Jornales vs. Central Azucarera de Bais

A complaint alleging that employees were dismissed for failing to become members of a union pursuant to a closed-shop agreement states an unfair labor practice, and where it prays for reinstatement, jurisdiction lies with the Court of Industrial Relations, not the Court of First Instance.

Plaintiffs-appellants were permanent, year-round employees of defendants-appellees Central Azucarera de Bais and Compania Celulosa de Filipinas under agreements of employment. The companies had entered into a collective bargaining agreement with the United Central and Cellulose Labor Association (UCCLA-PLUM), the exclusive bargaining representative designated by the Court of Industrial Relations, containing a closed-shop clause requiring non-member employees to become members as a condition of continued employment. The dispute implicated the jurisdiction conferred by Republic Act No. 875 over unfair labor practices and the Court of Industrial Relations' authority to prevent them.

On September 17, 1958, Vivencio Jornales, Alfredo Barrios, Florentino Clavesillas, Liberato Pao, Digno Gati-an, Aurelio Dinopol, Ignacio Golez, Galo Reyes, and Teodoro Timoney filed a complaint against Central Azucarera de Bais and Compania Celulosa de Filipinas. They alleged that they were permanent, year-round employees of the defendants by virtue of agreements entered into between them, and that the defendants dismissed them from employment in violation of those agreements. They prayed for a writ of preliminary mandatory injunction for immediate reinstatement and, after trial, that the dismissals be declared illegal and that they be awarded moral damages and attorney's fees.

Defendants answered that they had no agreement with plaintiffs with respect to the duration of employment. They justified the dismissals on the ground that they had entered into a collective bargaining agreement with the United Central and Cellulose Labor Association (UCCLA-PLUM), the exclusive bargaining representative designated by the Court of Industrial Relations, containing a closed-shop clause. At the instance of UCCLA, defendants asked plaintiffs to comply, but plaintiffs failed to do so, whereupon defendants considered them separated from employment as of September 15, 1958.

The complaint attached individual letters as annexes. Annexes A to A-8 were letters dated August 11, 1958, sent by Compania Celulosa de Filipinas to appellants, informing them that on April 12, 1958 the company and UCCLA entered into a collective bargaining agreement, one term of which required employees not yet members of the union to become members within 15 days from the signing of the agreement and to continue as members as a condition of continued employment; that UCCLA had formally demanded that appellants, who were not members, comply with that provision within 30 days from notice; and that if appellants failed to register within that period, without UCCLA having withdrawn its demands, the company would be constrained to consider them separated from the service. Annexes B to B-8 were individual letters to appellants informing them that since they failed to affiliate themselves with UCCLA, and the latter had demanded prompt implementation of the closed-shop agreement, they were considered dismissed as of that date.

In the complaint, after alleging the conditions of their employment, appellants stated the manner of their dismissal: predicating their action on the notices, Annexes A to A-8, which were not based on any of the causes specifically provided by law for dismissal of employees and violated their contractual obligations, the defendants dismissed them as shown in the letters, Annexes B to B-8. The complaint thus averred that appellants were employees of appellees and that, upon their failure to become members of UCCLA as required by appellees, the latter dismissed them.

• Nature of Action: Petitioners maintained that the lower court erred in holding it had no jurisdiction; they designated their action as one for specific performance with damages and preliminary mandatory injunction and insisted they sought not prosecution of an unfair labor practice but specific performance of their employment contracts, which had been violated by unwarranted dismissals.
• Consideration of Answer: Petitioners maintained that the lower court erred in taking into consideration defendants' answer in determining jurisdiction.
• Dismissal Without Motion: Petitioners maintained that the lower court erred in dismissing the case without defendants having filed a motion to dismiss.

• No Agreement on Duration: Defendants alleged in their answer that they had no agreement with plaintiffs with respect to the duration of employment.
• Closed-Shop Compliance: Defendants justified the dismissals on the ground that they had entered into a collective bargaining agreement with UCCLA-PLUM, the exclusive bargaining representative designated by the Court of Industrial Relations, containing a closed-shop clause; at UCCLA's instance, they asked plaintiffs to comply, but plaintiffs failed to do so, whereupon defendants considered them separated from employment as of September 15, 1958.

