G.R. No. L-19911 March 15, 1968
THE COMMISSIONER OF CIVIL SERVICE, petitioner, vs. THE HON. JOSE S. BAUTISTA, Presiding Judge, Court of Industrial Relations and THE KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, respondents.

FACTS

In 1948, the Manila Railroad Company (Company) and the Kapisanan ng mga Manggagawa sa Manila Railroad Company (Union) entered into a Collective Bargaining Agreement (CBA), renewed in 1957, covering salary scales and rules for appointment and promotion. Upon the enactment of Republic Act No. 2260 (Civil Service Act of 1959), the Company required its employees to take a qualifying examination for permanent retention, causing many Union members to be converted from permanent to provisional status due to failure to take the exam. The Union filed a notice of strike. After Department of Labor conciliation, the parties agreed to submit the issue to arbitration. The parties, including the Company’s General Manager and the Union President, jointly selected then Presiding Judge of the Court of Industrial Relations, Jose Bautista, as sole Arbitrator. The Commissioner of Civil Service concurred with the selection “subject to the Constitution.” The issue submitted was whether the appointments of the Union member workers be exempt from the operation of the Civil Service Law in view of the 1948 CBA. The parties agreed in writing to accept the Arbitrator’s decision as final and unappealable. On March 18, 1962, the Arbitrator rendered an award in favor of the Union, holding that the CBA, concluded before the effectivity of the WAPCO classification and pay plans and the 1959 Civil Service Law, should prevail and that applying the Civil Service Law’s new requirements to these employees would impair the obligation of contracts and constitute deprivation of property (the right to labor) without due process. The Commissioner of Civil Service filed a petition for certiorari against the award.

ISSUE

Whether the Arbitrator’s award, which exempted the appointments of Union members from the operation of the Civil Service Law of 1959 based on the pre-existing Collective Bargaining Agreement, is valid and constitutional.

RULING

The Supreme Court denied the petition for certiorari and upheld the Arbitrator’s award. The Court found nothing unconstitutional or unlawful in the submission of the purely legal question to arbitration, a step taken by the primary parties to preserve industrial peace. The award, based on the Company’s resolution, a Department of Justice Opinion, and prior opinions of the Civil Service Commission itself, resolved the legal issue in the affirmative. The parties’ solemn agreement to accept the award as final and unappealable gave it the character of a binding compromise agreement. The Commissioner of Civil Service, whose predecessor concurred with the arbitration agreement, was similarly bound. The award did not unlawfully dictate actions to the Commissioner but merely decided the coverage question. The reservation “subject to the Constitution” only allowed a challenge on constitutional grounds, which the Court found absent.