G.R. No. L-48645 January 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 BOCALING and GODOFREDO CUETO,respondents.

GUTIERREZ, JR.,J.:The elemental question in labor law of whether or not an employer-employee relationship exists between petitioners-members of the "Brotherhood Labor Unit Movement of the Philippines" (BLUM) and respondent San Miguel Corporation, is the main issue in this petition. The disputed decision of public respondent Ronaldo Zamora, Presidential Assistant for legal Affairs, contains a brief summary of the facts involved:

1. The records disclose that on July 11, 1969, BLUM filed a complaint with the now defunct Court of Industrial Relations, charging San Miguel Corporation, and the following officers: Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio Eugenia Jr., Ernesto Villanueva, Antonio Bocaling 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 alleged that respondents ordered the individual complainants to disaffiliate from the complainant union; and that management dismissed the individual complainants when they insisted on their union membership.

On their part, respondents moved for the dismissal of the complaint on the grounds that the complainants are not and have never been employees of respondent company but employees of the independent contractor; that respondent company has never had control over the means and methods followed by the independent contractor who enjoyed full authority to hire and control said employees; and that the individual complainants are barred by estoppel from asserting that they are employees of respondent company.

While pending with the Court of Industrial Relations CIR pleadings and testimonial and documentary evidences were duly presented, although the actual hearing was delayed by several postponements. The dispute was taken over by the National Labor Relations Commission (NLRC) with the decreed abolition of the CIR and the hearing of the case intransferably commenced on September 8, 1975.

On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants which was concurred in by the NLRC in a decision dated June 28, 1976. The amount of backwages awarded, however, was reduced by NLRC to the equivalent of one (1) year salary.

On appeal, the Secretary in a decision dated June 1, 1977, set aside the NLRC ruling, stressing the absence of an employer-mployee relationship as borne out by the records of the case. ...

The petitioners strongly argue that there exists an employer-employee relationship between them and the respondent 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 establish that the petitioners are workers who have been employed at 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 from company trucks and warehouses. At times, they accompanied the company trucks on their delivery routes.

The petitioners first reported for work to Superintendent-in-Charge Camahort. They were issued gate passes signed by Camahort and were provided by the respondent company with the tools, equipment and paraphernalia used in the loading, unloading, piling and hauling operation.

Job orders emanated from Camahort. The orders are then transmitted to an assistant-officer-in-charge. In turn, the assistant informs the warehousemen and checkers regarding the same. The latter, thereafter, relays said orders to the capatazes or group leaders who then give orders to the workers as to where, when and what to load, unload, pile, pallet or clean.

Work in the glass factory was neither regular nor continuous, depending wholly on the volume of bottles manufactured to be loaded and unloaded, as well as the business activity of the company. Work did not necessarily mean a full eight (8) hour day for the petitioners. However, work,at times, exceeded the eight (8) hour day and necessitated work on Sundays and holidays. 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 rate basis, that is, according to the number of cartons and wooden 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. This is then made the basis of a report or statement which is compared with the notes of the checker and warehousemen as to whether or not they tally. Final approval of report is by officer-in-charge Camahort. The pay check is given to the group leaders for encashment, distribution, and payment to the petitioners in accordance with payrolls prepared by said leaders. From the total earnings of the group, the group leader gets a participation or share of ten (10%) percent plus an additional 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 furnaces suffered a breakdown, making a shutdown necessary, the petitioners work was temporarily suspended. Thereafter, the petitioners would return to work at the glass plant.

Sometime in January, 1969, the petitioner workers numbering one hundred and forty (140) organized and affiliated themselves with the petitioner union and engaged in union activities. Believing themselves entitled to overtime and holiday pay, the petitioners pressed management, airing other grievances such as being paid below the minimum wage law, inhuman treatment, being forced to borrow at usurious rates of interest and to buy raffle tickets, coerced by withholding their salaries, and salary 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 connection with the dismissal of some of its members who were allegedly castigated for their union membership and warned 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, the complainant union through its officers headed by National President Artemio Portugal Sr., presented a letter to the respondent company containing proposals and/or labor demands together with a request for recognition and collective bargaining.

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

On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter, denied entrance to respondent company's glass factory despite their regularly reporting for work. A complaint for illegal dismissal and unfair labor practice was filed by the petitioners.

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

The question of whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. (Mafinco Trading Corporation v. Ople, 70 SCRA 139).

In determining the existence of an employer-employee relationship, the elements that are generally considered are 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 the employee with respect to the means and methods by which 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 Social Security System, 21 SCRA 924; Mafinco Trading Corp. v. Ople,supra,and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).

Applying the above criteria, the evidence strongly indicates the existence of an employer-employee relationship between petitioner workers and respondent San Miguel Corporation. The respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent labor contracting firm.

The facts and evidence on record negate respondent SMC'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 independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right 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 and payment of the contractor's workers; the control of the premises; 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 written contract to specify the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship. The records fail to show that a large commercial outfit, such as the San Miguel Corporation, entered into mere oral agreements of employment or labor contracting where the same would involve considerable expenses and dealings with a large number of workers over a long period of time. Despite respondent company's allegations not an iota of evidence was offered to prove the same or its particulars. Such failure makes respondent SMC's stand subject to serious doubts.

Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and exclusively for the respondent company's shipping and warehousing department. Considering the length of time that the petitioners have worked with the respondent company, there is justification to conclude that they were engaged to perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are, therefore regular employees (Phil. Fishing Boat Officers and Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and RJL Martinez Fishing Corporation v. National Labor Relations Commission, 127 SCRA 454).

As we have found inRJL Martinez Fishing Corporation v. National Labor Relations Commission (supra):... [T]he employer-employee relationship between the parties herein is not coterminous with each loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents' vessels and then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the 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@itso as it with petitioners in the case at bar. In fact, despite past shutdowns of the glass plant for repairs, the petitioners, thereafter, promptly returned to their jobs, never having been replaced, or assigned elsewhere until the present controversy arose. The term of the petitioners' employment appears indefinite. The continuity and 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 between respondent SMC and the alleged labor contractor, respondent's case will, nevertheless, fail.

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

Job contracting. There is job contracting permissible under the Code if the following conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of 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 the conduct of his business.

