Collective Bargaining Agreement

A CBA is a contract entered by the employer and the workers’ sole and exclusive bargaining agent, who shall be the only one authorized to represent the employees for the purpose of collective bargaining.

1. Concepts

“Collective bargaining agreement” – refers to the contract entered by the employer and the workers’ sole and exclusive bargaining agent on the wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party. (See Article 263, P.D. 442, Labor Code)

A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. (Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, G.R. No. 145561, 15 June 2005)

a. Law between the parties

It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions. (Benson Industries Employees Union-ALU-TUCP v. Benson Industries, Inc., G.R. No. 200746, 06 August 2014)

b. Autonomy principle

As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, supra.)

c. As a code

A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system. The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. (UKCEU-PTGWO v. Kimberly-Clark Philippines, Inc., G.R. No. 162957, 06 March 2006)

2. Representation provisions

a. 5-year rule

Art. 265. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years… (P.D. 442, Labor Code)

1) 60-day freedom period

Art. 265. xxx No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five-year term of the Collective Bargaining Agreement. (P.D. 442, Labor Code)

2) Status quo

At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. (Article 268, P.D. 442, Labor Code)

While it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative. The provision for status quo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them. (Picop Resources, Incorporated v. Dequilla, G.R. No. 172666, 07 December 2011)

PICOP RESOURCES, INCORPORATED v. DEQUILLA, G.R. No. 172666, 07 December 2011

⦁ “In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000. Therefore, following Article 256, at the expiration of the freedom period, [the employer’s] obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case.”

⦁ “Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised.”

⦁ “Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned.”

3) If CBA is extended

FVCLU-PTGWO v. SANAMA-FVC-SIGLO, G.R. No. 176249, 27 November 2009

⦁ “The root of the controversy can be traced to a misunderstanding of the interaction between a union’s exclusive bargaining representation status in a CBA and the term or effective period of the CBA.”

⦁ “FVCLU-PTGWO has taken the view that its exclusive representation status should fully be in step with the term of the CBA and that this status can be challenged only within 60 days before the expiration of this term. Thus, when the term of the CBA was extended, its exclusive bargaining status was similarly extended so that the freedom period for the filing of a petition for certification election should be counted back from the expiration of the amended CBA term.”

⦁ “We hold this FVCLU-PTGWO position to be correct, but only with respect to the original five-year term of the CBA which, by law, is also the effective period of the union’s exclusive bargaining representation status. While the parties may agree to extend the CBA’s original five-year term together with all other CBA provisions, any such amendment or term in excess of five years will not carry with it a change in the union’s exclusive collective bargaining status. By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the representation status is a legal matter not for the workplace parties to agree upon. In other words, despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment, the bargaining union’s exclusive bargaining status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of the CBA’s first five years…”

⦁ “In the present case, the CBA was originally signed for a period of five years, i.e., from February 1, 1998 to January 30, 2003, with a provision for the renegotiation of the CBA’s other provisions at the end of the 3rd year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties sat down for renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003.”

⦁ “As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWO’s exclusive bargaining representation status which remained effective only for five years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLU-PTGWO’s exclusive bargaining status, was seasonably filed.”

4) If CBA is suspended

RIVERA v. ESPIRITU, G.R. No. 135547, 23 January 2002

⦁ Petitioners’ contention that the agreement installs PALEA as a virtual company union is also untenable. Under Article 248 (d) of the Labor Code, a company union exists when the employer acts “[t]o initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters.” The case records are bare of any showing of such acts by PAL.

⦁ We also do not agree that the agreement violates the five-year representation limit mandated by Article 253-A. Under said article, the representation limit for the exclusive bargaining agent applies only when there is an extant CBA in full force and effect. In the instant case, the parties agreed to suspend the CBA and put in abeyance the limit on the representation period.

⦁ In sum, we are of the view that the PAL-PALEA agreement dated September 27, 1998, is a valid exercise of the freedom to contract. Under the principle of inviolability of contracts guaranteed by the Constitution, the contract must be upheld.

b. Substitutionary doctrine

“[S]ubstitutionary” doctrine only provides that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase “said new agent would have to respect said contract” must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof. (Benguet Consolidated, Inc. v. BCI Employees, G.R. No. L-24711, En Banc, 30 April 1968)

In formulating the “substitutionary” doctrine, the only consideration involved was the employees’ interest in the existing bargaining agreement. The agent’s interest never entered the picture. (Ibid.)

Benguet Consolidated, Inc. v. BCI Employees and Workers Union-PAFLU, En Banc, G.R. No. L-24711, 30 April 1968

⦁ The “substitutionary” doctrine… cannot be invoked to support the contention that a newly certified collective bargaining agent automatically assumes all the personal undertakings — like the no-strike stipulation here — in the collective bargaining agreement made by the deposed union. When [the deposed union] bound itself and its officers not to strike, it could not have validly bound also all the other rival unions existing in the bargaining units in question. [The deposed union] was the agent of the employees, not of the other unions which possess distinct personalities. To consider [the new union] contractually bound to the no-strike stipulation would therefore violate the legal maxim that res inter alios nec prodest nec nocet.”

