EN BANC

G.R. No. L-26461 November 27, 1968

ASSOCIATED LABOR UNION, petitioner,
vs.
JUDGE JOSE C. BORROMEO and ANTONIO LUA doing business under the name CEBU HOME &
INDUSTRIAL SUPPLY, respondents.
Seno, Mendoza, Ruiz and Associates for petitioner.
Diores and Escareal Law Office for respondents.
CONCEPCION, C.J.:
Original action for certiorari and prohibition, with preliminary injunction, to annul writs of preliminary
injunction issued in Case No. R-9414 of the Court of First Instance of Cebu, entitled "Cebu Home and
Industrial Supply and Antonio Lua vs. Associated Labor Union", and to restrain the Honorable Jose C.
Borromeo, as Judge of that Court, from hearing said case.
Petitioner herein, Associated Labor Union — hereinafter referred to as ALU — is a duly registered labor
organization. Among the members thereof are employees of Superior Gas and Equipment Company of
Cebu, Inc. hereinafter referred to as SUGECO — a domestic corporation with offices at Juan Luna Street,
Cebu City and a factory plant in Basak, Mandaue, province of Cebu. On January 1, 1965, ALU and SUGECO
entered into a collective bargaining contract, effective up to January 1, 1966. Negotiations for the renewal
of the contract between ALU and SUGECO were begun prior to the date last mentioned. While said
negotiations were going on, late in February, 1966, twelve (12) SUGECO employees resigned from ALU.
Thereupon, the negotiations stopped. On March 1, 1966, ALU wrote SUGECO requesting that the twelve
(12) resigned employees be not allowed to report for work unless they produced a clearance from
ALU;1 but this request was immediately rejected by SUGECO, upon the ground that it would cause
irreparable injury, that the bargaining contract had lapsed already, and that SUGECO could no longer
demand said clearance from its employees. SUGECO intimated, however, that, should the twelve (12) men
rejoin ALU, negotiations "for the renewal of the collective bargaining contract" could be resumed.
On the same date, ALU wrote SUGECO charging that the latter was bargaining in bad faith and that its
supervisors had campaigned for the resignation of ALU members, as well as serving notice that, unless
these unfair labor practice acts were stopped immediately and a collective bargaining contract between
SUGECO and ALU forthwith entered into, the latter would declare a strike and establish the corresponding
picket lines "in any place where your business may be found." Counsel for SUGECO replied to the ALU, on
March 3, 1966, stating that, with the resignation of the aforementioned ALU members, ALU no longer
represented the majority of the SUGECO employees for purposes of negotiation and recognition.
On March 4, 1966, ALU struck and picketed the SUGECO plant in Mandaue. The next day, March 5,
SUGECO commenced Civil Case No. R-9221 of the Court of First Instance of Cebu, against ALU, to restrain
the same from picketing said plant and the SUGECO offices at Cebu City and elsewhere in the Philippines.
Forthwith, the Honorable Amador E. Gomez, as Judge of the Court of First Instance of Cebu, Branch II,
caused to be issued, ex parte, the writ of preliminary injunction prayed for by SUGECO.
On the same date,2 ALU preferred, in the Court of Industrial Relations — hereinafter referred to as CIR
unfair labor practice charges against SUGECO, its general manager, Concepcion Y. Lua — hereinafter
referred to as Mrs. Lua — and its two (2) supervisors, alleging, inter alia, that these respondents had
coerced and exerted pressure upon the aforementioned ALU members to resign, as they did resign from
ALU, and that their resignations were seized upon by SUGECO to refuse further negotiations with ALU. On
April 29, 1966, an acting prosecutor of the CIR filed therein against SUGECO the corresponding complaint
for unfair labor practice.3
Meanwhile, ALU had moved for a reconsideration of the order of Judge Gomez, dated March 5, 1966,
sanctioning the issuance of the writ of preliminary injunction against ALU. This motion was later denied
by Judge Jose C. Borromeo, who presided Branch IV of the Court of First Instance of Cebu.4 Hence, on May
9, 1966, ALU instituted Case No. L-25999 of the Supreme Court, for certiorari and prohibition, with
preliminary injunction, against Judges Gomez and Borromeo and the SUGECO, and prayed therein that
the CFI of Cebu be declared without jurisdiction over the subject-matter of said Case No. R-9221; that the
writ of preliminary injunction therein issued be annulled; that Judges Gomez and Borromeo be directed
to dismiss said case; and that, meanwhile, they be ordered to desist from further proceedings in said case,
and from enforcing the writ aforementioned. On May 16, 1966, we issued the writ of preliminary
injunction sought by ALU in L-25999. Subsequently, or on February 9, 1967, we rendered judgment therein
in favor of ALU, annulling the writ of preliminary injunction issued in said Case No. R-9221, on March 5,
1966, directing respondent Judges to dismiss the same, and declaring permanent the writ of preliminary
injunction issued by us on May 16, 1966.
