Title
Interphil Laboratories Employees Union vs. Interphil Laboratories, Inc.
Case
G.R. No. 142824
Decision Date
Dec 19, 2001
Union-led overtime boycott and work slowdown deemed illegal strike; Supreme Court upheld jurisdiction, rejected condonation claim, and affirmed unfair labor practice ruling.
labor dispute
illegal strike
jurisdiction
A

Case Summary (G.R. No. 142824)

Factual Background

The union was the certified sole and exclusive bargaining agent for rank-and-file employees of Interphil Laboratories, a pharmaceutical manufacturer. The CBA provided for an eight-hour normal workday with stated regular company hours from 7:30 a.m. to 4:30 p.m., but expressly allowed the company to change prevailing work time at its discretion when necessary for operations and required employees to observe company rules controlling working hours. Since 1988, the company operated a continuous 24-hour schedule consisting of two 12-hour shifts (6:00 a.m.–6:00 p.m. and 6:00 p.m.–6:00 a.m.), which employees and union officers had followed in practice without formal complaint.

Events Precipitating the Dispute

In early 1993 union officers repeatedly inquired about the company’s willingness to make the new CBA effective 1 August 1993 with a two-year duration. Management (Salazar) repeatedly declined to commit pending formal negotiations. On 16 April 1993, immediately after a meeting in which management declined to agree to the union’s requested CBA terms, rank-and-file employees ceased rendering overtime and left work early, effectively stopping work at 2:00 p.m. and 2:00 a.m. during the two shifts, failing to secure materials and causing production disruption. The union also organized a work slowdown during regular working hours. The overtime boycott and slowdown continued intermittently through March 1994.

Procedural History — Administrative and Judicial Steps

Interphil filed a petition with the NLRC on 3 September 1993 seeking a declaration that the overtime boycott and slowdown were an illegal strike; the case was assigned to Labor Arbiter Caday. The company also sought preventive mediation with the NCMB (filed 22 October 1993). The Office of the Secretary of Labor assumed jurisdiction over the labor dispute on 14 February 1994 after the union filed a notice of strike (24 January 1994) and staged a strike (12 February 1994). The Secretary directed the company to reinstate striking workers and pay accrued benefits (order dated 2 March 1994), and subsumed related cases under the assumption order. Labor Arbiter Caday continued hearings and submitted his report and recommendation on 5 September 1995. Secretary Quisumbing approved and adopted the Labor Arbiter’s report in an order dated 13 August 1997. The union sought relief from the Court of Appeals, which dismissed the petition on 29 December 1999. The union then petitioned this Court.

Issues Presented

(1) Whether the Secretary of Labor and Employment had jurisdiction to assume and decide the dispute notwithstanding earlier filing before the labor arbiter; (2) Whether the Labor Arbiter and the appellate court improperly disregarded the parol evidence rule by considering evidence that the working schedule was 6:00 a.m.–6:00 p.m. and 6:00 p.m.–6:00 a.m. despite the CBA provision stating regular hours as 7:30 a.m.–4:30 p.m.; (3) Whether the employer’s granting of separation packages to union officers during pendency amounted to condonation of alleged illegal acts.

Jurisdictional Analysis and Holding

The Court upheld the Secretary’s jurisdiction. The decision reasons that although Interphil’s petition to declare the concerted activities illegal was filed with the labor arbiter before the Secretary’s assumption order, the issues were intertwined with the labor dispute assumed by the Secretary. The union itself sought consolidation with the Secretary’s proceedings and later participated in hearings conducted under directives that the labor arbiter submit reports to the Secretary. The appellate court’s conclusion that the union’s continued participation effectively affirmed the Secretary’s jurisdiction was sustained. The decision relied on the construction of Article 263(g) and Article 217 of the Labor Code as previously interpreted in International Pharmaceutical, holding that the Secretary’s authority to assume jurisdiction over a labor dispute includes the power to decide all related controversies, even those ordinarily within a labor arbiter’s exclusive jurisdiction, to avoid conflicting rulings and to give effect to the statute’s objectives.

Admissibility of Evidence and Parol Evidence Rule

The Court rejected the union’s contention that the parol evidence rule barred consideration of evidence contradicting the written CBA schedule. It explained that procedural and evidentiary rules applicable in courts are not applied rigidly in labor cases before the NLRC, and labor arbiters may accept and evaluate evidence even if it differs from written contract terms. The CBA itself contained a provision (Section 1, Regular Working Hours) that preserved the company’s right to change prevailing work time at its discretion when necessary for operations and required employees to observe company rules on working hours, thus permitting a factual inquiry into actual working practices.

Factual Findings on Work Schedule and Waiver

Labor Arbiter Caday found, supported by evidence, that a two-shift 24-hour schedule had been in operation since 1988 and that employees acquiesced to and followed that schedule without complaint. The record contained testimony and documents showing union awareness of and participation in the overtime regimen (including overtime permits and internal union communications), and admissions by union witnesses acknowledging the 6:00–6:00 schedule in practice. Given that employees had accepted the continuous shift practice in fact, the arbiter and courts treated the earlier CBA hours as effectively modified by practice, and the union could not justify the overtime boycott on the basis of the eight-hour provision.

Determination that Concerted Activities Were Illegal Strike

The Court affirmed the finding that the overtime boycott and concerted work slowdown (from 16 April 1993 up to 7 March 1994) constituted an illegal strike. The factual record showed that the union organized and instructed members not to render overtime and to slow down work as leverage to compel management to accede to demanded CBA terms. The activities breached the no-strike clause in the existing CBA, were characterized as a strike on an installment plan (slowdown), and caused financial losses and damage to the company’s business reputation. The decision relied on precedent recognizing slowdowns as inherently illicit concerted a

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