LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa
JULY 20, 2017
Estillore
Collective bargaining is not an ordinary contract. It
is a sui juris contract. The two parties that agree in a
collective bargaining agreement do not stand in equal
footing.
Justice Enrique Fernando used to say that the right to
self-organization enables the labor to stand toe-to-toe, in
equal footing, with capital. But even with the right to
self-organization, even if it is already a union, it still does
not stand in equal footing.
Why? Because you are agreeing on something that
already belongs to capital. So, the employer has
managerial prerogative because he owns the business.
This is my disappointment with Chan’s 2017 book
because it says that managerial prerogative is a judicial
pronouncement. There is no managerial prerogatives in
the Labor Code. Where does managerial prerogatives
come from? It says, “Because the Supreme Court says
so!” As the manager, the employer has this array of
rights over and above its role as a manager.
That is the thing! Managerial Prerogatives is a
misnomer. It should be properly called “Ownership
Prerogatives”. In Civil Law, Managerial Prerogative is
merely is merely administrative. Managerial
Prerogatives, when you go down to this, actually
includes the right to disposition which is ownership. If
you are an administrator you cannot dispose. You
require a special power of attorney. What is the
opposite of SPA? That’s powers of administration?
(Huh? Wrong question!) It’s called special power of
attorney because you are disposing land(?). Managerial
prerogatives arose from ownership, which you know in
Civil Law is a bundle of right. It is not just one right.
Because you are an owner, you have the right to
possess. That’s jus possedendi , jus fruendi (right to the
fruits), jus utendi (right to use), jus disponendi, and jus
abutendi (?). Those rights are all managerial
prerogatives. The employee is co-opted into the
enterprise of the employer.
Even if there is a CBA, he has the right to do what he
can do with his enterprise.
Muingon ba diay ning tag-iya – “Kay late ka man, sige
kag ka late ug abot dinha, I protest under the CBA.” Dili
siya muingon ana! Muingon siya “Ako may ga sweldo
nimo, kanang kwarta akoa man na, wa kay sweldo!
Managerial prerogatives - kwarta na nako! Nganong
sweldoan pa man taka nga di man ka mutunga!”
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
Kay wa man ka mihatag, ang empleyado mag-mulo.
Muingon siya “Pagkalain. Wa nakoy pagkaon, wa nakoy
ibutang sa lamesa sa akong pamilya.” Maguol siya.
Mao nang naay grievance. He grieves.
There is no breach of CBA because the employer has
many remedies simply because he owns the business.
So, it is not an ordinary contract. Timani ni ha. Walay
breach of contract sa CBA. Muingon gani ka ug naay
breach of CBA, ihagbong ka nako because you
completely missed what is collective bargaining. There
is only grievance. Di man maghulat ang employer sa
CBA. He acts on his prerogatives because he has an
asset that he’s trying to make profitable.
From this, you know that the employer in a CBA is the
pro-active party. The employee is only the re-active
party. Magpaabot ra siya kung unsa buhaton sa
employer kay siya man tag-iya. Ang employee walay
assets (?), masakitan man siya mao nang mag-mulo na
siya – he grieves. Mag file siya ug grievance.
When does the duty to bargain begin? Because the
employer is proactive and the employee is reactive, it is
always the employee that asserts the right to bargain. It
is always the employer who has the duty to bargain
because - number one - if there is no CBA, there is
individual contract. If the CBA is already expired, it is
the employee who has an interest that a new CBA be
concluded so that he will have more benefits more than
the preceding CBA. So it’s always in favor of the
employer to delay or postpone collective bargaining as a
process, to delay or postpone the conclusion of the CBA,
because there is always another contract that can take
the place of another contract which is supposed to be
the product of bargaining process. So ang mag-sige
pursige sa right to collective bargaining is the employee.
The employer will have to respond to the duty to bargain.
When does the duty to bargain begin? The decided
case is Kiok Loy (Swedish Ice Cream) vs. NLRC.
Before, Swedish Ice Cream was made by this
businessman called Kiok Loy. This is where the SC
made pronouncement as to when the duty to bargain
begins. It is when
1. Majority representation status is possessed by
the labor organization
2. There is proof of majority representation status
3. The labor union that is the representative of the
bargaining unit has submitted in writing the
bargaining proposals.
In other words, Article 250 has begun. Now, it’s Article
260. It says – the following procedure shall be observed
in collective bargaining:
 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
is that party who desires to negotiate? It’s always the
union and not the employer, because the employer, di
man na mag sakit iyang tiyan kung walay CBA. It’s the
union. But the law says that “when a party..” kaduha
nalang na. If the union desires to negotiate an
agreement, it shall serve written notice upon the other
party with the statement of its proposal. The other party
shall make a reply thereto not later than 10 calendar
days rom receipt of such notice.
So, submit ka bargaining proposals. In the 1930s, it was
called bargaining demands. Now it’s called bargaining
proposals. You submit it in writing and now the
employer has 10 days to make a reply. How does he
reply? He will say – “I accept all your proposals. I will
grant all your proposals.” Highly unlikely. It’s possible
but it is improbable. So, after 10 days he has to give an
answer. Normally, he gives an answer by counter-
proposals should differences arise. On the basis of
such notice of reply, either party may request for a
conference which shall begin not later than 10 calendar
days from the date of the written notice.
If the dispute is not settled, the National Conciliation and
Mediation Board (NCMB) shall intervene. It shall
intervene upon request of either both parties or on its
own initiative (motu proprio), and immediately call the
parties to conciliation meetings. The Board shall have
the power to issue subpoenas requiring the attendance
of the parties to such meetings. It shall be the duty of
the parties to participate fully and promptly in the
conciliation meeting the Board might call.
During the conciliation proceedings in the Board, the
parties are prohibited from doing any act which may
disrupt or impede the early settlement of the disputes.
The Board shall exert all efforts to settle dispute
amicable and encourage the parties to submit their case
to voluntary arbitration.
You know, this is where you notice that the DOLE or the
author of this big book (referring to Chan, I guess) is
really schizophrenic. Why? The NCMB is conciliation
and mediation. It must be the parties that should arrive
at a resolution. But the NCMB has subpoena powers!
Pugson niya. Unsaon man niya pagpugos na sila ra
man kaha mag settle. Unsaon man na niya?