Soon after the issuance of the latter writ, ALU resumed the picketing of the SUGECO plant in Mandaue.
Moreover, it began to picket the house of Mrs. Lua, SUGECO's general manager, and her husband Antonio
Lua — hereinafter referred to as Mr. Lua — at Abellana Street, Cebu City, and the store of the Cebu Home
and Industrial Supply — hereinafter referred to as Cebu Home — at Gonzalez Street, Cebu City. The Cebu
Home, which belongs to and is managed by Mr. Lua, deals in general merchandise, among which are
oxygen, acetylene and cooking gas produced by SUGECO. On June 21, 1966, Cebu Home and Mr. Lua —
hereinafter referred to as respondents — filed a complaint, docketed as Civil Case No. 9414 of the CFI of
Cebu, against ALU, to restrain the latter from picketing the store and residence aforementioned and to
recover damages. Thereupon, Judge Borromeo issued an order requiring the ALU to show cause why the
writ sought should not be issued. In a memorandum filed on June 25, 1966 and a motion to dismiss dated
June 29, 1966, the ALU assailed the Court's jurisdiction to hear the case upon the ground that it had grown
out of a labor dispute. This, notwithstanding, on June 30, 1966, Judge Borromeo issued an order the
dispositive part of which reads:
WHEREFORE, upon filing of a bond by the petitioners5 in the amount of P3,000.00 to answer for damages
which the respondent6 may be entitled, let a writ of preliminary injunction be issued, restraining the
respondent, its officers, employees, agents or persons acting in its behalf:
1) From picketing the office of the Cebu Home and Industrial Supply in Gonzales Street, Cebu City and the
residence of the petitioner Antonio Lua in Abellana Street, Cebu City;
2) From preventing the employees of the petitioners from entering inside or going out the office of the
Cebu Home and Industrial Supply and the residence of the petitioner Antonio Lua;
3) From stopping the car, truck or other vehicles entering or going out the office of Cebu Home and
Industrial Supply and the residence of Antonio Lua;
4) From preventing the sale and distribution by the petitioners of its merchandise in connection with its
business; and
5) From performing acts which cause disturbance of the tranquility and privacy of the petitioner and his
family.
On July 4, 1966, respondents herein moved to amend the foregoing order so as to broaden its scope.
Upon the other hand, on July 6, 1966, ALU sought a reconsideration of said order and the lifting of the
writ of preliminary injunction issued on June 30, 1966. Acting upon a motion to amend of respondents
herein, Judge Borromeo issued, on July 22, 1966, another order, from which we quote:
Considering the evidence presented and the facts stated in the previous order of the Court, it is believed
that the petition is justified and that the acts complained of, if not restrained, will render the writ of
preliminary injunction ineffective.
WHEREFORE, in connection with the writ of preliminary injunction which was previously issued, the
respondent union, its members, agents or persons acting in its behalf are hereby restrained:
a) From preventing the petitioners, their employees or representatives from unloading their merchandise
and other supplies coming from Manila or other places and from hauling them from the waterfront for
the purpose of delivering them to the place of the petitioners;
b) From preventing the petitioners or their representatives from delivering and loading their empty tanks
and other supplies to the boat or other means of transportation for Manila or other places; and
c) From preventing, obstructing or molesting the petitioners, their employees or representatives from
performing acts in connection with their business.
On July 25, 1966, Judge Borromeo denied ALU's motion to dismiss Case No. R-9414 and to reconsider his
order and dissolve the writ of preliminary injunction of June 30, 1966. Thereupon, or on August 26, 1966,
ALU commenced the present action for certiorari and prohibition with preliminary injunction, to annul
the writs of preliminary injunction issued, on June 30 and July 22, 1966, in Case No. R-9414 and to restrain
the lower court from hearing the same.
