SECOND DIVISION

[G.R. No. 111809. May 5, 1997.]

MINDANAO TERMINAL AND BROKERAGE SERVICES, INC. , petitioner,

vs . HON. MA. NIEVES ROLDAN-CONFESOR, in her capacity as
Secretary of Labor and Employment, and ASSOCIATED LABOR
UNIONS (ALU-TUCP) , respondents.

Froilan M . Bacungan & Associates for petitioner.

Seno, Mendoza and Associates Law Offices for private respondent.

SYLLABUS

1. CIVIL LAW; CONTRACTS; EVEN WITHOUT ANY WRITTEN EVIDENCE OF THE

COLLECTIVE BARGAINING AGREEMENT MADE BY THE PARTIES, A VALID AGREEMENT
EXISTED IN THIS CASE FROM THE MOMENT THE MINDS OF THE PARTIES MEET ON ALL
MATTERS THEY SET OUT TO DISCUSS. — The fact that no agreement was then signed is
of no moment. Art. 253-A refers merely to an "agreement" which, according to Black's Law
Dictionary is "a coming together of minds; the coming together in accord of two minds on
a given proposition." This is similar to Art. 1305 of the Civil Code's de nition of "contract"
as "a meeting of minds between two persons." The two terms, "agreement" and "contract,"
are indeed similar, although the former is broader than the latter because an agreement
may not have all the elements of a contract. As in the case of contracts, however,
agreements may be oral or written. Hence, even without any written evidence of the
Collective Bargaining Agreement made by the parties, a valid agreement existed in this
case from the moment the minds of the parties met on all matters they set out to discuss.
As Art. 1315 of the Civil Code states: Contracts are perfected by mere consent, and from
that moment, the parties are bound not only to the ful llment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.
2. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; STRIKES AND
LOCKOUTS; ARBITRAL AWARD; BINDING ON THE PARTIES; CASE AT BAR. — The order of
the Secretary of Labor may be considered in the nature of an arbitral award, pursuant to
Art. 263(g) of the Labor Code, and, therefore, binding on the parties. After all, the Secretary
of Labor assumed jurisdiction over the dispute because petitioner asked the Secretary of
Labor to do so after the NCMB failed to make the parties come to an agreement. It is also
conceded that the industry in which the petitioner is engaged is vital to the national
interest.
3. ID.; ID.; ID.; ID.; THE SECRETARY OF LABOR IS DEEMED VESTED WITH
PLENARY AND DISCRETIONARY POWERS TO DETERMINE THE EFFECTIVITY OF AN
ARBITRAL AWARD. — In St. Luke's Medical Center, Inc . vs. Torres , a deadlock also
developed during the CBA negotiations between management and the union. The
Secretary of Labor assumed jurisdiction and ordered the retroaction of their CBA to the
date of expiration of the previous CBA. As in this case, it was alleged that the Secretary of
Labor gravely abused his discretion in making his award retroactive. In dismissing this
contention, this Court held: Therefore, in the absence of a speci c provision of law
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 prohibiting retroactivity of the effectivity of 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 and discretionary powers to determine the
effectivity thereof. This case is controlled by the ruling in that case.
4. ID.; LABOR STANDARDS; CREDITING OF WAGE INCREASES IN CBA AS
COMPLIANCE WITH FUTURE MANDATED INCREASES IS THE EXCEPTION RATHER THAN
THE RULE; THE GENERAL RULE IS THAT SUCH INCREASES ARE OVER AND ABOVE ANY
INCREASES THAT MAY BE GRANTED BY LAW OR WAGE ORDER. — With respect to the
issue of the creditability of the fourth and fth year wage increases, the Court takes
cognizance of the fact that the question was raised by the Company only when the six-
month period was almost over and all that was left to be done by the parties was to sign
their agreement. Before that, the Company did not qualify its position. It should have
known that crediting of wage increases in the CBA as compliance with future mandated
increases is the exception rather than the rule. For the general rule is that such increases
are over and above any increase that may be granted by law or wage order. As held in
Meycauayan College vs. Drilon: Increments to the laborers' nancial grati cation, be they in
the form of salary increases or changes in the salary scale are aimed at one thing —
improvement of the economic predicament of the laborers. As such they should be viewed
in the light of the State's avowed policy to protect labor. Thus, having entered into an
agreement with its employees, an employer may not be allowed to renege on its obligation
under a collective bargaining agreement should, at the same time, the law grant the
employees the same or better terms and conditions of employment. Employee bene ts
derived from law are exclusive of bene ts arrived at through negotiation and agreement
unless otherwise provided by the agreement itself or by law.