Then take a look at this – the Board shall exert all efforts
to settle the disputes. It cannot settle dispute. It’s the
parties who settle the dispute, not the conciliator or
mediator. This is the problem of our Labor Relations
because voluntary arbitration is less than voluntary. It is
actually disguised compulsory arbitration.
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
There is a bargaining proposal in writing submitted to the
management. The management responds in 10 days.
And then, the union asks for conciliation bargaining
session. They will be bargaining until one or both give
up. They declare deadlock. Once there is a deadlock,
the NCMB comes in and tries to get them to agree. But
if they cannot agree, then the NCMB will do (?) out of the
picture because the next thing that will happen is their
compulsory arbitration or voluntary arbitration.
Compulsory Arbitration. One might say - “That there’s a
deadlock so therefore, we declare a strike on the basis
of the deadlock to compel the other party to grant our
demands.” So, when there is a strike, what can
happen? If it’s a hospital, a bank, or an industry
indispensable to the national interest, it’s possible that
the Dpartment of Labor Secretary will assume
jurisdiction over the dispute. Wala na’y strike. Siya ang
mu-decide kung unsa na ang naa dinha. Or the
Secretary will throw it to the NLRC. Then, the NLRC will
decide.
The US Supreme Court paints a picture of what a CBA
is. It says: Collective Bargaining is similar to someone
bringing his h to the bank of the river and getting his
horse to stretch out its neck, bow down, and drink from
the river. Paimnon niya ang kabayo kay mulakaw na sila
ug layo, wa na kay mainom! Now, the horseman can
only bring the horse to the edge of the river but the
horseman can never drink for the horse. It must be the
horse. In the end, you must wrap (?) up the water and
drink. Mao sad na ang collective bargaining. The law
conspires to bring the parties to the table but they cannot
be forced to agree. In the end, they must agree because
anything more than that is no longer an agreement.
This is where Philippine jurisprudence departs from US
jurisprudence. Because in Kiok Loy, a union presented
bargaining proposals. Niabot nalang ang isa ka buwan,
wa gyud mutubag ang management. So the workers left
their factory floor, gathered, and went to the
administration building of Kiok Loy. They demonstrated.
When they did that, Kiok Loy instituted dismissal
proceedings for the union leaders because according to
Kiok Loy they have conducted an illegal strike without
filing a notice of strike. They left work and
demonstrated. He says there is work stoppage.
The union answered by saying that management has
violated the duty to bargain. “We sent the proposals
but were not answered. They did not even acknowledge
receipt of the proposals.”
In their answer, Kiok Loy invoked an affirmative defense
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
 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
did not observe cooling off period. So, they should be
dismissed because they conducted an illegal strike, the
leaders may be dismissed.
Now, it goes to the SC because the NLRC, in deciding,
said that Kiok Loy did not even advert to the bargaining
proposals. He has the duty to respond to the bargaining
proposals thus violating the duty to bargain. When you
do not bargain, and the proposals are reasonable taken
in themselves, then the NLRC has the jurisdiction to
order that the terms of the CBA will be the proposal.
Tan-awa ra. According to the NLRC, the DOLE has the
prerogative to order that the proposals, seen that they
are reasonable in themselves, will become the CBA. Did
Kiok Loy agree? No! They did not even advert to it.
Does the DOLE have that power? SC said yes, it has
that power. Naloko na. Where is the agreement? It is
now collective order of the NLRC. It is no longer a CBA.
That is what the SC says.
What happened to Kiok Loy? He declared bankruptcy
and closed the same. Do you see Swedish Ice Cream
for sale? No more. Wala na. Nawagtang na.
KIOK LOY vs. NLRC and PAMBANSANG KILUSAN
NG PAGGAWA (KILUSAN)
FACTS:
In a certification election, KILUSAN, a legitimate late
labor federation, won and was subsequently certified in a
resolution by the BLR as the sole and exclusive
bargaining agent of the rank-and-file employees of
Sweden Ice Cream Plant (Company).
Thereafter, the Union furnished the Company with
copies of its proposed CBA. At the same time, it
requested the Company for its counter proposals. The
request were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the
Company to the bargaining table, the Union filed a
“Notice of Strike”, with the BLR on ground of unresolved
economic issues in collective bargaining.
The NLRC rendered its decision, the dispositive portion
of which reads as follows:
WHEREFORE, the respondent [company] is hereby
declared guilty of unjustified refusal to bargain, in
violation of Section (g) Article 248 (now Article 249), of
P.D. 442, as amended. xx
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
ISSUE: Did the NLRC act with grave abuse of
discretion?
HELD: NO
Collective bargaining which is defined as negotiations
towards a collective agreement, is one of the democratic
frameworks under the New Labor Code, designed to
stabilize the relation between labor and management
and to create a climate of sound and stable industrial
peace. It is a mutual responsibility of the employer and
the Union and is characterized as a legal obligation. So
much so that Article 249, par. (g) of the Labor Code
makes it an unfair labor practice for an employer to
refuse “to meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work, and all other terms
and conditions of employment including proposals for
adjusting any grievance or question arising under such
an agreement and executing a contract incorporating
such agreement, if requested by either party.
From the over-all conduct of petitioner company in
relation to the task of negotiation, there can be no doubt
that the Union has a valid cause to complain against its
(Company’s) attitude, the totality of which is indicative of
the latter’s disregard of, and failure to live up to, what is
enjoined by the Labor Code — to bargain in good faith.
NOTES: While it is a mutual obligation of the parties to
bargain, the employer, however, is not under any legal
duty to initiate contract negotiation. The mechanics of
collective bargaining is set in motion only when the
following jurisdictional preconditions are present,
namely,
(1) possession of the status of majority representation of
the employees’ representative in accordance with any of
the means of selection or designation provided for by the
Labor Code;
(2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the
New Labor Code . … all of which preconditions are
undisputedly present in the instant case.
There is this amendment to the Labor Code which came
after the decision of Kiok Loy. The amendment is found
in Article 250 - rights of legitimate labor organization,
 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
request with the annual audited financial statements,
including the balance sheet, and profit and loss
statement within 30 calendar years from the date of
receipt of the request.
Here, the SC said that it is not just a legitimate LO. This
must be an exclusive bargaining agent who has the right
to be furnished, upon written request, within 30 days the
latest audited financial statements. The law is even
more specific that it must include balance sheet and
profit and loss statement within 30 days from the date of
receipt after the union has been duly recognized by the
employer or certified as the sole and exclusive
bargaining representative of the employees in the BU.
