MODULE 4

COLLECTIVE BARGAINING AND

ADMINISTRATION OF AGREEMENTS

Prepared by:

Atty. Alyssa Clarizze E. Malaluan

Guest Lecturer
BSU ARASOF- NASUGBU

(Excerpts from the book Fundamentals of Labor

Law by Diego Atienza)
 MODULE INTRODUCTION

This module primarily focuses on the basic concepts of

collective bargaining and the administration of agreements
entered into by the labor and the management.

INTENDED LEARNING OUTCOME

At the end of the module, the student should be able to:

1. Understand the concept and history of collective bargaining
and collective bargaining agreement;
2. Know how one organization becomes the representative for
the purpose of collective bargaining;
3. Understand what is a collective bargaining unit and what are
the procedures in bargaining; and
4. Determine what are the ULPs in Collective Bargaining.
1.Collective Bargaining: Concept and History

Collective bargaining is of seminal importance in the field of labor relations.

Without it, unionism does not carry much significance because it is the primordial
objective of the organization of workers, the main purpose of the exercise of the
right to self-organization.

Collective bargaining is a system or a process by which employees, through

their duly chosen representative, negotiate with their employer regarding the
terms and conditions of their employment. The process usually results in a
collective bargaining agreement, which is a contract where the agreed terms and
conditions are laid down. Being a contract, it is the law between the parties
thereto, insofar as the terms and conditions of employment are concerned.

Aptly enough, collective bargaining has been described as industrial

democracy at work, or a system of industrial self- government. In enterprises
where it has been adopted, it replaces unilateral imposition by the management of
the terms under which its employees shall work.

Like unionism itself, collective bargaining originated in Great Britain, where

it was conceived as an aftermath of the industrial revolution, as the workers'
response to the growing complexity of industrial life which threatened their
employment security and their livelihood. The invention of the system cannot be
attributed to any identified person or group of persons. It is no exaggeration to
say, however, that it is equivalent in importance, as far as workers are concerned,
to the invention of the wheel or of the steam engine.

In the Philippines, collective bargaining was formally introduced as a part

of the labor relations system by means of a law, C.A. 213, passed on 21 November
1936, whose stated purpose was "to define and regulate legitimate labor
organizations." A legitimate labor organization, according to this law, is "an
organization, association or union of labourers duly registered and permitted to
operate by the Department of Labor, and governed by a constitution and by-laws
not repugnant to or inconsistent with the laws of the Philip- pines." All such
organizations were granted "the right to collective bargaining with employers for-
the purpose of seeking better working and living conditions, fair wages, and
shorter working hours well-being of their members."

But the said law neither defined collective bargaining nor set down the
procedure in pursuing it. These were to come later, with the enactment of R.A.
875, also known as the Industrial Peace Act, and more popularly, as the Magna
Carta of Labor, on 20 June 1953. The law, among other things, defined the right
to self-organization and the duty to bargain collectively, established the rules on
employee representation for bargaining purposes, and prescribed the rules to be
followed in the negotiation and administration of collective bargaining agreements.

Many of the provisions of R.A. 875 have been carried over, at least in
substance, to Book V of the Labor Code.
 2. The Duty to Bargain Collectively.

The primary meaning of the duty to bargain collectively is laid down in

Article 263. Article 262 provides how that duty is to be complied with in the
absence of an agreement or arrangement for a more expeditious manner of
collective bargaining. Article 264 says what the duty to bargaining collectively
"also" means that when there is already a CBA between the parties, neither party
shall modify nor the same during its lifetime terminate. All of these, together with
the question of when the duty to bargain arises, have been discussed in the
immediately preceding Title, in connection with unfair labor practice consisting of
violation of the duty to bargain collectively.

Collective bargaining is a continuing process, Consequently, the duty to

bargain collectively does not end with the execution of a collective bargaining
agreement but extends to the settlement of grievances arising from its
interpretation or implementation. (Master Iron Labor Union v. NLRC, 219 SCRA
47.) It also means that complying in good faith with its provisions is a necessary
part of the process.

3. Representation for the Purpose of Collective Bargaining.

The parties to collective bargaining are the employer on one side and, on
the other side, his employees or a distinct aggrupation of his employee,
represented by a union. The bargaining union is required to be a legitimate labor
organization, or one duly registered in the BLR. Once it acquires representative
status, it becomes an exclusive collective bargaining agent.

That status is attained by either of three methods, namely: (1voluntary

recognition, (2).certification by the BLR after winning in a certification election; or (3)
winning in a consent election.

1)Voluntary Recognition.
Voluntary Recognition can be granted by the employer to the union in an
unorganized establishment by complying with the conditions and procedures provided in
Rule VII, Book V of the
Omnibus Rules. After the submission of the required documents, the fact of voluntary
recognition shall be recorded by the appropriate Regional Officę. From the time of such
recording, the union shall enjoy the rights, privileges and obligations of an exclusive
collective bargaining representative.

An unorganized establishment is a firm or company where a recognized or

certified exclusive bargaining agent does not exist.

