G.R. No. L-80737 September 29, 1988
PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND CARLOS CABAL, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, ROSALINA M. PULPULAAN AND EMELITA SALONGA, respondents.

FACTS

In October 1984, petitioner Philippine Graphic Arts Inc., citing economic difficulties, implemented a mandatory vacation leave scheme for its workers in batches. The leaves ranged from 15 to 45 days, and the workers were paid by charging the amounts against their earned leave credits. Private respondents Rosalina Pulpulaan and Emelita Salonga filed complaints for unfair labor practice and discrimination. The Labor Arbiter dismissed the complaint for lack of merit but ordered the restoration of a company grocery policy. The private respondents filed a partial appeal with the NLRC, contesting the dismissal of their complaint and arguing the forced leaves were effectively without pay.
The NLRC affirmed the Labor Arbiter’s finding of no unfair labor practice but modified the decision. It held that while not an unfair labor practice, the forced leave was implemented with arbitrariness. Consequently, the NLRC ordered the petitioners to refund the amounts equivalent to the earned leaves charged to the complainants. The petitioners then elevated the case to the Supreme Court, arguing the NLRC committed grave abuse of discretion by ruling on a money claim not raised on appeal and by granting relief to non-parties.

ISSUE

The principal issue is whether the implementation of forced vacation leave constituted unfair labor practice or was tainted with arbitrariness, thereby justifying the NLRC’s award of a refund.

RULING

The Supreme Court granted the petition, setting aside the NLRC resolution and reinstating the Labor Arbiter’s decision. The Court held there was no unfair labor practice. The economic crisis prompting the measure was undisputed, and the temporary reduction of work through forced leave, reached after notice and consultations, was a valid management prerogative and a more humane alternative to retrenchment. This was also in consonance with the collective bargaining agreement.
On the claim of arbitrariness, primarily due to alleged non-recourse to the grievance machinery, the Court found no merit. The statutory grievance procedure under Article 261 of the Labor Code requires both employer and bargaining representative to meet to adjust grievances. The Court reasoned that the party aggrieved is logically the one to initiate the process. Here, the private respondents, upon receiving notice, filed a case directly with the Labor Arbiter instead of initiating grievance proceedings. The petitioners even moved for dismissal or referral to the grievance machinery. Therefore, the petitioners could not be faulted for bypassing it. The implementation, given the economic necessity and the steps taken, was not exercised in a malicious, oppressive, or arbitrary manner. The NLRC’s modification for a refund constituted an error, as it granted relief on an issue not properly appealed and without a factual or legal basis for finding arbitrariness.