Labor Standards

Assumption of jurisdiction power by the DOLE Secretary

1. Concept

When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. (Article 278 [263] (g), P.D. 442, Labor Code)

a. Police power

After martial law was lifted and democracy was restored, the assumption of jurisdiction in Art. 263(g) has now been viewed as an exercise of the police power of the State with the aim of promoting the common good. (YSS Employees Union – Philippine Transport and General Workers Organization v. YSS Laboratories, Inc., G.R. No.155125, 04 December 2009)

The powers given to the DOLE Secretary under Article 263 (g) is an exercise of police power with the aim of promoting public good. In fact, the scope of the powers is limited to an industry indispensable to the national interest as determined by the DOLE Secretary. (San Fernando Coca-Cola Rank-and-File Union (SACURO) v. Coca-Cola Bottlers Philippines, Inc. [CCBPI], G.R. No. 200499, 04 October 2017)

The grant of these plenary powers to the Secretary of Labor makes it incumbent upon him to bring about soonest, a fair and just solution to the differences between the employer and the employees, so that the damage such labor dispute might cause upon the national interest may be minimized as much as possible, if not totally averted, by avoiding stoppage of work or any lag in the activities of the industry or the possibility of those contingencies that might cause detriment to the national interest. (YSS Employees Union – Philippine Transport and General Workers Organization v. YSS Laboratories, Inc., supra.)

b. Full authority

The DOLE Secretary’s power to assume jurisdiction is a full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to the dispute, including cases over which the labor arbiter has exclusive jurisdiction. (Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department of Labor and Employment, G.R. Nos. 167401, 167407, 05 July 2010)

This includes the authority to resolve dismissal issues, even if within the exclusive jurisdiction of the labor arbiter. (Ibid.)

1) Doctrine of great breadth of discretion

The powers of the Secretary in “national interest” cases are not set by metes and bounds. Rather, the Secretary is given wide latitude to adopt appropriate means to finally resolve the labor dispute. The doctrine of “great breadth of discretion” possessed by the Secretary dates back to our earlier rulings which recognized the broad powers of the former Court of Industrial Relations (CIR), which had jurisdiction over national interest cases prior to the enactment of the Labor Code. (University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085, 178086, 14 September 2015)

Judicial authorities defining the scope of the former CIR’s power in respect of national interest cases apply mutatis mutandis in cases involving the Secretary’s assumption of jurisdiction under Article 263(g). In the Secretary’s exercise of such broad discretion, the prevailing rule is that we will not interfere or substitute the Secretary’s judgment with our own, unless grave abuse is cogently shown. And in determining whether the acts of the Secretary constitute grave abuse of discretion, the standard we apply is that of reasonableness. (University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, supra.)

c. Plenary and discretionary power

1) Not appealable

The authority of the Secretary of Labor to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to national interest includes and extends to all questions and controversies arising therefrom. The power is plenary and discretionary in nature to enable him to effectively and efficiently dispose of the primary dispute. This wide latitude of discretion given to the Secretary of Labor may not be the subject of appeal. (PHILTRANCO Service Enterprises, Inc. v. Philtranco Workers Union-Association of Genuine Labor Organizations [PWU-AGLO], G.R. No. 180962, 26 February 2014)

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Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department of Labor and Employment

G.R. Nos. 167401, 167407, 05 July 2010

[When the DOLE Secretary assumed jurisdiction to resolve a strike case, the decision did not include any resolution on the dismissal of the union officers.]

[RESOLUTION]

We agree with the CA’s conclusion that the Labor Secretary erred, to the point of abusing his discretion, when he did not resolve the dismissal issue on the mistaken reading that this issue falls within the jurisdiction of the labor arbiter. This was an egregious error and an abdication of authority on the matter of strikes – the ultimate weapon in labor disputes that the law specifically singled out under Article 263 of the Labor Code by granting the Labor Secretary assumption of jurisdiction powers. Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary situation – a strike or lockout in an industry indispensable to the national interest. This grant is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term “assume jurisdiction” connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to the dispute, including cases over which the labor arbiter has exclusive jurisdiction.

In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment that resulted from the strike. Article 264 significantly dwells on this exact subject matter by defining the circumstances when a union officer or member may be declared to have lost his employment. We find from the records that this was an issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the union’s motion for the issuance of an order for immediate reinstatement of the dismissed officers and the company’s opposition to the motion. Thus, the dismissal issue was properly brought before the Labor Secretary and this development in fact gave rise to his mistaken ruling that the matter is legally within the jurisdiction of the labor arbiter to decide.

