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Labor Law 2 A2010 - 1 - DisiniBACKGROUND MATERIAL

FROM COMPULSORY ARBITRATION TO COLLECTIVE BARGAINING INTHE PHILIPPINESCicero Calderon

2 Contrasting Approaches to the Regulation of Labor Relations1. System of Compulsory Arbitration (1936)2. Collective Bargaining

COMPULSORY ARBITRATION

Factors that Contributed to its Adoption- On the basis of Art. 2, sec. 5 and Art. 14, sec. 6 of the 1935 Constitution, theNational Assembly of the Philippines in 1936, adopted compulsory arbitration byproviding for a Court of Industrial Relation under C.A. No. 103- The adoption of compulsory arbitration was a deliberate response of the policy-makers to the social scene characterized by acute agrarian and industrial unrestof disturbing proportions. Other factors contributing to the adoption were:1. the poor state of organization of the workers and farm workers and theresultant2. lack of effective collective bargaining3. the customary reliance of the Filipino upon courts of justice in the adjudication

of controversies of whatever nature3. the desire to experiment with compulsory arbitration which had been rejectedat least 3 times under American Rule4. the apparent inadequacy or effectiveness of the Governments policy of non-intervention in the area of labor management relations5. the strong influence of the then President, Manuel L. Quezon who advocatedits adoption before the National Assembly

Court of Industrial Relation- The CIR was organized at the close of 1936 but started to function only in1937.- The Courts docket started to clog in 1947. This number rose very rapidly onthe succeeding 6 years, from 137 in 1948 to over 1, 500 in 1953.- The adjudication of labor disputes was being delayed and that the mainmachinery to enforce the system of compulsory arbitration was unable, or was

no longer able, to cope adequately and effectively with h responsibilities placedupon it.- Major factors responsible for the accumulation of cases:1. Lack of adequate support from the Government itself2. Consequent inefficiency of the Court3. The extremely generous discretionary powers vested in the Court to grantcontinuances, modify its orders and hear motions for reconsideration (sitting asfull court) and to other aspects of its procedure.

Weaknesses of the System of Compulsory Arbitration1. There were varied concepts of what constituted fair and just wage, just orunjust cause for dismissal, public interest, social justice and other technicalabstractions. Under such conditions instability and confusion characterized labormanagement relations.2. A judicial approach was adopted to the settlement of labor disputes, with the

result that policy considerations and economic factors played a less importantrole than technicalities of law.3. Excessive dependence on the CIR.4. The system of compulsory arbitration and the law failed to provide adequateprotection for the exercise of the right of self-organization by the workers.5. The Supreme Court and the CIR failed to perceive that the best means ofprotecting the workers was to help them build strong unions free from companydomination.6. The legal provisions on strikes and the wide latitude given to the CIR inexercising powers to issue injunctions made it difficult to use strikes and otherconcerted activities, or the threat of them, as a means of improving thebargaining position of labor.7. The CIR found that not all differences between workers and employers couldbe proper subjects of compulsory arbitration.8. The failure of the CIR to resolve conflicting demands for recognition of unions

for collective bargaining purposes did not lead to stability in labor managementrelations.

An Evaluation of the System of Compulsory Arbitration- The basic objectives underlying the adoption of compulsory arbitration1. To afford protection to labor because of the great disparity in bargainingpower- On the whole, terms and conditions of employment were improved for those

workers who had the courage and staying power to fight their case before theCIR. But its effectiveness in affording protection to labor was greatly reduced

when disputes dragged out in interminable litigation and the Governmentfailed to meet the increased demand for the Courts services.2. Stability in Labor Management Relations- Labor management greatly improved for a while. The effectiveness of thesystem in promoting stability of labor-management relations was greatlyreduced, however, during the post-war years.- Under compulsory arbitration an interesting phenomenon developed: theemergence of a labor movement under the leadership of lawyers.3. Stability of Society in General- The Cir appeared effective in playing the role from its organization untilthe Philippines were engulfed in the Second World War in 1941.- It was unable to play the role ineffectively during the post-war years. Thisfailure contributed to no small measure to the resurgence of agrarianunrest and strikes in the country.

THE ADOPTIONOF COLLECTIVE BARGAINING- Collective bargaining was adopted as the labor relations policy of thePhilippines on June 17, 1953, when R.A. No. 875 was approved.- Its adoption can be attributed to several factors the most significant ofwhich were:1. The rising discontent of labor groups with the operation of the CIRbecause of protracted delays in the adjudication cases.2. The exposure of Filipino labor leaders to concepts of collective

bargaining resulting either from contacts with foreign labor leaders visitingthe Philippines or from visits made to other countries by several of theFilipino labor leaders3. The participation by the Philippines in the adoption of 2 importantConventions by the International .Labor Conference namely the Freedomof Association and Protection of the Right to Organise Convention, 1948,and the Right to Organise and Collective Bargaining Convention, 1949.4. The influence of experience in the United States under the NationalLabor Relations Act of 1953 ( Wagner Act), which greatly encouraged thedevelopment of trade unions and collective bargaining in that country andthe enactment of the Labor Management Relations Act of 1947 (Taft-Hartley).

Basic Features of the Act of 19531. Registration of Labor Organizations

- to obtain the status of a legitimate labor organization and to avail itself ofthe right to be certified as the exclusive bargaining representative in anappropriate bargaining unit and act as such a labor organization,association or union must register with the Department of Labor by filingwith the Office of the Secretary of Labor notice of its organization andexistence.2. Certification Election- When a number of union seeks to bargain for a particular group ofworkers or when the employer doubts the claim of a particular union to berepresentative of the majority of the workers in his factory orestablishment, the CIR shall order the Department of Labor to conduct acertification election by secret ballot, either on its own initiative or when it ispetitioned to do so by the employer or by at least 10% of the employees inthe appropriate unit.3. Collective Bargaining Process

- In recognition the real industrial peace cannot be achieved bycompulsion of law and that sound stable industrial relations must rest, inkeeping with the spirit of democratic institutions, on an essentiallyvoluntary basis the Act provides that no court of the Philippines shallhave the power to set wages, rates of pay, hours of employment orconditions of employment except as in this Act is otherwise provided.4. Unfair Labor Practice- The Act prohibits certain practices on the part of employers and tradeunions which it characterizes as unfair labor practices.5. Procedure for the Prevention of Unfair Labor Practices- The Act gives the CIR, following a special procedure, the power toprevent unfair labor practices, with exclusive jurisdiction to hear allcomplaints relating thereto.6. Labor Disputes in Industries Indispensable to the National Interest- In cases of labor disputes in industries indispensable to the national

interest and certified as such by the President of the Philippines to the CIR,the Court is empowered by the Act to issue restraining orders enjoining anemployer from locking out his employees and employees from striking.7. The Labor Injunction- The Act provides that, except in labor disputes affecting the national, norestraining order or temporary or permanent injunction shall be issued inany case involving or growing out of a labor dispute except to restrain thecommission of violence, fraud and other illegal acts committed in thecourse of the labor dispute.8. Role of State Agencies


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Labor Law 2 A2010 - 2 - Disini- Though the Industrial Peace Act was designed to reduce the role of the Statein the field of labor-management relations to a minimum, it also recognizes thatthe State cannot merely perform a passive role.2 state agencies play an important part in the collective bargaining process,namely the Court of Industrial Relations and the Department of Labor and arecharged with various functions under the Act.

Effects of the New Policy- Increase in the number of trade unions- Development of a more cohesive labor movement- Emergence of union leadership from the rank and file- Collective bargaining agreements- Labor disputes

Difficulties Encountered- Ease of registering unions- Delay in determination of unfair labor practice cases- Delay in hearing petitions for certification elections- Excessive use of injunctions in labor disputes- Failure to adopt voluntary arbitration as a method of settling disputes.

Possible Avenues of Improvement- Requiring the officers of a union applying for registration to make a sworn

statement that the union is free from employer support, control or influence.- The CIR should be given exclusive power to issue labor injunctions andconduct certification elections. The appeals to the Supreme Court should not beallowed in certification election cases.- The CIR should not be limited to granting of relief in the form of cease anddesist orders or reinstatement with or without back pay in cases where workershave been dismissed for trade union membership or activity; it should beempowered to award damages in proper cases.- The Labor Management Advisory Council of the Department of Labor shouldbring the various Chambers of Commerce and the major labor \federationstogether to discuss the question of voluntary arbitration as a final step in thegrievance machinery and a substitute for direct action in the enforcement ofcollective bargaining and assume responsibility for the adoption of appropriatemeasures for its general introduction.- The Conciliation Service should be provided with enough trained conciliators to

ensure that the process of collective bargaining will operate smoothly.- Backing these measures is the program of workers education.

Conclusion- 3 important stages of development of the labor relations policy of thePhilippines Government:1. Before 1936 pattern of non-interference on the part of the Government2. As early as 1933 when the world found itself in the throes of economicdepression, Frank Murphy, stated before the Legislature that a responsibilityrests upon government for control and guidance in a field that was formerly leftto the automatic regulation of self-interest and individual ambition and the policyof non-interference was completely abandoned when compulsory arbitrationwas adopted under C.A. 103.3. Re-examination of policy and the adoption of collective bargaining under theIndustrial Peace Act of 1953 reflected as new and new objectives.

