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G.R. N O. L-48645 J ANUARY 7, 1987

"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES, ANTONIO CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON, PATRICIO SERRANO, ANTONIO B. BOBIAS, VIRGILIO ECHAS, DOMINGO PARINAS, NORBERTO GALANG, JUANITO NAVARRO, NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA, CARLOS SUMOYAN, LAMBERTO RONQUILLO, ANGELITO AMANCIO, DANILO B. MATIAR, ET AL., PETITIONERS , VS.HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, HON. AMADO G. INCIONG, UNDERSECRETARY OF LABOR, SAN MIGUEL CORPORATION, GENARO OLIVES, ENRIQUE CAMAHORT, FEDERICO OATE, ERNESTO VILLANUEVA, ANTONIO BOCALINGANDGODOFREDO CUETO,RESPONDENTS.

Armando V. Ampil for petitioners.

Siguion Reyna, Montecillo and Ongsiako Law Office for private respondents.

GUTIERREZ, JR., J .:

The elemental question in labor law of whether or not anemployer-employee relationship exists between

petitioners-members of the "Brotherhood Labor UnitMovement of the Philippines" (BLUM) and respondentSan Miguel Corporation, is the main issue in this petition.The disputed decision of public respondent RonaldoZamora, Presidential Assistant for legal Affairs, containsa brief summary of the facts involved:

1. The records disclose that on July 11,1969, BLUM filed a complaint with the nowdefunct Court of Industrial Relations,

charging San Miguel Corporation, and thefollowing officers: Enrique Camahort,Federico Ofiate Feliciano Arceo, MelencioEugenia Jr., Ernesto Villanueva, AntonioBocaling and Godofredo Cueto of unfair labor practice as set forth in Section 4 (a),sub-sections (1) and (4) of Republic Act No.875 and of Legal dismissal. It was allegedthat respondents ordered the individualcomplainants to disaffiliate from the

complainant union; and that managementdismissed the individual complainants whenthey insisted on their union membership.

On their part, respondents moved for thedismissal of the complaint on the groundsthat the complainants are not and havenever been employees of respondentcompany but employees of the independent


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contractor; that respondent company hasnever had control over the means andmethods followed by the independentcontractor who enjoyed full authority to hire

and control said employees; and that theindividual complainants are barred byestoppel from asserting that they areemployees of respondent company.

While pending with the Court of IndustrialRelations CIR pleadings and testimonialand documentary evidences were dulypresented, although the actual hearing wasdelayed by several postponements. The

dispute was taken over by the NationalLabor Relations Commission (NLRC) withthe decreed abolition of the CIR and thehearing of the case intransferablycommenced on September 8, 1975.

On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants which wasconcurred in by the NLRC in a decisiondated June 28, 1976. The amount of

backwages awarded, however, wasreduced by NLRC to the equivalent of one(1) year salary.

On appeal, the Secretary in a decisiondated June 1, 1977, set aside the NLRCruling, stressing the absence of anemployer-mployee relationship as borne outby the records of the case. ...

The petitioners strongly argue that there exists anemployer-employee relationship between them and therespondent company and that they were dismissed for unionism, an act constituting unfair labor practice "for

which respondents must be made to answer."

Unrebutted evidence and testimony on record establishthat the petitioners are workers who have been employedat the San Miguel Parola Glass Factory since 1961,averaging about seven (7) years of service at the time of their termination. They worked as "cargadores" or "pahinante" at the SMC Plant loading, unloading, piling or palleting empty bottles and woosen shells to and fromcompany trucks and warehouses. At times, they

accompanied the company trucks on their deliveryroutes.

The petitioners first reported for work to Superintendent-in-Charge Camahort. They were issued gate passessigned by Camahort and were provided by therespondent company with the tools, equipment andparaphernalia used in the loading, unloading, piling andhauling operation.

Job orders emanated from Camahort. The orders arethen transmitted to an assistant-officer-in-charge. In turn,the assistant informs the warehousemen and checkersregarding the same. The latter, thereafter, relays saidorders to the capatazes or group leaders who then giveorders to the workers as to where, when and what toload, unload, pile, pallet or clean.


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Work in the glass factory was neither regular nor continuous, depending wholly on the volume of bottlesmanufactured to be loaded and unloaded, as well as thebusiness activity of the company. Work did not

necessarily mean a full eight (8) hour day for thepetitioners. However, work,at times, exceeded the eight(8) hour day and necessitated work on Sundays andholidays. For this, they were neither paid overtime nor compensation for work on Sundays and holidays.

Petitioners were paid every ten (10) days on a piece ratebasis, that is, according to the number of cartons andwooden shells they were able to load, unload, or pile.The group leader notes down the number or volume of

work that each individual worker has accomplished. Thisis then made the basis of a report or statement which iscompared with the notes of the checker andwarehousemen as to whether or not they tally. Finalapproval of report is by officer-in-charge Camahort. Thepay check is given to the group leaders for encashment,distribution, and payment to the petitioners in accordancewith payrolls prepared by said leaders. From the totalearnings of the group, the group leader gets aparticipation or share of ten (10%) percent plus anadditional amount from the earnings of each individual.

The petitioners worked exclusive at the SMC plant, never having been assigned to other companies or departments of SMC plant, even when the volume of work was at its minimum. When any of the glass furnacessuffered a breakdown, making a shutdown necessary,the petitioners work was temporarily suspended.

Thereafter, the petitioners would return to work at theglass plant.

Sometime in January, 1969, the petitioner workers

numbering one hundred and forty (140) organized andaffiliated themselves with the petitioner union andengaged in union activities. Believing themselves entitledto overtime and holiday pay, the petitioners pressedmanagement, airing other grievances such as being paidbelow the minimum wage law, inhuman treatment, beingforced to borrow at usurious rates of interest and to buyraffle tickets, coerced by withholding their salaries, andsalary deductions made without their consent. However,their gripes and grievances were not heeded by the

respondents.On February 6, 1969, the petitioner union filed a notice of strike with the Bureau of Labor Relations in connectionwith the dismissal of some of its members who wereallegedly castigated for their union membership andwarned that should they persist in continuing with their union activities they would be dismissed from their jobs.Several conciliation conferences were scheduled in order to thresh out their differences, On February 12, 1969,union member Rogelio Dipad was dismissed from work.

At the scheduled conference on February 19, 1969, thecomplainant union through its officers headed by NationalPresident Artemio Portugal Sr., presented a letter to therespondent company containing proposals and/or labor demands together with a request for recognition andcollective bargaining.


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San Miguel refused to bargain with the petitioner unionalleging that the workers are not their employees.

