National Federation of Sugar Workers (NFSW) vs. Ethelwoldo R. Ovejera, et al.

The cooling-off period under Article 264(c) and the 7-day strike ban after the strike-vote report under Article 264(f) of the Labor Code are mandatory requirements, and a strike declared before the lapse of these periods is illegal. Under Presidential Decree No. 851, an employer already paying its employees a 13th month pay or its equivalent — including Christmas bonus, mid-year bonus, profit-sharing payments, and other cash bonuses amounting to not less than 1/12th of the basic salary — is exempt from the obligation to pay a separate 13th month pay.

The National Federation of Sugar Workers (NFSW) was the certified bargaining agent of the rank and file employees of Central Azucarera de la Carlota (CAC), a sugar mill in Negros Occidental, representing about 1,200 of more than 2,000 personnel. The parties had concluded a collective bargaining agreement effective February 16, 1981 to February 15, 1984, which under Article VII, Section 5 maintained the practice of granting Christmas bonus, milling bonus, and amelioration bonus, with the Christmas and milling bonuses amounting to 1-½ months' salary. Presidential Decree No. 851, issued on December 16, 1975, required all employers to pay employees receiving not more than P1,000 basic salary a month a 13th month pay, but exempted employers already paying their employees a 13th month pay or its equivalent.

The National Federation of Sugar Workers (NFSW) was the bargaining agent of the rank and file employees of Central Azucarera de la Carlota (CAC), a sugar central in Negros Occidental, and had concluded with CAC a collective bargaining agreement effective February 16, 1981 to February 15, 1984. Under Article VII, Section 5 of the CBA, the parties agreed to maintain the present practice on the grant of Christmas bonus, milling bonus, and amelioration bonus to the extent required by law, with the Christmas and milling bonuses amounting to 1-½ months' salary.

On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th month pay under PD 851, in addition to the Christmas, milling, and amelioration bonuses being enjoyed by CAC workers. To settle the strike, a compromise agreement was concluded between CAC and NFSW on November 30, 1981, paragraph 4 of which provided that the parties would abide by the final decision of the Supreme Court in any case involving the 13th Month Pay Law if it was clearly held that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given.

As of November 30, 1981, G.R. No. 51254 (Marcopper Mining Corp. vs. Blas Ople and Amado Inciong) was still pending in the Supreme Court. The petition in that case had been dismissed on June 11, 1981 on the vote of seven Justices, and a motion for reconsideration was denied in a resolution dated December 15, 1981, with only five Justices voting for denial, three dissenting, two reserving their votes, and four not taking part. On December 18, 1981, the Marcopper decision having become final and executory, entry of judgment was made.

After the Marcopper decision had become final, NFSW renewed its demand that CAC give the 13th month pay, but CAC refused. On January 22, 1982, NFSW filed with the Ministry of Labor and Employment (MOLE) Regional Office in Bacolod City a notice to strike based on non-payment of the 13th month pay. Six days after, on January 28, 1982, NFSW struck. One day after the commencement of the strike, on January 29, 1982, a report of the strike-vote was filed by NFSW with MOLE.

On February 8, 1982, CAC filed a petition with the Regional Arbitration Branch VI-A, MOLE, at Bacolod City to declare the strike illegal, principally for being violative of Batas Pambansa Blg. 130 — that the strike was declared before the expiration of the 15-day cooling-off period for unfair labor practice strikes, and that the strike was staged before the lapse of seven days from the submission to MOLE of the result of the strike-vote. After the submission of position papers and hearing, Labor Arbiter Ovejera declared the NFSW strike illegal, directing the Central to resume operations immediately, to accept back to work all employees appearing in its payroll as of January 28, 1982 except those covered by the February 1, 1982 memorandum on preventive suspension, to pay the salaries of those placed on preventive suspension, and directing NFSW, its officers, members, and sympathizers to desist from committing acts that may impair or impede the milling operations of the Central.

On February 26, 1982, NFSW filed the instant Petition for Prohibition, alleging that Labor Arbiter Ovejera, CAC, and the PC Provincial Commander of Negros Occidental were threatening to immediately enforce the February 20, 1982 decision which would violate fundamental rights of the petitioner. The petition prayed for a restraining order against implementation of the decision, and for the decision to be declared null and void. Hearing was held, after which the parties submitted their memoranda, and no restraining order was issued.

