LEGEND INTERNATIONAL RESORTS, LTD. VS. KILUSANG MANGGAGAWA NG LEGEND GR 169754.

February 23, 2011

Facts: During the pendency of the Petition for Certification Election filed by Kilusang Manggagawa ng Legend (KML), Legend International Resorts (Legend) filed a Petition for Cancellation of Union Registration of KML alleging the same grounds as its motion to dismiss in KMLs Petition for Certification Election, which are: (a) KMLs membership is a mixture of rank and file and supervisory employees and (b) there was fraud in the acquisition of its certificate of registration. KMLs Petition was denied, while Legends Petition was granted. On appeal, the DOLE Secretary rendered for KML. CA affirmed. Issue: Does the finality of the decision cancelling the certificate registration pending the Petition for Certificate Election remove the legal personality of union to be granted such petition? Law: Section 5, Rule V of the Implementing Rules of Book V (Department Order No. 9) states as follows: SEC. 5. Effect of registration. - The labor organization or worker's association shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be subject to collateral attack but may be questioned only in an independent petition for cancellation in accordance with these Rules. Ruling: NO. The cancellation of KMLs certificate of registration should not retroact to the time of its issuance, hence divesting KML of the legal personality to be granted a Certification Election. Moreover, the pendency of a petition for cancellation of union registration does not also preclude collective bargaining. For the fact is that at the time the union filed its petition for certification, it still had the legal personality to perform such act absent an order directing its cancellation. Petition to cancel/revoke registration is not a prejudicial question to the petition for certification election because it is well-settled rule that `a certification proceedings is not a litigation in the sense that the term is ordinarily understood, but an investigation of a non-adversarial and fact finding character. Thus, the technical rules of evidence do not apply if the decision to grant it proceeds from an examination of the sufficiency of the petition as well as a careful look into the arguments contained in the position papers and other documents. Further, such legal personality may not be subject to a collateral attack but only through a separate action instituted particularly for the purpose of assailing it. Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which provides for the dismissal of a petition for certification election based on the lack of legal personality of a labor organization only in the following instances: (1) appellant is not listed by the Regional Office or the BLR in its registry of LLO; or (2) appellant's legal personality has been revoked or cancelled with finality. Since KML is listed in the registry of LLO, and its legitimacy has not been revoked or cancelled with finality, the granting of its petition for certification election is proper.

Opinion: I am in concurrence with the Honorable Supreme Court in ruling for the KML. Indeed the Department Order is clear in its terms and needs no interpretation. Verba legis. Once a legal personality to file a petition for certification election is granted to a union and the same cannot be subject to collateral attack except through a separate action instituted for purpose of assailing it. Moreover, even if such separate action is filed pending the petition for certificate election, such separate action cannot operate as a prejudicial question. Ruling otherwise will place the right of union on the manipulative hands of the employer, such that, the employer will always have the unbridled discretion to hamper, through the mere filing of a petition for cancellation of union registration, the exercise of employees guaranteed to them under the Constitution, i.e., legitimation of a union (right to self-organization) and exercise of collective bargaining.

THE HERITAGE HOTEL MANILA vs. NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC) GR 178296, January 12, 2011

Facts: The National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC) was issued an order for certification election. Subsequently, when Heritage Hotel Manila (Heritage) discovered that NUWHRAIN-HHMSC had failed to submit to the BLR its annual financial report for several years and the list of its members since the time it filed its registration papers, Heritage filed a Petition for Cancellation of Registration of NUWHRAINHHMSC and requested the suspension of the certification election proceedings. Nevertheless, the certification election pushed through and NUWHRAIN-HHMSC emerged as the winner. Thereafter, Heritage filed a Protest with Motion to Defer Certification of Election Results and Winner contending that the petition for cancellation should be first resolved before the proclamation of the winner in the certification election. The Med-Arbiter held that the pendency of a petition for cancellation of registration is not a bar to the holding of a certification election. The DOLE Secretary likewise dismissed the appeal and the subsequent MR. In the meantime, the Regional Director of DOLE-NCR finally resolved the petition for cancellation of registration. While finding that respondent had indeed failed to file financial reports and the list of its members for several years, he, nonetheless, denied the petition, because the freedom of association and the employees right to self-organization are more substantive considerations. The DOLE Secretary Sto. Tomas dismissed the subsequent appeal, holding that the constitutionally guaranteed freedom of association and right of workers to self-organization outweighed respondents noncompliance with the statutory requirements to maintain its status as a legitimate labor organization. MR was denied. CA affirmed the decision of the DOLE Secretary. Issue: Is the cancellation of union registration a ministerial duty of the Regional Director upon the existence of any of the grounds enumerated under Article 239 of the Labor Code? Laws: Articles 238 and 239 of the Labor Code:

