MANILA ELECTRIC COMPANY vs.

THE The Labor Secretary: finally granted an arbitral

HONORABLE SECRETARY OF LABOR LEONARDO award on December 28, 1996 where it provided for
QUISUMBING AND MERALCO EMPLOYEES AND the retroactivity of the CBA from December 1,
WORKERS ASSOCIATION (MEWA) 1995 to November 30, 1997.
G.R. No. 127598 | January 27, 1999
Petitioner’s Contention: MERALCO assails the
Facts: Secretary's order that the effectivity of the new CBA
shall retroact to December 1, 1995, the date of the
commencement of the last two years of the
MEWA is the duly recognized labor organization of
effectivity of the existing CBA. This retroactive date,
the rank-and-file employees of MERALCO. On
MERALCO argues, is contrary to the ruling of this
September 7, 1995, MEWA informed MERALCO of its
Court in Pier 8 Arrastre and Stevedoring Services,
intention to re-negotiate the terms and conditions of
Inc. vs. Roldan-Confessor  which mandates that the
their existing 1992-1997 Collective Bargaining
effective date of the new CBA should be the date the
Agreement (CBA) covering the remaining period of
Secretary of Labor has resolved the labor dispute.
two years starting from December 1, 1995 to
November 30, 1997.  MERALCO signified its
willingness to re-negotiate through its letter dated Respondent’s Contention: MEWA (union) supports
October 17, 1995 and formed a CBA negotiating the ruling of the Secretary on the theory that he has
panel for the purpose. On November 10, 1995, plenary power and discretion to fix the date of
MEWA submitted its proposal to MERALCO, which, in effectivity of his arbitral award citing our ruling in St.
turn, presented a counter-proposal. Thereafter, Lakes Medical Center, Inc. vs.Torres.  MEWA also
collective bargaining negotiations proceeded. contends that if the arbitral award takes effect on the
However, despite the series of meetings between the date of the Secretary Labor's ruling on the parties'
negotiating panels of MERALCO and MEWA, the motion for reconsideration (i.e., on December 28,
parties failed to arrive at "terms and conditions 1996), an anomaly situation will result when CBA
acceptable to both of them." would be more than the 5-year term mandated by
Article 253-A of the Labor Code.
MEWA filed a Notice of Strike with the National
Capital Region Branch of the National Conciliation Issue: Whether or not retroactivity of arbitral
and Mediation Board (NCMB) of DOLE on the grounds awards shall commence at such time as
of bargaining deadlock and unfair labor practices. granted by Secretary.
The NCMB then conducted a series of conciliation
meetings but the parties failed to reach an amicable
Ruling:
settlement.

RETROACTIVITY OF THE CBA. Neither party took into

Faced with the imminence of a strike, MERALCO filed
account the factors necessary for a proper resolution
an Urgent Petition with the DOLE praying that the
of this aspect. 
Secretary assume jurisdiction over the labor dispute
and to enjoin the striking employees to go back to
work. The Labor Secretary granted the petition Pier 8, for instance, does not involve a mid-term
through its Order of May 8, 1996. negotiation similar to this case, while St. Lukes does
not take the "hold over" principle into account, i.e.,
the rule that although a CBA has expired, it
Thereafter, the parties submitted their respective
continues to have legal effects as between the
memoranda and on August 19, 1996, the Secretary
parties until a new CBA has been entered into. 
resolved the labor dispute through an Order,
containing various awards and benefits.
Art. 253-A serves as the guide in determining
when the effectivity of the CBA at bar is to take
MERALCO filed a supplement motion for
effect. It provides that the representation aspect of
reconsideration on September 18, 1995, alleging
the CBA is to be for a term of 5 years, while
that the Secretary of Labor did not properly
. . . [A]ll other provisions of the Collective
appreciate the effect of the awarded wages and
Bargaining Agreement shall be re-negotiated not
benefits on MERALCO's financial viability.
later than 3 years after its execution. Any agreement
on such other provision of the Collective Bargaining
MEWA likewise filed a motion asking the Secretary of Agreement entered into within 6 months from the
Labor to reconsider its Order on the wage increase, date of expiry of the term of such other provisions as
leaves, decentralized filing of paternity and maternity fixed in such Collective Bargaining Agreement shall
leaves, bonuses, retirement benefits, optional retroact to the day immediately following such date.
retirement, medical, dental and hospitalization If such agreement is entered into beyond 6 months,
benefits, short swing and payroll treatment. On its the parties shall agree on the duration of the
political demands, MEWA asked the Secretary to rule effectivity thereof. . . . .
on its proposal to institute a Code of Discipline for its
members and the union's representation in the
administration of the Pension Fund.
Under these terms, it is clear that the 5-year term
requirement is specific to the representation aspect.
What the law additionally requires is that a CBA must
be re-negotiated within 3 years "after its execution."
It is in this re-negotiation that gives rise to the
present CBA deadlock.

If no agreement is reached within 6 months from the

expiry date of the 3 years that follow the CBA
execution, the law expressly gives the parties — not
anybody else — the discretion to fix the effectivity of
the agreement.

Significantly, the law does not specifically cover the

situation where 6 months have elapsed but no
agreement has been reached with respect to
effectivity. In this eventuality, we hold that any
provision of law should then apply for the law abhors
a vacuum. 

One such provision is the principle of “hold

over”, i.e., that in the absence of a new CBA, the
parties must maintain the   status quo  and must
continue in full force and effect the terms and
conditions of the existing agreement until a new
agreement is reached.  In this manner, the law
prevents the existence of a gap in the relationship
between the collective bargaining parties. Another
legal principle that should apply is that in the
absence of an agreement between the parties, then,
an arbitrated CBA takes on the nature of any judicial
or quasi-judicial award; it operates and may be
executed only respectively unless there are
legal justifications for its retroactive
application.

Consequently, we find no sufficient legal ground on

the other justification for the retroactive application
of the disputed CBA, and therefore hold that the
CBA should be effective for a term of 2 years
counted from December 28, 1996 (the date of
the Secretary of Labor's disputed order on the
parties' motion for reconsideration) up to
December 27, 1999.

Dispositive portion: Petition is granted.