Labor Arbitration - June 23 Meeting

PAL V.
NLRC
Thursday, July 01, 2004
12:17 AM
PHIL. AIRLINES V NLRC (PALEA)

225 SCRA 301
MELO; August 13, 1993
NATURE
Petition for certiorari
FACTS
- On March 15, 1985, PAL completely revised its 1966 Code of Discipline. The Code was circulated among the employees and was immediately implemented,
and some employees were subjected to the disciplinary measures.
- The Philippine Airlines Employees Association (PALEA) filed a complaint before the NLRC contending that PAL, by its unilateral implementation of the Code,
w as guilty of unfair labor practice, specifically Paragraphs E and G of Art 249 and Art 253 of the Labor Code. PALEA alleged that copies of the Code had been
circulated in limited numbers; that being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code w as arbitrary,
oppressive, and prejudicial to the rights of the employ ees. It pray ed that implementation of the Code be held in abey ance; that PAL should discuss the substance
of the Code w ith PALEA; that employ ees dismissed under the Code reinstated and their cases subjected to further hearing; and that PAL be declared guilty of
unfair labor practice and be ordered to pay damages.
- PAL filed a MTD, asserting its prerogativ e as an employer to prescribe rules and regulations regarding employees' conduct in carrying out their duties and
functions, and alleging that it had not v iolated the CBA or any provision of the Labor Code.
ISSUE
1. WON the formulation of a Code of Discipline among employees is a shared responsibility of the employer and the employees
HELD
1. YES.
Ratio Employees have a right to participate in the deliberation of matters w hich may affect their rights and the formulation of policies relative thereto and one
such matter is the formulation of a code of discipline.
Reasoning It w as only on March 2, 1989, with the approval of RA 6715, amending Art 211 of the Labor Code, that the law ex plicitly considered it a State policy
"to ensure the participation of w orkers in decision and policy-making processes affecting their rights, duties and welfare." However, even in the absence of said
clear prov ision of law , the exercise of management prerogatives was never considered boundless. Thus, in Cruz vs. Medina, it w as held that management's
prerogativ es must be without abuse of discretion.
- In San Miguel Brew ery Sales Force Union vs. Ople, we upheld the company's right to implement a new system of distributing its products, but gav e the
follow ing caveat: So long as a company's management prerogatives are exercised in good faith for the adv ancement the employer's interest and not for the
purpose of defeating or circumventing the rights of the employ ee, under special laws or under valid agreements, this Court will uphold them.
- All this points to the conclusion that the ex ercise of managerial prerogativ es is not unlimited. It is circumscribed by limitations found in law, a CBA, or the
general principles of fair play and justice. Moreover, it must be duly established that the prerogativ e being invoked is clearly a managerial one.
- Verily , a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of the employ ees. In
treating the latter, management should see to it that its employ ees are at least properly informed of its decisions or modes of action. PAL asserts that all its
employ ees have been furnished copies of the Code, the LA and the NLRC found to the contrary , which finding, is entitled to great respect.
- PALEA recognizes the right of the Company to determine matters of management policy and Company operations and to direct its manpower. Management of
the Company includes the right to organize, plan, direct and control operations, to hire, assign employees to work, transfer employees from one department to
another, to promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for v alid and legal causes, to introduce new or
improv ed methods or facilities or to change existing methods or facilities and the right to make and enforce Company rules and regulations to carry out the
functions of management. The exercise by management of its prerogativ e shall be done in a just, reasonable, humane and/or lawful manner.
- Such prov ision in the CBA may not be interpreted as cession of employees' rights to participate in the deliberation of matters w hich may affect their rights and
the formulation of policies relativ e thereto. And one such matter is the formulation of a code of discipline. Industrial peace cannot be achieved if the employees
are denied their just participation in the discussion of matters affecting their rights.
Disposition Petition is DISMISSED.
Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 85985 August 13, 1993

PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA
and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation
of a Code of Discipline among employees is a shared responsibility of the employer and the
employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
Labor Arbitration Page 1

Discipline. The Code was circulated among the employees and was immediately implemented, and
some employees were forthwith subjected to the disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint
before the National Labor Relations Commission (NLRC) for unfair labor practice (Case No.
NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of PAL's Code of
Discipline without notice and prior discussion with Union by Management" (Rollo, p. 41). In its
position paper, PALEA contended that PAL, by its unilateral implementation of the Code, was guilty
of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor
Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being
penal in nature the Code must conform with the requirements of sufficient publication, and that the
Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss the substance of the
Code with PALEA; that employees dismissed under the Code be reinstated and their cases
subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be ordered
to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe
rules and regulations regarding employess' conduct in carrying out their duties and functions, and
alleging that by implementing the Code, it had not violated the collective bargaining agreement
(CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence, PAL
maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements for
negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.
In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was
violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV and I of
Chapter II of the Code as defective for, respectively, running counter to the construction of penal
laws and making punishable any offense within PAL's contemplation. These provisions are the
following:
Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules and regulations of the
company. Every employee is bound to comply with all applicable rules, regulations, policies,
procedures and standards, including standards of quality, productivity and behaviour, as issued and
promulgated by the company through its duly authorized officials. Any violations thereof shall be
punishable with a penalty to be determined by the gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record of offenses shall be cumulative. The penalty for
an offense shall be determined on the basis of his past record of offenses of any nature or the
absence thereof. The more habitual an offender has been, the greater shall be the penalty for the
latest offense. Thus, an employee may be dismissed if the number of his past offenses warrants
such penalty in the judgment of management even if each offense considered separately may not
warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due
regard shall be given to the length of time between commission of individual offenses to determine
whether the employee's conduct may indicate occasional lapses (which may nevertheless require
sterner disciplinary action) or a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed
to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to present
evidence, the labor arbiter considered the case submitted for decision. On November 7, 1986, a
decision was rendered finding no bad faith on the part of PAL in adopting the Code and ruling that
no unfair labor practice had been committed. However, the arbiter held that PAL was "not totally fault
free" considering that while the issuance of rules and regulations governing the conduct of
employees is a "legitimate management prerogative" such rules and regulations must meet the test
of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all
embracing and all encompassing provision that makes punishable any offense one can think of in
the company"; while Section 7, likewise quoted above, is "objectionable for it violates the rule against
double jeopardy thereby ushering in two or more punishment for the same misdemeanor." (pp.
38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated."
Noting that PAL's assertion that it had furnished all its employees copies of the Code is unsupported
by documentary evidence, she stated that such "failure" on the part of PAL resulted in the imposition
of penalties on employees who thought all the while that the 1966 Code was still being followed.
Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses no one from
compliance . . . finds application only after it has been conclusively shown that the law was
circulated to all the parties concerned and efforts to disseminate information regarding the new law
have been exerted. (p. 39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of Discipline;
2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and

2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and
remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.
All other claims of the complainant union (is) [are] hereby, dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion,
with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no
evidence of unfair labor practice committed by PAL and affirmed the dismissal of PALEA's charge.
Nonetheless, the NLRC made the following observations:
Indeed, failure of management to discuss the provisions of a contemplated code of discipline which
shall govern the conduct of its employees would result in the erosion and deterioration of an
otherwise harmonious and smooth relationship between them as did happen in the instant case.
There is no dispute that adoption of rules of conduct or discipline is a prerogative of management
and is imperative and essential if an industry, has to survive in a competitive world. But labor climate
has progressed, too. In the Philippine scene, at no time in our contemporary history is the need for a
cooperative, supportive and smooth relationship between labor and management more keenly felt if
we are to survive economically. Management can no longer exclude labor in the deliberation and
adoption of rules and regulations that will affect them.
The complainant union in this case has the right to feel isolated in the adoption of the New Code of
Discipline. The Code of Discipline involves security of tenure and loss of employment — a property
right! It is time that management realizes that to attain effectiveness in its conduct rules, there should
be candidness and openness by Management and participation by the union, representing its
members. In fact, our Constitution has recognized the principle of "shared responsibility" between
employers and workers and has likewise recognized the right of workers to participate in "policy and
decision-making process affecting their rights . . ." The latter provision was interpreted by the
Constitutional Commissioners to mean participation in "management"' (Record of the Constitutional
Commission, Vol. II).
In a sense, participation by the union in the adoption of the code if conduct could have accelerated
and enhanced their feelings of belonging and would have resulted in cooperation rather than
resistance to the Code. In fact, labor-management cooperation is now "the thing." (pp. 3-4, NLRC
Decision ff. p. 149, Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the appealed decision in the sense that the New
Code of Discipline should be reviewed and discussed with complainant union, particularly the
disputed provisions [.] (T)hereafter, respondent is directed to furnish each employee with a copy of
the appealed Code of Discipline. The pending cases adverted to in the appealed decision if still in
the arbitral level, should be reconsidered by the respondent Philippine Air Lines. Other dispositions
of the Labor Arbiter are sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition for certiorari charging public respondents with grave abuse of
discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of
Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative with
the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to reconsider
pending cases still in the arbitral level (p. 7, Petition; p. 8,Rollo.)
As stated above, the Principal issue submitted for resolution in the instant petition is whether
management may be compelled to share with the union or its employees its prerogative of
formulating a code of discipline.
PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the
sharing of responsibility therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article
211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the
participation of workers in decision and policy-making processes affecting the rights, duties and
welfare." However, even in the absence of said clear provision of law, the exercise of management
prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it
was held that management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the
company's right to implement a new system of distributing its products, but gave the following
caveat:
So long as a company's management prerogatives are exercised in good faith for the advancement
of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective bargaining agreement, or the general
principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be duly
established that the prerogative being invoked is clearly a managerial one.
A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the company as in
the San Miguel case. The provisions of the Code clearly have repercusions on the employee's right
to security of tenure. The implementation of the provisions may result in the deprivation of an
employee's means of livelihood which, as correctly pointed out by the NLRC, is a property right
(Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects of the case
which border on infringement of constitutional rights, we must uphold the constitutional requirements
for the protection of labor and the promotion of social justice, for these factors, according to Justice
Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker" (Employees
Association of the Philippine American Life Insurance Company vs. NLRC, 199 SCRA 628 [1991]
635).
Verily, a line must be drawn between management prerogatives regarding business operations per
se and those which affect the rights of the employees. In treating the latter, management should see
to it that its employees are at least properly informed of its decisions or modes action. PAL asserts
that all its employees have been furnished copies of the Code. Public respondents found to the
contrary, which finding, to say the least is entitled to great respect.
PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27,
1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules and
regulations to carry out the functions of management without having to discuss the same with
PALEA and much less, obtain the latter'sconformity thereto" (pp. 11-12, Petitioner's Memorandum;
pp 180-181, Rollo.) Petitioner's view is based on the following provision of the agreement:
The Association recognizes the right of the Company to determine matters of management it policy
and Company operations and to direct its manpower. Management of the Company includes the
right to organize, plan, direct and control operations, to hire, assign employees to work, transfer
employees from one department, to another, to promote, demote, discipline, suspend or discharge
employees for just cause; to lay-off employees for valid and legal causes, to introduce new or
improved methods or facilities or to change existing methods or facilities and the right to make and
enforce Company rules and regulations to carry out the functions of management.
The exercise by management of its prerogative shall be done in a just reasonable, humane and/or
lawful manner.
Such provision in the collective bargaining agreement may not be interpreted as cession of
employees' rights to participate in the deliberation of matters which may affect their rights and the
formulation of policies relative thereto. And one such mater is the formulation of a code of discipline.
Indeed, industrial peace cannot be achieved if the employees are denied their just participation in
the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code (P.D.
442) was amended by Republic Act No. 6715, it was already declared a policy of the State, "(d) To
promote the enlightenment of workers concerning their rights and obligations . . . as employees."
This was, of course, amplified by Republic Act No 6715 when it decreed the "participation of workers
in decision and policy making processes affecting their rights, duties and welfare." PAL's position
that it cannot be saddled with the "obligation" of sharing management prerogatives as during the
formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's
Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet
founded in law when the Code was formulated, the attainment of a harmonious labor-management
relationship and the then already existing state policy of enlightening workers concerning their rights
as employees demand no less than the observance of transparency in managerial moves affecting
employees' rights.
Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the
nature of its business cannot be overemphasized. In fact, its being a local monopoly in the business
demands the most stringent of measures to attain safe travel for its patrons. Nonetheless, whatever
disciplinary measures are adopted cannot be properly implemented in the absence of full
cooperation of the employees. Such cooperation cannot be attained if the employees are restive on
account, of their being left out in the determination of cardinal and fundamental matters affecting
their employment.
WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special
pronouncement is made as to costs.
SO ORDERED.
Feliciano, Bidin, Romero and Vitug, JJ., concur.

SMB Sales Force Union vs. Ople (1989)
12:36 AM
G.R. No. L-53515 February 8, 1989

SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner,
vs.
HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.
Lorenzo F. Miravite for petitioner.
Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.
Siguion Reyna, Montecillo & Ongsiako for private respondent.
GRIÑO-AQUINO, J.:
This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor
Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the
"Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint
for unfair labor practice.
On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31,
1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the
private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113,
Rollo.)
In September 1979, the company introduced a marketing scheme known as the "Complementary
Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers
through San Miguel's sales offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor,
with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme
whereby the Route Salesmen were assigned specific territories within which to sell their stocks of
beer, and wholesalers had to buy beer products from them, not from the company. It was alleged
that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement
because the introduction of the CDS would reduce the take-home pay of the salesmen and their
truck helpers for the company would be unfairly competing with them.
The complaint filed by the petitioner against the respondent company raised two issues: (1) whether
the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of busting
the union.
In its order of February 28, 1980, the Minister of Labor found:
... We see nothing in the record as to suggest that the unilateral action of the employer in
inaugurating the new sales scheme was designed to discourage union organization or diminish its
influence, but rather it is undisputable that the establishment of such scheme was part of its overall
plan to improve efficiency and economy and at the same time gain profit to the highest. While it may
be admitted that the introduction of new sales plan somewhat disturbed the present set-up, the
change however was too insignificant as to convince this Office to interpret that the innovation
interferred with the worker's right to self-organization.
Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a
prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work out to
the workers' [benefit] and therefore management must adopt a new system of marketing. But what
the petitioner failed to consider is the fact that corollary to the adoption of the assailed marketing
technique is the effort of the company to compensate whatever loss the workers may suffer because
of the new plan over and above than what has been provided in the collective bargaining agreement.
To us, this is one indication that the action of the management is devoid of any anti-union hues. (pp.
24-25, Rollo.)
The dispositive part of the Minister's Order reads:
WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery
Sales Force Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an
additional three (3) months back adjustment commissions over and above the adjusted commission
under the complementary distribution system. (p. 26, Rollo.)
The petition has no merit.
Public respondent was correct in holding that the CDS is a valid exercise of management
prerogatives:
Except as limited by special laws, an employer is free to regulate, according to his own discretion

Except as limited by special laws, an employer is free to regulate, according to his own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings
Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.)
(Emphasis ours.)
Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise
means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the advancement
of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures
Workers vs. LVN, 35 SCRA 147; Phil. American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer
to compensate the members of its sales force who will be adversely affected by the implementation
of the CDS by paying them a so-called "back adjustment commission" to make up for the
commissions they might lose as a result of the CDS proves the company's good faith and lack of
intention to bust their union.
WHEREFORE, the petition for certiorari is dismissed for lack of merit.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
Pasted from <http://www.lawphil.net/judjuris/juri1989/feb1989/gr_l53515_1989.html>

GTE Directories Corp. v. GTE Directories Corp. Employees Union
(1991)
12:24 AM
GTE Directories Corp. v. GTE Directories Corp. Employees Union (1991)

Minister Sanchez decided the dispute in the exercise of the jurisdiction assumed by his predecessor in accordance with
Article 263 (g) of the Labor Code.
Even that assumption s is open to question. The production and publication of telephone directories, which is the
principal activity of GTE, can scarcely be described as an industry affecting the national interest. GTE is a publishing firm
chiefly dependent on the marketing and sale of advertising space for its not inconsiderable revenues.
Its services, while of value, cannot be deemed to be in the same category of such essential activities as "the generation
or distribution of energy" or those undertaken by "banks, hospitals, and export -oriented industries."
 It cannot be regarded as playing as vital a role in communication as other mass media. The small number of
employees involved in the dispute, the employer's payment of "P10 million in income tax alone to the Philippine
government," and the fact that the "top officers of the union were dismissed during the conciliation process," obviously
do not suffice to make the dispute in the case at bar one "adversely affecting the national interest."
G.R. No. 76219 May 27, 1991

GTE DIRECTORIES CORPORATION, petitioner,
vs.
HON. AUGUSTO S. SANCHEZ and GTE DIRECTORIES CORPORATION EMPLOYEES UNION, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Ignacio P. Lacsina for respondent Union.
NARVASA, J.:p
GTE Directories Corporation (hereafter, simply GTE) is a foreign corporation engaged in the Philippines in the
business of publishing the PLDT (Philippine Long Distance Telephone Company) telephone directories for Metro
Manila and several provinces.
The record shows that initially, the practice was for its sales representatives to be given work assignments within
specific territories by the so-called "draw method." These sales territories were so plotted or mapped out as to have
"an equal number of advertisers as well as . . . revenue. . ." Within these territories, the sales representatives
therein assigned were given quotas; i.e., they had to "achieve a certain amount of revenue or advertisements sold,
decreased, increased or cancelled within a given period of time."
A territory was not fully released to the salesperson for handling at one time, but assigned in increments or partial
releases of account. Now, increments were given by the so-called "Grid System," grids (divisions or sections)
within each territory usually numbering five (i.e., Grids I to V). Each grid was assigned a fixed closing dated. At
such closing date, a salesperson should have achieved a certain amount of the revenue target designated for his
grid; otherwise, he loses the forthcoming grid or forfeits the remaining grids not yet received. The Grid System was
installed for the following reasons: (1) to give all salespersons an opportunity to contact advertisers within a
reasonable period; (2) to assure GTE that it will get its share of advertising budget from clients as early as possible;
and (3) to ensure an even flow of work throughout the company.
This practice was observed from 1980 until sometime in June, 1984 when GTE realized that competition among
media for a share of the advertising revenue had become so keen as to require quick reaction. GTE therefore
launched an aggressive campaign to get what it considered to be its rightful share of the advertising budget of its
clientele before it could be allocated to other media (newspaper, television, radio, etc.) It adopted a new strategy by
which:
(1) all its sales representatives were required, as in the past, to achieve specified revenue targets (advertisements
sold) within pre-determined periods;
(2) in cases of cancelled revenue accounts or advertisements, it required all its salespersons to re -establish
contact and renew the same within a fixed period;
(3) if the cancelled revenue accounts were not renewed within the assigned period, said accounts were declared,
for a set period, OPEN TERRITORY to all sales representatives including the one who reported the cancellation;
(4) if not renewed during said open territory period, said cancelled accounts were deemed no longer "open
territory," and the same could be referred for handling to contractual salespersons and/or outside agencies.
A new "Sales Evaluation and Production Policy" was thereafter drawn up. GTE informed all its sales
representatives of the new policy in a Memorandum dated October 12, 1984. The new policy was regarded as an
improvement over the previous Sales Production Policy, which solely considered quota attainment and handling in
the Sales Report for the purpose of evaluating performance.
It appears that the new policy did not sit well with the union. It demanded that it be given 15 days "to raise
questions or objections to or to seek reconsideration of the sales and administrative practices issued by the
Company on June 14, 1984." This, GTE granted, and by letter dated October 26, 1984, the union submitted its
proposals for "revisions, corrections and deletions of some policies incorporated in the Sales Administrative
Practices issued on June 14, 1984 including the new policies recently promulgated by Management."
GTE next formulated a new set of "Sales Administrative Practices," pursuant to which it issued on July 9, 1985, a
memorandum requiring all Premise Sales Representatives (PSRs) to submit individual reports reflecting target
revenues as of deadlines, set at August 2, 1985. This was superseded by another memorandum dated July 16,

revenues as of deadlines, set at August 2, 1985. This was superseded by another memorandum dated July 16,
1985, revising the previous schedules on the basis of "the consensus reached after several discussions with your
DSMs, as well as, most of you," and pointing out that "the amount required on the 1st deadline (P30,000) . . . has
been reduced further (to P20,000) having taken into consideration that most of your accounts you have already on
hand are with your respective "prep artists""
On August 5, 1985, GTE's Sales Manager sent another Memorandum to "all premise sales personnel." That
memorandum observed that most of them had omitted to submit reports regarding "the target of P20,000.00
revenue handled on . . . (the) first Grid deadline of August 2, 1985" notwithstanding that "several
consultations/discussions . . . (had) been held with your DSMs, as well as yourselves in different and separate
occasions," and "these schedules/targets were drawn up by no less than you, collectively," and notwithstanding
that "this has been a practice of several years." It closed with the expressed expectation that the sales reports
would be submitted "no later than 2:00 P.M. reflecting P20,000.00 revenue handled, as per memo re: Grid
Deadlines dated July 16, 1985."
But as before, the sales representatives did not submit the reports. Instead their union , GTE Directories
Corporation Employees Union (hereafter, simply the union), sent a letter to the Sales Manager dated August 5,
1985. 1 The letter stated that in fact "only one out of nineteen sales representatives met the P20,000 revenue
handled on our first grid deadline of August 2;" that the schedule was not "drawn (up) as a result of an agreement
of all concerned" since GTE had failed to get "affirmative responses" from "clustered groups of SRs;" that the union
could not "Comprehend how cancelling non-cancelling accounts help production;" and that its members would fail
"expectations of cancelling . . . non-cancelling accounts" since it "would result to further reduction of our pay which
(they) believe is the purpose of your discriminate and whimsical memo."
The following day, on August 6, 1985, the union filed in behalf of the sales representatives, a notice of strike
grounded on alleged unfair labor practices of GTE consisting of the following:
1. Refusal to bargain on unjust sales policies particularly on the failure to meet the 75% of the average sales
production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer; and
4. Non-payment of eight days' suspension pay increase.
In due course, the Bureau of Labor Relations undertook to conciliate the dispute.
On the same day, August 6, 1985, GTE sent still another memorandum to sixteen (16) of its premise sales
representatives, this time through its Director for Marketing & Sales, requiring submission of "individual reports
reflecting target revenues as of grid deadlines . . . not later than 4:00 P.M. . . ." 2 No compliance was made. GTE
thereupon suspended its sales representatives "without pay effective August 12, 1985 for five (5) working days"
and warned them that their failure to submit the requisite reports by August 19, 1985 would merit "more drastic
disciplinary actions." Still, no sales representative complied with the requirement to submit the reports ("list of
accounts to be cancelled"). So, by memorandum of the Marketing Director dated August 19, 1985, all the sales
representatives concerned were suspended anew "effective August 20, 1985 until you submit the . . . (report)."
Finally, GTE gave its sales representatives an ultimatum. By memorandum dated August 23, 1985, individually
addressed to its sales representatives, GTE required them, for the last time, to submit the required reports ("list of
accounts to be cancelled") within twenty-four (24) hours from receipt of the memorandum; otherwise, they would be
terminated "for cause." Again not one sales representatives submitted a report. Instead, on August 29, 1985, the
Union President sent an undated letter to GTE (addressed to its Director for Marketing & Sales) acknowledging
receipt of the notice of their suspension on August 19, 1985 in view of their "continued refusal to submit the list of
accounts to be cancelled," professing surprise at being "served with a contradictory notice, giving us this time 24
hours to submit the required list, without the suspension letter, which we consider as still in force, being first
recalled or withdrawn," asking that they be informed which of the two directives should be followed, and reserving
their "right to take such action against you personally for your acts of harassment and intimidation which are clearly
designed to discourage our legitimate union activities in protesting management's continious ( sic) unfair labor
practices."
Consequently, by separate letters dated August 29, 1985 individually received, GTE terminated the employment of
the recalcitrant sales representatives, numbering fourteen, with the undertaking to give them "separation pay, upon
proper clearance and submission of company documents, material etc., in . . . (their) possession." Among those
dismissed were the union's president and third vice president, and several members of its board of directors. On
September 2, 1985, the union declared a strike in which about 60 employees participated.
During all this time, conciliation efforts were being exerted by the Bureau of Labor Relations, including attempts to
prevent the imposition of sanctions by GTE on its employees, and the strike itself. When these proved futile, Acting
Labor Minister Vicente Leogardo, Jr. issued an Order dated December 6, 1985 assuming jurisdiction over the
dispute. The order made the following disposition, to wit:
WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at G.T.E. Directories, pursuant to
Article 264 (g) of the Labor Code of the Philippines, as amended. Accordingly, all striking workers including those
who were dismissed during the conciliation proceedings, except those who have already resigned, are hereby
directed to return to work and the management of G.T.E. Directories to accept all returning employees under the
same terms and conditions prevailing previous to the strike notice and without prejudice to the determination of the
obligation and rights of the parties or to the final outcome of this dispute. The Bureau of Labor Relations is hereby
directed to hear the dispute and submit its recommendations within 15 days upon submission of the case for
resolution.
All concerned including the military and police authorities are hereby requested to assist in the implementation of
this Order."
The Acting Secretary opined that the dispute "adversely affects the national interest," because:
1) GTE, a "100% foreign owned" company, had, as publisher of "PLDT's Metro Manila and provincial

The Acting Secretary opined that the dispute "adversely affects the national interest," because:
1) GTE, a "100% foreign owned" company, had, as publisher of "PLDT's Metro Manila and provincial
directories . . . earned a total of P127,038,463 contributing close to P10 million in income tax alone to the Philippine
government," and that "major contribution to the national economy . . . (was) being threatened because of the
strike;" and
2) "top officers of the union were dismissed during the conciliation process thereby compounding the dispute,"
Reconsideration of this Order was sought by GTE by motion filed on December 16, 1985, on the ground that —
1) "the basis for assumption of jurisdiction is belied by the facts and records of the case and hence, unwarranted;"
2) "national interest is not adversely affected to warrant assumption of jurisdiction by (the) Office of the Minister of
Labor and Employment;" and
3) "assumption of jurisdiction by the . . . Minister . . . without prior consultation with the parties violates the
company's right to due process of law."
GTE however reiterated its previously declared "position that with or without the order now being questioned, it will
accept all striking employees back to work except the fourteen (14) premise sales representatives who were
dismissed for cause prior to the strike."
By Resolution of then Labor Minister Blas Ople dated January 20, 1986, GTE's motion for reconsideration was
denied. The order noted inter alia that GTE had "accepted back to work all the returning workers except fourteen
(14) whom it previously dismissed insisting that they were legally dismissed for violation of company rules and,
therefore, are not included and may not be reinstated on the basis of a return -to-work order," and that "they were
dismissed for their alleged failure to comply with the reportorial requirement under the Sales and Administrative
Practices in effect since 1981 but which for the present is the subject of negotiations between the parties." The
Order then —
1) adverted to the "general rule (that) promulgations of company policies and regulations are basic management
prerogatives although the principle of collective bargaining encompasses almost all relations between the employer
and its employees which are best threshed out through negotiations, . . . (and that) it is recognized that company
policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and valid
on the parties until finally revised or amended unilaterally or preferably through negotiations or by competent
authorities;"
2) affirmed the "recognized principle of law that company policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding (and) valid on the parties and must be complied with until finally
revised or amended unilaterally or preferably through negotiations or by competent authorities;" and
3) closed by pointing out that "as a basic principle, the matter of the acceptability of company policies and rules is a
proper subject of collective negotiations between the parties or arbitration if necessary."
In a clarificatory Order dated January 21, 1986, Minister Ople reiterated the proposition that "promulgations of
company policies and regulations are basic management prerogatives," and that "unless shown to be grossly
oppressive or contrary to law," they are "generally binding and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably, through negotiations or by competent authorities."
Adjudication of the dispute on the merits was made on March 31, 1986 by Order of Minister Ople's successor,
Augusto Sanchez. The Order —
1) pointed out "that the issue central to the labor dispute revolves around compliance with existing company
policies, rules and regulations specifically the sales evaluation and production policy which was amended by the
October 12, 1984 memorandum and the grid schedule;"
2) declared that because fourteen (14) sales representatives — who after reinstatement pursuant to the order of
January 20, 1986 had been placed "on forced leave with pay —"were actually dismissed for failure to comply with
the reporting requirements under the "Sales Administration Practices" which was ( sic) then the subject of
negotiations between the parties at the Bureau of Labor Relations," it was only fair that they 'be reinstated . . .with
back wages since they were terminated from employment based on a policy . . . still being negotiated to avoid
precisely a labor-management dispute from arising" therefrom;"
3) pronounced the union's action relative to the allegedly illegal dismissal of one Brian Pineda to be "barred by
extinctive prescription" in accordance with the CBA then in force; and
4) on the foregoing premises adjudicated the dispute as follows:
1. The union and management of G.T.E. Directories Corporation are directed to negotiate and effect a voluntary
settlement on the questioned Grid schedule, the Sales Evaluation and Production Policy;
2. Management is ordered to reinstate the fourteen (14) employees with full back wages from the time they were
dismissed up to the time that they were on forced leave with pay."
Both the Union and GTE moved for reconsideration of the Order.
The Union contended that:
1) GTE should have been adjudged guilty of unfair labor practice and other unlawful acts;
2) its strike should have been declared lawful;
3) GTE's so-called "bottom-third" policy, as well as all sales and administrative practices related thereto, should
have been held illegal; and
4) GTE should have been commanded: (a) to pay all striking employees their usual salaries, allowances,
commission and other emoluments corresponding to the period of their strike; (b) to release to its employees the 8 -
days pay increase unlawfully withheld from them; (c) to lift the suspension imposed on Brian Pineda and restore to
him the pay withheld corresponding to the suspension period; (d) to pay the sales representatives all their lost
income corresponding to the period of their suspensions, and dismissal, including commissions that they might
have earned corresponding to their one-week forced leave.
GTE for its part, argued that the termination of the employment of its fourteen (14) premise sales representatives
prior to the strike should have been upheld. It also filed an opposition to the union's motion for reconsideration.
The motions were resolved in a "Decision" handed down by Minister Sanchez on June 6, 1986. The Minister stated
that he saw no need to change his rulings as regards Pineda's suspension, the question on GTE's sales and

that he saw no need to change his rulings as regards Pineda's suspension, the question on GTE's sales and
administrative policies, and the matter of back wages. However, as regards "the other issues raised by the union,"
the Minister agreed "with the company that these were not adequately threshed out in the earlier proceedings . . .
(for) (w)hile it is true that the union had already presented evidence to support its contention, the company should
be given the opportunity to present its own evidence." Accordingly, he directed the Bureau of Labor Relations to
hear said "other issues raised by the union and to submit its findings and recommendations thereon within 20 days
from submission of the case for decision."
Again GTE moved for reconsideration; again it was rebuffed. The Labor Minister denied its motion by Order dated
October 1, 1986. In that order, the Minister, among other things—
1) invoked Section 6, Rule XIII of the Rules and Regulations Implementing the Labor Code, pertinently reading as
follows:
During the proceedings, the parties shall not do any act which may disrupt or impede the early settlement of the
dispute. They are obliged, as part of their duty to bargain collectively in good faith, to participate fully and promptly
in the conciliation proceedings called by the Bureau or the Regional Office.
and pointed out that "in dismissing 14 salesmen . . . for alleged violations of the reportorial requirements of its sales
policies which was then the subject of conciliation proceedings between them, (GTE) acted evidently in bad faith;
hence the status quo prior to their dismissal must be restored . . . (and) their reinstatement with backwages is in
order up to the time they were on forced leave. . . ;"
2) declared that because he had "ordered the parties to negotiate and effect a voluntary settlement of the
questioned Grid Schedule, the Sales Evaluation and Productions Policy, it would be unripe and premature for us to
rule on the legality or illegality on the company's sales policies at this instance;"
3) opted, however, to himself resolve "the so-called 'other issues"' which he had earlier directed the Bureau of
Labor Relations to first hear and resolve (in the Decision of June 6, 1986, supra), i.e., GTE's liability for unfair labor
practice, the legality of the strike and the strikers' right to be paid their wages while on strike, his ruling thereon
being as follows:
While the company, in merely implementing its challenged sales policies did not ipso facto commit an unfair labor
practice, it did so when it in mala fide dismissed the fourteen salesmen, all union members, while conciliation
proceedings were being conducted on disputes on its very same policies, especially at that time when a strike
notice was filed on the complaint of the union alleging that said sales policies are being used to bust the union;
thus precipitating a lawful strike on the part of the latter. A strike is legal if it was provoked by the employer's failure
to abide by the terms and conditions of its collective bargaining agreement with the union, by the discrimination
employed by it with regard to the hire and tenure of employment, and the dismissal of employees due to union
activities as well as the company's refusal to bargain collectively in good faith (Cromwell Commercial Co., Inc. vs.
Cromwell Employees and Laborers Union, 19 SCRA 398). The same rule applies if employer was guilty of bad faith
delay in reinstating them to their position (RCPI vs. Phil. Communications Electronics & Electricity Workers
Federation, 58 SCRA 762).
While as a rule strikers are not entitled to backpay for the strike period (J.P. Heilbronn Co. vs. NLU, 92 Phil. 575)
strikers may be properly awarded backwages where the strike was precipitated by union busting activities of the
employer (Davao Free Workers, Front, et al. vs, CIR, 60 SCRA 408), as in the case at bar. . . .
The Minister accordingly annulled and set aside his order for the Bureau of Labor Relations to conduct hearings on
said issues since he had already resolved them, and affirmed his Order of March 31, 1986 —"directing Union and
Management to negotiate a voluntary settlement on the company sales policies and reinstating the fourteen
employees with full backwages from the time they were dismissed up to the time they were on forced leave with
pay" — "but with the modification that management . . . (was) directed to give the striking workers strike duration
pay for the whole period of the strike less earnings."
GTE thereupon instituted the special civil action of certiorari at bar praying for invalidation, because rendered with
grave abuse of discretion, of the Labor Minister's orders—
1) commanding "reinstatement of the fourteen dismissed employees, and
2) "finding . . . (it) guilty of unfair labor practice and directing (it) to pay strike duration pay to striking workers."
It seems to the Court that upon the undisputed facts on record, GTE had cause to dismiss the fourteen (14)
premise sales representatives who had repeatedly and deliberately, not to say defiantly, refused to comply with its
directive for submission of individual reports on specified matters. The record shows that GTE addressed no less
than (six) written official communications to said premise sales representatives embodying this requirement, to wit:
1) Memorandum of July 9, 1985 pursuant to GTE's "Sales Administrative Practices" — superseded by a
memorandum dated July 16, 198 — requiring submission of individual reports by August 2, 1985;
2) Memorandum of August 5, 1985, requiring submission of the reports by 2:00 P.M.;
3) Memorandum of August 6, 1985, for submission of requisite reports not later than 4:00 P.M. of that day, with a
warning of "appropriate disciplinary action;"
4) Letter of August 9, 1985 imposing suspension without pay for five (5) working days and extending the period for
submission of reports to August 19, 1985;
5) Letter of August 19, 1985 suspending the sales representatives until their submission of the required reports;
6) Letter dated August 28, 1985 giving the sales representatives "a last chance to comply with . . . (the) directive
within 24 hours from receipt . . .;" with warning that failure to comply would result in termination of employment.
The only response of the sales representatives to these formal directives were:
1) a letter by their Union to GTE's Sales Manager dated August 5, 1985 in which the requirement was criticized as
not being the "result of an agreement of all concerned," and as incomprehensible, "discriminate and whimsical;"
2) a strike notice filed with the Ministry of Labor on August 6, 1985; and
3) an undated letter sent to GTE's Director for Marketing & Sales on August 29, 1985, drawing attention to what it
deemed contradictory directives, and reserving the right to take action against the manager for "acts of harassment
and intimidation . . . clearly designed to discourage our legitimate union activities in protesting management's

and intimidation . . . clearly designed to discourage our legitimate union activities in protesting management's
continuous unfair labor practices."
The basic question then is whether or not the effectivity of an employer's regulations and policies is dependent
upon the acceptance and consent of the employees thereby sought to be bound; or otherwise stated, whether or
not the union's objections to, or request for reconsideration of those regulations or policies automatically suspend
enforcement thereof and excuse the employees' refusal to comply with the same.
This Court has already had occasion to rule upon a similar issue. The issue was raised in a 1989 case, G.R. No.
53515, San Miguel Brewery Sales Force Union (PTGWO) v. Ople. 3 In that case, the facts were briefly as follows:
In September 1979, the company introduced a marketing scheme known as the "Complementary distribution
system" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales
offices.
The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of
strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen
were assigned specific territories within which to sell their stocks of beer, and wholesalers had to buy beer products
from them, not from the company. It was alleged that the new marketing scheme violates . . . (a provision) of the
collective bargaining agreement because the introduction of the CDS would reduce the take -home pay of the
salesmen and their truck helpers for the company would be unfairly competing with them."
The Labor Minister found nothing to suggest that the employer's unilateral action of inaugurating a new sales
scheme "was designed to discourage union organization or diminish its influence;" that on the contrary, it was "part
of its overall plan to improve efficiency and economy and at the same time gain profit to the highest;" that the
union's "conjecture that the new plan will sow dissatisfaction from its rank is already a prejudgment of the plan's
viability and effectiveness, . . . like saying that the plan will not work out to the workers' (benefit) and therefore
management must adopt a new system of marketing." The Minister accordingly dismissed the strike notice,
although he ordered a slight revision of the CDS which the employer evidently found acceptable.
This Court approved of the Minister's findings, and declared correct his holding that the CDS was "a valid exercise
of management prerogatives," 4 viz.:
Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and manner of work,
tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers and the discipline, dismissal and recall of work. . . . (NLU vs. Insular La Yebana
Co., 2 SCRA 924; Republic Savings Bank vs. CIR, 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations
Law, 1985 ed., p. 44.) (Emphasis ours.)
The Court then closed its decision with the following pronouncements: 5
Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed
towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:
. . . Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the advancement of the
employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special
laws or under valid agreements, this Court will uphold them (LVN, Pictures Workers vs. LVN, 35 SCRA 147; Phil.
American Embroideries vs. Embroidery and Garments Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18
SCRA 110). . . .
In the case at bar, it must thus be conceded that its adoption of a new "Sales Evaluation and Production Policy"
was within its management prerogative to regulate, according to its own discretion and judgment, all aspects of
employment, including the manner, procedure and processes by which particular work activities should be done.
There were, to be sure, objections presented by the union, i.e., that the schedule had not been "drawn (up) as a
result of an agreement of all concerned," that the new policy was incomprehensible, discriminatory and whimsical,
and "would result to further reduction" of the sales representatives' compensation. There was, too, the union's
accusation that GTE had committed unfair labor practices, such as—
1. Refusal to bargain on unjust sales policies particularly on the failure to meet the 75% of the average sales
production for two consecutive years;
2. Open territory of accounts;
3. Illegal suspension of Brian Pineda, a union officer; and
4. Non-payment of eight days' suspension pay increase.
This Court fails to see, however, how these objections and accusations justify the deliberate and obdurate refusal
of the sales representatives to obey the management's simple requirement for submission by all Premise Sales
Representatives (PSRs) of individual reports or memoranda requiring reflecting target revenues —which is all that
GTE basically required — and which it addressed to the employees concerned no less than six (6) times. The
Court fails to see how the existence of objections made by the union justify the studied disregard, or wilful
disobedience by the sales representatives of direct orders of their superior officers to submit reports. Surely,
compliance with their superiors' directives could not have foreclosed their demands for the revocation or revision of
the new sales policies or rules; there was nothing to prevent them from submitting the requisite reports with the
reservation to seek such revocation or revision.
To sanction disregard or disobedience by employees of a rule or order laid down by management, on the pleaded
theory that the rule or order is unreasonable, illegal, or otherwise irregular for one reason or another, would be
disastrous to the discipline and order that it is in the interest of both the employer and his employees to preserve
and maintain in the working establishment and without which no meaningful operation and progress is possible.
Deliberate disregard or disobedience of rules, defiance of management authority cannot be countenanced. This is
not to say that the employees have no remedy against rules or orders they regard as unjust or illegal. They may

not to say that the employees have no remedy against rules or orders they regard as unjust or illegal. They may
object thereto, ask to negotiate thereon, bring proceedings for redress against the employer before the Ministry of
Labor. But until and Unless the rules or orders are declared to be illegal or improper by competent authority, the
employees ignore or disobey them at their peril. It is impermissible to reverse the process: suspend enforcement of
the orders or rules until their legality or propriety shall have been subject of negotiation, conciliation, or arbitration.
These propositions were in fact adverted to in relation to the dispute in question by then Minister Blas Ople in his
Order dated January 21, 1986, to the effect among others, that "promulgations of company policies and regulations
are basic management prerogatives" and that it is a "recognized principle of law that company policies and
regulations are, unless shown to be grossly oppressive or contrary to law, generally binding (and) valid on the
parties and must be complied with until finally revised or amended unilaterally or preferably through negotiations or
by competent authorities."
Minister Sanchez however found GTE to have "acted evidently in bad faith" in firing its 14 salespersons "for alleged
violations of the reportorial requirements of its sales policies which was then the subject of conciliation proceedings
between them;" 6 and that "(w)hile the company, in merely implementing its challenged sales policies did not ipso
facto commit an unfair labor practice, it did so when it in mala fide dismissed the fourteen salesmen, all union
members, while conciliation proceedings were being conducted on disputes on its very same policies, especially at
that time when a strike notice was filed on the complaint of the union alleging that said sales policies are being
used to bust the union; thus precipitating a lawful strike on the part of the latter." No other facts appear on record
relevant to the issue of GTE's dismissal of the 14 sales representatives. There is no proof on record to demonstrate
any underhanded motive on the part of GTE in formulating and imposing the sales policies in question, or requiring
the submission of reports in line therewith. What, in fine, appears to be the Minister's thesis is that an employer has
the prerogative to lay down basic policies and rules applicable to its employees, but may not exact compliance
therewith, much less impose sanctions on employees shown to have violated them, the moment the propriety or
feasibility of those policies and rules, or their motivation, is challenged by the employees and the latter file a strike
notice with the Labor Department — which is the situation in the case at bar.
When the strike notice was filed by the union, the chain of events which culminated in the termination of the 14
sales persons' employment was already taking place, the series of defiant refusals by said sales representatives to
comply with GTE's requirement to submit individual reports was already in progress. At that time, no less than
three (3) of the ultimate six (6) direct orders of the employer for the submission of the reports had already been
disobeyed. The filing of the strike notice, and the commencement of conciliation activities by the Bureau of Labor
Relations did not operate to make GTE's orders illegal or unenforceable so as to excuse continued non -compliance
therewith. It does not follow that just because the employees or their union are unable to realize or appreciate the
desirability of their employers' policies or rules, the latter were laid down to oppress the former and subvert
legitimate union activities. Indeed, the overt, direct, deliberate and continued defiance and disregard by the
employees of the authority of their employer left the latter with no alternative except to impose sanctions. The
sanction of suspension having proved futile, termination of employment was the only option left to the employer.
To repeat, it would be dangerous doctrine indeed to allow employees to refuse to comply with rules and
regulations, policies and procedures laid down by their employer by the simple expedient of formally challenging
their reasonableness or the motives which inspired them, or filing a strike notice with the Department of Labor and
Employment, or, what amounts to the same thing, to give the employees the power to suspend compliance with
company rules or policies by requesting that they be first subject of collective bargaining, It would be well nigh
impossible under these circumstances for any employer to maintain discipline in its establishment. This is, of
course, intolerable. For common sense teaches, as Mr. Justice Gregorio Perfecto once had occasion to
stress 7that:
Success of industries and public services is the foundation upon which just wages may be paid. There cannot be
success without efficiency. There cannot be efficiency without discipline. Consequently, when employees and
laborers violate the rules of discipline they jeopardize not only the interest of the employer but also their own. In
violating the rules of discipline they aim at killing the hen that lays the golden eggs. Laborers who trample down the
rules set for an efficient service are, in effect, parties to a conspiracy, not only against capital but also against labor.
The high interest of society and of the individuals demand that we should require everybody to do his duty. That
demand is addressed not only to employer but also to employees.
Minister Sanchez decided the dispute in the exercise of the jurisdiction assumed by his predecessor in accordance
with Article 263 (g) of the Labor Code, 8 providing in part as follows:
(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely affecting
the national interest, such as may occur in but not limited to public utilities, companies engaged in the generation
or distribution of energy, banks, hospitals, and export-oriented industries, including those within export processing
zones, the Minister of Labor and Employment shall assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. . . .
Even that assumption of jurisdiction is open to question.
The production and publication of telephone directories, which is the principal activity of GTE, can scarcely be
described as an industry affecting the national interest. GTE is a publishing firm chiefly dependent on the marketing
and sale of advertising space for its not inconsiderable revenues. Its services, while of value, cannot be deemed to
be in the same category of such essential activities as "the generation or distribution of energy" or those
undertaken by "banks, hospitals, and export-oriented industries." It cannot be regarded as playing as vital a role in
communication as other mass media. The small number of employees involved in the dispute, the employer's
payment of "P10 million in income tax alone to the Philippine government," and the fact that the "top officers of the
union were dismissed during the conciliation process," obviously do not suffice to make the dispute in the case at
bar one "adversely affecting the national interest."
WHEREFORE, the petition is GRANTED, and as prayed for, the Order dated October 1, 1986 of the public
respondent is NULLIFIED and SET ASIDE.

respondent is NULLIFIED and SET ASIDE.
SO ORDERED.
Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Cruz, J., took no part.
Footnotes
1 The original was attached as Annex B of the Compliance dated Sept. 10, 1990 submitted by GTE through
counsel (rollo, pp. 270, 273).
2 Copies were attached as Annexes C, C-1 to C-15 of the Compliance dated Sept. 10, 1990, supra(rollo, pp.
276-291).
3 170 SCRA 25-28.
4 At pp. 27-28.
5 At p. 28.
6 SEE page 7, supra.
7 Batangas Transportation Co. v. Bagong Pagkakaisa of the Employees and Laborers of the Batangas Trans. Co.,
7 Phil. 108, 112 (1949).
8 Order dated Dec. 6, 1985 by Acting Labor Minister Vicente Leogardo, Jr.: SEE p. 4, supra.
Pasted from <http://www.lawphil.net/judjuris/juri1991/may1991/gr_76219_1991.html>

MERALCO v. QUISUMBING
12:17 AM
Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 127598 January 27, 1999

