G.R. No.

140992
March 25, 2004
SAMAHANG MANGGAGAWA SA SULPICIO LINES, INC.NAFLU, RODOLFO ALINDATO, ROQUE TAN, JESSIE LIM, SUSAN
TOPACIO, LYDDA PASCUAL, BERNARDO ALCANTARA, GELACIO DESQUITADO, RODRIGO AVELINO, LEONARDO
ANDRADE, DANILO CHUA, AMANDO EUGENIO, CALVIN LOPEZ, ANDRES BASCO, JR., and CIRILO ALON, petitioners,
vs.
SULPICIO LINES, INC., respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
A strike is a powerful weapon of the working class. But like a sensitive explosive, it must be handled carefully, lest it blows up in the workers own
hands.1 Thus, the right to strike has to be pursued within the bounds of law.
For our resolution is the instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the
Decision2 dated May 28, 1999 and the Resolution3 dated November 25, 1999 rendered by the Court of Appeals in CA-G.R. SP No. 51322, entitled
"Samahang Manggagawa sa Sulpicio Lines, Inc. NAFLU vs. National Labor Relations Commission and Sulpicio Lines, Inc."
The factual antecedents as gleaned from the records are:
On February 5, 1991, Sulpicio Lines, Inc. (herein respondent) and the Samahang Manggagawa sa Sulpicio Lines Inc. NAFLU (herein petitioner)
executed a collective bargaining agreement (CBA) with a term of five (5) years (from October 17, 1990 to October 16, 1995).
After three (3) years or on December 15, 1993, petitioner union and respondent company started their negotiation on the CBAs economic
provisions.4 But this negotiation remained at stalemate.
On March 1, 1994, petitioner filed with the National Conciliation and Mediation Board (NCMB), National Capital Region, a notice of strike due to
collective bargaining deadlock, docketed as NCMB-NCR-NS-03-118-94.
For its part, respondent, on March 21, 1994, filed with the Office of the Secretary, Department of Labor and Employment a petition praying that the
Labor Secretary assume jurisdiction over the controversy.
On March 23, 1994, former Labor Secretary Nieves R. Confesor issued an Order assuming jurisdiction over the labor dispute pursuant to Article 263
(g) of the Labor Code, as amended, thus:
"WHEREFORE PREMISES CONSIDERED, this Office assumes jurisdiction over the labor dispute at Sulpicio Lines, Inc. pursuant to
Article 263 (g) of the Labor Code, as amended.
"Accordingly, any strike or lockout whether actual or intended is hereby enjoined.
"Further, the parties are directed to cease and desist from committing any and all acts that might exacerbate the situation.
"SO ORDERED."
Meanwhile, on May 20, 1994, petitioner filed with the NCMB a second notice of strike alleging that respondent company committed
acts5 constituting unfair labor practice amounting to union busting, docketed as NCMB NCR-05-261-94.
Provoked by respondents alleged unfair labor practice/s, petitioner union immediately conducted a strike vote. Thus, on May 20, 1994, about 9:30
oclock in the morning, 167 rank-and-file employees, officers and members of petitioner, did not report for work and instead gathered in front of Pier
12, North Harbor at Manila.
As a remedial measure, former Labor Secretary Confesor issued an Order dated May 20, 1994 directing the striking employees to return to work; and
certifying the labor dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration. This certified labor dispute was
docketed as NLRC Case No. CC-0083-94.
Meanwhile, respondent company filed with the NLRC a complaint for "illegal strike/clearance for termination," docketed as NLRC NCR Case No.
00-05-04705-94.
On September 29, 1995, the NLRC issued a Resolution6 declaring the strike of petitioners officers and members illegal, with notice to respondent of
the option to terminate their (petitioners officers) employment. In the same Resolution, the NLRC dismissed petitioners complaint against
respondent, thus:
"WHEREFORE, premises considered, after a careful and judicious consideration of the facts, arguments and evidence thus adduced, it is
the considered opinion of thie Commission that the union (Samahang Manggagawa sa Sulpicio Lines, Inc.) had clearly engaged in an
illegal strike on May 20, 1994, when its officers and members actively participated in a well concerted refusal, stoppage and cessation to
render work at Sulpicio Lines, Inc.. In clear violation not only of the procedural requirements of a valid strike, but worse, in clear and
blatant contravention of the assumption order of the Secretary of Labor and Employment. Consequently, the following union
officers named in the complaint, to wit:
1) Allan F. Aguhar

9) Rodrigo Avelino

2) Rodolfo Alindato

10) Leonardo Andrade

3) Roque Tan

11) Danilo Chua

4) Jessie Lim

12) Amando Eugenio

5) Susan Topacio

13) Calvin Lopez

6) Lydda Pascual

14) Andres Rasco, Jr.

7) Bernardo Alcantara

15) Cirilo Alon

8) Gelacio Dequitado
are declared to have lost their employment status with the company, and the latter may now, if it so desires, terminate their
employment with it. The unions complaint against the company is hereby DISMISSED for lack of merit.
"SO ORDERED."
Petitioner filed a motion for reconsideration but was denied by the NLRC in a Resolution 7 dated January 15, 1996.
On March 19, 1996, petitioner filed with this Court a petition for certiorari assailing the NLRC Resolutions. Pursuant to our ruling in St. Martins
Funeral Home vs. NLRC,8 we referred the petition to the Court of Appeals for its appropriate action and disposition.
On May 28, 1999, the Court of Appeals rendered a Decision affirming the NLRC Resolutions. The Appellate Court held (1) that the NLRC has
jurisdiction to resolve the issue of legality of the strike; (2) that the May 20, 1994 temporary work stoppage by the officers and members of petitioner
amounted to an illegal strike; (3) that even assuming that respondent committed unfair labor practice/s, still, the strike is illegal because it failed to
comply with the mandatory procedural requirements of a valid strike under Article 263 (c) and (f) of the Labor Code, as amended; and (4) that the
dismissal of petitioners officers who knowingly participated in an illegal strike is in accordance with Article 264 (a) of the Labor Code, as amended.
On October 20, 1995, petitioner filed a motion for reconsideration but was denied by the Court of Appeals in a Resolution dated November 25, 1999.
Hence, this petition for review on certiorari. Petitioner alleged that the Court of Appeals seriously erred (1) in holding that the one-day work
stoppage of petitioners officers and members is an illegal strike; (2) in sustaining the dismissal from the service of its officers; and (3) in ruling that
the NLRC has jurisdiction over a petition to declare the strike illegal.
The basic issue for our determination is whether the strike staged by petitioners officers and members is illegal. Articles 263 and 264 of
the Labor Code, as amended, provide:
"ART. 263. STRIKES, PICKETING AND LOCKOUTS.
xxx
(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike x x x with the Ministry
(now Department) at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15
days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor
organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with
the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15-day
cooling-off period shall not apply and the union may take action immediately.
xxx
(f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned,
obtained by secret ballot in meetings or referenda called for that purpose. x x x. The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry (now Department) may
at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union x x x
shall furnish the Ministry (now Department) the results of the voting at least seven days before the intended strike or lockout,
subject to the cooling-off period herein provided.
x x x.
ART. 264. PROHIBITED ACTIVITIES.
(a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with
Title VII of this Book or without first having filed the notice required in the preceding article or without the necessary strike or lockout
vote first having been obtained and reported to the Ministry (now Department).
x x x."
Following are the Implementing Guidelines of the above provisions issued by the Department of Labor and Employment:
1. A strike shall be filed with the Department of Labor and Employment at least 15 days if the issues raised are unfair labor practice or at
least 30 days if the issue involved bargaining deadlock. However, in case of dismissal from employment of union officers duly elected in
accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the
15-day cooling-off period shall not apply and the union may take action immediately;
2. The strike shall be supported by a majority vote of the members of the union obtained by secret ballot in a meeting called for the
purpose; and
3. A strike vote shall be reported to the Department of Labor and Employment at least seven (7) days before the intended strike.
There is no showing that the petitioner union observed the 7-day strike ban; and that the results of the strike vote were submitted by petitioners to the
Department of Labor and Employment at least seven (7) days before the strike.
We thus hold that for failing to comply with the mandatory requirements of Article 263 (c) and (f) of the Labor Code, the strike mounted by petitioner
union on May 20, 1994 is illegal.
In Gold City Integrated Port Service, Inc. vs. NLRC,9 we stressed that "the language of the law leaves no room for doubt that the cooling-off
period and the seven-day strike ban after the strike-vote report were intended to be mandatory."
But petitioner insists that the strike can still be declared legal for it was done in good faith, being in response to what its officers and members
honestly perceived as unfair labor practice or union busting committed by respondent.
Petitioners accusation of union busting is bereft of any proof. We scanned the records very carefully and failed to discern any evidence to sustain
such charge.
In Tiu vs. NLRC,10 we held:
"x x x. It is the union, therefore, who had the burden of proof to present substantial evidence to support its allegations (of unfair
labor practices committed by management).
"x x x.
"x x x, but in the case at bar the facts and the evidence did not establish even at least a rational basis why the union would wield a strike
based on alleged unfair labor practices it did not even bother to substantiate during the conciliation proceedings. It is not enough that the
union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie
showing to warrant such a belief."

We explained in National Federation of Labor vs. NLRC11 that "with the enactment of Republic Act No. 6715 which took effect on March 21, 1989,
the rule now is that such requirements as the filing of a notice of strike, strike vote, and notice given to the Department of Labor are
mandatory in nature. Thus, even if the union acted in good faith in the belief that the company was committing an unfair labor practice, if no
notice of strike and a strike vote were conducted, the said strike is illegal."
In a desperate attempt to justify its position, petitioner insists that what transpired on May 20, 1994 was not a strike but merely a "one-day work
absence"12 or a "simple act of absenteeism". 13
We are not convinced. A strike, as defined in Article 212 (o) of the Labor Code, as amended, means "any temporary stoppage of work by the
concerted action of employees as a result of an industrial or labor dispute." The term "strike" shall comprise not only concerted work stoppages, but
also slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities. 14
The basic elements of a strike are present in the case at bar. First, petitioners officers and members numbering 167, in a concerted manner, did not
report for work on May 20, 1994; second, they gathered in front of respondents office at Pier 12, North Harbor at Manila to participate in a strike
voting conducted by petitioner; and third, such union activity was an aftermath of petitioners second notice of strike by reason of respondents unfair
labor practice/s. Clearly, what transpired then was a strike because the cessation of work by petitioners concerted action resulted from a labor
dispute.
Invoking compassion, petitioner pleads that its officers who participated in the one-day strike should not be dismissed from the service, considering
that respondents business activities were not interrupted, much less paralyzed. While we sympathize with their plight, however, we must take care
that in the contest between labor and capital, the results achieved are fair and in conformity with the law. 15
Pertinent is Article 264 (a) of the same Code, thus:
"ART. 264. PROHIBITED ACTIVITIES.
"x x x. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a
worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by
the employer during such lawful strike.
x x x."
It is worth reiterating that the strike is illegal for failure of petitioner to submit the strike vote to the Department of Labor and Employment at least
seven (7) days prior thereto. Also, petitioner failed to prove that respondent company committed any unfair labor practice. Amid this background,
the participation of the union officers in an illegal strike forfeits their employment status.
In Telefunken Semiconductors Employees Union-FFW vs. Secretary of Labor and Employment,16 we explained
"The effects of such illegal strikes, outlined in Article 265 (now Article 264) of the Labor Code, make a distinction between workers and
union officers who participate therein.
"A union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost their employment status. An ordinary striking worker cannot be
terminated for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike. A union
officer, on the other hand, may be terminated from work when he knowingly participates in an illegal strike, and like other
workers, when he commits an illegal act during a strike."
Moreover, petitioner maintains that the Labor Arbiter, not the NLRC, should have taken cognizance of the case at bar. We do not agree.
In International Pharmaceuticals, Inc. v. Secretary of Labor and Employment,17 we held:
x x x [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly.
Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and
controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction (underscoring supplied).
"In the same manner, when the Secretary of Labor and Employment certifies the labor dispute to the NLRC for compulsory
arbitration the latter is concomitantly empowered to resolve all questions and controversies arising therefrom including cases
otherwise belonging originally and exclusively to the Labor Arbiter."
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated May 28, 1999 and November 25, 1999 are
hereby AFFIRMED.
SO ORDERED.
G.R. No. 100158 June 2, 1992
ST. SCHOLASTICA'S COLLEGE, petitioner,
vs.
HON. RUBEN TORRES, in his capacity as SECRETARY OF LABOR AND EMPLOYMENT, and SAMAHANG NG MANGGAGAWANG
PANG-EDUKASYON SA STA. ESKOLASTIKA-NAFTEU, respondents.
BELLOSILLO, J.:
The principal issue to be resolved in this recourse is whether striking union members terminated for abandonment of work after failing to comply
with return-to-work orders of the Secretary of Labor and Employment (SECRETARY, for brevity) should by law be reinstated.
On 20 July 1990, petitioner St. Scholastica's College (COLLEGE, for brevity) and private respondent Samahan ng Manggagawang Pang-Edukasyon
sa Sta. Eskolastika-NAFTEU (UNION, for brevity) initiated negotiations for a first-ever collective bargaining agreement. A deadlock in the
negotiations prompted the UNION to file on 4 October 1990 a Notice of Strike with the Department of Labor and Employment (DEPARTMENT, for
brevity), docketed as NCMB-NCR-NS-10-826.
On 5 November 1990, the UNION declared a strike which paralyzed the operations of the COLLEGE. Affecting as it did the interest of the students,
public respondent SECRETARY immediately assumed jurisdiction over the labor dispute and issued on the same day, 5 November 1990, a return-towork order. The following day, 6 November 1990, instead of returning to work, the UNION filed a motion for reconsideration of the return-to-work
order questioning inter alia the assumption of jurisdiction by the SECRETARY over the labor dispute.
On 9 November 1990, the COLLEGE sent individual letters to the striking employees enjoining them to return to work not later than 8:00 o'clock
A.M. of 12 November 1990 and, at the same time, giving notice to some twenty-three (23) workers that their return would be without prejudice to the

