Union Carbide Labor Union (NLU) vs. Union Carbide Philippines, Inc.

A company may validly exercise its management prerogative to change employee work schedules even during the term of an existing collective bargaining agreement, provided the CBA expressly reserves that right to management and the prerogative is exercised in good faith for the advancement of the employer's interest and not to circumvent employee rights.

Union Carbide Philippines, Inc. operated a factory on three daily shifts and maintained a collective bargaining agreement with the Union Carbide Labor Union (NLU), which represented its rank-and-file employees. The CBA, effective September 1, 1971, was to remain in force until August 31, 1974, and contained both a duration clause and a management-rights clause reserving to the company sole authority over work scheduling. The dispute arose under the regime of then-Secretary of Labor Blas Ople, whose administrative decisions on clearance-to-terminate applications governed dismissal cases during the period of martial law.

Union Carbide Philippines, Inc. operated its factory on three shifts — morning, afternoon, and night. Workers on the third shift normally worked Monday to Friday, totaling forty hours per week. Sometime in July 1972, the company changed the working schedule for the third shift from Monday–Friday to Sunday–Thursday, effective July 5, 1972. On November 6, 1972, the night-shift employees filed a demand with the Committee on Labor Relations to maintain the old Monday–Friday schedule. The demand was referred to the Labor Management Relation Committee and discussed from November 15 to November 24, 1972. In those discussions, it was agreed that all night-shift operating personnel would be allowed to start their work on Monday and on Saturday, excepting employees in the maintenance and preparation crews, whose schedule would remain Sunday–Thursday. The revised schedule was approved and disseminated to take effect November 26, 1972.

In manifestation of their dissent to the new work schedule, three employees — Agapito Duro, Alfredo Torio, and Rustico Javillonar — did not report for work on November 26, 1972, a Sunday, contending that it was not a working day under the provisions of the Collective Bargaining Agreement. Their absence resulted in a fourteen-day suspension. The company thereafter applied for clearance to terminate their employment, which the Secretary of Labor approved on December 19,, 1972, on the ground of "willful violation of Company regulations, gross insubordination and refusal to submit to a Company investigation."

On May 4, 1973, the Arbitrator rendered a decision ordering the reinstatement of the complainants with backwages. The National Labor Relations Commission dismissed the company's appeal on June 8, 1973, for having been filed out of time. The company then filed a motion for reconsideration before the Secretary of Labor, which was treated as an appeal. The Secretary of Labor modified the Arbitrator's decision, substituting an award of separation pay for the order of reinstatement. The petitioner's subsequent motion for reconsideration was denied for lack of merit on July 24, 1975, prompting the present petition for review.

• Violation of the CBA: Petitioner alleged that the change in the company's working schedule violated the existing Collective Bargaining Agreement between the parties, and that the complainants therefore could not be dismissed since their refusal to comply with the rescheduled working hours was based on a provision of the CBA.
• Constitutional Violation: Petitioner further contended that the dismissal of the complainants violated Section 9, Article II of the 1973 Constitution, which guarantees the right of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work.

• Validity of Dismissal: Whether the complainants could be validly dismissed from their employment on the ground of insubordination for refusing to comply with the new work schedule.
• Management Prerogative vs. CBA: Whether the company's change of the working schedule during the term of the CBA was a valid exercise of management prerogative.
• Retroactivity of the 1973 Constitution: Whether the 1973 Constitution's guarantee of security of tenure could be applied retroactively to the dismissal, which occurred in 1972.

• Validity of Dismissal: No. The act of the complainants in refusing to follow the new working hours did not amount to serious misconduct or willful disobedience; however, reinstatement was no longer feasible, and separation pay was the appropriate award.
• Management Prerogative vs. CBA: The company validly exercised its management prerogative. Section 2, Article II of the CBA expressly reserved to the company the sole and exclusive right to schedule hours of work, shifts, and work schedules, and this prerogative was upheld as long as exercised in good faith.
• Retroactivity of the 1973 Constitution: No. The incident occurred in 1972, before the 1973 Constitution took effect, and constitutional provisions are given prospective application only unless legislative intent for retroactive application is clearly provided.

• Validity of Dismissal: The Court agreed with the findings of both the Arbitrator and the Secretary of Labor that there was no unfair labor practice, no gross and habitual neglect of the complainants' duties, and that the complainants' refusal to follow the new working hours did not amount to serious misconduct or willful disobedience. Although no serious objection could be offered to the Arbitrator's conclusion ordering reinstatement with backwages, the Court refrained from doing so because reinstatement was no longer feasible — the controversy had started more than twenty years earlier and relations between the parties were obviously strained. Separation pay was thus the appropriate remedy.

