ARRASTRE SECURITY ASSOCIATION-TUPAS, AGUSTIN TIBO AND 350 INDIVIDUAL MEMBERS, PETITIONERS, VS. HON. BLAS F. OPLE, NATIONAL LABOR RELATIONS COMMISSION, GUACODS MARINE INC., E. RA…

This is a petition for certiorari to set aside the order and
resolution of Minister of Labor Blas F. Ople denying the payment of
backwages to the petitioners and the decision of the Ad Hoc National
Labor Relations Commission considering them as temporarily laid off
without compensation until their actual reinstatement. This petition is
an offshoot of an unfair labor practice case.

The background facts of the case are not in dispute. In the words of the mediator-fact finder of the NLRC, they are:

“It appears that the Arrastre Security Association-TUPAS, ASA in
short, is a duly registered labor organization with Registration
Certificate No. 1159-IP, issued on December 22, 1954 having as members
security employees in the arrastre service at South Harbor, Port Area,
Manila, and was under the employ of the Delgado Brothers, Inc., Arrastre
operator.

“That the Court of Industrial Relations repeatedly certified it on
August 6, 1955 and May 14, 1957 as the sole and exclusive contractor.

“That in May, 1966 Guacods Marine Terminal and E. Razon, Inc.,
arrastre contractors, took over the arrastre service at South Harbor,
Port Area, Manila, by virtue of winning the bid. The former as the new
acknowledged employers of the ASA signed their respective collective
bargaining agreements with the latter.

“That on April 11, 1972 the Court of Industrial Relations
certified the ASA as the sole and exclusive agent of all the security
employees of respondent Guacods Marine Terminal for purposes of
collective bargaining as regards wages, hours of work, terms and other
conditions of employment.

“That on May 9, 1972 the Court of Industrial Relations likewise
certified the ASA as the exclusive representative of all the watchmen
employed with respondent E. Razon, Inc. in respect to rates of pay,
wages, hours of work and other terms and conditions of employment for
collective bargaining purposes.

“That on October 9, 1972 the Philippine Constabulary issued Letter
Directive M-10, by virtue of, and pursuant to, Proclamation No. 1081,
requiring company guards being employed by private firms companies and
corporations to acquire the necessary ‘License to Exercise Profession’
as watchmen or security guards. To secure such license, applicant must
submit, among others, ‘certification under oath of the
Proprietor/personnel or Administrative Manager of firm/corporation as to
the date the company guard was first employed and that he is still
em­ployed by said firm/corporation.

“That on October 13, 1972 the ASA sent letters to the Guacods
Marine Terminal and E. Razon, Inc. requesting them to give the necessary
individual certi­fication of employment to all its members security
guard and/or watchmen.

“That on October 13, 1972, respondent Guacods Marine Terminal in
its reply-letter refused to ‘issue said certification of employment for
the simple reason that we consider the members of your association as
your employees and not that of our corporations. However, it
acknowledged on October 23 conference that the members of the ASA are
their employees.

“That on October 14, 1972, employer E. Razon, Inc. in its
reply-letter likewise refused to ‘give the certificate of employment in
view of the memorandum of October 13, 1972 of the Acting Deputy
Commissioner of Customs’. Nevertheless, it also acknowledged on Oct. 23
conference among the parties before the undersigned that an
employer-employee relationship existed between them.

“That on October 13, 1972, Atty. Pedro Mendoza, Acting Deputy
Commissioner of Customs, by virtue of the decision of the Department of
National Defense authorities thru the chief of Staff, in consonance with
the enforcement of Republic Act 5487 (The Private Agency Law) as
amended by Presidential Decree No. 11, issued a memorandum for the
commissioner of Customs directing the Customs Metropolitan Police
Service (CMPS) to take over the function of the Arrastre Security
Association.” (Rollo, pp. 33-35)

xxx                                xxx                                xxx

Questioning the respondent corporations’ refusal to make the
required certifications of employment, the petitioner-union in
representation of the 350 security guards filed with the Bureau of Labor
Relations a “Request for Assistance In Dispute Settlement” alleging
union busting discrimination, harassment, violation of collective
bargaining agreement, and other acts constituting unfair labor
practices.

