Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

 

G.R. No. 120751 March 17, 1999

PHIMCO INDUSTRIES, INC., petitioner,
vs.
HONORABLE ACTING SECRETARY OF LABOR JOSE BRILLANTES and PHIMCO INDUSTRIES LABOR ASSOCIATION, respondents.

 

PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, seeking to set aside the July 7, 1995 Order 1 of the then Acting Secretary Jose Brillantes of the Department of Labor and Employment, in NCMB-NCR-NS-03-122-95, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.

The antecedent facts are, as follows:

On March 9, 1995, the private respondent, Phimco Industries Labor Association (PILA), duly certified collective bargaining representative of the daily paid workers of the petitioner, Phimco Industries Inc. (PHIMCO), filed a notice of strike with the National Conciliation and Mediation Board, NCR, against PHIMCO, a corporation engaged in the production of matches, after a deadlock in the collective bargaining and negotiation. On April 21, 1995, when the several conciliation conferences called by the contending parties failed to resolve their differences PILA, composed of 352 2 members, staged a strike.

On June 7, 1995, PILA presented a petition for the intervention of the Secretary of Labor in the resolution of the labor dispute, to which petition PHIMCO opposed. Pending resolution of the said petition or on June 26, 1995, to be precise, PHIMCO sent notice of termination to some 47 3 workers including several union officers.

On July 7, 1995, the then Acting Secretary of Labor Jose Brillantes assumed jurisdiction over the labor dispute and issued his Order ruling, thus:

WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g) of the Labor Code, as amended, this office hereby assumes jurisdiction over the dispute at, Phimco industries, Inc.

Accordingly, all the striking workers, except those who have been handed down termination papers on June 26, 1995, are hereby directed to return to work with twenty-four (24) hours from receipt of this Order and for the Company to accept them back under the same terms and conditions prevailing prior to the strike.

The parties are further ordered to cease and desist from committing any act that will aggravate the situation.

To expedite the resolution of this dispute, the parties are directed to submit their position papers and evidence within ten (10) days from receipt of this Order.

SO ORDERED. 4

On July 12, 1995, petitioner brought the present petition; theorizing, that:

I

THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH THE GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDER.

II

THE HONORABLE ACTING SECRETARY JOSE BRILLANTES ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN HE WENT BEYOND THE BASIS FOR ASSUMPTION OF JURISDICTION UNDER ART. 263 OF THE LABOR CODE. 5

On July 31, 1995, two weeks after the filing of the Petition, the public respondent issued another Order 6 temporarily holding in abeyance the implementation of the questioned Order dated July 7, 1995 for a period of thirty (30) day; directing, as follows:

WHEREFORE PREMISES CONSIDERED, the implementation of our Order dated 7 July 1995 hereby temporarily held in abeyance for a period of thirty (30) days effective from receipt thereof pending the private negotiations of the parties for the settlement of their labor dispute. Thereafter, both the Union and the Company are directed to submit to this Office the result of their negotiations for our evaluation and appropriate action.

SO ORDERED. 7

The pivotal issue here is: whether or not the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction in assuming jurisdiction over subject labor dispute.

The petition is impressed with merit.

Art. 263, paragraph (g) of the Labor Code, provides:

(g) When, in his opinion, there exist a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration . . .

The Labor Code vests in the Secretary of Labor the discretion to determine what industries are indispensable to the national interest. Accordingly, upon the determination by the Secretary of Labor that such industry is indispensable to the national interest, he will assume jurisdiction over the labor dispute in the said industry. 8 This power, however, is not without any limitation. In upholding the constitutionality of B.P. 130 insofar as it amends Article 264 (g) 9 of the Labor Code, it stressed in the case of Free telephone Workers Union vs. Honorable Minister of Labor and Employment, et al., 10 the limitation set by the legislature on the power of the Secretary of Labor to assume jurisdiction over a labor dispute, thus:

Batas Pambansa Blg. 130 cannot be any clearer, the coverage being limited to "strikes or lockouts adversely affecting the national interest. 11

In this case at bar, however, the very admission by the public respondent draws the labor dispute in question out of the ambit of the Secretary's prerogative, to wit.