ALU maintains that the lower Court has no jurisdiction over Case No. R-9414 because it had grown out of
a labor dispute, is intimately connected with an unfair labor practice case pending before the CIR and
involves a strike the injunction against which had already been lifted by the Supreme Court in G.R. No. L-
25999.7 Moreover, ALU claims that even if the lower court had jurisdiction over Case No. R-9414, the writs
of preliminary injunction issued therein are null and void, not only because of said lack of jurisdiction, but,
also, because it failed to observe the requirements of Sec. 9(f) of Republic Act No. 875, as well as the
provisions of Sec. 9 (d) (5) of the same Act, requiring findings of facts on matters enumerated therein.
Upon the other hand, respondents argue that the issue in the lower court does not fall within the
jurisdiction of the CIR, there being no employer-employee relationship and "no labor dispute" between
the ALU members and Cebu Home; and that, at any rate, the SUGECO products distributed and sold by
Cebu Home, came, not from the SUGECO plant in Mandaue, but from other parts of the Philippines.
Respondents further deny that the residence of Mr. Lua was being used as a place to store and refill
SUGECO gas for resale.
Respondents' pretense is untenable. To begin with, Section 5 (a) of Republic Act No. 875 8 vests in the
Court of Industrial Relations exclusive jurisdiction over the prevention of any unfair labor practice.
Moreover, for an issue "concerning terms, tenure or conditions of employment, or concerning the
association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to
arrange terms or conditions of employment" to partake of the nature of a "labor dispute", it is not
necessary that "the disputants stand in the proximate relation of employer and employee."9
Then, again, in order to apply the provisions of Sec. 9 of Republic Act No. 875, governing the conditions
under which "any restraining order" or "temporary or permanent injunction" may issue in any "case
involving or growing out of a labor dispute", it is not indispensable that the persons involved in the case
be "employees of the same employer", although this is the usual case. Sec. 9,10 likewise, governs cases
involving persons: 1) "who are engaged in the same industry, trade, craft, or occupation"; or 2) "who ...
have direct or indirect interests therein", or 3) "who are members of the same or an affiliated organization
of employers or employees"; or 4) "when the case involves any conflicting or competing interests in a
"labor dispute" (as hereinbefore defined) or "persons participating or interested" therein (as hereinafter
defined)". Furthermore, "a person or association shall be held to be a person participating or interested
in a labor dispute if relief is sought against him or it" and "he or it is engaged in the same industry, trade,
craft, or occupation in which such dispute occurs, or has a direct or indirect interest therein, or is a
member, officer, or agent of any association composed in whole or in part of employees or employers
engaged in such industry, trade, craft, or occupation."11
Now, then, there is no dispute regarding the existence of a labor dispute between the ALU and SUGECO-
Cebu; that SUGECO's general manager, Mrs. Lua, is the wife of the owner and manager of Cebu Home,
Antonio Lua; and that Cebu Home is engaged in the marketing of SUGECO products. It is, likewise, clear
that as managing member of the conjugal partnership between him and his wife, Mr. Lua has an interest
in the management by Mrs. Lua of the business of SUGECO and in the success or failure of her controversy
with the ALU, considering that the result thereof may affect the condition of said conjugal partnership.
Similarly, as a distributor of SUGECO products, the Cebu Home has, at least, an indirect interest in the
labor dispute between SUGECO and the ALU and in Case No. R-9221. In other words, respondents herein
have an indirect interest in said labor dispute, for which reason, we find that Section 9 of Republic Act No.
875 squarely applies to Case No. R-9414.
Thus, in Goldfinger v. Feintuch,12 it was held:
Within the limits of peaceful picketing, however, picketing may be carried on not only against the
manufacturer but against a non-union product sold by one in unity of interest with the manufacturer who
is in the same business for profit. Where a manufacturer pays less than union wages, both it and the
retailers who sell its products are in a position to undersell competitors who pay the higher scale, and this
may result in unfair reduction of the wages of union members. Concededly the defendant union would
be entitled to picket peacefully the plant of the manufacturer. Where the manufacturer disposes of the
product through retailers in unity of interest with it,13 unless the union may follow the product to the
place where it is sold and peacefully ask the public to refrain from purchasing it, the union would be
deprived of a fair and proper means of bringing its plea to the attention of the public.
