.

Remember, the union is the exclusive bargaining agent.
General Vice-President Boulware, after receiving the It is exclusive of anybody else, even the employees –
bargaining proposals of the union, he draws up a the principals, cannot bargain. It must be the
counter-proposal and says this is the best deal that representative – the union. If you short circuit it and you
union can get, that management can stand up to, and go the principal. You are in bad faith.
the shareholders and owners those who have interest in
the corporation can live with. Is it true in ordinary contract negotiations?

The man must now prove that he is potent. You have Naay yuta nga baligya. Nay agent na mubaligya ana.
taken this up in Persons and Family Relations. This is a Ang buyer muingon sa agent, “mahimo ba na makigsulti
landmark case. This woman from Zamboanga, and JBL ko sa imong seller jud mismo.” As the agent, “dili
Reyes points out the Triennial Cohabitation Rule. You mahimo nga makigstorya ka, ngari ka nako kay ako man
rd
are already in 3 year and you must be sensitive already ang gihatagan og authority.”
to the evidentiary implications.
Kinsa man ang imong principal? Ahh secret.
Cashier ka, you are in-charge of the properties of the
company, namely the money that comes in. A cashier is
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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

Nganong dili man niya itug-an ang iyang principal? Kay Now, what is at issue here. The issue is as to the
mamiligro ang iyang commission. Unya muingon siya retirement plan of Nestle. Nestle has something like 13
nga, magpromise ka nga muhatag ka nako og plants all over the Philippines. Then this particular plant,
commission nga 5%, paistoryahon tika sa akong which is an affiliate of KMU, says we want to renegotiate
principal, basta muhatag ka nako og 5%. Ha? Common the retirement plan. And management says, we do not
baya na. That is illegal. want to renegotiate it. It is so much higher than what the
law requires, it is non-contributory (meaning: dili na
Nganong siya man ang imong pangayoan? Ang imong kuhaan ang imong sweldo aron imong contribution sa
principal ang imong pangayoan, dili kanang other party. retirement plan, zero, walay contribution).
Unsa man ka, ha? Matud pa sa tinagalog, “namamangka
ng dalawang bangka or namugsay og duha ka sakayan. There is a compulsory retirement benefit for your
compulsory retirement under the labor code which is ½
Illegal na because you are now at the employ of the month salary plus 5 days service incentive leave for
buyer, if you receive something from the seller that th th
every year of service, plus 1/12 of the13 month pay
means you are working for his benefit. But if the agent for every year of service, a total of 23 days of salary per
says, okay I am secure with my commission with the year of service, you have that without even contributing.
principal, you can talk to him if you want, I will give you So if your retirement in a contributory plan, taking into
his number. Can he do it? Yes he can. consideration your contribution, is not even in excess of
that, it means that you are funding the obligation of the
But even if the union will say that you can talk to the
employer and that retirement plan is illegal.
workers, you cannot do it. It is exclusive. That is why it is
called, exclusive bargaining agent. He excludes the (Note: Tax discussion re: retirement plans. This can be
principal. deleted depending upon the sound discretion of the chief
editor )
Suppose of his own volition, the principal says to the
agent, can you step aside, I will take it from here. Can he Retirement plans under the NIRC may be tax exempt. In
do it? Yes he can do it. That is his right. And the contract other words, the company, the employer, may set aside
of agency is basically confidential trust. If the principal no and put up a special retirement plan. The contributions
longer has confidence in the agent, he can make the are deductible from gross revenues, it can lower the
agent step aside. In collective bargaining, that is not taxable base, provided that you register the retirement
true. You have to deal with the agent, because he is fund with the BIR and provided that it is an irrevocable
exclusive. Exclusive of the principal, exclusive of fund.
anybody else who wants to be an agent.
How do you know that a retirement fund is sufficient?
So, that is why the US SC said, you cannot bargain with Who are accountants here? (lol.. recitation time) How do
the union through the workers. You can only bargain you compute the possible claims of the workers? How
with the workers through the union. That is how the SC do you know when a retirement fund is sufficient for
explained Boulwarism as bad faith bargaining. now? You get all the employees, the number of years of
service, you get their salary now, and if the fund can
Alright, here is another case. 2 decisions. One is a main
take it if all of them retire now, that is the current value of
decision, and another is a resolution for the motion for
the fund and that is the adequacy of the fund. That is
reconsideration. It took 2 years for the MFR to be
how you determine.
resolved. This MFR was resolved with other parties filing
other motions. This is Union of Filipro Employees vs. What is the purpose of determining that? Kung ibaligya
Nestle, decided in 2006, and the MFR was decided in diay nimo ang kumpanya, if you are going into a merger,
March 3, 2008. if the retirement fund is not adequately funded, the
inadequacy should be deducted from the value of the
What does this illustrate of the elements?
company because in the end, the buyer of the company
The elements say, negative elements, but the duty to will have to put in more money into the retirement fund.
bargain does not include the duty to agree to any (thank you, very good daw sa nagrecit. Hehe)
proposal or to make any concession.
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Now this retirement benefit of Union of Nestle is Si Kiok Loy unsa man diay tong deperensya nila? Wala
adequately funded. It offers better retirement benefits man gud nakigstorya si Kiok Loy bahin sa ilang
than what the law provides, it is more than double. Sa proposal. Ha. Si Kiok Loy, stonewalled them. That is
law 23 days lang. Ang ilang gihatag is 2 months and a refusal to bargain, that is bad faith bargaining. Kaning
half for every year of service. Now they say, we do not Nestle, sige man silag negotiate nga dili sila
want to discuss in the collective bargaining the munegotiate. They are negotiating by saying na dili sila
retirement benefits, human na na. Dili mi gusto makig munegotiate. That is logic.
discuss ana. The union said no, you have to discuss it
with is because that is part of collective bargaining. UNION OF FILIPRO EMPLOYEES KILUSANG MAYO
UNO (UFE-DFA-KMU), vs. NESTLÉ PHILIPPINES,
So the first question that was raised to the SC on a INCORPORATED, March 3, 2008
question of law is whether or not the retirement
benefits constitute a mandatory subject of In the case at bar, Nestle never refused to bargain
bargaining? The only thing covered by collective collectively with UFE-DFA-KMU. The corporation
bargaining are terms and conditions of work, otherwise, simply wanted to exclude the Retirement Plan from the
it is not subject to collective bargaining. So is retirement issues to be taken up during CBA negotiations, on the
benefits a mandatory subject of collective bargaining? postulation that such was in the nature of a unilaterally
granted benefit.
The decision penned by Justice Chico-Nazario says, it is
a mandatory subject of bargaining. An employer’s steadfast insistence to exclude a
particular substantive provision is no different from a
But then the SC did not order Nestle to include in the bargaining representative’s perseverance to include
agenda of negotiations the agenda on retirement one that they deem of absolute necessity.
benefits which the union were specifically asking for in
their prayer. Indeed, an adamant insistence on a bargaining
position to the point where the negotiations reach an
So there was a MFR: If it is true that it is a mandatory impasse does not establish bad faith. It is but natural
subject of collective bargaining, then Nestle is in that at negotiations, management and labor adopt
contempt of court, because it continues to maintain that positions or make demands and offer proposals and
we will not discuss with you the retirement plan. counter-proposals. On account of the importance of
Pasaylo-a lang mi dili mi makigdiscuss ninyo. Human na the economic issue proposed by UFE-DFA-KMU,
nig discuss sa 12 ka planta unya kamo gusto ninyo Nestle could have refused to bargain with the former –
usbon. Paghuman ninyo usbon napod namo ang 12. So but it did not. And the management’s firm stand
they are saying that the employer here is in contempt of against the issue of the Retirement Plan did not mean
court. that it was bargaining in bad faith. It had a right to insist
on its position to the point of stalemate.
What did the SC say?