The request for assistance prompted the Department of Labor to
hold an initial conference regarding the matter. During this conference
presided by Undersecre­tary of Labor Amado Gat Inciong, all the parties
were represented by their respective counsel. A concilia­tion
conference among the parties followed.

At the conference, the counsels for Guacods Marine Terminal and E.
Razon Inc. manifested their willingness to issue the certifications of
employment required before the licenses as watchmen or security guards
would be issued by the Philippine Constabulary. Considering the
respondents’ admission of the employee-employer relationships, the
Secretary of Labor was informed by the Chief of his legal staff that it
was not necessary to certify the existence of this relationship. The
Secretary of Labor then informed the president of the Arrastre Security
Association that his members could proceed to secure the certifications
from the respondents.

The reinstatement of the petitioners, however, could not be effected
because the AFP Military Supervisor told the Bureau of Customs to
continue using the Customs Metropolitan Police Service to discharge the
functions of the Arrastre Security Association. As a result, the
petitioner union filed a complaint with the Ad Hoc National Labor
Relations Commission charging the respondent corporations with unfair
labor practices. It prayed that the respondent corporations: 1) be
declared guilty of unfair labor practices; 2) be ordered to reinstate
dismissed/locked-out members of complainant union, with full backwages
and without loss of seniority and other employees benefits; and 3) be
ordered to cease and desist from committing further acts of unfair labor
practices against complainant union and members.

After a preliminary fact-finding investigation, the case was assigned
to the chief of the legal staff of the Department of Labor who was
designated as compulsory arbitrator. After due hearings, a decision
finding respondent-corporations guilty of unfair labor practices was
promulgated. The dispositive portion of the decision reads:

“WHEREFORE, respondents Guacods Marine Terminal and E. Razon, Inc.
are hereby ordered to reinstate the 350 members of the Arrastre
Security Association-TUPAS to their former jobs with full back wages
from October 14, 1972 until actually re-instated, to cease and desist
from further committing unfair labor practices and finally issue an
individual certificate of employment as a requirement in procuring PC
permit in accordance with the Private Security Agency Law, as amended.”

E. Razon, Inc., appealed the decision to the Ad Hoc Labor Relations
Commission. The Commission, despite the fact that Guacods Marine
Terminal did not appeal, reviewed the whole decision. In its decision
dated March 22, 1973, the Commission modified the arbitrator’s decision
as follows:

“First, that it was through no fault of the respondents
that the members of the complainant union were barred from working as
security guards at the Customs Zone starting 14 October 1972. This
happened because the Customs Metropolitan Service, acting pursuant to a
Memorandum of Col. Pedro C. Mendoza, Jr., Acting Deputy Commissioner of
Customs dated 13 October 1972, took over the functions of the said
security guards. The respondents, therefore, did not commit any unfair
labor practice.

“Second, that Col. Mendoza issued the said memorandum in
compliance with a decision/order of top officials of the Department of
National Defense. In this sense, it was an act of a duly authorized
representative of the President under martial law and was, therefore, a
valid act of state. It was, moreover, a necessary act in the light of
the Government’s interests and responsibilities at the Customs Zone, on
the one hand, and, on the other, the anomalies that used to be daily
fare therein, perpetrated by government employees and private persons
alike, some of these in the security services not excluded.

“Third, that the security guards involved in those
anomalies and those who otherwise have bad records or not fit for the
security service in accordance with the requirements thereof, have no
place in such service, even as the rest who are honest and efficient
deserve to be returned thereto.

“Fourth and last, that the latter, however, may not be
awarded backwages because, as stated earlier, this would amount to
penalizing the respondents for a turn of events over which they had no
control. They should be considered as temporarily laid off without pay
from 14 October 1973 until the date they are actually returned to work
pursuant to this decision.”

The complainant union appealed the Commission’s decision to the
Secretary of Labor but limited the appeal to that portion which struck
out the claim for backwages from October 14, 1972 until the 350 members
would be reinstated to their jobs. The union appellant claimed that the
decision was not supported by the facts, law, and jurisprudence. For
the first time, Deputy Customs Commissioner Pedro Mendoza was included
as a respondent in this appeal.