MANILA ELECTRIC COMPANY, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR LEONARDO QUISUMBING AND
MERALCO EMPLOYEES AND WORKERS ASSOCIATION (MEWA), respondents.
MARTINEZ, J.:
In this petition for certiorari, the Manila Electric Company (MERALCO) seeks to annul
the orders of the Secretary of Labor dated August 19, 1996 and December 28, 1996,
wherein the Secretary required MERALCO and its rank and file union — the Meralco
Workers Association (MEWA) — to execute a collective bargaining agreement (CBA) for
the remainder of the parties' 1992-1997 CBA cycle, and to incorporate in this new CBA
the Secretary's dispositions on the disputed economic and non -economic issues.
MEWA is the duly recognized labor organization of the rank-and-file employees of
MERALCO.
On September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the
terms and conditions of their existing 1992-1997 Collective Bargaining Agreement
(CBA) covering the remaining period of two years starting from December 1, 1995 to
November 30, 1997. 1 MERALCO signified its willingness to re-negotiate through its
letter dated October 17, 1995 2 and formed a CBA negotiating panel for the purpose. On
November 10, 1995, MEWA submitted its proposal 3 to MERALCO, which, in turn,
presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded.
However, despite the series of meetings between the negotiating panels of MERALCO
and MEWA, the parties failed to arrive at "terms and conditions acceptable to both of
them."
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region
Branch of the National Conciliation and Mediation Board (NCMB) of the Department of
Labor and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on
the grounds of bargaining deadlock and unfair labor practices. The NCMB then
conducted a series of conciliation meetings but the parties failed to reach an amicable
settlement. Faced with the imminence of a strike, MERALCO on May 2, 1996, filed an
Urgent Petition 4 with the Department of Labor and Employment which was docketed as
OS-AJ No. 0503[1]96 praying that the Secretary assume jurisdiction over the labor
dispute and to enjoin the striking employees to go back to work.
The Labor Secretary granted the petition through its Order 5 of May 8, 1996, the
dispositive portion of which reads:
WHEREFORE, premises considered, this Office now assumes jurisdiction over the labor
dispute obtaining between the parties pursuant to Article 263(g) of the Labor Code.
Accordingly, the parties are here enjoined from committing any act that may exacerbate
the situation. To speed up the resolution of the dispute, the parties are also directed to
submit their respective Position Papers within ten (10) days from receipt.
Undersecretary Jose M. Espanol, Jr. is deputized to conduct conciliation conferences
between the parties to bridge their differences and eventually hammer out a solution
that is mutually acceptable. He shall be assisted by the Legal Service.
SO ORDERED.
Thereafter, the parties submitted their respective memoranda and on August 19, 1996,
the Secretary resolved the labor dispute through an Order, 6 containing the following
awards:
ECONOMIC DEMANDS
Wage increase — P2,300.00 for the first year covering the period from December 1,

Wage increase — P2,300.00 for the first year covering the period from December 1,
1995 to November 30, 1996
— P2,200.00 for the second year covering the period December 1, 1996 to November
30, 1997.
Red Circle Rate (RCR) Allowance — all RCR allowances (promotional increases that go
beyond the maximum range of a job classification salary) shall be integrated into the
basic salary of employees effective December 1, 1995.
Longevity Allowance — the integration of the longevity allowance into the basic wage is
denied; the present policy is maintained.
Longevity Increase — the present longevity bonus is maintained but the bonus shall be
incorporated into the new CBA.
Sick Leave — MEWA's demand for upgrading is denied; the company's present policy is
maintained. However, those who have not used the sick leave benefit during a particular
year shall be entitled to a one-day sick leave incentive.
Sick leave reserve — the present reserve of 25 days shall be reduced to 15 days; the
employee has the option either to convert the excess of 10 days to cash or let it remain
as long as he wants. In case he opts to let it remain, he may later on convert it into cash
at his retirement or separation.
Vacation Leave — MEWA's demand for upgrading denied & the company's present
policy is maintained which must be incorporated into the new CBA but scheduled
vacation leave may be rounded off to one full day at a time in case of a benefit involving
a fraction of a day;
Union Leave — of MEWA's officers, directors or stewards assigned to perform union
duties or legitimate union activity is increased from 30 to 40 Mondays per month.
Maternity, Paternity and Funeral leaves — the existing policy is to be maintained and
must be incorporated in the new CBA unless a new law granting paternity leave benefit
is enacted which is superior to what the company has already granted.
Birthday Leave — union's demand is granted. If birthday falls on the employee's rest
day or on a non-working holiday, the worker shall be entitled to go on leave with pay on
the next working day.
Group Hospitalization & Surgical Insurance Plan (GHSIP) and Health Maintenance Plan
(HMP) — present policy is maintained insofar as the cost sharing is concerned — 70%
for the Company and 30% for MEWA.
Health Maintenance Plan (HMP) for dependents — subsidized dependents increased
from three to five dependents.
Longevity Bonus — is increased from P140.00 to P200.00 for even year of service to be
received by the employee after serving the Company for 5 years.
Christmas Bonus and Special Christmas Grant — MEWA's demand of one month salary
as Christmas Bonus two month's salary as Special Christmas Grant is granted and to be
incorporated in the new CBA.
Midyear Bonus — one month's pay to be included in the CBA.
Anniversary Bonus — union's demand is denied.
Christmas Gift Certificate — company has the discretion as to whether it will give it to its
employees.
Retirement Benefits:
a. Full retirement-present policy is maintained;
b. one cavan of rice per month is granted to retirees;
c. special retirement leave and allowance-present policy is maintained;
d. HMP coverage for retirees — HMP coverage is granted to retirees who have not
reached the age of 70, with MERALCO subsidizing 100% of the monthly premium; those
over 70 are entitled to not more than 30 days of hospitalization at the J.F. Cotton
Hospital with the company shouldering the entire cost.
e. HMP coverage for retiree's dependents is denied.
f. Monthly pension of P3,000.00 for each retiree is denied.
g. Death benefit for retiree's beneficiaries is denied.
Optional retirement — union's demand is denied; present policy is maintained;
employee is eligible for optional retirement if he has rendered at least 18 years of
service.
Dental, Medical and Hospitalization Benefits — grant of all the allowable medical,
surgical, dental and annual physical examination benefits, including free medicine
whenever the same is not available at the JFCH.
Resignation benefits — union's demand is denied.

whenever the same is not available at the JFCH.
Resignation benefits — union's demand is denied.
Night work — union demand is denied but present policy must be incorporated in CBA.
Shortswing — work in another shift within the same day shall be considered as the
employee's work for the following day and the employee shall be given additional four
(4) hours straight time and the applicable excess time premium if he works beyond 8
hours in the other shift.
High Voltage allowance — is increased from P45.00 to P55.00 to be given to any
employee authorized by the Safety Division to perform work on or near energized bare
lines & bus including stockman drivers & crane operators and other crew members on
ground.
High Pole Allowance — is increased from P30.00 to P40.00 to be given to those
authorized to climb poles up to at least 60 ft. from the ground. Members of the team
including stockman drivers, crane operators and other crew members on the ground,
are entitled to this benefit.
Towing Allowance — where stockmen drive tow trailers with long poles and equipment
on board, they shall be entitled to a towing allowance of P20.00 whether they perform
the job on regular shift or on overtime.
Employee's Cooperative — a loan of P3 M seed money is granted to the proposed
establishment of a cooperative, payable in twenty (20) years starting one year from the
start of operations.
Holdup Allowance — the union demand is denied; the present policy shall be
maintained.
Meal and Lodging Allowance — shall be increased effective December 1, 1995 as
follows:
Breakfast — from P25.00 to P35.00
Lunch — from P35.00 to P45.00
Dinner — from P35.00 to P45.00
Lodging — from P135.00 to P180.00 a night in all MERALCO franchise areas.
Payroll Treatment for Accident while on Duty — an employee shall be paid his salary
and allowance if any is due plus average excess time for the past 12 months from the
time of the accident up to the time of full recovery and placing of the employee back to
normal duty or an allowance of P2,000.00, whichever is higher.
Housing and Equity Assistance Loan — is increased to P60,000.00; those who have
already availed of the privilege shall be allowed to get the difference.
Benefits for Collectors:
a. Company shall reduce proportionately the quota and monthly average product level
(MAPL) in terms of equivalent bill assignment when an employee is on sick leave and
paid vacation leave.
b. When required to work on Saturdays, Sundays and holidays, an employee shall
receive P60.00 lunch allowance and applicable transportation allowance as determined
by the Company and shall also receive an additional compensation to one day fixed
portion in addition to lunch and transportation allowance.
c. The collector shall be entitled to an incentive pay of P25.00 for every delinquent
account disconnected.
d. When a collector voluntarily performs other work on regular shift or overtime, he shall
be entitled to remuneration based on his computed hourly compensation and the
reimbursement of actually incurred transportation expenses.
e. Collectors shall be provided with bobcat belt bags every year.
f. Collector's cash bond shall be deposited under his capital contribution to MESALA.
g. Collectors quota and MAPL shall be proportionately reduced during typhoons, floods,
earthquakes and other similar force majeure events when it is impossible for a collector
to perform collection work.
Political Demands:
a. Scope of the collective bargaining unit — the collective bargaining unit shall be
composed of all regular rank-and-file employees hired by the company in all its offices
and operative centers throughout its franchise area and those it may employ by reason
of expansion, reorganization or as a result of operational exigencies.
b. Union recognition and security —
i. The union shall be recognized by the Company as sole and exclusive bargaining
representative of the rank-and-file employees included in the bargaining unit. The
Company shall agree to meet only with Union officers and its authorized representatives
on all matters involving the Union and all issues arising from the implementation and

on all matters involving the Union and all issues arising from the implementation and
interpretation of the new CBA.
ii. The union shall meet with the newly regularized employees for a period not to exceed
four (4) hours, on company time, to acquaint the new regular employees of the rights,
duties and benefits of Union membership.
iii. The right of all rank-and-file employees to join the union shall be recognized in
accordance with the maintenance of membership principle as a form of union security.
c. Transfer of assignment and job security —
i. No transfer of an employee from one position to another shall be made if motivated by
considerations of sex, race, creed, political and religious belief, seniority or union
activity.
ii. If the transfer is due to the reorganization or decentralization, the distance from the
employee's residence shall be considered unless the transfer is accepted by the
employee. If the transfer is extremely necessary, the transfer shall be made within the
offices in the same district.
iii. Personnel hired through agencies or contractors to perform the work done by
covered employees shall not exceed one month. If extension is necessary the union
shall be informed. But the Company shall not permanently contract out regular or
permanent positions that are necessary in the normal operation of the Company.
d. Check off Union Dues — where the union increases its dues as approved by the
Board of Directors, the Company shall check off such increase from the salaries of
union members after the union submits check off authorizations signed by the majority
of the members. The Company shall honor only those individual authorizations signed
by the majority of the union members and collectively submitted by the union to the
Company's Salary Administration.
e. Payroll Reinstatement — shall be in accordance with Article 223, p. 3 of the Labor
Code.
f. Union Representation in Committees — the union is allowed to participate in policy
formulation and in the decision-making process on matters affecting their rights and
welfare, particularly in the Uniform Committee, the Safety Committee and other
committees that may be formed in the future.
Signing Bonus — P4,000.00 per member of the bargaining unit for the conclusion of the
CBA.
Existing benefits already granted by the Company but which are not expressly or
impliedly repealed in the new agreement shall remain subsisting and shall be included in
the new agreement to be signed by the parties effective December 1, 1995.
On August 30, 1996, MERALCO filed a motion for reconsideration 7 alleging that the
Secretary of Labor committed grave abuse of discretion amounting to lack or excess of
jurisdiction:
1. in awarding to MEWA a package that would cost at least P1.142 billion, a package
that is grossly excessive and exorbitant, would not be affordable to MERALCO and
would imperil its viability as a public utility affected with national interest.
2. in ordering the grant of a P4,500.00 wage increase, as well as a new and improved
fringe benefits, under the remaining two (2) years of the CBA for the -rank-and-file
employees.
3. in ordering the "incorporation into the CBA of all existing employee benefits, on the
one hand, and those that MERALCO has unilaterally granted to its employees by virtue
of voluntary company policy or practice, on the other hand."
4. in granting certain "political demands" presented by the union.
5. in ordering the CBA to be "effective December 1995" instead of August 19, 1996
when he resolved the dispute.
MERALCO filed a supplement to the motion for reconsideration on September 18, 1995,
alleging that the Secretary of Labor did not properly appreciate the effect of the awarded
wages and benefits on MERALCO's financial viability.
MEWA likewise filed a motion asking the Secretary of Labor to reconsider its Order on
the wage increase, leaves, decentralized filing of paternity and maternity leaves,
bonuses, retirement benefits, optional retirement, medical, dental and hospitalization
benefits, short swing and payroll treatment. On its political demands, MEWA asked the
Secretary to rule on its proposal to institute a Code of Discipline for its members and the
union's representation in the administration of the Pension Fund.
On December 28, 1996, the Secretary issued an Order 8 resolving the parties' separate
motions, the modifications of the August 19, 1996 Order being highlighted hereunder:

motions, the modifications of the August 19, 1996 Order being highlighted hereunder:
1) Effectivity of Agreement — December 1, 1995 to November 30, 1997.
Economic Demands
2) Wage Increase:
First year — P2,200.00 per month;
Second year — P2,200.00 per month.
3) Integration of Red Circle Rate (RCR) and Longevity Allowance into Basic Salary —
the RCR allowance shall be integrated into the basic salary of employees as of August
19, 1996 (the date of the disputed Order).
4) Longevity Bonus — P170 per year of service starting from 10 years of continuous
service.
5) Vacation Leave — The status quo shall be maintained as to the number of vacation
leave but employees' scheduled vacation may be taken one day at a time in the manner
that this has been provided in the supervisory CBA.
6) Sick Leave Reserve — is reduced to 15 days, with any excess payable at the end of
the year. The employee has the option to avail of this cash conversion or to accumulate
his sick leave credits up to 25 days for conversion to cash at retirement or separation
from the service.
7) Birthday Leave — the grant of a day off when an employee's birthday falls on a non -
working day is deleted.
8) Retirement Benefits for Retirees — The benefits granted shall be effective on August
19, 1996, the date of the disputed order up to November 30, 1997, which is the date the
CBA expires and shall apply to those who are members of the bargaining unit at the
time the award is made.
One sack of rice per quarter of the year shall be given to those retiring between August
19, 1996 and November 30, 1997.
On HMP Coverage for Retirees — The parties "maintain the status quo, that is, with the
Company complying with the present arrangement and the obligations to retirees as is."
9) Medical, Dental and Hospitalization Benefits — The cost of medicine unavailable at
the J.F. Cotton Hospital shall be in accordance with MERALCO's Memorandum dated
September 14, 1976.
10) GHSIP and HMP for Dependents — The number of dependents to be subsidized
shall be reduced from 5 to 4 provided that their premiums are proportionately increased.
11) Employees' Cooperative — The original award of P3 million pesos as seed money
for the proposed Cooperative is reduced to P1.5 million pesos.
12) Shortswing — the original award is deleted.
13) Payroll Treatment for Accident on Duty — Company ordered to continue its present
practice on payroll treatment for accident on duty without need to pay the excess time
the Union demanded.
Political Demands:
14) Scope of the collective bargaining unit — The bargaining unit shall be composed of
all rank and file employees hired by the Company in accordance with the original Order.
15) Union recognition and security — The incorporation of a closed shop form of union
security in the CBA; the Company is prohibited from entertaining individuals or groups of
individuals only on matters that are exclusively within the domain of the union; the
Company shall furnish the Union with a complete list of newly regularized employees
within a week from regularization so that the Union can meet these employees on the
Union's and the employee's own time.
16) Transfer of assignment and job security — Transfer is a prerogative of the Company
but the transfer must be for a valid business reason, made in good faith and must be
reasonably exercised. The CBA shall provide that "No transfer of an employee from one
position to another, without the employee's written consent, shall be made if motivated
by considerations of sea, race, creed, political and religious belief, age or union activity.
17) Contracting Out — The Company has the prerogative to contract out services
provided that this move is based on valid business reasons in accordance with law, is
made in good faith, is reasonably exercised and, provided further that if the contracting
out involves more than six months, the Union must be consulted before its
implementation.
18) Check off of union dues
In any increase of union dues or contributions for mandatory activities, the union must
submit to the Company a copy of its board resolution increasing the union dues or
authorizing such contributions;

authorizing such contributions;
If a board resolution is submitted, the Company shall deduct union dues from all union
members after a majority of the union members have submitted their individual written
authorizations. Only those check-off authorization submitted by the union shall be
honored by the Company.
With respect to special assessments, attorney's fees, negotiation fees or any other
extraordinary fees individual authorization shall be necessary before the company may
so deduct the same.
19) Union Representation in Committees — The union is granted representation in the
Safety Committee, the Uniform Committee and other committees of a similar nature and
purpose involving personnel welfare, rights and benefits as well as duties.
Dissatisfied, petitioner filed this petition contending that the Secretary of Labor gravely
abused his discretion:
1) . . . in awarding wage increases of P2,200.00 for 1996 and P2,200 for 1997.
2) . . . in awarding the following economic benefits:
a. Two months Christmas bonus;
b. Rice Subsidy and retirement benefits for retirees;
c. Loan for the employees' cooperative;
d. Social benefits such as GHSIP and HMP for dependents, employees' cooperative
and housing equity assistance loan;
e. Signing bonus;
f. Integration of the Red Circle Rate Allowance.
g. Sick leave reserve of 15 days
h. The 40-day union leave;
i. High pole/high voltage and towing allowance; and
j. Benefits for collectors
3) . . . in expanding the scope of the bargaining unit to all regular rank and file
employees hired by the company in all its offices and operating centers and those it may
employ by reason of expansion, reorganization or as a result of operational exigencies;
4) . . . in ordering for a closed shop when his original order for a maintenance of
membership arrangement was not questioned by the parties;
5) . . . in ordering that Meralco should consult the union before any contracting out for
more than six months;
6) . . . in decreeing that the union be allowed to have representation in policy and
decision making into matters affecting "personnel welfare, rights and benefits as well as
duties;"
7) . . . in ruling for the inclusion of all terms and conditions of employment in the
collective bargaining agreement;
8) . . . in exercising discretion in determining the retroactivity of the CBA;
Both MEWA and the Solicitor General, on behalf of the Secretary of Labor, filed their
comments to the petition. While the case was also set for oral argument on Feb. 10,
1997, this hearing was cancelled due to MERALCO not having received the comment of
the opposing parties. The parties were instead required to submit written memoranda,
which they did. Subsequently, both petitioner and private respondent MEWA also filed
replies to the opposing parties' Memoranda, all of which We took into account in the
resolution of this case.
The union disputes the allegation of MERALCO that the Secretary abused his discretion
in issuing the assailed orders arguing that he acted within the scope of the powers
granted him by law and by the Constitution. The union contends that any judicial review
is limited to an examination of the Secretary's decision-making/discretion — exercising
process to determine if this process was attended by some capricious or whimsical act
that constitutes "grave abuse"; in the absence of such abuse, his findings — considering
that he has both jurisdiction and expertise to make them — are valid.
The union's position is anchored on two premises:
First, no reviewable abuse of discretion could have attended the Secretary's arbitral
award because the Secretary complied with constitutional norms in rendering the
disputed award. The union posits that the yardstick for comparison and for the
determination of the validity of the Secretary's actions should be the specific standards
laid down by the Constitution itself. To the union, these standards include the State
policy on the promotion of workers' welfare, 9 the principle of distributive justice, 10 the
right of the State to regulate the use of property, 11the obligation of the State to protect
workers, both organized and unorganized, and insure their enjoyment of "humane

workers, both organized and unorganized, and insure their enjoyment of "humane
conditions of work" and a "living wage," and the right of labor to a just share in the fruits
of production. 12
Second, no reversible abuse of discretion attended the Secretary's decision because
the Secretary took all the relevant evidence into account, judiciously weighed them, and
rendered a decision based on the facts and law. Also, the arbitral award should not be
reversed given the Secretary's expertise in his field and the general rule that findings of
fact based on such expertise is generally binding on this Court.
To put matters in proper perspective, we go back to basic principles. The Secretary of
Labor's statutory power under Art. 263 (g) of the Labor Code to assume jurisdiction over
a labor dispute in an industry indispensable to the national interest, and, to render an
award on compulsory arbitration, does not exempt the exercise of this power from the
judicial review that Sec. 1, Art. 8 of the Constitution mandates. This constitutional
provision states:
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the government .
Under this constitutional mandate, every legal power of the Secretary of Labor under the
Labor Code, or, for that matter, any act of the Executive, that is attended by grave
abuse of discretion is subject to review by this Court in an appropriate proceeding. To
be sure, the existence of an executive power alone — whether granted by statute or by
the Constitution — cannot exempt the executive action from judicial oversight,
interference or reversal when grave abuse of discretion is, or is alleged to be, present.
This is particularly true when constitutional norms are cited as the applicable yardsticks
since this Court is the final interpreter of the meaning and intent of the Constitution. 13
The extent of judicial review over the Secretary of Labor's arbitral award is not limited to
a determination of grave abuse in the manner of the secretary's exercise of his statutory
powers. This Court is entitled to, and must — in the exercise of its judicial power —
review the substance of the Secretary's award when grave abuse of discretion is alleged
to exist in the award, i.e., in the appreciation of and the conclusions the Secretary drew
from the evidence presented.
The natural and ever present limitation on the Secretary's acts is, of course, the
Constitution. And we recognize that indeed the constitutional provisions the union cited
are State policies on labor and social justice that can serve as standards in assessing
the validity of a Secretary of Labor's actions. However, we note that these provisions do
not provide clear, precise and objective standards of conduct that lend themselves to
easy application. We likewise recognize that the Constitution is not a lopsided document
that only recognizes the interests of the working man; it too protects the interests of the
property owner and employer as well. 14
For these reasons — and more importantly because a ruling on the breadth and scope
of the suggested constitutional yardsticks is not absolutely necessary in the disposition
of this case — we shall not use these yardsticks in accordance with the time-honored
practice of avoiding constitutional interpretations when a decision can be reached using
non-constitutional standards. We have repeatedly held that one of the essential
requisites for a successful judicial inquiry into constitutional questions is that the
resolution of the constitutional question must be necessary in deciding the case. 15
In this case we believe that the more appropriate and available standard — and one
does not require a constitutional interpretation — is simply the standard of
reasonableness. In layman's terms, reasonableness implies the absence of
arbitrariness; 16 in legal parlance, this translates into the exercise of proper discretion
and to the observance of due process. Thus, the question we have to answer in
deciding this case is whether the Secretary's actions have been reasonable in light of
the parties positions and the evidence they presented.
MEWA's second premise — i.e., that the Secretary duly considered the evidence
presented — is the main issue that we shall discuss at length below. Additionally,
MEWA implied that we should take great care before reading an abuse of discretion on
the part of the Secretary because of his expertise on labor issues and because his
findings of fact deserve the highest respect from this Court.
This Court has recognized the Secretary of Labor's distinct expertise in the study and
settlement of labor disputes falling under his power of compulsory arbitration. 17 It is also
well-settled that factual findings of labor administrative officials, if supported by

well-settled that factual findings of labor administrative officials, if supported by
substantial evidence, are entitled not only to great respect but even to finality. 18 We,
therefore, have no difficulty in accepting the union's caveat on how to handle a
Secretary of Labor's arbitral award.
But at the same time, we also recognize the possibility that abuse of discretion may
attend the exercise of the Secretary's arbitral functions; his findings in an arbitration
case are usually based on position papers and their supporting documents (as they are
in the present case), and not on the thorough examination of the parties' contending
claims that may be present in a court trial and in the face-to-face adversarial process
that better insures the proper presentation and appreciation of evidence. 19 There may
also be grave abuse of discretion where the board, tribunal or officer exercising judicial
function fails to consider evidence adduced by the present. 20 Given the parties' positions
on the justiciability of the issues before us, the question we have to answer is one that
goes into the substance of the Secretary's disputed orders: Did the Secretary properly
consider and appreciate the evidence presented before him?
We find, based on our consideration of the parties' positions and the evidence on
record, that the Secretary of Labor disregarded and misappreciated evidence,
particularly with respect to the wage award. The Secretary of Labor apparently also
acted arbitrarily and even whimsically in considering a number of legal points; even the
Solicitor General himself considered that the Secretary gravely abused his discretion on
at least three major points: (a) on the signing bonus issue; (b) on the inclusion of
confidential employees in the rank and file bargaining unit, and (c) in mandating a union
security "closed-shop" regime in the bargaining unit.
We begin with a discussion on the wages issue. The focal point in the consideration of
the wage award is the projected net income for 1996 which became the basis for the
1996 wage award, which in turn — by extrapolation — became the basis for the (2nd
Year) 1997 award. MERALCO projected that the net operating income for 1996 was
14.7% above the 1999 level or a total net operating income of 4.171 Billion, while the
union placed the 1996 net operating income at 5.795 Billion.
MERALCO based its projection on the increase of the income for the first 6 months of
1996 over the same period in 1995. The union, on the other hand, projected that the
1996 income would increase by 29% to 35% because the "consumption of electric
power is at its highest during the last two quarters with the advent of the Yuletide
season." The union likewise relied heavily on a newspaper report citing an estimate by
an all Asia capital financial analyst that the net operating income would amount to 5.795
Billion. 21
Based essentially on these considerations, the Secretary made the following
computations and ordered his disputed wage award:
Projected net operating
income for 1996 5,795,000,000
Principals and interests 1,426,571,703
Dividends at 1995 rate 1,636,949,000
Net Amount left with the Company 2,729,479,297
Add: Tax credit equivalent to 35% of labor cost 231,804,940
Company's net operating income 2,961,284,237
For 1997, the projected income is P7,613,612 which can easily absorb the incremental
increase of P2,200 per month or a total of P4,500 during the last year of the CBA period.
xxx xxx xxx
An overriding aim is to estimate the amount that is left with the Company after the
awarded wages and benefits and the company's customary obligations are paid. This
amount can be the source of an item not found in the above computations but which the
Company must provide for, that is — the amount the company can use for expansion.
Considering the expansion plans stated in the Company's Supplement that calls for capital
expenditures of 6 billion, 6.263 billion and 5.802 billion for 1996, 1997 and 1998
respectively, We conclude that our original award of P2,300 per month for the first year and
P2,200 for the second year will still leave much by way of retained income that can be used
for expansion." 22 (Emphasis ours.)
We find after considering the records that the Secretary gravely abused his discretion in
making this wage award because he disregarded evidence on record. Where he

making this wage award because he disregarded evidence on record. Where he
considered MERALCO's evidence at all, he apparently misappreciated this evidence in
favor of claims that do not have evidentiary support. To our mind, the MERALCO
projection had every reason to be reliable because it mas based on actual and
undisputed figures for the first six months of 1996. 23 On the other hand, the union
projection was based on a speculation of Yuletide consumption that the union failed to
substantiate. In fact, as against the union's unsubstantiated Yuletide consumption claim,
MERALCO adduced evidence in the form of historical consumption data showing that a
lengthy consumption does not tend to rise during the Christmas period. 24 Additionally,
the All-Asia Capital Report was nothing more than a newspaper report that did not show
any specific breakdown or computations. While the union claimed that its cited figure is
based on MERALCO's 10-year income stream, 25 no data or computation of this 10-year
stream appear in the record.
While the Secretary is not expected to accept the company-offered figures wholesale in
determining a wage award, we find it a grave abuse of discretion to completely
disregard data that is based on actual and undisputed record of financial performance in
favor of the third-hand and unfounded claims the Secretary eventually relied upon. At
the very least, the Secretary should have properly justified his disregard of the company
figures. The Secretary should have also reasonably insured that the figure that served
as the starting point for his computation had some substantial basis.
Both parties extensely discussed the factors that the decision maker should consider in
making a wage award. While We do not seek to enumerate in this decision the factors
that should affect wage determination, we must emphasize that a collective bargaining
dispute such as this one requires due consideration and proper balancing of the
interests of the parties to the dispute and of those who might be affected by the dispute.
To our mind, the best way in approaching this task holistically is to consider the
available objective facts, including, where applicable, factors such as the bargaining
history of the company, the trends and amounts of arbitrated and agreed wage awards
and the company's previous CBAs, and industry trends in general. As a rule,
affordability or capacity to pay should be taken into account but cannot be the sole
yardstick in determining the wage award, especially in a public utility like MERALCO. In
considering a public utility, the decision maker must always take into account the "public
interest" aspects of the case; MERALCO's income and the amount of money available
for operating expenses — including labor costs — are subject to State regulation. We
must also keep in mind that high operating costs will certainly and eventually be passed
on to the consuming public as MERALCO has bluntly warned in its pleadings.
We take note of the "middle ground" approach employed by the Secretary in this case
which. we do not necessarily find to be the best method of resolving a wage dispute.
Merely finding the midway point between the demands of the company and the union,
and "splitting the difference" is a simplistic solution that fails to recognize that the parties
may already be at the limits of the wage levels they can afford. It may lead to the danger
too that neither of the parties will engage in principled bargaining; the company may
keep its position artificially low while the union presents an artificially high position, on
the fear that a "Solomonic" solution cannot be avoided. Thus, rather than encourage
agreement, a "middle ground approach" instead promotes a "play safe" attitude that
leads to more deadlocks than to successfully negotiated CBAs.
After considering the various factors the parties cited, we believe that the interests of
both labor and management are best served by a wage increase of P1,900.00 per
month for the first year and another P1,900.00 per month for the second year of the two -
year CBA term. Our reason for this is that these increases sufficiently protects the
interest of the worker as they are roughly 15% of the monthly average salary of
P11,600.00. 26 They likewise sufficiently consider the employer's costs and its overall
wage structure, while at the same time, being within the range that will not disrupt the
wage trends in Philippine industries.
The record shows that MERALCO, throughout its long years of existence, was never
remiss in its obligation towards its employees. In fact, as a manifestation of its strong
commitment to the promotion of the welfare and well-being of its employees, it has
consistently improved their compensation package. For instance, MERALCO has
granted salary increases 27 through the collective bargaining agreement the amount of
which since 1980 for both rank-and-file and supervisory employees were as follows:

AMOUNT OF CBA DIFFEREN
INCREASES CE
CBA COVERAGE RANK-AND- SUPERVISO AMOUN PERCEN
FILE RY T T
1980 230 342.5 112.5 48.91%
1981 210 322.5 112.5 53.57
1982 200 312.5 112.5 56.25
TOTAL 640 977.5 337.5 52.73
1983 320 432.5 112.5 35.16
1984 350 462.5 112.5 32.14
1985 370 482.5 112.5 30.41
TOTAL 1,040.00 1,377.50 337.5 32.45
1986 860 972.5 112.5 13.08
1987 640 752.5 112.5 17.58
1988 600 712.5 112.5 18.75
TOTAL 2,100.00 2,437.50 337.5 16.07
1989 1,100.00 1,212.50 112.5 10.23
1990 1,200.00 1,312.50 112.5 9.38
1991 1,300.00 1,412.50 112.5 8.65
TOTAL 3,600.00 3,937.50 337.5 9.38
1992 1,400.00 1,742.50 342.5 24.46
1993 1,350.00 1,682.50 332.5 24.63
1994 1,150.00 1,442.50 292.5 25.43
TOTAL 3,900.00 4,867.50 967.5 24.81
Based on the above-quoted table, specifically under the column "RANK-AND-FILE," it is

easily discernible that the total wage increase of P3,800.00 for 1996 to 1997 which we
are granting in the instant case is significantly higher than the total increases given in
1992 to 1994, or a span of three (3) years, which is only P3,900.00 a month. Thus, the
Secretary's grant of P2,200.00 monthly wage increase in the assailed order is
unreasonably high a burden for MERALCO to shoulder.
We now go to the economic issues.
1. CHRISTMAS BONUS
MERALCO questions the Secretary's award of "Christmas bonuses" on the ground that
what it had given its employees were special bonuses to mark or celebrate "special
occasions," such as when the Asia Money Magazine recognized MERALCO as the
"best managed company in Asia." These grants were given on or about Christmas time,
and the timing of the grant apparently led the Secretary to the conclusion that what were
given were Christmas bonuses given by way of a "company practice" on top of the
legally required 13th month pay.
The Secretary in granting the two-month bonus, considered the following factual finding,
to wit:
We note that each of the grant mentioned in the commonly adopted table of grants has
a special description. Christmas bonuses were given in 1988 and 1989. However, the
amounts of bonuses given differed. In 1988, it was P1,500. In 1989, it was 1/2 month
salary. The use of "Christmas bonus" title stopped after 1989. In 1990, what was given
was a "cash gift" of 1/2 month's salary. The grants thereafter bore different titles and
were for varying amounts. Significantly, the Company explained the reason for the 1995
bonuses and this explanation was not substantially contradicted by the Union.
What comes out from all these is that while the Company has consistently give some

What comes out from all these is that while the Company has consistently give some
amount by way of bonuses since 1988, these awards were not given uniformly as
Christmas bonuses or special Christmas grants although they may have been given at
or about Christmas time.
xxx xxx xxx
The Company is not therefore correct in its position that there is no established practice of
giving Christmas bonuses that has ripened to the status of being a term and condition of
employment. Regardless of its nomenclature and purpose, the act of giving this bonus in the
spirit of Christmas has ripened into a Company practice. 28
It is MERALCO's position that the Secretary erred when he recognized that there was
an "established practice" of giving a two-month Christmas bonus based on the fact that
bonuses were given on or about Christmas time. It points out that the "established
practice" attributed to MERALCO was neither for a considerable period of time nor
identical in either amount or purpose. The purpose and title of the grants were never the
same except for the Christmas bonuses of 1988 and 1989, and were not in the same
amounts.
We do not agree.
As a rule, a bonus is not a demandable and enforceable obligation; 29 it may
nevertheless be granted on equitable considerations 30 as when the giving of such
bonus has been the company's long and regular practice. 31 To be considered a "regular
practice," the giving of the bonus should have been done over a long period of time, and
must be shown to have been consistent and deliberate. 32 Thus we have ruled
in National Sugar Refineries Corporation vs. NLRC: 33
The test or rationale of this rule on long practice requires an indubitable showing that the
employer agreed to continue giving the benefits knowing fully well that said employees
are not covered by the law requiring payment thereof.
In the case at bar, the record shows that MERALCO, aside from complying with the
regular 13th month bonus, has further been giving its employees an additional
Christmas bonus at the tail-end of the year since 1988. While the special bonuses
differed in amount and bore different titles, it can not be denied that these were given
voluntarily and continuously on or about Christmas time. The considerable length of time
MERALCO has been giving the special grants to its employees indicates a unilateral
and voluntary act on its part, to continue giving said benefits knowing that such act was
not required by law.
Indeed, a company practice favorable to the employees has been established and the
payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the
employees. Consequently, the giving of the special bonus can no longer be withdrawn
by the company as this would amount to a diminution of the employee's existing
benefits. 34
We can not, however, affirm the Secretary's award of a two-month special Christmas
bonus to the employees since there was no recognized company practice of giving a
two-month special grant. The two-month special bonus was given only in 1995 in
recognition of the employees prompt and efficient response during the calamities.
Instead, a one-month special bonus, We believe, is sufficient, this being merely a
generous act on the part of MERALCO.
2. RICE SUBSIDY and RETIREMENT BENEFITS for RETIREES
It appears that the Secretary of Labor originally ordered the increase of the retirement
pay, rice subsidy and medical benefits of MERALCO retirees. This ruling was
reconsidered based on the position that retirees are no longer employees of the
company and therefore are no longer bargaining members who can benefit from a
compulsory arbitration award. The Secretary, however, ruled that all members of the
bargaining unit who retire between August 19, 1996 and November 30, 1997 ( i.e., the
term of the disputed CBA under the Secretary's disputed orders) are entitled to receive
an additional rice subsidy.
The question squarely brought in this petition is whether the Secretary can issue an
order that binds the retirement fund. The company alleges that a separate and
independent trust fund is the source of retirement benefits for MERALCO retirees, while
the union maintains that MERALCO controls these funds and may therefore be
compelled to improve this benefit in an arbitral award.
The issue requires a finding of fact on the legal personality of the retirement fund. In the
absence of any evidence on record indicating the nature of the retirement fund's legal
personality, we rule that the issue should be remanded to the Secretary for reception of

personality, we rule that the issue should be remanded to the Secretary for reception of
evidence as whether or not the MERALCO retirement fund is a separate and
independent trust fund. The existence of a separate and independent juridical entity
which controls an irrevocable retirement trust fund means that these retirement funds
are beyond the scope of collective bargaining: they are administered by an entity not a
party to the collective bargaining and the funds may not be touched without the trustee's
conformity.
On the other hand, MERALCO control over these funds means that MERALCO may be
compelled in the compulsory arbitration of a CBA deadlock where it is the employer, to
improve retirement benefits since retirement is a term or condition of employment that is
a mandatory subject of bargaining.
3. EMPLOYEES' COOPERATIVE
The Secretary's disputed ruling requires MERALCO to provide the employees covered
by the bargaining unit with a loan of 1.5 Million as seed money for the employees
formation of a cooperative under the Cooperative Law, R.A. 6938. We see nothing in
this law — whether expressed or implied — that requires employers to provide funds, by
loan or otherwise, that employees can use to form a cooperative. The formation of a
cooperative is a purely voluntary act under this law, and no party in any context or
relationship is required by law to set up a cooperative or to provide the funds therefor. In
the absence of such legal requirement, the Secretary has no basis to order the grant of
a 1.5 million loan to MERALCO employees for the formation of a cooperative.
Furthermore, we do not see the formation of an employees cooperative, in the absence
of an agreement by the collective bargaining parties that this is a bargainable term or
condition of employment, to be a term or condition of employment that can be imposed
on the parties on compulsory arbitration.
4. GHSIP, HMP BENEFITS FOR DEPENDENTS and HOUSING EQUITY LOAN
MERALCO contends that it is not bound to bargain on these benefits because these do
not relate to "wages, hours of work and other terms and conditions of employment"
hence, the denial of these demands cannot result in a bargaining impasse.
The GHSIP, HMP benefits for dependents and the housing equity loan have been the
subject of bargaining and arbitral awards in the past. We do not see any reason why
MERALCO should not now bargain on these benefits. Thus, we agree with the
Secretary's ruling:
. . . Additionally and more importantly, GHSIP and HMP, aside from being contributory plans,
have been the subject of previous rulings from this Office as bargainable matters. At this
point, we cannot do any less and must recognize that GHSIP and HMP are matters where
the union can demand and negotiate for improvements within the framework of the collective
bargaining system. 35
Moreover, MERALCO have long been extending these benefits to the employees and
their dependents that they now become part of the terms and conditions of employment.
In fact, MERALCO even pledged to continue giving these benefits. Hence, these
benefits should be incorporated in the new CBA.
With regard to the increase of the housing equity grant, we find P60,000.00 reasonable
considering the prevailing economic crisis.
5. SIGNING BONUS
On the signing bonus issue, we agree with the positions commonly taken by MERALCO
and by the Office of the Solicitor General that the signing bonus is a grant motivated by
the goodwill generated when a CBA is successfully negotiated and signed between the
employer and the union. In the present case, this goodwill does not exist. In the words of
the Solicitor General:
When negotiations for the last two years of the 1992-1997 CBA broke down and the parties
sought the assistance of the NCMB, but which failed to reconcile their differences, and when
petitioner MERALCO bluntly invoked the jurisdiction of the Secretary of Labor in the
resolution of the labor dispute, whatever goodwill existed between petitioner MERALCO and
respondent union disappeared. . . . . 36
In contractual terms, a signing bonus is justified by and is the consideration paid for the
goodwill that existed in the negotiations that culminated in the signing of a CBA. Without
the goodwill, the payment of a signing bonus cannot be justified and any order for such
payment, to our mind, constitutes grave abuse of discretion. This is more so where the
signing bonus is in the not insignificant total amount of P16 Million.
6. RED-CIRCLE-RATE ALLOWANCE
An RCR allowance is an amount, not included in the basic salary, that is granted by the

An RCR allowance is an amount, not included in the basic salary, that is granted by the
company to an employee who is promoted to a higher position grade but whose actual
basic salary at the time of the promotion already exceeds the maximum salary for the
position to which he or she is promoted. As an allowance, it applies only to specific
individuals whose salary levels are unique with respect to their new and higher
positions. It is for these reasons that MERALCO prays that it be allowed to maintain the
RCR allowance as a separate benefit and not be integrated in the basic salary.
The integration of the RCR allowance in the basic salary of the employees had
consistently been raised in the past CBAs (1989 and 1992) and in those cases, the
Secretary decreed the integration of the RCR allowance in the basic salary. We do not
see any reason why it should not be included in the present CBA. In fact, in the 1995
CBA between MERALCO and the supervisory union (FLAMES), the integration of the
RCR allowance was recognized. Thus, Sec. 4 of the CBA provides:
All Red-Circle-date Allowance as of December 1, 1995 shall be integrated in the basic salary
of the covered employees who as of such date are receiving such allowance. Thereafter, the
company rules on RCR allowance shall continue to be observed/applied. 37
For purposes of uniformity, we affirm the Secretary's order on the integration of the RCR
allowance in the basic salary of the employees.
7. SICK LEAVE RESERVE OF 15 DAYS
MERALCO assails the Secretary's reduction of the sick leave reserve benefit from 25
days to 15 days, contending that the sick leave reserve of 15 days has reached the
lowest safe level that should be maintained to give employees sufficient buffer in the
event they fall ill.
We find no compelling reason to deviate from the Secretary's ruling that the sick leave
reserve is reduced to 15 days, with any excess convertible to cash at the end of the
year. The employee has the option to avail of this cash conversion or to accumulate his
sick leave credits up to 25 days for conversion to cash at his retirement or separation
from the service. This arrangement is, in fact, beneficial to MERALCO. The latter admits
that "the diminution of this reserve does not seriously affect MERALCO because
whatever is in reserve are sick leave credits that are payable to the employee upon
separation from service. In fact, it may be to MERALCO's financial interest to pay these
leave credits now under present salary levels than pay them at future higher salary
levels. 38
8. 40-DAY UNION LEAVE
MERALCO objects to the demanded increase in union leave because the union leave
granted to the union is already substantial. It argues that the union has not
demonstrated any real need for additional union leave.
The thirty (30) days union leave granted by the Secretary, to our mind, constitute
sufficient time within which the union can carry out its union activities such as but not
limited to the election of union officers, selection or election of appropriate bargaining
agents, conduct referendum on union matters and other union -related matters in
furtherance of union objectives. Furthermore, the union already enjoys a special union
leave with pay for union authorized representatives to attend work education seminars,
meetings, conventions and conferences where union representation is required or
necessary, and Paid-Time-off for union officers, stewards and representatives for
purpose of handling or processing grievances.
9. HIGH VOLTAGE/HIGH POLE/TOWING ALLOWANCE
MERALCO argues that there is no justification for the increase of these allowances. The
personnel concerned will not receive any additional risk during the life of the current
CBA that would justify the increase demanded by the union. In the absence of such risk,
then these personnel deserve only the same salary increase that all other members of
the bargaining unit will get as a result of the disputed CBA. MERALCO likewise assails
the grant of the high voltage/high pole allowance to members of the team who are not
exposed to the high voltage/high pole risks. The risks that justify the higher salary and
the added allowance are personal to those who are exposed to those risks. They are not
granted to a team because some members of the team are not exposed to the given
risks.
The increase in the high-voltage allowance (from P45.00 to P55.00), high-pole
allowance (from P30.00 to P40.00), and towing allowance is justified considering the
heavy risk the employees concerned are exposed to. The high-voltage allowance is
granted to an employee who is authorized by the company to actually perform work on

or near energized bare lines and bus, while the high-pole allowance is given to those
authorized to climb poles on a height of at least 60 feet from the ground to work thereat.
The towing allowance, on the other hand, is granted to the stockman drivers who tow
trailers with long poles and equipment on board. Based on the nature of the job of these
concerned employees, it is imperative to give them these additional allowances for
taking additional risks. These increases are not even commensurate to the danger the
employees concerned are subjected to. Besides, no increase has been given by the
company since 1992. 39
We do not, however, subscribe to the Secretary's order granting these allowances to the
members of the team who are not exposed to the given risks. The reason is obvious no
risk, no pay. To award them the said allowances would be manifestly unfair for the
company and even to those who are exposed to the risks, as well as to the other
members of the bargaining unit who do not receive the said allowances.
10. BENEFITS FOR COLLECTORS
MERALCO opposes the Secretary's grant of benefits for collectors on the ground that
this is grossly unreasonable both in scope and on the premise it is founded.
We have considered the arguments of the opposing parties regarding these benefits
and find the Secretary's ruling on the (a) lunch allowance; (b) disconnection fee for
delinquent accounts; (c) voluntary performance of other work at the instance of the
Company; (d) bobcat belt bags; and (e) reduction of quota and MAPL during typhoons
and other force majeure events, reasonable considering the risks taken by the company
personnel involved, the nature of the employees' functions and responsibilities and the
prevailing standard of living. We do not however subscribe to the Secretary's award on
the following:
(a) Reduction of quota and MAPL when the collector is on sick leave because the
previous CBA has already provided for a reduction of this demand. There is no need to
further reduce this.
(b) Deposit of cash bond at MESALA because this is no longer necessary in view of the
fact that collectors are no longer required to post a bond.
We shall now resolve the non-economic issues.
1. SCOPE OF THE BARGAINING UNIT
The Secretary's ruling on this issue states that:
a. Scope of the collective bargaining unit. The union is demanding that the collective
bargaining unit shall be composed of all regular rank and file employees hired by the
company in all its offices and operating centers through its franchise and those it may
employ by reason of expansion, reorganization or as a result of operational exigencies.
The law is that only managerial employees are excluded from any collective bargaining
unit and supervisors are now allowed to form their own union (Art. 254 of the Labor
Code as amended by R.A. 6715 ). We grant the union demand.
Both MERALCO and the Office of the Solicitor General dispute this ruling because it
disregards the rule. We have established on the exclusion of confidential employees
from the rank and file bargaining unit.
In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores Union , 40 we ruled
that:
Put another way, the confidential employee does not share in the same "community of
interest" that might otherwise make him eligible to join his rank and file co-workers,
precisely because of a conflict in those interests.
Thus, in Metrolab Industries vs. Roldan-Confesor, 41 We ruled:
. . . that the Secretary's order should exclude the confidential employees from the
regular rank and file employees qualified to become members of the MEWA bargaining
unit.
From the foregoing disquisition, it is clear that employees holding a confidential position
are prohibited from joining the union of the rank and file employees.
2. ISSUE OF UNION SECURITY
The Secretary in his Order of August 19, 1996, 42 ruled that:
b. Union recognition and security. The Union is proposing that it be recognized by the
Company as sole and exclusive bargaining representative of the rank and file
employees included in the bargaining unit for the purpose of collective bargaining
regarding rates of pay, wages, hours of work and other terms and conditions of
employment. For this reason, the Company shall agree to meet only with the Union
officers and its authorized representatives on all matters involving the Union as an
organization and all issues arising from the implementation and interpretation of the new

organization and all issues arising from the implementation and interpretation of the new
CBA. Towards this end, the Company shall not entertain any individual or group of
individuals on matters within the exclusive domain of the Union.
Additionally, the Union is demanding that the right of all rank and file employees to join
the Union shall be recognized by the Company. Accordingly, all rank and file employees
shall join the Union.
xxx xxx xxx
These demands are fairly reasonable. We grant the same in accordance with the
maintenance of membership principle as a form of union security.
The Secretary reconsidered this portion of his original order when he said in his
December 28, 1996 order that:
. . . . When we decreed that all rank and file employees shall join the Union, we were
actually decreeing the incorporation of a closed shop form of union security in the CBA
between the parties. In Ferrer v. NLRC, 224 SCRA 410, the Supreme Court ruled that a
CBA provision for a closed shop is a valid form of union security and is not a restriction
on the right or freedom of association guaranteed by the Constitution, citing Lirag v.
Blanco, 109 SCRA 87.
MERALCO objected to this ruling on the grounds that: (a) it was never questioned by
the parties; (b) there is no evidence presented that would justify the restriction on
employee's union membership; and (c) the Secretary cannot rule on the union security
demand because this is not a mandatory subject for collective bargaining agreement.
We agree with MERALCO's contention.
An examination of the records of the case shows that the union did not ask for a closed
shop security regime; the Secretary in the first instance expressly stated that a
maintenance of membership clause should govern; neither MERALCO nor MEWA
raised the issue of union security in their respective motions for reconsideration of the
Secretary's first disputed order; and that despite the parties clear acceptance of the
Secretary's first ruling, the Secretary motu proprio reconsidered his maintenance of
membership ruling in favor of the more stringent union shop regime.
Under these circumstances, it is indubitably clear that the Secretary gravely abused his
discretion when he ordered a union shop in his order of December 28, 1996. The
distinctions between a maintenance of membership regime from a closed shop and their
consequences in the relationship between the union and the company are well
established and need no further elaboration.
Consequently, We rule that the maintenance of membership regime should govern at
MERALCO in accordance with the Secretary's order of August 19, 1996 which neither
party disputed.
3. THE CONTRACTING OUT ISSUE
This issue is limited to the validity of the requirement that the union be consulted before
the implementation of any contracting out that would last for 6 months or more.
Proceeding from our ruling in San Miguel Employees Union-PTGWO vs.
Bersamira, 43 (where we recognized that contracting out of work is a proprietary right of
the employer in the exercise of an inherent management prerogative) the issue we see
is whether the Secretary's consultation requirement is reasonable or unduly restrictive of
the company's management prerogative. We note that the Secretary himself has
considered that management should not be hampered in the operations of its business
when he said that:
We feel that the limitations imposed by the union advocates are too specific and may not be
applicable to the situations that the company and the union may face in the future. To our
mind, the greater risk with this type of limitation is that it will tend to curtail rather than allow
the business growth that the company and the union must aspire for. Hence, we are for the
general limitations we have stated above because they will allow a calibrated response to
specific future situations the company and the union may face. 44
Additionally, We recognize that contracting out is not unlimited; rather, it is a prerogative
that management enjoys subject to well-defined legal limitations. As we have previously
held, the company can determine in its best business judgment whether it should
contract out the performance of some of its work for as long as the employer is
motivated by good faith, and the contracting out must not have been resorted to
circumvent the law or must not have been the result of malicious or arbitrary
action. 45 The Labor Code and its implementing rules also contain specific rules
governing contracting out (Department or Labor Order No. 10, May 30, 1997, Sections
1-25).

