Philcom Employees Union vs. Philippine Global Communications

The Secretary of Labor's assumption of jurisdiction over a labor dispute in an industry indispensable to national interest is plenary and discretionary, extending to all questions and controversies arising from the dispute, including the legality of any strike; and a strike staged in defiance of return-to-work orders in a vital industry, using unlawful means, during preventive mediation proceedings, and in disregard of the CBA grievance machinery, is patently illegal, warranting loss of employment status for knowingly participating union officers and members who commit illegal acts or defy such orders.

Philcom Employees Union (PEU) was the collective bargaining representative of the rank-and-file employees of Philippine Global Communications, Inc. (Philcom), a company engaged in the telecommunications industry — specifically international telecommunications — for 73 years. The CBA between PEU and Philcom expired on June 30, 1997. Philcom Corporation was impleaded as a co-respondent after the Secretary of Labor found that a merger had occurred between it and Philippine Global Communications, Inc., such that the employer-employee relationship was never severed. Telecommunications is classified as a vital industry under Presidential Decree No. 823, as amended, and Letter of Instruction No. 368, rendering strikes and lockouts strictly prohibited therein.

Philcom Employees Union (PEU) was the duly recognized collective bargaining representative of the rank-and-file employees of Philippine Global Communications, Inc. (Philcom), a company engaged in the telecommunications industry, particularly international telecommunications, for 73 years. The CBA between PEU and Philcom expired on June 30, 1997, prompting the parties to commence negotiations for its renewal in July 1997. While negotiations were ongoing, PEU filed a Notice of Strike on October 21, 1997 with the National Conciliation and Mediation Board (NCMB)-NCR, docketed as NCMB-NCR-NS No. 10-435-97, citing perceived unfair labor practices committed by the company. The company responded by suspending CBA negotiations, which led PEU to file a second Notice of Strike on November 4, 1997, docketed as NCMB-NCR-NS No. 11-465-97, this time on the ground of bargaining deadlock.

At a conciliation conference held on November 11, 1997 at the NCMB-NCR office, the parties agreed to consolidate the two notices of strike and to maintain the status quo during the pendency of the proceedings. Six days later, on November 17, 1997, while union representatives and company officers were meeting, the remaining union officers and members staged a strike at the company premises, barricading the entrances and egresses and setting up a stationary picket at the main entrance. The following day, Philcom filed a petition for the Secretary of Labor and Employment to assume jurisdiction over the labor dispute under Article 263(g) of the Labor Code.

On November 19, 1997, Acting Labor Secretary Cresenciano B. Trajano issued an Order assuming jurisdiction over the dispute, enjoining any strike or lockout, directing the striking workers to return to work within twenty-four hours, and directing management to resume operations and accept the workers back under the same terms and conditions prior to the strike. A second order was issued on November 28, 1997, reiterating the directive to return to work immediately. PEU filed a motion for reconsideration assailing the authority of Acting Secretary Trajano to assume jurisdiction, which was denied on January 7, 1998. The parties thereafter submitted their respective position papers. PEU enumerated ten categories of alleged unfair labor practices, ranging from contractualization and flexible labor arrangements to misimplementation of employee benefits and surveillance of union activities. Philcom, for its part, raised the sole issue of the illegality of the strike. PEU filed a Manifestation/Motion to Strike Out portions of Philcom's position paper relating to the illegal strike, arguing that the Secretary could not rule on that issue absent a petition to declare the strike illegal. Philcom countered that the strike was precisely the reason the Secretary assumed jurisdiction.

The Secretary issued the first assailed Order on October 2, 1998, dismissing PEU's unfair labor practice charges as mere grievances subject to the CBA grievance machinery, denying PEU's motion to strike out, impleading Philcom Corporation as a party-litigant, and directing all striking workers to return to work while deferring resolution of the illegal strike and bargaining deadlock issues for a full-blown hearing. Both parties filed motions for reconsideration, which were denied in the second assailed Order dated November 27, 1998. The Secretary reiterated that Philcom Corporation was properly impleaded because there was a mere merger and the employer-employee relationship was never severed, and held that the issue of the legality of the strike was within its jurisdiction. PEU elevated the case to the Supreme Court via certiorari under Rule 65, which referred it to the Court of Appeals. The Court of Appeals denied the petition on July 31, 2000, affirming the Secretary's Orders. PEU then filed the present petition for review under Rule 45.

