The Supreme Court ruled that when the Secretary of Labor certifies a labor dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration, employers must readmit all striking workers under the same terms and conditions prevailing before the strike. This includes workers who were previously retrenched. The Court emphasized that this requirement is not optional but a mandatory obligation to maintain economic equilibrium and prevent disruptions to national interest.

YSS Laboratories: Must Retrenched Employees Be Included in a Return-to-Work Order?

YSS Laboratories, facing business losses, implemented a retrenchment program affecting 11 employees, including union officers and members of the YSS Employees Union (YSSEU). YSSEU, alleging discrimination and union-busting, declared a strike. The Secretary of Labor intervened, certifying the dispute to the NLRC and ordering all striking workers to return to work. YSS Laboratories refused to readmit the retrenched employees, arguing their termination was valid. The core legal question was whether the return-to-work order encompassed employees who had already been retrenched prior to the strike.

The Secretary of Labor’s orders, mandating the return of all striking workers, including those retrenched, were grounded in Article 263(g) of the Labor Code. This provision empowers the Secretary to assume jurisdiction over labor disputes affecting industries vital to national interest. According to Article 263(g) of the Labor Code:

Art. 263. Strikes, picketing, and lockouts.

(g) 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 Supreme Court highlighted that this authority is an exercise of the State’s police power. The Court then stated:

[I]t must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the police power of the State, which has been defined as the power inherent in a government to enact laws, within constitutional limits, to promote the order, safety, health, morals and general welfare of society. The police power, together with the power of eminent domain and the power of taxation, is an inherent power of government and does not need to be expressly conferred by the Constitution.

The Court emphasized that this power enables the Secretary to swiftly resolve labor disputes. The goal is to minimize potential damage to national interest by preventing work stoppages.

The Court also looked at the concept of grave abuse of discretion, it stated that:

Thus, an act may be considered as committed in grave abuse of discretion when the same is performed in a capricious or whimsical exercise of judgment, which is equivalent to lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility.

YSS Laboratories’ refusal to include retrenched employees in the return-to-work order was seen as undermining the Secretary of Labor’s authority. The Supreme Court stressed that assumption and certification orders are executory and must be strictly followed, regardless of pending challenges to their validity. The Court’s decision underscores the mandatory nature of return-to-work orders. Employers must readmit all striking employees, regardless of prior retrenchment claims. The Court also stated:

The very nature of a return-to-work order issued in a certified case lends itself to no other construction. The certification attests to the urgency of the matter, affecting as it does an industry indispensable to the national interest. The order is issued in the exercise of the court’s compulsory power of arbitration, and therefore must be obeyed until set aside.

This obligation ensures that labor disputes do not disrupt economic stability. This ensures a balanced approach that protects both employer and employee interests without undue preference.

FAQs

What was the key issue in this case?	The key issue was whether a return-to-work order issued by the Secretary of Labor should include employees who had been previously retrenched by the company.
What is a return-to-work order?	A return-to-work order is issued by the Secretary of Labor to compel striking employees to return to their jobs and employers to accept them back under the same terms and conditions as before the strike, pending resolution of the labor dispute.
Why did the Secretary of Labor issue the return-to-work order?	The Secretary of Labor issued the order to prevent a prolonged labor dispute that could harm the national interest, particularly in an industry deemed indispensable.
What was YSS Laboratories’ argument against the order?	YSS Laboratories argued that the retrenched employees should be excluded from the return-to-work order because their termination was a result of a valid retrenchment program due to business losses.
What did the Supreme Court decide?	The Supreme Court decided that the return-to-work order must include all striking employees, including those who had been previously retrenched, emphasizing the mandatory nature of the order.
What is the basis for the Secretary of Labor’s authority to issue such orders?	The Secretary of Labor’s authority stems from Article 263(g) of the Labor Code, which allows the Secretary to assume jurisdiction over labor disputes affecting industries indispensable to the national interest.
What is the consequence of not complying with a return-to-work order?	Failure to comply with a return-to-work order can be considered an undermining of the Secretary of Labor’s authority and may result in legal sanctions, as the orders are executory and must be strictly followed.
Does a return-to-work order interfere with management prerogatives?	The Court clarified that a return-to-work order does not unduly interfere with management prerogatives but merely regulates them when the exercise of such rights affects national interests.
Can the validity of the retrenchment be questioned even with a return-to-work order?	Yes, the validity of the retrenchment and the legality of the strike can still be determined in the proper forum, such as the NLRC, while the return-to-work order is in effect.

This case reinforces the government’s commitment to maintaining industrial peace and economic stability through strict enforcement of return-to-work orders. Employers must comply with these orders, even when challenging their validity, to ensure the smooth resolution of labor disputes and the protection of national interests.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: YSS Employees Union v. YSS Laboratories, G.R. No. 155125, December 04, 2009