Rivera vs. Espiritu

A voluntary agreement suspending a collective bargaining agreement for ten years, entered into by a union and employer under extraordinary financial circumstances to prevent the closure of the business, is a valid exercise of the right to collective bargaining and does not violate Article 253-A of the Labor Code or the constitutional protection-to-labor policy, as Article 253-A does not prohibit the parties from waiving or suspending its mandatory timetables by mutual consent.

Petitioners are officers and members of the PAL Employees Association (PALEA), the exclusive bargaining agent of PAL's regular rank-and-file ground employees. Respondents include officials of an Inter-Agency Task Force created under Administrative Order No. 16 issued by President Joseph E. Estrada on August 28, 1998, to address the problems of the financially beleaguered Philippine Airlines (PAL), as well as PAL management and its principal stockholder Lucio Tan. The Task Force, composed of several government departments and the SEC, was empowered to summon all parties concerned for conciliation and mediation to arrive at a total and complete solution to PAL's problems. The dispute arose in the context of PAL's severe financial crisis, triggered by a pilots' strike in June 1998 and a PALEA strike in July 1998, which pushed the airline to the brink of bankruptcy and closure.

On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) went on a three-week strike, causing serious losses to the already financially beleaguered flag carrier. PAL's financial situation deteriorated further, prompting the airline to adopt a rehabilitation plan and downsize its labor force by more than one-third. On July 22, 1998, PALEA went on strike to protest the retrenchment measures, which affected 1,899 union members. The strike ended four days later when PAL and PALEA agreed to a more systematic reduction in PAL's work force and the payment of separation benefits to all retrenched employees.

On August 28, 1998, President Estrada issued Administrative Order No. 16, creating an Inter-Agency Task Force to address PAL's problems, with then Finance Secretary Edgardo Espiritu designated as chairman. Conciliation meetings were held between PAL management and the three unions—ALPAP, PALEA, and FASAP—with the Task Force as mediator. On September 4, 1998, PAL management submitted to the Task Force an offer by Lucio Tan, PAL's Chairman and CEO, to transfer 60,000 fully paid shares of stock to each employee, grant three seats on the PAL Board of Directors to employees, and request a ten-year suspension of the collective bargaining agreements. On September 10, 1998, the PALEA Board voted to accept Tan's offer, but union members rejected it, and under pressure from the membership, the board subsequently reversed its position.

On September 17, 1998, PAL informed the Task Force that it would shut down operations effective September 23, 1998, preparatory to liquidation, claiming rehabilitation was no longer feasible. PALEA sought presidential intervention, and a DOLE-supervised referendum on Tan's offer was held on September 21–22, 1998, with 1,055 voting in favor and 1,371 rejecting out of 2,799 votes cast. PAL ceased operations on September 23, 1998 and sent termination notices to its employees. Two days later, the PALEA board wrote President Estrada offering a ten-year moratorium on strikes and a waiver of some CBA economic benefits, but Tan rejected this counter-offer.

On September 27, 1998, the PALEA board again wrote the President proposing terms substantially similar to Tan's original offer: 60,000 shares per employee, three board seats, a ten-year suspension of the PAL-PALEA CBA subject to safeguards including continued recognition of PALEA as bargaining agent and respect for the union shop provision, and priority rehiring of retrenched members. Among the signatories were petitioners Rivera, Ramiso, and Aranas as officers and members of the PALEA Board. PAL management accepted the proposal, and a DOLE-supervised referendum was held on October 2, 1998, in which 61% of the 5,324 votes cast favored acceptance while 34% rejected it. PAL resumed domestic operations on October 7, 1998. On the same date, seven PALEA officers and members filed the instant petition to annul the September 27, 1998 agreement.

• Improper Exercise of Jurisdiction: Petitioners charged public respondents with grave abuse of discretion amounting to lack or excess of jurisdiction for actively pursuing and presiding over the conclusion of the PAL-PALEA agreement, arguing that the Task Force functionaries exceeded their mandate.
• Unconstitutional Waiver of Rights: Petitioners contended that the agreement was void because it abrogated the workers' constitutional rights to self-organization and collective bargaining, as the ten-year CBA suspension foreclosed any renegotiation or possibility of forging a new CBA for a decade, violating the "protection to labor" policy of the Constitution.
• Violation of Article 253-A: Petitioners submitted that a ten-year CBA suspension was inordinately long, way beyond the maximum statutory life of a CBA under Article 253-A of the Labor Code, and that by agreeing to it, PALEA effectively abdicated the workers' right to bargain for another CBA at the mandated time.
• Unfair Labor Practice: Petitioners alleged that the ten-year suspension virtually installed PALEA as a company union for the period, amounting to unfair labor practice in violation of Article 253-A, which mandates that an exclusive bargaining agent serves for five years only.
• Coercion Through Threat of Closure: Petitioners argued that the agreement was concluded under threat of PAL's abusive exercise of its management prerogative to close business, used as a subterfuge for union-busting.