We find that Guaranteed and Reliable Labor contractors have neither substantial capital nor investment to qualify as an independent contractor under the law. The premises, tools, equipment and paraphernalia used by the petitioners in their jobs are admittedly all supplied by respondent company. It is only the manpower or labor force which the alleged contractors supply, suggesting the existence of a "labor only" contracting scheme prohibited by law (Article 106, 109 of the Labor Code; Section 9(b), Rule VIII, Book III, Implementing Rules and Regulations of the Labor Code). In fact, even the alleged contractor's office, which consists of a space at respondent company's warehouse, table, chair, typewriter and cabinet, are provided for by respondent SMC. It is therefore clear that the alleged contractors have no capital outlay involved in the conduct of its business, in the maintenance thereof or in the payment of its workers' salaries.

The payment of the workers' wages is a critical factor in determining the actuality of an employer-employee relationship whether between respondent company and petitioners or between the alleged independent contractor and petitioners. It is important to emphasize that in a truly independent contractor-contractee relationship, 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 the company. This is the rule inSocial 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 the workers were entitled to, arrived at by adding the salaries of each worker which depend on the volume of work they. had accomplished individually. These are based on payrolls, reports or statements prepared by the workers' group leader, warehousemen and checkers, where they note down the number of cartons, wooden shells and bottles each worker was able to load, unload, pile or pallet and see whether they tally. The amount paid by respondent company to the alleged independent contractor considers no business expenses or capital outlay of the latter. Nor is the profit or gain of the alleged contractor in the conduct of its business provided for as an amount over and above the workers' wages. Instead, the alleged contractor receives a percentage from the total earnings of all the workers plus an additional amount corresponding to a percentage of the earnings of each individual worker, which, perhaps, accounts for the petitioners' charge of unauthorized deductions from their salaries by the respondents.

Anent the argument that the petitioners are not employees as they worked on piece basis, we merely have to cite our rulings inDy Keh Beng v. International Labor and Marine Union of the Philippines(90 SCRA 161), as follows:

"[C]ircumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not define the essence of the relation. Units of time . . . and units of work are in establishments like respondent (sic) just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe payment by the piece where work is done in such an establishment so as to put the worker completely at liberty to turn him out and take 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 be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

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

Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to the means and 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 respondent SMC and the alleged contractor is that the job of having the bottles and wooden shells brought to and from the warehouse be done. More evident and pronounced is respondent company's right to control in the discipline of petitioners. Documentary evidence presented by the petitioners establish respondent SMC's right to impose disciplinary measures for violations or infractions of its rules and regulations as well as its right to recommend transfers and dismissals of the piece workers. The inter-office memoranda submitted in evidence prove the company's control over the petitioners. That respondent SMC has the power to recommend penalties or dismissal of the piece workers, even as to Abner Bungay who is alleged by SMC to be a representative of the alleged labor contractor, is the strongest indication of respondent company's right of control over the petitioners as direct employer. There is no evidence to show that the alleged labor contractor had such right of control or much less had been there to supervise or deal with the petitioners.

The petitioners were dismissed allegedly because of the shutdown of the glass manufacturing plant. Respondent company 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 such is not the case here. The respondent's shutdown was merely temporary, one of its furnaces needing repair. Operations continued after such repairs, but the petitioners had already been refused entry to the premises and dismissed from respondent's service. New workers manned their positions. It is apparent that the closure of respondent's warehouse was merely a ploy to get rid of the petitioners, who were then agitating the respondent company for benefits, reforms and collective bargaining as a union. There is no showing that petitioners had been remiss in their obligations and inefficient 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 collective bargaining agreement with the IBM union which is the recognized collective bargaining representative at the respondent's glass plant.

There being a recognized bargaining representative of all employees at the company's glass plant, the petitioners cannot merely form a union and demand bargaining. The Labor 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 is hereby ordered to REINSTATE petitioners, with three (3) years backwages. However, where reinstatement is no longer possible, the respondent SMC is ordered to pay the petitioners separation pay equivalent to one (1) month pay for every year of service.

SO ORDERED.

G.R. No. 87700 June 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.

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 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 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 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,...;

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 ...;

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, ..., 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 .., 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 thestatus 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 thestatus quo antedeclaration of strike" (p. 2,62 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 ... 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 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 courta quoinvolves 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 were 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 and 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 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 negative 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 the 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 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 inLayno 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; ... and 5. cases arising from any violation of Article 265 of this Code, including questions involving the legality of striker and lockouts. ..." 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 ofcertiorariis 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. Thestatus quoante 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-01-02189 and NCMB-NCR-NS-01-093-83. No costs.

SO ORDERED.

G.R. No. 87211 March 5, 1991

JOVENCIO L. MAYORpetitioner,vs.HON. CATALINO MACARAIG, HON. GUILLERMO CARAGUE, HON. RIZALINA CAJUCOM, HON. FRANKLIN DRILON,respondents. LOURDES A. SALES and RICARDO OLAIREZ,petitioners-intervenors.

G.R. No. 90044 March 5, 1991

PASCUAL V. REYES,petitioner,vs.HON. FRANKLIN DRILON,respondent.

G.R. No. 91547 March 5, 1991

CEFERINO E. DULAY, ROSARIO G. ENCARNACION and DANIEL LUCAS, JR.,petitioners,vs.HON. CATALINO MACARAIG, JR., as Executive Secretary, HON. GUILLERMO N. CARAGUE, as Secretary of Budget and Management, HON. DIONISIO DE LA SERNA, as Acting Secretary of Labor & Employment, BARTOLOME CARALE, VICENTE S.E. VELOSO III, ROMEO B. TUOMO, EDNA BONTO PEREZ, DOMINGO H. ZAPANTA, RUSTICO L. DIOKNO, LOURDES C. JAVIER, IRINEO B. BARNALDO, ROGELIO I. RAYALA, ERNESTO G. LADRINO III, IRENEA E. CENIZA, BERNABE S. BATUHAN, MUSIB M. BUAT, L.B. GONZAGA, JR. and OSCAR ABELLA,respondents.

