LIBERATION STEAMSHIP CO., INC., PETITIONER, VS. COURT OF INDUSTRIAL RELATIONS AND THE UNLICENSED CREW MEMBERS OF THE THREE (3) DOÑA VESSELS, ALL AFFILIATES WITH THE PHILIPPINE M…

Petitions filed separately by the Liberation Steamship Co., Inc.
(hereinafter referred to as LISTCO) and the National Development Company
(referred to hereafter as NDC) for the review of the resolution of the Court of
Industrial Relations en banc of September 2, 1965 modifying the
decision of the trial Judge of May 13, 1964 in Cases Nos. 36-IPA, 36-IPA(81), 36-IPA(2) and 36-IPA(4).

Petitioner NDC, a government-owned and
controlled corporation, in 1961 was the owner and operator of the vessels M/S
“Doña Alicia”, Doña Nati” and Doña
Aurora”.  It can be gathered from
the records that prior to April 15,
1961, said corporation decided to dispose of these three vessels;
and in the bidding that ensued, LISTCO won. 
The crew members of the three vessels, through the Philippine Maritime
Industrial Union (PMIU), made representation with both the seller and the
purchaser to retain them in the service of the vessels.  And when in the final deed of sale no
provision on the hiring of the complement of the vessels was included, the
crew-members declared a strike on April
15, 1961.  On April 25, 1961, the dispute was
certified by the President to the Court of industrial Relations.

On April 29, 1961,
the Industrial Court
ordered, as follows:

“O R D E R

It appears from the record that the three Doña
vessels mentioned in the presidential certification had already been sold by
the government to the Liberation Steamship Company.  Hence, the said company is indispensable
party in this liti­gation, without whom no final
determination of this case can be had.

“The Clerk of Court shall summon said company to appear in
this action.

“SO ORDERED.”

Then, acting upon NDC’s
petition, alleging that the strike was causing the corporation an actual loss
of about P15,000.00 daily, the court, on May 3, 1961, issued a return-to-work
order, the pertinent part of which reads:

“- – – considering further, that the labor dispute between the
management of the National Development Company and the unlicensed crew members
of said vessels cannot be promptly settled or decided, the Court hereby
directs all the strikers to return to work immediately upon receipt of this
Order, and the management to take them back under the last terms
existing before the dispute arose.

“During the pendency of this case, the
management shall refrain from dismissing any employee or laborer, unless
with the express authority of this Court.

“SO ORDERED.” (Underscoring
supplied)

Over a month and a half after this order, i.e., on June 17, 1961, representatives of the
LISTCO posted notices around the M/S “Doña
Alicia” to the effect that the officers end members of the crew not
otherwise appointed by the said new owner will be ejected.  Then, at about 3:30 in the afternoon of the
same day, some 30 security guards and about 50 men with luggages
came aboard the said vessels and never departed therefrom
– until the vessel left port on June 21, 1961, and only after the remaining
members of the original crew had been sent down.

The unlicensed crew members of the three “Doña”
vessels thus petitioned the industrial Court for an order to restrain LISTCO
from carrying out its ejection threat of the officers and/or crew members of
the M/S “Doña Alicia” and of the two other
“Doña” vessels upon their delivery to the
new owner.  A restraining order was
accordingly issued on June 30, 1961
against therein respondent NDC and/or its successor, the LISTCO, directing the
maintenance of status quo during the pendency
of the dispute.  The restraining order,
however, covered only the officers and unlicensed crew members of the “Doña Nati” and “Doña Aurora”; it did not extend to the crew of the
“Doña Alicia”, because their dismissal had
been already carried out.  Petitioners
merely reserved the right to file the appropriate action against whoever was
res­ponsible therefor.  A petition for contempt against the LISTCO,
because of the dismissal of the original complement of the M/S “Doña Alicia”, became one of the incidents of the case, but
was later dismissed.

