WMSU LLB 2A 2015

Labor Relations
Atty. RJJ Plagata

UNFAIR LABOR PRACTICE

ILLUSTRATIVE CASES
TABLE OF CONTENTS

GMC vs CA; 422 SCRA 514 ............................................................................................................................ 2

New Pacific Timber vs NLRC; 328 SCRA 404 ............................................................................................... 11
Rivera vs Espiritu 374 SCRA 351.................................................................................................................. 20

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GMC VS CA; 422 SCRA 514

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 146728

February 11, 2004

GENERAL MILLING CORPORATION, petitioner,

vs
HON. COURT OF APPEALS, GENERAL MILLING CORPORATION INDEPENDENT LABOR UNION
(GMC-ILU), and RITO MANGUBAT, respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision1 dated July 19, 2000, of the Court of
Appeals in CA-G.R. SP No. 50383, which earlier reversed the decision2 dated January 30, 1998 of
the National Labor Relations Commission (NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling
Corporation (GMC) employed 190 workers. They were all members of private
respondent General Milling Corporation Independent Labor Union (union, for brevity), a
duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement
(CBA) which included the issue of representation effective for a term of three years. The
CBA was effective for three years retroactive to December 1, 1988. Hence, it would
expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a
proposed CBA, with a request that a counter-proposal be submitted within ten (10)
days.
As early as October 1991, however, GMC had received collective and individual letters
from workers who stated that they had withdrawn from their union membership, on

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grounds of religious affiliation and personal differences. Believing that the union no
longer had standing to negotiate a CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat and
Victor Lastimoso. The letter stated that it felt there was no basis to negotiate with a
union which no longer existed, but that management was nonetheless always willing to
dialogue with them on matters of common concern and was open to suggestions on
how the company may improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any
massive disaffiliation or resignation from the union and submitted a manifesto, signed
by its members, stating that they had not withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground
of incompetence. The union protested and requested GMC to submit the matter to the
grievance procedure provided in the CBA. GMC, however, advised the union to "refer to
our letter dated December 16, 1991."3
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration
Division, Cebu City. The complaint alleged unfair labor practice on the part of GMC for: (1)
refusal to bargain collectively; (2) interference with the right to self-organization; and (3)
discrimination. The labor arbiter dismissed the case with the recommendation that a petition
for certification election be held to determine if the union still enjoyed the support of the
workers.lawphi1.nt
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article 253-A of the
Labor Code, as amended by Rep. Act No. 6715,4 which fixed the terms of a collective bargaining
agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a
period of two (2) years beginning December 1, 1991, the date when the original CBA ended, to
November 30, 1993. The NLRC also ordered GMC to pay the attorneys fees.5
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration
of a CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of
GMC-Independent Labor Union was from December 1, 1988 to November 30, 1993. All other
provisions of the CBA are to be renegotiated not later than three (3) years after its execution.
Thus, the NLRC held that respondent union remained as the exclusive bargaining agent with the
right to renegotiate the economic provisions of the CBA. Consequently, it was unfair labor
practice for GMC not to enter into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13
of its members from February to June 1993 confirmed the pressure exerted by GMC on its

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employees to resign from the union. Thus, the NLRC also found GMC guilty of unfair labor
practice for interfering with the right of its employees to self-organization.
With respect to the unions claim of discrimination, the NLRC found the claim unsupported by
substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its decision of January 30, 1998,
through a resolution dated October 6, 1998. It found GMCs doubts as to the status of the union
justified and the allegation of coercion exerted by GMC on the unions members to resign
unfounded. Hence, the union filed a petition for certioraribefore the Court of Appeals. For
failure of the union to attach the required copies of pleadings and other documents and
material portions of the record to support the allegations in its petition, the CA dismissed the
petition on February 9, 1999. The same petition was subsequently filed by the union, this time
with the necessary documents. In its resolution dated April 26, 1999, the appellate court
treated the refiled petition as a motion for reconsideration and gave the petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive portion of which
reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998
is hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the
award of attorneys fees which is hereby deleted, REINSTATED.6
A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October
26, 2000, the CA denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO DECISION
SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN CLEARLY AND DISTINCTLY
THE FACTS AND THE LAW ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING THE
DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY
FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION.
III

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THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT THE NLRC
HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A COLLECTIVE
BARGAINING AGREEMENT.7
Thus, in the instant case, the principal issue for our determination is whether or not the Court
of Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in (1)
finding GMC guilty of unfair labor practice for violating the duty to bargain collectively and/or
interfering with the right of its employees to self-organization, and (2) imposing upon GMC the
draft CBA proposed by the union for two years to begin from the expiration of the original
CBA.lawphi1.nt
On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect is
concerned, be for a term of five (5) years. No petition questioning the majority status of
the incumbent bargaining agent shall be entertained and no certification election shall
be conducted by the Department of Labor and Employment outside of the sixty-day
period immediately before the date of expiry of such five year term of the Collective
Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its execution....
The law mandates that the representation provision of a CBA should last for five years. The
relation between labor and management should be undisturbed until the last 60 days of the
fifth year. Hence, it is indisputable that when the union requested for a renegotiation of the
economic terms of the CBA on November 29, 1991, it was still the certified collective bargaining
agent of the workers, because it was seeking said renegotiation within five (5) years from the
date of effectivity of the CBA on December 1, 1988. The unions proposal was also submitted
within the prescribed 3-year period from the date of effectivity of the CBA, albeit just before
the last day of said period. It was obvious that GMC had no valid reason to refuse to negotiate
in good faith with the union. For refusing to send a counter-proposal to the union and to
bargain anew on the economic terms of the CBA, the company committed an unfair labor
practice under Article 248 of the Labor Code, which provides that:
ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer to
commit any of the following unfair labor practice:
...
(g) To violate the duty to bargain collectively as prescribed by this Code;
...