The SC says, in effect that, Nestle, by saying we are not

going to bargain with you on the retirement benefit, that Pagsungag namo, nga wala nay makadvance, you have
is a legitimate bargaining position, because the law does the right to reach tha point, why? Because you have no
not require you to agree to any proposal or to make any obligation to agree to any proposal or to make any
concession. That is as valid as stance as you stance is, concession. Very important that you remember that
that we should discuss the retirement plan. specially for the Bar exams.

Muingon ang Nestle, dili mi gusto magdiscuss, muingon Article 263. Art. 253. Duty to bargain collectively
dayon ang pikas, kinahanglan magdiscuss ta ana. Dili when there exists a collective bargaining
lagi. Magdiscuss ta. Dili lagi para namo human na. Sigeg agreement.
balik balik. That is negotiation according to the SC, so
there is negotiation. Because negotiation does not When there is a collective bargaining agreement, the
require you to agree to any proposal or to make any duty to bargain collectively shall also mean that
concessions. Very fine distinction. neither party shall terminate nor modify such
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agreement during its lifetime. However, either party - The employer can modify if it is favourable to the
can serve a written notice to terminate or modify the worker.
agreement at least sixty (60) days prior to its st
expiration date. It shall be the duty of both parties to The CBA just says, “The increase for the 1 year is 10
nd rd
keep the status quo and to continue in full force and pesos a day. Increase for the 2 year is P10 again, 3
th th
effect the terms and conditions of the existing year P10, 4 year P10, 5 year P10. Now suppose the
agreement during the 60-day period and/or until a new employer will say, “Since we are doing very well, (in the
th
agreement is reached by the parties. 4 year) we’ll have an increase of not only P10 but P15
a day increase. Unya mu-ingon diay mo ug “aww you
are modifying. That is being violative of [Art.] 263”?
haha.
RECITATION
You cannot terminate or modify if it is contrary to the
Q: So, when is this duty binding upon the parties? welfare of the employee. But if it is for the good, bisan
usbon pa nimo na tanan dinha mahimo.
A: When there is already a collective bargaining
agreement. Remember, when there is a conflict between the CBA
and actual practice, which prevails? Whichever is
Q: Is this still the duty when the collective bargaining
favorable to the employee. You are guided by that.
agreement has expired?
WHICHEVER IS FAVORABLE
A: The last clause – “until a new agreement is reached.”
ADMINISTRATION PHASE
So this does not cover only while the collective
Alright, so this is where the CBA exists. What is the
bargaining agreement is in force and in effect according
bargaining that happens during the administration phase
to its terms because this is an Automatic Hold-over
of the CBA? This is the Administration phase. You
provision imposed by law.
administer the CBA.
A CBA is in force and in effect during its term, there will
Who administers the CBA? It is supposed to be a union
be a provision there that says, “this CBA shall be in force
rd and the employer. Jointly they administer the CBA for
and in effect from and after the ratification of 2/3 of the
the benefit of the bargaining unit.
bargaining unit and until midnight of such and such a
date.” The five years end. Even if the CBA says that, the Is there a chance to compromise; negotiate, even if the
law says that it is in force and in effect until a new CBA is already there? There is. And that is precisely
agreement is reached by the parties. That is an what is called grievance. You try to adjust grievances.
automatic hold over provision. You try to adjust grievance.

