Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-ALU v. Court of Appeals

Under Article 263(g) of the Labor Code, when the Secretary of Labor assumes jurisdiction over or certifies a labor dispute to the NLRC for compulsory arbitration, the employer must readmit all striking workers under the same terms and conditions prevailing before the strike — which means returning them to their former ship assignments through the issuance of embarkation orders — and this statutory directive constitutes an exception to the employer's management prerogative to transfer or reassign employees.

Respondent Trans-Asia Shipping Lines, Inc. is a domestic corporation engaged in coastwise shipping services for the transportation of passengers and cargoes, operating thirteen vessels servicing seventeen points in the Visayas and Mindanao with the Port of Cebu as its base, and employing around 700 workers. Petitioner TASLI-ALU is the labor union of the respondent's rank-and-file employees, while petitioner TASLI-APSOTEU is the union of its supervisory employees; the individual petitioners are members of these unions and employees of the respondent. The dispute turns on the scope of the Secretary of Labor's power under Article 263(g) of the Labor Code to compel the readmission of striking workers in an industry indispensable to the national interest.

On July 6 and 7, 1999, TASLI-ALU and TASLI-APSOTEU filed separate notices of strike with the NCMB-RB VII against Trans-Asia on the ground of unfair labor practice. Acting on the notices and to avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued an Order dated July 20, 1999 certifying the labor dispute to the NLRC for compulsory arbitration pursuant to Article 263(g) of the Labor Code, enjoining any strike or lock-out, and directing the parties to cease and desist from committing any act that would exacerbate the situation.

Despite that order, the petitioners went on strike on July 23, 1999, paralyzing the respondent's operations. The Secretary of Labor was thus constrained to issue an Order dated July 23, 1999 directing all striking workers to return to work within twelve hours from receipt and the company to accept them back under the same terms and conditions prevailing before the strike. On even date, twenty-one of the striking workers, including the individual petitioners, were dismissed from employment by the respondent for alleged violation of the cease-and-desist directive contained in the July 20, 1999 Order by waging an illegal strike.

The petitioners, through their respective officers, manifested their willingness to comply with the return-to-work order provided the twenty-one employees would also be allowed to report back for work, and demanded that the respondent issue embarkation orders to the positions they held prior to the strike before they lifted the pickets and barricades. The respondent refused, claiming that the assignment of an employee to a post is purely a management prerogative. The dispute thus hinged on the proper interpretation of the phrase "for the company to accept them back under the same terms and conditions prevailing before the strike": the terminated workers asserted that it meant reinstatement to their former assignments, while the respondent posited that it referred only to salary grades, rank and seniority and could not encompass the usurpation of management's prerogative to determine where its employees are to be assigned or their job assignments. The strike continued as the parties insisted on their respective hard-line stance, and the Coalition of Shipowners and Arrastre Operators, of which the respondent is a member, supported the latter by not operating their vessels beginning July 26, 1999.

On July 27, 1999, recognizing that protracted work disruptions were inimical to the parties and to the national interest, the Secretary of Labor issued an Order reiterating the dispositions of the July 23, 1999 Order, directing the striking workers to return to work immediately and the company to accept them back under the same terms and conditions of employment prevailing prior to the strike. The Order suspended the effects of the termination of the twenty-one employees and directed management to reinstate them, enjoined the NLRC to hold marathon hearings and terminate the proceedings within sixty days from start thereof, and reiterated the deputization of PNP Regional Director Danilo G. Flores to assist in implementation, including the maintenance of free ingress to and egress from the company's premises, the maintenance of peace and order, and the safety and security of returning employees.

On July 28 and 29, 1999, then NLRC Chairman Rogelio I. Rayala met with the parties. The petitioners manifested that the twenty-one employees be issued their respective embarkation orders to the vessels they were assigned as crew members as a precondition to their reporting for work, and Chairman Rayala directed them to comply with the Secretary of Labor's return-to-work order. The respondent consequently reinstated the twenty-one employees, but it continued to refuse to issue their embarkation orders to their former ship assignments, and the employees thus refused to report back for work.

The respondent forthwith filed with the CA a petition for certiorari alleging grave abuse of discretion on the part of the Secretary of Labor in issuing the reinstatement order, which allegedly constituted an unlawful deprivation of property and denial of due process for preventing the respondent from taking disciplinary action and seeking redress for the huge property losses it suffered as a result of the petitioners' illegal mass action. On August 26, 1999, the CA, through the former Tenth Division, issued a temporary restraining order enjoining the Secretary of Labor from implementing the reinstatement order. On August 30, 1999, bolstered by that temporary restraining order, the respondent issued a memorandum terminating the employment of the twenty-one employees, including the individual petitioners. On September 27, 1999, the NLRC Fourth Division issued an Order directing the parties to comply faithfully with the July 20, 1999 Order of the Secretary of Labor. The respondent then manifested before the CA that a case was pending with the NLRC involving the legality of the strike and the individual petitioners' dismissal, and prayed that a writ of preliminary injunction issue to enjoin the NLRC from implementing its September 27, 1999 Order; upon the respondent's filing of a bond in the amount of P1,000,000.00, the CA promulgated the Resolution dated November 5, 1999 issuing the writ and enjoining the Secretary of Labor, the NLRC Fourth Division, and their agents and representatives from implementing their respective orders directing reinstatement.