2)Certification Election.
Certification is the act of certifying a legitimate labor organization as the exclusive
bargaining representative of an appropriate collective bargaining unit, after winning in a
certification election,
through secret ballot conducted for that purpose. The object of certification proceedings is
not the decision of any alleged commission of wrongs nor asserted deprivation of rights
but is merely the determination of proper bargaining units and the ascertainment of the
will and choice of the employees with respect to the selection of a collective bargaining
representative. A certification proceeding, therefore, is non-litigious in character.

Any legitimate labor organization may file a petition for certification election. If a
federation which possesses that status files the petition on behalf of its local chapter, the
latter, as the principal, should itself be a legitimate labor organization, having complied
with all the requirements prescribed by the Omnibus Rules for attaining such standing.
(Lopez Sugar Corporation v. Secretary of Labor, 247 SCRA 1.) An employer may also file
such a petition, when requested
to bargain collectively, and is in doubt as to the requesting union's representative status.
If the employer entertains no such doubt, it can just extend voluntary recognition to the
union.

Under Article 258-A (now 271) no matter who filed the petition for certification
election, the employer is a mere bystander in such proceedings; this matter is the
exclusive concern of the employees. (Divine Word University of Tacloban vs Secretary of
Labor 213 SCRA 759). It has no personality even to oppose a petition for certification
election. (California Manufacturing Corporation vs Laguesma, 209 SCRA 606.) Its
interference in opposing such role is thus limited to being informed of the filing of the
petition a submitting the list of employees during the pre-election conference in case the
petition is granted.

However, the rule that an employer is a mere bystander in certification

proceedings does not apply when there is-a question existence of an employer-employee
relationship, in which case the employer has the right to intervene. (NATU v. Laguesma,
264 SCRA 637.)

A petition for certification election may be filed with the Med Arbiter through the
Regional Office which has jurisdiction over the principal office of the employer or where
the bargaining unit is principally situated. It may be filed at any time, except where there
is a duly registered CBA in the establishment in which case the filing may be made only
during the freedom period, or the period of 60 days before the expiration of the CBA. This
is known as the "contract-bar rul”,} the existence a duly registered contract operates as a
bar to certification elections. Deviation from the "contract-bar" rule is justified only where
the need for industrial stability is clearly shown to be imperative, such as where the
identity of the authorized representative of the workers is in doubt. (Port Workers Union of
the Philippines v. Undersecretary of Labor, 207 SCRA 329.)

The other "bars" to certification elections are as follows:

Election bar or twelve-month bar: No petition for certification 4 election may be

filed within one year from the date of a valid certification, consent or run-off election. This
bar presupposes that there, were final certification election results; i.e., there was an
election, ballots were cast and a counting of votes was conducted. (R Transport
Corporation v. Laguesma, 227 SCRA 826.) A possible exception to this bar is where,
during that period, a radical change in the size of the collective bargaining unit occurs
due to, say, increase in hìring.
 Negotiation bar: Ne petition for certification election can be entertained if the duly
recognized or certified union has commenced negotiation with the employer during the
one-year period from certification or recognition, for the duration of the negotiation as
long as honestly pursued.

Deadlock bar: There can also be no certification proceedings during the existence
of a bargaining deadlock to which an incumbent bargaining agent is a party and which
has been submitted to conciliation or arbitration or has become the subject of a valid
notice of strike or lockout. (NACUSIP v. Trajano, 208 SCRA 18.). These conditions are
indications of the existence of a real bargaining
deadlock.

Article 268, in relation to Rule VIII, Book V of the Omnibus Rules, provides the
procedure in resolving a representation issue in an organized establishment, from the
filing of a verified petition wherein the majority status of the incumbent bargaining agent
is challenged, down to deciding an appeal from the decision disposing of the petition. An
organized establishment is one were a recognized or certified exclusive collective
bargaining agent exists. If the petition is supported by at least 25 percent of (all the
employees in the bargaining unit, an order to conduct an election shall automatically
issue.

Since the law calls for automatic ordering of a certification election, the Med-
Arbiter has no discretion on the matter. (Philippine Scout Veterans Security and
Investigation Agency v. Torres, 224 SCRA 682.) The provision of Article 268 which calls for
an automatic order of election is clear and leaves no room for further interpretation. It has
to be issued in spite of the absence of one union from the hearing because certification
proceedings are not litigation in the sense in which this term is ordinarily understood, but
an investigation of a non-adversarial and fact-finding character, not bound by technical
rules of evidence (ALU v. Ferrer-Calleja, 179 SCRA 129.)

That does not mean that where the support for the petition is less than 25% of the
employees of the bargaining unit, an election order may not be issued. The BLR, in the
exercise of sound discretion, may order a certification election notwithstanding the failure
to meet the statutory requirement. (Western Agusan Workers Union v. Trajano, 196 SCRA
622.) Thus, certification election is mandatory where the support exists, and discretionary
where the support is less than that prescribed. (United Aluminum Fabricators v. Drilon,
211 SCRA 104.) Quite another question is whether it is mandatory to support, the
percentage thereof was reduced due to withdrawal from the petitioning union of
employees belonging to the collective bargaining unit. In the case of Oriental Tin Can
Labor Union Secretary of Labor (294 SCRA 640), the Supreme Court held that once the
required percentage-support of 25% has been reached, the employees' withdrawal from
union membership taking place after the filing of the petition will not affect the latter. The
presumption arises that the withdrawal was not free but was procured through duress,
coercion or for a valuable consideration: In that situation issuance of an order for
certification is still mandatory.

