THE COMMISSIONER OF CIVIL SERVICE, PETITIONER, VS. THE HON. JOSE S. BAUTISTA, PRE­SIDING JUDGE, COURT OF INDUSTRIAL RELATIONS AND THE KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILR…

In 1948 the Manila Railroad Company, hereinafter re­ferred to as the
Company, and the respondent Union entered into a Collective Bargaining
Agreement – duly renewed on November 4, 1957 – covering several matters
including the standardization plan of salary scales and rules to govern the
appointment and promotion of its employees.

Upon the enactment of Republic Act No. 2260 in 1959, the Company required its
employees, in compliance with the rules and regulations of the Commission of
Civil Service, to take a qualifying examination as a condition for the
permanent retention of their employment. Due to their failure to do so, many
members of the Union were converted from permanent to provisional employees.
Realizing the danger of its members ultimately losing their employment, the
Union, in their behalf, filed a notice of strike. The Department of Labor intervened for purposes of conciliation and, as a result, a committee composed of the President of the
Union, a representative of the Commission of Civil Service, and the Acting
Director, Bureau of Labor Relations of the Depart­ment of Labor, constituted to
find ways and means of solving the controversy, recommended that it be
certified to the Court of Industrial Relations for compulsory arbitration for the
purpose of preventing the disruption of the operations of the Company.

Upon consideration of the
fact that the Collective Bar­gaining Agreement between the Company and the Union provided for arbitration as the final step in
the settlement of labor disputes between them, the Department of Labor
succeeded in prevailing upon said parties to submit the issue or contro­versy
to an Arbitrator, for adjudication. In line with this, the parties selected the
then Presiding Judge of the Court of Industrial Relations, the Hon. Jose
Bautista Salamat, as Ar­bitrator to decide the following issue “for the
sake of in­dustrial peace”:

“Whether the appointments of the workers of the company who
are members of the Kapisa­nan Ng Mga Manggagawa sa MRRCo. be exempt from the operation
of the Civil Service Law (Re­public Act No. 2260) in view of the Collective
Bargaining Agreement entered into between the Manila Railroad Company and the
said union in 1948 ?”

On February 9, 1962 the
Acting Director of the Bureau of Labor Relations addressed to the Presiding
Judge of the Court of Industrial Relations an official communicatiqn in­forming
him of his selection by the parties concerned as the sole Arbitrator, and
requesting information as to whether he was willing to accept “the task entrusted
to you by the parties”. Three days thereafter Presiding Judge Bautista
replied accepting the trust provided the
parties concerned made their request in writing and both agreed in writing to
accept his decision as final
and unappealable. On February 16 of the same year the Judge received a letter jointly signed by Teofilo Zosa,
General Manager of the Company, and Vicente K. Olazo, President of the
respondent Union, re­questing him to act as sole Arbitrator to resolve the
question already setforth above and wherein they expressly accepted whatever
decision might be rendered by him as final and unappealable.  The Commissioner of Civil Service at that time also signed the joint letter after the
following state­ment: “With our
concurrence, subject to the Constitution”.

Thereafter the parties submitted the case to the Ar­bitrator
through memoranda, and on March 28, 1962, the latter made the award subject of
the petition for certiorari now before Us.

The Company and Union are not parties in this case.  It must be assumed, therefore, that they are
honoring their mutual commitment to accept the decision of the Arbitrator as “final and
unappealable”.

As far as the correctness of the award is concerned, We feel that
very little need be said.  The following
are its most salient portions:

“xxx   xxx   xxx 
On December 14, 1961, to maintain cordial relations with the union, the
company adopted Resolution No. 2065, which reads:

‘Resolve that all appointments of employees of
the Manila Railroad Company shall continue to be submit­ted to the WAPCO and
Civil Service Commission, provided, however, that in cases of appointments of
members of the Kapisanan Ng Mga Manggagawa Sa Manila Railroad Company, the same
be exempt pursuant to the opinion of the Secretary of Justice above ad­verted
to, subject to the approval of higher authorities.’

