G.R. No. 111809 May 5, 1997
Mindanao Terminal and Brokerage Service, Inc., petitioner, vs. Hon. Ma. Nieves Roldan-Confessor, in her capacity as Secretary of Labor and Employment, and Associated Labor Unions (ALU-TUCP), respondents.

FACTS

Petitioner Company and respondent Union entered into a five-year Collective Bargaining Agreement (CBA) effective August 1, 1989. Upon reaching the third year, the parties renegotiated terms for the fourth and fifth years but reached a deadlock on several economic issues. Following conciliation efforts by the National Conciliation and Mediation Board (NCMB), the parties settled substantially all issues, including wage increases of P3.00/day for both the fourth and fifth years. A Med-Arbiter noted the settlement and terminated the notice of strike.
Subsequently, the Company introduced new conditions, asserting that the agreed wage increases should be creditable against future government-mandated wage orders and should not be made retroactive to the start of the CBA years. This revived the dispute, leading to a strike. The Secretary of Labor assumed jurisdiction and issued an order directing the incorporation of all negotiated improvements into the CBA. The order ruled that the wage increases were not creditable against future mandated increases and were to be retroactive: the fourth-year increase to August 1, 1992, and the fifth-year to August 1, 1993. The Company’s motion for reconsideration was denied.

ISSUE

Whether the Secretary of Labor committed grave abuse of discretion in: (1) ruling that the negotiated wage increases are not creditable against future mandated wage increases; and (2) ordering the retroactive effectivity of the fourth and fifth-year wage increases.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion. On the issue of retroactivity, the Court held that while Article 253-A of the Labor Code provides for a six-month period for renegotiation after the CBA’s third and fifth years, it does not prohibit the retroactive effectivity of arbitral awards issued by the Secretary when assuming jurisdiction under Article 263(g). The Secretary is vested with plenary and discretionary powers to determine the effectivity of such awards to promote industrial peace, especially where, as here, the Company’s belated imposition of new conditions prolonged the dispute. Granting retroactivity to the start of the respective CBA years was within her authority.
On the issue of creditability, the Court affirmed the Secretary’s ruling. The general principle is that benefits negotiated in a CBA are separate and distinct from those granted by law, unless the agreement itself or the law expressly provides otherwise. The Company raised the creditability issue only at the final stages, after substantial agreement had been reached. This belated maneuver, which sought to diminish the value of the negotiated increases, contravened the requirement of good faith in collective bargaining. If the Company intended the increases to be credited against future statutory adjustments, it should have expressly stipulated this during negotiations. The Secretary’s finding that the Company’s conduct smacked of bad faith was thus sustained.