In an unorganized establishment, the law does not require any manifested

support coming from the members of the bargaining unit. Upon the filing of a petition by
a legitimate labor organization, a certification election shall be automatically conducted
by the Med- Arbiter.
 It can thus be seen that since the policy of the law is to promote self-organization
and collective bargaining, it makes it relatively easy for the workers to organize
themselves and take the initial steps towards negotiating with the employer in an
unorganized establishment. On the other hand, once a union has established itself as the
employees' bargaining representative, the law does not make it as easy for another union
to dislodge the incumbent representative, because industrial peace in the enterprise is
disrupted by any inter-union struggle.

A representation case is not adversely affected by a CBA registered before or

during the last 60 days of a subsisting agreement. A CBA that was prematurely renewed
is not a bar to certification election. (Ala Mode Garments, Inc. v. NLRC, 268 SCRA 497.)

Such a premature CBA cannot be deemed permanent. However, to prevent a

vacuum, it should be implemented on a temporary basis, subject to the results of the
certification election. If the union that negotiated it wins in the election and is certified as
the exclusive collective bargaining agent, the CBA may be continued in force, but if the
petitioning union wins, the latter may reject the CBA and negotiate its own. (Associated
Trade Union v. Trajano, 172 SCRA 49.)

The hearing of the petition for eertification election is suspendedduring the

pendency of a case for the cancellation of registration of the petitioning union. The Med-
Arbiter should look into the merits of the petition for cancellation instead of issuing an
election order, because whether a union has the right to file a petition for certification
election depends, first and foremost, on whether it has attained the status of a legitimate
labor organization. (Progressive Development Corporation v. Laguesma, 271 SCRA 593.)

A different conclusion, however, was reached in the case of Pepsi-Cola Products

Philippines, Inc. v. Secretary of Labor (312 SCRA 204.) Here the Supreme Court ruled that
a certification election can be conducted despite the pendency of a petition for
cancellation of the petitioning union's registration because, at the time it filed the petition
for certification election, the union still had the legal personality to file it, absent an order
directing the cancellation of its registration.

This jurisprudential conflict has been rendered moot and academic by the new
provision introduced by R.A. 9451 as Article 238-A (now Article 246), which is to the effect
that a petition for cancellation of union registration shall not suspend the certification
election proceedings nor prevent the filing of a petition for certification election.

But a charge of company domination against the petitioning union is definitely a

barrier to a petition for certification election because such a charge raises a question
which is prejudicial in character. If the petitioning union is certified as exclusive collective
bargaining agent, but is subsequently decertified for being a company union, the whole
election proceeding would be rendered useless and nugatory. (United CMC Textile
Workers Union v. BLR, 128 SCRA 316.)

In the absence of any legal impediment to granting the petition for certification
election, it is the duty of the Med-Arbiter to grant it and to order the conduct of an
election.
 Rule IX, Book V of the Omnibus Rules provides the procedure in the conduct of
certification election, from the pre-election conference to the resolution of protests and
appeals. Rule X lays down the rules for the conduct of a run-off election, should one be
necessary. A run-off election is an election between the labor union receiving the two
highest number of votes in a situation where a certification election which provides for
three or more choices results in no choice receiving a majority of the valid votes cast,
provided that the total number of votes for all contending unions is at least 50% of the
number of votes cast.

All employees who are members of the appropriate bargaining unit sought to be
represented by the petitioner at the certification election, including dismissed employees
who are contesting the egality of their dismissal in a pending case are qualified to vote.
(Section 5, Rule IX, Book V, Omnibus Rules.) Without a final judgment declaring the
legality of dismissal, dismissed employees are eligible to participate and vote in a
certification elections. (Yokohama Tire Philippines Inc vs Yokohama Employees Union 539
SCRA 556.) Also included are probationary employees, because they have a substantial
interest in the election of the bargaining representative. (Airtime Specialists v. Ferrer-
Calleja, 180SCRA 749), and members of religious sects like Iglesia ni Kristo who are
prohibited by their religion to join a labor organization, because there is no law or rule
which requires that an employee be a member of a union to be qualified to vote in a
certification election. (Reyes v. Trajano, 209 SCRA 484.) They can vote for “no union," if
they so desire.

If an issue is raised concerning the eligibility of voters, on the ground that they are
not employees of the employer concerned, the Med-Arbiter originally, and the Secretary of
Labor and Employment on appeal, are authorized to rule on that question and determine
the existence of a relationship of employer and employee, which is necessary and
indispensable in the exercise of jurisdiction over the certification case. (M.Y. San Biscuits
Inc. v. Laguesma, 196 SCRA 256.)