filing of appropriate charges against them. In response, the UNION presented a list of (6) demands to the COLLEGE in a dialogue conducted on 11
November 1990. The most important of these demands was the unconditional acceptance back to work of the striking employees. But these were
flatly rejected.
Likewise, on 9 November 1990, respondent SECRETARY denied reconsideration of his return-to-work order and sternly warned the striking
employees to comply with its terms. On 12 November 1990, the UNION received the Order.
Thereafter, particularly on 14 and 15 November 1990, the parties held conciliation meetings before the National Conciliation and Mediation Board
where the UNION pruned down its demands to three (3), viz.: that striking employees be reinstated under the same terms and conditions before the
strike; that no retaliatory or disciplinary action be taken against them; and, that CBA negotiations be continued. However, these efforts proved futile
as the COLLEGE remained steadfast in its position that any return-to-work offer should be unconditional.
On 16 November 1990, the COLLEGE manifested to respondent SECRETARY that the UNION continued to defy his return-to-work order of 5
November 1990 so that "appropriate steps under the said circumstances" may be undertaken by him. 1
On 23 November 1990, the COLLEGE mailed individual notices of termination to the striking employees, which were received on 26 November
1990, or later. The UNION officers and members then tried to return to work but were no longer accepted by the COLLEGE.
On 5 December 1990, a Complaint for Illegal Strike was filed against the UNION, its officers and several of its members before the National Labor
Relations Commission (NLRC), docketed as NLRC Case No. 00-12-06256-90.
The UNION moved for the enforcement of the return-to-work order before respondent SECRETARY, citing "selective acceptance of returning
strikers" by the COLLEGE. It also sought dismissal of the complaint. Since then, no further hearings were conducted.
Respondent SECRETARY required the parties to submit their respective position papers. The COLLEGE prayed that respondent SECRETARY
uphold the dismissal of the employees who defied his return-to-work order.
On 12 April 1991, respondent SECRETARY issued the assailed Order which, inter alia, directed the reinstatement of striking UNION members,
premised on his finding that no violent or otherwise illegal act accompanied the conduct of the strike and that a fledgling UNION like private
respondent was "naturally expected to exhibit unbridled if inexperienced enthusiasm, in asserting its existence". 2 Nevertheless, the aforesaid Order
held UNION officers responsible for the violation of the return-to-work orders of 5 and 9 November 1990 and, correspondingly, sustained their
termination.
Both parties moved for partial reconsideration of the Order, with petitioner COLLEGE questioning the wisdom of the reinstatement of striking
UNION members, and private respondent UNION, the dismissal of its officers.
On 31 May 1991, in a Resolution, respondent SECRETARY denied both motions. Hence, this Petition for Certiorari, with Prayer for the Issuance of
a Temporary Restraining Order.
On 26 June 1991, We restrained the SECRETARY from enforcing his assailed Orders insofar as they directed the reinstatement of the striking
workers previously terminated.
Petitioner questions the assumption by respondent SECRETARY of jurisdiction to decide on termination disputes, maintaining that such jurisdiction
is vested instead in the Labor Arbiter pursuant to Art. 217 of the Labor Code, thus
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, the following cases involving all workers, whether agricultural or nonagricultural: . . . 2. Termination disputes . . . 5. Cases arising from any violation of Article 264 of this Code, including questions
on the legality of strikes and lock-outs . . .
In support of its position, petitioner invokes Our ruling in PAL v. Secretary of Labor and Employment 3 where We held:
The labor Secretary exceeded his jurisdiction when he restrained PAL from taking disciplinary measures against its guilty
employees, for, under Art. 263 of the Labor Code, all that the Secretary may enjoin is the holding of the strike but not the
company's right to take action against union officers who participated in the illegal strike and committed illegal acts.
Petitioner further contends that following the doctrine laid down in Sarmiento v. Tuico 4 and Union of Filipro Employees v. Nestle Philippines,
Inc., 5 workers who refuse to obey a return-to-work order are not entitled to be paid for work not done, or to reinstatement to the positions they have
abandoned of their refusal to return thereto as ordered.
Taking a contrary stand, private respondent UNION pleads for reinstatement of its dismissed officers considering that the act of the UNION in
continuing with its picket was never characterized as a "brazen disregard of successive legal orders", which was readily apparent in Union Filipro
Employees v. Nestle Philippines, Inc., supra, nor was it a willful refusal to return to work, which was the basis of the ruling in Sarmiento v. Tuico,
supra. The failure of UNION officers and members to immediately comply with the return-to-work orders was not because they wanted to defy said
orders; rather, they held the view that academic institutions were not industries indispensable to the national interest. When respondent SECRETARY
denied their motion for reconsideration, however, the UNION intimated that efforts were immediately initiated to fashion out a reasonable return-towork agreement with the COLLEGE, albeit, if failed.
The issue on whether respondent SECRETARY has the power to assume jurisdiction over a labor dispute and its incidental controversies, causing or
likely to cause a strike or lockout in an industry indispensable to the national interest, was already settled in International Pharmaceuticals, Inc. v.
Secretary of Labor and Employment. 6 Therein, We ruled that:
. . . [T]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions
and include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has
exclusive jurisdiction.
And rightly so, for, as found in the aforesaid case, Article 217 of the Labor Code did contemplate of exceptions thereto where the SECRETARY is
authorized to assume jurisdiction over a labor dispute otherwise belonging exclusively to the Labor Arbiter. This is readily evident from its opening
proviso reading "(e)xcept as otherwise provided under this Code . . .
Previously, We held that Article 263 (g) of the Labor Code was broad enough to give the Secretary of Labor and Employment the power to take
jurisdiction over an issue involving unfair labor practice. 7
At first glance, the rulings above stated seem to run counter to that of PAL v. Secretary of Labor and Employment, supra, which was cited by
petitioner. But the conflict is only apparent, not real.

To recall, We ruled in the latter case that the jurisdiction of the Secretary of Labor and Employment in assumption and/or certification cases is limited
to the issues that are involved in the disputes or to those that are submitted to him for resolution. The seeming difference is, however, reconcilable.
Since the matter on the legality or illegality of the strike was never submitted to him for resolution, he was thus found to have exceeded his
jurisdiction when he restrained the employer from taking disciplinary action against employees who staged an illegal strike.
Before the Secretary of Labor and Employment may take cognizance of an issue which is merely incidental to the labor dispute, therefore, the same
must be involved in the labor disputed itself, or otherwise submitted to him for resolution. If it was not, as was the case in PAL v. Secretary or Labor
and Employment, supra, and he nevertheless acted on it, that assumption of jurisdiction is tantamount to a grave abuse of discretion. Otherwise, the
ruling in International Pharmaceuticals, Inc. v. Secretary of Labor and Employment, supra, will apply.
The submission of an incidental issue of a labor dispute, in assumption and/or certification cases, to the Secretary of Labor and Employment for his
resolution is thus one of the instances referred to whereby the latter may exercise concurrent jurisdiction together with the Labor Arbiters.
In the instant petition, the COLLEGE in its Manifestation, dated 16 November 1990, asked the "Secretary of Labor to take the appropriate steps
under the said circumstances." It likewise prayed in its position paper that respondent SECRETARY uphold its termination of the striking employees.
Upon the other hand, the UNION questioned the termination of its officers and members before respondent SECRETARY by moving for the
enforcement of the return-to-work orders. There is no dispute then that the issue on the legality of the termination of striking employees was properly
submitted to respondent SECRETARY for resolution.
Such an interpretation will be in consonance with the intention of our labor authorities to provide workers immediate access to their rights and
benefits without being inconvenienced by the arbitration and litigation process that prove to be not only nerve-wracking, but financially burdensome
in the long run. Social justice legislation, to be truly meaningful and rewarding to our workers, must not be hampered in its application by longwinded arbitration and litigation. Rights must be asserted and benefits received with the least inconvenience. For, labor laws are meant to promote,
not defeat, social justice (Maternity Children's Hospital v. Hon. Secretary of Labor ). 8 After all, Art. 4 of the Labor Code does state that all doubts in
the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor.
We now come to the more pivotal question of whether striking union members, terminated for abandonment of work after failing to comply strictly
with a return-to-work order, should be reinstated.
We quote hereunder the pertinent provisions of law which govern the effects of defying a return-to-work order:
1. Article 263 (g) of the Labor Code
Art. 263. Strikes, picketing, and lockouts. . . . (g) When, in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and 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 or certification order. If one has already taken place at the time of assumption or certification, all striking or locked
out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the
Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such
orders as he may issue to enforce the same . . . (as amended by Sec. 27, R.A. 6715; emphasis supplied).
2. Article 264, same Labor Code
Art. 264. Prohibited activities. (a) No labor organization or employer shall declare a strike or lockout without first having
bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding
Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or
submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for
the strike or lockout
. . . (emphasis supplied).
Any worker whose employment has been terminated as consequence of an unlawful lockout shall be entitled to reinstatement
with full back wages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status:
Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful strike . . . (emphasis supplied).
3. Section 6, Rule IX, of the New Rules of Procedure of the NLRC (which took effect on 31 August 1990)
Sec. 6. Effects of Defiance. Non-compliance with the certification order of the Secretary of Labor and Employment or a return
to work order of the Commission shall be considered an illegal act committed in the course of the strike or lockout and shall
authorize the Secretary of Labor and Employment or the Commission, as the case may be, to enforce the same under pain or loss
of employment status or entitlement to full employment benefits from the locking-out employer or backwages, damages and/or
other positive and/or affirmative reliefs, even to criminal prosecution against the liable parties . . . (emphasis supplied).
Private respondent UNION maintains that the reason they failed to immediately comply with the return-to-work order of 5 November 1990 was
because they questioned the assumption of jurisdiction of respondent SECRETARY. They were of the impression that being an academic institution,
the school could not be considered an industry indispensable to national interest, and that pending resolution of the issue, they were under no
obligation to immediately return to work.
This position of the UNION is simply flawed. Article 263 (g) of the Labor Code provides that if a strike has already taken place at the time of
assumption, "all striking . . . employees shall immediately return to work." This means that by its very terms, a return-to-work order is immediately
effective and executory notwithstanding the filing of a motion for reconsideration (University of Sto. Tomas v. NLRC). 9 It must be strictly complied
with even during the pendency of any petition questioning its validity (Union of Filipro Employees v. Nestle Philippines, Inc., supra). After all, the
assumption and/or certification order is issued in the exercise of respondent SECRETARY's compulsive power of arbitration and, until set aside, must
therefore be immediately complied with.
The rationale for this rule is explained in University of Sto. Tomas v. NLRC, supra, citing Philippine Air Lines Employees Association v. Philippine
Air Lines, Inc., 10 thus