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Article 252 of the Labor Code elucidates the meaning of the phrase "duty to bargain
collectively," thus:
ART. 252. Meaning of duty to bargain collectively. The duty to bargain
collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an
agreement....
We have held that the crucial question whether or not a party has met his statutory
duty to bargain in good faith typically turn$ on the facts of the individual case. 8 There is
no per se test of good faith in bargaining.9Good faith or bad faith is an inference to be
drawn from the facts.10 The effect of an employers or a unions actions individually is
not the test of good-faith bargaining, but the impact of all such occasions or actions,
considered as a whole.11
Under Article 252 abovecited, both parties are required to perform their mutual obligation to
meet and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement. The union lived up to this obligation when it presented proposals for a new CBA to
GMC within three (3) years from the effectivity of the original CBA. But GMC failed in its duty
under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the
union and the status of its membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is
mandatory because of the basic interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The following procedures shall be
observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written
notice upon the other party with a statement of its proposals. The other
party shall make a reply thereto not later than ten (10) calendar days from
receipt of such notice. (Underscoring supplied.)
GMCs failure to make a timely reply to the proposals presented by the union is indicative of its
utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer
represented the workers, was mainly dilatory as it turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the unions proposal for CBA
negotiation is an indication of its bad faith. Where the employer did not even bother to submit
an answer to the bargaining proposals of the union, there is a clear evasion of the duty to
bargain collectively.12
Failing to comply with the mandatory obligation to submit a reply to the unions proposals,
GMC violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce,
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the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees right to self-organization? The CA found that the letters
between February to June 1993 by 13 union members signifying their resignation from the
union clearly indicated that GMC exerted pressure on its employees. The records show that
GMC presented these letters to prove that the union no longer enjoyed the support of the
workers. The fact that the resignations of the union members occurred during the pendency of
the case before the labor arbiter shows GMCs desperate attempts to cast doubt on the
legitimate status of the union. We agree with the CAs conclusion that the ill-timed letters of
resignation from the union members indicate that GMC had interfered with the right of its
employees to self-organization. Thus, we hold that the appellate court did not commit grave
abuse of discretion in finding GMC guilty of unfair labor practice for interfering with the right of
its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed
by the union for two years commencing from the expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. .... It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period [prior to its expiration date] and/or until a new
agreement is reached by the parties. (Underscoring supplied.)
The provision mandates the parties to keep the status quo while they are still in the process of
working out their respective proposal and counter proposal. The general rule is that when a
CBA already exists, its provision shall continue to govern the relationship between the parties,
until a new one is agreed upon. The rule necessarily presupposes that all other things are equal.
That is, that neither party is guilty of bad faith. However, when one of the parties abuses this
grace period by purposely delaying the bargaining process, a departure from the general rule is
warranted.
In Kiok Loy vs. NLRC,13 we found that petitioner therein, Sweden Ice Cream Plant, refused to
submit any counter proposal to the CBA proposed by its employees certified bargaining agent.
We ruled that the former had thereby lost its right to bargain the terms and conditions of the
CBA. Thus, we did not hesitate to impose on the erring company the CBA proposed by its
employees union - lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the
present case, to wit:
petitioner Companys approach and attitude stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion except that it is unwilling
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to negotiate and reach an agreement with the Union. Petitioner has not at any instance,
evinced good faith or willingness to discuss freely and fully the claims and demands set
forth by the Union much less justify its objection thereto.14
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and
Employment,15 petitioner therein, Divine Word University of Tacloban, refused to perform its
duty to bargain collectively. Thus, we upheld the unilateral imposition on the university of the
CBA proposed by the Divine Word University Employees Union. We said further:
That being the said case, the petitioner may not validly assert that its consent should be
a primordial consideration in the bargaining process. By its acts, no less than its action
which bespeak its insincerity, it has forfeited whatever rights it could have asserted as
an employer.16
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union
and its members if the terms and conditions contained in the old CBA would continue to be
imposed on GMCs employees for the remaining two (2) years of the CBAs duration. We are
not inclined to gratify GMC with an extended term of the old CBA after it resorted to delaying
tactics to prevent negotiations. Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine Word University of Tacloban, it had lost its statutory
right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the
union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was
no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban.
Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said
two cases. To rule otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be
allowed to resort with impunity to schemes feigning negotiations by going through empty
gestures.17 Thus, by imposing on GMC the provisions of the draft CBA proposed by the union, in
our view, the interests of equity and fair play were properly served and both parties regained
equal footing, which was lost when GMC thwarted the negotiations for new economic terms of
the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft
CBA proposed by the union should not be disturbed since they are supported by substantial
evidence. On this score, we see no cogent reason to rule otherwise. Hence, we hold that the
Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of
jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft
CBA proposed by the union for the remaining two (2) years of the duration of the original CBA.
Fairness, equity, and social justice are best served in this case by sustaining the appellate
courts decision on this issue.
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WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the
resolution dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383,
are AFFIRMED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

Footnotes

Rollo, pp. 172-179. Penned by Associate Justice Conchita Carpio Morales (now a
member of this Court), with Associate Justices Teodoro P. Regino and Mercedes GozoDadole.
2

Id. at 34-48.

Id. at 175; See also CA Rollo, CA G.R. No. 51763, p. 83.

Effective March 21, 1989.

Rollo, p. 44.

Id. at 178.

Id. at 10.

Hongkong and Shanghai Banking Corporation Employees Union v. National Labor

Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.
9

Ibid.

