G.R. No. 111480. March 10, 1994
PHILIPPINE AIRLINES, INC., PETITIONER, VS. HON. SECRETARY OF LABOR NIEVES R. CONFESOR AND PHILIPPINE AIRLINES EMPLOYEES’ASSOCIATION, RESPONDENTS.
NOCON, J.:
This petition for certiorari filed by petitioner
Philippine Airlines, Inc. (PAL) seeks to annul the Orders dated June 30, 1993
and July 30, 1993 of respondent Secretary of Labor Nieves R. Confesor which
directed the inclusion of benefits worth at least P1.268 billion in its
collective bargaining agreement (CBA) with the respondent Philippine Airlines
Employees’ Association (PALEA).
The facts are as follows: On September 30, 1992, the non-representation aspects or economic
package of the 1989-1992 CBA between PAL and PALEA expired. That same day, PALEA expressed its desire to
renegotiate the CBA and submitted its proposals for an economic package that
would cost PAL P16.1 billion.
Negotiations soon began thereafter. PAL presented its proposed economic package amounting to P1
billion. This was rejected by
PALEA. The parties continued their
negotiations, but were unable to reach an agreement.
On May 3, 1993, PALEA declared a deadlock in the negotiations and
filed on the following day a notice of strike with the National Conciliation and
Mediation Board (NCMB), which was docketed as NCMB-NCR-NS-05-282-93.
At the time of the deadlock, the positions of the parties were as
follows:
1. PAL – it proposed a P991,492,046.00 package, broken down as follows:
Wage increase:
Year 1 – P1, 200.00
Year 2 – 650.00
Year 3 – 750.00
Under this wage structure, PAL would end up
paying the following amounts:
Salary increase – P591,673.800.00
Retirement – 217,067,095.00
Seniority pay – 44,782,164.00
Benefits – 137,967,987.00
TOTAL – P991,492,046.00
PAL also proposed several provisions to
increase productivity, cut cost and generate revenue.
2. PALEA – It proposed
the following economic package, broken down as follows:
Wage increase:
Year 1 – P2,000.00
Year 2 – 2,000.00
Year 3 – 2,000.00
plus updating of pay
scales and separate pay scales for employees working directly with aircraft
parts and components.
In addition, PALEA proposed, among other
things, the following items:
a. Additional one month salary each for Christmas bonus and 13th month pay;
b. Construction of PAL Labor Center to be shouldered by PAL at the cost of
P20 million;
c. Improved retirement benefits;
d. Grocery and laundry allowance;
e. Productivity Bonus Incentive/ Improvement of Service Recognition and
Perfect Attendance; and
f. Seniority pay of P200.00 per year of service with recomputation starting
January 1, 1993;
g. Additional vacation and sick leaves and commutation of the unused
portion of the same to cash.
h. Travel benefit improvement –
1) additional five (5) positive space
allocation for employees with at least 20 years of service.
2) upgrading of travel priorities.
3) service fees/reduced rates of trip passes
based on rates lower than those offered by travel agencies.
i. Additional Overtime, Night Differential and other premium pays.
j. Free Uniforms, for all
employees.
m. Implementation of
Supreme Court decision dated March 31, 1976 on exact computation of daily rate
salaries of monthly pay employees as follows:
Basic salary x 12
———————— = Daily
Rate
250
n. The Union, however, included a proviso that
the above priorities are without prejudice to the provisions and proposals
submitted by the Union to the Company dated September 20, 1992 including non-economic
proposals.
According to PAL, the estimated cost of
the foregoing PALEA demands which are easily computable amounts to P3.4
billion.
On May 21, 1993, PAL wrote respondent Secretary requesting that
she assume jurisdiction over the dispute in view of the importance of its
business and to prevent PALEA from going on strike.
On May 31, 1993, respondent Secretary issued an order assuming
jurisdiction over the labor dispute. She enjoined any work stoppage and ordered the parties to desist from
any act that would exacerbate the situation. She also ordered the parties to submit their respective position papers
within ten (10) days to facilitate the resolution of the dispute.
The parties submitted their respective position papers as
directed by respondent Secretary, with PAL filing a reply to PALEA’s position
paper.
In the Order of June 30, 1993, respondent Secretary reviewed the
positions of the parties on the main deadlocked issues, based on their
respective position papers, as follows:
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Respondent Secretary then ordered:
“Given all these premises, we find the following award just
and equitable:
“1. Wage increase:
Year 1 – P1,400.00
Year 2 – 1,000.00
Year 3 – 1,200.00
TOTAL – P3,600.00
“Notably, while the above wage award already corresponds to a
substantial increase in the existing salaries of the Company’s rank and file,
there still exists a need to upgrade and update the prevailing payscale. This is especially true in the case of those
employees working directly with aircraft parts and components. The parties, therefore, more particularly
the Company, are urged to continue discussing and threshing out this matter.