G.R. No. 91730 March 5, 1991

CONRADO B. MAGLAYA,petitioner,vs.HON. CATALINO MACARAEG, HON. GUILLERMO CARAGUE, HON. RIZALINA CAJOCUM, and the HONORABLE SECRETARY OF LABOR,respondents.

G.R. No. 94518 March 5, 1991

ROLANDO D. GAMBITO,petitioner,vs.THE SECRETARY OF LABOR AND EMPLOYMENT and THE EXECUTIVE SECRETARY,respondents.

NARVASA,J.:pFive (5) special civil actions are hereby jointly decided because they involve one common, fundamental issue, the constitutionality of Republic Act No. 6715, effective March 21, 1989, in so far as it declares vacant "all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the National Labor Relations Commission," and operates to remove the incumbents upon the appointment and qualification of their successors. The law is entitled, "AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE CONSTITUTIONAL RIGHTS OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE BARGAINING AND PEACEFUL CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE AND HARMONY, PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF SETTLING LABOR DISPUTES ANDRE-ORGANIZE THE NATIONAL LABOR RELATIONS COMMISSION, AMENDING PRESIDENTIAL DECREE NO. 441, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES."1The provision directly dealing with the reorganization of the National Labor Relations Commission is Section 35. It reads as follows:2Sec. 35. Equity of the Incumbent. Incumbent career officials and rank-and-file employees of the National labor Relations Commission not otherwise affected by the Act shall continue to hold office without need of reappointment. However, consistent with the need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments,all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations Commission are hereby declared vacant. However, subject officials shall continue to temporarily discharge their duties and functions until their successors shall have been duly appointed and qualified.

The first of these five consolidated cases was filed by Labor Arbiter Jovencio Ll. Mayor on March 8, 1989. In the year that followed, eight other officers of the Commission, as initiators of their own separate actions or as intervenors, joined Mayor in the attempt to invalidate the reorganization and to be reinstated to their positions in the Government service.

G.R.No.87211:Jovencio Mayor;and Intervenors Lourdes A.Sales and Ricardo OlairezJovencio Ll. Mayor, a member of the Philippine Bar for fifteen (15) years, was appointed Labor Arbiter in 1986 after he had, according to him, met the prescribed qualifications and passed "a rigid screening process." Fearing that he would be removed from office on account of the expected reorganization, he filed in this Court the action now docketed as G.R. No. 87211. His fears proved groundless, however. He was in fact reappointed a Labor Arbiter on March 8, 1990. Hence, as he himself says, the case became moot as to him.

Like Mayor, both intervenors Lourdes A. Sales and Ricardo N. Olairez were appointed Labor Arbiters in 1986, but unlike Mayor, were not among the one hundred fifty-one (151) Labor Arbiters reappointed by the President on March 8, 1990.

G.R.No.90044;Pascual Y Reyes;and Intervenor Eugenio L Sagmit, Jr.

At the time of the effectivity of R.A. No. 6715, Pascual Y. Reyes was holding the office of Executive Director of the National Labor Relations Commission in virtue of an appointment extended to him on May 30, 1975. As specified by Administrative Order No. 10 of the Secretary of Labor, dated July 14, 1975, the functions of his office were "to take charge of all administrative matters of the Commission and to have direct supervision overall units and personnel assigned to perform administrative tasks;"and Article 213 of the Labor Code, as amended, declared that the "Executive Director, assisted by a Deputy Executive Director,shall exercise the administrative functions of the Commission." Reyes states that he has been "a public servant for 42 years," and "is about to retire at sixty-five (65)," in 1991.

The petitioner-in-intervention, Eugenio I. Sagmit, Jr., was Reyes' Deputy Executive Director, appointed as such on October 27, 1987 after twenty-five (25) years of government service.

Both Reyes and Sagmit were informed that they had been separated from employment upon the effectivity of R.A. No. 6715, pursuant to a Memorandum-Order issued by then Secretary of Labor Franklin Drilon on August 17, 1989 to the effect that the offices of Executive Director and Deputy Executive Director had been abolished by Section 35, in relation to Section 5 of said Act, and "their functions transferred to the Chairman, aided by the Executive Clerk.

Reyes moved for reconsideration on August 29, 1989, but when no action was allegedly taken thereon, he instituted the action at bar, G.R. No. 90044. Sagmit was afterwards granted leave to intervene in the action.

G.R.No.91547:Ceferino Dulay, Rosario G.Encarnacion, and Daniel M.LucasPetitioners Rosario G. Encarnacion and Daniel M. Lucas, Jr. were appointed National Labor Relations Commissioners on October 20, 1986, after the Commission was reorganized pursuant to Executive Order No. 47 of President Aquino. Later, or more precisely on November 19, 1986, Lucas was designated Presiding Commissioner of the Commission's Second Division; and Commissioner Ceferino E. Dulay was appointed Presiding Commissioner of the Third Division.

Executive Order No. 252, issued by the President on July 25, 1987, amended Article 215 of the Labor Code by providing that "the Commissioners appointed under Executive Order No. 47 dated September 10, 1986 shall hold office for a term of six (6) years . . . (but of those thus appointed) three shall hold office for four (4) years, and three for two (2) years . . . without prejudice to reappointment." Under Executive Order No. 252, the terms of Encarnacion and Lucas would expire on October 23, 1992, and that of Dulay, on December 18, 1992.

On November 18, 1989, R.A. No. 6715 being then already in effect, the President extended to Encarnacion, Lucas and Dulay new appointments as Commissioners of the NLRC despite the fact that, according to them, they had not been served with notice of the termination of their services as incumbent commissioners, and no vacancy existed in their positions. Their new appointments were submitted to Congress, but since Congress adjourned on December 22, 1989 without approving their appointments, said appointments becamefunctus officio.

No other appointments were thereafter extended to Encarnacion and Dulay. Lucas was however offered the position of Assistant Regional Director by Secretary Drilon and then by Acting Secretary Dionisio de la Serna (by letter dated January 9, 1990 which referred to his appointment as such Assistant Regional Director supposedly "issued by the President on November 8, 1989"). Lucas declined the offer, believing it imported a demotion.

