Case Summary (G.R. No. 87700)
Petitioners, Respondents, and Representative Roles
Petitioners: the Union and named union members who contend that certain workers engaged through Lipercon and DRite are labor‑only contractors and should be regularized and absorbed into SanMig’s workforce and represented by the Union. Respondents: (1) the presiding RTC judge who issued a Writ of Preliminary Injunction and related orders in Civil Case No. 57055 filed by SanMig, and (2) SanMig, which sought injunctive relief and damages to prevent the Union from representing or inducing contractual workers to strike, picket, or otherwise interfere with SanMig operations.
Key Dates and Procedural Milestones
Relevant dates from the record: SanMig entered into contracts with Lipercon and DRite in 1983–1984. Union notice to SanMig dated 20 November 1988; notices of strike filed 12 and 30 January 1989; picketing from 14 February to 2 March 1989; SanMig filed complaint for injunction and damages on 6 March 1989; respondent RTC issued an order granting injunctive relief on 25 March 1989 and the corresponding Writ of Preliminary Injunction was issued 29 March 1989; motion to dismiss before RTC denied 11 April 1989; this Court issued a Temporary Restraining Order 24 April 1989 and later required restoration of the status quo ante declaration of strike on 24 May 1989. Memorandum agreement between the parties recalled laid‑off workers effective 8 May 1989.
Applicable Law and Constitutional Provision
Because the decision stemmed from 1990 events, the Court applied the 1987 Constitution. The decision relies on the Labor Code definitions and jurisdictional provisions, specifically Article 212(1) (definition of labor dispute) and Article 217 (original and exclusive jurisdiction of Labor Arbiters for certain cases prior to amendment by R.A. No. 6715, noting the suit was instituted before that amendment). The Court also recognized constitutional protections for workers: the right to self‑organization, collective bargaining, and peaceful concerted activities, including the right to strike (Section 3, Article XIII, 1987 Constitution).
Factual Background — Contracting and Collective Bargaining Agreement
SanMig contracted merchandising services to independent contractors Lipercon and DRite; those contracts expressly provided that the contractors’ workers would be paid by the contractors and would not be deemed employees or agents of SanMig. The Union is the certified bargaining representative of monthly paid rank‑and‑file employees under a Collective Bargaining Agreement (CBA) effective 1 July 1986–30 June 1989; that CBA expressly excluded temporary, probationary, or contract employees from the bargaining unit. The Union alleged that many contractual workers had worked continuously for SanMig from six months to fifteen years, performing activities necessary to SanMig’s business, and therefore claimed labor‑only contracting and sought regularization and collective representation.
Union Actions and Administrative Proceedings
The Union formally demanded regularization and subsequently filed notices of strike for unfair labor practice, CBA violations, and union busting after receiving no favorable response. The two notices were consolidated and conciliation conferences were held before the NCMB (docket nos. NCMB‑NCR‑NS‑01‑021‑89 and NCMB‑NCR‑NS‑01‑093‑83). Picketing and other concerted activities occurred in February–March 1989, prompting SanMig to seek judicial injunctive relief in civil court.
SanMig’s Civil Complaint and Relief Sought
SanMig’s verified complaint in the RTC sought injunction and damages to restrain the Union from: representing Lipercon/DRite workers for collective bargaining; calling a strike vote to compel SanMig to hire those workers; instigating pickets/demonstrations and other obstructive activities at SanMig plants; intimidating employees and third parties; blocking ingress and egress; and preventing normal operations. SanMig argued there was no employer‑employee relationship between it and the contractual workers and that the Union lacked capacity to represent them under the existing CBA.
Lower Court Proceedings and Issuance of Injunction
The respondent RTC found the complaint sufficient and initially issued a Temporary Restraining Order to maintain the status quo, later holding hearings, receiving testimonial and documentary evidence, and ultimately issuing an order (25 March 1989) granting the injunction and a writ (29 March 1989) after the posting of a P100,000 bond. The RTC’s reasoning was that the absence of an employer‑employee relationship negated the existence of a labor dispute and thus the court had jurisdiction; it also noted that a final determination on employment relationship would require full trial but that irreparable injury to SanMig would result unless acts were restrained.
