Manila Diamond Hotel Employees Union v.

CA, Secretary of Labor, and Manila Diamond Hotel (2004)

Doctrine
GENERAL RULE: The State promotes principle of shared responsibility between workers and employers
and the preferential use of voluntary modes of settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace. (Constitution, Article XIII, Sec 3, par 3).

EXCEPTION: where the dispute involves an industry indispensable to national interest (LC Art 263(g))

Facts
1. Petitioner union (Union) has members working at the Manila Diamond Hotel (Hotel) but it is not
the exclusive bargaining agent for all rank and file employees. Petition to be declared as such was
denied by the DOLE.
2. The Union requested the Hotel to engage in collective bargaining negotiations for its members,
which the Hotel refused. Union staged a strike against the Hotel and relations became strained.
3. Secretary of Labor issued an order assuming jurisdiction over the labor dispute under Labor Code,
Article 263(g) and ordered the termination of the strike reinstatement of the employees.
4. The Union reported back to work but the Hotel refused to take them back.
5. Citing “strained relations” Acting Secretary of Labor issued an order for PAYROLL REINSTATEMENT
instead of actual reinstatement.
6. The Union challenged the order for Payroll Reinstatement.

CA decision: CA upheld the order for payroll reinstatement, citing the case of UST v. NLRC where the
Supreme Court upheld the decision of the NLRC to provide for PAYROLL REINSTATEMENT as an alternative
remedy for striking teachers.

Action: Petition for certiorari of the Court of Appeals decision to uphold the Labor Secretary Order

SC Decision
1. General Rule: Employers and employees have the responsibility to settle labor disputes through
negotiations and other voluntary modes of settling disputes (SEE Constitution Article XII Sec 3, LC
211 Sec A(a), LC 211 Sec B))
2. Exception is provided for in LC 263 (g) in cases where the labor disputes involves an industry
indispensable to the national interest, under the exercise of the State’s police power.
3. The rule in LC 263 (g) provides for actual reinstatement since it directs the employer to accept the
striking employees “under the same terms and conditions”.
4. UST v. NLRC is the exception to this rule only in that there was a special circumstance – the striking
teachers could not immediately return to a teaching load because it was the middle of the
semester.
5. PURPOSE OF THE LAW: Protect the State and the economy. Does not favor labor or management.

Dispositive: CA decision reversed and order of Acting Labor Secretary set aside.

Text of LC Art 263(g)

LC Article 263(g). When, in his opinion, there exists a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the assumption or certification order. If one has already
taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. Xxxxx