They all pray that their removal be pronounced unconstitutional and void and they be declared Commissioners lawfully in office, or, alternatively, that they be paid all salaries, benefits and emoluments accruing to them for the unexpired portions of their six-year terms and allowed to enjoy retirement benefits under applicable laws (pursuant to R.A. 910 and the Resolution re Judge Mario Ortiz, G. R. No. 78951, June 28, 1988).

Of the incumbent Commissioners as of the effectivity of R.A. 6715, six (6) were reappointed, namely: (1) Hon. Edna Bonto Perez (as Presiding Commissioner, Second Division NCR]), (2) Domingo H. Zapanta (Associate Commissioner, Second Division), (3) Lourdes C. Javier (Presiding Commissioner, Third Division [Luzon except NCR]), (4) Ernesto G. Ladrido III (Presiding Commissioner, Fourth Division [Visayas]), (5) Musib M. Buat (Presiding Commissioner, Fifth Division [Mindanao]), and (6) Oscar N. Abella (Associate Commissioner, Fifth Division). Other members appointed to the reorganized Commission were Vicente S.E. Veloso III, Romeo B. Putong, Rustico L. Diokno, Ireneo B. Bernardo, Rogelio I. Rayala, Irenea E. Ceniza, Bernabe S. Batuhan, and Leon G. Gonzaga, Jr. Appointed Chairman was Hon. Bartolome Carale,quondamDean of the College of Law of the University of the Philippines.

G.R.No.91730:Conrado MaglayaPetitioner Conrado Maglaya alleges that he has been "a member of the Philippine Bar for thirty-six (36) years of which 31 years . . . (had been) devoted to public service, the last 24 years in the field of labor relations law;" that he was appointed Labor Arbiter on May 30, 1975 and "was retained in such position despite the reorganization under the Freedom Constitution of 1986 . . . (and) later promoted to and appointed by the President as Commissioner of the . . . (NLRC) First Division on October 23, 1986." He complains that he was effectively removed from his position as a result of the designation of the full complement of Commissioners in and to all Five Divisions of the NLRC by Administrative Order No. 161 dated November 18, 1989, issued by Labor Secretary Drilon.

G.R.No.94518:Rolando D.GambitoRolando Gambito passed the bar examinations in 1971, joined the Government service in 1974, serving for sixteen years in the Department of Health, and as Labor Arbiter in the Department of Labor and Employment from October, 1986. He was not included in the list of newly appointed Labor Arbiters released on March 8, 1990; and his attempt to obtain a recosideration of his exclusion therefrom and bring about his reinstatement as Labor Arbiter was unavailing.

The Basic Issue

A number of issues have been raised and ventilated by the petitioners in their separate pleadings. They may all be reduced to one basic question, relating to the constitutionality of the provisions of Republic Act No. 6715 DECLARING VACANT "all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations Commission,"3according to which the public respondents

1) considered as effectively separated from the serviceinter alia, all holders of said positions at the time of the effectivity of said Republic Act No. 6715, including the positions ofExecutive DirectorandDeputy Executive Directorof the Commission, and

2) consequently, thereafter caused the appointment of other persons to the new positions specified in said statute: of Chairman Commissioners, Executive Clerk, Deputy Executive Clerk, and Labor Arbiters of the reorganized National Labor Relations Commission. The old positions were declared vacant because, as the statute states, of "the need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments."

As everyone knows, security of tenure is a protected right under the Constitution. The right is secured to all employees in privates as well as in public employment. "No officer or employee in the civil service," the Constitution declares, "shall be removed or suspended except for cause provided by law."4There can scarcely be any doubt that each of the petitioners commissioner, administrative officer, or labor arbiter falls within the concept of an "officer or employee in the civil service" since the civil service "embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including governmentowned or controlled corporations with original charters."5The Commissioners thus had the right to remain of office until the expiration of the terms for which they had been appointed, unless sooner removed "for cause provided by law." So, too, the Executive Director and Deputy Executive Director, and the Labor Arbiters had the right to retain their positions until the age of compulsory retirement, unless sooner removed "for cause provided by law." None of them could be deemed to be serving at the pleasure of the President.

Now, a recognized cause for several or termination of employment of a Government officer or employee is the abolition by law of his office as a result of reorganization carried out by reason of economy or to remove redundancy of functions, or clear and explicit constitutional mandate for such termination of employment.6Abolition of an office is obviously not the same as the declaration that that office is vacant. While it is undoubtedly a prerogative of the legislature to abolish certain offices, it can not be conceded the power to simply pronounce those offices vacant and thereby effectively remove the occupants or holders thereof from the civil service. Such an act would constitute, on its face, an infringement of the constitutional guarantee of security of tenure, and will have to be struck down on that account. It can not be justified by the professed "need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments."

The Constitution does not, of course, ordain the abolition of the petitioners' positions of their removal from their offices; and there is no claim that the petitioners' separation from the service is due to a cause other than RA 6715. The inquiry therefore should be whether or not RA 6715 has worked such an abolition of the petitioners' offices, expressly or impliedly. This is the only mode by which, under the circumstances, the petitioners' removal from their positions may be defended and sustained.

It is immediately apparent that there is noexpressabolition in RA 6715 of the petitioners' positions. So, justification must be sought, if at all, in an implied abolition thereof;i.e., that resulting from an irreconcilable inconsistency between the nature, duties and functions of the petitioners' offices under the old rules and those corresponding thereof under the new law. An examination of the relevant provisions of RA 6715, with a view to discovering the changes thereby effected on the nature, composition, powers, duties and functions of the Commission and the Commissioners, the Executive Director, the Deputy Executive Director, and the labor Arbiters under the prior legislation, fails to disclose such essential inconsistencies.

1. Amendments as Regards the NLRC and the CommissionersFirst, as regards the National Labor Relations Commissioners.

A. Nature and Composition of the Commission, Generally1. Prior to its amendment by RA 6715, Article 213 of the Labor Code envisaged the NLRC as being an integral part of the Department of labor and Employment. "There shall," it said, "be a National Labor Relations Commissioninthe Department of Labor and Employment . . . ." RA 6715 would appear to have made the Commission somewhat more autonomous. Article 213 now declares that, "There shall be a National labor Relations Commissionwhich shall be attached tothe Department of labor and Employmentfor program coordination only. . . ."

