SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., PETITIONERS, VS. HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS P…

Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this
special civil action for Certiorari and Prohibition for having issued
the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case
No. 57055 of his Court entitled “San Miguel Corporation vs. SMCEU-PTGWO, et als.”

Petitioners’ plea is that
said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved.  Private respondent San Miguel Corporation (SanMig, for short), for its part, defends the Writ on the
ground of absence of any employer-employee relationship between it and the
contractual workers employed by the companies Lipercon
Services, Inc. (Lipercon) and D’Rite
Service Enterprises (D’Rite), besides the fact that
the Union is bereft of personality to represent said workers for purposes of
collective bargaining.  The Solicitor
General agrees with the position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig
entered into contracts for merchandising services with Lipercon
and D’Rite (Annexes K and I, SanMig’s
Comment, respectively).  These companies
are independent contractors duly licensed by the Department of Labor and
Employment (DOLE).  SanMig
entered into those contracts to maintain its competitive position and in
keeping with the imperatives of efficiency, business expansion and the
diversity of its operation.  In said
contracts, it was expressly understood and agreed that the workers employed by
the contractors were to be paid by the latter and that none of them were to be
deemed employees or agents of SanMig.  There was to be no employer-employee relation
between the contractors and/or its workers, on the one hand, and SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO (the
Union, for brevity) is the duly authorized representative of the monthly paid
rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986
to 30 June 1989 (Annex A, SanMig’s Comment).  Section 1 of their CBA specifically provides
that “temporary, probationary, or contract employees and workers are excluded
from the bargaining unit and, therefore, outside the scope of this Agreement.”

In a letter, dated 20 November 1988 (Annex C, Petition), the
Union advised SanMig that some Lipercon
and D’Rite workers had signed up for union membership
and sought the regularization of their employment with SMC.  The Union alleged that this group of
employees, while appearing to be contractual workers of supposedly independent
contractors, have been continuously working for SanMig
for a period ranging from six (6) months to fifteen (15) years and that their
work is neither casual nor seasonal as they are performing work or activities
necessary or desirable in the usual business or trade of SanMig.  Thus, it was contended that there exists a
“labor-only” contracting situation.  It
was then demanded that the employment status of these workers be regularized.

On 12 January 1989,
on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of
strike for unfair labor practice, CBA violations, and union busting (Annex D,
Petition).

On 30 January 1989,
the Union again filed a second notice of strike for
unfair labor practice (Annex F, Petition).

As in the first notice of strike, conciliatory meetings were held
on the second notice.  Subsequently, the
two (2) notices of strike were consolidated and several conciliation
conferences were held to settle the dispute before the National Conciliation
and Mediation Board (NCMB) of DOLE (Annex G, Petition).

Beginning 14 February
1989 until 2 March 1989,
series of pickets were staged by Lipercon and D’Rite workers in various SMC plants and offices.

On 6 March 1989,
SMC filed a verified Complaint for Injunction and Damages before respondent
Court to enjoin the Union from:

a.  representing and/or acting for and in
behalf of the employees of LIPERCON and/or D’RITE for the purposes of
collective bargaining;

b.  calling for and holding a strike vote
to compel plaintiff to hire the employees or workers of LIPERCON and D’RITE;

c. inciting,
instigating and/or inducing the employees or workers of LIPERCON and D’RITE to
demonstrate and/or picket at the plants and offices of plaintiff within the
bargaining unit referred to in the CBA, x x x;

d.  staging a strike to compel plaintiff
to hire the employees or workers of LIPERCON and D’RITE;

e. using the employees or workers of
LIPERCON AND D’RITE to man the strike area and/or picket lines and/or
barricades which the defendants may set up at the plants and offices of
plaintiff within the bargaining unit referred to in the CBA x x x ;

f. 
intimidating, threatening with bodily harm and/or molesting the other
employees and/or contract workers of plaintiff, as well as those persons lawfully
transacting business with plaintiff at the work places within the bargaining
unit referred to in the CBA, x x x
, to compel plaintiff to hire the employees or workers of LIPERCON and D’RITE;

g. blocking, preventing, prohibiting,
obstructing and/or impeding the free ingress to, and egress from, the work
places within the bargaining unit referred to in the CBA x x
, to compel plaintiff to hire the employees or workers of LIPERCON and D’RITE.

h. preventing
and/or disrupting the peaceful and normal operation of plaintiff at the work
places within the bargaining unit referred to in the CBA.  Annex “C” hereof, to compel
plaintiff to hire the employees or workers of LIPERCON and D’RITE.  (Annex H, Petition)

Respondent Court found the Complaint sufficient in form and
substance and issued a Temporary Restraining Order for the purpose of
maintaining the status quo, and set the application for
Injunction for hearing.

In the meantime, on 13
March 1989, the Union filed a Motion to
Dismiss SanMig’s Complaint on the ground of lack of
jurisdiction over the case/nature of the action, which motion was opposed by SanMig.  That Motion
was denied by respondent Judge in an Order dated 11 April 1989.

