G.R. No. 111262 September 19, 1996
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN MIGUEL CORPORATION, MAGNOLIA CORPORATION and SAN MIGUEL FOODS, INC., respondents.
FACTS
Petitioner San Miguel Corporation Employees Union-PTGWO entered into a Collective Bargaining Agreement (CBA) with San Miguel Corporation (SMC) effective June 30, 1989. The CBA stipulated a five-year term for the representation aspect until June 30, 1994, and allowed the renegotiation of all other economic provisions sixty days before June 30, 1992. In October 1991, SMC spun off its Magnolia and Feeds and Livestock divisions into two separate and distinct corporations: Magnolia Corporation and San Miguel Foods, Inc. (SMFI). When the parties renegotiated the CBA after June 30, 1992, a deadlock ensued. The union insisted the bargaining unit must still include the employees of the spun-off corporations and that the new CBA’s duration should be only two years, coterminous with the representation term. SMC contended the spun-off employees were no longer part of its bargaining unit and the new CBA should have a three-year term.
ISSUE
The primary issues were: (1) whether the duration of the renegotiated CBA should be two or three years; and (2) whether the appropriate bargaining unit of SMC includes the employees of the spun-off Magnolia Corporation and SMFI.
RULING
The Supreme Court upheld the Secretary of Labor’s order, finding no grave abuse of discretion. On the first issue, the Court ruled the renegotiated CBA should have a three-year term. Article 253-A of the Labor Code mandates that any CBA, except those on representation, should be for a term of three years. The law does not permit a “staggered” system where economic terms expire ahead of the representation clause. The union’s reliance on a prior Secretary of Labor ruling in a different case was misplaced, as it did not establish a controlling doctrine.
On the second issue, the Court ruled that the employees of Magnolia and SMFI were no longer part of the SMC bargaining unit. The spin-off created separate juridical entities with distinct managements and operations. The determination of an appropriate bargaining unit considers factors like substantial mutual interests in wages, hours, and working conditions. The employees of the new corporations now have separate and distinct interests from those remaining at SMC. This separation was recognized in the prior case of Borbon v. Laguesma. Consequently, the bargaining unit at SMC is limited to its own employees. The petition was dismissed for lack of merit.