To say that its (return-to-work order) effectivity must wait affirmance in a motion for reconsideration is not only to emasculate it
but indeed to defeat its import, for by then the deadline fixed for the return to work would, in the ordinary course, have already
passed and hence can no longer be affirmed insofar as the time element is concerned.
Moreover, the assumption of jurisdiction by the Secretary of Labor and Employment over labor disputes involving academic institutions was already
upheld in Philippine School of Business Administration v. Noriel 11 where We ruled thus:
There is no doubt that the on-going labor dispute at the school adversely affects the national interest. The school is a duly
registered educational institution of higher learning with more or less 9,000 students. The on-going work stoppage at the school
unduly prejudices the students and will entail great loss in terms of time, effort and money to all concerned. More important, it is
not amiss to mention that the school is engaged in the promotion of the physical, intellectual and emotional well-being of the
country's youth.
Respondent UNION's failure to immediately comply with the return-to-work order of 5 November 1990, therefore, cannot be condoned.
The respective liabilities of striking union officers and members who failed to immediately comply with the return-to-work order is outlined in Art.
264 of the Labor Code which provides that any declaration of a strike or lockout after the Secretary of Labor and Employment has assumed
jurisdiction over the labor dispute is considered an illegal. act. Any worker or union officer who knowingly participates in a strike defying a return-towork order may, consequently, "be declared to have lost his employment status."
Section 6 Rule IX, of the New Rules of Procedure of the NLRC, which provides the penalties for defying a certification order of the Secretary of
Labor or a return-to-work order of the Commission, also reiterates the same penalty. It specifically states that non-compliance with the aforesaid
orders, which is considered an illegal act, "shall authorize the Secretary of Labor and Employment or the Commission . . . to enforce the same under
pain of loss of employment status." Under the Labor Code, assumption and/or certification orders are similarly treated.
Thus, we held in Sarmiento v. Tuico, supra, that by insisting on staging the restrained strike and defiantly picketing the company premises to prevent
the resumption of operations, the strikers have forfeited their right to be readmitted, having abandoned their positions, and so could be validly
replaced.
We recently reiterated this stance in Federation of Free Workers v. Inciong, 12 wherein we cited Union of Filipro Employees v. Nestle Philippines,
Inc., supra, thus
A strike undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited
activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as amended . . . The union officers and
members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act.
Despite knowledge of the ruling in Sarmiento v. Tuico, supra, records of the case reveal that private respondent UNION opted to defy not only the
return-to-work order of 5 November 1990 but also that of 9 November 1990.
While they claim that after receiving copy of the Order of 9 November 1990 initiatives were immediately undertaken to fashion out a return-to-work
agreement with management, still, the unrebutted evidence remains that the striking union officers and members tried to return to work only eleven
(11) days after the conciliation meetings ended in failure, or twenty (20) days after they received copy of the first return-to-work order on 5
November 1990.
The sympathy of the Court which, as a rule, is on the side of the laboring classes (Reliance Surety & Insurance Co., Inc. v. NLRC), 13 cannot be
extended to the striking union officers and members in the instant petition. There was willful disobedience not only to one but two return-to-work
orders. Considering that the UNION consisted mainly of teachers, who are supposed to be well-lettered and well-informed, the Court cannot
overlook the plain arrogance and pride displayed by the UNION in this labor dispute. Despite containing threats of disciplinary action against some
union officers and members who actively participated in the strike, the letter dated 9 November 1990 sent by the COLLEGE enjoining the union
officers and members to return to work on 12 November 1990 presented the workers an opportunity to return to work under the same terms and
conditions or prior to the strike. Yet, the UNION decided to ignore the same. The COLLEGE, correspondingly, had every right to terminate the
services of those who chose to disregard the return-to-work orders issued by respondent SECRETARY in order to protect the interests of its students
who form part of the youth of the land.
Lastly, the UNION officers and members also argue that the doctrine laid down in Sarmiento v. Tuico, supra, and Union of Filipro Employees v.
Nestle, Philippines, Inc., supra, cannot be made applicable to them because in the latter two cases, workers defied the return-to-work orders for more
than five (5) months. Their defiance of the return-to-work order, it is said, did not last more than a month.
Again, this line of argument must be rejected. It is clear from the provisions above quoted that from the moment a worker defies a return-to-work
order, he is deemed to have abandoned his job. It is already in itself knowingly participating in an illegal act. Otherwise, the worker will just simply
refuse to return to his work and cause a standstill in the company operations while retaining the positions they refuse to discharge or allow the
management to fill (Sarmiento v. Tuico, supra). Suffice it to say, in Federation of Free Workers v. Inciong, supra, the workers were terminated from
work after defying the return-to-work order for only nine (9) days. It is indeed inconceivable that an employee, despite a return-to-work order, will be
allowed in the interim to stand akimbo and wait until five (5) orders shall have been issued for their return before they report back to work. This is
absurd.
In fine, respondent SECRETARY gravely abused his discretion when he ordered the reinstatement of striking union members who refused to report
back to work after he issued two (2) return-to-work orders, which in itself is knowingly participating in an illegal act. The Order in question is,
certainly, contrary to existing law and jurisprudence.
WHEREFORE, the Petition for Certiorari is hereby GRANTED. The Order of 12 April 1991 and the Resolution 31 May 1991 both issued by
respondent Secretary of Labor and Employment are SET ASIDE insofar as they order the reinstatement of striking union members terminated by
petitioner, and the temporary restraining order We issued on June 26, 1991, is made permanent.
No costs.
SO ORDERED.
G.R. No. 120751 March 17, 1999
PHIMCO INDUSTRIES, INC., petitioner,
vs.
HONORABLE ACTING SECRETARY OF LABOR JOSE BRILLANTES and PHIMCO INDUSTRIES LABOR
ASSOCIATION, respondents.

PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to set aside the July 7, 1995 Order 1 of the then Acting
Secretary Jose Brillantes of the Department of Labor and Employment, in NCMB-NCR-NS-03-122-95, on the ground of grave abuse of discretion
amounting to lack or excess of jurisdiction.
The antecedent facts are, as follows:
On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA), duly certified collective bargaining representative of the
daily paid workers of the petitioner, Phimco Industries Inc. (PHIMCO), filed a notice of strike with the National Conciliation and Mediation Board,
NCR, against PHIMCO, a corporation engaged in the production of matches, after a deadlock in the collective bargaining and negotiation. On April
21, 1995, when the several conciliation conferences called by the contending parties failed to resolve their differences PILA, composed of
352 2 members, staged a strike.
On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in the resolution of the labor dispute, to which petition
PHIMCO opposed. Pending resolution of the said petition or on June 26, 1995, to be precise, PHIMCO sent notice of termination to some
47 3 workers including several union officers.
On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction over the labor dispute and issued his Order ruling, thus:
WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this office hereby
assumes jurisdiction over the dispute at, Phimco industries, Inc.
Accordingly, all the striking workers, except those who have been handed down termination papers on June 26, 1995, are hereby directed to
return to work with twenty-four (24) hours from receipt of this Order and for the Company to accept them back under the same terms and
conditions prevailing prior to the strike.
The parties are further ordered to cease and desist from committing any act that will aggravate the situation.
To expedite the resolution of this dispute, the parties are directed to submit their position papers and evidence within ten (10) days from
receipt of this Order.
SO ORDERED. 4
On July 12, 1995, petitioner brought the present petition; theorizing, that:
I
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH THE GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER.
II
THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION WHEN HE WENT BEYOND THE BASIS FOR ASSUMPTION OF JURISDICTION
UNDER ART. 263 OF THE LABOR CODE. 5
On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued another Order 6temporarily holding in abeyance the
implementation of the questioned Order dated July 7, 1995 for a period of thirty (30) day; directing, as follows:
WHEREFORE PREMISES CONSIDERED, the implementation of our Order dated 7 July 1995 hereby temporarily held in abeyance for a
period of thirty (30) days effective from receipt thereof pending the private negotiations of the parties for the settlement of their labor
dispute. Thereafter, both the Union and the Company are directed to submit to this Office the result of their negotiations for our evaluation
and appropriate action.
SO ORDERED. 7
The pivotal issue here is: whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in
assuming jurisdiction over subject labor dispute.
The petition is impressed with merit.
Art. 263, paragraph (g) of the Labor Code, provides:
(g) When, in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration . . .
The Labor Code vests in the Secretary of Labor the discretion to determine what industries are indispensable to the national interest. Accordingly,
upon the determination by the Secretary of Labor that such industry is indispensable to the national interest, he will assume jurisdiction over the labor
dispute in the said industry. 8 This power, however, is not without any limitation. In upholding the constitutionality of B.P. 130 insofar as it amends
Article 264 (g) 9 of the Labor Code, it stressed in the case of Free telephone Workers Union vs. Honorable Minister of Labor and
Employment, et al., 10 the limitation set by the legislature on the power of the Secretary of Labor to assume jurisdiction over a labor dispute, thus:
Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to "strikes or lockouts adversely affecting the national
interest. 11
In this case at bar, however, the very admission by the public respondent draws the labor dispute in question out of the ambit of the Secretary's
prerogative, to wit.
While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this office
believes that the obtaining circumstances warrant the exercise of the powers under Article 263 (g) of the Labor Code, as amended. 12
The private respondent did not even make any effort to touch on the indispensability of the match factory to the national interest. It must have been
aware that a match factory, though of value, can scarcely be considered as an industry "indispensable to the national interest" as it cannot be in the
same category as "generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries." 13 Yet, the public
respondent assumed jurisdiction thereover, ratiocinating as follows:
For one, the prolonged work disruption has adversely affected not only the protagonists, i.e., the workers and the Company, but also those
directly and indirectly dependent upon the unhampered and continued operations of the Company for their means of livelihood and
existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company
remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the
unemployment problem of the country.

Thus we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved,
particularly when alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein. 14
It is thus evident from the foregoing that the Secretary's assumption of jurisdiction grounded on the alleged "obtaining circumstances" and not on a
determination that the industry involved in the labor dispute is one indispensable to the "national interest", the standard set by the legislature,
constitutes grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public respondent under the premises
would be stretching too far the power of the Secretary of Labor as every case of a strike or lockout where there are inconveniences in the community,
or work disruptions in an industry though not indispensable to the national interest, would then come within the Secretary's power. It would be
practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure. This is precisely why the law sets and defines the
standard: even in the exercise of his power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For
"when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its
meaning as the law itself is disregarded" 15
In light of the foregoing, we hold that the public respondent gravely abused his discretion in assuming jurisdiction over the labor dispute sued upon in
the case.
WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7, 1995, of the Acting Secretary of Labor SET ASIDE. No
pronouncement as to costs.
SO ORDERED.
Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.
Panganiban, J., see concurring opinion.
--------------------------------------------------------------------------Separate Opinions
PANGANIBAN, J., concurring opinion;
I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave abuse of discretion in assuming jurisdiction over a
labor dispute without any showing that the disputants were engaged in an industry indispensable to national interest. Quite the contrary, the
respondent secretary himself admits that the industry, of which petitioner is a part, is not indispensable to national interest. Indeed, a labor dispute
must seriously and deleteriously affect an industry indispensable to national interest before the secretary may assume jurisdiction over it.
Art. 263 (g) Requires a Labor Dispute in an
Industry Indispensable to National Interest.
Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for their mutual benefit and protection. 1 Concerted
activities, like the holding of a strike, are resorted to by employees in their effort to obtain more favorable terms and conditions of work for
themselves. Due to its importance, the exercise of such right is limited only by the demands of national interest under paragraph (g) of said article:
(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and 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 or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.
xxx xxx xxx
The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion,
are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to
settle or terminate the same.
From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of jurisdiction over a labor dispute is meant to be
used sparingly and only if the national interest demands it. He, like everyone else, must respect labor's paramount right to stage concerted activities.
Jurisprudence Requires National Interest
to Justify Assumption of Jurisdiction
Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is intended not to interfere with or impede workers' rights, but
to obtain speedy settlement of labor disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the secretary's
assumption of jurisdiction in many cases, some of which are worth mentioning to show the care with which such plenary power should be used.
In Philippine School of Business Administration v. Noriel, 3 the Court has declared that the administration of a school is of national interest because
" . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth." Work stoppage at a school unduly
prejudices the students and entails great loss to all concerned in terms of time, effort and money.
In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating more than $12 million dollars per year was declared to be
of national interest. Any disruption of operations would have caused the delay of shipments of export consisting of finished products previously
committed to customers abroad, a delay that would have hampered the economic recovery program pursued by the government.
The manufacture of drugs and pharmaceuticals has also been declared to belong to the same classification. 5Likewise, the operation of an airline that
services domestic routes has been deemed to be imbued with national interest. 6 In one case, a company was considered to be indispensable to
national interest, as it was responsible for 22 percent of the tire production in the Philippines, and work disruption would have or only aggravated the
already worsening unemployment situation but also discouraged foreign and domestic entrepreneurs from further investing in the country. 7
On the other hand, the Court has disallowed the imprudent use of this power in even more cases. Perhaps the most eloquent of these GTE Directories
Corporation v. Sanchez, 8 wherein the Court declared the secretary to be without jurisdiction to take over a labor dispute involving a company that
produced telephone directories, viz:
The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be described as an industry
affecting the national interest. GTE is a publishing firm chiefly dependent on the marketing and sale of advertising space for its not
inconsiderable revenues. Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the

generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented industries." It cannot be regarded as
playing as vital a role in communication as other mass media. The small number of employees involved in the dispute, the employer's
payment of "P10 million in income tax alone to the Philippine Government," and the fact that the "top officers of the union were dismissed
during the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national
interest."
The Secretary is Vested with Broad Powers
When He Assumes Jurisdiction
When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of discretion" in order to find a solution to a labor dispute.
In The Philippine America Management Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the Court
clarified the extent of the powers vested in the then Court of Industrial Relations, as follows:
. . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in the
ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power of
jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and
jurisdiction to carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix the terms and
conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the
employment.
The most obvious of these powers is the automatic enjoinment of an impending strike or lockout or the lifting thereof if one has already taken place.
Assumption of jurisdiction always coexist with an order for workers to return to work immediately and for employers to readmit all workers under
the same terms and conditions prevailing before the strike or lockout. Defiance of return-to-work order produces forfeiture of workers'
employment. 10 Thus, not only does it diminish the right of labor to strike; it also limits the prerogatives of management to hire workers under its own
terms and conditions. 11
The secretary is conferred other powers, including jurisdiction over incidents arising from the labor dispute, in order to avoid the undesirable result of
diametrically opposed rulings being issued by the secretary and the labor arbiter. These powers comprehend those that the secretary needs to dispose
of the primary dispute effectively and efficiently. 12
The almost unlimited breadth of such powers calls for caution on the part of its possessor add strict scrutiny of the excesses of government on the part
of the judiciary.
Precursor of Article 263(g)
The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715 was enacted, then President Ferdinand Marcos sought
to quell mass expressions of dissent, including strikes, through General Order No. 5 which provided:
WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national emergency now prevailing
throughout the country which has been brought about by the activities of groups of men now actively engaged in criminal conspiracy to
seize political power and state power in the Philippines in order to take over the Government by force and violence, the extent of which has
now assumed the proportion of an actual war against our people and their legitimate Government; and
WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it is necessary to prohibit the
inhabitants of the country from doing certain acts of undertaking certain activities such as rallies, demonstrations, picketing or strikes in
certain vital industries, and other forms of group actions which would cause hysteria or panic among the populace or would incense the
people against their legitimate Government, or would generate sympathy for the radical and lawless elements, or would aggravate the
already critical political and social turmoil now prevailing throughout the land;
NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to
Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that henceforth and until otherwise ordered by me or by my duly designated
representative, all rallies, demonstrations and other forms of group actions by persons within the geographical limits of the Philippines,
including strikes and picketing in vital industries such as in companies engaged in the manufacture or processing as well in the distribution
of fuel gas, gasoline, and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products
for exports, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are strictly prohibited and
any person violating this order shall forthwith be arrested and taken into custody and held for the duration of the national emergency or
until he or she is otherwise ordered released by me or by my duly designated representative.
General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically detailed the vital industries or firms referred to, as
follows:
For the guidance of workers and employers, some of whom have been led into filing notices of strikes and lockouts even in vital industries,
you are hereby instructed to consider the following as vital industries and companies or firms under PD 823 as amended:
1. Public Utilities:
A. Transportation:
1) All land, air and water companies or firms engaged in passenger, freight or tourist transport;
2) All brokerage, arrastre, warehousing companies or firms;
B. Communications:
1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or firms;
2) Radio and television companies or firms;
3) Print Media companies;
4) Postal and messengerial service companies;
C. Companies engaged in electric, light, gas, steam and water power generation and distribution and sanitary service
companies;
D. Other Public Utilities:
1) Ice and Refrigeration plants
2. Companies or firms engaged in the manufacture or processing of the following essential commodities:
A. Animal feeds
B. Cement

C. Chemicals and fertilizers

D. Drugs and medicines
E. Flour
F. Products which are classified as essential commodities in the list of National Economic and Development Authority except the
following: rice, corn, some basic cuts of meat, cooking oil, laundry soap, lumber and plywood, galvanized iron sheets, writing
pads and notebooks.
G. Iron, steel, copper, tin plates and other basic mineral products;
H. Milk
I. Newsprint
J. Tires
K. Sugar
L. Textile and garments
3. Companies engaged in the production and processing of products for export which are holders of Central Bank or Board of Investment
Certificate of Export Orientation, including hotels and restaurants classified as three (3), four (4) or five (5) star by the Department of
Tourism;
4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper, gold, and other minerals;
5. Companies or firms engaged in banking, including:
A. Commercial Banks
B. Saving Banks
C. Development Banks
D. Investment Banks
E. Rural Banks
F. Savings and Loans Associations
G. Cooperative Banks
H. Credit Unions
6. Companies or firms which are actually engaged in government infrastructure projects and in activities covered by Defense contracts;
7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the Labor Code of the Philippines;
8. School and Colleges duly recognized by the Government.
The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as the national interest, national security, or
general welfare may require.
When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more listing of industries indispensable to national interest.
The labor and employment secretary was given discretion in determining which industries would qualify as such. But the discretion cannot be
abused. It is subject to judicial review.
Under General Order No. 5, the state prohibited the holding of strikes for a stated public purpose: a national emergency and only in enumerated
industries considered vital to the ailing economy. Even the height of martial rule in the country, there was no intention to provide a blanket authority
to the secretary to assume jurisdiction over labor disputes without any showing that national interest, national security or general welfare demanded
it.
Police Power Requires Public Necessity
After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art. 263(g) has now been viewed as an exercise of the
police power of the state with the aim of promoting the common good. A prolonged strike or lockout can be inimical to the national
economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public to self-protection. But such public necessity and
need for self-protection are absent in labor disputes industries not indispensable to national interest. In the spirit of free enterprise, it is more in
keeping with national interest to allow labor to negotiate with management for decent pay and humane working conditions without intervention from
the government.
Not Always Beneficial to Labor
Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute under Art. 263. Although the intention may be to find
a balance between the demands of labor and the resources of management, intervention from the state and the derogation of the right to strike are not
always the solutions to the just demands of labor. More often than not, the intervention is more to the advantage of management, which would not
incur overhead expenses that would otherwise be wasted during a work stoppage. For the same reason, it does not necessarily follow that intervention
works for the protection of labor.
Other Available Remedies
Even without compulsory arbitration, other remedies for resolving their labor disputes are still available to labor and management. Striking
employees can file illegal dismissal cases if they are dismissed without cause. On the other hand, management can dismiss employees engaged in
illegal strikes, or it can negotiate with those involved in legal strikes.
The Secretary Found No National Interest
As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus, does not qualify as one engaged in an "industry
indispensable to national interest." The respondent labor and employment secretary admits this facts, expressly declaring that "the case at bar appears
on its face not to fall within the strict categorization of cases imbued with "national interest."" He nevertheless assumed jurisdiction over petitioner's
labor dispute with PHIMCO Industries Labor Association (PILA), rationalizing thus: 14
While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this Office
believes that obtaining circumstances warrant the exercise of the powers under Article 263(g) of the Labor Code, as amended.
For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the workers and the Company, but also
those directly and indirectly dependent upon the unhampared and continued operations of the Company for their means of livelihood and
existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company
remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the
unemployment problem of the country.

10

Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved,
particularly when an alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein.
These excuses fail to show how petitioner falls within the category of "industries indispensable to national interest." The allegation of the public
respondent that the "match industry like the textile or garment industry may be classified as export-oriented" is sufficiently rebutted by petitioner's
simple argument pointing out that its export is very negligible and would not qualify under the definition of "export-oriented industries" in Section
14, Book V, Rule XIII of the Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to be supported by the
secretary, who in his assailed Order, found that petitioner's business was not an industry indispensable to national interest.
The case at bar is peculiar in the sense that it was the union (PILA), rather than management, that petitioned the secretary to assume jurisdiction over
the controversy. It appears that PILA had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's power of
compulsory arbitration. Petitioner, on the other hand, questions the intervention, obviously because it is not amenable to accepting all the returning
workers, some of whom were dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues.
How true it is that the road to damnation is paved with good intentions. The secretary's intention to reconcile the disputants may have been noble but
it does not imbue the labor dispute with national interest. Neither does it clothe him with power to assume jurisdiction over the case.
WHEREFORE, I vote to GRANT the petition.
# Separate Opinions
PANGANIBAN, J., concurring opinion;
I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave abuse of discretion in assuming jurisdiction over a
labor dispute without any showing that the disputants were engaged in an industry indispensable to national interest. Quite the contrary, the
respondent secretary himself admits that the industry, of which petitioner is a part, is not indispensable to national interest. Indeed, a labor dispute
must seriously and deleteriously affect an industry indispensable to national interest before the secretary may assume jurisdiction over it.
Art. 263 (g) Requires a Labor Dispute in an
Industry Indispensable to National Interest.
Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for their mutual benefit and protection. 1 Concerted
activities, like the holding of a strike, are resorted to by employees in their effort to obtain more favorable terms and conditions of work for
themselves. Due to its importance, the exercise of such right is limited only by the demands of national interest under paragraph (g) of said article:
(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and 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 or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.
xxx xxx xxx
The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion,
are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to
settle or terminate the same.
From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of jurisdiction over a labor dispute is meant to be
used sparingly and only if the national interest demands it. He, like everyone else, must respect labor's paramount right to stage concerted activities.
Jurisprudence Requires National Interest
to Justify Assumption of Jurisdiction
Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is intended not to interfere with or impede workers' rights, but
to obtain speedy settlement of labor disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the secretary's
assumption of jurisdiction in many cases, some of which are worth mentioning to show the care with which such plenary power should be used.
In Philippine School of Business Administration v. Noriel, 3 the Court has declared that the administration of a school is of national interest because
" . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth." Work stoppage at a school unduly
prejudices the students and entails great loss to all concerned in terms of time, effort and money.
In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating more than $12 million dollars per year was declared to be
of national interest. Any disruption of operations would have caused the delay of shipments of export consisting of finished products previously
committed to customers abroad, a delay that would have hampered the economic recovery program pursued by the government.
The manufacture of drugs and pharmaceuticals has also been declared to belong to the same classification. 5Likewise, the operation of an airline that
services domestic routes has been deemed to be imbued with national interest. 6 In one case, a company was considered to be indispensable to
national interest, as it was responsible for 22 percent of the tire production in the Philippines, and work disruption would have or only aggravated the
already worsening unemployment situation but also discouraged foreign and domestic entrepreneurs from further investing in the country. 7
On the other hand, the Court has disallowed the imprudent use of this power in even more cases. Perhaps the most eloquent of these GTE Directories
Corporation v. Sanchez, 8 wherein the Court declared the secretary to be without jurisdiction to take over a labor dispute involving a company that
produced telephone directories, viz:
The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be described as an industry
affecting the national interest. GTE is a publishing firm chiefly dependent on the marketing and sale of advertising space for its not
inconsiderable revenues. Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the
generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented industries." It cannot be regarded as
playing as vital a role in communication as other mass media. The small number of employees involved in the dispute, the employer's
payment of "P10 million in income tax alone to the Philippine Government," and the fact that the "top officers of the union were dismissed
during the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national
interest."
The Secretary is Vested with Broad Powers

