New Pacific Timber & Supply Company, Co., Inc. vs. NLRC

In the absence of a new collective bargaining agreement, the terms and conditions of the existing CBA—including its economic provisions—continue in full force and effect beyond the stipulated term and even beyond the three-year period provided by law, and employees hired after the CBA’s term are entitled to its benefits.

New Pacific Timber & Supply Company, Inc. is the employer, while the National Federation of Labor was certified as the sole and exclusive bargaining representative of all its regular rank-and-file employees. The dispute concerns the legal effect of the CBA between them after its stipulated term, particularly whether its economic provisions continued to govern and whether employees hired after that term could claim its benefits. Article 253 of the Labor Code supplies the statutory backdrop: it obliges the parties to keep the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached.

The National Federation of Labor (NFL) was certified as the sole and exclusive bargaining representative of all the regular rank-and-file employees of New Pacific Timber & Supply Co., Inc. NFL then negotiated for better terms and conditions of employment, but the company allegedly resisted, prompting NFL to file a complaint for unfair labor practice on the ground of refusal to bargain collectively. On March 31, 1987, Executive Labor Arbiter Hakim S. Abdulwahid issued an order declaring the company guilty of unfair labor practice and adopting NFL's CBA proposals as the CBA between the regular rank-and-file employees in the bargaining unit and the company. The CBA's economic provisions included yearly wage increases, housing allowances, bonuses, and other monetary benefits; the wage increase provision in the 1981 to 1984 CBA provided for yearly increases. The company appealed to the NLRC, which dismissed the appeal for lack of merit on November 15, 1989; its motion for reconsideration was denied on November 12, 1990. The company then filed a petition for certiorari with the Supreme Court, but the Court dismissed it in a Resolution dated January 21, 1991.

The records were remanded to the arbitration branch of origin for execution of Labor Arbiter Abdulwahid's March 31, 1987 Order, granting monetary benefits to the regular rank-and-file employees. After a series of conferences to thresh out the computation, Labor Arbiter Reynaldo S. Villena issued an Order dated October 18, 1993 directing the company to pay the 142 employees entitled to the benefits the respective amounts due them under the CBA. The company complied, and the corresponding quitclaims were executed. The case was considered closed after NFL manifested that it would no longer appeal the October 18, 1993 Order.

Notwithstanding that manifestation, a "Petition for Relief" was filed on May 12, 1994 in behalf of 186 of the private respondents, "Mariano J. Akilit and 350 others." They claimed that they were wrongfully excluded from enjoying the benefits under the CBA because the agreement with NFL and the company limited the CBA's implementation to only the 142 rank-and-file employees enumerated, and that NFL's misrepresentations had precluded them from appealing their exclusion. The NLRC treated the petition for relief as an appeal. On August 4, 1994, the NLRC issued a resolution declaring that the 186 excluded employees "form part and parcel of the then existing rank-and-file bargaining unit" and were therefore entitled to the benefits under the CBA. It set aside and vacated the October 18, 1993 Order and directed the company to pay all its regular rank-and-file workers their wage differentials and other benefits arising from the decreed CBA. The company filed a motion for reconsideration.

Meanwhile, four separate groups of the private respondents, including the original 186 who had filed the petition for relief, filed individual money claims docketed as NLRC Cases Nos. M-001991-94 to M-001994-94 before the Arbitration Branch of the NLRC, Cagayan de Oro City. Labor Arbiter Villena dismissed these cases in Orders dated March 11, 1994; April 13, 1994; March 9, 1994; and May 10, 1994. The employees appealed the dismissals to the NLRC, which consolidated the appeals with the company's motion for reconsideration.

On February 29, 1996, the NLRC issued a resolution denying the company's motion for reconsideration for lack of merit and sustaining its August 4, 1994 Resolution. It set aside and vacated the separate orders of the Labor Arbiter dated March 11, 1994, April 13, 1994, March 9, 1994, and May 10, 1994 for lack of legal bases. The company was directed to pay the individual complainants their CBA benefits in the aggregate amount of P13,559,510.37, as detailed in Annex "A," plus ten percent (10%) thereof as attorney's fees. The NLRC found that no new agreement had been entered into by the company and NFL pending appeal of the decision in NLRC Case No. RAB-IX-0334-82, and that none of the economic provisions or terms and conditions pertaining to monetary benefits in the existing agreement had been modified or altered. The company then filed the instant petition for certiorari.