So what constitutes the duty? Let me explain. Suppose you have a disciplinary case.
Here is a union member within the bargaining unit (so
- “neither party shall terminate nor modify such
covered by the CBA) and the bargaining unit has one of
agreement during its lifetime” and “to keep the
its annexes agreed upon by the union: the rule book of
status quo and to continue in full force and effect
the company. What does the rule book say? The rule
the terms and conditions of the existing
book has a matrix.
agreement during the 60-day period and/or until
a new agreement is reached by the parties.

Is it true to say that the employer cannot change the

CBA? Is the employer prevented by such duty that
neither party shall terminate? Outside the 60 day
freedom period, can the employer not modify? Can you
think of an instance where the employer can modify?

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(Father draws on board) Article 292 [277]

st nd rd th th
Offense 1 2 3 4 5 (b) Subject to the constitutional right of workers to
s Offens Offens Offens Offens Offens security of tenure (Fr: which is erroneous) and their
e e e e e right to be protected against dismissal except for a
Tardine OR WW F + S D just and authorized cause and without prejudice to
ss WR the requirement of notice under Article 283 of this
Theft D Code, the employer shall furnish the worker whose
employment is sought to be terminated a written
Legend: notice containing a statement or the causes for
OR - Oral Reprimand WW - Written Reprimand termination and shall afford the latter ample
opportunity to be heard and to defend himself with
WW - Written Warning S - Suspension
the assistance of his representative if he so desires
F - Fine D - Dismissal in accordance with company rules and regulations
promulgated pursuant to guidelines set by the
st
Kung theft, 1 offense: oral warning… Dili! Dismissal Department of Labor and Employment. Any decision
dayon! Nangawat gud! Tanan tawo naa nay chance taken by the employer shall be without prejudice to
mangawat! Hurot na imong properties. Dismissal na the right of the worker to contest the validity or
dayon! legality of his dismissal by filing a complaint with
the regional branch of the National Labor Relations
Commission. The burden of proving that the
Normally, the employer will bargain that these rules be termination was for a valid or authorized cause shall
annexed to the CBA so that for the term of the CBA, the rest on the employer. xxx
rules are binding.

Now, suppose there is an employee who is caught with So there is a procedure. Does this become obsolete with
theft. Nadakpan na siya’g theft. Ingon ang management, the CBA because there is already a grievance procedure
“Inyuha pa ba diay nang dependehan nga nangakawat in the CBA? Which prevails: the grievance procedure or
na man na.” Muingon ang union, “Mag-grievance ta. Dili this [Art. 292] procedure? First, you have to have this
ba ninyo mahimo sa ngalan sa kaluoy Diyos nga procedure because if he is not found to be guilty, there is
mupasaylo? Kaduha baya ni siya nga ma-employee of no need for a grievance. But if he is found guilty here
the month. Unya, usa ni siya sa maayo kayo ug agi. [Art.292 procedure], now he is prejudiced. Now you bring
Unya karon pa gyud ni siya madakpan nga mangawat. it to grievance.
Lisod na man gyud kaayo ang kinabuhi. Ang iyang
So this must be followed first and then you go to
asawa bag-o lang na caesarean [section], daghan siya
grievance. If the grievance fails, then the employee can
utang nga bayrunon. Unya ang iya pa gyud ugangan,
file an illegal dismissal suit with the Labor Arbiter
naka__ pa gyud! Dili ba nato ni ayu-ayuhon? Dose
because under Article 219 [I think F.Gus meant 224,
anyos na [nagtrabaho]. Dili ba ka nga mahimo nga
previously217],
madawat sa inyong kasing-kasing nga pasayluon na
lang siya? Ato nalang kini siyang i-fine, suspend. Ayaw Article 224 [217]. Jurisdiction of the Labor Arbiters
lang intawon palakawa. and the Commission. – (a) Except as otherwise
provided under this Code, the Labor Arbiters shall
Unsa may buhaton sa management? Grievance! Mao na have original and exclusive jurisdiction to hear and
nang naay negotiation. Mao na na. The grievance decide, within thirty (30) days after the submission
procedure. of the case by the parties for decision without
extension, even in the absence of stenographic
But mind you, before you go to grievance, you must notes, the following cases involving all workers,
whether agricultural or non-agricultural:
go through the investigation and proper procedure
1. Unfair labor practice cases;
for penalizing an erring employee. 2. Termination disputes;
xxx
There must be an investigation, diba? Under 291 (b) [I
think Father Gus meant 292, previously 277], let me
read this to you:

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Illegal termination or dismissal is under the exclusive nepotism in the appointment and favoritism as well as
and original jurisdiction of the Labor Arbiter. So that is discrimination to bank employees.
what will happen.
At the instance of respondents, Prosecutor A. Tirona
When is this procedure applicable? It is applicable when filed a complaint in the CIR alleging that the Bank
violated the Industrial Peace Act, which makes it an
an employee is in jeopardy of being dismissed or he is in
unfair labor practice for an employer to discriminate
jeopardy of being suspended. He is entitled to a hearing. against an employee for having filed charges.
Under the Renato Corona decision, the law says that ISSUE: Whether or not the Bank conducted unfair labor
this particular requirement does not necessarily mean practice
that there must be a hearing. Something equivalent of a
hearing where the employee has ample opportunity to RULING: Yes. The action of the private respondents will
argue his side and present evidence for and in his behalf affect their labor organization.
– that is what is required.
Assuming that the private respondents acted in their
So, because of this, there can still be negotiations while individual capacities when they wrote the letter-charge
they were nonetheless protected for they were engaged
the CBA is already fixed; where the CBA is already fixed.
in concerted activity, in the exercise of their right of self-
That is why the SC has said that the duty to bargain organization that includes concerted activity for mutual
and negotiate does not end with a CBA. It continues aid and protection, interference with which constitutes an
because there is grievance. There is a grievance unfair labor practice under section 4(a)(1). This is the
machinery. This was brought out by the SC in the view of some members of this Court. For, as has been
celebrated case of Republic Savings Bank v. CIR aptly stated, the joining in protests or demands, even by
(1967). a small group of employees, if in furtherance of their
interests as such, is a concerted activity protected by the
Industrial Peace Act. It is not necessary that union
“Collective bargaining does not end with the
activity be involved or that collective bargaining be
execution of an agreement. It is a continuous contemplated.
process. The duty to bargain imposes on the parties Indeed, when the respondents complained against
during the term of their agreement, the mutual nepotism, favoritism and other management practices,
obligation to meet and confer promptly and they were acting within an area marked out by the Act as
expeditiously and in good faith for the purpose of a proper sphere of collective bargaining. Even the
adjusting any grievances or question arising under reference to immorality was not irrelevant as it was
made to support the respondents' other charge that the
such agreement. And the violation of this obligation
bank president had failed to provide wholesome working
is an unfair labor practice.” conditions, let alone a good moral example, for the
employees by practicing discrimination and favoritism in
That is the reason why the SC says, “The duty to the appointment and promotion of certain employees on
bargain collectively is a never-ending process.” Wa the basis of illicit relations or blood relationship with
pay CBA, they negotiate. Naa nay CBA, mahimo man them.
gihapon magnegotiate, nu, to adjust grievances? It does
not end. Now, this is illustrated by the Republic Savings DISPOSITIVE: Private Respondents won. In final sum
Bank case. I suggest you read it. 721 SCRA 226. and substance, this Court is in unanimity that the Bank's
conduct, identified as an interference with the
employees' right of self-organization, or as a retaliatory
REPUBLIC SAVINGS BANK vs. CIR
action, and/or as a refusal to bargain collectively,
constituted an unfair labor practice within the meaning
FACTS:
and intendment of section 4(a) of the Industrial Peace
The Bank employs Resuello et. al. In 1958, it then
Act.
discharged the private respondents for having written a
patently libelous letter tending to cause the dishonor,
DOCTRINE: Assuming that the private respondents
discredit, or contempt not only of officers and employees
acted in their individual capacities when they wrote the
of this bank, but also of the bank itself.
letter-charge they were nonetheless protected for they
were engaged in concerted activity, in the exercise of
The letter was actually a letter-charge, which Private
their right of self-organization that includes concerted
Respondents had written to the bank president,
activity for mutual aid and protection, interference with
demanding his resignation on the grounds of immorality,
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which constitutes an unfair labor practice under section have done the investigation required by Article 291
4(a)(1). This is the view of some members of this Court. (b).”
For, as has been aptly stated, the joining in protests or
demands, even by a small group of employees, if in I think I’ll have to end here. I have two more hours to go
furtherance of their interests as such, is a concerted with the bar review. (Wawa naman si F.Gus)
activity protected by the Industrial Peace Act. It is not
necessary that union activity be involved or that AUGUST 9, 2017
collective bargaining be contemplated. Mortejo, Duco, Petallo

The first part of Collective Bargaining is identification of

This has to do with a bank president. One day the bank
president received an open letter signed by the union the duties that is prevailing in the 3 stages of
president, vice-president, treasurer, secretary, accusing collective bargaining. What are these 3 stages?
him of immorality and other irregular practices. Their
letter went on to state that, “You, Mr. Bank President and
1. Negotiation (phase 1)
Manager, are a no good executive. You are no good.
Your secretary is your mistress. That’s why you brought 2. Administration (phase 2) – begins with the
her to a banking conference in California and not the effectivity of the CBA
other co-officers of the bank.”
3. Re-negotiation (phase 3)
So what happened? When the president of the bank
received that, he got so mad. He filed a [de facto?] case 1. Negotiation
against the officers of the union. An in fact, he dismissed
The characteristic and the content of the duty to bargain
them. But the officers of the union filed an illegal
dismissal case. They said that their letter was an in negotiation:
exercise of the right to self-organization. The SC agreed Positive part of the duty - “to meet promptly and
with the officers of the union. The SC said [to the bank
expeditiously in good faith for the purpose of arriving at a
president], you should have taken his [union’s] letter as a
grievance. And you should have promptly and CBA”.
expeditiously met right away with the union to try and Negative part of the duty – “but neither party has the
adjust his grievance. That should have been what you
obligation to agree to any proposal or to make any
should have done. But because you didn’t, you must
reinstate [them]. concession”