On February 20, 1969, all the petitioners were dismissed

from their jobs and, thereafter, denied entrance torespondent company's glass factory despite their regularly reporting for work. A complaint for illegaldismissal and unfair labor practice was filed by thepetitioners.

The case reaches us now with the same issues to beresolved as when it had begun.

The question of whether an employer-employee

relationship exists in a certain situation continues tobedevil the courts. Some businessmen try to avoid thebringing about of an employer-employee relationship intheir enterprises because that judicial relation spawnsobligations connected with workmen's compensation,social security, medicare, minimum wage, terminationpay, and unionism. (Mafinco Trading Corporation v. Ople,70 SCRA 139).

In determining the existence of an employer-employee

relationship, the elements that are generally consideredare the following: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control theemployee with respect to the means and methods bywhich the work is to be accomplished. It. is the called"control test" that is the most important element(Investment Planning Corp. of the Phils. v. The SocialSecurity System, 21 SCRA 924; Mafinco Trading Corp. v.

Ople, supra, and Rosario Brothers, Inc. v. Ople, 131SCRA 72).

Applying the above criteria, the evidence strongly

indicates the existence of an employer-employeerelationship between petitioner workers and respondentSan Miguel Corporation. The respondent asserts that thepetitioners are employees of the Guaranteed Labor Contractor, an independent labor contracting firm.

The facts and evidence on record negate respondentSMC's claim.

The existence of an independent contractor relationship

is generally established by the following criteria: "whether or not the contractor is carrying on an independentbusiness; the nature and extent of the work; the skillrequired; the term and duration of the relationship; theright to assign the performance of a specified piece of work; the control and supervision of the work to another;the employer's power with respect to the hiring, firing andpayment of the contractor's workers; the control of thepremises; the duty to supply the premises tools,appliances, materials and labor; and the mode, manner and terms of payment" (56 CJS Master and Servant, Sec.3(2), 46; See also 27 AM. Jur. Independent Contractor,Sec. 5, 485 and Annex 75 ALR 7260727)

None of the above criteria exists in the case at bar.

Highly unusual and suspect is the absence of a writtencontract to specify the performance of a specified pieceof work, the nature and extent of the work and the term


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and duration of the relationship. The records fail to showthat a large commercial outfit, such as the San MiguelCorporation, entered into mere oral agreements of employment or labor contracting where the same would

involve considerable expenses and dealings with a largenumber of workers over a long period of time. Despiterespondent company's allegations not an iota of evidencewas offered to prove the same or its particulars. Suchfailure makes respondent SMC's stand subject to seriousdoubts.

Uncontroverted is the fact that for an average of seven(7) years, each of the petitioners had workedcontinuously and exclusively for the respondent

company's shipping and warehousing department.Considering the length of time that the petitioners haveworked with the respondent company, there is

justification to conclude that they were engaged toperform activities necessary or desirable in the usualbusiness or trade of the respondent, and the petitionersare, therefore regular employees (Phil. Fishing BoatOfficers and Engineers Union v. Court of IndustrialRelations, 112 SCRA 159 and RJL Martinez FishingCorporation v. National Labor Relations Commission,127 SCRA 454).

As we have found in RJL Martinez Fishing Corporation v.National Labor Relations Commission (supra):

... [T]he employer-employee relationshipbetween the parties herein is notcoterminous with each loading andunloading job. As earlier shown,

respondents are engaged in the business of fishing. For this purpose, they have a fleetof fishing vessels. Under this situation,respondents' activity of catching fish is a

continuous process and could hardly beconsidered as seasonal in nature. So thatthe activities performed by hereincomplainants, i.e. unloading the catch of tuna fish from respondents' vessels andthen loading the same to refrigerated vans,are necessary or desirable in the businessof respondents. This circumstance makesthe employment of complainants a regular one, in the sense that it does not depend on

any specific project or seasonable activity.(NLRC Decision, p. 94, Rollo). lwphl@it

so as it with petitioners in the case at bar. In fact, despitepast shutdowns of the glass plant for repairs, thepetitioners, thereafter, promptly returned to their jobs,never having been replaced, or assigned elsewhere untilthe present controversy arose. The term of thepetitioners' employment appears indefinite. The continuityand habituality of petitioners' work bolsters their claim of employee status vis-a-vis respondent company,

Even under the assumption that a contract of employment had indeed been executed betweenrespondent SMC and the alleged labor contractor,respondent's case will, nevertheless, fail.

Section 8, Rule VIII, Book III of the Implementing Rulesof the Labor Code provides:


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Job contracting. There is job contractingpermissible under the Code if the followingconditions are met:

(1) The contractor carries on anindependent business and undertakes thecontract work on his own account under hisown responsibility according to his ownmanner and method, free from the controland direction of his employer or principal inall matters connected with the performanceof the work except as to the results thereof;and

(2) The contractor has substantial capital or investment in the form of tools, equipment,machineries, work premises, and other materials which are necessary in theconduct of his business.

We find that Guaranteed and Reliable Labor contractorshave neither substantial capital nor investment to qualifyas an independent contractor under the law. Thepremises, tools, equipment and paraphernalia used bythe petitioners in their jobs are admittedly all supplied byrespondent company. It is only the manpower or labor force which the alleged contractors supply, suggestingthe existence of a "labor only" contracting schemeprohibited by law (Article 106, 109 of the Labor Code;Section 9(b), Rule VIII, Book III, Implementing Rules andRegulations of the Labor Code). In fact, even the allegedcontractor's office, which consists of a space atrespondent company's warehouse, table, chair,

typewriter and cabinet, are provided for by respondentSMC. It is therefore clear that the alleged contractorshave no capital outlay involved in the conduct of itsbusiness, in the maintenance thereof or in the payment of

its workers' salaries.The payment of the workers' wages is a critical factor indetermining the actuality of an employer-employeerelationship whether between respondent company andpetitioners or between the alleged independentcontractor and petitioners. It is important to emphasizethat in a truly independent contractor-contracteerelationship, the fees are paid directly to the manpower agency in lump sum without indicating or implying that

the basis of such lump sum is the salary per worker multiplied by the number of workers assigned to thecompany. This is the rule in Social Security System v.Court of Appeals (39 SCRA 629, 635).

The alleged independent contractors in the case at bar were paid a lump sum representing only the salaries theworkers were entitled to, arrived at by adding the salariesof each worker which depend on the volume of workthey. had accomplished individually. These are based onpayrolls, reports or statements prepared by the workers'group leader, warehousemen and checkers, where theynote down the number of cartons, wooden shells andbottles each worker was able to load, unload, pile or pallet and see whether they tally. The amount paid byrespondent company to the alleged independentcontractor considers no business expenses or capitaloutlay of the latter. Nor is the profit or gain of the allegedcontractor in the conduct of its business provided for as


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an amount over and above the workers' wages. Instead,the alleged contractor receives a percentage from thetotal earnings of all the workers plus an additionalamount corresponding to a percentage of the earnings of

each individual worker, which, perhaps, accounts for thepetitioners' charge of unauthorized deductions from their salaries by the respondents.

