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MANILA ELECTRIC COMPANY v. SECRETARY OF LABOR LEONARDO QUISUMBING

FACTS:

The case involves the Manila Electric Company (MERALCO) and its rank-and-file union, the Meralco Workers Association (MEWA). In 1995, MEWA initiated negotiations to re-negotiate the terms of their existing 1992-1997 Collective Bargaining Agreement (CBA) for the remaining period covering December 1, 1995, to November 30, 1997. MERALCO responded positively and formed a negotiating panel, leading to the submission of proposals and counter-proposals from both parties. Despite numerous meetings, no agreement was reached, prompting MEWA to file a Notice of Strike on April 23, 1996, citing bargaining deadlock and unfair labor practices. MERALCO, facing the threat of a strike, petitioned the Department of Labor and Employment (DOLE) on May 2, 1996, to assume jurisdiction over the dispute. The Secretary of Labor assumed jurisdiction on May 8, 1996, enjoining both parties from exacerbating the situation and directing them to submit position papers. Following submissions and conferences, the Secretary issued an order on August 19, 1996, directing the execution of a new CBA incorporating his dispositions on the disputed issues. Both parties filed motions for reconsideration against various aspects of the Secretary's order, leading to modifications in a subsequent order dated December 28, 1996. MERALCO filed a petition seeking to annul the Secretary's orders, alleging grave abuse of discretion in various aspects of the awarded CBA terms and wages. MEWA and the Solicitor General countered that the Secretary acted within his jurisdiction and expertise.

ISSUES:

  1. Whether the Secretary of Labor committed grave abuse of discretion in awarding wage increases and other economic benefits.

  2. Whether the Secretary of Labor erred in expanding the scope of the bargaining unit.

  3. Whether the Secretary of Labor's directive for a closed-shop union was appropriate.

  4. Whether the Secretary of Labor had the authority to mandate consultation with the union before contracting out services for more than six months.

  5. Whether the inclusion of terms and conditions of employment in the collective bargaining agreement should have been mandated.

  6. Whether the retroactivity of the CBA to December 1, 1995, instead of August 19, 1996, when the dispute was resolved, was valid.

RULING:

  1. The Secretary of Labor committed grave abuse of discretion in awarding wage increases of P2,200.00 for the first and second years without appropriate consideration of MERALCO's financial evidence. The Court modified the wage increase to P1,900.00 per month for the first and second years.

  2. The Secretary committed grave abuse in expanding the bargaining unit to include confidential employees, violating established judicial precedents.

  3. The retroactive implementation of a closed-shop union without it being an issue raised by either party constituted an abuse of discretion by the Secretary. The "maintenance of membership" principle should continue.

  4. The requirement for union consultation before any contracting out for more than six months was considered unreasonable and struck down.

  5. The inclusion of all current terms and conditions of employment in the CBA was ruled as overstepping by the Secretary, and the Court limited incorporation only to those terms expressly stipulated or granted.

  6. The retroactive effectivity ruled by the Secretary to December 1, 1995, was modified by the Court. Instead, the CBA would be effective for a term of 2 years counted from December 28, 1996, to December 27, 1999.

PRINCIPLES:

  1. Grave Abuse of Discretion: When an official disregards evidence, acts arbitrarily or whimsically, especially in the context of economic awards in labor disputes.

  2. Judicial Review: Courts can review the substance of the Secretary of Labor's decisions to ensure fairness and adherence to legal standards.

  3. Union Security Clauses: Maintenance of membership principles versus closed-shop arrangements and the necessity of clear terms when these are implemented.

  4. Confidential Employees: Precedents that establish the exclusion of confidential employees from the rank and file union.

  5. Retroactivity of CBAs: Collective Bargaining Agreements (CBAs) and the principles of hold-over and judicial/quasi-judicial awards becoming effective unless otherwise legally justified.

  6. Contracting Out Labor: Management prerogative to contract out labor, subject to reasonableness and legal limitations.