2. Tripartite representation was to a certain extent restored in the Commission. The same Section 213, as amended, now provides that the Chairman and fourteen (14) members composing the NLRC shall be chosen from the workers', employers' and the public sectors, as follows:

Five (5) members each shall be chosen from among the nominees of the workers and employers organization, respectively. The Chairman and the four (4) remaining members shall come from the public sector, with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment.

However, once they assume office," the members nominated by the workers and employers organizations shall divest themselves of any affiliations with or interest in the federation or association to which they belong."

B. Allocation of Powers Between NLRC En Banc and its DivisionsAnother amendment was made in respect of the allocation of powers and functions between the Commissionen banc, on the one hand, and its divisions, on the other. Both under the old and the amended law, the Commission was vested with rule-making and administrative authority, as well as adjudicatory and other powers, functions and duties, and could siten bancor in divisions of three (3) members each. But whereas under the old law, the cases to be decideden bancand those by a division were determined by rules laid down by the Commission with the approval of theex officio, Chairman (the Secretary of labor) said Commission, in other words, then exercisebothadministrative and adjudicatory powers the law now, as amended by RA 6715, provides that

1) the Commission "shall siten banconly for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations;" but

2) it "shall exercise its adjudicatory and all other powers, functions and duties through itsdivisions."

C. Official Stations, and Appellate Jurisdiction over Fixed TerritoryOther changes related to the official station of the Commission and its divisions, and the territory over which the divisions could exercise exclusive appellate jurisdiction.

1. Under the old law, the Commissionen bancand its divisions had their main office in Metropolitan Manila; and appeals could be taken to them from decisions of Labor Arbiters regardless of the regional office whence the case originated.

2. Under the law now, the First and Second Divisions have their official station in Metropolitan Manila and "handle cases coming from the National Capital Region;" the Third Division has its main office also in Metropolitan Manila but would have appellate jurisdiction over "cases from other parts of Luzon;" and the Fourth and Fifth Divisions have their main offices in Cebu and Cagayan de Oro City, and exercise jurisdiction over cases "from the Visayas and Mindanao," respectively; and the appellate authority of the divisions isexclusive "within their respective territorial jurisdiction."D. Qualifications and Tenure of CommissionersRevisions were also made by RA 6715 with respect to the qualifications and tenure of the National Labor Relations Commissioners.

Prescribed by the old law as qualifications for commissioners appointed for a term of six (6) years were that they (a) by members of the Philippine bar, and (b) have at least five years' experience in handling labor-management relations.7RA 6715, on the other hand, requires (a) membership in the bar, (b) engagement in the practice of law for at least 15 years, (c) at least five years' experience or exposure in the field of labor-management relations, and (d) preferably, residence in the region where the commissioner is to hold office. The commissioners appointed shall hold office during good behavior until they reach the age of sixty-five (65) years, unless they are sooner removed for cause as provided by law or become incapacited to discharge the duties of their office.

2. Amendments Regarding Executive Labor Arbiters and Labor ArbitersA. QualificationsThe old provided for one hundred fifty (150) labor arbiters assigned to the different regional offices or branches of the Department of Labor and Employment (including sub-regional branches or provincial extension units), each regional branch being headed by an Executive Labor Arbiter. RA 6715 does not specify any fixed number of labor arbiters, but simply provides that there shall be as many labor arbiters as may be necessary for the effective and efficient operation of the Commission.

The old law declared that Executive Labor Arbiters and Labor Arbiters should be members of the Bar, with at least two (2) years experience in the field of labor management relations. They were appointed by the President upon recommendation of the Chairman, and were "subject to the Civil Service Law, rules and regulations."

On the other hand, RA 6715 requires that the "Executive Labor Arbiters and Labor Arbiters shall likewise be members of the Philippine Bar," but in addition "must have been in the practice of law in the Philippines for at least seven (7) years, with at least three (3) years experience or exposure in the field of labor-management relations." For "purposes of reappointment," however, "incumbent Executive Labor Arbiters and Labor Arbiters who have been engaged in the practice of law for at least five (5) years may be considered as already qualified." They are appointed by the President, on recommendation of the Secretary of Labor and Employment, and are subject to the Civil Service Law, rules and regulations.

B. Exclusive Original JurisdictionBefore the effectivity of RA 6715, the exclusive original jurisdiction of labor arbiters comprehended the following cases involving all workers, whether agricultural or non-agricultural:

(1) Unfair labor practice cases;

(2) Those that workers may file involving wages, hours of work and other terms and conditions of employment;

(3) All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits;

(4) Cases involving household services; and

(5) Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.

Some changes were introduced by RA 6715, indicated by italics in the enumeration which shortly follows. The exclusive, original jurisdiction of Labor Arbiters now embraces the following involving all workers, whether agricultural or non-agricultural:

(1) Unfair labor practice cases;

(2) Termination disputes;

(3) If accompanies with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;8(5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts;

(6) Except claims for employees compensation, social security, medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service,involving an amount exceeding five thousand pesos (P5,000.00), whether or not accompanies with a claim for reinstatement.

Now, as before, the Labor Arbiters are given thirty (30) calendar days after the submission of the case by the parties to decide the case, without extension, except that the present statute stresses that "even in the absence of stenographic notes," the period to decide is still thirty days, without extension.

Furthermore, RA 6715 provides that "Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements."

3. Amendments as Regards the Executive Director and Deputy Executive DirectorPrior to RA 6715, there was, as earlier stated, an Executive Director, assisted by a Deputy Executive Director, who was charged with the "exercise (of) the administrative functions of the Commission."9More particularly, his chief functions were "to take charge of all administrative matters of the Commission and to have direct supervision over all units and personnel assigned to perform administrative tasks."10Although not so stated in the law, in the performance of their functions, the Executive Director and the Deputy Executive Director were obviously themselves subject to the supervision and control of the head of office, theex officioChairman of the National Labor Relations Commission (the Secretary of Labor), or the Commission itself.

Under RA 6715, the Secretary of Labor is no longerex officioChairman of the Commission. There has been created the office of Chairman, who "shall have the administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters." In this function, the law says, he shall be "aided by the Executive Clerk of the Commission."