Anent the argument that the petitioners are notemployees as they worked on piece basis, we merelyhave to cite our rulings in Dy Keh Beng v. International Labor and Marine Union of the Philippines (90 SCRA161), as follows:

"[C]ircumstances must be construed todetermine indeed if payment by the piece is just a method of compensation and doesnot define the essence of the relation. Unitsof time . . . and units of work are inestablishments like respondent (sic) justyardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe paymentby the piece where work is done in such anestablishment so as to put the worker completely at liberty to turn him out andtake in another at pleasure."

Article 106 of the Labor Code provides the legal effect of a labor only contracting scheme, to wit:

... the person or intermediary shall beconsidered merely as an agent of the

employer who shall be responsible to theworkers in the same manner and extent asif the latter were directly employed by him.

Firmly establishing respondent SMC's role as employer isthe control exercised by it over the petitioners that is,control in the means and methods/manner by whichpetitioners are to go about their work, as well as indisciplinary measures imposed by it.

Because of the nature of the petitioners' work ascargadores or pahinantes, supervision as to the meansand manner of performing the same is practically nil. For,how many ways are there to load and unload bottles and

wooden shells? The mere concern of both respondentSMC and the alleged contractor is that the job of havingthe bottles and wooden shells brought to and from thewarehouse be done. More evident and pronounced isrespondent company's right to control in the discipline of petitioners. Documentary evidence presented by thepetitioners establish respondent SMC's right to imposedisciplinary measures for violations or infractions of itsrules and regulations as well as its right to recommendtransfers and dismissals of the piece workers. The inter-office memoranda submitted in evidence prove thecompany's control over the petitioners. That respondentSMC has the power to recommend penalties or dismissalof the piece workers, even as to Abner Bungay who isalleged by SMC to be a representative of the allegedlabor contractor, is the strongest indication of respondentcompany's right of control over the petitioners as directemployer. There is no evidence to show that the alleged


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labor contractor had such right of control or much lesshad been there to supervise or deal with the petitioners.

The petitioners were dismissed allegedly because of the

shutdown of the glass manufacturing plant. Respondentcompany would have us believe that this was a case of retrenchment due to the closure or cessation of operations of the establishment or undertaking. But suchis not the case here. The respondent's shutdown wasmerely temporary, one of its furnaces needing repair.Operations continued after such repairs, but thepetitioners had already been refused entry to thepremises and dismissed from respondent's service. Newworkers manned their positions. It is apparent that theclosure of respondent's warehouse was merely a ploy toget rid of the petitioners, who were then agitating therespondent company for benefits, reforms and collectivebargaining as a union. There is no showing thatpetitioners had been remiss in their obligations andinefficient in their jobs to warrant their separation.

As to the charge of unfair labor practice because of SMC's refusal to bargain with the petitioners, it is clear that the respondent company had an existing collectivebargaining agreement with the IBM union which is therecognized collective bargaining representative at therespondent's glass plant.

There being a recognized bargaining representative of allemployees at the company's glass plant, the petitionerscannot merely form a union and demand bargaining. TheLabor Code provides the proper procedure for the

recognition of unions as sole bargaining representatives.This must be followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the

petition is GRANTED. The San Miguel Corporation ishereby ordered to REINSTATE petitioners, with three (3)years backwages. However, where reinstatement is nolonger possible, the respondent SMC is ordered to paythe petitioners separation pay equivalent to one (1)month pay for every year of service.

SO ORDERED.

Feria (Chairman), Fernan, Alampay and Paras, JJ.,

concur.G.R. NO . 87700 J UNE 13, 1990

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 PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, AND SAN MIGUEL CORPORATION, RESPONDENTS .

Romeo C. Lagman for petitioners.

Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.


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MELENCIO-HERRERA, J .:

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 issuedthe challenged Writ of Preliminary Injunction on 29 March1989 in Civil Case No. 57055 of his Court entitled " SanMiguel Corporation vs. SMCEU-PTGWO, et als ."

Petitioners' plea is that said Writ was issued without or inexcess of jurisdiction and with grave abuse of discretion,a labor dispute being involved. Private respondent SanMiguel Corporation (SanMig. for short), for its part,defends the Writ on the ground of absence of anyemployer-employee relationship between it and thecontractual workers employed by the companiesLipercon Services, Inc. (Lipercon) and D'Rite ServiceEnterprises (D'Rite), besides the fact that the Union isbereft of personality to represent said workers for purposes of collective bargaining. The Solicitor Generalagrees with the position of SanMig.

The antecedents of the controversy reveal that:

Sometime in 1983 and 1984, SanMig entered intocontracts for merchandising services with Lipercon andD'Rite (Annexes K and I, SanMig's Comment,respectively). These companies are independentcontractors duly licensed by the Department of Labor andEmployment (DOLE). SanMig entered into thosecontracts to maintain its competitive position and inkeeping with the imperatives of efficiency, businessexpansion and diversity of its operation. In said contracts,

it was expressly understood and agreed that the workersemployed 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 itsworkers, on the one hand, and SanMig on the other.

Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorizedrepresentative of the monthly paid rank-and-fileemployees of SanMig with whom the latter executed aCollective Bargaining Agreement (CBA) effective 1 July1986 to 30 June 1989 (Annex A, SanMig's Comment).Section 1 of their CBA specifically provides that"temporary, probationary, or contract employees andworkers 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'Riteworkers had signed up for union membership and soughtthe regularization of their employment with SMC. TheUnion alleged that this group of employees, whileappearing to be contractual workers supposedlyindependent contractors, have been continuouslyworking 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 existsa "labor-only" contracting situation. It was thendemanded that the employment status of these workersbe regularized.


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On 12 January 1989 on the ground that it had failed toreceive any favorable response from SanMig, the Unionfiled a notice of strike for unfair labor practice, CBAviolations, and union busting (Annex D, Petition).

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

As in the first notice of strike. Conciliatory meetings wereheld on the second notice. Subsequently, the two (2)notices of strike were consolidated and severalconciliation conferences were held to settle the disputebefore 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 invarious SMC plants and offices.