• Jurisdiction over Illegal Strike Issue: Petitioner contended that the Secretary of Labor should not have taken cognizance of the issue on the alleged illegal strike because it was not properly submitted for resolution, PEU having filed a Manifestation/Motion to Strike Out portions of Philcom's position paper that raised the issue. PEU asserted that the Secretary's assumption of jurisdiction was based on the two notices of strike filed with the NCMB, not on Philcom's petition, and that only the issues of unfair labor practice and bargaining deadlock should have been resolved.
• Dismissal of Unfair Labor Practice Charges: Petitioner argued that the Court of Appeals decided a question of substance in a way not in accord with law and jurisprudence when it affirmed the dismissal of the union's charges of unfair labor practices, insisting that there were "factual and evidentiary bases" for the charges against Philcom.
• Writ of Execution for Return to Work and Backwages: Petitioner asserted that the Court of Appeals should have issued an order directing the issuance of a writ of execution ordering Philcom to unconditionally accept back to work the striking union officers and members under the same terms and conditions prevailing before the strike, and to pay their salaries, backwages, and monetary equivalent of other benefits from October 6, 1998 onward. PEU maintained that a return-to-work order is immediately executory and that workers should first be readmitted before any determination of individual liability.

• Inclusion of Illegal Strike Issue: Respondent argued that it was precisely due to the strike suddenly staged by the union on November 17, 1997 that the dispute was assumed by the Labor Secretary, making the issue of the legality of the strike necessarily part of the labor dispute itself and not merely incidental thereto.

• Jurisdiction over Illegal Strike: Whether the Secretary of Labor properly took cognizance of the issue on the legality of the strike despite the absence of a separate petition to declare the strike illegal and PEU's opposition to its inclusion.
• Unfair Labor Practice Charges: Whether the Secretary of Labor and the Court of Appeals correctly dismissed PEU's charges of unfair labor practice against Philcom.
• Return to Work and Backwages: Whether a writ of execution should issue directing Philcom to unconditionally accept back to work the striking union officers and members and to pay their salaries, backwages, and other benefits.

• Jurisdiction over Illegal Strike: Yes. The Secretary properly took cognizance of the legality of the strike, the assumption of jurisdiction being premised on Philcom's petition filed as a consequence of the strike, making any issue regarding the strike essentially involved in the labor dispute itself. The Secretary's power under Article 263(g) is plenary and discretionary, extending to all questions and controversies arising from the labor dispute.
• Unfair Labor Practice Charges: Yes. The dismissal of the unfair labor practice charges was proper, the acts complained of not falling under any of the prohibited acts enumerated in Article 248 of the Labor Code and constituting mere grievances resolvable through the CBA grievance machinery or voluntary arbitration.
• Return to Work and Backwages: No. No writ of execution should issue for the return to work of PEU officers who participated in the illegal strike, and PEU members who committed illegal acts or defied the return-to-work orders, the strike having been declared patently illegal on five independent grounds.

• Jurisdiction over Illegal Strike: The Secretary assumed jurisdiction over the dispute because Philcom operates in an industry indispensable to the national interest — telecommunications — and the strike was the precipitating event. The Secretary's powers under Article 263(g) are characterized as an exercise of police power, granting "great breadth of discretion" to find a solution to the labor dispute. The authority to assume jurisdiction includes and extends to all questions and controversies arising from such labor dispute; the power is plenary and discretionary. It was upon Philcom's petition that the Secretary immediately assumed jurisdiction on November 19, 1997; had PEU's notices of strike been the basis, the assumption order would have issued earlier. PEU could not prevent resolution of the legality of the strike by merely refusing to submit the issue, nor was it material that the issue was not formally submitted as a separate petition. The portions of Philcom's position paper that PEU sought to expunge were found necessary for resolution, and the attached documents (except Annexes MM-2 to MM-22 dealing with consolidation) were relevant and material.

• Unfair Labor Practice Charges: Unfair labor practice refers to acts that violate the workers' right to organize; the prohibited acts under Article 248 are related to the right to self-organization and the observance of a CBA. Without that element, acts — no matter how unfair — are not unfair labor practices. A review of the acts complained of revealed that none fell under Article 248. Issues of misimplementation or non-implementation of employee benefits, non-payment of overtime, inadequate transportation allowance, and similar complaints were matters of implementation or interpretation of the economic provisions of the CBA, subject to the grievance procedure. The company provided plausible justifications: flexible labor arrangements were voluntary responses to business slowdowns; benefit adjustments were tied to abolished positions or employee preferences; contractualization of the PABX operator position was in anticipation of automation and did not interfere with self-organization; promotions were based on merit and vacancy, not union-busting; and allegations of surveillance and disinformation were unsupported by evidence. Even assuming Philcom had violated some CBA provisions, there was no showing of flagrant or malicious refusal to comply with economic provisions, which Article 261 requires before CBA violations may be treated as unfair labor practice rather than mere grievances. Management prerogative was respected: the law on unfair labor practices is not intended to deprive employers of their fundamental right to prescribe and enforce rules necessary for productive and profitable operations.