1-25).
Given these realities, we recognize that a balance already exists in the parties'
relationship with respect to contracting out; MERALCO has its legally defined and
protected management prerogatives while workers are guaranteed their own protection
through specific labor provisions and the recognition of limits to the exercise of
management prerogatives. From these premises, we can only conclude that the
Secretary's added requirement only introduces an imbalance in the parties' collective
bargaining relationship on a matter that the law already sufficiently regulates. Hence, we
rule that the Secretary's added requirement, being unreasonable, restrictive and
potentially disruptive should be struck down.
4. UNION REPRESENTATION IN COMMITTEES
As regards this issue, We quote with approval the holding of the Secretary in his Order
of December 28, 1996, to wit:
We see no convincing reason to modify our original Order on union representation in
committees. It reiterates what the Article 211 (A)(g) of the Labor Code provides: "To
ensure the participation of workers in decision and policy-making processes affecting
their rights, duties and welfare. Denying this opportunity to the Union is to lay the claim
that only management has the monopoly of ideas that may improve management
strategies in enhancing the Company's growth. What every company should remember
is that there might be one among the Union members who may offer productive and
viable ideas on expanding the Company's business horizons. The Union's participation
in such committees might just be the opportune time for dormant ideas to come forward.
So, the Company must welcome this development (see also PAL v. NLRC, et. al., G.R.
85985, August 13, 1995). It must be understood, however, that the committees referred
to here are the Safety Committee, the Uniform Committee and other committees of a
similar nature and purpose involving personnel welfare, rights and benefits as well as
duties."
We do not find merit in MERALCO's contention that the above-quoted ruling of the
Secretary is an intrusion into the management prerogatives of MERALCO. It is
worthwhile to note that all the Union demands and what the Secretary's order granted is
that the Union be allowed to participate in policy formulation and decision -making
process on matters affecting the Union members' rights, duties and welfare as required
in Article 211 (A) (g) of the Labor Code. And this can only be done when the Union is
allowed to have representatives in the Safety Committee, Uniform Committee and other
committees of a similar nature. Certainly, such participation by the Union in the said
committees is not in the nature of a co-management control of the business of
MERALCO. What is granted by the Secretary is participation and representation. Thus,
there is no impairment of management prerogatives.
5. INCLUSION OF ALL TERMS AND CONDITIONS IN THE CBA
MERALCO also decries the Secretary's ruling in both the assailed Orders that —
All other benefits being enjoyed by the Company's employees but which are not expressly or
impliedly repealed in this new agreement shall remain subsisting and shall likewise be
included in the new collective bargaining agreement to be signed by the parties effective
December 1, 1995. 46
claiming that the above-quoted ruling intruded into the employer's freedom to contract
by ordering the inclusion in the new CBA all other benefits presently enjoyed by the
employees even if they are not incorporated in the new CBA. This matter of inclusion,
MERALCO argues, was never discussed and agreed upon in the negotiations; nor
presented as issues before the Secretary; nor were part of the previous CBA's between
the parties.
We agree with MERALCO.
The Secretary acted in excess of the discretion allowed him by law when he ordered the
inclusion of benefits, terms and conditions that the law and the parties did not intend to
be reflected in their CBA.
To avoid the possible problems that the disputed orders may bring, we are constrained
to rule that only the terms and conditions already existing in the current CBA and was
granted by the Secretary (subject to the modifications decreed in this decision) should
be incorporated in the CBA, and that the Secretary's disputed orders should accordingly
be modified.
6. RETROACTIVITY OF THE CBA
Finally, MERALCO also assails the Secretary's order that the effectivity of the new CBA
shall retroact to December 1, 1995, the date of the commencement of the last two years

shall retroact to December 1, 1995, the date of the commencement of the last two years
of the effectivity of the existing CBA. This retroactive date, MERALCO argues, is
contrary to the ruling of this Court in Pier 8 Arrastre and Stevedoring Services, Inc. vs.
Roldan-Confessor 47 which mandates that the effective date of the new CBA should be
the date the Secretary of Labor has resolved the labor dispute.
On the other hand, MEWA supports the ruling of the Secretary on the theory that he has
plenary power and discretion to fix the date of effectivity of his arbitral award citing our
ruling in St. Lakes Medical Center, Inc. vs.
Torres. 48 MEWA also contends that if the arbitral award takes effect on the date of the
Secretary Labor's ruling on the parties' motion for reconsideration ( i.e., on December 28,
1996), an anomaly situation will result when CBA would be more than the 5 -year term
mandated by Article 253-A of the Labor Code.
However, neither party took into account the factors necessary for a proper resolution of
this aspect. Pier 8, for instance, does not involve a mid-term negotiation similar to this
case, while St. Lukes does not take the "hold over" principle into account, i.e., the rule
that although a CBA has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into. 49
Art. 253-A serves as the guide in determining when the effectivity of the CBA at bar is to
take effect. It provides that the representation aspect of the CBA is to be for a term of 5
years, while
. . . [A]ll other provisions of the Collective Bargaining Agreement shall be re -negotiated
not later than 3 years after its execution. Any agreement on such other provision of the
Collective Bargaining Agreement entered into within 6 months from the date of expiry of
the term of such other provisions as fixed in such Collective Bargaining Agreement shall
retroact to the day immediately following such date. If such agreement is entered into
beyond 6 months, the parties shall agree on the duration of the effectivity thereof. . . . .
Under these terms, it is clear that the 5-year term requirement is specific to the
representation aspect. What the law additionally requires is that a CBA must be re -
negotiated within 3 years "after its execution." It is in this re-negotiation that gives rise to
the present CBA deadlock.
If no agreement is reached within 6 months from the expiry date of the 3 years that
follow the CBA execution, the law expressly gives the parties — not anybody else — the
discretion to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the situation where 6 months have
elapsed but no agreement has been reached with respect to effectivity. In this
eventuality, we hold that any provision of law should then apply for the law abhors a
vacuum. 50
One such provision is the principle of hold over, i.e., that in the absence of a new CBA,
the parties must maintain the status quo and must continue in full force and effect the
terms and conditions of the existing agreement until a new agreement is reached. 51 In
this manner, the law prevents the existence of a gap in the relationship between the
collective bargaining parties. Another legal principle that should apply is that in the
absence of an agreement between the parties, then, an arbitrated CBA takes on the
nature of any judicial or quasi-judicial award; it operates and may be executed only
respectively unless there are legal justifications for its retroactive application.
Consequently, we find no sufficient legal ground on the other justification for the
retroactive application of the disputed CBA, and therefore hold that the CBA should be
effective for a term of 2 years counted from December 28, 1996 (the date of the
Secretary of Labor's disputed order on the parties' motion for reconsideration) up to
December 27, 1999.
WHEREFORE, the petition is granted and the orders of public respondent Secretary of
Labor dated August 19, 1996 and December 28, 1996 are set aside to the extent set
forth above. The parties are directed to execute a Collective Bargaining Agreement
incorporating the terms and conditions contained in the unaffected portion is of the
Secretary of Labor's orders of August 19, 1996 and December 28, 1996, and the
modifications set forth above. The retirement fund issue is remanded to the Secretary of
Labor for reception of evidence and determination of the legal personality of the
MERALCO retirement fund. 1âwphi 1.nê
t
SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan and Pardo, JJ., concur.
Footnotes
1 Annex "A" of Petition, Rollo, p. 93.

1 Annex "A" of Petition, Rollo, p. 93.
2 Annex "B" of Petition, Rollo, p. 94.
3 Annex "5" of MEWA's Comment, Rollo, pp. 852-879:
1. Wage increase — 1995 — P4,000.00/month
1996 — P3,000.00/month
2. Integration of RCR and longevity allowances into the basic salary.
3. Longevity increase in the amount of P30.00 a year.
4. Sick leave upgraded from 21 to 31 days depending on length of service and sick
leave reserve reduced to 15 days.
5. Vacational leave — 24 days minimum — 32 days maximum.
6. Union leave with pay for 50 Mondays per month.
7. Maternity leave — 70 days — normal delivery
90 days — caesarian
Paternity leave — 10 days — normal
14 days — caesarian
8 days — miscarriage.
8. Funeral leave — 12 days — 6 days.
9. Birthday leave — falls on regular working day — leave with pay regular day off —
entitled next working day — non-working holiday — next working day.
10. Group hospitalization and surgical insurance plan (GHSIP) and health and
maintenance plan (HMP) for dependents.
11. Longevity bonus.
12. Christmas bonus — equivalent to one month's salary & allowance and special
Christmas grant — (incorporated in the CBA) equivalent to two month's pay to be given
in the middle of November and second week of December.
13. Mid-year bonus — incorporated in the CBA.
14. Anniversary bonus — P6,000.00/1st year P8,000.00/2nd year.
15. Christmas Gift Certificate
16 Retirement
17. Dental, medical and hospitalization benefits
18. Resignation benefit — for employees who served for at least 7 years.
19. Night work — 50% of employees basic salary.
20. Shortswing — an employee after resting for not more than 8 hours is required to
work in another shift is considered employees' work for the following day and given
additional 4 hours straight time.
21. High voltage/high pole allowance for P45.00 to P75.00.
22. Employees' Cooperative — to provide the seed money of P3,000,000.00.
23. Hold-up allowance — pay P5,000.00 value of personal belonging taken from
accountable officer.
24. Fieldmen's rubber shoes
25. Uniforms
26. Calamity leave
27. Danger exposure allowance
28. Meal and lodging allowance breakfast — P40.00
Lunch — P60.00
Dinner — P60.00
Lodging — P200 night
29. Payroll treatment for accident while on duty
30. Housing equity assistance loan — increased to P60,000.00
31. Female employee's uniforms, and
32. Benefits for collectors.
The Union's political demands consist of:
1. The scope of the collective bargaining unit — all regular rank and file hired by the
company in all its offices.
1. Union recognition and security — all rank & file employees to join the union.
2. allow union to meet with the newly regularized employees for a period not exceeding
4 hours — excused for work.
3. Transfer of assignment and job security.
4. Check-off of union dues.
5. Payroll reinstatement.
6. Union representation in committees.
7. Signing bonus of P7,000.00.

7. Signing bonus of P7,000.00.
4 Annex "G" of Petition, Rollo, pp. 120-122.
5 Annex "H" of Petition, Rollo, pp. 124-125.
6 Annex "M", Rollo, pp. 319-340.
7 Annex "N" of Petition, Rollo, pp. 341-394.
8 Annex "V" of Petition, Rollo, pp. 661-715.
9 Sec. 18, Article 2 of the 1987 Constitution.
10 Sec. 6, Article 12, Id.
11 Sec. 1, Article 13, Id.
12 Sec. 3, Article 12 and Section 3[3], Article 15 of the 1987 Constitution.
13 Phil. Scout Veteran Security vs. NLRC, 262 SCRA 112 [1996], citing Insular Bank of
Asia and America Employees Union (IBAAEU) vs. Inciong, 132 SCRA 663 [1984];
Endencia vs. David, 93 Phil. 696 [1953].
14 Sec. 3, pars. 3 & 4, Article 13 of the 1987 Constitution.
15 Garcia vs. Exec. Secretary, 204 SCRA 516 [1991]; Dumlao vs. Comelec, 95 SCRA
390 [1980]; Assoc. of Small Landowners of the Phil. vs. Secretary of Agrarian Reform,
175 SCRA 343 [1989].
16 Taxicab Operators of Metro Manila, Inc. vs. Board of Transportation, 117 SCRA 597
[1982].
17 Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, 241 SCRA 295
[1995].
18 American Home Assurance Company vs. NLRC, 259 SCRA 280 [1996]; Lopez
Sugar Corp. vs. Federation of Free Workers, et. al., 189 SCRA 179 [1990].
19 PAL vs. Confesor, 231 SCRA 41 [1994].
20 PAL vs. Confesor, Id.; Caltex Filipino Managers Supervisors vs. CIR, 44 SCRA 350
[1972]; Labor ng Pagkakaisa sa Peter-Paul vs. CIR, 96 Phil. 63 [1954].
21 See Annex "B" of the Union's Rejoinder to Company's Opposition to Union's Motion
for Reconsideration, Rollo, p. 1521.
22 Annex "V" of Petition, Rollo, p. 694.
23 Annex "S" of Petition, Rollo, p. 596.
24 Annex "W" of Petition, Rollo, p. 716.
25 A formula used by the Court in determining the reasonableness of the wages award
in PAL vs. Confesor, supra.
26 Annex "I", Rollo, p. 133.
The MERALCO rank and file employee receives a monthly average salary of P11,601
as against the median salary of P9,620 monthly and the weighted average salary of
P9,729 monthly prevailing in the community. This means that Meralco's average
monthly salary rate for its rank and file employees is 20.60 percent higher than the
median salary and 19.24 percent higher than the weighted average salary enjoyed by
other rank and file employees within the community.
27 Annex "K", Rollo, p. 221.
29 Azucena, The Labor Code, Vol. 1, 1996 Ed., p. 314.
30 Philippine Education Co., Inc. vs. Court of Industrial Relations, 92 SCRA 381 [1979].
31 Liberation Steamship Co., Inc. vs CIR, 23 Phil. 1105 [1968]; National Development
Co., vs. CIR, 23 Phil. 1106; Heacock Co. vs. NLU, 95 Phil. 553; NWSA vs. NWSA
Consilidated Labor Union, 21 SCRA 203 [1967].
32 Globe Mackay Cable and Radio Corporation vs. NLRC, 163 SCRA 71 [1988].
33 220 SCRA 463 [1993].
34 Art. 100 of the Labor Code; Davao Fruits Corporation vs. Associate Labor Union, 225
SCRA 567 [1993].
35 Annex "V" of Petition, Rollo, p. 704.
36 See Rollo, p. 1786.
37 Annex "E" of the Union's Rejoinder to Company's Opposition to Union's Motion for
Reconsideration, Rollo, p. 1525.
38 MERALCO's Memorandum, Rollo, p. 1721.
39 MEWA's Memorandum, p. 37.
40 214 SCRA 295 [1995]; citing Golden Farms, Inc. vs. Calleja, 175 SCRA 471 [1989];
Philips Industrial Development, Inc. vs. NLRC, 210 SCRA 348 [1992]; National
Association of Trade Unions-Republic Planters Bank Supervisors Chapter vs. Hon.
Ruben Torres, 239 SCRA 546 [1994].
41 254 SCRA 182.

Ruben Torres, 239 SCRA 546 [1994].
41 254 SCRA 182.
42 Annex "M" of Petition, Rollo, p. 338.
43 186 SCRA 496 [1990].
45 De Ocampo vs. NLRC, 213 SCRA 652 [1992].
46 Annex "M" of Petition, Rollo, p. 340.
47 241 SCRA 294, 307 [1995].
48 223 SCRA 779 [1993].
49 Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179 [1990].
50 Duldulao vs. Ramos, 91 Phil. 2611; Rivera vs. Court of Appeals, 176 SCRA 169
[1989].
51 National Congress of Unions in the Sugar Industry vs. Ferrer -Calleja, 205 SCRA 478
[1995].
The Lawphil Project - Arellano Law Foundation
Pasted from <http://www.lawphil.net/judjuris/juri1999/jan1999/gr_127598_1999.html>

San Miguel Corp. Employees Union-PTGWO v. Bersamira (1990)
12:27 AM
San Miguel Corp. Employees Union-PTGWO v. Bersamira (1990)

A labor dispute can nevertheless exist “regardless of whether the disputants stand in the proximate
relationship of employer and employee,” provided the controversy concerns, among others, the terms
and conditions of employment or a change or arrangement thereof. The existence of a labor dispute is
not negatived by the fact that the plaintiffs and defendants do not stand in the proximate relation
of an employer and employee.
SAN MIGUEL EMPLOYEES UNION V BERSAMIRA

186 SCRA 496
MELENCIO-HERRERA; June 13, 1990
NATURE
Special civ il action for certiorari
FACTS
- SMC entered into contracts for merchandising services with Lipercon and D'Rite (L&D), independent contractors duly licensed by DOLE. In said contracts, it
w as expressly understood and agreed that the EEs employed by the contractors were to be paid by the latter and that none of them w ere to be deemed EEs or
agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SMC on the other.
- Petitioner SMCEU-PTWGO (Union) is duly authorized representative of the monthly paid rank-and-file EEs of SMC. Their CBA provides that temporary,
probationary , or contract EEs are excluded from the bargaining unit and outside scope of CBA.
- Union adv ised SMC that some L&D w orkers had signed up for union membership and sought the regularization of their employment w ith SMC. Union alleged
that this group of EEs, w hile appearing to be contractual workers of supposedly independent contractors, have been continuously working for SMC for a period of
6 months to 15 y ears and that their w ork is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or
trade of SMC, and that there ex ists a "labor-only" contracting situation. It w as then demanded that the employment status of these workers be regularized. This
w as not acted upon by SMC, and so Union filed a notice of strike, and then a second notice.
- Series of pickets w ere staged by L&D workers in various SMC plants and offices. SMC RTC to enjoin the Union from: representing and or acting for and in
behalf of the employ ees of L&D for the purposes of collective bargaining; calling for and holding a strike vote to compel plaintiff to hire the employ ees or workers
of L&D, among others.
- Union filed a Motion to Dismiss SMC's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SMC,
w hich was denied by respondent Judge. And after several hearings, issued Injunction. RTC reasoned that the absence of ER-EE relationship negates the
ex istence of labor dispute, so court has jurisdiction to take cognizance of SMC's grievance. Hence, this action.
ISSUE
1. WON RTC correctly assumed jurisdiction over the controversy and properly issued the Writ of Preliminary Injunction.
HELD
1. NO
Re: Definition of Labor Dispute (p4 of Outline)
Ratio A labor dispute can nevertheless exist “regardless of whether the disputants stand in the proximate relationship of employer and employee, provided the
controv ersy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof” The exis tence of a labor dispute is not
negativ ed by the fact that the plaintiffs and defendants do not stand in the prox imate relation of employ er and employee. (A212 LC)
Reasoning Crucial to the resolution of the question on jurisdiction, is the matter of w hether or not the case at bar inv olv es, or is inconnection with, or relates to a
labor dispute. An affirmativ e answer would bring the case within the original and exclusiv e jurisdic tion of labor tribunals to the ex clusion of the regular Courts. In
this case, the matter re terms, tenure and conditions of EE’s employment and the arrangement of those terms as well as the matter of representation bring these
issues w ithin the scope of a labor dispute. Hence it is the labor tribunals that hav e jurisdiction and not the regular courts
Re: ER Functions and ULP (p30 of Outline)

- As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. So, Labor Arbiters have original and exclusiv e jurisdiction to
hear and decide the follow ing cases involving all workers including: [a] unfair labor practice cases; [b] those that w orkers may file inv olving wages, hours of work
and other terms and conditions of employment; and [c] cases arising from any violation of A265 LC, including questions involving the legality of striker and
lockouts.
- SMC’s claim that the action is for damages under A19, 20 and 21 of CC is not enough to keep the case within the jurisdictional boundaries of regular Courts.
That claim for damages is interwoven with a labor dispute. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to
the orderly administration of justice.
- SC recognizes the proprietary right of SMC to exercise an inherent management prerogative and its best business judgment to determine whether it should
contract out the performance of some of its w ork to independent contractors. However, the rights of all w orkers to self-organization, collective bargaining and
negotiations, and peaceful concerted activ ities, including the right to strike in accordance with law (S3, A13, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspectiv e and equilibrium.
Disposition Petition is GRANTED.
G.R. No. 87700 June 13, 1990

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II,
HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166,
RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.

RTC, PASIG, and SAN MIGUEL CORPORATION, respondents.
Romeo C. Lagman for petitioners.
Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.
MELENCIO-HERRERA, J.:
Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in
this special civil action for certiorari and Prohibition for having issued the challenged Writ of
Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel
Corporation vs. SMCEU-PTGWO, et als."
Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse
of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig.
for short), for its part, defends the Writ on the ground of absence of any employer-employee
relationship between it and the contractual workers employed by the companies Lipercon Services,
Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of
personality to represent said workers for purposes of collective bargaining. The Solicitor General
agrees with the position of SanMig.
The antecedents of the controversy reveal that:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with
Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are
independent contractors duly licensed by the Department of Labor and Employment (DOLE).
SanMig entered into those contracts to maintain its competitive position and in keeping with the
imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was
expressly understood and agreed that the workers employed by the contractors were to be paid by
the latter and that none of them were to be deemed employees or agents of SanMig. There was to
be no employer-employee relation between the contractors and/or its workers, on the one hand, and
SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly
authorized representative of the monthly paid rank-and-file employees of SanMig with whom the
latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989
(Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary,
probationary, or contract employees and workers are excluded from the bargaining unit and,
therefore, outside the scope of this Agreement."
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some
Lipercon and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing to be
contractual workers supposedly independent contractors, have been continuously working for
SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither
casual nor seasonal as they are performing work or activities necessary or desirable in the usual
business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting
situation. It was then demanded that the employment status of these workers be regularized.
On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig,
the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex
D, Petition).
On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex
F, Petition).
As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently,
the two (2) notices of strike were consolidated and several conciliation conferences were held to
settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G,
Petition).
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and
D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent
Court to enjoin the Union from:
a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the
purposes of collective bargaining;
b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of
LIPERCON and D'RITE;
c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to
demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in
the CBA,...;
d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;
e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket
lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within

lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within
the bargaining unit referred to in the CBA ...;
f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract
workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work
places within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees
or workers of LIPERCON and D'RITE;
g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from,
the work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE;
h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places
within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the
employees or workers of LIPERCON and D'RITE. (Annex H, Petition)
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction
for hearing.
In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the
ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989.
After several hearings on SanMig's application for injunctive relief, where the parties presented both
testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned
Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts
complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding
Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer
for whatever damages petitioners may sustain by reason thereof.
In issuing the Injunction, respondent Court rationalized:
The absence of employer-employee relationship negates the existence of labor dispute. Verily, this
court has jurisdiction to take cognizance of plaintiff's grievance.
The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and
D'Rite. The application and contract for employment of the defendants' witnesses are either with
Lipercon or D'Rite. What could be discerned is that there is no employer-employee relationship
between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does
not mean that a final determination regarding the question of the existence of employer-employee
relationship has already been made. To finally resolve this dispute, the court must extensively
consider and delve into the manner of selection and engagement of the putative employee; the
mode of payment of wages; the presence or absence of a power of dismissal; and the Presence or
absence of a power to control the putative employee's conduct. This necessitates a full-blown trial. If
the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages.
Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable
damages.
Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo)
Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the
challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the
implementation of the Injunction issued by respondent Court. The Union construed this to mean that
"we can now strike," which it superimposed on the Order and widely circulated to entice the Union
membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we
required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo).
In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the
contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen
(13) of the latter's plants and offices.
On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to
conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite
employees were recalled, and discussion on their other demands, such as wage distortion and
appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement
between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case)
and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8
May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to
"lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and
return to work.
After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and
required the parties to submit their memoranda simultaneously, the last of which was filed on 9
January 1990.
The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction
over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution

over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution
of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or
relates to a labor dispute. An affirmative answer would bring the case within the original and
exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts.
Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves
or arose out of a labor dispute and is directly connected or interwoven with the cases pending with
the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts
complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private
respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners'
Memo).
On the other hand, SanMig denies the existence of any employer-employee relationship and
consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that
"respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of
strike staged by petitioner union and its officers herein complained of," for the reasons that:
A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer
to hire and thereby create an employment relationship with contractual workers, especially were the
contractual workers were recognized by the union, under the governing collective bargaining
agreement, as excluded from, and therefore strangers to, the bargaining unit.
B. A strike is a coercive economic weapon granted the bargaining representative only in the event of
a deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the
employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially
on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the
latter will help re-elect them.
C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise
out of a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or
not to hire. (SanMig's Memorandum, pp. 475-476, Rollo).
We find the Petition of a meritorious character.
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter
concerning terms and conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of employer and employee."
While it is SanMig's submission that no employer-employee relationship exists between itself, on the
one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can
nevertheless exist "regardless of whether the disputants stand in the proximate relationship of
employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns,
among others, the terms and conditions of employment or a "change" or "arrangement" thereof
(ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the
fact that the plaintiffs and defendants do not stand in the proximate relation of employer and
employee.
That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that
they be absorbed into the working unit of SanMig. This matter definitely dwells on the working
relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their
employment and the arrangement of those terms are thus involved bringing the matter within the
purview of a labor dispute. Further, the Union also seeks to represent those workers, who have
signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee relationship between it
and those workers and because the demand violates the terms of their CBA. Obvious then is that
representation and association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation.
Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied
that the controversy below is directly connected with the labor dispute already taken cognizance of
by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83).
Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and
D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship
may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon
and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the
notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the
employer to hire strangers outside the working unit; — those are issues the resolution of which call
for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably
linked with those issues.
The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon
by SanMig is not controlling as in that case there was no controversy over terms, tenure or

by SanMig is not controlling as in that case there was no controversy over terms, tenure or
conditions, of employment or the representation of employees that called for the application of labor
laws. In that case, what the petitioning union demanded was not a change in working terms and
conditions, or the representation of the employees, but that its members be hired as stevedores in
the place of the members of a rival union, which petitioners wanted discharged notwithstanding the
existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis
of those facts unique to that case, that such a demand could hardly be considered a labor dispute.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As
explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on
21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original
and exclusive jurisdiction to hear and decide the following cases involving all workers including "1.
unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other
terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this
Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the
plain command of the law.
The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil
Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That
claim for damages is interwoven with a labor dispute existing between the parties and would have to
be ventilated before the administrative machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is
obnoxious to the orderly administration of justice (Philippine Communications, Electronics and
Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321).
We recognize the proprietary right of SanMig to exercise an inherent management prerogative and
its best business judgment to determine whether it should contract out the performance of some of
its work to independent contractors. However, the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and
protection. Those contending interests must be placed in proper perspective and equilibrium.
WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March
1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent
Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of
dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be
observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor
and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs.
SO ORDERED.
Paras and Regalado, JJ., concur.
Padilla, Sarmiento, JJ., took no part.
Pasted from <http://www.lawphil.net/judjuris/juri1990/jun1990/gr_87700_1990.html>

Gold City Integrated Port Service, Inc. v. NLRC (1995)
12:30 AM
Gold City Integrated Port Service, Inc. v. NLRC (1995)

Note: A strike can only happen when there is a labor dispute.
In this case a strike occurred. It was an illegal strike for not complying with formal requisites.
a. A STRIKE, considered as the most effective weapon of labor is defined as any temporary stoppage of
work by the concerted action of employees as a result of an industrial or labor dispute.
b. A labor dispute includes any controversy or matter concerning terms or conditions of employment of
the association or representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless of whether or not the disputants stand in the
proximate relation of employers and employees.
c. Private respondents and their co-workers stopped working and held the mass action to press for their
wages and other benefits. What transpired then was clearly a strike, for the cessation of work by
concerted action resulted from a labor dispute.
G.R. No. 103560 July 6, 1995

GOLD CITY INTEGRATED PORT SERVICE, INC. (INPORT), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Fifth Division) ADELO EBUNA, EMMANUEL
VALMORIDA, RODOLFO PEREZ, ROGER ZAGADO, MARCOS GANZAN, AND REY VALLE,
(WILFREDO DAHAN, ROGELIO VILLAFUERTE, WILFREDO AMPER, RICARDO ABA, YOLITO
AMBUS, FIDEL CALIO, VICENTE CAHATOL, SOTECO CUENCA, NICOLAS DALAGUAN,
BALBINO FAJARDO, ROLANDO JAMILA, RICARDO LAURETO, RUDY LAURETO, QUIRICO
LEJANIO, OSCAR LAPINIG, FELIPE LAURETE, JESUSTUDY OMISOL, ZOSIMO OMISOL,
PEDRO SUAREZ, SATURNINO SISIBAN and MANUEL YANEZ), respondents.
G.R. No. 103599 July 6, 1995
ADELO EBUNA, WILFREDO DAHAN, RICARDO LAURETO, REY VALLE, VICENTE CAHATOL,
MARCOS GANZAN, RODOLFO PEREZ, ROEL SAA, ROGELIO VILLAFUERTE, MANUEL
YANEZ, WILFREDO AMPER, QUIRECO LEJANO, EMMANUEL VALMORIA, ROLANDO
JAMILLA, NICOLAS DALAGUAN, BALBINO FAJARDO, PEDRO SUAREZ, ELPIDIO ESTROGA,
RUBEN PAJO, JESUSTODY OMISOL, RICARDO ABA, FIDEL CALIO, SATURNINO SESYBAN,
RUDY LAURETO, OSCAR LAPINIG, FELIPE LAURENTE, ROGER ZAGADO, SOTECO
CUENCA, FIDEL ESLIT, ZOSIMO OMISOL, ANGEL BERNIDO, and MICHAEL
YAGOTYOT, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, and GOLD CITY
INTEGRATED PORT SERVICES, INC. (INPORT), respondents.
ROMERO, J.:
Should separation pay and backwages be awarded by public respondent NLRC to participants of an
illegal strike? This is the core issue to be decided in these two petitions.
Gold City Integrated Port Service, Inc. (INPORT) filed a petition for certiorari against the National
Labor Relations Commission (NLRC) assailing the latter's decision in "Gold City Integrated Port
Services, Inc. v. Adelo Ebuna, et al." (NLRC RAB X Case No. 5-0405-85) with twenty-seven private
respondents (G.R. No. 103599). 1 This petition has been consolidated with G.R. No. 103599 where
the petitioners are the private respondents in instant case and the private respondent is INPORT.
For the sake of clarity, INPORT shall be denominated in the case at bench as the petitioner and the
employees as private respondents.
Instant case arose from the following facts:
Early in the morning of April 30, 1985, petitioner's employees stopped working and gathered in a
mass action to express their grievances regarding wages, thirteenth month pay and hazard pay.
Said employees were all members of the Macajalar Labor Union — Federation of Free Workers
(MLU-FFW) with whom petitioner had an existing collective bargaining agreement.
Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan de Oro. The
strike paralyzed operations at said port.
On the same morning, the strikers filed individual notices of strike ("Kaugalingon nga Declarasyon sa

Pag-Welga") with the then Ministry of Labor and Employment.
With the failure of conciliation conferences between petitioner and the strikers, INPORT filed a
complaint before the Labor Arbiter for Illegal Strike with prayer for a restraining order/preliminary
injunction.
On May 7, 1985, the National Labor Relations Commission issued a temporary restraining order.
Thereafter, majority of the strikers returned to work, leaving herein private respondents who
continued their protest. 2
Counsel for private respondents filed a manifestation that petitioner required prior screening
conducted by the MLU-FFW before the remaining strikers could be accepted back to work.
Meanwhile, counsel for the Macajalar Labor Union (MLU-FFW) filed a "Motion to Drop Most of the
Party Respondents From the Above Entitled Case." The 278 employees on whose behalf the motion
was filed, claimed that they were duped or tricked into signing the individual notices of strike. After
discovering this deception and verifying that the strike was staged by a minority of the union officers
and members and without the approval of, or consultation with, majority of the union members, they
immediately withdrew their notice of strike and returned to work.
The petitioner INPORT, not having interposed any objection, the Labor Arbiter, in his decision dated
July 23, 1985, granted their prayer to be excluded as respondents in the complaint for illegal strike.
Moreover, petitioner's complaint was directed against the 31 respondents who did not return to work
and continued with the strike.
For not having complied with the formal requirements in Article 264 of the Labor Code, 3 the strike
staged by petitioner's workers on April 30, 1985 was found by the Labor Arbiter to be illegal. 4 The
workers who participated in the illegal strike did not, however, lose their employment, since there
was no evidence that they participated in illegal acts. After noting that petitioner accepted the other
striking employees back to work, the Labor Arbiter held that the private respondents should similarly
be allowed to return to work without having to undergo the required screening to be undertaken by
their union (MLU-FFW).
As regards the six private respondents who were union officers, the Labor Arbiter ruled that they
could not have possibly been "duped or tricked" into signing the strike notice for they were active
participants in the conciliation meetings and were thus fully aware of what was going on. Hence, said
union officers should be accepted back to work after seeking reconsideration from herein petitioner. 5
The dispositive portion of the decision reads:
IN VIEW OF THE FOREGOING, it is hereby ordered that the strike undertaken by the officers and
majority union members of Macajalar Labor Union-FFW is ILLEGAL contrary to Article 264 of the Labor
Code, as amended. Our conclusion on the employment status of the illegal strikers is subject to our
discussion above. 6
Both petitioner and private respondents filed motions for reconsideration, which public respondent
NLRC treated as appeals. 7
On January 14, 1991, the NLRC affirmed with modification 8 the Arbiter's decision. It held that the
concerted action by the workers was more of a "protest action" than a strike. Private respondents,
including the six union officers, should also be allowed to work unconditionally to avoid
discrimination. However, in view of the strained relations between the parties, separation pay was
awarded in lieu of reinstatement. The decretal portion of the Resolution reads:
WHEREFORE, the decision appealed from is Affirmed with modification in accordance with the foregoing
resolution. Complainant INPORT is hereby ordered, in lieu of reinstatement, to pay respondents the
equivalent of twelve (12) months salaries each as separation pay. Complainant is further ordered to pay
respondents two (2) years backwages based on their last salaries, without qualification or deduction. The
appeal of complainant INPORT is Dismissed for lack of merit. 9
Upon petitioner's motion for reconsideration, public respondent modified the above resolution on
December 12, 1991. 10
The Commission ruled that since private respondents were not actually terminated from service,
there was no basis for reinstatement. However, it awarded six months' salary as separation pay or
financial assistance in the nature of "equitable relief." The award for backwages was also deleted for
lack of factual and legal basis. In lieu of backwages, compensation equivalent to P1,000.00 was
given.
The dispositive portion of the assailed Resolution reads:
WHEREFORE, the resolution of January 14, 1991 is Modified reducing the award for separation pay to
six (6) months each in favor of respondents, inclusive of lawful benefits as well as those granted under
the CBA, if any, based on the latest salary of respondents, as and by way of financial assistance while the
award for backwages is Deleted and Set Aside. In lieu thereof, respondents are granted compensation for
their sudden loss of employment in the sum of P1,000.00 each. The motion of respondents to implead
PPA as third-party respondent is Noted. Except for this modification the rest of the decision sought to be
reconsidered shall stand. 11
In the instant petitions for certiorari, petitioner alleges that public respondent Commission committed
grave abuse of discretion in awarding private respondents separation pay and backwages despite

grave abuse of discretion in awarding private respondents separation pay and backwages despite
the declaration that the strike was illegal.
On the other hand, private respondents, in their petition, assail the reduction of separation pay and
deletion of backwages by the NLRC as constituting grave abuse of discretion.
They also allege that the Resolution of January 14, 1991 could not be reconsidered after the
unreasonable length of time of eleven months.
Before proceeding with the principal issues raised by the parties, it is necessary to clarify public
respondent's statements concerning the strike staged by INPORT's employees.
In its resolution dated January 14, 1991, the NLRC held that the facts prevailing in the case at bench
require a relaxation of the rule that the formal requisites for a declaration of a strike are mandatory.
Furthermore, what the employees engaged in was more of a spontaneous protest action than a
strike. 12
Nevertheless, the Commission affirmed the Labor Arbiter's decision which declared the strike illegal.
A strike, considered as the most effective weapon of labor, 13 is defined as any temporary stoppage
of work by the concerted action of employees as a result of an industrial or labor dispute. 14 A labor
dispute includes any controversy or matter concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging the
terms and conditions of employment, regardless of whether or not the disputants stand in the
proximate relation of employers and employees. 15
Private respondents and their co-workers stopped working and held the mass action on April 30,
1985 to press for their wages and other benefits. What transpired then was clearly a strike, for the
cessation of work by concerted action resulted from a labor dispute.
The complaint before the Labor Arbiter involved the legality of said strike. The Arbiter correctly ruled
that the strike was illegal for failure to comply with the requirements of Article 264 (now Article 263)
paragraphs (c) and (f) of the Labor Code. 16
The individual notices of strike filed by the workers did not conform to the notice required by the law
to be filed since they were represented by a union (MLU-FFW) which even had an existing collective
bargaining agreement with INPORT.
Neither did the striking workers observe the strike vote by secret ballot, cooling-off period and
reporting requirements.
As we stated in the case of National Federation of Sugar Workers v. Ovejera, 17 the language of the
law leaves no room for doubt that the cooling-off period and the seven-day strike ban after the strike-
vote report were intended to be mandatory. 18
Article 265 of the Labor Code reads, inter alia:
(i)t SHALL be unlawful for any labor organization . . . to declare a strike . . . without first having filed
the notice required in the preceding Article or without the necessary strike vote first having been
obtained and reported to the Ministry. (Emphasis ours)
In explaining the above provision, we said:
In requiring a strike notice and a cooling-off period, the avowed intent of the law is to provide an
opportunity for mediation and conciliation. It thus directs the MOLE to exert all efforts at mediation
and conciliation to effect a voluntary settlement' during the cooling-off period. . . .
xxx xxx xxx
The cooling-off period and the 7-day strike ban after the filing of a strike-vote report, as prescribed in Art.
264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain the legitimate
policy objectives embodied in the law. We hold that they constitute a valid exercise of the police power of
the state.19
From the foregoing, it is patent that the strike on April 30, 1985 was illegal for failure to comply with
the requirements of the law.
The effects of such illegal strikes, outlined in Article 265 (now Article 264) of the Labor Code, make a
distinction between workers and union officers who participate therein.
A union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost
their employment status. 20 An ordinary striking worker cannot be terminated for mere participation in
an illegal strike. There must be proof that he committed illegal acts during a strike. A union officer, on
the other hand, may be terminated from work when he knowingly participates in an illegal strike, and
like other workers, when he commits an illegal act during a strike.
In the case at bench, INPORT accepted the majority of the striking workers, including union officers,
back to work. Private respondents were left to continue with the strike after they refused to submit to
the "screening" required by the company. 21
The question to be resolved now is what these remaining strikers, considering the circumstances of
the case, are entitled to receive under the law, if any.
Are they entitled, as they claim, to reinstatement or separation pay and backwages?
In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the remaining workers as well

In his decision, the Labor Arbiter ordered INPORT to reinstate/accept the remaining workers as well
as to accept the remaining union officers after the latter sought reconsideration from INPORT. 22
The NLRC on January 14, 1991, modified the above decision by ordering INPORT to pay private
respondents the equivalent of twelve months in salary as separation pay in lieu of reinstatement and
two years' backwages. 23
On reconsideration, public respondent modified its original award and reduced the separation pay to
six months, deleted the award for backwages and instead awarded P1,000.00 as compensation for
their sudden loss of employment. 24
Under the law, an employee is entitled to reinstatement and to his full backwages when he is
unjustly dismissed. 25
Reinstatement means restoration to a state or condition from which one had been removed or
separated. Reinstatement and backwages are separate and distinct reliefs given to an illegally
dismissed employee. 26
Separation pay is awarded when reinstatement is not possible, due, for instance, to strained
relations between employer and employee.
It is also given as a form of financial assistance when a worker is dismissed in cases such as the
installation of labor saving devices, redundancy, retrenchment to prevent losses, closing or
cessation of operation of the establishment, or in case the employee was found to have been
suffering from a disease such that his continued employment is prohibited by law. 27
Separation pay is a statutory right defined as the amount that an employee receives at the time of
his severance from the service and is designed to provide the employee with the wherewithal during
the period that he is looking for another employment. 28 It is oriented towards the immediate future,
the transitional period the dismissed employee must undergo before locating a replacement job. 29
Hence, an employee dismissed for causes other than those cited above is not entitled to separation
pay. 30Well-settled is it that separation pay shall be allowed only in those instances where the
employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral character. 31
Backwages, on the other hand, is a form of relief that restores the income that was lost by reason of
unlawful dismissal. 32
It is clear from the foregoing summary of legal provisions and jurisprudence that there must
generally be unjust or illegal dismissal from work, before reinstatement and backwages may be
granted. And in cases where reinstatement is not possible or when dismissal is due to valid causes,
separation pay may be granted.
Private respondents contend that they were terminated for failure to submit to the controversial
"screening" requirement.
Public respondent Commission took the opposite view and held:
As the evidence on record will show, respondents were not actually terminated from the service.
They were merely made to submit to a screening committee as a prerequisite for readmission to
work. While this condition was found not wholly justified, the fact remains that respondents who are
resistant to such procedure are partly responsible for the delay in their readmission back to work.
Thus, We find justifiable basis in further modifying our resolution of January 14, 1991 in accordance
with the equities of the case.
We shall therefore recall the award for backwages for lack of factual and legal basis. The award for
separation pay shall likewise (be) reasonably reduced. Normally, severance benefit is granted as an
alternative remedy to reinstatement. And since there is no dismissal to speak of, there is no basis for
awarding reinstatement as a legal remedy. In lieu thereof, We shall grant herein respondents separation
pay as and by way of financial assistance in the nature of an "equitable relief". 33
We find that private respondents were indeed dismissed when INPORT refused to accept them back
to work after the former refused to submit to the "screening" process.
Applying the law (Article 264 of the Labor Code) which makes a distinction, we differentiate between
the union members and the union officers among private respondents in granting the reliefs prayed
for.
Under Article 264 of the Labor Code, a worker merely participating in an illegal strike may not be
terminated from his employment. It is only when he commits illegal acts during a strike that he may
be declared to have lost his employment status. Since there appears no proof that these union
members committed illegal acts during the strike, they cannot be dismissed. The striking union
members among private respondents are thus entitled to reinstatement, there being no just cause
for their dismissal.
However, considering that a decade has already lapsed from the time the disputed strike occurred,
we find that to award separation pay in lieu of reinstatement would be more practical and
appropriate.
No backwages will be awarded to private respondent-union members as a penalty for their

participation in the illegal strike. Their continued participation in said strike, even after most of their
co-workers had returned to work, can hardly be rewarded by such an award.
The fate of private respondent-union officers is different. Their insistence on unconditional
reinstatement or separation pay and backwages is unwarranted and unjustified. For knowingly
participating in an illegal strike, the law mandates that a union officer may be terminated from
employment. 34
Notwithstanding the fact that INPORT previously accepted other union officers and that the
screening required by it was uncalled for, still it cannot be gainsaid that it possessed the right and
prerogative to terminate the union officers from service. The law, in using the word may, grants the
employer the option of declaring a union officer who participated in an illegal strike as having lost his
employment. 35
Moreover, an illegal strike which, more often than not, brings about unnecessary economic
disruption and chaos in the workplace should not be countenanced by a relaxation of the sanctions
prescribed by law.
The union officers are, therefore, not entitled to any relief.
However, the above disquisition is now considered moot and academic and cannot be effected in
view of a manifestation filed by INPORT dated May 15, 1987. 36 In said Manifestation, it attached a
Certification by the President of the Macajalar Labor Union (MLU-FFW) to the effect that the private
respondents/remaining strikers have ceased to be members of said union. The MLU-FFW had an
existing collective bargaining agreement with INPORT containing a union security clause. Article 1,
Section 2(b) of the CBA provides:
The corporation shall discharge, dismiss or terminate any employee who may be a member of the Union
but loses his good standing with the Union and or corporation, upon proper notice of such fact made by
the latter; provided, however, . . . after they shall have received the regular appointment as a condition for
his continued employment with the corporation. . . . 37
Since private respondents (union members) are no longer members of the MLU, they cannot be
reinstated. In lieu of reinstatement, which was a proper remedy before May 1987 when they were
dismissed from the union, we award them separation pay. We find that to award one month salary
for every year of service until 1985, after April of which year they no longer formed part of INPORT's
productive work force partly through their own fault, is a fair settlement.
Finally, there is no merit in INPORT's statement that a Resolution of the NLRC cannot be modified
upon reconsideration after the lapse of an unreasonable period of time. Under the present
circumstances, a period of eleven months is not an unreasonable length of time. The Resolution of
the public respondent dated January 14, 1991 did not acquire finality in view of the timely filing of a
motion for reconsideration. Hence, the Commission's modified Resolution issued on December 12,
1991 is valid and in accordance with law.
In sum, reinstatement and backwages or, if no longer feasible, separation pay, can only be granted if
sufficient bases exist under the law, particularly after a showing of illegal dismissal. However, while
the union members may thus be entitled under the law to be reinstated or to receive separation pay,
their expulsion from the union in accordance with the collective bargaining agreement renders the
same impossible.
The NLRC's award of separation pay as "equitable relief" and P1,000.00 as compensation should be
deleted, these being incompatible with our findings detailed above.
WHEREFORE, from the foregoing premises, the petition in G.R. No. 103560 ("Gold City Integrated
Port Service Inc. v. National Labor Relations Commission, et al.") is GRANTED. One month salary
for each year of service until 1985 is awarded to private respondents who were not union officers as
separation pay. The petition in G.R. No. 103599 ("Adelo Ebuna, et al. v. National Labor Relations
Commission, et al.") is DISMISSED for lack of merit. No costs.
SO ORDERED.
Feliciano, Melo, Vitug and Francisco, JJ., concur.
Footnotes
1 Namely, Adelo Ebuna, Wilfredo Dahan, Ricardo Laureto, Rey Valle, Vicente Cahatol, Marcos
Ganzan, Rodolfo Perez, Roel Saa, Rogelio Villafuerte, Manuel Yanez, Wilfredo Amper, Quireco
Lejano, Emmanuel Valmoria, Rolando Jamilla, Nicolas Dalaguan, Balbino Fajardo, Pedro Suarez,
Elpidio Estroga, Ruben Pajo, Jesustody Omisol, Ricardo Aba, Fidel Calio, Saturnino Sesyban, Rudy
Laureto, Oscar Lapinig, Felipe Laurente, Roger Zagado, Soteco Cuenca, Fidel Eslit, Zosimo Omisol,
Angel Bernido and Michael Yagotyot.
2 Of the thirty-one remaining strikers, four have already died, leaving the twenty-seven respondents
herein.
3 Now Article 263.
4 Decision of Executive Labor Arbiter Ildefonso O. Agbuya, dated July 23, 1985, NLRC RABX Case
No. 5-0405-85. Rollo, p. 57.