What the bank should have done was to refer the letter
Remember, there is still no collective bargaining
charged to the grievance committee. This was its duty.
Failing which it committed an ULP. Instead of stifling agreement. It’s a (maiden?) venture towards the
criticism, the bank should have allowed respondents to formation of a CBA.
air their grievances. Good faith bargaining requires of
the bank an open mind and a sincere desire to negotiate
over grievances. 2. Administration
Once again, there are specific contents to the duty to
So, the case you have to read with respect to the
possible conflict between 291 (b) – the investigation bargain once there is a CBA. The law says:
requirement; ample opportunity to be heard, versus 1. Neither party should amend the agreement
grievance is the recent case of Standard Electric (exception: if it is in favor of the employee
Manufacturing, Corporation vs. Standard Electric
covered by the CBA) or terminate the agreement
Employees Union, 468 SCRA 316 (2005). This is
where the SC says that, “the investigation should (exception: if by overwhelming majority, the
have preceded the grievance sessions. You have to bargaining unit decides to change the EBA. It is
comply with these grievance sessions only after you
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terminating the relationship of the EBA with the 2. Whenever there is a grievance, the parties
employer) should meet promptly and expeditiously for the
purpose of adjusting this grievance.
Read: Benguet vs Benguet (digest at next page) – 3. But in the last 60 days of the CBA, the parties
the substitutionary doctrine is applied. The old EBA is may serve notice to the other party to begin
replaced by a new one. Recall your “unions and right to negotiation of the next CBA that will take over
self-organization”, if you are an affiliate to a federation the existing CBA (freedom period).
then there is no problem. Why? Because an affiliate is 4. Even after the end of the CBA, if there is still no
both a local and has his own independent registration. agreement that has been arrived at that would
Once it disaffiliates, it still has a personality. It can dovetail the end of the existing CBA, this same
continue administering the CBA. The federation is out of CBA shall continue to remain in full force and
the picture but the local can administer. effect.

But what if the local is just a local chartered by the Benguet vs Benguet
federation? It has no independent registration. If it
FACTS:
disaffiliates, it has no more personality to administer the
On June 23, 1959, the Benguet-Balatoc Workers Union
CBA. There will be instances where the Bureau of Labor
(“BBWU”), for and in behalf of all Benguet Consolidated,
Relations helps the local to obtain an independent Inc (BENGUET) employees in its mines and milling
establishment located at Balatoc, Antamok and Acupan,
registration. So there is a hiatus (a week or 2 weeks).
Mt. Province, entered into a Collective Bargaining
But then that is salvaged once they are issued that Contract (CONTRACT) with BENGUET. The
CONTRACT was stipulated to be effective for a period of
independent registration.
4-1/2 years, or from June 23, 1959 to December 23,
1963. It likewise embodied a No-Strike, No-Lockout
clause.
The better way to arrange it is when they disaffiliate from
the federation, at the same time they affiliate with a new 3 years later, or on April 6, 1962, a certification election
was conducted by the Department of Labor among all
federation. Now, the EBA has a new agent (remember,
the rank and file employees of BENGUET in the same
the federation is the agent of the local and the local is collective bargaining units. BCI EMPLOYEES &
WORKERS UNION (UNION) obtained more than 50% of
the agent of the bargaining unit). And the person who
the total number of votes, defeating BBWU. The Court of
actually sits in the negotiating table is the Bargaining Industrial Relations certified the UNION as the sole and
exclusive collective bargaining agent of all BENGUET
Representative or the agent of the agent of the EBA.
employees as regards rates of pay, wages, hours of
There is a natural person in the end that does the work and such other terms and conditions of
employment allowed them by law or contract.
negotiation who can be the agent of the federation. And
the federation, in turn, is the agent of the EBA which is Later on, the UNION filed a notice of strike against
BENGUET. UNION members who were BENGUET
the local because the SC has said:
employees in the mining camps at Acupan, Antamok
and Balatoc, went on strike. The strike was attended by
violence, some of the workers and executives of the
“The labor organization at the workplace is the
BENGUET were prevented from entering the premises
real party-in-interest. The federation is just a and some of the properties of the BENGUET were
damaged as a result of the strike. Eventually, the parties
representative.”
agreed to end the dispute. BENGUET and UNION
executed the AGREEMENT. PAFLU placed its
conformity thereto. About a year later or on January 29,
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1964, a collective bargaining contract was finally employees cannot revoke the validly executed collective
executed between UNION-PAFLU and BENGUET. bargaining contract with their employer by the simple
expedient of changing their bargaining agent. And it is in
Meanwhile, BENGUET sued UNION, PAFLU and their the light of this that the phrase “said new agent would
Presidents to recover the amount the former incurred for have to respect said contract” must be understood. It
the repair of the damaged properties resulting from the only means that the employees, thru their new
strike. BENGUET also argued that the UNION violated bargaining agent, cannot renege on their collective
the CONTRACT which has a stipulation not to strike bargaining contract, except of course to negotiate with
during the effectivity thereof. management for the shortening thereof.