• Management Prerogative vs. CBA: Although Article XIX of the CBA fixed the duration of the agreement from September 1, 1971 to August 31, 1974, this did not mean the company could no longer change its working schedule. Section 2, Article II of the same CBA expressly granted the company the sole and exclusive right to schedule hours of work, shifts, and work schedules, to require work in excess of eight hours or on Sundays or holidays as exigencies of service required, and to plan, direct, curtail, and control factory operations and production schedules. The Court upheld this exercise of management prerogative, citing San Miguel Brewery Sales Force Union (PTGWO) vs. Ople and Abbott Laboratories (Phil.), Inc. vs. NLRC, on the principle that as long as the prerogative is exercised in good faith for the advancement of the employer's interest and not to defeat or circumvent employee rights under special laws or valid agreements, the Court will uphold it.

• Retroactivity of the 1973 Constitution: The incident complained of took place sometime in 1972, so there was no violation of the 1973 Constitution to speak of, because the guarantee of security of tenure under Section 9, Article II could not be given retroactive effect. The Court cited Justice Isagani Cruz's treatise for the principle that provisions of the Constitution should be given only prospective application unless the contrary is clearly intended, lest rights already acquired or vested be unduly disturbed or withdrawn.

• Management Prerogative — An employer retains the sole and exclusive right to direct its operations and working force, including the authority to schedule hours of work, shifts, and work schedules, to require work beyond regular hours or on Sundays and holidays as exigencies require, and to plan, direct, curtail, and control factory operations and production schedules. This prerogative is upheld by courts as long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of employees under special laws or valid agreements. In this case, the CBA itself expressly reserved this right to the company, and the change in work schedule was deemed a valid exercise of that prerogative.

• Prospective Application of Constitutional Provisions — Provisions of the fundamental law are given prospective application only, unless legislative intent for retroactive application is clearly provided. Were the rule otherwise, rights already acquired or vested might be unduly disturbed or withdrawn even in the absence of an unmistakable intention to place them within the scope of the Constitution. Applied here, the 1973 Constitution's security-of-tenure guarantee could not govern a dismissal that occurred in 1972, before the Constitution took effect.

• Infeasibility of Reinstatement — Even where reinstatement with backwages would otherwise be warranted, courts may decline to order reinstatement where it is no longer feasible due to the passage of a considerable period of time and obviously strained relations between the parties, substituting instead an award of separation pay.

• "Verily and wisely, management retained the prerogative, whenever exigencies of the service so require, to change the working hours of its employees. And as long as such prerogative is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold such exercise" — This passage articulates the controlling standard for validating an employer's exercise of management prerogative over work schedules.

• "Finally, it should be observed that the provisions of the Constitution should be given only a prospective application unless the contrary is clearly intended. Were the rule otherwise, rights already acquired or vested might be unduly disturbed or withdrawn even in the absence of an unmistakable intention to place them within the scope of the Constitution." — Quoted from Justice Isagani Cruz's treatise, this passage states the rule on prospective application of constitutional provisions, which barred the petitioner's reliance on the 1973 Constitution for events occurring in 1972.

• "Although no serious objections may be offered to the Arbitrator's conclusion to order reinstatement with backwages of the complainants, We now refrain from doing so considering that reinstatement is no longer feasible due to the fact that the controversy started more than 20 years ago aside from the obviously strained relations between the parties." — This passage explains the Court's substitution of separation pay for reinstatement on equitable grounds, establishing the doctrine that lapse of time and strained relations may render reinstatement infeasible.

• San Miguel Brewery Sales Force Union (PTGWO) vs. Ople, 170 SCRA 25 (1989) — Followed as controlling authority for the proposition that management prerogative to change working hours is upheld as long as it is exercised in good faith for the advancement of the employer's interest and not to circumvent employee rights.

• Abbott Laboratories (Phil.), Inc. vs. NLRC, 154 SCRA 713 (1987) — Followed for the principle that the law must also protect the right of an employer to exercise clearly management prerogatives, and that the free will of management to conduct its own business affairs cannot be denied.

• Section 2, Article II, CBA between Union Carbide Philippines, Inc. and Union Carbide Labor Union (NLU) — Reserved to the company the sole and exclusive right to schedule hours of work, shifts, and work schedules, among other management functions. The Court relied on this provision to uphold the company's change of the night-shift work schedule as a valid exercise of management prerogative, notwithstanding the CBA's duration clause.

• Article XIX, CBA — Fixed the duration of the agreement from September 1, 1971 to August 31, 1974. Petitioner invoked this provision to argue that the company could not change work schedules during the CBA term; the Court rejected this argument, finding that the management-rights clause in Section 2, Article II expressly authorized such changes.

• Section 9, Article II, 1973 Constitution — Guaranteed the right of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. Petitioner invoked this provision, but the Court held it could not be applied retroactively to events occurring in 1972, before the 1973 Constitution took effect.

Gutierrez, Jr., Bidin, Davide, Jr., and Romero, JJ., concurred.