3. Non-Representation provisions

a. 3-year renegotiation

Art. 265. x x x All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. (P.D. 442, Labor Code)

1) Economic provisions

“CBA economic provisions” – refer to compensation and benefits, including but not limited:

1) Salaries/wages;

2) 13th month pay;

3) Overtime pay;

4) Night shift differential pay;

5) Holiday pay;

6) Premium pay;

7) Retirement pay;

8) Service charges;

9) Separation pay;

10) Service incentive leave;

11) Maternity leave;

12) Paternity leave;

13) Solo parental leave;

14) Special leave for women;

15) VAWC leave;

16) Company-provided benefits/leaves; and

17) Analogous thereto.

2) Non-economic provisions

CBA non-economic provisions refer to those not related to compensation and benefits, including but not limited to:

1) Working conditions;

2) Personal protective equipment;

3) Due process and disciplinary action;

4) Employee violations and penalties;

5) Last-in-first-out;

6) Redundancy;

7) Retrenchment; and

8) Analogous thereto.

4. Coverage of CBA benefits

1) Union and non-union members

[W]hatever benefits the majority union obtains from the employer accrue to its members as well as to nonmembers. But this alone does not justify the collection of agency fee from non-members. For the benefits of a collective bargaining agreement are extended to all employees regardless of their membership in the union because to withhold the same from the nonmembers would be to discriminate against them. (National Brewery & Allied Industries Labor Union of the Philippines v. San Miguel, Brewery Inc., En Banc, G.R. No. L-18170, 31 August 1963)

But the benefits that accrue to nonmembers by reason of a collective bargaining agreement can hardly be termed “unjust enrichment” because, as already pointed out, the same are extended to them precisely to avoid discrimination among employees. (Ibid. citing International Oil Factory Workers’ Union (FFW) v. Martinez, G.R. No. L-15560, Dec. 31, 1960)

2) Excluded: Managers; With exception

GENERAL RULE: [M]anagerial employees cannot, in the absence of an agreement to the contrary, be allowed to share in the concessions obtained by the labor union through collective negotiation. Otherwise, they would be exposed to the temptation of colluding with the union during the negotiations to the detriment of the employer. (Martinez v. NLRC, GMCR, Inc., G.R. No. 118743, 12 October 1998)

EXCEPTION: However, there is nothing to prevent the employer from granting benefits to managerial employees equal to or higher than those afforded to union members. There can be no conflict of interest where the employer himself voluntarily agrees to grant such benefits to managerial employees. (Ibid.)

5. CBA Retroactivity

Art. 265. x x x Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the Collective Bargaining Agreement, the parties may exercise their rights under [the Labor Code]. (P.D. 442, Labor Code)

Further, the Labor Code also provides that “[a]ny agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. (Article 256, P.D. 442, Labor Code)

a. Within 6 months

1) Effectivity: Date of Agreement

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. v. ROLDAN-CONFESSOR, G.R. No. 111809, 05 May 1997

⦁ The signing of the CBA is not determinative of the question whether “the agreement was entered into within six months from the date of expiry of the term of such other provisions as fixed in such collective bargaining agreement” within the contemplation of Art. 253-A.

⦁ As already stated, on November 12, 1992, the Union sent the Company a notice of deadlock in view of their inability to reconcile their positions on the main issues, particularly on wages. The Union filed a notice of strike. However, on December 18, 1992, in a conference called by the NCMB, the Union and the Company agreed on a number of provisions of the CBA, including the provision on wage increase, leaving only the issue of retirement to be threshed out. In time, this, too, was settled, so that in his record of the January 14, 1993 conference, the Med-Arbiter noted that “the issues raised by the notice of strike had been settled and said notice is thus terminated.” It would therefore seem that at that point, there was already a meeting of the minds of the parties, which was before the February 1993 end of the six-month period provided in Art. 253-A.

⦁ The fact that no agreement was then signed is of no moment. Art. 253-A refers merely to an “agreement” which, according to Black’s Law Dictionary is “a coming together of minds; the coming together in accord of two minds on a given proposition.” This is similar to Art. 1305 of the Civil Code’s definition of “contract” as “a meeting of minds between two persons.”

⦁ The two terms, “agreement” and “contract,” are indeed similar, although the former is broader than the latter because an agreement may not have all the elements of a contract. As in the case of contracts, however, agreements may be oral or written. Hence, even without any written evidence of the Collective Bargaining Agreement made by the parties, a valid agreement existed in this case from the moment the minds of the parties met on all matters they set out to discuss. As Art. 1315 of the Civil Code states:

Contracts are perfected by mere consent, and from that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.

