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MANILA ELECTRIC COMPANY v. SECRETARY OF LABOR LEONARDO QUISUMBING

FACTS:

This case involves a petition challenging the orders of the Secretary of Labor regarding a Collective Bargaining Agreement (CBA) between the petitioner corporation and the private respondent union. The Court granted the petition and set aside the Secretary's orders to the extent specified. Certain modifications were made to the Secretary's resolutions, including adjustments to wages, bonuses, retirees' benefits, loans, and other terms and conditions. Dissatisfied parties filed motions for intervention and reconsideration of the Court's decision. The Court required comments but the Solicitor-General asked to be excused. The alleged newly elected president of the union also filed an appeal seeking immediate reconsideration. The Court stated that the issues raised in the motions for reconsideration were already addressed in the previous decision. However, the Court agreed to consider matters regarding the amount of wages and the retroactivity of the CBA arbitral awards. The petitioner argued against granting a wage increase, claiming that it would result in increased electricity rates for consumers. The Court dismissed this argument and stated that any increase in rates requires approval from the regulatory government agency. The Court also rejected the use of a commercial report relied on by the union to support its wage claim. The Court considered the petitioner's net income for 1996 and decided to increase the awarded wage amount. The Court also discussed the retroactivity of the CBA arbitral award, stating that it should retroact to a certain period.

ISSUES:

  1. Whether the CBA arbitral award should retroact to the date of the award or such time granted by the Secretary of Labor.

  2. Whether the Secretary of Labor has the discretion to determine the retroactivity of the CBA arbitral award.

  3. Whether the principles under Article 253-A of the Labor Code can be applied by analogy to an arbitral award.

  4. Whether or not the arbitral award shall retroact from December 1, 1995 to November 30, 1997.

  5. Whether or not the grant of a loan to a cooperative is similar to housing loans granted by the employer.

  6. Whether or not the 40-day union leave is a typographical error.

  7. Whether or not the added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or more is valid.

RULING:

  1. The Court ruled that the CBA arbitral award shall retroact to the first day after the six-month period following the expiration of the last day of the CBA should there be one, in the absence of an agreement by the parties as to retroactivity.

  2. The Secretary of Labor has the plenary and discretionary powers to determine the retroactivity of a CBA arbitral award.

  3. The principles under Article 253-A of the Labor Code can be applied by analogy to an arbitral award.

  4. The arbitral award shall retroact from December 1, 1995 to November 30, 1997. The Court considers the actions of the petitioner, which indicate recognition that the CBA award covers the said period. Therefore, there is no reason to retroact the subject CBA awards to a different date.

  5. The grant of a loan to a cooperative is not similar to housing loans granted by the employer. While housing loans pertain to a basic necessity of life and are allowed by law, providing seed money for the establishment of an employee's cooperative is not an obligation of the employer or any private individual. Courts should not be used to compel any person to grant loans to another without justification.

  6. The 40-day union leave is a typographical error. It is declared that the union leave is only thirty (30) days as granted by the Secretary of Labor and affirmed by the Court.

  7. The added requirement of consultation imposed by the Secretary in cases of contracting out for six (6) months or more is rejected by the Court. The employer has the freedom to regulate the hiring of workers and has the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies. While there should be mutual consultation, the employer's judgment in contracting out is to be deferred to, unless there is proof of malicious or arbitrary actions.

PRINCIPLES:

  • The relations between labor and capital are impressed with public interest and should yield to the common good.

  • Matters of salary increases are part of management prerogative.

  • The duration of retroactivity of a CBA negotiated within six months after the expiration of the existing CBA should retroact to the day immediately following such date, unless agreed otherwise.

  • The retroactivity of a CBA arbitral award, granted after six months from the expiration of the last CBA, shall be determined by the agreement of both employer and employees or their union. In the absence of an agreement, it shall retroact to the first day after the six-month period following the expiration of the last day of the CBA.

  • The Secretary of Labor has the discretionary powers to determine the retroactivity of a CBA arbitral award.

  • The principles under Article 253-A of the Labor Code can be applied by analogy to an arbitral award.

  • Actions of a party may be considered in determining the duration of retroactivity in a CBA award.

  • Granting loans for housing is justified as it pertains to a basic necessity of life, while providing seed money for the establishment of a cooperative is not an obligation of the employer or any private individual.

  • Courts should not be used to compel individuals to grant loans without justification.

  • Typographical errors in an award can be corrected.

  • The employer has the freedom to regulate the hiring of workers and decide whether services should be performed by its personnel or contracted out to outside agencies, subject to special laws and agreements and fair standards of justice.