So there is statutory recognition of the right to recognize
the exclusive bargaining unit agent. Or within 60
calendar days before the expiration of the existing CBA
or during the collective bargaining negotiations. So,
there are three instances when the exclusive bargaining
agent can demand from the employer the latest audited
financial statement:
1. As soon as it is voluntarily recognized or it is
certified as the exclusive bargaining agent after
a certification election
2. During the 60-day freedom period of a CBA
3. During the collective bargaining negotiations
If you have not asked before and you are already
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
the duty to bargain begins with the bargaining proposal.
According to the SC, this is a separate duty. If the
employer does not give the latest audited financial
statements, he can be charged with unfair labor practice.
But this is not yet the beginning. This is just a duty. The
SC said that for this duty to be activated, the request
must be in writing. It is not enough that you make a
request even during the bargaining sessions and request
was recording in the minutes. That is not complying with
the duty to make a written request.
There is this case of Restaurant Employees of Aristocrat
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
ground that the management has refused to bargain.
So, when the notice of strike was served on the
employer, the old lady, Reyes, who was the owner, the
patriarch of the family that owns Aristocrat, appeared in
the conciliation mediation. She says -
“I’m sorry. I did not get a copy of your proposals. Where
is your proposal? Do you have a copy now?” They
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
gave her a copy and right then and there, she went
through the bargaining proposals and made marginal
notes and gave back the proposals. Is that enough? SC
said that it is a substantial compliance of Article 260.
No violation of its duty to bargain because he made
marginal notes on the bargaining proposal. If you don’t
advert to it, then that’s a refusal to bargain and if the
proposals are considered reasonable by the DOLE, the
latter can order that the proposal be the standing
proposal. There is no such rule in the US because it will
only bring the parties back to the table because that
would not be an agreement.
JULY 26, 2017
Berguia, Abad, Buhay
Let us go through the Collective Bargaining Duty
provisions of the labor code. It begins with 260. We
said, this is one of the elements of the beginning of the
collective bargaining. What are those elements?
1. Majority representation STATUS
2. You must produce PROOF of the majority
representation status.
3. You must submit to the other party,
management or employer, your BARGAINING
PROPOSALS IN WRITING.
Art 260 (old 250). Procedure in Collective
Bargaining. The following procedures shall be
observed in collective bargaining:
a) When the party desires to negotiate an
agreement, it shall serve a written notice
upon the other party with the statements of
its proposals. The other party shall make a
reply thereto not later than 10 calendar days
from receipt of such notice;
Xxxxxx
So Art 260, according to Justice Cuevas, citing the case
of Kiok Loy- if the employer does not advert or do
anything to the bargaining proposals and if it (bargaining
proposals) seems reasonable he simply agrees to it.
That becomes their CBA. If he doesn’t acknowledge
receiving it, he prescinds from it. So, the department of
labor or the secretary of labor has discretion to
 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
and if it is so, then that becomes the CBA of the
management and the union.
Now, this is violative of the term AGREEMENT. When is
there agreement? When there is meeting of the minds
over a definite or determinable subject matter. Unsay
meeting of the minds ato nga siya ra may ni-submit?
Siya ra may nag buot-buot. Unya karon, nahimo na
dayon natong agreement kay ana ang Secretary of
Labor na mao na ni atong CBA? I tell you this only
happens in the Philippines.
Now, 261:
Art 261 (251). Duty to bargain collectively in the
absence of CBA. In the absence of an agreement or
other voluntary arrangement providing for a more
expeditious manner of collective bargaining, it shall
be the duty of the employer and the representatives
of the employees to bargain collectively in
accordance with the provisions of this Code.
RECITATION:
Q: In your opinion, what is this provision all about?
A: *opinion -----
What does this provision tell you? It tells you nothing!
Sige pangitaa daw sa Labor Code nang gina-ingon dira.
Useless provision! Taas kayo nga sentence, unya kato
diay, zero. Nada!
Article 262(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 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
and executing a contract incorporating such agreements
if requested by either party but such duty does not
compel any party to agree to a proposal or to make any
concession.
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
RECITATION:
Q: When does this duty to bargain apply (because the
next provision is [about] duty to bargain again)?
A: It applies in the negotiation stage.
Q: How many elements are there?
A: There are five elements.
The five elements: (MEMORIZE THE ELEMENTS AS
PER FATHER)
First: to meet and convene promptly and expeditiously
Second: in good faith
Third: for the purpose of negotiating an agreement
Fourth: does not compel any party to agree to a
proposal
Fifth: or to make any concession.
The FOURTH and FIFTH elements are negative -- does
not compel any party to agree to a proposal or to make
any concession.
First element-- to meet and convene promptly and
expeditiously. That is binocular; you can observe it with
your eyes.
Example 1: Nagsabot mo magbargaining session, 11:30
sa Davao Famous. 11:30, 12, 12:30 bugnaw na ang
pancit, wa gihapon ka miabot. That is a violation of the
first element to meet and convene promptly and
expeditiously.
Second element- in good faith. When you say in good
faith that is more difficult to determine because good
faith is presumed.
Example 1.1: Nakigsabot ka, mayo inyong pagsabot.
Nagsabot na gani mo sa inyong orderon sa restaurant.
Gitawagan na daan ang management nagpareserve na
daan didto ug lamisa. Dili ba na in good faith? The first
two agreements? Isn’t that already good faith? Except
th
when it is already the 99 meeting. Unya pancit ra
gihapon gi order. Mao ra gihapon na restaurant . Wa
ghapon CBA. 99 times mo nagtagbo. Hapit na maupos
ang certification- year-rule.
What is the Certification Year Rule? Within one year
from the results of the certification election, no petition
for certification election may be entertained.
 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
one of the parties in the CBA. Will you say it is in good
faith? That is more difficult to prove. Good faith and bad
faith are very difficult to prove. In him or her, who
alleges the opposite, lies the burden of proof.
Like potency, impotency is very difficult to prove.
Potency is presumed because you have to postulate that
God is a very generous God that equips everyone
generally with the same basics or necessary equipment.
The subject is impotent but what happens when the
triennial cohabitation rule applies under you Persons
and Family Relations? When a married couple has
cohabited for three years and the woman is still a virgin
that is when the triennial cohabitation rule applies which
means that the burden of proof shifts. The man must
now prove that he is potent. You are in third year. You
must be sensitive to the evidentiary implications.