• Nature of Action and Jurisdiction: Whether the action, though styled as one for specific performance with damages and preliminary mandatory injunction, is in substance an unfair labor practice case cognizable by the Court of Industrial Relations rather than the Court of First Instance.
• Consideration of Answer: Whether the lower court erred in taking into consideration defendants' answer in determining jurisdiction.
• Dismissal Without Motion: Whether the lower court erred in dismissing the case without defendants having filed a motion to dismiss.

• Nature of Action and Jurisdiction: No. The complaint and its annexes averred dismissal for failure to become union members as required by the employers, which states an unfair labor practice; with the prayer for reinstatement, jurisdiction lay with the Court of Industrial Relations, not the Court of First Instance.
• Consideration of Answer: No error. The jurisdictional defect was apparent from the complaint and its annexed letters, which are deemed part of the complaint and construed together; the dismissal was correct.
• Dismissal Without Motion: No error. Lack of jurisdiction over the subject matter is fatal and may be raised at any stage; the court may dismiss the action ex mero motu, and Section 10, Rule 9 requires dismissal whenever lack of jurisdiction appears.

• Nature of Action and Jurisdiction: The label "specific performance with damages and preliminary mandatory injunction" is not conclusive. The complaint and annexes A to A-8 and B to B-8 show that the collective bargaining agreement between Compania Celulosa de Filipinas and UCCLA, dated April 12, 1958, contained a closed-shop clause requiring non-member employees to join within 15 days and to remain members as a condition of continued employment; that UCCLA demanded compliance within 30 days; and that appellants were considered dismissed for failing to affiliate. The complaint therefore avers that appellants were employees and that, upon their failure to become members of UCCLA as required by appellees, they were dismissed. This is a clear statement of an unfair labor practice by the employers. Under Section 4(a)(4) of Republic Act No. 875, it is an unfair labor practice for an employer to discriminate in regard to hire or tenure of employment to encourage or discourage membership in any labor organization, although an employer may make an agreement requiring membership as a condition of employment if the labor organization is the representative of the employees under Section 12. Under Section 5(a) of Republic Act No. 875, the Court of Industrial Relations has jurisdiction over the prevention of unfair labor practices. Because the complaint prayed for reinstatement, cognizance belonged to the Court of Industrial Relations. The distinction is that an unjustifiable dismissal is a breach of a private contract ordinarily remediable by rescission or specific performance in the Court of First Instance, but a discriminatory dismissal, though also a contractual breach, violates a public right specially protected by law and must be redressed through the specific procedure in the Industrial Court. The alleged manner of breach, as described by appellants themselves, placed the case outside the lower court's jurisdiction.
• Consideration of Answer: The Court determined the nature of the action by considering the complaint and the annexes attached to it, which are deemed part of the complaint and are to be construed together with its formal allegations. The complaint and annexes themselves described a discriminatory dismissal for failure to comply with the closed-shop requirement. The jurisdictional conclusion thus rested on the complaint and its annexes, and the assigned error does not disturb the dismissal.
• Dismissal Without Motion: A lack of jurisdiction over the subject matter is fatal and may be objected to at any stage of the proceedings, either in the court below or on appeal. Where the subject matter is not within the court's jurisdiction, the court may dismiss the proceeding ex mero motu. Section 10, Rule 9 of the Rules of Court provides that whenever it appears that the court has no jurisdiction over the subject matter, it shall dismiss the action. The lower court therefore correctly dismissed the case even though appellees had not moved for dismissal.

• Unfair labor practice jurisdiction — Under Republic Act No. 875, the Court of Industrial Relations has jurisdiction over the prevention of unfair labor practices. A complaint alleging that employees were dismissed for failing to become union members as required by the employer, with a prayer for reinstatement, states an unfair labor practice and falls within that jurisdiction.
• Nature of action determined by complaint and annexes — The plaintiff's designation of the action is not conclusive. The complaint and documents annexed to it and made part thereof are construed together to determine the nature of the action and the court's jurisdiction.
• Discriminatory dismissal vs. ordinary breach of employment contract — An unjustifiable dismissal is a breach of a private contract, and an action to compel reinstatement is cognizable by the Court of First Instance under the general law on contracts. If the dismissal is discriminatory, it also violates a public right specially protected by law and must be redressed through the specific procedure in the Industrial Court.
• Closed-shop clause and existing employees — Section 4(a)(4) of Republic Act No. 875 permits an employer to agree with a labor organization to require membership as a condition of employment if the union is the representative of the employees under Section 12. The Court's footnote cites authority that employees already in the employ of the company when the collective bargaining agreement was entered into are not under obligation to join the union to keep their jobs.
• Lack of jurisdiction may be raised at any stage; dismissal ex mero motu — Lack of jurisdiction over the subject matter is fatal and may be raised at any stage, in the lower court or on appeal. The court may dismiss the proceeding on its own motion, and Section 10, Rule 9 of the Rules of Court requires dismissal whenever lack of jurisdiction appears.