• Return to Work and Backwages: The strike was declared patently illegal on five independent grounds. First, Philcom is engaged in a vital industry — communications — protected from strikes under PD 823, as amended, and LOI 368. Second, the Secretary had already assumed jurisdiction and issued return-to-work orders on November 19 and 28, 1997, which the striking employees defied; a return-to-work order is immediately effective and executory notwithstanding the filing of a motion for reconsideration, and defiance thereof constitutes a valid ground for dismissal under Article 264(a). Third, PEU employed unlawful means — human barricades at all entrances and egresses, obstructing other tenants — violating Article 264(e)'s prohibition against violence, coercion, intimidation, or obstruction of free ingress and egress. Fourth, PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB, violating Section 6, Book V, Rule XXII of the Omnibus Rules and Article 264(a). Fifth, PEU staged the strike in disregard of the grievance procedure established in the CBA; a strike declared on grievances not submitted to the grievance committee is premature and illegal. Because the strike was illegal and PEU's officers and members committed illegal acts, no writ of execution should issue for their return to work. Union officers who knowingly participated in the illegal strike, and union members who committed illegal acts or defied return-to-work orders, are deemed to have lost their employment status under Article 264(a). The determination of who among the officers and members fall under these categories is a question of fact to be resolved by the Secretary of Labor in appropriate proceedings.

• Plenary and Discretionary Power of the Secretary of Labor under Article 263(g) — The Secretary's authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and controversies arising from such labor dispute. The power is plenary and discretionary, enabling the Secretary to effectively and efficiently dispose of the dispute. The union cannot prevent resolution of an issue — such as the legality of a strike — by merely refusing to submit it for resolution.

• Immediately Executory Nature of Return-to-Work Orders — A return-to-work order is immediately effective and executory despite the filing of a motion for reconsideration. It must be strictly complied with even during the pendency of any petition questioning its validity. A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived; workers who choose not to obey do so at the risk of severing their relationship with the employer. Defiance of return-to-work orders constitutes a valid ground for dismissal.

• Unfair Labor Practice Must Relate to Right to Self-Organization — Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts under Article 248 are related to the workers' right to self-organization and the observance of a CBA. Without that element, acts — no matter how unfair — are not unfair labor practices. The only exception is Article 248(f), relating to testimony under the Labor Code.

• CBA Violations as Mere Grievances Except When Gross — Under Article 261 of the Labor Code, violations of a CBA, except those gross in character, are no longer treated as unfair labor practice and shall be resolved as grievances under the CBA. Gross violations mean flagrant and/or malicious refusal to comply with the economic provisions of the agreement. Absent such flagrant or malicious refusal, complaints are mere grievances subject to the grievance machinery or voluntary arbitration.

• Illegal Strike in Vital Industries — Strikes, picketings, and lockouts are strictly prohibited in vital industries under PD 823, as amended, including public utilities such as communications (wire or wireless telecommunications). A strike undertaken despite the Secretary's issuance of an assumption or certification order becomes a prohibited activity under Article 264(a), and union officers who knowingly participate, as well as workers or union officers who knowingly participate in the commission of illegal acts during a strike, may be declared to have lost their employment status.

• Premature Strike for Failure to Resort to Grievance Machinery — A strike declared on the basis of grievances which have not been submitted to the grievance committee as stipulated in the CBA is premature and illegal. Union leaders who knowingly participate in such a strike have acted unreasonably, and the law cannot interpose its hand to protect them from the consequences of their illegal acts.

• "The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and controversies arising from such labor dispute. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the dispute." — This passage articulates the scope and nature of the Secretary's power under Article 263(g), establishing that assumption of jurisdiction is not limited to the specific issues raised by the parties but encompasses all questions arising from the labor dispute.

• "Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are related to the workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices." — This defines the essential element of unfair labor practice under Article 248, distinguishing acts that merely appear unfair from those legally cognizable as ULP, and is frequently cited in subsequent labor jurisprudence.

• "A return-to-work order imposes a duty that must be discharged more than it confers a right that may be waived. While the workers may choose not to obey, they do so at the risk of severing their relationship with their employer." — This formulation captures the mandatory character of return-to-work orders and the consequences of defiance, clarifying that compliance is an obligation rather than a privilege.

• "A strike declared on the basis of grievances which have not been submitted to the grievance committee as stipulated in the CBA of the parties is premature and illegal." — This states the rule that recourse to the grievance machinery is a condition precedent to a valid strike based on grievances, and failure to exhaust this remedy renders the strike illegal.

• Telefunken Semiconductors Employees Union-FFW vs. Secretary of Labor and Employment and Temic Telefunken Micro-Electronics (Phils.), Inc., G.R. Nos. 122743 and 127215, Dec. 12, 1997 — Cited by the Secretary of Labor for the proposition that while a strike after assumption of jurisdiction may be illegal and failure to return to work may warrant dismissal, the liability of each union officer and worker must still be individually determined. The Supreme Court relied on this case to support the modification directing the Secretary to determine individual liabilities.

