FAMIT vs. Court of Appeals

During the lifetime of a Collective Bargaining Agreement (CBA), neither party may unilaterally terminate nor modify any of its provisions; both parties are duty-bound to maintain the status quo and continue in full force and effect all terms and conditions of the existing agreement until a new agreement is reached or the existing one expires, in accordance with Article 253 of the Labor Code.

In 2000-2001, Mapua Institute of Technology (MIT) engaged consultants to develop a new faculty ranking and compensation system. During negotiations for a new Collective Bargaining Agreement (CBA) in 2001, MIT presented this new system to the Faculty Association of Mapua Institute of Technology (FAMIT). The parties eventually executed a CBA effective June 1, 2001, which incorporated the new ranking system but explicitly provided for no diminution in existing rank and adherence to the "same rank, same pay" policy. The CBA included specific annexes detailing the faculty ranking sheet and corresponding pay rates based on a 19-level structure for college faculty and a rate-per-load formula for high school faculty.

• In July 2000, MIT hired Arthur Andersen to develop a new faculty ranking and compensation system.
• On January 29, 2001, during the 5th CBA negotiation meeting, MIT presented the new faculty ranking instrument to FAMIT, which agreed to its adoption with the reservation that there would be no diminution in rank and pay of faculty members.
• On April 17, 2001, FAMIT and MIT executed a CBA effective June 1, 2001, incorporating the new faculty ranking in Section 8 of Article V with the condition that "there shall be no diminution in the existing rank and the policy 'same rank, same pay' shall apply."
• The CBA included Annex "B" (Faculty Ranking Sheet) and Annex "C" (College Faculty Rates for Permanent Faculty showing point ranges and pay rates for 19 faculty levels).
• After the CBA took effect, MIT's Vice President for Academic Affairs issued a memorandum directing the evaluation and re-ranking of faculty using the new instrument based on eight weighted factors.
• On July 5, 2001, MIT sent a letter to FAMIT requesting amendments to Annexes "B," "C," and "D," claiming that the "TOTAL POINTS" data in Annexes C and D were not germane and that the Faculty Ranking Point Range sheet was inadvertently omitted.
• MIT's proposed amendments would replace the 19-level ranking system with a 23-level system and revise the point ranges.
• Meanwhile, MIT implemented curriculum changes affecting teaching hours and adopted a new formula for high school faculty salaries: Rate/Load x Total Teaching Load = Salary, where total teaching load equals number of classes multiplied by hours of service per week divided by 3 hours.
• FAMIT opposed the new formula, arguing that Article VI, Section 2 of the CBA explicitly prescribed a "rate per load" basis for high school faculty salaries with specific percentage increases.
• FAMIT brought both issues (college faculty ranking and high school salary formula) to the National Conciliation and Mediation Board, and subsequently to the Panel of Voluntary Arbitrators when mediation failed.

• FAMIT argued that MIT's proposal to amend the faculty ranking system from 19 to 23 levels constituted an unlawful unilateral modification of the ratified 2001 CBA without FAMIT's approval.
• It asserted that the proposed changes would result in a diminution of rank and benefits for college faculty members, violating Section 8 of Article V of the CBA which guaranteed no diminution in existing rank.
• FAMIT contended that MIT's unilateral adoption of a new salary computation formula for high school faculty (changing from rate per load to rate per hour) violated Article VI, Section 2 of the CBA which specifically provided for payment on a "rate per load" basis.
• It maintained that MIT's actions violated Article 253 of the Labor Code, which prohibits the unilateral modification of a CBA during its lifetime and requires maintenance of the status quo.

• MIT argued that the new faculty ranking instrument was developed in good faith and represented a valid exercise of its inherent management prerogative to regulate all aspects of employment according to its own discretion and judgment.
• It claimed that the amendments to Annexes B, C, and D were necessary to correct inadvertent omissions and errors, specifically that the Faculty Ranking Point Range sheet was not attached and that the "TOTAL POINTS" columns in Annexes C and D contained non-germane data.
• MIT contended that it was within its rights to change the pay formula for high school faculty to achieve fairness and justice by considering actual teaching hours, and that the new formula was a reasonable interpretation of the CBA provisions.