“2. Allowance : P400.00/month starting on the third year of
effectivity of the CBA
“3. Seniority Pay : P50.00, with recomputation starting 01 January 1993
“4.
Travel Benefits : Service fees to be based on lowest fare
rates offered by the Company
“5. Retirement : Benefits shall be fully vested upon employee’s completion of 20
years service.
“6. Effectivity : 01 October 1992 until 30 September 1995
“Wherefore, the Philippine Airlines, Inc. and the Philippine Airlines
Employees Association are hereby ordered to execute a collective bargaining
agreement incorporating the dispositions herein contained. The agreement shall be retroactive from 01
October 1992 and shall remain effective for three years thereafter. All other demands not passed upon herein are
deemed denied, without prejudice to the retention of all existing benefits as
well as to such improved terms and conditions as the parties may have agreed
upon in the meantime.”[2]
The parties filed separate motions for reconsideration of said
Order. On July 30, 1993, respondent
Secretary issued the other questioned Order denying PALEA’s motion for
reconsideration while granting in part that of PAL’s. As a consequence, the wage increases now provided:
Year 1 – P1,200.00
Year 2 – 1,200.00
Year 3 – 1,200.00
TOTAL – P3,600.00[3]
Respondent Secretary also ordered the inclusion of two provisions
proposed by PAL to increase efficiency, namely:
“1. For purposes of promotion, the seniority
factor shall be reduced by 5% and the efficiency factor shall be
correspondingly increased by 5%; and
“2. For
the same purpose, bidding for vacant positions shall not be limited to specific
sections, but shall be opened to the entire department under which a particular
section is located.”[4]
Thereafter, PAL filed the instant petition raising the following
grounds, to wit:
“I.
“THE HONORABLE SECRETARY OF LABOR, IN AWARDING A PACKAGE OF AT
LEAST P1.268 BILLION GAVE TO PALEA MORE THAN TWICE WHAT PALEA IS
ENTITLED TO ASSUMING THE VALIDITY OF THE RATIONALE FOR THE AWARD; IN SO DOING,
RESPONDENT SECRETARY IGNORED THE VERY PARAMETERS SHE HAD HERSELF SET THUS
GRAVELY ABUSING HER DISCRETION IN THE PROCESS AND COMMITTING AN ERROR SO
SERIOUS SHE HAS OUSTED HERSELF FROM HER JURISDICTION.
“II.
“THE HONORABLE SECRETARY OF LABOR GRAVELY ABUSED HER
DISCRETION IN AWARDING TO PALEA A PACKAGE THAT WOULD COST AT LEAST P1.268
BILLION; IN SO DOING, SHE RELIED ON THE PROBABILITIES AND CONJECTURE, AND SHE
IGNORED AND MISAPPREHENDED PAL’S EVIDENCE SHOWING THAT SUCH AN AWARD WOULD NOT
BE AFFORDABLE AND WOULD THREATEN PAL’S VIABILITY.
“III.
“THE HONORABLE SECRETARY OF LABOR ACTED OUTSIDE OF HER
JURISDICTION IN INSISTING ON DISCUSSIONS ON THE PAYSCALE SINCE THIS ISSUE HAS
BEEN SETTLED IN A PREVIOUS FINAL DECISION.
“IV.
“THE HONORABLE SECRETARY OF LABOR ABUSED HER DISCRETION,
AMOUNTING TO LACK OF JURISDICTION, IN ORDERING THE RETROACTIVITY OF THE CBA.
“V.
“THE HONORABLE SECRETARY OF LABOR COMMITTED SERIOUS ERROR IN
NOT AWARDING TO PAL OTHER FEATURES WHICH WOULD ENHANCE PAL’S PRODUCTIVITY AND
EFFICIENCY.
“VI.
“THE HONORABLE SECRETARY OF LABOR ERRED IN NOT LIMITING HER
AWARD TO THE P1 BILLION PACKAGE OFFERED BY PAL.”[5]
Initially, the Court did not grant PAL’s prayer for a temporary
restraining order (TRO). After several
motions for the issuance of a TRO by PAL, and considering the ramifications an
execution of the questioned orders may have on PAL, the Court granted a TRO on
December 20, 1993.[6]
In the meantime, respondent PALEA filed its Comment to the petition,
while the Solicitor General filed a Manifestation and Motion in lieu of Comment
supporting PAL’s petition.
We treat the Comment of PALEA as an answer and give due course to
the petition.
PAL argues that respondent Secretary had gravely abused her
discretion, amounting to lack or excess of jurisdiction, in awarding P1.268
billion in benefits in favor of PALEA as the same was based on probabilities
and conjectures not supported by the evidence. PAL points out that while respondent Secretary had agreed that its
erratic financial performance — which she found to be “characterized by
long periods of losses alternating with short periods of profitability” —
could not sustain PALEA’s demand, she held that, given the company’s recent
performance, PAL would experience constant profitability over the three-year
contract period, with net earnings of P3.4 billion.