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d. Limitation

The coverage of the power is limited to “strikes or lockouts adversely affecting the national interest.” (PHILTRANCO Service Enterprises, Inc. v. Philtranco Workers Union-Association of Genuine Labor Organizations [PWU-AGLO], supra.)

From the text and the tenor of the law, it is clear as daylight that the secretary’s assumption of jurisdiction over a labor dispute is meant to be used sparingly and only if the national interest demands it. He, like everyone else, must respect labor’s paramount right to stage concerted activities. (PHIMCO v. Brillantes, G.R. No. 120751, 17 March 1999)

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PHIMCO Industries Inc. v. Brillantes (March 1999)

In this case at bar, however, the very admission by the public respondent draws the labor dispute in question out of the ambit of the Secretary’s prerogative, to wit. While the case at bar appears on its face not to fall within the strict categorization of cases imbued with “national interest”, this office believes that the obtaining circumstances warrant the exercise of the powers under Article 263 (g) of the Labor Code, as amended.

The private respondent did not even make any effort to touch on the indispensability of the match factory to the national interest. It must have been aware that a match factory, though of value, can scarcely be considered as an industry “indispensable to the national interest” as it cannot be in the same category as “generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries.”

It is thus evident from the foregoing that the Secretary’s assumption of jurisdiction grounded on the alleged “obtaining circumstances” and not on a determination that the industry involved in the labor dispute is one indispensable to the “national interest”, the standard set by the legislature, constitutes grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public respondent under the premises would be stretching too far the power of the Secretary of Labor as every case of a strike or lockout where there are inconveniences in the community, or work disruptions in an industry though not indispensable to the national interest, would then come within the Secretary’s power. It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For “when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded.”

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2. Industry indispensable to the national interest

Industries that are indispensable to the national interest are those essential industries such as the generation or distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries. (San Fernando Coca-Cola Rank-and-File Union (SACURO) v. Coca-Cola Bottlers Philippines, Inc. [CCBPI], G.R. No. 200499, 04 October 2017)

The Labor Code vests in the Secretary of Labor the discretion to determine what industries are indispensable to the national interest. Accordingly, upon the determination by the Secretary of Labor that such industry is indispensable to the national interest, he will assume jurisdiction over the labor dispute in the said industry. This power, however, is not without any limitation. (PHIMCO Industries Inc. v. Brillantes, G.R. No. 120751, G.R. No. 120751, 17 March 1999)

[T]he discretion to assume jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity of prior notice or hearing given to any of the parties. The rationale for his primary assumption of jurisdiction can justifiably rest on his own consideration of the exigency of the situation in relation to the national interests. (Capitol Medical Center, Inc. v. Trajano, G.R. No. 155690, 30 June 2005)

The Labor Code vests upon the Secretary of Labor the discretion to determine what industries are indispensable to national interest. Thus, upon the determination of the Secretary of Labor that such industry is indispensable to the national interest, it will assume jurisdiction over the labor dispute of said industry. The assumption of jurisdiction is in the nature of police power measure. This is done for the promotion of the common good considering that a prolonged strike or lockout can be inimical to the national economy. The Secretary of Labor acts to maintain industrial peace. Thus, his certification for compulsory arbitration is not intended to impede the workers’ right to strike but to obtain a speedy settlement of the dispute.(PTWU v. Confesor, G.R. No. 117169, 12 March 1997)

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PHIMCO Industries Inc. v. Brillantes

G.R. No. 120751, G.R. No. 120751, 17 March 1999

[BACKGROUND: The DOLE Secretary exercised its power to assume jurisdiction over a labor dispute despite the industry not being indispensable to the national interest.]

[RESOLUTION]

In this case at bar, however, the very admission by the public respondent [DOLE Secretary] draws the labor dispute in question out of the ambit of the Secretary’s prerogative, to wit.

While the case at bar appears on its face not to fall within the strict categorization of cases imbued with “national interest”, this office believes that the obtaining circumstances warrant the exercise of the powers under Article 263 (g) of the Labor Code, as amended.

The private respondent did not even make any effort to touch on the indispensability of the match factory to the national interest. It must have been aware that a match factory, though of value, can scarcely be considered as an industry “indispensable to the national interest” as it cannot be in the same category as “generation and distribution of energy, or those undertaken by banks, hospitals, and export-oriented industries.” Yet, the public respondent assumed jurisdiction…

x x x

… the Secretary’s assumption of jurisdiction grounded on the alleged “obtaining circumstances” and not on a determination that the industry involved in the labor dispute is one indispensable to the “national interest”, the standard set by the legislature, constitutes grave abuse of discretion amounting to lack of or excess of jurisdiction. To uphold the action of the public respondent under the premises would be stretching too far the power of the Secretary of Labor as every case of a strike or lockout where there are inconveniences in the community, or work disruptions in an industry though not indispensable to the national interest, would then come within the Secretary’s power. It would be practically allowing the Secretary of Labor to intervene in any Labor dispute at his pleasure. This is precisely why the law sets and defines the standard: even in the exercise of his power of compulsory arbitration under Article 263 (g) of the Labor Code, the Secretary must follow the law. For “when an overzealous official by-passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its meaning as the law itself is disregarded”

