Halagueña vs. Philippine Airlines Incorporated

A declaratory relief action seeking to annul a CBA provision on grounds of unconstitutionality and gender discrimination falls within the jurisdiction of the Regional Trial Court, not labor tribunals, where the employer-employee relationship is merely incidental and the cause of action arises from the Constitution, international treaties, and general civil law rather than from the Labor Code or the CBA itself.

Petitioners were female flight attendants of Philippine Airlines (PAL), employed on different dates prior to November 22, 1996, and members of the Flight Attendants and Stewards Association of the Philippines (FASAP), the sole and exclusive bargaining representative of PAL's flight attendants, flight stewards, and pursers. On July 11, 2001, PAL and FASAP entered into a Collective Bargaining Agreement covering the years 2000 to 2005 (PAL-FASAP CBA). Section 144, Part A of that CBA fixed compulsory retirement at age 55 for female cabin attendants and age 60 for male cabin attendants hired before November 22, 1996. The Philippines ratified the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) in 1981, a multilateral convention condemning all forms of discrimination against women.

Petitioners were female flight attendants of Philippine Airlines, hired on different dates prior to November 22, 1996, and members of FASAP, the certified sole and exclusive bargaining representative of PAL's flight attendants, flight stewards, and pursers. On July 11, 2001, PAL and FASAP entered into a Collective Bargaining Agreement for the years 2000 to 2005. Section 144, Part A of the PAL-FASAP CBA provided that for cabin attendants hired before November 22, 1996, compulsory retirement was set at age 55 for females and age 60 for males.

On July 22, 2003, petitioners and several female cabin crews wrote to PAL manifesting that the CBA provision on compulsory retirement was discriminatory and demanding equal treatment with their male counterparts. Petitioners' counsel reiterated this demand in a subsequent letter, seeking the removal of gender discrimination provisions in the upcoming renegotiations of the PAL-FASAP CBA. On July 12, 2004, FASAP's President, Robert D. Anduiza, submitted the association's 2004-2005 CBA proposals and manifested willingness to commence collective bargaining negotiations. However, FASAP exerted no further efforts to pursue the proposal to change the questioned provision, and there was no showing that FASAP endeavored to negotiate with PAL for the removal of the difference in compulsory retirement age between female and male flight attendants.

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of a TRO and Writ of Preliminary Injunction before the RTC of Makati City, Branch 147, docketed as Civil Case No. 04-886, seeking to invalidate Section 144, Part A of the PAL-FASAP CBA as unconstitutional and discriminatory. The RTC upheld its jurisdiction on August 9, 2004, issued a TRO on August 10, 2004, and a writ of preliminary injunction on September 27, 2004. Respondent PAL filed a Petition for Certiorari and Prohibition with the Court of Appeals, which granted the petition on August 31, 2005, declaring the RTC to have no jurisdiction and ordering dismissal of the case. Petitioners' motion for reconsideration was denied on March 7, 2006, prompting the instant petition for review on certiorari before the Supreme Court.

• Jurisdiction of the RTC: Petitioners argued that the RTC has jurisdiction over all civil actions in which the subject of litigation is incapable of pecuniary estimation and in all cases not within the exclusive jurisdiction of any court, tribunal, or body exercising judicial or quasi-judicial functions. The issue of constitutionality or legality of Section 144, Part A of the PAL-FASAP CBA is constitutional in character, placing it beyond the jurisdiction of labor arbiters or the NLRC.
• Nature of the Cause of Action: Petitioners maintained that the case is not a labor dispute but an action for declaratory relief seeking annulment of a CBA provision alleged to be discriminatory, unconstitutional, and unlawful, requiring application of the Constitution, labor statutes, law on contracts, and CEDAW.
• Relief Sought: Petitioners prayed that judgment be rendered on the merits declaring Section 144, Part A of the PAL-FASAP CBA null and void to the extent that it discriminates against female flight attendants, and that they be declared entitled to work until age 60 like their male counterparts.

• Jurisdiction of Labor Tribunals: Respondent argued that labor tribunals have jurisdiction because the controversy partakes of a labor dispute concerning the terms and conditions of petitioners' employment, specifically their retirement age.
• Exclusive Jurisdiction of Voluntary Arbitrator: Respondent contended that the RTC has no jurisdiction over the petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators has original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA, and that regular courts have no power to set and fix the terms and conditions of employment.
• Procedural Impropriety: Respondent alleged that petitioners' prayer for the Supreme Court to resolve the petition for declaratory relief on the merits is procedurally improper and baseless.

• Jurisdiction: Whether the Regional Trial Court has jurisdiction over the petitioners' action challenging the legality or constitutionality of the compulsory retirement age provision in the CBA between PAL and FASAP.
• Grievance Machinery and Voluntary Arbitration: Whether referral to the grievance machinery and voluntary arbitration under the CBA is appropriate for resolving the petitioners' challenge to the questioned provision.
• Scope of Review: Whether the Supreme Court may resolve the merits of the declaratory relief action on appeal under Rule 45.