Besides, the ALU introduced evidence to the effect that the SUGECO products had been brought to Cebu
Home and were being distributed in the latter, as a means to circumvent, defeat or minimize the adverse
effects of the picketing conducted in the SUGECO plant and offices in Mandaue and Cebu City respectively
by ALU. It is true that respondents averred that said products were purchased by Cebu Home before the
strike was declared against SUGECO and that some of said products were obtained from SUGECO in other
parts of the country; but, even if true, these circumstances did not place the picketing of the Cebu Home
beyond the pale of the aforesaid Section 9 of Republic Act No. 875 because, as distributor of SUGECO
products, Cebu Home was engaged in the same trade as SUGECO. Neither does the claim that some
SUGECO products marketed by Cebu Home had come, not from the Mandaue plant, but from other parts
of the Philippines, detract from the applicability of said provisions, considering that ALU had struck against
SUGECO and had announced, as early as March 1, 1966 — or three (3) days before it struck — its intent
to picket "any place where your business may be found" and that SUGECO in Cebu is a sister company of
SUGECO elsewhere in the Philippines.
For, a similar reason, in American Brake Shoe Co. v. District Lodge 9 of International Association of
Machinists,14the Supreme Court of Pennsylvania ruled:
Where corporate employer had separate plants in Missouri and Pennsylvania, and labor dispute existed
at Missouri plant, but not at the Pennsylvania plant, peaceful picketing at Pennsylvania plant by members
of union representing employees at Missouri plant was not an unfair labor practice as defined by Labor
Management Relations Act....15
In the language of the American Jurisprudence:16
It seems now generally agreed that a state cannot either by its common law or by statute prohibit the
peaceful picketing of a place of business solely on the ground that the picketing is carried on by
persons not employed therein. The United States Supreme Court has held that the constitutional guaranty
of free speech is infringed by the judicial policy of a state to forbid peaceful picketing on the ground that
it is being conducted by strangers to the employer affected, that is, by persons not in the relation of
employer and employee with him. Rules limiting picketing to the occasion of a labor dispute
are not offended by the act of a union having a grievance against a manufacturer in picketing a retail
establishment in which its products are sold when there is a unity of interest between the manufacturer
and the retailer; this is true even when the shopkeeper is the sole person required to run his business.
And the right of employees on strike at one plant of an employer to picket another plant of the same
employer has been upheld even though some of the employees of the picketed plant as a result refused
to work despite a no-strike agreement. Also, a union may picket a retail store selling goods made in
a nonunion factory between which and the union there is an industrial dispute, provided there is a unity
of interest between the retailer and the manufacturer.17
Apart from the foregoing, it will be recalled that, prior to the expiration of the collective bargaining
contract between ALU and SUGECO, on January 1, 1966, negotiations had started for the renewal of said
contract; that during said negotiations, late in February 1966, twelve (12) SUGECO employees resigned
from ALU, owing — according to charges preferred by ALU and confirmed by a complaint filed by a CIR
prosecutor — to unfair labor practices allegedly committed by SUGECO and its supervisors who, it was
also claimed, had induced and coerced said employees to quit the ALU, which they did; that, thereupon,
SUGECO stopped negotiating with ALU alleging that, with the resignation of said twelve (12) members,
ALU no longer represented a majority of the SUGECO employees; that on March 4, 1966, ALU declared a
strike and picketed the SUGECO plant in Mandaue; that the next day, SUGECO filed Case No. R-9221 of
the CFI of Cebu, which forthwith issued a writ of preliminary injunction restraining ALU from picketing,
not only the plant, but, also, the SUGECO offices elsewhere in the Philippines; that said injunction was
dissolved by the Supreme Court on May 16, 1966;18 and that the premises of respondents herein were
not picketed until after our injunction was enforced, subsequently to May 16, 1966.
This factual background reveals that, from sometime before January 1, 1966 — when negotiations for the
renewal of the collective bargaining agreement between SUGECO and ALU were begun — to sometime
after May 16, 1966,19or, at least, from late in February 1966 — when the aforementioned unfair labor
practices were allegedly committed by SUGECO — to sometime before June 21, 1966,20 there was ample
opportunity to store SUGECO products in respondents' premises. There was, therefore, reasonable
ground for the ALU to believe or suspect that SUGECO was using said premises to circumvent and blunt
the ALU strike and picketing in the SUGECO plant in Mandaue or to defeat or offset the adverse effects of
both.
