G.R. No. 109002 - De La Salle University vs. De La Salle University Employees Association

Case Summary (G.R. No. 109002)

Procedural Background and Applicable Law

Two consolidated petitions for certiorari were filed with the Supreme Court challenging the voluntary arbitrator’s decision dated January 19, 1993, on grounds of grave abuse of discretion amounting to lack or excess of jurisdiction. The 1987 Philippine Constitution serves as the legal framework guiding the Court’s review of this labor dispute.

Facts and the Arbitration Proceeding

The Union initiated negotiations for a new collective bargaining agreement during the “freedom period,” or 60 days before the expiration of the 1986–1989 CBA. The negotiation was unsuccessful, leading the Union to file a Notice of Strike with the National Conciliation and Mediation Board. Five of eleven issues raised in the strike notice were resolved, resulting in a partial CBA. The remaining six unresolved issues, identified in a Submission Agreement dated March 18, 1991, were referred to voluntary arbitration, and Buenaventura Magsalin was appointed arbitrator.

Issues Resolved by the Voluntary Arbitrator

The voluntary arbitrator addressed several key issues:

Scope of the Bargaining Unit:
- Computer Operators assigned to the Computer Services Center (CSC) and Discipline Officers were included in the bargaining unit after finding their duties largely clerical or non-confidential and not involving management policy decisions.
- Employees of the College of St. Benilde (CSB) were excluded from the unit due to CSB’s separate juridical personality from the University.
Union Shop Clause:
- Inclusion of a union shop clause was mandated alongside the existing maintenance of membership clause, as it was considered a valid form of union security consistent with constitutional policies to promote unionism.
Lay-off and Transfer Methods:
- The employer’s prerogative to select employees based on valid grounds such as performance and qualifications was upheld, rejecting the Union’s demand to apply the “last-in-first-out” principle.
Salary Increases:
- The University could not be compelled to grant a second round of salary increases for the school years 1991–92 and 1992–93 charged against incremental proceeds due to alleged financial constraints.
Union President’s Workload and Leave Benefits:
- Demands to reduce the union president’s workload, grant special leave benefits, and indefinite union leave with pay were denied for lack of justification.
Duration of Collective Bargaining Agreement:
- The validity of the duration clause in the original CBA was respected despite reopening the issue through arbitration.
Economic Provisions:
- Economic provisions were subject to reopening only after the third year, in compliance with the Labor Code.

Contentions and Arguments of the Parties

University:
Argued the computer operators and discipline officers should be excluded as confidential employees, stressed the employees of CSB have separate personality, contended a union shop clause violates freedom of association, upheld management prerogative over layoffs and transfers, denied feasibility of wage increases based on the proposed budget, and rejected the Union’s leave benefits demands.
Union:
Contended the computer operators and discipline officers should be included in the bargaining unit; the veil of corporate fiction should be pierced to include CSB employees as part of the University; supported the union shop clause; advocated for the “last-in-first-out” layoff method based on social justice; demanded wage increases based on actual finances rather than budget proposals; and requested workload reduction and improved leave benefits for union leadership.
Solicitor General (on behalf of the arbitrator):
Agreed with the arbitrator on all points except the exclusion of CSB employees, asserting that CSB is an integral part of the University and its employees should belong to the bargaining unit.

Supreme Court's Analysis and Findings

Inclusion of Computer Operators and Discipline Officers:
The Court held that previous exclusion in the 1986 CBA did not preclude renegotiation and inclusion of these employees in the bargaining unit. It found, based on substantial evidence, that their duties are mainly clerical and not confidential, and that they do not participate in management decisions. Therefore, they are properly included as rank-and-file employees.
Status of Employees of College of St. Benilde:
The Court affirmed the arbitrator’s view that CSB and the University are separate juridical entities and refused to pierce the corporate veil, hence excluding CSB employees from the University’s bargaining unit.
Union Shop Clause:
The Court upheld the arbitrator’s inclusion of a union shop clause in the CBA, reaffirming Article 248(e) of the Labor Code, which allows union security agreements while respecting constitutional policies promoting unionism. The University’s constitutional arguments were rejected as misplaced.
Management Prerogative in Lay-Offs and Transfers:
The Court agreed with the arbitrator that the employer’s management prerogative allows selection based on valid and equitable criteria and that this right is recognized and protected by law. Thus, the rejection of the “last-in-first-out” method was proper.
Salary Increases and Financial Proofs:
The Court found grave abuse of discretion in basing the refusal to grant salary increases on the University’s proposed budget rather than on audited financial statements. It emphasized that audited financial statements are the proper standard to determine financial capacity, given the susceptibility of budgets to manipulation.
Union President’s Workload and Leave Benefits:
The Court agreed with the arbitrator that there was no sufficient basis to reduce the workload of the union president or to grant special or indefinite union leave with pay.
Role of the Multi-sectoral Committee in Salary Determination:
The Court found no grave abuse of discretion in recognizing the multi-sectoral committee as the body supervising salary increases and fringe benefits. However, it stressed that decisions must be grounded on audited financial data.
Sources of Salary Increases and Fringe Benefits:
The Court did not make a conclusive ruling on whether the 70% share in incremental tuition proceeds is the exclusive source of employee compensation adjustments, deeming the matter unnecessary in light of the remand for financial determination.