After several hearings on SanMig’s
application for injunctive relief, where the parties presented both testimonial
and documentary evidence, on 25 March
1989, respond­ent Court issued the questioned Order (Annex A,
Petition) granting the application and enjoining the Union
from committing the acts complained of, supra.  Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had
posted the required bond of P100,000.00 to answer for
whatever damages petitioners may sustain by reason thereof.

In issuing the Injunction, respondent Court rationalized:

The absence of employer-employee relationship negates the existence
of labor dispute.  Verily, this court has
jurisdiction to take cognizance of plaintiff’s grievance.

The evidence so far presented indicates that plaintiff has
contracts for services with Lipercon and D’Rite.  The
application and contract for employment of the defendants’ witnesses are either
with Lipercon or D’Rite.  What could be discerned is that there is no
employer-employee relationship between plaintiff and the contractual workers
employed by Lipercon and D’Rite.  This, however, does not mean that a final
determination regarding the question of the existence of employer-employee
relationship has already been made.  To
finally resolve this dispute, the court must extensively consider and delve
into the manner of selection and engagement of the putative employee; the mode
of payment of wages; the presence or absence of a power of dismissal; and the
presence or absence of a power to control the putative employee’s conduct.  This necessitates a full-blown trial.  If the acts complained of are not restrained,
plaintiff would, undoubtedly, suffer irreparable damages.  Upon the other hand, a writ of injunction
does not necessarily expose defendants to irreparable damages.

Evidently, plaintiff has established its right to the relief
demanded.  (p. 21, Rollo)

Anchored on grave abuse of discretion, petitioners are now before
us seeking nullification of the challenged Writ.  On 24
April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court.  The Union construed
this to mean that “we can now strike,” which it superimposed on the Order and
widely circulated to entice the Union membership to go on strike.  Upon being apprised thereof, in a Resolution
of 24 May 1989, we required
the parties to “RESTORE the status quo ante declaration of
strike” (p. 262 Rollo).

In the meantime, however, or on 2 May 1989, the Union went on
strike.  Apparently, some of the
contractual workers of Lipercon and D’Rite had been laid off. 
The strike adversely affected thirteen (13) of the latter’s plants and
offices.

On 3 May 1989,
the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation.  The Union
stated that it would lift the strike if the thirty (30) Lipercon
and D’Rite employees were recalled, and discussion on
their other demands, such as wage distortion and appointment of coordinators,
were made.  Effected eventually was a
Memorandum of Agreement between SanMig and the Union
that “without prejudice to the outcome of G.R. No. 87700 (this case) and Civil
Case No. 57055 (the case below), the laid-off individuals x x
x shall be recalled effective 8 May 1989 to their
former jobs or equivalent positions under the same terms and conditions prior
to lay-off” (Annex 15, SanMig Comment).  In turn, the Union
would immediately lift the pickets and return to work.

After an exchange of pleadings, this Court, on 12 October 1989, gave due course to
the Petition and required the parties to submit their memoranda simultaneously,
the last of which was filed on 9
January 1990.

The focal issue for determination is whether or not respondent
Court correctly assumed jurisdiction over the present controversy and properly
issued the Writ of Preliminary Injunction. 
Crucial to the resolution of that question, is the matter of whether or
not the case at bar involves, or is in connection with, or relates to a labor
dispute.  An affirmative answer would
bring the case within the original and exclusive jurisdiction of labor
tribunals to the exclusion of the regular Courts.

Petitioners take the position that “it is beyond dispute that the
controversy in the court a quo involves or arose out of a labor
dispute and is directly connected or interwoven with the cases pending with the
NCMB-DOLE, and is thus beyond the ambit of the public respondent’s
jurisdiction.  That the acts complained
of (i.e., the mass concerted action of picketing and the reliefs
prayed for by the private respondent) are within the competence of labor
tribunals, is beyond question” (pp. 6-7, Petitioners’ Memo).

On the other hand, SanMig denies the
existence of any employer-employee relationship and consequently of any labor
dispute between itself and the Union.  SanMig submits, in
particular, that “respondent Court is vested with jurisdiction and judicial
competence to enjoin the specific type of strike staged by petitioner union and
its officers herein complained of,” for the reasons that:

A.  The exclusive bargaining
representative of an employer unit cannot strike to compel the employer to hire
and thereby create an employment relationship with contractual workers,
especially where the contractual workers were recognized by the union, under
the governing collective bargaining agreement, as excluded from, and therefore
strangers to, the bargaining unit.

B.   A strike is a coercive
economic weapon granted the bargaining representative only in the event of a
deadlock in a labor dispute over ‘wages, hours of work and all other terms and
conditions of the employment’ of the employees in the unit.  The union leaders cannot instigate a strike
to compel the employer, especially on the eve of certification elections, to hire
strangers or workers outside the unit, in the hope the latter will help
re-elect them.

C.  Civil courts have the
jurisdiction to enjoin the above strike because this specie of strike does not
arise out of a labor dispute, is an abuse of right, and violates the employer’s
constitutional liberty to hire or not to hire. 
(SanMig’s Memorandum, pp.
475-476, Rollo).