Respondent Judge seemed to be of the opinion that, for the subject-matter of Case No. 9414 to be within
the exclusive jurisdiction of the CIR, it was necessary to establish, as a fact, the truth of ALU's contention
that respondents' premises were being used as an outlet for SUGECO products.
Such view suffers from a basic flaw. It overlooks the fact that the jurisdiction of a court or quasi-judicial
or administrative organ is determined by the issues raised by the parties, not by their success or failure in
proving the allegations in their respective pleadings.21 Said view would require the reception of proof, as
a condition precedent to the assumption of jurisdiction, when precisely jurisdiction must
exist before evidence can be taken, since the authority to receive it is in itself an exercise of jurisdiction.
Moreover, it fails to consider that, to affect the jurisdiction of said court, or organ, the main requirement
is that the issue raised be a genuine one. In other words, the question posed must be one that is material
to the right of action or which could affect the result of the dispute or controversy.22 Such is, manifestly,
the nature of ALU's contention in the lower court, which should have, accordingly, granted the motion to
dismiss and lifted the writs of preliminary injunction complained of.
Finally, respondents herein have not alleged, let alone proved, that the conditions enumerated in Section
9 (d) of Republic Act No. 875,23 as a prerequisite to an injunction in labor disputes, have been complied
with. Such failure is, as has been repeatedly held24 fatal to the validity of said injunction.
WHEREFORE, the orders of respondent Judge dated June 30, and July 22, 1966 and the writs of preliminary
injunction issued in accordance therewith are hereby declared null and void ab initio, with costs against
respondents herein, the Cebu Home and Industrial Supply and Antonio Lua. It is so ordered.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando and Capistrano, JJ., concur.
SPECIAL FIRST DIVISION
[G.R. No. 90856. February 1, 1996]
ARTURO DE GUZMAN, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, (2ND DIVISION),
LABOR ARBITER MA. LOURDES A. SALES, AVELINO D. VALLES-TEROL, ALEJANDRO Q. FRIAS, LINDA DELA
CRUZ, CORAZON M. DELA FUENTE, LILIA F. FLORO, and MARIO F. JAYME, respondents.
RESOLUTION
FRANCISCO, J.:
This is a motion filed by petitioner Arturo de Guzman seeking the reconsideration of the decision of this
Court, promulgated on July 23, 1992,[1] which modified the decisions of the Labor Arbiter and the National
Labor Relations Commission in NLRC-NCR Case No. 7-2739-86 and ordered as follows:
WHEREFORE, the questioned decision is AFFIRMED but with modification that the petitioner shall not be
held jointly and severally liable with AMAL for the private respondents money claims against the
latter. However, for his bad faith in arrogating to himself AMALs properties to the prejudice of the private
respondents, the petitioner is ordered: 1) to pay the private respondents moral damages in the sum of
P20,000.00 and exemplary damages in the sum of P20,000.00; and 2) to return the assets of AMAL that
he has appropriated, or the value thereof, with legal interest thereon from the date of the appropriation
until they are actually restored, these amounts to be proportionately distributed among private
respondents in satisfaction of the judgment rendered in their favor against AMAL.[2]
Petitioner was the general manager of the Manila Office of Affiliated Machineries Agency, Ltd. (AMAL)
and among the respondents in a complaint for illegal dismissal and non-payment of statutory benefits
filed by herein respondents who were former employees of AMAL.
Respondent employees initiated the complaint following AMALs refusal to pay the formers monetary
claims after AMAL decided to cease its operations in 1986. Petitioner was impleaded for allegedly selling
part of AMALs assets and applying the proceeds of the same, as well as the remaining assets, to satisfy his
own claims against the company. He also formed a new company named Susarco, Inc. and engaged in the
same line of business with the former clients of AMAL.
On September 30, 1987, the Labor Arbiter rendered judgment and held petitioner jointly and severally
liable with AMAL for respondent employees claims.[3] Upon appeal to the National Labor Relations
Commission, the decision was affirmed in toto.[4]
Not satisfied, petitioner proceeded to this Court on certiorari assailing the aforementioned decision and
claiming grave abuse of discretion.
