Labor Standards

Duty to bargain

The duty to bargain in good faith is mandated on both the employer and the employee’s sole and exclusive bargaining agent, whether or not there exists a collective bargaining agreement.

Summary

▪ In the context of labor relations, the employer and the workers’ bargaining unit has the duty to bargain collectively.

▪ There is duty to bargain whether there is a CBA or not.

1. Concepts

“Duty to bargain collectively” – means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to 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 but such duty does not compel any party to agree to a proposal or to make any concession. (Article 263, P.D. 442, Labor Code)

a. Surface bargaining

“Surface bargaining” – is defined as “going through the motions of negotiating” without any legal intent to reach an agreement. (Standard Chartered Bank Employees Union v. Confesor, Standard Chartered Bank, G.R. No. 114974, 16 June 2004)

1) Question of intent

The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table.  It involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining. (Ibid.)

Standard Chartered Bank Employees Union v. Confesor, Standard Chartered Bank
G.R. No. 114974, 16 June 2004
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any intention of violating its duty to bargain with the Union. Records show that after the Union sent its proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged economic and non-economic proposals and counter-proposals.
The Union has not been able to show that the Bank had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the Union or to settle the differences between it and the Union. Admittedly, the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the duty to bargain “does not compel either party to agree to a proposal or require the making of a concession.” Hence, the parties’ failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The inference that respondents did not refuse to bargain collectively with the complaining union because they accepted some of the demands while they refused the others even leaving open other demands for future discussion is correct, especially so when those demands were discussed at a meeting called by respondents themselves precisely in view of the letter sent by the union on April 29, 1960…
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad-faith provisions has no leg to stand on. The records show that the Bank’s counterproposals on the non-economic provisions or political provisions did not put “up for grabs” the entire work of the Union and its predecessors. As can be gleaned from the Bank’s counterproposal, there were many provisions which it proposed to be retained. The revisions on the other provisions were made after the parties had come to an agreement. Far from buttressing the Union’s claim that the Bank made bad-faith proposals on the non-economic provisions, all these, on the contrary, disprove such allegations.

2. Test of good faith

a. Drawn from facts

The crucial question whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the individual case. There is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be drawn from the facts. The effect of an employer’s or a union’s actions individually is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole. (General Milling Corporation v. CA, GMC-ILU, G.R. No. 146728, 11 February 2004)

General Milling Corporation v. CA, GMC-ILU
G.R. No. 146728, 11 February 2004
Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. The union lived up to this obligation when it presented proposals for a new CBA to [the employer] within three (3) years from the effectivity of the original CBA. But [the employer] failed in its duty under Article 252. What it did was to devise a flimsy excuse, by questioning the existence of the union and the status of its membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory because of the basic interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. – The following procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice…
[The employer’s] failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the workers, was mainly dilatory as it turned out to be utterly baseless.
We hold that [the employer]’s refusal to make a counter-proposal to the union’s proposal for CBA negotiation is an indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively.
Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, [the employer] violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in finding that [the employer] is, under the circumstances, guilty of unfair labor practice.
Did [the employer] interfere with the employees’ right to self-organization? The CA found that the letters between February to June 1993 by 13 union members signifying their resignation from the union clearly indicated that [the employer] exerted pressure on its employees. The records show that [the employer] presented these letters to prove that the union no longer enjoyed the support of the workers. The fact that the resignations of the union members occurred during the pendency of the case before the labor arbiter shows [the employer’s] desperate attempts to cast doubt on the legitimate status of the union. We agree with the CA’s conclusion that the ill-timed letters of resignation from the union members indicate that [the employer] had interfered with the right of its employees to self-organization. Thus, we hold that the appellate court did not commit grave abuse of discretion in finding [the employer] guilty of unfair labor practice for interfering with the right of its employees to self-organization.

3. Collective Bargaining Agreement

a. When there is no CBA

Art. 262. In the absence of an agreement or other voluntary arrangement providing for a more expeditious manner of collective bargaining, it shall be the duty of employer and the representatives of the employees to bargain collectively in accordance with the provisions of this Code. (P.D. 442, Labor Code.)

b. When there is a CBA

Art. 264. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. 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. (P.D. 442, Labor Code)

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, Buat, G.R. No. 124224, 17 March 2000)

New Pacific Timber & Supply Company, Co., Inc. v. NLRC, Buat
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 [employee’s SEBA] 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…
x x x
Having established that the CBA between petitioner Company and NFL remained in full force and effect even beyond the stipulated term, in the absence of a new agreement; and, therefore, that the economic provisions such as wage increases continued to have legal effect, we are now faced with the question of who are entitled to the benefits provided thereunder.

4. Effects if duty is violated

If the employer violates the duty to bargain in bad faith, the union’s proposed collective bargaining agreement may be imposed on the erring company by the courts.

General Milling Corporation v. CA, GMC-ILU
G.R. No. 146728, 11 February 2004
… did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by the union for two years commencing from the expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. – …. 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 [prior to its expiration date] and/or until a new agreement is reached by the parties.
The provision 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.
In Kiok Loy vs. NLRC, we found that petitioner therein, Sweden Ice Cream Plant, refused to submit any counter proposal to the CBA proposed by its employees’ certified bargaining agent. We ruled that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus, we did not hesitate to impose on the erring company the CBA proposed by its employees’ union – lock, stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case, to wit:
… petitioner Company’s approach and attitude – stalling the negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to discuss freely and fully the claims and demands set forth by the Union much less justify its objection thereto.
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment, petitioner therein, Divine Word University of Tacloban, refused to perform its duty to bargain collectively. Thus, we upheld the unilateral imposition on the university of the CBA proposed by the Divine Word University Employees Union. We said further:
That being the said case, the petitioner may not validly assert that its consent should be a primordial consideration in the bargaining process. By its acts, no less than its action which bespeak its insincerity, it has forfeited whatever rights it could have asserted as an employer.
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and its members if the terms and conditions contained in the old CBA would continue to be imposed on GMC’s employees for the remaining two (2) years of the CBA’s duration. We are not inclined to gratify GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC which violated the duty to bargain collectively, based on Kiok Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was no pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the proposals of the other. But an erring party should not be allowed to resort with impunity to schemes feigning negotiations by going through empty gestures.17 Thus, by imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the interests of equity and fair play were properly served and both parties regained equal footing, which was lost when GMC thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft CBA proposed by the union should not be disturbed since they are supported by substantial evidence. On this score, we see no cogent reason to rule otherwise. Hence, we hold that the Court of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the union for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social justice are best served in this case by sustaining the appellate court’s decision on this issue.

5. Procedure in collective bargaining

The following procedures shall be observed in collective bargaining:
1) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice;
2) Should differences arise on the basis of such notice and reply, either party may request for a conference which shall begin not later than ten (10) calendar days from the date of request;
3) If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its own initiative and immediately call the parties to conciliation meetings. The Board shall have the power to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the parties to participate fully and promptly in the conciliation meetings the Board may call;
4) During the conciliation proceedings in the Board, the parties are prohibited from doing any act which may disrupt or impede the early settlement of the disputes; and
5) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a voluntary arbitrator. (Article 261, P.D. 442, Labor Code)

References

Presidential Decree No. 442, Labor Code of the Philippines

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

▪ Jurisprudence or Supreme Court Decisions (as cited above)

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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