PAL also argues that respondent Secretary had acted with grave
abuse of discretion in applying the so-called “traditional
budget-management approach” and awarded one-third of the projected net
profits to PALEA, and in making the award retroactive to October 1, 1992.
In its Comment, PALEA argues that the issues questioning the
validity of the award involve the findings of fact of respondent Secretary
which cannot be reviewed in a petition for certiorari. Furthermore, PALEA argues that the subject
matter involved pertains to the field of expertise of respondent Secretary and
therefore her appreciation of the
evidence should be respected by this Court.
We agree with PAL. Basically, there is grave abuse of discretion amounting to lack of
jurisdiction where the respondent board, tribunal or officer exercising
judicial functions exercised its judgment in a capricious, whimsical, arbitrary
or despotic manner.[7]
However, it has also been said that grave abuse is committed when “the
lower court acted capriciously, and whimsically or the petitioner’s contention
appears to be clearly tenable or the broader interest of justice or public
policy [so] require x x x.”[8]
Also, grave abuse of discretion is committed when the board,
tribunal or officer exercising judicial function fails to consider evidence
adduced by the parties.[9]
While it is true that findings of fact of the Secretary of Labor
are entitled to respect by this Court, we are inclined to review her findings
since the fundamental issue here is the survival of the company. Besides, her findings are not based on a
thorough examination of the parties’ contending claims but merely on their
respective position papers. There was
no trial wherein the adversarial process would ensure a better presentation and
appreciation of the evidence.
After going over the record, we find that respondent Secretary
gravely abused her discretion when she based her award in favor of PALEA on the
assumption that PAL would earn P3.4 billion pesos during the three-year
contract period. The assumption finds
no basis on the evidence adduced before her. Respondent Secretary had noted in her original order PAL’s erratic
performance over a ten-year period beginning fiscal year (FY) 1981-1982 up to
1990-1991. Said respondent Secretary:
“In appears that in spite of its net profits for the last two
years, the Company has not established a firm financial foothold which could
give us sufficient basis to sustain the Union’s demands. Not to be ignored is that the Company’s
financial history has been characterized by long period of losses alternating
with short period of profitability. It
is too early, in this sense to forecast if its apparent financial rebound over
the last two years can be sustained for the coming years, especially during the
contract period in consideration.
x x x
“First, for 1992-1993, the Company already incurred a
shortfall in its projected income. Second, the Company is presently in a state of transition, with all the
attendant risks and possibilities, resulting from its recent
privatization. Third, the Company has
not acquired the ten wide-bodied aircrafts it intended to acquire, thereby
necessarily lowering its income projections. And fourth, it is a matter of public and administrative knowledge that
the net profitability of the airline industry worldwide is experiencing a
downturn as a result of increased operating costs and cut-throat
competition. While not irreversible as
the Company would have us believe, this downturn will necessarily have a
dampening impact on growth projections.”[10]
Despite her recognition of PAL’s unstable financial performance
and the possibility that its earnings in the foreseeable future could be held
down by the factors she enumerated above, respondent Secretary proceeded to
forecast that PAL would make a projected net profit of P1.128 billion for FY
1992-1993, and P3.4 billion for the three-year contract period.
This Court believes that a more realistic projection should take
into account PAL’s performance for the previous ten years, during which time
PAL only experienced profit during two fiscal years,[11]
and not solely on the net earnings posted in FY 1991-1992 of
P1,113,478,000.00. Relying solely on
said amount would be a mistake since the profit was largely due to the
privatization of PAL wherein the National Government assumed PAL’s foreign
currency obligations amounting to some P13.5 billion.
Subsequent events have shown the error in respondent Secretary’s
projections. The actual net income
earned by PAL for FY 1992-1993 was P1,025,665.00, which fell short of
respondent Secretary’s projection by P87.813 million. Clearly, there is no way PAL could realize the income projected
by respondent Secretary.
After making her projection of PAL’s net profits for the
three-year contract period, respondent Secretary then allocated one-third of
the projected profits as labor costs to be paid to PALEA under the so-called
“traditional budget-management approach.” This Court is unaware of
such a budget-management approach being traditional in this jurisdiction. Given the fact that neither of the parties
cited the same in their position papers filed before her, respondent Secretary
should have explained more thoroughly her application of said “traditional
approach.”