Central Legal Issue
The dispositive legal question presented to this Court was whether the RTC correctly assumed jurisdiction and properly issued the Writ of Preliminary Injunction, or whether the dispute is a labor dispute that falls within the original and exclusive jurisdiction of labor tribunals and administrative machinery (NCMB/DOLE) rather than the regular courts.
Court’s Legal Analysis — Definition of Labor Dispute
The Court analyzed the statutory definition of "labor dispute" under Article 212(1) of the Labor Code, which includes controversies concerning terms and conditions of employment or representation regardless of whether the parties are in a proximate employer‑employee relation. The Court emphasized that the existence of a labor dispute is not negated by the absence of a proximate employer‑employee relationship if the controversy nevertheless concerns terms and conditions of employment or the association/representation of persons in negotiating or arranging those terms.
Court’s Legal Analysis — Application to the Case
Applying that definition, the Court concluded the controversy fell squarely within the concept of a labor dispute. The Union’s primary objective—regularization of Lipercon/DRite workers and their absorption into SanMig’s workforce—necessarily implicated terms, tenure, and conditions of employment and the right to representation. The Union also sought to represent those workers for collective bargaining purposes, an issue expressly within labor law. SanMig’s counterclaims and request for injunctive relief were inextricably linked to these labor issues; thus, the Court reasoned, resolution requires application of labor laws and the administrative procedures and forums established for labor disputes.
Jurisdictional Conclusion and Role of Article 217
Given that the suit below was filed on 6 March 1989, the Court applied Article 217 as it stood prior to amendment by R.A. No. 6715 (21 March 1989), which vested original and exclusive jurisdiction over specified labor matters, including unfair labor practice cases and questions involving the legality of strikes and lockouts, in Labor Arbiters and the labor administrative machinery. The Court found that allowing the RTC action to proceed would create impermissible split jurisdiction and undermine the specialized, expeditious administrative remedy intended by the Labor Code.
Distinguishing Precedent (Layno v. de la Cruz)
The Court rejected SanMig’s reliance on the Layno v. de la Cruz precedent, explaini
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Procedural Posture and Reliefs Sought in the Special Civil Action
- Petitioners (San Miguel Corporation Employees Union-PTGWO and named individuals) filed a special civil action for Certiorari and Prohibition contesting respondent Judge Jesus G. Bersamira’s issuance of a Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055, entitled San Miguel Corporation vs. SMCEU-PTGWO, et al.
- Petitioners alleged the Writ was issued without or in excess of jurisdiction and with grave abuse of discretion because a labor dispute was involved.
- Private respondent San Miguel Corporation (SanMig) defended the issuance of the Writ, contending absence of any employer-employee relationship between SanMig and the contractual workers employed by Lipercon Services, Inc. (Lipercon) and DRite Service Enterprises (DRite), and that the Union lacked personality to represent those contractual workers for collective bargaining purposes.
- The Solicitor General agreed with SanMig’s position defending the Injunction.
- Reliefs prayed for by SanMig in the court below (Civil Case No. 57055) included, by way of verified Complaint for Injunction and Damages, an order enjoining the Union from a series of acts (detailed below) allegedly undertaken to compel SanMig to hire contractual workers.
Factual Background — Contracts, Workers, Union Membership and CBA
- In 1983 and 1984, SanMig entered into contracts for merchandising services with independent contractors Lipercon and DRite; these companies were licensed by the Department of Labor and Employment (DOLE).
- The contracts were entered into by SanMig to maintain competitiveness, efficiency, business expansion, and operational diversity.