• Illegality of the Strike: Petitioner argued that the strike was not illegal, contending that the cooling-off period and the 7-day strike ban after the strike-vote report are merely directory, not mandatory, and that only the filing of the strike notice and the strike-vote report are mandatory requirements.
• Criminal Liability and ULP Strike: Petitioner contended that since the non-compliance with PD 851 imputed to CAC is an unfair labor practice which is an offense against the state, the cooling-off period provided in the Labor Code would not apply, as it does not apply to ULP strikes, and that mediation or conciliation to settle a criminal offense is not allowed.
• Entitlement to 13th Month Pay: Petitioner claimed entitlement to a 13th month pay on top of the bonuses given by CAC to its workers, arguing that the Marcopper decision "clearly held" that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given, within the meaning of the compromise agreement.

• Illegality of the Strike: Respondent CAC argued that the strike was illegal for being violative of Batas Pambansa Blg. 130, specifically that the strike was declared before the expiration of the 15-day cooling-off period for unfair labor practice strikes, and that the strike was staged before the lapse of seven days from the submission to MOLE of the result of the strike-vote.
• Purpose of Strike-Vote Report: The Solicitor General pointed out that many disastrous strikes have been staged in the past based merely on the insistence of minority groups within the union, and that the submission of the report gives assurance that a strike vote has been taken and that, if the report concerning it is false, the majority of the members can take appropriate remedy before it is too late.
• Exemption from PD 851: Respondent CAC argued that it was not obliged to give a 13th month pay in addition to the Christmas, milling, and amelioration bonuses, the aggregate of which admittedly exceeds by far the disputed 13th month pay.

• Mandatory Character of Cooling-Off Period and Strike Ban: Whether the cooling-off period and the 7-day strike ban after report to MOLE of the result of a strike-vote, as prescribed in the Labor Code, are mandatory or directory.
• Obligation Under PD 851: Whether under Presidential Decree 851 (13th Month Pay Law), CAC is obliged to give its workers a 13th month salary in addition to Christmas, milling, and amelioration bonuses, the aggregate of which admittedly exceeds by far the disputed 13th month pay.

• Mandatory Character of Cooling-Off Period and Strike Ban: Yes. The cooling-off period in Art. 264(c) and the 7-day strike ban after the strike-vote report prescribed in Art. 264(f) of the Labor Code were meant to be, and should be deemed, mandatory. The NFSW strike was illegal because it was declared six days after filing a strike notice, before the lapse of the mandatory cooling-off period, and the strike-vote report was filed with MOLE after the strike had actually commenced.
• Obligation Under PD 851: No. Under PD 851, CAC is not obliged to give its workers a 13th month salary in addition to the Christmas, milling, and amelioration bonuses stipulated in the collective bargaining agreement, which amount to more than a month's pay. Employers already paying their employees a 13th month pay or its equivalent are exempt from the Decree.

• Mandatory Character of Cooling-Off Period and Strike Ban: The Court examined the language of Articles 264 and 265 of the Labor Code. When the law says "the labor union may strike" should the dispute "remain unsettled until the lapse of the requisite number of days (cooling-off period) from the filing of the notice," the unmistakable implication is that the union may not strike before the lapse of the cooling-off period. Similarly, the mandatory character of the 7-day strike ban after the report on the strike-vote is manifest in the provision that "in every case," the union shall furnish the MOLE with the results of the voting "at least seven (7) days before the intended strike, subject to the (prescribed) cooling-off period." The Court stressed that the requirements of cooling-off period and 7-day strike ban must both be complied with, although the labor union may take a strike vote and report the same within the statutory cooling-off period. If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not the waiting periods so specifically and emphatically prescribed by law, the purposes for which the filing of the strike notice and strike-vote report is required would not be achieved. The avowed intent of the law in requiring a strike notice and a cooling-off period is to provide an opportunity for mediation and conciliation, directing the MOLE "to exert all efforts at mediation and conciliation to effect a voluntary settlement" during the cooling-off period. The 7-day strike-vote report ensures that a strike vote has been taken and that the majority of the members can take appropriate remedy if the report is false. The Court cited the principle that when a statute is founded on public policy, such as the policy to encourage voluntary settlement of disputes without resorting to strikes, those to whom it applies should not be permitted to waive its provisions. The cooling-off period and the 7-day strike ban constitute a valid exercise of the police power of the state, being reasonable restrictions essential to attain the legitimate policy objectives embodied in the law. The Court rejected the petitioner's contention that the cooling-off period would not apply to ULP strikes because it is at best unclear whether the refusal of CAC to give a 13th month pay constitutes a criminal act, and amicable settlement of criminal liability is not inexorably forbidden by law. The NFSW declared the strike six days after filing a strike notice, before the lapse of the mandatory cooling-off period, and failed to file with the MOLE before launching the strike a report on the strike-vote, when it should have filed such report "at least seven (7) days before the intended strike." Under the circumstances, the strike staged by petitioner was not in conformity with law.