The Executive Clerk appears to be the officer who used to be known under the old law as the Executive Director. The office of Executive Director is nowhere mentioned in RA 6715. Said Executive Clerk is given the additional responsibility of assisting the Commissionen bancand the First Division, in performing "such similar or equivalent functions and duties as are discharged by the Clerk of Court . . . of the Court of Appeals." The position of Deputy Executive Clerks have also been created whose main role is to assist the other divisions of the Commission (the second, third, fourth and fifth) "in the performance of such similar or equivalent functions and duties as are discharged by the . . . Deputy Clerk(s) of the Court of Appeals."

Summing up

1. Republic Act No. 6715 did not abolish the NLRC, or change its essential character as a supervisory and adjudicatory body. Under said Act, as under the former law, the NLRC continues to act collegially, whether it performs administrative or rule-making functions or exercises appellate jurisdiction to review decisions and final orders of the Labor Arbiters. The provisions conferring a somewhat greater measure of autonomy; requiring that its membership be drawn from tripartite sectors (workers, employees and the public sector); changing the official stations of the Commission's divisions, and even those prescribing higher or other qualifications for the positions of Commissioner which, if at all, should operate only prospectively, not to mention the fact that the petitioners (in G.R. No. 91547) have asserted without dispute that they possess the new qualifications none of these can be said to work so essential or radical a revision of the nature, powers and duties of the NLRC as to justify a conclusion that the Act in truth did not merely declare vacant but actually abolished the offices of commissioners and created others in their place.

2. Similar considerations yield the same conclusion as far as the positions of Labor Arbiters are concerned, there being no essential inconsistency on that score between Republic Act No. 6715 and the old law. The Labor Arbiters continue to exercise the same basic power and function: the adjudication, in the first instance, of certain classes of labor disputes. Their original and exclusive jurisdiction remains substantially the same under both the old law and the new. Again, their incumbents' constitutionally guaranteed security of tenure cannot be defeated by the provision for higher or other qualifications than were prescribed under the old law; said provision can only operate prospectively and as to new appointees to positions regularly vacated; and there is, besides, also no showing that the petitioning Arbiters do not qualify under the new law.

3. The position titles of "Executive Clerk" and "Deputy Executive Clerk(s)" provided for in RA 6715 are obviously not those of newly-created offices, but new appellations or designations given to the existing positions of Executive Director and Deputy Executive Director. There is no essential change from the prescribed and basically administrative duties of these positions and, at the same time, no mention in the Act of the former titles, from which the logical conclusion is that what was intended was merely a change in nomenclature, not an express or implied abolition. Neither does the Act specify the qualifications for Executive Clerk and Deputy Executive Clerks. There is no reason to suppose that these could be higher than those for Executive Director and Deputy Executive Director, or that anything inheres in these positions that would preclude their incumbents from being named Executive Clerk and Deputy Executive Clerks.

WHEREFORE, the petitions are, as they must be, GRANTED , and the following specific dispositions are hereby RENDERED:

1. InG.R.No.91547, andG.R.No.91730, the removal of petitioners Rosario G. Encarnacion, Daniel M. Lucas, Jr., Ceferino E. Dulay, and Conrado Maglaya as Commissioners of the NLRC is ruled unconstitutional and void; however, to avoid displacement of any of the incumbent Commissioners now serving, it not appearing that any of them is unfit or has given cause for removal, and conformably to the alternative prayer of the petitioners themselves, it is ORDERED that said petitioners be paid all salaries, benefits and emoluments accruing to them for the unexpired portions of their six-year terms and allowed to enjoy retirement benefits under applicable laws, pursuant to RA No. 910 and this Court's Resolution inOrtiz vs.Commission on Elections, G.R. No. 79857, 161 SCRA 812;

This disposition does not involve or apply to respondent Hon. Bartolome Carale, who replaced the Secretary of Labor asex officioChairman of the NLRC pursuant to RA 6715, none of the petitioners having been affected or in any manner prejudiced by his appointment and incumbency as such;

2. InG.R.No.90044, the removal of petitioner Pascual Y. Reyes and petitioner-in-intervention Eugenio L. Sagmit, Jr. as NLRC Executive Director and Deputy Executive Director, respectively, is likewise declared unconstitutional and void, and they are ordered reinstated as Executive Clerk and Deputy Executive Clerk, respectively, unless they opt for retirement, in either case with full back salaries, emoluments and benefits from the date of their removal to that of their reinstatement; and

3. InG.R.Nos.87211, and94518, petitioners-intervenors Lourdes A. Sales and Ricardo Olairez and petitioner Rolando D. Gambito, having also been illegally removed as Labor Arbiters, are ordered reinstated to said positions with full back salaries, emoluments and benefits from the dates of their removal up to the time they are reinstated.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 91636 April 23, 1992

PETER JOHN D. CALDERON,petitioner,vs.BARTOLOME CARALE, in his capacity as Chairman of the National Labor Relations Commission, EDNA BONTO PEREZ, LOURDES C. JAVIER, ERNESTO G. LADRIDO III, MUSIB M. BUAT, DOMINGO H. ZAPANTA, VICENTE S.E. VELOSO III, IRENEO B. BERNARDO, IRENEA E. CENIZA, LEON G. GONZAGA, JR., ROMEO B. PUTONG, ROGELIO I. RAYALA, RUSTICO L. DIOKNO, BERNABE S. BATUHAN and OSCAR N. ABELLA, in their capacity as Commissioners of the National Labor Relations Commission, and GUILLERMO CARAGUE, in his capacity as Secretary of Budget and Management,respondents.

PADILLA,J.:Controversy is focused anew on Sec. 16, Art. VII of the 1987 Constitution which provides:

Sec. 16. The President shall nominate and, with the consent of the Commission on Appointments, appoint the heads of the executive departments, ambassadors, other public ministers and consuls, or officers of the armed forces from the rank of colonel or naval captain, and other officers whose appointments are vested in him in this Constitution. He shall also appoint all other officers of the Government whose appointments are not otherwise provided for by law, and those whom he may be authorized by law to appoint. The Congress may, by law, vest the appointment of other officers lower in rank in the President alone, in the courts, or in the heads of departments, agencies, commissions, or boards.