The appeal and a subsequent motion for reconsi­deration were denied by
the Secretary of Labor. At the same time, the Secretary ordered the
respondents to extend financial assistance equivalent to one month
salary to each of the laid off workers. This assistance was justified
as follows:

“We believe, however, that while the law must be fully implemented
in conformity with its letter and spirit, the same must nonetheless be
tempered with mercy and humane considerations. It should not be
overlooked that the individual members of complainant union whose
reinstatement may no longer be possible had, for many years, been in the
service of respondents. While they are not entirely without fault such
that they can no longer be reinstated, much less may they qualify for
separation pay, it would be in keeping with the social justice policy of
the State that some measure of financial assistance be extended to
them.”

The petitioners not satisfied with the foregoing order, filed this petition and italized the following issues:

“1. That the Decision of Arbitrator Porfirio E. Villanueva
dated January 26, 1973 (Annex ‘E’) ordering the reinstatement of 350
individual petitioners is final and executory against respondents
Guacods, the Deputy Commissioner of Customs and E. Razon, Inc.

“2. That the Decision (Amax ‘E’) of Arbitrator Porfirio E.
Villanueva dated January 26, 1973 is supported by preponderant evidence
and is in accordance with law and jurisprudence laid down by this
Honorable Court.

“3. That the Decision (Annex ‘G’) of the Ad Hoc National
Labor Relations Commission denying the reinstatement of some of the
individual petitioners and the non-payment of backwages is without any
factual and legal basis, and constitutes a grave abuse of dis­cretion
amounting to lack of jurisdiction, and is therefore null and void ab
initio.

“4. That the Resolution dated July 31, 1974 (Annex ‘I’) and
the Order dated July 25, (Annex ‘K’) are capricious and whimsical,
issued in grave abuse of discretion in excess of jurisdiction, contrary
to and in violation of the Constitution.

“5. That respondents Guacods and E. Razon, Inc. are guilty of unfair labor practice.

“6. Section 11, Rule II, Book V of the Rules and
Regulations Implementing the Labor Code of the Philippines and Article
244 of the Labor Code of the Philippines (PD 442 as amended) is
unconstitutional.

“7. That individual petitioners were deprived of their property rights to employment without due process of law.

“8. That individual petitioners are entitled to
reinstatement with full backwages and those who cannot be reinstated due
to old age or physical disability are additionally entitled to
severance or termination pay.

“9. That the defenses and arguments put up by respondents are without any basis both in fact and in law and is devoid of merits.

“10. That petitioners are entitled to the reliefs prayed for
and they have no other pIain, speedy and adequate remedy in the ordinary
course of law than the instant petition.

All of the above issues revolve around one main issue — whether or not
the 350 complainants-petitioners may be reinstated to their former
positions with full backwages from October 14, 1972 until actual
reinstate­ment and whether or not the private respondents are guilty of
unfair labor practice.

We first resolve two preliminary issues. The respondents contend that
appeals from decisions of the Secretary of Labor should be elevated to
the President and, therefore, this Court has no jurisdiction over the
case.

The contention is without merit.

The case before us is a petition for certiorari asking for the
nullification of the Secretary of Labor’s resolution affirming the
decision of the respondent Commission and for the reinstatement of the
arbitrator’s decision. We ruled in Kapisanan Ng Mga Manggagawa Sa La Suerte Foitaf v. Noriel
(77 SCRA 414) that under the Labor Code, a jurisdictional question
arising from an allegation of lack of power or arbitrary or improvident
exercise of authority may be passed upon by this Court in an appropriate
certiorari proceeding.

Earlier, we ruled in San Miguel Corporation v. Secretary of Labor (64 SCRA 56, 60):

“Yangley raised a jurisdictional question which was not brought up
by public officials. He contends that this Court has no jurisdiction
to review the decisions of the NLRC and the Secretary of Labor ‘under
the principle of separation of powers’ and that judicial review is not
provided for in Presidential Decree No. 21.

“That contention is a flagrant error. ‘It is generally understood
that as to administrative agencies exercising quasi-judicial or
legislative power there is an underlying power in the courts to
scrutinize the acts of such agencies on questions of law and
jurisdiction even though no right of review is given by statute’ (73
C.J.S. 506, note 56).

