Petitioner Vs VS: en Banc
Petitioner Vs VS: en Banc
Petitioner Vs VS: en Banc
SYLLABUS
DECISION
MAKALINTAL , J : p
These are two separate appeals by certiorari from the decision dated March 25,
1963 (G.R. No. L-21484) and the order dated May 21, 1964 (G.R. No. L-23605) as
a rmed by the resolutions en banc, of the Court of Industrial Relations, in Cases Nos.
3450-ULP and 1327-MC, respectively. The parties, except the Confederation of Unions
in Government Corporations and O ces (CUGCO), being practically the same and the
principal issues involved related, only one decision is now rendered in these two cases.
The ACCFA moved to reconsider but was turned down in a resolution dated April
25, 1963 of the CIR en banc. Thereupon it brought this appeal by certiorari.
The ACCFA raises the following issues in its petition, to wit:
"1. Whether or not the respondent court has jurisdiction over this case,
which in turn depends on whether or not the ACCFA exercised governmental
or proprietary functions.
The implementation of the policy thus enunciated, insofar as the role of the ACA
therein is concerned, is spelled out in Sections 110 to 118, inclusive, of the Land Reform
Code. Section 110 provides that "the administrative machinery of the ACCFA shall be
reorganized to enable it to align its activities with the requirements and objective of this
Code and shall be known as the Agricultural Credit Administration." Under Section 112
the sum of P150,000,000 was appropriated out of national funds to nance the
additional credit functions of the ACA as a result of the land reform program laid down
in the Code. Section 103 grants the ACA the privilege of rediscounting with the Central
Bank, the Development Bank of the Philippines and the Philippine National Bank.
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Section 105 directs the loaning activities of the ACA "to stimulate the development of
farmers' cooperatives," including those "relating to the production and marketing of
agricultural products and those formed to manage and/or own, on a cooperative basis,
services and facilities, such as irrigation and transport systems, established to support
production and/or marketing of agriculture products." Section 106 deals with the
extension by ACA of credit to small farmers in order to stimulate agricultural
production. Sections 107 to 112 lay down certain guidelines to be followed in
connection with the granting of loans, such as security, interest and supervision of
credit. Sections 113 to 118, inclusive, invest the ACA with certain rights and powers not
accorded to non-governmental entities, thus:
"SEC. 113. Auditing of Operations. — For the effective supervision of
farmers' cooperatives, the head of the Agricultural Credit Administration
shall have the power to audit their operations, records and books of account
and to issue subpoena and subpoena duces tecum to compel the
attendance of witnesses and the production of books, documents and
records in the conduct of such audit or of any inquiry into their affairs. Any
person who, without lawful cause, fails to obey such subpoena or subpoena
duces tecum shall, upon application of the head of Agricultural Credit
Administration with the proper court, be liable to punishment for contempt in
the manner provided by law and if he is an o cer of the Association, to
suspension or removal from office.
The power to audit the operations of farmers' cooperatives and otherwise inquire
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into their affairs, as given by Section 113, is in the nature of the visitorial power of the
sovereign, which only a government agency specially delegated to do so by the
Congress may legally exercise,
On March 19, 1964 Executive Order No. 75 was promulgated. It is entitled:
"Rendering in Full Force and Effect the Plan of Reorganization Proposed by the Special
Committee on Reorganization of Agencies for Land Reform for the Administrative
Machinery of the Agricultural Land Reform Code," and contains the following pertinent
provisions:
"Section 3. The Land Reform Project Administration 2 shall be
considered a single organization and the personnel complement of the
member agencies including the legal o cers of the O ce of the Agrarian
Counsel which shall provide legal services to the LRPA shall be regarded as
one personnel pool from which the requirements of the operations shall be
drawn and subject only to the civil service laws, rules and regulations,
persons from one agency may be freely assigned to positions in another
agency within the LRPA when the interest of the service so demands.
"Section 4. The Land Reform Project Administration shall be
considered as one organization with respect to the standardization of job
descriptions position classi cation and wage and salary structures to the
end that positions involving the same or equivalent quali cations and equal
responsibilities and effort shall have the same remuneration.
"Section 5. The Civil Service laws, rules and regulations with respect
to promotions, particularly in the consideration of person next in rank, shall
be made applicable to the Land Reform Project Administration as a single
agency so that quali ed individuals in one member agency must be
considered in considering promotion to higher positions in another member
agency."
When the Agricultural Reform Code was being considered by the Congress, the
nature of the ACA was the subject of the following exposition on the Senate floor:
"Senator Tolentino: . . . "The ACA is not going to be a pro t making
institution. It is supposed to be a public service of the government to the
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lessees and farmer-owners of the lands that may be bought after
expropriation from owners. It is the government here that is the lender. The
government should not exact a higher interest than what we are telling a
private landowner now in his relation to his tenants if we give to their
farmers a higher rate of interest . . ." (pp. 17 & 18, Senate Journal No. 16,
July 3, 1963).