Example 2: You are a cashier and you are in-charge with
the money that comes in. A cashier subjected to a cash-
count and found to be short of the receipts or the cash
that got out in that day does not match. What happens?
The burden of proof shifts. She must now prove that she
has not absconded with the money that cannot be
accounted for. Normally, it is the prosecution that proves
na nangawat ka. If she does not present evidence
explaining the difference, convicted siya of Estafa.
When is there bad faith bargaining?
The cases mentioned here (handouts) are illustrative to
prove or disprove good faith.
1. Boulwarism
General Vice-President Boulware, after receiving the
bargaining proposals of the union, he draws up a
counter-proposal and says this is the best deal that
union can get, that management can stand up to, and
the shareholders and owners those who have interest in
the corporation can live with.
The man must now prove that he is potent. You have
taken this up in Persons and Family Relations. This is a
landmark case. This woman from Zamboanga, and JBL
Reyes points out the Triennial Cohabitation Rule. You
rd
are already in 3 year and you must be sensitive already
to the evidentiary implications.
Cashier ka, you are in-charge of the properties of the
company, namely the money that comes in. A cashier is
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
subjected to a cash count and was found to be short.
The receipts that were issued does not match the cash
and checks that she has. What happens? The burden of
proof shifts. She must now prove that she has not
absconded the money that cannot be accounted for.
Normally it is the prosecution that proves. Cash count na
gani, naan a dinha, it shifts. If she does not present any
evidence, she would be convicted of estafa.
Good faith, bad faith.
When is there Bad faith bargaining? That is why the
cases that are mentioned here, are illustrative by which
you prove or disprove good faith.
BOULWARISM. General Electric Vice President
Boulware, after receiving the bargaining proposals of the
union, he draws up a counter proposal and says that this
is the best deal that the union can get, and that the
management can stand up to, and the share holders and
the owners and those that have interest in the
corporation can live with. There is no other, this is the
best arrangement. So he goes over to the union
members and say convince your union to agree to this
because this is the best proposal.
What did the SC say?
You are in bad faith. You have to convince the Union,
the representative of the workers, that this is the best
deal. You do not bargain with the union by going to
the workers. You bargain to the workers by going to
the union.
Do not negate the bargaining representative.
Remember, the union is the exclusive bargaining agent.
It is exclusive of anybody else, even the employees –
the principals, cannot bargain. It must be the
representative – the union. If you short circuit it and you
go the principal. You are in bad faith.
Is it true in ordinary contract negotiations?
Naay yuta nga baligya. Nay agent na mubaligya ana.
Ang buyer muingon sa agent, “mahimo ba na makigsulti
ko sa imong seller jud mismo.” As the agent, “dili
mahimo nga makigstorya ka, ngari ka nako kay ako man
ang gihatagan og authority.”
Kinsa man ang imong principal? Ahh secret.
 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
mamiligro ang iyang commission. Unya muingon siya
nga, magpromise ka nga muhatag ka nako og
commission nga 5%, paistoryahon tika sa akong
principal, basta muhatag ka nako og 5%. Ha? Common
baya na. That is illegal.
Nganong siya man ang imong pangayoan? Ang imong
principal ang imong pangayoan, dili kanang other party.
Unsa man ka, ha? Matud pa sa tinagalog, “namamangka
ng dalawang bangka or namugsay og duha ka sakayan.
Illegal na because you are now at the employ of the
buyer, if you receive something from the seller that
means you are working for his benefit. But if the agent
says, okay I am secure with my commission with the
principal, you can talk to him if you want, I will give you
his number. Can he do it? Yes he can.
But even if the union will say that you can talk to the
workers, you cannot do it. It is exclusive. That is why it is
called, exclusive bargaining agent. He excludes the
principal.
Suppose of his own volition, the principal says to the
agent, can you step aside, I will take it from here. Can he
do it? Yes he can do it. That is his right. And the contract
of agency is basically confidential trust. If the principal no
longer has confidence in the agent, he can make the
agent step aside. In collective bargaining, that is not
true. You have to deal with the agent, because he is
exclusive. Exclusive of the principal, exclusive of
anybody else who wants to be an agent.
So, that is why the US SC said, you cannot bargain with
the union through the workers. You can only bargain
with the workers through the union. That is how the SC
explained Boulwarism as bad faith bargaining.
Alright, here is another case. 2 decisions. One is a main
decision, and another is a resolution for the motion for
reconsideration. It took 2 years for the MFR to be
resolved. This MFR was resolved with other parties filing
other motions. This is Union of Filipro Employees vs.
Nestle, decided in 2006, and the MFR was decided in
March 3, 2008.
What does this illustrate of the elements?
The elements say, negative elements, but the duty to
bargain does not include the duty to agree to any
proposal or to make any concession.
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
Now, what is at issue here. The issue is as to the
retirement plan of Nestle. Nestle has something like 13
plants all over the Philippines. Then this particular plant,
which is an affiliate of KMU, says we want to renegotiate
the retirement plan. And management says, we do not
want to renegotiate it. It is so much higher than what the
law requires, it is non-contributory (meaning: dili na
kuhaan ang imong sweldo aron imong contribution sa
retirement plan, zero, walay contribution).
There is a compulsory retirement benefit for your
compulsory retirement under the labor code which is ½
month salary plus 5 days service incentive leave for
th th
every year of service, plus 1/12 of the13 month pay
for every year of service, a total of 23 days of salary per
year of service, you have that without even contributing.
So if your retirement in a contributory plan, taking into
consideration your contribution, is not even in excess of
that, it means that you are funding the obligation of the
employer and that retirement plan is illegal.
(Note: Tax discussion re: retirement plans. This can be
deleted depending upon the sound discretion of the chief
editor )
Retirement plans under the NIRC may be tax exempt. In
other words, the company, the employer, may set aside
and put up a special retirement plan. The contributions
are deductible from gross revenues, it can lower the
taxable base, provided that you register the retirement
fund with the BIR and provided that it is an irrevocable
fund.
How do you know that a retirement fund is sufficient?
Who are accountants here? (lol.. recitation time) How do
you compute the possible claims of the workers? How
do you know when a retirement fund is sufficient for
now? You get all the employees, the number of years of
service, you get their salary now, and if the fund can
take it if all of them retire now, that is the current value of
the fund and that is the adequacy of the fund. That is
how you determine.