Said opinion of the
Secretary of Justice declares:

‘In Opinion No. 39, s. 1960, this Department held that ‘a collective bar­gaining agreement
concluded before May 5, 1956, when Congress approved Reorga­nization Plans 1-4 and 2-a, cannot be affected by said
Plans, and conversely, said Plans will override and prevail over a
collective bargaining agreement after said date.’ x x x Thus, we pointed out in
the said opinion
that ‘the col­lective
bargaining agreement between the MRR and its employees should be res­pected
if, as alleged, the said agree­ment was signed or concluded several years before the
approval of the WAPCO  classification and
pay plans.’ The date when the agreement was concluded,
THERE­FORE, is the decisive point in determining whether the
WAPCO Pay Plan or the collec­tive bargaining agreement rates should apply to a
union member’s appointment or promotion, and not the date of his member­ship or affiliation with the union. x x x’

‘x x x 
As the memorandum agreement containing the so-called ‘standardized
salaries’ was concluded long before the effectivity of the WAPCO pay and classi­fication
plans, this Office is of the opinion that the promotional appointments of Mr.
Eladio San Pedro and other mem­bers of the Kapisanan Ng Mga Manggagawa sa
MRRCo.’ should be processed in accordance therewith.’

“Executive Order No. 319, series of 1950, and Executive Order
No. 399, series of 1951, placed all the officers and employees of the Manila
Rail­road Company within the purview of the Civil Service Law.  The new Civil Service Act of 1959 provides
that the Philippine Civil Service shall embrace all branches of the Government, including
government-controlled corporations, like the Manila Railroad Company.

“But, on September 13, 1960, the Commission of Civil Service
recognized the validity and effectivity of the Memorandum Agreement of November
21, 1948:

‘However, attention is invited to x x and to Section 10 of Article
III of the Constitution of the Philippines which pro­vides ‘that no law
impairing the obligation contract shall be passed.’ In the light of of these
provisions, it is believed that the collective bargaining agreement concluded
between the company and the labor union con­cerned prior to the above-enacted
provision of Executive Order No. 319, series of 1950, and Executive Order No. 399,
series of 1951 cannot be affected by the Civil Service Law and rules. And that those
entered into thereafter may be considered valid and binding only if the
provisions thereof are not in conflict with the Civil Service Law and rules
which are in operation at the time said agreements were entered in­to,
notwithstanding any provision of Re­public Act No. 2260 to the contrary, which
became effective only on July 19, 1960.’

“On October 14, 1961, the Commissioner of Civil Service,
reiterating the same stand, said:

‘That the collective bargaining agree­ment entered into between the
Kapisanan Ng Mga Manggagawa Sa Manila Railroad Co. and the company on November 4, 1957 can
not be affected by the Civil Service Law and Rules.’

“Reducing the question of law into practical terms, the real
situation is this:

“The appointments of the Kapisanan members are required to be
submitted to the Civil Service Commission which, in turn, does not approve such
appointments unless the employees concerned pass examinations.  In other words, an old employee, in spite of
his long service before the enact­ment of the Civil Service Act of 1959, can be
replaced by a
new appointee if the former does not qualify.

“Employment in the Manila Railroad Company is not a public
office, since the Manila Railroad Company, engaged in transportation business,
is an ordinary business firm.  Its
functions are proprietory.  To require
examinations now for those employed before the passage of the law and to dismiss them
upon failure in the exami­nations is plain deprivation of property with­out due
process, since ‘the right of a person to his labor is deemed to be property’.  (Philip­pine Movie Pictures Workers Assn. vs.
Premiere Productions)

“‘To deprive a person of the exercise of right is to take away
such right from him.  Any restriction or
curtailment of the rights to life, liberty or property would likewise mean the
deprivation of such rights and is not allowable under the constitutional
provision unless the standard of fairness or justice or reasonable­ness is
met.’ (Tañada & Fernando, Constitution of the Philippines, Vol. I, p. 100).

“All employees of the company under the agreement are
employees even without appoint­ments by virtue of the contract of labor.  This contract, as to the right to labor and
the period and terms of holding the task to be per­formed, cannot be
violated.  The parties never agreed on
the requirement on appointments.

“‘Any law which enlarges, abridges, or in any manner changes
the intention of the parties necessarily impairs the contract itself.’ (Tañada
& Fernando, Constitution of the Philippines, Vol. 1, p. 438).

