SONEDCO Workers Free Labor Union v. Universal Robina Corporation

A wage increase not included in the Collective Bargaining Agreement is not demandable, except when it was withheld by the employer as part of its unfair labor practice against the union members, in which case the benefit must be granted to eliminate the discrimination caused by the unlawful act.

SONEDCO Workers Free Labor Union (SWOFLU) is the rank-and-file bargaining unit at Universal Robina Corporation, Sugar Division-Southern Negros Development Corporation (URC-SONEDCO). In 2007 and 2008, while no Collective Bargaining Agreement was in effect between the union and management, URC-SONEDCO offered wage increases of ₱16.00/day each year to its employees, conditioned on the signing of waivers providing that any subsequently negotiated CBA would only be effective the following year. Some union members recognized the waivers as undermining their collective bargaining rights and refused to sign, thereby foregoing the wage increases. A new CBA eventually took effect in 2009.

SONEDCO Workers Free Labor Union (SWOFLU) is the rank-and-file labor union of employees at Universal Robina Corporation, Sugar Division-Southern Negros Development Corporation (URC-SONEDCO). In 2007, while no Collective Bargaining Agreement was in effect between the union and management, URC-SONEDCO offered a ₱16.00/day wage increase to its employees. To receive the benefit, employees were required to sign a waiver stating that any subsequent CBA negotiated between management and the union would only be effective on January 1, 2008. Recognizing that the waiver constituted unfair labor practice, some members of SWOFLU refused to sign and consequently did not receive the wage increase.

URC-SONEDCO offered the same arrangement in 2008, extending an additional ₱16.00/day wage increase to employees who would agree that any CBA negotiated for that year would only be effective on January 1, 2009. Several SWOFLU members again refused to waive their collective bargaining rights and did not receive the wage increase, which by then had accumulated to a total of ₱32.00/day beginning 2009.

On July 2, 2009, SWOFLU and its members who had refused to sign the waivers filed a complaint for unfair labor practice against URC-SONEDCO, arguing that the waiver requirement constituted interference with the employees' right to self-organization, collective bargaining, and concerted action. They demanded the ₱16.00/day wage increase for 2007, an additional ₱16.00/day for 2008, and a continuing wage increase of ₱32.00/day from January 1, 2009 onwards. Both the National Labor Relations Commission and the Court of Appeals found URC-SONEDCO not guilty of unfair labor practice but nonetheless ordered the company to grant the 2007 and 2008 wage increases. The claim for the 2009 wage increase was denied because a new CBA was already in effect by 2009 and governed the relationship between the parties.

On October 5, 2016, the Supreme Court found URC-SONEDCO guilty of unfair labor practice for restricting the union's bargaining power by conditioning wage increases on waivers foregoing CBA negotiations. The Court ordered payment of the 2007 and 2008 wage increases and awarded moral and exemplary damages, but denied the claim for the 2009 wage increase, ruling that the proper recourse was to include it in the 2009 CBA. Petitioners thereafter filed a Motion for Partial Reconsideration, alleging that the ₱32.00/day wage increase had been integrated into the salary of employees who signed the waivers, so that those employees continued to receive ₱32.00/day more than the petitioners. In support, petitioners submitted a joint affidavit dated January 18, 2017, signed by 26 URC-SONEDCO employees who confirmed that they signed the 2007 and 2008 waivers and were currently receiving ₱32.00/day more than the petitioners.

• Integration of Wage Increase: Petitioners argued that the ₱16.00/day wage increases granted in 2007 and 2008 had been integrated into the salary of the employees who signed the waivers, such that since the start of 2009, those employees had been receiving ₱32.00/day more than the petitioners.
• Continuing Wage Increase: Petitioners maintained that the continuing wage increase of ₱32.00/day from January 1, 2009 to the present should be awarded to eliminate the continuing discrimination resulting from the employer's unfair labor practice.
• Attorney's Fees: Petitioners sought attorney's fees as part of the total monetary award.

• Prior Ruling: Respondent argued that the issue of the 2009 wage increase had already been ruled upon, and since the 2009 wage increase was not included in the 2009 CBA, it could not be demanded.