No. 5-0405-85. Rollo, p. 57.
5 Decision of the Labor Arbiter, p. 11; Rollo, p. 66.
6 Ibid., p. 66.
7 On May 20, 1987, petitioner filed a Manifestation to the effect that the 32 remaining striking
employees have ceased to be members of the Macajalar Labor Union — FFW, per Certification
dated May 15, 1987 by the President of MLU-FFW. Rollo, p. 84.
8 Resolution penned by Presiding Commissioner Musib M. Buat and concurred in by Commissioner
Leon G. Gonzaga, Jr., Commissioner Oscar N. Abella, on leave. Rollo, p. 85.
9 Rollo, p. 105.
10 Penned by Presiding Commissioner Musib M. Buat, with Commissioners Oscar N. Abella and
Leon G. Gonzaga, Jr., concurring. Rollo, p. 119.
11 Rollo, p. 124.
12 Rollo, pp. 96-98.
13 Bisig ng Manggagawa sa Concrete Aggregates Inc. v. NLRC, G.R. No. 105090, September 16,
1993, 226 SCRA 499; Ilaw at Buklod ng Manggagawa v. NLRC, G.R. No. 91980, June 27, 1991,
198 SCRA 586.
14 Labor Code, Article 212 (0).
15 Labor Code, Article 212 (1).
16 Article 264. Strikes, picketing, and lockouts. —
(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining representative may
file a notice of strike . . . with the Ministry at least thirty (30) days before the intended date thereof. In
cases of unfair labor practices, the period of strike shall be shortened to fifteen (15) days; and in the
absence of a duly certified or recognized bargaining representative, the notice of strike may be filed
by any legitimate labor organization in behalf of its members.
xxx xxx xxx
(f) A decision to declare a strike must be approved by at least two-thirds (2/3) of the total union
membership in the bargaining unit concerned obtained by secret ballot in meetings or referenda. . . .
In every case, the union . . . shall furnish the Ministry the results of the voting at least seven (7) days
before the intended strike . . . , subject to the cooling-off period herein provided. (Emphasis supplied)
17 G.R. No. L-59743, May 31, 1982, 114 SCRA 354.
18 Ibid., p. 365.
19 Ibid., at p. 367.
20 Labor Code, Article 265 (now Article 264).
21 The screening was allegedly requested by the Macajalar Labor Union of petitioner INPORT upon
the belief that a competing union, the National Federation of Labor, influenced its members into
staging the strike. INPORT points out that it agreed to the screening requirement because it merely
wanted to avoid further friction with the union (MLU-FFW). Rollo, pp. 120-121.
22 Rollo, p. 66.
23 Rollo, p. 105.
24 Rollo, p. 124.
25 Labor Code, Article 279.
26 Torillo v. Leogardo, G.R. No. 77205, May 27, 1991, 197 SCRA 471; Indophil Acrylic Mfg. Corp. v.
NLRC, G.R. No. 96488, September 27, 1993, 226 SCRA 723.
27 Labor Code, Articles 283 and 284; Lemery Savings and Loan Bank v. NLRC, G.R. No. 96439,
January 27, 1992, 205 SCRA 492; Banco Filipino Savings and Mortgage Bank v. NLRC, G.R. No.
82135, August 20, 1990, 188 SCRA 700.
28 A Prime Security Services Inc. v. NLRC, G.R. No. 93476, March 19, 1993, 220 SCRA
142citing PLDT v. NLRC 164 SCRA 671, Del Castillo v. NLRC, 176 SCRA 229 and Cosmopolitan
Funeral Homes v. Maalat, 187 SCRA 108; Aquino v. NLRC, G.R. No. 87653, February 11, 1992,
206 SCRA 118.
29 Escareal v. NLRC, G.R. No. 99359, September 2, 1992, 213 SCRA 472.
30 Article 279 and 282; Rule 1, Section 7, Book VI, Omnibus Implementing Rules of the Labor Code.
31 PLDT v. NLRC, G.R. No. L-80609, Aug. 23, 1988, 164 SCRA 671; Sampaguita Garments Corp.
v. NLRC, G.R. No. 102406, June 17, 1994, 233 SCRA 260; Cathedral School of Technology, G.R.
No. 101483, October 13, 1991, 214 SCRA 551; Baguio Country Club v. NLRC, G.R. No. 102397,
September 4, 1992, 213 SCRA 664.
32 Escareal v. NLRC, 213 SCRA 472.
33 Rollo, p. 123.
34 Labor Code, Article 264.
35 Article 264.
(a) . . . Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during a strike MAY be declared
to have lost his employment status: Provided, That mere participation of a worker in a lawful strike

to have lost his employment status: Provided, That mere participation of a worker in a lawful strike
shall not constitute sufficient ground for termination of his employment, even if a replacement had
been hired by the employer during such lawful strike
36 Rollo, p. 84.
37 Petition, p. 15; Rollo, p. 15.
Pasted from <http://www.lawphil.net/judjuris/juri1995/jul1995/gr_103560_1995.html>

ELGIN, J. & E. RY. CO. v. BURLEY et al.
12:54 AM
325 U.S. 711

65 S.Ct. 1282
89 L.Ed. 1886
ELGIN, J. & E. RY. CO. v. BURLEY et al.
No. 160.
Argued Nov. 15, 1944.
Decided June 11, 1945.
Rehearing Granted Oct. 15, 1945.
See 66 S.Ct. 86.
Mr. Paul R. Conaghan, of Chicago, Ill., for petitioner.
Mr. John H. Gately, of Chicago, Ill., for respondents.
Mr. Justice RUTLEDGE delivered the opinion of the Court.
1
This cause, arising upon an amended complaint,1 brings for decision novel and important
questions concerning the authority of a collective bargaining representative, affecting the
operation of the Railway Labor Act of 1934, 48 Stat. 1185, 45 U.S.C. § 151 ff, 45 U.S.C.A. §
151 et seq. The ultimate issues are whether such an agent has authority, by virtue of the
Act or otherwise, either to compromise and settle accrued monetary claims of ten
employees or to submit them for determination by the National Railroad Adjustment Board
to the exclusion of their right, after the settlement and after the Board's adverse decision,
to assert them in a suit brought for that purpose. The claims are for 'penalty damages' for
alleged violation of the starting time provisions of a collective agreement, varying from
$3,500 to $14,000, and in the aggregate amounting to $65,274.00. 2
2
The District ourt rendered summary judgment for the carrier, holding that the Board's
award was a final adjudication of the claims, within the union's power to seek and the
Board's to make, precluding judicial review.3 The Court of Appeals reversed the judgment, 7
Cir., 140 F.2d 488, 490, holding that the record presented a question of fact whether the
union had been authorized by respondents 'to negotiate, compromise, and settle' the
claims. We granted certiorari, 323 U.S. 690, 65 S.Ct. 45, in order to resolve the important
questions affecting application and operation of the Act.
3
A statement of the more important facts will put the issues in sharper perspective. The
controversy relates to operations in petitioner's so-called 'Whiting Yard.' Prior to July 24,
1934, respondents, or some of them, were employed by the Standard Oil Company to do
private intraplant switching in its Whiting, Indiana, plant. On that date this work was taken
over by petitioner. Until then Standard Oil's switching crews began work each day at hours
fixed in advance by the management, which varied as plant operations required.
4
Prior to 1934 petitioner's crews at all yards in Indiana and Illinois began work daily in
accordance with starting time provisions contained in Article 6 of a collective agreement
made in 1927 between petitioner and the Brotherhood of Railroad Trainmen, governing
rules, working conditions and rates of pay of yardmen.
5
Upon transfer of the Whiting yard switching to petitioner, respondents theretofore employed
by Standard Oil became employees of petitioner and members of the Brotherhood. On July
24, 1934, company officials conferred with representatives of the engineers, the firemen
and the yardmen concerning terms of employ ment. The Brotherhood acted for the yardmen.
Apparently agreement was reached on all matters except starting time but, as to that,
versions of what transpired differ. Respondents and the Brotherhood have maintained that
the 1927 agreement, including Article 6, became applicable to them upon the transfer. They
say, however, that they assented to a suspension of Article 6 for thirty days from July 27,
1934, to enable the company to work out adjustment to the plant's operations, and
accordingly it governed their relation with petitioner from August 26, 1934.
6

6
The company has insisted that Article 6 did not become applicable to respondents upon the
transfer and that it made no agreement to apply Article 6, other than to follow it as closely
as possible, prior to October 31, 1938, when it and the Brotherhood eventually agreed to
place Whiting yard crews on fixed starting time under circumstances to be noted.
7
Whichever version is true, a long controversy resulted. The carrier continued to follow the
former practice, although departures from the schedule were reduced, as it claims, in
conformity with the oral undertaking to observe it as far as possible. The work went on
without interruption. But numerous complaints on account of departures were made through
local officers of the Brotherhood. Time slips were filed by the employees. Frequent
negotiations took place. None however resulted in a settlement prior to October 31, 1938.
8
In this state of affairs, respondents authorized the Brotherhood to file complaint with the
National Railroad Adjustment Board for violation of Article 6. This was done on November
23, 1936. The 'statement of claim' was signed and filed by Williams, chairman of the
general grievance committee. It asserted that the carrier, having 'placed the employees
under the agreement of the yardmen,' had 'failed to put into effect the starting time
provisions' o Article 6, and denied that violation was justified either because the carrier had
agreed with the Engineers to follow the formerly prevailing practice or by the carrier's claim
that the work could be done in no other way. The submission was intended to secure
compliance. There was no prayer for money damages. Petitioner maintained that Article 6
was not applicable.
9
The Board, following its customary procedure, 4 docketed the claim as No. 3537, notified the
carrier and the union that the case, with many others docketed at the same time, was
'assumed to be complete,' and forwarded to each copies of the other's submissions. The
record does not disclose what followed until nearly two years later.
10
On October 31, 1938, Williams and Johnson, secretary of the Brotherhood, two of the
grievance committee's three members, accepted an offer made by petitioner's president,
Rogers, to settle the claim. The settlement took the form of a proposal, made in a letter by
Rogers to Williams, to settle some 61 different claims, including 'Labor Board Docket No.
3537—Starting time of switch engines in Whiting S. O. Yard.' Williams and Johnson
endorsed acceptance for the Brotherhood and the yardmen on the letter. Because of its
importance, pertinent portions are set forth in the margin. 5 On the day the settlement was
concluded Rogers and Williams advised the Board of it by letter and jointly requested that
the case be withdrawn from the docket, which accordingly was done.
11
Notwithstanding the settlement, a further dispute arose. In March, 1939, the Brotherhood,
through Williams, requested the carrier to furnish a complete list of crews in the Whiting
yard started at times other than those fixed by Article 6 from August 27, 1934, to
November 15, 1938, when the settlement became effective. The company declined to
furnish the list, stating it was at a loss to understand the reason for the request in view of
the settlement.
12
The upshot of the dispute was the filing of another claim with the Board, Docket No. 7324,
on May 18, 1939, by Williams, acting for the Brotherhood. This submission was 'for one
day's pay at time and one-half for each foreman and each helper for each day they were
required to work in yard service in the Whiting (Standard Oil Company) Yard, in violation of
the fixed starting time provided for in Article No. 6 of the Yardmen's Agreement * * *
effective January 1, 1927, and applicable to Whiting (Standard Oil Company) Yardmen, July
27, 1934, from dates of August 27, 1934, until November 14, 1938, inclusive.'
13
The submission not only maintained the applicability of Article 6 and accrual of the
individual claims asserted. It also maintained that the settlement of October 31, 1938, was
effective only to fix the starting time for the future and had no effect to waive or determine
individual claims for penalty damages accrued prior to the settlement. 6
14
The carrier's submission reiterated its position in Case No. 3537. It also relied upon the
settlement as precluding later assertion of any claim, individual or collective, based upon

settlement as precluding later assertion of any claim, individual or collective, based upon
occurrences prior to the date of the settlement.
15
The matter went to decision by the Board. Under the procedure prescribed in case of
deadlock, cf. § 3, First (l), a referee was called in. The award was made by the First Division
on September 6, 1940. It sustained the Board's jurisdiction,7 found that 'the parties to said
dispute were given due notice of hearing thereon,' and held that 'the evidence shows that
the parties to the agreement disposed of the claim here made by the letter of carrier dated
October 28, 1938, accepted by employees October 31, 1938.' Accordingly the claim was
'denied per findings.'
16
Thereafter, on November 19, 1940, the present suit was instituted. As has been not d, the
case comes here after a summary judgment rendered on the carrier's motion, supported by
the affidavit of its vice president. This in effect set up the compromise agreement and the
award in Case No. 7324 as bases for the judgment sought.
17
The range and precise nature of the issues may be summarized best perhaps as they were
shaped upon respondents' opposition to the carrier's motion. They denied that either
Williams or the union had authority to release their individual claims or to submit them for
decision by the Board. They relied upon provisions of the Brotherhood's constitution and
rules,8 of which the carrier was alleged to have knowledge, as forbidding union officials to
release individual claims or to submit them to the Board 'without specific authority to do so
granted by the individual members themselves'; and denied that such authority in either
respect had been given.
18
The validity and the conclusive effect of the award were challenged also upon other
grounds, among them that respondents individually received no notice of the submission or
the hearing until after the award was made; that since the award denied a claim for money
damages, it was within the exception of Section 3, First (m), which provides that 'the
awards shall be final and binding upon both parties to the dispute, except insofar as they
shall contain a money award,' and therefore did not preclude this suit; and that the Act, if
construed to make the award conclusive, would violate the Fifth Amendment's due process
provision by denying judicial review to defeated employees, though allowing it to defeated
employers. Cf. § 3, First (p), (q); Washington Terminal Co. v. Boswell, 75 U.S.App.D.C. 1,
124 F.2d 235, affirmed by an equally divided Court, 319 U.S. 732, 63 S.Ct. 1430, 87 L.Ed.
1694.
19
Finally respondents suggested most sweepingly that the Board may act 'merely as an
arbitrator,' with the result that 'any decisions thereunder are void because it passes on
matters and bases its decision and its opinion on law and fact which is contrary to public
policy.' The prayer was that the court overrule the carrier's motion for summary judgment
and, in doing so, determine that the release was not effective; the award was not a final
adjudication of the claims; and the award was void for lack of jurisdiction of the parties or
the subject matter or 'because said Act under which award was entered is unconstitutional.'
20
The District Court's judgment rested squarely on the conclusive effect of the award in
Docket No. 7324. It did not indicate whether it regarded the Brotherhood's authority to
submit the claims and appear for the employees as derived from the statute or, apart from
the statute, as a matter of law upon the particular facts. But it must be taken to have held
that, upon the pleadings and the affidavits, no genuine issue of material fact was presented,
Federal Rules of Civil Procedure, Rule 56(c), 28 U.S.C.A. following section 723c, and
therefore that it was immaterial if, as alleged, respondents had not individually given the
Brotherhood or Williams specific authority to submit their claims for decision or represent
them in the hearings.
21
The Court of Appeals, however, made to reference to the issues concerning the award and
its effect upon the claims. But its judgment must be taken to have determined implicitly
that none of petitioner's contentions in these respects is valid.
22
The issues are not merely, as the Court of Appeals assumed, whether the Brotherhood had
authority to compromise and settle the claims by agreement with the carrier and whether

authority to compromise and settle the claims by agreement with the carrier and whether
on the record this presents a question of fact. For petitioner insists, and the District Court
held, that the award of the Board was validly made, and is final, precluding judicial review.
We do not reach the questions of finality, which turn upon construction of the statutory
provisions and their constitutional validity as construed. 9 Those questions should not be
determined unless the award was validly made, which presents, in our opinion, the crucial
question. Respondents attack the validity and legal effectiveness of the award in three
ways. Two strike at its validity on narrow grounds. Respondents say the Brotherhood had no
power to submit the dispute for decision by the Board without authority given by each of
them individually and that no such authority was given. They also maintain that they were
entitled to have notice individually of the proceedings before the Board and none was given.
23
The third and most sweeping contention undercuts all other issues concerning the award's
effects, whether for validity or for finality. In substance it is that the award, when rendered,
amounts to nothing more than an advisory opinion. The contention, founded upon language
of the opinion in Moore v. Illinois Central R. Co., 312 U.S. 630, 61 S.Ct. 754, 85 L.Ed. 1089,
regards the Act's entire scheme for the settlement of grievances as wholly conciliatory in
character, involving no element of legal effectiveness, with the consequence that the parties
are entirely free to accept or ignore the Board's decision.
24
At the outset we put aside this broadest contention as inconsistent with the Act's terms,
purposes and legislative history.1 0 The Moore case involved no question concerning the
validity or the legal effectiveness of an award when rendered. 1 1 Nor did it purport to
determine that the Act creates no legal obligations through an award or otherwise. Apart
from the affirmance by equal division in Washington Terminal Co. v. Boswell, supra, both
prior and later decisions here are wholly inconsistent with such a view of its effects. Cf.
Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789; Texas &
N.O.R. Co. v. Railway Clerks, 281 U.S. 548, 50 S.Ct. 427, 74 L.Ed. 1034;1 2 Switchmen's
Union v. National Mediation Board, 320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61; General
Committee v. M-K-T R. Co., 320 U.S. 323, 64 S.Ct. 146, 88 L.Ed. 76; General Committee v.
Southern Pacific Co., 320 U.S. 338, 64 S.Ct. 142, 88 L.Ed. 85.
I.
25
The difference between disputes over grievances and disputes concerning the making of
collective agreements is traditional in railway labor affairs. It has assumed large importance
in the Railway Labor Act of 1934, substantively and procedurally. 1 3 It divides the jurisdiction
and functions of the Adjustment Board from those of the Mediation Board, giving them their
distinct characters. It also affects the parts to be played by the collective agent and the
represented employees, first in negotiations for settlement in conference and later in the
quite different procedures which the Act creates for disposing of the two types of dispute.
Cf. §§ 3, 4.
26
The statute first marks the distinction in Section 2, which states as among the Act's five
general purposes: '(4) to provide for the prompt and orderly settlement of all disputes
concerning rates of pay, rules, or working conditions; (5) to provide for the prompt and
orderly settlement of all disputes growing out of grievances or out of the interpretation or
application of agreements covering rates of pay, rules, or working conditions.' The two sorts
of dispute are sharply distinguished,1 4 though there are points of common treatment.
Nevertheless, it is clear from the Act itself, from the history of railway labor disputes and
from the legislative history of the various statutes which have dealt with them, 1 5 that
Congress has drawn major lines of difference between the two classes of controversy.
27
The first relates to disputes over the formation of collective agreements or efforts to secure
them. They arise where there is no such agreement or where it is sought to change the
terms of one, and therefore the issue is not whether an existing agreement controls the
controversy. They look to the acquisition of rights for the future, not to assertion of rights
claimed to have vested in the past.
28
The second class, however, contemplates the existence of a collective agreement already
concluded or, at any rate, a situation in which no effort is made to bring about a formal
change in terms or to create a new one. The dispute relates either to the meaning or proper

change in terms or to create a new one. The dispute relates either to the meaning or proper
application of a particular provision with reference to a specific situation or to an omitted
case. In the latter event the claim is founded upon some incident of the employ ment
relation, or asserted one, independent of those covered by the collective agreement, e.g.,
claims on account of personal injuries. In either case the claim is to rights a crued, not
merely to have new ones created for the future.
29
In general the difference is between what are regarded traditionally as the major and the
minor disputes of the railway labor world. 1 6 The former present the large issues about which
strikes ordinarily arise with the consequent interruptions of traffic the Act sought to avoid.
Because they more often involve those consequences and because they seek to create
rather than to enforce contractual rights, they have been left for settlement entirely to the
processes of noncompulsory adjustment.
30
The so-called minor disputes, on the other hand, involving grievances, affect the smaller
differences which inevitably appear in the carrying out of major agreements and policies or
arise incidentally in the course of an employ ment. They represent specific maladjust ments
of a detailed or individual quality. They seldom produce strikes, though in exaggerated
instances they may do so.1 7 Because of their comparatively minor character and the general
improbability of their causing interruption of peaceful relations and of traffic, the 1934 Act
sets them apart from the major disputes and provides for very different treatment.
31
Broadly, the statute as amended marks out two distinct routes for settlement of the two
classes of dispute, respectively, each consisting of three stages. The Act treats the two
types of dispute alike in requiring negotiation as the first step toward settlement and
therefore in contemplating voluntary action for both at this stage, in the sense that
agreement is sought and cannot be compelled. To induce agreement, however, the duty to
negotiate is imposed for both grievances and major disputes. 1 8
32
Beyond the initial stages of negotiation and conference, however, the procedures diverge.
'Major disputes' go first to mediation under the auspices of the National Mediation Board; if
that fails, then to acceptance or rejection of arbitration, cf. § 7; Trainmen v. Toledo, P. &
W.R. Co., 321 U.S. 50, 64 S.Ct. 413, 88 L.Ed. 534, 150 A.L.R. 810; and finally to possible
presidential intervention to secure adjustment. § 10. For their settlement the statutory
scheme retains throughout the traditional voluntary processes of negotiation, mediation,
voluntary arbitration, and conciliation. Every facility for bringing about agreement is
provided and pressures for mobilizing public opinion are applied. The parties are required to
submit to the successive procedures designed to induce agreement. § 5, First (b). But
compulsions go only to insure that those procedures are exhausted before resort can be had
to self-help. No authority is empowered to decide the dispute and no such power is
intended, unless the parties themselves agree to arbitra ion.
33
The course prescribed for the settlement of grievances is very different beyond the initial
stage. Thereafter the Act does not leave the parties wholly free, at their own will, to agree
or not to agree. On the contrary, one of the main purposes of the 1934 amendments was to
provide a more effective process of settlement. 1 9
34
Prior to 1934 the parties were free at all times to go to court to settle these disputes.
Notwithstanding the contrary intent of the 1926 Act, 44 Stat. 577, 45 U.S.C.A. § 151 et
seq., each also had the power, if not the right, to defeat the intended settlement of
grievances by declining to join in creating the local boards of adjustment provided for by
that Act. They exercised this power to the limit. Deadlock became the common practice,
making decision impossible. The result was a complete breakdown in the practical working
of the machinery. Grievances accumulated and stagnated until the mass assumed the
proportions of a major dispute. Several organizations took strike ballots and thus
threatened to interrupt traffic, a factor which among others induced the Coordinator of
Transportation to become the principal author and advocate of the amendments. The
sponsor in the House insisted that Congress act upon them before adjournment for fear that
if no action were taken a railroad crisis might take place. 2 0 The old Mediation Board was
helpless.2 1 To break this log jam, and at the same time to get grievances out of the way of

the settling of major disputes through the functioning of the Mediation Board, the
Adjustment Board was created and given power to decide them. 2 2
35
The procedure adopted is not one of mediation an conciliation only, like that provided for
major disputes under the auspices of the Mediation Board. Another tribunal of very different
character is established with 'jurisdiction' to determine grievances and make awards
concerning them. Each party to the dispute may submit it for decision, w ether or not the
other is willing, provided he has himself discharged the initial duty of negotiation. 2 3 § 3,
First (i). Rights of notice, hearing, and participation or representation are given. § 3, First
(j). In some instances judicial review and enforcement of awards are expressly provided or
are contemplated. § 3, First (p); cf. § 3, First (m). When this is not done, the Act purports
to make the Board's decisions 'final and binding.' § 3, First (m).
36
The procedure is in terms and purpose very different from the preexisting system of local
boards. That system was in fact and effect nothing more than one for what respondents call
'voluntary arbitration.' No dispute could be settled unless submitted by agreement of all
parties. When one was submitted, deadlock was common and there was no way of escape.
The Adjustment Board was created to remove the settlement of grievances from this
stagnating process and bring them within a general and inclusive plan of decision. 2 4 The aim
was not to dispense with agreement. It was to add decision where agreement fails and thus
to safeguard the public as well as private interests against the harmful effects of the
preexisting scheme.
II.
37
The collective agent's power to act in the various stages of the statutory procedures is part
of those procedures and necessarily is related to them in function, scope and purpose.
38
The statute itself vests exclusive authority to negotiate and to conclude agreements
concerning major disputes in the duly selected collective agent. Cf. Virginian Ry. Co. v.
System Federation, supra. 2 5 Since the entire statutory procedure for settling major disputes
is aimed only at securing agreement and not decision, unless the parties agree to
arbitration, this exclusive authority includes representation of the employees not only in the
stage of conference, but also in the later ones of mediation, arbitration and conciliation.
39
Whether or not the agent's exclusive power extends also to the settlement of grievances, in
conference or in proceedings before the Board, presents more difficult questions. The
statute does not expressly so declare. Nor does it explicitly exclude these functions. The
questions therefore are to be determined by implication from the pertinent provisions.
These are the ones relating to rights of participation in negotiations for settlement and in
proceedings before the Board. They are in part identical with the provisions relating to
major disputes, but not entirely so; and the differences are highly material.
40
The questions of power to bargain concerning grievances, that is, to conclude agreements
for their settlement, and to represent aggrieved employees in proceedings before the Board
are not identical. But they obviously are closely related in the statutory scheme and in fact.
If the collective agent has exclusive power to settle grievance by agreements, a strong
inference, though not necessarily conclusive, would follow for its exclusive power to
represent the aggrieved employee before the Board. The converse also would be true.
Accordingly it will be convenient to consider the two questions together.
41
The primary provisions affecting the duty to treat are found in Section 2, First and Second,
imposing the duty generally as to all disputes, both major and minor, and Sections 2, Sixth
and 3, First (i), together with the proviso to Section 2, Fourth, which apply specially to
grievances. These sections in material part are set forth in the margin, 2 6 except the proviso
which is as follows: 'Provided, That nothing in this Act shall be construed to prohibit a
carrier from permitting an employee, individually, or local representatives of employees
from conferring with management during working hours without loss of time, or to prohibit
a carrier from furnishing free transportation to its employees while engaged in the business
of a labor organization.'2 7 (Emphasis added.)
42
Relating to participation in the Board's proceeding, in addition to the concluding sentence of

Relating to participation in the Board's proceeding, in addition to the concluding sentence of
Section 3, First (i), see note 26, is Section 3, First (j), as follows: 'Parties may be heard
either in person, by counsel, or by other representatives, as they may respectively elect,
and the several divisions of the Adjustment Board shall give due notice of all hearings to the
employee or employees and the carrier or carriers involved in any dispute submitted to
them.' (Emphasis added)
43
Petitioner urges that, notwithstanding the proviso and Section 3, First (j), the effect of the
provisions taken as a whole is to make the collective agent the employees' exclusive
representative for the settlement of all disputes, both major and minor, and of the latter
'whether arising out of the application of such (collective) agreements or otherwise.' The
argument rests primarily upon Sections 2, First, Second, Third, Fourth, Sixth, and 3, First
(i). It emphasizes the carrier's duty to treat with the collective representative, as reinforced
by Sections 2, Eighth and Tenth.2 8
44
Petitioner does not squarely deny that the aggrieved employee may confer with the carrier's
local officials either personally or through local union representatives in accordance with the
proviso to Section 2, Fourth. But this right, if it exists, is regarded apparently as at most
one to be heard, since in petitioner's view the power to make settlement by agreement is
vested exclusively in the collective agent. Cf. §§ 2, Sixth and 3, First (i).
45
The collective agent, as the carrier conceives the statute, is the 'representative(s),
designated and authorized so to confer' within the meaning of Section 2, Second, without
distinction between major and minor disputes. It is likewise the '(representative), for the
purposes of this Act,' again without distinction between the two types of dispute, in the
selection of which by 'the respective parties' Section 2, Third forbids the other to interfere.
It is also 'the designated representative' of the employees with whom, by Section 2, Sixth,
the carrier is required to treat concerning grievances in conference, a provision considered
to carry over into Section 3, First (i). The latter requires that disputes over grievances 'shall
be handled in the usual manner up to and including the chief operating officer of the carrier
designated to handle such disputes.'
46
In accordance with this view 'either party,' within the further provision of Section 3, First (i)
authorizing reference of the dispute to the Adjustment Board 'by petition of the parties or by
either party,' refers to the carrier or the collective agent, not to the aggrieved employee
acting otherwise than by the collective agent. Hence, 'parties' as used in Section 3, First (j),
is given similar meaning. Consequently the collective agent also has exclusive power to
submit the dispute to the Board and to represent aggrieved employees before it.
47
Petitioner's view has been adopted, apparently, in the general practice, if not the formally
declared policy of the Adjustment Board. And this, it seems, has been due to the position
taken consistently by the employees' representatives on the Board, over the opposition of
carrier representatives. 2 9 The unions, apparently, like petitioner in this case, interpret the
Act as not contemplating two distinct systems for the settlement of disputes, one wholly
collective for major disputes, the other wholly individual for minor ones. In this view the
collective agent becomes a party to the collective agreement by making it and its interest as
representative of the collective interest does not cease when that function ends. It remains
a party to the agreement, as such representative, after it is made; and consequently, in
that capacity and for the protection of the collective interest, is concerned with the manner
in which the agreement may be interpreted and applied.
48
Accordingly, petitioner urges that the statute, both by its terms and by its purpose, confers
upon the collective agent the same exclusive power to deal with grievances, whether by
negotiation and contract, or by presentation to the Board when agreement fails, as is given
with respect to major disputes. And the aggrieved employee's rights of individual action are
limited to rights of hearing before the union and possibly also by the carrier.
49
We think that such a view of the statute's effects, in so far as it would deprive the aggrieved
employee of effective voice in any settlement and of individual hearing before the Board,
would be contrary to the clear import of its provisions and to its policy.
50

would be contrary to the clear import of its provisions and to its policy.
50
It would be difficult to believe that Congress intended, by the 1934 amendments, to
submerge wholly the individual and minority interests, with all power to act concerning
them, in the collective interest and agency, not only in forming the contracts which govern
their employment relation,3 0 but also in giving effect to them and to all other incidents of
that relation. Acceptance of such a view would require the clearest expression of purpose.
For this would mean that Congress had nullified all preexisting rights of workers to act in
relation to their employ ment, including perhaps even the fundamental right to consult with
one's employer, except as the collective agent might permit. Apart from questions of
validity, the conclusion that Congress intended such consequences could be accepted only if
it were clear that no other construction would achieve the statutory aims. 3 1
51
The Act's provisions do not require such a construction. On the contrary they appear
expressly to preclude it. The proviso to Section 2, Fourth in terms reserves the right of 'an
employee, individually' to confer with management; and Section 3, First (j), not only
requires the Board to give 'due notice of all hearings to the employee * * * involved in any
dispute submitted * * *,' but provides for 'parties' to be heard 'either in person, by counsel,
or by other representatives, as they may respectively elect.'
52
These provisions would be inapposite if the collective agent, normally a labor union and an
unincorporated association, exclusively were contemplated. Such organizations do not and
cannot appear and be heard 'in person.' Nor would the provision for notice 'to the employee
* * * involved in any dispute' be either appropriate or necessary. If only the collective
representative were given rights of submission, notice, appearance and representation,
language more aptly designed so to limit those rights was readily available and was
essential for the purpose.
53
This conclusion accords fully with the terms of the proviso to Section 2, Fourth. It appears
to be intended as a qualification, in respect to loss of time and free transportation, of the
section's preceding prohibitions against the carrier's giving financial and other aid to labor
organizations and to employees in an effort to influence their union affiliations. 3 2 However,
the language clearly contemplates also that the individual employee's right to confer with
the management about his own grievance is preserved. There is some indication in the
legislative history to this effect. 3 3The right is so fundamental that we do not believe the
purpose was to destroy it. Cf. 40 Op.Atty.Gen., No. 59, pp. 5, 6 (Dec. 29, 1942); Hughes
Tool Co. v. National Labor Relations Board, 5 Cir., 147 F.2d 69.
54
Rights of conference are not identical with rights of settlement. But the purpose of
conference and the duty to treat is to bring about agreement. The right and the obligation
to share in the negotiations are relevant to their aim. Conceivably the statute might confer
the right to participate in the negotiations, that is, to be heard before any agreement is
concluded, either upon the collective agent or upon the aggrieved employee or employees,
at the same time conferring upon the other the final voice in determining the terms of the
settlement. This is, in effect, the position taken by each of the parties in this case. But they
differ concerning where the final say has been vested. Petitioner maintains it has been given
to the union. Respondents say it has been left with them.
55
In the view we take the Act guarantees to the aggrieved employee more than merely the
right to be heard by the union and the carrier. We cannot say that the terms of the proviso
to Section 2, Fourth and of Section 3, First (j) are so limited. Moreover, Section 3, First (p)
expressly states that the statutory suit to enforce an award in favor of an aggrieved
employee may be brought by 'the petitioner,' presumably the collective agent, or by the
employee. All of these provisions contemplate effective participation in the statutory
procedures by the aggrieved employee.
56
His rights, to share in the negotiations, to be heard before the Board, to have notice, and to
bring the enforcement suit, would become rights more of shadow than of substance if the
union, by coming to agreement with the carrier, could foreclose his claim altogether at the
threshold of the statutory procedure. This would be true in any case where the employee's
ideas of appropriate settlement might differ from the union's. But the drastic effects in
curtailment of his preexisting rights to act in such matters for his own protection would be

curtailment of his preexisting rights to act in such matters for his own protection would be
most obvious in two types of cases; one, where the grievance arises from incidents of the
employment not covered by a collective agreement, in which presumabl the collective
interest would be affected only remotely, if at all; the other, where the interest of an
employee not a member of the union and the collective interest, or that of the union itself,
are opposed or hostile. That the statute does not purport to discriminate between these and
other cases furnishes strong support for believing its purpose was not to vest final and
exclusive power of settlement in the collective agent. 3 4
57
We need not determine in this case whether Congress intended to leave the settlement of
grievances altogether to the individual workers, excluding the collective agent entirely
except as they may specifically authorize it to act for them, or intended it also to have voice
in the settlement as representative of the collective interest. Cf. Matter of Hughes Tool
Company, 56 N.L.R.B. 981, modified and enforced, Hughes Tool Co. v. National Labor
Relations Board, supra. The statute does not expressly exclude grievances from the
collective agent's duty to treat or power to submit to the Board. Both collective and
individual interests may be concerned in the settlement where, as in this case, the dispute
concerns all members alike, and settlement hangs exclusively upon a single common issue
or cause of dispute arising from the terms of a collective agreement. 3 5 Those interest
combine in almost infinite variety of relative importance in relation to particular grievances,
from situations in which the two are hostile or in which they bear little or no relation of
substance to each other and opposed to others in which they are identified. 3 6
58
Congress made no effort to deal specifically with these variations. 3 7 But whether or not the
collective agent has rights, independently of the aggrieved employee's authoriza ion, to act
as representative of the collective interest and for its protection in any settlement, whether
by agreement or in proceedings before the Board, an award cannot be effective as against
the aggrieved employee unless he is represented individually in the proceedings in
accordance with the rights of notice and appearance or representation given to him by
Section 3, First (j). Those rights are separate and distinct from any the collective agent may
have to represent the collective interest. For an award to affect the employee's rights,
therefore, more must be shown than that the collective agent appeared and purported to
act for him. It must appear that in some legally sufficient way he authorized it to act in his
behalf.3 8
59
Petitioner's contrary view, as has been indicated, regards the settlement of grievances as
part of the collective bargaining power, indistinguishable from the making of collective
agreements. The assumption ignores the major difference which the Act has drawn between
those functions, both in defining them and in the modes provided for settlement.
60
To settle for the future alone, without reference to or effect upon the past, is in fact to
bargain collectively, that is, to make a collective agreement. That authority is conferred
independently of the power to deal with grievances, as part of the power to contract
'concerning rates of pay, rules, or working conditions.' It includes the power to make a new
agreement settling for the future a dispute concerning the coverage or meaning of a pre-
existing collective agreement. For the collective bargaining power is not exhausted by being
once exercised; it covers changing the terms of an existing agreement as well as making
one in the first place.
61
But it does not cover changing them with retroactive effects upon accrued rights or claims.
For it is precisely the difference between making settlements effective only for the future
and making them effective retroactively to conclude rights claimed as having already
accrued which marks the statutory boundary between collective bargaining and the
settlement of grievances. The latter by explicit definition includes the 'interpretation or
application' of existing agreements. To regard this as part of the collective bargaining power
identifies it with making new agreements having only prospective operation; and by so
doing obliterates the statute's basic distinction between those functions. 3 9
62
The Brotherhood had power, therefore, as collective agent to make an agreement with the
carrier, effective for the future only, to settle the question of starting time, and that power
was derived from the Act itself. In dealing within its scope, the carrier was not required to

was derived from the Act itself. In dealing within its scope, the carrier was not required to
look further than the Act's provisions to ascertain the union's authority. But it does not
follow, as petitioner assumes, that it had the same right to deal with the union concerning
the past. That aspect of the dispute was not part of the collective agent's exclusive statutory
authority.
63
If to exclude it severs what otherwise might be considered organic, the severance clearly is
one which Congress could make and is one we think it has made, by its definition of
grievances and by the provisions for individual participation in their settlement. If,
moreover, as petitioner urges, this may make the settlement less convenient than if power
to deal with grievances were vested exclusively in the collective agent, that consequence
may be admitted. But it cannot outweigh the considerations of equal or greater force which
we think Congress has taken into account in preserving the individual workman's right to
have a voice amounting to more than mere protest in the settlement of claims arising out of
his employment.
64
From the fact that the Brotherhood occupied the position of collective bargaining agent and
as such had power to deal for the future, therefore, petitioner was not entitled to make any
assumption concerning its authority to settle the claims accrued for the past or to represent
the claimants exclusively in proceedings before the Board. Accordingly for the union to act
in their behalf with conclusive effect, authorization by them over and above any authority
given by the statute was essential.
III.
65
Petitioner urges that, apart from the statute, the facts of record show as a matter of law
that respondents authorized the Brotherhood to settle the claims, to submit them to the
Board, and to represent them in its proceedings. Respondents deny that authority in any of
these respects was given, either by individual authorization or by virtue of the
Brotherhood's constitution and rules; and they insist that the record presents these
questions as issues of fact.
66
Stripped of its statutory influences, petitioner's argument comes in substance to this. It is
undisputed that from August 27, 1934, to November 23, 1936, when the complaint in
Docket No. 3537 was filed, respondents made out time slips and filed many complaints with
the carrier's local officials through local officers of the Brotherhood on account of departures
from the schedule of Article 6. The question of the article's applicability was a matter of
discussion between the Brotherhood and company officials from the time of the transfer in
1934. Respondents admit having authorized the Brotherhood, at a meeting of their local
lodge, to file the complaint in Docket No. 3537 and that this complaint was filed in full
compliance with the Brotherhood's constitution and rules. The settlement of October, 1938,
and the consequent withdrawal of the claim in Docket No. 3537 were made by the same
official, Williams, whom respondents had authorized to file the claim and with whom, in
effect, both the collective agreement and the Brotherhood's regulations required petitioner
to deal concerning the matter. 4 0 Moreover, the complaint in Docket No. 7324, filed in May,
1939, was filed by Williams and in the same manner as the complaint in Docket No. 3537.
67
From these facts petitioner concludes that respondents authorized the Brotherhood to settle
the claims and to represent them before the Board. In its view, all of these transactions
related to the same subject matter, namely, whether Article 6 was applicable in the Whiting
yard, the only difference being that the relief sought in the two proceedings was not the
same; and that difference is not material.
68
Respondents differ concerning the effect of these facts and others they set forth. They
allege that under the Brotherhood's constitution and rules neither Williams and Johnson nor
the general grievance committee could 'revise or change a general wage 'schedule' or
agreement concerning rates of pay, nor working conditions, unless authorized to do so by a
majority vote of the lodges, or by a majority vote of the membership in the system'; that
claims of individual members for back compensation could not be released without specific
authority given individually; that no such authority was given; and that the carrier had
knowledge of these limitations. They further allege that Williams and Johnson failed to notify

them of the settlement, as the by-laws required;4 1 and deny that they knew of the
settlement, the proceedings in Docket 7324 or the award until after the award was made,
when they promptly repudiated it.4 2 They say accordingly that Williams acted without
authority from them directly or through the Brotherhood's regulations in submitting and
presenting the claims; and that the award is invalid not only for this reason but also
because no notice of the proceeding was given to them.
69
It is apparent that the parties are at odds upon the inferences to be drawn from the facts
and their legal effects rather than upon the facts themselves. Respondents deny, and
petitioner apparently does not claim, that they at any time individually and specifically
authorized the Brotherhood or its officials to compromise their claims for money due or to
act for them exclusively in Board proceedings concerning those claims. If there is an issue in
this respect it is obviously one of fact concerning which evidence and findings would be
required.
70
The real issues, as we view the record, come down to whether respondents assented, in
legal effect, to the final settlement of their claims by the union or to exclusive
representation by it in any of the following ways: (1) by making complaints through local
union officials; ( ) by authorizing the Brotherhood to submit the complaint in Docket No.
3537; (3) by virtue of the Brotherhood's regulations; (4) by virtue of the collective
agreement.
71
The collective agreement could not be effective to deprive the employees of their individual
rights. Otherwise those rights would be brought within the collective bargaining power by a
mere exercise of that power, contrary to the purport and effect of the Act as excepting them
from its scope and reserving them to the individuals aggrieved. In view of that reservation
the Act clearly does not contemplate that the right saved may be nullified merely by
agreement between the carrier and the union.
72
Nor can we say as a matter of law that the mere making of complaints through local
Brotherhood officials amounted to final authorization to the union to settle the claims or
represent the employees before the Board. Neither the statute nor the union's regulations
purported to give these effects to that conduct. The time slips apparently were filed by the
employees themselves. The record shows only the general fact that complaints concerning
departures were made through local officials. More than this would be required to disclose
unequivocal intention to surrender the individual's right to participate in the settlement and
to give the union final voice in making it together with exclusive power to represent him
before the Board. The making of complaints in this manner was only preliminary to
negotiation and equivocal at the most.
73
Nor can we say, in the present state of the record, that the union's regulations
unequivocally authorized the general grievance committee or its chairman either to settle
the claims or to act as exclusive representative before the Board. The parties rely upon
apparently conflicting provisions or, if they are not actually in conflict, then upon different
ones, the applicability of some of which is in dispute. Thus respondents rely upon Rule 3,
which forbids change in existing agreements without the required vote of local lodges or
system membership, and petitioner says the rule is not applicable to the dispute in this
case. Whether or not the rule is applicable is a question of fact to be determined in the light
of whatever evidence may be presented to sustain the one view or the other. Conceivably it
may be intended to apply only where no grievance is involved or to the settlement of
grievances and other disputes as well. But we cannot say, in the absence of further light
than is now available, that on its face the rule bears only the one construction or the other.
74
Similar difficulties arise in connection with the other regulations. Only some of them are set
forth in the printed record, although the full constitution and rules were made a part of the
record proper by petitioner. The rules and regulations do not purport to require members to
negotiate and settle their grievances only through the union. The general committee can act
only when a grievance is referred to it by a local lodge. The rules are extensive, parts of
them appear to involve possible conflict, the parties differ concerning their effects, and the
mode of their operation quite obviously may be largely affected by the manner in which
they are applied in practice. Their construction and legal effect are matters of some

they are applied in practice. Their construction and legal effect are matters of some
complexity and should not be undertaken in a vacuum apart from the facts relating to their
application in practice. Because both factual and legal inferences would be involved in
determining the effects of the regulations to bring about a surrender of the individual rights
to take part in the settlement and in the Board's proceedings, those effects cannot be
determined as a matter of law in the first instance here.
75
Nor can we say as a matter of law that authorizing the submission in Docket No. 3537,
without more, constitute authorization either to make the agreement of settlement or to
represent the employees in Docket No. 7324. The matter requires some explication in the
lig t of the view we have taken concerning the rights of an aggrieved employee in the
settlement of grievances. In that view no valid settlement can be made unless he agrees. If
settlement by agreement after negotiation fails, he has the right to submit the dispute to
the Board for decision. If it is submitted he has rights of notice, hearing and individual
representation according to his choice.
76
All these rights are separate and distinct, though closely related. A surrender or delegation
of one would not result in surrender of the others as a matter of law or necessarily as a
matter of fact. Whether in particular circumstances it might do so would depend upon
whether they were considered sufficient to disclose such an intent. 4 3 It follows that authority
to concur in an agreement of settlement does not imply without more authority to represent
the employee in Board proceedings, or the latter the former. This is true when the authority
is given to the collective agent as it is when it is given to another. That circumstance is not
controlling. It only bears as one factor in the total situation. Accordingly in this case the
mere fact that the respondents authorized the union to make the submission and to
represent them in Docket No. 3537 did not imply authority to make the settlement
agreement or to represent them in the quite different later proceedings in Docket No. 7324.
77
The record does not show conclusively that prior to the submission in Docket No. 3537 the
employees had finally committed the whole matter of their claims into the union's hands in
such a manner as to constitute a surrender of their individual rights to concur in any
agreement of settlement. That conclusion is not justified merely from the fact that the union
participated in negotiations with the carrier.
78
Moreover, the authorization, to act in Docket No. 3537, obviously was given after efforts to
secure settlement by negotiation and agreement were considered to have failed. Only then
was anyone entitled to make the submission. Accordingly that authorization was entirely
consistent with the idea that no further negotiations would be had, and therefore, without
more, also with the idea that no authority to negotiate further was implied. It may be that
upon a full hearing concerning the course and scope of the negotiations prior to this
submission, the evidence will justify a conclusion that the respondents had authorized the
union to act finally for them. But the record in its present state does not justify that
conclusion as a matter of law. 4 4
79
It may be true also that if Docket No. 3537 had been carried to decision the award would
have been effective to determine the rights of the parties. But no award was made in that
proceeding. It was terminated and the claim was withdrawn. Whether or not that action or
other events occurring later were effective to terminate the authority given to submit for the
Board's determination the issue which was the foundation of respondents' monetary claims
or whether that authority continued in spite of the changed conditions are questions also to
be determined from a factual evaluation of the entire situation, essentially preliminary to
determination of legal effects, which we cannot make.
80
Since upon the total situation we cannot say as a matter of law that respondents had
authorized the Brotherhood to act for them in Docket No. 7324, whether in submitting the
cacause or in representing them before the Board; since it is conceded also that they were
not given notice of the proceeding otherwise than as the union had knowledge of them; and
since further they have denied that they had knowledge of the proceedings and of the
award until after it was entered, the question whether the award was effective in any mater
to affect their rights must be determined in the further proceedings which are required. The
crucial issue in this respect, of course, will be initially whether respondents had authorized

crucial issue in this respect, of course, will be initially whether respondents had authorized
the Brotherhood in any legally sufficient manner to represent them, individually, in the
Board's proceedings in Docket No. 7324.
81
Until that question is determined, it is not necessary for us to pass upon the important issue
concerning the finality and conclusive effect of the award, or to determine the validity and
legal effect of the compromise agreement. We accordingly express no opinion concerning
those issues.
82
The judgment is affirmed. The cause is remanded for further proceedings in conformity with
this opinion.
83
Affirmed and cause remanded.
84
Mr. Justice FRANKFURTER, dissenting.
85
On July 27, 1934, the Brotherhood of Railroad Trainmen made an agreement with
petitioner, Elgin, Joliet and Eastern Railway Company, affecting its yardmen whereby the
starting time for switching crews was fixed. The respondents are employed as switching
crews in the Whiting, Indiana yard of petitioner. They are all members of the Brotherhood.
Observance by petitioner of this yard agreement was called into question. After abortive
conferences for the adjustment of these claims between officials of petitioner and of the
Brotherhood, C. H. Williams, General Chairman of the Brotherhood General Grievance
Committee, filed a complaint covering several grievances with the National Railroad
Adjustment Board, created by the Railway Labor Act of 1934, 48 Stat. 1185, 45 U.S.C. §
151 et seq., 45 U.S.C.A. § 151 et seq., to compel petitioner's compliance with the agreed
time. In November, 1936, the cases were duly docketed. Before they came to be heard,
petitioner, on October 28, 1938, proposed settlement of numerous claims against it by the
Brotherhood then pending before the Adjustment Board. Among these claims was the
dispute as to starting time. Petitioner agreed for a ninety-day trial period, beginning
November 15, 1938, to abide by the time fixed in the 1934 agreement. But its offer was
conditioned 'on a complete settlement and withdrawal of all cases now pending either before
the board, or under discussion with this office * * * and it is further understood that in the
event these settlements are accepted that the claims listed in this letter cover all claims of a
similar nature, and that no other claims covering the same or like situations will be
presented when such claims arise from causes occurring prior to the date of this
settlement.' On October 31, 1938, settlement on these terms was accepted for the yardmen
by Williams, General Chairman, and S. F. Johnson, the Secretary of the Brotherhood's
General Grievance Committee. On the same day and upon request of the Brotherhood and
Railway, the cases were removed from its docket by the Adjustment Board.
86
Later the Brotherhood filed with the Adjustment Board a second complaint claiming money
damages on behalf of its members for violation of the 1934 agreement. The Board, by
formal award, denied the claim on the ground that the 'evidence shows that the parties to
the agreement disposed of the claim here made by the letter of carrier dated October 28th,
1938, accepted by employees October 31, 1938.'
87
Respondents then filed this suit in the District Court for damages. Petitioner invoked the
1938 settlement and the Board's award thereon as a bar, and moved for summary
judgment. Respondents resisted this motion by denying the authority of the Brotherhood
officials to present their claims to the Board or to agree to the settlement. The District Court
gave summary judgment for the petitioner which was reversed by the Circuit Court of
Appeals for the Seventh Circuit on the ground that the question of authority of the
Brotherhood officials raised an issue of fact for trial by the District Court. 140 F.2d 488. The
correctness of this ruling is the important question now before us. 323 U.S. 690, 65 S.Ct.
45.
88
We have had recent occasion to consider the Railway Labor Act in other aspects.
Switchmen's Union v. National Mediation Board, 320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61;
General Committee v. M.-K.-T.R. Co., 320 U.S. 323, 64 S.Ct. 146, 88 L.Ed. 76; General

