G.R. No. 91025 - Union of Filipro Employees vs. National Labor Relations Commission

Case Summary (G.R. No. 91025)

Factual Background: Expired CBAs, Representation Issues, and the Company’s UFE Officers’ Dismissal

The records showed that, prior to the filing of the Notice of Strike, or as of June 30, 1987, the CBAs in four (4) Nestle units—Alabang/Cabuyao, Makati, Cagayan de Oro, and Cebu/Davao—had all expired. Under the expired CBAs, UFE represented the Alabang/Cabuyao and Makati units, while WATU represented the Cagayan de Oro unit and TUPAS represented the Cebu/Davao unit.

Before the expiration of the CBAs for Makati and Alabang/Cabuyao, UFE submitted CBA proposals to the company. The company expressed readiness to negotiate a new CBA for the Makati and Alabang/Cabuyao units, but reserved negotiation for the other units, citing the unresolved representation issue. Subsequently, UFE was certified as sole and exclusive bargaining representative of the Cagayan de Oro unit on June 10, 1987, and of the Cebu/Davao unit on July 28, 1987. Despite these developments, the company terminated the employment of UFE officers headed by Mr. Manuel Sarmiento and the members of the negotiating panel on September 14, 1987, after finding that they had instigated and knowingly participated in a strike staged on September 11, 1987 affecting the Makati, Alabang, Cabuyao, and Cagayan de Oro sites, without a filed notice of strike and without a strike vote obtained for that purpose. The union officers later filed a complaint for illegal dismissal on September 21, 1987, which the Labor Arbiter upheld on January 12, 1988, and which the NLRC en banc affirmed on November 2, 1988.

Developments During Bargaining: Competing Claims and the Department of Labor’s Caution

While the union sought recognition and bargaining authority through its elected officers, the company argued that the dismissal of UFE officers, including the negotiating panel members, caused the panel to cease to exist and left those members without legal personality or authority to represent the union. Separately, the company sought guidance from the Department of Labor on how it should treat letters from several splinter groups claiming authority to negotiate for UFE.

The records indicated that factions in the Nestle plant in Cabuyao and in the Makati office asserted authority from general membership. The Department of Labor’s BLR Director Pura Ferrer-Calleja, in a letter dated August 20, 1988, cautioned management that any direct dealing with factions claiming majority authority at that stage would be unwise because it could “only fan the fire.” In the meantime, the company concluded separate CBAs with the general membership at Cebu/Davao and Cagayan de Oro on March 20, 1988 and August 5, 1988, respectively, and separate officer elections were allegedly conducted in those units.

The union challenged these agreements by filing a ULP case before the NLRC-NCR Arbitration Branch on November 16, 1988. Efforts at amicable resolution through the NCMB failed due to irreconcilable conflicts on who should represent and negotiate for workers. On October 18, 1988, petitioner moved the Secretary of Labor to assume jurisdiction over the bargaining deadlock. On October 28, 1988, the Secretary certified the “sole issue of deadlock in CBA negotiations” affecting the Makati, Alabang, and Cabuyao units to the NLRC for compulsory arbitration and directed resolution within twenty (20) days from submission.

NLRC Proceedings and the Assailed Resolutions

On June 5, 1989, the NLRC Second Division promulgated a resolution that granted wage increases and other benefits, ruled on non-economic issues, and absolved the private respondent of the ULP charge. The dispositive portion ordered that the parties execute and implement, through their duly authorized representatives, a CBA for a duration of five (5) years from the promulgation of the resolution.

Petitioner moved for reconsideration, which the NLRC denied on August 8, 1989. Petitioner then filed the present certiorari, limiting the issues in the proceedings to six (6), including: whether the NLRC Second Division acted without jurisdiction in rendering the resolution rather than the NLRC en banc; whether the CBA covered only the bargaining units at Makati, Alabang, and Cabuyao; whether the NLRC acted with grave abuse of discretion in making the CBA effective only upon promulgation; whether the NLRC erred in denying a contract signing bonus and disregarding alleged long-standing company practices; whether the NLRC erred in denying a modified union shop security clause; and whether the NLRC erred in absolving the company from the ULP charge despite alleged substantial incriminatory evidence.