11

When He Assumes Jurisdiction

When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of discretion" in order to find a solution to a labor dispute.
In The Philippine America Management Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the Court
clarified the extent of the powers vested in the then Court of Industrial Relations, as follows:
. . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in the
ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power of
jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and
jurisdiction to carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix the terms and
conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the
employment.
The most obvious of these powers is the automatic enjoinment of an impending strike or lockout or the lifting thereof if one has already taken place.
Assumption of jurisdiction always coexist with an order for workers to return to work immediately and for employers to readmit all workers under
the same terms and conditions prevailing before the strike or lockout. Defiance of return-to-work order produces forfeiture of workers'
employment. 10 Thus, not only does it diminish the right of labor to strike; it also limits the prerogatives of management to hire workers under its own
terms and conditions. 11
The secretary is conferred other powers, including jurisdiction over incidents arising from the labor dispute, in order to avoid the undesirable result of
diametrically opposed rulings being issued by the secretary and the labor arbiter. These powers comprehend those that the secretary needs to dispose
of the primary dispute effectively and efficiently. 12
The almost unlimited breadth of such powers calls for caution on the part of its possessor add strict scrutiny of the excesses of government on the part
of the judiciary.
Precursor of Article 263(g)
The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715 was enacted, then President Ferdinand Marcos sought
to quell mass expressions of dissent, including strikes, through General Order No. 5 which provided:
WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national emergency now prevailing
throughout the country which has been brought about by the activities of groups of men now actively engaged in criminal conspiracy to
seize political power and state power in the Philippines in order to take over the Government by force and violence, the extent of which has
now assumed the proportion of an actual war against our people and their legitimate Government; and
WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it is necessary to prohibit the
inhabitants of the country from doing certain acts of undertaking certain activities such as rallies, demonstrations, picketing or strikes in
certain vital industries, and other forms of group actions which would cause hysteria or panic among the populace or would incense the
people against their legitimate Government, or would generate sympathy for the radical and lawless elements, or would aggravate the
already critical political and social turmoil now prevailing throughout the land;
NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to
Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that henceforth and until otherwise ordered by me or by my duly designated
representative, all rallies, demonstrations and other forms of group actions by persons within the geographical limits of the Philippines,
including strikes and picketing in vital industries such as in companies engaged in the manufacture or processing as well in the distribution
of fuel gas, gasoline, and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products
for exports, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are strictly prohibited and
any person violating this order shall forthwith be arrested and taken into custody and held for the duration of the national emergency or
until he or she is otherwise ordered released by me or by my duly designated representative.
General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically detailed the vital industries or firms referred to, as
follows:
For the guidance of workers and employers, some of whom have been led into filing notices of strikes and lockouts even in vital industries,
you are hereby instructed to consider the following as vital industries and companies or firms under PD 823 as amended:
1. Public Utilities:
A. Transportation:
1) All land, air and water companies or firms engaged in passenger, freight or tourist transport;
2) All brokerage, arrastre, warehousing companies or firms;
B. Communications:
1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or firms;
2) Radio and television companies or firms;
3) Print Media companies;
4) Postal and messengerial service companies;
C. Companies engaged in electric, light, gas, steam and water power generation and distribution and sanitary service
companies;
D. Other Public Utilities:
1) Ice and Refrigeration plants
2. Companies or firms engaged in the manufacture or processing of the following essential commodities:
A. Animal feeds
B. Cement
C. Chemicals and fertilizers
D. Drugs and medicines
E. Flour
F. Products which are classified as essential commodities in the list of National Economic and Development Authority except the
following: rice, corn, some basic cuts of meat, cooking oil, laundry soap, lumber and plywood, galvanized iron sheets, writing
pads and notebooks.

12

G. Iron, steel, copper, tin plates and other basic mineral products;
H. Milk
I. Newsprint
J. Tires
K. Sugar
L. Textile and garments
3. Companies engaged in the production and processing of products for export which are holders of Central Bank or Board of Investment
Certificate of Export Orientation, including hotels and restaurants classified as three (3), four (4) or five (5) star by the Department of
Tourism;
4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper, gold, and other minerals;
5. Companies or firms engaged in banking, including:
A. Commercial Banks
B. Saving Banks
C. Development Banks
D. Investment Banks
E. Rural Banks
F. Savings and Loans Associations
G. Cooperative Banks
H. Credit Unions
6. Companies or firms which are actually engaged in government infrastructure projects and in activities covered by Defense contracts;
7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the Labor Code of the Philippines;
8. School and Colleges duly recognized by the Government.
The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as the national interest, national security, or
general welfare may require.
When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more listing of industries indispensable to national interest.
The labor and employment secretary was given discretion in determining which industries would qualify as such. But the discretion cannot be
abused. It is subject to judicial review.
Under General Order No. 5, the state prohibited the holding of strikes for a stated public purpose: a national emergency and only in enumerated
industries considered vital to the ailing economy. Even the height of martial rule in the country, there was no intention to provide a blanket authority
to the secretary to assume jurisdiction over labor disputes without any showing that national interest, national security or general welfare demanded
it.
Police Power Requires Public Necessity
After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art. 263(g) has now been viewed as an exercise of the
police power of the state with the aim of promoting the common good. A prolonged strike or lockout can be inimical to the national
economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public to self-protection. But such public necessity and
need for self-protection are absent in labor disputes industries not indispensable to national interest. In the spirit of free enterprise, it is more in
keeping with national interest to allow labor to negotiate with management for decent pay and humane working conditions without intervention from
the government.
Not Always Beneficial to Labor
Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute under Art. 263. Although the intention may be to find
a balance between the demands of labor and the resources of management, intervention from the state and the derogation of the right to strike are not
always the solutions to the just demands of labor. More often than not, the intervention is more to the advantage of management, which would not
incur overhead expenses that would otherwise be wasted during a work stoppage. For the same reason, it does not necessarily follow that intervention
works for the protection of labor.
Other Available Remedies
Even without compulsory arbitration, other remedies for resolving their labor disputes are still available to labor and management. Striking
employees can file illegal dismissal cases if they are dismissed without cause. On the other hand, management can dismiss employees engaged in
illegal strikes, or it can negotiate with those involved in legal strikes.
The Secretary Found No National Interest
As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus, does not qualify as one engaged in an "industry
indispensable to national interest." The respondent labor and employment secretary admits this facts, expressly declaring that "the case at bar appears
on its face not to fall within the strict categorization of cases imbued with "national interest."" He nevertheless assumed jurisdiction over petitioner's
labor dispute with PHIMCO Industries Labor Association (PILA), rationalizing thus: 14
While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this Office
believes that obtaining circumstances warrant the exercise of the powers under Article 263(g) of the Labor Code, as amended.
For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the workers and the Company, but also
those directly and indirectly dependent upon the unhampared and continued operations of the Company for their means of livelihood and
existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company
remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the
unemployment problem of the country.
Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved,
particularly when an alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein.
These excuses fail to show how petitioner falls within the category of "industries indispensable to national interest." The allegation of the public
respondent that the "match industry like the textile or garment industry may be classified as export-oriented" is sufficiently rebutted by petitioner's
simple argument pointing out that its export is very negligible and would not qualify under the definition of "export-oriented industries" in Section

13

14, Book V, Rule XIII of the Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to be supported by the
secretary, who in his assailed Order, found that petitioner's business was not an industry indispensable to national interest.
The case at bar is peculiar in the sense that it was the union (PILA), rather than management, that petitioned the secretary to assume jurisdiction over
the controversy. It appears that PILA had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's power of
compulsory arbitration. Petitioner, on the other hand, questions the intervention, obviously because it is not amenable to accepting all the returning
workers, some of whom were dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues.
How true it is that the road to damnation is paved with good intentions. The secretary's intention to reconcile the disputants may have been noble but
it does not imbue the labor dispute with national interest. Neither does it clothe him with power to assume jurisdiction over the case.
WHEREFORE, I vote to GRANT the petition.
G.R. No. 123782 September 16, 1997
CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA), petitioner,
vs.
HON. JOSE S. BRILLANTES, in his capacity as Acting Secretary of the Department of Labor and Employment, and CALTEX
(PHILIPPINES), Inc., respondents.
RESOLUTION
PANGANIBAN, J.:
Unless shown to be clearly whimsical, capricious or arbitrary, the orders or resolutions of the secretary of labor and employment resolving conflicts
on what should be the contents of a collective bargaining agreement will be respected by this Court. We realize that, oftentimes, such orders and
resolutions are based neither on definitive shades of black or white, nor on what is legally right or wrong. Rather, they are grounded largely on what
is possible, fair and reasonable under the peculiar circumstances of each case.
Statement of the Case
Petitioner Caltex Refinery Employees Association (CREA) seeks through Rule 65 of the Rules of Court "reversal or modification" of three orders of
public respondent, then Acting Secretary of Labor and Employment Jose S. Brillantes, in Case No. OS-AJ-0044-95 1 entitled "In re: Labor Dispute at
Caltex (Phils.), Inc." The disposition of the first assailed Order 2 of public respondent dated October 9, 1995 reads: 3
WHEREFORE, ON THE BASIS OF THE FOREGOING, the Caltex Refinery Employees Association and Caltex Philippines,
Inc. are hereby directed to execute a new collective bargaining agreement embodying therein the appropriate dispositions above
spelled out including those subject of previous agreements.
Provisions in the old CBA, or existing benefits subject of Company policy or practice not otherwise modified or improved herein
are deemed maintained.
New demands not otherwise touched upon or disposed of are hereby denied.
The motions for reconsideration and clarification of the above Order filed by both petitioner and private respondent were denied in the second
assailed Order dated November 21, 1995, which disposed: 4
WHEREFORE, except the modifications hereinabove set forth, the Order dated 9 October 1995 is hereby affirmed.
Moreover, pursuant to the Agreement reached by the parties on 13 September 1995 for this Office to commence the proceedings
concerning the legality of strike and the termination of the union officers, after the resolution of the CBA issues, both parties are
hereby directed to submit their position papers and evidence within ten (10) days from receipt of a copy of this Order. For this
purpose, Atty. Tito F. Genilo is hereby designated as Hearing Officer and authorized as such, to immediately conduct hearings
and receive evidence and, thereafter, submit his report and recommendations thereon.
Petitioner's second motion for reconsideration of the above Order was likewise denied by the third assailed Order dated January 9, 1996, as follows: 5
WHEREFORE, PREMISES CONSIDERED, our Order of 21 November 1995 is hereby affirmed en toto, subject to the aforementioned clarification on the issue of Sunday work.
No further motions of this nature shall be entertained by this Office.
The parties are given another ten (10) days from receipt hereof to submit their respective position papers and evidences (sic)
relative to the issue of the legality of strike and termination of the union officers.
The Facts
Anticipating the expiration of their Collective Bargaining Agreement on July 31, 1995, petitioner and private respondent negotiated the terms and
conditions of employment to be contained in a new CBA. The negotiation between the two parties was participated in by the National Conciliation
and Mediation Board (NCMB) and the Office of the Secretary of Labor and Employment. Some items in the new CBA were amicably arrived at and
agreed upon, but others were unresolved.
To settle the unresolved issues, eight meetings between the parties were conducted. Because the parties failed to reach any significant progress in
these meetings, petitioner declared a deadlock. On July 24, 1995, petitioner filed a notice of strike. Six (6) conciliation meetings conducted by the
NCMB failed to settle the parties' differences. Then, the parties held marathon meetings at the plant level, but this remedy proved also unavailing.
During a strike vote on August 16, 1995, the members of petitioner opted for a walkout. Private respondent then filed with the Department of Labor
and Employment (DOLE) a petition for assumption of jurisdiction in accordance with Article 263 (g) of the Labor Code.
In an Order dated August 22, 1995, public respondent assumed jurisdiction "over the entire labor dispute at Caltex (Philippines) Inc.," with the
following disposition: 6
WHEREFORE ABOVE PREMISES CONSIDERED, this Office hereby assumes jurisdiction over the entire labor dispute at
Caltex (Philippines) Inc. pursuant to Article 263 (g) of the Labor Code, as amended.
Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined.
The parties are further directed to cease and desist from committing any and all acts which might exacerbate the situation.
To expedite the resolution of the instant dispute, the parties are further directed to submit their respective position papers and
evidence within ten (10) days from receipt hereof.
In defiance of the above Order expressly restraining any strike or lockout, petitioner began a strike and set up a picket in the premises of private
respondent on August 25, 1995. Thereafter, several company notices directing the striking employees to return to work were issued, but the members
of petitioner defied them and continued their mass action.