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

a. representing and/or acting for and inbehalf of the employees of LIPERCONand/or D'RITE for the purposes of collectivebargaining;

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

c. inciting, instigating and/or inducing theemployees or workers of LIPERCON andD'RITE to demonstrate and/or picket at theplants and offices of plaintiff within the

bargaining unit referred to in the CBA,...;d. staging a strike to compel plaintiff to hirethe employees or workers of LIPERCONand D'RITE;

e. using the employees or workers of LIPERCON AND D'RITE to man the strikearea and/or picket lines and/or barricadeswhich the defendants may set up at theplants and offices of plaintiff within thebargaining unit referred to in the CBA ...;

f. intimidating, threatening with bodily harmand/or molesting the other employeesand/or contract workers of plaintiff, as wellas those persons lawfully transactingbusiness with plaintiff at the work placeswithin the bargaining unit referred to in theCBA, ..., to compel plaintiff to hire theemployees or workers of LIPERCON andD'RITE;

g. blocking, preventing, prohibiting,obstructing and/or impeding the freeingress to, and egress from, the workplaces within the bargaining unit referred toin the CBA .., to compel plaintiff to hire the


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necessarily expose defendants toirreparable damages.

Evidently, plaintiff has established its right

to the relief demanded. (p. 21, Rollo) Anchored on grave abuse of discretion, petitioners arenow before us seeking nullification of the challenged Writ.On 24 April 1989, we issued a Temporary RestrainingOrder enjoining the implementation of the Injunctionissued by respondent Court. The Union construed this tomean that "we can now strike," which it superimposed onthe Order and widely circulated to entice the Unionmembership to go on strike. Upon being apprisedthereof, in a Resolution of 24 May 1989, we required theparties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).

In the meantime, however, or on 2 May 1989, the Unionwent on strike. Apparently, some of the contractualworkers of Lipercon and D'Rite had been laid off. Thestrike adversely affected thirteen (13) of the latter's plantsand offices.

On 3 May 1989, the National Conciliation and MediationBoard (NCMB) called the parties to conciliation. TheUnion stated that it would lift the strike if the thirty (30)Lipercon and D'Rite employees were recalled, anddiscussion on their other demands, such as wagedistortion and appointment of coordinators, were made.Effected eventually was a Memorandum of Agreementbetween SanMig and the Union that "without prejudice tothe outcome of G.R. No. 87700 (this case) and Civil Case

No. 57055 (the case below), the laid-off individuals ...shall be recalled effective 8 May 1989 to their former jobsor equivalent positions under the same terms andconditions prior to "lay-off" (Annex 15, SanMig

Comment). In turn, the Union would immediately lift thepickets and return to work.

After an exchange of pleadings, this Court, on 12October 1989, gave due course to the Petition andrequired the parties to submit their memorandasimultaneously, the last of which was filed on 9 January1990.

The focal issue for determination is whether or notrespondent Court correctly assumed jurisdiction over thepresent controversy and properly issued the Writ of Preliminary Injunction to the resolution of that question, isthe matter of whether, or not the case at bar involves, or is in connection with, or relates to a labor dispute. Anaffirmative answer would bring the case within theoriginal and exclusive jurisdiction of labor tribunals to theexclusion of the regular Courts.

Petitioners take the position that 'it is beyond dispute thatthe controversy in the court a quo involves or arose out of a labor dispute and is directly connected or interwovenwith the cases pending with the NCMB-DOLE, and isthus beyond the ambit of the public respondent's

jurisdiction. That the acts complained of (i.e., the massconcerted action of picketing and the reliefs prayed for bythe private respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'Memo).


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On the other hand, SanMig denies the existence of anyemployer-employee relationship and consequently of anylabor dispute between itself and the Union. SanMigsubmits, in particular, that "respondent Court is vestedwith jurisdiction and judicial competence to enjoin thespecific type of strike staged by petitioner union and itsofficers herein complained of," for the reasons that:

A. The exclusive bargaining representativeof an employer unit cannot strike to compelthe employer to hire and thereby create anemployment relationship with contractualworkers, especially were the contractualworkers were recognized by the union,under the governing collective bargainingagreement, as excluded from, and thereforestrangers to, the bargaining unit.

B. A strike is a coercive economic weapongranted the bargaining representative onlyin the event of a deadlock in a labor disputeover 'wages, hours of work and all other and of the employment' of the employees inthe unit. The union leaders cannot instigatea strike to compel the employer, especiallyon the eve of certification elections, to hirestrangers or workers outside the unit, in thehope the latter will help re-elect them.

C. Civil courts have the jurisdiction to enjointhe above because this specie of strikedoes not arise out of a labor dispute, is anabuse 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 concerningterms and conditions of employment or the association or representation of persons in negotiating, fixing,maintaining, changing, or arranging the terms andconditions of employment, regardless of whether thedisputants 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 onehand, and the contractual workers of Lipercon and D'Riteon the other, a labor dispute can nevertheless exist"regardless of whether the disputants stand in theproximate relationship of employer and employee"(Article 212 [1], Labor Code, supra ) provided thecontroversy concerns, among others, the terms andconditions of employment or a "change" or "arrangement"thereof ( ibid ). Put differently, and as defined by law, theexistence of a labor dispute is not negative by the factthat the plaintiffs and defendants do not stand in theproximate relation of employer and employee.

That a labor dispute, as defined by the law, does existherein is evident. At bottom, what the Union seeks is toregularize the status of the employees contracted byLipercon and D'Rite in effect, that they be absorbed into


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the working unit of SanMig. This matter definitely dwellson the working relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms arethus involved bringing the matter within the purview of alabor dispute. Further, the Union also seeks to representthose workers, who have signed up for Unionmembership, for the purpose of collective bargaining.SanMig, for its part, resists that Union demand on theground that there is no employer-employee relationshipbetween it and those workers and because the demandviolates the terms of their CBA. Obvious then is thatrepresentation and association, for the purpose of negotiating the conditions of employment are alsoinvolved. In fact, the injunction sought by SanMig wasprecisely also to prevent such representation. Again, thematter of representation falls within the scope of a labor dispute. Neither can it be denied that the controversybelow is directly connected with the labor dispute alreadytaken 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'Riteconstitute "labor-only" contracting and, therefore, aregular employer-employee relationship may, in fact, besaid to exist; whether or not the Union can lawfullyrepresent 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 strikeitself legal when it was allegedly instigated to compel theemployer 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 actionin the Court below are inextricably linked with thoseissues.

The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon bySanMig is not controlling as in that case there was nocontroversy over terms, tenure or conditions, of employment or the representation of employees thatcalled for the application of labor laws. In that case, whatthe petitioning union demanded was not a change inworking terms and conditions, or the representation of the employees, but that its members be hired asstevedores in the place of the members of a rival union,which petitioners wanted discharged notwithstanding theexisting contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis of thosefacts unique to that case, that such a demand couldhardly be considered a labor dispute.