As initially mentioned, this Court modified the decision of the NLRC and absolved petitioner from his
solidary liability for respondent employees claims. This was based on a finding that as mere managerial
employee, petitioner had no participation in the decision to cease operations and terminate the services
of respondent employees which was the exclusive responsibility of AMAL alone. Nevertheless, for having
acted in bad faith by appropriating the assets of AMAL to satisfy his own claims to the prejudice of
respondent employees pending claims, petitioner was held directly liable for moral and exemplary
damages based on the provisions of Articles 19, 21, 2219(10) and 2229 of the Civil Code.
In this motion, petitioner assails the award of damages and the order to return the assets of AMAL which
he appropriated for being unwarranted, arguing that the same were beyond the jurisdiction of this Court
to grant in a complaint for illegal dismissal in the absence of an employer-employee relationship between
petitioner and respondent employees.
The argument is premised on the following pronouncements on previous decisions that:
x x x. The Court, therefore, believes and so holds that the money claims of workers referred to in
paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-
employee relationship, or some aspect or incident of such relationship. Put a little differently, that money
claims of workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those
money claims which have some reasonable causal connection with the employer-employee relationship.
xxx xxx xxx
x x x. The important principle that runs through these three (3) cases is that where the claim to the
principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute
or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs
to the regular courts of justice and not to the Labor Arbiter or to the NLRC. In such situations, resolution
of the dispute requires expertise, not in labor management relation nor in wage structures and other
terms and conditions of employment, but rather in the application of the general civil law. Clearly, such
claims fall outside of the area of competence or expertise ordinarily ascribed to Labor Arbiters and the
NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears.[5]
While it is conceded that no employer-employee ties existed between the petitioner and respondent
employees, this does not preclude this Court from adjudging him liable for damages. In labor disputes like
the instant suit, it is not required that the claim for relief should directly result from an employer-
employee relationship. It suffices that there be a showing of a reasonable causal connection between the
claim asserted and the employer-employee relations.[6]
Respondent employees could have been afforded relief in their suit for illegal dismissal and non-payment
of statutory benefits were it not for petitioners unscrupulous acts of appropriating for himself the assets
of AMAL which rendered the satisfaction of respondent employees claims impossible. By taking undue
advantage of his position as general manager of AMAL, petitioner was able to facilitate the consummation
of his acts as he had access over the companys assets.
On this score, it is evident that petitioners acts of bad faith were offshoots of the termination of their
employment relations with AMAL. The companys decision to close down its business impelled petitioner
to act precipitately in appropriating the assets of AMAL, fearing perhaps that the same might not be
enough to satisfy all the legitimate claims against it.
Petitioners contention that his application of AMALs assets to satisfy his own claims against the company
is nothing more than a simple legal compensation or set-off deserves scant consideration as it was done
without deference to the legitimate claims of respondent employees and other creditors of AMAL, in
contravention of the provisions on concurrence and preference of credits under the Civil Code. Although
his legitimate claims are not disputed, the same, however, are properly cognizable at the proceedings for
AMALs dissolution.
Thus, we affirm our previous conclusion that although the question of damages arising from petitioners
bad faith has not directly sprung from the illegal dismissal, it is clearly intertwined therewith. Accordingly,
petitioners bad faith having been sufficiently established, the award of damages against him and the order
for him to return the assets of AMAL which he appropriated, or their value, are in order.
Finally, we underscore the fact that this case has already dragged on for the past nine years, making it
extremely urgent that it be resolved with finality and for this Court not to sanction any further delay or
attempts to frustrate the disposition of the legitimate claims of respondent employees.
WHEREORE, the motion for reconsideration is hereby DENIED for lack of merit. The denial is final.
SO ORDERED.
SECOND DIVISION
G.R. No. 87700 June 13, 1990
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES,
MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and
SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this
special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary
Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs.
SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of
discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for short),
for its part, defends the Writ on the ground of absence of any employer-employee relationship between
it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite
Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said
workers for purposes of collective bargaining. The Solicitor General agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and
D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors
duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts
to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion
and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers
employed by the contractors were to be paid by the latter and that none of them were to be deemed
employees or agents of SanMig. There was to be no employer-employee relation between the contractors
and/or its workers, on the one hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter
executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A,
SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or
contract employees and workers are excluded from the bargaining unit and, therefore, outside the scope
of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon
and D'Rite workers had signed up for union membership and sought the regularization of their
employment with SMC. The Union alleged that this group of employees, while appearing to be contractual
workers supposedly independent contractors, have been continuously working for SanMig for a period
ranging from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they
are performing work or activities necessary or desirable in the usual business or trade of SanMig. Thus, it
was contended that there exists a "labor-only" contracting situation. It was then demanded that the
employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the
Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D,
Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F,
Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the
two (2) notices of strike were consolidated and several conciliation conferences were held to settle the
dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite
workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to
enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the
purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON
and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to demonstrate
and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines
and/or barricades which the defendants may set up at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract
workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work places
within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees or workers
of LIPERCON and D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the
work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within
the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or
workers of LIPERCON and D'RITE. (Annex H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for
hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig.