Defendants unions and their presidents defended that:

(1) they were not bound by the CONTRACT which
3. Re-negotiation
BBWU, the defeated union, had executed with
BENGUET; (2) the strike was due, among others, to The set of duties (in administration phase) are carried
unfair labor practices of BENGUET; and (3) the strike
over. Why? Because you are negotiating a new CBA, at
was lawful and in the exercise of the legitimate rights of
UNION-PAFLU under Republic Act 875. the same time you are administering an existing CBA.
What is that that you are administering? The old CBA
that has a statutory hold-over provision. Parties shall
ISSUE:
continue to observe and respect the CBA that has
WON the Collective Bargaining Contract executed expired. That is still the law of the parties here.
between Benguet and BBWU on 1959 and effective until
1963 automatically bind UNION-PAFLU upon its
certification, on August 18, 1962, as sole bargaining There is a long treatment of cases where there is a
representative of all BENGUET employees
violation or sometimes no violation of the duty to
bargain. What is the “duty to bargain” precisely? Know
RULING:
the Nestle case (UFE-DFA-KMU vs Nestle) and the
NO. BENGUET erroneously invokes the so-called role that tentative agreements play because you agree
“Doctrine of Substitution”.
on an item-per-item basis. That is the way negotiations
This principle, formulated by the NLRB as its initial are arrived at.
compromise solution to the problem facing it when there
occurs a shift in employees’ union allegiance after the
execution of a bargaining contract with their employer, e.g. Increases in the salary
merely states that even during the effectivity of a st nd rd
Suppose you come to an agreement on the 1 , 2 , 3 ,
collective bargaining agreement executed between
th th
employer and employees thru their agent, the 4 and 5 year of increases, what is the nature of that
employees can change said agent but the contract
agreement? The SC has said that that agreement is
continues to bind them up to its expiration date. They
may bargain however for the shortening of said really temporary. For purposes of reckoning when the
expiration date.
agreement has really been concluded, you always refer
In formulating the “substitutionary” doctrine, the only to that point in time when the CBA as a whole, already
consideration involved was the employees‘ (principal)
signed by the parties, and the bargaining unit has ratified
interest in the existing bargaining agreement. The
agent’s (union) interest never entered the picture. The the CBA. That is the point in time when the agreement
majority of the employees, as an entity under the statute,
really comes into effect. This has been ruled by the SC
is the true party in interest to the contract, holding rights
through the agency of the union representative. Thus, in the case of Samahang Manggagawa vs NLRC (295
any exclusive interest claimed by the agent is defeasible
SCRA 171, 1998).
at the will of the principal.

The “substitutionary” doctrine only provides that the

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Remember that case ha, this was during the this not evidence that it should be there inside and
negotiations. While they were negotiating, there was a therefore it should obligate?” The SC says that since it is
wage order issued by the RTWPB-NCR. The union not in the contract, it is considered outside. It does not
brings up to management during negotiation that even if bind.
only a few in the bargaining unit are benefitted by the
wage order, can the management find it in its heart to Why did the SC put it that way? The reason of the SC is
apply the wage order to the entire bargaining unit and the very reason of the parol evidence rule. The moment
apply it over and above what is agreed in the CBA as you admit of extraneous evidence other than what is
anniversary increases. The management said “YES, we within the contract, you will never end anymore.
agree”. The union said, do you agree to also put that in Everybody will start bringing out things that is not within
the CBA so it becomes a CBA benefit? The the contract. So, why else did you put it in writing kung
management said “Yes, we agree that we should put it in mangita pakag ebidensya gawas anang kasulatan? It
the CBA”. So, they put it down in the minutes that they will never end. It is therefore a rule based on necessity,
have agreed about it. convenience and the end of litigation as to the content of
that agreement.
What happens? In the end, they forgot to put it in the
CBA. Later on when the union remembers, the union One of the charges of union is that the management
asks from management “What happened to your cannot claim that it has no obligation because if it is true
promise?” The management said that “We will not that it has no obligation, then management all along is
comply. Though we said yes, we have difficulties in engaged in “bad faith bargaining”. The SC says that it
complying with it. Anyway, it’s not in the CBA.” Union is not bad faith bargaining. The existence of the CBA
said, “But you agreed to put it in the CBA”. Management negates the charge of bad faith bargaining.
said, “Yes we agreed but it is not in the CBA.” So the
union went to the court. How did the SC decide this Kung nakig-sabot ka na porma-porma ra ug wa gyud
particular controversy? diay kay katuyuan na magkasabot, nganong naa may
gipirmahan? Edi nagkasabot gyud diay kay naa may
The SC says this is where the maxim in the Rules of gipirmahan, naa may kasulatan. How can you say there
Court applies. What is that? The Parol Evidence Rule - is bad faith bargaining when they resulted in a CBA?
When the terms of an agreement have been reduced What is the rule then? If a CBA is concluded, then all
into writing, there shall be no other evidence as to the charges of bad faith bargaining are negated because of
contents of what has been agreed upon, that shall be the existence of the CBA.
accepted or admitted except those contained in the four
corners of the agreement. There is also another case, KNITJOY VS NLRC. Knitjoy
is a garments factory. It should be distinguished from a
The SC says, since what you are claiming as a source of textile factory. In textile factory, what is the end-product?
right is not in the CBA, then it cannot be a source of The end-product is cloth. In garments factory, the end-
right. Now, the unions says “But we have evidence in product is actually clothes – RTW (ready-to-wear)
writing that management agreed to put it in writing, is clothes. (Fr. Gus remarks about gloves, sweaters, and