“‘The purpose of judicial review is to keep the administrative
agency within its jurisdiction and protect substantial rights of parties
affected by its decisions’ (73 C.J.S. 507, Sec. 165). It is part of
the system of checks and balances which restricts the separation of
powers and forestalls arbitrary and unjust adjudication.

“Judicial review is proper in case of lack of jurisdiction, grave
abuse of discretion, error of law, fraud or collusion (Timbancaya v.
Vicente, 62 O.G. 9424; Macatangay v. Secretary of Public Works and
Communications, 63 O.G. 11236; Ortua v. Singson Encarnacion, 59 Phil.
440).

“‘The courts may declare an action or resolution of an
administrative authority to be illegal (1) because it violates or fails
to comply with some mandatory provision of the law or (2) because it is
corrupt, arbitrary or capricious’ (Borromeo v. City of Manila and
Rodriguez Lanuza, 62 Phil. 512, 516; Villegas v. Auditor General, 18
SCRA 877, 891).”

The petitioners contend that the respondents failed to make a timely
appeal of the arbitrator’s decision to the National Labor Relations
Commission.

The records show that E. Razon received the arbitrator’s decision on
February 12, 1972 and on this same day filed its appeal with the
National Labor Relations Commission. (p. 146, Rollo). In its Order
dated February 22, 1973, the National Labor Relations Commission gave
due course to the appeal and ordered the parties to submit to the
Commission, “x x x if they so desire, their memorandum in support of, or
in opposition to the said Appeal within five (5) days from receipt by
them of this Order.” (Annex “2”, Comment E. Razon, p. 284, Rollo) In
compliance with the said Order, E. Razon, Inc. filed its memorandum on
March 3, 1973. Petitioners likewise filed their memorandum. An
examination of their memorandum shows that they did not raise as an
issue the timeliness of E. Razon’s appeal.

Moreover, the petitioners upon appeal of the National Labor Relations
Commission’s decision to the Secretary of Labor recognized the
timeliness of E. Razon’s appeal to the Commission because in their
COMPLAINANT’S APPEAL, they merely alleged that only respondent E. Razon,
Inc has appealed while co-respondent Guacods Marine Terminal and Acting
Commissioner Mendoza both failed to appeal.

The issue of the timeliness of E. Razon’s appeal from the arbitrator’s
decision to the National Labor Relations Commission surfaces only in
this petition. This issue being entirely new and an unpleaded matter in
the proceedings below may not now be raised for the first time before
this Court. (Davao Free Workers Front v. C.I.R., 60 SCRA 508).
Furthermore, after considering the foregoing circumstances there can be
no doubt that E. Razon’s appeal to the National Labor Relations
Commission was within the reglementary period provided for in Section 23
of the National Labor Relations Commission Rules and Regulations.

It is not mandatory that for the appeal to be perfected a memorandum
should also be submitted within the same five-day period to appeal.

The argument that the arbitrator’s decision has become final and
executory against the Deputy Commissioner of Customs is out of order.
The Deputy Commissioner of Customs was not impleaded as a respondent in
the petitioner’s initial complaint before the Department of Labor.
Moreover, the October 13, 1972 Memorandum issued by the Deputy
Commissioner was not even made an issue in the said complaint.

Respondent Guacods, Inc. did not appeal the arbitrator’s decision.
Nevertheless, the National Labor Relations Commission “in the interest
of justice” reviewed the whole case as if Guacods appealed for the
reason “x x x that they (respondent corporations) are uniformly situated
in so far as this case is concerned and, considering the whole context
thereof, to hold otherwise would bring about an untenable situation
which even the technical rules would frown upon.”

It is true that a decision becomes final and executory upon the lapse of
the period to file an appeal if no such appeal was perfected. In the
instant case, however, the respondent Commission was correct because the
decision ordering reinstatement could not be enforced. There were no
more positions to which the security guards could be reinstated. The
arbitrator had rendered, in effect, a decision over a moot issue and
against the wrong party.

