SANTUYO V. REMERCO (G.R. NO.

174420; MARCH 22, 2010)

MIGUELA SANTUYO, CORAZON ZACARIAS, EUGENIA CINCO, ELIZABETH

PERALES, SUSANA BELEDIANO, RUFINA TABINAS, LETICIA L. DELA ROSA,
NENITA LINESES, EDITHA DELA RAMA, MARIBEL M. OLIVAR, LOEVEL
MALAPAD, FLORENDA M. GONZALO, ELEANOR O. BUEN, EULALIA ABAGAO,
LORECA MOCORRO, DIANA MAGDUA, LUZ RAGAY, LYDIA MONTE, CORNELIA
BALTAZAR and DAISY MANGANTE, Petitioners, v. REMERCO GARMENTS
MANUFACTURING, INC. and/or VICTORIA REYES. Respondents.

FACTS: KMM Kilusan (union) staged a strike against respondent Remerco Garments

Manufacturing, Inc. (RGMI). Because the strike was subsequently declared illegal, all union
officers were dismissed. Employees who wanted to sever their employment were paid separation
pay while those who wanted to resume work were recalled on the condition that they would no
longer be paid a daily rate but on a piece-rate basis. Without allowing RGMI to normalize its
operations, the union filed a notice of strike. While the union and RGMI were undergoing
conciliation in the NCMB, RGMI transferred its factory site, where the union went on strike.

Labor secretary assumed jurisdiction and issued a return to work order. RGMI, on the other
hand, insisted that its employees refused to obey the November 21, 1995 order. Thus, it prayed
that the strike be declared illegal and that all union officers and those employees who refused to
return to work be declared to have abandoned their employment.

While the conciliation proceedings between the union and respondent were pending, petitioners
filed a complaint for illegal dismissal against RGMI and respondent Victoria Reyes, accusing the
latter of harassment. Respondents, on the other hand, moved to dismiss the complaint in view
of the pending conciliation proceedings (which involved the same issue) in the NCMB.
Moreover, alleged violations of the CBA should be resolved according to the grievance procedure
laid out therein. Thus, the labor arbiter had no jurisdiction over the complaint.

The LA ruled in favor of petitioners. On appeal, the NLRC affirmed the LA Decision. Aggrieved,
respondents filed a petition for certiorari in the Court of Appeals (CA) claiming that the NLRC
acted with grave abuse of discretion in affirming the decision of the labor arbiter. They argued
that since the complaint involved the implementation of the CBA, the labor arbiter had no
jurisdiction over it. The CA reversed the NLRC decision. Upon denial of their motion for
reconsideration, petitioners filed the present petition.

ISSUE:
Does the LA have jurisdiction?
HELD: The controversy was not a simple case of illegal dismissal but a labor dispute involving
the manner of ascertaining employees salaries, a matter which was governed by the existing
CBA.

Petitioners clearly and consistently questioned the legality of RGMIs adoption of the new salary
scheme (i.e., piece-rate basis), asserting that such action, among others, violated the existing
CBA.

Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the labor arbiter
should have referred the matter to the grievance machinery provided in the CBA. Because the
labor arbiter clearly did not have jurisdiction over the subject matter, his decision was void.

Nonetheless, the Secretary of the Labor assumed jurisdiction over the labor dispute between the
union and RGMI and resolved the same in his September 18, 1996 order. Article 263(g) of the
Labor Code gives the Secretary of Labor discretion to assume jurisdiction over a labor dispute
likely to cause a strike or a lockout in an industry indispensable to the national interest and to
decide the controversy or to refer the same to the NLRC for compulsory arbitration. In doing so,
the Secretary of Labor shall resolve all questions and controversies in order to settle the dispute.
His power is therefore plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the issue.

The Secretary of Labor assumed jurisdiction over the controversy because RGMI had a
substantial number of employees and was a major exporter of garments to the United States and
Canada. In view of these considerations, the Secretary of Labor resolved the labor dispute
between the union and RGMI in his September 18, 1996 order. Since neither the union nor
RGMI appealed the said order, it became final and executory.

DENIED