While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this office believes that the obtaining circumstances warrant the exercise of the powers under Article 263 (g) of the Labor Code, as amended. 12

The private respondent did not even make any effort to touch on the indispensability of the match factory to the national interest. It must have been aware that a match factory, though of value, can scarcely be considered as an industry "indispensable to the national interest" as it cannot be in the same category as "generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries." 13 Yet, the public respondent assumed jurisdiction thereover, ratiocinating as follows:

For one, the prolonged work disruption has adversely affected not only the protagonists, i.e., the workers and the Company, but also those directly and indirectly dependent upon the unhampered and continued operations of the Company for their means of livelihood and existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the unemployment problem of the country.

Thus we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved, particularly when alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein. 14

It is thus evident from the foregoing that the Secretary's assumption of jurisdiction grounded on the alleged "obtaining circumstances" and not on a determination that the industry involved in the labor dispute is one indispensable to the "national interest", the standard set by the legislature, constitutes grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public respondent under the premises would be stretching too far the power of the Secretary of Labor as every case of a strike or lockout where there are inconveniences in the community, or work disruptions in an industry though not indispensable to the national interest, would then come within the Secretary's power. It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For "when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded" 15

In light of the foregoing, we hold that the public respondent gravely abused his discretion in assuming jurisdiction over the labor dispute sued upon in the case.

WHEREFORE, the petition is hereby GRANTED; and the assailed Order, dated July 7, 1995, of the Acting Secretary of Labor SET ASIDE. No pronouncement as to costs.

SO ORDERED.

Romero, Vitug, Panganiban and Gonzaga-Reyes, JJ., concur.

Panganiban, J., see concurring opinion.

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Separate Opinions

 

PANGANIBAN, J., concurring opinion;

I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave abuse of discretion in assuming jurisdiction over a labor dispute without any showing that the disputants were engaged in an industry indispensable to national interest. Quite the contrary, the respondent secretary himself admits that the industry, of which petitioner is a part, is not indispensable to national interest. Indeed, a labor dispute must seriously and deleteriously affect an industry indispensable to national interest before the secretary may assume jurisdiction over it.

Art. 263 (g) Requires a Labor Dispute in an

Industry Indispensable to National Interest.

Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for their mutual benefit and protection. 1 Concerted activities, like the holding of a strike, are resorted to by employees in their effort to obtain more favorable terms and conditions of work for themselves. Due to its importance, the exercise of such right is limited only by the demands of national interest under paragraph (g) of said article:

(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, 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 of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.

xxx xxx xxx

The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same.

From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of jurisdiction over a labor dispute is meant to be used sparingly and only if the national interest demands it. He, like everyone else, must respect labor's paramount right to stage concerted activities.

Jurisprudence Requires National Interest

to Justify Assumption of Jurisdiction

Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is intended not to interfere with or impede workers' rights, but to obtain speedy settlement of labor disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the secretary's assumption of jurisdiction in many cases, some of which are worth mentioning to show the care with which such plenary power should be used.

In Philippine School of Business Administration v. Noriel, 3 the Court has declared that the administration of a school is of national interest because
" . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth." Work stoppage at a school unduly prejudices the students and entails great loss to all concerned in terms of time, effort and money.

In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating more than $12 million dollars per year was declared to be of national interest. Any disruption of operations would have caused the delay of shipments of export consisting of finished products previously committed to customers abroad, a delay that would have hampered the economic recovery program pursued by the government.

The manufacture of drugs and pharmaceuticals has also been declared to belong to the same classification. 5 Likewise, the operation of an airline that services domestic routes has been deemed to be imbued with national interest. 6 In one case, a company was considered to be indispensable to national interest, as it was responsible for 22 percent of the tire production in the Philippines, and work disruption would have or only aggravated the already worsening unemployment situation but also discouraged foreign and domestic entrepreneurs from further investing in the country. 7

On the other hand, the Court has disallowed the imprudent use of this power in even more cases. Perhaps the most eloquent of these GTE Directories Corporation v. Sanchez, 8 wherein the Court declared the secretary to be without jurisdiction to take over a labor dispute involving a company that produced telephone directories, viz:

The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be described as an industry affecting the national interest. GTE is a publishing firm chiefly dependent on the marketing and sale of advertising space for its not inconsiderable revenues. Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented industries." It cannot be regarded as playing as vital a role in communication as other mass media. The small number of employees involved in the dispute, the employer's payment of "P10 million in income tax alone to the Philippine Government," and the fact that the "top officers of the union were dismissed during the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national interest."

