Philippine-American Management & Financing Company, Inc. vs. Management & Supervisors Association of the Philippine-American Management & Financing Company, Inc.

The Court of Industrial Relations, not the courts of first instance, has exclusive jurisdiction over petitions for declaratory relief seeking the interpretation of collective bargaining agreements, particularly where the dispute involves or may involve an unfair labor practice. The prevailing doctrine is that whenever the existence of a labor dispute and of other facts placing the issue within the exclusive jurisdiction of the Court of Industrial Relations has been duly established, the court of first instance has no authority to hear and decide the case.

The two consolidated cases arose under Republic Act No. 875, known as the Industrial Peace Act, which governs labor-management relations in the Philippines. The statutory scheme vests the Court of Industrial Relations with jurisdiction over unfair labor practices and labor disputes, while Section 44(e) of the Judiciary Act of 1948 defines the jurisdiction of courts of first instance over declaratory relief petitions. The constitutional mandate under Article XIV, Section 6 of the Constitution accords protection to labor and regulates the relations between labor and capital in industry and agriculture. The cases presented a question of first impression: whether the interpretation of a collective bargaining agreement through a declaratory relief petition is a matter for the ordinary courts or for the specialized labor tribunal.

In the first case, Philippine-American Management & Financing Company, Inc. filed a petition for declaratory relief before the court of first instance seeking an interpretation of whether, under the then-existing collective bargaining contract between the parties, department managers could join the respondent Management and Supervisors Association of Philippine-American Management & Financing Company, Inc. The respondents moved to dismiss the petition on the ground of lack of jurisdiction, contending that such a petition was for the Court of Industrial Relations to pass upon. The lower court sustained the motion, ruling that the controversy involved was specifically provided under Republic Act No. 875 and that it was the Court of Industrial Relations which had jurisdiction over the case, not the court of first instance. The petitioner appealed the order of dismissal to the Supreme Court on a question of law.

In the second case, the Philippine Virginia Tobacco Administration Employees Association-(CUGCO) was the petitioner in a certiorari and prohibition proceeding before the Supreme Court. Respondent Judge Honorato B. Masakayan had denied a motion to dismiss a petition for declaratory relief filed before his court as to whether a provision of an existing collective bargaining contract between the Philippine Virginia Tobacco Administration and the petitioner union could be implemented without the approval of the Commissioner of Civil Service. The petitioner union strongly objected to the assumption of jurisdiction, primarily on the ground that there was then pending in the Court of Industrial Relations an unfair labor practice case with which the declaratory relief petition was interrelated. The basis of the unfair labor practice charge was bad faith on the part of management, it being alleged that by way of retaliation against union activity, the Philippine Virginia Tobacco Administration failed to approve the appointments and to give the corresponding salary increases of the persons appointed according to such collective bargaining contract, on the ostensible plea that there must be an approval by the Commissioner of Civil Service, a matter not provided for therein. As far back as August 7, 1967, the allegation of bad faith by way of retaliatory action for union activity had already been made. Notwithstanding the union's plea, the respondent Judge continued asserting jurisdiction, prompting the petition for certiorari and prohibition.

• Jurisdiction of the Court of Industrial Relations (L-29538): The petitioner union argued that the respondent Judge should have dismissed the declaratory relief petition because there was then pending in the Court of Industrial Relations an unfair labor practice case with which the declaratory relief petition was interrelated, and the Court of Industrial Relations had exclusive jurisdiction over the matter.

• Lack of Jurisdiction of the Court of First Instance (L-27953): The respondents contended that the petition for declaratory relief seeking an interpretation of whether department managers could join the respondent union under the existing collective bargaining contract was for the Court of Industrial Relations to pass upon, not the court of first instance.

• Jurisdiction over Declaratory Relief Involving Collective Bargaining Agreements: Whether a court of first instance or the Court of Industrial Relations is vested with jurisdiction to pass upon a petition for declaratory relief regarding the interpretation of a collective bargaining agreement.

• Jurisdiction over Declaratory Relief Involving Collective Bargaining Agreements: The Court of Industrial Relations has exclusive jurisdiction. The order of dismissal in the Philippine-American Management & Financing Company case was affirmed, and the petition for certiorari and prohibition in the Philippine Virginia Tobacco Administration Employees Association case was granted, the respondent Judge being declared without jurisdiction to act on Civil Case No. Q-11961.

