LMG Chemicals Corp. v.

DOLE Secretary Quisumbing, Chemical Workers Union

G.R. No.127422. April 17, 2001.

Facts:
Petitioner LMG Chemicals Corp. is a domestic corp. engaged in the manufacture and sale of various
kinds of chemical substances. Petitioner has 3 divisions, namely: Organic Division, Inorganic Division
and the Pinamucan Bulk Carriers. Respondent Chemical Workers Union is a duly registered labor
organization acting as the collective bargaining agent of all the daily paid employees of petitioners
Inorganic Division.

In December 1995, petitioner and respondent union started their negotiation for a new Collective
Bargaining Agreement (CBA) as their old CBA was about to expire. The positions of the parties with
respect to the wage increase issue were:

Petitioner Company
P40 per day on the first year
P40 per day on the second year
P40 per day on the third year
Respondent Union
P350 per day on the first 18 months, and
P150 per day for the next 18 months

The Union lowered their proposal to P215 per day, broken down as follows:

P142 for the first 18 months
P73 for the second 18 months

The CBA negotiations were at a deadlock so the Union filed a Notice of Strike with the National
Conciliation and Mediation Board on March 6, 1996. However, the parties still failed to reach an
amicable settlement. The union staged a strike. In an attempt to end the strike early, petitioner made an
improved offer of P135 per day, spread over the period of three years, as follows:

P55 per day on the first year;
P45 per day on the second year;
P35 per day on the third year.

In another conciliation meeting, petitioner reiterated its improved offer of P135 per day which was again
rejected by the respondent union.

The DOLE Sec., finding the instant labor dispute impressed with national interest, assumed jurisdiction
over the same. In its position paper, petitioner made a turn-around, stating that it could no longer
afford to grant its previous offer due to serious financial losses during the early months of 1996. It
then made the following offer:

Zero increase in the first year;
P30 per day increase in the second year; and
P20 per day increase in the third year.

The DOLE Sec. issued the assailed order, increasing the companys offer from P135 per day to P140 per
day to be incorporated in the new CBA as follows:

P90 per day for the first 18 months, and
P50 per day for the next 18 months.

The DOLE Sec. noted that Petitioner corporation granted its supervisory employees an increase of P4,500
per month or P166 per day. The DOLE Sec. also ordered that the CBA which the parties will sign shall
retroact to January 1, 1996.

Issue/s:
1. W/N the DOLE Sec. committed GADALEJ in disregarding the evidence of petitioners financial
losses and in granting a P140 wage increase to the Union - NO
2. W/N the DOLE Sec. committed GADALEJ in decreeing that the new CBA to be signed by the
parties shall retroact to January 1, ,1996 - NO

Held/Ratio:
1. No. While it may be true that the Inorganic Division of the corporation suffered losses, it is a
sound business practice that a Companys income from all sources are collated to determine its
true financial condition. In fact, the loss in one is usually offset by the gains in the others. It is not
a good business practice to isolate the employees or workers of one division, which incurred an
operating loss for a particular period. That will create demoralization among its ranks, which will
ultimately affect productivity. When the Company made the offer of P135 per day for the three
year period, it was presumed to have studied its financial condition properly, taking into
consideration its past performance and projected income. In fact, the Company realized a net
income for 1995 in all its operations, which could be one factor why it offered the wage increase
package of P135 per day for the Union members.

Moreover, petitioner company granted its supervisory employees, during the pendency of the
negotiations between the parties, a wage increase of P4,500 per month or P166 per day, more or
less. Petitioners actuation is actually a discrimination against respondent union members. If it
could grant a wage increase to its supervisors, there is no valid reason why it should deny the
same to respondent union members.

2. No. The DOLE Secretary assumed jurisdiction over the dispute because it is impressed with
national interest. As noted by the Secretary, the petitioner corporation was then supplying the
sulfate requirements of MWSS as well as the sulfuric acid of NAPOCOR, and consequently, the
continuation of the strike would seriously affect the water supply of Metro Manila and the power
supply of the Luzon Grid. Such authority of the Secretary to assume jurisdiction carries with it
the power to determine the retroactivity of the parties CBA. The authority of the Secretary of
Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in
an industry indispensable to national interest includes and extends to all questions and
controversies arising therefrom. The power is plenary and discretionary in nature to enable him to
effectively and efficiently dispose of the primary dispute.

Art. 253-A cannot be properly applied to herein case. Article 253-A of the Labor Code, speaks of
agreement by and between the parties, and not arbitral awards. In the absence of the specific
provision of law prohibiting retroactivity of the effectivity of the arbitral awards issued by the
Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public
respondent is deemed vested with plenary powers to determine the effectivity thereof.