G.R. No.

127598 February 22, 2000 Collectors - no need for cash bond, no

need to reduce quota and MAPL
MANILA ELECTRIC COMPANY, petitioner,
vs. CBU - exclude confidential employees include
Hon. SECRETARY OF LABOR LEONARDO QUISUMBING and MERALCO EMPLOYEES Union security - maintenance of membership closed shop
and WORKERS ASSOCIATION (MEWA), respondent.
Contracting out - no need to consult union consult first
RESOLUTION
All benefits - existing terms and conditions all terms
YNARES-SANTIAGO, J.: Retroactivity - Dec. 28, 1996-Dec. 27, 199(9) from Dec. 1, 1995

In the Decision promulgated on January 27, 1999, the Court disposed of the case as follows: Dissatisfied with the Decision, some alleged members of private respondent union (Union for
brevity) filed a motion for intervention and a motion for reconsideration of the said Decision. A
WHEREFORE, the petition is granted and the orders of public respondent Secretary of separate intervention was likewise made by the supervisor's union (FLAMES 2) of petitioner
Labor dated August 19, 1996 and December 28, 1996 are set aside to the extent set corporation alleging that it has bona fide legal interest in the outcome of the case. 3 The Court
forth above. The parties are directed to execute a Collective Bargaining Agreement required the "proper parties" to file a comment to the three motions for reconsideration but the
incorporating the terms and conditions contained in the unaffected portions of the Solicitor-General asked that he be excused from filing the comment because the "petition filed in
Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the the instant case was granted" by the Court.4 Consequently, petitioner filed its own consolidated
modifications set forth above. The retirement fund issue is remanded to the Secretary of comment. An "Appeal Seeking Immediate Reconsideration" was also filed by the alleged newly
Labor for reception of evidence and determination of the legal personality of the elected president of the Union.5 Other subsequent pleadings were filed by the parties and
MERALCO retirement fund.1 intervenors.

The modifications of the public respondent's resolutions include the following: The issues raised in the motions for reconsideration had already been passed upon by the Court
in the January 27, 1999 decision. No new arguments were presented for consideration of the
January 27, 1999 decision Secretary's resolution Court. Nonetheless, certain matters will be considered herein, particularly those involving the
amount of wages and the retroactivity of the Collective Bargaining Agreement (CBA) arbitral
Wages - P1,900.00 for 1995-96 P2,200.00 awards.
X'mas bonus - modified to one month 2 months
Petitioner warns that if the wage increase of P2,200.00 per month as ordered by the Secretary is
Retirees - remanded to the Secretary Granted allowed, it would simply pass the cost covering such increase to the consumers through an
increase in the rate of electricity. This is a non sequitur. The Court cannot be threatened with
Loan to coops - denied Granted
such a misleading argument. An increase in the prices of electric current needs the approval of
GHSIP, HMP and the appropriate regulatory government agency and does not automatically result from a mere
Housing loans - granted up to P60,000.00 Granted increase in the wages of petitioner's employees. Besides, this argument presupposes that
petitioner is capable of meeting a wage increase. The All Asia Capital report upon which the
Signing bonus - denied Granted Union relies to support its position regarding the wage issue cannot be an accurate basis and
Union leave - 40 days (typo error) 30 days conclusive determinant of the rate of wage increase. Section 45 of Rule 130 Rules of Evidence
provides:
High voltage/pole - not apply to those who are members of a team
not exposed to the risk Commercial lists and the like. — Evidence of statements of matters of interest to persons
engaged in an occupation contained in a list, register, periodical, or other published
 compilation is admissible as tending to prove the truth of any relevant matter so stated if On the retroactivity of the CBA arbitral award, it is well to recall that this petition had its origin in
that compilation is published for use by persons engaged in that occupation and is the renegotiation of the parties' 1992-1997 CBA insofar as the last two-year period thereof is
generally used and relied upon by them therein. concerned. When the Secretary of Labor assumed jurisdiction and granted the arbitral awards,
there was no question that these arbitral awards were to be given retroactive effect. However,
Under the afore-quoted rule, statement of matters contained in a periodical, may be admitted the parties dispute the reckoning period when retroaction shall commence. Petitioner claims that
only "if that compilation is published for use by persons engaged in that occupation and is the award should retroact only from such time that the Secretary of Labor rendered the award,
generally used and relied upon by them therein." As correctly held in our Decision dated January invoking the 1995 decision in Pier 8 case 14 where the Court, citing Union of Filipino Employees v.
27, 1999, the cited report is a mere newspaper account and not even a commercial list. At most, NLRC,15 said:
it is but an analysis or opinion which carries no persuasive weight for purposes of this case as no
sufficient figures to support it were presented. Neither did anybody testify to its accuracy. It The assailed resolution which incorporated the CBA to be signed by the parties was
cannot be said that businessmen generally rely on news items such as this in their occupation. promulgated on June 5, 1989, the expiry date of the past CBA. Based on the provision of
Besides, no evidence was presented that the publication was regularly prepared by a person in Section 253-A, its retroactivity should be agreed upon by the parties. But since no
touch with the market and that it is generally regarded as trustworthy and reliable. Absent agreement to that effect was made, public respondent did not abuse its discretion in
extrinsic proof of their accuracy, these reports are not admissible. 6 In the same manner, giving the said CBA a prospective effect. The action of the public respondent is within
newspapers containing stock quotations are not admissible in evidence when the source of the the ambit of its authority vested by existing law.
reports is available.7 With more reason, mere analyses or projections of such reports cannot be
admitted. In particular, the source of the report in this case can be easily made available On the other hand, the Union argues that the award should retroact to such time granted by the
considering that the same is necessary for compliance with certain governmental requirements. Secretary, citing the 1993 decision of St. Luke's. 16