ART. 238. CANCELLATION OF REGISTRATION; APPEAL The certificate of registration of any legitimate labor organization, whether national or local, shall be canceled by the Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the requirements herein prescribed. (emphasis supplied). ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION. The following shall constitute grounds for cancellation of union registration: xxxx (d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the financial report itself; xxxx

(i)

Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau. (emphasis supplied).

Republic Act (R.A.) No. 9481, An Act Strengthening the Workers Constitutional Right to SelfOrganization, Amending for the Purpose Presidential Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines, which became effective on June 14, 2007, sought to strengthen the workers right to self-organization and enhance the Philippines compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers organizations by administrative authority. Thus, R.A. No. 9481 amended Article 239 to read: ART. 239. Grounds for Cancellation of Union Registration.The following may constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members. R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides: ART. 242-A. Reportorial Requirements.The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned: (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-laws or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election;

(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and (d) Its list of members at least once a year or whenever required by the Bureau. Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty. (emphasis supplied). Ruling: No. The use of the word shall in Article 238 does not make the cancellation of registration a mere ministerial duty, once it is determined that a ground enumerated in Article 239 of the Labor Code is present. use of the word shall. This is because, the same provision of the Article 238 if it has reason to believe, which thereby indicates an ample discretion in dealing with a petition for cancellation of a unions registration, particularly, determining whether the union still meets the requirements prescribed by law. It is sufficient to give the Regional Director license to treat the late filing of required documents as sufficient compliance with the requirements of the law. After all, the law requires the labor organization to submit the annual financial report and list of members in order to verify if it is still viable and financially sustainable as an organization so as to protect the employer and employees from fraudulent or fly-by-

night unions. With the submission of the required documents by NUWHRAIN-HHMSC, the purpose of the law has been achieved, though belatedly. The union members and, in fact, all the employees belonging to the appropriate bargaining unit should not be deprived of a bargaining agent, merely because of the negligence of the union officers who were responsible for the submission of the documents to the BLR. Labor authorities should, indeed, act with circumspection in treating petitions for cancellation of union registration, lest they be accused of interfering with union activities. In resolving the petition, consideration must be taken of the fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities. Labor authorities should bear in mind that registration confers upon a union the status of legitimacy and the concomitant right and privileges granted by law to a legitimate labor organization, particularly the right to participate in or ask for certification election in a bargaining unit. Thus, the cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization. For without such registration, it loses - as a rule - its rights under the Labor Code. Moreso, it is worth mentioning that the amendment introduced by RA 9481 to the Labor Codes provisions on cancellation of union registration and on reportorial requirements further strengthened the Constitutionally guaranteed right of the worker to self-organization because the said new law enhanced the Philippines compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers organizations by administrative authority. Thus, R.A. No. 9481 amended the Labor Code making the failure to file an annual financial report within thirty (30) days after the close of every fiscal year as herein assailed not a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty. Opinion: I respectfully agree with the Honorable Supreme Court that the Constitutional rights guaranteed to the workers, being substantial in character should not be haltered by non-compliance with procedural matters. The correctness of this ruling is further magnified by the international arena itself, which prompted the passage of RA 9481 strengthening the right to self-organization through non-dissolution of workers organization by administrative authority. Considering that it is through the mere negligence of the officers of the union that the procedural matters are not complied with, the right of other innocent workers to self-organization should not be prejudiced. The right to self-organization is not meant to make the members of the union suffer collectively for a mere mistake of a single member of it. The purpose of the right is to protect labor and not to penalize labor for joining such organization. Therefore, the right to self-organization was properly upheld contra the non-compliance with the procedural requirements of the law.