DECISION

MENDOZA , J : p

This is a petition for certiorari to set aside the order of respondent Honorable
Secretary of Labor and Employment, declaring (1) wage increases granted by petitioner to
its employees not creditable as compliance by the company with future mandated wage
increases, and (2) the increases to be retroactive, in the case of the fourth year wage
increase, to August 1, 1992 to be implemented until July 31, 1993 and, in the case of the
fth year wage increase, to August 1, 1993 to be implemented until the expiration of the
CBA on July 31, 1994. casia

Petitioner Mindanao Terminal and Brokerage Service, Inc., (hereafter referred to as

the Company) and respondent Associated Labor Unions, (hereafter referred to as the
Union) entered into a collective bargaining agreement for a period of ve (5) years, starting
on August 1, 1989 and ending July 31, 1994.
On the third year of the CBA on August 1, 1992, the Company and the Union met to
renegotiate the provisions of the CBA for the fourth and fth years. The parties, however,
failed to resolve some of their differences, as a result of which a deadlock developed.
On November 12, 1992, a formal notice of deadlock was sent to the Company on
the following issues: wages, vacation leave, sick leave, hospitalization, optional retirement,
13th month pay and signing bonus.
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 On November 18, 1992, the Company announced a cost-cutting or retrenchment
program.
Charging unfair labor practice and citing the deadlock in the negotiations, the Union
led, on December 3, 1992, a notice of strike with the National Conciliation and Mediation
Board (NCMB).
On December 18, 1992, as a result of a conference called by the NCMB, the Union
and the Company went back to the bargaining table and agreed on the following
provisions:
a. Wage Increase (Article V, Section 2, CBA) — P3.00/day for the fourth
year of the CBA and P3.00/day for the fifth Year of the CBA:

b. Vacation and Sick Leaves (Article VII, Section 1(c), CBA) — 1,100
hours of aggregate service instead of the existing 1,500 hours within a year to be
entitled to leave bene ts but subject to reversion to the previous CBA if majority
of the gangs average eight (8) vessels a month;

c. Hospitalization (Article VIII, Section 1, CBA) — Maximum aggregate

of 1,100 hours instead of the 1,500 hours and up to be entitled to the bene t of
P2,500.00 with the lower brackets adjusted accordingly but subject to reversion to
the previous CBA if majority of the gangs average eight (8) vessels a month;

d. 13th Month Pay (Article XIII, Section 1, CBA) — Average of six (6)
vessels instead of the existing eight (8) vessels to be entitled to eleven (11) days
basic pay but subject to reversion to the previous CBA if majority of the gangs
average eight (8) vessels a month,

e. Signing bonus; and

f. Seniority.