• Petition for Relief as Improper Remedy: Petitioner contended that a "Petition for Relief" is not the proper mode of seeking review of a decision rendered by the arbitration branch of the NLRC, because nowhere in the Labor Code or in the NLRC Rules of Procedure is there such a pleading; the remedy of an aggrieved party is to appeal the labor arbiter's judgment to the NLRC.
• Late Appeal: Petitioner asserted that even assuming the NLRC correctly treated the petition for relief as an appeal, the petition should not have been allowed to prosper because it was filed several months after the ten-day reglementary period for filing an appeal had expired and failed to comply with the requirements of an appeal under the Labor Code and the NLRC Rules of Procedure.
• Forum Shopping: Petitioner argued that by filing separate complaints and/or money claims at the arbitration level despite their pending petition for relief and the final October 18, 1993 Order in NLRC Case No. RAB-IX-0334-82, the private respondents were forum-shopping.
• Employees Hired After CBA Term Not Entitled: Petitioner maintained that the private respondents were not entitled to the benefits under the CBA because employees hired after the term of a CBA are not parties to the agreement and may not claim benefits thereunder, even if they subsequently become members of the bargaining unit.
• Term of CBA Under Article 253: Petitioner argued that Article 253 of the Labor Code refers to the continuation in full force and effect of the previous CBA's terms and conditions, and by necessity could not refer to terms and conditions which, as expressly stipulated, ceased to have force and effect.
• No Contractual Basis for Post-1984 Benefits: Petitioner claimed that the wage increase provision in the 1981 to 1984 CBA provided for yearly wage increases, which logically ended in 1984, the last year the economic provisions were effective; there was no contractual basis for granting CBA benefits such as wage increases in 1985 and subsequent years.
• No Fault in Delay of New CBA: Petitioner alleged that it was through no fault of its own that no new CBA was entered into pending appeal of the decision in NLRC Case No. RAB-IX-0334-82.
• No Opportunity to Submit Counter-Computation: Petitioner claimed that it was never given the opportunity to submit a counter-computation of the benefits supposedly due the private respondents, and that the NLRC relied on the private respondents' self-serving computations.

• Wrongful Exclusion from CBA Benefits: Private respondents claimed that they were wrongfully excluded from enjoying the benefits under the CBA because the agreement with NFL and petitioner Company limited the CBA's implementation to only the 142 rank-and-file employees enumerated.
• Preclusion from Appeal: Private respondents claimed that NFL's misrepresentations had precluded them from appealing their exclusion.

• Propriety of Petition for Relief: Whether the NLRC committed grave abuse of discretion in allowing the "Petition for Relief" to prosper and treating it as an appeal despite its late filing.
• Extension of CBA Economic Provisions: Whether the term of a CBA as to its economic provisions may be extended beyond the term expressly stipulated therein and, in the absence of a new CBA, even beyond the three-year period provided by law.
• Coverage of Employees Hired After CBA Term: Whether employees hired after the stipulated term of a CBA are entitled to the benefits provided thereunder.
• Factual Findings and Dispositive Portions: Whether the NLRC committed grave abuse of discretion in making factual findings without basis and in issuing dispositive portions that are defective and/or reveal grave abuse of discretion.

• Propriety of Petition for Relief: No. The NLRC did not commit grave abuse of discretion; liberality in applying technical rules was warranted, and Articles 218(c) and 221 of the Labor Code allow the NLRC to correct, amend, or waive errors and to ascertain facts without regard to technicalities in the interest of due process.
• Extension of CBA Economic Provisions: Yes. Article 253 mandates that the parties keep the status quo and continue in full force and effect the terms and conditions of the existing agreement until a new agreement is reached; no exception excludes economic provisions.
• Coverage of Employees Hired After CBA Term: Yes. Employees hired after the CBA term are entitled to its benefits; non-member employees are entitled to CBA benefits, and excluding them would constitute undue discrimination.
• Factual Findings and Dispositive Portions: No. The other issues pertained to questions of fact already passed upon by the NLRC, whose findings, supported by substantial evidence, are accorded respect and finality; no grave abuse of discretion was shown.