• Procedural: N/A
• Substantive Issues:
  • Whether MIT may legally and validly alter, modify, or replace unilaterally the provisions of the 2001 CBA regarding the faculty ranking system for college faculty, specifically changing from the agreed 19-level system to a proposed 23-level system.
  • Whether MIT may legally and validly change unilaterally the formula for computing the salaries of high school faculty from the "rate per load" basis stipulated in the CBA to a "rate per hour" basis.

• Procedural: N/A
• Substantive:
  • On the first issue, the Court held that MIT's new 23-level point range system constituted an unauthorized modification of Annex "C" of the 2001 CBA. The Court found that the proposed system was substantially different from the 19-level system incorporated in the CBA and would result in the diminution of rank for certain faculty members, violating Section 8 of Article V of the CBA. The Court ruled that Article 253 of the Labor Code prohibits either party from unilaterally modifying a CBA during its lifetime, and parties must maintain the status quo until a new agreement is reached.
  • On the second issue, the Court ruled that MIT could not unilaterally change the salary computation formula for high school faculty. The Court found that Article VI, Section 2 of the CBA explicitly provided for a "rate per load" basis, and MIT's change to a rate per hour basis violated this provision. The Court applied Article 4 of the Labor Code, resolving doubts in favor of labor, and held that the employer's unilateral interpretation could not override the clear terms of the CBA.

• Duty to Bargain Collectively When a CBA Exists (Article 253, Labor Code) — This doctrine mandates that when a collective bargaining agreement exists, neither party shall terminate nor modify such agreement during its lifetime. Both parties must maintain the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to expiration and/or until a new agreement is reached. The Court applied this to prohibit MIT's unilateral changes to the faculty ranking system and salary computation formula.
• CBA as the Law Between the Parties — This principle holds that the provisions of a collective bargaining agreement constitute the norm of conduct between the employer and the employees, and compliance therewith is mandated by the express policy of the law. The Court emphasized that the CBA provisions on the 19-level ranking system and rate-per-load computation were binding on both parties.
• Construction in Favor of Labor (Article 4, Labor Code) — This doctrine provides that all doubts in the implementation and interpretation of the Labor Code and its implementing rules shall be resolved in favor of labor. The Court applied this principle in interpreting the salary computation provision for high school faculty, ruling that the ambiguity created by MIT's unilateral change must be resolved in favor of the faculty union.

• "When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime."
• "Until a new CBA is executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement."
• "The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its terms and conditions 'constitute the law between the parties.'"
• "Needless to stress, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor."

• New Pacific Timber & Supply Company, Inc. v. NLRC — Cited for the principle that parties to a CBA are duty-bound to keep the status quo and continue in full force and effect the terms of the existing agreement until a new one is reached.
• Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI — Cited for the doctrine that a CBA constitutes the law between the parties and those entitled to its benefits can invoke its provisions.
• Dole Philippines, Inc. v. Pawis ng Makabayang Obrero — Cited for the principle that the CBA is the norm of conduct between the parties and compliance therewith is mandated by law.
• Mactan Workers Union v. Aboitiz — Cited in Holy Cross of Davao College for the binding nature of CBA provisions.

• Article 253 of the Labor Code (Duty to bargain collectively when there exists a collective bargaining agreement) — Prohibits unilateral termination or modification of a CBA during its lifetime and mandates the maintenance of status quo.
• Article 4 of the Labor Code (Construction in favor of labor) — Mandates that doubts in the implementation and interpretation of the Labor Code provisions shall be resolved in favor of labor.
• Article V, Section 8 of the 2001 CBA — Provided for the implementation of a new faculty ranking without diminution in existing rank and adherence to the "same rank, same pay" policy.
• Article VI, Section 2 of the 2001 CBA — Stipulated that high school faculty salaries shall be computed on a "rate per load" basis with specific percentage increases.