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitlyprovided for in Article 217 of the Labor Code, prior to itsamendment by R.A. No. 6715 on 21 March 1989, sincethe suit below was instituted on 6 March 1989, Labor

Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workersincluding "1. unfair labor practice cases; 2. those thatworkers may file involving wages, hours of work andother terms and conditions of employment; ... and 5.cases arising from any violation of Article 265 of thisCode, including questions involving the legality of striker


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and lockouts. ..." Article 217 lays down the plaincommand of the law.

The claim of SanMig that the action below is for damagesunder Articles 19, 20 and 21 of the Civil Code would notsuffice to keep the case within the jurisdictionalboundaries of regular Courts. That claim for damages isinterwoven with a labor dispute existing between theparties and would have to be ventilated before theadministrative machinery established for the expeditioussettlement of those disputes. To allow the action filedbelow to prosper would bring about "split jurisdiction"which is obnoxious to the orderly administration of justice(Philippine Communications, Electronics and ElectricityWorkers Federation vs. Hon. Nolasco, L-24984, 29 July1968, 24 SCRA 321).

We recognize the proprietary right of SanMig to exercisean inherent management prerogative and its bestbusiness judgment to determine whether it shouldcontract out the performance of some of its work toindependent contractors. However, the rights of allworkers to self-organization, collective bargaining andnegotiations, and peaceful concerted activities, includingthe right to strike in accordance with law (Section 3,

Article XIII, 1987 Constitution) equally call for recognitionand protection. Those contending interests must beplaced in proper perspective and equilibrium.

WHEREFORE, the Writ of certiorari is GRANTED andthe Orders of respondent Judge of 25 March 1989 and29 March 1989 are SET ASIDE. The Writ of Prohibition isGRANTED and respondent Judge is enjoined from taking

any further action in Civil Case No. 57055 except for thepurpose of dismissing it. The status quo ante declarationof strike ordered by the Court on 24 May 1989 shall beobserved pending the proceedings in the NationalConciliation Mediation Board-Department of Labor andEmployment, docketed as NCMB-NCR-NS-01-02189 andNCMB-NCR-NS-01-093-83. No costs.

SO ORDERED.

Paras and Regalado, JJ., concur.

Padilla, Sarmiento, JJ., took no part.


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PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO,

MARIANNE V. KATINDIG,

BERNADETTE A. CABALQUINTO,

LORNA B. TUGAS, MARY CHRISTINE A. VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R. CRESENCIO,ANDOTHER FLIGHT ATTENDANTS OFPHILIPPINE AIRLINES,

PETITIONERS,

- VERSUS-

PHILIPPINE AIRLINES INCORPORATED,

RESPONDENT.

G.R. No. 172013

Present:

YNARES-SANTIAGO, J .,

Chairperson,

CHICO-NAZARIO,

VELASCO, JR.,

NACHURA, and

PERALTA, JJ.

Promulgated:

October 2, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - x

DECISION


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PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and setaside the Decision1[1] and the Resolution2[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 86813.

Petitioners were employed as female flight attendantsof respondent Philippine Airlines (PAL) on different dates

prior to November 22, 1996. They are members of the FlightAttendants and Stewards Association of the Philippines(FASAP), a labor organization certified as the sole andexclusive certified as the sole and exclusive bargainingrepresentative of the flight attendants, flight stewards and

pursers of respondent.

On July 11, 2001, respondent and FASAP entered intoa Collective Bargaining Agreement3[3] incorporating the terms

1[1] Penned by Associate Justice Salvador J. Valdez, Jr.,with Associate Justice Mariano C. Del Castillo and

Associate Justice Magdangal M. De Leon.,concurring; r ollo, pp. 52-71.

2[2] Id . at 73-74.

3[3] Rollo , pp. 146-193.

and conditions of their agreement for the years 2000 to 2005,hereinafter referred to as PAL-FASAP CBA.

Section 144, Part A of the PAL-FASAP CBA, providesthat:

A. For the Cabin Attendantshired before 22 November 1996:

x x x x

3. Compulsory Retirement

Subject to the grooming standards provisions of this Agreement,compulsory retirement shall be fifty-five (55)for females and sixty (60) for males. x xx.

In a letter dated July 22, 2003,4[4] petitioners andseveral female cabin crews manifested that the aforementionedCBA provision on compulsory retirement is discriminatory,and demanded for an equal treatment with their malecounterparts. This demand was reiterated in a letter5[5] by

4[4] Id . at 507-509.

5[5] Id. at 510-512.


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petitioners' counsel addressed to respondent demanding theremoval of gender discrimination provisions in the coming re-negotiations of the PAL-FASAP CBA.

On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA proposals6[6] andmanifested their willingness to commence the collective

bargaining negotiations between the management and theassociation, at the soonest possible time.

On July 29, 2004, petitioners filed a Special CivilAction for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of PreliminaryInjunction7[7] with the Regional Trial Court (RTC) of MakatiCity, Branch 147, docketed as Civil Case No. 04-886, againstrespondent for the invalidity of Section 144, Part A of thePAL-FASAP CBA. The RTC set a hearing on petitioners'application for a TRO and, thereafter, required the parties tosubmit their respective memoranda.

6[6] Rollo, pp. 513-528.

7[7] Id. at 124-135.

On August 9, 2004, the RTC issued an Order8[8]upholding its jurisdiction over the present case. The RTCreasoned that:

In the instant case, the thrust of thePetition is Sec. 144 of the subject CBA which isallegedly discriminatory as it discriminatesagainst female flight attendants, in violation of the Constitution, the Labor Code, and theCEDAW. The allegations in the Petition do notmake out a labor dispute arising fromemployer-employee relationship as none isshown to exist. This case is not directedspecifically against respondent arising from anyact of the latter, nor does it involve a claimagainst the respondent. Rather, this case seeks adeclaration of the nullity of the questioned

provision of the CBA, which is within theCourt's competence, with the allegations in thePetition constituting the bases for such relief sought.

The RTC issued a TRO on August 10, 2004,9[9]enjoining the respondent for implementing Section 144, Part Aof the PAL-FASAP CBA.

8[8] Rollo, pp. 204-205.

9[9] Id. at 206.


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The respondent filed an omnibus motion10[10] seekingreconsideration of the order overruling its objection to the

jurisdiction of the RTC the lifting of the TRO. It further prayedthat the (1) petitioners' application for the issuance of a writ of

preliminary injunction be denied; and (2) the petition bedismissed or the proceedings in this case be suspended.