• Propriety of Petition for Relief: The Court reasoned that ordinarily a final and executory judgment can no longer be disturbed, altered, or modified. However, the facts and circumstances warranted liberality in applying technical rules and procedure because it would be a greater injustice to deprive the concerned employees of monetary benefits rightly due them due to a circumstance over which they had no control. Private respondents claimed they were wrongfully excluded from the list of those entitled to CBA benefits by NFL without their knowledge, and because they were under the impression that they were ably represented, they were not able to appeal on time. The Supreme Court has allowed appeals from decisions of the labor arbiter to the NLRC even if filed beyond the reglementary period in the interest of justice. Article 218(c) allows the NLRC to correct, amend, or waive any error, defect, or irregularity whether in substance or in form. Article 221 provides that rules of evidence prevailing in courts of law or equity shall not be controlling and mandates the use of every and all reasonable means to ascertain the facts speedily and objectively without regard to technicalities of law or procedure, all in the interest of due process.
• Extension of CBA Economic Provisions: Article 253 provides that when there is a CBA, the duty to bargain collectively means that neither party shall terminate nor modify such agreement during its lifetime; either party can serve written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date; and it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached. The provision has no exception or qualification as to which economic provisions retain force and effect; thus, it encompasses all terms and conditions. In this case, no new agreement was entered into pending appeal, and none of the economic provisions or terms and conditions pertaining to monetary benefits were modified or altered. Therefore, the existing CBA in its entirety continued to have legal effect. Article 253 and 253-A mandate the parties to keep the status quo and continue the existing agreement, and the automatic renewal clause deemed incorporated in all CBAs explains why a new CBA can only be given prospective effect. Lopez Sugar Corporation vs. Federation of Free Workers reiterated that although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into. To rule otherwise would create a gap during which no agreement would govern, from the time the old contract expired to the time a new agreement is entered into, depriving employees from 1985 onwards of monetary benefits and running contrary to the purpose of Article 253 and 253-A to curb labor unrest and promote industrial peace.
• Coverage of Employees Hired After CBA Term: The Court held that when a collective bargaining contract is entered into by the union representing the employees and the employer, even non-member employees are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against nonmembers. A laborer can claim benefits from the CBA entered into between the company and the union of which he is a member at the time of the conclusion of the agreement, even after he has resigned from the union. In the same vein, the benefits under the CBA should be extended to employees who only became such after 1984. To exclude them would constitute undue discrimination and deprive them of monetary benefits they would otherwise be entitled to under a new collective bargaining contract to which they would have been parties. Since no new agreement had been entered into after the CBA's stipulated term, it was fair and just that employees hired thereafter be included in the existing CBA. This is in consonance with the ruling that the terms and conditions of a CBA continue to have force and effect beyond the stipulated term when no new agreement is executed, to avoid the situation where no CBA at all would govern between the employer and its employees.
• Factual Findings and Dispositive Portions: The other issues raised pertained to questions of fact that had already been passed upon by the NLRC. The factual findings of the NLRC, which has acquired expertise because its jurisdiction is confined to specific matters, are accorded respect and finality by the Supreme Court when supported by substantial evidence. A perusal of the assailed resolution revealed that it was reached on the basis of the required quantum of evidence. The alleged defects in the dispositive portions did not warrant reversal; the resolution contained a detailed computation in Annex "A" and awarded attorney's fees, and no grave abuse of discretion was shown.

• Status Quo and Continuation of CBA Terms Under Article 253 — When a CBA exists, the duty to bargain collectively includes the obligation of both parties to keep the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period before expiration and/or until a new agreement is reached. The law does not distinguish among economic provisions; all terms and conditions continue. The Court applied this doctrine because no new CBA had been executed and no economic provisions had been modified, so the existing CBA remained effective in its entirety.
• Automatic Renewal and No Gap in CBA Coverage — Article 253 and Article 253-A are deemed to incorporate an automatic renewal clause in all CBAs, so that a new CBA can only be given prospective effect. The existing CBA continues to govern after expiration until a replacement is reached. The Court applied this to prevent a gap during which no agreement would govern, which would deprive employees of wage increases and other monetary benefits and undermine industrial peace.
• CBA Benefits for Non-Members and Post-Term Hires — When a collective bargaining contract is entered into by the union representing the employees and the employer, even non-member employees are entitled to the benefits of the contract. To accord benefits only to union members without valid reason constitutes undue discrimination. Employees hired after the CBA term are likewise entitled to its benefits when no new agreement has been executed, because excluding them would unduly discriminate and deprive them of benefits they would have enjoyed under a new CBA.
• Liberal Application of Procedural Rules in Labor Cases — Under Article 218(c) and Article 221 of the Labor Code, the NLRC may correct, amend, or waive any error, defect, or irregularity in substance or form, and labor proceedings are not controlled by technical rules of evidence; the Commission must use all reasonable means to ascertain facts speedily and objectively without regard to technicalities, in the interest of due process. The Court applied this to sustain the NLRC's entertainment of a late petition for relief treated as an appeal, because the employees were allegedly misled by their union and would otherwise be deprived of benefits they had no opportunity to timely claim.
• Finality of NLRC Factual Findings — Factual findings of the NLRC, which has acquired expertise because its jurisdiction is confined to specific matters, are accorded respect and finality by the Supreme Court when supported by substantial evidence. The Court applied this to reject petitioner's remaining factual objections, finding that the assailed resolution was supported by the required quantum of evidence.

