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190515

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Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 190515 November 15, 2010

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS, Petitioner,

vs.
CIRTEK ELECTRONICS, INC., Respondent.

DECISION

CARPIO MORALES, J.:

Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm situated inside the Laguna Technopark,
had an existing Collective Bargaining Agreement (CBA) with Cirtek Employees Labor Union-Federation of Free
Workers (petitioner) for the period January 1, 2001 up to December 31, 2005. Prior to the 3rd year of the CBA, the
parties renegotiated its economic provisions but failed to reach a settlement, particularly on the issue of wage
increases. Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike with the National
Conciliation and Mediation Board-Regional Office No. IV (NCMB-RO IV) on April 26, 2004. Respondent, upon the
other hand, filed a Notice of Lockout on June 16, 2004.

While the conciliation proceedings were ongoing, respondent placed seven union officers including the President, a
Vice President, the Secretary and the Chairman of the Board of Directors under preventive suspension for allegedly
spearheading a boycott of overtime work. The officers were eventually dismissed from employment, prompting
petitioner to file another Notice of Strike which was, after conciliation meetings, converted to a voluntary arbitration
case. The dismissal of the officers was later found to be legal, hence, petitioner appealed.

In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike on June 20, 2005. By
Order1 dated June 23, 2005, the Secretary of Labor assumed jurisdiction over the controversy and issued a Return
to Work Order which was complied with.

Before the Secretary of Labor could rule on the controversy, respondent created a Labor Management Council
(LMC) through which it concluded with the remaining officers of petitioner a Memorandum of Agreement (MOA)2
providing for daily wage increases of ₱6.00 per day effective January 1, 2004 and ₱9.00 per day effective January
1, 2005. Petitioner submitted the MOA via Motion and Manifestation3 to the Secretary of Labor, alleging that the
remaining officers signed the MOA under respondent’s assurance that should the Secretary order a higher award of
wage increase, respondent would comply.

By Order4 dated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by awarding a wage increase
of from ₱6.00 to ₱10.00 per day effective January 1, 2004 and from ₱9.00 to ₱15.00 per day effective January 1,
2005, and adopting all other benefits as embodied in the MOA.

Respondent moved for a reconsideration of the Decision as petitioner’s vice-president submitted a "Muling
Pagpapatibay ng Pagsang-ayon sa Kasunduan na may Petsang ika-4 ng Agosto 2005,"5 stating that the union
members were waiving their rights and benefits under the Secretary’s Decision. Reconsideration of the Decision
was denied by Resolution6 of August 12, 2008, hence, respondent filed a petition for certiorari before the Court of
Appeals.

By Decision7 of September 24, 2009, the appellate court ruled in favor of respondent and accordingly set aside the
Decision of the Secretary of Labor. It held that the Secretary of Labor gravely abused his discretion in not respecting
the MOA. It did not give credence to the minutes of the meeting8 that attended the forging of the MOA as it was not
verified, nor to the "Paliwanag"9 submitted by respondent union members explaining why they signed the MOA as it
was not notarized.

Petitioner’s motion for reconsideration having been denied by Resolution10 of December 2, 2009, the present
petition was filed, maintaining that the Secretary of Labor’s award is in order, being in accord with the parties’ CBA
history ─ respondent having already granted ₱15.00 per day for 2001, ₱10.00 per day for 2002, and ₱10.00 per day
for 2003, and that the Secretary has the power to grant awards higher than what are stated in the CBA.

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Respecting the MOA, petitioner posits that it was "surreptitiously entered into [in] bad faith," it having been forged
without the assistance of the Federation of Free Workers or counsel, adding that respondent could have waited for
the Secretary’s resolution of the pending CBA deadlock or that the MOA could have been concluded before
representatives of the Secretary of Labor.

The relevant issues for resolution are 1) whether the Secretary of Labor is authorized to give an award higher than
that agreed upon in the MOA, and 2) whether the MOA was entered into and ratified by the remaining officers of
petitioner under the condition, which was not incorporated in the MOA, that respondent would honor the Secretary of
Labor’s award in the event that it is higher.