The holding of a certification election is based on a statutory policy, which is for

labor to be able to exercise their free choice; that policy cannot be circumvented.
(Progressive Development Corporation v. Secretary, 205 SCRA 802). It is the fairest and
most efficient way of determining which labor union truly represents the working force
who should be allowed to freely express their choice. (Toyota Motor Philippines
Corporation v. Toyota Motor Philippines Corporation Labor Union, 267 SCRA 573.)

A protest against an election must be formalized before the Med-Arbiter within five
days from the close of the election proceedings. A late protest means forfeiture of the right
to impugn the election. (Timbungco v. Castro, 183 SCRA 140.) As noted earlier, the
employer is a mere bystander in certification proceedings. As a rule, therefore, the
results of a certification election cannot be questioned by the employer, who has no
standing in the case. Such concern must come from the emplovees themselves. (Asian
Design and Manufacturing Corporation v. Ferrer-Calleja, 174 SCRA 477).

However, in the case of National Federation of Labor v. Secretary of Labor (287

SCRA 599), the Supreme Court held that while an employer is prohibited from interfering
with the conduct of certification election for the purpose of influencing its outcome, it has
an abiding interest in seeing to it that the election is clean, peaceful, orderly and credible.
The employer, therefore, may protest against such irregularities as disenfranchisement of
employees due to lack of notice, and fraud in the conduct of the election.

Under Article 267, the labor organization designated or selected by the majority of
the employees in a collective bargaining unit shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining. The requirement,
however, does not seem to be that an absolute majority of the bargaining unit must have
voted for the winning union. Under Article 268, the election is valid if at least a majority of
all eligible voters in the unit have cast their votes, and the union receiving the majority of
the valid votes cast shall be certified as the exclusive bargaining agent of all the workers
in the unit. Consequently, 26% of the eligible voters could effectively designate a union as
exclusive collective bargaining representative where only 51% (or the majority the eligible
voters) cast their votes and a majority thereof (or at least 26%) voted for
that union. Under the so-called “double-majority" rule, for there to be a valid certification
election, a majority of the bargaining unit must have voted and the winning union must
have constituted a majority of the votes cast. Majority is 50% plus one. (NUWHRAIN-
Manila Pavilion Chapter v. Security of Labor and Employment, 549 SCRA 773.)

3)Consent Election.
Consent election is not mentioned in the Labor Code, but is allowed by the
Omnibus Rules. It refers to an election voluntarily agreed upon by the parties, with or
without the intervention of the Department, to determine the issue of majority
representation of all the workers in the appropriate collective bargaining unit. (Section
1[h], Rule I Book V, Omnibus Rules.)

While a certification election is conducted upon order of the Med-Arbiter after

certification proceedings, a consent election is agreed upon by the parties, although it
may have been the result of the intervention of the Med-Arbiter in what started out as a
petition for certification election. Where that is the case, no order for the conduct of an
election is issued. Instead, the agreement between the parties is entered in the minutes,
signed by them and attested by the Med-Arbiter.
(Section 16, Rule VIII, Book V, Omnibus Rules.)

The holding of a consent election upon the intervention of the Med- Arbiter puts
into operation the election or twelve-month bar. But where no petition for certification had
been filed but the parties on their own agreed to hold a consent election, the result thereof
shall not constitute a bar to another certification election unless the winning union had
been extended voluntary recognition by the employer. (Ibid.) The latter, however, is not
likely to happen because, under Rule VII, Book V of the Omnibus Rules, one the
requirements for voluntary recognition is the submission by the employer and the union
of a joint statement to the effect that there is no other legitimate labor organization
operating within the bargaining unit. The holding of a consent election presupposes that
there was such other union in the bargaining unit.

4) Direct Certification

Under the original Article 257 of the Labor Code, direct certification of an
exclusive collective bargaining agent without. going through the process of certification
election was allowed, if the choice of the members of the bargaining unit could be
ascertained from the documents submitted. An election was conducted if there was any
reasonable doubt as to whom the employees had chosen as their representative for the
purpose of collective bargaining. The present law, however, does not provide for direct-
certification. Articles 268, 269 and 270 require that a certification election be conducted,
on an automatic basis, in certain situations.

4.Collective Bargaining Unit.

The constituency of a duly recognized or certified exclusive collective bargaining

representative is a group of employees called collective bargaining unit. Such a unit is
defined in the Omnibus Rules-(Section 1[d], Rule I, Book V) as. “a group of employees-
sharing mutual interest within a given employer unit, comprised of all or less than all of
the entire body of employees in the employer unit or any specific occupational or
geographical grouping within such employer unit." A collective bargaining agreement
usually contains a provision on “coverage," which defines the scope of the collective
bargaining unit. As so defined, all the members of such unit, whether or not affiliated
with the bargaining union, are-directly entitled to the benefits provided by the CBA.