On September 27, 2004, the RTC issued anOrder11[11] directing the issuance of a writ of preliminaryinjunction enjoining the respondent or any of its agents andrepresentatives from further implementing Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case.

Aggrieved, respondent, on October 8, 2004, filed aPetition for Certiorari and Prohibition with Prayer for aTemporary Restraining Order and Writ of PreliminaryInjunction12[12] with the Court of Appeals (CA) praying thatthe order of the RTC, which denied its objection to its

jurisdiction, be annuled and set aside for having been issuedwithout and/or with grave abuse of discretion amounting tolack of jurisdiction.

10[10] Id. at 207-241.

11 [11] Id. at 302-304.

12[12] Rollo, pp. 305-348.

The CA rendered a Decision, dated August 31, 2005,granting the respondent's petition, and ruled that:

WHEREFORE, the respondent court is by us declared to have NO JURISDICTIONOVER THE CASE BELOW and, consequently,all the proceedings, orders and processes it hasso far issued therein are ANNULED and SETASIDE. Respondent court is ordered toDISMISS its Civil Case No. 04-886.

SO ORDERED.

Petitioner filed a motion for reconsideration,13[13]which was denied by the CA in its Resolution dated March 7,2006.

Hence, the instant petition assigning the followingerror:

13[13] Id. at 425-450.


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THE COURT OF APPEALS' CONCLUSIONTHAT THE SUBJECT MATTER IS A LABOR DISPUTE OR GRIEVANCE IS CONTRARYTO LAW AND JURISPRUDENCE.

The main issue in this case is whether the RTC has jurisdiction over the petitioners' action challenging the legalityor constitutionality of the provisions on the compulsoryretirement age contained in the CBA between respondent PALand FASAP.

Petitioners submit that the RTC has jurisdiction in allcivil actions in which the subject of the litigation is incapableof pecuniary estimation and in all cases not within theexclusive jurisdiction of any court, tribunal, person or bodyexercising judicial or quasi-judicial functions. The RTC has the

power to adjudicate all controversies except those expresslywitheld from the plenary powers of the court. Accordingly, ithas the power to decide issues of constitutionality or legality of the provisions of Section 144, Part A of the PAL-FASAP CBA.As the issue involved is constitutional in character, the labor arbiter or the National Labor Relations Commission (NLRC)has no jurisdiction over the case and, thus, the petitioners praythat judgment be rendered on the merits declaring Section 144,Part A of the PAL-FASAP CBA null and void.

Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present case, as the

controversy partakes of a labor dispute. The dispute concernsthe terms and conditions of petitioners' employment in PAL,specifically their retirement age. The RTC has no jurisdictionover the subject matter of petitioners' petition for declaratoryrelief because the Voluntary Arbitrator or panel of VoluntaryArbitrators have original and exclusive jurisdiction to hear anddecide all unresolved grievances arising from the interpretationor implementation of the CBA. Regular courts have no power to set and fix the terms and conditions of employment. Finally,respondent alleged that petitioners' prayer before this Court toresolve their petition for declaratory relief on the merits is

procedurally improper and baseless.

The petition is meritorious.

Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for irrespective of whether plaintiff is entitledto such relief.14[14]

In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of actionis the annulment of Section 144, Part A of the PAL-FASAPCBA. The pertinent portion of the petition recites:

14[14] Polomolok Water District v. Polomolok General Consumers Association, Inc., G.R. No. 162124, October 18, 2007, 536 SCRA 647, 651.


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CAUSE OF ACTION

24. Petitioners have the constitutional right tofundamental equality with men under Section14, Article II, 1987 of the Constitution and,within the specific context of this case, with themale cabin attendants of Philippine Airlines.

26. Petitioners have the statutory right to equalwork and employment opportunities with menunder Article 3, Presidential Decree No. 442,The Labor Code and, within the specificcontext of this case, with the male cabinattendants of Philippine Airlines.

27. It is unlawful, even criminal, for anemployer to discriminate against womenemployees with respect to terms and conditionsof employment solely on account of their sexunder Article 135 of the Labor Code asamended by Republic Act No. 6725 or the ActStrengthening Prohibition on DiscriminationAgainst Women.

28. This discrimination against Petitioners islikewise against the Convention on theElimination of All Forms of DiscriminationAgainst Women (hereafter, CEDAW), amultilateral convention that the Philippinesratified in 1981. The Government and its

agents, including our courts, not only mustcondemn all forms of discrimination againstwomen, but must also implement measurestowards its elimination.

29. This case is a matter of public interest notonly because of Philippine Airlines' violation of the Constitution and existing laws, but also

because it highlights the fact that twenty-threeyears after the Philippine Senate ratified theCEDAW, discrimination against womencontinues.31. Section 114, Part A of the PAL-FASAP2000-20005 CBA on compulsory retirementfrom service is invidiously discriminatoryagainst and manifestly prejudicial to Petitioners

because, they are compelled to retire at a lower age (fifty-five (55) relative to their malecounterparts (sixty (60).

33. There is no reasonable, much less lawful, basis for Philippine Airlines to distinguish,differentiate or classify cabin attendants on the

basis of sex and thereby arbitrarily set a lower compulsory retirement age of 55 for Petitionersfor the sole reason that they are women.

37. For being patently unconstitutional andunlawful, Section 114, Part A of the PAL-FASAP 2000-2005 CBA must be declaredinvalid and stricken down to the extent that itdiscriminates against petitioner.


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38. Accordingly, consistent with theconstitutional and statutory guarantee of equality between men and women, Petitionersshould be adjudged and declared entitled, liketheir male counterparts, to work until they aresixty (60) years old.

PRAYER

WHEREFORE, it is most respectfully prayedthat the Honorable Court:

c. after trial on the merits:

(I) declare Section 114, Part Aof the PAL-FASAP 2000-2005CBA INVALID, NULL andVOID to the extent that itdiscriminates against Petitioners;x x x x

From the petitioners' allegations and relief prayed for inits petition, it is clear that the issue raised is whether Section144, Part A of the PAL-FASAP CBA is unlawful andunconstitutional. Here, the petitioners' primary relief in CivilCase No. 04-886 is the annulment of Section 144, Part A of thePAL-FASAP CBA, which allegedly discriminates against themfor being female flight attendants. The subject of litigation isincapable of pecuniary estimation, exclusively cognizable bythe RTC, pursuant to Section 19 (1) of Batas Pambansa Blg.

129, as amended.15[15] Being an ordinary civil action, thesame is beyond the jurisdiction of labor tribunals.