The Secretary is Vested with Broad Powers

When He Assumes Jurisdiction

When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of discretion" in order to find a solution to a labor dispute. In The Philippine America Management Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the Court clarified the extent of the powers vested in the then Court of Industrial Relations, as follows:

. . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the employment.

The most obvious of these powers is the automatic enjoinment of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction always coexist 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. Defiance of return-to-work order produces forfeiture of workers' employment. 10 Thus, not only does it diminish the right of labor to strike; it also limits the prerogatives of management to hire workers under its own terms and conditions. 11

The secretary is conferred other powers, including jurisdiction over incidents arising from the labor dispute, in order to avoid the undesirable result of diametrically opposed rulings being issued by the secretary and the labor arbiter. These powers comprehend those that the secretary needs to dispose of the primary dispute effectively and efficiently. 12

The almost unlimited breadth of such powers calls for caution on the part of its possessor add strict scrutiny of the excesses of government on the part of the judiciary.

Precursor of Article 263(g)

The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715 was enacted, then President Ferdinand Marcos sought to quell mass expressions of dissent, including strikes, through General Order No. 5 which provided:

WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national emergency now prevailing throughout the country which has been brought about by the activities of groups of men now actively engaged in criminal conspiracy to seize political power and state power in the Philippines in order to take over the Government by force and violence, the extent of which has now assumed the proportion of an actual war against our people and their legitimate Government; and

WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it is necessary to prohibit the inhabitants of the country from doing certain acts of undertaking certain activities such as rallies, demonstrations, picketing or strikes in certain vital industries, and other forms of group actions which would cause hysteria or panic among the populace or would incense the people against their legitimate Government, or would generate sympathy for the radical and lawless elements, or would aggravate the already critical political and social turmoil now prevailing throughout the land;

NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that henceforth and until otherwise ordered by me or by my duly designated representative, all rallies, demonstrations and other forms of group actions by persons within the geographical limits of the Philippines, including strikes and picketing in vital industries such as in companies engaged in the manufacture or processing as well in the distribution of fuel gas, gasoline, and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products for exports, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are strictly prohibited and any person violating this order shall forthwith be arrested and taken into custody and held for the duration of the national emergency or until he or she is otherwise ordered released by me or by my duly designated representative.

General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically detailed the vital industries or firms referred to, as follows:

For the guidance of workers and employers, some of whom have been led into filing notices of strikes and lockouts even in vital industries, you are hereby instructed to consider the following as vital industries and companies or firms under PD 823 as amended:

1. Public Utilities:

A. Transportation:

1) All land, air and water companies or firms engaged in passenger, freight or tourist transport;

2) All brokerage, arrastre, warehousing companies or firms;

B. Communications:

1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or firms;

2) Radio and television companies or firms;

3) Print Media companies;

4) Postal and messengerial service companies;

C. Companies engaged in electric, light, gas, steam and water power generation and distribution and sanitary service companies;

D. Other Public Utilities:

1) Ice and Refrigeration plants

2. Companies or firms engaged in the manufacture or processing of the following essential commodities:

A. Animal feeds

B. Cement

C. Chemicals and fertilizers

D. Drugs and medicines

E. Flour

F. Products which are classified as essential commodities in the list of National Economic and Development Authority except the following: rice, corn, some basic cuts of meat, cooking oil, laundry soap, lumber and plywood, galvanized iron sheets, writing pads and notebooks.