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

basketball shorts) Those are garments. Kining Knitjoy, SC says: INVALID. A CBA cannot excuse the employer
knitting. The raw materials are all imported. They are not from complying with minimum wage provisions. Once
made here. It is just the labor. Gloves, bonnets, again, labor standards cannot be the object of a waiver
sweaters. in the forward direction. Cannot agree forward the
minimum wage. So, void. Illegal. The Labor Arbiter has
So, what happened? There was a wage order. All the authority to witness and certify an agreement even lower
workers are covered because they are just minimum- than the minimum wage. Where is that found? It used to
wage. The workers said: “We must implement the wage be 227, but now renumbered as 233.
order”. Knitjoy says: “You cannot. We just close,
because we cannot implement that.” So they closed. ART. 233 [227]. COMPROMISE AGREEMENTS.
And the union went on strike. Because in the beginning, Any compromise settlement, including those
the union thought this is just posturing. Sira-sira sila pero involving labor standard laws, voluntarily agreed upon by
ganahan ra gyud diay sila muabri. Unya mga 6 ka the parties with the assistance of the Bureau or the
buwan, wa paman niabri ang Knitjoy. Ang union nay regional office of the Department of Labor, shall be final
niadto sa Knitjoy, ingon sila “abrihi na lang intawon na and binding upon the parties. The National Labor
kay dugay na kaayo mi diri sa gawas. Wa nami kwarta, Relations Commission or any court shall not assume
abrihi nalang” Ingon ang Management, “unya abrihan jurisdiction over issues involved therein except in case of
nato ni, di man ta ka-afford sa wage order increase. We noncompliance thereof or if there is prima facie evidence
cannot pay you the adjustment, pasayloa na lang mi. Di that the settlement was obtained through fraud,
namo ma-implement ang wage order.” And then the misrepresentation, or coercion.
Union replies that they will just sign the CBA.
So labor standards benefits may be compromised the
So, they signed a CBA that does not even grant the moment when it is filed as a case. But it cannot be
minimum benefits. Specifically the Union says: We waive compromised in the CBA because that is in the forward
our right under the NCR Wage Order No. such and such. direction. Once it’s history, it can be compromised.
And it was ratified by 100%. Not just 2/3 of the Muingon ang Union, sige di na nako ipahatag ni ninyo.
bargaining unit but 100%. Subayon nato. Sugod sa sinugdanan sa CBA. Duha na
ka tuig, iphon na. Ang underpayment sa minimum wage
The issue is: What is the validity of the clause excusing kada trabahante ila nang […] Unya miingon ang Knitjoy:
the employer from its obligation under a wage order. Pila na ka milyon? Mao ni 20 milyon ni. Kay 2 milyon
This time, it is the Union signing and the entire CBA that man ning trabahante. Hala. Inyuha na na. You execute
ratified it. So everybody asked for it. And it was given an in the machineries kining tanan. Kay wa namay mupalit
imprimatur by the DOLE because the DOLE registered ani. Manguhag gloves? Kinsa pa man? Kinsa may
the CBA. Bayad ug P1,000 ang Union, rehistro na. It is a mupalit? Muingon ka ibaligya na ngadto sa Bangladesh.
certified CBA even if the benefits therein are below Ang pasahe pa lang ana, wa na. So wa gihapon kay
minimum wage. What is the validity? makuha kung i-execute nimo.

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

The worst thing is parehas sa nahitabo sa faculty union  Mandatory Provisions in the CBA - means
sa Alma Mater ni Imelda Romualdez Marcos. Divine that every CBA must contain that provision.
Word University Tacloban. Pildi ang University
Administration, bad faith bargaining. What is their bad  Mandatory Subjects of Bargaining - means
faith? Their bad faith – they told the Union their that if brought up by either party, that subject
sentiment with the bargaining proposals. Okay, let’s must be negotiated; must be at the table for
bargain. You schedule the meeting. Our first meeting is negotiation.
next week. First meeting. We proceed. In the same day,
they filed a petition for certification election. SC says that What constitutes “Mandatory Subjects of
is bad faith. Gidawat na nimo sila nga they are Bargaining”? It is terms and conditions of work. Not just
representing the bargaining unit. You already have terms and conditions of work anywhere but terms and
scheduled, and yet, on the other hand, you filed a conditions of work within the bargaining unit that is being
procedure to determine who the representative is. That represented.
is bad faith bargaining.
So, suppose in the CBA there is this provision:
So, according to the SC: Guilty of bad faith bargaining. “xxx…Management hereby agrees that should there be
These proposals had long been postponed. You are now a closure of any product line or any manufacturing
liable under these proposals and the wage order. In process which involves the sale or disposal of a part, a
peso terms, that reached around P40 million. They had portion, or certain machineries of the company, then the
been adjudged as such. Affirmed by the SC. Divine same shall be offered first to the union who represents
Word University under the SDV Fathers, they said the bargaining unit...xxx” What is that called? Right of
“Okay, take what you can from the school”. The school first refusal.
does not have money. It has been closed. So they asked Right of first refusal in the Civil Code is called what?
the sheriff to execute. They went to the ROD, lo and That is an option to buy. When is an option to buy
behold, the land does not belong to the Divine Word binding? If there is a distinct separate consideration for
University. that option. How do you settle that controversy? You
go to the regular courts. That is precisely the issue of
Who owns the land? The owner of the land is the mandatory subject of bargaining. The CBA should
Archdiocese of Leyte. The Bishop owns the land. Ila na contain only mandatory subjects of bargaining because
unta tong pang-ibton ang ceilings ug atop. Unsaon man that is only the jurisdiction of the labor tribunals.
na nimo? As taught in Property, Civil law, improvements
of the land belongs to the owner of the land, because Outside the mandatory subjects of bargaining, there are
they are accessories. other fora of justice that has jurisdiction. There is this old
Meralco v. NLRC case where Meralco says violation of
We talked about “Mandatory Subjects of Bargaining” and the CBA on the part of Meralco according to the union
“Mandatory Provisions in the CBA”: because in the * of the CBA it says ‘Management agrees
to put up a seed fund that shall constitute, to the course
of time with contributions from the union and other