14

In the course of the strike, DOLE Undersecretary Bienvenido Laguesma interceded and conducted several conciliation meetings between the
contending parties. He was able to convince the members of the union to return to work and to enter into a memorandum of agreement with private
respondent. On September 9, 1995, the picket lines were finally lifted. Thereafter, the contending parties filed their position papers pertaining to
unresolved issues. 7
Because of the strike, private respondent terminated the employment of some officers of petitioner union. The legality of these dismissals brought
additional contentious issues. 8
Again, the parties tried to resolve their differences through conciliation. Failing to come to any substantial agreement, the parties stopped further
negotiation and, on September 13, 1995, decided to refer the problem to the secretary of labor and employment: 9
It appearing that the possibility of an amicable settlement appears remote, the parties agreed to submit their respective position
paper and evidence simultaneously on 27 September 1995 at the Office of the Secretary. The parties further agreed that there will
be no extension of time for filing and no further pleading will be filed.
The decision of the Secretary of Labor and Employment will be rendered on or before October 9, 1995.
The proceedings concerning the legal issues involving the legality of strike and the termination of the Union officers will be
commenced by the Office of the Secretary after the resolution of the CBA issues.
As already stated, public respondent issued as scheduled on October 9, 1995 the assailed Order resolving the deadlock, followed by two more
assailed Orders on November 21, 1995 and January 16, 1996 disposing of the motions for reconsideration/clarification of both parties. Dissatisfied
with these Orders issued by public respondent, petitioner sought remedy from this Court.
After realizing the urgency of the case and after meticulously reviewing the Petition dated February 23, 1996;Comment by the private respondent
dated April 16, 1996 which was adopted as its own by the public respondent;Reply by the petitioner dated September 7, 1996; Rejoinder dated
October 3, 1996 and Sur-Rejoinder dated November 12, 1996, the Court resolved to give due course to the petition and to consider the case submitted
for resolution without requiring memoranda from the parties.
The Issues
Petitioner does not specifically pinpoint the issues it wants the Court to rule upon. It appears, however, that petitioner questions public respondent's
resolution of five issues in the CBA, specifically on wage increase, union security clause, retirement benefits or application of the new retirement
plan, signing bonus and grievance and arbitration machineries.
Private respondent, on the other hand, submits this lone issue: 10
Whether or not the Honorable Secretary of Labor and Employment committed grave abuse of discretion in resolving the instant
labor dispute.
The Court's Ruling
The petition is partly meritorious.
Preliminary Matter: Certiorari in Labor Cases
At the outset, we must reiterate several settled rules in a petition for certiorari involving labor cases.
First, the factual findings of quasi-judicial agencies (such as the Department of Labor and Employment), when supported by substantial evidence, are
binding on this Court and entitled to great respect, considering the expertise of these agencies in their respective fields. 11 It is well-established that
findings of these administrative agencies are generally accorded not only respect but even finality. 12
Second, substantial evidence in labor cases is such amount of relevant evidence which a reasonable mind will accept as adequate to justify a
conclusion. 13
Third, in Flores vs. National Labor Relations Commission 14 we explained the role and function of Rule 65 as an extraordinary remedy:
It should be noted, in the first place, that the instant petition is a special civil action for certiorari under Rule 65 of the Revised
Rules of Court. An extraordinary remedy, its use is available only and restrictively in truly exceptional cases those wherein the
action of an inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being wholly void on
grounds of jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the
commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of public
respondent NLRC's evaluation of the evidence and factual findings based thereon, which are generally accorded not only great
respect but even finality.
No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead, what is being sought is a
judicial re-evaluation of the adequacy or inadequacy of the evidence on record, which is certainly beyond the province of the
extraordinary writ of certiorari. Such demand is impermissible for it would involve this Court in determining what evidence is
entitled to belief and the weight to be assigned it. As we have reiterated countless times, judicial review by this Court in labor
cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or
its determination but is limited only to issues of jurisdiction or grave abuse of discretion amounting to lack of jurisdiction.
We shall thus use the foregoing time-tested standards in deciding this petition.
1. Wage Increase
The main assailed Order dated October 9, 1995 resolved the ticklish demand for wage increase as follows: 15
With this in mind and taking into view similar factors as financial capacity, position in the industry, package of existing benefits,
inflation rate, seniority, and maintenance of the wage differentiation between and among the various classes of employees within
the entire Company, this Office hereby finds the following improved benefits fair, reasonable and equitable:
1. Wage increases
Effective August 1, 1995 14%
Effective August 1, 1996 14%
Effective August 1, 1997 13%
2. meal subsidy P 15.00
In denying the motions for reconsideration/clarification of the above award, public respondent ruled in the challenged Order dated November 21,
1995: 16
First, on the matter of wages, we find no compelling reasons to alter or modify our award after having sufficiently passed upon
the same arguments raised by both parties in our previous Order. The subsequent agreement on a package of wage increases at

15

Shell Company, adverted to by the Union as the usual yardstick for purposes of developing its own package of improved wage
increases, would not be sufficient basis to grant the same increases to the Union members herein considering that other factors,
among which is employment size, were carefully taken into account. While it is true that inflation has direct impact on wage
increases, it is not quite accurate to state that inflation "as of September 1995" is already registered at 11.8%. The truth of the
matter is that the average inflation for the first ten (10) months was only 7.496% and Central Bank projections indicate that it will
take a 13.5% inflation for November and December to record an average inflation of 8.5% for the year. We, therefore, maintain
the reasonableness of the package of wage increases that we awarded.
Petitioner belittles the awarded increases. It insists that the increase should be ruled on the basis of four factors: "(a) the economic needs of the
[u]nion's members; (b) the [c]ompany's financial capacity; (c) the bargaining history between the [u]nion and the [c]ompany; and (d) the traditional
parity in wages between Caltex and Shell Refinery Employees." 17
Petitioner contends that the "inflation rate rose to 11.8% in September [1995], rose further in October, and is still a double-digit figure at the time of
this writing." Therefore, public respondent's so-called "improved benefits" are in reality "retrogressive." 18
Petitioner tries to show private respondent's "immense financial capacity" by citing Caltex's "Banaba Housing Up-grading" which would cost "not
less than P200,000,000.00" 19 Petitioner does "not begrudge" private respondent's "pampering of its [r]efinery [m]anagers and supervisors," but asks
that the rank and file employees be "not left too far behind." 20
Petitioner maintains that the salaries of Shell Refinery employees be used as a "reference point" in upgrading the compensation of private
respondent's employees because these two companies are in the "same industry and their refineries are both in Batangas." Thus, the wage increase of
petitioner's members should be "15%/15%/15%." 21
Private respondent counters with a "proposed 9% 7% 7% increase for the same period with automatic adjustment should the increase fall short of the
inflation rate." Hence, the Secretary's award of "14% 14% 13%" increase really comes "closer to the Union's position." 22
Petitioner's arguments fail to impress us. First, the matter of inflation rate was clearly addressed in public respondent's Order dated November 21,
1995. Contrary to petitioners undocumented claim of 11.8% inflation in September of 1995, the "truth of the matter is that the average inflation for
the first ten (10) months was only 7.496%, and Central Bank projections indicate that it will take a 13.5% inflation for November and December to
record an average inflation of 8.5% for the year." 23 Second, private respondent's financial capacity has been insufficiently explained in its Comment
dated April 16, 1996 in which it stated that the Banaba "upgrading" should not be construed as a yardstick of its financial standing: 24
It is equally amazing how the Union (petitioner) desperately justifies their demands by comparing the "upgrading cost" of the
Company's (private respondent) Banaba Housing Facilities, a matter totally unrelated to the case, to the cost of their demands.
The Union not only errs in its choice of yardstick of the Company's capacity to pay, it likewise displays its ignorance of the
Banaba Housing Program .
The Banaba Housing Facility is not a benefit. It is an integral part of an indispensable requirement for smooth Plant operations
and assurance of an emergency response crew in times of calamities and accidents. Employees who are required to stay in the
housing facility are members of the Refinery's emergency response organization. It is also not a case of "upgrading." The Banaba
Housing Facility was built in 1954. A significant number of its structure are dilapidated and in dire need of rehabilitation and
preservation. Finally, Banaba is not a yardstick of the Company's capacity to pay, but rather, an eloquent demonstration of the
Company's will to survive and remain globally competitive.
The above reasoning convinces us that such upgrading should not be equated with private respondent's financial capacity to pay the
proposed wage increase, but should be evaluated as a business judgment "to survive and remain globally competitive." We believe that the
standard proof of a company's financial standing is its financial statements duly audited by independent and credible external
auditors. 25 Third, the traditional parity in wages used by petitioner to justify its proposal is flimsy and trivial. Aside from its bare allegation
of "similarity" in salaries and locations, petitioner did not proffer any substantial reason to impute grave abuse of discretion on the part of
the public respondent. On the other hand, we find private respondent's discussion of this matter reasonable, as the following shows: 26
It is further amazing that the Union continues to use an outmoded concept of the "Shell yardstick" and "relative parities in wages"
to justify an imperative need for them to keep their traditional edge in pay over their industry counterparts. It is not just a matter
of being above the rest. Sound compensation principle of higher productivity equals higher pay, as well as, recent developments
in the industry have negated this argument. Both Shell and Petron continue to benefit from increasing manpower productivity.
Shell, for instance, produces 155,000 barrels per day on a 120 manpower complement of operatives and rank and file; while the
Company only produces 65,000 barrels per day with its 221 manpower complement. In addition, the counterpart union at Shell
incurs an average overtime rate of 37%, as a percentage of base pay; the Union's overtime rate is 102%.
Thus, the issue is productivity, not sales, and so far, the Company's Refinery is not as productive as Shell's or Petron's. To ask for
relative parity in the face of this reality is not only unreasonable, it is likewise illogical.
As it is, the wage increase of 14%, 14% and 13% will result in an average basic salary of P23,510,00 at the end of the three-year
cycle. The resulting pay is excessive and disproportionately high compared with the value of the jobs within the bargaining unit.
Stated differently, this average salary will be unreasonably high for the skills and qualifications needed for the job.
Even now, with an average monthly salary (prior to the DOLE awarded CBA increases) of P16,010plus overtime, holiday and
other premiums way above those mandated by law, the Union members are already the highest paid in the Philippines, in terms of
gross income.
The alleged "similarity" in the situation of Caltex and Shell cannot be considered a valid ground for a demand of wage increase, in the absence of a
showing that the two companies are also similar in "substantial aspects," as discussed above. Private respondent is merely asking that an employee
should be paid on the basis of work done. If such employee is absent on a certain day, he should not, as a rule, be paid wages for that day. And if the
employee has worked only for a portion of a day, he is not entitled to the pay corresponding to a full day. A contrary precept would ultimately result
in the financial ruin of the employer. The age-old general rule governing relations between labor and capital, or management and employee, is "a fair
day's wage for a fair day's work." If no work is performed by the employee, there can be no wage or pay unless, of course, the laborer was ready,
willing and able to work but was locked out, dismissed, suspended or otherwise illegally prevented from
working. 27 True, union members have the right to demand wage increases through their collective force; but it is equally cogent that they should also
be able to justify an appreciable increase in wages. We observe that private respondent's detailed allegations on productivity are unrebutted. It is