Decision and Orders

The Supreme Court partially granted the consolidated petitions. The arbitrator’s decision was affirmed in all respects except for the issue on salary increases for the 1991–92 and 1992–93 school years. This issue was remanded for resolution based on externally audited financial statements submitted by the Union, directing the arbitrator to make a definitive ruling within one month from the finality of the Court’s decision.

Legal Principles Establ

Case Syllabus (G.R. No. 109002)

Background and Procedural History

Two consolidated petitions for certiorari were filed before the Supreme Court (G.R. Nos. 109002 and 110072) challenging the January 19, 1993 decision of voluntary arbitrator Buenaventura Magsalin.
The petitions assailed the voluntary arbitrator's ruling for alleged grave abuse of discretion amounting to lack or excess of jurisdiction.
The dispute arose from negotiations following the expiration of a collective bargaining agreement (CBA) between De La Salle University ("University") and Dela Salle University Employees Association - National Federation of Teachers and Employees Union ("Union" or DLSUEA-NAFTEU).
Initial CBA covered December 23, 1986 to December 22, 1989, and during the freedom period (60 days before expiration), the Union sought to negotiate a new CBA but negotiations failed, leading to a Notice of Strike.
After conciliations, only some issues were resolved; the remaining six unresolved issues were submitted for voluntary arbitration with Buenaventura Magsalin as arbitrator.

Facts and Issues Submitted for Arbitration

The six unresolved issues identified were:
1. Scope of the bargaining unit
2. Inclusion of a union shop clause in addition to maintenance of membership clause
3. Use of the "last-in-first-out" method for retrenchment and transfer
4. Salary increases for the second and third years of the CBA
5. Reduction of the union president's workload, special leave benefits, and indefinite union leave with pay
6. Duration of the CBA
The voluntary arbitrator issued a decision on January 19, 1993 addressing each issue.

Decision of the Voluntary Arbitrator

Scope of Bargaining Unit:
- Computer operators at the Computer Services Center (CSC) are included as rank-and-file employees as their duties were found clerical and non-confidential.
- Discipline officers also considered rank-and-file based on the job nature.
- Employees of the College of St. Benilde (CSB) were excluded from the bargaining unit because CSB is a separate juridical entity distinct from the University.
Union Shop Clause:
- The arbitrator ruled inclusion of a union shop clause was valid and not a restriction of employees’ freedom of association but a valid form of union security consistent with constitutional policies promoting unionism.
"Last-in-first-out" Layoff Method:
- Management prerogative to select and terminate employees was recognized, allowing adoption of equitable criteria (e.g., performance, competence). The Union’s demand for last-in-first-out layoff was denied.
Salary Increases:
- The arbitrator held the University’s financial condition did not allow granting a second round of wage increases for school years 1991-92 and 1992-93 charged to incremental proceeds, rejecting Union’s demand.
Union President’s Workload and Leave Benefits:
- Requests for reductions in workload, special leave, and indefinite union leave were denied. No sufficient justification was found, and the Union and faculty association were not similarly situated.
Duration of Agreement:
- The arbitrator respected the original CBA clause on duration despite the reopening of the issue. Economic provisions were to be reopened after three years following the Labor Code.
Motions for reconsideration filed by both parties were not entertained by the arbitrator in accordance with rules governing voluntary arbitration.

Proceedings Before the Supreme Court

Both parties filed petitions for certiorari for review of the arbitrator's decision alleging grave abuse of discretion.
The petitions were consolidated and transferred to the Second Division of the Supreme Court.
The Solicitor General, representing the voluntary arbitrator, filed a consolidated comment generally supporting the arbitrator's decision except on the inclusion of CSB employees in the bargaining unit.
The Solicitor General argued that CSB is an integral part of the University, and its employees should be included in the bargaining unit, based on evidence of coordination and control between CSB and DLSU.

Issues Raised Before the Supreme Court

The University’s grounds