At any rate, it would be improper to apply said formula to the
instant case since PALEA does not represent PAL’s entire labor force. PALEA accounts for only 45% of PAL’s total
labor force. If the one-third rule
would be applied, then PALEA should only be entitled to 45% thereof. The consequences of applying the one-third
rule and awarding the entirety to PALEA would be nothing short of disastrous
for PAL. As succinctly put by PAL:
“To plow back the entire one-third of
the projected net income to PALEA alone is simply anomalous and discriminatory
as this would rob the other components of the labor force of their rightful
share in the allocation and require PAL to shoulder a much higher financial burden
to the detriment of its stockholders and at a higher and greater risk to its
continued viability.”[12]
The offer of PAL of P1 billion to PALEA, which, by the way, is
twice the amount that PALEA would be entitled to if the one-third rule was
properly applied, was based on its computation of its projected operational
costs during the three-year contract period and should not be so easily waived
aside. However, this Court believes
that the suggestion of the Solicitor General is more appropriate: respondent Secretary should review the
positions of the parties so that a more acceptable and practicable amount could
be found. If her recomputation should
turn out to be less than the amount offered by PAL, then she should award PALEA
the amount offered by PAL.
On the matter of whether the arbitral award may be made
retroactive to October 1, 1992, the Court need but cite the decision in St.
Luke’s Medical Center, Inc. vs. Hon. Ruben O. Torres, et al,[13]
wherein it was held that:
“Finally, the effectivity of the Order of January 28, 1991,
must retroact to the date of the expiration of the previous CBA, contrary to
the position of petitioner. Under the
circumstances of the case, Article 253-A cannot be properly applied to herein
case. As correctly stated by public respondent
in his assailed Order of April 12, 1991 dismissing petitioner’s Motion for
Reconsideration -?
‘Anent the alleged lack of basis for the retroactivity provisions
awarded, we would stress that the provision of law invoked by the Hospital,
Article 253-A of the Labor Code, speaks of agreement by and between the
parties, and not arbitral awards.’ (p. 818, Rollo)
Therefore, in the absence of a specific provision of law
prohibiting retroactivity of the effectivity of arbitral awards issued by the
Secretary of Labor pursuant to Article 263 (g) of the Labor Code, such as
herein involved, public respondent is deemed vested with plenary and
discretionary powers to determine the effectivity thereof.”
Finally, PALEA argues that the instant petition was apparently
filed in violation of Circular No. 28-91 of this Court. PAL had initially filed this petition as
G.R. No. 111119 on August 6, 1993. On
August 16, 1993, said petition was dismissed for non-compliance with paragraph
3 of Circular No. 1-88. PAL then filed
the instant petition on September 1, 1993. PALEA claims that the failure of PAL to mention the dismissal of its
petition in G.R. No. 111119 in the certification required under Circular No.
28-91 warrants the dismissal of the present petition.
We find no violation of Circular No. 28-91. PAL is not required to mention the dismissal
of its previous petition since, having been dismissed, it is not a case pending
before any court or tribunal within the contemplation of said circular. In addition, a petition dismissed under
Circular No. 1-88 may be refiled as a new petition provided the proper
reglementary period is observed.[14] The
Court notes that present petition was filed within the proper reglementary
period for the filing of a special civil action.
In fine, this Court finds that respondent Secretary had committed
grave abuse of discretion amounting to lack of jurisdiction in failing to give
weight to the evidence presented by PAL and in applying the so-called
traditional budget-management approach.
WHEREFORE, the petition is hereby GIVEN DUE COURSE and the
same GRANTED. The orders of respondent
Secretary are annulled and set aside and the case remanded to said respondent
for recomputation and to award to PALEA either the recomputed amount or the
package offered by PAL, whichever may be higher.
SO ORDERED.
Narvasa, C.J., (Chairman), Padilla, Regalado, and Puno, JJ.,
concur.
[1]
Order of June 30, 1993, pp. 221-231.
[2]
Id., pp. 10-11; Rollo, pp. 230-231.
[3]
Order of July 30, 1993, p. 7; Rollo, p. 503.
[4]
Order of July 30, 1993, p. 10; Rollo, p. 506.
[5]
Petition, pp. 13-15; Rollo, pp. 14-16.
[6]
Rollo, p. 854.
[7]
Abad Santos vs. Prov. of Tarlac, 67 Phil 480; Planters Products, Inc. vs.
Court of Appeals, 193 SCRA 563.
[8]
De Laureano vs. Adil, 72 SCRA 161 (1976).
[9]
Caltex Filipino Manager’s Supervisors vs. Court of Industrial Relations,
44 SCRA 350; Labor ng Pagkakaisa sa Peter Paul vs. Court of Industrial
Relations, 96 Phil. 63.
[10]
Order of June 30, 1993, pp. 8-9.
[11]
FY 1986-1987 (P318,128,000.00) and FY 1988-1989 (P304,506,000.00).
[12]
Petition, p. 18.
[13]
G.R. No. 99395, June 30, 1993.
[14]
Caños Medical Center vs. Trajano, 215 SCRA 818 (1992).