SUPREME COURT

SECOND DIVISION

SAN MIGUEL CORPORATION

EMPLOYEES UNION-PTGWO, DANIEL
S.L. BORBON II, HERMINIA REYES,
MARCELA PURIFICACION, ET AL.,
Petitioners,

-versus- G.R. No. 87700

June 13, 1990

HON. JESUS G. BERSAMIRA, IN HIS

CAPACITY AS PRESIDING JUDGE OF
BRANCH 166, RTC, PASIG, and SAN
MIGUEL CORPORATION,
Respondents.
x---------------------------------------------------x

DECISION

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 al.”
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. chanroblespublishingcompany

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.chanroblespublishingcompany

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 of 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. chanroblespublishingcompany

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.chanroblespublishingcompany

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;
chanroblespublishingcompany

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; chanroblespublishingcompany

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. chanroblespublishingcompany
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. chanroblespublishingcompany

Evidently, plaintiff has established its right to the relief

demanded. (p. 21, Rollo). chanroblespublishingcompany
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 adjoining 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. 262 Rollo). chanroblespublishingcompany

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. chanroblespublishingcompany

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. chanroblespublishingcompany

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. Crucial 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). chanroblespublishingcompany

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: chanroblespublishingcompany

A. The exclusive bargaining representative of an employer

unit cannot strike to compel the employer to hire and
thereby create en 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
terms and conditions 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 strike

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). chanroblespublishingcompany

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.” chanroblespublishingcompany

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 negatived by the
fact that the plaintiffs and defendants do not stand in the proximate
relation of employer and employee. chanroblespublishingcompany

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 and, 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-O1-021-89; NCMB NCR NS-01-093-
83).chanroblespublishingcompany

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. chanroblespublishingcompany

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. chanroblespublishingcompany

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. chanroblespublishingcompany

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). chanroblespublishingcompany

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. chanroblespublishingcompany

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-01-021-89 and NCMB-NCR-NS-01-093-83. No
costs.

SO ORDERED.

Paras and Regalado, JJ., concur.

Padilla, J., (Because of substantial interests in San Miguel
Corporation) took no part.
Sarmiento, J., took no part (I was a former Director and
Legal Consultant).
chanroblespublishingcompany