G.R. No. 169745 - Republic vs. Namboku Peak, Inc.

Case Digest (G.R. No. 169745)
Expanded Legal Reasoning Model

Facts:

Namboku Peak, Inc. (G.R. No. 169745)

Background and Nature of Business

Namboku Peak, Inc. is a domestic corporation engaged in providing manpower services, primarily to airline companies.

Petition for Certification Election

On April 28, 2003, the Philippine Aircraft Loaders and Cargo Employees Association-Solidarity of Unions in the Philippines for Empowerment and Reforms (PALCEA-SUPER) filed a petition before the Med-Arbiter.
The petition sought a direct certification election to determine the exclusive bargaining representative for the rank-and-file employees of Namboku assigned at the Cargo and Loading Station of Philippine Airlines (PAL) at Ninoy Aquino International Airport.
PALCEA-SUPER alleged that:

It is a local chapter affiliate of Solidarity of Unions in the Philippines for Empowerment and Reforms.
Out of 155 regular rank-and-file employees of Namboku, 122 (or 78%) are its members.
Namboku is an unorganized establishment.

Namboku’s Opposition and Contentions

Namboku opposed the petition on the ground that the members of PALCEA-SUPER are project employees, not regular rank-and-file employees.

The company emphasized that individual Project Employee Contracts indicated a fixed period nature of employment, tied to a specific Services Agreement with PAL.

PALCEA-SUPER was held to have misrepresented the employment status of its members.

Med-Arbiter’s Order and Subsequent Developments

On June 17, 2003, the Med-Arbiter issued an order determining that, despite the fixed period of engagement, the employees were not informed of a predetermined duration or completion for their respective tasks, thereby classifying them as regular employees.
The order granted the petition and ordered the conduct of a certification election with the following directives:

The election was limited to the regular rank-and-file employees of Namboku.
The employer was directed to submit within ten (10) days a certified list of employees or, where necessary, payrolls covering the last three months.

Namboku appealed the Med-Arbiter’s decision to the Secretary of Labor, asserting:

The employees were project employees.
Combining project and regular employees would disrupt the coherence of the bargaining unit due to their differing nature.

On July 29, 2003, a summons for a pre-election conference was issued, stating that the order for certification election in an unorganized establishment was not appealable.
Namboku further filed motions (including a Manifestation and Motion, and a Supplemental Motion) to suspend the certification election, contesting the constitutionality of Section 17, Rule VIII of Department Order No. 40-03 on the ground that it infringed upon the right to appeal under Article 259 of the Labor Code.
In a letter-resolution dated October 22, 2003, Secretary of Labor and Employment (DOLE) denied Namboku’s appeal and affirmed the Med-Arbiter’s Order.

Phil-Japan Industrial Manufacturing Corporation (G.R. No. 170091)

Background and Nature of Business

Phil-Japan is a domestic corporation engaged in manufacturing mufflers, chassis, and other car accessories for both local and international markets.

Petition for Certification Election

On June 6, 2003, the Phil-Japan Workers Union-Solidarity of Unions in the Philippines for Empowerment and Reforms (PJWU-SUPER) filed a petition before the Med-Arbiter.
The petition sought to determine the sole and exclusive bargaining representative for the rank-and-file employees of Phil-Japan.
PJWU-SUPER asserted that:

It is a legitimate labor organization.
Out of 100 rank-and-file employees, 69 (or 69%) are its members.
Phil-Japan is an unorganized establishment.
No certification election had been conducted during the preceding 12 months.

Phil-Japan’s Opposition and Contentions

Phil-Japan contended that:

The alleged members of PJWU-SUPER were not employees of Phil-Japan.
Many of the listed members had either resigned, had expired contracts, or were employed by its job contractors (CMC Management and PEPC Management Services).

Consequently, Phil-Japan prayed either for the dismissal of the petition or for the suspension of proceedings pending resolution of the employer-employee relationship issue.

Med-Arbiter’s Decision and Subsequent Actions

On August 25, 2003, the Med-Arbiter rendered a decision ordering the conduct of a certification election.

The decision noted that while there was insufficient documentary evidence to resolve the employer-employee relationship, Section 15, Rule VIII of the Rules Implementing Book V of the Labor Code did not permit suspension of the election.
The votes of employees whose employment status was ambiguous were to be segregated, with later determination of their materiality.
The employer was directed to furnish a certified list or applicable payrolls within ten (10) days for the last three months.

Phil-Japan appealed the Med-Arbiter’s decision to the Office of the Secretary of Labor, arguing:

The Med-Arbiter gravely abused her discretion by not resolving the existence of an employer-employee relationship.
The appeal contention included the assertion that Section 17, Rule VIII of Department Order No. 40-03, which restricted the right to appeal, conflicted with Article 259 of the Labor Code.

A Hearing Officer, during a hearing on October 7, 2003, informed Phil-Japan that the appeal would not be acted upon under Section 17, Rule VIII, paving the way for the certification election.
Phil-Japan subsequently filed a Petition for Certiorari before the Court of Appeals.

Procedural History and Consolidation of Issues

Court of Appeals Decisions

In CA-G.R. SP No. 80603 (March 18, 2005), the Court of Appeals:

Reversed the Secretary of Labor’s October 22, 2003 letter-resolution.
Held that the members of PALCEA-SUPER were project employees and not similarly situated with regular rank-and-file employees.
Declared Section 17, Rule VIII of Department Order No. 40-03 null and void for conflicting with Article 259 of the Labor Code.
Addressed and denied motions for reconsideration or expungement filed by the parties.

In CA-G.R. SP No. 80106 (January 19, 2005), the Court of Appeals:

Reversed the Med-Arbiter’s decision regarding the certification election.
Concluded that, based on the evidence, 67 out of 69 alleged members of PJWU-SUPER were not employees of Phil-Japan.
Similarly held that Section 17, Rule VIII of Department Order No. 40-03 was violative of Article 259 of the Labor Code.
Denied subsequent motions for reconsideration and reaffirmed its ruling on September 12, 2005.

Consolidation and Submission to the Supreme Court

Two separate petitions for review on certiorari were filed:

Petition in G.R. No. 169745 challenging the CA decision in the Namboku case.
Petition in G.R. No. 170091 challenging the CA decision in the Phil-Japan case.

Both petitions principally sought to vindicate the validity of Section 17, Rule VIII of Department Order No. 40-03 and assert its harmony with Article 259 of the Labor Code.
The Secretary of Labor, initially a nominal party, later assumed an active defensive role in asserting the constitutionality of the provision in both cases.

Issues:

Constitutionality of Section 17, Rule VIII of Department Order No. 40-03

Whether Section 17, Rule VIII, which prohibits the filing of an appeal from an order granting the conduct of a certification election in an unorganized establishment, is unconstitutional.
Whether this provision runs counter to Article 259 of the Labor Code by unduly restricting the right to appeal the Med-Arbiter’s decisions.

Determination of the Appropriate Bargaining Unit

Whether project employees, whose employment status and contractual nature differ from regular rank-and-file employees, may be included with regular employees in a single bargaining unit for certification election purposes.

Locus Standi and Real Party-in-Interest

Whether the Secretary of Labor has the legal standing or necessary personality to file a petition for review on certiorari concerning decisions initially rendered by the Med-Arbiter and subsequently by the Court of Appeals.
Whether the Secretary of Labor, as a quasi-judicial officer, should have actively participated or defended the validity of Section 17, Rule VIII given her nominal status in the original proceedings.

Ruling:

(Subscriber-Only)

Ratio:

(Subscriber-Only)

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Case Digest (G.R. No. 169745)
Expanded Legal Reasoning Model