G. Iron, steel, copper, tin plates and other basic mineral products;

H. Milk

I. Newsprint

J. Tires

K. Sugar

L. Textile and garments

3. Companies engaged in the production and processing of products for export which are holders of Central Bank or Board of Investment Certificate of Export Orientation, including hotels and restaurants classified as three (3), four (4) or five (5) star by the Department of Tourism;

4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper, gold, and other minerals;

5. Companies or firms engaged in banking, including:

A. Commercial Banks

B. Saving Banks

C. Development Banks

D. Investment Banks

E. Rural Banks

F. Savings and Loans Associations

G. Cooperative Banks

H. Credit Unions

6. Companies or firms which are actually engaged in government infrastructure projects and in activities covered by Defense contracts;

7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the Labor Code of the Philippines;

8. School and Colleges duly recognized by the Government.

The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as the national interest, national security, or general welfare may require.

When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more listing of industries indispensable to national interest. The labor and employment secretary was given discretion in determining which industries would qualify as such. But the discretion cannot be abused. It is subject to judicial review.

Under General Order No. 5, the state prohibited the holding of strikes for a stated public purpose: a national emergency and only in enumerated industries considered vital to the ailing economy. Even the height of martial rule in the country, there was no intention to provide a blanket authority to the secretary to assume jurisdiction over labor disputes without any showing that national interest, national security or general welfare demanded it.

Police Power Requires Public Necessity

After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art. 263(g) has now been viewed as an exercise of the police power of the state with the aim of promoting the common good. A prolonged strike or lockout can be inimical to the national economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public to self-protection. But such public necessity and need for self-protection are absent in labor disputes industries not indispensable to national interest. In the spirit of free enterprise, it is more in keeping with national interest to allow labor to negotiate with management for decent pay and humane working conditions without intervention from the government.

Not Always Beneficial to Labor

Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute under Art. 263. Although the intention may be to find a balance between the demands of labor and the resources of management, intervention from the state and the derogation of the right to strike are not always the solutions to the just demands of labor. More often than not, the intervention is more to the advantage of management, which would not incur overhead expenses that would otherwise be wasted during a work stoppage. For the same reason, it does not necessarily follow that intervention works for the protection of labor.

Other Available Remedies

Even without compulsory arbitration, other remedies for resolving their labor disputes are still available to labor and management. Striking employees can file illegal dismissal cases if they are dismissed without cause. On the other hand, management can dismiss employees engaged in illegal strikes, or it can negotiate with those involved in legal strikes.

The Secretary Found No National Interest

As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus, does not qualify as one engaged in an "industry indispensable to national interest." The respondent labor and employment secretary admits this facts, expressly declaring that "the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest."" He nevertheless assumed jurisdiction over petitioner's labor dispute with PHIMCO Industries Labor Association (PILA), rationalizing thus: 14

While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this Office believes that obtaining circumstances warrant the exercise of the powers under Article 263(g) of the Labor Code, as amended.

For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the workers and the Company, but also those directly and indirectly dependent upon the unhampared and continued operations of the Company for their means of livelihood and existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the unemployment problem of the country.

Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved, particularly when an alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein.

These excuses fail to show how petitioner falls within the category of "industries indispensable to national interest." The allegation of the public respondent that the "match industry like the textile or garment industry may be classified as export-oriented" is sufficiently rebutted by petitioner's simple argument pointing out that its export is very negligible and would not qualify under the definition of "export-oriented industries" in Section 14, Book V, Rule XIII of the Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to be supported by the secretary, who in his assailed Order, found that petitioner's business was not an industry indispensable to national interest.

The case at bar is peculiar in the sense that it was the union (PILA), rather than management, that petitioned the secretary to assume jurisdiction over the controversy. It appears that PILA had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's power of compulsory arbitration. Petitioner, on the other hand, questions the intervention, obviously because it is not amenable to accepting all the returning workers, some of whom were dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues.

How true it is that the road to damnation is paved with good intentions. The secretary's intention to reconcile the disputants may have been noble but it does not imbue the labor dispute with national interest. Neither does it clothe him with power to assume jurisdiction over the case.

WHEREFORE, I vote to GRANT the petition.