• "It is clear from the above provision of law that until a new Collective Bargaining Agreement has been 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 law does not provide for any exception nor qualification as to which of the economic provisions of the existing agreement are to retain force and effect, therefore, it must be understood as encompassing all the terms and conditions in the said agreement." — This passage states the ratio decidendi on Article 253, holding that all economic provisions of an existing CBA continue in force until a new agreement is reached.
• "In a long line of cases, this Court has held that when a collective bargaining contract is entered into by the union representing the employees and the employer, even the non-member employees are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against nonmembers." — This defines the doctrine that CBA benefits extend to non-members and is central to the ruling that employees hired after the CBA term may claim those benefits.
• "In the same vein, the benefits under the CBA in the instant case should be extended to those employees who only became such after the year 1984. To exclude them would constitute undue discrimination and deprive them of monetary benefits they would otherwise be entitled to under a new collective bargaining contract to which they would have been parties." — This passage applies the non-discrimination principle to post-term hires and explains why they are covered by the existing CBA when no new agreement exists.
• "Ordinarily, once a judgment has become final and executory, it can no longer be disturbed, altered or modified. However, a careful scrutiny of the facts and circumstances of the instant case warrants liberality in the application of technical rules and procedure." — This passage justifies the NLRC's liberal treatment of the late petition for relief and is frequently cited for relaxing procedural rules in labor cases to prevent injustice.

• City Fair Corporation vs. NLRC, 243 SCRA 572 (1995) — Cited to support the rule that the Supreme Court has allowed appeals from decisions of the labor arbiter to the NLRC even if filed beyond the reglementary period, in the interest of justice.
• Union of Filipino Employees vs. NLRC, 192 SCRA 414 (1990) — Cited for the rule that Article 253 and Article 253-A mandate the parties to keep the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached; the automatic renewal clause explains why a new CBA has only prospective effect.
• Lopez Sugar Corporation vs. Federation of Free Workers, et al., 189 SCRA 179 — Cited for the rule that although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into, and the parties are duty-bound to keep the status quo and continue the terms and conditions of the existing agreement.
• Pier 8 Arrastre & Stevedoring Services, Inc. vs. Hon. Ma. Nieves Roldan-Confesor, et al., 241 SCRA 294 (1995) — Cited for the same duty of the parties to keep the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached.
• International Oil Factory Workers Union vs. Hon. Martinez, et al., 110 Phil. 595 (1960) — Cited for the rule that when a collective bargaining contract is entered into by the union representing the employees and the employer, even non-member employees are entitled to the benefits of the contract.
• National Brewery & Allied Industries Labor Union vs. San Miguel Brewery Inc., et al., 118 Phil. 806 (1963) — Cited together with International Oil Factory Workers Union for the same non-member coverage rule.
• Kapisanan Ng Mga Manggagawang Pinagyakap vs. Franklin Baker Co. of the Phil., June 3, 1949 — Cited for the rule that a laborer can claim benefits from a CBA entered into between the company and the union of which he is a member at the time of the conclusion of the agreement, even after he has resigned from the union.

• Article 253, Labor Code — Provides that when there is a CBA, the duty to bargain collectively means neither party shall terminate nor modify the agreement during its lifetime; either party may serve written notice to terminate or modify at least sixty (60) days prior to expiration; and both parties must keep the status quo and continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached. The Court applied this to hold that the existing CBA's economic provisions remained effective beyond the stipulated term because no new agreement had been executed.
• Article 253-A, Labor Code — Provides that a CBA's representation aspect is for five (5) years, while all other provisions shall be renegotiated not later than three (3) years after execution; agreements on other provisions within six (6) months from expiry retroact to the day immediately following such date, and if entered into beyond six months, the parties shall agree on the bargaining agreement and may exercise their rights under the Code. The Court cited this with Article 253 to support the status quo requirement and the automatic renewal clause, under which a new CBA can only be given prospective effect.
• Article 218(c), Labor Code — Provides that the NLRC may, in the exercise of its appellate powers, correct, amend, or waive any error, defect, or irregularity whether in substance or in form. The Court applied this to justify the NLRC's liberal treatment of the private respondents' late petition for relief.
• Article 221, Labor Code — Provides that in any proceeding before the Commission or any Labor Arbiter, the rules of evidence prevailing in courts of law or equity shall not be controlling, and the Commission, its members, and the Labor Arbiter shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. The Court applied this to sustain the NLRC's relaxation of procedural technicalities.

Chief Justice Davide, Jr., and Justices Puno and Ynares-Santiago concurred. Justice Pardo was on official business abroad.