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

contributions, seed fund to loan out to employees bargaining unit is composed of regular workers.
covered by the bargaining unit, to enable them to obtain Probationary workers are outside the purview of
a loan to construct their first house.’ negotiations but time and again, you will see that in
CBAs.
So management will put up a fund, a seed fund so that
this fund will be jointly managed by the union and Health benefits are a mandatory subject of
management that will lend out money to the workers in bargaining even if they are for the retirees already.
order for them to construct their first house. Wa man According to the SC yes because that is a future benefit
mucontribute ang Meralco. Gipugos na sa agent, wa in view of which you cannot earn the same while being
man. So they were sued for violating an economic regular. But you negotiate it during your work and
provision of the CBA. continued inclusion in the bargaining unit.

This is where the SC said that is not mandatory subject Now, what are the jurisdictions of the voluntary
of bargaining because they are talking about putting up a arbitrator? You have the mandatory jurisdiction and you
loan fund. You are not talking about end benefit. If it said have permissive jurisdiction.
‘Management agrees to make available to all those
covered in the bargaining unit a loan equivalent to 10% Mandatory jurisdiction, there are at least 3:
of their basic pay, everyone who has served at least 10 1. Implementation and interpretation of company
years with the company.’ That’s a benefit. But if you’re personnel policies;
talking about putting up a fund, according to the SC, that 2. Controversies arising from interpretation and
is not a mandatory subject of bargaining, and you cannot implementation of the CBA; and
compel parties to sit down and negotiate on mandatory 3. Wage distortions as the same is provided for
subject of bargaining. under Article 124.

So, daghan musipyat anang provision sa CBA, union Now, permissive jurisdiction: All other issues
security clause “xxx….The company is open to hire submitted by the parties including ULP, Labor Standards
applicants whether or not they are members of the etc.
union, but those who are not members of any union
must, after being made regular in the workforce, they will When you say all other issues, does it mean all? In other
have 6 months to become members of the union and words, can you include their non-mandatory subjects of
continued membership with the union is a requirement bargaining? It is my submission that you cannot include
for continued employment. Should any member of the non-mandatory subjects of bargaining. Why? Parties
union be expelled from the union, then the union can have already agreed, why can you not include? Let’s say
compel management to terminate this expelled right of first refusal, if the parties agree to submit it to
member…xxx’ Then there’s a paragraph it says grievance, should not it be submitted to grievance
“xxx…Management agrees to provide the union a list of because the parties have already agreed: union,
its probationary workers….xxx” That is not a management, and the complainants.
mandatory subject of bargaining. Why? Because the

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 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

You cannot submit to the labor tribunals because

jurisdiction is determined by law. Contracts, like the What is the correct decision? Very difficult. The
contracts of sale, are delegated by law as belonging to discretion is so wide. Very difficult to determine what is
the jurisdiction of the regular courts. Are you amending the liveable decision something which the employer can
the law? Do you have a license to amend the law just live with, the worker can live with for the long term and
because you can expand the permissive jurisdiction of the other stakeholders: the stockholders, the creditors.
the voluntary arbitrator? You cannot. In other words, the So, interests dispute, there is no such thing as definite
qualifier ‘all’ cannot embrace non-mandatory subjects of correct answer.
bargaining without doing violence to the law creating the
jurisdiction of the regular courts. rd
---End of 3 Exam Coverage---

Alright, kinds of controversies, there are:

1. Interests disputes; and
2. Rights disputes.

Rights disputes, example is a disciplinary case. The

discretion of the voluntary arbitrator is limited to the
application of the law and/or the CBA provisions,
findings point to who is right and who is wrong. All that
the voluntary arbitrator has to do is who has the
evidence and the favour of the law and then he has to
act accordingly.

But when you come to an interest dispute like

bargaining deadlock, the discretion of the voluntary
arbitrator is directed towards arriving at what many have
called a labor code decision by all parties. There is a
deadlock. Management says they are only willing to give
an increase of 10 pesos a day increase in the daily paid
over those covered in the bargaining unit. The union
says we want 300 pesos daily increase. Why? You look
at the findings of the UN, how much a decent living
requires. It is not just food, shelter, health, it also
requires something for education, leisure, etc. and so
this is the figure against which you are to be measured.
This is the benchmark. So 300. Management says 10.
So finally deadlock. Now, they go to voluntary arbitration
on the deadlock.

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