• Continuing Wage Increase: Whether a continuing wage increase of ₱32.00/day from January 1, 2009 to the present should be awarded to petitioners who refused to sign waivers foregoing CBA negotiations, notwithstanding the existence of a 2009 CBA that did not include such increase.

• Continuing Wage Increase: Yes. The continuing wage increase of ₱32.00/day from January 1, 2009 to the present was granted, because denying it would perpetuate the discrimination caused by the employer's unfair labor practice. Although benefits not included in a CBA are generally not demandable, the peculiar circumstances of this case warranted an exception.

• Continuing Wage Increase: The general rule is that the CBA controls the relationship between the parties and any benefit not included in it is not demandable. However, the peculiar circumstances of this case required departure from that rule. Petitioners submitted a joint affidavit from 26 URC-SONEDCO employees confirming that those who signed the 2007 and 2008 waivers were receiving ₱32.00/day more than the petitioners, the wage increase having been integrated into their salaries. The respondent company granted this benefit to induce employees to waive their collective bargaining rights—an act already declared unfair labor practice. To continue denying the petitioners the same wage increase would perpetuate the discrimination against them, which was a direct result of the unfair labor practice. All consequences of the unfair labor practice must be addressed. The grant of the ₱32.00/day increase was not an additional benefit outside the 2009 CBA but rather the elimination of the discrimination caused by the employer's unlawful conduct. Because exemplary damages were imposed, attorney's fees were also deemed proper under Article 2208 of the Civil Code.

• CBA as primary source of benefits — Generally, the Collective Bargaining Agreement controls the relationship between the parties, and any benefit not included in it is not demandable. The Court recognized this as the default rule but carved out an exception where the benefit was withheld as part of an employer's unfair labor practice.

• Remediation of all consequences of unfair labor practice — When an employer commits unfair labor practice, all the consequences of that unlawful act must be addressed. Where the unfair labor practice results in continuing wage discrimination against employees who refused to waive their collective bargaining rights, the wage increase must be granted to eliminate the discrimination, even if the benefit is not included in a subsequent CBA.

• "Generally, a wage increase not included in the Collective Bargaining Agreement is not demandable. However, if it was withheld by the employer as part of its unfair labor practice against the union members, this benefit should be granted." — This opening passage states the ratio decidendi, articulating the exception to the general rule that CBA benefits are the sole source of demandable entitlements.

• "To rule otherwise will perpetuate the discrimination against petitioners. All the consequences of the unfair labor practice must be addressed." — This passage defines the doctrinal basis for granting the continuing wage increase: the principle that all consequences of unfair labor practice must be remediated, not merely the initial unlawful act.

• "The grant of the ₱32.00/day wage increase is not an additional benefit outside the Collective Bargaining Agreement of 2009. By granting this increase to petitioners, this Court is eliminating the discrimination against them, which was a result of respondent's unfair labor practice." — This passage clarifies that the award does not contravene the CBA-as-controlling-rule doctrine but rather remedies the discriminatory effects of the employer's prior unlawful conduct.

• SONEDCO Workers Free Labor Union vs. Universal Robina Corporation, Sugar Division-Southern Negros Development Corporation, G.R. No. 220383, October 5, 2016 — The prior Decision in the same case, which found URC-SONEDCO guilty of unfair labor practice for conditioning wage increases on waivers foregoing CBA negotiations. The October 5, 2016 Decision ordered payment of the 2007 and 2008 wage increases and awarded moral and exemplary damages but denied the 2009 continuing wage increase claim. The present Resolution modified that Decision to include the continuing wage increase.

• Article 2208, Civil Code — Provides that attorney's fees may be recovered when exemplary damages are awarded. The Court applied this provision to grant attorney's fees of ten percent of the total award, given that exemplary damages had been imposed in the October 5, 2016 Decision.

Justice Antonio T. Carpio (Chairperson), Justice Mariano C. Del Castillo, Justice Jose Catral Mendoza, and Justice Samuel R. Martires concurred.