Committee v. Sou. Pac. Co., 320 U.S. 338, 64 S.Ct. 142, 88 L.Ed. 85. The complexities
which the problems in those cases laid bare, make clear that the specific question
immediately before us cannot be isolated from the scheme and structure of the Railway
Labor Act as an entirety. The Act in turn cannot be appreciated apart from the environment
out of which it came and the purposes which it was designed to serve.
89
From the point of view of industrial relations our railroads are largely a thing apart. The
nature and history of the industry, the experience with unionization of the roads, the
concentration of authority on both sides of the industry in negotiating collective
agreements, the intimacy of relationship between the leaders of the two parties shaped by a
long course of national, or at least regional, negotiations, the intricate technical aspects of
these agreements and the specialized knowledge for which their interpretation and
application call, the practical interdependence of seemingly separate collective
agreements—these and similar considerations admonish against mutilating the
comprehensive and complicated system governing railroad industrial relations by episodic
utilization of inapposite judicial remedies.
90
The Railway Labor Act of 1934 is primarily an instrument of government. As such, the view
that is held of the particular world for which the Act was designed will largely guide the
direction of judicial interpretation of the Act. The railroad would for which the Railway Labor
Act was designed has thus been summarized by one of the most discerning students of
railroad labor relations: 'The railroad world is like a state within a state. Its population of
some three million, if we include the families of workers, has its own customs and its own
vocabulary, and lives according to rules of its own making. * * * This state within a state
has enjoyed a high degree of internal peace for two generations; despite the divergent
interests of its component parts, the reign of law has been firmly established.' Garrison, Th
Railroad Adjustment Board: A Unique Administrative Agency (1937) 46 Yale L.J. 567,
568-69.
91
The Railway Labor Act of 1934 is an expression of that 'reign of law' and provides the means
for maintaining it. Nearly half a century of experimental legislation lies behind the Act. It is
fair to say that every stage in the evolution of this railroad labor code was progressively
infused with the purpose of securing self-adjustment between the effectively organized
railroads and the equally effective railroad unions and, to that end, of establishing facilities
for such self-adjustment by the railroad community of its own industrial controversies.
These were certainly not expected to be solved by illadapted judicial interferences, escape
from which was indeed one of the driving motives in establishing specialized machinery of
mediation and arbitration. Government intervention of any kind was contemplated only as a
last resort for the avoidance of calamitous strikes.
92
The landmarks in this history, tersely summarized, are the meager act of October 1, 1888,
25 Stat. 501, providing for voluntary arbitration; the Erdman Act of June 1, 1898, 30 Stat.
424, securing government mediation and arbitration, but applicable only to those actually
engaged in train service operations; the Newlands Act of July 15, 1913, 38 Stat. 103, 45
U.S.C.A. §§ 101 125 providing for a permanent board of mediation and also a board of
arbitration; the Adamson Act of September 3, 1916, 39 Stat. 721, as to which see Wilson v.
New, 243 U.S. 332, 37 S.Ct. 298, 61 L.Ed. 755, L.R.A1917E, 938, Ann.Cas.1918A, 1024;
Order No. 8 of February 21, 1918, formulating the labor policy of the Government after the
United States took over the railroads, see Hines, War History of American Railroads (1928)
p. 155 et seq.; the more elaborate machinery established by Title III of the Transportation
Act of 1920, 41 Stat. 456, 469, 45 U.S.C.A. § 131 et seq. for adjustments of these
controversies, which in its turn was repealed and replaced by the Railway Labor Act of May
20, 1926, 44 Stat. 577, 45 U.S.C.A. § 151 et seq., legislation agreed upon between the
railroads and the Brotherhoods and probably unique in having been frankly accepted as
such by the President and Congress. 1 The actual operation of this legislation partly
disappointed the hopes of its sponsors, and led, for the still greater promotion of self-
government by the railroad industry, to the Act of 1934.
93
The assumption as well as the aim of that Act is a process of permanent conference and
negotiation between the carriers on the one hand and the employees through their unions
on the other. Section 2, First, 45 U.S.C.A. § 152, First, provides 'It shall be the duty of all

on the other. Section 2, First, 45 U.S.C.A. § 152, First, provides 'It shall be the duty of all
carriers * * * and employees to exert every reasonable effort to make and maintain
agreements concerning rates of pay, rules, and working conditions, and to settle all
disputes, whether arising out of the application of such agreements or otherwise * * *.'
Section 2, Second, provides 'All disputes between a carrier * * * and its * * * employees
shall be considered, and, if possible, decided, with all expedition, in conference between
representatives designated and authorized so to confer, respectively, by the carrier * * *
and by the employees thereof interested in the dispute.' According to § 2, Sixth, 'In case of
a dispute * * * arising out of grievances or out of the interpretation or application of
agreements concerning rates of pay, rules, or working conditions, it shall be the duty of the
designated representative or representatives of such carrier * * * and of such employees,
wit in ten days after the receipt of notice of a desire on the part of either party to confer in
respect to such dispute, to specify a time and place at which such conference shall be held *
* *.' Section 3, First (i) directs that disputes growing out of grievances or the interpretation
or application of agreements concerning rates of pay, rules, or working conditions be
handled by conference and negotiation, including resort if necessary to the chief operating
officer of the carrier. Compliance with these statutory duties is a prerequisite to appeal to
the National Railroad Adjustment Board. The purpose of this legislation is the exertion of
maximum pressure toward amicable settlement between the parties. Resort to the
Adjustment Board is the last step in the statutory process.
94
In the controversy before us an amicable adjustment between the parties—the goal of the
legislation—had been achieved by pursuing the course which the Act of 1934 directed. We
are now asked to nullify this settlement, arrived at after prolonged negotiations, and to
open the door of litigation to new discords. Not only is it sought to revive the dispute and to
restore it to the status it had before the Adjustment Board more than eight years ago. The
respondents claim that after all these years they have a right to repudiate their bargaining
agents and to try the authority of these agents as though this were a conventional lawsuit
involving the responsibility of a principal for the donduct of his agent.
95
As members of their Brotherhood, respondents were of course familiar with the procedure
whereby the union speaks for them both to the Railroad and before the Adjustment Board.
The Brotherhood's 'Constitution and General Rules', which the respondents made part of
their case below, are clear about this. Rule No. 7 declares that, after a grievance has been
transmitted to a General Grievance Committee, that Committee 'shall have power to alter,
amend, add to or strike out * * * any part or all of any complaint or claim submitted to the
committee, subject to appeal to the entire General Committee and/or Board of Appeals. A
general grievance Committee may authority their chairman to handle all grievances
received from local lodges with the management for settlement * * *.' Respondents cannot
deny that the Brotherhood officials had authority to seek compliance by the railroad with the
starting time agreement through the Adjustment Board. In view of the sweeping power of
the General Grievance Committee to settle grievances, the settlement that was made on
behalf of the Brotherhood is invulnerable. The attack on the settlement because it was
signed by only two of the three members of the Committee is frivolous. Such procedure is
not at all unusual. Williams and Johnson settled other grievances in like manner, many of
them involving claims for money. The Brotherhood's own rules sanction such action in that
the Committee may authorize the Chairman to handle all grievances.
96
This is not a simple little case about an agent's authority. Demands of the employees'
representative imply not only authority from those for whom he speaks but the duty of
respect from those to whom he speaks. The carrier is under a legal duty to treat with the
union's representative for the purposes of the Railway Labor Act. Section 2, Ninth; see
Virginian Ry. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789. We do not
have the ordinary case where a third person dealing with an ostensible agent must at his
peril ascertain the agent's authority. In such a situation a person may protect himself by
refusing to deal. Here petitioner has a duty to deal. If petitioner refuses to deal with the
officials of the employees' union by challenging their authority, it does so under pain of
penalty. If it deals with them on the reasonable belief that the grievance officials of the
Brotherhood are acting in accordance with customary union procedure, settlements thus
made ought not to be at the hazard of being jettis ned by future litigation. To allow such
settlements to be thus set aside is to obstruct the smooth working of the Act. It undermines

settlements to be thus set aside is to obstruct the smooth working of the Act. It undermines
the confidence so indispensable to adjustment by negotiation, which is the vital object of
the Act. See Division 525, Order of Ry. Conductors of America v. Gorman, 8 Cir., 133 F.2d
273, 278.
97
But respondents claim that irrespective of the authority of the Brotherhood officials to
handle claims for the enforcement of the agreed starting time, Williams did not have
authority to present to the Adjustment Board the claim for damages due to respondents for
petitioner's alleged past violation of the starting-time agreement. They insist that there is
no relation between a claim for money resulting from the violation of a collective agreement
and a claim for the enforcement of a collective agreement. But surely this is to sever that
which is organic. It wholly disregards the nature of such a collective agreement, its
implications and its ramifications. In passing on the claim for money damages arising out of
the yard agreement, any tribunal would have to examine, interpret and apply the collective
agreement precisely as it would if the issue were the duty to observe the agreement in the
future. An award based on the application of the collective agreement would, quite apart
from technical questions of res judicata, affect future claims governed by the same
collective agreement whatever the particular forms in which the claims may be cast. To find
here merely an isolated, narrow question of law as to past liability is to disregard the ties
which bind the money controversy to its railroad environment. Such a view is blind to the
fact that 'all members of the class or craft to which an aggrieved employee belongs have a
real and legitimate interest in the dispute. Each of them, at some later time, may be
involved in a similar dispute.' 40 Ops. Atty. Gen., No. 59 (Dec. 29, 1942) pp. 4, 5. Indeed,
such a view leaves out of consideration not only the significant bearing of the construction
of the same collective agreement on parts of the carrier's lines not immediately before the
Court. It overlooks the relation of a provision in a collective agreement with one railroad to
comparable provisions of collective agreements with other roads.
98
To allow the issue of authorization after an award by the Board to be relitigated in the
courts is inimical to the internal government of the Brotherhood. Union membership
generates complicated relations. Policy counsels against judicial intrusion upon these
relations. If resort to courts is at all available, it certainly should not disregard and displace
the arrangements which the members of the organization voluntarily establish for their
reciprocal interests and by which they bound themselves to be governed. The rights and
duties of membership are governed by the rules of the Brotherhood. Rule 10 concerns
objections to official action: 'Whatever action may be taken by the general grievance
committee * * * shall be law to the lodges on that road until the next meeting of the board
of appeals, and if any member refuses to vote or abide by the action of such general
grievance committee or board of adjustment he shall be expelled from the Brotherhood for
violation of obligation.' To ask courts to adjudicate the meaning of the Brotherhood rules
and customs without preliminary resort to remedial proceedings within the Brotherhood is to
encourage influences of disruption within the union instead of fostering these unions as
stabilizing forces. Rules of fraternal organizations, with all the customs and assumptions
that give them life, cannot be treated as though they were ordinary legal documents of
settled meaning. 'Freedom of litigation, for instance, is hardly so essential a part of the
democratic process that the courts should be asked to strike down all hindrances to its
pursuit. The courts are as wise, to take an example of this, in adhering to the general
requirement that all available remedies ithin the union be exhausted before redress is
sought before them as they are unwise in many of the exceptions they have grafted upon
this rule.' Witmer, Civil Liberties and the Trade Union (1941) 50 Yale L.J. 621, 630. To an
increasing extent, courts require dissidents within a union to seek interpretation of the
organization's rules and to seek redress for grievances arising out of them before
appropriate union tribunals. Compare Norfolk & W. Ry. Co. v. Harris, 260 Ky. 132, 84
S.W.2d 69; Agrippino v. Perrotti, 270 Mass. 55, 169 N.E. 793; Snay v. Lovely, 276 Mass.
159, 176 N.E. 791; Webb v. Chicago, R.I. & G. Ry. Co., Tex.Civ.App., 136 S.W.2d 245.
99
The Railway Labor Act, as the product of long experience, is a complicated but carefully
devised scheme for adjusting the relations between the two powerful groups constituting
the railroad industry. It misconceives the legislation and mutilates its provisions to read into
it common law notions for the settlement of private rights. If, when a dispute arises over

the meaning of a collective agreement, the legally designated railroad bargaining unit
cannot negotiate with the carrier without first obtaining the specific authorization of every
individual member of the union who may be financially involved in the dispute, it not only
weakens the union by encouraging divisive elements. It gravely handicaps the union in its
power to bargain responsibly. That is not all. Not to allow the duly elected officers of an
accredited union to speak for its membership in accordance with the terms of the internal
government of the union and to permit any member of the union to pursue his own interest
under a collective agreement undermines the very conception of a collective agreement. It
reintroduces the destructive individualism in the relations between the railroads and their
workers which it was the very purpose of the Railway Labor Act to eliminate. To allow every
individual worker to base individual claims on his private notions of the scope and meaning
of a collective agreement intended to lay down uniform standards for all those covered by
the collective agreement, is to permit juries and courts to make varying findings and give
varying constructions to an agreement inevitably couched in words or phrases reflecting the
habits, usage and understanding of the railroad industry. Thus will be introduced those
disclocating differentiations for workers in the same craft which have always been among
the most fertile provocations to friction, strife, and strike in the railroad world. The Railway
Labor Act, one had supposed, would be construed so as to reduce and not to multiply these
seeds of strife.
100
In order to avoid mischievous opportunities for the assertion of individual claims by shippers
as against the common interest of uniformity in construing railroad tariffs, this Court so
construed the Interstate Commerce Act in the famous Abilene Cotton Oil case, Texas & P.
Ry. Co. v. Abilene Cotton Oil Co., 204 U.S. 426, 27 S.Ct 350, 51 L.Ed. 553, 9 Ann.Cas.
1075, as to withdraw from the shipper the historic common law right to sue in the courts for
charging unreasonable rates. It required resort to the Interstate Commerce Commission
because not to do so would result in the impairment of the general purpose of that Act. It
did so because even though theoretically this Court could ultimately review such
adjudications imbedded in the various judicial judgments—if a shipper could go to a court in
the first instance—there would be considerations of fact which this Court could not possibly
disentangle so as to secure the necessary uniformity. The beneficent rule in the Abilene
Cotton Oil case was evolved by reading the Interstate Commerce Act, 49 U.S.C.A. § 1 et
seq., not as though it were a collection of abstract words, but by treating it as an
instrument of government growing out of long experience with certain evils and addressed
to their correction. Chief Justice White's opinion in that case was characterized by his
successor, Chief Justice Taft, as a 'conspicuous instance of his unusual and remarkable
power and facility in statesmanlike interpretation of statute law.' 257 U.S. xxv. The
provisions of the Railway Labor Act do not even necessitate such a creative act of
adjudication as this Court in the Abilene case unanimously accomplished. The Railway Labor
Act contains no embarrassing specific provision, as was true of § 22 of the Interstate
Commerce Act, 24 Stat. 379, 387, 49 U.S.C.A. § 22, calling for subordination to the main
purpose of the legislation. The considerations making for harmonious adjustment of railroad
industrial relations through the machinery designed by Congress in the Railway Labor Act
are disregarded by allowing that machinery to be by-passed and by introducing dislocating
differentiations through individual resort to the courts in the application of a collective
agreement.
101
Since the claim before the Adjustment Board was for money, there remains the question
whether its disposition was open to judicial review. The Railway Labor Act commands that
the Board's 'awards shall be final and binding upon both parties to the dispute, except
insofar as they shall contain a money award.' Section 3, First (m). But the determination
here in controversy does not 'contain a money award' so as to be excepted from the final
and binding effect given other awards. The obvious meaning of 'money award' is an award
directing the payment of money, not one denying payment. See Berry man v. Pullman Co.,
D.C., 48 F.Supp. 542. We are pointed to no aids to construction that should withhold us
from giving the familiar term 'money award' any other than its ordinary meaning as
something that awards money. This construction is confirmed by comparison with the
provisions of the Interstate Commerce Act dealing with reparation orders. Since both Act
came out of the same Congressional Committees one finds, naturally enough, that the
provisions for enforcement and review of the Adjustment Board's awards were based on

those for reparation orders by the Interstate Commerce Commission. Compare Railway
Labor Act, § 3, First (p) with interstate Commerce Act, as amended by § 5 of the Hepburn
Act, 34 Stat. 584, 590, 49 U.S.C. § 16(1), (2), 49 U.S.C.A. § 16(1, 2). If a carrier fails to
comply with a reparation order, as is true of non-compliance with an Adjustment Board
award, the complainant may sue in court for enforcement; the Commission's order and
findings and evidence then become prima facie evidence of the facts stated. But a denial of
a money claim by the Interstate Commerce Commission bars the door to redress in the
courts. Baltimore & Ohio R. Co. v. Brady, 288 U.S. 448, 53 S.Ct. 441, 77 L.Ed. 888;
Interstate Commerce Comm. v. United States, 289 U.S. 385, 388, 53 S.Ct. 607, 609, 77
L.Ed. 1273; Terminal Warehouse v. Penn. R. Co., 297 U.S. 500, 507, 56 S.Ct. 546, 548, 80
L.Ed. 827.
102
The Railway Labor Act precludes review of the Board's award; and, since authorization of
the Brotherhood officials to make the settlement is not now open to judicial inquiry, the
judgment calls for reversal.
103
The CHIEF JUSTICE, Mr. Justice ROBERTS and Mr. Justice JACKSON join in this dissent.
1
Amendments were allowed to cure jurisdictional defects found to exist upon an earlier
appeal. Alderman v. Elgin, Joliet & Eastern Ry. Co., 7 Cir., 125 F.2d 971.
2
The record sets forth no provision for penalty damages. But the complaint alleges that
under the terms of the agreement each of the plaintiffs is entitled to 'pay for an additional
day, at time and one-half, at the regular daily rate' for each day he was required to work
contrary to the agreement's terms.
3
The court said: 'I think that the controversy was submitted to the Board, that it had
jurisdiction and that it was decided, and that the plaintiffs were represented there and are
bound thereby. * * * I think the ruling of the Adjustment Board was binding upon the
plaintiffs as well as upon the defendant, and that it is binding on this court in this
proceeding.'
4
The procedure, though informal, consists principally in written statements or 'submissions'

filed by the parties, which perform the functions of pleading and evidence combined, and
oral argument upon the submissions thus made. See Garrison, The National Railroad
Adjustment Board: A Unique Administrative Agency (1937) 46 Yale L.J. 567, for a detailed
description of the procedure. See also Final Report of the Attorney General's Committee on
Administrative Procedure (1941) 185 ff.; Administrative Procedure in Government Agencies,
Sen. Doc. No. 10, Part IV, 77th Cong., 1st Sess.
5
The letter was addressed to Williams, as general chairman of the Brotherhood, and dated
October 28, 1938. It stated:
'Since my letter of August 18th in which I tentatively proposed settlement of certain matters
of grievance we have had further correspondence and conferences which had modified our
decision in some cases. Therefore, in order that the whole matter be placed in concrete
form I am outlining below our proposals to settle all of the cases except as otherwise
specified.
'Case No. 5—Labor Board Docket #3537—Starting time of switch engines in Whiting S. O.
Yard.
'Settled by agreement that the starting times for a ninety day trial period commencing
November 15th, 1938, shall be the times provided for in Article 6 of the Yardmen's
Agreement instead of the starting times heretofore agreed upon and now being followed. If
at the end of the ninety day trial period the Railway Company or its employees claim that
the starting times as fixed in Article 6 do not result in efficient and economical operation
and in satisfaction to our employees and to the industry served, then representatives of the
Railway Company and representatives of the Yardmen, and representatives of the Engineers
and representatives of the Firemen will sit down and work out a schedule of starting time
best suited for meeting the special requirements of the industry.
'We have by this letter given you a complete resume of all of the claims which have not
heretofore been disposed of, filed by you on behalf of the employees whom you represent
and have proposed in this letter a very liberal disposition of all the cases involved. The

and have proposed in this letter a very liberal disposition of all the cases involved. The
settlements proposed are predicated on a complete settlement and withdrawal of all cases
now pending either before the board, or under discussion with this office except Case No. 4,
which it is understood will be left to a decision by the National Railroad Adjustment Board,
and it is further understood that n the event these settlements are accepted that the claims
listed in this letter cover all claims of a similar nature, and that no other claims covering the
same or like situations will be presented when such claims arise from causes occurring prior
to the date of this settlement. (Emphasis added)
'Yours truly,
'S. M. Rogers, President.
'Accepted for the Yardmen:
Oct. 31, 1938.
'C. H. Williams, General Chairman, B. of R.T.
'S. F. Johnson, Secretary, B. of R.T.'
6
Cf. note 5. The submission stated: 'There were no agreements reached whereby payment
for violation of Article No. 6 of the Yardmen's Agreement would be waived as a result of
withdrawal of Labor Board Docket No. 3537. In fact that case held no claims for payment
for time. It was simply a case to settle the dispute as to the carrier's right to force the yard
crews in the Whiting yard to work at times other than the fixed starting time provided for in
Article 6. * * *
'As stated before, Case No. 5—Labor Board Docket No. 3537 contained no claim for pay to
Whiting Yardmen. Consequently it was not a question before the Management and the
Committee in the starting time negotiation and claim cannot be made that a waiver was
made on a matter which was not negotiated.'
The submission also denied that oral agreements relating to starting time, claimed by the
carrier to have been made at the time of the transfer in 1934, could be effective 'to
invalidate the prescribed written rule of Article 6.' Williams however did not question the
validity of the verbal agreement, as he maintained, for the thirty day suspension.
7
The submission in no way challenged the jurisdiction of the Board or of the Division.
8
See Part III. The provisions regulate the union's internal procedure in relation to making
changes in a 'general or system wage schedule or agreement,' Rule No. 3, and that to be
followed when the local chairman or grievance committee fails 'satisfactorily to adjust any
grievance referred to it.' Rule No. 7. The latter includes a provision that 'a general grievance
committee may authorize their chairman to handle all grievances received from local
lodges.' See also note 40.
9
Cf. § 3 First (m), (o), (p), (q).

10
Cf. Part I.
11
It was held that nothing in the Act 'purports to take away from the courts the jurisdiction to
determine a controversy over a wrongful discharge or to make an administrative finding a
prerequisite to filing a suit in court,' 312 U.S. at page 634, 61 S.Ct. at page 756, 85 L.Ed.
1089; and therefore the employee's suit could be maintained against the carrier without
prior resort to the Adjustment Board. Among the reasons assigned was that the machinery
provided for settling disputes was not 'based on a philosophy of legal compulsion' but
created 'a system for peaceful adjustment and mediation voluntary in its nature.'
The problem presented was whether the Adjustment Board procedure either was exclusive
or was an essential preliminary to judicial proceedings within the doctrine of primary
jurisdiction. These were questions not entirely determinable by the criterion of whether the
procedure is wholly advisory or conciliatory in character. For, conceivably, Congress might
have made the taking of the Board's merely advisory opinion a condition precedent to
asking for judicial relief; and, conversely, allowing that relief without prior resort to the
Board does not necessarily make the Board's action, when taken, merely advisory.
12
Thus, one of the statute's primary commands, judicially enforceable, is found in the
repeated declaration of a duty upon all parties to a di pute to negotiate for its settlement.
See note 26; Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed.

See note 26; Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed.
789; cf. Switchmen's Union v. National Mediation Board, 320 U.S. 297, 300, 320, 64 S.Ct.
95, 96, 106, 88 L.Ed. 61; General Committee v. M-K-T R. Co., 320 U.S. 323, 331, 334, 64
S.Ct. 146, 150, 151, 88 L.Ed. 76. This duty is not merely perfunctory. Good faith exhaustion
of the possibility of agreement is required to fulfill it. Cf. Virginian Ry. Co. v. System
Federation, supra, 300 U.S. at pages 548, 550, 57 S.Ct. at pages 599, 600, 81 L.Ed. 789;
Brotherhood of Railroad Trainmen v. Toledo, P. & W.R. Co., 321 U.S. 50, 56 ff, 64 S.Ct.
413, 416, 88 L.Ed. 534, 150 A.L.R. 810. At successive stages of the statutory procedure
other duties are imposed. Cf. §§ 5, First (b), 6, 10.
13
Cf. the references cited in notes 4 and 15.

14
Cf. text Part II at note 38; also Hughes Tool Co. v. National Labor Relations Board, 5 Cir.,
147 F.2d 69, 72, 73.
15
See the references cited in note 4; Hearings before Committee on Interstate Commerce on
H.R.7650, 73d Cong., 2d Sess.; Hearings before Committee on Interstate Commerce on
S.3266, 73d Cong., 2d Sess.; Pennsylvania R. Co. v. Railroad Labor Board, 261 U.S. 72, 43
S.Ct. 278, 67 L.Ed. 536; Pennsylvania Railroad System Federation v. Pennsylvania R.
Co., 267 U.S. 203, 45 S.Ct. 307, 69 L.Ed. 574; Texas & N.O.R. Co. v. Brotherhood, 281 U.S.
548, 50 S.Ct. 427, 74 L.Ed. 1034; Virginian Ry. Co. v. System Federation, 300 U.S. 515, 57
S.Ct. 592, 81 L.Ed. 789.
16
Cf. the references cited in note 4. Commissioner (also Coordinator) Eastman, who very
largely drafted the 1934 amendments, said in testifying at the House Committee hearings
concerning them:
'Please note that disputes concerning changes in rates of pay, rules, or working conditions
may not be so referred (to the National Adjustment Board), but are to be handled, when
unadjusted, through the process of mediation. The national adjustment board is to handle
only the minor cases growing out of grievances or out of the interpretation or application of
agreements.' Hearings before Committee on Interstate Commerce on H.R.7650, 73 Cong.,
2d Sess., 47; cf. also pp. 49, 51, 59, 62. And see the testimony of Harrison, a principal
union proponent, before the House Committee, id., at 80—83; and before the Senate
Committee, Hearings before Committee on Interstate Commerce on S.3266, 73d Cong., 2d
Sess., 33, 35.
17
Cf. the testimony of Eastman and Harrison, cited in note 16.

18
Cf. note 12; also notes 26, 27, and text infra. The obligation is not partial. In plain terms
the duty is laid on carrier and employees alike, together with their representatives; and in
equally plain terms it applies to all disputes covered by the Act, whether major or minor.
19
H.Rep.No.1944 on H.R.9861, 73d Cong., 2d Sess., 3; S.Rep.No.1065 on S.3266, 73d Cong.,

2d Sess., 1, 2.
20
Cf. 78 Cong.Rec.12553. Coordinator Eastman referred, in his testimony, to four recent

strike votes occasioned by deadlock. Hearings before Committee on Interstate Commerce
on S.3266, 73d Cong., 2d Sess., 17.
21
The Chairman told the Senate Committee: 'The provision in the present act (1926) for
adjustment boards is in practice about as near a fool provision as anything could possibly
be. I mean this—that on the face of it they shall, by agreement, do so and so. Well, you can
do pretty nearly anything by agreement, but how can you get them to agree?' Hearings
before Committee on Interstate Commerce on S.3266, 73d Cong., 2d Sess., 137.
22
See, for a general view of the circumstances inducing enactment of the 1934 Amendments,
the references cited above in notes 4, 15, 16, 19. The report of the House Committee in
charge of the bill stated:
'Many thousands of these disputes have been considered by boards established under the
Railway Labor Act; but the boards have been unable to reach a majority decision, and so
the proceedings have been deadlocked. These unadjusted disputes have become so

the proceedings have been deadlocked. These unadjusted disputes have become so
numerous that on several occasions the employees have resorted to the issuance of strike
ballots and threatened to interrupt interstate commerce in order to secure an adjustment.
This has made it necessary for the President of the United States to intervene and establish
an emergency board to investigate the controversies. This condition should be corrected in
the interest of industrial peace and of uninterrupted transportation service. This bill,
therefore, provides for the establishment of a national board of adjustment to which these
disputes may be submitted if they shall not have been adjusted in conference between the
parties.' H.Rep.No.1944, 73d Cong., 2d Sess., 3. Cf. also the testimony of Coordinator
Eastman, Hearings before Committee on Interstate Commerce on H.R.7650, 73d Cong., 2d
Sess., 49.
23
Section 3, First (i) expressly conditions the right to move from negotiation into proceedings
before the Adjustment Board upon 'failing to reach an adjustment in this manner,' i.e., by
negotiation.
24
See the testimony of Coordinator Eastman and Mr. Harrison, cited in note 16. The latter
stated, at the Senate Committee hearings, pp. 33, 35:
'* * * (T)his has been a question for the last 14 years as to what kind of boards we are
going to have to settle our grievances. * * * We have always sought national boards; the
railroads * * * have sought the system boards, regional boards. * * * Most of the boards *
* * under the present law have deadlocked on any number of cases. As a result of that
there was fast growing up in our industry a serious condition that might very well develop
into substantial interruption of interstate commerce. * * * These railway labor organizations
have always opposed compulsory determination of their controversies. We have lived a long
time and got a lot of experience, and we know that these minor cases that develop out of
contracts that we make freely, and * * * we are now ready to concede that we can risk
having our grievances go to a board and get them determined, and that is a contribution
that these organizations are willing to make; * * * if we are going to get a hodge-podge
arrangement by law, then we don't want to give up that right, because we only give up the
right because we feel that we will get a measure of justice by this machinery that we
suggest here.' (Emphasis added.)
25
Cf. also Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 64 S.Ct.
830, 88 L.Ed. 1007; J. I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 64 S.Ct.
576, 88 L.Ed. 762.
26
By Section 2, First, 'It shall be the duty of all carriers, their officers, agents, and employees
to exert every reasonable effort to make and maintain agreements concerning rates of pay,
rules, and working conditions, and to settle all disputes, whether arising our of the
application of such agreements or otherwise, in order to avoid any interruption to commerce
* * *.' By Section 2, Second, 'All disputes between a carrier or carriers and its or their
employees shall be considered, and, if possible, decided, with all expedition, in conference
between representatives designated and authorized so to confer, respectively, by the carrier
or carriers and by the employees thereof interested in the dispute.' (Emphasis added.)
These are the basic sections creating the duty, applicable to all disputes, major or minor,
and to carriers and employees alike.
Other provisions affecting the general duty to treat are those of Section 2 Third, that
'representatives, for the purposes of this Act, shall be designated by the respective parties
without interference' by the other and 'need not be persons in the employ of the carrier'; of
Section 2, Fourth, that 'the majority of any craft or class of employees shall have the right
to determine who shall be the representative of the craft or class for the purposes of this
Act'; and of Section 2, Eighth that 'every carrier shall notify its employees by printed notices
* * * that all disputes between the carrier and its employees will be handled in accordance
with the requirements of this Act.' (Emphasis added.)
Section 2, Sixth applies specially to grievances, as does Section 3, First (i). The former
provides: 'In case of a dispute between a carrier or carriers and its or their employees,
arising out of grievances or out of the interpretation or application of agreement's
concerning rates of pay, rules, or working conditions, it shall be the duty of the designated
representative or representatives of such carrier or carriers and of such employees, within
ten days after the receipt of notice of a desire on the part of either party to confer in respect

ten days after the receipt of notice of a desire on the part of either party to confer in respect
to such dispute, to specify a time and place * * *.' Section 3 First (i) is as follows: 'The
disputes between an employee or group of employees and a carrier or carriers growing out
of grievances or out of the interpretation or application of agreements concerning rates of
pay, rules, or working conditions, including cases pending and unadjusted on the date of
approval of this Act, shall be handled in the usual manner up to and including the chief
operating officer of the carrier designated to handle such disputes; but, failing to reach an
adjustment in this manner, the disputes may be referred by petition of the parties or by
either party to the appropriate division of the Adjustment Board with a full statement of the
facts and all supporting data bearing upon the disputes.' (Emphasis added.)
27
Section 2, Eighth makes this proviso part of the contract of employ ment between the carrier
and each employee, and section 2, Tenth makes it a misdemeanor for the carrier to refuse
to observe it. Section 2, Eighth incorporates the provisions of Sections 2, Third, Fourth and
Fifth in each employee's contract of employ ment. Section 2, Tenth makes it a misdemeanor
for the carrier to fail or refuse to comply with the terms of Section 2, Third, Fourth, Fifth,
Seventh and Eighth.
28
See note 27.

29
Cf. Administrative Procedure in Government Agencies, Sen.Doc. 10, Part IV, 77th Cong., 1st
Sess., 7.
30
Cf. Steele v. Louisville & N.R. Co., 323 U.S. 192, 65 S.Ct. 226; Tunstall v. Brotherhood of
Locomotive Firemen & Enginemen,323 U.S. 210, 65 S.Ct. 235; Wallace Corp. v. National
Labor Relations Board, 323 U.S. 248, 65 S.Ct. 238.
31
In this connection it is important to recall that the Act does not contemplate the existence of
closed shops, to the extent at any rate that the carrier is forbidden to make such
agreements. Cf. § 2, Fourth; 78 Cong.Rec. 12,402; 40 Op.Atty.Gen., No. 59 (Dec. 29,
1942). Accordingly the interests of unorganized workers and members of minority unions
are concerned in the solution. These are not always adverse to the interests of the majority
or of the designated union. But they may be so or even hostile. Cf. the authorities cited in
note 30. To regard the statute as so completely depriving persons thus situated of voice in
affairs affecting their very means of livelihood would raise very serious questions.
32
This undoubtedly was the primary object. The language in the concluding clause, 'while
engaged in the business of a labor organization,' applies literally only to employees
travelling upon union business, and has no apparent application to the preceding provision
relating to the individual employee's right to confer with management.
33
Hearings before Committee on Interstate Commerce on H.R.7650, 73d Cong., 2d Sess., 36,
44, 89.
34
Cf. note 37 and text. It is to be doubted that Congress by the generally inclusive language
used concerning grievances intended, for instance, to give the collective agent exclusive
power to settle a grievance arising independently of the collective agreement, affecting only
non-union men to whose claim the union and the majority were hostile.
35
But whether or not the carrier's violation affects all the members of the group immediately
and alike, so as to create a present basis for claims by each, the violation, though resulting
from misinterpretation, would constitute a present threat to the similar rights of all covered
by the contract. Cf. Hughes Tool Co. v. National Labor Relations Board, supra, 147 F.2d 72,
74; 40 Op.Atty.Gen., No. 59, pp. 4, 5 (Dec. 29, 1942).
To leave settlements in such cases ultimately to the several choices of the members, each
according to his own desire without regard to the effect upon the collective interest, would
mean that each affected worker would have the right to choose his own terms and to
determine the meaning and effect of the collective agreement for himself. Necessarily, the
carrier would be free to join with him in doing so and thus to bargain with each employee
for whatever terms its economic power, pitted against his own, might induce him to accept.
The result necessarily would be to make the agreement effective, not to all alike, but

The result necessarily would be to make the agreement effective, not to all alike, but
according to whatever varied interpretations individual workers, from equally varied
motivations, might be willing to accept. To give the collective agent power to make the
agreement, but exclude it from any voice whatever in its interpretation would go far toward
destroying its uniform application.
36
Depending upon the substantive character of the claim, its foundation in a collective
agreement or otherwise, its intrinsically substantial or insubstantial nature, the number of
employees affected, the length of time it remains unsettled, the number of claims allowed
so to run, or perhaps other factors, the grievance may be a matter of large moment to the
group as a whole or of little or no concern to it and, it may be, of either identical or
converse importance to the individual or individuals directly affected.
37
Congress was concerned primarily with differences between the carrier and the employees,
not with differences among the latter or between them, or some of them, and the collective
agent. The statute therefore was not drawn with an eye levelled to these problems, except
as to choice of representatives, cf. § 2, Fourth; § 2, Ninth; and note 34.
38
Authority might be conferred in whatever ways would be sufficient according to generally

accepted or 'common law' rules for the creation of an agency, as conceivably by specific
authorization given orally or in writing to settle each grievance, by general authority given
to settle such grievances as might arise, or by assenting to such authority by becoming a
member of a union and thereby accepting a provision in its constitution or rules authorizing
it to make such settlements.
39
The distinction holds true although 'interpretation or application' may look to the future as
well as the past, as it often does. It goes to the source of the right asserted, whether in an
antecedent agreement or only to one presently sought. The difference is important for other
issues as well as those presently involved, e.g., application of statutes of limitations.
The distinction is not to be ignored or wiped out merely because a particular dispute or
agreement may look both to the past and to the future. The special procedure for settling
grievances was created because it was intended they should be disposed of differently from
disputes over 'rates of pay, rules, or working conditions,' which were committed exclusively
o the collective agent's authority. One important difference preserved the aggrieved
employee's rights to participate in all stages of the settlement. Congress therefore, when it
preserved those rights, contemplated something more than collective representation and
action to make the settlement effective for the past. It follows that the individual
employee's rights cannot be nullified merely by agreement between the carrier and the
union. They are statutory rights, which he may exercise independently or authorize the
union to exercise in his behalf.
40
The collective agreement, of which Article 6 is a part, provides: 'Any controversy arising as
to the application of the rules herein agreed upon * * * shall be taken up * * *' by the
general grievance committee with the general superintendent of the carrier, 'and in the
event of their failure to agree upon a satisfactory settlement, the Committee may appeal to
the Vice President.' (Emphasis added.) Petitioner says this provision bound it to deal only
with the general committee.
Petitioner also relies upon Rule 10 of the Brotherhood's constitution and general rules as
imposing the same duty:
'Whatever action may be taken by the General Grievance Committee or Board of
Adjustment of any system within the meaning of the above General Rules shall be law to
the Lodges on that road until and unless reversed by the Board of Appeals, and if any
member refuses to vote or abide by the action of such General Grievance Committee or
Board of Adjustment, he shall be expelled from the Brotherhood for violation of obligation.'
See also note 8.
41
This, they say, was because Williams did not regard the agreement as waiving the money
claims, since he did not give them the required notice and shortly after the settlement filed
the money claims with the Board. Cf. note 6.
42
Respondents also attack the settlement because it was not signed by the third member of

Respondents also attack the settlement because it was not signed by the third member of
the grievance committee, the local grievance chairman. This objection borders on the
frivolous.
43
In other words, the aggrieved employee has the right to delegate his power to concur in an
agreement of settlement, but at the same time to reserve his rights to make submission to
the Board and of appearance and representation before it, or conversely to reserve his right
to concur and delegate the rights of submission and representation. To what extent he may
delegate one or all depends therefore upon the intent with which he makes the particular
delegation as disclosed by the circumstances in which it is made, or gives evidence of such
intent by his conduct, and this will be a question of fact unless the circumstances so clearly
show he intended to make the delegation claimed that no other conclusion is possible.
44
It is true that respondents' position concerning the consequences of their authorization to

make the submission in Docket No. 3537 is not altogether consistent. For in claiming that
they authorized submission only to determine the applicability of Article 6 for the future,
and not to determine the question of retroactivity so as to establish or conclude adversely
the basis for their individual monetary claims, they appear to ignore, as does petitioner in
some of its contentions, the distinction between collective bargaining and the settlement of
grievances as the Act defines them. Cf. note 39 and text. If their purpose was merely to
authorize settlement for the future, without retroactive effects, the submission to the
Adjustment B ard was misconceived, since it has no power to render a decision requiring the
carrier or the union to make a new agreement. Its only authority, under the Act, is to
determine what they have agreed upon previously or, outside the scope of a collective
agreement, what rights the carrier and its employees may have acquired by virtue of other
incidents of the employ ment relation. Such an issue by its very nature looks to the past,
though it may also seek compliance for the future.
1
In his message of December 8, 1925, to Congress, President Coolidge stated: 'I am

informed that the railroad managers and their employees have reached a substantial
agreement as to what legislation is necessary to regulate and improve their relationship.
Whenever they bring forward such proposals, which seems sufficient to protect the interests
of the public, they should be enacted into law.' 67 Cong.Rec. 463.
Pasted from <http://openjurist.org/325/us/711/elgin-ry-co-v-burley>