It may be stated at this juncture that petitioners’ demands
included payments by NDC of a gratuity equivalent to one month salary for every
year of service, from their employment up to the termination of their services
on account of the sale of the vessels to LISTCO; payment of strike-duration
pay; commutation of accumulated vacation and sick leaves, of unpaid overtime
services rendered from the dates of their employment, and of gratuity and
accumulated vacation and sick leaves to the officers and/or crew members who
were on leave and were required by the NDC to man the new cargo liners from
Japan to the Philippines.  Petitioners
asked of the LISTCO their retention as officers and/or crew members of the
“Dona” vessels; for the observance or continuation of the collective
bargaining contract between NDC and the union until its expiration in June
1962, and for separation pay for any officer and/or crew members retained but
separated by LISTCO from the service within one year from the turnover of the
vessels.

Thereafter, an agreement was reached between the petitioning
officers^[1]
and crew members of the M/S “Doña Alicia”
and the LISTCO, duly approved by the court On November 29, 1961, by virtue of which those who were laid
off in June, 1961 were readmitted to work. 
On August 14, 1962,
however, the NDC again took possession of the vessels^[2]
and resumed their operation.

On May 13, 1964, the court rendered judgment:  (a) petitioners’ demand gratuity pay (from
the date of their employment to the sale of the vessels) was denied on the
ground that, with the resumption of the operation of the vessels by NDC, this
claim had become moot and academic; (b) petitioners were declared entitled to
accumulation of sick and vacation leaves with pay, not exceeding 5 months,
allegedly in accordance with Government Enterprises Circular No. 4 which
authorizes payment of vacation and sick leaves to employees of government-owned
and controlled corporations, as per section 285 and 285-A of the Administrative
Code, as amended; (c) the claim for unpaid overtime was ruled out on the ground
of prescription, demand therefor having been made
beyond three years from the accrual of cause of action; (d) denied the demand
for gratuity for those who were required to serve as delivery crew of the new
cargo liners from Japan to the Philippines, because gratuity is essentially voluntary
and the management cannot be compelled to give the same.  However, they were declared entitled to the
corresponding vacation and sick leaves with pay.  The trial judge also held NDC responsible for
the ejection of the crew of the M/S “Doña
Alicia”, in view of its failure to incorporate in the deed of sale in favor of
LISTCO a provision on the retention of the services of the complement of the
vessels, in spite of the latter’s requests therefor
prior to the consummation­ of the sale. 
Consequently, the NDC was ordered to pay the back wages of the ejected
crew up to the date of their actual reinstatement.  The LISTCO, on the other hand, was completely
exonerated from any liability, the trial court reasoning that the lay off of
the crew of the M/S “Doña Alicia” was committed
on June 21, 1961, or before said respondent became subject to the restraining
order of June 30, 1961.

On September 2, 1965,
the Court of Industrial Relations en banc, resolving the motion
for reconsideration filed by the NDC, modified the decision of the trial judge,
by holding the NDC and LISTCO solidarily liable for
payment of the backwages of the officers and/or crew
members of the M/S “Dona Alicia” for the duration of their
lay-off.  In holding LISTCO equally
responsible, the court en banc took into account the fact that as
of April 29, 1961, it was
already an indispensable party to the case. 
Thus, with knowledge of the restraining order of May 3, 1961 to the “management” against
unauthorized dis­missal of employees and laborers, the court held that LISTCO
could not claim to have acted in good faith when it ejected the crew of the M/S
“Dona Alicia” on June 21,
1961.  The resolution en
banc also increased the allowable accumulated vacation and sick leaves
with pay of the petitioners, from 5
to 10 months, pursuant to Republic Act 1081. 
Furthermore, considering the petitioners’ allegation in a supplemental
memorandum that a new sale of the “Doña” vessels had
taken place during the pendency of the motion for
reconsideration, the case was ordered reopened, but only for the purpose of
determining the merits of the demand for gratuity pay.  This is a resolution now subject of these
petitions for review.

In G.R. No. 25389, LISTCO assails the correctness of the ruling
of the Court of Industrial Relations en banc insofar as it
required this petitioner to pay, jointly and severally with the NDC, back wages
to the affected officers and crew members of the M/S “Doña
Alicia”, claiming (1) that the Industrial Court was without jurisdiction
over its persons, LISTCO not being a party to the labor dispute certified to it
by the President; (2) that the restraining order of May 3, 1961 did not include
this petitioner; and (3) that it cannot legally be compelled to retain the
services of the original crew of the M/S “Dona Alicia”.