# Separate Opinions

PANGANIBAN, J., concurring opinion;

I now agree with Justice Purisima's revised ponencia that the labor secretary acted with grave abuse of discretion in assuming jurisdiction over a labor dispute without any showing that the disputants were engaged in an industry indispensable to national interest. Quite the contrary, the respondent secretary himself admits that the industry, of which petitioner is a part, is not indispensable to national interest. Indeed, a labor dispute must seriously and deleteriously affect an industry indispensable to national interest before the secretary may assume jurisdiction over it.

Art. 263 (g) Requires a Labor Dispute in an

Industry Indispensable to National Interest.

Art. 263 of the Labor Code speaks of the right of workers to engage in concerted activities for their mutual benefit and protection. 1 Concerted activities, like the holding of a strike, are resorted to by employees in their effort to obtain more favorable terms and conditions of work for themselves. Due to its importance, the exercise of such right is limited only by the demands of national interest under paragraph (g) of said article:

(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, 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 of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same.

xxx xxx xxx

The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same.

From the text and the tenor of the law, it is clear as daylight that the secretary's assumption of jurisdiction over a labor dispute is meant to be used sparingly and only if the national interest demands it. He, like everyone else, must respect labor's paramount right to stage concerted activities.

Jurisprudence Requires National Interest

to Justify Assumption of Jurisdiction

Indeed, the Court has consistently ruled that the secretary's assumption of jurisdiction is intended not to interfere with or impede workers' rights, but to obtain speedy settlement of labor disputes and only if national interests will be affected. 2 Admittedly, the Court has allowed the secretary's assumption of jurisdiction in many cases, some of which are worth mentioning to show the care with which such plenary power should be used.

In Philippine School of Business Administration v. Noriel, 3 the Court has declared that the administration of a school is of national interest because
" . . . [it] is engaged in the promotion of the physical, intellectual and emotional well-being of the country's youth." Work stoppage at a school unduly prejudices the students and entails great loss to all concerned in terms of time, effort and money.

In Sarmiento v. Tuico, 4 an enterprise exporting 90 percent of its production and generating more than $12 million dollars per year was declared to be of national interest. Any disruption of operations would have caused the delay of shipments of export consisting of finished products previously committed to customers abroad, a delay that would have hampered the economic recovery program pursued by the government.

The manufacture of drugs and pharmaceuticals has also been declared to belong to the same classification. 5 Likewise, the operation of an airline that services domestic routes has been deemed to be imbued with national interest. 6 In one case, a company was considered to be indispensable to national interest, as it was responsible for 22 percent of the tire production in the Philippines, and work disruption would have or only aggravated the already worsening unemployment situation but also discouraged foreign and domestic entrepreneurs from further investing in the country. 7

On the other hand, the Court has disallowed the imprudent use of this power in even more cases. Perhaps the most eloquent of these GTE Directories Corporation v. Sanchez, 8 wherein the Court declared the secretary to be without jurisdiction to take over a labor dispute involving a company that produced telephone directories, viz:

The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be described as an industry affecting the national interest. GTE is a publishing firm chiefly dependent on the marketing and sale of advertising space for its not inconsiderable revenues. Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the generation or distribution of energy" or those undertaken by "banks, hospitals, and export-oriented industries." It cannot be regarded as playing as vital a role in communication as other mass media. The small number of employees involved in the dispute, the employer's payment of "P10 million in income tax alone to the Philippine Government," and the fact that the "top officers of the union were dismissed during the conciliation process," obviously do not suffice to make the dispute in the case at bar one "adversely affecting the national interest."

The Secretary is Vested with Broad Powers

When He Assumes Jurisdiction

When the secretary assumes jurisdiction under Art. 263(g), he is granted "great breadth of discretion" in order to find a solution to a labor dispute. In The Philippine America Management Co., Inc. v. The Philippine American Management Employees Association (PAMEA-FFW), 9 the Court clarified the extent of the powers vested in the then Court of Industrial Relations, as follows:

. . . If the Court of Industrial Relations is granted authority to find a solution in an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power of jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted. Lastly; if the Court of Industrial Relations has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of the employment.