10

Ibid.

11

Ibid.

12

Colegio De San Juan De Letran v. Association of Employees and Faculty of Letran, G.R.
No. 141471, 18 September 2000, 340 SCRA 587, 595.
13

No. L-54334, 22 January 1986, 141 SCRA 179, 188.

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14

Supra.

15

213 SCRA 759, 11 September 1992.

16

Supra.

17

Ibid., citing H. Rothenberg, Rothenberg on Labor Relations 435 (1949), NLRB v.

Sunshine Mining Co., 110 F. 2d 780, NLRB v. Condenser Corp., 128 F. 2d 67.

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NEW PACIFIC TIMBER VS NLRC; 328 SCRA 404

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 124224

March 17, 2000

NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, MUSIB M. BUAT, LEON G. GONZAGA, JR., ET AL.,
NATIONAL FEDERATION OF LABOR, MARIANO AKILIT and 350 OTHERS, respondents.
KAPUNAN, J.:
May the term of a Collective Bargaining Agreement (CBA) as to its economic provisions be
extended beyond the term expressly stipulated therein, and, in the absence of a new CBA, even
beyond the three-year period provided by law? Are employees hired after the stipulated term
of a CBA entitled to the benefits provided thereunder?
These are the issues at the heart of the instant petition for certiorari with prayer for the
issuance of preliminary injunction and/or temporary restraining order filed by petitioner New
Pacific Timber & Supply Company, Incorporated against the National Labor Relations
Commission (NLRC), et. al., and the National Federation of Labor, et. al.
The antecedents facts, as found by the NLRC, are as follows:
The National Federation of Labor (NFL, for brevity) was certified as the sole and exclusive
bargaining representative of all the regular rank-and-file employees of New Pacific Timber &
Supply Co., Inc. (hereinafter referred to as petitioner Company). 1 As such, NFL started to
negotiate for better terms and conditions of employment for the employees in the bargaining
unit which it represented. However, the same was allegedly met with stiff resistance by
petitioner Company, so that the former was prompted to file a complaint for unfair labor
practice (ULP) against the latter on the ground of refusal to bargain collectively. 2
On March 31, 1987, then Executive Labor Arbiter Hakim S. Abdulwahid issued an order
declaring (a) herein petitioner Company guilty of ULP; and (b) the CBA proposals submitted by
the NFL as the CBA between the regular rank-and-file employees in the bargaining unit and
petitioner Company. 3