16

noteworthy that petitioner ignored this argument of private respondent and based its demand for wage increase not on the ground that they were as
productive as the Shell employees. Thus, we cannot attribute grave abuse of discretion to public respondent.
2. Union Security Clause
In the impugned Order dated October 9, 1995, public respondent's contested resolution on the "union [security] clause" reads: 28
The relevant provisions found in Article III of the CBA, which hereby read, thus:
Sec. 1. Employees of the COMPANY who at the signing of this Agreement are members of the UNION and those who
subsequently become members thereof shall maintain their membership with the UNION for the duration of this Agreement as a
condition of employment.
Sec. 2. Members of the UNION who cease to be members of the UNION in good standing by reason of resignation or expulsion
shall not be retained in the employment of the COMPANY.
xxx xxx xxx
are sought to be amended by the Union, to read as follows:
Sec. 1. Employees of the Company who at the signing of this Agreement are members of the Union and those who subsequently
become members thereof shall maintain their membership in GOOD STANDING with the Union for the duration of this
Agreement as a condition of CONTINUOUS employment.
Sec. 2. PURSUANT TO THE FOREGOING, ANY UNION MEMBER WHO CEASES TO BE SUCH MEMBER ON
GROUNDS PROVIDED IN ITS CONSTITUTION AND BY-LAWS SHALL, UPON PRIOR WRITTEN NOTICE BY THE
UNION TO THE COMPANY, BUT SUBJECT TO THE OBSERVANCE OF DUE PROCESS AND THE EXPRESS
RATIFICATION OF THE MAJORITY OF THE UNION MEMBERSHIP, BE DISMISSED FROM EMPLOYMENT BY THE
COMPANY; PROVIDED, HOWEVER, THAT THE UNION SHALL HOLD THE COMPANY FREE AND BLAMELESS
FROM ANY LIABILITY IN THE EVENT THAT THE EMPLOYEE IN ANY MANNER QUESTIONS HIS DISMISSAL.
The proposed amendment of the Union gives the same substantial effect as the existing provision. Rather, the same tackles more
on procedure which, to our belief, is already sufficiently provided under its constitution and by-laws. Insofar as Union security is
concerned, this is sufficiently addressed by the present provisions in the CBA. Hence, we find we are not competent to arbitrarily
incorporate any modification thereof. We are convinced that any amendment on this matter should be a product of mutual
concern and agreement. 29
Petitioner contends that the foregoing disposition leaving to the parties the decision on the union security clause issue is "contrary to the whole idea
of assumption of jurisdiction." Petitioner argues that in spite of the provisions on the "union security clause," it may expel a member only on any of
three grounds: non-payment of dues, subversion, or conviction for a crime involving moral turpitude. If the employee's act does not constitute any of
these three grounds, the member would continue to be employed by private respondent. Thus, the disagreement between petitioner and private
respondent on this issue is not only "procedural" but also "substantial." 30
On the other hand, private respondent argues that nothing prevents petitioner from expelling its members; however, termination of employment
should be based only on these three grounds agreed upon in the existing CBA. Further, private respondent explains that petitioner's citation of Article
249 (a) 31 of the Labor Code is out of context. It adds that the cited section provides only for the right of a union to prescribe its own rules with
respect to the acquisition and retention of membership, and that upholding the arguments of petitioner would make the private respondent a
policeman of the union. 32
We agree with petitioner. The disagreement between petitioner and private respondent on the union security clause should have been definitively
resolved by public respondent. The labor secretary should take cognizance of an issue which is not merely incidental to but essentially involved in the
labor dispute itself, or which is otherwise submitted to him for resolution. 33 In this case, the parties have submitted the issue of the union security
clause for public respondent's disposition. But the secretary of labor has given no valid reason for avoiding the said issue; he merely points out that
this issue is a procedural matter. Such vacillation clearly sidesteps the nature of the union security clause as one intended to strengthen the contracting
union and to protect it from the fickleness or perfidy of its own members. Without such safeguard, group solidarity becomes uncertain; the union
becomes gradually weakened and increasingly vulnerable to company machinations. In this security clause lies the strength of the union during the
enforcement of the collective bargaining agreement. It is this clause that provides labor with substantial power in collective bargaining. The secretary
of labor assumed jurisdiction over this labor dispute in an industry indispensable to national interest, precisely to settle once and for all the disputes
over which he has jurisdiction at his level. In not performing his duty, the secretary of labor committed a grave abuse of discretion.
3. New Retirement Plan
Public respondent's contested resolution on "retirement benefits (application of the new retirement plan)" in the Order dated November 21, 1995
reads: 34
Third, the matter of retirement benefits deserves a second look considering that the concerned employees were already previously
granted the option to choose between the old and the new plan at the time the latter was initiated and they chose to be covered
under the Old Plan. To accede to the Union's demand to cover them under the new plan entails a different arrangement under a
new scheme and likewise requires the approval of a Board of Trustees. It is, therefore, understood that the new Retirement Plan
does not apply to the more or less 40 employees being sought by the Union to be covered under the New Plan.
Petitioner contends that "40 of its members who are still covered by the Old Retirement Plan because they were not able to exercise the option to shift
to the New Retirement Plan, for one reason or another, when such option was given in the past" are included in the New Retirement Plan. Petitioner
argues that the exclusion of forty employees from the New Plan constitutes grave abuse of discretion for three reasons. First, "it is a case of the left
hand taking away, so to speak, what the right hand had given." Second, the change "was done for a very shallow reason." The new scheme was no
longer new, "as the New Retirement Plan had been in place for at least two years." Third, in not applying the New Retirement Plan to the 40
employees, public respondent was perpetrating his department's discriminatory practice. 35
Private respondent counters that "these 40 or so employees have opted to remain covered by the old plan despite opportunities given them in 1985 to
shift to the New Plan." 36
We hold that public respondent did not commit grave abuse of discretion in respecting the free and voluntary decision of the employees in regard to
the Provident Plan and the irrevocable one-time option provided for in the New Retirement Plan. Although the union has every right to represent its
members in the negotiation regarding the terms and conditions of their employment, it cannot negate their wishes on matters which are purely
personal and individual to them. In this case, the forty employees freely opted to be covered by the Old Plan; their decision should be respected. The

17

company gave them every opportunity to choose, and they voluntarily exercised their choice. The union cannot pretend to know better; it cannot
impose its will on them.
4. Grievance Machinery and Arbitration
The public respondent's contested resolution on "grievance and arbitration machineries" in the Order dated November 21, 1995 reads: 37
Seventh, we are constrained to take a closer look at the existing procedure concerning grievance in relation to the modifications
being proposed by the Union. In this regard, we affirm our resolution to shorten the periods to process/resolve grievances based
on existing practice from (45) days to (30) days at the first step and (10) days to seven (7) days at the second step which is the
level of the VP for Manufacturing. We further reviewed the steps through which a grievance may be processed and in line with
the principle to expedite the early resolution of grievances, we find that the establishment of a joint Council as an additional step
in the grievance procedure, may only serve to protract the proceeding and, therefore, no longer necessary. Instead, the unresolved
grievance, if, not settled within (7) days at the level of the VP for Manufacturing, shall automatically be referred by both parties
to voluntary arbitration in accordance with R.A. 6715. As to the number of Arbitrators for which the Union proposes to employ
only one instead of a panel of three Arbitrators, we find it best to leave the matter to the agreement of both parties. Finally, we
hereby advise the parties that the list of accredited voluntary arbitrators is now being maintained and disseminated by the
National Conciliation and Mediation Board and no longer by the Bureau of Labor Relations.
Petitioner contends that public respondent "derailed the grievance and arbitration scheme proposed by the Union." 38 Petitioner argues that the
proposed "Grievance Settlement Council" is intended to "supplement the effort of the Vice President for Manufacturing in reviewing the grievance
elevated to him, so that instead of acting alone . . . he will be obliged to convoke a conference of the Council to afford the grievant a thorough
hearing." Petitioner's recommendation for a "single arbitrator is based on the proposition that if voluntary arbitration should be resorted to at all, this
recourse should entail the least possible expense." 39
Private respondent counters that the disposition on the grievance machinery is likewise "fair and reasonable under the circumstances and in fact was
merely a reiteration of the (u)nion's position during the conciliation meetings conducted by Undersecretary Bienvenido Laguesma." 40
No particular setup for a grievance machinery is mandated by law. Rather, Article 260 of the Labor Code, as incorporated by RA 6715, provides for
only a single grievance machinery in the company to settle problems arising from "interpretation or implementation of their collective bargaining
agreement and those arising from the interpretation or enforcement of company personnel policies." Article 260, as amended, reads:
Art. 260. Grievance Machinery and Voluntary Arbitration. The parties to a Collective Bargaining Agreement shall include therein
provisions that will ensure the mutual observance of its terms and conditions. They shall establish a machinery for the adjustment
and resolution of grievances arising from the interpretation or implementation of their Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its
submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a Voluntary Arbitrator or
panel of Voluntary Arbitrators, or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of
Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the
parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or
panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining
Agreement, which shall act with same force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties
as described above.
We believe that the procedure described by public respondent sufficiently complies with the minimum requirement of the law. Public respondent
even provided for two steps in hearing grievances prior to their referral to arbitration. The parties will decide on the number of arbitrators who may
hear a dispute only when the need for it arises. Even the law itself does not specify the number of arbitrators. Their alternatives whether to have
one or three arbitrators have their respective advantages and disadvantages. In this matter, cost is not the only consideration; full deliberation on
the issues is another, and it is best accomplished in a hearing conducted by three arbitrators. In effect, the parties are afforded the latitude to decide
for themselves the composition of the grievance machinery as they find appropriate to a particular situation. At bottom, we cannot really impute
grave abuse of discretion to public respondent on this issue.
5. Signing Bonus
The public respondent's contested resolution on the "signing bonus" in the Order dated November 21, 1995 reads: 41
Fifth, specifically on the issue of whether the signing bonus is covered under the "maintenance of existing benefits" clause, we
find that a clarification is indeed imperative. Despite the expressed provision for a signing bonus in the previous CBA, we uphold
the principle that the award for a signing bonus should partake the nature of an incentive and premium for peaceful negotiations
and amicable resolution of disputes which apparently are not present in the instant case. Thus, we are constrained to rule that the
award of signing bonus is not covered by the "maintenance of existing benefits" clause.
Petitioner asseverates that the "signing bonus is an existing benefit embodied in the old CBA." 42 It explains that public respondent erred in removing
the award of a signing bonus which is "given not only as an incentive for peaceful negotiations and amicable settlement of disputes but also as an
extra award to the workers following the settlement of a CBA dispute by whatever means." 43
Private respondent disagrees, contending that a signing bonus is not awarded when CBA negotiations "result in a strike." There are two reasons
therefor: First, "the grant of a signing bonus is a matter of discretion and cannot be demanded as a matter of right;" and second the signing bonus is
meant as an incentive for a peaceful negotiation. Once these negotiations result in a strike, an illegal one at that, the basis or rationale for such an
award is lost." 44
Although proposed by petitioner, 45 the signing bonus was not accepted by private respondent. 46 Besides, a signing bonus is not a benefit which may
be demanded under the law. Rather, it is now claimed by petitioner under the principle of "maintenance of existing benefits" of the old CBA.
However, as clearly explained by private respondent, a signing bonus may not be demanded as a matter of right. If it is not agreed upon by the parties
or unilaterally offered as an additional incentive by private respondent, the condition for awarding it must be duly satisfied. In the present case, the
condition sine qua non for its grant a non-strike was not complied with. In fact, private respondent categorically sated in its counter-proposal
to the exclusion of those agreed upon before that the new collective bargaining agreement would constitute the only agreement between the
parties, as follows:

18

Sec. 4. Scope of Agreement. The terms and conditions of employment of the employees within the appropriate bargaining unit
are embodied in this Agreement. On the other hand, all such benefits which are not expressly provided for in this Agreement, but
which are now being accorded, may in the future be accorded, or might have been previously accorded to employees, by the
COMPANY shall be deemed as purely discretionary or pure acts of grace and magnanimity on the part of the COMPANY in each
particular case, and the continuance or repetition thereof now or in the future, no matter how long or how often, shall not be
construed as establishing a right for the employee and/or obligation on the part of the COMPANY. 47
This provision on the scope of the agreement is further buttressed by the clause on waiver: 48
The parties acknowledge that during the negotiations which resulted in the execution of this Agreement, each of them had the
unlimited opportunity to make demands and proposals with respect to any and all subjects and matters proper for collective
bargaining and not prohibited by law; and the parties further acknowledge that the understandings and agreements arrived at by
them after the exercise of that right and unlimited opportunity are fully set forth in this Agreement. Therefore, the COMPANY
and the UNION during the life of this Agreement, each voluntarily and unqualifiedly waives the right and each agrees that the
other shall not be obligated to bargain collectively with respect to any subject or matter referred to or covered in this Agreement
or with respect to any subject or matter not specifically referred to or covered in this Agreement even though such subject or
matter may not have been within the knowledge or contemplation of either or both parties at the time they negotiated or signed
this Agreement.
Epilogue
We have carefully reviewed the assailed Orders. Other than his failure to rule on the issue of union security, the secretary of labor cannot be indicted
for grave abuse of discretion amounting to want or excess of jurisdiction.
Basically, there is grave abuse of discretion amounting to lack of jurisdiction where the respondent board, tribunal or officer
exercising judicial functions exercised its judgment in a capricious, whimsical, arbitrary or despotic manner. However, it has also
been said that grave abuse is committed when "the lower court acted capriciously, and whimsically or the petitioner's contention
appears td be clearly tenable or the broader interest of justice or public policy [so] require . . . ." Also, grave abuse of discretion is
committed when the board, tribunal or officer exercising judicial function fails to consider evidence adduced by the parties. 49
In Saballa vs. National Labor Relations Commission, 50 we ruled on how a decision of an administrative body must be drawn:
The Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make
certain that
they truly and accurately reflect their conclusions and their final dispositions. . . . The same thing goes for the findings of fact
made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by
substantial evidence, otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of
discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with
an explanation of the factual and legal reasons that led to the conclusions of the court. A decision that does not clearly and
distinctly state the facts and the law of which it is based leaves the parties in the dark as to how it was reached and is especially
prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal.
In the present case, the foregoing requirement has been sufficiently met. Petitioner's claim of grave abuse of discretion is anchored on the simple fact
that public respondent adopted largely the proposals of private respondent. It should be understood that bargaining is not equivalent to an adversarial
litigation where rights and obligations are delineated and remedies applied. It is simply a process of finding a reasonable solution to a conflict and
harmonizing opposite positions into a fair and reasonable compromise. When parties agree to submit unresolved issues to the secretary of labor for
his resolution, they should not expect their positions to be adoptedin toto. It is understood that they defer to his wisdom and objectivity in insuring
industrial peace. And unless they can clearly demonstrate bias, arbitrariness, capriciousness or personal hostility on the part of such public officer, the
Court will not interfere or substitute the said officer's judgment with its own. In this case, it is possible that this Court, or some its members at least,
may even agree with the wisdom of petitioner's claims. But unless grave abuse of discretion is cogently shown, this Court will refrain from using its
extraordinary power of certiorari to strike down decisions and orders of quasi-judicial officers specially tasked by law to settle administrative
questions and disputes. This is particularly true in the resolution of controversies in collective bargaining agreements where the question is rarely one
of legal right or wrong nay, of black and white but one of wisdom, cogency and compromise as to what is possible, fair and reasonable under
the circumstances.
WHEREFORE, premises considered, the petition is partly GRANTED. The assailed Orders are AFFIRMED with the modification that the issue on
the union security clause be REMANDED to the Department of Labor and Employment for definite resolution within one month from the finality of
this Decision. No costs.
SO ORDERED.
G.R. No. 128632
August 5, 1999
MSF TIRE AND RUBBER, INC., petitioner,
vs.
COURT OF APPEALS and PHILTREAD TIRE WORKERS' UNION, respondents.
MENDOZA, J.:
Petitioner seeks a review of the decision1 of the Court of Appeals, dated March 20, 1997, which set aside the order of the Regional Trial Court of
Makati, dated July 2, 1996, in Civil Case No. 95-770, granting petitioner's application for a writ of preliminary injunction.
The facts are as follows:
A labor dispute arose between Philtread Tire and Rubber Corporation (Philtread) and private respondent, Philtread Tire Workers' Union (Union), as a
result of which the Union filed on May 27, 1994 a notice of strike in the National Conciliation and Mediation Board National Capital Region
charging Philtread with unfair labor practices for allegedly engaging in union-busting for violation of the provisions of the collective bargaining
agreement. This was followed by picketing and the holding of assemblies by the Union outside the gate of Philtread's plant at Km. 21, East Service
Road, South Superhighway, Muntinlupa, Metro Manila. Philtread, on the other hand, filed a notice of lock-out on May 30, 1994 which it carried out
on June 15, 1994.
In an order, dated September 4, 1994,2 then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for
compulsory arbitration. She enjoined the Union from striking and Philtread from locking out members of the Union.