On the first issue raised by this appellant, it is contended that
the disputed ruling is based on the singular factor that LISTCO was a party to
the case.  This, according to petitioner,
is erroneous, because under Section 10 of Republic Act 875 the Industrial
Court has jurisdiction only over the employer and
employees involved in the dispute certified to it.  And since what was certified was the labor
conflict between the crew members of the vessels and the NDC, it is now asserted
that the Industrial Court
was bereft of authority to bring LISTCO (which had no employer-employee
relationship with therein peti­tioners) into the case and thereafter to issue
orders against it.

The contention is without merit. 
It cannot be denied that when the certification was made by the
President on April 25, 1961,
and the Court of Industrial Relations assumed jurisdiction over the case, the
three “Dona” vessels were still owned and operated by the NDC.  Understandably, the presidential
certification mentioned only the crew of the vessels and the NDC as parties to
the dispute.  Although not originally
named as respondent, the court, informed of the consummation of the sale,
ordered the inclusion of LISTCO as an indispensable party.

Petitioner LISTCO cannot contest the authority of the trial judge
in ordering it to be impleaded in the
proceeding.  In the first place, this
being a certified case, the Court of Industrial Relations, in the exercise of
its arbitration power, can direct the inclusion or exclusion of parties therefrom;^[3]
it is clothed with authority to issue such order or orders as may be necessary
to make effective the exercise of its jurisdiction,^[4]
which may include the bringing in of parties into the case.  Secondly, what confers jurisdiction on the Industrial
Court is not the form or manner of certification
by the President, but the referral to said court of the industrial dispute
between the employer and the employee.^[5]
Thus, the court is not deprived of jurisdiction over a case simply because the
certification of the President is erroneous.^[6]
In other words, the particular names of the contending parties, as specified in
the presidential directive, are merely descriptive of the disputants.  That LISTCO was not so named in the
certification would not make it any less the employer of the petitioning em­ployees
within the contemplation of law, since by the transfer of ownership of the
vessels it actually became such employer.

It is next claimed that LISTCO is not bound by the restraining order
(back to work and no lockout order) of May
3, 1961, for the reason that the order itself referred to “the
management of the National Development Company”.  Besides, petitioner asks, how could it comply
with the order to take the strikers back when the crew-members were never in
its employ?

The argument fails to consider that by the order of April 29, 1961 LISTCO, as the new
owner of the vessels, was included as an indispensable party in the litigation,
“without which no final determination of this case can be had.” It
was, therefore, made of record that LISTCO was then already the owner and opera­tor
of the ships, there having been no showing that the management thereof was
lodged in another; it was a party against which any appropriate order shall be binding
and enforceable.  The order of the trial
judge to “the management”, to reinstate the strikers under the last
terms existing before the dispute arose and to refrain from dismissing any
employee or laborer, could not have been directed solely against the NDC but
also to LISTCO which had the power to admit or discharge employees.

Even if we follow petitioner’s theory that the restraining order
should be literally construed, and the ambiguity or imperfection created by the
mention of “the management of the National Development Company” be resolved in favor of LISTCO, the ruling of the court
below must still be affirmed.  With
actual knowledge of the aforementioned restraining order of May 3, 1961, LISTCO cannot claim to
have acted in good faith when it caused the ejection of the crew of the M/S “Doña Alicia”, and should be held liable for payment of the
wages which the crew of the latter failed to receive.  Hence, the award of back wages by the Court
of Industrial Relations is proper.  It is
a means adopted to enforce or carry into effect a solution to the labor
dispute; a valid exercise of its power of arbitration and conciliation under
Commonwealth Act 103.^[7]

In L-25390, the NDC raises as issues (1) the legality of the
strike staged by the crews of the three vessels and of their right to
strike-duration pay; (2) its liability for such strike-duration pay and for
reinstatement of the officers and crew-members who were not reemployed after
the conclusion of the Agreement of November 28, 1961; (3) the jurisdiction of
the Court of Industrial Relations over the officers of the vessels; (4) the
legality of the ruling that the crew-members are entitled to accumulated sick
and vacation leaves with pay; and (5) the correctness of the order of the court
en banc to reopen the case, insofar as the union’s demands for
gratuity (Nos. 1 and 8) are concerned.