UNITED EMPLOYEES UNION OF GELMART INDUSTRIES V NORIEL
12:10 AM
UNITED EMPLOYEES UNION OF GELMART INDUSTRIES V NORIEL

67 SCRA 267
FERNANDO; October 3, 1975
NATURE
Petition for certiorari and prohibition
FACTS
- the petition seeks to have the certification election declared null and void, for it w as held under circumstances that manifested lack
of fairness
- it w as alleged that the petitioner-union w as included, but under another name, in the list of contending unions in the election, w here
the w inning party had 63% of the votes, w hile the petitioner only had 4.5% (thus, the w inner w on by a landslide, even if the votes of
all the other 7 contending unions w ere combined. Therefore, the mistake didn’t really affect the outcome of the election)
ISSUE WON the certification election is void
HELD NO
Ratio Considering what transpired, it is apparent that the grievance spoken of is more fancied than real, the assertion of confusion
and demoralization based on conjecture rather than reality. At most, it w as an honest mistake
Reasoning The institution of collective bargaining is a prime manifestation of industrial democracy at w ork. The tw o parties to the
relationship, labor and management, make their ow n rules by coming to terms. That is to govern themselves in matters that really
count. As labor, how ever, is composed of a number of individuals, it is indispensable that they be represented by a labor
organization of their choice. Thus may be discerned how crucial a certification election is.
- There must be an opportunity to determine w hich labor organization shall act on their behalf.It is precisely because respect must
be accorded to the w ill of labor thus ascertained that a general allegation of duress is not sufficient to invalidate a certif ication
election; it must be show n by competent and credible proof. That is to give substance to the principle of majority rule, one of the
basic concepts of a democratic polity.
Disposition Petition dismissed.
G.R. No. L-40810 October 3, 1975

UNITED EMPLOYEES UNION OF GELMART INDUSTRIES PHILIPPINES (UEUGIP), petitioner,
vs.
HON. CARMELO NORIEL, DIRECTOR, BUREAU OF LABOR RELATIONS; GEORGE A.
EDUVALA, REPRESENTATION OFFICER, BUREAU OF LABOR RELATIONS; and NATIONAL
UNION OF GARMENTS, TEXTILE, CORDAGE AND ALLIED WORKERS OF THE PHILIPPINES
(GATCORD), respondents.
Benito P. Fabie for petitioner.
Assistant Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Reynato S. Puno and
Solicitor Romeo C. de la Cruz for respondents Carmelo Noriel, etc., et al.
Hermon C. Lagman for respondents Unions.
FERNANDO, J.:
The plea for setting aside a certification election earnestly and vigorously pressed by petitioner in
this certiorariand prohibition proceeding is predicated on the proposition that it was held under
circumstances that manifested lack of fairness, thus raising a procedural due process question.
There was an equally firm and vehement denial in a comprehensive comment filed on behalf of
private respondent, National Union of Garments, Textile, Cordage and Allied Workers of the
Philippines. The stress in the comment of respondent Director Carmelo Noriel 1 was on the absence
of a grave abuse of discretion. As will be more fully discussed, a careful scrutiny of what transpired
as revealed not only in the pleadings but in the oral argument will disclose that the attack on the
certification election cannot succeed. The petition lacks merit.
The petition sought to have the certification election declared null and void ab initio and thus
unenforceable, alleging that the contending parties in a pre-election conference conducted by the
Bureau of Labor Relations agreed that petitioner would be listed in the ballot as United Employees
Union of Gelmart Industries Philippines (UEUGIP). 2 In the notice of the certification election,
however, it was wilfully deleted and replaced by "a non-contending party, namely, Philippine Social
Security Labor Union (PSSLU), which, although an existing labor federation ... has nothing to do and
has no interest or right of participation [therein]." 3 So it did appear likewise in the sample ballot. 4 As
a result, there was confusion in the minds of independent voters and demoralization in the ranks of
those inclined to favor petitioner. 5 There was a protest but it was not based on this ground; instead
the grievance complained of referred to the alleged electioneering of nuns and a priest as observers
or inspectors on behalf of private respondent. 6 The above notwithstanding, the certification election
took place "on the scheduled date, May 24, 1975 and respondent GATCORD garnered the highest

took place "on the scheduled date, May 24, 1975 and respondent GATCORD garnered the highest
number of votes ...." 7 It was then set forth that despite such defect in the mode of conducting the
election which for petitioner sufficed to cause "the nullity of the election in question," respondent
Director Carmelo Noriel of the Bureau of Labor Relations "[was] about to certify respondent
GATCORD as the sole and exclusive collective bargaining representative of the rank and file
employees [and] workers of Gelmart Industries Philippines, Inc." 8 Hence this petition with its
overtones as indicated of an alleged violation of procedural due process.
The comment to the petition filed on behalf of private respondent National Union of Garments,
Textile, Cordage and Allied Workers of the Philippines (GATCORD) denied the imputation of
irregularity and sought to clarify matters by a factual presentation of what did transpire. At the outset,
however, it made clear that the petitioner, which garnered only 291 votes or 4.5% of the total number
of votes cast as against the 3,970 or 63% of the votes in its favor, certainly could not be heard to
challenge the validity of the certification election. Thus: "1. Pursuant to an order of the Bureau of
Labor Relations of the Department of Labor, a certification election was conducted on 24 May 1975
in Gelmart Industries Philippines, Inc., South Superhighway, Parañaque, Rizal, to choose the
collective bargaining agent of the company's rank and file employees; 2. The certification election
was conducted and supervised by the Bureau of Labor Relations; it took almost the entire personnel
of the Bureau, including the Director himself, to man the election, there were 11 precincts, each of
which was presided over by a med-arbiter of the Bureau, as chairman, and another representation
officer of the Bureau; there was also created a central election committee composed of four top
personnel of the Bureau for optimum supervision; 3. There were some 8,900 eligible voters out of
about 10,000 employees of the company; out of the 8,900 eligible voters, duly agreed upon by all the
parties and approved by the Bureau, 6,309 or 79.7% voted; out of the 6,309 eligible voters
cast,3970 or 63% went to GATCORD, [with UEUGIP placing] only fifth with a measly 291 votes or
barely 4.5% of the total number of votes cast. It may be noted that even if the votes of all seven
losing unions[were added], their total would only be 2,057, which is still 1,823 votes short of
GATCORD's 2,970 votes. It is thus clear that GATCORD won by an overwhelming majority:" 9 It
characterized such votes as an "unassailable majority." 10 On the question of the alleged irregularity,
the comment set forth the following: "Petitioner UEUGIP did not lodge any protest concerning the
alleged misprinting or omission of its name in the Notice of Certification Election in the Sample
Ballot ... before the election, during the election or shortly after the election, [but merely questioned]
the presence of the priests and nuns, over which it filed a protest with the BLR, [not the alleged
misprinting] or omission of its name in the election notice and the sample ballot; 10. The fact is,
when GATCORD petitioned for the certification election (NLRC Case No. LR-4891, later numbered
as BLR Case No. 256) in July, 1974, the United Employees Union of Gelmart Industries
Philippines(UEUGIP) intervened, as represented by Ruben Escreza, the union's duly elected
president, [with] Antonio Diaz, herein alleged representative of UEUGIP, [intervening] then not for
UEUGIP but for UEUGIP-Workers' Faction; 11. Since Mr. Diaz was representing only a faction of
UEUGIP, which faction had no legal personality separate from UEUGIP which was duly represented
by Mr. Escreza, the order of the Bureau dated 15 January 1975 included only UEUGIP as one of the
contending unions, without including UEUGIP-Workers' Faction; 12. Subsequently, the Philippine
Transport and General Workers Organization (PTGWO) intervened and, claiming that UEUGIP had
affiliated with PTGWO, moved for a correction of the name UEUGIP in the order, making it UEUGIP-
PTGWO, ...;13. During the first two pre-election conferences in connection with the certification
election held on February 14 and 17, 1975, Mr. Diaz appeared, but he was no longer representing
UEUGIP-Workers' Faction; he entered a new union - the Philippine Social Security Labor Union
(PSSLU); ... 14. In the succeeding pre-election conferences, however, Mr. Diaz, apparently out to
create trouble, began claiming to represent UEUGIP and abandoned representation of PSSLU [with
the result that] UEUGIP had two representatives often clashing with each other; Mr. Escreza and Mr.
Diaz; 15. On 19 May 1975 the Bureau of Labor Relations caused the posting of 'Notice of
Certification Election' with a 'Sample Ballot', [with said posting being made at a time when] the
parties had not yet agreed as to how their names should appear in the ballot, ... 16. It was only on 20
May 1974, after the election notice was already posted with the original sample ballot, that the
parties came to discuss how their respective names should appear in the ballot,[at which time] the
parties had agreed that the names of the contending unions should be printed in the ballots as they
were printed, that is, with UNITED EMPLOYEES UNION OF GELMART INDUSTRIES PHILIPPINES
(UEUGIP) there and without PSSLU." 11 Private respondent then considered the following as the
pertinent questions: "If Mr. Diaz felt that the posting of the election notice and the original sample
ballot was erroneous and it was prejudicial to his group, why did he not raise this question early
enough? He could have raised it soon after the posting was made, especially considering that two
more pre-election conferences, on May 20, 22 and 23 were held. Or he could have raised the
question during the election day. But he did not. Is it because he did not really care then, is it
because his people inside the company did not really care, or is it because he had really no people

because his people inside the company did not really care, or is it because he had really no people
inside to bother at all about said 'error?' If they were that disinterested in correcting the 'error' at least
during the last four days before the election, how could Mr. Diaz claim now that his group was
adversely affected by the alleged 'error' and that if said 'error' was not made, his group could have
won the election?" 12 The comment ended on a statement rather rhetorical in character: "The truth is,
Mr. Diaz had but a droplet of support, which, dream as he would, could never match, much less
overcome, the raging torrents of GATCORD." 13 The comment on behalf of respondent Director
Noriel and the respondent Representation Officer Eduvala stressed a grave abuse of discretion to
certify an action forcertiorari. Petitioner sought permission to reply and was granted. There was, as
could be expected, a stout denial of the recital of facts of private respondent, but it cannot be said
that it is impressed with a high degree of persuasiveness..
At any rate, after the Court considered the comments as answers and set the case for hearing, with
arguments coming from both counsel Benito Fabie for petitioner and Jose W. Diokno for private
respondent, and with the labor leader Antonio Diaz referred to in the comment of private respondent
being questioned and presenting petitioner's side of the controversy, a much clearer picture
emerged. It was none too favorable for petitioner.
As noted at the outset, we find for respondents. The petition lacks merit.
1. The institution of collective bargaining is, to recall Cox, a prime manifestation of industrial
democracy at work. The two parties to the relationship, labor and management, make their own
rules by coming to terms. That is to govern themselves in matters that really count. As labor,
however, is composed of a number of individuals, it is indispensable that they be represented by a
labor organization of their choice. Thus may be discerned how crucial is a certification election. So
our decisions from the earliest case of PLDT Employees Union v. PLDT Co. Free Telephone
Workers Union 14 to the latest, Philippine Communications, Electronics & Electricity Workers'
Federation (PCWF) v. Court of Industrial Relations, 15 have made clear. Thus is one of the earliest
cases, TheStandard Cigarette Workers' Union v. Court of Industrial Relations, 16 it was made clear in
the opinion of Justice J. B. L. Reyes that "a complaint for unfair labor practice may be considered a
prejudicial question in a proceeding for certification election when it is charged therein that one or
more labor unions participating in the election are being aided, or are controlled, by the company or
employer. The reason is that the certification election may lead to the selection of an employer-
dominated or company union as the employees' bargaining representative, and when the court finds
that said union is employer-dominated in the unfair labor practice case, the union selected would be
decertified and the whole election proceedings would be rendered useless and nugatory." 17 For it is
easily understandable how essential it is, in the language of former Chief Justice Concepcion, in the
leading case of LVN Pictures v. Philippine Musicians Guild 18 "to insure the fair and free choice of
bargaining representatives by employees." 19 There must be such an opportunity to determine which
labor organization shall act on their behalf. 20 It is precisely because respect must be accorded to the
will of labor thus ascertained that a general allegation of duress is not sufficient to invalidate a
certification election; it must be shown by competent and credible proof. 21 That is to give substance
to the principle of majority rule, one of the basic concepts of a democratic polity. 22The matter is
summarized thus in one of the latest decisions of this Court, Federation of the United Workers
Organization v. Court of Industrial Relations: 23 "The slightest doubt cannot therefore be entertained
that what possesses significance in a petition for certification is that through such a device the
employees are given the opportunity to make known who shall have the right to represent them.
What is equally important is that not only some but all of them should have the right to do so." 24 If
heed be paid to the above well-settled principle and applied to the facts disclosed in the present
petition, it would be apparent that the grievance spoken of is more fancied than real, the assertion of
confusion and demoralization based on conjecture rather than reality. The mode and manner in
which Antonio Diaz demonstrated how militant and articulate he could be in presenting his side of
the controversy could hardly argue for the accuracy of his claim that his men did lose heart by what
appeared at the most to be an honest mistake, if it could be characterized as one. Certainly then, the
accusation that there was abuse of discretion, much less a grave one, falls to the ground.
2. Nor need this Court pass upon the ground of protest based on the alleged participation by nuns
and a priest who presumably aided the cause of private respondent. Petitioner did not choose to
press this point. It is understandable why. In the leading case of Victoriano v. Elizalde Rope Workers'
Union, 25 this Court, through Justice Zaldivar, left no doubt as to the privacy of religious freedom, to
which contractual rights, even on labor matters, must yield, thus removing any taint of nullity from the
amendment to the Industrial Peace Act, 26 which would allow exemption from a closed shop on the
part of employees, members of a given religious sect prohibiting its devotees from affiliating with any
labor organization. Subsequently, in Basa v. Federacion Obrera de la Industria Tabaquera, 27 such
doctrine was reaffirmed, thus emphasizing that one's religious convictions may be the basis for an
employee joining or refusing to join a labor union. Certainly, the wide latitude accorded religious
groups in the exercise of their constitutional freedom would caution against reliance on such

groups in the exercise of their constitutional freedom would caution against reliance on such
aground to invalidate a certification election. It thus appears that such an approach is reflected in the
attitude adopted by petitioner, which in effect amounts to an abandonment of such a possible ground
of protest, not at all lodged with this Court but merely mentioned in its recital of background facts.
3. During the hearing of this case, reference was made to the registration of private respondent
allegedly having been revoked. As the pleadings do not touch upon the matter at all, this Court is not
in a position to rule on such a question. The decision therefore leaves that particular aspect of the
litigation open.
WHEREFORE, the petition for certiorari and prohibition is dismissed for lack of merit. The restraining
order issued by this Court is lifted. This decision is immediately executory. No costs.
Barredo, Antonio, Aquino and Martin, JJ., concur.
Concepcion Jr., J, is on leave.
Footnotes
1 He is the Director of the Bureau of Labor Relations. The representation, officer of such Bureau,
George A. Eduvala, was likewise named respondent.
2 Petition, par. 5.
3 Ibid; par. 7.
4 Ibid, par. 8.
5 Ibid, par. 10.
6 Ibid, par. 12.
7 Ibid, par. 13.
8 Ibid, par. 15.
9 Comment of Private Respondent, pars. 1-5.
10 Ibid, par. 6.
11 Ibid, par. 9-16.
12 Ibid, par. 18.
13 Ibid, par. 19.
14 97 Phil. 424 (1955). Cf. Bacolod-Murcia Milling Co., Inc. v. National Employees-Workers Security
Union, 100 Phil. 516 (1956).
15 L-34531, March 29, 1974, 56 SCRA 480. Cf. Compañia Maritima v. Compañia Maritima Labor
Union, L-29504, Feb. 29, 1972, 43 SCRA 464; Philippine Association of Free Labor Unions v. Court
of Industrial Relations, L-33781, Oct. 31, 1972, 47 SCRA 390; Lakas ng Manggagawang Pilipino v.
Benguet Consolidated, Inc., L-35075, Nov. 24, 1972, 48 SCRA 169, B.F. Goodrich Philippines, Inc.
v. B.F. Goodrich Confidential and Salaried Employees Union, L-34069, Feb. 28, 1973, 49 SCRA
532.
16 101 Phil. 126 (1957).
17 Ibid, 128. Cf. Acoje Mines Employees and Acoje United Workers Union v. Acoje Labor Union and
Acoje Mining Co., 814 (1958).
18 10 Phil. 725 (1961).
19 Ibid, 728-729. Cf. Philex Miners Union v. National Mines and Allied Workers Union, L-18019,
Dec. 29, 1962, 6 SCRA 992.
20 Cf. B. F. Goodrich Philippines, Inc. v. B. F. Goodrich Confidential and Salaried Employees Union,
L-34069-70, Feb. 28,1973, 49 SCRA 532.
21 Cf. Acoje Workers' Union v. National Mines and Allied Workers' Union, L-18848, April 23, 1963, 7
SCRA 730.
22 Cf. Allied Workers' Association v. Court of Industrial Relations, L-22580, June 6, 1967, 20 SCRA
364.
23 L-37392, December 19, 1973, 54 SCRA 305.
24 Ibid, 310. Cf. Federation of Free Workers v. Parades, L-36466, Nov. 26, 1973, 54 SCRA 75.
25 L-25246, September 12, 1974, 59 SCRA 54.
26 Republic Act No. 3350 (1961).
27 L-27113, November 19, 1974, 61 SCRA 93.

NATIONAL UNION OF RESTAURANT WORKERS V CIR
12:11 AM
NATIONAL UNION OF RESTAURANT WORKERS V CIR

10 SCRA 843
BAUTISTA ANGELO; APR.30, 1964
NATURE
PETITION for review by certiorari of a resolution of the Court of Industrial Relations.
FACTS
- On June 9, 1960, a complaint for unfair labor practice w as lodged against the ow ners of Tres Hermanas Restaurant, particularly
Mrs. Felisa Herrera, on the ground, among others, that respondents refused to bargain collectively w ith the complaining union;
respondents made a counter-proposal in the sense that they w ould bargain w ith said union and w ould accept its demands if the
same w ould become a company union, and one Martin Briones, an employee, w as separated from the service because he was
found to be the organizer and adviser of the complaining union.
- Responents denied the charges, and they w ere exonerated. The judge found that the charges w ere not proven and dismissed the
complaint.
ISSUES
1. WON respondents refused to bargain collectively w ith the union and committed unfair labor practice
2. WON respondents interfered, coerced or restrained their employees in the exercise of their right to join the complaining union
3. WON respondents dismissed said employee because he w as found to be the organizer and adviser of the complaining union.
HELD
1. NO
Reasoning The court cited several instances that showed respondent’s willingness to bargain w ith the union.
It is true that under Sec 14, RA 875 w henever a party serves a written notice upon the employer making some demands the latter
shall reply thereto not later than 10 days from receipt thereof, but this condition is merely procedural, and as much its non-
compliance cannot be deemed to be an act of unfair labor practice. The fact is respondents did not ignore the letter sent by the
union so much so that they called a meeting to discuss its demands.
The court also pointed out the markings on the letter made by respondent in the meeting w ith the union on May 3, 1960 at their
restaurant in Quezon City, indicating the w illingness and actual bargaining made w ith the union. (Check for agreement, a cross for
disapproval and a circle for demands left open for further discussion)
It is contended that respondents refused to bargain w ith the complaining union as such even if they called a meeting of its officers
and employees hereby concluding that they did not desire to enter into a bargaining agreement w ith said union. It is belied by the
fact that respondents did actually agree and bargain w ith the representatives of the union. Respondents w ere of the impression that
before a union could have that capacity it must first be certified by the CIR as the duly authorized bargaining unit, w hich they also
stated in their answ er to the petition for certification filed by said union before the CIR. In that case, another union known as the
International Labor and Marine Union of the Philippines claimed to represent the majority of the employees of respondent
restaurant, and this is w hat it alleged in a letter sent to the manager of respondents dated May 25, 1962.
2. NO.
Reasoning On this document certain notations w ere made by one Ernesto Tan w hich are indeed derogatory and w hich were
allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation on w hich the union relies is one
w hich states that respondent Herrera would be w illing to recognize the union "if union w ould become company union", w hich w ould
indeed show that Mrs. Herrera interfered w ith the employees' right to self-organization. But respondents denied that they ever
authorized Ernesto Tan to make such notation or to represent them in the negotiations. Although Tan w as the nephew of
respondent Herrera, in the company, he w as merely a bookkeeper w hose duties w ere confined to the keeping and examination of
their books of accounts and sales invoices. It appears that he w as not even invited to the meeting but merely volunteered to be
present and made those notations on his ow n account and initiative.
3. NO.
Reasoning. Respondents maintain that Briones w as dismissed because of the “smouldering embers of hatred” that Briones had
against Mrs. Herrera, the threats he made, and her fear for her ow n safety being alw ays together with in her car driven by Briones
during business routine. Petitioners maintain that Briones w as dismissed because of his union activities. It appears in Briones’
testimony that he is not the only one w ho organized the union, yet the members w ho are more active in the union and serve as its
officers are still employed at the restaurant.
Disposition CIR decision AFFIRMED.
G.R. No. L-20044 April 30, 1964

NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Alejandro C. Villavieja for petitioner.
Padilla Law Office for respondents.
BAUTISTA ANGELO, J.:
On June 9, 1960, a complaint for unfair labor practice was lodged against the owners of Tres
Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the ground, among others, that
respondents refused to bargain collectively with the complaining union; respondents made a

respondents refused to bargain collectively with the complaining union; respondents made a
counter-proposal in the sense that they would bargain with said union and would accept its demands
if the same would become a company union, and one Martin Briones, an employee, was separated
from the service because he was found to be the organizer and adviser of the complaining union.
After respondents had filed their answer, wherein they denied the charges of unfair labor practice
filed against them, Judge Emiliano C. Tabigne, who was assigned to act on the complaint, received
the evidence, and on July 28, 1961, rendered decision exonerating respondents. He found that the
charges were not proven and dismissed the complaint.
The case was taken to the court en banc, where in a split decision the court affirmed the decision of
Judge Tabigne. The case is now before us on a petition for review.
The important findings of the court a quo which are now disputed by the union are: (1) respondents
did not refuse to bargain collectively with the union as in fact they met its members with the only
particularity that they were not able to accept all the demands of the union; (2) respondents did not
interfere, coerce or restrain their employees in the exercise of their right to join the complaining
union; and (3) the dismissal of Martin Briones was due to the concern of Mrs. Herrera for her life on
account of the hatred that Briones had entertained against her, she being always with him in the car
he used to drive during their business routine. It is claimed that Judge Tabigne committed a grave
abuse of discretion in making the above findings.
Anent the first issue, the court a quo found that in the letter sent by the union to respondents
containing its demands marked in the case as Exhibit 1, there appears certain marks, opposite each
demand, such as a check for those demands to which Mrs. Felisa Herrera was agreeable, a cross
signifying the disapproval of Mrs. Herrera, and a circle regarding those demands which were left
open for discussion on some future occasion that the parties may deem convenient. Such markings
were made during the discussion of the demands in the meeting called by respondents on May 3,
1960 at their restaurant in Quezon City. The court a quo concluded that the fact that respondent
Herrera had agreed to some of the demands shows that she did not refuse to bargain collectively
with the complaining union.
We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they accepted
some of the demands while they refused the others even leaving open other demands for future
discussion is correct, especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29, 1960. It is true
that under Section 14 of Republic Act 875 whenever a party serves a written notice upon the
employer making some demands the latter shall reply thereto not later than 10 days from receipt
thereof, but this rendition is merely procedural and as such its non-compliance cannot be deemed to
be an act of unfair labor practice. The fact is that respondents did not ignore the letter sent by the
union so much so that they called a meeting to discuss its demands, as already stated elsewhere.
It is contended that respondents refused to bargain with the complaining union as such even if they
called a meeting of its officers and employees thereby concluding that they did not desire to enter
into a bargaining agreement with said union. This conclusion has no rational relation with the main
premise of the union for it is belied by the fact that respondents did actually agree and bargain with
the representatives of the union. While it is true that respondents denied the capacity of the
complaining union to bargain collectively with the respondents this is because they were of the
impression that before a union could have that capacity it must first be certified by the Court of
Industrial Relations as the duly authorized bargaining unit, in fact this is what they stated in their
answer to the petition for certification filed by said union before the Court of Industrial Relations (See
Case No. 763-MC). In said case, another union known as the International Labor and Marine Union
of the Philippines claimed to represent the majority of the employees of respondent restaurant, and
this is what it alleged in a letter sent to the manager of respondents dated May 25, 1962.
Anent the second issue, the claim of the complaining union has also no basis. This is premised on a
document marked Exhibit C which contains certain alleged counter-proposals tendered to
complainant union the nature of which would apparently indicate that respondents made use of
coercion which interferes with the right of the employees to self-organization. On this document
certain notations were made by one Ernesto Tan which are indeed derogatory and which were
allegedly made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent notation
on which the union relies is one which states that respondent Herrera would be willing to recognize
the union "if union would be willing to recognize the union", which would indeed show that Mrs.
Herrera interfered with the employees' right to self-organization. But respondents denied that they
ever authorized Ernesto Tan to make such notation or to represent them in the negotiations, for he
was merely a bookkeeper whose duties were confined to the keeping and examination of their books
of accounts and sales invoices. It appears that he was not even invited to the meeting but merely
volunteered to be present and made those notations on his own account and initiative. The court a
quo gave credence to this stand of respondents, as can be seen in the following finding: "There is no

quo gave credence to this stand of respondents, as can be seen in the following finding: "There is no
evidence to show that Ernesto Tan was authorized to represent management in the meeting held on
May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of respondents, he is not a part of
management although he is the nephew of Mrs. Herrera." We are not prepared to disturb this finding
of the court a quo.
Finally, it is alleged in connection with the third issue that respondent Herrera dismissed Martin
Briones without sufficient cause other than his being the organizer and adviser of the complaining
union. It however appears from the very testimony of Martin Briones that he is not the only one who
organized the complaining union but together with Galicano Apiz, Pablo Cabreros and Juan Morales,
with the particularity that, as Briones himself had intimated, Apiz, Cabreros and Morales were more
active than himself in organizing the union so much so that they were appointed officers of that
union. And yet, Apiz, Cabreros and Morales were never touched and continued to be employed in
respondents' restaurant. For this reason, the court a quo discredited the claim that Briones was
dismissed because of union activities but rather because of the threats he made on Mrs. Herrera, as
communicated to her by her sister Aureata. The following is the finding made by the court a quo on
this point: "If it is the union activities of complainant's members that Mrs. Herrera did not like, Apiz,
Cabreros and Morales should have been dismissed by her also, because said persons were more
active than Briones in the organization of the union. Verily, it was not the union activities of Martin
Briones that prompted Mrs. Herrera to dismiss him, but her fear for the safety of her life on account
of the smouldering members of hatred that the former had against the latter, the said persons being
always together in her car driven by Briones, during business routine." This finding finds support in
the evidence.
On the strength of the foregoing considerations, we find no justification for disturbing the findings of
the court a quo which led to the dismissal of the complaint under consideration. 1äwph
ï1
.ñ
ët
WHEREFORE, the decision appealed from is affirmed. No costs.

Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and
Makalintal, JJ., concur.
Padilla, J., took no part.
Pasted from <http://www.lawphil.net/judjuris/juri1964/apr1964/gr_l-20044_1964.html>

PHILAM Mgt Co. Inc vs. Philam Employees Assn (1973)
1:11 AM
G.R. No. L-35254 May 25, 1973

THE PHILIPPINE AMERICAN MANAGEMENT COMPANY, INC., and PHILIPPINE AMERICAN
LIFE INSURANCE COMPANY, petitioners,
vs.
THE PHILIPPINE AMERICAN MANAGEMENT EMPLOYEES ASSOCIATION (PAMEA-FFW)
COURT OF INDUSTRIAL RELATIONS, respondents.
Cacnio & Pablo Law Office for petitioners.
F. F. Bonifacio, Jr. for respondent The Philippine American Management Employees Association
(PAMEA-FFW).
RESO L U TI O N
FERNANDO, J.:
In our decision promulgated last January, 1 we ruled that where a labor dispute concerning a
minimum wage question results in a strike, the Secretary of Labor in the events his effort at
conciliation fails, may endorse the matter to the Court of Industrial Relations, which under its arbitral
power could issue a return-to-work order pending the final outcome of the controversy before it.
Petitioner would pursue the matter further in a motion for reconsideration filed with us on March 1,
1973, supplemented by a rejoinder filed on April 18, 1973 to the comments previously submitted be
respondent Labor Union on their motion for reconsideration. Even a cursory glance at such
pleadings yield the impression, not that it is unexpected, that they have less than full sympathy for
Laski's observation that in the interpretation of an enactment providing for a statutory minimum as to
wages, the judiciary is called upon to display solicitate for the plight of those afflicted with the
tragedies of existence consequent upon the meager pittance that is their share, not infrequently
hardly enough to keep body and soul together, haunting them with the perpetual fear that the
morrow may bring. Nor is this the reason why their plea is not to be heeded. As will be subsequently
shown, their continued reliance on what for them is the basic foundation of the Industrial Peace
Act, 2 which is to leave the parties to settle as between themselves conditions of labor and their
attempt to erode the doctrine of an act of a department head being attributed to the President, do not
help their cause at all. Our decision stands.
1. There is, to be sure, no inherent objection to parties exhibiting the trait of persistence. It was not
surprising then that in both motion for reconsideration and the rejoinder, there was reference anew
to the view that to allow respondent to issue a return-to-work order would be at war with the basic
philosophy of the Industrial Peace Act, with its retreat the institution of compulsory arbitration and its
adoption regime of free bargaining. This is how such an argument disposed of in our decision:
"Neither does it avail petitioner argue that the basic question as to the jurisdiction respondent Court
to issue a return-to-work order is to be answered in the negative, in view of the alleged repugnancy
between the basic philosophy underlying the Industrial Peace Act, in the main hostile to the concept
of compulsory arbitration, and the Court of Industrial Relations Act. Such a contention, while
possessing a semblance of plausibility cannot prevail against a strict analysis. There is no need to
repeat that the Industrial Peace Act explicitly continues jurisdiction of respondent Court with
reference to a minimum wage controversy endorsed to it by the Secretary of Labor. The power to be
exercised is necessarily one of compulsory arbitration. Should it be emasculated just because there
is explicit conferment of the authority which it did possess under the act of its creation, still in full
force and effect at the time the enactment of the Minimum Wage Law? For petitioners to take that
stand is in effect to advance the view that there is an implied repeal. A recent decision, Villegas v.
Subido, cautions against such an approach. ... Moreover, there is a failure on the part of petitioners
to accord the most careful appraisal of what is implicit in a regime of collective bargaining, the basic
postulate of the present Industrial Peace Act. It thus enshrines industrial democracy in the sense
that the parties, through the collective contract, could determine the rules that regulate labor-
management relations. Even then, there is an area placed beyond the sphere of bargaining between
the parties. Included therein is the question of minimum wages. It is understandable why it should be
so. For legislation of that character proceeds on the premise that there is a floor below which the
amount paid labor should not fall. That is to assure decent living conditions. Such an enactment is
compulsory in nature; not even the consent of the employees themselves suffices to defeat its
operation. More plainly put, the question of minimum wage is not negotiable. What the law decrees
must be obeyed. It is as simple as that. That is why it is obvious that petitioners cannot successfully
invoke the principles associated with the institution of collective bargaining. Nor is this all. The

invoke the principles associated with the institution of collective bargaining. Nor is this all. The
approach followed by petitioners ignores a relevant provision of the Industrial Peace Act. ... With
such an express recognition of the continuance of the role of respondent Court insofar as minimum
wage is concerned, the argument that the crucial issue in this case, namely whether it is within the
jurisdiction of respondent Court to issue a return-to-work order, deserves an answer in the negative,
falls flat."3
There is to be sure no thought of deviating from the basic concept that the area of free play of
bargaining between management and labor is not to be constricted. What cannot be denied,
however, is that neither party in this particular case is at liberty to agree to an amount lower than that
the law requires as to the wages to be paid. To that extent, there is no room for offer and counter
offer. The employer has an obligation to meet. His duty is plain. He must pay what he has to.
Petitioners, with an obduracy worthy of a better cause, would argue that the Industrial Peace Act
which manifests adherence to the principle of contracts freely arrived at, stands in the way of the
respondent Court having the power to issue return-to-work order. Such is not the case. What do they
have to accomplish? Has not the amount as to the bottom scale of payment been legislatively
determined? What good then their reiteration of fealty to the regime of collective bargaining? Nor is
this to set at naught what is implied industrial democracy. A more intense effort at a serious inquiry
into the background and doctrines of American federal labor law, to which the ancestry of the
Industrial Peace could be traced, could have resulted in the realization that even in the United
States, there is room for direct state action excluding participation by management and labor with
giving rise to any question that thereby the integrity of collective bargaining process has been
impaired. 4
2. The second principal ground of the motion reconsideration, as noted, is premised on an attempt
distinction between the act of the Secretary of Labor result from a statute and the exercise of
authority as a subordinate the President. It is much too late in the day to dislodge from the structure
of the law a doctrine so firmly embedded as that attributing to the Executive the authorship of what is
officially by a cabinet member. In our decision, it was noted that an allegation in their very petition
did show that on January 6, 1972, the Secretary of Labor, pursuant to the Minimum Wage Law,
endorsed the controversy to respondent Court. Then came this portion: "What was done by him, as
a department head, in the regular course of business and conformably to a statutory provision is,
according to settled jurisprudence that dates back to an authoritative pronouncement by Justice
Laurel in 1939, inVillena v. Secretary of Interior, presumptively the act of the President, who is the
only dignitary who could, paraphrasing the language of the decisions, disapprove or reprobate
it" 5 With such a premise, the legal consequence was that respondent Court as an arbitral agency,
could make full use of its powers under the law of its creation 6 whenever a case has been sent to it
by the Executive. This is not to deny that even at the time of the enunciation of such a principle, it did
not elicit approval from certain elements. Justice Laurel anticipated in his epochal opinion such a
reaction. Thus: "Fear is expressed. ... that the acceptance of the principle of qualified political
agency in this and similar cases would result in the assumption of responsibility by the President of
the Philippines for acts of any member of his cabinet, however illegal, irregular, or improper may be
theses acts. ... Fear, however, is no valid argument against the system once adopted, established
and operated. Familiarity with the essential background of the type of Government established under
our constitution, in the light of certain well-known principles and practices that go with the system,
should offer the necessary explanation." 7 Not content with the above, this distinguished jurist
emphasized: "With reference to the Executive Department of the government, there is one purpose
which is crystal-clear and is readily visible without the projection of judicial searchlight, and that is,
the establishment of a single, not plural, Executive. The first section of Article VII of the Constitution,
dealing with the Executive Department, begins with the enunciation of the principle that 'The
executive power shall be vested in a President of the Philippines.' This means that the President of
the Philippines is the Executive of the Government of the Philippines, no other. The heads of the
executive departments occupy political positions and hold office in an advisory capacity and in the
language of Thomas Jefferson, 'should be of the bosom confidence' ... 'are, in the language of
Attorney-General Cushing ... are subject to the direction of the President.' Without minimizing the
importance of the heads of the various departments, their personality is in reality but the projection of
that of the President. Stated otherwise, and as forcibly characterized by Chief Justice Taft of the
Supreme Court of the United States, 'each head of a department is, and must be, the President's
alter ego in the matters of that department where President is required by law to exercise
authority.' ... Secretaries of departments, of course, exercise certain powers under the law but the
law cannot impair or in any way affect the constitutional power of control and direction of the
President. As a matter of executive policy, they may be granted departmental autonomy as to certain
matters but is by mere concession of the executive, in the absence of legislation in the particular
field. If the President, then, is authority in the Executive Department, he assumes the corresponding
responsibility. The head of a department is a man of his confidence; he controls and directs his acts;

responsibility. The head of a department is a man of his confidence; he controls and directs his acts;
appoints him and can remove him at pleasure; he is executive, not any of his secretaries. It is
therefore logical that he, the President, should be answerable for the acts administration of the entire
Executive Department before own conscience no less than before that undefined power public
opinion which, in the language of Daniel Webster, is last repository of popular government. These
are the necessary corollaries of the American presidential type of government and if there is any
defect, it is attributable to the system itself. We cannot modify the system unless we modify
Constitution, and we cannot modify the Constitution by any subtle process of judicial interpretation or
construction." 8
As late as the middle of July 1970, this Court had occasion stress anew the continued primacy of
what was held in Villena. Thus in Tecson v. Salas, 9 it was stated: "Insofar, however, the power of
control over all executive departments, bureaus offices is concerned, the Villena ruling applies with
undiminished force. As a matter of fact, the present Chief Justice, in a decision rendered more than
a year later after Hebron v. Reyes, People v. Jolliffe, quoted extensively from the Villena ruling to
stress what Justice Laurel referred to as the 'qualified political agency' concept resulting in the
'assumption of responsibility by the President of the Philippines for acts of any member of his
cabinet.' No doubt can be entertained then as to the continuing vitality of the Villena doctrine
concerning the plenitude of authority lodged in the President implicit in the power of control
expressly granted him by the Constitution." 10
There is no denial, nor can it be denied, that if in legal contemplation, it was the Executive who did
endorse the matter to respondent Court, then no valid objection could be interposed to it exercising
to the full its arbitral powers. No one can question its issuance of a return-to-work order. That is why
petitioners would have us depart from the Villena ruling. It is an insuperable obstacle to their plea.
There is, as made plain, no reason for us to do so. There can be thus only one justifiable outcome to
their motion for reconsideration.
3. The other points raised do not really reach the merits of the controversy. A junior counsel, who
undoubtedly aided the more senior members of the two distinguished law firms appearing for
petitioners in preparing the relevant pleadings, is well-advised not to clutter up the record with
random observations of a former occupant of a seat in respondent Court, uttered at the spur of the
moment in a lecture, without the benefit of hearing arguments on a many-sided legal question.
Moreover, since, to paraphrase Cardozo, the function of a court is "to give the rule or sentence, it is
inappropriate to engage in intellectual jousts with members of the bar learned in the craft even if,
doubtless, it could be mentally stimulating. Or, in the matter-of-fact language of Justice Malcolm. "a
court cannot permit itself to enter into a joint debate with counsel for the losing side who is naturally
superficial," otherwise it could even result in allowing litigation "so stretch out to infinity." 11 That we
should not allow to happen — especially so in a labor case with its gross disparity as to the staying
power of contending parties.
WHEREFORE, the motion for reconsideration filed petitioners is denied.
Makalintal, Zaldivar, Castro, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
Footnotes
1 Philippine American Management Co., Inc. v. Philippine American Employees Asso., L-35254,
January 29, 1973, 49 SCRA 194.
2 Republic Act No. 875 (1953).
3 49 SCRA 194, 206-208.
4 Cf. Soule, An Economic Constitution for Democracy, 28-64 (1939); Buforn on the Wagner Act,
106 — 124 (1941); Gregory, Labor and the Law, 223-252 (1946); Slitcher, The Challenge of
Industrial Relations, 53 (1949); Millis and Brown From the Wagner Act to Taft Hartley Act, 30-128
(1949); Riensfeld and Maxwell, Modern Social Legislation 585-679 (1950); Chamberlain, Collective
Bargaining, 1-47 (1951); Falcone Labor Law, 31-129 (1962); Summers and Wellington, Labor Law,
140-278 (1968); Cox and Bok, Labor Law, 946-976 (1969).
5 49 SCRA 194, 205. Villena is reported in 67 Phil. 451.
6 Com. Act No. 103 (1936).
7 67 Phil. 451, 464.
8 Ibid, 464-465.
9 L-27524, July 31, 1970, 34 SCRA 275.
10 Ibid, 283-284.
11 United States v. Aztigarraga. 36 Phil., 886, 891 (1917).
Pasted from <http://www.lawphil.net/judjuris/juri1973/may1973/gr_35254_1973.html>

KIOK LOY VS NLRC (PAMBANSANG KILUSAN NG PAGGAWA)
12:10 AM
KIOK LOY VS NLRC (PAMBANSANG KILUSAN NG PAGGAWA)