Nonetheless, by petitioner's own allegations, its actual total net income for 1996 was P5.1 Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the
billion.8 An estimate by the All Asia financial analyst stated that petitioner's net operating income expiration of the previous CBA, contrary to the position of petitioner. Under the
for the same year was about P5.7 billion, a figure which the Union relies on to support its claim. circumstances of the case, Article 253-A cannot be properly applied to herein case. As
Assuming without admitting the truth thereof, the figure is higher than the P4.171 billion correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing
allegedly suggested by petitioner as its projected net operating income. The P5.7 billion which petitioner's Motion for Reconsideration —
was the Secretary's basis for granting the P2,200.00 is higher than the actual net income of P5.1
billion admitted by petitioner. It would be proper then to increase this Court's award of Anent the alleged lack of basis for the retroactivity provisions awarded; we would
P1,900.00 to P2,000.00 for the two years of the CBA award. For 1992, the agreed CBA wage stress that the provision of law invoked by the Hospital, Article 253-A of the
increase for rank-and-file was P1,400.00 and was reduced to P1,350.00; for 1993; further Labor Code, speaks of agreements by and between the parties, and not arbitral
reduced to P1,150.00 for 1994. For supervisory employees, the agreed wage increase for the awards . . .
years 1992-1994 are P1,742.50, P1,682.50 and P1,442.50, respectively. Based on the foregoing
figures, the P2,000.00 increase for the two-year period awarded to the rank-and-file is much Therefore, in the absence of a specific provision of law prohibiting retroactivity of the
higher than the highest increase granted to supervisory employees. 9 As mentioned in the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g)
January 27, 1999 Decision, the Court does "not seek to enumerate in this decision the factors of the Labor Code, such as herein involved, public respondent is deemed vested with
that should affect wage determination" because collective bargaining disputes particularly those plenary and discretionary powers to determine the effectivity thereof.
affecting the national interest and public service "requires due consideration and proper
balancing of the interests of the parties to the dispute and of those who might be affected by In the 1997 case of Mindanao Terminal,17 the Court applied the St. Luke's doctrine and ruled
the dispute."10 The Court takes judicial notice that the new amounts granted herein are that:
significantly higher than the weighted average salary currently enjoyed by other rank-and-file
employees within the community. It should be noted that the relations between labor and capital
In St. Luke's Medical Center v. Torres, a deadlock also developed during the CBA
is impressed with public interest which must yield to the common good. 11 Neither party should
negotiations between management and the union. The Secretary of Labor assumed
act oppressively against the other or impair the interest or convenience of the public. 12Besides,
jurisdiction and ordered the retroaction of the CBA to the date of expiration of the
matters of salary increases are part of management prerogative.13
 previous CBA. As in this case, it was alleged that the Secretary of Labor gravely abused copy of its proposed CBA covering the same period inclusive. 21 In addition, petitioner does not
its discretion in making his award retroactive. In dismissing this contention this Court dispute the allegation that in the past CBA arbitral awards, the Secretary granted retroactivity
held: commencing from the period immediately following the last day of the expired CBA. Thus, by
petitioner's own actions, the Court sees no reason to retroact the subject CBA awards to a
Therefore, in the absence of a specific provision of law prohibiting retroactive of different date. The period is herein set at two (2) years from December 1, 1995 to November
the effectivity of arbitral awards issued by the Secretary of Labor pursuant to 30, 1997.
Article 263(g) of the Labor Code, such as herein involved, public respondent is
deemed vested with plenary and discretionary powers to determine the On the allegation concerning the grant of loan to a cooperative, there is no merit in the union's
effectivity thereof. claim that it is no different from housing loans granted by the employer. The award of loans for
housing is justified because it pertains to a basic necessity of life. It is part of a privilege
The Court in the January 27, 1999 Decision, stated that the CBA shall be "effective for a period recognized by the employer and allowed by law. In contrast, providing seed money for the
of 2 years counted from December 28, 1996 up to December 27, 1999." Parenthetically, this establishment of the employee's cooperative is a matter in which the employer has no business
actually covers a three-year period. Labor laws are silent as to when an arbitral award in a labor interest or legal obligation. Courts should not be utilized as a tool to compel any person to grant
dispute where the Secretary had assumed jurisdiction by virtue of Article 263 (g) of the Labor loans to another nor to force parties to undertake an obligation without justification. On the
Code shall retroact. In general, a CBA negotiated within six months after the expiration of the contrary, it is the government that has the obligation to render financial assistance to