The said issue cannot be resolved solely by applyingthe Labor Code. Rather, it requires the application of theConstitution, labor statutes, law on contracts and theConvention on the Elimination of All Forms of DiscriminationAgainst Women,16[16] and the power to apply and interpretthe constitution and CEDAW is within the jurisdiction of trialcourts, a court of general jurisdiction. In Georg GrotjahnGMBH & Co. v. Isnani ,17[17] this Court held that not everydispute between an employer and employee involves mattersthat only labor arbiters and the NLRC can resolve in theexercise of their adjudicatory or quasi-judicial powers. The

jurisdiction of labor arbiters and the NLRC under Article 217of the Labor Code is limited to disputes arising from anemployer-employee relationship which can only be resolved byreference to the Labor Code, other labor statutes, or their collective bargaining agreement .

15[15] Regional Trial Courts shall exercise exclusive original jurisdiction in all civilactions in which the

subject of the litigation is incapable of pecuniary estimation.

16[16] Otherwise known as Bill of Rights for Women was adopted in December 1979 bythe UN General Assembly, it is regarded as the most comprehensive international treatygoverning the rights of women. The Philippines became a signatory thereto a year after itsadoption by the UN and in 1981, the country ratified it.

17[17] G.R. No. 109272, August 10, 1994, 235 SCRA 217, 221. (Emphasis supplied.)


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Not every controversy or money claim by an employeeagainst the employer or vice-versa is within the exclusive

jurisdiction of the labor arbiter. Actions between employeesand employer where the employer-employee relationship ismerely incidental and the cause of action precedes from adifferent source of obligation is within the exclusive

jurisdiction of the regular court.18[18] Here, the employer-employee relationship between the parties is merely incidentaland the cause of action ultimately arose from different sourcesof obligation , i.e. , the Constitution and CEDAW.

Thus, where the principal relief sought is to be resolvednot by reference to the Labor Code or other labor relationsstatute or a collective bargaining agreement but by the generalcivil law, the jurisdiction over the dispute belongs to theregular courts of justice and not to the labor arbiter and the

NLRC. In such situations, resolution of the dispute requiresexpertise, not in labor management relations nor in wagestructures and other terms and conditions of employment, butrather in the application of the general civil law. Clearly, suchclaims fall outside the area of competence or expertiseordinarily ascribed to labor arbiters and the NLRC and therationale for granting jurisdiction over such claims to theseagencies disappears.19[19]

18[18] Eviota v. Court of Appeals, G.R. No. 152121, July 29, 2003, 407 SCRA 394, 402.

19[19] San Miguel Corporation v. NLRC, No. L-80774, May 31, 1988, 161 SCRA 719,730.

If We divest the regular courts of jurisdiction over thecase, then which tribunal or forum shall determine theconstitutionality or legality of the assailed CBA provision?

This Court holds that the grievance machinery andvoluntary arbitrators do not have the power to determine andsettle the issues at hand. They have no jurisdiction andcompetence to decide constitutional issues relative to thequestioned compulsory retirement age. Their exercise of

jurisdiction is futile, as it is like vesting power to someone whocannot wield it.

In Gonzales v. Climax Mining Ltd. ,20[20] this Courtaffirmed the jurisdiction of courts over questions onconstitutionality of contracts, as the same involves the exerciseof judicial power. The Court said:

Whether the case involves void or voidable contracts is still a judicial question. Itmay, in some instances, involve questions of fact especially with regard to the determinationof the circumstances of the execution of thecontracts. But the resolution of the validity or voidness of the contracts remains a legal or

judicial question as it requires the exercise of judicial function. It requires the ascertainment

20[20] 492 Phil. 682, 695. (2005).


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of what laws are applicable to the dispute, theinterpretation and application of those laws, andthe rendering of a judgment based thereon.Clearly, the dispute is not a mining conflict. Itis essentially judicial. The complaint was notmerely for the determination of rights under themining contracts since the very validity of thosecontracts is put in issue.

In Saura v. Saura, Jr. ,21[21] this Court emphasized the primacy of the regular court's judicial power enshrined in theConstitution that is true that the trend is towards vestingadministrative bodies like the SEC with the power toadjudicate matters coming under their particular specialization,to insure a more knowledgeable solution of the problemssubmitted to them. This would also relieve the regular courtsof a substantial number of cases that would otherwise swelltheir already clogged dockets. But as expedient as this poli cy may be, it shoul d not deprive the cour ts of ju stice of th eir power to decide ordinary cases in accordance with the general l aws that do not r equir e any parti cul ar experti se or trai ni ng to in terpret and apply. Otherwi se, the creepin g take- over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent i n th e discharge of the duties assigned to it by the Constitution .

21[21] G.R. No. 136159, September 1, 1999, 313 SCRA 465, 474. (emphasis supplied.)

To be sure, in Rivera v. Espiritu ,22[22] after PhilippineAirlines (PAL) and PAL Employees Association (PALEA)entered into an agreement, which includes the provision tosuspend the PAL-PALEA CBA for 10 years, severalemployees questioned its validity via a petition for certioraridirectly to the Supreme Court. They said that the suspensionwas unconstitutional and contrary to public policy. Petitionerssubmit that the suspension was inordinately long, way beyondthe maximum statutory life of 5 years for a CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers'constitutional right to bargain for another CBA at the mandatedtime.

In that case, this Court denied the petition for certiorari,ruling that there is available to petitioners a plain, speedy, andadequate remedy in the ordinary course of law. The Court saidthat while the petition was denominated as one for certiorariand prohibition, its object was actually the nullification of thePAL-PALEA agreement. As such, petitioners' proper remedy isan ordinary civil action for annulment of contract, an actionwhich properly falls under the jurisdiction of the regional trialcourts.

The change in the terms and conditions of employment,should Section 144 of the CBA be held invalid, is but anecessary and unavoidable consequence of the principal relief

22[22] G.R. No. 135547, January 23, 2002, 374 SCRA 351.


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sought, i.e., nullification of the alleged discriminatory provision in the CBA. Thus, it does not necessarily follow thata resolution of controversy that would bring about a change inthe terms and conditions of employment is a labor dispute,cognizable by labor tribunals. It is unfair to preclude petitionersfrom invoking the trial court's jurisdiction merely because itmay eventually result into a change of the terms and conditionsof employment. Along that line, the trial court is not asked toset and fix the terms and conditions of employment, but iscalled upon to determine whether CBA is consistent with thelaws.

Although the CBA provides for a procedure for theadjustment of grievances, such referral to the grievancemachinery and thereafter to voluntary arbitration would beinappropriate to the petitioners, because the union and themanagement have unanimously agreed to the terms of the CBAand their interest is unified.

