Caltex Refinery Employees Assn. v.

Brillantes, 279 SCRA 218 [1998]

Facts:
Anticipating the expiration of their CBA on July 31, 1995, petitioner CREA and private
respondent Caltex (Philippines), Inc. negotiated, under the guidance of the NCMB and the
Office of the SOLE, the terms and conditions of employment to be contained in a new CBA.
Some items were amicably arrived at and agreed upon, others were left unresolved.
To resolve these issues, eight meetings were held, but none were successful, prompting the
petitioner to declare a deadlock and file a notice of strike. Six further conciliation meetings held
by the NCMB were likewise unavailing, as were various meetings at the plant level.
During a strike vote on Aug. 16, 1995, the members of CREA opted for a walk out. Caltex thus
filed with the DOLE a petition for assumption of jurisdiction pursuant to Art. 263 (g) of the
Labor Code.
Jose Brillantes, then Acting SOLE, issued an order assuming jurisdiction over the labor
dispute and enjoining any strike or lockout.
CREA defied the order and began to strike and picket the premises of Caltex. Several company
notices directing the employees to return to work were likewise defied.
During the course of the strike, DOLE Undersecretary Bienvenido Laguesma interceded and
conducted several conciliation meetings, during which he was able to convince the CREA
members to return to work and enter into a memorandum of agreement with Caltex.
The picket was finally lifted on Sept. 9, 1995, though both parties filed position papers on
unresolved issues.
Because of the strike, Caltex dismissed some officers of CREA due to the strike. As a result, the
partiesfailed to come to any substantial agreement and decided to refer the problem to the
SOLE, Jose S. Brillantes.
Brillantes issued three orders, in favor of CREAone directing that a new CBA be executed,
and one order each denying the two MRs filed by the petitioner. Hence this Special Civic Action
for Certiorari.
Issue: Whether the SOLE committed GAD in resolving the instant labor dispute as regards the
matters of:
1.
2.
3.
4.
5.

Wage increase - NO
Union Security Clause - YES
Retirement Plan - NO
Grievance Machinery - NO
Signing Bonus - NO

Ratio:

Preliminary Matter: Certiorari in Labor Cases

At the outset, we must reiterate several settled rules in a petition for certiorari involving labor
cases.
First, the factual findings of quasi-judicial agencies when supported by substantial evidence
are binding on the SC, considering the expertise of these agencies in their respective fields.
Second, substantial evidence in labor cases is such amount of relevant evidence which a
reasonable mind will accept as adequate to justify a conclusion.
Third, ss an extraordinary remedy, a Rule 65 petition is available only in truly exceptional
cases involving errors of jurisdiction or grave abuse of discretion (GAD). It does not include
correction of the NLRCs evaluation of the evidence.
Flores v. NLRC:
Here, there is no question raised regarding jurisdiction. Instead, what is being sought is
a judicial re-evaluation of the adequacy or inadequacy of the evidence on record, which
is impermissible in a certiorari petition.
1. As to wage increase: NO GAD
The Orders issued by Brillantes found the rates of 14%, 14% and 13% as wage increase for
the years 1995, 1996, and 1997, respectively, to be proper, based on factors such as financial
capacity, position in the industry, package of existing benefits, etc.
In denying the Motions for Reconsideration/clarification of the above award, Brillantes found
no reason to alter the award, saying that the subsequent agreement on wage increases at Shell
Company, as well as the claimed inflation rate at the time, would not be sufficient bases to
alter the package of wage increases considering that other factors, like employment size, were
carefully taken into account.
CREA assailed the award contending that the increase should be based on four factors: (1)
economic needs of the unions members; (2) the companys financial capacity; (3) the
bargaining history between the union and the company; (4) and the traditional parity in wages
between Caltex and Shell Refinery Employees.
To show Caltexs immense financial capacity, CREA also brought up housing
upgrades to housing for managers and supervisors in the Banaba Housing Up-grading
plan, which would cost not less than P200M . It also maintained that the salaries of Shell
employees be used as a reference point in upgrading their compensation.
SC: The matter of inflation rate had already been decided in the assailed orders. Contrary to
CREAs undocumented claim of 11.8% inflation in September 1995, the average inflation for the
first 10 months of 1995 was only 7.496% and Central Bank projections indicated it would take
a 13.5% inflation for Nov. and Dec. to record an inflation of 8.5% for the year.
Further, the Banaba Housing upgrade should not be construed as a yardstick of its
financial standing. The housing plan has nothing to do with their demand for wage
increase. It was not a benefit; it was an indispensable requirement for smooth plant

operations and assurance of an emergency response crew in times of calamities and