existing CBA retroacts to the day immediately following such date and if agreed thereafter, the cooperatives and the Cooperative Code does not make it an obligation of the employer or any
effectivity depends on the agreement of the parties.18 On the other hand, the law is silent as to private individual.22
the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual agreement
of the parties but by intervention of the government. Despite the silence of the law, the Court Anent the 40-day union leave, the Court finds that the same is a typographical error. In order to
rules herein that CBA arbitral awards granted after six months from the expiration of the last avoid any confusion, it is herein declared that the union leave is only thirty (30) days as granted
CBA shall retroact to such time agreed upon by both employer and the employees or their union. by the Secretary of Labor and affirmed in the Decision of this Court.
Absent such an agreement as to retroactivity, the 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 The added requirement of consultation imposed by the Secretary in cases of contracting out for
absence of a CBA, the Secretary's determination of the date of retroactivity as part of his six (6) months or more has been rejected by the Court. Suffice it to say that the employer is
discretionary powers over arbitral awards shall control. allowed to contract out services for six months or more. However, a line must be drawn between
management prerogatives regarding business operationsper se and those which affect the rights
It is true that an arbitral award cannot per se be categorized as an agreement voluntarily of employees, and in treating the latter, the employer should see to it that its employees are at
entered into by the parties because it requires the interference and imposing power of the State least properly informed of its decision or modes of action in order to attain a harmonious labor-
thru the Secretary of Labor when he assumes jurisdiction. However, the arbitral award can be management relationship and enlighten the workers concerning their rights. 23 Hiring of workers
considered as an approximation of a collective bargaining agreement which would otherwise is within the employer's inherent freedom to regulate and is a valid exercise of its management
have been entered into by the parties.19 The terms or periods set forth in Article 253-A pertains prerogative subject only to special laws and agreements on the matter and the fair standards of
explicitly to a CBA. But there is nothing that would prevent its application by analogy to an justice.24 The management cannot be denied the faculty of promoting efficiency and attaining
arbitral award by the Secretary considering the absence of an applicable law. Under Article 253- economy by a study of what units are essential for its operation. It has the ultimate
A: "(I)f any such agreement is entered into beyond six months, the parties shall agree on the determination of whether services should be performed by its personnel or contracted to outside
duration of retroactivity thereof." In other words, the law contemplates retroactivity whether the agencies. While there should be mutual consultation, eventually deference is to be paid to what
agreement be entered into before or after the said six-month period. The agreement of the management decides.25 Contracting out of services is an exercise of business judgment or
parties need not be categorically stated for their acts may be considered in determining the management prerogative.26 Absent proof that management acted in a malicious or arbitrary
duration of retroactivity. In this connection, the Court considers the letter of petitioner's manner, the Court will not interfere with the exercise of judgment by an employer. 27 As
Chairman of the Board and its President addressed to their stockholders, which states that the mentioned in the January 27, 1999 Decision, the law already sufficiently regulates this
CBA "for the rank-and-file employees covering the period December 1, 1995 to November 30, matter.28 Jurisprudence also provides adequate limitations, such that the employer must be
1997 is still with the Supreme Court,"20 as indicative of petitioner's recognition that the CBA motivated by good faith and the contracting out should not be resorted to circumvent the law or
award covers the said period. Earlier, petitioner's negotiating panel transmitted to the Union a
must not have been the result of malicious or arbitrary actions. 29 These are matters that may be 9
See the January 27, 1999 Decision.
categorically determined only when an actual suit on the matter arises.
10
Manila Electric Company v. Quisumbing, 302 SCRA 173, 196 (1999).
WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision
is MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995 to 11
Art. 1700, New Civil Code (NCC).
November 30, 1997; and (2) the award of wage is increased from the original amount of One
Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years 12
Art. 1701, NCC.
1995 and 1996. This Resolution is subject to the monetary advances granted by petitioner to its
rank-and-file employees during the pendency of this case assuming such advances had actually 13
See National Federation of Labor Unions v. NLRC, 202 SCRA 346 (1991).
been distributed to them. The assailed Decision is AFFIRMED in all other respects.1âwphi1.nêt

