Accfa vs. Cugco, 30 Scra 649

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  Today is Monday, September 04, 2017 Custom SearchRepublic of the Philippines  SUPREME COURT  ManilaEN BANC G.R. No. L-21484 November 29, 1969THE AGRICULTURAL CREDIT and COOPERATIVE FINANCING ADMINISTRATION (ACCFA),  petitioner, vs.  ACCFA SUPERVISORS' ASSOCIATION, ACCFA WORKERS' ASSOCIATION, and THE COURT OFINDUSTRIAL RELATIONS,  respondents. Deogracias E. Lerma and Esmeraldo U. Guloy for petitioner Agricultural Credit and Cooperative Financing  Administration. Office of the Agrarian Counsel, Department of Justice for petitioner Agricultural Credit Administration J. C. Espinas and Associates for respendents Confederation of Unions in Government Corporations Offices, et al.Mariano B. Tuason for respondent Court of Industrial Relations. MAKALINTAL, J.: These are two separate appeals by certiorari from the decision dated March 25, 1963 (G.R. No. L-21484) and theorder dated May 21, 1964 (G.R. No. L-23605) as affirmed by the resolutions en banc  , of the Court of IndustrialRelations, in Cases Nos. 3450-ULP and 1327-MC, respectively. The parties, except the Confederation of Unions inGovernment Corporations and Offices (CUGCO), being practically the same and the principal issues involvedrelated, only one decision is now rendered in these two cases.The Agricultural Credit and Cooperative Financing Administration (ACCFA) was a government agency createdunder Republic Act No. 821, as amended. Its administrative machinery was reorganized and its name changed to Agricultural Credit Administration (ACA) under the Land Reform Code (Republic Act No. 3844). On the other hand,the ACCFA Supervisors' Association (ASA) and the ACCFA Workers' Association (AWA), hereinafter referred to asthe Unions, are labor organizations composed of the supervisors and the rank-and-file employees, respectively, inthe ACCFA (now ACA). G.R. No. L-21484 On September 4, 1961 a collective bargaining agreement, which was to be effective for a period of one (1) year fromJuly 1, 1961, was entered into by and between the Unions and the ACCFA. A few months thereafter, the Unionsstarted protesting against alleged violations and non-implementation of said agreement. Finally, on October 25,1962 the Unions declared a strike, which was ended when the strikers voluntarily returned to work on November 26,1962.On October 30, 1962 the Unions, together with its mother union, the Confederation of Unions in GovernmentCorporations and Offices (CUGCO), filed a complaint with the Court of Industrial Relations against the ACCFA(Case No. 3450-ULP) for having allegedly committed acts of unfair labor practice, namely: violation of the collectivebargaining agreement in order to discourage the members of the Unions in the exercise of their right to self-organization, discrimination against said members in the matter of promotions, and refusal to bargain. The ACCFAdenied the charges and interposed as affirmative and special defenses lack of jurisdiction of the CIR over the case,illegality of the bargaining contract, expiration of said contract and lack of approval by the office of the President of the fringe benefits provided for therein. Brushing aside the foregoing defenses, the CIR in its decision dated March25, 1963 ordered the ACCFA:1. To cease and desist from committing further acts tending to discourage the members of complainantunions in the exercise of their right to self-organization;2. To comply with and implement the provision of the collective bargaining contract executed on September 4,1961, including the payment of P30.00 a month living allowance;3. To bargain in good faith and expeditiously with the herein complainants.  The ACCFA moved to reconsider but was turned down in a resolution dated April 25, 1963 of the CIR en banc  .Thereupon it brought this appeal by certiorari  .The ACCFA raises the following issues in its petition, to wit:1. Whether or not the respondent court has jurisdiction over this case, which in turn depends on whether or not ACCFA exercised governmental or proprietary functions.2. Whether or not the collective bargaining agreement between the petitioner and the respondent union isvalid; if valid, whether or not it has already lapsed; and if not, whether or not its (sic) fringe benefits arealready enforceable.3. Whether or not there is a legal and/or factual basis for the finding of the respondent court that the petitioner had committed acts of unfair labor practice.4. Whether or not it is within the competence of the court to enforce the collective bargaining agreementbetween the petitioner and the respondent unions, the same having already expired. G.R. No. L-23605  During the pendency of the above mentioned case (G.R. No. L-21484), specifically on August 8, 1963, the Presidentof the Philippines signed into law the Agricultural Land Reform Code (Republic Act No. 