I. INTRODUCTORY MATERIALS1.1 STATUTORY BASIS

B.F. GOODRICH PHILIPPINES, INC. vs. B.F. GOODRICH (MARIKINAFACTORY) CONFIDENTIAL & SALARIED EMPLOYEES UNION-NATU, B.F.GOODRICH (MAKATI OFFICE) CONFIDENTIAL & SALARIED EMPLOYEES

UNION-NATU, and COURT OF INDUSTRIAL RELATIONS49 SCRA 532

FERNANDO; February 28, 1973Facts:The Goodrich Unions were seeking to be recognized as the bargaining agent ofBF Goodrich Phils employees so that there could negotiations for a collectivecontract. BF Goodrich countered this by filing for two petitions for certificationelection with the CIR. Strike notices were sent to the company by the union

demanding recognition and soon after a strike was actually held. The companythen filed a case of illegal strike and unfair labor practice against the unions.

ISSUE:WON the determination of an unfair labor practice case, brought against unions,must precede the holding of a certification election

HELD: No.

REASONING:

- If under the circumstances disclosed, management is allowed to haveits way, the result might be to dilute or fritter away the strength of anorganization bent on a more zealous defense of labor's prerogatives.

- This is not to say that management is to be precluded from filing anunfair labor practice case. It is merely to stress that such a suit shouldnot be allowed to lend itself as a means, whether intended or not, toprevent a truly free expression of the will of the labor group as to theorganization that will represent it.

- There is no valid reason then for the postponement sought. This is oneinstance that calls for the application of the maxim, lex dilationessemper exhorret. (The law abhors delays.)

- The law clearly contemplates all the employees, not only some of them,to take part in the certification election. (Some of the employees couldpossibly lose such status, by virtue of a pending unfair labor practicecase, if such case is to be resolved first before the election.)

- Another reason (re: no point in the postponement of said election) isthat even if the company wins in the pending case, it does not meanthat the employees involved automatically would lose their jobs makingthem ineligible to participate in the cert. election. (Ergo the respondentcourt decided in the negative.)

- Besides, it was said in General Maritime Stevedores' Union v. SouthSea Shipping Line: the question of whether or not a certification electionshall be held "may well be left to the sound discretion of the Court of

Industrial Relations, considering the conditions involved in the case."

FN 25 under page 542

- As a matter of fact, the only American Supreme Court decision citedin the petition, National Labor Relations Board v. A.J. Tower Co., 25

likewise, sustains the same principle (under Gen. Maritime case). Itwas there held that the discretion of the labor tribunal, in this case,the National Labor Relations Board of the United States, is not lightlyto be interfered with. (The issue in that case, concerns the procedureused in elections under the National Labor Relations Act in whichemployees choose a statutory representative for purposes ofcollective bargaining. The propriety of the National Labor RelationsBoard's refusal to accept an employers post-election challenge to theeligibility of a voter who participated in a consent election must bedetermined. The First Circuit Court of Appeals set aside the Board's

order and so the matter was then taken to the US SC on certiorari.)- In reversing the Circuit Court of Appeals, Justice Murphy made clear

the acceptance of such a doctrine in the light of the National LaborRelations Act thus: "As we have noted before, Congress hasentrusted the Board with a wide degree of discretion in establishingthe procedure and safeguards necessary to insure the fair and freechoice of bargaining representatives by employees."

- In the United States as in the Philippines, the decision in suchmatters by the administrative agency is accorded the utmostrespect. CJ Concepcion: in such proceedings, thedetermination of what is an appropriate bargaining unit is"entitled to almost complete finality."

- The prevailing principle then on questions as to certification, as wellas in other labor cases, is that only where there is a showing of clearabuse of discretion would this Tribunal be warranted in reversing theactuation of respondent Court. There is no showing of such a failingin this case.

DISPOSITIVE : The petition for certiorari is dismissed .

1.2 DEFINITIONS1.2.1 Employer and employee

FEATI UNIVERSITY V BAUTISTA18 SCRA 1191

ZALDIVAR; December 27, 1966

NATUREConsolidated cases/petitions for certiorari, prohibition w/ writ of preliminaryinjunction

FACTS

25 329 US 324 (1946). Reference was made in the earlier portion of this opinion that

the petition contains "copious references to National Labor Relations Board cases."While not to be discouraged as the Industrial Peace Act owes much to the NationalLabor Relations Act of 1935, commonly known as the Warner Act, as well as to theNorris-La Guardia Act of 1932, still their persuasive force would depend on the fullerdiscussion of the facts in each of the cases cited and the rulings arrived at. Suchfeature is conspicuously lacking in the petition.


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Labor Law 2 A2010 - 3 - Disini-Jan 14, 1963: the President of the Faculty Club wrote to the President of theUniversity a letter informing the latter of the organization of the Faculty Club as alabor union, duly registered with the Bureau of Labor Relations-Jan 22, 1963: another letter was sent, to which was attached a list of demandsconsisting of 26 items, and asking the President of the University to answerwithin ten days from date of receipt thereof.-The University questioned the right of the Faculty Club to be the exclusiverepresentative of the majority of the employees and asked proof that the FacultyClub had been designated or selected as exclusive representative by the vote ofthe majority of said employees.-Feb 1, 1963: the Faculty Club filed with the Bureau of Labor Relations a noticeof strike alleging as reason therefore the refusal of the University to bargaincollectively with the representative of the faculty members.-Feb 18, 1963: the members of the Faculty Club went on strike and establishedpicket lines in the premises of the University, thereby disrupting the schedule ofclasses.-March 1, 1963: the Faculty Club filed Case No. 3666-ULP for unfair laborpractice against the University, but which was later dismissed (on April 2, 1963after Case 41-IPA was certified to the CIR).-March 7, 1963: a petition for certification election, Case No. 1183-MC, was filedby the Faculty Club in the CIR

ISSUES

1. WON the definition of employer in RA875 covers an educational institutionlike Feati University2. WON the members of the Faculty Club are independent contractors (If theyare, then they are not employees within the purview of the said Act.)

HELD1. YES. It is true that the SC has ruled that certain educational institutions andother juridical entities are beyond the purview of RA875 in the sense that theCIR has no jurisdiction to take cognizance of ULP charges against them, but theprincipal reason in ruling in those cases is that those entities are not organized,maintained and operated for profit and do not declare dividends to stockholders.-In the decisions in the cases of the Boy Scouts of the Philippines, the Universityof San Agustin, the UST, and LaConsolacion College, this Court was notunanimous in the view that the Industrial Peace Act (Republic Act No. 875) isnot applicable to charitable, or non-profit organizations which include

educational institutions not operated for profit. There are members of this Courtwho hold the view that the Industrial Peace Act would apply also to non-profitorganizations or entities, the only exception being the Government, includingany political subdivision or instrumentality thereof, in so far as governmentalfunctions are concerned. However, in the Far Eastern University case this Courtis unanimous in supporting the view that an educational institution that isoperated for profit comes within the scope of the Industrial Peace Act. Weconsider it a settled doctrine of this Court, therefore, that the Industrial PeaceAct is applicable to any organization or entity whatever may be its purpose whenit was created.-TEST: Does the University operate as an educational institution for profit?Does it declare dividends for its stockholders? If it does not, it must be declaredbeyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875must apply to it. In this case, Feati University itself admits that it has declareddividends. CIR also found that the University is not for strictly educational

purposes and that "It realizes profits and parts of such earning is distributed asdividends to private stockholders or individuals. Under this circumstance, and inconsonance with the rulings in the decisions of this Court, above cited, it isobvious that Republic Act No. 875 is applicable to herein petitioner FeatiUniversity.-RA 875, Sec 2(c): The term employer includes any person acting in the interestof an employer, directly or indirectly, but shall not include any labor organization(otherwise than when acting as an employer) or any one acting in the capacityor agent of such labor organization.-It will be noted that in defining the term "employer" the Act uses the word"includes" and not the word "means". In using the word "includes" and not"means", Congress did not intend to give a complete definition of "employer",but rather that such definition should be complementary to what is commonlyunderstood as employer. Congress intended the term to be understood in abroad meaning because, firstly, the statutory definition includes not only "a

principal employer but also a person acting in the interest of the employer"; and,secondly, the Act itself specifically enumerated those who are not included inthe term "employer", namely: (1) a labor organization (otherwise thanwhen acting as an employer), (2) anyone acting in the capacity of officer oragent of such labor organization [Sec. 2(c)], and (3) the Government and anypolitical subdivision or instrumentality thereof insofar as the right to strike for thepurpose of securing changes or modifications in the terms and conditions ofemployment is concerned (Section 11). Among these statutory exemptions,educational institutions are not included; hence, they can be included in the term"employer". This Court, however, has ruled that those educational institutions

that are not operated for profit are not within the purview of Republic ActNo. 875.-RA 875 does not give a comprehensive but only a complementarydefinition of the term "employer". The term encompasses those that are inordinary parlance "employers." What is commonly meant by "employer"?The term "employer" has been given several acceptations. The lexicaldefinition is "one who employs; one who uses; one who engages orkeeps in service;" and "to employ" is "to provide work and pay for; toengage one's service; to hire." [see full case for other definitions of theword employer as provided for by the Workmen's Compensation Act,the Minimum Wage Law, the Social Security Act , etc]-Jurisprudence: An employer is one who employs the services of others;one for whom employees work and who pays their wages or salaries(Black Law Dictionary, 4th ed., p. 618).-Under none of these definitions may the University be excluded. TheUniversity engaged the services of the professors, provided them work,and paid them compensation or salary for their services. Even if theUniversity may be considered as a lessee of services under a contractbetween it and the members of its Faculty, still it is included in the term"employer". "Running through the word `employ' is the thought that therehas been an agreement on the part of one person to perform a certainservice in return for compensation to be paid by an employer.