14
Pier 8 Arrastre and Stevedoring Service, Inc. v. Roldan-Confesor, (2nd Div), 311 Phil.
SO ORDERED. 311 penned by Justice Puno with Chief Justice Narvasa (ret.) and Justices Bidin (ret.),
Regalado (ret.) and Mendoza, concurring, p. 329.
Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.
15
192 SCRA 414 (1990).

16
St. Luke's Medical Center v. Torres, (3rd Div), 223 SCRA 779 (1993), penned by Justice
Melo with Justices Feliciano (ret.), Bidin (ret.), Davide (now Chief Justice) and Romero
Footnotes (ret.), concurring, pp. 792-793.
1
Decision promulgated January 27, 1999, G.R. No. 127598 penned by Justice Antonio 17
In Mindanao Terminal and Brokerage Service, Inc. v. Confesor, (2nd Div), 338 Phil.
Martinez (now retired) with Chief Justice Hilario Davide, Jr. and Justices Jose Melo, 671 penned by Justice Mendoza with justices Regalado (ret.), Romero, (ret.), Puno and
Santiago Kapunan and Bernardo Pardo, concurring. Torres (ret.), concurring, p. 679.
2
First Line Association of Meralco Supervisory Employees. 18
Art. 253-A, Labor Code, as amended.
3
Motion for Leave to Intervene and to treat this as Movant's Intervention filed by 19
Mindanao Terminal and Brokerage Service, Inc. v. Confesor, 338 Phil. 671.
FLAMES, p. 4; Rollo, p. 2476.
20
Rollo, p. 2347.
4
Solicitor-General's Manifestation and Motion dated August 10, 1999, p. 2; Rollo, p.
2506. 21
Annex "C" of the Petition.
5
Rollo, p. 2495. 22
See Section 2, R.A. No. 6838 (Cooperative Code of the Philippines) which provides: "It
is the declared policy of the State to foster the creation and growth of cooperative as a
6
20 Am. Jur. 819. practical vehicle for promoting self-reliance and harnessing people power towards the
attainment of economic development and social justice. The State shall encourage the
7
20 Am. Jr. 819-820. private sector to undertake the actual formation of cooperatives and shall create an
atmosphere that is conducive to the organizational growth and development of the
8
Petitioner's Comment Motion for Reconsideration and Motion for Intervention, p. cooperatives.
6; Rollo, p. 2514.
 Towards this end, the Government and all its branches, subsidiaries,
instrumentalities, and agencies shall ensure the provision of technical
guidelines, financial assistance, and other services to enable said cooperative to
development into viable and responsive economic enterprises and thereby bring
about a strong cooperative movement that is free from any conditions that might
infringe upon the autonomy or organizational integrity of cooperatives.

23
Philippine Airlines v. NLRC, 225 SCRA 259 (1993).

24
Tierra International Construction Corporation v. NLRC, 256 SCRA 36 (1996); Business
Day Information Systems v. NLRC, 221 SCRA 9 (1993); Philtread Tire v. NLRC, 218 SCRA
805 (1993); San Miguel Corporation v. Ubaldo, 218 SCRA 293 (1993); San Miguel
Brewery Sales Force Union v. Ople, 170 SCRA 25 (1989).

25
Shell Oil Workers Union v. Shell Company of the Philippines, Ltd., 39 SCRA 276 (1971).

26
De Ocampo v. NLRC, 213 SCRA 652 (1992).

27
Asian Alcohol Corporation v. NLRC, G.R. No. 131108, March 25, 1999 cited in Serrano
v. NLRC, G.R. No. 117040, January 27, 2000.

28
See also Metrolab Industries v. Roldan-Confesor, 254 SCRA 182 (1996).

29
Manila Electric Company v. Quisumbing, 302 SCRA 173, 196 (1999) citing De Ocampo
v. NLRC, 213 SCRA 652 (1992).