• Obligation Under PD 851: The Court examined the thrusts and application of PD 851, issued on December 16, 1975, which required all employers to pay employees receiving a basic salary of not more than P1,000 a month a 13th month pay not later than December 24 of every year. Exempted from the obligation are employers already paying their employees a 13th month pay or its equivalent. The evident intention of the law was to grant an additional income in the form of a 13th month pay to employees not already receiving the same — to grant some relief only to the unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever name called. It was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent, whether out of pure generosity or on the basis of a binding agreement, so long as there is actual payment. Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay. The Rules Implementing PD 851 issued by MOLE, under Section 3(e), provide that "its equivalent" shall include Christmas bonus, mid-year bonus, profit-sharing payments, and other cash bonuses amounting to not less than 1/12th of the basic salary. Having been issued by the agency charged with the implementation of PD 851 as its contemporaneous interpretation of the law, the quoted rule should be accorded great weight. Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual bonuses for the purpose of determining liability for the 13th month pay, as requiring employers already giving their employees a 13th month salary or its equivalent to give a second 13th month pay would be unfair and productive of undesirable results. In the case at bar, the NFSW-CAC collective bargaining agreement provides for the grant to CAC workers of Christmas bonus, milling bonus, and amelioration bonus, the aggregate of which is very much more than a worker's monthly pay. The Court also held that the Marcopper decision, having been supported by the votes of only seven Justices in the original dismissal and only five Justices in the denial of the motion for reconsideration, was a Court decision but without the necessary eight votes to be doctrinal, and therefore it cannot be said that the Marcopper decision "clearly held" that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given, within the meaning of the NFSW-CAC compromise agreement.

• Mandatory Character of Statutory Waiting Periods — When a statute directs acts or proceedings to be done in a certain way, and a fair interpretation shows the legislature intended compliance with such provision to be essential to the validity of the act or proceeding, or when some antecedent and prerequisite conditions must exist prior to the exercise of power, the statute must be regarded as mandatory. The Court applied this principle to hold that the cooling-off period and the 7-day strike ban under Article 264 of the Labor Code are mandatory, not directory, because the purposes of the strike notice and strike-vote report — providing an opportunity for mediation and conciliation, and ensuring that a strike vote has been taken — would not be achieved if only the filing requirements were mandatory but not the waiting periods.

• Valid Exercise of Police Power Over the Right to Strike — The right to strike, because of its more serious impact upon the public interest, is more vulnerable to regulation than the right to organize and select representatives for lawful purposes of collective bargaining. The cooling-off period and the 7-day strike ban after the filing of a strike-vote report, as prescribed in Article 264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain the legitimate policy objectives embodied in the law, constituting a valid exercise of the police power of the state.

• Exemption Under PD 851 for Employers Paying 13th Month Pay or Its Equivalent — Under Section 2 of PD 851, employers already paying their employees a 13th month pay or its equivalent are not covered by the Decree. The term "its equivalent" includes Christmas bonus, mid-year bonus, profit-sharing payments, and other cash bonuses amounting to not less than 1/12th of the basic salary. The evident intention of the law was to grant relief only to employees not actually paid a 13th month salary or what amounts to it, by whatever name called, and not to impose a double burden on the employer already paying his employees a 13th month pay or its equivalent.

• Doctrinal Value of Supreme Court Decisions — A Supreme Court decision without the necessary eight votes to be doctrinal cannot be considered as stare decisis. The Court applied this principle to hold that the Marcopper decision, supported by only seven Justices in the original dismissal and only five Justices in the denial of the motion for reconsideration, did not "clearly hold" that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given, within the meaning of the NFSW-CAC compromise agreement.

• "When the law says 'the labor union may strike' should the dispute 'remain unsettled until the lapse of the requisite number of days (cooling-off period) from the filing of the notice,' the unmistakable implication is that the union may not strike before the lapse of the cooling-off period." — This passage articulates the Court's primary reasoning for holding that the cooling-off period is mandatory, forming the basis for declaring the NFSW strike illegal.

• "The evident intention of the law, as revealed by the law itself, was to grant an additional income in the form of a 13th month pay to employees not already receiving the same. Otherwise put, the intention was to grant some relief — not to all workers — but only to the unfortunate ones not actually paid a 13th month salary or what amounts to it, by whatever name called; but it was not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent." — This passage states the Court's interpretation of PD 851's purpose and the basis for exempting employers who already pay bonuses equivalent to the 13th month pay.