3844), which among other things required the reorganization of the administrative machinery of the Agricultural Credit and CooperativeFinancing Administration (ACCFA) and changed its name to Agricultural Credit Administration (ACA). On March 17,1964 the ACCFA Supervisors' Association and the ACCFA Workers' Association filed a petition for certificationelection with the Court of Industrial Relations (Case No. 1327-MC) praying that they be certified as the exclusivebargaining agents for the supervisors and rank-and-file employees, respectively, in the ACA. The trial Court in itsorder dated March 30, 1964 directed the Manager or Officer-in-Charge of the ACA to allow the posting of said order  for the information of all employees and workers thereof, and to answer the petition. In compliance therewith, the ACA, while admitting most of the allegations in the petition, denied that the Unions represented the majority of thesupervisors and rank-and-file workers, respectively, in the ACA. It further alleged that the petition was premature,that the ACA was not the proper party to be notified and to answer the petition, and that the employees andsupervisors could not lawfully become members of the Unions, nor be represented by them. However, in a jointmanifestation of the Unions dated May 7, 1964, with the conformity of the ACA Administrator and of the AgrarianCounsel in his capacity as such and as counsel for the National Land Reform Council, it was agreed that the unionpetitioners in this case represent the majority of the employees in their respective bargaining units and that only thelegal issues raised would be submitted for the resolution of the trial Court.Finding the remaining grounds for ACA's opposition to the petition to be without merit, the trial Court in its order dated May 21, 1964 certified the ACCFA Workers' Association and the ACCFA Supervisors' Association as the soleand exclusive bargaining representatives of the rank-and-file employees and supervisors, respectively, of the Agricultural Credit Administration. Said order was affirmed by the CIR en banc   in its resolution dated August 24,1964.On October 2, 1964 the ACA filed in this Court a petition for certiorari with urgent motion to stay the CIR order of May 21, 1964. In a resolution dated October 6, 1964, this Court dismissed the petition for lack of adequateallegations, but the dismissal was later reconsidered when the ACA complied with the formal requirement stated insaid resolution. As prayed for, this Court ordered the CIR to stay the execution of its order of May 21, 1964.In this appeal, the ACA in effect challenges the jurisdiction of the CIR to entertain the petition of the Unions for certification election on the ground that it (ACA) is engaged in governmental functions. The Unions join the issue onthis single point, contending that the ACA forms proprietary functions.Under Section 3 of the Agricultural Land Reform Code the ACA was established, among other governmentalagencies, 1  to extend credit and similar assistance to agriculture, in pursuance of the policy enunciated in Section 2as follows:SEC. 2. Declaration of Policy  . — It is the policy of the State:(1) To establish owner-cultivatorships and the economic family-size farm as the basis of Philippine agricultureand, as a consequence, divert landlord capital in agriculture to industrial development;(2) To achieve a dignified existence for the small farmers free from pernicious institutional restraints andpractices;(3) To create a truly viable social and economic structure in agriculture conducive to greater productivity andhigher farm incomes;  (4) To apply all labor laws equally and without discrimination to both industrial and agricultural wage earners;(5) To provide a more vigorous and systematic land resettlement program and public land distribution; and(6) To make the small farmers more independent, self-reliant and responsible citizens, and a source of genuine strength in our democratic society.The implementation of the policy thus enunciated, insofar as the role of the ACA therein is concerned, is spelled outin Sections 110 to 118, inclusive, of the Land Reform Code. Section 110 provides that the administrative machineryof the ACCFA shall be reorganized to enable it to align its activities with the requirements and objective of this Codeand shall be known as the Agricultural Credit Administration. Under Section 112 the sum of P150,000,000 wasappropriated out of national funds to finance the additional credit functions of the ACA as a result of the land reformprogram laid down in the Code. Section 103 grants the ACA the privilege of rediscounting with the Central Bank, theDevelopment Bank of the Philippines and the Philippine National Bank. Section 105 directs the loaning activities of the ACA to stimulate the development of farmers' cooperatives, including those relating to the production andmarketing of agricultural products and those formed to manage and/or own, on a cooperative basis, services andfacilities, such as irrigation and transport systems, established to support production and/or marketing of agriculturalproducts. Section 106 deals with the extension by ACA of credit to small farmers in order to stimulate agriculturalproduction. Sections 107 to 112 lay down certain guidelines to be followed in connection with the granting of loans,such as security, interest and supervision of credit. Sections 113 to 118, inclusive, invest the ACA with certain rightsand powers not accorded to non-governmental entities, thus:SEC. 113.  