• Bulletin Publishing Corporation vs. Sanchez, 144 SCRA 628 (1986) — Followed for the principle that promotion of employees to managerial positions is a management prerogative, and a promotion manifestly beneficial to an employee should not give rise to gratuitous speculation that it was made to deprive the union of the promoted employee's membership.

• PAL vs. NLRC, 347 Phil. 602 (1997) — Cited by the Court of Appeals for the rule that as of March 21, 1989, violations of CBAs will no longer be deemed unfair labor practices except those gross in character, and are instead mere grievances resolvable through the grievance machinery or voluntary arbitration.

• St. Scholastica's College vs. Torres, G.R. No. 100158, 210 SCRA 565 (June 29, 1992) — Followed for the doctrine that a return-to-work order is immediately executory notwithstanding the filing of a motion for reconsideration, and that workers who defy such orders forfeit their right to be readmitted.

• Allied Banking Corp. vs. NLRC, G.R. No. 116128, 258 SCRA 724 (July 12, 1996) — Followed for the principle that striking employees should have ceased or desisted from all acts undermining the Secretary's authority under Article 263(g), regardless of their motives or the validity of their claims, and that defiance of return-to-work orders constitutes a valid ground for dismissal.

• Filipinas Port Services, Inc. vs. NLRC, G.R. No. 97237 (Aug. 16, 1991) — Cited by the Secretary of Labor for the rule that in a merger, employees of the merged companies are deemed absorbed by the new company, supporting the finding that Philcom Corporation was properly impleaded.

• LMG Chemicals Corporation vs. Secretary of the Department of Labor and Employment, G.R. No. 127422, 356 SCRA 577 (Apr. 17, 2001) — Followed for the proposition that the Secretary's power to assume jurisdiction is plenary and discretionary, extending to all questions and controversies arising from the labor dispute.

• Article 263(g), Labor Code — Empowers the Secretary of Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, with the effect of automatically enjoining the strike or lockout and directing the return to work of striking employees and resumption of operations by the employer. Applied as the statutory basis for the Secretary's assumption of jurisdiction over the Philcom dispute and the issuance of return-to-work orders.

• Article 248, Labor Code — Enumerates the unfair labor practices of employers, including interference with self-organization, contracting out services to interfere with union rights, discrimination to encourage or discourage union membership, violation of the duty to bargain collectively, and violation of a CBA. Applied to determine that none of PEU's complaints fell under any enumerated prohibited act, as they were unrelated to the right to self-organization.

• Article 261, Labor Code — Provides that violations of a CBA, except those gross in character (defined as flagrant and/or malicious refusal to comply with economic provisions), shall no longer be treated as unfair labor practice and shall be resolved as grievances under the CBA. Applied to hold that PEU's complaints were mere grievances absent any showing of flagrant or malicious refusal by Philcom.

• Article 264(a), Labor Code — Prohibits strikes or lockouts after assumption of jurisdiction by the Secretary or after certification or submission to compulsory or voluntary arbitration; provides that union officers who knowingly participate in an illegal strike and workers or union officers who knowingly participate in the commission of illegal acts during a strike may be declared to have lost their employment status. Applied to hold that the strike was a prohibited activity and that participating officers and members who committed illegal acts or defied return-to-work orders lost their employment status.

• Article 264(e), Labor Code — Prohibits persons engaged in picketing from committing acts of violence, coercion, or intimidation, or obstructing free ingress to or egress from the employer's premises for lawful purposes, or obstructing public thoroughfares. Applied to hold that PEU's human barricades and obstruction of other tenants constituted illegal strike activities.

• Presidential Decree No. 823, as amended by Presidential Decree No. 849 — Declares State policy to encourage free trade unionism and free collective bargaining within the framework of compulsory and voluntary arbitration, and strictly prohibits strikes, picketings, and lockouts in vital industries such as public utilities including communications. Applied to hold that Philcom, as a telecommunications company, operates in a vital industry where strikes are prohibited.

• Letter of Instruction No. 368 — Enumerates vital industries and companies under PD 823, including wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies. Applied to classify Philcom as operating in a vital industry.

• Section 6, Book V, Rule XXII, Omnibus Rules Implementing the Labor Code — Obliges parties to bargain collectively in good faith and prohibits them from doing any act that may disrupt or impede the early settlement of disputes during conciliation proceedings. Applied to hold that PEU's strike during pendency of preventive mediation proceedings was a blatant violation.

Quisumbing (Chairman), Carpio-Morales, Tinga, and Velasco, Jr. concurred.