The factors that should be considered in determining the appropriate collective

bargaining unit are: I) the will of the employees (Globe Doctrine); 2), affinity and unity of
the employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interest Rule), 3) prior
collective bargaining history; and 4) similarity of employment status. The basic test of an
asserted collective bargaining unit's acceptability is whether or not it is fundamentally the
combination that will best assure to all employees the exercise of their collective
bargaining rights. (International Alliance of Educators v. Quisumbing, 333 SCRA 13.)

The Supreme Court has emphasized the importance, as a test of proper grouping,
of community and mutuality of interest. (Belyca Corporation v. Ferrer-Calleja, 168 SCRA
184.) On the other hand, the existence of a prior collective bargaining history, while also a
factor, is neither decisive nor conclusive in the determination of what constitutes an
appropriate bargaining unit. (San Miguel Corporation v. Laguesma, 236 SCRA 595.)

The so-called Globe doctrine is the doctrine in bargaining unit controversies which
says that where the usual standards show that the adoption of either a single unit or
multiple units is appropriate, the will or desire of the employees concerned is the
controlling consideration (Fernandez, op. cit., p. 222, citing Globe Machine and Stamping
Co., 3 NLRB 294.)

A single, enterprise-wide bargaining unit is favored in this jurisdiction. The

proliferation of unions in an employer unit is discouraged as a matter of policy unless
there are compelling reasons which would deny to a certain class of employees the right to
self-organization, such as substantial distinctions warranting the recognition of a
separate group of rank-and-file workers. (Philtranco Service enterprises v. BLR, 174 SCRA
388.) Thus, it has been held that even if the employees work in three different plants of
the company, where the work is of the same nature, the wages and compensation are the
same, and they share a common stake in concerted activities, they may to one collective
bargaining unit, because a unit to be appropriate must effect a grouping of employees-
who have substantial, mutual interest in wages, hours, working conditions and other
subjects of collective bargaining. (SMC Supervisors and Exempt Employees Union v.
Laguesma, 277 SCRA 370.)
 On the other hand, two corporate entities cannot have a single bargaining unit no
matter how related their businesses may be, such as Lianga Bay Logging Co Inc. and
Georgina Pacific International Corporation, which are indubitably distinct entities, with
separate juridical personalities. (Diatagon Labor Federation Local 110 of the ULGWP vs
Ople, 101 SCRA 534). The same ruling was made in the case that involved Magnolia
Corporation and San Miguel Foods, Inc., both of which were divisions of San Miguel
Corporation which were transformed into separate corporations. (San Miguel Corporation
Employees Union-PTGWO v. Confessor, 262 SCRA 81.)

The express exclusion of a certain class of employees from the bargaining unit of
rank and file employees in the previous CBA does not bar any renegotiation for their
future inclusion. During the freedom period the parties may not only review the existing
CBA but may also propose and discuss modifications or amendments thereto. (De La Salle
University Employees Association, 330 SCRA 363.)

Under Art. 267, employees do not have to form a union, or belong to a collective
bargaining unit, to be able to present grievances to their employer. Any individual
employee or group of employees has that right. Moreover, organized or not, workers have
the right to participate in policy- and decision-making processes of the establishments
where they are employed insofar as those processes will directly affect their rights,
benefits and welfare. Workers' participation has been discussed earlier in connection with
labor relations policy. (Chapter I, Title I, Book V, supra.)

5. Procedure in Bargaining.

Article 262 allows the parties to make their own arrangements for bargaining
collectively in an expeditious manner. They usually do it by agreeing to a set of ground
rules to be followed in the bargaining process. They are also free to change or adjust the
rules as they go along, to serve the purpose of expeditious and orderly bargaining. In the
absence of any such agreement, the parties have to bargain in accordance with the
provisions of the Code, that is to say, comply with the duty. to bargain collectively as
spelled out in Articles 262 and 264, and observe the procedure outlined in Article 261.
The process is initiated by means of a notice served by the party desiring to negotiate an
agreement upon the other party, with a statement of the bargaining proposals. The other
party has the obligation to make a reply to the notice and the proposals within 10 days
from receipt.

Should differences arise on the basis of the notice and the reply, either party may
request for a conference which shall begin no later than 10 days from the date of request.
That signals the start of the actual negotiations where the parties try to overcome their
differences and arrive at an agreement.

If no agreement is reached on certain issues, in spite of good faith bargaining, a

state of deadlock occurs with respect to those issues, in which case the parties may
exercise their rights under the law. The union may file a notice of strike and the employer
a notice of lockout. At this stage the National Conciliation and Mediation Board, motu
proprio, or upon request by either party, whether such notice has been filed, may
intervene to help the parties arrive at a settlement. Attendance and full participation by
the parties in the conciliation meetings called by the Board are mandatory.
6.ULPS in Collective Bargaining.

There are three acts of unfair labor practice that may be committed in connection
with collective bargaining, namely: violation of the duty to bargain collectively, payment of
negotiation or attorney's fee, and gross violation of a CBA.

1) The first may be committed by refusing to bargain or evading the duty to bargain with
respect to wages, hours or work and other terms and conditions of employment,
bargaining in bad, and refusing to execute a contract if requested by any party after
agreement is reached.

