Manila Electric Company v. Quisumbing (Feb 2000)

MANILA
ELECTRIC COMPANY v. QUISUMBING

G.R. No. 127598. February 22, 2000.
Ynares-Santiago, J.
FACTS: A January 27, 1999 decision was modi ied by a resolution made by the Secretary of Labor in
favor of Meralco Employees. In the said decision, the P1,900 wage was increased to P2,200.
Petitioner warns that if the wage increase as ordered by the Secretary is allowed it would simply
pass the cost covering such increase to the consumers through an increase in the rate of electricity.
Nonetheless, by petitioner’s own allegations, its actual total net income for 1996 was P5.1 billion.
An estimate by the All Asia inancial analyst stated that petitioner’s net operating income for the
same year was about P5.7 billion, a igure which the Union reliefs on to support its claim. Assuming
without admitting the truth, the igure is higher than the P4.171 billion allegedly suggested by
petitioner as its projected net operating income. The P5.7 billion which was the Secretary’s basis for
granting the P2,200 is higher than the actual net income of P5.1 billion admitted by petitioner. It
would be proper then to increase the Court’s award of P1,900 to P2,000 for the 2 years of the CBA
award.
ISSUE: Whether or not the CBA arbitral award may be applied retroactively
RULING: Yes. The Court in the January 27, 1999 decision, stated that the CBA shall be “effective for a
period of 2 years counted from December 28, 1996 up to December 27, 1999.” This actually covers a
3 year period. Labor laws are silent as to when an arbitral award in a labor dispute where the
Secretary had assumed jurisdiction by virtue of Art. 263 (9) of the Labor Code shall retroact. In
general, a CBA negotiated within 6 months after the expiration of the existing CBA retroacts to the
day immediately following such date and if agreed, the effectivity depends on the agreement of the
parties. On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that
granted not by virtue of the mutual agreement of the parties but by intervention of the government.
Despite the silence, the Court ruled that CBA arbitral awards granted after 6 months from the
expiration of the last CBA shall retroact to such time agreed upon by both employer and the
employees or their union. Absent such an agreement as to retroactivity, the award shall retroact to
the irst day after the 6 month period following the expiration of the last day of the CBA should
there be one. In the absence of a CBA, the Secretary’s determination of the date of retroactivity as
part of his discretionary powers over arbitral awards shall control.
It is true that an arbitral award cannot per se be categorized as an agreement voluntarily entered
into by the parties because it requires the interference and imposing power of the State thru the
Secretary of Labor when he assumes jurisdiction. However, the arbitral award can be considered as
an approximation of a collective bargaining agreement which would otherwise have been entered
into by the parties. The terms or periods set forth in Article 253-A pertains explicitly to a CBA. But
there is nothing that would prevent its application by analogy to an arbitral award by the Secretary
considering the absence of an applicable law. The law contemplates retroactivity whether the
agreement be entered into before or after the said six-month period. The agreement of the parties
need not be categorically stated for their acts may be considered in determining the duration of
retroactivity. In this case, the Court considers the letter of petitioner's Chairman of the Board and its
President addressed to their stockholders, which states that the CBA "for the rank-and- ile
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employees covering the period December 1, 1995 to November 30, 1997 is still with the Supreme
Court," as indicative of petitioner's recognition that the CBA award covers the said period. Earlier,
petitioner's negotiating panel transmitted to the Union a copy of its proposed CBA covering the
same period inclusive. In addition, petitioner does not dispute the allegation that in the past CBA
arbitral awards, the Secretary granted retroactivity commencing from the period immediately
following the last day of the expired CBA. Thus, by petitioner's own actions, the Court sees no
reason to retroact the subject CBA awards to a different date. The period is herein set at two (2)
years from December 1, 1995 to November 30, 1997.
NOTE: Art 253-A - If any such agreement is entered into beyond 6 months, the parties shall agree on
the duration of retroactivity thereof.

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MANILA

ELECTRIC COMPANY v. QUISUMBING

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