The considerations set forth above militate quite strongly against the recognition
of collective bargaining powers in the respondent Unions within the context of Republic
Act No. 875, and hence against the grant of their basic petition for certi cation election
as proper bargaining units. The ACA is a government o ce or agency engaged in
governmental, not proprietary functions. These functions may not be strictly what
President Wilson described as "constituent" (as distinguished from "ministrant"), 4 such
as those relating to the maintenance of peace and the prevention of crime, those
regulating property and property rights, those relating to the administration of justice
and the determination of political duties of citizens, and those relating to national
defense and foreign relations. Under this traditional classi cation, such constituent
functions are exercised by the State as attributes of sovereignty, and not merely to
promote the welfare, progress and prosperity of the people — these letter functions
being ministrant, he exercise of which is optional on the part of the government.
The growing complexities of modern society, however, have rendered this
traditional classi cation of the functions of government quite unrealistic, not to say
obsolete. The areas which used to be left to private enterprise and initiative and which
the government was called upon to enter optionally, and only "because it was better
equipped to administer for the public welfare than is any private individual or group of
individuals." 5 continue to lose their well-de ned boundaries and to be absorbed within
activities that the government must undertake in its sovereign capacity if it is to meet
the increasing social challenges of the times. Here as almost everywhere else the
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tendency is undoubtedly towards a greater socialization of economic forces. Here of
course this development was envisioned, indeed adopted as a national policy, by the
Constitution itself in its declaration of principle concerning the promotion of social
justice.
It was in furtherance of such policy that the Land Reform Code was enacted and
the various agencies, the ACA among them, established to carry out its purposes. There
can be no dispute as to the fact that the land reform program contemplated in the said
Code is beyond the capabilities of any private enterprise to translate into reality. It is a
purely governmental function, no less than, say, the establishment and maintenance of
public schools and public hospitals. And when, aside from the governmental objectives
of the ACA, geared as they are to the implementation of the land reform program of the
State, the law itself declares that the ACA is a government o ce, with the formulation
of policies, plans and programs vested no longer in a Board of Governors, as in the
case of the ACCFA, but in the National Land Reform Council, itself a government
instrumentality; and that its personnel are subject to Civil Service laws and to rules of
standardization with respect to positions and salaries, any vestige of doubt as to the
governmental character of its functions disappears.
In view of the foregoing premises, we hold that the respondent Unions are not
entitled to the certi cation election sought in the Court below. Such certi cation is
admittedly for purposes of bargaining in behalf of the employees with respect to terms
and conditions of employment, including the right to strike as a coercive economic
weapon, as in fact the said unions did strike in 1962 against the ACCFA (G.R. No. L-
21824). 6 This is contrary to Section 11 of Republic Act No. 875, which provides:
"SEC. 11. Prohibition Against Strike in the Government. — The terms
and conditions of employment in the Government, including any political
subdivision or instrumentality thereof, are governed by law and it is declared
to be the policy of this Act that employees therein shall not strike for the
purposes of securing changes or modi cation in their terms and conditions
of employment. Such employees may belong to any labor organization
which does not impose the obligation to strike or to join in strike: Provided,
However, that this section shall apply only to employees employed in
governmental functions of the Government including but not limited to
governmental corporations." 7
With the reorganization of the ACCFA and its conversion into the ACA under the
Land Reform Code and in view of our ruling as to the governmental character of the
functions of the ACA, the decision of the respondent Court dated March 25, 1963, and
the resolution en banc a rming it, in the unfair labor practice case led by the ACCFA,
which decision is the subject of the present review in G. R. No. L-21484, has become
moot and academic, particularly insofar as the order to bargain collectively with the
respondent Unions is concerned.
What remains to be resolved is the question of fringe bene ts provided for in the
collective bargaining contract of September 4, 1961. The position of the ACCFA in this
regard is that the said fringe bene ts have not become enforceable because the
condition that they should rst be approved by the O ce of the President has not been
complied with. The Unions, on the other hand, contend that no such condition existed in
the bargaining contract, and the respondent Court upheld this contention in its decision.
It is to be noted that under Section 3, Article XIV, of the agreement, the same
"shall not become effective unless and until the same is duly rati ed by the Board of
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Governors of the Administration." Such approval was given even before the formal
execution of the agreement, by virtue of "Resolution No. 67, Regular Meeting No. 7, FY
1960-61, held on August 17, 1961," but with the proviso that "the fringe bene ts
contained therein shall take effect only if approved by the o ce of the President." The
condition is, therefore, deemed to be incorporated into the agreement by reference.
On October 23, 1962 the O ce of the President, in a letter signed by the
Executive Secretary, expressed its approval of the bargaining contract "provided the
salaries and bene ts therein xed are not in con ict with applicable laws and
regulations, are believed to be reasonable considering the exigencies of the service and
the welfare of the employees, and are well within the nancial ability of the particular
corporation to bear."
On July 1, 1963 the ACCFA management and the Unions entered into an
agreement for the implementation of the decision of the respondent Court concerning
the fringe benefits, thus:
"In the meantime, only Cost of Living Adjustment, Longevity Pay, and
Night Differential Bene ts accruing from July 1, 1961 to June 30, 1963 shall
be paid to all employees entitled thereto, in the following manner:
A) The sum of P180,000 shall be set aside for the payment of:
1) Night differential benefits for Security Guards.