Under the primary definition of the duty to bargain collectively (Article 263), the first
duty of the parties is to meet and convene promptly and expeditiously. Meeting and
convening are the prerequisites to negotiating an agreement. Therefore, violation of that
duly to meet and convene is unfair labor practice, but only if the matters to meet and
convene about include wages, hours of work and other terms and conditions of
employment and proposals for adjusting grievances arising under the agreement. These
are known as the statutory or mandatory subjects of collective bargaining.

A party may, at the risk of an impasse or deadlock, refuse to enter into an agreement
unless it includes a desired provision related to a mandatory subject of bargaining. This
process is known
as a bargaining to an impasse. But a refusal to enter into an agreement unless it covers a
matter which is not a mandatory subject ie equivalent to a refusal to bargain about
matters which are manda tory subjects of bargaining. (Divine Word University of Tacloban
y Secretary of Labor and Employment, 213 SCRA 759.)

The parties, on the other hand, have no obligation to negotiate over non-
mandatory subjects or those that fall outside the statutory subjects of collective
bargaining.

Failure or refusal to meet and convene can be done indirectly such as where the
employer, to evade that duty, indirectly discharged his employees by selling the enterprise
to a buyer who was not willing to accept or absorb his employees. The rule here is that ie
an employer commits unfair labor practice by directly dismissing his employees to
forestall a demand to bargain collectively, it is also unfair labor practice to evade that
responsibility, by indirectly causing the dismissal by selling to a buyer that the employer
knows is unwilling to accept his employees. (Fernando v. Angat Labor Union, 5 SCRA
248.)

Moreover, if the purchaser' was himself in bad faith because. during the
negotiation for the sale, he was informed of the existence of - a bargaining representative
and the labor problems in the business being sold, he is in the position of tortfeasor,
having been a party likewise responsible. for the damage suffered by the members of the
union, cannot justly escape responsibility, and is liable, along with the seller, for the
reinstatement with back wages of the former employees. (Cruz v. PAFLU, 42 SCRA 38.)
This is an example of the application of the "successor employer" doctrine, which is to the
effect that while an innocent transferee of a going concern has no liability to the
employees of the transferor with respect to either their continuation in employment or the
past unfair labor practices of the previous owner, such liability devolves on the successor
by virtue of obligations assumed under the contract of sale or because of the latter's
participation in defeating the rights of the employees. -The duty to bargain-collectively
requires bargaining in good faith. A party who bargains in bad faith commits unfair labor
practice. Bad faith bargaining, however, has no cut-and-dried definition. Whether a party
is bargaining in good faith or bad faith is a matter that can be determined on the basis of
the circumstances attending each case. In Hong Kong and Shanghai Banking Corporation
Employees Union v. NLRC (281 SCRA 509), the Supreme Court, citing an American
authority, held that there is no per se test of good faith in bargaining. Rather, good faith
or bad faith is an inference to be drawn from the facts and is largely a matter for the
determination of the NLRC.

It has been held, however, that there is bad faith on the part of an employer where
his conduct in the course of bargaining, taken as a whole, is incompatible with the
expeditious resolution of controversies or disputes pending between the parties. (Caltex
Filipino Managers and Supervisors Association v. NLRC, 295 SCRA 171.)

It can fairly be said that bad party goes through the process of bargaining just
perfunctorily with no genuine desire to end the dispute with the other party. This is also
known as "surface bargaining." But, with the execution of CBA, bad faith bargaining can
no longer be imputed to any of the parties thereto. (Samahang Manggagawa sa Top Forum
Manufacturing v. NLRC, 295 SCRA 171.)

On the other hand, the adamant insistence by a party on a bargaining position to

the point where the negotiations reach an impasse does not necessarily establish bad
faith. Neither can bad faith be inferred from the party's insistence on the inclusion of a
particular substantive provision unless it concerns trivial matters or is obviously
intolerable (Ibid.) After all, under Article 263, the duty to bargain collectively does not
compel any party to agree to a proposal or to make any concession.

A party's refusal to execute a contract embodying the agreements reached through

negotiations, if requested by the other party, is another form of unfair labor practice
consisting of violation of the duty to bargain collectively.

2) Under Article 259(h), it is unfair labor practice for an employer to pay

negotiation or attorney's fees to the union or its officers or agents as part of the settlement
of any issue in collective bargain-ing or any other dispute, while under Article 260(e), it is
unfair labor practice for a labor organization to ask for or accept negotiation or attorney's
fees from employers for the same consideration. These subjects have been discussed
under the Title on Unfair Labor Practices.

3) The third unfair labor practice in collective bargaining is violation of a collective

bargaining agreement, under Articles 259(i) and 260(f), in relation to Article 274. The
latter Article provides that violation of a CBA is an act of unfair labor practice only if it
gross, i.e., consisting of flagrant and/or malicious refusal to comply with the economic
provisions of the CBA. This matter will be taken further under Article 274.

