Benson Industries Employees Union vs.

Benson Industries
G.R. No. 200746

August 6, 2014

Topic: CBA as an informal source of labor law.

Facts: Respondent Benson Industries (BI) is the employer and Petitioner Benson Industries Employees
Union (BIEU) is the Employee-Union. BI sent its employees a notice informing them of their intended
termination from employment due to the closure and/or cessation of business operations. The employees,
through BIEU, filed a notice of strike, but it did not push through because an amicable settlement was
occurred, in which the parties agreed that BI will pay its employees separation pay, computed 15 days for
every year of service. Petitioners proffered a claim for payment of additional separation pay at the rate of
4 days for every year of service, invoking their Collective Bargaining Agreement (CBA). BI countered that
the law does not require them to pay separation benefits when the closure is due to serious losses,
pursuant to Art. 297 of the Labor Code
Issue: Can the additional separation pay be given to the employees pursuant to the CBA?
Ruling: Yes. The obligation to pay separation benefits in this case, is not sourced from law but from
contract, which is the CBA. For such exemption to obtain against a contract, such as a CBA, the tenor of
the parties agreement ought to be similar to the laws tenor. When the parties, however, agree to deviate
therefrom, and unqualifiedly covenant the payment of separation benefits irrespective of the employers
financial position, then the obligatory force of that contract prevails and its terms should be carried out to
its full effect. Verily, it is fundamental that obligations arising from contracts have the force of law between
the contracting parties and thus should be complied with in good faith; and parties are bound by the
stipulations, clauses, terms and conditions they have agreed to, the only limitation being that these
stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy.
A collective bargaining agreement 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.
In this case, it was not found that the CBA is not contrary to law, morals, good customs, public order or
public policy, thus it is valid and subsisting, and therefore the employer is required to pay the benefits.