Case Summary (G.R. No. 186965)
Background of the Collective Bargaining Agreement
On May 6, 2005, the Petitioner and the Respondent entered into a collective bargaining agreement (CBA) covering the period from January 1, 2005, to December 31, 2009. The Petitioner operates multiple departments, including a warehouse section divided into four areas where regular rank-and-file employees perform various clerical and material handling functions. Since 1998, the Petitioner has contracted certain warehouse services out to three independent service providers, namely, Diversified Cargo Services, Inc., Airfreight 2100, and Kuehne & Nagel, Inc. This arrangement led to grievances from the union, specifically regarding whether the functions performed by employees of these forwarders overlapped with those of regular rank-and-file employees.
Dispute and Initial Arbitration
The union demanded that the forwarders’ employees be integrated into the Petitioner’s regular workforce, asserting that they perform similar functions to those of regular employees. In contrast, the Petitioner contended that this outsourcing of functions falls within its management prerogative. Unable to resolve the issue through internal grievance processes, the parties sought voluntary arbitration, choosing Atty. Roberto A. Padilla as their arbitrator. The key issues to be arbitrated were the legitimacy of the Petitioner’s outsourcing practices and whether the forwarders' employees performed identical functions to those of the bargaining unit employees.
Findings of the Voluntary Arbitrator
The voluntary arbitrator ruled on May 1, 2007, that the Petitioner could validly outsource its forwarding services but found that the forwarders’ employees were encroaching on the functions of the regular rank-and-file employees. The arbitrator determined that these forwarders' employees were effectively performing the roles traditionally held by company employees, mandating that the forwarders' personnel be classified as employees of the Petitioner entitled to the same rights and privileges.
Court of Appeals Decision
The Court of Appeals, in a decision issued on October 28, 2008, affirmed the voluntary arbitrator’s ruling, establishing three grounds: (1) the decisions made by voluntary arbitrators are generally final and conclusive; (2) agreements for forwarding should not extend operations beyond their intended scope; and (3) the arbitrator retained the authority to resolve consequential matters pertinent to the submitted issues.
Petitioner's Appeals and Arguments
The Petitioner raised issues regarding the finality of the voluntary arbitrator's decisions and questioned the jurisdiction exercised in classifying the forwarders' employees as regular company personnel. The Petitioner contended that the functions performed by forwarders diverged significantly from those of regular employees and that it did not exercise control over the forwarders' employees, thus maintaining that the union lacked authority to represent them in arbitration.
Union's Position
In response, the Respondent maintained that management prerogatives are not absolute and must align with legal and contractual frameworks. The union argued for the necessity to recognize the forwarders' employees as regular employees, citing consistent performance of tasks overlapping with those of regular employees.
Court's Assessment of Jurisdictional Issues
The Supreme Court ruled in favor of the Petitioner, asserting that the classifications imposed on the forwarders' employees by the voluntary arbitrator exceeded the scope of issues presented for arbitration, which did not include entities that were not parties to the case. The court emphasized that while the initial arbitration contained legitimate inquiries, the adjudication could not impose determinations on non-p
...continue readingCase Syllabus (G.R. No. 186965)
Case Overview
- Petitioner: Temic Automotive Philippines, Inc.
- Respondent: Temic Automotive Philippines, Inc. Employees Union-FFW
- G.R. No.: 186965
- Date of Decision: December 23, 2009
- Court: Supreme Court of the Philippines
Background of the Case
- Temic Automotive Philippines, Inc. manufactures electronic brake systems and comfort body electronics for vehicles.
- The Employees Union-FFW is the exclusive bargaining agent for the rank-and-file employees of Temic.
- A collective bargaining agreement (CBA) was executed on May 6, 2005, covering the period from January 1, 2005, to December 31, 2009.
- The warehouse department, where union members work, consists of two warehouses divided into four sections, where clerks and material handlers perform interrelated functions.
Nature of the Dispute
- Since 1998, Temic has contracted out certain warehouse functions to independent service providers (Diversified Cargo Services, Inc.; Airfreight 2100; Kuehne & Nagel, Inc.).
- The union contested whether the functions performed by the forwarders’ employees were also performed by regular employees within the bargaining unit.
- The union demanded the absorption of forwarders’ employees into the company’s regular workforce.
Management’s Position
- Temic argued that contracting out was a valid exercise of its management prerogative.
- It maintained that the functions of the forwarders’ employees were distinct from those of regular company employees.
- The CBA was cited to support the assertion that management had the exclusive right to hire and contract out work.
Arbitration Proceedings
- The dispute escalated to voluntary arbitration, with Atty. Roberto A. Padilla as the arbitrator.
- The key issues submitted for arbitration were:
- Validity of contracting o