To question the legality of the strike declared on April 15, 1961, for the purpose of
disputing the award of back pay to the affected employees and the order to
reinstate the strikers, is not here proper. 
It may be pointed out that in both the decision of the trial judge and
the resolution of the court en banc presently on review, the
award of back wages is not for the period when the employees were on strike,
but while the crew members of the M/S Doña
Alicia” were out of work, on account of their ejection from the vessel by
LISTCO.  In other words, the legality or
illegality of the strike has nothing to do with the judgment for backwages; the payment of these wages was the offshoot or
consequence of the disregard or violation of the court’s order of May 3, 1961 prohibiting unauthorized
dismissal of employees during the pendency of the
main controversy.

Furthermore, it is evident that the strike of April 15, 1961 was precipitated by
the non-inclusion in the deed of sale in favor of LISTCO of provision on the
retention in the service of the complements of the vessels.  With the reinstatement of the employees, as a
consequence of the agreement of November
28, 1961, and the reacquisition by the original owner, NDC, of the
possession and management of the vessels, this issue has become academic.

Nor is there reason for exempting the NDC from liability for
payment of the employees’ back wages. 
There can be no dispute that as of June 17, 1961, when the Owner’s
Protocol of Delivery and Acceptance (of the M/S “Doña
Alicia” was signed, purporting to grant to the LISTCO the sole right of
management of the vessel and the absolute authority to hire and fire the
members of the crew, the Court of Industrial Relations back to work order
simultaneously ordering management to refrain from dismissing laborers without
the labor court’s authority was already in full force, having been issued since
May 3.  Yet, in its letter dated June 17,
1961 and sent to the Master of the M/S “Doña
Alicia”, the General Manager of the NDC “enjoined” the officers and
crew members thereof, who were not selected by the new owner to debark.  This letter, in effect, was a defiance of the
Industrial Court’s
injunction, just as the LISTCO’s replacement of the
“Doña Alicia” crew was in disregard of the same
order.  This cooperation and concordant
action of both appellants, plainly contrary to the express order of the Court
of Industrial Relations of May 3, justifies their being held solidarily liable for the back wages of the officers and
crew of said motor vessel.

The claim that the Court of Industrial Relations did not acquire
jurisdiction over the person and demands of the officers of the three vessels
because they did not go on strike and were not included in the certification by
the President, is without merit.  The
inclusion of said officers, as parties petitioners, effected
in virtue of the order of July 31,
1961, was well within the power of the court below to do.^[8]
And, as heretofore discussed, it is not the title of the case nor the names of
the disputants mentioned in the presidential certification that confers
jurisdiction on the Industrial Court
over an industrial dispute, but the reference to it of such dispute by the
President.

The question whether or not the petitioning officers and crew
members of the vessels are entitled to accumulated sick and vacation leaves
with pay is actually an important one. 
In arguing against the affirmative ruling of the court en banc,
petitioner NDC contends that the employment of seamen or sailors are on
voyage-to-voyage basis and, therefore, cannot be considered permanent or
regular.  This matter of the nature or
character of employment of the complement of the vessel cannot be passed upon
in this case.  There was a finding by the
trial judge on the absence of proof that the employment of seamen was
temporary; it was found that they were paid their wages from payday to payday,
regardless of the renewal of the Shipping Articles; they were previously given
leaves of absence, and had been in the employ of NDC for the past 10
years.  These factual findings, left
unaltered by the court en banc, we cannot here review.

The lower court’s recognition of the right of herein private
respondents to accumulation of sick and vacation leaves with pay is based on
the provisions of Government Enterprises Counsel Circular No. 4 of March 19,
1948 (Exhibit “BB”), allowing payment of sick and vacation leaves to
employees of government-owned and controlled corporations, and of Sections
284-286 of the Administrative Code, as amended by Republic Act No. 1081, which
increased the allowable accumulated vacation and sick leaves of government
employees to 10 months.

Admittedly, the NDC is a government-owned and controlled
corporation.  The fact that the officers
and unlicensed members of the crews of the vessel had a collective bargaining
contract that did not contain any provision on the payment of accumulated
leaves does not bar by itself the employees’ resort to the leave-law.  The rule is that the law forms part of, and
is read into, every contract, unless clearly excluded therefrom
in those cases such exclusion is allowed [Manresa,
Comm. Vol. 8, part 2 (5th Ed) p. 535.]

