National Development Company v. National Development Company Employees and Workers' Union and Court of Industrial Relations
REITERATIONFacts
The Antecedents: The NDC Employees and Workers' Union filed an unfair labor practice complaint against the National Development Company (NDC) for allegedly bargaining in bad faith by failing to comply with a provision in their Collective Bargaining Agreement (CBA) executed on April 6, 1964. This provision stipulated that the company would give its employees a Christmas bonus of seven percent (7%) of the net profit, to be distributed equally, with payment before Christmas. Procedural History: NDC filed a motion to dismiss, arguing that the Court of Industrial Relations (CIR) lacked jurisdiction as the case was for the payment of money claims and enforcement of a CBA. The CIR deferred resolution. NDC then filed an answer, asserting no basis for the bonus due to company losses and raising defenses of lack of jurisdiction and prematurity due to the union's failure to exhaust the grievance machinery. The Petition: The CIR, in its decision dated May 12, 1970, found NDC guilty of unfair labor practice and ordered it to cease and desist and to pay the Christmas bonus equivalent to seven percent (7%) of the net profit for fiscal years 1965-1966 and 1966-1967. The motion for reconsideration was denied by the CIR en banc on July 6, 1970. NDC filed a petition for certiorari with the Supreme Court.
Issue(s)
Whether the National Development Company (NDC), as a government entity, is immune from suit. Whether the Court of Industrial Relations (CIR) has jurisdiction over the subject matter of the complaint, which involves the enforcement of a collective bargaining agreement and a claim for Christmas bonus. Whether the NDC committed unfair labor practice by refusing to pay the Christmas bonus stipulated in the CBA. Whether the company's alleged financial losses negate its obligation to pay the Christmas bonus. Whether the union's failure to exhaust the grievance machinery bars its complaint.
Ruling
The petition is denied. The National Development Company is ordered to pay its officers and employees the Christmas bonus equivalent to seven percent (7%) of the net profit for the fiscal years 1965-1966 and 1966-1967.
Ratio Decidendi
On the suability of NDC: The Supreme Court reiterated its ruling in National Development Company vs. Tobias that NDC, as an agency performing purely corporate, proprietary, or business functions, is suable. It does not exercise sovereign powers and is subject to the provisions of the Corporation Law, allowing it to engage in commercial and industrial activities and perform acts authorized for corporations or natural persons. When the state descends to the level of a private enterprise through contracts, it divests itself of its sovereign character and immunity from suits. On the jurisdiction of the CIR: The Court affirmed that the CIR has jurisdiction over the case. The complaint primarily alleged unfair labor practice, specifically bargaining in bad faith, and prayed for NDC to be declared guilty of such and ordered to cease and desist. The Supreme Court has consistently upheld the CIR's jurisdiction over cases involving unfair labor practices, as established in numerous cases starting with PAFLU vs. Tan. The jurisdiction of the CIR is determined by the allegations in the complaint and the issues raised, not by the parties' success or failure in proving their claims. A refusal to comply with the terms of a CBA constitutes bargaining in bad faith and an unfair labor practice. On the commission of unfair labor practice: The Court found NDC guilty of unfair labor practice. The duty to bargain collectively under Section 13 of R.A. No. 875 extends to matters set forth in a written contract. Paragraph 2 of Section 13 prohibits terminating or modifying a CBA without written notice. Section 4(a)(6) defines refusal to bargain collectively as an unfair labor practice. NDC's failure to pay the stipulated Christmas bonus without serving notice of termination or modification of the CBA violated these provisions. On the company's financial losses: The Court rejected NDC's contention that no bonus was payable due to losses. The NDC General Manager's annual report indicated profits, which were not denied. While the Corporate Auditor's report showed losses based on a different accounting procedure ('Current Operating Concept'), the General Manager's report used the 'All Inclusive or Clean Surplus' theory, which includes capital gains and extraordinary charges/credits. The Court found that regardless of the accounting method, the incomes swelled the company's coffers. The difference in results was attributed solely to the accounting procedure, not to an absence of profit. On the exhaustion of grievance machinery: The Court ruled that the union was not barred by failure to exhaust administrative remedies. The CBA provided for a grievance machinery, but its composition was not identified or organized within the contract, meaning it effectively did not exist. The rule on exhaustion of administrative remedies is not absolute and can be relaxed when there is no other recourse or when urgency demands judicial intervention. In this case, the union had no concrete grievance machinery to resort to, and after the NDC Manager denied their demand, direct resort to the CIR was the only logical and proper recourse.
Main Doctrine
A refusal to comply with the terms of a collective bargaining agreement constitutes bargaining in bad faith and an unfair labor practice. Government-owned and controlled corporations performing proprietary functions are not immune from suits. The Court of Industrial Relations has jurisdiction over cases involving unfair labor practices, irrespective of whether the complaint also involves a claim for money.