• Jurisdiction: Yes. The RTC has jurisdiction because the cause of action is the annulment of a CBA provision on constitutional and statutory grounds, a subject incapable of pecuniary estimation and cognizable by the RTC under Section 19(1) of Batas Pambansa Blg. 129, as amended. The employer-employee relationship is merely incidental, and the cause of action arises from the Constitution, CEDAW, and general civil law.

• Grievance Machinery and Voluntary Arbitration: No. Referral to the grievance machinery and voluntary arbitration would be inappropriate because FASAP and PAL unanimously agreed to the questioned provision, making the grievance machinery incapable of impartiality; voluntary arbitrators lack competence to decide constitutional issues; and FASAP failed to actively pursue the matter on behalf of its female members.

• Scope of Review: No. The question of whether the CBA provision is actually discriminatory is a question of fact requiring presentation and reception of evidence and a full-blown trial, which is beyond the scope of a Rule 45 petition limited to questions of law. The case was remanded to the RTC for proper determination on the merits.

• Jurisdiction: Jurisdiction is determined by the material allegations of the complaint and the character of the relief prayed for, irrespective of whether the plaintiff is entitled to such relief. The petitioners' cause of action was the annulment of Section 144, Part A of the PAL-FASAP CBA on the ground that it discriminated against female flight attendants, in violation of the Constitution, the Labor Code as amended by Republic Act No. 6725, and CEDAW. The subject of litigation is incapable of pecuniary estimation, placing it within the RTC's exclusive original jurisdiction under Section 19(1) of Batas Pambansa Blg. 129. The issue cannot be resolved solely by applying the Labor Code; it requires application of the Constitution, labor statutes, the law on contracts, and CEDAW. Citing Georg Grotjahn GMBH & Co. vs. Isnani, the Court reiterated that not every dispute between employer and employee is within the jurisdiction of labor arbiters and the NLRC; their jurisdiction under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or the CBA. Where the employer-employee relationship is merely incidental and the cause of action arises from a different source of obligation, jurisdiction belongs to regular courts. The change in terms and conditions of employment that would result from nullification of the CBA provision is a necessary and unavoidable consequence of the principal relief sought, and does not transform the action into a labor dispute cognizable by labor tribunals.

• Grievance Machinery and Voluntary Arbitration: The grievance machinery and voluntary arbitrators have no power to determine and settle constitutional issues relative to the questioned compulsory retirement age. Their exercise of jurisdiction would be futile, as they lack the competence to decide constitutional questions. Moreover, the dispute is not between FASAP and PAL, who both previously agreed upon the questioned provision, but between PAL and several individual female flight attendants who questioned it. Applying the rationale in Pantranco North Express, Inc. vs. NLRC, referral to the grievance machinery would not serve the petitioners' interests because the union and the company are united in their agreement on the provision. Due process demands that the petitioners' grievances be ventilated before an impartial body. Additionally, referral would be futile because PAL had already implemented the provision when several female flight attendants reached the compulsory retirement age of 55, and FASAP exerted no meaningful effort to negotiate the removal of the discriminatory difference in retirement age. The trial court is not asked to interpret the CBA provision, as the provision is not ambiguous and does not require interpretation; the only controversy lies in its intrinsic validity.

• Scope of Review: The question of whether Section 144, Part A of the PAL-FASAP CBA is discriminatory is a question of fact, requiring presentation and reception of evidence for the trial court to ascertain whether the provision violates the Constitution, statutes, and treaties. A full-blown trial is necessary, and the Supreme Court is not a trier of facts. Under Rule 45, pure questions of fact may not be the proper subject of an appeal by certiorari, which is generally limited to questions of law. Accordingly, a remand to the RTC for proper determination of the merits of the petition for declaratory relief was just and proper.

• Determination of Jurisdiction by Allegations and Relief Sought — Jurisdiction of a court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for, irrespective of whether the plaintiff is entitled to such relief. The Court applied this principle by examining the petition for declaratory relief and concluding that the cause of action was annulment of a CBA provision on constitutional and statutory grounds, a subject incapable of pecuniary estimation and thus within RTC jurisdiction.

• Incidental Employer-Employee Relationship Doctrine — Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation are within the exclusive jurisdiction of the regular courts. The Court applied this by holding that the cause of action arose from the Constitution and CEDAW, not from the Labor Code or CBA, making the employer-employee relationship merely incidental.

• Limitations on Party Autonomy in Labor Contracts — The principle of party autonomy in contracts is not absolute; contracting parties may establish stipulations provided they are not contrary to law, morals, good customs, public order, or public policy. Labor contracts are not ordinary contracts but are imbued with public interest and subject to the police power of the state. Retirement provisions in a CBA that run contrary to law, public morals, or public policy may be voided.

• Inapplicability of Grievance Machinery Where Union and Management Are United — Only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. Where both the union and the company have agreed upon the questioned provision, no grievance between them exists, and due process demands that the aggrieved employees' claims be ventilated before an impartial body rather than a grievance machinery whose members are designated by the union and the company.

• "Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement." — This passage, quoted from Georg Grotjahn GMBH & Co. vs. Isnani, articulates the controlling principle that limits labor tribunal jurisdiction and establishes the basis for RTC jurisdiction where the cause of action arises from sources other than labor law.

