Chua

Topic: When discrimination constitutes ULP

67. San Miguel Foods, Inc. (SMFI) v. San Miguel Corporation Employees Union-PTWGO
Doctrine: Violations of a CBA, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the Collective
Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions
of such agreement.
For ULP cases to be cognizable by the Labor Arbiter, the allegations in the complaint should
show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2)
the violation pertains to the economic provisions of the CBA.
Since the seniority rule has a bearing on salary and benefits, it may, following a liberal
construction of Article 261 of the Labor Code, be considered an "economic provision" of the
CBA.
Action Sequence: Union complaint to Grievance Machinery denied -> Labor Arbiter complaint
for ULP dismissed for lack of jurisdiction -> NLRC reversed in favor of LA jurisdiction -> CA
affirmed NLRC -> SC affirmed CA
Facts: On November 9, 1992, some employees of SMFI’s Finance Department, through the
Union represented by Edgar Moraleda, brought a grievance against Finance Manager Gideon
Montesa for "discrimination, favoritism, unfair labor practices, not flexible, harassment,
promoting divisiveness and sectarianism, etc.," before SMFI Plant Operations Manager George
Nava, in accordance with Step 1 of the grievance machinery in the CBA between SMFI and the
Union. The Union sought the “review, evaluation, and upgrading of all finance staff, and the
promotion of Montesa to other SMC affiliates and subsidiaries.”
In a January 14, 1993 grievance meeting, SMFI informed the Union that it would address the
grievance through a work management review by March 1993, which was not completed,
causing the union to elevate the matter to Step 2. On October 6, 1993, SMFI rendered a Step 1
decision stating it was still in the process of the work management review and could not grant
the Union’s request.
The Union filed a complaint before the NLRC against SMFI for “unfair labor practice and unjust
discrimination in matters of promotion”, praying that SMFI be ordered to promote the employees
with corresponding pay increases and salary differentials. SMFI filed a motion to dismiss stating
that these were grievance issues which should be resolved in the grievance machinery.
In its position paper, the Union alleged that SMFI committed acts of ULP under Art. 248 (e) in
discriminating with regards to terms and conditions of employment and Art. 248 (i) for violating
the CBA.
The Labor Arbiter granted the motion to dismiss and ordered the remand of the case to the
grievance machinery for the completion of proceedings. The NLRC granted the union’s appeal
and ordered the Labor Arbiter to continue the proceedings. SMFI filed a petition for certiorari,
which the CA denied, finding that the Labor Arbiter has jurisdiction as they have violated the
seniority rule under the CBA by appointing and promoting certain employees, which amounted
to a ULP. SMFI filed a petition for certiorari before the SC alleging that the CA erred in finding
that the Labor Arbiter had jurisdiction and that SMFI’s alleged violation of the CBA constituted
ULP.
Issue: Whether the Labor Arbiter has jurisdiction over the case
Ruling: YES.
SMFI argues that the allegations in the Union’s complaint filed before the Labor Arbiter do not
establish a cause of action for ULP, the Union having merely contended that SMFI was guilty
thereof without specifying the ultimate facts upon which it was based, violating Sec. 1 of Rule 8
of the rules of court. However, while the complaint did not specify the ultimate facts in its
complaint, these were sufficiently detailed by the Union in its position paper. Since the technical
rules in courts of law do not strictly apply to proceedings before the labor arbiter, the allegations
in the position paper may be considered.
In its position paper, the Union alleged that SMFI committed “large scale and wanton unjust
discrimination in matters of promotion” and “gross blatant violations of Job Security and
Grievance machinery provisions of the CBA.” However, the Union did not allege that these were
done to encourage or discourage membership in a labor organization, as in fact, the members
whose promotions were complained of are likewise members of the union. Thus, the promotions
do not amount to ULP under Art. 248 (e) of the Labor Code.
Concerning the alleged violations of the CBA under Art. 248 (i), to be treated as ULP, under Art.
261, “violations of a CBA, except those which are gross in character, shall no longer be treated
as unfair labor practice and shall be resolved as grievances under the Collective Bargaining
Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement
shall mean flagrant and/or malicious refusal to comply with the economic provisions of such
agreement.”
For ULP cases to be cognizable by the Labor Arbiter, the allegations in the complaint should
show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2)
the violation pertains to the economic provisions of the CBA. Since the grievance machinery
provision is not an economic provision, the second requirement is not present.
As to the violation of the Job Security provision for appointing less senior employees ang by-
passing the more senior and equally or more qualified employees, since the seniority rule has a
bearing on salary and benefits, it may, following a liberal construction of Article 261 of the Labor
Code, be considered an "economic provision" of the CBA. Thus, the Labor Arbiter has
jurisdiction
Dispositive: Petition is denied.