FACTS:

The case involves a labor dispute between Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA), a labor union, and Asia Brewery, Incorporated (ABI), the employer. TPMA and ABI were negotiating for a new collective bargaining agreement (CBA) for the years 2003-2006 but were unable to reconcile their differences, particularly on wages and other economic benefits. TPMA declared a deadlock and filed a notice of strike with the National Conciliation and Mediation Board (NCMB). However, the parties did not come to terms even before the NCMB. ABI then petitioned the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the labor dispute, invoking Article 263 (g) of the Labor Code. TPMA opposed the assumption of jurisdiction, arguing that ABI's business is not indispensable to the national interest. The Secretary of Labor, through Undersecretary/Acting Secretary Manuel G. Imson, issued an order assuming jurisdiction over the labor dispute and enjoined any strike or lockout. The parties were directed to submit their position papers, and ABI was required to provide audited financial statements, projected financial statements, CBA history, and average monthly salaries of employees. The Secretary of Labor later resolved the deadlock and granted wage increases and health care benefits. TPMA filed a motion for reconsideration and clarification of the decision.

The parties in this case executed and signed a Collective Bargaining Agreement (CBA) with a term from August 1, 2003, to July 31, 2006, on February 9, 2004. Subsequently, on April 1, 2004, the respondent union filed a petition for certiorari before the Court of Appeals (CA), assailing the arbitral award and alleging grave abuse of discretion by the public respondent.

The CA rendered a decision on October 6, 2005, affirming with modification the arbitral award of the Secretary of Labor. The CA ruled that the CBA should be effective from August 1, 2003, instead of January 1, 2004, as decreed by the Secretary of Labor. The computation of wage increase was remanded to the Secretary of Labor, as it was based on unaudited financial statements and done in contravention of DOLE Advisory No. 1, Series of 2004. The CA also awarded a health benefit of P1,390.00 per covered employee, as agreed upon by petitioner corporation.

Respondent union and petitioner corporation filed motions for reconsideration and partial reconsideration, respectively. The CA issued an amended decision on February 17, 2006, wherein it denied the motion for reconsideration of the respondent union and partially granted the partial motion for reconsideration of petitioner corporation. The signing bonus previously awarded was deleted, and the issue on salary increases was remanded to the Secretary of Labor for resolution.

Petitioner corporation appealed to the Supreme Court through a Petition for Review on Certiorari from the CA's amended decision. The issues raised by petitioner corporation for resolution include whether the CA erred in failing to dismiss the petition despite the lack of authority of those who instituted it, whether it erred in remanding the issue on wage increase to the Secretary of Labor, and whether it erred in awarding P1,390.00 as a premium payment for each covered employee.

ISSUES:

1. Whether Rodrigo Perez had sufficient authority to file the petition before the CA.

2. Whether the two labor cases divested Perez of his authority to file the petition.

3. Whether unaudited financial statements are admissible as evidence to justify closure or retrenchment.

4. Whether the Secretary of Labor's determination of a proper wage award should be reviewed for reasonableness.

5. Whether the Secretary of Labor gravely abused her discretion in relying on unaudited financial statements in determining the wage award.

6. Whether the Secretary of Labor failed to provide sufficient basis for the wage award.

7. Whether the modification of the arbitral award on health benefits was proper.

8. Whether or not the Secretary of Labor committed grave abuse of discretion in reducing the premium payment below the previously agreed amount.

9. Whether or not the respondent union effectively waived its proposal on the renegotiation of the premium payment on the second and third years of the CBA.

RULING:

1. The authority of Rodrigo Perez to file the petition before the CA was not sufficiently refuted. Petitioner corporation claimed that Perez was without authority to represent the union in the case. However, the Secretary's Certificate attached to the petition stated that the union's board of directors authorized Perez to file the petition. Petitioner corporation failed to provide proof that the proper procedure for calling a meeting was not followed. The union president, Jose Manuel Miranda, did not contest the validity of the resolution or Secretary's Certificate. Additionally, the provisions cited in the union's constitution and by-laws regarding the two-week notice requirement were not shown to apply to resolutions granting authority to individuals to represent the union in court cases. The silence of the union from the time of the adoption of the resolution until the filing of the petition indicated an implied ratification of Perez's authority.

2. The two labor cases did not affect Perez's legal capacity to file the petition. The first labor case involved the amendment of the union's Constitution and By-Laws, which was ruled to be invalidly ratified and resulted in the annulment of a recall election. The second labor case involved an illegal strike. However, these cases did not nullify the authority granted to Perez in the union's resolution to file the petition. Furthermore, the material facts of these cases occurred and the decisions were rendered after the petition was already filed with the CA.

3. The Supreme Court ruled that unaudited financial statements are not admissible as evidence to justify closure or retrenchment. The statements are mere self-serving declarations and lack probative value unless accompanied by the signature of a certified public accountant or audited by an independent auditor. The burden of proof to establish alleged losses must be discharged through sufficient and convincing evidence.

4. The Supreme Court held that the Secretary of Labor's determination of a proper wage award should be reviewed for reasonableness. The court is entitled to review the substance of the Secretary's award and evaluate the proper exercise of discretion and observance of due process. Factual findings of labor administrative officials are entitled to great respect and finality if supported by substantial evidence, but there is a possibility of abuse of discretion if the evidence presented by the parties is not considered.

5. The Secretary of Labor gravely abused her discretion in relying on unaudited financial statements in determining the wage award. This violates the order of the Secretary of Labor herself to submit complete audited financial statements and may result in a wage award based on an inaccurate and biased picture of the corporation's capacity to pay.

6. The Secretary of Labor failed to provide sufficient basis for the wage award. She utilized the "middle ground" approach which is not the best method of resolving a wage dispute. The specific data and factors upon which the wage award was based were not indicated, preventing the parties from seeking a review of the award.

7. The modification of the arbitral award on health benefits from P1,300.00 to P1,390.00 was proper. The minutes of the collective bargaining negotiations showed that the parties had agreed to the higher premium payment amount.

8. The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court ruled that it was grave abuse of discretion on the part of the Secretary of Labor to reduce the premium payment below the previously agreed amount. The Court also noted that the respondent union effectively waived its proposal on the renegotiation of the premium payment on the second and third years of the CBA.

PRINCIPLES:

• Authority to represent an entity in legal proceedings should be properly established and can be impliedly ratified.

• Provisions in a union's constitution and by-laws must be interpreted in a manner that promotes the union's interest and purpose.

• Substantial compliance may be sufficient when producing documents as ordered by a court or administrative agency, as long as the purpose of the order is achieved.

• Unaudited financial statements are not admissible as evidence to justify closure or retrenchment. They lack probative value without the signature of a certified public accountant or independent auditor. Sufficient and convincing evidence is necessary to establish alleged losses.

• The determination of a proper wage award by the Secretary of Labor should be reviewed for reasonableness. The court must evaluate the exercise of discretion and observance of due process. Factual findings of labor administrative officials are entitled to respect and finality if supported by substantial evidence, but there is a possibility of abuse of discretion if evidence of both parties is not considered.

Grave abuse of discretion - The prerogative to determine grave abuse of discretion is not absolute, for the Court does not substitute its own judgment for that of the public respondent; otherwise, it would be substituting its own discretion for that of the administrative agency. An act may only be considered as done with grave abuse of discretion when the act is “done contrary to the Constitution, the law or existing jurisprudence or done in a capricious, whimsical, arbitrary or despotic manner, and that it must be patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.”