MSF Tire and Rubber, Inc. vs. Court of Appeals

A corporation is not an "innocent bystander" entitled to enjoin a labor union's picketing where its personality is closely linked to the employer in the labor dispute through shared ownership, plant, equipment, working conditions, and products; the trial court then has no jurisdiction to issue the injunction. An innocent bystander seeking to enjoin a labor strike must show that, aside from the grounds under Rule 58, it is entirely different from and without any connection whatsoever to either party to the dispute, with interests totally foreign to the context thereof.

Philtread Tire and Rubber Corporation was the employer in a labor dispute with Philtread Tire Workers' Union. MSF Tire and Rubber, Inc. was the new company formed to acquire Philtread's plant and equipment under an arrangement with Siam Tyre Public Company Limited, with Philtread retaining a 20% interest in MSF and a 60% interest in Sucat Land Corporation, which acquired the plant site. The governing legal backdrop is the "innocent bystander" rule, which determines when a third party may ask civil courts to enjoin picketing in a labor dispute to which it is not a party.

Philtread Tire and Rubber Corporation had a plant at Km. 21, East Service Road, South Superhighway, Muntinlupa, Metro Manila, and Philtread Tire Workers' Union was the union involved in a labor dispute with it. On May 27, 1994, the Union filed a notice of strike before the National Conciliation and Mediation Board — National Capital Region, charging Philtread with unfair labor practices for allegedly engaging in union-busting and violating the collective bargaining agreement. The Union then picketed and held assemblies outside the gate of Philtread's plant. Philtread filed a notice of lock-out on May 30, 1994, which it carried out on June 15, 1994. On September 4, 1994, then Secretary of Labor Nieves Confesor assumed jurisdiction over the labor dispute and certified it for compulsory arbitration, enjoining the Union from striking and Philtread from locking out Union members.

On December 9, 1994, during the pendency of the labor dispute, a Memorandum of Agreement was entered into with Siam Tyre Public Company Limited, a subsidiary of Siam Cement. Under the 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 its officers and directors before the RTC 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 and the parties submitted their respective memoranda, the trial court, in an order dated March 25, 1996, denied petitioner's application for injunction and dismissed the complaint. On petitioner's motion, however, the trial court, in an order dated July 2, 1996, reconsidered its order, reinstated the complaint, denied the Union's motion to dismiss, and granted a preliminary injunction upon posting of a P1,000,000.00 bond, ordering the defendants and persons acting on their behalf to desist from conducting their assembly immediately outside the plant and from placing banners, streamers, posters, placards, tents, shanties, or other structures on the fence or along the sidewalk outside the plant premises until further orders.

Without filing a motion for reconsideration, the Union filed on August 5, 1996 a petition for certiorari and prohibition before the CA. On March 20, 1997, the CA rendered a decision granting the Union's petition and ordering the trial court to dismiss the civil case for lack of jurisdiction. The CA found that the negotiation, contract of sale, and post-transaction between Philtread as vendor and Siam Tyre as vendee revealed a legal relation that could not be ignored; Philtread remained 20% owner of petitioner and 60% owner of Sucat Land Corporation, which owned the land where the subject plant was located. It also noted that petitioner used the same plant or factory, similar or substantially the same working conditions, same machinery, tools, and equipment, and manufactured the same products as Philtread. The CA stressed that it had not touched on whether petitioner was a mere dummy or continuation of Philtread.

• Non-Forum Shopping and Motion for Reconsideration: Petitioner argued that the CA erred in not summarily dismissing the Union's petition for its false certification of non-forum shopping and for the Union's failure to file a motion for reconsideration before going up to the CA on a petition for certiorari.
• Lack of Jurisdiction and Clear Right to Injunction: Petitioner argued that the CA gravely erred in dismissing Civil Case No. 95-770 for lack of jurisdiction and merit on the alleged ground that MSF did not have a clear and unmistakable right to a writ of preliminary injunction.
• Innocent Bystander/Corporate Personality: Petitioner argued that the CA's pronouncement that it had not touched the issue of whether the party seeking injunction was a mere innocent bystander to the labor dispute, or a mere dummy or continuity of Philtread, was contrary to its own conclusions in the body of the decision, which conclusions were erroneous.
• Injunction and Union's Communication: Petitioner argued that the CA gravely abused its discretion in disallowing the injunction based on Philtread's remaining operations in the country and in allowing the Union to exercise its right to communicate the facts of its labor dispute within MSF's premises, given Philtread's percentage of interest in both MSF and the corporation owning the land where the plant stood.

