SAN MIGUEL CORP EMPLOYEES UNION-PTGWO vs.

CONFESOR

OCTOBER 25, 2012 ~ VBDIAZ

G.R. No. 111262 September 19, 1996

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President RAYMUNDO

HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN MIGUEL
CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC.
(Formerly, B-Meg Plant)

FACTS: On June 28, 1990, petitioner-union San Miguel Corporation Employees Union — PTGWO entered
into a CBA with private respondent San Miguel Corporation (SMC) to take effect upon the expiration of
the previous CBA or on June 30, 1989.

This CBA provided, among others, that:

ARTICLE XIV

DURATION OF AGREEMENT

Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective successors-in-
interest, shall become effective and shall remain in force and effect until June 30, 1992.

Sec. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement
insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to June 30,
1994. Hence, the freedom period for purposes of such representation shall be sixty (60) days prior to
June 30, 1994.

Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of this
Agreement, except insofar as the representation aspect is concerned . If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent agreement
is reached by the parties .

Meanwhile, effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and
became two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods,
Inc. (SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect.

After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article 253-
A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties submitting their
respective proposals and counterproposals.

During the negotiations, the

SMC, on the other hand, contended that the members/employees who had moved to Magnolia and
SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA should be
effective for three years in accordance with Art. 253-A of the Labor Code.

Unable to agree on these issues with respect to the bargaining unit and duration of the CBA, petitioner-
union declared a deadlock on September 29, 1990.

(Notice of strike…Secretary assumed jurisdiction)

Secretary’s decision: the CBA shall be effective for the period of 3 years from June 30, 1992; and that
such CBA shall cover only the employees of SMC and not of Magnolia and SMFI.

ISSUES: 1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three
years of for only two years; and 2) Whether or not the bargaining unit of SMC includes also the
employees of the Magnolia and SMFI.

HELD: We agree with the Secretary of Labor.

Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:

Art. 253-A. Terms of a CBA. — Any CBA that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of 5 years. 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 CBA. All other provisions of the CBA shall be renegotiated not
later than 3 years after its execution . Any agreement on such other provisions of the CBA entered into
within 6 months from the date of expiry of the term of such other provisions as fixed in such CBA, 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 CBA, the parties may exercise their rights under this Code. (Emphasis supplied.)

The “representation aspect” refers to the identity and majority status of the union that negotiated the
CBA as the exclusive bargaining representative of the appropriate bargaining unit concerned. “All other
provisions” simply refers to the rest of the CBA, economic as well as non-economic provisions, except
representation.

The law is clear and definite on the duration of the CBA insofar as the representation aspect is
concerned, but is quite ambiguous with the terms of the other provisions of the CBA. It is a cardinal
principle of statutory construction that the Court must ascertain the legislative intent for the purpose of
giving effect to any statute.
(as usual mahabang conversation ng mga framers)

Obviously, the framers of the law wanted to maintain industrial peace and stability by having both
management and labor work harmoniously together without any disturbance. Thus, no outside union
can enter the establishment within 5 years and challenge the status of the incumbent union as the
exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and non-
economic) can not be questioned by the employers or employees during the period of effectivity of the
CBA. The CBA is a contract between the parties and the parties must respect the terms and conditions of
the agreement.

Notably, the framers of the law did not give a fixed term as to the effectivity of the terms and conditions
of employment. It can be gleaned from their discussions that it was left to the parties to fix the period.

The issue as to the term of the non-representation provisions of the CBA need not belaboured. The
parties, by mutual agreement, enter into a renegotiated contract with a term of three (3) years or one
which does not coincide with the said 5-year term, and said agreement is ratified by majority of the
members in the bargaining unit, the subject contract is valid and legal and therefore, binds the
contracting parties.

Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that the
effectivity of the renegotiated terms of the CBA shall be for 3 years.

II. Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals. Neither
can we impute any bad faith on the part of SMC so as to justify the application of the doctrine of piercing
the corporate veil. Ever mindful of the employees’ interests, management has assured the concerned
employees that they will be absorbed by the new corporations without loss of tenure and retaining their
present pay and benefits according to the existing CBAs. They were advised that upon the expiration of
the CBAs, new agreements will be negotiated between the management of the new corporations and
the bargaining representatives of the employees concerned.

Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical personalities.
Thus, they can not belong to a single bargaining unit.

Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or

Interests of employees in the different companies perforce differ. The nature of their products and scales
of business may require different skills which must necessarily be commensurated by different
compensation packages. The different companies may have different volumes of work and different
working conditions. For such reason, the employees of the different companies see the need to group
themselves together and organize themselves into distinctive and different groups. It would then be best
to have separate bargaining units for the different companies where the employees can bargain
separately according to their needs and according to their own working conditions.

WHEREFORE, the petition is DISMISSED for lack of merit.

From Atty. Bayani^^