We find the Petition of a meritorious character.

A “labor dispute” as defined in Article 212 (1) of the Labor Code
includes “any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating,
fixing, maintaining, changing, or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the proximate
relation of employer and employee.”

While it is SanMig’s submission that no
employer-employee relationship exists between itself, on the one hand, and the
contractual workers of Lipercon and D’Rite on the other, a labor dispute can nevertheless exist
“regardless of whether the disputants stand in the proximate relationship of
employer and employee” (Article 212 [1], Labor Code, supra) provided the
controversy concerns, among others, the terms and conditions of employment or a
“change” or “arrangement” thereof (ibid.). 
Put differently, and as defined by law, the existence of a labor dispute
is not negatived by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and employee.

That a labor dispute, as defined by law, does exist herein is
evident.  At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D’Rite and, in
effect, that they be absorbed into the working unit of SanMig.  This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig.  Terms,
tenure and conditions of their employment and the arrangement of those terms
are thus involved bringing the matter within the purview of a labor
dispute.  Further, the Union
also seeks to represent those workers, who have signed up for Union membership,
for the purpose of collective bargaining. 
SanMig, for its part, resists that Union
demand on the ground that there is no employer-employee relationship between it
and those workers and because the demand violates the terms of their CBA.  Obvious then is that representation and
association, for the purpose of negotiating the conditions of employment are
also involved.  In fact, the injunction
sought by SanMig was precisely also to prevent such
representation.  Again, the matter of
representation falls within the scope of a labor dispute.  Neither can it be denied that the controversy
below is directly connected with the labor dispute already taken cognizance of
by the NCMB-DOLE (NCMB-NCR-NS-01-021-89; NCMB NCR-NS-01-093-83).

Whether or not the Union demands are valid; whether or not SanMig’s contracts with Lipercon
and D’Rite constitute “labor-only” contracting and,
therefore, a regular employer-employee relationship may, in fact, be said to exist;
whether or not the Union can lawfully represent the workers of Lipercon and D’Rite in their
demands against SanMig in the light of the existing
CBA; whether or not the notice of strike was valid and the strike itself legal
when it was allegedly instigated to compel the employer to hire strangers
outside the working unit; – those are issues the resolution of which call for
the application of labor laws.  And SanMig’s cause/s of action in the Court below are inextricably linked with those issues.

The precedent in Layno
vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied
upon by SanMig is not controlling as in that case
there was no controversy over terms, tenure or conditions of employment or the
representation of employees that called for the application of labor laws.  In that case, what the petitioning union
demanded was not a change in working terms and conditions, or the
representation of the employees, but that its members be hired as stevedores in
the place of the members of a rival union, which petitioners wanted discharged
notwithstanding the existing contract of the arrastre
company with the latter union.  Hence,
the ruling therein, on the basis of those facts unique to that case, that such
a demand could hardly be considered a labor dispute.

As the case is indisputably linked with a labor dispute,
jurisdiction belongs to the labor tribunals. 
As explicitly provided for in Article 217 of the Labor Code, prior to
its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was
instituted on 6 March 1989, Labor Arbiters have original and exclusive
jurisdiction to hear and decide the following cases involving all workers
including “1. unfair labor practice cases; 2. those
that workers may file involving wages, hours of work and other terms and
conditions of employment; x x x
and 5. cases arising from any violation of Article 265
of this Code, including questions involving the legality of strikes and
lockouts.  x x x.”  Article 217 lays down the plain command of
the law.

The claim of SanMig that the action
below is for damages under Articles 19, 20 and 21 of the Civil Code would not
suffice to keep the case within the jurisdictional boundaries of regular
Courts.  That claim for damages is
interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the
expeditious settlement of those disputes. 
To allow the action filed below to prosper would bring about “split
jurisdiction” which is obnoxious to the orderly administration of justice
(Philippine Communications, Electronics and Electricity Workers Federation vs.
Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).

We recognize the proprietary right of SanMig
to exercise an inherent management prerogative and its best business judgment
to determine whether it should contract out the performance of some of its work
to independent contractors.  However, the
rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike
in accordance with law (Section 3, Article XIII, 1987 Constitution) equally
call for recognition and protection. 
Those contending interests must be placed in proper perspective and
equilibrium.

WHEREFORE, the Writ of Certiorari is GRANTED and
the Orders of respondent Judge of 25
March 1989 and 29 March
1989 are SET ASIDE.  The Writ
of Prohibition is GRANTED and respondent Judge is enjoined from taking any
further action in Civil Case No. 57055 except for the purpose of dismissing
it.  The status quo ante
declaration of strike ordered by the Court on 24 May 1989 shall be observed
pending the proceedings in the National Conciliation Mediation Board –
Department of Labor and Employment, docketed as NCMB-NCR-NS-01-021-89 and
NCMB-NCR-NS-01-093-83.  No costs.

SO ORDERED.

Paras and
Regalado, JJ., concur.

Padilla, J., because of substantial interests in San Miguel Corporation, took no
part.

Sarmiento, J., took no part
, was former Director and legal consultant.