“Pero en los
mas de sus preceptos, la ley como se
ha dicho muchas veces, da un solo modelo del contrato, que pueden
o no aceptar los contratantes.  Sentado esto y siendo costumbre la modificacion de este
modelo legal, puede surgir la duda de si el contrato que nada diga, se suple por los
preceptos legales o por la practica que mos modifica.  La superioridad
incontrovertible de la ley, hace
suponer que el problema se decidiria generalmente por esta, salvo dos excepciones:  una indudable, cuando ella misma
hace sus preceptos supletorios, no solo del
pacto, sino de los usos locales; otra legitima, cuando la costumbre es constante, y ademas hay en el contrato datos para suponer
su aceptacion.”

In the absence of any showing that the parties intended to
exclude the application of Sections 284-286 of the Administrative Code and
Government Enterprises Counsel Circular No. 4, it is rational to assume that
they intended these legal rules to apply, and that for this very reason no stip­ulation
was made any more in the collective agreement about vacation and sick leaves.

As regard the last assigned issue, it appears that the trial
judge denied the employees’ demands for payment by NDC of gratuity (Demands
Nos. 1 and 8) on the ground that with the reacquisition by NDC of possession
and management of the vessels they had become academic.  The court en banc however,
informed of the resale of the vessels to another party during the pendency of the motion for reconsideration of the trial
court’s decision ordered the reopening of the case insofar as these demands for
gratuity are concerned.  Petitioner
contends such reopening to be error because gratuity is not demandable by an
employee as a matter of right, being a reward given by an employer in
recognition of the services rendered by the employees; consequently, it is a
proper subject for negotiation or collective bargaining.  It is argued further that there being no
showing that the collective bargaining contract between the employees and the
NDC provides for payment of gratuity by the employer upon termination of the
employee’s services, the order to remand the case for reception of evidence on
Demand 1 lacks legal basis.

To this reasoning we can not agree.  While normally discretionary, grant of a
gratuity or bonus, by reason of its long and regular concession may become
regarded as part of regular compensation (Philippine Education Co., Inc.  vs. C.I.R., 92 Phil. 382, 385, and cases
cited therein).  In order to determine
whether such conditions operated in the instant ease, the reopening of the
trial for receiving, evidence on the point was evidently proper.

WHEREFORE, the resolution appealed from is hereby
affirmed.  Costs in G.R. No. L-25389 are taxed against petitioner-appellant LISTCO and in G.R.
No. L-25390, against petitioner-appellant NDC.

Concepcion, C.J., Dizon,
Makalintal, Zaldivar,
Sanchez, Castro, Angeles, and Fernando
JJ., concur.

^[1]
Notwithstanding opposition by the respondents, the title of the case was
amended by order of July 31, 1961 to include as parties-petitioner “the
licensed officers and/or crew members represented by Gerardo Angeles”, the
court considering the situation that a common question of fact or law, arising
from the same subject matter, exist between the unlicensed crew members and the
licensed officers and crew members of the Doña vessels
(pp. 229-230, CIR record).

^[2]
On May 15, 1962, LISTCO
served notice on NDC to rescind the contract of sale of the vessels, claiming
that the latter failed to disclose during the negotiations its obligations to
the Philippine Maritime Industrial Union, thus bring about LISTCO’s
involvement in legal disputes.  The NDC
later repossessed the vessels, charging LISTCO with having abandoned them and
breach of contract.

^[3] Section 7, Commonwealth Act 103.

^[4] Rizal Cement
Co., Inc. vs. Rizal Cement Workers Union, G.
R. No. L-12747, July 31, 1960;
Hind Sugar Co. vs. CIR, G.R. No. L-13364, July 26, 1960; Philippine Marine Radio Officers Association vs. CIR, 102
Phil. 373.

^[5] Section 10, Republic Act 875.

^[6] See Pampanga Sugar Development Co. vs.
CIR, et al., G. R. No. L-13178, March
25, 1961.

^[7]
Philippine Marine Radio Officers Association vs. CIR, 102 Phil. 372,
383.

^[8]
See Notes (3) and (4), ante.