141 SCRA 179
FACTS
CUEVAS: January 22, 1986 - Pambansang Kilusan ng Paggaw a (Kilusan),
a legitimate labor federation, w on cert election
NATURE: Petition for certiorari to annul the decision of the National Labor Relations Commission and w as certified by the BLR as the sole and
exclusive bargaining agent of the rank-and-file
FACTS: employees of Sw eden Ice Cream Plant
- In a certification election held on October 3, 1978, the Pambansang Kilusang Paggaw a (Union for short) w as subsequently (Company).
certified in a resolution dated November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining
agent of the rank-and-file employees of Sw eden Ice Cream Plant (Company for short). The Company's motion for - Kilusan then gave the Company tw o copies of
reconsideration of the said resolution w as denied on January 25, 1978. its proposed CBA. It requested the Company
- December 7, 1978, the Union furnished the Company w ith tw o copies of its proposed collective bargaining agreement. It for its counter proposals. There w as no
also requested the Company for its counter proposals. Both requests w ere ignored and remained unacted upon by the response from Company. Kilusan again
Company. requested the Company for collective
- The Union, on February 14, 1979, filed a "Notice of Strike", w ith the Bureau of Labor Relations (BLR) on ground of bargaining negotiations and for the Company to
unresolved economic issues in collective bargaining. furnish them w ith its counter proposals. Both
- Conciliation proceedings then follow ed during the thirty -day statutory cooling-off period. requests w ere ignored and remained unacted
- The Bureau of Labor Relations to certify the case to the National Labor Relations Commission for compulsory arbitration. upon by the Company.
- The labor arbiter set the initial hearing for April 29, 1979. For failure how ever, of the parties to submit their respective
position papers as required, the said hearing w as cancelled and reset to another date. -Kilusan on Feb 14, 1979, filed a "Notice of
- The Union submitted its position paper. Strike", w ith the BLR on ground of unresolved
economic issues in collective bargaining.
- On July 20, 1979, the National Labor Relations Commission rendered its decision declaring the respondent guilty of
unjustified refusal to bargain -Conciliation proceedings follow ed but all
- Petitioner contends that the National Labor Relations Commission acted w ithout or in excess of its jurisdiction or w ith grave attempts tow ards an amicable settlement failed.
abuse of discretion amounting to lack of jurisdiction in rendering the challenged decision. BLR certified the case to the NLRC for
- Petitioner further contends that the National Labor Relations Commission's finding of unfair labor practice for refusal to compulsory arbitration. The case w as
bargain is not supported by law reset/postponed several times (mostly
Company’s “request”).
ISSUE/S:
-Then in the scheduled hearing on June 4,
- WON the respondent is guilty of unjustified refusal to bargain 1979, the Company's representative, Mr.
Ching, w ho w as supposed to be examined,
HELD: failed to appear. The Company’s counsel
YES requested for another postponement. The labor
unfair labor practice is committed w hen it is show n that the respondent employer, after having been served w ith a w ritten bar gaining arbiter denied. He ruled that the Company has
proposal by the petitioning Union, did not even bother to submit an answ er or reply to the said proposal w aived its right to present further evidence and,
Ratio therefore, considered the case submitted for
Unfair labor practice is committed w hen it is show n that the respondent employer, after having been served w ith a w ritten bar gaining resolution.
proposal by the petitioning Union, did not even bother to submit an answ er or reply to the said proposal
Reaspmomg - NLRC held: Sw eden Ice Cream guilty of
Collective bargaining w hich is defined as negotiations tow ards a collective agreement, is one of the democratic framew orks un der unjustified refusal to bargain. The draft
the New Labor Code, designed to stabilize the relation betw een labor and management and to create a climate of sound and stab le proposal for a CBA w as found to be reasonable
industrial peace. It is a mutual responsibility of the employer and the Union and is characterized as a legal obligation. So much so under the premises, and declared to be the
that Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene collective agreement w /c should govern the
promptly and expeditiously in good faith for the purpose of negotiating an agreement w ith respect to w ages, hours of work, an d all relationship betw een the parties.
other terms and conditions of employment including proposals for adjusting any grievance or question arising under such an
agreement and executing a contract incorporating such agreement, if requested by either party. -Petitioner: …its right to procedural due
While it is a mutual obligation of the parties to bargain, the employer, how ever, is not under any legal duty to initiate con tract process has been violated w hen it w as
negotiation. The mechanics of collective bargaining is set in motion only w hen the follow ing jurisdictional preconditions are present, precluded from presenting further evidence in
namely, (1) possession of the status of majority representation of the employees' representative in accordance w ith any of th e support of its stand and w hen its request for
means of selection or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to b argain further postponement w as denied.
under Article 251, par. (a) of the New Labor Code . …that the NLRC’s finding of unfair labor
- From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no doubt that the Union has a practice for refusal to bargain is not supported
valid cause to complain against its (Company's) attitude, the totality of w hich is indicative of the latter's disregard of, a nd failure to by law and the evidence considering that it w as
live up to, w hat is enjoined by the Labor Code to bargain in good faith. only on May 24. 1979 w hen the Union
furnished them w ith a copy of the proposed
DISPOSITION: Petition dismissed CBA and it w as only then that they came to
know of the Union's demands; … that CBA
approved and adopted by the NLRC is
G.R. No. L-54334 January 22, 1986 unreasonable and lacks legal basis.
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM PLANT, petitioner,
vs. ISSUE/S
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and PAMBANSANG KILUSAN NG 1) WON company’s right to due process
PAGGAWA (KILUSAN), respondents. has been violated
Ablan and Associates for petitioner. 2) WON company is guilty of ULP
Abdulcadir T. Ibrahim for private respondent. 3) WON CBA is reasonable
HELD
CUEVAS, J.: 1) NO
Petition for certiorari to annul the decision 1 of the National Labor Relations Commission (NLRC) dated -Considering the various postponements
July 20, 1979 which found petitioner Sweden Ice Cream guilty of unfair labor practice for unjustified granted in its behalf, the claimed denial of due
refusal to bargain, in violation of par. (g) of Article 249 2 of the New Labor Code, 3 and declared the draft process appeared totally bereft of any legal and
factual support. As herein earlier stated,
proposal of the Union for a collective bargaining agreement as the governing collective bargaining petitioner had not even honored respondent
agreement between the employees and the management. union w ith any reply to the latter's successive
The pertinent background facts are as follows: letters, all geared tow ards bringing the
Company to the bargaining table.. Certainly,
In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa (Union for the moves and overall behavior of company
short), a legitimate late labor federation, won and was subsequently certified in a resolution dated w ere in total derogation of the policy enshrined
November 29, 1978 by the Bureau of Labor Relations as the sole and exclusive bargaining agent of in the Labor Code w hich is aimed tow ards
expediting settlement of economic disputes.
the rank-and-file employees of Sweden Ice Cream Plant (Company for short). The Company's Hence, the Court is not prepared to affix its
motion for reconsideration of the said resolution was denied on January 25, 1978. imprimatur to such an illegal scheme and
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the Company with two dubious maneuvers.
copies of its proposed collective bargaining agreement. At the same time, it requested the Company for
2) YES
its counter proposals. Eliciting no response to the aforesaid request, the Union again wrote the Company
reiterating its request for collective bargaining negotiations and for the Company to furnish them with its - Article 249, par. (g) LC makes it an unfair
counter proposals. Both requests were ignored and remained unacted upon by the Company. labor practice for an employer to refuse "to
Left with no other alternative in its attempt to bring the Company to the bargaining table, the Union, on meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an
February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations (BLR) on ground of agreement w ith respect to w ages, hours of
unresolved economic issues in collective bargaining. 5 w ork, and all other terms and conditions of
Conciliation proceedings then followed during the thirty-day statutory cooling-off period. But all employment including proposals for adjusting
attempts towards an amicable settlement failed, prompting the Bureau of Labor Relations to certify any grievance or question arising under such
an agreement and executing a contract
the case to the National Labor Relations Commission (NLRC) for compulsory arbitration pursuant to incorporating such agreement, if requested by
Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino, to whom the case was either party."
assigned, set the initial hearing for April 29, 1979. For failure however, of the parties to submit their
-Collective bargaining w hich is defined as
respective position papers as required, the said hearing was cancelled and reset to another date. negotiations tow ards a collective agreement, is
Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for

negotiations tow ards a collective agreement, is
Meanwhile, the Union submitted its position paper. The Company did not, and instead requested for designed to stabilize the relation betw een labor
a resetting which was granted. The Company was directed anew to submit its financial statements and management and to create a climate of
sound and stable industrial peace. It is a mutual
for the years 1976, 1977, and 1978. responsibility of the employer and the Union
The case was further reset to May 11, 1979 due to the withdrawal of the Company's counsel of and is characterized as a legal obligation.
record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato Panganiban formally entered his
- While it is a mutual obligation of the parties to
appearance as counsel for the Company only to request for another postponement allegedly for the bargain, the employer, how ever, is not under
purpose of acquainting himself with the case. Meanwhile, the Company submitted its position paper any legal duty to initiate contract negotiation.
on May 28, 1979.
-The mechanics of collective bargaining is set
When the case was called for hearing on June 4, 1979 as scheduled, the Company's representative, in motion only w hen the ff. jurisdictional
Mr. Ching, who was supposed to be examined, failed to appear. Atty. Panganiban then requested for preconditions are present, namely, (1)
another postponement which the labor arbiter denied. He also ruled that the Company has waived possession of the status of majority
its right to present further evidence and, therefore, considered the case submitted for resolution. representation of the employees' representative
in accordance w ith any of the means of
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National Labor Relations selection or designation provided for by the LC;
Commission. On July 20, 1979, the National Labor Relations Commission rendered its decision, the (2) proof of majority representation; and (3) a
dispositive portion of which reads as follows: demand to bargain under Art 251, par. (a) of
the Labor Code . . . all of w hich preconditions
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of unjustified refusal to are undisputedly present in the instant case.
bargain, in violation of Section (g) Article 248 (now Article 249), of P.D. 442, as amended. Further,
the draft proposal for a collective bargaining agreement (Exh. "E ") hereto attached and made an -From the over-all conduct of petitioner
integral part of this decision, sent by the Union (Private respondent) to the respondent (petitioner company, Kilusan has a valid cause to
herein) and which is hereby found to be reasonable under the premises, is hereby declared to be the complain against Company's attitude, the
totality of w hich is indicative of the latter's
collective agreement which should govern the relationship between the parties herein. disregard of, and failure to live up to, w hat is
SO ORDERED. (Emphasis supplied) enjoined by the Labor Code ---- to bargain in
Petitioner now comes before Us assailing the aforesaid decision contending that the National Labor good faith.
Relations Commission acted without or in excess of its jurisdiction or with grave abuse of discretion -Company is GUILTY of unfair labor practice.
amounting to lack of jurisdiction in rendering the challenged decision. On August 4, 1980, this Court (1) respondent Union w as a duly certified
dismissed the petition for lack of merit. Upon motion of the petitioner, however, the Resolution of bargaining agent; (2) it made a definite request
to bargain, accompanied w ith a copy of the
dismissal was reconsidered and the petition was given due course in a Resolution dated April 1, proposed CBA, to the Company not only once
1981. but tw ice w hich were left unanswered and
Petitioner Company now maintains that its right to procedural due process has been violated when it unacted upon; and (3) the Company made no
counter proposal w hatsoever all of w hich
was precluded from presenting further evidence in support of its stand and when its request for conclusively indicate lack of a sincere desire to
further postponement was denied. Petitioner further contends that the National Labor Relations negotiate. Even during the period of
Commission's finding of unfair labor practice for refusal to bargain is not supported by law and the compulsory arbitration before the NLRC,
evidence considering that it was only on May 24, 1979 when the Union furnished them with a copy of Company's stalled the negotiation by a series
of postponements, non-appearance at the
the proposed Collective Bargaining Agreement and it was only then that they came to know of the hearing conducted
Union's demands; and finally, that the Collective Bargaining Agreement approved and adopted by
the National Labor Relations Commission is unreasonable and lacks legal basis. -Herald Delivery Carriers Union (PAFLU) vs.
Herald Publications: "unfair labor practice is
The petition lacks merit. Consequently, its dismissal is in order. committed w hen it is show n that the respondent
Collective bargaining which is defined as negotiations towards a collective agreement, 6 is one of the employer, after having been served w ith a
democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and w ritten bargaining proposal by the petitioning
Union, did not even bother to submit an answ er
management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of or reply to the said proposal. This doctrine w as
the employer and the Union and is characterized as a legal obligation. So much so that Article 249, par. reiterated in Bradman vs. CIR: "w hile the law
(g) of the Labor Code makes it an unfair labor practice for an employer to refuse "to meet and convene does not compel the parties to reach an
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to agreement, it does contemplate that both
wages, hours of work, and all other terms and conditions of employment including proposals for adjusting parties w ill approach the negotiation w ith an
open mind and make a reasonable effort to
any grievance or question arising under such an agreement and executing a contract incorporating such reach a common ground of agreement".
agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however, is not under any legal duty 3) YES
to initiate contract negotiation. 7 The mechanics of collective bargaining is set in motion only when the - The instant case being a certified one, it must
following jurisdictional preconditions are present, namely, (1) possession of the status of majority be resolved by the NLRC pursuant to the
representation of the employees' representative in accordance with any of the means of selection or mandate of P.D. 873, as amended, w hich
designation provided for by the Labor Code; (2) proof of majority representation; and (3) a demand to authorizes the said body to determine the
bargain under Article 251, par. (a) of the New Labor Code . ... all of which preconditions are undisputedly reasonableness of the terms and conditions of
employment embodied in any CBA. To that
present in the instant case. extent, utmost deference to its findings of
From the over-all conduct of petitioner company in relation to the task of negotiation, there can be no reasonableness of any Collective Bargaining
doubt that the Union has a valid cause to complain against its (Company's) attitude, the totality of Agreement as the governing agreement by the
employees and management must be accorded
which is indicative of the latter's disregard of, and failure to live up to, what is enjoined by the Labor due respect by this Court.
Code — to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner Company is GUILTY of
Disposition Petition dismissed.
unfair labor practice. It has been indubitably established that (1) respondent Union was a duly certified
bargaining agent; (2) it made a definite request to bargain, accompanied with a copy of the proposed
Collective Bargaining Agreement, to the Company not only once but twice which were left unanswered
and unacted upon; and (3) the Company made no counter proposal whatsoever all of which conclusively
indicate lack of a sincere desire to negotiate. 8 A Company's refusal to make counter proposal if
considered in relation to the entire bargaining process, may indicate bad faith and this is specially true
where the Union's request for a counter proposal is left unanswered. 9 Even during the period of
compulsory arbitration before the NLRC, petitioner Company's approach and attitude-stalling the
negotiation by a series of postponements, non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion except that it is unwilling to negotiate and
reach an agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness
to discuss freely and fully the claims and demands set forth by the Union much less justify its opposition
thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers Union (PAFLU) vs.
Herald Publications 11the rule had been laid down that "unfair labor practice is committed when it is shown
that the respondent employer, after having been served with a written bargaining proposal by the
petitioning Union, did not even bother to submit an answer or reply to the said proposal This doctrine was
reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further ruled that "while the
law does not compel the parties to reach an agreement, it does contemplate that both parties will
approach the negotiation with an open mind and make a reasonable effort to reach a common ground of
agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed, petitioner
capitalizes on the issue of due process claiming, that it was denied the right to be heard and present
its side when the Labor Arbiter denied the Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various postponements granted
in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual
support. As herein earlier stated, petitioner had not even honored respondent Union with any reply to
the latter's successive letters, all geared towards bringing the Company to the bargaining table. It did
not even bother to furnish or serve the Union with its counter proposal despite persistent requests

made therefor. Certainly, the moves and overall behavior of petitioner -company were in total
derogation of the policy enshrined in the New Labor Code which is aimed towards expediting
settlement of economic disputes. Hence, this Court is not prepared to affix its imprimatur to such an
illegal scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective Bargaining Agreement
which was approved and adopted by the NLRC is a total nullity for it lacks the company's consent,
much less its argument that once the Collective Bargaining Agreement is implemented, the
Company will face the prospect of closing down because it has to pay a staggering amount of
economic benefits to the Union that will equal if not exceed its capital. Such a stand and the
evidence in support thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be tolerated and
allowed with impunity to resort to schemes feigning negotiations by going through empty gestures. 13 More
so, as in the instant case, where the intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by the BLR failed. The instant case being a
certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, which
authorizes the said body to determine the reasonableness of the terms and conditions of employment
embodied in any Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement by the employees
and management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order issued on August
27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
Concepcion, Jr., (Chairman), Abad Santos, Escolin and Alampay, JJ., concur.
Footnotes
1 Pages 23-26, Rollo.
2 Previously Article 248 renumbered as Article 249 by Batas Pambansa Blg. 70, May 1, 1980.
3 P.D. 442, as amended.
4 Thru a letter attached thereto to BLR Resolution.
5 BLR-S-2-692-79.
6 Pampanga Bus Co. vs. Pambusco Employees, 68 Phil. 541.
7 National Labor Relations Board vs. Columbian Enameling & Stamping Co., 306 U.S. 292 '83 L. Ed.
660,59 Ct 501 (1939).
8 National Labor Relations Board vs. George Piling & Sons Co., 119 F. (2nd) 32.
9 Teller, II Labor Disputes & Collective Bargaining 889, citing Glove Cotton Mills vs. NLRB 103 F.
(2nd) 91.
10 Herald Delivery Carriers Union (PAFLU) vs. Herald Publications, Inc., 55 SCRA 713 (1974), citing
NLRB vs. Piling & Sons, Co., 119 F. (2nd) 32 (1941).
11 55 SCRA 713 (1974).
12 78 SCRA 10 (1977), citing Prof. Archibald Cox, "The Duty to Bargain in Good Faith", 71 Harv.
Law Rev. 1401, 1405 (1934).
13 Rothenberg on Labor Relations, p. 435m citing NLRB vs. Boss Mfg. Co., 107 F. (2nd) 574; NLRB
vs. Sunshine Mining Co., 110 F (2nd) 780; NLRB vs. Condenser Corp., 128 F. (2nd) 67.
Pasted from <http://www.lawphil.net/judjuris/juri1986/jan1986/gr_54334_1986.html>

Divine Word University vs. SOLE (1992)
1:11 AM
SUPREME COURT
THIRD DIVISION
DIVINE WORD UNIVERSITY OF TACLOBAN,
Petitioner,
-versus- G.R. No. 91915
September 11, 1992
SECRETARY OF LABOR AND EMPLOYMENT and DIVINE WORD UNIVERSITY EMPLOYEES UNION-ALU,
Respondents.
x---------------------------------------------------x
DE C I S I O N
ROMERO, J.:
Assailed in this Petition for Certiorari for being violative of the “constitutional right of employees to self-
organization which includes the right to form, join or assist labor organizations of their own choosing for
purposes of collective bargaining,”*1+ are the Orders of May 23, 1989 and January 17, 1990 issued by
then Secretary of Labor and Employment Franklin H. Drilon and Acting Secretary of Labor and
Employment Dionisio D. de la Serna, respectively. chanroblespublishingcompany
Culled from the records are the following facts which led to the filing of the instant petition:
On September 6, 1984, Med-Arbiter Bienvenido C. Elorcha certified the Divine Word University
Employees Union (DWUEU) as the sole and exclusive bargaining agent of the Divine Word University
(University for brevity). On March 7, 1985, DWUEU submitted its collective bargaining proposals. On
March 26, 1985, the University replied and requested a preliminary conference to be held on May 28,
1985. However, two days before the scheduled conference or on May 26, 1985, DWUEU’s resigned vice-
president Mr. Brigido Urminita (or Urmeneta) wrote a letter addressed to the University unilaterally
withdrawing the CBA proposals. Consequently, the preliminary conference was cancelled.[2]
After almost three years, or on March 11, 1988, DWUEU, which had by then affiliated with the
Associated Labor Union,[3] requested a conference with the University for the purpose of continuing the
collective bargaining negotiations.[4] Not having heard from the University, DWUEU-ALU sent a follow-
up letter on March 23, 1988 reiterating its request for a conference and warning the University against
committing acts of interference through its various meetings with both the academic and non-academic
employees regarding their union affiliation and activities. Despite the letter, the University persisted in
maintaining silence. chanroblespublishingcompany
On April 25, 1988, DWUEU-ALU filed with the National Conciliation and Mediation Board of the
Department of Labor and Employment a notice of strike on the grounds of bargaining deadlock and
unfair labor practice acts, specifically, refusal to bargain, discrimination and coercion on (sic)
employees.[5] The conferences which were held after the filing of the notice of strike led to the
conclusion of an agreement between the University and DWUEU-ALU on May 10, 1888 with the
following terms: chanroblespublishingcompany
“1. Union will submit their (sic) CBA proposals on Friday, May 13, 1988 for whatever action management
will take. chanroblespublishingcompany
2. Union and management agrees (sic) to sit down and determine (sic) the number of employees that
will represent their bargaining unit.
3. Conciliation proceedings is (sic) temporarily suspended until the parties inform this office of further
development.
4. The issues of discrimination: re Ms. Colinayo and Ms. Cinco Flores is settled.
5. Issue (sic) on coercion and refusal to bargain shall be subject of continuing dialogue.
chanroblespublishingcompany
6. Atty. Jacinto shall be given 10 days notice in the next conciliation meeting.”*6+
However, it turned out that an hour before the May 10, 1988 agreement was concluded, the University
had filed a petition for certification election with the Region VIII office of the Department of Labor and

had filed a petition for certification election with the Region VIII office of the Department of Labor and
Employment.[7] chanroblespublishingcompany
On the other hand, on May 19, 1988, DWUEU-ALU, consonant with the agreement, submitted its
collective bargaining proposals. These were ignored by the University. Thereafter, through the National
Conciliation and Mediation Board (NCMB) of Region VIII, marathon conciliation conferences were
conducted but to no avail. Hence, on August 25, 1988, then Secretary of Labor Franklin M. Drilon,
exercising his powers under Art. 263(g) of the Labor Code, issued an Order assuming jurisdiction over
the labor dispute and directing all striking workers to report back to work within twenty-four (24) hours
and the management to accept them back under the same terms and conditions prevailing prior to the
work stoppage. The Secretary also designated the NCMB to hear the case and to submit its report
thereon.[8] chanroblespublishingcompany
On the same day, Med-Arbiter Rodolfo S. Milado, acting on the University’s petition for certification
election, issued an Order directing the conduct of a certification election to be participated in by
DWUEU-ALU and “no union,” after he found the petition to be “well-supported in fact and in law.”*9+
Said Order prompted the DWUEU-ALU to file with the Secretary of Labor an urgent motion seeking to
enjoin Milado from further acting on the matter of the certification election. On September 20, 1988,
the Labor Secretary granted said motion and directed Milado to hold in abeyance any and all
certification election proceedings at the University pending the resolution of the labor dispute.[10] The
Labor Secretary’s Order, predicated on his extraordinary powers under Art. 263 (g) of the Labor Code,
conformed with this Court s Resolution of October 29, 1987 in the Bulletin Today cases (G.R. Nos. 79276
and 79883) where the issue of strong disagreement among the parties on the question of
representation was deemed subsumed in the labor dispute certified for compulsory arbitration. The
Secretary added: chanroblespublishingcompany
“Underscoring the necessity to conform with this settled doctrine is the fact that the dispute over which
this Office assumed jurisdiction arose from the alleged continued refusal by the University to negotiate a
CBA with the Union despite the latter’s certification as exclusive bargaining agent in 1984. Necessarily
related thereto is the representativity issue raised by the University in its certification election petition.
The resolution of these issues in one proceeding is, in the words of the Supreme Court, ‘meet and
proper in view of the very special circumstances obtaining in this case, and will prevent split jurisdiction
and that multiplicity of proceedings which the law abhors’ (24 December 1987 *should be December 17,
1987] resolution of the Supreme Court in the Bulletin Today cases, supra).
Moreover, to allow a certification election to proceed at this point in time might further rupture the
already strained labor-management relations pervading at the University. The assumption order issued
by this Office merely served as a temporary bond to hold together such a fragile relationship. More
importantly, the projected election hastily decreed would preempt the proper resolution of the issues
raised and pursued so zealously by the employees that prompted them to stage their strike.”*11+
The NCMB of Region VIII conducted hearings on the case from October 17-18, 1988. On October 26,
1988, the Divine Word University Independent Faculty and Employees Union (DWUIFEU), which was
registered earlier that day, filed a motion for intervention alleging that it had “at least 20% of the rank
and file employees” of the University.*12+ chanroblespublishingcompany
Exercising once again his extraordinary powers under Art. 263(g) of the Labor Code, the Secretary
consolidated “the entire labor dispute including all incidents arising therefrom, or necessarily related
thereto” in his Order of May 23, 1989*13+ and the following cases were “subsumed or consolidated to
the labor dispute”: the petition for certification election docketed as MED-ARB-Case No. 5-04-88, the
DWUEU’s complaint docketed as NLRC Case No. 8-0321-88, and the University’s complaint docketed as
NLRC Case No. 8-0323-88. Thus, in said Order of May 23, 1989, the Secretary of Labor resolved these
issues: “(1) whether there was refusal to bargain and an impasse in bargaining; (2) whether the
complaints for unfair labor practices against each other filed by both parties, including the legality of the
strike with the NLRC, which later on was subsumed by the assumption Order, are with merits; and, (3)
whether or not the certification election can be passed upon by this Office.”
On the first issue, the Secretary of Labor said:
“It is a matter of record that when the Union filed its Notice of Strike (Exh. A) two of the issues it raised
were bargaining deadlock and refusal to bargain. It is also worth mentioning that the CBA proposals by

were bargaining deadlock and refusal to bargain. It is also worth mentioning that the CBA proposals by
the Union were submitted on March 7, 1985 (Exh. 9) after Med-Arbiter Bienvenido Elorcha issued a
certification election Order dated September 6, 1984 (Exh. 4). An examination of the CBA proposals
submitted by the Union of the University showed there was (sic) some negotiations that has (sic) taken
place as indicated on the handwritten notations made in the CBA proposal (Exh. F). The said proposals
include among others, union scope, union recognition, union security, union rights, job security,
practices and privileges, terms and conditions of work, leave of absence, hours of work, compensation
salary and wages, workers’ rights and safety,
workers’ education, retirement longevity pay, strike and lockouts and grievance machinery.
“The said CBA proposals were indorsed by DWU President to Atty. Generosa R. Jacinto, Divine Word
University legal counsel together with a copy of the Union CBA proposals. The submission of the CBA
proposals and the reply letter of the DWU counsel, dated March 26, 1985 to the Union indicated that
the CBA negotiations process was set into motion. DWU’s counsel even suggested that the preliminary
conference between the union and the university be scheduled on 28 May 1985 at 2:30 P.M. which
unfortunately did not take place due to the alleged withdrawal of the CBA proposals.
“Undeniably, the Union and the DWU have not been able to conclude a CBA since its certification on 6
September 1984 by then Med-Arbiter Bienvenido Elorcha. But the non-conclusion of a CBA within one
year, as in this case, does not automatically authorize the holding of a certification election when it
appears that a bargaining deadlock issue has been submitted to conciliation by the certified bargaining
agent. The records show that the Notice of Strike was filed by the Union on 25 April 1988, citing
bargaining deadlock as one of the grounds (Annex ‘1’), while the Petition for Certification Election was
filed by the DWU on 10 May 1988. The filing of the notice of strike was precipitated by the University’s
act of not replying to the Union’s letters of March 11 and March 23, 1988.
“This being the case, Section 3, Rule V, Book V of the Rules Implementing the Labor Code applies and we
quote: chanroblespublishingcompany
‘Sec. 3. When to file. In the absence of a collective bargaining agreement submitted in accordance with
Article 231 of the Code, a petition for certification election may be filed at any time. However, no
certification election may be held within one year from the date of issuance of declaration of a final
certification election result. Neither may a representation question be entertained it (sic) before the
filing of a petition for certification election, a bargaining deadlock to which an
incumbent or certified bargaining agent is a party has been submitted to conciliation or arbitration or
had become the subject of a valid notice of strike or lockout.’
“Clearly, a bargaining deadlock exists and as a matter of fact this is being conciliated by the National
Conciliation and Mediation Board at the time the University filed its Petition for Certification Election on
10 May 1988. In fact the deadlock remained unresolved and was in fact mutually agreed upon to be
conciliated further by the NCMB as per items 1 and 5 of the ‘Agreement’ (Exhibit ‘L’).
“The aforequoted rule clearly barred the Med-Arbiter from further entertaining the petition for
certification election. Furthermore, the various communications sent to the University by the Union
prior to the filing of the notice of strike was enough opportunity for the former to raise the issue of
representation if it really casts doubt to the majority status of the Union. More importantly, if DWU
indeed doubted the status of the union, how come it entered into an agreement with the latter on May
10, 1988. Apparently, the move to file the petition on the same day was an afterthought on the part of
the University which this Office considers as fatal.”*14+ chanroblespublishingcompany
The same Order dismissed not only the case filed by DWUEU-ALU for unfair labor practice on the ground
of the union’s failure to prove the commission of the unfair labor practice acts specifically complained of
(NLRC Case No. 8-0321-88) but also the complaint filed by the University for unfair labor practices and
illegal strike for “obvious lack of merit brought about by its utter failure to submit evidence” (NLRC Case
No. 8-0323-88). chanroblespublishingcompany
Citing the Bulletin Today cases, the said Order pronounced as untenable the University s claim that the
assumption Order earlier issued by the Office of the Secretary of Labor merely held in abeyance the
holding of a certification election and that the representation issue was not deemed consolidated by
virtue of the said assumption Order. Accordingly, the Order has this dispositive portion:
“WHEREFORE, ALL THE FOREGOING PREMISES CONSIDERED, the Divine Word University of Tacloban and
the Divine Word University Employees Union are hereby directed to enter into a collective bargaining

the Divine Word University Employees Union are hereby directed to enter into a collective bargaining
agreement by adopting the Union’s CBA proposals sent to the DWU President on 19 May 1988 (Exhibit
‘6’). DWU is hereby warned that any unwarranted delay in the execution of the collective bargaining
agreement will be construed as an unfair labor practice act. Moreover, the petition for certification
election filed by the University is hereby dismissed for lack of merit and the Order of Med-Arbiter
Rodolfo Milado set aside. Likewise, NLRC CASES Nos. 8-0321-88 and 8-0323 filed by the Union and the
DWU, respectively, are hereby dismissed for lack of merit. chanroblespublishingcompany
SO ORDERED.”*15+
The University filed a motion for the reconsideration of said Order. It was opposed by the DWUEU-ALU.
However, since on May 5, 1989 the DWUEU-ALU had filed a second notice of strike charging the
University with violation of the return-to-work order of the Secretary of Labor and unfair labor practices
such as dismissal of union officers, coercion of employees and illegal suspension,[16] the Office of the
Secretary called for a series of conciliation and mediation conferences between the parties. At the July
5, 1989 conference, the University agreed to submit its proposals on how to settle amicably the labor
dispute on or before July 17, 1989.
On said date, however, the University failed to appear. Instead, its representative phoned in a request
for the resetting of the conference purportedly because its Board of Directors had failed to muster a
quorum. Hence, after so informing ALU’s Eastern Visayas Vice-President, the conference was
rescheduled for July 19, 1989. The University once again failed to appear. chanroblespublishingcompany
In view of the University’s intransigence, the DWUEU-ALU pursued its second notice of strike on
November 24, 1989. Four days later, the University filed with the Office of the Secretary of Labor a
motion praying that said Office assume jurisdiction over the dispute or certify the same to the NLRC for
compulsory arbitration on the ground that the strike affected not only the University but also its other
academic
and non-academic employees, the students and their parents. On December 4, 1989, the Office of the
Secretary of Labor received a Resolution passed by the students of the University urging said Office’s
assumption of jurisdiction over the labor dispute and the earliest resolution of the case.
Consequently, on December 29, 1989, Secretary Drilon issued an Order reiterating the August 28, 1988
Order which assumed jurisdiction over the labor dispute. He ordered all striking workers to return to
work within 24 hours and the University to accept them back under the same terms and conditions of
employment; deemed the issues raised in the May 5, 1989 notice of strike as “subsumed in this case”;
ordered the Director of Regional Office No. VIII to hear the issues raised in said notice of strike and to
submit his findings and recommendations within ten days from submission of the case by the parties,
and enjoined the parties to cease and desist from any act that may “aggravate the employer-employee
relationship.” chanroblespublishingcompany
On January 17, 1990, Acting Secretary of Labor Dionisio L. de la Serna, “dismissed” for lack of merit the
University’s motion for reconsideration and affirmed the Order of May 23, 1989. He noted the fact that
the March 7, 1985 collective bargaining proposals of the DWUEU had not been validly withdrawn as the
union’s Vice-President had resigned and the withdrawal was signed only by three of the eight members
of the Executive Board of said union. Granting that the withdrawal was valid, the Acting Secretary
believed that it did not “exculpate the University from the duty to bargain with the Union” because the
collective bargaining processes had been “set in motion from the time the CBA proposals was (sic)
received by the University until the impasse took place on account of its failure to reply to the Union’s
letters pursuing its CBA Proposals dated March 11 and 23, 1988.”
On the University’s assertion that no negotiations took place insofar as the March 7, 1985 collective
bargaining proposals are concerned, the Acting Secretary found that: chanroblespublishingcompany
“The records indicate otherwise Conciliation meetings were conducted precisely to discuss the CBA
proposals the Union submitted to the University on March 7, 1985. As a matter of
fact, the University admitted the existence of the deadlock when a provision was incorporated in the
agreement it signed on May 10, 1988 with the Union which reads: chanroblespublishingcompany
‘a. That on the matter of Bargaining Deadlock —
1. Union will submit their (renewed) CBA proposals on Friday May 13, 1988 for whatever action
management will take. chanroblespublishingcompany
2. Union and Management agree to sit down and determine the number of employees that will
represent (constitute) their bargaining unit. chanroblespublishingcompany

represent (constitute) their bargaining unit. chanroblespublishingcompany
x x x’
On account of the deadlock regarding the March 7, 1985 CBA proposals, it was agreed that the Union
submit a renewed CBA proposal which it did on May 19, 1988. The records indicate that no response
was made by the University. The uncooperative posture of the University to respond and continue with
the negotiations could very well be explained when one (1) hour prior to the start of the conciliation on
May 10, 1988, the University filed a Petition for Certification with (sic) Regional Office. The surreptitious
filing of the petition and at the same time cunningly entering into an agreement which required the
Union to submit a renewed CBA proposal, is patently negotiating in bad faith. The University should
have candidly and timely raised the issue of representation, if it believed that such issue was valid, not
by entering into an agreement. The May 10, 1988 Agreement only served to falsely heighten the
expectations of the Union and this Office that a mutually acceptable settlement of the dispute was in
the offing. This Office cannot tolerate such actuations by the University.”*17+
The Acting Secretary then concluded that for reneging on the agreement of May 10, 1988 and for its
“reluctance and subscription to legal delay,” the University should be “declared in default.” He also
maintained that since under the circumstances the University cannot
claim deprivation of due process, the Office of the Secretary of Labor may rightfully impose the Union’s
May 19, 1988 collective bargaining agreement proposals motu proprio. On the University’s contention
that the motion for intervention of the DWU-IFEU was not resolved, the Acting Secretary ruled that said
motion was in effect denied when the petition for certification election filed by the University was
dismissed in the Order of May 23, 1989. chanroblespublishingcompany
Hence, the University had recourse to instant petition.
In its petition for certiorari and prohibition with preliminary injunction filed on February 9, 1990, the
University raises as grounds therefor the following:
“A. Respondent Secretary committed grave and patent abuse of discretion amounting to lack of
jurisdiction in issuing his order dated 17 January 1990 finally denying petitioner’s motion for
reconsideration in the face of the order dated 29 December 1989 and subsequent acts of DOLE official
subsuming the second notice of strike with the first notice of strike.
B. In the absence of a certified CBA and there having been no certification election held in petitioner
unit for more than five (5) years, a certification election is mandatory. chanroblespublishingcompany
C. Respondent Secretary committed grave and patent abuse of discretion in issuing his orders dated 23
May 1989 and 17 January 1990 disregarding evidence on record, provisions of law and established
jurisprudence.
D. Petitioner was denied due process.”*18+
Citing the dispositive portion of the December 29, 1989 Order of the Secretary of Labor which states
that the issues raised in the May 5, 1989 notice of strike “are ordered subsumed in this case” and
elaborating on the meaning of the word “subsume,” i.e., “to include within a larger class, group, order,
etc.,”*19+ the petitioner University argues that the Secretary of Labor “cannot resolve petitioner’s and
(intervenor) DWU-IFEU’s motions for reconsideration (in the NS. 1)
of the Order dated 23 May 1989 until the proceedings in the subsumed NS. 2 are terminated.” It opines
that since the Regional Director is an extension of the Secretary of Labor, the latter should have waited
for the recommendation of the former on the issues in notices of strike nos. 1 and 2 before the he
issued the Order of January 17, 1990. chanroblespublishingcompany
We agree with the Acting Secretary of Labor’s observation that the action for intervention had in effect
been denied by the dismissal of the petition for certification election in the May 23, 1989 Order. The sub
silencio treatment of the motion for intervention in said Order does not mean that the motion was
overlooked. It only means, as shown by the findings of facts in the same Order, that there was no
necessity for the holding of a certification election wherein the DWU-IFEU could participate. In this
regard, petitioner’s undue interest in the resolution of the DWU-IFEU’s motion for intervention becomes
significant since a certification election is the sole concern of employees except where the employer
itself has to file a petition for certification election. But once an employer has filed said petition, as the
petitioner did in this case, its active role ceases and it becomes a mere bystander. Any uncalled-for
concern on the part of the employer may give rise to the suspicion that it is batting for a company
union.[20] chanroblespublishingcompany

union.[20] chanroblespublishingcompany
Petitioner’s contention that the Acting Secretary of Labor should have deferred the issuance of the
Order of January 17, 1990 until after his receipt of the Regional Director’s recommendation on the
notices of strike is, under the circumstances, untenable. Ideally, a single decision or order should settle
all controversies resulting from a labor dispute. This is in consonance with the principle of avoiding
multiplicity of suits. However, the exigencies of a case may also demand that some matters be threshed
out and resolved ahead of the others. Any contrary interpretation of the Secretary of Labor’s powers
under Art. 263(g) of the Labor Code on this matter would only result in confusion and delay in the
resolution of the manageable aspects of the labor dispute. chanroblespublishingcompany
In this case, resolution of the motion for reconsideration at the earliest possible time was urgently
needed to set at rest the issues regarding the first notice of strike, the certification election and the
unfair labor practice cases filed by the University and the DWUEU-ALU. The nature of the business of the
University demanded immediate and effective action on the part of the respondent public officials.
Otherwise, not only the contending parties in the dispute would be adversely affected but more
importantly, the studentry and their parents. It should be emphasized that on January 17, 1990, the
second notice of strike could not have been resolved as yet considering that at that time, Regional
Director Teddy S. Cabeltes was still conducting the conference between the parties in pursuance of the
directive in the Order of December 19, 1989. The Secretary, or for that matter, the Acting Secretary,
could not have intended the efforts of the Regional Director to be inutile or fruitless. Thus, when he set
aside the issues raised in the second notice of strike, the Acting Secretary was acting in accordance with
the exigencies of the circumstances of the case. Hardly can it be said to be an abuse of his discretion.
On the issue of whether or not a certification election should have been ordered by the Secretary of
Labor, pertinent are the following respective provisions of the Labor Code and Rule V, Book V of the
Implementing Rules and Regulations of the same Code:
“ART. 258. When an employer may file petition. — When requested to bargain collectively, an employer
may petition the Bureau for an election. If there is no existing certified collective bargaining agreement
in the unit, the Bureau shall, after hearing, order a certification election.”
All certification cases shall be decided within twenty (20) working days.
The Bureau shall conduct a certification election within twenty (20) days in accordance with the rules
and regulations prescribed by the Secretary of Labor. chanroblespublishingcompany
Sec. 3. When to file. — In the absence of a collective bargaining agreement duly registered in
accordance with Article 231 of the Code, a petition for certification election may be filed at any time.
However, no certification election may be held within one year from the date of issuance of a final
certification election
result. Neither may a representation question be entertained if, before the filing of a petition for
certification election, a bargaining deadlock to which an incumbent or certified bargaining agent is a
party had been submitted to conciliation or arbitration or had become the subject of valid notice of
strike or lockout. (Emphasis supplied) chanroblespublishingcompany
If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code,
a petition for certification election or a motion for intervention can only be entertained within sixty (60)
days prior to the expiry date of such agreement.”
These provisions make it plain that in the absence of a collective bargaining agreement, an employer
who is requested to bargain collectively may file a petition for certification election any time except
upon a clear showing that one of these two instances exists: (a) the petition is filed within one year from
the date of issuance of a final certification election result or (b) when a bargaining deadlock had been
submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout.
While there is no question that the petition for certification election was filed by the herein petitioner
after almost four years from the time of the certification election and, therefore, there is no question as
to the timeliness of the petition, the problem appears to lie in the fact that the Secretary of Labor had
found that a bargaining deadlock exists.
A “deadlock” is defined as the “counteraction of things producing entire stoppage: a state of inaction or
of neutralization caused by the opposition of persons or of factions (as in government or a voting body):
standstill.”*21+ There is a deadlock when there is a “complete blocking or stoppage resulting from the
action of equal and opposed forces; as, the deadlock of a jury or legislature.”*22+ The word is

action of equal and opposed forces; as, the deadlock of a jury or legislature.”*22+ The word is
synonymous with the word impasse[23] which, within the meaning of the American federal labor laws,
“presupposes reasonable effort at good faith bargaining which, despite noble intentions, does not
conclude in agreement between the parties.”*24+ chanroblespublishingcompany
A thorough study of the records reveals that there was no “reasonable effort at good faith bargaining”
specially on the part of the University. Its indifferent attitude towards collective bargaining inevitably
resulted in the failure of the parties to arrive at an agreement. As it was evident that unilateral moves
were being undertaken only by the DWUEU-ALU, there was no “counteraction” of forces or an impasse
to speak of. While collective bargaining should be initiated by the union, there is a corresponding
responsibility on the part of the employer to respond in some manner to such acts. This is clear from the
provisions of the Labor Code Art. 250(a) of which states:
“ART. 250. Procedure in collective bargaining. — The following procedures shall be observed in
collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party
with a statement of its proposals. The other party shall make a reply thereto not later than ten (10)
calendar days from receipt of such notice.
(b) Should differences arise on the basis of such notice and reply, either party may request for a
conference which shall begin not later than ten (10) calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of either or both parties or at its
own initiative and immediately call the parties to conciliation meetings. The Board shall have the power
to issue subpoenas requiring the attendance of the parties to such meetings. It shall be the duty of the
parties to participate fully and promptly in the conciliation meetings the Board may call;
(d) During the conciliation proceedings in the Board, the parties are prohibited from doing any act which
may disrupt or impede the early settlement of the disputes; and chanroblespublishingcompany
(e) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their
case to a voluntary arbitrator.” chanroblespublishingcompany
Considering the procedure outlined above, the Court cannot help but notice that the DWUEU was not
entirely blameless in the matter of the delay in the bargaining process. While it is true that as early as
March 7, 1985, said union had submitted its collective bargaining proposals and that, its subsequent
withdrawal by the DWUEU Vice-President being unauthorized and therefore ineffective, the same
proposals could be considered as subsisting, the fact remains that said union remained passive for three
years. The records do not show that during this three-year period, it exerted any effort to pursue
collective bargaining as a means of attaining better terms of employment.
It was only after its affiliation with the ALU that the same union, through the ALU Director for
Operations, requested an “initial conference” for the purpose of collective bargaining.*25+ That the
DWUEU abandoned its collective bargaining proposals prior to its affiliation with ALU is further
confirmed by the fact that in the aforequoted May 10, 1988 agreement with the University, said Union
bound itself to submit a new set of proposals on May 13, 1988. Under the circumstances, the agreement
of May 10, 1988 may as well be considered the written notice to bargain referred to in the aforequoted
Art. 250(a) of the Labor Code, which thereby set into motion the machinery for collective bargaining, as
in fact, on May 19, 1988, DWUEU-ALU submitted its collective bargaining proposals.
Be that as it may, the Court is not inclined to rule that there has been a deadlock or an impasse in the
collective bargaining process. As the Court earlier observed, there has not been a “reasonable effort at
good faith bargaining” on the part of the University. While DWUEU-ALU was opening all possible
avenues for the conclusion of an agreement, the record is replete with evidence on the University’s
reluctance and thinly disguised refusal to bargain with the duly certified bargaining agent, such that the
inescapable conclusion is that the University evidently had no intention of bargaining with it. Thus, while
the Court recognizes that technically, the University has the right to file the petition for certification
election as there was no bargaining deadlock
to speak of, to grant its prayer that the herein assailed Orders be annulled would put an unjustified
premium on bad faith bargaining.
Bad faith on the part of the University is further exemplified by the fact that an hour before the start of
the May 10, 1988 conference, it surreptitiously filed the petition for certification election. And yet
during said conference, it committed itself to “sit down” with the Union. Obviously, the University tried

during said conference, it committed itself to “sit down” with the Union. Obviously, the University tried
to preempt the conference which would have legally foreclosed its right to file the petition for
certification election. In so doing, the University failed to act in accordance with Art. 252 of the Labor
Code which defines the meaning of the duty to bargain collectively as “the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith.” Moreover, by filing the
petition for certification election while agreeing to confer with the DWUEU-ALU, the University violated
the mandate of Art. 19 of the Civil Code that “(e)very person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.”
Moreover, the University’s unscrupulous attitude towards the DWUEU-ALU is also betrayed by its
belated questioning of the status of the said union. The communications between them afforded the
University ample opportunity to raise the issue of representation if indeed it was doubtful of the
DWUEU-ALU’s status as a majority union, but it failed to do so. On the other hand, in the agreement of
May 10, 1988, the University even agreed “to sit down and determine the number of employees that
will represent their bargaining unit.” This clearly indicates that the University recognized the DWUEU-
ALU as the bargaining representative of the employees and is, therefore, estopped from questioning the
majority status of the said union. chanroblespublishingcompany
Hence, petitioner’s contention that the DWUEU-ALU’s proposals may not be unilaterally imposed on it
on the ground that a collective bargaining agreement is a contract wherein the consent of both parties is
indispensable is devoid of merit. A similar argument had already been disregarded in the case of Kiok
Loy vs. NLRC,*26+ where we upheld the order of the NLRC declaring the union’s draft CBA proposal as
the collective agreement which should govern the
relationship between the parties. Kiok Loy vs. NLRC is applicable in the instant case considering that the
facts therein have also been indubitably established in this case. These factors are: (a) the union is the
duly certified bargaining agent; (b) it made a definite request to bargain and submitted its collective
bargaining proposals, and (c) the University made no counter proposal whatsoever. As we said in Kiok
Loy, “*a+ company’s refusal to make counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is especially true where the Union’s request for a counter
proposal is left unanswered.”*27+ Moreover, the Court added in the same case that “it is not obligatory
upon either side of a labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be tolerated and allowed with impunity to resort to schemes feigning
negotiations by going through empty gestures.”*28+ chanroblespublishingcompany
That being the case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its inaction which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an employer. We, therefore, find it
superfluous to discuss the two other contentions in its petition. chanroblespublishingcompany
WHEREFORE, the instant Petition is hereby DISMISSED for lack of merit. This Decision is immediately
executory. Costs against the petitioner. chanroblespublishingcompany
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., J., is on leave. chanroblespublishingcompany
[1] Petition, p. 3; Rollo, p. 4.
[2] Rollo, p. 101. chanroblespublishingcompany
[3] DWUEU became an affiliate of ALU on February 9, 1988 upon the issuance of Charter Certificate No.
347. Rollo, p. 73. chanroblespublishingcompany
[4] DWUEU-ALU’s Comment, p. 2; Rollo, p. 298. chanroblespublishingcompany
*5+ Annex “A” of Petition; Rollo, p. 63. chanroblespublishingcompany
*6+ Annex “B-1” of Petition; Rollo, p. 66.
*7+ Annex “B” of Petition; Rollo, pp. 64-65.
*8+ Annex “C” of Petition; Rollo, pp. 67-69.
*9+ Annex “D” of Petition; Rollo, pp. 70-77.
*10+ Annex “E” of Petition; Rollo, p. 78-79.
[11] Id. chanroblespublishingcompany
*12+ Annex “G” of Petition; Rollo, pp. 97-98.
*13+ Annex “H” of Petition; Rollo, pp. 100-104.

*12+ Annex “G” of Petition; Rollo, pp. 97-98.
*13+ Annex “H” of Petition; Rollo, pp. 100-104.
[14] Ibid., pp. 102-103.
[15] Ibid., p. 104. chanroblespublishingcompany
[17] Rollo, pp. 201-202. chanroblespublishingcompany
[18] Petition, p. 18; Rollo, p. 19.
[19] Petition, p. 19; Rollo, p. 20. chanroblespublishingcompany
[20] See: Trade Unions of the Philippines and Allied Services vs. Trajano, G.R. No. 61153, January 17,
1983, 120 SCRA 64, 66. chanroblespublishingcompany
*21+ Webster’s Third New International Dictionary, 1986 Ed., p. 580.
*22+ Webster’s New Twentieth Century Dictionary, 2nd Ed., p. 465.
*23+ William C. Burton’s Legal Thesaurus, 1980 Ed., p. 133.
[24] N.L.R.B. vs. Bancroft, 635 F.2d 492 (1981).
[26] G.R. No. 54334, January 22, 1986, 141 SCRA 179.

GEN. MILLING CORP. v CA (GEN. MILLING CORP. INDEPENDENT
LABOR UNION)
12:13 AM
GEN. MILLING CORP. v CA (GEN. MILLING CORP. INDEPENDENT LABOR UNION)

422 SCRA 514
QUISIMBING; February 11, 2004
NATURE Petition for certiorari assailing the decision of the CA.
FACTS
- Gen. Milling employed 190 employees in its tw o plants in Cebu and Lapu-Lapu. They w ere all members of respondent Gen. Milling
Corp. Independent Labor Union (union), a duly certified bargaining agent.
- April 28, 1989: GMC and the union concluded a CBA w hich included the issue of representation effective for a term of three years.
The CBA w as effective for three years retroactive to December 1, 1988 (expiration: November 30, 1991).
- A day before the expiration, the union to GMC a CBA, w ith a request for a counter-proposal to be returned w ithin 10 days from
receipt.
- GMC received collective and individual letters from w orkers who stated that they had w ithdrawn from their union membership, due
to religious affiliation and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC did not
send any counter-proposal.
- December 16, 1991: GMC w rote a letter to the union’s officers, stating that even if there w as no longer a basis for negotiations
(since there w as no union already), management w as still w illing to enter a dialogue w ith the union. The union officers disclaimed
the massive disaffiliation.
- January 13, 1992: GMC dismissed Marcia Tumbiga, a union member, on the ground of incompetence. The union protested and
requested GMC to submit the matter to the grievance procedure provided in the CBA. GMC, how ever, advised the union to ―refer to
our letter dated December 16, 1991.‖
- July 2, 1992: the union filed a complaint against GMC w ith the NLRC, Arbitration Division, Cebu City, alleging unfair labor practice.
The labor arbiter dismissed the case w ith the recommendation that a petition for certification election be held to determine if the
union still enjoyed the support of the w orkers.
- The union appealed to the NLRC. The NLRC set aside the labor arbiter’s decision, and ordered GMC to abide by the CBA draft
that the union proposed for a period of tw o (2) years. NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration
of a CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-Independent Labor Union
w as from December 1, 1988 to November 30, 1993; the union remained as the exclusive bargaining agent.
ISSUES
1. WON GMC is guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with the right of its
em ployees to self-organization;
2. WON CA abused its discretion w hen it imposed upon GMC the draft CBA proposed by the union for tw o years to begin from the
expiration of the original CBA.
HELD
1. YES
Ratio Failing to comply w ith the mandatory obligation to submit a reply to the union’s proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor practice. Reasoning
Article 253-A, Labor Code

Terms of a collective bargaining agreement. – Any Collective Bargaining Agreement that the parties may enter into shall,
insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status
of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of
Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the
Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution....
- The representation provision of a CBA should last for five years. The relation betw een labor and management should be
undisturbed until the last 60 days of the fifth year. It is indisputable that w hen the union requested for a renegotiation of the
economic terms of the CBA on November 29, 1991, it w as still the certified collective bargaining agent of the w orkers, because it
w as seeking said renegotiation w ithin five (5) years from the date of effectivity of the CBA on December 1, 1988.
- For refusing to send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the
com pany committed an unfair labor practice under Article 248 of the Labor Code:
ART. 248. Unfair labor practices of employers. – It shall be unlaw ful for an employer to commit any of the follow ing unfair labor
practice:
(g) To violate the duty to bargain collectively as prescribed by this Code;
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively means the performance of a m utual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement....
- Good faith or bad faith is an inference to be draw n from the facts. The effect of an employer’s or a union’s actions individually is not
the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a w hole.
- Under Article 252 both parties are required to perform their mutual obligation to meet and convene promptly and expeditiouslyin
good faith for the purpose of negotiating an agreement. The union lived up to this obligation w hen it presented proposals fora new
CBA to GMC. On the other hand, GMC failed in its duty under Article 252. What it did w as to devise a flimsy excuse, by questioning
the existence of the union and the status of its membership to prevent any negotiation. GMC’s failure to make a timely reply to the
proposals presented by the union is indicative of its utter lack of interest in bargaining w ith the union.
- The CA found that the letters betw een February to June 1993 by 13 union members signifying their resignation from the union
clearly indicated that GMC exerted pressure on its employees. Yes, GMC interfered with the right of employees to self-
organization.