“Hence, the Civil Service Act of 1959, by inserting new
requirements that the parties never agreed upon, impairs the contract itself.

“Employees have the right to form a union, enter into collective
bargaining agreement and declare a strike, while the employer has a
corresponding duty to bargain collectively. In fact, they concluded an agreement. These em­ployees’ rights and
the employer’s duty and the agreement itself would become worthless and
ineffectual if
the Civil Service Law
would apply to the agreement.

“It is true, there is
no stipulation in the agreement of November 21, 1948 and its reiteration
of November 4, 1957 that the Civil
Service Law shall not apply to the Kapisanan members or their
appointments shall not be subject to said law. 
With or without stipulation, the Civil Service Act cannot be applied to
the Kapisanan members under the agreement, because said Act can neither impair
a contract, nor deprive a person of the right of his labor without due process.

“WHEREFORE, the appointments of the Kapisanan members are not
subject to the Civil Service Act of 1959, in view of the Agreement of November
21, 1948.”

But while the Company and the Union – as already stated above – have taken
no step to contest the correctness nor the validity of the award, the
Commissioner of Civil Service commenced this certiorari proceedings to have it
set aside,
claiming that: (a) the Court of Industrial Relations had no jurisdiction to
decide the question of whether or not the Civil Service Law is applicable
to the employees of the Manila Railroad Company, and (b) the issue resolved by
the award “involved the submission to
arbitration by a public official on (of) matters regarding the discharge
of duties so that res­pondent judge ruled on what the Commissioner of Civil Service can
do or can not do under the law”.

Both contentions are, in
our opinion, without merit.

It is true that the controversy between the Company and the Union
was originally referred to the Court of In­dustrial Relations, but it is just
as true that the same was, by agreement in writing of the parties, including
the Com­missioner of Civil Service at the time, withdrawn from that court’s
jurisdiction and placed in the hands of its Presid­ing Judge as sole Arbitrator. In
fact, the parties went to the extent of agreeing in writing to abide by, and
accept his award as final and unappealable.

True, the Commissioner of Civil Service gave his con­currence to the
above agreement “subject to the Constitution”, but We believe that
the only fair implication from said re­servation is that he reserved the right
to contest the vali­dity of the agreement to refer the controversy to an
Arbitra­tor on constitutional grounds. 
In this respect, We do not find the reference nor the award to be in violation of any particular provision
of the Constitution.  As already stated, the only issue
between the Company and the Union was purely legal in nature – whether
or not the members of the Union who were employees of the Company at the time,
were exempt from the operation of the Civil Service Law enacted in 1959, in
view of the Collective Bargaining Agreement existing between the Company and
the Union since 1948.  The Arbitrator resolved this issue in the
affirmative based not only upon a
resolution adopted by the Company on December 14, 1961, but upon Opinion
No. 39, series of 19 60 of the Department of Justice and two different opinions
rendered by the very Com­mission of Civil Service on September 13, 1960 and
October 14, 1961.

Upon the other hand, We find nothing unconstitutional nor
unlawful in
the submission of the abovementioned question of law to an Arbitrator
who was at the time precisely the Presiding Judge of the Court of Industrial
Relations.  The parties primarily
involved in the controversy took this step clearly for the purpose of
preserving industrial peace and avoiding unnecessary litigation between
them.  Besides, their solemn agreement to accept the award to be rendered by the
Arbitrator as final and unappealable, impliedly gave the award the character of a
compromise agreement binding upon the contending parties.  If they must be deemed bound by, and in
estoppel to assail the award, We see no reason why petitioner should not be
similarly bound, his predecessor in office having concurred with the
agreement to refer the controversy to an Arbitrator.

The contention that the award virtually tells the Commissioner of
Civil Service what to do and what not to do in connection with the discharge of
his official duties is due, in our opinion, to a misapprehension of its purpose and effect
– which was nothing more than to decide the question of whether or not the
employees of the Company who were members of the Union before the enactment of
the Civil Service
Law were covered by the provisions of the latter.

PREMISES CONSIDERED, the petition for certiorari under
consideration is hereby denied.  Without
pronouncements as to costs.

Reyes, Acting C.J., Makalintal, Bengzon, Zaldivar, Sanchez,
Castro, Angeles, and Fernando, concur.