Elizalde Rope Factory, Inc. vs. Court of Industrial Relations

An employer's refusal to respond to a union's grievance letters does not constitute refusal to bargain — and thus not unfair labor practice — when the parties' collective bargaining agreement prescribes a binding grievance procedure that the union failed to follow.

Elizalde Rope Factory, Inc. is a Philippine corporation engaged in the production and sale of rope and related products. Gerson Karasig was a laborer in the factory, and the Rope Workers Union, affiliated with PAFLU, was the collective bargaining representative of the company's employees. A collective bargaining agreement existed between the company and the union, containing a defined grievance procedure and a specific definition of what constituted a "grievance" under Section 21 thereof. Republic Act No. 875, the Industrial Peace Act, governed unfair labor practice and the duty to bargain collectively.

On August 22, 1958, the operator of one of the spinning machines in the spinning department of Elizalde Rope Factory became sick and, after securing permission, left the factory at about 9:00 a.m. The factory lacked personnel to operate the vacant spinning machine, and management needed continuity of production in the department. While Gerson Karasig was working on a shearing machine, foreman Eugenio Espejo stopped Karasig's machine and instructed him to transfer to the spinning department. Espejo repeated the instruction three times, but Karasig did not obey. When Espejo approached Karasig for the fourth time, Karasig told the foreman that he would go home. He dressed up and left the factory, then returned and wrote "I stop at 9:10" in ink on his time card.

Karasig then went to see the superintendent and requested that he not be transferred from one machine to another. Instead of a favorable response, the superintendent insulted him and told him to go back to college to learn how to obey the foreman. Karasig told the superintendent he would rather retire, so the superintendent called for application blanks for him to fill out. The reason Karasig wrote on the retirement form was "unfair labor practice and inhuman treatment of his foreman." Management decided to treat the note on his time card and his departure from the factory as a resignation, and turned down his retirement application on the ground that he was not incapacitated within the meaning of the collective bargaining contract.

Karasig reported the incident to his union president, who sent letters to management seeking adjustment of the grievance. About a week later, petitioner's counsel informed the union president that, as far as the company was concerned, Karasig had resigned and left work without notifying the company as required by law, and that his retirement application had been denied. The legal department of PAFLU sought to have Karasig's case treated as a grievance, but the company insisted that the matter was excluded from the collective bargaining contract and that, even assuming it was a grievance, the union had not followed the procedure prescribed in the bargaining agreement. The union and Karasig then filed an unfair labor practice charge before the Court of Industrial Relations, alleging that Karasig was dismissed for his union activities and that the company refused to bargain.

• Voluntary Departure: Petitioner contended that compelling it to retain Karasig's services is illegal, because after his disagreement with his immediate superiors, Karasig left work on his own desire and volition and did not report back.
• Not a Grievance Under the CBA: Petitioner argued that Karasig's abandonment of work does not call for interpretation of the terms, conditions, and benefits embodied in the collective bargaining contract, because Section 21 thereof defines a grievance as any disagreement between the union and the company as to the application and interpretation of actual benefits and provisions of the contract, and that other matters subject of collective bargaining or regulated by existing labor laws shall not be considered a grievance.
• Failure to Follow Grievance Procedure: Petitioner maintained that, granting the matter was a grievance, the union did not follow the grievance procedure agreed upon in the collective bargaining agreement, which required the complainant worker to first discuss and settle the dispute with his foreman, then appeal in writing to the Assistant Superintendent, and finally take the grievance to the superintendent and/or manager through the Union Grievance Board.
• No Refusal to Bargain: Petitioner argued that for these reasons the respondent court erred in concluding that the failure to reply to the union's letters was tantamount to refusal to bargain.

• Unfair Labor Practice: Respondents claimed that as there was refusal to bargain on the part of the petitioner, as found by the respondent court, the petitioner is guilty of unfair labor practice under Section 4(a), paragraph 6 of Republic Act No. 875, which justifies the reinstatement of the complaining laborer.

• Unfair Labor Practice — Refusal to Bargain: Whether the petitioner committed unfair labor practice by refusing to bargain with the union within the meaning of Section 4(a)(6) of Republic Act No. 875.
• Applicability of Grievance Procedure: Whether the employer's failure to reply to the union's letters constituted refusal to bargain when the grievance procedure stipulated in the collective bargaining agreement was not followed by the union.

• Unfair Labor Practice — Refusal to Bargain: No. The charge of unfair labor practice was dismissed, the CIR judgment having erroneously concluded that the employer's failure to reply to the union's letters constituted refusal to bargain.
• Applicability of Grievance Procedure: No. The duty to bargain collectively for the purpose of adjusting grievances was unavailable because the grievance procedure stipulated in the collective bargaining agreement — binding upon both parties — was not availed of or resorted to by the union.