The President shall have the power to make appointments during the recess of the Congress, whether voluntary or compulsory, but such appointments shall be effective only until disapproval by the Commission on Appointments or until the next adjournment of the Congress.1The power of the Commission on Appointments (CA for brevity) to confirm appointments, contained in the aforequoted paragraph 1 of Sec. 16, Art. VII, was first construed inSarmiento III vs.Mison2as follows:

. . . it is evident that the position of Commissioner of the Bureau of Customs (a bureau head) is not one of those within the first group of appointments where the consent of the Commission on Appointments is required. As a matter of fact, as already pointed out, while the 1935 Constitution includes "heads of bureaus" among those officers whose appointments need the consent of the Commission on Appointments, the 1987 Constitution, on the other hand, deliberately excluded the position of "heads of bureaus" from appointments that need the consent (confirmation) of the Commission on Appointments.

. . . Consequently, we rule that the President of the Philippines acted within her constitutional authority and power in appointing respondent Salvador Mison, Commissioner of the Bureau of Customs, without submitting his nomination to the Commission on Appointments for confirmation. . . .

. . . In the 1987 Constitution, however, as already pointed out,the clear and expressed intent of its framers was to exclude presidential appointments from confirmation by the Commission on Appointments, except appointments to offices expressly mentioned in the first sentence of Sec.16, Art.VII.Consequently, there was no reason to use in the third sentence of Sec. 16, Article VII the word "alone" after the word "President" in providing that Congress may by law vest the appointment of lower-ranked officers in the President alone, or in the courts, or in the heads of departments, because the power to appoint officers whom he (the president) may be authorized by law to appoint is already vested in the President, without need of confirmation by the Commission on Appointments, in the second sentence of the same Sec. 16, Article VII." (emphasis supplied)

Next cameMary Concepcion Bautista v.Salonga,3this time involving the appointment of the Chairman of the Commission on Human Rights. Adhering to the doctrine inMison, the Court explained:

. . . Since the position of Chairman of the Commission on Human Rights is not among the positions mentioned in the first sentence of Sec. 16, Art. VII of the 1987 Constitution, appointments to which are to be made with the confirmation of the Commission on Appointments, it follows that the appointment by the President of the Chairman of the CHR is to be made without the review or participation of the Commission on Appointments. To be more precise, the appointment of the Chairman and Members of the Commission on Human Rights is not specifically provided for in the Constitution itself, unlike the Chairmen and Members of the Civil Service Commission, the Commission on Elections and the Commission on Audit, whose appointments are expressly vested by the Constitution in the president with the consent of the Commission on Appointments. The president appoints the Chairman and Members of The Commission on Human Rights pursuant to the second sentence in Section 16, Art. VII, that is, without the confirmation of the Commission on Appointments because they are among the officers of government "whom he (the President) may be authorized by law to appoint." And Section 2(c), Executive Order No. 163, 5 May 1987, authorizes the President to appoint the Chairman and Members of the Commission on Human Rights.

Consistent with its rulings inMisonandBautista,inTeresita Quintos Deles, et al.v.The Commission on Constitutional Commissions, et al.,4the power of confirmation of the Commission on Appointments over appointments by the President of sectoral representatives in Congress was upheld because:

. . . Since the seats reserved for sectoral representatives in paragraph 2, Section 5, Art. VI may be filled by appointment by the President by express provision of Section 7, Art. XVIII of the Constitution, it is indubitable that sectoral representatives to the House of Representatives are among the "other officers whose appointments are vested in the President in this Constitution," referred to in the first sentence of Section 16, Art. VII whose appointments are subject to confirmation by the Commission on Appointments.

From the three (3) cases above-mentioned, these doctrines are deducible:

1. Confirmation by the Commission on Appointments is required only for presidential appointees mentioned in the first sentence of Section 16, Article VII, including, those officers whose appointments are expressly vested by the Constitution itself in the president (like sectoral representatives to Congress and members of the constitutional commissions of Audit, Civil Service and Election).

2. Confirmation is not required when the President appoints other government officers whose appointments are not otherwise provided for by law or those officers whom he may be authorized by law to appoint (like the Chairman and Members of the Commission on Human Rights). Also, as observed inMison, when Congress creates inferior offices but omits to provide for appointment thereto, or provides in an unconstitutional manner for such appointments, the officers are considered as among those whose appointments are not otherwise provided for by law.

Sometime in March 1989, RA 6715 (Herrera-Veloso Law), amending the Labor Code (PD 442) was approved. It provides in Section 13 thereof as follows:

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The Chairman, the Division Presiding Commissioners and other Commissioners shall all be appointed by the President, subject to confirmation by the Commission on Appointments. Appointments to any vacancy shall come from the nominees of the sector which nominated the predecessor. The Executive Labor Arbiters and Labor Arbiters shall also be appointed by the President, upon recommendation of the Secretary of Labor and Employment, and shall be subject to the Civil Service Law, rules and regulations.5Pursuant to said law (RA 6715), President Aquino appointed the Chairman and Commissioners of the NLRC representing the public, workers and employers sectors. The appointments stated that the appointees may qualify and enter upon the performance of the duties of the office. After said appointments, then Labor Secretary Franklin Drilon issued Administrative Order No. 161, series of 1989, designating the places of assignment of the newly appointed commissioners.

This petition for prohibition questions the constitutionality and legality of the permanent appointments extended by the President of the Philippines to the respondents Chairman and Members of the National Labor Relations Commission (NLRC), without submitting the same to the Commission on Appointments for confirmation pursuant to Art. 215 of the Labor Code as amended by said RA 6715.

Petitioner insists on a mandatory compliance with RA 6715 which has in its favor the presumption of validity. RA 6715 is not, according to petitioner, an encroachment on the appointing power of the executive contained in Section 16, Art. VII, of the Constitution, as Congress may, by law, require confirmation by the Commission on Appointments of other officers appointed by the President additional to those mentioned in the first sentence of Section 16 of Article VII of the Constitution. Petitioner claims that theMisonandBautistarulings are not decisive of the issue in this case for in the case at bar, the President issued permanent appointments to the respondents without submitting them to the CA for confirmationdespite passage of a law (RA 6715) which requires the confirmation by the Commission on Appointments of such appointments.