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Petitioner Company appealed the above order to the NLRC. On November 15, 1989, the NLRC
rendered a decision dismissing the appeal for lack of merit. A motion for reconsideration
thereof was, likewise, denied in a Resolution, dated November 12, 1990. 4
Unsatisfied, petitioner Company filed a petition for certiorari with this Court. But the Court
dismissed said petition in a Resolution, dated January 21, 1991. 5
Thereafter, the records of the case were remanded to the arbitration branch of origin of the
execution of Labor Arbiter Abdulwahid's Order, dated March 31, 1987, granting monetary
benefits consisting of wage increases, housing allowances, bonuses, etc. to the regular rankand-file employees. Following a series of conferences to thresh out the details of computation,
Labor Arbiter Reynaldo S. Villena issued an Order, dated October 18, 1993, directing petitioner
Company to pay the 142 employees entitled to the aforesaid benefits the respective amounts
due them under the CBA. Petitioner Company complied; and the corresponding quitclaims were
executed. The case was considered closed following NFL's manifestation that it will no longer
appeal the October 18, 1993 Order of Labor Arbiter Villena. 6
However, notwithstanding such manifestation, a "Petition for Relief" was filed in behalf of 186
of the private respondents "Mariano J. Akilit and 350 others" on May 12, 1994. In their petition,
they claimed that they were wrongfully excluded from enjoying the benefits under the CBA
since the agreement with NFL and petitioner Company limited the CBA's implementation to
only the 142 rank-and-file employees enumerated. They claimed that NFL's misrepresentations
had precluded them from appealing their exclusion. 7
Treating the petition for relief as an appeal, the NLRC entertained the same. On August 4, 1994,
said commission issued a resolution 8 declaring that the 186 excluded employees "form part
and parcel of the then existing rank-and-file bargaining unit" and were, therefore, entitled to
the benefits under the CBA. The NLRC held, thus:
WHEREFORE, the appeal is hereby granted and the Order of the Labor arbiter dated
October 18, 1993 is hereby. Set Aside and Vacated. In lieu hereof, a new Order is hereby
issued directing respondent New Pacific Timber & Supply Co., Inc. to pay all its regular
rank-and-file workers their wage differentials and other benefits arising from the
decreed CBA as explained above, within ten (10) days from receipt of this order.
SO ORDERED. 9
Petitioner Company filed a motion for reconsideration of the aforequoted resolution.
Meanwhile, four separate groups of the private respondents, including the original 186 who
had filed the "Petition for Relief" filed individual money claims, docketed as NLRC Cases Nos. M001991-94 to M-001994-94, before the Arbitration Branch of the NLRC, Cagayan de Oro City.
However, Labor Arbiter Villena dismissed these cases in Orders, dated March 11, 1994; April 13,
1994; March 9, 1994; and, May 10, 1994. The employees appealed the respective dismissals of
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their complainants to the NLRC. The latter consolidated these appeals with the aforementioned
motion for reconsideration filed by petitioner Company.
On February 29, 1996, the NLRC issued a resolution, the dispositive portions of which reads as
follows:
WHEREFORE, the instant petition for reconsideration of respondent is DENIED for lack of
merit and the Resolution of the Commission dated August 4, 1994 Sustained. The
separate orders of the Labor Arbiter dated March 11, 1994, April 13, 1994, March 9,
1994 and May 10, 1994, respectively, in NLRC Cases Nos. M-001991-94 to M-001994-94
are Set Aside and Vacated for lack of legal bases.
Conformably, respondent New Pacific Timber and Supply Co., Inc., is hereby directed to
pay individual complainants their CBA benefits in the aggregate amount of
P13,559,510.37, the detailed computation thereof is contained in Annex "A" which
forms an integral part of this resolution, plus ten (10%) percent thereof as Attorney's
fees.
SO ORDERED. 10
Hence, the instant petition wherein petitioner Company raises the following issues:
I
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN
ALLOWING THE "PETITION FOR RELIEF" TO PROSPER.
II
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN RULING
THAT PRIVATE RESPONDENTS MARIANO AKILIT AND 350 OTHERS ARE ENTITLED TO
BENEFITS UNDER THE COLLECTIVE BARGAINING AGREEMENT IN SPITE OF THE FACT
THAT THEY WERE NOT EMPLOYED BY THE PETITIONER MUCH LESS WERE THEY
MEMBERS OF THE BARGAINING UNIT DURING THE TERM OF THE CBA.
III
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING
FACTUAL FINDINGS WITHOUT BASIS.
IV
THE DISPOSITIVE PORTIONS OF THE ASSAILED RESOLUTIONS ARE DEFECTIVE AND/OR
REVEAL THE GRAVE ABUSE OF DISCRETION COMMITTED BY PUBLIC RESPONDENT. 11
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Petitioner company contends that a "Petition of Relief" is not the proper mode of seeking a
review of a decision rendered by the arbitration branch of the NLRC. 12 According to the
petitioner, nowhere in the Labor Code or in the NLRC Rules of Procedure is there such a
pleading. Rather, the remedy of a party aggrieved by an unfavorable of the labor arbiter is to
appeal said judgment to the NLRC. 13
Petitioners asseverates that even assuming that the NLRC correctly treated the petition for
relief as an appeal, still, it should not have allowed the same to prosper, because the petition
was filed several months after the ten-day reglementary period for filing an appeal had expired;
and therefore, it failed to comply with the requirements of an appeal under the Labor Code and
the NLRC Rules of Procedure.
Petitioner Company further contends that in filing separate complaints and/or money claims at
the arbitration level in spite of their pending petition for relief and in spite of the final order,
dated October 18, 1993, in NLRC Case No. RAB-IX-0334-82, the private respondents were in fact
forum-shopping, an act which is proscribed as trifling with the courts and abusing their
practices.
Anent the second issue, petitioners argues that the private respondents are not entitled to the
benefits under the CBA because employees hired after the term of a CBA are not parties to the
agreement, and therefore, may not claim benefits thereunder, even if they subsequently
become members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of the Labor Code refers to the
continuation in full force and effect of the previous CBA's terms and conditions. By necessity, it
could not possibly refers to terms and conditions which, as expressly stipulated, ceased to have
force and effect.14
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA between
petitioner Company and NFL provided for yearly wage increases. Logically, these provisions
ended in the years 1984 the last year that the economic provisions of the CBA were, to
contract and law, effective. Petitioner claims that there is no contractual basis for the grant of
CBA benefits such as wage increases in 1985 and subsequent years, since the CBA stipulated
only the increases for the years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs that no new CBA was entered
pending appeal of the decision in NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given the opportunity to submit a countercomputation of the benefits supposedly due the private respondents. Instead, the NLRC
allegedly relied on the self-serving computations of private respondents.
Petitioner's contentions as untenable.

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We find no grave abuse of discretion on the part of the NLRC, when it entertained the petition
for relief filed by the private respondents and treated it as an appeal, even if it was filed beyond
the reglementary period for filing an appeal. Ordinarily, once a judgment has become final and
executory, it can no longer be disturbed, altered or modified. However, a careful scrutiny of the
facts and circumstances of the instant case warrants liberality in the application of technical
rules and procedure. It would be a greater injustice to deprive the concerned employees of the
monetary benefits rightly due them because of a circumstance over which they had no control.
As stated above, private respondents, in their petition for relief, claimed that they were
wrongfully excluded from the list of those entitled to the CBA benefits by their union, NFL,
without their knowledge; and, because they were under the impression that they were ably
represented, they were not able to appeal their case on time.
The Supreme Court has allowed appeals from decisions of the labor arbiter to the NLRC, even if
filed beyond the reglementary period, in the interest of justice. 15 Moreover, under Article 218
(c) of the Labor Code, the NLRC may, in the exercise of its appellate powers, "correct, amend or
waive any error, defect or irregularity whether in the substance or in form." Further, Article 221
of the same provides that "In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it
is the spirit and intention of this Code that the Commission and its members and the Labor
Arbiter shall use every and all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law or procedure, all in the interest of due
process. . . . 16
Anent the issue of whether or not the term of an existing CB, particularly as to its economic
provisions, can be extended beyond the period stipulated therein, and even beyond the threeyear period prescribed by law, in the absence of a new agreement, Article 253 of the Labor
Code explicitly provides:
Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. When there is a collective bargaining agreement, the duty to bargain
collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its expiration date. It
shall be the duty of both parties to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties. (Emphasis supplied.)
It is clear from the above provision of law that until a new Collective Bargaining Agreement has
been executed by and between the parties, they are duty-bound to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement. The law
does not provide for any exception nor qualification as to which of the economic provisions of
the existing agreement are to retain force and effect, therefore, it must be understood as
encompassing all the terms and conditions in the said agreement.