• Interpretation of "Same Terms and Conditions": The petitioners asserted that the phrase "for the company to accept them back under the same terms and conditions prevailing before the strike" must be construed to mean that the terminated workers be reinstated to their former assignments, and they demanded that the respondent issue embarkation orders to the positions they held prior to the strike before they would lift the pickets and barricades.

• Management Prerogative: The respondent countered that the phrase refers only to salary grades, rank and seniority, and cannot encompass the usurpation of management's prerogative to determine where its employees are to be assigned nor to determine their job assignments.
• Grave Abuse of Discretion and Due Process: The respondent alleged that the Secretary of Labor committed grave abuse of discretion in issuing the reinstatement order, which constituted an unlawful deprivation of property and denial of due process because it prevented the respondent from taking disciplinary action and seeking redress for the huge property losses it suffered as a result of the petitioners' illegal mass action.
• Illegal Strike and Refusal to Reinstate: The respondent maintained that the twenty-one workers were validly dismissed for violating the cease-and-desist directive by waging an illegal strike, and that its refusal to reinstate them was a legitimate precautionary measure.

• Return-to-Work Orders under Article 263(g): Whether the CA acted contrary to law when it enjoined the Secretary of Labor from implementing the return-to-work orders dated July 20, 1999, July 23, 1999, and July 27, 1999 in connection with the labor dispute at Trans-Asia, Inc. (NCMB RB VII-NS-07-43-99/07-44-99).

• Return-to-Work Orders under Article 263(g): Yes, the CA acted contrary to law. The Secretary of Labor's orders were issued pursuant to Article 263(g) of the Labor Code, which mandates readmission of striking workers under the same terms and conditions prevailing before the strike; absent grave abuse of discretion, the CA unduly interfered with the Secretary's powers in enjoining their implementation.

• Return-to-Work Orders under Article 263(g): Article 263(g) of the Labor Code provides that when the Secretary of Labor assumes jurisdiction over a labor dispute in an industry indispensable to the national interest or certifies the same to the NLRC for compulsory arbitration, such assumption or certification automatically enjoins the intended or impending strike or lockout; if one has already taken place, "all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout." The SC characterized the powers granted to the Secretary under this provision as an exercise of the police power of the State, aimed at promoting public good, and noted that the Secretary is granted "great breadth of discretion" in finding a solution to a labor dispute. Assumption of jurisdiction over a labor dispute, or certification of the same to the NLRC for compulsory arbitration, always co-exists with an order for workers to return to work immediately and for employers to readmit all workers under the same terms and conditions prevailing before the strike or lockout. The CA, adopting the respondent's theory, ruled that the phrase could not encompass the usurpation of management's prerogative to determine assignments, but the SC held this to be reversible error: case law recognizes the employer's right to transfer or assign employees from one area of operation to another, but that right is not absolute and is subject to limitations imposed by law, and Article 263(g) constitutes one such limitation. In Metrolab Industries, Inc. vs. Roldan-Confesor, where the Secretary of Labor declared a layoff illegal and ordered reinstatement pending resolution of the dispute, the SC upheld the order and quoted the ruling that "when a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts, management prerogatives must always be exercised consistently with the statutory objective." In University of Sto. Tomas vs. NLRC, where the Secretary directed the university to readmit faculty members under the same terms and conditions prevailing prior to the dispute and the university instead gave substantially equivalent academic assignments without loss in rank, pay or privilege, the SC ruled that such assignments could not be sustained because they could not be considered a reinstatement under the same terms and conditions prevailing before the strike. Applying these rulings, the SC held that the respondent cannot rightfully exercise its management prerogative to determine where its employees are to be assigned or their job assignments in view of the explicit directive in the July 23 and July 27, 1999 Orders to accept the striking workers back "under the same terms and conditions prevailing prior to the strike"; the order simply means that the employees should be returned to their ship assignments as before they staged their strike, and the respondent is mandated to issue embarkation orders to enable them to report to those assignments. The SC further held that the respondent's business is of national interest — it is engaged in coastwise shipping services for the transportation of passengers and cargoes, with vessels servicing various routes in the Visayas and Mindanao and the Port of Cebu as its base — and that the maritime industry is indubitably imbued with national interest, so the Labor Secretary correctly intervened by certifying the dispute to the NLRC for compulsory arbitration and issuing the three Orders pursuant to Article 263(g). Finally, the SC noted that despite its protestations of a right to dismiss the individual petitioners for illegal acts during the strike, the respondent is deemed to have waived such right when it agreed to reinstate them and issue their embarkation orders during the conference on July 28 to 29, 1999 held with then NLRC Chairman Rayala. In fine, absent any showing of grave abuse of discretion on the part of the Secretary of Labor in issuing the said orders, particularly the July 27, 1999 Order, the CA patently erred in enjoining him from implementing the same and thereby unduly interfered with the powers granted to the Secretary under Article 263(g).