The Solicitor General, on the other hand, contends that RA 6715 which amended the Labor CodetransgressesSection 16, Article VII by expanding the confirmation powers of the Commission on Appointments without constitutional basis.MisonandBautistalaid the issue to rest, says the Solicitor General, with the following exposition:

As interpreted by this Honorable Court in theMisoncase, confirmation by the Commission on Appointments is required exclusively for the heads of executive departments, ambassadors, public ministers, consuls, officers of the armed forces from the rank of colonel or naval captain, and other officers whose appointments are vested in the President by the Constitution, such as the members of the various Constitutional Commissions. With respect to the other officers whose appointments are not otherwise provided for by the law and to those whom the President may be authorized by law to appoint, no confirmation by the Commission on Appointments is required.

Had it been the intention to allow Congress to expand the list of officers whose appointments must be confirmed by the Commission on Appointments, the Constitution would have said so by adding the phrase "and other officers required by law" at the end of the first sentence, or the phrase, "with the consent of the Commission on Appointments" at the end of the second sentence. Evidently, our Constitution has significantly omitted to provide for such additions.

The original text of Section 16 of Article VII of the present Constitution as embodied in Resolution No. 517 of the Constitutional Commission reads as follows:

"The President shall nominate and, with the consent of the Commission on Appointments, shall appoint the heads of the executive departments and bureaus, ambassadors, other public ministers and consuls, or officers of the armed forces from the rank of captain or commander, and all other officers of the Government whose appointments are not herein otherwise provided for by law, and those whom he may be authorized by law to appoint. The Congress may by law vest the appointment of inferior officers in the President alone, in the courts or in the heads of the department."

Three points should be noted regarding sub-section 3 of Section 10 of Article VII of the 1935 Constitution and in the original text of Section 16 of Article VII of the present Constitution as proposed in Resolution No. 517.

First, in both of them, the appointments of heads of bureaus were required to be confirmed by the Commission on Appointments.

Second, in both of them, the appointments of other officers, "whose appointments are not otherwise provided for by law to appoint" are expressly made subject to confirmation by the Commission on Appointments. However, in the final version of Resolution No. 517, as embodied in Section 16 of Article VII of the present Constitution, the appointment of the above mentioned officers (heads of bureaus; other officers whose appointments are not provided for by law; and those whom he may be authorized by law to appoint) are excluded from the list of those officers whose appointments are to be confirmed by the Commission on Appointments. This amendment, reflected in Section 16 of Article VII of the Constitution, clearly shows the intent of the framers to exclude such appointments from the requirement of confirmation by the Commission on Appointments.

Third, under the 1935 Constitution the word "nominate" qualifies the entire Subsection 3 of Section 10 of Article VII thereof.

Respondent reiterates that if confirmation is required, the three (3) stage process of nomination, confirmation and appointment operates. This is only true of the first group enumerated in Section 16, but the word nominate does not any more appear in the 2nd and 3rd sentences. Therefore, the president's appointment pursuant to the 2nd and 3rd sentences needs no confirmation.6The only issue to be resolved by the Court in the present case is whether or not Congress may,by law,require confirmation by the Commission on Appointments of appointments extended by the president to government officersadditionalto those expressly mentioned in the first sentence of Sec. 16, Art. VII of the Constitution whose appointments require confirmation by the Commission on Appointments.

To resolve the issue, we go back toMisonwhere the Court stated:

. . . there are four (4) groups of officers whom the President shall appoint. These four (4) groups, to which we will hereafter refer from time to time, are:

First, the heads of the executive departments, ambassadors, other public ministers and consuls, officers of the armed forces from the rank of colonel or naval captain, and other officers whose appointments are vested in him in this Constitution;

Second, all other officers of the Government whose appointments are not otherwise provided for by law;

Third, those whom the president may be authorized by law to appoint;

Fourth, officers lower in rank whose appointments the Congress may by law vest in the President alone.7Misonalso opined:

In the course of the debates on the text of Section 16, there were two (2) major changes proposed and approved by the Commission. These were (1) the exclusion of the appointments of heads of bureaus from the requirement of confirmation by the Commission on Appointments; and (2) the exclusion of appointments made under the second sentence of the section from the same requirement. . . .

The second sentence of Sec. 16, Art. VII refers to all other officers of the government whose appointments are not otherwise provided for by law and those whom the President may be authorized by law to appoint.

Indubitably, the NLRC Chairman and Commissioners fall within the second sentence of Section 16, Article VII of the Constitution, more specifically under the "third groups" of appointees referred to inMison, i.e. those whom the President may be authorized by law to appoint. Undeniably, the Chairman and Members of the NLRC are not among the officers mentioned in the first sentence of Section 16, Article VII whose appointments requires confirmation by the Commission on Appointments. To the extent that RA 6715 requires confirmation by the Commission on Appointments of the appointments of respondents Chairman and Members of the National Labor Relations Commission, it is unconstitutional because:

1) it amends by legislation, the first sentence of Sec. 16, Art. VII of the Constitution by adding thereto appointments requiring confirmation by the Commission on Appointments; and

2) it amends by legislation the second sentence of Sec. 16, Art. VII of the Constitution, by imposing the confirmation of the Commission on Appointments on appointments which are otherwise entrusted only with the President.

Deciding on what laws to pass is a legislative prerogative. Determining their constitutionality is a judicial function. The Court respects the laudable intention of the legislature. Regretfully, however, the constitutional infirmity of Sec. 13 of RA 6715 amending Art. 215 of the Labor Code, insofar as it requires confirmation of the Commission on Appointments over appointments of the Chairman and Member of the National Labor Relations Commission (NLRC) is, as we see it, beyond redemption if we are to render fealty to the mandate of the Constitution in Sec. 16, Art. VII thereof.

Supreme Court decisions applying or interpreting the Constitution shall form part of the legal system of the Philippines.8No doctrine or principle of law laid down by the Court in a decision rendereden bancor in division may be modified or reversed except by the Court sittingen banc.9. . . The interpretation upon a law by this Court constitutes, in a way, a part of the law as of the date that law was originally passed, since this Court's construction merely estab