The most obvious of these powers is the automatic enjoinment of an impending strike or lockout or the lifting thereof if one has already taken place. Assumption of jurisdiction always coexist 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. Defiance of return-to-work order produces forfeiture of workers' employment. 10 Thus, not only does it diminish the right of labor to strike; it also limits the prerogatives of management to hire workers under its own terms and conditions. 11

The secretary is conferred other powers, including jurisdiction over incidents arising from the labor dispute, in order to avoid the undesirable result of diametrically opposed rulings being issued by the secretary and the labor arbiter. These powers comprehend those that the secretary needs to dispose of the primary dispute effectively and efficiently. 12

The almost unlimited breadth of such powers calls for caution on the part of its possessor add strict scrutiny of the excesses of government on the part of the judiciary.

Precursor of Article 263(g)

The power to restrict strikes and lockouts is of martial law vintage. Before Republic Act. 6715 was enacted, then President Ferdinand Marcos sought to quell mass expressions of dissent, including strikes, through General Order No. 5 which provided:

WHEREAS, Proclamation No. 1081 dated Sept. 21, 1972, was issued by me because of a grave national emergency now prevailing throughout the country which has been brought about by the activities of groups of men now actively engaged in criminal conspiracy to seize political power and state power in the Philippines in order to take over the Government by force and violence, the extent of which has now assumed the proportion of an actual war against our people and their legitimate Government; and

WHEREAS, in order to restore the tranquillity and stability of the nation in the quickest possible manner, it is necessary to prohibit the inhabitants of the country from doing certain acts of undertaking certain activities such as rallies, demonstrations, picketing or strikes in certain vital industries, and other forms of group actions which would cause hysteria or panic among the populace or would incense the people against their legitimate Government, or would generate sympathy for the radical and lawless elements, or would aggravate the already critical political and social turmoil now prevailing throughout the land;

NOW, THEREFORE, I, Ferdinand E. Marcos, Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081 dated Sept. 21, 1972, do hereby order that henceforth and until otherwise ordered by me or by my duly designated representative, all rallies, demonstrations and other forms of group actions by persons within the geographical limits of the Philippines, including strikes and picketing in vital industries such as in companies engaged in the manufacture or processing as well in the distribution of fuel gas, gasoline, and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products for exports, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges, are strictly prohibited and any person violating this order shall forthwith be arrested and taken into custody and held for the duration of the national emergency or until he or she is otherwise ordered released by me or by my duly designated representative.

General Order No. 5, which was accompanied by Letter of Instructions No. 368, specifically detailed the vital industries or firms referred to, as follows:

For the guidance of workers and employers, some of whom have been led into filing notices of strikes and lockouts even in vital industries, you are hereby instructed to consider the following as vital industries and companies or firms under PD 823 as amended:

1. Public Utilities:

A. Transportation:

1) All land, air and water companies or firms engaged in passenger, freight or tourist transport;

2) All brokerage, arrastre, warehousing companies or firms;

B. Communications:

1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or firms;

2) Radio and television companies or firms;

3) Print Media companies;

4) Postal and messengerial service companies;

C. Companies engaged in electric, light, gas, steam and water power generation and distribution and sanitary service companies;

D. Other Public Utilities:

1) Ice and Refrigeration plants

2. Companies or firms engaged in the manufacture or processing of the following essential commodities:

A. Animal feeds

B. Cement

C. Chemicals and fertilizers

D. Drugs and medicines

E. Flour

F. Products which are classified as essential commodities in the list of National Economic and Development Authority except the following: rice, corn, some basic cuts of meat, cooking oil, laundry soap, lumber and plywood, galvanized iron sheets, writing pads and notebooks.

