DY PAC AND COMPANY, PETITIONER, VS. KATIPUNAN NG MGA MANGGAGAWA SA KAHOY SA FILIPINAS, AND LEOPOLDO ROVIRA, RESPONDENTS.

Dy Pac and Company versus Katipunan ng mga Manggagawa sa Kahoy sa Filipinas

The Case

This is a petition for a writ of certiorari filed by Dy Pac and Company against the Katipunan ng mga Manggagawa sa Kahoy sa Filipinas and Leopoldo Rovira, seeking to reverse a decision of the Court of Industrial Relations that had ordered the company to reinstate a dismissed laborer named Benito Nahag and to pay his back wages. The case matters because it draws the boundary between the State's power to regulate labor and the employer's right to hire and discharge. It teaches that the State may regulate that right, but it cannot compel an employer to keep a worker who was admittedly guilty of misconduct and whose continuance in service is patently inimical to the employer's interest.

Procedural History

The dispute began in the Department of Labor, which tried to settle the controversy but failed because no agreement could be reached between the parties. On August 19, 1940, the Department of Labor certified the dispute to the Court of Industrial Relations. After hearing, that court rendered judgment on September 5, 1940, declaring that the incident between Benito Nahag and Martin Hollman was of minimal importance and not a reasonable ground for dismissal. It ordered the immediate readmission of Benito Nahag and the payment of his salaries from August 1, 1940 until his actual return to work. Dy Pac and Company then brought a petition for a writ of certiorari before the Supreme Court, asking it to reverse that judgment on the ground that the dispute had been erroneously certified and that the Court of Industrial Relations had acted in excess of its jurisdiction.

Facts

Benito Nahag was a laborer in the employ of Dy Pac and Company, and at the time of his dismissal he was the president of the branch of the respondent union in the company's establishment. On or about July 29, 1940, a fight occurred between Nahag and a coworker named Martin Hollman, a truck driver. After the management investigated the incident, both Hollman and Nahag were dismissed. Hollman did not contest his dismissal, but the union, through its president, protested the discharge of Nahag and demanded his reinstatement.

Before this controversy arose, a collective bargaining contract existed between the company and the union, under which the company was empowered to dismiss any laborer guilty of disorderly conduct. It also appeared that Nahag had been discharged once before for cause, but was taken back on the condition that the president and secretary of his union would guarantee his good conduct and deportment.

After the Department of Labor failed to settle the matter, the union declared a strike, and the dispute was certified to the Court of Industrial Relations. That court ordered Nahag's reinstatement with back wages, prompting the company to seek review by the Supreme Court.

Issues

• Whether or not the Court of Industrial Relations erred in ordering the reinstatement of Benito Nahag.
• Whether or not the company, in dismissing Benito Nahag for the second time, acted within its right to hire and discharge its employees under the collective bargaining contract.

Applicable Provisions

No statutory provision is quoted in the decision. The Court instead applied the collective bargaining contract between the company and the union, which empowered the company to dismiss any laborer guilty of disorderly conduct. That contractual authority bears directly on the case because it defines the employer's power to dismiss and frames the question of whether the dismissal was a normal exercise of that right.

Ruling

On the first issue, the Court held that the Court of Industrial Relations erred in ordering reinstatement. It noted that the present case is not one where the dismissal of an employee is whimsical, unjustified, or otherwise illegal. The cause of the dismissal was Nahag's improper conduct in engaging a coworker in a fight, and this was his second discharge for cause.

On the second issue, the Court held that the company acted merely in the normal exercise of its right to hire and discharge its employees and in strict accord with the collective bargaining contract. The Court relied on its earlier ruling in Manila Trading and Supply Company versus Zulueta, where it held that the right of an employer to freely select or discharge his employees is subject to regulation by the State basically in the exercise of its paramount police power, but that an employer cannot legally be compelled to continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance, and whose continuance in the service of the latter is patently inimical to his interest.

Doctrine

The right of an employer to freely select or discharge employees is subject to regulation by the State in the exercise of its paramount police power. However, the State cannot compel an employer to continue employing a person who was admittedly guilty of misfeasance or malfeasance, and whose continued service is patently inimical to the employer's interest. A dismissal that is not whimsical, unjustified, or otherwise illegal, and that is made in accord with a collective bargaining contract authorizing dismissal for disorderly conduct, is a valid exercise of the employer's right to hire and discharge.

Disposition

The writ was granted, and the order of the Court of Industrial Relations was reversed, without pronouncement as to costs. Dy Pac and Company won.

Remember This

The single line to memorize is that an employer cannot be compelled to retain a worker admittedly guilty of misfeasance whose continuance is patently inimical to the employer's interest. Examiners use this case to test the limits of the State's police power over the employer's right to hire and discharge, especially where a collective bargaining contract authorizes dismissal for disorderly conduct.