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After almost a decade of protracted litigation in the Department
of Labor and
Employment and the Court of Appeals, the dispute between Cirtek
Employees Labor Union-Federation of Free Workers and Cirtek
Electronics Inc. over the proposed increase in the wages
of rank and file employees eventually went up to the Supreme
Court. In the November 15, 2010
decision of the SC penned by Associate Justice Conchita
Carpio-Morales,1
the wage increase
initially proposed by the Union during the 2003 renegotiation of
the CBA was granted.
The issue in the Supreme Court arose from the conflicting
decisions of the Secretary of
Labor and Employment and the court of Appeals. The Secretary of
Labor in an order2
datedMarch 16, 2006 awarded the union with a wage increase of
P10.00/day effective 1 January 2004
and P15.00/day effective January 2005 of the existing CBA. In so
ruling, the Secretary of Labor
said that the company can tolerate the increase in the wages
since its previous bargaining historyhas also shown increases in
the workers wages and also, the financial status of the company
isnot as bleak as the CEI argued it to be.
Moreover, the Memorandum of Agreement entered into by the CEI
and the Union during
the pendency of the case before the DOLE was brushed aside by
the Secretary of Labor sayingthat the MOA was entered into by the
employees without the authorized negotiators since the
agreement was signed through the Labor Management Council and
not through the Union whichhas the exclusive right to directly
negotiate with CEI regarding CBA disputes. The Secretary of
Labor place emphasis on the rule that a Labor Management Council
should not be used as an
avenue for bargaining, citing Department Order no. 40-03,
Section 1 which provides:
The Department shall promote the formation of labor-management
councils inorganized and unorganized establishments to enable the
workers to participate in
policy and decision-making processes in the establishment,
insofar as said
processes will directly affect their rights, benefits, and
welfare, except those
which are covered by collective bargaining agreements or are
traditional areas
of bargaining. (emphasis in the original)
The award, however, was not implemented due to the timely appeal
filed by CEI in the Court of
Appeals which reversed the ruling of the Secretary of Labor.
Premising its ruling on the MOA, the Court of Appeals reversed
the decision of the
Secretary of Labor. In the September 24, 2009 decision3
penned by Associate Justice Romeo
Barza, he ruled that the Secretary of Labor committed grave
abuse of discretion in promulgatingthe previously cited decision.
Associate Justice Barza said that when the Secretary exercises
the
powers granted by Article 263(g) of the Labor Code, he is
granted great breadth of discretion but
such discretion must still be exercised within the confines of
the law.
Even though the CA agreed with the DOLE that CEI did not
sufficiently proved its claim
of substantial financial losses, it ruled that the Secretary was
not correct to award a further wage
increase despite the fact that a MOA stating the agreed wage
increase and other benefits had
1GR no. 190515, November 15, 2010
2OS-AJ-016-05
3CA-GR. SP no. 105078, September 24, 2009
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already been entered into by the parties. Contrary to the ruling
of the Secretary of Labor, the CA
ruled that the MOA was signed by the remaining officers of the
Union who were duly authorizedto represent and negotiate in behalf
of the Union and that it was ratified by the majority of the
companys rank-and-file employees whom the union represents.
Moreover, the CA ruled that the
MOA executed by the parties is the contract between them and
therefore constitutes the law
between the parties. Having this nature, the Secretary of Labor
and Employment cannot grant ahigher wage increase than what is
embodied in writing in the MOA.
With this contrasting rulings, the issue before the SC is
therefore not much of a findingfact, that is, whether or not the
CEI is suffering financial losses so as to justify its refusal
to
award the proposed wage increase. The issue rests on the proper
appreciation of the MOA
executed between CEI and the Union and whether or not its terms
should be considered as finalbetween the parties in connection with
the extent of the Secretary of Labors jurisdiction over thedispute.
Corollary to this issue is the legitimacy of the representatives of
the employees who
signed the MOA and the propriety of concluding the agreement
through the Labor Management
Council.
In upholding the award of the Secretary of Labor, the SC said
that the signing of the
MOA did not divest the Secretary of his jurisdiction nor
restricted his leeway in deciding thelabor dispute before him. The
power given to the Secretary of Labor under Article 263(g) of
the
Labor Code is to such an extent that in computing for the
arbitral award, he can go higher than
the terms of the MOA and he can consider other pertinent
documents and the parties bargaining
history and CEIs financial outlook and improvements as stated in
its website. To quote from thedecision, the SC said that while an
arbitral award cannot per se be categorized as anagreement
voluntarily entered into by the parties because it requires the
intervention and
imposing power of the State thru the Secretary of Labor when he
assumes jurisdiction, the
arbitral award can be considered an approximation of a
collective bargaining agreement which
would otherwise have been entered into by the parties, hence, it
has the force and effect of a
valid contractual obligation.
In its Motion for Reconsideration of the SCs aforecited
decision, CEI insists on theimpropriety of the award granted by the
Secretary adding the argument that as early as February
5, 2010, there was already a resolution of disaffiliation signed
by the members of the Union andfiled before the Department of Labor
from the Federation of Free Workers resulting in the
latters lack of personality to represent the workers in the
present case. In denying the motion,
the SC reiterated its ruling, adding that the Labor Management
Council should not be used as anavenue for bargaining for the
purpose of affording workers to participate in policy and
decision
making. The SC also ruled that the alleged disaffiliation will
not affect the propriety of the
arbitral award granted by the Secretary.
In analyzing the ruling of the SC, it is important to compare
and contrast the decision
with previous rulings of the SC especially those relating to the
nature of the CBA as a contract
between the employer and the employees, the extent of the
Secretary of Labors power upon his
assumption of jurisdiction of a labor dispute, and, for the
purposes of this paper, the dynamics ofCBA negotiation disputes
within the context of a national union representing the a local
union.