There were also other supervening events which render the award of
backwages and reinstatement im­possible. In Virata v. Bocar (50 SCRA
468) a final award to operate the arrastre services for all the piers in
the Manila South Harbor was granted in favor of Guacod’s co-respondent,
E. Razon, Inc. In connection with this decision, an agreement dated
July 9, 1973 approved by the NLRC Chairman was executed among E. Razon,
Inc., Bureau of Customs and Tupas. The terms of the agreement are as
follows:

“1. E. Razon will accept the eleven already licensed former GUACODS security guards subject to medical examination.

“2. E. Razon will prepare a list of acceptable former GUACODS
security guards and then submit the list to the Bureau of Customs for
screening. E. Razon representatives will go over the 201 files of
former GUACODS employees which are in possession of the Bureau of
Customs.

“3. The screening committee will go over the list prepared by E. Razon for the purpose of updating it.

“4. All security guards approved by the Bureau of Customs shall
have 90 days from the time of the issuance of certification of
employment by E. Razon within which to secure licenses. This period
maybe modified depending upon the circumstances as verified by the
union.”

The basic ground for our affirming the resolution of the respondent
Secretary with some clarificatory modifications is that the 350 security
guards who filed this petition together with their union were barred
from the customs area and their functions were turned over to the
customs police. This was a martial law measure taken under the then
newly promulgated Proclamation No. 1081. The Bureau of Customs had
prior consultations with the Secretary of National Defense before taking
over all security work in the customs area.

The memorandum barring the petitioners from customs premises effective October 14, 1972 reads:

“By virtue of the decision of the Department of National Defense
authorities, thru the Chief of Staff, in con­sonance with the
enforcement of Republic Act 5487 (The Private Agency Law) as amended by
Presidential Decree No. 11 dated October 3, 1972, it is hereby directed
that the Customs Metropolitan Police Service (CMPS) take over the
functions of the Arrastre Security Association (ASA) inasmuch as this
association is not exempted from the restrictive provisions of said RA
5487, as amended by Presidential Decree No. 11.

“As any further operations by the Arrastre Security Association
within the Customs jurisdictional zone are construed to be contrary to
the aforecited Presidential Decree, you are hereby directed to assume full command and immediate take-over of the functions of the members of the Arrastre Security Association until further orders from this Office.”

If the respondent Commission and Secretary of Labor ordered E. Razon and
Guacods to reinstate the security guards, the private respondents would
have 350 security guards on their payrolls with nothing to do because
they were barred from working in the customs zone where they used to
work.

As stated by the public respondents in their memorandum:

“Even if the Commission and the Secretary of Labor ordered the
reinstatement of all the security guards, if the Bureau of Customs
refused to allow them to work in the customs zone, the order would be
futile. It is not because the Commission and the Secretary of Labor
have no authority over the Bureau of Customs. It is because they have
not acquired jurisdiction over the Bureau of Customs or Deputy
Commissioner Mendoza who were not made parties in the unfair labor
practice proceeding. And even if the Bureau of Customs and Deputy
Commissioner Mendoza were made parties, still the Commission and the
Secretary of Labor would have no jurisdiction over them as the security
guards have no employer-employee relationship with them.

“If the Commission and the Secretary of Labor went out of their
way to strike a happy compromise between the security guards on the one
hand and Guacods and E. Razon on the other hand, by using their moral
suasion (sic) on the Bureau of Customs to allow selected security guards
to be reemployed by Guacods and E. Razon and work in the customs zone,
they deserve to be thanked rather than be charged with grave abuse of
discretion. The Commission and the Secretary of Labor could have simply
ruled that Guacods and E. Razon did not commit unfair labor practice in
terminating the employment of the security guards because they were
forced by a martial law measure, i.e., the memorandum of Deputy
Commissioner Mendoza barring the security guards from the customs zone
and transferring their functions to the Customs Police. But they did
not. Having in mind the welfare of the Security guards, they endeavored
to save some of them from the difficult plight of the unemployed.

“The decision of Deputy Commissioner Mendoza to bar the security
guards from customs zone is of course not subject to question in this
proceeding. The labor arbiter, the National Labor Relations Commission
and the Secretary of Labor have jurisdiction only over cases arising
from employer-employee relations. The barring of the security guards
from the customs zone is not a matter involving employer-employee
relations. As aforesaid, the Bureau of Customs is not the employer of
the security guards.