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In the case at bar, no new agreement was entered into by and between petitioner Company
and NFL pending appeal of the decision in NLRC Case No. RAB-IX-0334-82; nor were any of the
economic provisions and/or terms and conditions pertaining to monetary benefits in the
existing agreement modified or altered. Therefore, the existing CBA in its entirety, continues to
have legal effect.
In a recent case, the Court had occasion to rule that Article 253 and 253-A 17 mandate the
parties to keep thestatus quo and to continue in full force and effect the terms and conditions
of the existing agreement during the 60-day period prior to the expiration of the old CBA
and/or until a new agreement is reached by the parties. Consequently, the automatic renewal
clause provided for by the law, which is deemed incorporated in all CBA's, provides the reason
why the new CBA can only be given a prospective effect. 18
In the case of Lopez Sugar Corporation vs. Federation of Free Workers, et. al, 19 this Court
reiterated the rule although a CBA has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep
the status quo, and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new agreement is reached by the parties. 20
To rule otherwise, i.e., that the economic provisions of the existing CBA in the instant case
ceased to have force and effect in the year 1984 would be to create a gap during which no
agreement would govern, from the time the old contract expired to the time a new agreement
shall have been entered into. For if, as contended by the petitioner, the economic provisions of
the existing CBA were to have no legal effect, what agreement as to wage increases and other
monetary benefits would govern at all? None, it would seem, if we are to follow the logic of
petitioner Company. Consequently, the employees from the year 1985 onwards would be
deprived of a substantial amount of monetary benefits which they could have enjoyed had the
terms and conditions of the CBA remained in force and effect. Such a situation runs contrary to
the very intent and purpose of Article 253 and 253-A of the Labor Code which is to curb labor
unrest and to promote industrial peace, as can be gleaned from the discussion of the legislators
leading to the passage of the said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari.
And I think our responsibility here is to create a legal framework to promote industrial
peace and to develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity.
xxx

xxx

xxx

HON. CHAIRMAN VELOSO: (continuing) . . . . in other words, the longer the period of effectivity
of the CBA, the better for industrial peace.
xxx

xxx
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Having established that the CBA between petitioner Company and NFL remained in full force
and effect even beyond the stipulated term, in the absence of a new agreement; and,
therefore, that the economic provisions such as wage increases continued to have legal effect,
we are now faced with the question of who are entitled to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired after the term of the CBA
inspite of their subsequent membership in the bargaining unit, are not parties to the
agreement, and certainly may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that when a collective bargaining
contract is entered into by the union representing the employees and the employer, even the
non-member employees are entitled to the benefits of the contract. To accord its benefits only
to members of the union without any valid reason would constitute undue discrimination
against nonmembers. 22 It is even conceded, that a laborer can claim benefits from the CBA
entered into between the company and the union of which he is a member at the time of the
conclusion of the agreement, after he has resigned from the said union. 23
In the same vein, the benefits under the CBA in the instant case should be extended to those
employees who only became such after the year 1984. To exclude them would constitute
undue discrimination and deprive them of monetary benefits they would otherwise be entitled
to under a new collective bargaining contract to which they would have been parties. Since in
this particular case, no new agreement had been entered into after the CBA's stipulated term, it
is only fair and just that the employees hired thereafter be included in the existing CBA. This is
in consonance with our ruling that the terms and conditions of a collective bargaining
agreement continue to have force and effect even beyond the stipulated term when no new
agreement is executed by and between the parties to avoid or prevent the situation where no
collective bargaining agreement at all would govern between the employer company and its
employees.
Anent the other issues raised by petitioner Company, the Court finds that these pertain to
questions of fact that have already been passed upon by the NLRC. It is axiomatic that, the
factual findings of the National Labor Relations Commissions, which have acquired expertise
because its jurisdiction is confined to specific matters, are accorded respect and finality by the
Supreme Court, when these are supported by substantial evidence. "A perusal of the assailed
resolution reveals that the same was reached on the basis of the required quantum of
evidence.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is hereby DISMISSED
for lack of merit.1wphi1.nt
SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
Pardo, J., is on official business abroad.
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Footnotes
1

Rollo, p. 42.

Ibid.

Id., at 42.

Id., at 43.

Id., at 43.

Id., at 46.

Id., at 137.

Id., at 40.

Id., at 138.

10

Id., at 69-70.

11

Id., at 12.

12

Id., at 12.

13

Id., at 13.

14

Id., at 25.

15

City Fair Corporation vs. NLRC, 243 SCRA 572 (1995).

16

Id., at 576.

17

Art. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining

Agreement that the parties may enter into shall insofar as the representation aspect is
concerned, be for a term of five (5) years. . . . All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three (3) years after its
execution. Any agreement on such other provisions of the Collective Bargaining
Agreement entered into within six (6) months from the date of expiry of the term of
such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to
the day immediately following such date. If any such agreement is entered into beyond
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six months, the parties shall agree on bargaining agreement, the parties may exercise
their rights under this Code.
18

Union of Filipino Employees vs. NLRC, 192 SCRA 414 (1990).

19

189 SCRA 179.

20

Pier 8 Arrastre & Stevedoring Services, Inc., vs. Hon. Ma. Nieves RoldanConfesor, et. al., 241 SCRA 294 (1995).
21

Conference Committee on Labor, December 15, 1988.

22

International Oil Factory Workers Union vs. Hon. Martinez, et. al., 110 Phil. 595
(1960); National Brewery & Allied Industries Labor Union vs. San Miguel Brewery
Inc., et. al., 118 Phil 806 (1963).
23

Kapisanan Ng Mga Manggagawang Pinagyakap vs. Franklin Baker Co., of the Phil. June
3, 1949.