On July 24, 1963 the ACCFA Board of Governors rati ed the agreement thus
entered into, pursuant to the provision thereof requiring such rati cation, but with the
express quali cation that the same was "without prejudice to the pending appeal in the
Supreme Court . . . in Case No. 3450-ULP." The payment of the fringe bene ts agreed
upon, to our mind, shows that the same were within the nancial capability of the
ACCFA then, and hence justi es the conclusion that this particular condition imposed
by the Office of the President in its approval of the bargaining contract was satisfied.
We hold, therefore, that insofar as the fringe bene ts already paid are concerned,
there is no reason to set aside the decision of the respondent Court, but that since the
respondent Unions have no right to the certi cation election sought by them nor,
consequently, to bargain collectively with the petitioner, no further fringe bene ts may
be demanded on the basis of any collective bargaining agreement.
Separate Opinions
FERNANDO , J., concurring :
The decision reached by this Court so ably given expression in the opinion of
Justice Makalintal, characterized with vigor, clarity and precision, represents what for
me is a clear tendency not to be necessarily bound by our previous pronouncements on
what activities partake of a nature that is governmental. 1 Of even greater signi cance,
there is a de nite rejection of the "constituent-ministrant" criterion of governmental
functions, followed in Bacani v. National Coconut Corporation. 2 That indeed is cause
for grati cation. For me at least, there is again full adherence to the basic philosophy of
the Constitution as to the extensive and vast power lodged in our government to cope
with the social and economic problems that even now sorely beset us. There is
therefore full concurrence on my part to the opinion of the Court, distinguished by its
high quality of juristic craftsmanship. I feel however that the matter is of such vital
importance that a separate concurring opinion is not inappropriate. It will also serve to
give expression to my view, which is that of the Court likewise, that our decision today
does not pass upon the rights of labor employed in instrumentalities of the state
discharging governmental functions.
Footnotes
3. Section 79(D) of the Revised Administrative Code provides in part: "The Department Head,
upon the recommendation of the Chief of bureaus or o ce concerned, shall appoint all
subordinate o cers and employees whose appointment is not expressly vested by law
in the President of the Philippines, . . ."
4. Bacani vs. National Coconut Corporation, G.R. No. L-9657, Nov. 29, 1956, 53 O.G. p. 2800.
5. Malcolm, The Government of the Philippines, pp. 19-20; Bacani vs. National Coconut
Corporation, supra.
6. It must be stated, however, that we do not here decide the question — not at issue in this case
— of whether or not a labor organization composed of employees discharging
governmental functions, which is allowed under the legal provision just quoted provided
such organization does not impose the obligation to strike or to join in strike, may
petition for a certification election and compel the employer to bargain collectively with it
for purposes other than to secure changes or modi cations in the terms and conditions
of their employment. Withal, it may not be amiss to observe, albeit obiter, that the right to
organize thus allowed would be meaningless unless there is a correlative right on the
part of the organization to be recognized as the proper representative of the employees
and to bargain in their behalf in relation to matters outside the limitations imposed by
the statute, such as those provided for in Section 28(b) of Republic Act No. 2260,
concerning complaints and grievances of the employees.
7. Reenacted in Sec. 28(c) of the Civil Service Act of 1959, R.A. No. 2260.
1. National Coal Co. v. Collector, 46 Phil. 583 (1924), Gov't. of P.I. v. Springer, 50 Phil. 259
(1927); Govt. of P.I. v. China Banking Corp., 54 Phil. 845 (1930); Association Cooperativa
de Credito Agricola de Miagao v. Monteclaro, 74 Phil. 281 (1943); Abad Santos v. Auditor
General, 79 Phil. 190; (1947); National Airports Corp. v. Teodoro, 91 Phil. 203 (1952),
GSIS v. Castillo, 98 Phil. 876 (1956); Price Stabilization Corp., 102 Phil. 515 (1957); Boy
Scouts of Phil. v Araos, 102 Phil. 1080 (1958); Naric Worker's Union v. Alvendia, 107 Phil.
404 (1360); GSIS Employees Asso. v. Alvendia, L-15614, May 30, 1960; National Dev. Co.
v. Tobias, 7 SCRA 692 (1963); SSS Employees Asso. v. Soriano, 7 SCRA 1016 (1963);
PAL Employees' Asso. v. Phil. Airlines, Inc., 11 SCRA 387 (1964); Nawasa v. NWSA
Consolidated Unions, 11 SCRA 766 (1964); Phil. Mfg. Co. v. Manila Port Service, 16
SCRA 95 (1966) and Phil. Postal Savings Bank v. Court, 21 SCRA 1330 (1967).
4. Ibid.
5. Malcolm, The Government of Philippine Islands.
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6. The Constitutional Position of the Property Owner in 2 Selected Essays on Constitutional
Law, p. 2 (1938).
7. Cardozo, The Nature of Judicial Process, p. 77 (1921).
8. 198 US 45 (1905).
9. 208 US 412.
10. 243 US 426.
11. 261 US 525. Again there was a vigorous dissent from Holmes.
12. 300 US 379.
13. 262 US 522.
14. 291 US 502.