“But even if it is subject to question in the unfair labor case
proceeding, its wisdom must have to be upheld. The decision was not
arrived at the spur of the moment. It was arrived at after mature
deliberations involving no less than the Secretary of National Defense.
It was precipitated by the long-observed existence of extensive
pilferages, graft and corruption in the customs zone trace­able partly
to activities of the security guards. When martial law presented the
opportunity to correct this pervasive anomaly, the Bureau of Customs
grabbed it by barring the security guards from the customs zone and
transferring their functions to the Customs Police.

“Since the termination of the employment of the security guards
was caused by a measure to protect the national interest and to improve
public service – not the union activities of the security guards — it
can not be unfair labor practice. Dismissal of an employee, to be
unfair labor practice, must be in derogation of his right to
self-organization or interference with his union activities. (Sterling
Products International, Inc. v. Sol, 7 SCRA 446).”

As early as February 13, 1973, the respondent Deputy Commissioner made
it clear in a letter addressed to the counsel of E. Razon that the order
of take over by the customs police was in full force and effect
notwithstanding any NLRC decision in the reinstatement with backwages
case. He stated:

“Anent your letter of the 12th instant, please be informed that
the Order/Memorandum dated October 13, 1972 stands, and the same shall
continue to be in full force and effect, the Decision of the National
Labor Relations Commission in NLRC Case No. 0320 entitled ‘Arrastre
Security Association­-Tupas, Complainants, versus E. Razon, Inc., et
al., Respondents’ notwithstanding, until and unless otherwise finally
ordered by a court/tribunal of competent jurisdiction. We are
constrained to take this stand in view of the provisions of Presidential
Decree No. 11 and related decrees.”

Considering all of the foregoing, the respondent companies could not
be declared to have been guilty of unfair labor practice through locking
out the petitioners, in violation of their collective bargaining
agreement. Hence, the respondent-corporations could not be ordered to
reinstate much less pay backwages. As the Secretary of Labor stated:

xxx                                xxx                                xxx

“We affirm the Commission’s judgment that the members of the
complainant Union may not recover back wages during their temporary
lay-off. This lay off was clearly brought about by sudden changes
introduced under the Martial Law by authorities of the government within
the Customs jurisdictional zone by virtue of which respondents were
virtually deprived of control and management over their area of
operation. Thus, under these emergency conditions, no unfair labor
practice charges could be levelled against respondents for failure of
the unionists to work. Given their choices, respondents would have in
all probability allowed members of the complainant Union to continue
with their work, considering their existing collective bargaining
agreement. But, during this interregnum, respondents were left no
choice at all but to submit to the overriding requirements of the public
interest and national security. Certainly, requiring respondents to
assume the additional burden of paying backwages to complainant
unionists during this period, the cause of which was not attributable to
them, would indeed be unfair and unjust.”

The Secretary of Labor ordered the private respon­dents to extend
financial assistance equivalent to one month salary to each laid off
worker. Under the circumstances and equities of this case, it is more
appropriate to consider the termination of employment as part of a
reduction in force occasioned by the cessation of operations in the
customs premises. The petitioners are, therefore, entitled to
separation pay according to the provisions of their collective
bargaining agreement and, if there is none, according to the pertinent
pro­visions of the Labor Code and applicable rules and regulations.

We see no need to pass upon the alleged unconstitutionality of Article
244 of Presidential Decree No. 442 as amended and Section 11, Rule Two,
Book V of the Rules and Regulations implementing the Labor Code. This
petition may be resolved without touching upon the constitutional issue.

WHEREFORE, the petition calling for the nullifica­tion and setting aside
of the questioned decision and resolution is dismissed for lack of
merit. The resolution of the respondent Secretary of Labor is modified
to entitle the three hundred fifty (350) security guards-petitioners to
separation pay according to the terms of their collective bargaining
agreement or the pertinent provisions of the Labor Code and implementing
rules and regulations but in no event to be less than the one month
salary ordered by the respondent Secretary.

SO ORDERED.

Fernando, C.J., Concepcion, Jr., Guerrero, De Castro, Melencio-Herrera, Plana, Escolin, and Relova, JJ., concur.

Teehankee, Aquino, and Abad Santos, JJ., no part.

Makasiar, J., in the result.