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RIVERA VS ESPIRITU 374 SCRA 351

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 135547

January 23, 2002

GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD, DENNIS R. ARANAS, DAVID

SORIMA, JR., JORGE P. DELA ROSA, and ISAGANI ALDEA, Petitioners,
vs.
HON. EDGARDO ESPIRITU in his capacity as Chairman of the PAL Inter-Agency Task Force
created under Administrative Order No. 16; HON. BIENVENIDO LAGUESMA in his capacity as
Secretary of Labor and Employment; PHILIPPINE AIRLINES (PAL), LUCIO TAN, HENRY SO UY,
ANTONIO V. OCAMPO, MANOLO E. AQUINO, JAIME J. BAUTISTA, and ALEXANDER O.
BARRIENTOS, Respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioners charge public respondents
with grave abuse of discretion amounting to lack or excess of jurisdiction for acts taken in
regard to the enforcement of the agreement dated September 27, 1998, between Philippine
Airlines (PAL) and its union, the PAL Employees Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the Philippines
(ALPAP) went on a three-week strike, causing serious losses to the financially beleaguered flag
carrier. As a result, PALs financial situation went from bad to worse. Faced with bankruptcy,
PAL adopted a rehabilitation plan and downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the retrenchment measures adopted by the
airline, which affected 1,899 union members. The strike ended four days later, when PAL and
PALEA agreed to a more systematic reduction in PALs work force and the payment of
separation benefits to all retrenched employees.
On August 28, 1998, then President Joseph E. Estrada issued Administrative Order No. 16
creating an Inter-Agency Task Force (Task Force) to address the problems of the ailing flag
carrier. The Task Force was composed of the Departments of Finance, Labor and Employment,
Foreign Affairs, Transportation and Communication, and Tourism, together with the Securities
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and Exchange Commission (SEC). Public respondent Edgardo Espiritu, then the Secretary of
Finance, was designated chairman of the Task Force. It was "empowered to summon all parties
concerned for conciliation, mediation (for) the purpose of arriving at a total and complete
solution of the problem."1 Conciliation meetings were then held between PAL management and
the three unions representing the airlines employees,2 with the Task Force as mediator.
On September 4, 1998, PAL management submitted to the Task Force an offer by private
respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a plan to transfer shares
of stock to its employees. The pertinent portion of said plan reads:
1. From the issued shares of stock within the group of Mr. Lucio Tans holdings, the
ownership of 60,000 fully paid shares of stock of Philippine Airlines with a par value of
PHP5.00/share will be transferred in favor of each employee of Philippine Airlines in the
active payroll as of September 15, 1998. Should any share-owning employee leave PAL,
he/she has the option to keep the shares or sells (sic) his/her shares to his/her union or
other employees currently employed by PAL.
2. The aggregate shares of stock transferred to PAL employees will allow them three (3)
members to (sic) the PAL Board of Directors. We, thus, become partners in the
boardroom and together, we shall address and find solutions to the wide range of
problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are tackling its problems,
we would request for a suspension of the Collective Bargaining Agreements (CBAs) for
10 years.3
On September 10, 1998, the Board of Directors of PALEA voted to accept Tans offer and
requested the Task Forces assistance in implementing the same. Union members, however,
rejected Tans offer. Under intense pressure from PALEA members, the unions directors
subsequently resolved to reject Tans offer.
On September 17, 1998, PAL informed the Task Force that it was shutting down its operations
effective September 23, 1998, preparatory to liquidating its assets and paying off its creditors.
The airline claimed that given its labor problems, rehabilitation was no longer feasible, and
hence, the airline had no alternative but to close shop.
On September 18, 1998, PALEA sought the intervention of the Office of the President in
immediately convening the parties, the PAL management, PALEA, ALPAP, and FASAP, including
the SEC under the direction of the Inter-Agency Task Force, to prevent the imminent closure of
PAL.4
On September 19, 1998, PALEA informed the Department of Labor and Employment (DOLE)
that it had no objection to a referendum on the Tans offer. 2,799 out of 6,738 PALEA members

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cast their votes in the referendum under DOLE supervision held on September 21-22, 1998. Of
the votes cast, 1,055 voted in favor of Tans offer while 1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent notices of termination to its
employees.
Two days later, the PALEA board wrote President Estrada anew, seeking his intervention. PALEA
offered a 10-year moratorium on strikes and similar actions and a waiver of some of the
economic benefits in the existing CBA.5 Tan, however, rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the President proposing the following
terms and conditions, subject to ratification by the general membership:
1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00,
from Mr. Lucio Tans shareholdings, with three (3) seats in the PAL Board and an
additional seat from government shares as indicated by His Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in
committees or bodies which deal with matters affecting terms and conditions of
employment;
3. To enhance and strengthen labor-management relations, the existing LaborManagement Coordinating Council shall be reorganized and revitalized, with adequate
representation from both PAL management and PALEA;
4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the
ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a
period of ten (10) years, provided the following safeguards are in place:
a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of
the regular rank-and-file ground employees of the Company;
b. The union shop/maintenance of membership provision under the PAL-PALEA
CBA shall be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement
forged by and between PAL and PALEA, to those employees who may opt to retire or be
separated from the company.
6. PALEA members who have been retrenched but have not received separation
benefits shall be granted priority in the hiring/rehiring of employees.