7. Collective Bargaining Agreement.

 A collective bargaining agreement, which is a binding contract between the
employer and his employees concerning the latter terms and conditions of employment, is
for that reason sometimes referred to as the industrial constitution of the enterprise.
Being a contract, a CBA is the law between the parties and should be implemented
according to its obvious intendment. Where there is a conflict between words and the
evident intention of the parties, the latter must prevail. (Kimberly Clark Philippines v.
Larredo, 226 SCRA 639.) Since the CBA is the law between the parties during the period
agreed upon, no one can be compelled to accept changes in its terms during that period.
(Golden Farms, Inc. v. Ferrer-Calleja, 175 SCRA 471.) The NLRC cannot remake a
contract by eviscerating it, by deleting from it words placed by the parties. No court, no
interpreter or applier of a contract has such a prerogative (United Textile Mills v. NLRC,
184 SCRA 273.)

Where the words of a CBA are plain, there is no need for interpretation beyond
their literal meaning, But, where there is an ambiguity, the same should be resolved in
favor of labor (Plastic Town Center Corporation v. NLRC, 172 SCRA 580.) Under Article
1702 of the Civil Code, in case of doubt all labor legislation and all labor contracts should
be construed in favor of the safety and decent living for the laborer.

A CBA is not an ordinary contract but one impressed with public interest, and
thus must yield to the common good. It should be construed liberally rather than
narrowly and technically. (Davao Integrated Port Services v. Abarquez, 220 SCRA 197.) In
interpreting it, the constitutional policy of according utmost protection and justice to
labor shall be upheld. (Marcopper Mining Corporation v. NLRC, 255 SCRA 322.) The
courts must place a practical and realistic construction upon it, giving due consideration
to the context in which it was negotiated and the purpose which it is intended to serve.
(Pantranco North Express, Inc. v. NLRC, 259 SCRA 161.)

The contemporaneous and subsequent conduct of the parties may be taken into
account by a court which must interpret and apply a contract entered into by them.
(Caltex Organized Employees at Manila Office v. Caltex Philippines, Inc., 247 SCRA 398.)

But the parties are not under obligation to comply with provisions other than
those embodied in the CBA, Provisions or proposals of one party that did not find print in
the CBA are not implementable, although stated in the minutes of the negotiations. It is
pointless to say that the said minutes form part of the CBA. (Samahang Manggagawa sa
Top Form Manufacturing-UWP v. NLRC, 295 SCRA 171.)

The provisions of existing laws are deemed to enter into and form part of a valid
contract without the parties expressly making reference to law is null and void. But, since
the purpose of a CBA is to improve upon the minimum standards of employment fixed by
law, any such improvement provided in a CBA does not violate, but rather enhances, the
law because it serves the broad purposes of the latter.

A CBA binds the parties thereto, that is to say, the employer and the contracting
union in representation of the employees concerned. The contracting union binds the
union itself, its individual members, and all the members of the appropriate collective
bargaining unit, whether union members or not. When a CBA is entered into by the union
representing the employees and the employer, even the non-union members are entitled
to the benefits of the contract. (New Pacific Timber and Supply Company, Inc. v. NLRC,
328 SCRA 404.)

Is a CBA enforceable against the transferee of an enterprise? As a general rule, the

answer is no because a CBA is a contract in personam which is binding only on the
parties thereto. There are exceptions, however. In cases where the transferee assumed
liability under the CBA in the contract of sale, or the transfer was made in bad faith, or in
the transfer of a going concern, where the identity of the business is left intact or is
continued to be operated without substantial change, liability under the CBA devolves on
the transferee. (See điscussion of successor employer under Labor Practices in Collective
Bargaining, supra.)

A likely example of the third exception is a case of merger or consolidation of two

or more corporations into a single corporation by respectively, joining into one of the
existing corporations, with the others ceasing to exist, or joining into a single new
corporation, with all the old constituent corporations ceasing to exist. Under Section 80 of
the Corporation Code (B.P. 68), the surviving or consolidated corporation, as the case may
be, shall be responsible and liable for all the liabilities and obligations of each of the
constituent corporations in the same manner as if such surviving or consolidated
corporation had itself incurred such liabilities or obligations.

It is more in keeping with the dictates of social justice and the state policy of
protection to labor to deem employment contracts as automatically assumed by the
surviving corporation in a merger, even in the absence of an express stipulation in the
articles of merger or the merger plan. (BPI vs BPI Employees Union, 658 SCRA 828.)

The execution of a contract does not-end the collective bargaining process. It just
signals the end of the contract negotiation, which is sometimes referred to as the
legislative aspect of that process. The executive aspect, consisting of the day-by-day
administration of the contract, and the judicial aspect, or the settlement of disputes
arising thereunder, are yet to come. For the latter purposes, Article 273 requires that
every CBA contain provisions that will ensure the mutual observance of its terms and
conditions, and a machinery for the settlement and resolution of grievances arising from
the interpretation or implementation of the CBA as well as those arising from the
interpretation and enforcement of company personnel policies.

These requirements of Article 273 support the proposition that mutual observance
of the terms and conditions of a CBA and resolving, through the grievance machinery, the
grievances arising from the interpretation and implementation thereof form part of the
duty to bargain collectively.

