G.R. No. L-49990 September 30, 1982
UNITED STATES LINES, INC., petitioner, vs. ACTING MINISTER OF LABOR AMADO INCIONG, ASSOCIATED WATCHMEN AND SECURITY UNION, BERNARDO ABADILLOS, et al., respondents.

FACTS

The Associated Watchmen and Security Union (Union) had a Collective Bargaining Agreement (CBA) with United States Lines, Inc. (Company). The CBA contained a union security clause and granted the Union the right to assign watchmen to the Company’s vessels. An intra-union dispute arose in 1968, resulting in two factions, each claiming leadership and the right to make work assignments under the CBA. One faction, led by Apolinar Bernardo, filed an unfair labor practice complaint against the Company and the other faction’s leader, Narciso Lim, alleging they deprived certain watchmen of work assignments. The Labor Arbiter dismissed the unfair labor practice charge but ordered the Company to reinstate the individual complainants to their former positions without backwages and directed Narciso Lim to pay them financial assistance equivalent to six months’ back wages. This decision was affirmed by the National Labor Relations Commission and the Acting Minister of Labor.

ISSUE

Whether the Acting Minister of Labor committed grave abuse of discretion in affirming the order for the Company to reinstate the watchmen and for Narciso Lim to pay financial assistance.

RULING

Yes, the Supreme Court granted the petition. The legal logic is anchored on the nature of the employment relationship and the specific provisions of the CBA. The Court found that the watchmen were not regular employees of the Company. The CBA explicitly stated that the Union had the sole right to assign watchmen upon the Company’s request, and the Company’s obligation was merely to pay the watchmen so assigned. The watchmen’s compensation was not paid directly by the Company but was sourced from a special fund contributed by shipping companies. Crucially, the Company had no power to hire or fire the watchmen; that power resided with the Union under the CBA’s terms. Therefore, no employer-employee relationship existed between the Company and the individual watchmen. Consequently, the Labor Arbiter and the Minister of Labor had no jurisdiction to order the Company to reinstate them. The order for reinstatement, having been issued without jurisdiction, was null and void. The award of financial assistance against Narciso Lim was also set aside as it was premised on the invalid reinstatement order. The Court emphasized that jurisdiction is conferred by law and cannot be granted by the parties’ acquiescence. Since the essential element of employer-employee relationship was absent, the labor tribunals exceeded their authority.