G.R. No. 185556; March 28, 2011
SUPREME STEEL CORPORATION, Petitioner, vs. NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMS-IND-APL), Respondent.

FACTS

Petitioner Supreme Steel Pipe Corporation and respondent Nagkakaisang Manggagawa ng Supreme Independent Union (the certified bargaining agent) executed a Collective Bargaining Agreement (CBA) covering June 1, 2003 to May 31, 2008. On July 27, 2005, respondent filed a notice of strike alleging eleven CBA violations. The dispute was certified to the NLRC for compulsory arbitration. The specific violations alleged were:
1. Denial of CBA Wage Increase: Petitioner denied the annual CBA wage increases to four employees (Juan Niño, Reynaldo Acosta, Rommel Talavera, and Eddie Dalagon) by offsetting them against the anniversary increases the employees received upon reaching one year of service, claiming this was a long-standing company practice.
2. Contracting-out Labor: Petitioner hired temporary/contractual workers for five-month renewable contracts and assigned them to almost all departments, despite Article II, Section 6 of the CBA which mandated the phasing out of contractual employees in all departments except the Warehouse and Packing Section within 30 days from the CBA’s signing. Respondent argued this scheme circumvented regular employment laws and impaired the right to self-organization by depriving potential members of regular status.
3. Failure to Provide Shuttle Service: Petitioner failed to provide shuttle service as per Article XIV, Section 7 of the CBA, which obligated service “once the company vehicle used for the purpose has been reconditioned.” Respondent claimed the vehicle had not been reconditioned since the CBA signing.
4. Refusal to Answer for Medical Expenses: Petitioner refused to fully shoulder medical expenses for three injured employees (Alberto Guevarra, Job Canizares, and Rodrigo Solitario), charging them for transportation to the hospital and, in Solitario’s case, deducting the cost of first aid medicine from his salary. Respondent cited Article VIII, Section 4, where petitioner agreed to provide first aid medicine and service free of charge.
5. Failure to Comply with Time-Off with Pay: Petitioner did not grant paid time-off to union representatives and employees summoned by the union to attend grievance hearings and other labor-related meetings, as required by Article II, Section 8 of the CBA. Petitioner argued it was not obliged to pay for time spent on union-initiated activities.

ISSUE

Whether petitioner Supreme Steel Corporation violated the cited provisions of the Collective Bargaining Agreement.

RULING

The Supreme Court affirmed the findings of the NLRC and the Court of Appeals, ruling that petitioner violated the CBA.
1. On the CBA Wage Increase: The Court ruled that the CBA provision on wage increases was clear and granted a general increase to all employees. Petitioner’s practice of offsetting the CBA increase against an anniversary increase was a unilateral act that modified the CBA without the union’s consent, violating the principle that a CBA is a binding contract. The anniversary increase, being a separate benefit, could not substitute for the CBA-mandated increase.
2. On Contracting-out Labor: The Court found that petitioner’s hiring of temporary workers in departments other than the Warehouse and Packing Section directly violated the explicit prohibition in Article II, Section 6 of the CBA. The practice of using successive five-month contracts for necessary and desirable jobs indicated a scheme to prevent regularization, circumventing labor laws and the CBA’s union shop clause. This impaired the employees’ right to security of tenure and the union’s right to collective bargaining and representation.
3. On the Shuttle Service: The Court held that the CBA provision on shuttle service was a binding commitment. Petitioner’s mere assertion of difficulty in implementation and failure to recondition the vehicle constituted a violation of its contractual obligation under the CBA.
4. On Medical Expenses: The Court ruled that petitioner violated Article VIII, Section 4 of the CBA. The stipulation to provide first aid medicine and service “free of charge” meant the company should bear all related costs, including transportation to a hospital for treatment. Charging employees for transport and deducting medicine costs from wages contravened this clear agreement.
5. On Time-Off with Pay: The Court held that petitioner violated Article II, Section 8. The CBA expressly granted paid time-off for union representatives or employees summoned by the union for grievance hearings and other specified activities. Petitioner’s refusal to pay, on the ground that the meetings were union-initiated, disregarded the plain terms of the agreement. The CBA did not distinguish between company-initiated and union-initiated gatherings for this purpose.
In conclusion, petitioner was found liable for violating the CBA. The CBA, as a contract between the company and the union, must be respected and its provisions faithfully complied with in good faith.