The Parties’ Contentions

Petitioner contended, first, that the NLRC should have decided a certified dispute en banc, and that the Second Division lacked jurisdiction under the rules existing at the time the dispute was certified. It argued, second, that the NLRC gravely erred by limiting the CBA to bargaining units in Makati, Alabang, and Cabuyao, and by excluding Cebu/Davao and Cagayan de Oro, which it claimed belonged to the same union nationwide. Petitioner further attacked the effectivity of the CBA, asserting that it should have had retroactive effect to avoid deprivation of monetary benefits that would otherwise accrue during the interregnum. It also sought inclusion of a contract signing bonus and a modified union shop clause, and alleged that the NLRC disregarded established practices and applicable jurisprudence. Lastly, petitioner argued that by absolving Nestle from the ULP charge, the NLRC disregarded substantial incriminatory evidence and improperly allowed procedural splitting and multiplicity of suits.

In its view, as reflected in the NLRC’s treatment of the case, the compulsory arbitration had a limited and specific purpose: to resolve the certified deadlock promptly and formulate the terms and conditions of the CBA within the scope of the Secretary of Labor’s certification.

Legal Basis and Reasoning on Jurisdiction: Effect of R.A. 6715 and Administrative Order No. 36

The Court held that the jurisdictional challenge failed. The Court explained that at the time the case was certified on October 28, 1988, the then existing rules required the NLRC en banc to resolve a certified dispute. However, the Court emphasized that Republic Act No. 6715 took effect during the pendency of the case and altered the NLRC’s structure and adjudicatory scheme. Under the amended Art. 213 of the Labor Code as stated in the text of R.A. 6715, the NLRC was to exercise adjudicatory powers through its divisions, and the Commission would sit en banc only for limited purposes such as rule-making and policy formulation affecting administration and operations.

The Court relied on Administrative Order No. 36 (Series of 1989) issued by the Secretary of Labor on March 21, 1989, which provided that effective on the date of R.A. 6715’s effectivity, the NLRC would cease holding en banc sessions for adjudicating cases and would discharge adjudicatory functions through its respective divisions. The Court sustained the validity of Administrative Order No. 36, reasoning that the Secretary was authorized to promulgate implementing rules by Section 36 of R.A. 6715, which conferred rule-making authority to implement the Act. The Court further noted as a matter of judicial notice that after the effectivity of R.A. 6715, many cases had already been decided by the NLRC’s divisions, reinforcing the absence of legal justification to entertain petitioner’s contrary position. The Court viewed this statutory intent as consistent with the objective of expediting labor case disposition.

Scope of the Certified Dispute: Limitation to Makati, Alabang, and Cabuyao Units

On the second issue, the Court agreed that the NLRC did not commit grave abuse of discretion in resolving only the “sole issue” certified by the Secretary and in formulating a CBA covering the bargaining units consisting of all regular rank-and-file employees at Makati, Alabang, and Cabuyao. The NLRC had reasoned that after certification, petitioner had sought modification to include Cebu/Davao and Cagayan de Oro and had also manifested intent to file a ULP complaint, which it did. The NLRC explained that issues concerning whether the company’s separate execution of CBAs and other acts constituted ULP were better heard separately due to evidentiary needs and the risk of delay. It also observed that consolidation would raise complicated questions on venue and joinder of parties.

The Court held that the NLRC’s resolution was proper because it complied with the Secretary’s certification order. It characterized the Secretary’s assumption of jurisdiction over disputes causing or likely to cause a strike or lockout in an industry indispensable to national interest as a police power measure, intended to suppress impediments to essential production. As such, the Secretary’s certification order for compulsory arbitration was proper for immediate formulation of an already delayed CBA. The Court then reasoned that the NLRC, as the implementing body, could not amend the Secretary’s order. In support, the Court cited University of Santo Tomas v. National Labor Relations Commission, UST Faculty Union, G.R. No. 89920, October 18, 1990, for the proposition that the NLRC’s authority in compulsory arbitration did not extend to amending the certification.

The Court also rejected petitioner’s attempt to include a determination of ULP in the present petition, holding that this exceeded the scope of the certified compulsory arbitration.

Definition and Limits of Compulsory Arbitration: Administrative Implementation Rather Than Judicial Expansion

On petitioner’s argument that the NLRC’s refusal to take up ULP matters caused impermissible splitting and multiplicity of suits, the Court explained the nature of compulsory arbitration. Citing Philippine Airlines, Inc. v. National Labor Relations Commission (G.R. No. 55159, 22 Dec. 89) as quoted in the text, the Court stated t

Case Syllabus (G.R. No. 91025)

The Union of Filipro Employees filed a special civil action of certiorari assailing a National Labor Relations Commission (NLRC) resolution dated June 5, 1989 and its denial of a motion for reconsideration dated August 8, 1989.
The challenged NLRC action arose from Certified Case No. 0522, which involved a CBA deadlock and related matters following a Notice of Strike.
The Court treated the case as one that required resolution of whether the NLRC committed jurisdictional error or grave abuse of discretion in crafting and limiting the terms of a CBA under compulsory arbitration.