2. NO.-RA 875, Section 2 (d): The term "employee" shall include any employeeand shall not be limited to the employee of a particular employer unlessthe act explicitly states otherwise and shall include any individual whosework has ceased as a consequence of, or in connection with, anycurrent labor dispute or because of any unfair labor practice and whohas not obtained any other substantially equivalent and regularemployment.-This definition, by the use of the term include is again complementary.This Court has defined the term "employer" as "one who employs theservices of others; one for whom employees work and who pays theirwages or salaries. Correlatively, an employee must be one who isengaged in the service of another; who performs services for another; whoworks for salary or wages.-It is admitted by the University that the striking professors and/or

instructors are under contract to teach particular courses and that they arepaid for their services. They are, therefore, employees of the University.-The contention of the University that the professors and/or instructors areindependent contractors, because the University does not exercise controlover their work, is likewise untenable. This Court takes judicial notice that auniversity controls the work of the members of its faculty; that a universityprescribes the courses or subjects that professors teach, and when andwhere to teach; that the professors' work is characterized by regularity andcontinuity for a fixed duration; that professors are compensated for theirservices by wages and salaries, rather than by profits; that the professorsand/or instructors cannot substitute others to do their work without theconsent of the university; and that the professors can be laid off if theirwork is found not satisfactory. All these indicate that the university hascontrol over their work; and professors are, therefore, employees and notindependent contractors.

-Moreover, even if university professors are considered independentcontractors, still they would be covered by RA 875. This law modelled afterthe Wagner Act, or the National Labor Relations Act, of the United States,did not exclude "independent contractors" from the orbit of "employees". Itwas in the subsequent legislation the Labor Management Relation Act(Taft-Harley Act) that "independent contractors" together with agriculturallaborers, individuals in domestic service of the home, supervisors, andothers were excluded.

Disposition Petition for certiorari & prohibition with preliminary injunctiondismissed. Writs prayed for therein denied. Writ of preliminary injunctiondissolved. Costs against Feati University.

NYK INTERNATIONAL KNITWEAR CORP. PHILS. V NLRC (PUBLICO)397 SCRA 607

QUISUMBING; February 17, 2003

NATUREPetition for review on certiorari

FACTS


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Labor Law 2 A2010 - 4 - Disini- Petitioner NYK hired respondent Virginia Publico as a sewer. She was paid ona piece-rate basis, and was required to work from 8 AM to 12 midnight.- May 7, 1997 Publico left the work place early as she was not feeling well dueto flu. Publico did not come to work the next day. Due to this absence, Publicowas informed by Stephen Ng (owner of NYK) that she was dismissed.

ISSUE/S1. WON there was illegal dismissal;2. WON petitioners are solidarily liable to pay backwages and separationpay as there was no malice or bad faith.

HELD1. YESRatio The petitioners allegations of abandonment cannot stand the unswervingconclusion by the NLRC and Labor Arbiter.Reasoning Petitioners raised factual questions which are improper in a petitionfor review on certiorari. Finding of facts of the NLRC, particularly in a casewhere the NLRC and the Labor Arbiter are in agreement, are deemed bindingand conclusive upon this Court.2. YESRatio Cathy Ng falls within the meaning of an employer as contemplated bythe Labor Code, who may be held jointly and severally liable for the obligationsof the corporation to its dismissed employees.

Reasoning Since a corporation is an artificial person, it must have an officerwho can be presumed to be the employer, being the person acting in theinterest of the employer.1In this case, Cathy Ng, in her capacity as manager, isdeemed the employer, and is thus solidarily liable regardless of absence malice.She cannot be exonerated from her liability in the payment to privaterespondent.

Disposition Instant petition is denied.

1.2.2 LABOR ORGANIZATION- LEGITIMATELABOR ORGANIZATION

AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES V. CIR76 SCRA 274

CASTRO; April 15, 1977

Definition of Legitimate Labor Organization:Section 2(e) of R.A. 875 defines "labor organization" as any union or associationof employees which exist, in whole or in part, for the purpose of the collectivebargaining or dealing with employers concerning terms and conditions ofemployment." The emphasis of Industrial Peace Act is clearly on the pourposesfor which a union or association of employees established rather than thatmembership therein should be limited only to the employees of a particularemployer. Under Section 2(h) of R.A 875 "representative" is define as including"a legitimate labor organization or any officer or agent of such organization,whether or not employed by the employer or employee whom he represents." Itcannot be overemphasized likewise that labor dispute can exist "regardless ofwhether the disputants stand in the proximate relation of employer andemployee.

DUNLOP SLAZENGER V SEC. OF LABOR (RUIZ)300 SCRA 120

PUNO; DECEMBER 11, 1998

NATUREPetition for certiorari

FACTS- Respondent union filed a Petition for Certification Election among thesupervisory, office and technical employees of the petitioner company beforethe DOLE, Regional Office No. III.- Petitioner company filed a motion to dismiss based on 1) that the respondentunion is comprised of supervisory and rank-and-file employees and cannot actas bargaining agent for the proposed unit; (2) that a single certification electioncannot be conducted jointly among supervisory and rank-and-file employees;

and (3) that the respondent union lacks legal standing since it failed to submit itsbooks of accounts.- Respondent alleges that it is composed only of supervisory employees andthat it has no obligation to attach its books of accounts since it is a legitimatelabor organization.- The mediator arbiter granted the petition of the union. It said that thecontention of the respondent that the petitioning union is composed of bothsupervisory and rank and file employees is not sufficient to dismiss the petition.It can be remedied thru the exclusion-inclusion proceedings wherein those

1A.C. Ransom Labor union-CCLU v NLRC

employees who are occupying rank and file positions will be excluded fromthe list of eligible voters. The secretary of labor affirmed.

ISSUE/SWON the union can be composed of supervisory and rank and fileemployees

HELDNO.Ratio Article 245 of the Labor Code clearly provides that "supervisoryemployees shall not be eligible for membership in a labor organization ofthe rank-and-file employees.Reasoning Public respondent gravely misappreciates the basic antipathybetween the interest of supervisors and the interest of rank-and-fileemployees. There is a irreconcilability of their interests which cannot becured even in the exclusion-inclusion proceedings.-Appropriate bargaining unit: Group of employees of a giver employer,composed of all or less than the entire body of employees, which thecollective interests of all the employees, consistent with equity to theemployer, indicate to be best suited to serve reciprocal rights and duties.

Disposition Petition is granted.

Lopez Sugar Corporation v. Sec. of Labor (and NATIONALCONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF THEPHILIPPINES (NACUSIP) and COMMERCIAL AND AGRO-INDUSTRIAL

LABOR ORGANIZATION (CAILO))Vitug ; August 1995

247 SCRA 1

Facts-The Med-Arbiter, sustained by the Secretary of Labor and Employment,has ruled that Art. 257 is mandatory and give him no other choice than toconduct a certification election upon the receipt of the correspondingpetition.

"Art. 257. Petitions in unorganized establishments. - In anyestablishment where there is no certified bargaining agent, a certificationelection shall automatically be conducted by the Med-Arbiter upon the filing

of a petition by a legitimate labor organization."-National Congress of Unions in the Sugar Industry of the Philippines-TUCP ("NACUSIP-TUCP") filed with the Department of Labor andEmployment ("DOLE") a petition for direct certification or for certificationelection to determine the sole and exclusive collective bargainingrepresentative of the supervisory employees of herein petitioner, LopezSugar Corporation ("LSC"). NACUSIP-TUCP averred that it was alegitimate national labor organization; that LSC was employing 55supervisory employees, the majority of whom were members of the union;that no other labor organization was claiming membership over thesupervisory employees; that there was no existing collective bargainingagreement covering said employees; and that there was no legalimpediment either to a direct certification of NACUSIP-TUCP or to theholding of a certification election.-LSC contended it. NACUSIP-TUCP submitted Charter Certificate No. 003-

89, dated 20 July 1989, of the NACUSIP-TUCP Lopez Sugar CentralSupervisory Chapter.-LSC appealed to the DOLE and asseverated that the order was a patentnullity and that the Med-Arbiter acted with grave abuse of discretion, Sec.of Labor denied it. Petition for certiorari was filed.

