Case Digest: Cirtek Employees v. Cirtek Electronics

G.R. No. 190515 : November 15, 2010




Prior to the 3rd year of the CBA of respondent and petitioner, the parties renegotiated its economic provisions but failed to reach a settlement, particularly on the issue of wage increases. Petitioner thereupon declared a bargaining deadlock and filed a Notice of Strike. Respondent, upon the other hand, filed a Notice of Lockout.

In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike. The Secretary of Labor assumed jurisdiction over the controversy and issued a Return to Work Order which was complied with.

Before the Secretary of Labor could rule on the controversy, respondent created a Labor Management Council through which it concluded with the remaining officers of petitioner a Memorandum of Agreement providing for daily wage increases.

The Secretary of Labor resolved the CBA deadlock by awarding a wage increase.

Respondent moved for a reconsideration of the Decision stating that the union members were waiving their rights and benefits under the Secretarys Decision. Reconsideration of the Decision was denied. Hence, respondent filed a petition for certiorari before the Court of Appeals.

The appellate court ruled in favor of respondent and accordingly set aside the Decision of the Secretary of Labor. It held that the Secretary of Labor gravely abused his discretion in not respecting the MOA.

Whether or not the Secretary of Labor is authorized to give an award higher than that agreed upon in the MOA?


It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction under Art. 263 (g) of the Labor Code, may resolve all issues involved in the controversy including the award of wage increases and benefits. While an arbitral award cannot per sebe categorized as an agreement voluntarily entered into by the parties because it requires the intervention and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties, hence, it has the force and effect of a valid contract obligation.

That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no moment. For the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents submitted by respondent as well as the parties bargaining history and respondents financial outlook and improvements as stated in its website.

It bears noting that since the filing and submission of the MOA did not have the effect of divesting the Secretary of his jurisdiction, or of automatically disposing the controversy, then neither should the provisions of the MOA restrict the Secretarys leeway in deciding the matters before him.

While a contract constitutes the law between the parties, this is so in the present case with respect to the CBA, not to the MOA in which even the unions signatories had expressed reservations thereto. But even assuming arguendo that the MOA is treated as a new CBA, since it is imbued with public interest, it must be construed liberally and yield to the common good.

While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to which is applied the principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature butimpressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place apractical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.


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