Auditing of Operations . — For the effective supervision of farmers' cooperatives, the head of the Agricultural Credit Administration shall have the power to audit their operations, records and books of accountand to issue subpoena and subpoena duces tecum to compel the attendance of witnesses and the productionof books, documents and records in the conduct of such audit or of any inquiry into their affairs. Any personwho, without lawful cause, fails to obey such subpoena or subpoena duces tecum shall, upon application of the head of Agricultural Credit Administration with the proper court, be liable to punishment for contempt inthe manner provided by law and if he is an officer of the Association, to suspension or removal from office.SEC. 114. Prosecution of officials . — The Agricultural Credit Administration, through the appropriateprovincial or city fiscal, shall have the power to file and prosecute any and all actions which it may haveagainst any and all officials or employees of farmers' cooperatives arising from misfeasance or malfeasancein office.SEC. 115. Free Notarial Service . — Any justice of the peace, in his capacity as notary ex-officio, shall render service free of charge to any person applying for a loan under this Code either in administering the oath or inthe acknowledgment of instruments relating to such loan.SEC. 116. Free Registration of Deeds . — Any register of deeds shall accept for registration, free of chargeany instrument relative to a loan made under this Code.SEC. 117. Writing-off Unsecured and Outstanding Loans . — Subject to the approval of the President uponrecommendation of the Auditor General, the Agricultural Credit Administration may write-off from its books,unsecured and outstanding loans and accounts receivable which may become uncollectible by reason of thedeath or disappearance of the debtor, should there be no visible means of collecting the same in theforeseeable future, or where the debtor has been verified to have no income or property whatsoever withwhich to effect payment. In all cases, the writing-off shall be after five years from the date the debtor defaults.SEC. 118. Exemption from Duties, Taxes and Levies . — The Agricultural Credit Administration is herebyexempted from the payment of all duties, taxes, levies, and fees, including docket and sheriff's fees, of whatever nature or kind, in the performance of its functions and in the exercise of its powers hereunder.The power to audit the operations of farmers' cooperatives and otherwise inquire into their affairs, as given bySection 113, is in the nature of the visitorial power of the sovereign, which only a government agency speciallydelegated to do so by the Congress may legally exercise.On March 19, 1964 Executive Order No. 75 was promulgated. It is entitled: Rendering in Full Force and Effect thePlan of Reorganization Proposed by the Special Committee on Reorganization of Agencies for Land Reform for the Administrative Machinery of the Agricultural Land Reform Code, and contains the following pertinent provisions:Section 3. The Land Reform Project Administration 2  shall be considered a single organization and thepersonnel complement of the member agencies including the legal officers of the Office of the AgrarianCounsel which shall provide legal services to the LRPA shall be regarded as one personnel pool from whichthe requirements of the operations shall be drawn and subject only to the civil service laws, rules andregulations, persons from one agency may be freely assigned to positions in another agency within the LRPAwhen the interest of the service so demands.  