• "In effect, therefore, the complaint avers that appellant were employees of appellees, and that upon their failure to become members of the UCCLA as required by appellees the latter dismissed them. This is a clear statement of an unfair labor practice committed by the employers, cognizance of which, there being in the petition a prayer for reinstatement, as in this case is given to the Court of Industrial Relations." — This passage states the ratio decidendi on jurisdiction: the complaint's allegations, not its label, determine that the case is an unfair labor practice cognizable by the Court of Industrial Relations.
• "A contract of employment may be violated by the employer by unjustifiably dismissing the employee, in which case the general law on contracts applies, and the action to compel the employer to reinstate the employee is cognizable by the court of first instance. However, if the dismissal is discriminatory — though also a breach of a private contract ordinarily remediable by rescission or reinstatement by way of specific performance — it constitutes a violation of a public right which the law specially protects, and for the redress of which a specific procedure in a designated court, i.e., the Industrial Court, must be followed." — This excerpt defines the controlling distinction between an ordinary contractual breach and a discriminatory dismissal that violates a public right.
• "Upon finding that it has no jurisdiction over the case, the lower court correctly dismissed it, even though appellees had not moved for dismissals." — This passage supports the ruling that a court may dismiss a case for lack of jurisdiction even without a motion to dismiss from the defendant.
• "Whenever it appears that the court has no jurisdiction over the subject matter, it shall dismiss the action." — This is the procedural rule cited to justify dismissal ex mero motu when jurisdiction over the subject matter is absent.

• Sumcad vs. CIR, L-18716, April 29, 1963 — Cited in footnote for the proposition that employees already in the employ of the company when the collective bargaining agreement was entered into are not under obligation to join the union to keep their jobs.
• United States Lines Co. vs. Associated Watchmen and Security Union, et al., L-15508, June 29, 1963 — Cited in the same footnote for the same proposition.
• Barranta vs. International Harvester Co., L-18198, April 22, 1963 — Cited for the Court of Industrial Relations' jurisdiction over the prevention of unfair labor practices under Section 5(a) of Republic Act No. 875.
• Araullo vs. Monte de Piedad Savings Bank, et al., L-17840, April 23, 1963 — Cited for the same jurisdictional proposition.
• National Labor Union vs. Insular Yebana Tobacco Corporation, L-15363, July 31, 1961 — Cited for the distinction between unfair labor practice cases, which involve violations of a public right or policy, and mere contractual breaches by an employer.
• Baguio Gold Mining vs. Tabisola, L-15265, April 27, 1962 — Cited for the same distinction.
• U.S. vs. Jayme, 24 Phil. 90 — Cited for the rule that lack of jurisdiction over the subject matter is fatal, may be raised at any stage, and may be acted upon by the court ex mero motu.

• Section 4(a)(4), Republic Act No. 875 — Defines an unfair labor practice for an employer to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization; the proviso allows an employer to make an agreement requiring membership as a condition of employment if the labor organization is the representative of the employees under Section 12. The Court used this provision to characterize the dismissal as an unfair labor practice.
• Section 5(a), Republic Act No. 875 — Confers jurisdiction on the Court of Industrial Relations over the prevention of unfair labor practices and empowers it to prevent any person from engaging in an unfair labor practice. This was the basis for holding that the Court of Industrial Relations, not the Court of First Instance, had cognizance of the case.
• Section 12, Republic Act No. 875 — Referenced in the proviso to Section 4(a)(4) as the provision determining when a labor organization is the representative of the employees for purposes of a valid union-security agreement.
• Section 10, Rule 9, Rules of Court — Provides that whenever it appears that the court has no jurisdiction over the subject matter, it shall dismiss the action. The Court cited this in holding that dismissal was proper even without a motion to dismiss.

Bengzon, C.J.; Padilla, J.; Bautista Angelo, J.; Concepcion, J.; Barrera, J.; Paredes, J.; Dizon, J.; and Regala, J.