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    Meralco Electric Co. v Quisumbing RESOLUTION (AUGUST 2000)  August 1, 2000| Ynares-Santiago, J. | Digester: Endaya, Ana Kristina R. SUMMARY:  The February 2000 resolution decreed that where an arbitral award granted beyond six months after the expiration of the existing CBA, and there is no agreement between the parties as to the date of effectivity thereof, the arbitral award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA. MERALCO filed a motion for partial reconsideration. (Date: December 1, 1995 to November 30, 1997)  After balancing the 2 interests (1  –   MERALCO in an industry imbued with public interest and the consequences to the national economy; 2  –   laws favor the labor), the SC held that the arbitral award in this case be made to retroact to the first day after the six-month period following the expiration of the last day of the CBA (from June 1, 1996 to May 31, 1998). The rule in the February 2000 resolution is  pro hac vice   (on this occasion only).Consonant with this rule, the two-year effectivity period must start from June 1, 1996 up to May 31, 1998. (The December 1, 1995 to November 30, 1997 was what was inadvertently stated in the February 2000 Resolution) DOCTRINE: Balancing these two contrasting interests, this Court turned to the dictates of fairness and equitable justice and thus arrived at a formula that would address the concerns of both sides. Hence, this Court held that the arbitral award in this case be made to retroact to the first day after the six-month period following the expiration of the last day of the CBA (from June 1, 1996 to May 31, 1998). FACTS:     January 27, 1999 Decision: The CBA should be effective for a term of two years counted from December 28, 1996 (the date of the Secretary of Labors disputed Order on the parties motion for reconsideration) up to December 27, 1998.  –   The arbitral award was given prospective effect.    February 22, 2000 Resolution: MR is partially granted.Decision is modified: 1.   The arbitral award shall retroact from December 1, 1995 to November 30, 1997; (Ratio for this decision is below italicized)   -   Labor laws are silent as to when an arbitral award in a labor dispute where the SOLE had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. o   In general, a CBA negotiated within 6 months after the expiration of the existing CBA retroacts to the day immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties. o   On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual agreement of the parties but by intervention of the government. -   Despite the silence of the law, the Court rules herein that CBA arbitral awards  granted after 6 months from the expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the 6- month period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the Secretarys determination of the date of retroactivity as part of his discretionary  powers over arbitral awards shall control. 2.    The award of wage is increased from the srcinal amount of P1,900 to P2,000 for the years 1995 and 1996.     This Resolution is subject to the monetary advances granted by petitioner to its rank-and-file employees during the pendency of this case assuming such advances had actually been distributed to them.    MERALCO filed a Motion for Partial Reconsideration based on the following grounds: I.   Court’s ruling on the retroactivity issue:  a.   Fails to account for previous rulings of the Court on the same issue; b.   Fails to indicate the reasons for reversing the srcinal ruling in this case on the retroactivity issue; and c.   Internally inconsistent. II.   Court’s ruling on the retroactivity issue does not take into account the huge cost that this award imposes on petitioner, estimated at no less than P800 Million.    MEWA filed a comment o    The Motion for Partial Reconsideration was unauthorized since MERALCO ’s  President (Lopez) has categorically stated in a memorandum to the rank-and- file employees that management will comply with this Court’s ruling and will not file any motion for reconsideration; o    The February Resolution should be modified to conform to the St. Luke o   s ruling, to the effect that, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, he is deemed  vested with plenary and discretionary powers to determine the effectivity thereof. MERALCO’s Argument s: (with reference to the assailed resolution  –   the one italicized) I.   Court’s ruling in the retroactivity issue is an error:  1.    While it alludes to the Secretary  ’ s discretionary powers only in the absence of a CBA, Article 253-A of the Labor Code always presupposes the existence of a prior or subsisting CBA; hence the exercise by the Secretary of his discretionary powers  will never come to pass. 2.    The Resolution contravenes the jurisprudential rule laid down in the cases: a.   Union of Filipro Employees v. NLRC: Court upheld the NLRC’s act of giving prospective effect to the CBA.    b.   Filipro  applied in Pier 8 Arrastre and Stevedoring Services v. Roldan-Confesor  : Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity thereof. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing laws      What MERALCO argues to be applied in this case in light of the rulings: That the two-year arbitral award in the case at bar should likewise be applied prospectively, counted from December 28, 1996 to December 27, 1998. There is nothing in Article 253-A of the Labor Code which states that arbitral awards or renewals of a collective bargaining agreement shall always have retroactive effect. 2.   Court erred in holding that the effectivity of CBA provisions are automatically retroactive. -   MERALCO invokes SC’s ruling in January 27, 1999 (the 1 st  case), which  was modified in the assailed Resolution o    That in the absence of an agreement between the parties, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it operates and may be executed only prospectively unless there are legal justifications for its retroactive application. 3.   Court erred in the interpretation of certain acts of MERALCO as consent to the retroactive application of the arbitral award. 4.    The Resolution is internally flawed because when it held that the award shall retroact to the first day after the 6-month period following the expiration of the last day of the CBA, the reckoning date should have been June 1, 1996, not December 1, 1995, which is the last day of the 3-year lifetime of the economic provisions of the CBA. II.   Cour t’s ruling on the retroactivity issue does not take into account the huge cost that this award imposes on petitioner, estimated at no less than P800 Million. 1.   MERALCO prays that the 2-year term of CBA be fixed from December 28, 1996 to December 27, 1998. 2.   MERALCO prays that the Court decrees that the award of P2,000 be paid to the rank-and-file employees during this two-year period. In the alternative, that the award of P2,000 be made to retroact to June 1, 1996 as the effectivity date of the CBA. MEWA’s  Argument: 1.    The arbitral award in this case should be made effective from December 1, 1995 to November 30, 1997 as enunciated in St. Lukes Medical Center, Inc. v. Torres  . -   St. Luke:   The Secretary of Labor has plenary and discretionary powers to determine the effectivity of arbitral awards -   St.Luke  was reiterated in  Manila Central Line Corp (1998): Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their mutual agreement. The CBA in this case, on the other hand, is part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement.Iin the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof RULING: Motion for Partial Reconsideration is GRANTED. The February 2000 resolution is partially modified as follows: a.   The arbitral award shall retroact to the two-year period from June 1, 1996 to May 31, 1998; b.   The increased wage award of P2,000 shall be paid to the rank-and-file employees during the said two-year period. This Resolution is subject to the monetary advances granted by MERALCO to said employees during the pendency of this case, assuming such advances had actually been distributed to them. What is the proper date for the retroactive effect of the arbitral award?  –  The arbitral award in this case be made to retroact to the first day after the six-month  period following the expiration of the last day of the CBA, i.e., from June 1, 1996 to May 31, 1998 (not December 1, 1995 to November 30, 1997)    SC took into account and balanced the 2 interests below: 1.    The fact that MERALCO belongs to an industry imbued with public interest.  As such, it cannot ignore the enormous cost that MERALCO will have to bear as a consequence of the full retroaction of the arbitral award to the date of expiry of the CBA, and the inevitable effect that it would have on the national economy. 2.   On the other hand, under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law.    Balancing these two contrasting interests, this Court turned to the dictates of fairness and equitable justice and thus arrived at a formula that would address the concerns of both sides. Hence, this Court held that the arbitral award in this case be made to retroact to the first day after the six-month period following the expiration of the last day of the CBA   (from June 1, 1996 to May 31, 1998).       Therefore, the rule in the February 2000 resolution is  pro hac vice   (on this occasion only). o   It must be clarified, however, that consonant with this rule, the two-year effectivity period must start from June 1, 1996 up to May 31, 1998, not December 1, 1995 to November 30, 1997. (this was what was in the February 2000 resolution  –   check notes)    During the interval between the expiration of the economic provisions of the CBA and the date of effectivity of the arbitral award, it is understood that the hold-over principle shall govern: o   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 freedom period and/or until a new agreement is reached by the parties. Despite the lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed.  Whether MERALCO’s prayer that the award of P2,000 shall be paid to rank-and-file employees during the two-year period?  –   YES, but this award does not extent to MERALCO’s supervisory employees.   Notes:    Court notes that both parties ’  arguments were well supported by jurisprudence.    In the dispositive portion of the February 2000 resolution, the SC now notes that the period to which the award shall retroact was inadvertently stated as beginning on December 1, 1995 up to November 30, 1997.     