Section 4. The Land Reform Project Administration shall be considered as one organization with respect tothe standardization of job descriptions position classification and wage and salary structures to the end thatpositions involving the same or equivalent qualifications and equal responsibilities and effort shall have thesame remuneration.Section 5. The Civil Service laws, rules and regulations with respect to promotions, particularly in theconsideration of person next in rank, shall be made applicable to the Land Reform Project Administration as asingle agency so that qualified individuals in one member agency must be considered in consideringpromotion to higher positions in another member agency.The implementation of the land reform program of the government according to Republic Act No. 3844 is mostcertainly a governmental, not a proprietary, function; and for that purpose Executive Order No. 75 has placed the ACA under the Land Reform Project Administration together with the other member agencies, the personnelcomplement of all of which are placed in one single pool and made available for assignment from one agency toanother, subject only to Civil Service laws, rules and regulations, position classification and wage structures.The appointing authority in respect of the officials and employees of the ACA is the President of the Philippines, asstated in a 1st indorsement by his office to the Chairman of the National Reform Council dated May 22, 1964, asfollows: Appointments of officials and employees of the National Land Reform Council and its agencies may be madeonly by the President, pursuant to the provisions of Section 79(D) of the Revised Administrative Code. Inaccordance with the policy and practice, such appointments should be prepared for the signature of theExecutive Secretary, By Authority ofthe President . 3 When the Agricultural Reform Code was being considered by the Congress, the nature of the ACA was the subjectof the following exposition on the Senate floor:Senator Tolentino: . . . . The ACA is not going to be a profit making institution. It is supposed to be a publicservice of the government to the lessees and farmer-owners of the lands that may be bought after expropriation from owners. It is the government here that is the lender. The government should not exact ahigher interest than what we are telling a private landowner now in his relation to his tenants if we give to their farmers a higher rate of interest . . . . (pp. 17 & 18, Senate Journal No. 16, July 3, 1963)The reason is obvious, to pinpoint responsibility for many losses in the government, in order to avoid irresponsiblelending of government money — to pinpoint responsibility for many losses . . . .Senator Manglapus: . . . But assuming that hypothesis, that is the reason why we are appropriatingP150,000,000.00 for the Agricultural Credit Administration which will go to intensified credit operations on thebarrio level . . . (p. 3, Senate Journal No. 7).That it is the reason why we are providing for the expansion of the ACCFA and the weeding out of the cooperativeactivity of the ACCFA and turning this over to the Agricultural Productivity Commission, so that the AgriculturalCredit Administration will concentrate entirely on the facilitation of credit on the barrio level with the massive supportof 150 million provided by the government. . . . (pp. 4 & 5 of Senate Journal No. 7, July 3, 1963). . . But by releasing them from this situation, we feel that we are putting them in a much better condition than that inwhich they are found by providing them with a business-like way of obtaining credit, not depending on a paternalisticsystem but one which is business-like — that is to say, a government office, which on the barrio level will providethem that credit directly . . . . (p. 40, Senate Journal No. 7, July 3, 1963) (emphasis supplied).The considerations set forth above militate quite strongly against the recognition of collective bargaining powers inthe respondent Unions within the context of Republic Act No. 875, and hence against the grant of their basic petitionfor certification election as proper bargaining units. The ACA is a government office or agency engaged ingovernmental, not proprietary functions. These functions may not be strictly what President Wilson described as constituent (as distinguished from ministrant ), 4  such as those relating to the maintenance of peace and theprevention of crime, those regulating property and property rights, those relating to the administration of justice andthe determination of political duties of citizens, and those relating to national defense and foreign relations. Under this traditional classification, such constituent functions are exercised by the State as attributes of sovereignty, andnot merely to promote the welfare, progress and prosperity of the people — these letter functions being ministranthe exercise of which is optional on the part of the government.The growing complexities of modern society, however, have rendered this traditional classification of the functions of government quite unrealistic, not to say obsolete. The areas which used to be left to private enterprise and initiativeand which the government was called upon to enter optionally, and only because it was better equipped toadminister for the public welfare than is any private individual or group of individuals, 5  continue to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign
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