G. Iron, steel, copper, tin plates and other basic mineral products;

H. Milk

I. Newsprint

J. Tires

K. Sugar

L. Textile and garments

3. Companies engaged in the production and processing of products for export which are holders of Central Bank or Board of Investment Certificate of Export Orientation, including hotels and restaurants classified as three (3), four (4) or five (5) star by the Department of Tourism;

4. Companies engaged in exploration, development, mining, smelting, or refining coal, oil, iron, copper, gold, and other minerals;

5. Companies or firms engaged in banking, including:

A. Commercial Banks

B. Saving Banks

C. Development Banks

D. Investment Banks

E. Rural Banks

F. Savings and Loans Associations

G. Cooperative Banks

H. Credit Unions

6. Companies or firms which are actually engaged in government infrastructure projects and in activities covered by Defense contracts;

7. Hospitals as defined in Section 2, Rule 1-A, Book III of the Rules and Regulations Implementing the Labor Code of the Philippines;

8. School and Colleges duly recognized by the Government.

The Secretary of Labor may include in/or exclude from the above list any industry, firm, or company as the national interest, national security, or general welfare may require.

When Republic Act 6715 took effect and General Order No. 5 was repealed, there was no more listing of industries indispensable to national interest. The labor and employment secretary was given discretion in determining which industries would qualify as such. But the discretion cannot be abused. It is subject to judicial review.

Under General Order No. 5, the state prohibited the holding of strikes for a stated public purpose: a national emergency and only in enumerated industries considered vital to the ailing economy. Even the height of martial rule in the country, there was no intention to provide a blanket authority to the secretary to assume jurisdiction over labor disputes without any showing that national interest, national security or general welfare demanded it.

Police Power Requires Public Necessity

After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art. 263(g) has now been viewed as an exercise of the police power of the state with the aim of promoting the common good. A prolonged strike or lockout can be inimical to the national economy. 13 Therefore, it is imbued with public necessity and the right of the state and the public to self-protection. But such public necessity and need for self-protection are absent in labor disputes industries not indispensable to national interest. In the spirit of free enterprise, it is more in keeping with national interest to allow labor to negotiate with management for decent pay and humane working conditions without intervention from the government.

Not Always Beneficial to Labor

Even for labor, it is not always beneficial to allow the secretary's intervention in a labor dispute under Art. 263. Although the intention may be to find a balance between the demands of labor and the resources of management, intervention from the state and the derogation of the right to strike are not always the solutions to the just demands of labor. More often than not, the intervention is more to the advantage of management, which would not incur overhead expenses that would otherwise be wasted during a work stoppage. For the same reason, it does not necessarily follow that intervention works for the protection of labor.

Other Available Remedies

Even without compulsory arbitration, other remedies for resolving their labor disputes are still available to labor and management. Striking employees can file illegal dismissal cases if they are dismissed without cause. On the other hand, management can dismiss employees engaged in illegal strikes, or it can negotiate with those involved in legal strikes.

The Secretary Found No National Interest

As stated earlier, Petitioner PHIMCO is a company which manufactures matches and, thus, does not qualify as one engaged in an "industry indispensable to national interest." The respondent labor and employment secretary admits this facts, expressly declaring that "the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest."" He nevertheless assumed jurisdiction over petitioner's labor dispute with PHIMCO Industries Labor Association (PILA), rationalizing thus: 14

While the case at bar appears on its face not to fall within the strict categorization of cases imbued with "national interest", this Office believes that obtaining circumstances warrant the exercise of the powers under Article 263(g) of the Labor Code, as amended.

For one, the prolonged work disruption has adversely affected not only the direct protagonists, i.e., the workers and the Company, but also those directly and indirectly dependent upon the unhampared and continued operations of the Company for their means of livelihood and existence. In addition, the entire community where the plant is situated has also been placed in jeopardy. If the dispute at the Company remains unabated, possible loss of employment, not to mention consequent social problems, might result thereby compounding the unemployment problem of the country.

Thus; we cannot be unmindful of the possible dire consequences that might ensue if the present dispute is allowed to remain unresolved, particularly when an alternative dispute resolution mechanism obtains to dispose of the differences between the parties herein.

These excuses fail to show how petitioner falls within the category of "industries indispensable to national interest." The allegation of the public respondent that the "match industry like the textile or garment industry may be classified as export-oriented" is sufficiently rebutted by petitioner's simple argument pointing out that its export is very negligible and would not qualify under the definition of "export-oriented industries" in Section 14, Book V, Rule XIII of the Omnibus Rules Implementing the Labor Code. 15 Besides, such allegation does not appear to be supported by the secretary, who in his assailed Order, found that petitioner's business was not an industry indispensable to national interest.

