MRR YARD CREW UNION, ANTONIO VERCELES, ET AL., PETITIONERS, VS. PHILIPPINE NATIONAL RAIL­WAYS AND THE COURT OF INDUSTRIAL RELA­TIONS, RESPONDENTS.

MRR Yard Crew Union versus Philippine National Railways

The Case

This is a labor case about the meaning of the familiar bargaining promise of actual work, actual pay. The MRR Yard Crew Union, joined by Antonio Verceles and others, brought a petition before the Court of Industrial Relations against the Philippine National Railways, asking that Verceles be paid the salary attached to the higher position he had been designated to perform, and that he be given a permanent appointment to that position. The case matters because it fixes two rules a reviewee must carry into the examination room: a collective bargaining agreement on actual work, actual pay prevails over a designation that says "without additional compensation," and the salary differential runs from the date the employee actually began performing the higher duties, not from the date of a later agreement.

Procedural History

The union filed its petition with the Court of Industrial Relations in March 1967. On January 28, 1971, the industrial court issued an order recognizing Verceles' right to salary differentials, but only effective December 23, 1964 up to his retirement, and it refused to pass upon the prayer for a permanent appointment. The petitioners moved for reconsideration, asking that the differentials be computed from October 25, 1962 and that the prayer for permanent status be resolved. The motion was denied on April 21, 1971 for lack of merit. The petitioners then filed a notice of appeal, and the case reached the Supreme Court by appeal from the order of the Court of Industrial Relations.

Facts

Antonio Verceles was in charge of the Freight and Passengers Statistics Office of the Philippine National Railways. On October 25, 1962, by Office Order Number 2 of the same date, he was designated Acting Chief of the Statistical Division, Traffic Department, vice Jose Yason, who had been designated Assistant Traffic Manager for Freight and Express. The office order expressly stated that the designation carried no additional compensation. Verceles performed all the duties of a division chief, but he continued to receive only 3,720 pesos per annum, instead of the 6,600 pesos per annum attached to the position of division chief.

Before the designation, on May 24, 1962, the company and the PNR Supervisors Association had entered into a collective bargaining agreement containing an article on actual work, actual pay. On December 23, 1964, a new collective bargaining agreement renewed that of 1962 and substantially reincorporated the same stipulation. Meanwhile, Verceles wrote a series of letters, in March 1963, March 1964, January 1965, and October 1966, requesting a permanent appointment, and asking that if he was not qualified he be returned to his former position. The union then wrote the General Manager in January and February 1967, invoking the agreement and demanding the higher salary and a permanent appointment. When the company remained indifferent, the union filed the petition in March 1967.

The company answered, admitting some allegations but claiming that there was no such position as Chief of the Statistical Division, although it admitted having designated Verceles as Acting Chief. It later claimed that the position had been abolished in July 1965 after Yason retired on February 8, 1965, and that the duties were thereafter performed by the Traffic Manager. Verceles retired on June 13, 1967.

Issues

• Whether or not Antonio Verceles is entitled to salary differentials for actual work performed effective October 25, 1962, the date of his designation as Acting Chief, and not merely from December 23, 1964 as the industrial court directed.
• Whether or not the Court of Industrial Relations committed rank injustice when it refused to pass upon the prayer that Verceles be granted a permanent appointment as Chief of the Statistical Division.

Applicable Provisions

Article Ten of the May 24, 1962 collective bargaining agreement provides:

ACTUAL WORK, ACTUAL PAY. — The COMPANY and the ASSOCIATION hereby agree that whenever an employee or official with the category of Supervisor shall be assigned to a position of higher rank and salary, the COMPANY shall pay the corresponding salary attached to the position. It is understood, however, that this provision shall not apply to relief employees.

This is the agreement in force when Verceles was designated on October 25, 1962, and it is the provision that governs the effectivity of his salary differentials.

Article Nine of the December 23, 1964 collective bargaining agreement provides:

ACTUAL WORK, ACTUAL PAY. The COMPANY and the ASSOCIATION agree that whenever an employee in the category of Supervisor will be assigned to position of higher rank and salary, whether by automatic assumption of duties or by designation in acting or temporary capacity, the COMPANY is under obligation to pay said employee the corresponding salary pertaining to that higher position and shall undertake all necessary steps to the end that the employee concerned shall be paid the salary corresponding to the higher position. It is understood, however, that this provision shall not be applicable to relief employees if the period of such relief will not exceed fifteen (15) days.

This later agreement continued the stipulation by substantially reincorporating the earlier article, and it expressly covers a designation in an acting or temporary capacity.

Section 13 of the Industrial Peace Act provides:

That neither party shall terminate or modify an existing collective bargaining agreement, unless it has served a written notice upon the other party of the proposed termination or modification at least 30 days prior to the expiration date of the agreement, or in the absence of an express provision concerning the period of validity of such agreement prior to the time it is intended to have such termination or modification take effect.

This provision anchors the Court's holding that the 1962 agreement cannot be disregarded as to a designation made while it was in force.

Ruling

On the first issue, the Court ruled that Verceles is entitled to salary differentials effective October 25, 1962, the date of his designation, and not merely from December 23, 1964. The Court held that Article Ten of the 1962 agreement governs, because that was the agreement in force and operative when Verceles was designated, and the 1964 agreement merely continued the stipulation by substantially reincorporating it. To regard the 1962 agreement as inapplicable, the Court said, would do violence to Section 13 of the Industrial Peace Act, and would place a premium on a refusal by the company to comply with the terms of the agreement, which the Court had denounced as an unfair labor practice.

The Court also rejected the company's claim that the office of Chief of the Statistical Division did not exist, calling it a palpable lie, since the office existed before the designation and was headed by Jose Yason at 6,600 pesos per annum. The Court likewise rejected the claim of abolition by implication, holding that abolition of office must be done in good faith, and that the want of notice to Verceles was a clear badge of bad faith. On the designation being "without additional compensation," the Court held that this cannot prevail over the actual work, actual pay provisions of the collective bargaining agreements. The Court added that the employee's having received the lower salary does not militate against him, citing the rule that a satisfaction receipt does not result in waiver, since the law does not consider as valid any agreement to receive less compensation than what a worker is entitled to recover.

On the second issue, the Court held that the prayer for permanent appointment had been rendered moot and academic by Verceles' retirement in 1967, there being no proof that his retirement was involuntary.

Doctrine

A collective bargaining stipulation on actual work, actual pay prevails over a designation that expressly states "without additional compensation." An employee assigned to a position of higher rank and salary, whether by automatic assumption of duties or by designation in an acting or temporary capacity, is entitled to the salary attached to that higher position. The salary differential runs from the date the employee actually began performing the higher duties, under the agreement then in force, and not from the date of a later agreement that merely reincorporates the same stipulation. Abolition of office cannot be done by implication and must be exercised in good faith. A prayer for permanent appointment is rendered moot and academic by the employee's supervening retirement.

Disposition

The Court modified the order of the Court of Industrial Relations so that Antonio Verceles is entitled to salary differentials effective October 25, 1962 until his retirement on June 13, 1967, and affirmed the order in all other respects, without costs. The petitioners prevailed on the salary differentials.

Remember This

The single line to memorize is that actual work, actual pay under the collective bargaining agreement prevails over a designation "without additional compensation," and the differential runs from the date the higher duties were actually performed. Examiners use this case to test the effectivity of salary differentials and the rule that abolition of office must be in good faith and cannot be implied.