The agreement left only one issue for resolution of the parties, namely, retirement.
Even this issue was soon settled as the parties met before the NCMB on January 14, 1993
and then agreed on an improved Optional Retirement Clause by giving the employees the
option to retire after rendering eighteen (18) years of service instead of the previous
twenty (20) years, and granting the employees retirement bene ts equivalent to sixteen
(16) days for every year of service. Thus, as the Med-Arbiter noted in the record of the
January 14, 1993 conference, "the issues raised by the notice of strike had been settled
and said notice is thus terminated."
But no sooner had he stated this than the Company claimed that the wage increases
which it had agreed to give to the employees should be creditable as compliance with
future mandated wage increases. In addition, it maintained that such increases should not
be retroactive.
Reacting to this development, the Union again led a Notice of Strike on January 28,
1993, with the NCMB. On March 7, 1993, the Union staged a strike.
The NCMB tried to settle the issues of creditability and retroactivity, calling for this
purpose a conciliation conference on March 9, 1993. As conciliation proved futile, the
Company petitioned respondent Secretary of Labor and Employment (hereafter Secretary
of Labor) to assume jurisdiction over the dispute. On March 10, 1993, respondent
assumed jurisdiction over the dispute and ordered the parties to submit their respective
position papers on the two unresolved issues.
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 After submission by the parties of their position papers, the Secretary of Labor
issued an Order dated May 14, 1993, ordering the Company and the Union to incorporate
into their existing collective bargaining agreement all improvements reached by them in
the course of renegotiations. The Secretary of Labor held that the wage increases for the
fourth and fth years of the CBA were not to be credited as compliance with future
mandated increases. In addition, the fourth year wage increase was to be retroactive to
August 1992 and was to be implemented until July 31, 1993, while the fth year wage
increase was to take effect on August 1, 1993 until the expiration of the CBA. 1
On May 31, 1993, the Company sought reconsideration of the May 14, 1993 order.
The motion was denied for lack of merit by the Secretary of Labor in a resolution dated
July 7, 1993. Hence, this petition for certiorari, alleging grave abuse of discretion on the
part of respondent Secretary of Labor.
The petitioner contends that respondent erred in making the fourth year wage
increase retroactive to August 1, 1992. It denies the power of the Secretary of Labor to
decree retroaction of the wage increases, as the respondent herself had stated in her
order subject of this petition, that it had been more than six (6) months since the expiration
of the third anniversary of the CBA and, therefore, the automatic renewal clause of Art.
253-A of the Labor Code had no application. Although petitioner originally opposed giving
retroactive effect to their agreement, it subsequently modi ed its stand and agreed that
the fourth year wage increase and the other provisions of the CBA be made retroactive to
the date the Secretary of Labor assumed jurisdiction of the dispute on March 10, 1993.
The petition is without merit. Art. 253-A of the Labor Code reads:
Terms of a collective bargaining agreement . — Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation
aspect is concerned, be for a term of ve (5) years. No petition questioning the
majority status of the incumbent bargaining agent shall be entertained and no
certi cation election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry
of such ve year term of the Collective Bargaining Agreement. All other provisions
of the Collective Bargaining Agreement shall be renegotiated not later than three
(3) years after its execution. Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within six (6) months from the date
of expiry of the term of such other provisions as xed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date.
If any such agreement is entered into beyond six months, the parties shall agree
on the duration of retroactivity thereof. In case of a deadlock in the renegotiation
of the collective bargaining agreement, the parties may exercise their rights under
this Code.

The respondent indeed stated in her order of May 14, 1993 that "this case is clearly
beyond the scope of the automatic renewal clause," 2 but she also stated in the same
order that "the parties have reached an agreement on all the renegotiated provisions of the
CBA" on January 14, 1993, i.e., within six (6) months of the expiration of the third year of
the CBA.
The signing of the CBA is not determinative of the question whether "the agreement
was entered into within six months from the date of expiry of the term of such other
provisions as xed in such collective bargaining agreement" within the contemplation of
Art. 253-A.
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 As already stated, on November 12, 1992, the Union sent the Company a notice of
deadlock in view of their inability to reconcile their positions on the main issues, 3
particularly on wages. The Union led a notice of strike. However, on December 18, 1992,
in a conference called by the NCMB, the Union and the Company agreed on a number of
provisions of the CBA, including the provision on wage increase, 4 leaving only the issue of
retirement to be threshed out. In time, this, too, was settled, so that in his record of the
January 14, 1993 conference, the Med-Arbiter noted that "the issues raised by the notice
of strike had been settled and said notice is thus terminated." It would therefore seem that
at that point, there was already a meeting of the minds of the parties, which was before the
February 1993 end of the six-month period provided in Art. 253-A.
The fact that no agreement was then signed is of no moment. Art. 253-A refers
merely to an "agreement" which, according to Black's Law Dictionary is "a coming together
of minds; the coming together in accord of two minds on a given proposition." 5 This is
similar to Art. 1305 of the Civil Code's de nition of "contract" as "a meeting of minds
between two persons." prcd

The two terms, "agreement" and "contract," are indeed similar, although the former is
broader than the latter because an agreement may not have all the elements of a contract.
As in the case of contracts, however, agreements may be oral or written. 6 Hence, even
without any written evidence of the Collective Bargaining Agreement made by the parties, a
valid agreement existed in this case from the moment the minds of the parties met on all
matters they set out to discuss. As Art. 1315 of the Civil Code states:
Contracts are perfected by mere consent, and from that moment, the
parties are bound not only to the ful llment of what has been expressly stipulated
but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law.