What is the purpose of determining that? Kung ibaligya
diay nimo ang kumpanya, if you are going into a merger,
if the retirement fund is not adequately funded, the
inadequacy should be deducted from the value of the
company because in the end, the buyer of the company
will have to put in more money into the retirement fund.
(thank you, very good daw sa nagrecit. Hehe)
 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa
Now this retirement benefit of Union of Nestle is
adequately funded. It offers better retirement benefits
than what the law provides, it is more than double. Sa
law 23 days lang. Ang ilang gihatag is 2 months and a
half for every year of service. Now they say, we do not
want to discuss in the collective bargaining the
retirement benefits, human na na. Dili mi gusto makig
discuss ana. The union said no, you have to discuss it
with is because that is part of collective bargaining.
So the first question that was raised to the SC on a
question of law is whether or not the retirement
benefits constitute a mandatory subject of
bargaining? The only thing covered by collective
bargaining are terms and conditions of work, otherwise,
it is not subject to collective bargaining. So is retirement
benefits a mandatory subject of collective bargaining?
The decision penned by Justice Chico-Nazario says, it is
a mandatory subject of bargaining.
But then the SC did not order Nestle to include in the
agenda of negotiations the agenda on retirement
benefits which the union were specifically asking for in
their prayer.
So there was a MFR: If it is true that it is a mandatory
subject of collective bargaining, then Nestle is in
contempt of court, because it continues to maintain that
we will not discuss with you the retirement plan.
Pasaylo-a lang mi dili mi makigdiscuss ninyo. Human na
nig discuss sa 12 ka planta unya kamo gusto ninyo
usbon. Paghuman ninyo usbon napod namo ang 12. So
they are saying that the employer here is in contempt of
court.
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
is a legitimate bargaining position, because the law does
not require you to agree to any proposal or to make any
concession. That is as valid as stance as you stance is,
that we should discuss the retirement plan.
Muingon ang Nestle, dili mi gusto magdiscuss, muingon
dayon ang pikas, kinahanglan magdiscuss ta ana. Dili
lagi. Magdiscuss ta. Dili lagi para namo human na. Sigeg
balik balik. That is negotiation according to the SC, so
there is negotiation. Because negotiation does not
require you to agree to any proposal or to make any
concessions. Very fine distinction.
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
Si Kiok Loy unsa man diay tong deperensya nila? Wala
man gud nakigstorya si Kiok Loy bahin sa ilang
proposal. Ha. Si Kiok Loy, stonewalled them. That is
refusal to bargain, that is bad faith bargaining. Kaning
Nestle, sige man silag negotiate nga dili sila
munegotiate. They are negotiating by saying na dili sila
munegotiate. That is logic.
UNION OF FILIPRO EMPLOYEES KILUSANG MAYO
UNO (UFE-DFA-KMU), vs. NESTLÉ PHILIPPINES,
INCORPORATED, March 3, 2008
In the case at bar, Nestle never refused to bargain
collectively with UFE-DFA-KMU. The corporation
simply wanted to exclude the Retirement Plan from the
issues to be taken up during CBA negotiations, on the
postulation that such was in the nature of a unilaterally
granted benefit.
An employer’s steadfast insistence to exclude a
particular substantive provision is no different from a
bargaining representative’s perseverance to include
one that they deem of absolute necessity.
Indeed, an adamant insistence on a bargaining
position to the point where the negotiations reach an
impasse does not establish bad faith. It is but natural
that at negotiations, management and labor adopt
positions or make demands and offer proposals and
counter-proposals. On account of the importance of
the economic issue proposed by UFE-DFA-KMU,
Nestle could have refused to bargain with the former –
but it did not. And the management’s firm stand
against the issue of the Retirement Plan did not mean
that it was bargaining in bad faith. It had a right to insist
on its position to the point of stalemate.
Pagsungag namo, nga wala nay makadvance, you have
the right to reach tha point, why? Because you have no
obligation to agree to any proposal or to make any
concession. Very important that you remember that
specially for the Bar exams.
Article 263. 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
 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

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.
RECITATION
Q: So, when is this duty binding upon the parties?
A: When there is already a collective bargaining
agreement.
Q: Is this still the duty when the collective bargaining
agreement has expired?
A: The last clause – “until a new agreement is reached.”
So this does not cover only while the collective
bargaining agreement is in force and in effect according
to its terms because this is an Automatic Hold-over
provision imposed by law.
A CBA is in force and in effect during its term, there will
be a provision there that says, “this CBA shall be in force
rd
and in effect from and after the ratification of 2/3 of the
bargaining unit and until midnight of such and such a
date.” The five years end. Even if the CBA says that, the
law says that it is in force and in effect until a new
agreement is reached by the parties. That is an
automatic hold over provision.
- The employer can modify if it is favourable to the
worker.
st
The CBA just says, “The increase for the 1 year is 10
nd rd
pesos a day. Increase for the 2 year is P10 again, 3
th th
year P10, 4 year P10, 5 year P10. Now suppose the
employer will say, “Since we are doing very well, (in the
th
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.
You cannot terminate or modify if it is contrary to the
welfare of the employee. But if it is for the good, bisan
usbon pa nimo na tanan dinha mahimo.
Remember, when there is a conflict between the CBA
and actual practice, which prevails? Whichever is
favorable to the employee. You are guided by that.
WHICHEVER IS FAVORABLE
ADMINISTRATION PHASE
Alright, so this is where the CBA exists. What is the
bargaining that happens during the administration phase
of the CBA? This is the Administration phase. You
administer the CBA.
Who administers the CBA? It is supposed to be a union
and the employer. Jointly they administer the CBA for
the benefit of the bargaining unit.
Is there a chance to compromise; negotiate, even if the
CBA is already there? There is. And that is precisely
what is called grievance. You try to adjust grievances.
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?

Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo

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

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

Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo

 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa
Illegal termination or dismissal is under the exclusive
and original jurisdiction of the Labor Arbiter. So that is
what will happen.
When is this procedure applicable? It is applicable when
an employee is in jeopardy of being dismissed or he is in
jeopardy of being suspended. He is entitled to a hearing.
Under the Renato Corona decision, the law says that
this particular requirement does not necessarily mean
that there must be a hearing. Something equivalent of a
hearing where the employee has ample opportunity to
argue his side and present evidence for and in his behalf
– that is what is required.
So, because of this, there can still be negotiations while
the CBA is already fixed; where the CBA is already fixed.