- The service contracts expressly provided that the contractors would pay their own workers and that those workers were not to be deemed employees or agents of SanMig; no employer-employee relationship was to exist between SanMig and the contractors’ workers.
- The San Miguel Corporation Employees Union-PTGWO (the Union) was the duly authorized representative of SanMig’s monthly-paid rank-and-file employees under a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989.
- Section 1 of the CBA specifically excluded temporary, probationary, or contract employees and workers from the bargaining unit and from the scope of the Agreement.
- By letter dated 20 November 1988, the Union advised SanMig that some Lipercon and DRite workers had signed up for union membership and demanded the regularization of their employment with SanMig, alleging continuous service with SanMig ranging from six months to fifteen years and asserting that their work was neither casual nor seasonal.
- The Union contended that the alleged situation constituted “labor-only contracting” and demanded regularization and representation for purposes of collective bargaining.
Labor-Related Proceedings and Industrial Actions Prior to Civil Suit
- On 12 January 1989, the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting, and filed a second notice of strike on 30 January 1989 for unfair labor practice.
- Conciliatory meetings were held following both notices; the two notices were consolidated and several conciliation conferences were conducted before the National Conciliation and Mediation Board (NCMB) of DOLE.
- Series of pickets by Lipercon and DRite workers occurred beginning 14 February 1989 until 2 March 1989 at various SanMig plants and offices.
Civil Case No. 57055 — SanMig’s Complaint and the Injunction Sought
- On 6 March 1989, SanMig filed a verified Complaint for Injunction and Damages in respondent Court seeking to enjoin the Union from:
- representing or acting for and on behalf of Lipercon and/or DRite employees for purposes of collective bargaining;
- calling and holding a strike vote to compel SanMig to hire Lipercon and/or DRite employees;
- inciting, instigating, or inducing Lipercon and/or DRite employees to demonstrate or picket at SanMig plants and offices within the bargaining unit;
- staging a strike to compel SanMig to hire Lipercon and/or DRite employees;
- using Lipercon and/or DRite employees to man strike areas, picket lines, or barricades at SanMig premises within the bargaining unit;
- intimidating, threatening bodily harm, or molesting other employees or contract workers of SanMig or persons transacting business with SanMig at its workplaces to compel SanMig to hire Lipercon and/or DRite employees;
- blocking, preventing, impeding free ingress and egress to and from SanMig workplaces within the bargaining unit to compel SanMig to hire those contractual employees; and
- preventing or disrupting the peaceful and normal operation of SanMig at its workplaces within the bargaining unit.
- Respondent Court initially found SanMig’s Complaint sufficient in form and substance and issued a Temporary Restraining Order (TRO) to maintain the status quo and scheduled the application for Injunction for hearing.
- After hearings and the presentation of testimonial and documentary evidence, respondent Court issued an Order on 25 March 1989 granting the application for injunctive relief and enjoining the Union from the acts complained of.
- On 29 March 1989, the respondent Court issued the Writ of Preliminary Injunction after SanMig posted the required bond of P100,000.00.
Union’s Motion to Dismiss and Trial-Court Rulings
- The Union filed a Motion to Dismiss SanMig’s Complaint on the ground of lack of jurisdiction on 13 March 1989; SanMig opposed the motion.
- The Motion to Dismiss was denied by respondent Judge in an Order dated 11 April 1989.
- Respondent Court, in issuing the Injunction, stated that the absence of an employer-employee relationship negated the existence of a labor dispute and that the court had jurisdiction over the grievance.
- The trial court noted that, based on the evidence presented, the contractors had contracts with SanMig and the application and contracts for employment of the defendant witnesses were with Lipercon or DRite, concluding there appeared to be no employer-employee relationship between SanMig and the contractual workers — though the court reserved final determination pending full trial.
- The trial court found that, if the acts complained of were not restrained, SanMig would suffer irreparable damages; the court also concluded that issuance of a writ would not necessarily expose the defendants to irreparable damage and that SanMig had established its right to the relief de