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Philippine School of Business Administration

G.R. No. 80648, 15 August 1988

There is no doubt that the on-going labor dispute at the School adversely affects the national interest. The School is a duly registered educational institution of higher learning with more or less 9,000 students. The ongoing work stoppage at the School unduly prejudices the students and will entail great loss in terms of time, effort and money to everyone concerned. More important, it is not amiss to mention that the school is engaged in the promotion of the physical, intellectual and emotional well-being of the country’s youth.

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4. Effects of assumption of jurisdiction

The 2 immediate effects:
1) The enjoining of an impending strike or lockout or its lifting; and
2) An order for the workers to return to work immediately and for the employer to readmit all workers under the same terms and conditions prevailing before the strike or lockout, or the return-to-work order. (San Fernando Coca-Cola Rank-and-File Union (SACURO) v. Coca-Cola Bottlers Philippines, Inc. [CCBPI], supra.)

a. Enjoining of impending strike or lockout

Under the law, the Labor Secretary’s assumption of jurisdiction over the dispute or its certification to the National Labor Relations Commission for compulsory arbitration shall have the effect of automatically enjoining the intended or impending strike or lockout and all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions before the strike or lockout. (Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department of Labor and Employment, G.R. Nos. 167401, 167407, 05 July 2010.)

1) Non-compliance, illegal strike

The union and its officers, as well as the workers, defied the Labor Secretary’s assumption of jurisdiction, especially the accompanying return-to-work order within twenty-four (24) hours; their defiance made the strike illegal under the law and applicable jurisprudence. (Ibid.)

Union officers. Consequently, it constitutes a valid ground for dismissal. Article 264(a), paragraph 3 of the Labor Code provides that “Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status.” (Ibid.)

Union members. While the employer is authorized to declare a union officer who participated in an illegal strike as having lost his employment, his/its option is not as wide with respect to union members or workers for the law itself draws a line and makes a distinction between union officers and members/ordinary workers. An ordinary striking worker or union member cannot, as a rule, be terminated for mere participation in an illegal strike; there must be proof that he committed illegal acts during the strike. And lest it be forgotten, the law invests the Secretary of Labor and Employment the prerogative of tempering the consequence of the defiance to the assumption order. The Secretary may thus merely suspend rather than dismiss the employee involved. (Nissan Motors Philippines, Inc. v. Secretary of Labor and Employment, G.R. Nos. 158190-1, 158276, and 158283, 21 June 2006)

Any worker who participates in a strike or otherwise engages in any prohibited act in defiance of the assumption order may be meted the penalty of loss of employment status. But the law itself authorizes the graduation of penalties, Article 264 of the Labor Code making, as it were, a distinction between union officers and its members or any other workers, the main differing line contextually being that the latter do not necessarily lose their job by mere participation in an illegal strike absent proof that they committed illegal acts. Thus, the responsibility of union officers, as main players in an illegal strike, is greater than that of the members and, therefore, limiting the penalty of dismissal only for the former for participation in an illegal strike is in order. (Ibid.)

Return to work order. The determination of who among the strikers could be admitted back to work cannot be made to depend upon the discretion of employer, lest we strip the certification or assumption-of-jurisdiction orders of the coercive power that is necessary for attaining their laudable objective. The return-to-work order does not interfere with the management’s prerogative, but merely regulates it when, in the exercise of such right, national interests will be affected. (Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department of Labor and Employment, supra.)

b. Readmit under same terms and conditions

Actual/physical reinstatement. Under Article 263(g), all workers must immediately return to work and all employers must readmit all of them under the same terms and conditions prevailing before the strike or lockout. This Court must point out that the law uses the precise phrase of “under the same terms and conditions,” revealing that it contemplates only actual reinstatement. (Manila Diamond Hotel Employees’ Union v. CA, Manila Diamond Hotel, G.R. No. 140518, 16 December 2004)

This is in keeping with the rationale that any work stoppage or slowdown in that particular industry can be inimical to the national economy. It is clear that Article 263(g) was not written to protect labor from the excesses of management, nor was it written to ease management from expenses, which it normally incurs during a work stoppage or slowdown. It was an error on the part of the Court of Appeals to view the assumption order of the Secretary as a measure to protect the striking workers from any retaliatory action from the Hotel. This Court reiterates that this law was written as a means to be used by the State to protect itself from an emergency or crisis. It is not for labor, nor is it for management. (Ibid.)