That Motion was denied by respondent Judge in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order
(Annex A, Petition) granting the application and enjoining the Union from Committing the acts complained
of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary
Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages
petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court
has jurisdiction to take cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite.
The application and contract for employment of the defendants' witnesses are either with Lipercon or
D'Rite. What could be discerned is that there is no employer-employee relationship between plaintiff and
the contractual workers employed by Lipercon and D'Rite. This, however, does not mean that a final
determination regarding the question of the existence of employer-employee relationship has already
been made. To finally resolve this dispute, the court must extensively consider and delve into the manner
of selection and engagement of the putative employee; the mode of payment of wages; the presence or
absence of a power of dismissal; and the Presence or absence of a power to control the putative
employee's conduct. This necessitates a full-blown trial. If the acts complained of are not restrained,
plaintiff would, undoubtedly, suffer irreparable damages. Upon the other hand, a writ of injunction does
not necessarily expose defendants to irreparable damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we
can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required
the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13)
of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation.
The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were recalled,
and discussion on their other demands, such as wage distortion and appointment of coordinators, were
made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that
"without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below),
the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or equivalent positions
under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union
would immediately lift the pickets and return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January
1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over
the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that
question, is the matter of whether, or not the case at bar involves, or is in connection with, or relates to
a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction
of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or
arose out of a labor dispute and is directly connected or interwoven with the cases pending with the
NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and consequently
of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court
is vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by petitioner
union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to
hire and thereby create an employment relationship with contractual workers, especially were the
contractual workers were recognized by the union, under the governing collective bargaining agreement,
as excluded from, and therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a
deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the
employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially on
the eve of certification elections, to hire strangers or workers outside the unit, in the hope the latter will
help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of
a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or not to
hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists between itself, on the one
hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless
exist "regardless of whether the disputants stand in the proximate relationship of employer and
employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the
terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and
as defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks
is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that they be
absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship
between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the
arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute.
Further, the Union also seeks to represent those workers, who have signed up for Union membership, for
the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that
there is no employer-employee relationship between it and those workers and because the demand
violates the terms of their CBA. Obvious then is that representation and association, for the purpose of
negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was
precisely also to prevent such representation. Again, the matter of representation falls within the scope
of a labor dispute. Neither can it be denied that the controversy below is directly connected with the labor
dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-
093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite
constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may, in fact,
be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and D'Rite in
their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid
and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside
the working unit; — those are issues the resolution of which call for the application of labor laws, and
SanMig's cause's of action in the Court below are inextricably linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig
is not controlling as in that case there was no controversy over terms, tenure or conditions, of
employment or the representation of employees that called for the application of labor laws. In that case,
what the petitioning union demanded was not a change in working terms and conditions, or the
representation of the employees, but that its members be hired as stevedores in the place of the members
of a rival union, which petitioners wanted discharged notwithstanding the existing contract of the arrastre
company with the latter union. Hence, the ruling therein, on the basis of those facts unique to that case,
that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21
March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and
exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor
practice cases; 2. those that workers may file involving wages, hours of work and other terms and
conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code, including
questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of
the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code
would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for
damages is interwoven with a labor dispute existing between the parties and would have to be ventilated
before the administrative machinery established for the expeditious settlement of those disputes. To
allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the
orderly administration of justice (Philippine Communications, Electronics and Electricity Workers
Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its
best business judgment to determine whether it should contract out the performance of some of its work
to independent contractors. However, the rights of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike in accordance with law
(Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending
interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989
and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is enjoined
from taking any further action in Civil Case No. 57055 except for the purpose of dismissing it. The status
quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the
proceedings in the National Conciliation Mediation Board-Department of Labor and Employment,
docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.