The Court resolves both issues in the affirmative.

It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction under Art. 263 (g)11
of the Labor Code, may resolve all issues involved in the controversy including the award of wage increases and
benefits.12 While an arbitral award cannot per se be categorized as an agreement 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 contract
obligation.13

That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no moment. For
the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage
increases. He could, as he did, consider the financial documents14 submitted by respondent as well as the parties’
bargaining history and respondent’s financial outlook and improvements as stated in its website.15

It bears noting that since the filing and submission of the MOA did not have the effect of divesting the Secretary of
his jurisdiction, or of automatically disposing the controversy, then neither should the provisions of the MOA restrict
the Secretary’s leeway in deciding the matters before him. 1avvphi1

The appellate court’s brushing aside of the "Paliwanag" and the minutes of the meeting that resulted in the
conclusion of the MOA because they were not verified and notarized, thus violating, so the appellate court reasoned,
the rules on parol evidence, does not lie. Like any other rule on evidence, parol evidence should not be strictly
applied in labor cases.

The reliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor
Arbiter, the rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and
evidence are not applied in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded
from accepting and evaluating evidence other than, and even contrary to, what is stated in the CBA.16 (emphasis
supplied)

While a contract constitutes the law between the parties, this is so in the present case with respect to the CBA, not
to the MOA in which even the union’s signatories had expressed reservations thereto. But even assuming arguendo
that the MOA is treated as a new CBA, since it is imbued with public interest, it must be construed liberally and yield
to the common good.

While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary
contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the
contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and
capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common
good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and
purpose which it is intended to serve.17 (emphasis and underscoring supplied)

WHEREFORE, the petition is GRANTED. The Decision dated September 24, 2009 and the Resolution dated
December 2, 2009 of the Court of Appeals are REVERSED and SET ASIDE and the Order dated March 16, 2006
and Resolution dated August 12, 2008 of the Secretary of Labor are REINSTATED.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO*

Associate Justice

LUCAS P. BERSAMIN MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

MARIA LOURDES P.A. SERENO

Associate Justice

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ATTE STATI O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

CONCHITA CARPIO MORALES

Chairperson

C E RTI F I CATI O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice

Footnotes
*
Additional member per Raffle dated November 15, 2010 in lieu of Associate Justice Arturo D. Brion.
1
DOLE records, pp. 20-22. Penned by Secretary Patricia A. Sto. Tomas.
2 Id. at 251-289.

3 Id. at 290-293.

4
CA rollo, pp. 47-51.
5 DOLE records, p. 383.

6 Id. at. 393-403. Penned by Undersecretary Romeo C. Lagman.

7
CA rollo, pp. 312-323. Penned by Associate Justice Romeo F. Barza and concurred in by Associate Justices
Remedios A. Salazar-Fernando and Isaias P. Dicdican.

8 Id. at 340.

9 Id. at 216-222.

10
Id. at 368-369. Ibid.
11 (g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoining the intended or impending
strike or lockout as specified in the assumption or certification order. If one has already taken place at the
time of assumption or certification, all striking or locked out employees shall immediately return-to-work and
the employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission
may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.

x x x x (emphasis supplied)

12 International Pharmaceutical, Inc. v. Hon. Secretary of Labor and Associated Labor Union, G.R. Nos.
92981-83, January 8, 1992, 205 SCRA 59.
13
Vide Manila Electric Company v. Quisumbing, G.R. No. 127598, February 22, 2000, citing Mindanao
Terminal and Brokerage Service, Inc. v. Confesor, 338 Phil. 671.

14 DOLE records, pp. 303-305; 129-250; 32-48.

15 Id. at 306-307.

16
Interphil Laboratories Employees Union-FFW v. Interphil Laboratories, Inc., G.R. No. 142824, December
19, 2001, 372 SCRA 658.

17 Davao Integrated Port Stevedoring v. Abarquez, G.R. No. 102132. March 19, 1993, 220 SCRA 197-198.

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The Lawphil Project - Arellano Law Foundation

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