IssueWON the certification election should push through

HeldNo, because the labor organization is not legitimate.

It was held in Progressive Development Corporation vs. Secretary,Department of Labor and Employment:"But while Article 257 cited by the Solicitor General directs the automatic

conduct of a certification election in an unorganized establishment, it alsorequires that the petition for certification election must be filed by alegitimate labor organization. Article 212(h) defines a legitimate labororganization as 'any labor organization duly registered with the DOLE andincludes any branch or local thereof.' Rule 1, Section 1(j), Book V of theImplementing Rules likewise defines a legitimate labor organization as 'anylabor organization duly registered with the DOLE and includes any branch,local or affiliate thereof .' "

Indeed, the law did not reduce the Med-Arbiter to an automaton whichcan instantly be set to impulse by the mere filing of a petition for


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Labor Law 2 A2010 - 5 - Disinicertification election. He is still tasked to satisfy himself that all theconditions of the law are met, and among the legal requirements is thatthe petitioning union must be a legitimate labor organization in goodstanding.The petition for certification election, in the case at bench, was filed by theNACUSIP-TUCP, a national labor organization duly registered with the DOLE.The legitimate status of NACUSIP-TUCP might be conceded; being merely,however, an agent for the local organization (the NACUSIP-TUCP Lopez SugarCentral Supervisory Chapter), the federation's bona fide status alone wouldnot suffice. The local chapter, as its principal, should also be a legitimatelabor organization in good standing. Accordingly, in ProgressiveDevelopment, we elucidated:"In the case of union affiliation with a federation, the documentary requirementsare found in Rule II, Section 3(e), Book V of the Implementing Rules, which weagain quote as follows:"'(c ) The local or chapter of a labor federation or national union shall have andmaintain a constitution and by laws, set of officers and books of accounts. Forreporting purposes, the procedure governing the reporting of independentlyregistered unions, federations or national unions shall be observed.'"Since the 'procedure governing the reporting independently registered unions'refers to the certification and attestation requirements contained in Article 235,paragraph 2, it follows that the constitution and by-laws, set of officers andbooks of accounts submitted by the local and chapter must likewise comply with

these requirements. The same rationale for requiring the submission of dulysubscribed documents upon union registration exists in the case of unionaffiliation. Moreover, there is greater reason to exact compliance with thecertification and attestation requirements because, as previously mentioned,several requirements applicable to independent union registration are no longerrequired in the case of the formation a local or chapter. The policy of the law inconferring greater bargaining power upon labor unions must be balanced withthe policy of providing preventive measures against the commission of fraud."A local or chapter therefore becomes a legitimate labor organization onlyupon submission of the following to the BLR:"1) A charter certificate, within 30 days from its issuance by the labor federationor national union, and"2) The constitution and by-laws, a statement on the set of officers, and thebooks of accounts all of which are certified under oath by the secretary ortreasurer, as the case may be, of such local or chapter, and attested to by its

president."Absent compliance with these mandatory requirements, the local or chapterdoes not become legitimate labor organization."

The only document extant on record to establish the legitimacy of the NACUSIP-TUCP Lopez Sugar Central Supervisory Chapter is a charter certificate andnothing else.DispositionWHEREFORE, the assailed Decision of the Secretary of Labor, dated 06 March1990, affirming that of the Med-Arbiter, is ANNULLED and SET ASIDE. Thepetition for certification election is dismissed.

1.2.3 LABOR DISPUTE

FEATI UNIVERSITY V BAUTISTA

18 SCRA 1191ZALDIVAR; December 27, 1966

NATUREConsolidated cases/petitions for certiorari, prohibition w/ writ of preliminaryinjunction

FACTS-Jan 14, 1963: the President of the Faculty Club wrote to the President of theUniversity a letter informing the latter of the organization of the Faculty Club as alabor union, duly registered with the Bureau of Labor Relations-Jan 22, 1963: another letter was sent, to which was attached a list of demandsconsisting of 26 items, and asking the President of the University to answerwithin ten days from date of receipt thereof.-The University questioned the right of the Faculty Club to be the exclusive

representative of the majority of the employees and asked proof that the FacultyClub had been designated or selected as exclusive representative by the vote ofthe majority of said employees.-Feb 1, 1963: the Faculty Club filed with the Bureau of Labor Relations a noticeof strike alleging as reason therefor the refusal of the University to bargaincollectively with the representative of the faculty members.-Feb 18, 1963: the members of the Faculty Club went on strike and establishedpicket lines in the premises of the University, thereby disrupting the schedule ofclasses.

-March 1, 1963: the Faculty Club filed Case No. 3666-ULP for unfair laborpractice against the University, but which was later dismissed (on April 2,1963 after Case 41-IPA was certified to the CIR).-March 7, 1963: a petition for certification election, Case No. 1183-MC,was filed by the Faculty Club in the CIR.

ISSUESWON there is a labor dispute between the University and the Faculty Club

HELDYES.-RA 875 provides that the term "labor dispute" includes any controversyconcerning terms, tenure or conditions of employment, or concerning theassociation or representation of persons in negotiating, fixing, maintaining,changing, or seeking to arrange terms or conditions of employmentregardless of whether the disputants stand in proximate relation ofemployer and employees.-The test of whether a controversy comes within the definition of"labor dispute" depends on whether the controversy involves orconcerns "terms, tenure or condition of employment" or"representation."-All the admitted facts show that the controversy between the Universityand the Faculty Club involved terms and conditions of employment, and

the question of representation. Hence, there was a labor dispute betweenthe University and the Faculty Club, as contemplated by Republic Act No.875.-Recall: RA 875, sec10: When in the opinion of the President of thePhilippines there exists a labor dispute in an industry indispensable to thenational interest and when such labor dispute is certified by the Presidentto the Court of Industrial Relations, said Court may cause to be issued arestraining order forbidding the employees to strike or the employer tolockout the employees, and if no other solution to the dispute is found, theCourt may issue an order fixing the terms and conditions of employment.-To certify a labor dispute to the CIR is the prerogative of the Presidentunder the law, and this Court will not interfere in, much less curtail, theexercise of that prerogative. Once the jurisdiction is acquired pursuant tothe presidential certification, the CIR may exercise its broad powers asprovided in Commonwealth Act 103. All phases of the labor dispute and

the employer-employee relationship may be threshed out before the CIR,and the CIR may issue such order or orders as may be necessary to makeeffective the exercise of its jurisdiction. The parties involved in the casemay appeal to the Supreme Court from the order or orders thus issued bythe CIR.

Disposition Petition for certiorari & prohibition with preliminary injunctiondismissed. Writs prayed for therein denied. Writ of preliminary injunctiondissolved. Costs against Feati University.

SAN MIGUEL EMPLOYEES UNION V BERSAMIRA186 SCRA 496

MELENCIO-HERRERA; June 13, 1990

NATURESpecial civil action for certiorari

FACTS- SMC entered into contracts for merchandising services with Lipercon andD'Rite (L&D), independent contractors duly licensed by DOLE. In saidcontracts, it was expressly understood and agreed that the EEs employed

by the contractors were to be paid by the latter and that none of them wereto be deemed EEs or agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the onehand, and SMC on the other.- Petitioner SMCEU-PTWGO (Union) is duly authorized representative ofthe monthly paid rank-and-file EEs of SMC. Their CBA provides thattemporary, probationary, or contract EEs are excluded from the bargainingunit and outside scope of CBA.- Union advised SMC that some L&D workers had signed up for unionmembership and sought the regularization of their employment with SMC.Union alleged that this group of EEs, while appearing to be contractual


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Labor Law 2 A2010 - 6 - Disiniworkers of supposedly independent contractors, have been continuouslyworking for SMC for a period of 6 months to 15 years and that their work isneither casual nor seasonal as they are performing work or activities necessaryor desirable in the usual business or trade of SMC, and that there exists a"labor-only" contracting situation. It was then demanded that the employmentstatus of these workers be regularized. This was not acted upon by SMC, andso Union filed a notice of strike, and then a second notice.- Series of pickets were staged by L&D workers in various SMC plants andoffices. SMC RTC to enjoin the Union from: representing and or acting for and inbehalf of the employees of L&D for the purposes of collective bargaining; callingfor and holding a strike vote to compel plaintiff to hire the employees or workersof L&D, among others.- Union filed a Motion to Dismiss SMC's Complaint on the ground of lack ofjurisdiction over the case/nature of the action, which motion was opposed bySMC, which was denied by respondent Judge. And after several hearings,issued Injunction. RTC reasoned that the absence of ER-EE relationshipnegates the existence of labor dispute, so court has jurisdiction to takecognizance of SMC's grievance. Hence, this action.

ISSUE1. WON RTC correctly assumed jurisdiction over the controversy and properlyissued the Writ of Preliminary Injunction.