• "The cooling-off period and the 7-day strike ban after the filing of a strike-vote report, as prescribed in Art. 264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain the legitimate policy objectives embodied in the law. We hold that they constitute a valid exercise of the police power of the state." — This passage establishes the constitutional validity of the mandatory waiting periods as a reasonable regulation of the right to strike.

• "The Marcopper decision is therefore a Court decision but without the necessary eight votes to be doctrinal. This being so, it cannot be said that the Marcopper decision 'clearly held' that 'the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given,' within the meaning of the NFSW-CAC compromise agreement." — This passage explains why the Marcopper decision did not trigger the parties' compromise agreement obligation, because it lacked doctrinal force.

• Marcopper Mining Corp. vs. Blas Ople and Amado Inciong, G.R. No. 51254, June 11, 1981, 105 SCRA 75 — Distinguished. The Court held that this decision, having been supported by only seven Justices in the original dismissal and only five Justices in the denial of the motion for reconsideration, was not doctrinal and did not "clearly hold" that the employer is liable to pay a 13th month pay separate and distinct from the bonuses already given, within the meaning of the NFSW-CAC compromise agreement.

• International Union vs. Wisconsin Employment Relations Board, 336 U.S. 245 — Cited as authority for the proposition that the right to strike, because of its more serious impact upon the public interest, is more vulnerable to regulation than the right to organize and select representatives for lawful purposes of collective bargaining.

• Article 264(c), Labor Code — Provides that in cases of bargaining deadlocks, the certified or duly recognized bargaining representative may file a notice of strike with the Ministry at least thirty (30) days before the intended date thereof, and in cases of unfair labor practices, the period of notice shall be shortened to fifteen (15) days. The Court held that the union may not strike before the lapse of the cooling-off period.

• Article 264(f), Labor Code — Provides that a decision to declare a strike must be approved by at least two-thirds (2/3) of the total union membership in the bargaining unit concerned by secret ballots, and that in every case, the union or the employer shall furnish the Ministry the results of the voting at least seven (7) days before the intended strike or lockout, subject to the cooling-off period. The Court held that the 7-day strike ban is mandatory.

• Article 265, Labor Code — Provides that it shall be unlawful for any labor organization or employer to declare a strike or lockout without first having bargained collectively, without first having filed the notice required, or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. The Court found it unnecessary to determine whether the pendency of an arbitration case rendered the strike illegal under this provision, given the strike was already illegal for violating the cooling-off period and 7-day ban.

• Presidential Decree No. 851, Section 2 — Requires all employers to pay their employees receiving a basic salary of not more than P1,000 a month a 13th month pay not later than December 24 of every year, but exempts employers already paying their employees a 13th month pay or its equivalent. The Court held that CAC was exempt because its Christmas, milling, and amelioration bonuses, the aggregate of which exceeded a month's pay, constituted the equivalent of the 13th month pay.

• Section 3(e), Rules Implementing PD 851 — Defines "its equivalent" to include Christmas bonus, mid-year bonus, profit-sharing payments, and other cash bonuses amounting to not less than 1/12th of the basic salary. The Court accorded great weight to this contemporaneous interpretation by the agency charged with implementing PD 851.

Aquino, Guerrero, Escolin, Vasquez, Relova, and Gutierrez, JJ., concurred. Concepcion, J., was on leave. Teehankee, J., concurred in the result. Separate concurring opinions were filed by Makasiar, J. (concurring in the separate opinion of qualified concurrence as to the illegality of the strike and of dissent as to the interpretation of PD 851 submitted by the Chief Justice), Fernando, C.J. (concurring with qualifications on the legality of the strike and dissenting on the interpretation of PD 851), Barredo, J. (concurring fully in the main opinion as regards both issues), Abad Santos, J. (concurring, distinguishing the factual situations in Marcopper and La Carlota), and Melencio-Herrera, J. (concurring with the dismissal, with express statements that La Carlota's Christmas bonus and other bonuses exempt it from giving 13th month pay and that the strike was illegal).

• Chief Justice Fernando (concurring in result, dissenting on PD 851 interpretation) — While agreeing that the strike was illegal, the Chief Justice dissented on the interpretation of PD 851, arguing that the social justice and protection to labor provisions of the Constitution require that any lurking ambiguity in PD 851 be construed against the rights of labor. He maintained that the Marcopper decision, despite lacking doctrinal force, "clearly held" that there is liability on the part of the employer to pay a 13th month pay separate and distinct from the bonuses already given, and that the parties' compromise agreement should be interpreted in light of this. He also expressed concern that the decision did not define the consequences of the illegal strike, particularly regarding loss of employment or seniority rights.