In Pantranco North Express, Inc., v. NLRC, 23[23] thisCourt held that:

23[23] G.R. No.95940, July 24, 1996, 259 SCRA 161, 168, citing Sanyo PhilippinesWorkers Union - PSSLU v. Caizares, G.R. No. 101619, July 8, 1992, 211 SCRA 361.

x x x Hence, only disputes involving the unionand the company shall be referred to thegrievance machinery or voluntary arbitrators.In the instant case, both the union and thecompany are united or have come to anagreement regarding the dismissal of privaterespondents. No grievance between them existswhich could be brought to a grievancemachinery. The problem or dispute in the

present case is between the union and thecompany on the one hand and some union andnon-union members who were dismissed, onthe other hand. The dispute has to be settled

before an impartial body. The grievancemachinery with members designated by theunion and the company cannot be expected to

be impartial against the dismissed employees.Due process demands that the dismissedworkers grievances be ventilated before animpartial body. x x x .

Applying the same rationale to the case at bar,it cannot be said that the "dispute" is betweenthe union and petitioner company because bothhave previously agreed upon the provision on

"compulsory retirement" as embodied in theCBA. Also, it was only private respondent onhis own who questioned the compulsoryretirement. x x x.

In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both previously agreed upon the provision on the compulsoryretirement of female flight attendants as embodied in the CBA.


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The dispute is between respondent PAL and several femaleflight attendants who questioned the provision on compulsoryretirement of female flight attendants. Thus, applying the

principle in the aforementioned case cited, referral to thegrievance machinery and voluntary arbitration would not servethe interest of the petitioners.

Besides, a referral of the case to the grievancemachinery and to the voluntary arbitrator under the CBAwould be futile because respondent already implementedSection 114, Part A of PAL-FASAP CBA when several of itsfemale flight attendants reached the compulsory retirement ageof 55.

Further, FASAP, in a letter dated July 12, 2004,addressed to PAL, submitted its association's bargaining

proposal for the remaining period of 2004-2005 of the PAL-FASAP CBA, which includes the renegotiation of the subjectSection 144. However, FASAP's attempt to change thequestioned provision was shallow and superficial, to say theleast, because it exerted no further efforts to pursue its

proposal. When petitioners in their individual capacitiesquestioned the legality of the compulsory retirement in theCBA before the trial court, there was no showing that FASAP,as their representative, endeavored to adjust, settle or negotiatewith PAL for the removal of the difference in compulsory ageretirement between its female and male flight attendants,

particularly those employed before November 22, 1996.Without FASAP's active participation on behalf of its female

flight attendants, the utilization of the grievance machinery or voluntary arbitration would be pointless.

The trial court in this case is not asked to interpretSection 144, Part A of the PAL-FASAP CBA. Interpretation,as defined in Black's Law Dictionary, is the art of or process of discovering and ascertaining the meaning of a statute, will,contract, or other written document.24[24] The provisionregarding the compulsory retirement of flight attendants is notambiguous and does not require interpretation. Neither is thereany question regarding the implementation of the subject CBA

provision, because the manner of implementing the same isclear in itself. The only controversy lies in its intrinsic validity.

Although it is a rule that a contract freely entered between the parties should be respected, since a contract is thelaw between the parties, said rule is not absolute.

In Pakistan International Airlines Corporation v.Ople, 25[25] this Court held that:

24[24] Fifth Edition, p. 734.

25[25] G.R.No. 61594, September 28, 1990, 190 SCRA 90, 99.


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The principle of party autonomy in contracts isnot, however, an absolute principle. The rule inArticle 1306, of our Civil Code is that thecontracting parties may establish suchstipulations as they may deem convenient,provided they are not contrary to law, morals,good customs, public order or public policy.Thus, counter-balancing the principle of autonomy of contracting parties is the equallygeneral rule that provisions of applicable law,especially provisions relating to matters affectedwith public policy, are deemed written into thecontract. Put a little differently, the governing

principle is that parties may not contract awayapplicable provisions of law especially

peremptory provisions dealing with mattersheavily impressed with public interest. The lawrelating to labor and employment is clearly suchan area and parties are not at liberty to insulatethemselves and their relationships from theimpact of labor laws and regulations by simplycontracting with each other.

Moreover, the relations between capital and labor arenot merely contractual. They are so impressed with publicinterest that labor contracts must yield to the common good.x xx 26[26] The supremacy of the law over contracts is explained

by the fact that labor contracts are not ordinary contracts; theseare imbued with public interest and therefore are subject to the

26[26] New Civil Code, Art. 1700.

police power of the state.27[27] It should not be taken to meanthat retirement provisions agreed upon in the CBA areabsolutely beyond the ambit of judicial review andnullification. A CBA, as a labor contract, is not merelycontractual in nature but impressed with public interest. If theretirement provisions in the CBA run contrary to law, publicmorals, or public policy, such provisions may very well bevoided.28[28]

Finally, the issue in the petition for certiorari brought before the CA by the respondent was the alleged exercise of grave abuse of discretion of the RTC in taking cognizance of the case for declaratory relief. When the CA annuled and setaside the RTC's order, petitioners sought relief before thisCourt through the instant petition for review under Rule 45. A

perusal of the petition before Us, petitioners pray for thedeclaration of the alleged discriminatory provision in the CBAagainst its female flight attendants.

This Court is not persuaded. The rule is settled that purequestions of fact may not be the proper subject of an appeal bycertiorari under Rule 45 of the Revised Rules of Court. Thismode of appeal is generally limited only to questions of law

27[27] Villa v. National Labor Relations Commission , G.R. No. 117043, January 14,1998, 284 SCRA 105, 127,128.

28[28] Cainta Catholic School v. Cainta Catholic School Employees Union (CCSEU) ,G.R. No. 151021, May 4, 2006. 489 SCRA 468, 485.


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which must be distinctly set forth in the petition. The SupremeCourt is not a trier of facts.29[29]

The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. This would require the presentation and reception of evidence by the parties in order for the trial court to ascertainthe facts of the case and whether said provision violates theConstitution, statutes and treaties. A full-blown trial isnecessary, which jurisdiction to hear the same is properlylodged with the the RTC. Therefore, a remand of this case tothe RTC for the proper determination of the merits of the

petition for declaratory relief is just and proper.

WHEREFORE , the petition is PARTLY GRANTED .The Decision and Resolution of the Court of Appeals, datedAugust 31, 2005 and March 7, 2006, respectively, in CA-G.R.SP. No. 86813 are REVERSED and SET ASIDE . TheRegional Trial Court of Makati City, Branch 147 isDIRECTED to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch.

SO ORDERED.

29[29] Far East Bank & Trust Co. v. CA , 326. Phil. 15, 18. (1996).

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