HELD1. NORe: Definition of Labor Dispute (p4 of Outline)Ratio A labor dispute can nevertheless exist regardless of whether thedisputants stand in the proximate relationship of employer and employee,provided the controversy concerns, among others, the terms and conditions ofemployment or a "change" or "arrangement" thereof The existence of a labordispute is not negatived by the fact that the plaintiffs and defendants do notstand in the proximate relation of employer and employee. (A212 LC)Reasoning Crucial to the resolution of the question on jurisdiction, is the matterof whether or not the case at bar involves, or is in connection with, or relates toa labor dispute. An affirmative answer would bring the case within the originaland exclusive jurisdiction of labor tribunals to the exclusion of the regularCourts. In this case, the matter re terms, tenure and conditions of EEsemployment and the arrangement of those terms as well as the matter of

representation bring these issues within the scope of a labor dispute. Hence it isthe labor tribunals that have jurisdiction and not the regular courts

Re: ER Functions and ULP (p30 of Outline)- As the case is indisputably linked with a labor dispute, jurisdiction belongs tothe labor tribunals. So, Labor Arbiters have original and exclusive jurisdiction tohear and decide the following cases involving all workers including: [a] unfairlabor practice cases; [b] those that workers may file involving wages, hours ofwork and other terms and conditions of employment; and [c] cases arising fromany violation of A265 LC, including questions involving the legality of striker andlockouts.- SMCs claim that the action is for damages under A19, 20 and 21 of CC is notenough to keep the case within the jurisdictional boundaries of regular Courts.That claim for damages is interwoven with a labor dispute. To allow the actionfiled below to prosper would bring about "split jurisdiction" which is obnoxious to

the orderly administration of justice.- SC recognizes the proprietary right of SMC to exercise an inherentmanagement prerogative and its best business judgment to determine whether itshould contract out the performance of some of its work to independentcontractors. However, the rights of all workers to self-organization, collectivebargaining and negotiations, and peaceful concerted activities, including theright to strike in accordance with law (S3, A13, 1987 Constitution) equally call forrecognition and protection. Those contending interests must be placed in properperspective and equilibrium.

Disposition Petition is GRANTED.

NESTLE PHILS., INC. V NLRC (NUEZ)195 SCRA 340

GRIO-AQUINO; March 18, 1991


FACTS- The private respondents, who were employed by Nestl either as salesrepresentatives or medical representatives, availed of the petitioner's car loanpolicy. Under that policy, the company advances the purchase price of a car tobe paid back by the employee through monthly deductions from his salary, thecompany retaining the ownership of the motor vehicle until it shall have beenfully paid for.

- After having participated in an illegal strike, the private respondents weredismissed from service. Nestl directed the private respondents to eithersettle the remaining balance of the cost of their respective cars, or returnthem to the company for proper disposition.- Private respondents failed and refused to avail of either option, so thecompany filed in the Regional Trial Court of Makati a civil suit to recoverpossession of the cars. The private respondents sought a temporaryrestraining order in the NLRC to stop the company from cancelling their carloans and collecting their monthly amortizations. The NLRC, en banc,granted their petition for injunction.- The company filed a motion for reconsideration, but it was denied fortardiness. Hence, this petition for certiorari alleging that the NLRC actedwith grave abuse of discretion amounting to lack of jurisdiction when itissued a labor injunction without legal basis and in the absence of anylabor dispute related to the same.

ISSUEWON there is a labor dispute between the petitioner and the privaterespondents

HELDNORatio Paragraph (1) of Article 212 of the Labor Code defines a labor

dispute as follows:

"(1) 'Labor dispute' includes any controversy or mattersconcerning terms or conditions of employment or theassociation or representation of persons in negotiating, fixing,maintaining, changing or arranging the terms and conditions ofemployment, regardless of whether the disputants stand in theproximate relation of employer and employee."

Nestls demand for payment of the private respondents' amortizations ontheir car loans, or, in the alternative, the return of the cars to the company,is not a labor, but a civil, dispute. It involves debtor-creditor relations,rather than employee-employer relations.

Reasoning Whether or not the private respondents remain as employees

of the petitioner, there is no escape from their obligation to pay theiroutstanding accountabilities to the petitioner; and if they cannot afford it, toreturn the cars assigned to them. The options given to the privaterespondents are civil in nature arising from contractual obligations. Thereis no labor aspect involved in the enforcement of those obligations. TheNLRC gravely abused its discretion and exceeded its jurisdiction by issuingthe writ of injunction to stop the company from enforcing the civil obligationof the private respondents under the car loan agreements and fromprotecting its interest in the cars which, by the terms of those agreements,belong to it (the company) until their purchase price shall have been fullypaid by the employee. The terms of the car loan agreements are not inissue in the labor case. The rights and obligations of the parties underthose contracts may be enforced by a separate civil action in the regularcourts, not in the NLRC.

Disposition Petition is granted.

1.3 LABOR RELATIONS POLICY1.3.1 Method Dispute Settlement

KIOK LOY VS NLRC (PAMBANSANG KILUSAN NG PAGGAWA)141 SCRA 179

CUEVAS: January 22, 1986

NATURE:

- Petition for certiorari to annul the decision of the National LaborRelations Commission

FACTS:- In a certification election held on October 3, 1978, the Pambansang

Kilusang Paggawa (Union for short) was subsequently certified in aresolution dated November 29, 1978 by the Bureau of Labor Relationsas the sole and exclusive bargaining agent of the rank-and-fileemployees of Sweden Ice Cream Plant (Company for short). TheCompany's motion for reconsideration of the said resolution was deniedon January 25, 1978.

- December 7, 1978, the Union furnished the Company with two copies ofits proposed collective bargaining agreement. It also requested theCompany for its counter proposals. Both requests were ignored andremained unacted upon by the Company.


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Labor Law 2 A2010 - 7 - Disini- The Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of

Labor Relations (BLR) on ground of unresolved economic issues in collectivebargaining.

- Conciliation proceedings then followed during the thirty-day statutory cooling-off period.

- The Bureau of Labor Relations to certify the case to the National LaborRelations Commission for compulsory arbitration.

- The labor arbiter set the initial hearing for April 29, 1979. For failure however,of the parties to submit their respective position papers as required, the saidhearing was cancelled and reset to another date.

- The Union submitted its position paper.- On July 20, 1979, the National Labor Relations Commission rendered its

decision declaring the respondent guilty of unjustified refusal to bargain- Petitioner contends that the National Labor Relations Commission acted

without or in excess of its jurisdiction or with grave abuse of discretionamounting to lack of jurisdiction in rendering the challenged decision.

- Petitioner further contends that the National Labor Relations Commission'sfinding of unfair labor practice for refusal to bargain is not supported by law

ISSUE/S:WON the respondent is guilty of unjustified refusal to bargain

HELD:

YESunfair labor practice is committed when it is shown that the respondentemployer, after having been served with a written bargaining proposal by thepetitioning Union, did not even bother to submit an answer or reply to the saidproposalRatioUnfair labor practice is committed when it is shown that the respondentemployer, after having been served with a written bargaining proposal by thepetitioning Union, did not even bother to submit an answer or reply to the saidproposalReaspmomgCollective bargaining which is defined as negotiations towards a collectiveagreement, is one of the democratic frameworks under the New Labor Code,designed to stabilize the relation between labor and management and to createa climate of sound and stable industrial peace. It is a mutual responsibility of the

employer and the Union and is characterized as a legal obligation. So much sothat Article 249, par. (g) of the Labor Code makes it an unfair labor practice foran employer to refuse "to meet and convene promptly and expeditiously in goodfaith for the purpose of negotiating an agreement with respect to wages, hoursof work, and all other terms and conditions of employment including proposalsfor adjusting any grievance or question arising under such an agreement andexecuting a contract incorporating such agreement, if requested by either party.While it is a mutual obligation of the parties to bargain, the employer, however,is not under any legal duty to initiate contract negotiation. The mechanics ofcollective bargaining is set in motion only when the following jurisdictionalpreconditions are present, namely, (1) possession of the status of majorityrepresentation of the employees' representative in accordance with any of themeans of selection or designation provided for by the Labor Code; (2) proof ofmajority representation; and (3) a demand to bargain under Article 251, par. (a)of the New Labor Code .

- From the over-all conduct of petitioner company in relation to the task ofnegotiation, there can be no doubt that the Union has a valid cause to complainagainst its (Company's) attitude, the totality of which is indicative of the latter'sdisregard of, and failure to live up to, what is enjoined by the Labor Code tobargain in good faith.

DISPOSITION:- Petition dismissed

MANILA DIAMOND HOTEL EMPLOYEES UNION V CA (MANILA DIAMONDHOTEL)

447 SCRA 97AZCUNA; December 16, 2004

NaturePetition for review on certiorari of a decision of the Court of Appeals

Facts-Union filed a petition for certification election to be declared the exclusivebargaining representative of the Hotels employees. This petition was dismissedby DOLE for lack of legal requirements.-after a few months, Union sent a letter to Hotel informing it of its desire tonegotiate for a collective bargaining agreement. This was rejected by the Hotelstating that the Union was not the employees bargaining agent as their petitionfor cetification election was denied.