The Secretary of Labor found that "as early as January 14, 1993, well within the six
(6) month period provided by law, the Company and the Union have perfected their
agreement." 7 The claim of petitioner to the contrary notwithstanding, this is a nding of an
administrative agency which, in the absence of evidence to the contrary, must be affirmed.
Moreover, the order of the Secretary of Labor may be considered in the nature of an
arbitral award, pursuant to Art. 263(g) of the Labor Code, and, therefore, binding on the
parties. After all, the Secretary of Labor assumed jurisdiction over the dispute because
petitioner asked the Secretary of Labor to do so after the NCMB failed to make the parties
come to an agreement. It is also conceded that the industry in which the petitioner is
engaged is vital to the national interest. As stated in the Order issued by the Secretary of
Labor on March 10, 1993: 8
The services being provided by the Company evidently re ect their
indispensability to the normal operations of the Davao City Pier where millions of
crates and boxes of goods are loaded and unloaded monthly. The current
disruption, therefore, of the Company's services, if allowed to continue, will cause
serious prejudice and damages to the agricultural exporters, the cargo handlers,
the vessel owners, the foreign buyers of agricultural products and the entire
business sector in the area. These considerations and the dispute's implications
on the national economy warrant the intervention by this O ce to exercise its
power under Article 263(g) of the Labor Code, as amended.

In St. Luke's Medical Center, Inc . vs. Torres , 9 a deadlock also developed during the
CBA negotiations between management and the union. The Secretary of Labor assumed
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 jurisdiction and ordered the retroaction of their CBA to the date of expiration of the
previous CBA. As in this case, it was alleged that the Secretary of Labor gravely abused his
discretion in making his award retroactive. In dismissing this contention this Court held:
Therefore, in the absence of a speci c provision of law prohibiting
retroactivity of the effectivity of 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 and discretionary powers to determine
the effectivity thereof.

This case is controlled by the ruling in that case.

With respect to the issue of the creditability of the fourth and fth year wage
increases, the Court takes cognizance of the fact that the question was raised by the
Company only when the six-month period was almost over and all that was left to be done
by the parties was to sign their agreement. Before that, the Company did not qualify its
position. It should have known that crediting of wage increases in the CBA as compliance
with future mandated increases is the exception rather than the rule. For the general rule is
that such increases are over and above any increase that may be granted by law or wage
order. As held in Meycauayan College v. Drilon: 1 0
Increments to the laborers' nancial grati cation, be they in the form of
salary increases or changes in the salary scale are aimed at one thing —
improvement of the economic predicament of the laborers. As such they should
be viewed in the light of the State's avowed policy to protect labor. Thus, having
entered into an agreement with its employees, an employer may not be allowed to
renege on its obligation under a collective bargaining agreement should, at the
same time, the law grant the employees the same or better terms and conditions
of employment. Employee bene ts derived from law are exclusive of bene ts
arrived at through negotiation and agreement unless otherwise provided by the
agreement itself or by law.

For making a belated issue of "creditability," petitioner is correctly said to have

"delay[ed] the agreement beyond the six (6) month period so as to minimize its expenses
to the detriment of its workers" and its conduct to smack of "bad faith and [to run counter]
to the good faith required in Collective Bargaining." 1 1 If petitioner wanted to be given
credit for the wage increases in the event of future mandated wage increases, it should
have expressly stated its reservation during the early part of the CBA negotiations.
WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. cda

SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ., concur.

Footnotes
1. Rollo, p. 28.
2. Id., p. 25.
3. Respondent's Comment, p. 2, Rollo, p. 103.

4. Ibid.

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 5. BLACK'S LAW DICTIONARY 62 (5th ed., 1979).

6. Royal Lines, Inc. v. Court of Appeals, 143 SCRA 609 (1986).

7. Respondent's Comment, p. 8; Rollo, p. 109.
8. Rollo, p. 53.
9. 223 SCRA 779 (1993).
10. 185 SCRA 50 (1990).

11. Respondent's Comment, p. 9.

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