• Unfair Labor Practice — Refusal to Bargain: Section 4(a)(6) of Republic Act No. 875 prohibits an employer from refusing to bargain collectively with the representatives of his employees, subject to the provisions of Sections 13 and 14. Section 14, which governs the procedure for negotiating an agreement where none yet exists, has no application. Section 13 imposes the mutual obligation to meet and confer promptly and in good faith for the purpose of negotiating an agreement or "for the purpose of adjusting any grievances or question arising under such agreement." However, this duty does not compel either party to agree to a proposal or make a concession. The last clause — permitting adjustment of grievances arising under the agreement — could not be invoked by the union because the very terms of the collective bargaining agreement between the parties precluded its availability. The CBA contained a specific grievance procedure that was binding on both contracting parties. Since that procedure was not followed, the collective bargaining mechanism "for the purpose of adjusting any grievances or question arising under such agreement" was unavailable. The employer's refusal to reply to the union's letters therefore did not constitute refusal to bargain under the statute.
• Applicability of Grievance Procedure: The collective bargaining agreement's Section 21 defined a grievance as any disagreement between the union and the company as to the application and interpretation of actual benefits and provisions of the contract, expressly excluding other matters subject of collective bargaining or regulated by existing labor laws. The CBA further prescribed a three-step grievance procedure: (1) the complainant worker discusses and settles the dispute with his foreman, with or without a union representative, and if not settled within two days, must appeal in writing within three days; (2) the written appeal is filed with the Assistant Superintendent, who must render a decision within three days; and (3) further appeal is taken to the superintendent and/or manager through the Union Grievance Board within one week. Because the union did not avail of or resort to this procedure, the statutory duty to bargain for the purpose of adjusting grievances could not be triggered, and the employer's silence in response to the union's letters did not amount to unfair labor practice.

• Duty to Bargain Collectively — Under Section 13 of Republic Act No. 875, the duty to bargain collectively means the mutual obligation of the employer and the employees' representative to meet and confer promptly, expeditiously, and in good faith for the purpose of negotiating an agreement on wages, hours, and terms and conditions of employment, or for adjusting any grievance or question arising under an existing agreement. This duty does not compel any party to agree to a proposal or make a concession. In this case, the Court held that the duty to adjust grievances under the agreement could not be invoked where the parties' collective bargaining agreement prescribed a specific grievance procedure that the union failed to follow.

• Binding Nature of Contractual Grievance Procedure — A grievance procedure stipulated in a collective bargaining agreement is binding upon both contracting parties. Where the agreement defines what constitutes a grievance and prescribes the steps for its resolution, the parties must follow that procedure before invoking the statutory duty to bargain for the purpose of adjusting grievances. Failure to resort to the agreed-upon grievance procedure precludes a finding of refusal to bargain based on the employer's non-response to grievance letters.

• "The grievance handling and grievance procedure stipulated and provided for in the collective bargaining agreement which is binding upon both the contracting parties not having been availed of or resorted to, the collective bargaining 'for the purpose of adjusting any grievances or question arising under such agreement,' is unavailable." — This passage states the ratio decidendi: the statutory duty to bargain for grievance adjustment is unavailable when the contractual grievance mechanism was not followed.

• "Such duty to bargain collectively means the performance of the mutual obligation to meet and confer promptly and expeditiously and in good faith, for the purpose of negotiating an agreement with respect to wages, hours, and/or terms and conditions of employment, and of executing a written contract incorporating such agreement if requested by either party, or for the purpose of adjusting any grievances or question arising under such agreement, but such duty does not compel any party to agree to a proposal or to make concession." — This is the Court's quotation of Section 13 of Republic Act No. 875, defining the scope and limits of the duty to bargain collectively.

• Section 4(a)(6), Republic Act No. 875 (Industrial Peace Act) — Defines as unfair labor practice the act of an employer to refuse to bargain collectively with the representatives of his employees, subject to the provisions of Sections 13 and 14. The Court found that this provision was not violated because the statutory duty to bargain was not triggered.
• Section 13, Republic Act No. 875 — Imposes the duty of an employer and the representative of his employees to bargain collectively, defining such duty as the mutual obligation to meet and confer in good faith for negotiating an agreement or adjusting grievances arising under an existing agreement, but not compelling agreement to any proposal. The Court held that the grievance-adjustment aspect of this duty was unavailable because the CBA's grievance procedure was not followed.
• Section 14, Republic Act No. 875 — Governs the procedure for negotiating a collective bargaining agreement where none yet exists. The Court found this provision inapplicable to the case because a CBA already existed between the parties.
• Section 21, Collective Bargaining Agreement — Defined a grievance as any disagreement between the union and the company as to the application and interpretation of actual benefits and provisions of the contract, expressly excluding other matters subject of collective bargaining or regulated by existing labor laws. The Court relied on this definition and the associated grievance procedure to conclude that the union's failure to follow the CBA's grievance mechanism precluded a finding of refusal to bargain.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concurred.