G.R. No. L-32387 August 19, 1975
NATIONAL DEVELOPMENT COMPANY, petitioner, vs. NDC EMPLOYEES AND WORKERS’ UNION and COURT OF INDUSTRIAL RELATIONS, respondents.

FACTS

The NDC Employees and Workers’ Union filed an unfair labor practice complaint against the National Development Company (NDC) before the Court of Industrial Relations. The union alleged that NDC bargained in bad faith by failing to comply with a provision in their 1964 Collective Bargaining Agreement. This provision obligated NDC to grant its employees a Christmas bonus equivalent to 7% of the company’s net profit for the fiscal years 1965-1966 and 1966-1967. NDC moved to dismiss the complaint, arguing that the CIR lacked jurisdiction as the case was essentially a money claim for enforcing a contract. NDC also contended that the union failed to first exhaust the grievance machinery outlined in the CBA and that no bonus was due because the company incurred losses.
The CIR ruled against NDC, declaring it guilty of unfair labor practice for refusing to bargain collectively. The court ordered NDC to cease and desist from such acts and to pay the 7% Christmas bonus based on a net profit of P3,252,766.21 for the specified fiscal years. NDC’s motion for reconsideration was denied, prompting this petition for certiorari.

ISSUE

The primary issues were: (1) whether the CIR had jurisdiction over the complaint; (2) whether NDC, as a government entity, enjoyed immunity from suit; (3) whether the accounting method used to determine “net profit” was correct; and (4) whether the union failed to exhaust administrative remedies by not invoking the grievance procedure.

RULING

The Supreme Court denied the petition, affirming the CIR’s decision. On jurisdiction, the Court held that the allegation in the complaint controls. The union’s primary charge was unfair labor practice (bargaining in bad faith), not merely a money claim. A refusal to comply with CBA terms constitutes bad faith bargaining, an unfair labor practice falling squarely within the CIR’s jurisdiction under the Industrial Peace Act.
On immunity from suit, the Court ruled that NDC, while a government agency, performs proprietary functions under its corporate charter. By entering into a CBA, it descended to the level of a private party and thus could not invoke state immunity.
Regarding the computation of net profit, the Court sustained the CIR’s finding. It rejected NDC’s use of the “current operating concept,” which excluded extraordinary income. The Court agreed that all income, whether ordinary or extraordinary, enriches the company and should be included in the net profit base for computing the bonus, as intended by the CBA.
Finally, on exhaustion of remedies, the Court found the grievance machinery provision in the CBA was inoperative as no specific committee was ever constituted. The union’s direct appeal to the NDC Manager, who denied the demand, left no other recourse, making direct resort to the CIR both logical and proper. The rule on exhaustion is not absolute and yields under such circumstances.