• Jurisdiction over Declaratory Relief Involving Collective Bargaining Agreements: The Court reasoned that the question presented was an aspect of the thornier issue of where the dividing line is to be drawn between the power lodged in the Court of Industrial Relations and an ordinary tribunal in labor matters. Increasingly, the Court had been committed to the view that unless the law speaks clearly and unequivocally, the choice should fall on the Court of Industrial Relations. The Court traced the development of this doctrine from separate opinions in Allied Free Workers Union vs. Apostol (1957), through the categorical affirmation in Security Bank Employees Union vs. Security Bank and Trust Company (1968), which stated that no agency is better equipped by training, experience, and background to handle labor controversies than the Court of Industrial Relations. The Court relied on the rationale in Republic Savings Bank vs. Court of Industrial Relations (1967), which held that collective bargaining does not end with the execution of an agreement but is a continuous process, and that a violation of a collective bargaining agreement constitutes an unfair labor practice under Section 4(a)(6) of the Industrial Peace Act. Once it is admitted that a violation of a collective bargaining agreement is an unfair labor practice, the jurisdiction of the Court of Industrial Relations is correspondingly enlarged, for such class of disputes is exclusively within its competence. The Court cited the prevailing doctrine in Mindanao Rapid Co., Inc. vs. Omandam that whenever the existence of a labor dispute and of other facts placing the issue within the exclusive jurisdiction of the Court of Industrial Relations has been duly established, the court of first instance has no authority to hear and decide the case. Applying this doctrine, the Court found that in the first case, the allegation of non-compliance with the terms of a collective bargaining agreement could plausibly be maintained by the respondent association. In the second case, it was undeniable that the allegation of bad faith by way of retaliatory action for union activity, the basis of an unfair labor practice charge, had already been made as far back as August 7, 1967, and the petition for declaratory relief filed on March 18, 1968 came much later and furnished no basis for the court of first instance acting thereon. The Court further reasoned that the Court of Industrial Relations, unlike a court of justice which is essentially passive, has a more active, affirmative, and dynamic function, and is more likely to arrive at results in conformity with the wishes of the parties in appraising the meaning of stipulations in collective bargaining agreements. The Court acknowledged that there may be cases of enforcement of a collective bargaining agreement devoid of an unfair labor practice aspect where the jurisdiction of a court of first instance may not be successfully assailed, as held in Seno vs. Mendoza (1967), but the prevailing doctrine favors the Court of Industrial Relations.

• Exclusive Jurisdiction of the Court of Industrial Relations over Labor Disputes — Unless the law speaks clearly and unequivocally, jurisdiction over labor disputes involving collective bargaining agreements should fall on the Court of Industrial Relations. The Court applied this doctrine to hold that petitions for declaratory relief seeking the interpretation of collective bargaining agreements are within the exclusive competence of the Court of Industrial Relations, particularly where the dispute involves or may involve an unfair labor practice.

• Violation of a Collective Bargaining Agreement as an Unfair Labor Practice — A violation of a collective bargaining agreement constitutes an unfair labor practice under Section 4(a)(6) of the Industrial Peace Act, thereby enlarging the jurisdiction of the Court of Industrial Relations over such disputes. The Court applied this doctrine to conclude that once a dispute involves non-compliance with a collective bargaining agreement, the Court of Industrial Relations has exclusive jurisdiction.

• Collective Bargaining as a Continuous Process — Collective bargaining does not end with the execution of an agreement; it is a continuous process, and the duty to bargain imposes on the parties during the term of their agreement the mutual obligation to meet and confer promptly and expeditiously and in good faith for the purpose of adjusting any grievances or questions arising under such agreement. The Court relied on this doctrine to support the conclusion that disputes arising during the administration of a collective bargaining agreement fall within the jurisdiction of the Court of Industrial Relations.

• Active and Dynamic Function of the Court of Industrial Relations — Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and deciding only cases presented to it by the parties litigant, the function of the Court of Industrial Relations is more active, affirmative, and dynamic. The Court applied this doctrine to justify entrusting the interpretation of collective bargaining agreements to the Court of Industrial Relations, which is better equipped by training, experience, and background to handle labor controversies.

• "That such a result is not to be deplored should be obvious to all, for no agency is better equipped by training, experience, and background to handle labor controversies than the Court of Industrial Relations." — This passage from Security Bank Employees Union vs. Security Bank and Trust Company articulates the policy rationale for vesting jurisdiction over labor disputes in the Court of Industrial Relations and is central to the Court's reasoning.

• "For collective bargaining does not end with the execution of an agreement. It is a continuous process. The duty to bargain imposes on the parties during the term of their agreement the mutual obligation 'to meet and confer promptly and expeditiously and in good faith ... for the purpose of adjusting any grievances or question arising under such agreement' and a violation of this obligation is, by section 4(a) and (b) (3) an unfair labor practice." — This passage from Republic Savings Bank vs. Court of Industrial Relations establishes that violations of collective bargaining agreements constitute unfair labor practices, which is the doctrinal foundation for the Court's ruling.

