G.R. No. 108855 ; February 28, 1996
Metrolab Industries, Inc., petitioner, vs. Honorable Ma. Nieves Roldan-Confesor, in her capacity as Secretary of the Department of Labor and Employment and Metro Drug Corporation Employees Association – Federation of Free Workers, respondents.

FACTS

Petitioner Metrolab Industries, Inc. and private respondent Metro Drug Corporation Employees Association-Federation of Free Workers had a collective bargaining agreement (CBA) that expired. Negotiations for a new CBA ended in a deadlock, leading to a notice of strike. To contain the dispute, the Secretary of Labor issued an assumption order dated September 20, 1991, pursuant to Article 263(g) of the Labor Code, which assumed jurisdiction over the labor dispute and strictly enjoined any strike or lockout. The order also directed the parties “to cease and desist from committing any and all acts that might exacerbate the situation.” On December 27, 1991, the Secretary issued an order resolving the deadlocked CBA issues. While the Union’s motion for reconsideration of this order was pending, Metrolab laid off 94 rank-and-file employees on January 27, 1992, citing business losses and automation.

ISSUE

Whether the Secretary of Labor gravely abused her discretion in declaring the layoff of 94 employees illegal for violating the cease and desist directive in the assumption order.

RULING

No. The Supreme Court upheld the Secretary of Labor’s finding that the mass layoff was illegal for violating the specific injunction in the assumption order. The legal logic is anchored on the nature and purpose of an assumption order issued under Article 263(g) of the Labor Code. When the Secretary assumes jurisdiction over a labor dispute in an industry indispensable to the national interest, the order is to be strictly complied with as it is issued for public purpose. The directive to cease and desist from acts that may exacerbate the dispute is a statutory component of such an order, designed to maintain the status quo and prevent the escalation of hostilities. The layoff of 94 employees, implemented while the Union’s motion for reconsideration of the CBA terms was pending, constituted a unilateral act that altered the employment landscape and inevitably aggravated the already tense labor situation. The Court rejected Metrolab’s defense that the layoff was a valid exercise of management prerogative, ruling that such prerogative is not absolute and must yield to the overriding public interest embodied in the Secretary’s assumption order. The layoff, being a provocative act during a critical period of dispute resolution, clearly fell under the prohibition against exacerbating acts. Therefore, the Secretary of Labor did not commit grave abuse of discretion in ordering the reinstatement of the employees with full backwages.