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7. In the absence of applicable Company rule or regulation, the provisions of the Labor
Code shall apply.6
Among the signatories to the letter were herein petitioners Rivera, Ramiso, and Aranas, as
officers and/or members of the PALEA Board of Directors. PAL management accepted the
PALEA proposal and the necessary referendum was scheduled.
On October 2, 1998, 5,324 PALEA members cast their votes in a DOLE-supervised referendum.
Of the votes cast, 61% were in favor of accepting the PAL-PALEA agreement, while 34% rejected
it.
On October 7, 1998, PAL resumed domestic operations. On the same date, seven officers and
members of PALEA filed this instant petition to annul the September 27, 1998 agreement
entered into between PAL and PALEA on the following grounds:
I
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR
JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA AGREEMENT AS
THE CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING, BEING
FOUNDED ON PUBLIC POLICY, MAY NOT BE WAIVED, NOR THE WAIVER, RATIFIED.
II
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR
JURISDICTION IN PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA AGREEMENT UNDER
THREAT OF ABUSIVE EXERCISE OF PALS MANAGEMENT PREROGATIVE TO CLOSE BUSINESS
USED AS SUBTERFUGE FOR UNION-BUSTING.
The issues now for our resolution are:
(1) Is an original action for certiorari and prohibition the proper remedy to annul the
PAL-PALEA agreement of September 27, 1998;
(2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of
the PAL-PALEA CBA unconstitutional and contrary to public policy?
Anent the first issue, petitioners aver that public respondents as functionaries of the Task Force,
gravely abused their discretion and exceeded their jurisdiction when they actively pursued and
presided over the PAL-PALEA agreement.
Respondents, in turn, argue that the public respondents merely served as conciliators or
mediators, consistent with the mandate of A.O. No. 16 and merely supervised the conduct of
the October 3, 1998 referendum during which the PALEA members ratified the agreement.
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Thus, public respondents did not perform any judicial and quasi-judicial act pertaining to
jurisdiction. Furthermore, respondents pray for the dismissal of the petition for violating the
"hierarchy of courts" doctrine enunciated in People v. Cuaresma7 and Enrile v. Salazar.8
Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of Civil Procedure.
The essential requisites for a petition for certiorari under Rule 65 are: (1) the writ is directed
against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such
tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain,
speedy, and adequate remedy in the ordinary course of law.9 For writs of prohibition, the
requisites are: (1) the impugned act must be that of a "tribunal, corporation, board, officer, or
person, whether exercising judicial, quasi-judicial or ministerial functions;" and (2) there is no
plain, speedy, and adequate remedy in the ordinary course of law."10
The assailed agreement is clearly not the act of a tribunal, board, officer, or person exercising
judicial, quasi-judicial, or ministerial functions. It is not the act of public respondents Finance
Secretary Edgardo Espiritu and Labor Secretary Bienvenido Laguesma as functionaries of the
Task Force. Neither is there a judgment, order, or resolution of either public respondents
involved. Instead, what exists is a contract between a private firm and one of its labor unions,
albeit entered into with the assistance of the Task Force. The first and second requisites for
certiorari and prohibition are therefore not present in this case.
Furthermore, there is available to petitioners a plain, speedy, and adequate remedy in the
ordinary course of law. While the petition is denominated as one for certiorari and prohibition,
its object is actually the nullification of the PAL-PALEA agreement. As such, petitioners proper
remedy is an ordinary civil action for annulment of contract, an action which properly falls
under the jurisdiction of the regional trial courts.11 Neither certiorari nor prohibition is the
remedy in the present case.
Petitioners further assert that public respondents were partial towards PAL management. They
allegedly pressured the PALEA leaders into accepting the agreement. Petitioners ask this Court
to examine the circumstances that led to the signing of said agreement. This would involve
review of the facts and factual issues raised in a special civil action for certiorari which is not the
function of this Court.12
Nevertheless, considering the prayer of the parties principally we shall look into the substance
of the petition, in the higher interest of justice13 and in view of the public interest involved,
inasmuch as what is at stake here is industrial peace in the nations premier airline and flag
carrier, a national concern.
On the second issue, petitioners contend that the controverted PAL-PALEA agreement is void
because it abrogated the right of workers to self-organization14 and their right to collective
bargaining.15 Petitioners claim that the agreement was not meant merely to suspend the
existing PAL-PALEA CBA, which expires on September 30, 2000, but also to foreclose any
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renegotiation or any possibility to forge a new CBA for a decade or up to 2008. It violates the
"protection to labor" policy16 laid down by the Constitution.
Article 253-A of the Labor Code reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective Bargaining Agreement
that the parties may enter into shall, insofar as the representation aspect is concerned, be for a
term of five (5) years. No petition questioning the majority status of the incumbent bargaining
agent shall be entertained and no certification election shall be conducted by the Department
of Labor and Employment outside of the sixty-day period immediately before the date of expiry
of such five-year term of the Collective Bargaining Agreement. All other provisions of the
Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its
execution. Any agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such other provisions
as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately
following such date. If any such agreement is entered into beyond six months, the parties shall
agree on the duration of the retroactivity thereof. In case of a deadlock in the renegotiation of
the collective bargaining agreement, the parties may exercise their rights under this Code.
Under this provision, insofar as representation is concerned, a CBA has a term of five years,
while the other provisions, except for representation, may be negotiated not later than three
years after the execution.17Petitioners submit that a 10-year CBA suspension is inordinately
long, way beyond the maximum statutory life of a CBA, provided for in Article 253-A. By
agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers constitutional right
to bargain for another CBA at the mandated time.
We find the argument devoid of merit.
A CBA is "a contract executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect to wages,
hours of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement."18 The primary purpose of
a CBA is the stabilization of labor-management relations in order to create a climate of a sound
and stable industrial peace.19 In construing a CBA, the courts must be practical and realistic and
give due consideration to the context in which it is negotiated and the purpose which it is
intended to serve.20
The assailed PAL-PALEA agreement was the result of voluntary collective bargaining
negotiations undertaken in the light of the severe financial situation faced by the employer,
with the peculiar and unique intention of not merely promoting industrial peace at PAL, but
preventing the latters closure. We find no conflict between said agreement and Article 253-A
of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial stability
and predictability. Inasmuch as the agreement sought to promote industrial peace at PAL
during its rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is
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to assign specific timetables wherein negotiations become a matter of right and requirement.
Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory
timetables and agreeing on the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground employees,
that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the
10-year suspension of the CBA. Either case was the unions exercise of its right to collective
bargaining. The right to free collective bargaining, after all, includes the right to suspend it.
The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did
not contravene the "protection to labor" policy of the Constitution. The agreement afforded full
protection to labor; promoted the shared responsibility between workers and employers; and
the exercised voluntary modes in settling disputes, including conciliation to foster industrial
peace."21
Petitioners further allege that the 10-year suspension of the CBA under the PAL-PALEA
agreement virtually installed PALEA as a company union for said period, amounting to unfair
labor practice, in violation of Article 253-A of the Labor Code mandating that an exclusive
bargaining agent serves for five years only.
The questioned proviso of the agreement reads:
a. PAL shall continue recognizing PALEA as the duly certified-bargaining agent of the regular
rank-and-file ground employees of the Company;
Said proviso cannot be construed alone. In construing an instrument with several provisions, a
construction must be adopted as will give effect to all. Under Article 1374 of the Civil
Code,22 contracts cannot be construed by parts, but clauses must be interpreted in relation to
one another to give effect to the whole. The legal effect of a contract is not determined alone
by any particular provision disconnected from all others, but from the whole read
together.23 The aforesaid provision must be read within the context of the next clause, which
provides:
b. The union shop/maintenance of membership provision under the PAL-PALEA CBA shall be
respected.
The aforesaid provisions, taken together, clearly show the intent of the parties to maintain
"union security" during the period of the suspension of the CBA. Its objective is to assure the
continued existence of PALEA during the said period. We are unable to declare the objective of
union security an unfair labor practice. It is State policy to promote unionism to enable workers
to negotiate with management on an even playing field and with more persuasiveness than if
they were to individually and separately bargain with the employer. For this reason, the law has
allowed stipulations for "union shop" and "closed shop" as means of encouraging workers to