That is why the SC has said that the duty to bargain
and negotiate does not end with a CBA. It continues
because there is grievance. There is a grievance
machinery. This was brought out by the SC in the
celebrated case of Republic Savings Bank v. CIR
(1967).
“Collective bargaining does not end with the
execution of an agreement. It is a continuous
process. The duty to bargain imposes on the parties
during the term of their agreement, the mutual
obligation to meet and confer promptly and
expeditiously and in good faith for the purpose of
adjusting any grievances or question arising under
such agreement. And the violation of this obligation
is an unfair labor practice.”
That is the reason why the SC says, “The duty to
bargain collectively is a never-ending process.” Wa
pay CBA, they negotiate. Naa nay CBA, mahimo man
gihapon magnegotiate, nu, to adjust grievances? It does
not end. Now, this is illustrated by the Republic Savings
Bank case. I suggest you read it. 721 SCRA 226.
REPUBLIC SAVINGS BANK vs. CIR
FACTS:
The Bank employs Resuello et. al. In 1958, it then
discharged the private respondents for having written a
patently libelous letter tending to cause the dishonor,
discredit, or contempt not only of officers and employees
of this bank, but also of the bank itself.
The letter was actually a letter-charge, which Private
Respondents had written to the bank president,
demanding his resignation on the grounds of immorality,
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
nepotism in the appointment and favoritism as well as
discrimination to bank employees.
At the instance of respondents, Prosecutor A. Tirona
filed a complaint in the CIR alleging that the Bank
violated the Industrial Peace Act, which makes it an
unfair labor practice for an employer to discriminate
against an employee for having filed charges.
ISSUE: Whether or not the Bank conducted unfair labor
practice
RULING: Yes. The action of the private respondents will
affect their labor organization.
Assuming that the private respondents acted in their
individual capacities when they wrote the letter-charge
they were nonetheless protected for they were engaged
in concerted activity, in the exercise of their right of self-
organization that includes concerted activity for mutual
aid and protection, interference with which constitutes an
unfair labor practice under section 4(a)(1). This is the
view of some members of this Court. For, as has been
aptly stated, the joining in protests or demands, even by
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
activity be involved or that collective bargaining be
contemplated.
Indeed, when the respondents complained against
nepotism, favoritism and other management practices,
they were acting within an area marked out by the Act as
a proper sphere of collective bargaining. Even the
reference to immorality was not irrelevant as it was
made to support the respondents' other charge that the
bank president had failed to provide wholesome working
conditions, let alone a good moral example, for the
employees by practicing discrimination and favoritism in
the appointment and promotion of certain employees on
the basis of illicit relations or blood relationship with
them.
DISPOSITIVE: Private Respondents won. In final sum
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
action, and/or as a refusal to bargain collectively,
constituted an unfair labor practice within the meaning
and intendment of section 4(a) of the Industrial Peace
Act.
DOCTRINE: Assuming that the private respondents
acted in their individual capacities when they wrote the
letter-charge they were nonetheless protected for they
were engaged in concerted activity, in the exercise of
their right of self-organization that includes concerted
activity for mutual aid and protection, interference with
 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

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
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa
terminating the relationship of the EBA with the
employer)
Read: Benguet vs Benguet (digest at next page) –
the substitutionary doctrine is applied. The old EBA is
replaced by a new one. Recall your “unions and right to
self-organization”, if you are an affiliate to a federation
then there is no problem. Why? Because an affiliate is
both a local and has his own independent registration.
Once it disaffiliates, it still has a personality. It can
continue administering the CBA. The federation is out of
the picture but the local can administer.
But what if the local is just a local chartered by the
federation? It has no independent registration. If it
disaffiliates, it has no more personality to administer the
CBA. There will be instances where the Bureau of Labor
Relations helps the local to obtain an independent
registration. So there is a hiatus (a week or 2 weeks).
But then that is salvaged once they are issued that
independent registration.
The better way to arrange it is when they disaffiliate from
the federation, at the same time they affiliate with a new
federation. Now, the EBA has a new agent (remember,
the federation is the agent of the local and the local is
the agent of the bargaining unit). And the person who
actually sits in the negotiating table is the Bargaining
Representative or the agent of the agent of the EBA.
There is a natural person in the end that does the
negotiation who can be the agent of the federation. And
the federation, in turn, is the agent of the EBA which is
the local because the SC has said:
“The labor organization at the workplace is the
real party-in-interest. The federation is just a
representative.”
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
2. Whenever there is a grievance, the parties
should meet promptly and expeditiously for the
purpose of adjusting this grievance.
3. But in the last 60 days of the CBA, the parties
may serve notice to the other party to begin
negotiation of the next CBA that will take over
the existing CBA (freedom period).
4. Even after the end of the CBA, if there is still no
agreement that has been arrived at that would
dovetail the end of the existing CBA, this same
CBA shall continue to remain in full force and
effect.
Benguet vs Benguet
FACTS:
On June 23, 1959, the Benguet-Balatoc Workers Union
(“BBWU”), for and in behalf of all Benguet Consolidated,
Inc (BENGUET) employees in its mines and milling
establishment located at Balatoc, Antamok and Acupan,
Mt. Province, entered into a Collective Bargaining
Contract (CONTRACT) with BENGUET. The
CONTRACT was stipulated to be effective for a period of
4-1/2 years, or from June 23, 1959 to December 23,
1963. It likewise embodied a No-Strike, No-Lockout
clause.
3 years later, or on April 6, 1962, a certification election
was conducted by the Department of Labor among all
the rank and file employees of BENGUET in the same
collective bargaining units. BCI EMPLOYEES &
WORKERS UNION (UNION) obtained more than 50% of
the total number of votes, defeating BBWU. The Court of
Industrial Relations certified the UNION as the sole and
exclusive collective bargaining agent of all BENGUET
employees as regards rates of pay, wages, hours of
work and such other terms and conditions of
employment allowed them by law or contract.
Later on, the UNION filed a notice of strike against
BENGUET. UNION members who were BENGUET
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
BENGUET were prevented from entering the premises
and some of the properties of the BENGUET were
damaged as a result of the strike. Eventually, the parties
agreed to end the dispute. BENGUET and UNION
executed the AGREEMENT. PAFLU placed its
conformity thereto. About a year later or on January 29,
 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa

1964, a collective bargaining contract was finally
executed between UNION-PAFLU and BENGUET.