• Forum Shopping and Motion for Reconsideration: 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 July 2, 1996 order of the trial court were fatal to its petition for review before the CA.
• Innocent Bystander Rule: Whether petitioner has shown a clear legal right to the issuance of a writ of injunction under the "innocent bystander" rule.

• Forum Shopping and Motion for Reconsideration: No. The Union's failure to disclose the NCMB proceeding and to file a motion for reconsideration was not fatal; petitioner itself made the same omission in its own certification, and the trial court's injunction order was void for lack of jurisdiction.
• Innocent Bystander Rule: No. Petitioner was not an innocent bystander because its personality was closely linked to Philtread through shared ownership, plant, equipment, working conditions, and products; it therefore had no clear legal right to injunction.

• Forum Shopping and Motion for Reconsideration: Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition; it is malpractice, prohibited and condemned as trifling with courts and abusing their processes. The SC adopted the definition in Executive Secretary vs. Gordon: forum shopping consists of filing multiple suits involving the same parties for the same cause of action, simultaneously or successively, to obtain a favorable judgment, and it exists (1) when a party seeks a favorable decision in another forum after an adverse decision, other than by appeal or certiorari; (2) when a party files another petition before the CA after filing one before the SC, splitting appeals; or (3) when a party attempts to obtain a preliminary injunction in another court after failing to obtain it from the original court. The important test is whether the party's actions cause vexation to courts and litigants by asking different courts or agencies to rule on the same or related causes or grant the same or substantially the same reliefs, creating the possibility of conflicting decisions. Petitioner claimed the Union's certification was false because it did not mention NCMB-NCR-NS-05-167-96, but the SC found the argument without merit: petitioner was a party to the NCMB proceedings in which the Secretary of Labor's order was issued; petitioner initiated the injunction action before the trial court; the Union was forced to file its CA petition after the trial court issued the injunctive order; and the Union's petition 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. Petitioner also failed to notice that its own certification before the lower court suffered from the same omission—although the body of its complaint mentioned NCMB-NCR-NS-05-167-96, its certification was silent on the matter. The SC held it was not in keeping with fairness for petitioner to demand strict application of the prohibition against forum shopping when it was guilty of the same omission. On the failure to file a motion for reconsideration, the SC held that no motion was required because the trial court's July 2, 1996 order was a patent nullity, the trial court having no jurisdiction to issue the writ of injunction.
• Innocent Bystander Rule: In Philippine Association of Free Labor Unions (PAFLU) vs. Cloribel, the SC stated that 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 cannot be curtailed even in the absence of an employer-employee relationship. The right is not absolute: while peaceful picketing is protected as free speech, courts may confine or localize the sphere of communication or demonstration to the parties to the labor dispute, including those with related interest, and insulate establishments or persons with no industrial connection or with interest totally foreign to the context of the dispute. The right may be regulated at the instance of third parties or innocent bystanders if the inevitable result is to create an impression that a labor dispute exists between them and the picketing union, or to constitute an invasion of their rights. An innocent bystander seeking to enjoin a labor strike must satisfy the court that, aside from the grounds specified in Rule 58, it is entirely different from, without any connection whatsoever to, either party to the dispute, and its interests are totally foreign to the context. In PAFLU vs. Cloribel, Wellington and Galang were separate entities from Metropolitan Bank and Trust Company, the strike target, other than being the bank's landlord and co-lessee; in Liwayway Publications, Inc. vs. Permanent Concrete Workers Union, Liwayway was an innocent bystander because its only connection with the employer was that both were situated in the same premises. Here, petitioner could not be said to have no connection to the dispute. The CA observed that the negotiation, contract of sale, and post-transaction between Philtread and Siam Tyre revealed a legal relation; Philtread remained 20% owner of petitioner and 60% owner of Sucat Land Corporation, which owned the land where the subject plant was located; and petitioner used the same plant or factory, similar or substantially the same working conditions, same machinery, tools, and equipment, and manufactured the same products as Philtread. These facts led the CA to conclude that petitioner's personality was so closely linked to Philtread as to bar its entitlement to an injunctive writ. Although 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, the SC held that it is not these standards but those of the innocent bystander rule which govern whether petitioner is entitled to an injunctive writ. Petitioner therefore had no clear and unmistakable right to the injunctive writ.