• "whenever the existence of such dispute and of other facts placing the issue within the exclusive jurisdiction of the Court of Industrial Relations has been duly established, this Court has not hesitated to declare that the court of first instance has no authority to hear and decide the case." — This passage from Mindanao Rapid Co., Inc. vs. Omandam states the prevailing doctrine applied by the Court to both cases.

• "unlike a court of justice 'which is essentially passive, acting only when its jurisdiction is invoked and deciding only cases that are presented to it by the parties litigant, the function of the Court of Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and dynamic.'" — This passage from Ang Tibay vs. Court of Industrial Relations distinguishes the nature of the Court of Industrial Relations from ordinary courts and supports the policy of entrusting labor disputes to the specialized tribunal.

• Security Bank Employees Union vs. Security Bank and Trust Company, L-28536, April 30, 1968, 23 SCRA 503 — Controlling precedent that categorically affirmed the doctrine that the Court of Industrial Relations is better equipped by training, experience, and background to handle labor controversies; the Court relied on this case as the categorical affirmation of the prevailing doctrine.

• Republic Savings Bank vs. Court of Industrial Relations, L-20303, September 27, 1967, 21 SCRA 226 — Controlling precedent establishing that collective bargaining is a continuous process and that violation of a collective bargaining agreement constitutes an unfair labor practice; the Court relied on this case to enlarge the jurisdiction of the Court of Industrial Relations.

• Mindanao Rapid Co., Inc. vs. Omandam, L-23058, November 27, 1971, 42 SCRA 250 — Controlling precedent stating the prevailing doctrine that whenever the existence of a labor dispute and of other facts placing the issue within the exclusive jurisdiction of the Court of Industrial Relations has been duly established, the court of first instance has no authority to hear and decide the case.

• Seno vs. Mendoza, L-20565, November 29, 1967, 21 SCRA 1124 — Distinguished; the Court acknowledged that there may be cases of enforcement of a collective bargaining agreement devoid of an unfair labor practice aspect where the jurisdiction of a court of first instance may not be successfully assailed.

• Ang Tibay vs. Court of Industrial Relations, 69 Phil. 635 (1940) — Followed; cited for the proposition that the function of the Court of Industrial Relations is more active, affirmative, and dynamic compared to a court of justice which is essentially passive.

• Allied Free Workers Union vs. Apostol, 102 Phil. 292 (1957) — Cited as the origin of the approach favoring the Court of Industrial Relations, reflected in concurring and dissenting opinions of Justice J.B.L. Reyes and the present Chief Justice.

• Bay View Hotel, Inc. vs. Manila Hotel Workers Union, L-21803, December 17, 1966, 18 SCRA 946 — Cited as an earlier case appearing to head in the direction of vesting jurisdiction in the Court of Industrial Relations.

• Manila Hotel Co. vs. Pines Hotel Employees Association, L-24314, September 28, 1970, 35 SCRA 96 — Followed; affirmed that the question of whether there was compliance with the contract between the parties is undoubtedly within the competence of the Court of Industrial Relations.

• Alhambra Industries, Inc. vs. Court of Industrial Relations, L-25984, October 30, 1970, 35 SCRA 550 — Followed; held that failure to live up in good faith to the terms of a collective bargaining agreement constituted unfair labor practice.

• Section 3, Republic Act No. 875 (Industrial Peace Act) — The provision subject of the petition for declaratory judgment regarding its construction; the Court determined that controversies involving collective bargaining agreements under this Act are within the jurisdiction of the Court of Industrial Relations.

• Section 44(e), Judiciary Act of 1948, as amended — The provision defining the jurisdiction of courts of first instance over declaratory relief petitions; the Court held that this provision does not cover cases specifically provided under Republic Act No. 875.

• Section 4(a)(6), Republic Act No. 875 (Industrial Peace Act) — The provision defining as an unfair labor practice the failure to bargain collectively, including the duty to meet and confer promptly and expeditiously and in good faith for the purpose of adjusting any grievances or questions arising under a collective bargaining agreement.

• Section 4(a) and (b)(3), Republic Act No. 875 (Industrial Peace Act) — The provisions defining violations of the duty to bargain collectively as unfair labor practices.

• Article XIV, Section 6, 1935 Constitution — The constitutional mandate that the State shall accord protection to labor and shall regulate the relations between labor and capital in industry and agriculture; cited as the policy consideration supporting the Court's approach.

Concepcion, C.J., Makalintal, Castro, Teehankee, Barredo, Makasiar, Antonio, and Esguerra, JJ., concurred. Zaldivar, J., took no part.