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 retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code.    RIVERA v. ESPIRITU and LAGUESMA  January 23, 2002 | Quisumbing, J. | Contract Duration Digester: Fausto, Jaime Manuel A. SUMMARY: PAL suffered losses due to the ALPAP (pilot’s association) strike, and thus the former downsized the labor force by 1/3. PALEA, the SEBA, went on strike to protest the retrenchment measures, which affected 1899 union members. President E strada through AO 16 then created a Task Force to address PAL’s problems, and served as the mediator in the conciliation between PAL and PALEA. PAL (through Lucio Tan) offered that shares of stock were to be transferred to the employees and that 3 of the latter would be part of the BOD, with the request that a 10-year suspension of the CBA be effected. In a referendum, the PALEA members rejected this. Thus PAL had to cease operations and terminate the employees. The PALEA board, in trying to prevent the closure, made another offer. This was rejected at first, but in yet another offer, which included the same terms as PAL’s srcinal offer, was accepted by PAL and later by the PALEA members at another referendum. Then, some PALEA officers assailed the validity of this agreement, alleging that the 10-year suspension of the CBA abrogated their rights to self-organization and collective bargaining, invoking Article 265. The Court held that the agreement was valid because it was PALEA, as the exclusive bargaining agent of PALs ground employees, which 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 union ’ s exercise of its right to collective bargaining. The right to free collective bargaining, after all, includes the right to suspend it.This was just an exercise of a voluntary mode in dispute settlement. There was also no  violation of the 5-year representation limit under Article 265, as this only applies 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. DOCTRINE: First see the periods concerning the CBA in Art. 265 (notes).  Article 265 has a two-fold purpose: 1. To promote industrial stability and predictability: in this case, the agreement sought to promote industrial peace during PAL’s rehabilitation.  2. To assign specific timetables wherein the negotiations become a matter of right and requirement: nothing in the provision prohibits waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same.  Also, the right to free collective bargaining, after all, includes the right to suspend it. FACTS:     This case involves a dispute in the terms of the CBA between the company Philippine Airlines (PAL) and PAL Employees Association (PALEA).    Philippine Airlines’ (PAL) pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) causing serious losses to the financially beleaguered flag carrier. Facing bankruptcy, PAL adopted a rehabilitation plan and downsized its labor force by more than one-third.     Thus, PALEA went on strike to protest the retrenchment measures, which affected 1899 union members. The strike ended when the parties (PAL and PALEA) agreed to a systematic reduction of workers and payment of separation benefits.    Later, President Estrada issued AO 16, creating an Inter-Agency Task Force (Task force) to address PAL’s p roblems. Respondent Espiritu was the chairman. The  Task Force was empowered to summon all parties concerned for conciliation, mediation for the purpose of arriving at a total and complete solution of the problem.    PAL management then submitted an offer by respondent PAL CEO Lucio Tan,  wherein it planned to transfer shares of stock to the employees, with the ff. terms:    60k shares at P5/share will be transferred to each employee    3 of these employees will be allowed to be part of the PAL Board of Directors     To attain normalcy while tackling the problem, a 10-year suspension fo the CBA was requested      Pressured by the union members, the PALEA BOD had to reject the offer.    PAL later 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.     Then, PALEA informed the DOLE that it had no objection to a referendum on the Tan ’ s offer.    2,799 out of 6,738 PALEA members cast their votes in the referendum. Of the  votes cast, 1,055 voted in favor of Tans offer while 1,371 rejected it.     Thus, PAL ceased operations and sent notices of termination to the employees.     The PALEA board, despite the unfavorable votes of its members, and in trying to prevent the closure, wrote to President Estrada to intervene, and offered a 10-year moratorium on strikes and similar actions, and a waiver of some of the economic benefits of the existing CBA.       Tan however rejected this counteroffer.     The PALEA board made another offer, proposing the following terms:    Employees are granted the earlier proposed shares of stock and the 3 BOD seats, plus another seat from government shares    PALEA be granted adequate representation in committees which deal with terms and conditions of employment     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: o   PALEA shall continue as the SEBA of the rank and file employees o    The union shop/ maintenance of membership provision under the existing CBA shall be respected o   No salary deduction, with full medical benefits    PAL accepted this, and a referendum was scheduled where 61% of the union members accepted it.
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