The case at bar is peculiar in the sense that it was the union (PILA), rather than management, that petitioned the secretary to assume jurisdiction over the controversy. It appears that PILA had lost belief in the efficacy of its own strike and had chosen to seek refuge in the secretary's power of compulsory arbitration. Petitioner, on the other hand, questions the intervention, obviously because it is not amenable to accepting all the returning workers, some of whom were dismissed by reason of the strike. 16 The assumption of jurisdiction merely muddled the issues.

How true it is that the road to damnation is paved with good intentions. The secretary's intention to reconcile the disputants may have been noble but it does not imbue the labor dispute with national interest. Neither does it clothe him with power to assume jurisdiction over the case.

WHEREFORE, I vote to GRANT the petition.

Footnotes

1 Annex "A"; Rollo, pp. 17-21.

2 Petition, Rollo, p. 52.

3 Order, Rollo, p. 110.

4 Rollo, pp. 20-21.

5 Petition; Rollo, pp. 4-5.

6 Annex "A"; Rollo, pp. 107-112.

7 Order; Rollo, p. 112.

8 Philtread Workers Union (PTWU), et, al., vs. Confesor, et. al., 269 SCRA 393, p. 394 [March 12, 1997].

9 Now Article 263 (g).

10 108 SCRA 757 [ OCTOBER 30, 1991].

11 Id., pp. 769- 770.

12 Order; Rollo, p.19.

13 GTE Directors Corporation vs. Honorabe Augosto Sanchez et. al.,. 197 SCRA 452. P. 471.

14 Order; Rollo, pp. 19-20.

15 Colgate Palmolive Philippines Inc. vs. Ople, et al., 163 SCRA 323, P. 330 [JUNE 30, 1988].

PANGANIBAN, J., concurring opinion;

1 Art. 263. Strikes, picketing, and lockouts. . . .

(b) Workers shall have the right to engage in concerted activities for purposes of collectiive bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to strike and picket and of employers to lockout, consistent with the national interest, shall continue to be recognized and respected. . . .

2 Philtread Workers Union (PTWU) v. Confesor, 269 SCRA 393, 399, March 12, 1997.

3 164 SCRA 402, 407, August 15, 1988, per Cortes, J.

4 162 SCRA 676, 683-684, June 27, 1988.

5 International Pharmaceuticals, Inc. v. Secretary of Labor 205 SCRA 59, 62, January 9, 1992.

6 Philippine Airlines, Inc. v. Secretary of Labor and Employment, 193 SCRA 223, 226, January 23, 1991.

7 Philthread Workers Union (PTWU) v. Coonfessor, 269 SCRA 393, 400-401, March 12, 1997.

8 197 SCRA 452, 470-471, May 27, 1991, per Narvasa, J.

9 49 SCRA 194, 201-202, January 29, 1973, per Fernando, J.

10 Asians Transmission Corporation v. National Labor Relations Commission, November 22,1989; St. Scholastica's College v. Torres, 210 SCRA 565, 574-578, June 29, 1992; Sarmiento v. Tuico, 162 SCRA 676, 686, June 27, 1988.

11 Metrolab Industries, Inc. v. Roldan Confesor, 254 SCRA 182, 190, February 28, 1996.

12 International Pharmaceuticals, Inc. v. Secretary of Labor, 205 SCRA 59, 65-67, January 9,1992.

13 Philtread Workers Union (PTWU) v. Confesor, supra, p. 399; and Union of Filipino Employees v. Nesle Philippines, Inc., 192 SCRA 336, 409, December 19, 1990.

14 Rollo, pp. 19-20.

15 Export-oriented industries are firms exporting 50 per cent or more of their products worth atleast $1million or those annually exporting at least $10 million worth of their products or those exporting manufactured or processed goods with high value or labor value added as distinguished from traditional exports

16 Reply, p. 5; rollo, p. 148.


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