-Union filed a Notice of Strike with the NCMB alleging the Hotel refusal tobargain and for acts of unfair labor practices. NCMB summoned bothparties and held series of dialogues. Union however suddenly went onstrike-Secretary of DOLE assumed jurisdiction and ordered compulsoryarbitration pursuant to art. 263 (g) of LC. And Union members weredirected to return to work and for Hotel to accept them back. Hotel refusedto accept the employees return. The order was modified (by a differentSecretary) such that reinstatement was to be done only in the payroll.-Union filed for certiorari alleging grave abuse of discretion. Case wasreferred to the CA. CA affirmed that the payroll reinstatement was not agrave abuse of discretion.

ISSUEWON the CA commit grave abuse of discretion in affirming the validity ofpayroll reinstatement

HELD Yes-CA based its decision on the UST v NLRC case which affirms validity ofpayroll reinstatement. However, the UST case was made in light of a veryimportant fact- the teachers could not be given back their academicassignments because the semester was already halfway. In the presentcase, there is no showing that the facts called for payroll reinstatement as

an ALTERNATIVE remedy.-as to the nature of art.263(g), the State encourages an environmentwherein employers and employees themselves must deal with theirproblems in a manner that mutually suits them best (as embodied inArt 3, Sec 3 of the Constitution). Hence a voluntary instead ofcompulsory mode of dispute settlement is the general rule.-Art. 263 (g) is an exception to this rule by allowing the Secretary of theDOLE to assume jurisdiction over a dispute involving an industryindispensable to the national interest. And under this rule, the law uses thephrase under the same terms and conditions which contemplates onlyACTUAL REINSTATEMENT.

1.3.2 TRADE UNIONISMART. 211. Declaration of Policy. - A. It is the policy of the State:(b) To promote free trade unionism as an instrument for the enhancement

of democracy and the promotion of social justice and development;(c) To foster the free and voluntary organization of a strong and unitedlabor movement;

1.3.3 WORKER ENLIGHTENMENT

VICTORIA V INCIONG157 SCRA 339

FERNAN; January 26, 1988

NATUREReview of Order of Labor Secretary reversing decision of NLRC

FACTS- Complainant Saturno Victoria is the president of the Far EastBroadcasting Company Employees Union. On September 8, 1972, the

said union declared a strike against respondent company for refusal torecognize them. On September 11, 1972, respondent filed with the Courtof First Instance of Bulacan, Civil Case No. 750-V, for the issuance of aninjunction and a prayer that the strike be declared illegal.- Strikers filed case with NLRC for reinstatement. Reinstatement grantedwithout prejudice to outcome of Civil Case 750-V.- Strike was declared illegal because company was a non-profitorganization. Company dismissed complainant.- Complainant filed for illegal dismissal. NLRC granted. Sec. Inciongreversed.

ISSUE/S1. WON company should obtain clearance under Art. 267 beforedismissing complainant.

HELD1. NOThe purpose in requiring a prior clearance from the Secretary of Labor incases of shutdown or dismissal of employees, is to afford the Secretaryample opportunity to examine and determine the reasonableness of therequest. Consequently, private respondent acted in good faith when itterminated the employment of petitioner upon a declaration of illegality ofthe strike.Ratio This is a matter of responsibility and of answerability. Petitioner as aunion leader, must see to it that the policies and activities of the union inthe conduct of labor relations are within the precepts of law and any


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Labor Law 2 A2010 - 8 - Disinideviation from the legal boundaries shall be imputable to the leader. He bearsthe responsibility of guiding the union along the path of law and to cause theunion to demand what is not legally demandable, would foment anarchy which isa prelude to chaos.Reasoning As a strike is an economic weapon at war with the policy of theConstitution and the law at that time, a resort thereto by laborers shall bedeemed to be a choice of remedy peculiarly their own and outside of the statute,and as such, the strikers must accept all the risks attendant upon their choice. Ifthey succeed and the employer succumbs, the law will not stand in their way inthe enjoyment of the lawful fruits of their victory. But if they fail, they cannotthereafter invoke the protection of the law for the consequences of their conductunless the right they wished vindicated is one which the law will, by all means,protect and enforce.

Disposition WHEREFORE, the petition is dismissed. The decision of the actingSecretary of Labor is AFFIRMED in toto.

1.3.4 MACHINERY DISPUTE SETTLEMENTST MARTIN FUNERAL HOME V NLRC (ARICAYOS)

495 SCRA 295REGALADO; September 16, 1998

NATURESpecial civil action of certiorari

FACTS- stemmed from a complaint for illegal dismissal- Labor Arbiter in that case declared that no employer-employee relationshipexisted between the parties.- the private-respondent employee appealed to the NLRC, and the NLRC setaside the questioned decision and remanded the case to the labor arbiter- petitioner then filed a motion for reconsideration which the NLRC denied.Hence this present petition.

ISSUES1. Where should appeals from the NLRC be initially filed, considering thatSection 9 of BP 129 seems to say that there are cases which fall within the

appellate jurisdiction of the SC in accordance with the labor code, and not theCA

HELD1. The CAReasoning All references in the amended Section 9 of BP No. 129 to supposedappeals from the NLRC to the Supreme Court are interpreted and declared tomean and refer to petitions for certiorari under Rule 65.

Therefore, all such petitions should be initially filed in the CA in strictobservance of the doctrine on the hierarchy of courts.Disposition The instant petition for certiorari is REMANDED, and all pertinentrecorsd thereof ordered to be FORWARDED, to the CA for approporiate actionand disposition.

DELTA VENTURES V. CABATO

327 SCRA 521QUISUMBING; MARCH 9, 2000

NATURESpecial civil action for certiorari seeks to annul the Order Judge Cabato of theRTC, dismissing petitioner's amended third-party complaint, as well as theOrder denying motion for reconsideration.

FACTSA Decision was rendered by LA declaring the Green Mountain Farm, RobertoOngpin and Almus Alabe guilty of Illegal Dismissal and Unfair Labor Practiceand ordering them to pay the complainants, in solidum plus attorney's fees inthe amount of P10,000.00. Almus Alabe is also ordered to answer in exemplarydamages in the amount of P5,000.00 each to all the complainants.

LA issued a writ of execution directing NLRC Deputy Sheriff Adam Ventura toexecute the judgment. Sheriff Ventura then proceeded to enforce the writ bygarnishing certain personal properties of respondents. Finding that saidjudgment debtors do not have sufficient personal properties to satisfy themonetary award, Sheriff Ventura proceeded to levy upon a real propertyregistered in the name of Roberto Ongpin, one of the respondents in the laborcase.

Before the scheduled auction sale, herein petitioner filed before the Commissiona third-party claim asserting ownership over the property levied upon andsubject of the Sheriffs notice of sale. Labor Arbiter Rivera thus issued an order

directing the suspension of the auction sale until the merits of petitioner'sclaim has been resolved.

However, petitioner filed with the RTC a complaint for injunction anddamages, with a prayer for the issuance of a temporary restraining orderagainst Sheriff Ventura. Judge Cabato issued a temporary restrainingorder, enjoining respondents in the civil case before him to hold inabeyance any action relative to the enforcement of the decision in thelabor case.Further, petitioner filed with the Commission a manifestation questioningthe latter's authority to hear the case, the matter being within thejurisdiction of the regular courts. The manifestation, however, wasdismissed by Labor Arbiter Rivera.

ISSUEWON the trial court may take cognizance of the complaint filed bypetitioner and consequently provide the injunctive relief sought.

HELDNO. Basic as a hornbook principle,jurisdiction over the subject matterof a case is conferred by law and determined by the allegations in thecomplaint which comprise a concise statement of the ultimate facts

constituting the petitioner's cause of action. Ostensibly the complaintbefore the trial court was for the recovery of possession and injunction, butin essence it was an action challenging the legality or propriety of the levyvis-a-vis the alias writ of execution, including the acts performed by theLabor Arbiter and the Deputy Sheriff implementing the writ. The complaintwas in effect a motion to quash the wr it of execution of a decision renderedon a case properly within the jurisdiction of the Labor Arbiter, to wit: IllegalDismissal and Unfair Labor Practice. Considering the factual setting, it isthen logical to conclude that the subject matter of the third party claim isbut an incident of the labor case, a matter beyond the jurisdiction ofregional trial courts.

Precedent abound confirming the rule that said courts have no jurisdictionto act on labor cases or various incidents arising therefrom, including theexecution of decisions, awards or orders. Jurisdiction to try and adjudicate

such cases pertains exclusively to the proper labor official concernedunder the Department of Labor and Employment. To hold otherwise is tosanction split jurisdiction which is obnoxious to the orderly administration ofjustice.

The broad powers granted to the Labor Arbiter and to the National LaborRelations Commission by Articles 217, 218 and 224 of the Labor Code canonly be interpreted as vesting in them jurisdiction over incidents arisingfrom, in connection with or relating to labor disputes, as the controversyunder consideration, to the exclusion of the regular courts.

Having established that jurisdiction over the case rests with theCommission, we find no grave abuse of discretion on the part ofrespondent Judge Cabato in denying petitioner's motion for the issuance ofan injunction against the execution of the decision of the National Labor

Relations Commission.