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On December 9, 1994, during the pendency of the labor dispute, entered into a Memorandum of Agreement with Siam Tyre Public Company Limited
(Siam Tyre), a subsidiary of Siam Cement. Under the Memorandum of Agreement, Philtread's plant and equipment would be sold to a new company
(petitioner MSF Tire and Rubber, Inc.), 80% of which would be owned by Siam Tyre and 20% by Philtread, while the land on which the plant was
located would be sold to another company (Sucat Land Corporation), 60% of which would be owned by Philtread and 40% by Siam Tyre.
This was done and the Union was informed of the purchase of the plant by petitioner. Petitioner then asked the Union to desist from picketing outside
its plant and to remove the banners, streamers, and tent which it had placed outside the plant's fence.
As the Union refused petitioner's request, petitioner filed on May 25, 1995 a complaint for injunction with damages against the Union and the latter's
officers and directors before the Regional Trial Court of Makati, Branch 59 where the case was docketed as Civil Case No. 95-770.
On June 13, 1995, the Union moved to dismiss the complaint alleging lack of jurisdiction on the part of the trial court. It insisted that the parties were
involved in a labor dispute and that petitioner, being a mere "alter ego" of Philtread, was not an "innocent bystander."
After petitioner made its offer of evidence as well as the submission of the parties' respective memoranda, the trial court, in an order, dated March 25,
1996, denied petitioner's application for injunction and dismissed the complaint. However, on petitioner's motion, the trial court, on July 2, 1996,
reconsidered its order, and granted an injunction. Its order read: 3
Considering all that has been stated, the motion for reconsideration is granted. The Order dated March 25, 1996 is reconsideration and set
aside. Plaintiff's complaint is reinstated and defendant's motion to dismiss is DENIED.
As regards plaintiff's application for the issuance of a writ of preliminary injunction, the Court finds that the plaintiff has established a clear
and sustaining right to the injunctive relief, hence, the same is GRANTED. Upon posting by the plaintiff and approval by the Court of a
bond in the amount of One Million (P1,000,000.00) Pesos which shall answer for any damage that the defendants may suffer by reason of
the injunction in the event that the Court may finally adjudge that the plaintiff is not entitled thereto, let a writ of preliminary injunction
issue ordering the defendants and any other persons acting with them and/or on their behalf to desist immediately from conducting their
assembly in the area immediately outside the plaintiff's plant at Km. 21 East Service Road, South Superhighway, Muntinlupa, Metro
Manila, and from placing and/or constructing banners, streamers, posters and placards, and/or tents/shanties or any other structure, on the
fence of, and/or along the sidewalk outside, the said plant premises until further from this Court.
SO ORDERED.4
Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the Court of Appeals.
On March 20, 1997, the appellate court rendered a decision granting the Union's petition and ordering the trial court to dismiss the civil case for lack
of jurisdiction. Hence, this petition for review. Petitioner makes the following arguments in support of its petition:
a. The Court of Appeals erred in not summarily dismissing the Union's petition for its false certification of non-forum shopping and the
Union's failure to file a motion for reconsideration before going up to the Court of Appeals on a petition for certiorari.
b. The Court of Appeals gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged grounds that
MSF did not have a clear and unmistakable right to entitle it to a writ of preliminary injunction.
c. The Court of Appeals' pronouncement that it has not touched upon the issue of whether or not private respondent is a mere innocent
bystander to the labor dispute between Philtread and the Union or upon the issue of whether or not private respondent is a mere dummy or
continuity of Philtread is contrary to its own conclusions in the body of the decision, which conclusions are erroneous.
d. The Court of Appeals gravely abused its discretion when it disallowed the injunction based on Philtread's remaining operations in the
country and allowed the Union to exercise its right to communicate the facts of its labor dispute within MSF's premises, given the
percentage of interest Philtread has in both MSF and the corporation which owns the land bearing said plant.
The issues are (1) whether the Union's failure to disclose the pendency of NCMB-NCR-NS-05-167-96 in its certification of non-forum shopping and
its failure to file a motion for reconsideration of the order, dated July 2, 1996, of the trial court were fatal to its petition for review before the Court of
Appeals; and (2) whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the "innocent bystander" rule.
First. Forum shopping is the institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the
other court would make a favorable disposition.5 It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their
processes.6 As held in Executive Secretary v.Gordon:7
Forum-shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or
successively, for the purpose of obtaining a favorable judgment. Thus, it has been held that there is forum-shopping
(1) whenever as a result of an adverse decision one forum, a party seeks a favorable decision (other than by appeal or certiorari) in another,
or
(2) if, after he has filed a petition before the Supreme Court, a party files another before the Court of Appeals since in such case he
deliberately splits appeals "in the hope that even as one case in which a particular remedy is sought is dismissed, another case (offering a
similar remedy) would still be open, or
(3) where a party attempts to obtain a preliminary injunction in another court after failing to obtain the same from the original court.
In determining whether or not there is forum-shopping, what is important is the vexation caused the courts and parties-litigant by a party who asks
different courts and/or administrative agencies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the
process creating the possibility of conflicting decisions being rendered by the different fora upon the same issues. 8
Petitioner asserts that the Court of Appeals should have dismissed the Union's petition for review on the ground that the certification of non-forum
shopping was false and perjurious as a result of the Union's failure to mention the existence of NCMB-NCR-NS-05-167-96, a proceeding involving
the same parties and pending before the National Conciliation and Mediation Board.
The argument is without merit. Petitioner was a party to the proceedings before the National Conciliation and Mediation Board in which an order,
dated September 8, 1994, was issued by then Secretary of Labor Nieves Confesor, enjoining any strike or lock-out by the parties. 9 It was petitioner
which initiated the action for injunction before the trial court. Aggrieved by the injunctive order issued by the lower court, the Union was forced to
file a petition for review before the Court of Appeals. We cannot understand why petitioner should complain that no mention of the pendency of the
arbitration case before the labor department was made in the certificate of non-forum shopping attached to the Union's petition in the Court of
Appeals. The petition of the Union in the Court of Appeals was provoked by petitioner's action in seeking injunction from the trial court when it
could have obtained the same relief from the Secretary of Labor.
Indeed, by focusing on the Union's certification before the appellate court, petitioner failed to notice that its own certification before the lower court
suffered from the same omission for which it faults the Union. Although the body of petitioner's complaint mentions NCMB-NCR-NS-05-167-96, its

20

own certification is silent concerning this matter.10 It is not in keeping with the requirements of fairness for petitioner to demand strict application of
the prohibition against forum-shopping, when it, too, is guilty of the same omission.
Second. Petitioner asserts that its status as an "innocent bystander" with respect to the labor dispute between Philtread and the Union entitles it to a
writ of injunction from the civil courts and that the appellate court erred in not upholding its corporate personality as independent of Philtread's.
In Philippine Association of Free Labor Unions (PAFLU) v. Cloribel, 11 this Court, through Justice J.B.L. Reyes, stated the "innocent bystander" rule
as follows:
The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the
constitution. If peacefully carried out, it can not be curtailed even in the absence of employer-employee relationship.
The right is, however, not an absolute one. While peaceful picketing is entitled to protection as an exercise of free speech, we believe the
courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute,
including those with related interest, and to insulate establishments or persons with no industrial connection or having interest totally
foreign to the context of the dispute. Thus the right may be regulated at the instance of third parties or "innocent bystanders" if it appears
that the inevitable result of its is to create an impression that a labor dispute with which they have no connection or interest exists between
them and the picketing union or constitute an invasion of their rights. In one case decided by this Court, we upheld a trial court's injunction
prohibiting the union from blocking the entrance to a feed mill located within the compound of a flour mill with which the union had a
dispute. Although sustained on a different ground, no connection was found between the two mills owned by two different corporations
other than their being situated in the same premises. It is to be noted that in the instances cited, peaceful picketing has not been totally
banned but merely regulated. And in one American case, a picket by a labor union in front of a motion picture theater with which the union
had a labor dispute was enjoined by the court from being extended in front of the main entrance of the building housing the theater wherein
other stores operated by third persons were located. 12 (Emphasis added)
Thus, an "innocent bystander," who seeks to enjoin a labor strike, must satisfy the court that aside from the grounds specified in Rule 58 of the Rules
of Court, it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign
to the context thereof. For instance, inPAFLU v. Cloribel, supra, this Court held that Wellington and Galang were entirely separate entities, different
from, and without any connection whatsoever to, the Metropolitan Bank and Trust Company, against whom the strike was directed, other than the
incidental fact that they are the bank's landlord and co-lessee housed in the same building, respectively. Similarly, in Liwayway
Publications, Inc. v. Permanent Concrete Workers Union,13 this Court ruled that Liwayway was an "innocent bystander" and thus entitled to enjoin the
union's strike because Liwayway's only connection with the employer company was the fact that both were situated in the same premises.
In the case at bar, petitioner cannot be said not to have such on to the dispute. As correctly observed by the appellate court:
Coming now to the case before us, we find that the "negotiation, contract of sale, and the post transaction" between Philtread, as vendor,
and Siam Tyre, as vendee, reveals a legal relation between them which, in the interest of petitioner, we cannot ignore. To be sure, the
transaction between Philtread and Siam Tyre, was not a simple sale whereby Philtread ceased to have any proprietary rights over its sold
assets. On the contrary, Philtread remains as 20% owner of private respondent and 60% owner of Sucat Land Corporation which was
likewise incorporated in accordance with the terms of the Memorandum of Agreement with Siam Tyre, and which now owns the land were
subject plant is located. This, together with the fact that private respondent uses the same plant or factory; similar or substantially the same
working conditions; same machinery, tools, and equipment; and manufacture the same products as Philtread, lead us to safely conclude that
private respondent's personality is so closely linked to Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its
close links with Philtread as to bar its entitlement to an injunctive writ. Stated differently, given its close links with Philtread, we find no
clear and unmistakable right on the part of private respondent to entitle it to the writ of preliminary injunction it prayed for below.
xxx
xxx
xxx
We stress that in so ruling, we have not touched on the issue of . . . whether or not private is a mere dummy or continuation of
Philtread . . . .14
Although, as petitioner contends, the corporate fiction may be disregarded where it is used to defeat public convenience, justify wrong, protect fraud,
defend crime, or where the corporation is used as a mere alter-ego or business conduit, 15 it is not these standards but those of the "innocent bystander"
rule which govern whether or not petitioner is to an injunctive writ. Since petitioner is not an "innocent bystander", the trial court's order, dated July
2, 1996, is a patent nullity, the trial court having no jurisdiction to issue the writ of injunction. No motion for reconsideration need be filed where the
order is null and void.16
WHEREFORE, petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED.1wphi1.nt
SO ORDERED.

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