Goya Inc. v GI Employees Union- FFW

G.R. No. 170054               January 21, 2013


Goya, Inc., hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional services in its factory in Makati. Goya, Inc. Employees Union–FFW (Union) requested for a grievance conference on the ground that the contractual workers do not belong to the categories of employees stipulated in the existing CBA.

The Union asserts that  hiring of contractual employees, is not a management prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP). It noted that the contractual workers engaged have been assigned to work in positions previously handled by regular workers and Union members, in effect violating Section 4, Article I of the CBA.

The Company argued that: (a) the law expressly allows contracting and subcontracting arrangements; (b) the engagement of contractual employees did not, in any way, prejudice the Union, since not a single employee was terminated and neither did it result in a reduction of working hours nor a reduction or splitting of the bargaining unit c) Section 4, Article I of the CBA merely provides for the definition of the categories of employees and does not put a limitation on the Company’s right to engage the services of job contractors or its management prerogative to address temporary/occasional needs in its operation.

When the matter remained unresolved, the grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration. They they agreed to submit for resolution the solitary issue of “[w]hether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence.

  • The Voluntary Arbiter dismissed the complaint for being purely speculative and for lacking in factual basis but the Company was directed to observe and comply with its commitment under the CBA and found that the  engagement of PESO is not in keeping with the intent and spirit of the CBA provision in question. However, it must be stressed that the right of management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA. Given the foregoing, the Company’s engagement of PESO for the given purpose is indubitably a violation of the CBA.
  • The CA sustained the ruling of VA and held that the hiring of contractual employees from PESO was not in keeping with the intent and spirit of the CBA.


(1) WON the VA is empowered to rule on a matter not covered by the issue submitted for arbitration.

(2) Whether or not the Company is guilty of unfair labor practice in engaging the services of PESO, a third party service provider which is perceived as a violation of the CBA


(1) YES. In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonably assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without back pay.

Law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was created – speedy labor justice.

(2) NO. While the  Company’s engagement of PESO was indeed a management prerogative, this is not without limitation. In contracting out services, the management must be motivated by good faith and the contracting out should not be resorted to circumvent the law or must not have been the result of malicious arbitrary actions. In the case at bench, the CBA of the parties has already provided for the categories of the employees in the Company’s establishment. These categories of employees particularly with respect to casual employees serve as limitation to the Company’s prerogative to outsource parts of its operations especially when hiring contractual employees. As stated earlier, the work to be performed by PESO was similar to that of the casual employees. With the provision on casual employees, the hiring of PESO contractual employees, therefore, is not in keeping with the spirit and intent of their CBA.

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions.


A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.

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