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GOYA v. GOYA

FACTS:

The case involves a petition for review on certiorari seeking to reverse the decision and resolution of the Court of Appeals which sustained the decision of Voluntary Arbitrator Bienvenido E. Laguesma. The facts of the case are as follows: Petitioner Goya, Inc., a domestic corporation engaged in the manufacture, importation, and wholesale of food products, hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional services in its factory. The respondent Goya, Inc. Employees Union FFW (Union) requested for a grievance conference, claiming that the hiring of the contractual workers violated the existing Collective Bargaining Agreement (CBA) because they do not belong to the stipulated categories of employees. The grievance was referred to the National Conciliation and Mediation Board (NCMB) for voluntary arbitration. Both parties agreed to submit the issue of whether or not the company is guilty of unfair labor practice (ULP) in engaging the services of PESO for resolution. The Union argued that the hiring of contractual employees violated the CBA and constituted ULP, while the Company contended that the law allows contracting and subcontracting arrangements and that their engagement of contractual employees did not prejudice the Union. The voluntary arbitrator dismissed the Union's charge of ULP.

The case involves a dispute between the Union and the Company regarding the engagement of a third-party service provider, PESO, by the Company. The Union filed a charge of unfair labor practice (ULP) against the Company, alleging that the engagement of PESO violated the provisions of the Collective Bargaining Agreement (CBA). The Voluntary Arbitrator (VA) examined the relevant provisions of the CBA and concluded that the engagement of PESO was not in keeping with the intent and spirit of the CBA. The VA acknowledged that the CBA did not entirely eliminate management's prerogative to outsource parts of its operations, but it limited such prerogative if it involved functions or duties specified in the CBA. The VA further opined that if the Company needed to hire additional workers for occasional or seasonal work directly connected with its regular operations or for specific projects of limited duration not directly connected with its regular operations, it should have hired casual employees directly, rather than engaging PESO. The VA held that the engagement of PESO by the Company was a violation of the CBA, although it did not constitute gross violation as to be considered unfair labor practice.

The Company filed a petition for review before the Court of Appeals (CA) to set aside the VA's directive to comply with the CBA commitment. The Company argued that the engagement of PESO was within its management prerogative and not prohibited by law or the CBA. The CA dismissed the petition, stating that the VA's ruling that the engagement of PESO was not in keeping with the intent and spirit of the CBA was not arbitrary. The CA also referred to the VA's distinction between violations of the CBA that are gross in character and those that are not, noting that only gross violations are treated as unfair labor practice. The CA held that the dispute was interrelated with the issue of whether the Company engaged in unfair labor practice, as both concerned the engagement of PESO, which the VA deemed as a violation of the CBA. The CA observed that the CBA did not limit or prohibit the Company's right to contract out certain services in the exercise of its management prerogatives.

ISSUES:

  1. Whether the engagement of PESO constitutes a violation of the CBA and if it is a gross violation that amounts to unfair labor practice.

  2. Whether the engagement of PESO is in keeping with the intent and spirit of the CBA.

  3. Whether a voluntary arbitrator can award benefits not claimed in the submission agreement.

  4. Whether the company's prerogative to outsource services is limited by the specific provisions of the collective bargaining agreement (CBA) between the company and the union.

RULING:

  1. The engagement of PESO is deemed a violation of the CBA, but it is not considered a gross violation that amounts to unfair labor practice.

  2. The engagement of PESO is not in keeping with the intent and spirit of the CBA.

  3. The Supreme Court affirmed the ruling of the Court of Appeals and held that a voluntary arbitrator has the authority to award benefits not specifically raised in the submission agreement. While the arbitrator is expected to decide only those questions expressly delineated by the submission agreement, arbitration is the final resort for the adjudication of disputes, and the arbitrator can assume that he has the necessary power to make a final settlement. The Court emphasized that the plenary jurisdiction and authority of the voluntary arbitrator to interpret the collective bargaining agreement (CBA) and determine the scope of his/her own authority is subject to judicial review.

  4. The Court held that the company's prerogative to outsource services is indeed limited by the specific provisions of the CBA. The CBA is the contract between the parties and they are obligated to comply with its provisions. In this case, the CBA contains clear and unambiguous provisions regarding the categories of employees and union security. These provisions must be read together and given full force and effect. The exercise of management prerogative is not unlimited and is subject to the limitations found in law, collective bargaining agreement, or the general principles of fair play and justice. Therefore, the company cannot outsource services in a manner that violates the specific provisions of the CBA.

PRINCIPLES:

  • Violations of a CBA, except those that are gross in character, shall no longer be treated as unfair labor practice.

  • Gross violations of a CBA refer to flagrant and/or malicious refusal to comply with the economic provisions of the agreement.

  • Management prerogative refers to the right of the employer to regulate all aspects of employment, but it is not without limitation.

  • In contracting out services, management must be motivated by good faith and the contracting out should not be resorted to circumvent the law or as a result of malicious arbitrary actions.

  • A voluntary arbitrator has the authority to award benefits not specifically raised in the submission agreement, as arbitration is the final resort for the adjudication of disputes. (Ludo v. LEU, 2011)

  • The plenary jurisdiction and authority of the voluntary arbitrator to interpret the CBA and determine the scope of his/her own authority is subject to judicial review. (Ludo v. LEU, 2011)

  • The collective bargaining agreement (CBA) is the law between the parties and compliance with its provisions is mandated by law.

  • If the terms of a contract, such as a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.

  • The exercise of management prerogative is not unlimited and is subject to the limitations found in law, collective bargaining agreement, or the general principles of fair play and justice.