Manila Electric Company v. Secretary of Labor [G.R. No 127598. August 1, 2000]

FACTS: This is a motion for partial modification regarding the ruling in the Meralco case of February 22, 2000 wherein it ruled that the arbitral award would retroact to the date after the expiration of the previous CBA.

The assailed resolution stated since labor laws are silent as to when an arbitral award in a dispute upon which the Secretary had assumed jurisdiction shall retroact. The Court thus ruled that the CBA arbitral awards granted after six months from the expiration of the last CBA shall retroact to such time agreed upon by the employer and the employees or their union. Absent an agreement as to retroactivity, the award shall retroact first day after the six- month period following the expiration of the last day of the CBA; in the absence of a CBA, the Secretary shall have plenary discretionary powers to determine the date of retroactivity. Petitioner also alleges that the retroactive application of the arbitral will cost it no less than P800 million.


ISSUE: When should an arbitral retroact?


HELD: The cases cited by petitioner involve articles 253-A in relation to Article 263(g). The case of Union of Filipino Employees, it was ruled that since the resolution was outside the six month period of the past CBA, the NLRC could give prospective effect to the CBA and that the two –year arbitral award should be given prospective effect. There nothing that says the arbitral awards or renewals of collective bargaining agreements shall always have retroact effect. Although respondent MEWA (union) cites the St. Lukes case, stating that the Secretary of Labor has plenary and discretionary power to determine the effectivity of arbitral wards.

The Court therefore issued the resolution that: where an arbitral award granted beyond six month after the expiration of the exiting CBA, and there is no agreement between the parties as the date of effectivity thereof, the arbitral award shall retract to the first day after the six month period following the expiration of the last day of the CBA.

In resolving the motions for reconsideration in this case, the Court took into consideration the fact that petitioner belongs to an industry imbued with interest and cannot ignore the enormous cost in case of full retroaction of the arbitral award. Balancing this with the interest of social justice; the arbitral award this case would retroact to the first day after the six- month period of the following the expiration of the last day CBA. Parenthetically, during the period between the expiration of the economic provisions and the date of effectivity of the arbitral award, the hold- over principle shall govern.