• "If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall determine the constitutionality or legality of the assailed CBA provision?" — This rhetorical question underscores the Court's reasoning that neither the grievance machinery nor voluntary arbitrators possess the competence to adjudicate constitutional issues, reinforcing the necessity of RTC jurisdiction.

• "The change in the terms and conditions of employment, should Section 144 of the CBA be held invalid, is but a necessary and unavoidable consequence of the principal relief sought, i.e., nullification of the alleged discriminatory provision in the CBA. Thus, it does not necessarily follow that a resolution of controversy that would bring about a change in the terms and conditions of employment is a labor dispute, cognizable by labor tribunals." — This passage defines the critical distinction between a labor dispute and an ordinary civil action whose incidental effect is a change in employment terms, establishing that the character of the principal relief sought controls jurisdiction.

• "The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts; these are imbued with public interest and therefore are subject to the police power of the state." — This formulation articulates the doctrinal basis for judicial review and nullification of CBA provisions contrary to law, morals, or public policy, notwithstanding the principle that a contract is the law between the parties.

• Georg Grotjahn GMBH & Co. vs. Isnani, G.R. No. 109272, August 10, 1994, 235 SCRA 217 — Controlling precedent followed. Established that not every dispute between employer and employee falls within labor tribunal jurisdiction; jurisdiction of labor arbiters and the NLRC is limited to disputes resolvable by reference to the Labor Code, labor statutes, or the CBA.

• Eviota vs. Court of Appeals, G.R. No. 152121, July 29, 2003, 407 SCRA 394 — Followed. Held that actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation are within the exclusive jurisdiction of regular courts.

• Rivera vs. Espiritu, G.R. No. 135547, January 23, 2002, 374 SCRA 351 — Followed. Involving PAL and PALEA, the Court held that a petition seeking nullification of a CBA suspension agreement was properly an ordinary civil action for annulment of contract under RTC jurisdiction, not a labor dispute.

• Pantranco North Express, Inc. vs. NLRC, G.R. No. 95940, July 24, 1996, 259 SCRA 161 — Followed and applied. Held that only disputes between the union and the company shall be referred to the grievance machinery; where both are united in agreement, the grievance machinery cannot serve as an impartial forum for aggrieved employees.

• Gonzales vs. Climax Mining Ltd., 492 Phil. 682 (2005) — Followed. Affirmed the jurisdiction of courts over questions of constitutionality or validity of contracts, as such questions require the exercise of judicial power.

• Saura vs. Saura, Jr., G.R. No. 136159, September 1, 1999, 313 SCRA 465 — Followed. Emphasized the primacy of regular courts' judicial power and cautioned against creeping takeover by administrative agencies of judicial power vested in the courts.

• Pakistan International Airlines Corporation vs. Ople, G.R. No. 61594, September 28, 1990, 190 SCRA 90 — Followed. Established that the principle of party autonomy in contracts is not absolute and that labor contracts, being imbued with public interest, are subject to the police power of the state and cannot contract away applicable provisions of law.

• Section 19(1), Batas Pambansa Blg. 129, as amended (Judiciary Reorganization Act) — Provides that Regional Trial Courts shall exercise exclusive original jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation. Applied as the statutory basis for RTC jurisdiction over the declaratory relief action.

• Section 14, Article II, 1987 Constitution — Guarantees the fundamental right to equality between men and women. Cited as the constitutional basis for petitioners' cause of action challenging the discriminatory retirement age provision.

• Article 3, Presidential Decree No. 442 (Labor Code) — Guarantees equal work and employment opportunities for women and men. Cited as statutory basis for the challenge to the CBA provision.

• Article 135, Labor Code, as amended by Republic Act No. 6725 — Declares it unlawful for an employer to discriminate against women employees with respect to terms and conditions of employment solely on account of sex. Cited as the statutory prohibition against the discriminatory retirement provision.

• Article 1306, Civil Code — Provides that contracting parties may establish such stipulations as they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Applied to establish that CBA provisions are subject to legal limitations and may be voided if contrary to law or public policy.

• Article 1700, Civil Code — Provides that the relations between capital and labor are not merely contractual but are so impressed with public interest that labor contracts must yield to the common good. Applied to reinforce the supremacy of law over labor contracts.

• Article 217, Labor Code — Defines the jurisdiction of labor arbiters and the NLRC, limiting it to disputes arising from employer-employee relationships resolvable by reference to the Labor Code, labor statutes, or the CBA. Distinguished as inapplicable to the present case.

• Article 253-A, Labor Code — Provides the maximum statutory life of five years for a CBA. Referenced in the discussion of Rivera vs. Espiritu regarding the suspension of a CBA.

• Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) — International treaty ratified by the Philippines in 1981, condemning all forms of discrimination against women. Cited as a source of obligation forming the basis of petitioners' cause of action, requiring application and interpretation beyond the competence of labor tribunals.

Consuelo Ynares-Santiago (Chairperson), Minita V. Chico-Nazario, Presbitero J. Velasco, Jr., and Antonio Eduardo B. Nachura concurred.