• Proper Role as Mediators: Respondents argued that public respondents merely served as conciliators or mediators consistent with the mandate of A.O. No. 16 and merely supervised the conduct of the October 2, 1998 referendum during which PALEA members ratified the agreement, and thus did not perform any judicial or quasi-judicial act.
• Violation of Hierarchy of Courts: Respondents prayed for dismissal of the petition for violating the "hierarchy of courts" doctrine, citing People vs. Cuaresma and Enrile vs. Salazar.

• Propriety of Remedy: Whether an original action for certiorari and prohibition is the proper remedy to annul the PAL-PALEA agreement of September 27, 1998.
• Validity of CBA Suspension: Whether the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of the PAL-PALEA CBA for ten years, is unconstitutional and contrary to public policy.

• Propriety of Remedy: No. Certiorari and prohibition are improper because the assailed agreement is a contract between a private firm and its labor union, not the act of a tribunal, board, or officer exercising judicial, quasi-judicial, or ministerial functions; the proper remedy is an ordinary civil action for annulment of contract before the regional trial courts.
• Validity of CBA Suspension: No, the agreement is not unconstitutional or contrary to public policy. The ten-year CBA suspension was a voluntary exercise of the right to collective bargaining, consistent with the purposes of Article 253-A of the Labor Code and the constitutional protection-to-labor policy, and must be upheld under the principle of inviolability of contracts.

• Propriety of Remedy: The essential requisites for certiorari under Rule 65 require that the writ be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions, and that such tribunal, board, or officer acted without or in excess of jurisdiction or with grave abuse of discretion. For prohibition, the impugned act must be that of a tribunal, corporation, board, officer, or person exercising judicial, quasi-judicial, or ministerial functions. The assailed agreement is not the act of a tribunal, board, or officer exercising such functions; it is a contract between PAL and PALEA, entered into with the assistance of the Task Force. Neither is there a judgment, order, or resolution of either public respondent involved. The first and second requisites for both certiorari and prohibition are therefore absent. Furthermore, a plain, speedy, and adequate remedy exists in the ordinary course of law—an ordinary civil action for annulment of contract, which falls under the jurisdiction of the regional trial courts pursuant to B.P. Blg. 129 as amended by R.A. No. 7691. Nevertheless, in the higher interest of justice and given the public interest involved in industrial peace at the nation's flag carrier, the Court looked into the substance of the petition.

• Validity of CBA Suspension: A CBA is a contract executed upon request of either the employer or the exclusive bargaining representative, incorporating the agreement reached after negotiations with respect to wages, hours of work, and all other terms and conditions of employment. Its primary purpose is the stabilization of labor-management relations to create a climate of sound and stable industrial peace. The assailed agreement was the result of voluntary collective bargaining negotiations undertaken in light of PAL's severe financial situation, with the unique intention of not merely promoting industrial peace but preventing the airline's closure. Article 253-A of the Labor Code has a two-fold purpose: to promote industrial stability and predictability, and to assign specific timetables wherein negotiations become a matter of right and requirement. Nothing in Article 253-A prohibits the parties from waiving or suspending the mandatory timetables and agreeing on remedies to enforce the same. PALEA, as the exclusive bargaining agent, voluntarily entered into the CBA and voluntarily opted for the ten-year suspension—both acts constituting an exercise of the right to collective bargaining, which includes the right to suspend it. The agreement afforded full protection to labor, promoted shared responsibility between workers and employers, and exercised voluntary modes in settling disputes. Regarding the contention that the agreement installed PALEA as a company union, the proviso requiring PAL to continue recognizing PALEA as bargaining agent must be read together with the union shop provision, both intended to maintain union security during the suspension period—an objective that cannot be declared unfair labor practice. Under Article 248(d) of the Labor Code, a company union exists when the employer initiates, dominates, assists, or interferes with the formation or administration of a labor organization, and the records were bare of any such showing by PAL. The five-year representation limit under Article 253-A applies only when there is an extant CBA in full force and effect; here, the parties agreed to suspend the CBA and put in abeyance the limit on the representation period. The agreement was thus a valid exercise of the freedom to contract, upheld under the constitutional principle of inviolability of contracts.