accidents. Moreover, being built in 1954, most of its structures are dilapidated and in
dire need of rehabilitation and preservation.
As to the argument that the Shell employees had higher wages, there was no
substantial reason alleged to impute GAD on Brillantes part. The court was amazed
that CREA continued to use the outmoded concept of the Shell yardstick and relative
parity in wages.
The principle to be applied is higher productivity for higher pay. Where Shell produces
155,000 barrels per day with only 120 employees working at a 37% average overtime
rate, Caltex only produces 65,000 barrels daily with 221 employees working at a 102%
overtime rate. Thus, as Caltex employees are less productive, it is illogical to ask for
relative parity of wages.
Applying the principle of a fair days wage for a fair days work, there is no reason for
Caltex employees, already the best paid in the industry, and yet the least productive, to
receive a wage increase. There was no GAD regarding this matter.
2. Union Security Clause: Theres GAD
Brillantes found that there was no need to amend the union security clause, which provided
that employees who are members of the union shall maintain their membership with the
union for the duration of this agreement as a condition of employment.
The union wanted to make it a requirement for a member to be of good standing for
continued employment.
And whereas the original CBA provided that members of the union who cease to be
members thereof due to resignation or expulsion shall not be retained in the
employment of the company, the union sought to expand the reach of its clause by
making the dismissal include the grounds on its CBL.
Brillantes saw the proposed amendments merely as procedural ones, as the proposed
changes gave the same substantial effects as the original provisions, and so did not order the
amendment, instead deciding that it should have been decided by the parties based on mutual
concern and agreement.
CREA claimed that leaving to the parties the decision on the union security clause was
contrary to the idea of assuming jurisdiction over the case, as under the original CBA
provision, they had only three grounds for dismissal: non-payment of dues, subversion, or
conviction for a crime involving moral turpitude. Hence, the disagreement on this issue is also
substantial, not merely procedural.
The SC agreed, holding that the disagreement should have been definitely resolved by
Brillantes. As labor secretary, he should have taken cognizance of an issue not merely
incidental to but essentially involved in the labor dispute itself, or otherwise submitted for
resolution. He had no reason to avoid the issue, claiming that it was only a procedural issue.

 Such reasoning sidesteps the purpose of a union security clause as a safeguard against the
fickleness or perfidy of its own members, and thus of the solidarity of the union. Without such
safeguard, group solidarity becomes uncertain and the union weakens and becomes vulnerable
to company machinations.
In this security clause lies the strength of the union during the enforcement of the CBA. This
clause provides labor with substantial power in collective bargaining.
The secretary of labor assumed jurisdiction over this labor dispute in an industry
indispensable to national interest, to settle once and for all the jurisdiction over which he has
jurisdiction at his level. In not performing his duty, there was GAD.
3. Retirement Plan NO GAD
Brillantes had decided that the new retirement plan should not cover employees who had
previously chosen to be covered under the old plan, despite the petition by the Union to so
cover them. The 40 or so employees who chose the old plan were given the option to choose
between the old and new plans, and chose the former.
There was no GAD. The employees had been given a free choice, and their free and voluntary
decision must be respected. While the union has every right to represent its members in the
negotiation of the terms and conditions of their employment, it cannot negate their wishes on
matters that are purely personal and individual to them, like the 40 employees here who freely
opted to be covered by the old plan. The union cannot impose its will.
4. Grievance Machinery NO GAD
Brillantes affirmed a resolution to shorten the periods to process/resolve machinery from 45
to 30 days at the first step and from 10 to 7 days at the second step, as well as removing the
step of establishing a joint council, holding that it would only serve to protract the proceeding
and therefore, no longer necessary.
An unresolved grievance, if not settled within the 7days at the level of the VP, shall
automatically be referred by both parties to voluntary arbitration pursuant to RA 6715.
There was no GAD. No particular setup for grievance machinery is mandated by law. Art. 260
of the LC (now Art. 266), as incorporated by RA 6715, provides for a single grievance
machinery to settle problems arising from interpretation of implementation of the CBA.
The procedure ordered by Brillantes sufficiently complied with the minimum requirement of
the law. In fact, he went beyond the minimum by providing for two steps. While it was
contended that he did not act on the dispute by leaving the number of voluntary arbitrators to
the choice of the parties, this was seen as affording the parties latitude to decide for
themselves.
5. Signing Bonus NO GAD
Brillantes ruled that the maintenance of existing benefits clause did not cover signing
bonuses. The said signing bonus, which was present in the previous CBA, was not accepted by
Caltex.

 While CREA claimed that it was covered by the maintenance of existing benefits clause, the
SC ruled that a signing bonus is not a benefit which may be demanded under the law, nor as a
matter of right. If not agreed upon by the parties or unilaterally offered by the company, the
condition for awarding it mustbe satisfied.
Here, the condition was non-strike. Obviously, this was not followed. There was no GAD.
Epilogue:
Saballa v. NLRC provided that it is a requirement of due process and fair play that the parties
to a litigation be informed of how it was decided, with an explanation of the factual and legal
reasons that led to the conclusions of the court.
The requirement that the Sec. of Labor make findings supported by substantial evidence was
sufficiently met. The claim of GAD was simply based on the fact that Brillantes largely adopted
the proposals of Caltex.
However, it should be understood that collective bargaining is not equivalent to an adversarial
litigation where rights and obligations are delineated and remedies applied. It is a process of
finding a reasonable solution to a conflict and harmonizing opposite positions into a fair and
reasonable compromise.
When the parties agree to submit unresolved issues to the Sec. of Labor, they defer to his
wisdom and objectivity in insuring industrial peace. Unless they can clearly demonstrate bias
or arbitrariness on his part, the court will not interfere with his judgment.
While some of the Courts members may agree with the wisdom of the unions claims, the
Court will not use its power to strike down the decisions of officers tasked to settle
administrative questions