Contract execution is itself a part of the duty to bargain collectively if this is

requested by either party. The law, in fact, does not require any particular form for its
validity insofar as the parties thereto are concerned.

But execution of a CBA is necessary for several reasons. Firstly, a CBA has to be
registered in order to affect third persons especially for the purpose of application of the
contract-bar rule, and registration requires a written agreement, Secondly, ratification of
the CBA by a majority of all the members of the collective bargaining unit is a mandatory
requirement for its registration. Prior to voting for purposes of ratification, a copy of the
CBA must be posted in at least two conspicuous. Thirdly a written CBA also serves a vital
evidentiary purpose; it is the best evidence of the agreement between the parties.

Ratification, as a prerequisite to registration of a CBA, is no necessary when it is

the product of an arbitral award in voluntary or compulsory arbitration proceedings. But
it has to be posted in conspicuous places in the work place for the purpose of informing,
the employees concerned. It has been held that a CBA which is not shown to have been
ratified, but the benefits under which have been enjoyed by the employees affected, is not
rendered void for lack of ratification. It is unfair and iniquitous for the employees to
receive benefits under the CBA and later on disclaim its validity because its other
provisions are not to the liking of some of them. (Planters Products, Inc. v. NLRC, 169
SCRA 328.) The enjoyment of the CBA benefits can be deemed to be an implied
ratification of the СВА.

A CBA shall be for a term of five years insofar as the issue of a representation is
concerned. That means that no petition questioning the majority status of the incumbent
collective bargaining agent shall be entertained and no certification election shall be
conducted/ by the DOLE prior to the 60-day period immediately before the expiration of
the CBA. This is in consonance with the contract-bar rule, assuming that the CBA is duly
registered. It is believed that the representation issue also includes the composition of the
collective bargaining unit, which cannot, as a rule, be disturbed prior to the same period.

The other provisions of the CBA, those that do not involve the question of
representation, and commonly referred to, albeit inaccurately, as the economic provisions,
are renewable after three years. In the case of SMC Employees Union-PTGWO v.
Confessor (262 SCRA 81,) the Supreme Court stated that the lawmakers intended these
provisions to be for only three years. As renegotiated, the said other provisions shall be for
two years, coinciding with the last two years of the provisions on representation. However,
the parties, by mutual agreement, ratified by the majority of the members of the
bargaining unit, may provide for a period longer than two years, but without prejudice to
the right of another union to challenge the majority status of the incumbent agent within
the freedom period at the end of the original five years term of the CBA. (Ibid.)

The effective date of the renegotiated non-representation provisions shall be the

day after expiry of the three years, if an agreement is arrived at within six months from
such date of expiry. But if the agreement is reached after six months, the date of
effectivity as well as the duration thereof shall be-subject to agreement between the
parties. The date of agreement is not necessarily the date of execution thereof. What is
determinative is the date the parties had a meeting of the minds; if it occurred within the
six-month period, then the renewed provisions shall automatically retroact to the day
after the expiry of the first three years of the CBA. (Mindanao Terminal and Brokerage
Service v. Confessor, 272 SCRA 161.)

In the absence of a new CBA, the parties must maintain the status quo and
continue the old CBA in full force and effect, until a new agreement is reached, following
the principle of holdover (Manila Electric Company v. Quisumbing, 302 SCRA 173.)

Where there is no agreement between the parties as to the date of effectively, in

case of an arbitral award made beyond the six-month period by the NLRC in a certified
case, the NLRC has the authority to give the CBA a prospective effect (Union of Filipino
Employees v. NLRC, 192-SCRA 414); or by the DOLE Secretary in a case of assumption of
jurisdiction; the Secretary may make the award retroactive, since the law does not restrict
the effectively of arbitral awards by the Secretary: (St.Luke's Medical Center, Inc. v.
Torres, 223 SCRA 779.) In the case of Mindanao Terminal and Brokerage Service v.
Confessor (op. cit.), the Supreme Court made a similar ruling: in the absence of any
specific provision of law prohibiting retroactivity of the effectivity of the arbitral award of
the Secretary, he is deemed vested with plenary and discretionary powers to determine
the effectivity thereof. This is the prevailing rule, and a reasonable one, although, in a
later case (Manila Electric Co. v. Quisumbing, 326 SCRA 172 and 337 SCRA 90) the
Court held that in the absence of agreement between the parties the award shall. retroact
to the first day after the six-month period following the expiration of the last day of the
CBA. The latter ruling was made pro hac vice, or for this occasion only, in view of the
peculiar circumstances of this case.

It will be recalled that free collective bargaining and negotiations, along with
voluntary arbitration, conciliation and mediation, are promoted as a matter of policy
(Article 218[a]), as preferred modes of labor dispute settlement. Because an injunction
contradicts this policy, Article 266 provides that no temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be issued by-
any court or other agency except as otherwise provided in Article 225 (powers of the
NLRC) and 278 (assumption or certification of a strike or lockout dispute.)

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