Meanwhile, BENGUET sued UNION, PAFLU and their
Presidents to recover the amount the former incurred for
the repair of the damaged properties resulting from the
strike. BENGUET also argued that the UNION violated
the CONTRACT which has a stipulation not to strike
during the effectivity thereof.
employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple
expedient of changing their bargaining agent. And it is in
the light of this that the phrase “said new agent would
have to respect said contract” must be understood. It
only means that the employees, thru their new
bargaining agent, cannot renege on their collective
bargaining contract, except of course to negotiate with
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

Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo

 LABOR RELATIONS TSN 2017
Fr. Agustin Nazareno’s Lecture – 3rd Exam Coverage
Ateneo de Davao University | 3 Manresa
Remember that case ha, this was during
negotiations. While they were negotiating, there was a
wage order issued by the RTWPB-NCR. The union
brings up to management during negotiation that even if
only a few in the bargaining unit are benefitted by the
wage order, can the management find it in its heart to
apply the wage order to the entire bargaining unit and
apply it over and above what is agreed in the CBA as
anniversary increases. The management said “YES, we
agree”. The union said, do you agree to also put that in
the CBA so it becomes a CBA benefit?
management said “Yes, we agree that we should put it in
the CBA”. So, they put it down in the minutes that they
have agreed about it.
What happens? In the end, they forgot to put it in the
CBA. Later on when the union remembers, the union
asks from management “What happened to your
promise?” The management said that “We will not
comply. Though we said yes, we have difficulties in
complying with it. Anyway, it’s not in the CBA.” Union
said, “But you agreed to put it in the CBA”. Management
said, “Yes we agreed but it is not in the CBA.” So the
union went to the court. How did the SC decide this
particular controversy?
The SC says this is where the maxim in the Rules of
Court applies. What is that? The Parol Evidence Rule -
When the terms of an agreement have been reduced
into writing, there shall be no other evidence as to the
contents of what has been agreed upon, that shall be
accepted or admitted except those contained in the four
corners of the agreement.
The SC says, since what you are claiming as a source of
right is not in the CBA, then it cannot be a source of
right. Now, the unions says “But we have evidence in
writing that management agreed to put it in writing, is
the this not evidence that it should be there inside and
therefore it should obligate?” The SC says that since it is
not in the contract, it is considered outside. It does not
bind.
Why did the SC put it that way? The reason of the SC is
the very reason of the parol evidence rule. The moment
you admit of extraneous evidence other than what is
within the contract, you will never end anymore.
Everybody will start bringing out things that is not within
The the contract. So, why else did you put it in writing kung
mangita pakag ebidensya gawas anang kasulatan? It
will never end. It is therefore a rule based on necessity,
convenience and the end of litigation as to the content of
that agreement.
One of the charges of union is that the management
cannot claim that it has no obligation because if it is true
that it has no obligation, then management all along is
engaged in “bad faith bargaining”. The SC says that it
is not bad faith bargaining. The existence of the CBA
negates the charge of bad faith bargaining.
Kung nakig-sabot ka na porma-porma ra ug wa gyud
diay kay katuyuan na magkasabot, nganong naa may
gipirmahan? Edi nagkasabot gyud diay kay naa may
gipirmahan, naa may kasulatan. How can you say there
is bad faith bargaining when they resulted in a CBA?
What is the rule then? If a CBA is concluded, then all
charges of bad faith bargaining are negated because of
the existence of the CBA.
There is also another case, KNITJOY VS NLRC. Knitjoy
is a garments factory. It should be distinguished from a
textile factory. In textile factory, what is the end-product?
The end-product is cloth. In garments factory, the end-
product is actually clothes – RTW (ready-to-wear)
clothes. (Fr. Gus remarks about gloves, sweaters, and
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
 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,
knitting. The raw materials are all imported. They are not
made here. It is just the labor. Gloves, bonnets,
sweaters.
So, what happened? There was a wage order. All the
workers are covered because they are just minimum-
wage. The workers said: “We must implement the wage
order”. Knitjoy says: “You cannot. We just close,
because we cannot implement that.” So they closed.
And the union went on strike. Because in the beginning,
the union thought this is just posturing. Sira-sira sila pero
ganahan ra gyud diay sila muabri. Unya mga 6 ka
buwan, wa paman niabri ang Knitjoy. Ang union nay
niadto sa Knitjoy, ingon sila “abrihi na lang intawon na
kay dugay na kaayo mi diri sa gawas. Wa nami kwarta,
abrihi nalang” Ingon ang Management, “unya abrihan
nato ni, di man ta ka-afford sa wage order increase. We
cannot pay you the adjustment, pasayloa na lang mi. Di
namo ma-implement ang wage order.” And then the
Union replies that they will just sign the CBA.
So, they signed a CBA that does not even grant the
minimum benefits. Specifically the Union says: We waive
our right under the NCR Wage Order No. such and such.
And it was ratified by 100%. Not just 2/3 of the
bargaining unit but 100%.
The issue is: What is the validity of the clause excusing
the employer from its obligation under a wage order.
This time, it is the Union signing and the entire CBA that
ratified it. So everybody asked for it. And it was given an
imprimatur by the DOLE because the DOLE registered
the CBA. Bayad ug P1,000 ang Union, rehistro na. It is a
certified CBA even if the benefits therein are below
minimum wage. What is the validity?
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
SC says: INVALID. A CBA cannot excuse the employer
from complying with minimum wage provisions. Once
again, labor standards cannot be the object of a waiver
in the forward direction. Cannot agree forward the
minimum wage. So, void. Illegal. The Labor Arbiter has
authority to witness and certify an agreement even lower
than the minimum wage. Where is that found? It used to
be 227, but now renumbered as 233.
ART. 233 [227]. COMPROMISE AGREEMENTS.
Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by
the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final
and binding upon the parties. The National Labor
Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of
noncompliance thereof or if there is prima facie evidence
that the settlement was obtained through fraud,
misrepresentation, or coercion.
So labor standards benefits may be compromised the
moment when it is filed as a case. But it cannot be
compromised in the CBA because that is in the forward
direction. Once it’s history, it can be compromised.
Muingon ang Union, sige di na nako ipahatag ni ninyo.
Subayon nato. Sugod sa sinugdanan sa CBA. Duha na
ka tuig, iphon na. Ang underpayment sa minimum wage
kada trabahante ila nang […] Unya miingon ang Knitjoy:
Pila na ka milyon? Mao ni 20 milyon ni. Kay 2 milyon
man ning trabahante. Hala. Inyuha na na. You execute
in the machineries kining tanan. Kay wa namay mupalit
ani. Manguhag gloves? Kinsa pa man? Kinsa may
mupalit? Muingon ka ibaligya na ngadto sa Bangladesh.