1.3.5 INDUSTRIAL PEACEART. 211. Declaration of Policy. - A. It is the policy of the State:(f) To ensure a stable but dynamic and just industrial peace;

ART. 273. Study of labor-management relations. - The Secretary of Laborshall have the power and it shall be his duty to inquire into:

(a) the existing relations between employers and employees inthe Philippines;(b) the growth of associations of employees and the effect ofsuch associations upon employer-employee relations;(c) the extent and results of the methods of collectivebargaining in the determination of terms and conditions ofemployment;

(d) the methods which have been tried by employers andassociations of employees for maintaining mutually satisfactoryrelations;(e) desirable industrial practices which have been developedthrough collective bargaining and other voluntary arrangements;(f) the possible ways of increasing the usefulness and efficiencyof collective bargaining for settling differences;(g) the possibilities for the adoption of practical and effectivemethods of labor-management cooperation;


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Labor Law 2 A2010 - 9 - Disini(h) any other aspects of employer-employee relations concerning thepromotion of harmony and understanding between the parties;(i) the relevance of labor laws and labor relations to nationaldevelopment.

The Secretary of Labor shall also inquire into the causes of industrial unrest andtake all the necessary steps within his power as may be prescribed by law toalleviate the same, and shall from time to time recommend the enactment ofsuch remedial legislation as in his judgment may be desirable for themaintenance and promotion of industrial peace.

1.3.6 WORKER PARTICIPATION1987 CONSTI, ART XIII, Sec 3. The State shall afford full protection to labor,local and overseas, organized and unorganized, and promote full employmentand equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collectivebargaining and negotiations, and peaceful concerted activities, including theright to strike in accordance with law. They shall be entitled to security of tenure,humane conditions of work, and a living wage. They shall also participate inpolicy and decision-making processes affecting their rights and benefits as maybe provided by law.

The State shall promote the principle of shared responsibility between workersand employers and the preferential use of voluntary modes in settling disputes,including conciliation, and shall enforce their mutual compliance therewith tofoster industrial peace.

The State shall regulate the relations between workers and employers,recognizing the right of labor to its just share in the fruits of production and theright of enterprises to reasonable returns to investments, and to expansion andgrowth.

ART. 211. Declaration of Policy. - A. It is the policy of the State:(g) To ensure the participation of workers in decision and policy-makingprocesses affecting their rights, duties and welfare.

ART. 255. Exclusive bargaining representation and workers participation in

policy and decision-making. - The labor organization designated or selected bythe majority of the employees in an appropriate collective bargaining unit shallbe the exclusive representative of the employees in such unit for the purpose ofcollective bargaining. However, an individual employee or group of employeesshall have the right at any time to present grievances to their employer.Any provision of law to the contrary notwithstanding, workers shall have theright, subject to such rules and regulations as the Secretary of Labor andEmployment may promulgate, to participate in policy and decision-makingprocesses of the establishment where they are employed insofar as saidprocesses will directly affect their rights, benefits and welfare. For this purpose,workers and employers may form labor-management councils: Provided, Thatthe representatives of the workers in such labor-management councils shall beelected by at least the majority of all employees in said establishment. (Asamended by Section 22, Republic Act No. 6715, March 21, 1989).ART. 277. Miscellaneous provisions. - (a) All unions are authorized to collect

reasonable membership fees, union dues, assessments and fines and othercontributions for labor education and research, mutual death and hospitalizationbenefits, welfare fund, strike fund and credit and cooperative undertakings. (Asamended by Section 33, Republic Act No. 6715, March 21, 1989).(g) The Ministry shall help promote and gradually develop, with the agreementof labor organizations and employers, labor-management cooperation programsat appropriate levels of the enterprise based on the shared responsibility andmutual respect in order to ensure industrial peace and improvement inproductivity, working conditions and the quality of working life. (Incorporated byBatas Pambansa Bilang 130, August 21, 1981).

PHIL. AIRLINES V NLRC (PALEA)225 SCRA 301

MELO; August 13, 1993


FACTS- On March 15, 1985, PAL completely revised its 1966 Code of Discipline. TheCode was circulated among the employees and was immediately implemented,and some employees were subjected to the disciplinary measures.- The Philippine Airlines Employees Association (PALEA) filed a complaintbefore the NLRC contending that PAL, by its unilateral implementation of theCode, was guilty of unfair labor practice, specifically Paragraphs E and G of Art

249 and Art 253 of the Labor Code. PALEA alleged that copies of theCode had been circulated in limited numbers; that being penal in naturethe Code must conform with the requirements of sufficient publication, andthat the Code was arbitrary, oppressive, and prejudicial to the rights of theemployees. It prayed that implementation of the Code be held inabeyance; that PAL should discuss the substance of the Code withPALEA; that employees dismissed under the Code reinstated and theircases subjected to further hearing; and that PAL be declared guilty ofunfair labor practice and be ordered to pay damages.- PAL filed a MTD, asserting its prerogative as an employer to prescriberules and regulations regarding employees' conduct in carrying out theirduties and functions, and alleging that it had not violated the CBA or anyprovision of the Labor Code.

ISSUE1. WON the formulation of a Code of Discipline among employees is ashared responsibility of the employer and the employees

HELD1. YES.Ratio Employees have a right to participate in the deliberation of matterswhich may affect their rights and the formulation of policies relative theretoand one such matter is the formulation of a code of discipline.

Reasoning It was only on March 2, 1989, with the approval of RA 6715,amending Art 211 of the Labor Code, that the law explicitly considered it aState policy "to ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare." However,even in the absence of said clear provision of law, the exercise ofmanagement prerogatives was never considered boundless. Thus, in Cruzvs. Medina, it was held that management's prerogatives must be withoutabuse of discretion.- In San Miguel Brewery Sales Force Union vs. Ople, we upheld thecompany's right to implement a new system of distributing its products, butgave the following caveat: So long as a company's managementprerogatives are exercised in good faith for the advancement theemployer's interest and not for the purpose of defeating or circumventingthe rights of the employee, under special laws or under valid agreements,this Court will uphold them.

- All this points to the conclusion that the exercise of managerialprerogatives is not unlimited. It is circumscribed by limitations found in law,a CBA, or the general principles of fair play and justice. Moreover, it mustbe duly established that the prerogative being invoked is clearly amanagerial one.- Verily, a line must be drawn between management prerogativesregarding business operations per se and those which affect the rights ofthe employees. In treating the latter, management should see to it that itsemployees are at least properly informed of its decisions or modes ofaction. PAL asserts that all its employees have been furnished copies ofthe Code, the LA and the NLRC found to the contrary, which finding, isentitled to great respect.- PALEA recognizes the right of the Company to determine matters ofmanagement policy and Company operations and to direct its manpower.Management of the Company includes the right to organize, plan, direct

and control operations, to hire, assign employees to work, transferemployees from one department to another, to promote, demote,discipline, suspend or discharge employees for just cause; to lay-offemployees for valid and legal causes, to introduce new or improvedmethods or facilities or to change existing methods or facilities and theright to make and enforce Company rules and regulations to carry out thefunctions of management. The exercise by management of its prerogativeshall be done in a just, reasonable, humane and/or lawful manner.- Such provision in the CBA may not be interpreted as cession ofemployees' rights to participate in the deliberation of matters which mayaffect their rights and the formulation of policies relative thereto. And onesuch matter is the formulation of a code of discipline. Industrial peacecannot be achieved if the employees are denied their just participation inthe discussion of matters affecting their rights.Disposition Petition is DISMISSED.

MANILA ELECTRIC CO.. V QUISUMBING (MEWA).326 SCRA 172

YNARES-SANTIAGO; February 22, 2000

NATUREMotion for Reconsideration

FACTS- Members of the Meralco Employees and Workers Association (MEWA)filed a motion for reconsideration of an earlier decision of this Court


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Labor Law 2 A2010 - 10 - Disinidirecting the parties to execute a CBA incorporating the terms and conditionscontained in the unaffected portions of the Secretary of Labor's orders, andprayed for certain modifications.