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join and support the union of their choice in the protection of their rights and interests vis-vis the employer.24
Petitioners contention that the agreement installs PALEA as a virtual company union is also
untenable.1wphi1 Under Article 248 (d) of the Labor Code, a company union exists when the
employer acts "[t]o initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other support to it
or its organizers or supporters." The case records are bare of any showing of such acts by PAL.
We also do not agree that the agreement violates the five-year representation limit mandated
by Article 253-A. Under said article, the representation limit for the exclusive bargaining agent
applies only when there is an extant CBA in full force and effect. In the instant case, the parties
agreed to suspend the CBA and put in abeyance the limit on the representation period.
In sum, we are of the view that the PAL-PALEA agreement dated September 27, 1998, is a valid
exercise of the freedom to contract. Under the principle of inviolability of contracts guaranteed
by the Constitution,25 the contract must be upheld.
WHEREFORE, there being no grave abuse of discretion shown, the instant petition is
DISMISSED. No pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

Footnotes
1

Rollo, p. 68. Administrative Order No. 16, Sec. 2.

ALPAP, PALEA, and the Flight Attendants and Stewards Association of the Philippines
or FASAP.
3

Supra, note 1 at 69.

Id. at 98.

Id. at 101.

Id. at 65-66.

G.R. No. 67787, 172 SCRA 415, 424-425 (1989).

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8

G.R. No. 92163-64, 186 SCRA 217, 231 (1990).

Suntay v. Cojuangco-Suntay, G.R. No. 132524, 300 SCRA 760, 766 (1998); Cuison v.
Court of Appeals, G.R. No. 128540, 289 SCRA 159, 171 (1998).
10

1997 Rules of Civil Procedure, Rule 65, Sec. 2

11

Batas Pambansa Blg. 129, as amended by Rep. Act No. 7691, Sec. 19.

12

Stolt-Nielsen Marine Services, Inc. v. NLRC, G.R. No. 128395, 300 SCRA 713, 717-718
(1998); Suarezv. NLRC, G.R. No. 124723, 293 SCRA 496, 502 (1998).
13

Go v. Court of Appeals, G.R. No. 128954, 297 SCRA 574, 584 (1998); Fortich v. Corona,
G.R. No. 131457, 289 SCRA 624, 645 (1998).
14

Const. art. III, sec. 8.

15

Const. art. XIII, sec. 3.

16

Const. art II, sec. 18; art. XIII, sec. 3.

17

San Miguel Corporation Employees Union-PTGWO v. Confesor, G.R. No. 111262, 330
Phil. 628, 638 (1996).
18

Davao Integrated Port Stevedoring Services v. Abarquez, G.R. No. 102132, 220 SCRA
197, 204 (1993).
19

Kiok Loy v. NLRC, G.R. No. L-54334, 141 SCRA 179, 185 (1986).

20

Davao Integrated Port Stevedoring Services v. Abarquez, supra, note 19 at 204.

21

1987 Const. art. XIII sec. 3. Stress supplied.

22

Art. 1374. The various stipulations of a contract shall be interpreted together,

attributing to the doubtful ones that sense which may result from all of them taken
jointly.
23

Reparations Commission v. Northern Lines Inc., et al., G.R. No. L-24835, 145 Phil. 24,
33 (1970).
24

Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., G.R. Nos. 58768-70, 180 SCRA
668, 679-680 (1989).
25

Const. art. III, sec. 10.

28

MAS