007 CIRTEK EMPLOYEES LABOR UNION-FEDERATION AUTHOR: twinkle

OF FREE WORKERS vs. CIRTEK ELECTRONICS, INC. NOTES:

G.R. No. 190515 November 15, 2010
TOPIC:
PONENTE: CARPIO MORALES, J.
FACTS:
1. Cirtek Electronics, Inc. (Cirtek) had an existing CBA with Cirtek Employees Labor Union-Federation of Free Workers
(CELU) 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. CELU declared a bargaining
deadlock and filed a Notice of Strike with the National Conciliation and Mediation Board-Regional Office No. IV. Cirtek filed
a Notice of Lockout.

2. While the conciliation proceedings were ongoing, Cirtek placed seven union officers (President, VP, Sec and the Chairman of
the Board of Directors) under preventive suspension for allegedly spearheading a boycott of overtime work then dismissed
from employment which prompted CELU to file another Notice of Strike. After conciliation proceedings, it was converted to a
voluntary arbitration case. NCMB-RO-IV: dismissal was legal. Hence, CELU appealed.

3. Meanwhile, CELU went on strike on June 20, 2005. The Secretary of Labor assumed jurisdiction over the controversy and
issued a Return to Work Order which was complied with.

4. Before the Secretary of Labor could rule on the controversy, Cirtek created a Labor Management Council (LMC) through
which it concluded with the remaining officers of petitioner a Memorandum of Agreement (MOA) providing for daily wage
increases of P6.00 per day effective January 1, 2004 and P9.00 per day effective January 1, 2005. This was submitted to the
Secretary of Labor, alleging that the remaining officers signed the MOA under Cirtek’s assurance that should the Secretary
order a higher award of wage increase, respondent would comply.

5. The Secretary of Labor resolved the CBA deadlock by awarding a wage increase of from P6.00 to P10.00 per day effective
January 1, 2004 and from P9.00 to P15.00 per day effective January 1, 2005, and adopting all other benefits as embodied in
the MOA. Cirtek MR denied. Hence, appealed via certiorari with CA.

6. CA: reversed decision of Labor Sec. holding 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" submitted by respondent union members explaining why they signed the MOA as it was not notarized.

7. CELU MR denied. CELU appealed positing that the MOA "surreptitiously entered into [in] bad faith," it having been forged
without the assistance of the Federation of Free Workers or counsel, adding that Cirtek 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.
ISSUE(S): 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.
HELD: 1) YES.
2) YES.
PETITION GRANTED. DECISION OF SEC LABOR REINSTATED.
RATIO:
1) 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.
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.

2) 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 documents submitted by respondent as well as the parties’ bargaining history and
respondent’s financial outlook and improvements as stated in its website.

3) 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.

4) 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.

5) 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.

6) 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.

7) 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.