Ang pasahe pa lang ana, wa na. So wa gihapon kay
makuha kung i-execute nimo.
 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
sa Alma Mater ni Imelda Romualdez Marcos. Divine
Word University Tacloban. Pildi ang University
Administration, bad faith bargaining. What is their bad
faith? Their bad faith – they told the Union their
sentiment with the bargaining proposals. Okay, let’s
bargain. You schedule the meeting. Our first meeting is
next week. First meeting. We proceed. In the same day,
they filed a petition for certification election. SC says that
is bad faith. Gidawat na nimo sila nga they are
representing the bargaining unit. You already have
scheduled, and yet, on the other hand, you filed a
procedure to determine who the representative is. That
is bad faith bargaining.
So, according to the SC: Guilty of bad faith bargaining.
These proposals had long been postponed. You are now
liable under these proposals and the wage order. In
peso terms, that reached around P40 million. They had
been adjudged as such. Affirmed by the SC. Divine
Word University under the SDV Fathers, they said
“Okay, take what you can from the school”. The school
does not have money. It has been closed. So they asked
the sheriff to execute. They went to the ROD, lo and
behold, the land does not belong to the Divine Word
University.
Who owns the land? The owner of the land is the
Archdiocese of Leyte. The Bishop owns the land. Ila na
unta tong pang-ibton ang ceilings ug atop. Unsaon man
na nimo? As taught in Property, Civil law, improvements
of the land belongs to the owner of the land, because
they are accessories.
We talked about “Mandatory Subjects of Bargaining” and
“Mandatory Provisions in the CBA”:
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
 Mandatory Provisions in the CBA - means
that every CBA must contain that provision.
 Mandatory Subjects of Bargaining - means
that if brought up by either party, that subject
must be negotiated; must be at the table for
negotiation.
What constitutes “Mandatory Subjects of
Bargaining”? It is terms and conditions of work. Not just
terms and conditions of work anywhere but terms and
conditions of work within the bargaining unit that is being
represented.
So, suppose in the CBA there is this provision:
“xxx…Management hereby agrees that should there be
a closure of any product line or any manufacturing
process which involves the sale or disposal of a part, a
portion, or certain machineries of the company, then the
same shall be offered first to the union who represents
the bargaining unit...xxx” What is that called? Right of
first refusal.
Right of first refusal in the Civil Code is called what?
That is an option to buy. When is an option to buy
binding? If there is a distinct separate consideration for
that option. How do you settle that controversy? You
go to the regular courts. That is precisely the issue of
mandatory subject of bargaining. The CBA should
contain only mandatory subjects of bargaining because
that is only the jurisdiction of the labor tribunals.
Outside the mandatory subjects of bargaining, there are
other fora of justice that has jurisdiction. There is this old
Meralco v. NLRC case where Meralco says violation of
the CBA on the part of Meralco according to the union
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
 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
covered by the bargaining unit, to enable them to obtain
a loan to construct their first house.’
So management will put up a fund, a seed fund so that
this fund will be jointly managed by the union and
management that will lend out money to the workers in
order for them to construct their first house. Wa man
mucontribute ang Meralco. Gipugos na sa agent, wa
man. So they were sued for violating an economic
provision of the CBA.
This is where the SC said that is not mandatory subject
of bargaining because they are talking about putting up a
loan fund. You are not talking about end benefit. If it said
‘Management agrees to make available to all those
covered in the bargaining unit a loan equivalent to 10%
of their basic pay, everyone who has served at least 10
years with the company.’ That’s a benefit. But if you’re
talking about putting up a fund, according to the SC, that
is not a mandatory subject of bargaining, and you cannot
compel parties to sit down and negotiate on mandatory
subject of bargaining.
So, daghan musipyat anang provision sa CBA, union
security clause “xxx….The company is open to hire
applicants whether or not they are members of the
union, but those who are not members of any union
must, after being made regular in the workforce, they will
have 6 months to become members of the union and
continued membership with the union is a requirement
for continued employment. Should any member of the
union be expelled from the union, then the union can
compel management to terminate this expelled
member…xxx’ Then there’s a paragraph it says
“xxx…Management agrees to provide the union a list of
its probationary workers….xxx” That is not
mandatory subject of bargaining. Why? Because the
bargaining unit is composed of regular workers.
Probationary workers are outside the purview of
negotiations but time and again, you will see that in
CBAs.
Health benefits are a mandatory subject of
bargaining even if they are for the retirees already.
According to the SC yes because that is a future benefit
in view of which you cannot earn the same while being
regular. But you negotiate it during your work and
continued inclusion in the bargaining unit.
Now, what are the jurisdictions of the voluntary
arbitrator? You have the mandatory jurisdiction and you
have permissive jurisdiction.
Mandatory jurisdiction, there are at least 3:
1. Implementation and interpretation of company
personnel policies;
2. Controversies arising from interpretation and
implementation of the CBA; and
3. Wage distortions as the same is provided for
under Article 124.
Now, permissive jurisdiction: All other issues
submitted by the parties including ULP, Labor Standards
etc.
When you say all other issues, does it mean all? In other
words, can you include their non-mandatory subjects of
bargaining? It is my submission that you cannot include
non-mandatory subjects of bargaining. Why? Parties
have already agreed, why can you not include? Let’s say
right of first refusal, if the parties agree to submit it to
grievance, should not it be submitted to grievance
because the parties have already agreed: union,
a management, and the complainants.
Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo
 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
contracts of sale, are delegated by law as belonging to
the jurisdiction of the regular courts. Are you amending
the law? Do you have a license to amend the law just
because you can expand the permissive jurisdiction of
the voluntary arbitrator? You cannot. In other words, the
qualifier ‘all’ cannot embrace non-mandatory subjects of
bargaining without doing violence to the law creating the
jurisdiction of the regular courts.
What is the correct decision? Very difficult. The
discretion is so wide. Very difficult to determine what is
the liveable decision something which the employer can
live with, the worker can live with for the long term and
the other stakeholders: the stockholders, the creditors.
So, interests dispute, there is no such thing as definite
correct answer.
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.

Abad - Berguia – Buhay - Duco - Estillore - Mortejo - Petallo