ISSUE/S1. WON the decision should be modified

HELD1. YESRatio (On the requirement of consultation imposed by the Secretary in cases ofcontracting out for 6 months or more) A line must be drawn betweenmanagement prerogatives regarding business operations per se and thosewhich affect the rights of employees, and in treating the latter, the employershould see to it that its employees are at least properly informed of its decisionor modes of action in order to attain a harmonious labor-managementrelationship and enlighten the workers concerning their rights. Hiring of workersis within the employer's inherent freedom to regulate and is a valid exercise ofits management prerogative subject only to special laws and agreements on thematter and the fair standards of justice.Reasoning The management cannot be denied the faculty of promotingefficiency and attaining economy by a study of what units are essential for itsoperation. It has the ultimate determination of whether services should beperformed by its personnel or contracted to outside agencies. Absent proof that

management acted in a malicious or arbitrary manner, the Court will notinterfere with the exercise of judgment by an employer.Obiter- On increasing the wage awards: The Court does "not seek to enumerate in thisdecision the factors that should affect wage determination" because collectivebargaining disputes particularly those affecting the national interest and publicservice "requires due consideration and proper balancing of the interests of theparties to the dispute and of those who might be affected by the dispute.- On the retroactivity of the arbitral awards: The law is silent as to theretroactivity of a CBA arbitral award or that granted not by virtue of the mutualagreement of the parties but by intervention of the government. Despite thesilence of the law, the Court rules herein that CBA arbitral awards granted aftersix months from the expiration of the last CBA shall retroact to such time agreedupon by both employer and the employees or their union. Absent such anagreement as to retroactivity, the award shall retroact to the first day after the

six-month period following the expiration of the last day of the CBA should therebe one. In the absence of a CBA, the Secretary's determination of the date ofretroactivity as part of his discretionary powers over arbitral awards shall control- On the grant of a housing loan but not a cooperative loan: The award of loansfor housing is justified because it pertains to a basic necessity of life. It is part ofa privilege recognized by the employer and allowed by law. In contrast,providing seed money for the establishment of the employee's cooperative is amatter in which the employer has no business interest or legal obligation.Disposition Petition PARTIALLY GRANTED. The arbitral award was made toretroact and the award of wages was increased from P1,900 to P2,000 for theyears 1995 and 1996, subject to the monetary advances granted by petitioner toits rank-and-file employees during the pendency of this case assuming suchadvances had

1.3.7 WAGE FIXING

ART. 211. Declaration of Policy. - A. It is the policy of the State:B. To encourage a truly democratic method of regulating the relations betweenthe employers and employees by means of agreements freely entered intothrough collective bargaining, no court or administrative agency or official shallhave the power to set or fix wages, rates of pay, hours of work or other termsand conditions of employment, except as otherwise provided under this Code.(As amended by Section 3, Republic Act No. 6715, March 21, 1989).

ART. 263. Strikes, picketing and lockouts. - (a) It is the policy of the State toencourage free trade unionism and free collective bargaining.(g) When, in his opinion, there exists a labor dispute causing or likely to cause astrike or lockout in an industry indispensable to the national interest, theSecretary of Labor and Employment may assume jurisdiction over the disputeand decide it or certify the same to the Commission for compulsory arbitration.Such assumption or certification shall have the effect of automatically enjoining

the intended or impending strike or lockout as specified in the assumption orcertification order. If one has already taken place at the time of assumption orcertification, all striking or locked out employees shall immediately return-to-work and the employer shall immediately resume operations and readmit allworkers under the same terms and conditions prevailing before the strike orlockout. The Secretary of Labor and Employment or the Commission may seekthe assistance of law enforcement agencies to ensure compliance with thisprovision as well as with such orders as he may issue to enforce the same.

In line with the national concern for and the highest respect accorded to the rightof patients to life and health, strikes and lockouts in hospitals, clinics and similar

medical institutions shall, to every extent possible, be avoided, and allserious efforts, not only by labor and management but government as well,be exhausted to substantially minimize, if not prevent, their adverse effectson such life and health, through the exercise, however legitimate, by laborof its right to strike and by management to lockout. In labor disputesadversely affecting the continued operation of such hospitals, clinics ormedical institutions, it shall be the duty of the striking union or locking-outemployer to provide and maintain an effective skeletal workforce ofmedical and other health personnel, whose movement and services shallbe unhampered and unrestricted, as are necessary to insure the properand adequate protection of the life and health of its patients, mostespecially emergency cases, for the duration of the strike or lockout. Insuch cases, therefore, the Secretary of Labor and Employment mayimmediately assume, within twenty four (24) hours from knowledge of theoccurrence of such a strike or lockout, jurisdiction over the same or certifyit to the Commission for compulsory arbitration. For this purpose, thecontending parties are strictly enjoined to comply with such orders,prohibitions and/or injunctions as are issued by the Secretary of Labor andEmployment or the Commission, under pain of immediate disciplinaryaction, including dismissal or loss of employment status or payment by thelocking-out employer of backwages, damages and other affirmative relief,even criminal prosecution against either or both of them.

The foregoing notwithstanding, the President of the Philippines shall not beprecluded from determining the industries that, in his opinion, areindispensable to the national interest, and from intervening at any time andassuming jurisdiction over any such labor dispute in order to settle orterminate the sameRA 6727 WAGE RATIONALIZATION ACT Sec. 2. It is hereby declaredthe policy of the State to rationalize the fixing of minimum wages and topromote productivity-improvement and gain-sharing measures to ensure adecent standard of living for the workers and their families; to guaranteethe rights of labor to its just share in the fruits of production; to enhanceemployment generation in the countryside through industry dispersal; andto allow business and industry reasonable returns on investment,expansion and growth.

1.3.8 LABOR INJUNCTION

ART. 254. Injunction prohibited. - No temporary or permanent injunction orrestraining order in any case involving or growing out of labor disputesshall be issued by any court or other entity, except as otherwise providedin Articles 218 and 264 of this Code. (As amended by Batas PambansaBilang 227, June 1, 1982).

ART. 218. Powers of the Commission. - The Commission shall have thepower and authority:

(e) To enjoin or restrain any actual or threatened commission of any or allprohibited or unlawful acts or to require the performance of a particular actin any labor dispute which, if not restrained or performed forthwith, maycause grave or irreparable damage to any party or render ineffectual anydecision in favor of such party: Provided, That no temporary or permanentinjunction in any case involving or growing out of a labor dispute as defined

in this Code shall be issued except after hearing the testimony ofwitnesses, with opportunity for cross-examination, in support of theallegations of a complaint made under oath, and testimony in oppositionthereto, if offered, and only after a finding of fact by the Commission, to theeffect:

(1) That prohibited or unlawful acts have been threatened andwill be committed and will be continued unless restrained, butno injunction or temporary restraining order shall be issued onaccount of any threat, prohibited or unlawful act, except againstthe person or persons, association or organization making thethreat or committing the prohibited or unlawful act or actuallyauthorizing or ratifying the same after actual knowledge thereof;(2) That substantial and irreparable injury to complainantsproperty will follow;

(3) That as to each item of relief to be granted, greater injurywill be inflicted upon complainant by the denial of relief than willbe inflicted upon defendants by the granting of relief;

(4) That complainant has no adequate remedy at law; and

(5) That the public officers charged with the duty to protectcomplainants property are unable or unwilling to furnishadequate protection.


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Labor Law 2 A2010 - 11 - DisiniSuch hearing shall be held after due and personal notice thereof has beenserved, in such manner as the Commission shall direct, to all known personsagainst whom relief is sought, and also to the Chief Executive and other publicofficials of the province or city within which the unlawful acts have beenthreatened or committed, charged with the duty to protect complainantsproperty: Provided, however, that if a complainant shall also allege that, unlessa temporary restraining order shall be issued without notice, a substantial andirreparable injury to complainants property will be unavoidable, such atemporary restraining order may be issued upon testimony under oath,sufficient, if sustained, to justify the Commission in issuing a temporaryinjunction upon hearing after notice. Such a temporary restraining order shall beeffective for no longer than twenty (20) days and shall become void at theexpiration of said twenty (20) days. No such temporary restraining order ortemporary injunction shall be issued except on condition that complainant shallfirst file an undertaking with adequate security in an amount to be fixed by theCommission sufficient to recompense those enjoined for any loss, expense ordamage caused by the improvident or erroneous issuance of such order orinjunction, including all reasonable costs, together with a reasonable attorneysfee, and expense of defense against the order or against the granting of anyinjunctive relief sought in the same proceeding and subsequently denied by theCommission.The undertaking herein mentioned shall be understood to constitute anagreement entered into by the complainant and the surety upon which an order

may be rendered in the same suit or proceeding against said complainant andsurety, upon a hearing to assess damages, of which hearing, complainant andsurety shall have reasonable notice, the said complainant and surety submittingthemselves to the jurisdiction of the Commission for that purpose. But nothingherein contained shall deprive any party having a claim or cause of action underor upon such undertaking from electing to pursue his ordinary remedy by suit atlaw or in equity: Provided, further, That the reception of evidence for theapplication of a writ of injunction may be delegated by the Commission to any ofits Labor Arbiters who shall conduct such hearings in such places as he maydetermine to be accessible to the parties and their witnesses and shall submitthereafter his recommendation to the Commission. (As amended by Section 10,Republic Act No. 6715, March 21, 1989).

RA 8791 , Section 22. Strikes and Lockouts. The banking industry is herebydeclared as indispensable to the national interest and, not withstanding the

provisions of any law to the contrary, any strike or lockout involving banks, ifunsettled after seven (7) calendar days shall be reported by the Bangko Sentralto the Secretary of Labor who may assume jurisdiction over the dispute ordecide it or certify the same to the National Labor Relations Commission forcompulsory arbitration. However, the President of the Philippines may at anytime intervene and assume jurisdiction over such labor dispute in order to settleor terminate the same. (6-E)

1.3.9 TRIPARTISMART. 275. Tripartism and tripartite conferences. - (a) Tripartism in labor relationsis hereby declared a State policy. Towards this end, workers and employersshall, as far as practicable, be represented in decision and policy-making bodie

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