⦁ The Secretary of Labor found that “as early as January 14, 1993, well within the six (6) month period provided by law, the Company and the Union have perfected their agreement.” The claim of petitioner to the contrary notwithstanding, this is a finding of an administrative agency which, in the absence of evidence to the contrary, must be affirmed.

b. After 6 months

If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. (Article 256, P.D. 442, Labor Code)

It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. (Article 264, P.D. 442, Labor Code)

[Article 264 of the Labor Code] mandates the parties to keep the status quo while they are still in the process of working out their respective proposal and counter proposal. The general rule is that when a CBA already exists, its provision shall continue to govern the relationship between the parties, until a new one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that neither party is guilty of bad faith. However, when one of the parties abuses this grace period by purposely delaying the bargaining process, a departure from the general rule is warranted. (General Milling Corporation v. CA, G.R. No. 146728, 11 February 2004)

It is clear from the above provision of law that until a new Collective Bargaining Agreement has been executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception nor qualification as to which of the economic provisions of the existing agreement are to retain force and effect, therefore, it must be understood as encompassing all the terms and conditions in the said agreement. (New Pacific Timber & Supply Company, Co., Inc. v. NLRC, G.R. No. 124224, 17 March 2000)

NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC. v. NLRC, G.R. No. 124224, 17 March 2000

⦁ In the case at bar, no new agreement was entered into by and between petitioner Company and NFL pending appeal of the decision in NLRC Case No. RAB-IX-0334-82; nor were any of the economic provisions and/or terms and conditions pertaining to monetary benefits in the existing agreement modified or altered. Therefore, the existing CBA in its entirety, continues to have legal effect.

⦁ In a recent case, the Court had occasion to rule that Article 253 and 253-A 17 mandate the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. Consequently, the automatic renewal clause provided for by the law, which is deemed incorporated in all CBA’s, provides the reason why the new CBA can only be given a prospective effect.

⦁ In the case of Lopez Sugar Corporation vs. Federation of Free Workers, et. al, this Court reiterated the rule although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep the status quo, and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

⦁ To rule otherwise, i.e., that the economic provisions of the existing CBA in the instant case ceased to have force and effect in the year 1984 would be to create a gap during which no agreement would govern, from the time the old contract expired to the time a new agreement shall have been entered into. For if, as contended by the petitioner, the economic provisions of the existing CBA were to have no legal effect, what agreement as to wage increases and other monetary benefits would govern at all? None, it would seem, if we are to follow the logic of petitioner Company. Consequently, the employees from the year 1985 onwards would be deprived of a substantial amount of monetary benefits which they could have enjoyed had the terms and conditions of the CBA remained in force and effect. Such a situation runs contrary to the very intent and purpose of Article 253 and 253-A of the Labor Code which is to curb labor unrest and to promote industrial peace…

1) When prospective

UNION OF FILIPRO EMPLOYEES v. NLRC, G.R. No. 91025, 19 December 1990

⦁ The assailed [NLRC] resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, [the NLRC] did not abuse its discretion in giving the said CBA a prospective effect. The action of [the NLRC] is within the ambit of its authority vested by existing laws.

⦁ Articles 253 and 253-A mandate the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. Consequently, there being no new agreement reached, the automatic renewal clause provided for by the law which is deemed incorporated in all CBAs, provides the reason why the new CBA can only be given a prospective effect.

⦁ [The Union] claims that because of the prospective effect of the CBA, union members were deprived of substantial amount of monetary benefits which they could have enjoyed had the CBA be given retroactive effect. This would include backwages, the immediate effects of the mandated wage increase on the fringe benefits such as the 13th and 14th month pay, overtime premium, and right to differential pay, leaves, etc. This Court, is not unmindful of these. Nevertheless, We are convinced that the CBA formulated by public respondent is fair, reasonable and just. Even if prospective in effect, said CBA still entitles the Nestle workers and employees reasonable compensation and benefits which, in the opinion of this Court, is one of the highest, if not the highest in the industry. [The Union] did not succeed in overcoming the presumption of regularity in the performance of the public respondent’s functions. Even if the resolution fell short of meeting the numerous demands of the union, the petitioner failed to establish that [the NLRC] committed grave abuse of discretion in not giving the CBA a retrospective effect.

References

Book V, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

Book V, Omnibus Rules Implementing the Labor Code

DOLE Department Order No. 40, Series of 2003

DOLE Department Order No. 40-A-I, Series of 2003

DOLE Department Order No. 40-B, Series of 2003

DOLE Department Order No. 40-C, Series of 2004

DOLE Department Order No. 40-D, Series of 2005

DOLE Department Order No. 40-F-3, Series of 2008

DOLE Department Order No. 40-G-03, Series of 2010

DOLE Department Order No. 40-I, Series of 2015

DOLE Department Order No. 15, Series of 2015

/Updated: February 13, 2023

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