• Automatic Injunction and Return-to-Work under Article 263(g) — When the Secretary of Labor assumes jurisdiction over a labor dispute in an industry indispensable to the national interest, or certifies the same to the NLRC for compulsory arbitration, the assumption or certification automatically enjoins the intended or impending strike or lockout. If a strike or lockout has already taken place, all striking or locked-out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The SC applied this to uphold the July 20, July 23, and July 27, 1999 Orders.
• Article 263(g) as an Exercise of Police Power — The powers granted to the Secretary of Labor under Article 263(g) are an exercise of the police power of the State, enacted to promote the order, safety, health, morals, and general welfare of society, and the Secretary is granted "great breadth of discretion" in resolving a labor dispute. The SC used this to justify the Secretary's intervention in the Trans-Asia dispute and to reject the CA's injunction.
• Management Prerogative as a Limited Right — The employer's right to transfer or assign employees from one area of operation to another is recognized, but it is not absolute and is subject to limitations imposed by law. Article 263(g) of the Labor Code is one such limitation. The SC held that the respondent could not invoke management prerogative to determine job assignments in the face of the explicit return-to-work directive.
• "Same Terms and Conditions Prevailing Before the Strike" Includes Former Assignments — Readmission under the same terms and conditions means the employees must be returned to their ship assignments as before the strike, and the employer is mandated to issue embarkation orders to enable them to report to those assignments. Substantially equivalent but different assignments do not satisfy the directive, as held in University of Sto. Tomas vs. NLRC.
• Waiver of the Right to Dismiss — An employer that agrees to reinstate dismissed workers and issue their embarkation orders during a conference with the NLRC is deemed to have waived its right to dismiss them for illegal acts committed during the strike.

• "When a labor dispute has in fact occurred and a general injunction has been issued restraining the commission of disruptive acts, management prerogatives must always be exercised consistently with the statutory objective." — Quoted from Metrolab Industries, Inc. vs. Roldan-Confesor and adopted by the SC; it is the doctrinal bridge that subordinates management prerogative to the statutory objective of Article 263(g).
• "The order simply means that the employees should be returned to their ship assignments as before they staged their strike." — The operative construction of the Secretary's return-to-work directive, and the basis for requiring the issuance of embarkation orders.
• "To reiterate, Article 263 (g) of the Labor Code constitutes an exception to the management prerogative of hiring, firing, transfer, demotion and promotion of employees." — The categorical statement of the rule that resolves the conflict between the return-to-work order and management prerogative.
• "In fine, absent any showing that there was grave abuse of discretion on the part of the Secretary of Labor in issuing the said orders, particularly the Order of July 27, 1999, the appellate court patently erred in enjoining him from implementing the same." — The ratio for reversing the CA and affirming the July 27, 1999 Order.

• Metrolab Industries, Inc. vs. Roldan-Confesor, 254 SCRA 182 (1996) — Controlling precedent; upheld the Secretary of Labor's order reinstating laid-off employees pending resolution of the dispute and held that management prerogatives must be exercised consistently with the statutory objective of Article 263(g).
• University of Sto. Tomas vs. NLRC, 190 SCRA 758 (1990) — Controlling precedent; held that "substantially equivalent academic assignments without loss in rank, pay or privilege" did not satisfy a directive to readmit under the same terms and conditions prevailing before the strike.
• Philtread Workers Union (PTWU) vs. Confesor, 269 SCRA 393 (1997) — Cited for the proposition that Articles 263(g) and 264 of the Labor Code were enacted pursuant to the police power of the State.
• Union of Filipro Employees vs. Nestlé Philippines, Inc., 192 SCRA 396 (1990) — Cited alongside Philtread for the police-power basis of the Secretary's intervention powers.
• Asian Transmission Corporation vs. National Labor Relations Commission, 179 SCRA 582 (1989) — Cited for the rule that assumption of jurisdiction or certification always co-exists with an order for workers to return to work and for employers to readmit them under pre-strike terms and conditions.
• Lanzaderas vs. Amethyst Security and General Services, Inc., 404 SCRA 505 (2003) — Cited for the recognition of the employer's right to transfer or assign employees from one area of operation to another.
• Reformist Union of R.B. Liner, Inc. vs. NLRC, 266 SCRA 713 (1997) — Cited in support of the ruling that the respondent waived its right to dismiss the individual petitioners when it agreed to reinstate them.
• Phimco Industries, Inc. vs. Brillantes, 304 SCRA 747 (1999) — Cited through the concurring opinion of Justice Artemio V. Panganiban for the "great breadth of discretion" granted to the Secretary of Labor in resolving labor disputes.

• Article 263(g), Labor Code — The provision invoked by the Secretary of Labor in issuing the July 20, July 23, and July 27, 1999 Orders. It authorizes the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, or to certify the same to the NLRC for compulsory arbitration; such assumption or certification automatically enjoins the intended or impending strike or lockout, and if one has already taken place, all striking or locked-out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary or the Commission may also seek the assistance of law enforcement agencies to ensure compliance. The SC applied it to hold that the respondent was bound to readmit the twenty-one employees to their former ship assignments and to issue the corresponding embarkation orders.