• Forum Shopping — Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. It is prohibited as trifling with courts and abusing their processes. It exists when a party seeks a favorable decision in another forum after an adverse decision, files another petition after filing one before the SC, or attempts to obtain a preliminary injunction in another court after failing to obtain it from the original court. The important consideration is the vexation caused to courts and litigants by asking different courts or agencies to rule on the same or related causes or grant the same or substantially the same reliefs, creating the possibility of conflicting decisions. In this case, the SC did not treat the Union's omission as fatal because petitioner itself made the same omission and the Union's petition was provoked by petitioner's action.
• Innocent Bystander Rule — 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 cannot be curtailed even in the absence of an employer-employee relationship. The right is not absolute. Courts may confine or localize the sphere of communication or demonstration to the parties to the labor dispute, including those with related interest, and insulate establishments or persons with no industrial connection or with interest totally foreign to the context of the dispute. An innocent bystander seeking to enjoin a labor strike must satisfy the court that, aside from the grounds specified in Rule 58, it is entirely different from, without any connection whatsoever to, either party to the dispute, and its interests are totally foreign to the context. In this case, MSF failed the test because of its close links to Philtread.
• Corporate Fiction/Alter Ego — 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. The SC clarified, however, that entitlement to an injunction against picketing is governed not by these corporate-fiction standards but by the innocent bystander rule.

• "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 SC adopts the rule that peaceful picketing is protected as free speech even without an employer-employee relationship.
• "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." — This defines the requisites for a third party to obtain an injunction against a labor strike.
• "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." — The CA's factual conclusion, adopted by the SC, that MSF's close links to Philtread disqualified it from injunctive relief.
• "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." — The SC concludes that the RTC's injunction was void because MSF was not an innocent bystander.

• Executive Secretary vs. Gordon, G.R. No. 134171, November 18, 1998 — Cited for the definition and examples of forum shopping.
• Solid Homes, Inc. vs. Court of Appeals, 271 SCRA 157 (1997) — Cited for the definition of forum shopping as the institution of two or more actions grounded on the same cause.
• Golangco vs. Court of Appeals, 283 SCRA 493 (1997) — Cited for the test that the important consideration is the vexation caused to courts and litigants.
• Philippine Association of Free Labor Unions (PAFLU) vs. Cloribel, 27 SCRA 465 (1969) — Controlling precedent for the innocent bystander rule and the scope of peaceful picketing.
• Liwayway Publications, Inc. vs. Permanent Concrete Workers Union, 108 SCRA 161 (1981) — Cited as an example where a third party with only a premises connection was an innocent bystander.
• Indophil Textile Mill Workers Union vs. Calica, 205 SCRA 697 (1992) — Cited for the rule that corporate fiction may be disregarded in certain cases.
• Vda. de Sayman vs. Court of Appeals, 121 SCRA 650 (1983) — Cited for the rule that no motion for reconsideration is needed where the order is null and void.

• Rule 58, Rules of Court — The SC referred to the grounds for injunction under Rule 58; an innocent bystander seeking to enjoin a labor strike must satisfy those grounds and additionally show it is entirely different from and without connection to either party. Applied: MSF failed because it was not an innocent bystander.
• Constitution — freedom of speech — The SC described the right to picket as a phase of freedom of speech guaranteed by the Constitution; peaceful picketing cannot be curtailed even absent an employer-employee relationship, but it is not absolute and may be regulated to protect innocent bystanders. Applied: the Union's picketing was protected, but MSF could not claim the protection of the innocent bystander rule.