Grave abuse of discretion to order payroll reinstatement. It is, therefore, evident from the foregoing that the Secretary’s subsequent order for mere payroll reinstatement constitutes grave abuse of discretion amounting to lack or excess of jurisdiction. Indeed, this Court has always recognized the “great breadth of discretion” by the Secretary once he assumes jurisdiction over a labor dispute. However, payroll reinstatement in lieu of actual reinstatement is a departure from the rule in these cases and there must be showing of special circumstances rendering actual reinstatement impracticable otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. None appears to have been established in this case. Even in the exercise of his discretion under Article 236(g), the Secretary must always keep in mind the purpose of the law. Time and again, this Court has held that when an official by-passes the law on the asserted ground of attaining a laudable objective, the same will not be maintained if the intendment or purpose of the law would be defeated. (Ibid.)

Executory. The assumption and certification orders are executory in character and are to be strictly complied with by the parties, even during the pendency of any petition questioning their validity. (Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Secretary of the Department of Labor and Employment, supra.)

c. Resolve all controversies arising therefrom

[T]he Secretary’s assumption of jurisdiction power necessarily includes matters incidental to the labor dispute, that is, issues that are necessarily involved in the dispute itself, not just to those ascribed in the Notice of Strike; or, otherwise submitted to him for resolution. (UFE-DFA-KMU v. Nestlé Philippines, Incorporated, G.R.No. 158930-31, 22 August 2006)

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UFE-DFA-KMU v. Nestlé Philippines, Incorporated

G.R.No. 158930-31, 22 August 2006

Secretary Sto. Tomas correctly assumed jurisdiction over the questions incidental to the current labor dispute and those matters raised by the parties. In any event, the query as to whether or not the Retirement Plan is to be included in the CBA negotiations between the parties ineluctably dictates upon the Secretary of the DOLE to go into the substantive matter of the CBA negotiations.

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As held in the case of International Pharmaceuticals, Inc. v. Sec. of Labor and Employment, “x x x [t]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction.” Accordingly, even if not exactly on the ground upon which the Notice of Strike is based, the fact that the issue is incidental to the resolution of the subject labor dispute or that a specific issue had been submitted to the Secretary of the DOLE for her resolution, validly empowers the latter to take cognizance of and resolve the same. (Ibid.)

1) Dismissal issue

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Bagong Pagkakaisa ng Manggagawa ng Triumph International v. DOLE Secretary

G.R. Nos. 167401 and 167407, 05 July 2010

We agree with the CA’s conclusion that the Labor Secretary erred, to the point of abusing his discretion, when he did not resolve the dismissal issue on the mistaken reading that this issue falls within the jurisdiction of the labor arbiter. This was an egregious error and an abdication of authority on the matter of strikes – the ultimate weapon in labor disputes that the law specifically singled out under Article 263 of the Labor Code by granting the Labor Secretary assumption of jurisdiction powers. Article 263(g) is both an extraordinary and a preemptive power to address an extraordinary situation – a strike or lockout in an industry indispensable to the national interest. This grant is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term “assume jurisdiction” connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout; it includes and extends to all questions and controversies arising from or related to the dispute, including cases over which the labor arbiter has exclusive jurisdiction.

In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment that resulted from the strike. Article 264 significantly dwells on this exact subject matter by defining the circumstances when a union officer or member may be declared to have lost his employment. We find from the records that this was an issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the union’s motion for the issuance of an order for immediate reinstatement of the dismissed officers and the company’s opposition to the motion. Thus, the dismissal issue was properly brought before the Labor Secretary and this development in fact gave rise to his mistaken ruling that the matter is legally within the jurisdiction of the labor arbiter to decide.

d. Status quo

[F]rom the date the DOLE Secretary assumes jurisdiction over a dispute until its resolution, the parties have the obligation to maintain the status quo while the main issue is being threshed out in the proper forum – which could be with the DOLE Secretary or with the NLRC. This is to avoid any disruption to the economy and to the industry of the employer – as this is the potential effect of a strike or lockout in an industry indispensable to the national interest – while the DOLE Secretary or the NLRC is resolving the dispute. (SACORU v. Coca-Cola Bottlers Philippines, Inc., G.R. No. 200499, 04 October 2017)

References

Book V, Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

Book V, Omnibus Rules Implementing the Labor Code

2017 Revised NCMB Manual of Procedures for Conciliation and Prevention Mediation Cases

1996 DOLE Primer on Strike, Picketing and Lockout

NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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