Parties and Procedural Posture

Petitioner was Union of Filipro Employees, the sole and exclusive bargaining agent of all rank-and-file employees of Nestle Philippines, Inc. (private respondent).
Respondents were the NLRC and Nestle Philippines, Inc..
Petitioner initially raised thirteen errors but later limited the issues to six in an Urgent Manifestation and Motion dated September 24, 1990.
The petition sought certiorari relief from NLRC’s June 5, 1989 resolution and August 8, 1989 order denying reconsideration.

Key Factual Timeline

On June 22, 1988, petitioner filed a Notice of Strike at the Department of Labor citing CBA deadlock and unfair labor practice.
The National Conciliation and Mediation Board (NCMB) invited the parties for conference on February 4, 1988, but private respondent questioned the legal personality of the notice’s proponents to represent Nestle employees.
Despite private respondent’s refusal to attend conciliation unless it dealt with a duly constituted negotiating panel under the union’s constitution and by-laws, the NCMB proceeded with invitations, and private respondent failed to attend.
Before the notice of strike was filed, the CBAs in four Nestle units in Alabang/Cabuyao, Makati, Cagayan de Oro, and Cebu/Davao had expired on June 30, 1987.
Under the expiring CBAs, petitioner represented Alabang/Cabuyao and Makati, WATU represented Cagayan de Oro, and TUPAS represented Cebu/Davao.
Petitioner submitted CBA proposals for Makati and Alabang/Cabuyao, and the company expressed readiness to negotiate for those units while reserving negotiations for Cagayan de Oro and Cebu/Davao due to unresolved representation issues.
Petitioner was certified as sole and exclusive bargaining representative for Cagayan de Oro on June 10, 1987 and for Cebu/Davao on July 28, 1987.
On September 14, 1987, the company terminated from employment union officers and members of the negotiating panel headed by Mr. Manuel Sarmiento for instigating and knowingly participating in a strike staged on September 11, 1987, allegedly without notice of strike and strike vote.
Petitioner filed a complaint for illegal dismissal on September 21, 1987, and the Labor Arbiter upheld the dismissal in a decision dated January 12, 1988, later affirmed by the NLRC en banc on November 2, 1988.
The company later concluded separate CBAs with workers at Cebu/Davao on March 20, 1988 and at Cagayan de Oro on August 5, 1988, after workers conducted separate elections of officers.
Petitioner challenged the agreements by filing a ULP case against the company with the NLRC-NCR Arbitration Branch on November 16, 1988.
On October 18, 1988, petitioner moved the Secretary of Labor to assume jurisdiction over the dispute of deadlock in collective bargaining.
On October 28, 1988, the Secretary certified to the NLRC the sole issue of deadlock affecting Makati, Alabang, and Cabuyao for compulsory arbitration within twenty (20) days from submission for resolution.
On June 5, 1989, the Second Division of the NLRC issued the assailed resolution, ordering the parties to execute and implement a five (5)-year CBA effective from its promulgation.
Petitioner’s motion for reconsideration was denied on August 8, 1989, prompting this certiorari petition.

National Conciliation and Union Representation Issues

Private respondent assailed the legal personality of the proponents of the Notice of Strike, but the NCMB continued conciliation steps.
Prior representation involved multiple bargaining agents across units, and the representation contest persisted even after certifications for some units.
The company encountered letters from splinter groups claiming authority to negotiate for the union, while the Department of Labor advised that management dealing directly with factions would be unwise because it would “fan the fire.”
The Department of Labor’s advice emphasized procedural caution during the stage where factions claimed imprimatur from the majority of employees.

Statutory Framework and Jurisdiction

The Court applied the 1987 Constitution, the decision being promulgated in 1990.
The certification of deadlock to the NLRC occurred on October 28, 1988, when the prior regime required NLRC en banc resolution of certified disputes.
Republic Act No. 6715 took effect during the pendency of the case and amended Article 213 of the Labor Code, authorizing the NLRC to exercise adjudicatory powers through its divisions rather than en banc for adjudication.
The amended Art. 213 provided that the NLRC “shall exercise its adjudicatory and all other powers, functions and duties through its divisions,” while en banc sat only for specified rule-making and policy formulation.
Section 5 of R.A. 6715 supplied the statutory text of amended Art. 213, including that a division could sit and pronounce judgment or resolution with concurrence of two commissioners.
The Secretary of Labor issued Administrative Order No. 36 (Series of 1989) providing that, effective March 21, 1989, the NLRC would cease holding en banc sessions for adjudicating cases and discharge adjudicatory functions through divisions.

Issue