• Right to Collective Bargaining Includes the Right to Suspend It — The right to free collective bargaining encompasses not only the right to negotiate and enter into a CBA but also the right to voluntarily suspend the CBA by mutual agreement of the parties. Where a union, as the exclusive bargaining agent, voluntarily agrees to a suspension of the CBA under extraordinary circumstances, such as to prevent the closure of the employer's business, the suspension constitutes an exercise of—rather than a waiver of—the right to collective bargaining.
• Article 253-A Does Not Prohibit Voluntary Suspension of Mandatory Timetables — Article 253-A of the Labor Code, which prescribes a five-year term for the representation aspect of a CBA and three-year renegotiation cycles for other provisions, serves a two-fold purpose: promoting industrial stability and predictability, and assigning specific timetables for negotiations. Nothing in the article prohibits the parties from waiving or suspending the mandatory timetables by mutual consent. The five-year representation limit applies only when there is an extant CBA in full force and effect; where the parties agree to suspend the CBA, the limit on the representation period is likewise put in abeyance.
• Union Security Stipulations Are Not Unfair Labor Practice — Stipulations maintaining union security during a period of CBA suspension, such as continued recognition of the bargaining agent and respect for the union shop provision, are intended to assure the continued existence of the union and cannot be declared unfair labor practice. The law allows union shop and closed shop stipulations as means of encouraging workers to join and support the union of their choice.
• Certiorari Does Not Lie Against Acts That Are Contractual in Nature — Certiorari under Rule 65 requires that the writ be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions. A contract between a private firm and its labor union, even if entered into with government mediation, is not the act of such a tribunal, board, or officer, and certiorari and prohibition do not lie to annul it. The proper remedy is an ordinary civil action for annulment of contract before the regional trial courts.

• "The right to free collective bargaining, after all, includes the right to suspend it." — This passage articulates the core ratio decidendi of the decision, establishing that voluntary suspension of a CBA by the bargaining agent is itself an exercise of the right to collective bargaining rather than a violation of it.
• "Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same." — This defines the Court's interpretation of Article 253-A of the Labor Code, clarifying that the statutory timetables for CBA negotiation and representation are not absolute prohibitions but may be voluntarily suspended by mutual agreement.
• "The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing the latter's closure." — This passage contextualizes the agreement within the extraordinary circumstances of PAL's financial crisis, explaining why the Court upheld the agreement despite its deviation from standard CBA timetables.

• People vs. Cuaresma, G.R. No. 67787, 172 SCRA 415 (1989) — Cited by respondents for the "hierarchy of courts" doctrine, arguing that the petition should be dismissed for failure to resort to lower courts first.
• Enrile vs. Salazar, G.R. No. 92163-64, 186 SCRA 217 (1990) — Cited alongside Cuaresma for the same hierarchy-of-courts proposition.
• San Miguel Corporation Employees Union-PTGWO vs. Confesor, G.R. No. 111262, 330 Phil. 628 (1996) — Cited for the interpretation of Article 253-A of the Labor Code, specifically that the representation aspect of a CBA has a five-year term while other provisions may be renegotiated not later than three years after execution.
• Davao Integrated Port Stevedoring Services vs. Abarquez, G.R. No. 102132, 220 SCRA 197 (1993) — Cited for the definition of a collective bargaining agreement and the principle that courts must be practical and realistic in construing a CBA, giving due consideration to the context in which it was negotiated.
• Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc., G.R. Nos. 58768-70, 180 SCRA 668 (1989) — Cited for the proposition that the law allows union shop and closed shop stipulations as means of encouraging workers to join and support the union of their choice.

• Article 253-A, Labor Code — Prescribes the terms of a CBA: five years for the representation aspect, with renegotiation of other provisions not later than three years after execution. The Court held that this provision's mandatory timetables may be voluntarily suspended by mutual agreement, and that the five-year representation limit applies only when there is an extant CBA in full force and effect.
• Article 248(d), Labor Code — Defines unfair labor practice on the part of labor organizations, including employer acts to initiate, dominate, assist, or interfere with the formation or administration of any labor organization. The Court found no evidence of such acts by PAL, rejecting the claim that the agreement installed PALEA as a company union.
• Article 1374, Civil Code — Provides that the various stipulations of a contract shall be interpreted together, attributing to doubtful ones the sense resulting from all taken jointly. Applied to construe the union security provisions of the PAL-PALEA agreement in relation to one another.
• Rule 65, 1997 Rules of Civil Procedure — Governs petitions for certiorari and prohibition. The Court found the requisites absent because the assailed agreement was a contract, not a judicial or quasi-judicial act.
• Section 19, B.P. Blg. 129, as amended by R.A. No. 7691 — Confers jurisdiction over ordinary civil actions, including annulment of contract, upon the regional trial courts, identified as the proper remedy available to petitioners.
• Article III, Section 8, 1987 Constitution — Guarantees the right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law. Petitioners invoked this provision to argue that the agreement abrogated the right to self-organization.
• Article XIII, Section 3, 1987 Constitution — Mandates the State to afford full protection to labor and to promote shared responsibility between workers and employers and voluntary modes in settling disputes. The Court held that the agreement satisfied this policy.
• Article III, Section 10, 1987 Constitution — Guarantees the inviolability of contracts. The Court upheld the agreement under this principle as a valid exercise of the freedom to contract.
• Administrative Order No. 16 — Issued by President Estrada on August 28, 1998, creating the Inter-Agency Task Force empowered to summon all parties for conciliation and mediation to arrive at a total and complete solution to PAL's problems.

Bellosillo (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concurred.