2. NO
Ratio The provision mandates the parties to keep the status quo w hile they are still in the process of w orking out their respective
proposal and counter proposal. When one of the parties abuses this grace period by purposely delaying the bargaining process,a
departure from the general rule is w arranted, that is, the court may impose on the erring company the CBA proposed by its
employees’ union - lock, stock and barrel.
Reasoning By its acts, no less than its action w hich bespeak its insincerity, GMC has forfeited w hatever rights it could have
asserted as an employer.
- Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to the
proposals of the other. But an erring party should not be allow ed to resort w ith impunity to schemes feigning negotiations by going
through empty gestures.
DISPOSITION Petition is dismissed.
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\labor%20rd5%20compiled.doc>
G.R. No. 146728 February 11, 2004

GENERAL MILLING CORPORATION, petitioner,
vs
HON. COURT OF APPEALS, GENERAL MILLING CORPORATION INDEPENDENT LABOR
UNION (GMC-ILU), and RITO MANGUBAT, respondents.
DEC I SI O N
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision1 dated July 19, 2000, of the Court of
Appeals in CA-G.R. SP No. 50383, which earlier reversed the decision 2 dated January 30, 1998 of
the National Labor Relations Commission (NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling Corporation
(GMC) employed 190 workers. They were all members of private respondent General Milling
Corporation Independent Labor Union (union, for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement (CBA) which
included the issue of representation effective for a term of three years. The CBA was effective for
three years retroactive to December 1, 1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent GMC a proposed
CBA, with a request that a counter-proposal be submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and individual letters from workers
who stated that they had withdrawn from their union membership, on grounds of religious affiliation
and personal differences. Believing that the union no longer had standing to negotiate a CBA, GMC
did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the union’s officers, Rito Mangubat and Victor
Lastimoso. The letter stated that it felt there was no basis to negotiate with a union which no longer
existed, but that management was nonetheless always willing to dialogue with them on matters of
common concern and was open to suggestions on how the company may improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming any massive
disaffiliation or resignation from the union and submitted a manifesto, signed by its members, stating
that they had not withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the ground of
incompetence. The union protested and requested GMC to submit the matter to the grievance
procedure provided in the CBA. GMC, however, advised the union to "refer to our letter dated
December 16, 1991."3
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration Division,
Cebu City. The complaint alleged unfair labor practice on the part of GMC for: (1) refusal to bargain
collectively; (2) interference with the right to self-organization; and (3) discrimination. The labor
arbiter dismissed the case with the recommendation that a petition for certification election be held to
determine if the union still enjoyed the support of the workers. l awphi 1. nê
t
The union appealed to the NLRC.

On January 30, 1998, the NLRC set aside the labor arbiter’s decision. Citing Article 253-A of the
Labor Code, as amended by Rep. Act No. 6715, 4 which fixed the terms of a collective bargaining
agreement, the NLRC ordered GMC to abide by the CBA draft that the union proposed for a period
of two (2) years beginning December 1, 1991, the date when the original CBA ended, to November
30, 1993. The NLRC also ordered GMC to pay the attorney’s fees. 5
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715, the duration of a
CBA, insofar as the representation aspect is concerned, is five (5) years which, in the case of GMC-
Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of

Independent Labor Union was from December 1, 1988 to November 30, 1993. All other provisions of
the CBA are to be renegotiated not later than three (3) years after its execution. Thus, the NLRC
held that respondent union remained as the exclusive bargaining agent with the right to renegotiate
the economic provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter
into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the union submitted by 13 of its
members from February to June 1993 confirmed the pressure exerted by GMC on its employees to
resign from the union. Thus, the NLRC also found GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization.
With respect to the union’s claim of discrimination, the NLRC found the claim unsupported by
substantial evidence.
On GMC’s motion for reconsideration, the NLRC set aside its decision of January 30, 1998, through
a resolution dated October 6, 1998. It found GMC’s doubts as to the status of the union justified and
the allegation of coercion exerted by GMC on the union’s members to resign unfounded. Hence, the
union filed a petition for certiorari before the Court of Appeals. For failure of the union to attach the
required copies of pleadings and other documents and material portions of the record to support the
allegations in its petition, the CA dismissed the petition on February 9, 1999. The same petition was
subsequently filed by the union, this time with the necessary documents. In its resolution dated April
26, 1999, the appellate court treated the refiled petition as a motion for reconsideration and gave the
petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October 6, 1998 is
hereby SET ASIDE, and its decision of January 30, 1998 is, except with respect to the award of
attorney’s fees which is hereby deleted, REINSTATED.6
A motion for reconsideration was seasonably filed by GMC, but in a resolution dated October 26,
2000, the CA denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE THAT NO
DECISION SHALL BE RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING
THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION IN THE ABSENCE
OF ANY FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT APPRECIATING THAT
THE NLRC HAS NO JURISDICTION TO DETERMINE THE TERMS AND CONDITIONS OF A
COLLECTIVE BARGAINING AGREEMENT.7
Thus, in the instant case, the principal issue for our determination is whether or not the Court of
Appeals acted with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) finding
GMC guilty of unfair labor practice for violating the duty to bargain collectively and/or interfering with
the right of its employees to self-organization, and (2) imposing upon GMC the draft CBA proposed
by the union for two years to begin from the expiration of the original CBA. l awphi 1. nê
t
On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. – Any Collective Bargaining Agreement
that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term
of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall
be entertained and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution....
The law mandates that the representation provision of a CBA should last for five years. The relation
between labor and management should be undisturbed until the last 60 days of the fifth year. Hence,
it is indisputable that when the union requested for a renegotiation of the economic terms of the CBA
on November 29, 1991, it was still the certified collective bargaining agent of the workers, because it
was seeking said renegotiation within five (5) years from the date of effectivity of the CBA on
December 1, 1988. The union’s proposal was also submitted within the prescribed 3-year period
from the date of effectivity of the CBA, albeit just before the last day of said period. It was obvious
that GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to
send a counter-proposal to the union and to bargain anew on the economic terms of the CBA, the
company committed an unfair labor practice under Article 248 of the Labor Code, which provides

company committed an unfair labor practice under Article 248 of the Labor Code, which provides
that:
ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit
any of the following unfair labor practice:
.. .
(g) To violate the duty to bargain collectively as prescribed by this Code;
.. .
Article 252 of the Labor Code elucidates the meaning of the phrase "duty to bargain collectively,"
thus:
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement....
We have held that the crucial question whether or not a party has met his statutory duty to bargain in
good faith typically turn$ on the facts of the individual case.8 There is no per se test of good faith in
bargaining.9 Good faith or bad faith is an inference to be drawn from the facts. 10 The effect of an
employer’s or a union’s actions individually is not the test of good-faith bargaining, but the impact of
all such occasions or actions, considered as a whole.11
Under Article 252 abovecited, both parties are required to perform their mutual obligation to meet
and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.
The union lived up to this obligation when it presented proposals for a new CBA to GMC within three
(3) years from the effectivity of the original CBA. But GMC failed in its duty under Article 252. What it
did was to devise a flimsy excuse, by questioning the existence of the union and the status of its
membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code is mandatory
because of the basic interest of the state in ensuring lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. – The following procedures shall be observed in
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other
party with a statement of its proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice. (Underscoring supplied.)
GMC’s failure to make a timely reply to the proposals presented by the union is indicative of its utter
lack of interest in bargaining with the union. Its excuse that it felt the union no longer represented the
workers, was mainly dilatory as it turned out to be utterly baseless.
We hold that GMC’s refusal to make a counter-proposal to the union’s proposal for CBA negotiation
is an indication of its bad faith. Where the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. 12
Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, GMC
violated its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of
Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in
finding that GMC is, under the circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees’ right to self-organization? The CA found that the letters
between February to June 1993 by 13 union members signifying their resignation from the union
clearly indicated that GMC exerted pressure on its employees. The records show that GMC
presented these letters to prove that the union no longer enjoyed the support of the workers. The
fact that the resignations of the union members occurred during the pendency of the case before the
labor arbiter shows GMC’s desperate attempts to cast doubt on the legitimate status of the union.
We agree with the CA’s conclusion that the ill-timed letters of resignation from the union members
indicate that GMC had interfered with the right of its employees to self-organization. Thus, we hold
that the appellate court did not commit grave abuse of discretion in finding GMC guilty of unfair labor
practice for interfering with the right of its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft CBA proposed by
the union for two years commencing from the expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. – .... It shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60-day period [prior to
its expiration date] and/or until a new agreement is reached by the parties. (Underscoring supplied.)
The provision mandates the parties to keep the status quo while they are still in the process of
working out their respective proposal and counter proposal. The general rule is that when a CBA
already exists, its provision shall continue to govern the relationship between the parties, until a new
one is agreed upon. The rule necessarily presupposes that all other things are equal. That is, that
neither party is guilty of bad faith. However, when one of the parties abuses this grace period by
purposely delaying the bargaining process, a departure from the general rule is warranted.

purposely delaying the bargaining process, a departure from the general rule is warranted.
In Kiok Loy vs. NLRC,13 we found that petitioner therein, Sweden Ice Cream Plant, refused to submit
any counter proposal to the CBA proposed by its employees’ certified bargaining agent. We ruled
that the former had thereby lost its right to bargain the terms and conditions of the CBA. Thus, we
did not hesitate to impose on the erring company the CBA proposed by its employees’ union - lock,
stock and barrel. Our findings in Kiok Loy are similar to the facts in the present case, to wit:
… petitioner Company’s approach and attitude – stalling the negotiation by a series of
postponements, non-appearance at the hearing conducted, and undue delay in submitting its
financial statements, lead to no other conclusion except that it is unwilling to negotiate and reach an
agreement with the Union. Petitioner has not at any instance, evinced good faith or willingness to
discuss freely and fully the claims and demands set forth by the Union much less justify its objection
thereto.14
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and Employment,15 petitioner
therein, Divine Word University of Tacloban, refused to perform its duty to bargain collectively. Thus,
we upheld the unilateral imposition on the university of the CBA proposed by the Divine Word
University Employees Union. We said further:
That being the said case, the petitioner may not validly assert that its consent should be a primordial
consideration in the bargaining process. By its acts, no less than its action which bespeak its
insincerity, it has forfeited whatever rights it could have asserted as an employer.16
Applying the principle in the foregoing cases to the instant case, it would be unfair to the union and
its members if the terms and conditions contained in the old CBA would continue to be imposed on
GMC’s employees for the remaining two (2) years of the CBA’s duration. We are not inclined to
gratify GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent
negotiations. Since it was GMC which violated the duty to bargain collectively, based on Kiok
Loy and Divine Word University of Tacloban, it had lost its statutory right to negotiate or renegotiate
the terms and conditions of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case, there was no
pre-existing CBA between the parties in Kiok Loy and Divine Word University of Tacloban.
Nonetheless, we deem it proper to apply in this case the rationale of the doctrine in the said two
cases. To rule otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to
precipitately accept or agree to the proposals of the other. But an erring party should not be allowed
to resort with impunity to schemes feigning negotiations by going through empty gestures. 17 Thus, by
imposing on GMC the provisions of the draft CBA proposed by the union, in our view, the interests of
equity and fair play were properly served and both parties regained equal footing, which was lost
when GMC thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the reasonableness of the draft
CBA proposed by the union should not be disturbed since they are supported by substantial
evidence. On this score, we see no cogent reason to rule otherwise. Hence, we hold that the Court
of Appeals did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when
it imposed on GMC, after it had committed unfair labor practice, the draft CBA proposed by the union
for the remaining two (2) years of the duration of the original CBA. Fairness, equity, and social
justice are best served in this case by sustaining the appellate court’s decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19, 2000, and the
resolution dated October 26, 2000, of the Court of Appeals in CA-G.R. SP No. 50383,
are AFFIRMED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
Footnotes
1
Rollo, pp. 172-179. Penned by Associate Justice Conchita Carpio Morales (now a member of this
Court), with Associate Justices Teodoro P. Regino and Mercedes Gozo-Dadole.
2 Id. at 34-48.
3 Id. at 175; See also CA Rollo, CA G.R. No. 51763, p. 83.
4
Effective March 21, 1989.
5
Rollo, p. 44.
6 Id. at 178.
7 Id. at 10.
8
Hongkong and Shanghai Banking Corporation Employees Union v. National Labor Relations
Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.
9 Ibid.
10 Ibid.
11
Ibid.
12 Colegio De San Juan De Letran v. Association of Employees and Faculty of Letran, G.R. No.

12
Colegio De San Juan De Letran v. Association of Employees and Faculty of Letran, G.R. No.
141471, 18 September 2000, 340 SCRA 587, 595.
13 No. L-54334, 22 January 1986, 141 SCRA 179, 188.
14
Supra.
15
213 SCRA 759, 11 September 1992.
16 Supra.
17 Ibid., citing H. Rothenberg, Rothenberg on Labor Relations 435 (1949), NLRB v. Sunshine Mining
Co., 110 F. 2d 780, NLRB v. Condenser Corp., 128 F. 2d 67.
Pasted from <http://www.lawphil.net/judjuris/juri2004/feb2004/gr_146728_2004.html>

Lepanto Mining vs. Lepanto Local Union (2008)
1:31 AM
LEPANTO CONSOLIDATED G.R. No. 161713

MINING COMPANY,
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
LEPANTO LOCAL STAFF UNION, Promulgated:

Respondent. August 20, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
RE S OL U T I ON
CARPIO, J.:
The Case
Before the Court is a petition for review[1][1] assailing the 22 July 2003
Decision[2][2] and 20 January 2004 Resolution[3][3] of the Court of Appeals in
CA-G.R. SP No. 60644.
The Antecedent Facts
Lepanto Consolidated Mining Company[4][4] (petitioner) is a domestic mining

corporation. Lepanto Local Staff Union (respondent) is the duly certified
bargaining agent of petitioner’s employees occupying staff positions.
On 28 November 1998, petitioner and respondent entered into their fourth

Collective Bargaining Agreement (4th CBA) for the period from 1 July 1998
to 30 June 2000. The 4th CBA provides:
ARTICLE VIII – NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The Company shall continue to pay nightshift
differential for work during the first and third shifts to all covered employees within the
bargaining unit as follows:

For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic
rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the
basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00
p.m.), there [will] be no night differential pay added before the overtime pay is calculated.
ARTICLE XII – RIGHTS, PRIVILEGES AND OTHER BENEFITS
Section 9. Longevity pay – The company shall grant longevity pay of P30.00 per month
effective July 1, 1998 and every year thereafter.[5][5]
On 23 April 2000, respondent filed a complaint with the National Conciliation

and Mediation Board, Cordillera Administrative Region (NCMB-CAR)
alleging that petitioner failed to pay the night shift differential and longevity
pay of respondent’s members as provided in the 4th CBA. Petitioner and
respondent failed to amicably settle the dispute. They agreed to submit the
issues to Voluntary Arbitrator Norma B. Advincula (Voluntary Arbitrator) for
resolution.
The Ruling of the Voluntary Arbitrator
In a Decision dated 26 May 2000,[6][6] the Voluntary Arbitrator ruled in favor

of respondent as follows:
WHEREFORE, foregoing considered, this Office holds and so orders respondent
Lepanto Consolidated Mining Corporation (LCMC) to grant complainant Lepanto
Local Staff Union (LLSU) the following benefits:
Longevity pay of P30.00 per month which shall be reckoned form July 1, 1998 and
every year thereafter in consonance with their contract; and
Night shift differential pay of 15% of the basic rate for hours of work rendered
beyond 3:00 p.m. for the following shifts: 7:00 A.M. to 4:00 P.M., 7:30 A.M. to 4:30
P.M. and 8:00 A.M. to 5:00 P.M. to be reckoned from the date of the effectivity of the
4th CBA which was on July 1, 1998.
SO ORDERED.[7][7]
The Voluntary Arbitrator ruled that petitioner had the legal obligation to pay
longevity pay of P30 per month effective 1 July 1998. The Voluntary
Arbitrator rejected petitioner’s contention that “effective” should be
understood as the reckoning period from which the employees start earning
their right to longevity pay, and that the longevity pay should be paid only on
1 July 1999. The Voluntary Arbitrator ruled that 1 July 1998 was the
reckoning date that indicated when the amounts due were to be given.
The Voluntary Arbitrator agreed with respondent that surface workers on the

second shift who performed work after 3:00 p.m. should be given an
additional night shift differential pay equivalent to 15% of their basic rate.
Interpreting paragraph 3, Section 3, Article VIII of the 4th CBA, the Voluntary
Arbitrator ruled that it only meant that an employee who extends work beyond
the second shift shall receive overtime pay which shall be computed before
the night shift differential pay. In other words, it excludes the night shift
differential in the computation of overtime pay.
The Voluntary Arbitrator ruled that the inclusion of paragraph 3, Section 3,

Article VIII of the 4th CBA disclosed the intent of the parties to grant night
shift differential benefits to employees who rendered work beyond the regular
day shift. The Voluntary Arbitrator ruled that if the intention were otherwise,
paragraph 3 would have been deleted.
Finally, the Voluntary Arbitrator ruled that the respondent’s claim for night
shift differential arising from the 1st , 2nd, and 3rd CBAs had already prescribed.
Petitioner filed a motion for reconsideration. In her Resolution dated 5 August

2000,[8][8] the Voluntary Arbitrator denied the motion for reconsideration for
lack of merit.
Petitioner filed a petition for review before the Court of Appeals.
The Ruling of the Court of Appeals
In its 22 July 2003 Decision, the Court of Appeals affirmed the Voluntary
Arbitrator’s Decision.
The Court of Appeals ruled that paragraph 3, Section 3, Article VIII was clear
and unequivocal. It grants night shift differential pay to employees of the
second shift for work rendered beyond their regular day shift. However, the
night shift differential was excluded in the computation of the overtime pay.
The Court of Appeals further ruled that the records of the case revealed that
during the effectivity of the 4th CBA, petitioner voluntarily complied with
paragraph 3, Section 3, Article VIII by paying night shift differential to
employees for hours worked beyond 3:00 p.m. Petitioner’s act disclosed the
parties’ intent to include employees in the second shift in the payment of night
shift differential. The Court of Appeals rejected petitioner’s claim that the
payment was due to error and mere inadvertence on the part of petitioner’s
accounting employees. The Court of Appeals noted that the records revealed
that petitioner still continued to pay night shift differential for hours worked
beyond 3:00 p.m. after the Voluntary Arbitrator rendered the 26 May 2000
Decision. Thus, petitioner is estopped from claiming erroneous payment.
Petitioner filed a motion for reconsideration. In its 20 January 2004

Resolution, the Court of Appeals denied the motion for lack of merit.

Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the Court of Appeals erred in affirming
the Voluntary Arbitrator’s interpretation of the 4th CBA that the employees in
the second shift are entitled to night shift differential.
The Ruling of this Court
The petition has no merit.
The terms and conditions of a collective bargaining contract constitute the law
between the parties.[9][9] If the terms of the CBA are clear and have no doubt
upon the intention of the contracting parties, the literal meaning of its
stipulation shall prevail.[10][10]
The disputed provision of the 4th CBA provides:

ARTICLE VIII – NIGHT SHIFT DIFFERENTIAL
Section 3. Night Differential pay. - The Company shall continue to pay nightshift
differential for work during the first and third shifts to all covered employees within the
For the First Shift (11:00 p.m. to 7:00 a.m.), the differential pay will be 20% of the basic
rate. For the Third Shift (3:00 p.m. to 11:00 p.m.), the differential pay will be 15% of the
basic rate.
However, for overtime work, which extends beyond the regular day shift (7:00 a.m. to 3:00
p.m.), there [will] be no night differential pay added before the overtime pay is calculated.
There is no question that workers are entitled to night shift differential of 20%
of the basic rate for work performed during the first shift from 11:00 p.m. to
7:00 a.m. Workers are also entitled to night shift differential of 15% of the
basic rate for work performed during the third shift from 3:00 p.m. to 11:00
p.m. The issue is whether workers are entitled to night shift differential for
work performed beyond the regular day shift, from 7:00 a.m. to 3:00 p.m.
We sustain the interpretation of both the Voluntary Arbitrator and the Court of
Appeals. The first paragraph of Section 3 provides that petitioner shall
continue to pay night shift differential to workers of the first and third shifts. It
does not provide that workers who performed work beyond the second shift
shall not be entitled to night shift differential. The inclusion of the third
paragraph is not intended to exclude the regular day shift workers from
receiving night shift differential for work performed beyond 3:00 p.m. It only
provides that the night shift differential pay shall be excluded in the
computation of the overtime pay.

It is settled that in order to ascertain the intention of the contracting parties,
the Voluntary Arbitrator shall principally consider their contemporaneous and
subsequent acts as well as their negotiating and contractual history and
evidence of past practices.[11][11] In this case, the Voluntary Arbitrator and the
Court of Appeals both found that the provision in question was contained in
the 1st , 2nd, and 3rd CBAs between petitioner and respondent. During the
effectivity of the first three CBAs, petitioner paid night shift differentials to
other workers who were members of respondent for work performed beyond
3:00 p.m. Petitioner also paid night shift differential for work beyond 3:00
p.m. during the effectivity of the 4th CBA. Petitioner alleges that the payment
of night shift differential for work performed beyond 3:00 p.m. during the 4th
CBA was a mistake on the part of its accounting department. However, the
Court of Appeals correctly ruled that petitioner failed to present any
convincing evidence to prove that the payment was erroneous. In fact, the
Court of Appeals found that even after the promulgation of the Voluntary
Arbitrator’s decision and while the case was pending appeal, petitioner still
paid night shift differential for work performed beyond 3:00 p.m. It affirms
the intention of the parties to the CBA to grant night shift differential for work
performed beyond 3:00 p.m.
WHEREFORE, we DENY the petition. We AFFIRM the 22 July 2003

Decision and 20 January 2004 Resolution of the Court of Appeals in CA-G.R.
SP No. 60644. Costs against petitioner.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
RENATO C. CORONA ADOLFO S. AZCUNA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that
the conclusions in the above Resolution had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
REYNATO S. PUNO
Chief Justice
[12][1] Under Rule 45 of the 1997 Rules of Civil Procedure.

[13][2] Rollo, pp. 46-54. Penned by Associate Justice Ruben T. Reyes (now a member of this Court) with
Associate Justices Elvi John S. Asuncion and Lucas P. Bersamin, concurring.
[14][3] Id. at 56.
[15][4] Referred to as Lepanto Consolidated Mining Corporation by the Voluntary Arbitrator.
[16][5] CA rollo, p. 25.
[17][6] Id. at 24-30.
[18][7] Id. at 30.
[19][8] Id. at 31-34.
[20][9] Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No. 156098, 27
June 2005, 461 SCRA 319.
[21][10] United Kimberly-Clark Employees Union Philippine Transport General Workers’ Organization v.
Kimberly-Clark Phils., Inc., G.R. No. 162965, 6 March 2006, 484 SCRA 187.
[22][11] Id.
[1][1] Under Rule 45 of the 1997 Rules of Civil Procedure002E

[2][2] Rollo, pp. 46-54. Penned by Associate Justice Ruben T. Reyes (now a member of this Court) with
Associate Justices Elvi John S. Asuncion and Lucas P. Bersamin, concurring.
[3][3] Id. at 56.
[4][4] Referred to as Lepanto Consolidated Mining Corporation by the Voluntary Arbitrator.
[5][5] CA rollo, p. 25.
[6][6] Id. at 24-30.
[7][7] Id. at 30.

[6][6] Id. at 24-30.
[7][7] Id. at 30.
[8][8] Id. at 31-34.
[9][9] Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No. 156098, 27
June 2005, 461 SCRA 319.
[10][10] United Kimberly-Clark Employees Union Philippine Transport General Workers’ Organization v.
Kimberly-Clark Phils., Inc., G.R. No. 162965, 6 March 2006, 484 SCRA 187.
[11][11] Id.

\Labor%20Updates\6,%2010%20LEPANTO%20CONSOLIDATED%20G.doc>

COLEGIO DE SAN JUAN DE LETRAN V ASSOCIATION OF
EMPLOYEES AND FACULTY OF LETRAN
12:36 AM
COLEGIO DE SAN JUAN DE LETRAN V ASSOCIATION OF EMPLOYEES AND FACULTY OF

LETRAN
00 SCRA 00
KAPUNAN; September 18, 2000
NATURE
Petition for review on certiorari decision of CA
FACTS
- Letran and the labor union (AEFL) w ere in the process of negotiating a new CBA. How ever, the negotiations w ere suspended by
Letran after it purportedly received information that a new group of employees ha filed a petition for certification election
(there are other facts involved, but only these are relevant to the topic)
ISSUE/S
1. WON Letran is guilty of ULP by refusing to bargain w ith the union w hen it unilaterally suspended the ongoing negotiations for a
new CBA upon mere information that a petition for certification has been filed by another legitimate labor organization
HELD
1. YES
Ratio The filing of the petition for certification election w as barred by the existence of a valid and existing CBA. Consequently, there
is no legitimate representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the
ongoing negotiation. There is no doubt that petitioner is guilty of ULP by its stern refusal to bargain in good faith w ith respondent
union.
Reasoning Art.252, LC: The duty to bargain collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement w ith respect to w ages, hours of work andall
other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any
party to agree to a proposal or to make any concession.
- the parties have the mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement. Undoubtedly, the union lived up to this requisite w hen it presented its proposals for the CBA to Letran. On the other
hand, petitioner devised w ays and means in order to prevent the negotiation.
- Letran’s utter lack of interest in bargaining w ith the union is obvious in its failure to make a timely reply to the proposals presented
by the latter. More than a month after the proposals w ere submitted by the union, petitioner still had not made any counter-
proposals. This inaction on the part of Letran prompted the union to file its second notice of strike on March 13, 1996. Petitioner
could only offer a feeble explanation that the Board of Trustees had not yet convened to discuss the matter as its excuse forfailing
to file its reply. This is a clear violation of Art.250, governing the procedure in collective bargaining[1]
- company's refusal to make counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the employer did
not even bother to submit an answ er to the bargaining proposals of the union, there is a clear evasion of the duty to bargain
collectively. Here, Letran’s actuations show lack of sincere desire to negotiate (thus guilty of ULP).
- the claim that the suspension of negotiation w as proper since by the filing of the petition for certification election the issue on
majority representation of the employees had arose is untenable. According to petitioner, the authority of the union to negotiate on
behalf of the employees w as challenged w hen a rival union filed a petition for certification election.
- In order to allow the employer to validly suspend the bargaining process there must be a valid petition for certification election
raising a legitimate representation issue. Hence, the mere filing of a petition for certification election does not ipso facto justify the
suspension of negotiation by the employer. The petition must first comply w ith the provisions of the LC and its IRR. Foremost is that
a petition for certification election must be filed during the 60-day freedom period. The “Contract Bar Rule” under Sec.3, Rule XI,
Book V, of the Omnibus Rules Implementing the Labor Code, provides that: “.… If a CBA has been duly registered in accordance
w ith Article 231, a petition for certification election or a motion for intervention can only be entertained w ithin 60 days prior to the
expiry date of such agreement.” No petition for certification election for any representation issue may be filed after the lapse of the
60-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the lapse of the formal effectivity
of the CBA the law still considers the same as continuing in force and effect until a new CBA shall have been validly executed.
Hence, the contract bar rule still applies. The purpose is to ensure stability in the relationship of the w orkers and the company by
preventing frequent modifications of any CBA earlier entered into by them in good faith and for the stipulated original period.
- In the case at bar, the lifetime of the previous CBA w as from 1989-1994. The petition for certification election by ACEC, allegedly a
legitimate labor organization, w as filed w ith DOLE only on May 1996. Clearly, the petition w as filed outside the 60-day freedom
period. Hence, the filing thereof w as barred by the existence of a valid and existing CBA. Consequently, there is no legitimate
representation issue and, as such, the filing of the petition for certification election did not constitute a bar to the ongoing negotiation.
Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo Enterprises is misplaced since
that case involved a legitimate representation issue w hich is not present in the case at bar.
- Significantly, the same petition for certification election w as dismissed by the Labor Secretary.
Disposition Petition is dismissed.
[1] Art.250:Procedure in collective bargaining. - The following procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not
later than ten (10) calendar days from receipt of such notice.

FIRST DIVISION

FIRST DIVISION
[G.R. No. 141471. September 18, 2000]

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION OF EMPLOYEES
AND FACULTY OF LETRAN and ELEONOR AMBAS,respondents.
DECISIO N
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal of the Decision of the Court
of Appeals, promulgated on 9 August 1999, dismissing the petition filed by Colegio de San
Juan de Letran (hereinafter, "petitioner") and affirming the Order of the Secretary of Labor,
dated December 2, 1996, finding the petitioner guilty of unfair labor practice on two (2)
counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals, are as
follows:
"On December 1992, Salvador Abtria, then President of respondent union, Association of
Employees and Faculty of Letran, initiated the renegotiation of its Collective Bargaining
Agreement with petitionerColegio de San Juan de Letran for the last two (2) years of the CBA's
five (5) year lifetime from 1989-1994. On the same year, the union elected a new set of officers
wherein private respondent Eleanor Ambas emerged as the newly elected President (Secretary
of Labor and Employment's Order dated December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr. Edwin Lao,
claimed that the CBA was already prepared for signing by the parties. The parties submitted the
disputed CBA to a referendum by the union members, who eventually rejected the said CBA
(Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith before the National Labor
Relations Commission (NLRC). Labor Arbiter Edgardo M. Madriaga decided in favor of
petitioner. However, the Labor Arbiter's decision was reversed on appeal before the NLRC (Ibid,
p. 2).
On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of
its intention to strike on the grounds (sic) of petitioner's: non-compliance with the NLRC (1)
order to delete the name of Atty. Federico Leynes as the union's legal counsel; and (2) refusal
to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start negotiation
on a new five-year CBA starting 1994-1999. On February 7, 1996, the union submitted its
proposals to petitioner, which notified the union six days later or on February 13, 1996 that the
same had been submitted to its Board of Trustees. In the meantime, Ambas was informed
through a letter dated February 15, 1996 from her superior that her work schedule was being
changed from Monday to Friday to Tuesday to Saturday. Ambas protested and requested
management to submit the issue to a grievance machinery under the old CBA (Ibid, p. 2-3).
Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The parties met
on March 27, 1996 before the NCMB to discuss the ground rules for the negotiation. On March
29, 1996, the union received petitioner's letter dismissing Ambas for alleged insubordination.
Hence, the union amended its notice of strike to include Ambas' dismissal. (Ibid, p. 2-3).
On April 20, 1996, both parties again discussed the ground rules for the CBA renegotiation.
However, petitioner stopped the negotiations after it purportedly received information that a new
group of employees had filed a petition for certification election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the Secretary of
Labor and Employment assumed jurisdiction and ordered all striking employees including the
union president to return to work and for petitioner to accept them back under the same terms
and conditions before the actual strike. Petitioner readmitted the striking members except
Ambas. The parties then submitted their pleadings including their position papers which were
filed on July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order declaring petitioner guilty of unfair
labor practice on two counts and directing the reinstatement of private respondent Ambas with
backwages. Petitioner filed a motion for reconsideration which was denied in an Order dated
May 29, 1997 (Petition, pp. 8-9)."[1]
Having been denied its motion for reconsideration, petitioner sought a review of the order
of the Secretary of Labor and Employment before the Court of Appeals. The appellate
court dismissed the petition and affirmed the findings of the Secretary of Labor and

court dismissed the petition and affirmed the findings of the Secretary of Labor and
Employment. The dispositive portion of the decision of the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for being without
merit in fact and in law.
With cost to petitioner.
SO ORDERED.[2]
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF REFUSAL TO
BARGAIN (UNFAIR LABOR PRACTICE) FOR SUSPENDING THE COLLECTIVE
BARGAINING NEGOTIATIONS WITH RESPONDENT AEFL, DESPITE THE FACT THAT THE
SUSPENSION OF THE NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A
PETITION FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO
COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND
EMPLOYMENT WHICH DECLARES PETITIONER LETRAN GUILTY OF UNFAIR LABOR
PRACTICE FOR DISMISSING RESPONDENT AMBAS, DESPITE THE FACT THAT HER
DISMISSAL WAS CAUSED BY HER INSUBORDINATE ATTITUDE, SPECIFICALLY, HER
REFUSAL TO FOLLOW THE PRESCRIBED WORK SCHEDULE.[3]
The twin questions of law before this Court are the following: (1) whether petitioner is guilty
of unfair labor practice by refusing to bargain with the union when it unilaterally suspended
the ongoing negotiations for a new Collective Bargaining Agreement (CBA) upon mere
information that a petition for certification has been filed by another legitimate labor
organization? (2) whether the termination of the union president amounts to an
interference of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner has not
shown any compelling reason sufficient to overturn the ruling of the Court of Appeals
affirming the findings of the Secretary of Labor and Employment. It is axiomatic that the
findings of fact of the Court of Appeals are conclusive and binding on the Supreme Court
and will not be reviewed or disturbed on appeal. In this case, the petitioner failed to show
any extraordinary circumstance justifying a departure from this established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the phrase
"duty to bargain collectively," as follows:
Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement with respect to wages, hours of work and all
other terms and conditions of employment including proposals for adjusting any grievances or
questions arising under such agreement and executing a contract incorporating such
agreements if requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.
Noteworthy in the above definition is the requirement on both parties of the performance of
the mutual obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. Undoubtedly, respondent Association of Employees
and Faculty of Letran (AEFL) (hereinafter, "union") lived up to this requisite when it
presented its proposals for the CBA to petitioner on February 7, 1996. On the other hand,
petitioner devised ways and means in order to prevent the negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to
make a timely reply to the proposals presented by the latter. More than a month after the
proposals were submitted by the union, petitioner still had not made any counter-
proposals. This inaction on the part of petitioner prompted the union to file its second
notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that the
Board of Trustees had not yet convened to discuss the matter as its excuse for failing to
file its reply. This is a clear violation of Article 250 of the Labor Code governing the
procedure in collective bargaining, to wit:

procedure in collective bargaining, to wit:
Art. 250. Procedure in collective bargaining. - The following procedures shall be observed in
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the
other party with a statement of its proposals. The other party shall make a reply thereto not later
than ten (10) calendar days from receipt of such notice.[4]
xx x
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make
counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the bargaining proposals of the
union, there is a clear evasion of the duty to bargain collectively.[6] In the case at bar,
petitioner's actuation show a lack of sincere desire to negotiate rendering it guilty of unfair
labor practice.
Moreover, the series of events that transpired after the filing of the first notice of strike in
January 1996 show petitioner's resort to delaying tactics to ensure that negotiation would
not push through. Thus, on February 15, 1996, or barely a few days after the union
proposals for the new CBA were submitted, the union president was informed by her
superior that her work schedule was being changed from Mondays to Fridays to Tuesdays
to Saturdays. A request from the union president that the issue be submitted to a
grievance machinerywas subsequently denied. Thereafter, the petitioner and the union
met on March 27, 1996 to discuss the ground rules for negotiation. However, just two days
later, or on March 29, 1996, petitioner dismissed the union president for alleged
insubordination. In its final attempt to thwart the bargaining process, petitioner suspended
the negotiation on the ground that it allegedly received information that a new group of
employees called the Association of Concerned Employees of Colegio (ACEC) had filed a
petition for certification election. Clearly, petitioner tried to evade its duty to bargain
collectively.
Petitioner, however, argues that since it has already submitted the union's proposals to the
Board of Trustees and that a series of conferences had already been undertaken to
discuss the ground rules for negotiation such should already be considered as acts
indicative of its intention to bargain. As pointed out earlier, the evidence on record belie
the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by the filing
of the petition for certification election the issue on majority representation of the
employees has arose. According to petitioner, the authority of the union to negotiate on
behalf of the employees was challenged when a rival union filed a petition for certification
election. Citing the case of Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises,[7] petitioner asserts that in view of the pendency of the petition for certification
election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining process
there must be a valid petition for certification election raising a legitimate representation
issue. Hence, the mere filing of a petition for certification election does not ipso facto justify
the suspension of negotiation by the employer. The petition must first comply with the
provisions of the Labor Code and its Implementing Rules. Foremost is that a petition for
certification election must be filed during the sixty-day freedom period. The "Contract Bar
Rule" under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor
Code, provides that: " .… If a collective bargaining agreement has been duly registered in
accordance with Article 231 of the Code, a petition for certification election or a motion for
intervention can only be entertained within sixty (60) days prior to the expiry date of such
agreement." The rule is based on Article 232,[8] in relation to Articles 253, 253-A and 256
of the Labor Code. No petition for certification election for any representation issue may be
filed afterthe lapse of the sixty-day freedom period. The old CBA is extended until a new
one is signed. The rule is that despite the lapse of the formal effectivity of the CBA the law
still considers the same as continuing in force and effect until a new CBA shall have been
validly executed.[9] Hence, the contract bar rule still applies.[10] The purpose is to ensure
stability in the relationship of the workers and the company by preventing frequent
modifications of any CBA earlier entered into by them in good faith and for the stipulated
original period.[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition for
certification election by ACEC, allegedly a legitimate labor organization, was filed with the

certification election by ACEC, allegedly a legitimate labor organization, was filed with the
Department of Labor and Employment (DOLE) only on May 26, 1996. Clearly, the petition
was filed outside the sixty-day freedom period. Hence, the filing thereof was barred by the
existence of a valid and existing collective bargaining agreement. Consequently, there is
no legitimate representation issue and, as such, the filing of the petition for certification
election did not constitute a bar to the ongoing negotiation. Reliance, therefore, by
petitioner of the ruling in Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises [12] is misplaced since that case involved a legitimate representation issue
which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by the Secretary of
Labor on October 25, 1996. The dismissal was upheld by this Court in a Resolution, dated
April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice by its
stern refusal to bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we hold that
the dismissal was effected in violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union president was terminated for
cause, allegedly for insubordination for her failure to comply with the new working
schedule assigned to her, and pursuant to its managerial prerogative to discipline and/or
dismiss its employees. While we recognize the right of the employer to terminate the
services of an employee for a just or authorized cause, nevertheless, the dismissal of
employees must be made within the parameters of law and pursuant to the tenets of
equity and fair play.[14] The employer's right to terminate the services of an employee for
just or authorized cause must be exercised in good faith.[15] More importantly, it must not
amount to interfering with, restraining or coercing employees in the exercise of their right
to self-organization because it would amount to, as in this case, unlawful labor practice
under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that
she was dismissed in order to strip the union of a leader who would fight for the right of her
co-workers at the bargaining table. Ms. Ambas, at the time of her dismissal, had been
working for the petitioner for ten (10) years already. In fact, she was a recipient of a loyalty
award. Moreover, for the past ten (10) years her working schedule was from Monday to
Friday. However, things began to change when she was elected as union president and
when she started negotiating for a new CBA. Thus, it was when she was the union
president and during the period of tense and difficult negotiations when her work schedule
was altered from Mondays to Fridays to Tuesdays to Saturdays. When she did not budge,
although her schedule was changed, she was outrightly dismissed for alleged
insubordination.[16] We quote with approval the following findings of the Secretary of Labor
on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not, however, a valid
ground to teminate her employment. The disputed management action was directly connected
with Ms. Ambas' determination to change the complexion of the CBA. As a matter of fact, Ms.
Ambas' unflinching position in faithfully and truthfully carrying out her duties and responsibilities
to her Union and its members in getting a fair share of the fruits of their collective endeavors
was the proximate cause for her dismissal, the charge of insubordination being merely a ploy to
give a color of legality to the contemplated management action to dismiss her. Thus, the
dismissal of Ms. Ambas was heavily tainted with and evidently done in bad faith. Manifestly, it
was designed to interfere with the members' right to self-organization.
Admittedly, management has the prerogative to discipline its employees for insubordination. But
when the exercise of such management right tends to interfere with the employees' right to self-
organization, it amounts to union-busting and is therefore a prohibited act. The dismissal of Ms.
Ambas was clearly designed to frustrate the Union in its desire to forge a new CBA with the
College that is reflective of the true wishes and aspirations of the Union members. Her dismissal
was merely a subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her
from the premises of the College. It has the effect of busting the Union, stripping it of its strong-
willed leadership. When management refused to treat the charge of insubordination as a
grievance within the scope of the Grievance Machinery, the action of the College in finally
dismissing her from the service became arbitrary, capricious and whimsical, and therefore
violated Ms. Ambas' right to due process."[17]
In this regard, we find no cogent reason to disturb the findings of the Court of Appeals

In this regard, we find no cogent reason to disturb the findings of the Court of Appeals
affirming the findings of the Secretary of Labor and Employment. The right to self-
organization of employees must not be interfered with by the employer on the pretext of
exercising management prerogative of disciplining its employees. In this case, the totality
of conduct of the employer shows an evident attempt to restrain the employees from fully
exercising their rights under the law. This cannot be done under the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Pardo, JJ., concur.
Ynares-Santiago, J., on leave.
[1] Rollo, pp. 32-34.

[2] Id., at 37-38.
[3]
Id., at 16.
[4]
Underscoring supplied.
[5] 141 SCRA 179, 186 (1986).
[6]
The Bradman Co., Inc. vs. Court of Industrial Relations, 78 SCRA 10, 15 (1977).
[7]
118 SCRA 422 (1982).
[8]
Article 232. Prohibition on Certification Election. -- The Bureau shall not entertain any petition
for certification election or any other action which may disturb the administration of duly
registered existing collective bargaining agreements affecting the parties except under Articles
253, 253-A and 256 of this Code.
[9]
Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, 241 SCRA 294, 307
(1995).
[10] National Congress of Unions in the Sugar Industry of the Philippines vs. Ferrer-Calleja, 205
SCRA 478, 485 (1992).

[11] Ibid.
[12] Supra; note 6.
[13] G.R. No 128483, Association of Concerned Employees of Colegio (ACEC) vs. Secretary of
Labor and Employment, et al.

[14] Philippine Singapore Transport Services, Inc. vs. NLRC, 277 SCRA 506, 512 (1997).
[15] Samar II Electric Cooperative, Inc. vs. NLRC, 270 SCRA 290, 295 (1997).
[16] Rollo, p. 45.
[17] Id., at 46.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2000/sept2000/141471.htm>

MANILA FASHIONS, INC. V NLRC (ZAMORA AND NAGKAKAISANG
MANGGAGAWA NG MANILA FASHIONS, INC.)
12:14 AM
MANILA FASHIONS, INC. V NLRC (ZAMORA AND NAGKAKAISANG MANGGAGAWA NG MANILA

FASHIONS, INC.)
G.R. No. 117878
BELLOSILLO; November 13, 1996
FACTS
- respondent Nagkakaisang Manggagaw a ng Manila Fashions, Inc., through its president, respondent Nonito Zamora, filed a
complaint before the Labor Arbiter on behalf of its one hundred and fifty (150) members w ho w ere regular employees of petitioner
Manila Fashions, Inc. The complaint charged petitioner w ith non-compliance, w ith Wage Order No NCR-02 and 02-A mandating a
P12- increase in w ages effective 8 January 1991. As a result, complainants' basic pay, 13th month pay, service incentive leave pay,
legal holiday pay, night shift differential and overtime pay w ere all underpaid
- Petitioner countered that the failure to comply w ith the pertinent Wage Order w as brought about by the tremendous losses suffered
by it w hich were aggravated when the workers staged a strike on account of the non-adjustment of their basic pay. To forestall
continuous suspension/closure of business operations, which petitioner did for three (3) months, the strikers sent a notice that they
w ere willing to condone the implementation of the increase. The condonation w as distinctly stated in Sec. 3, Art. VIII, of the
Collective Bargaining Agreement (CBA) dated 4 February 1992, w hich w as voluntarily entered into by the parties and representsa
reasonable settlement “The Union realizes the company’s closeness to insolvency and, as such , sympathizes w ith the company’s
condition. Therefore, the Union has agreed, as it hereby agrees, to condone the implementation of Wage Order o. NCR-02 and 02-
A.
- The complainants admitted the existence of the aforementioned provision in the CBA; how ever they denied the validity thereof
inasmuch as it w as not reached after due consultation w ith the members.
- The Labor Arbiter sustained the claim that the subject provision of the CBA w as void but based its conclusion on a different
ground :
. . . While it is true that both union officers/members and (petitioner) signed the agreement, how ever, the same is not
enforceable since said agreement is null and void, it being contrary to law . It is only the Tripartite Wage Productivity Board of
(the) Department of Labor and Employment (DOLE) that could approve exemption (of) an establishment from coverage of
(a) Wage Order . . .
ISSUES
1. WON the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec. 3, Art. VIII, of the CBA w as
valid
HELD
1. NO
Reasoning A Collective Bargaining Agreement refers to the negotiated contract betw een a legitimate labor organization and the
employer concerning w ages, hours of work and all other terms and conditions of employment in a bargaining unit, including
mandatory provisions for grievances and arbitration machineries. As in all other contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law , morals, good
customs, public order or public policy. Section 3, Art. VIII, of the CBA is a void provision because by agreeing to condone the
implementation of the Wage Order the parties thereby contravened its mandate on w age increase of P12.00 effective 8 January
1991. Also, as stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could approve
exemption of an establishment from coverage of a Wage Order.
If petitioner is a financially distressed company then it should have applied for a w age exemption so that it could meet its labor costs
w ithout endangering its viability or its very existence upon w hich both management and labor depend for a living. The Office of the
Solicitor General emphasizes the point that parties to a CBA may not by themselves, set a wage lower than the minimum wage. To
do so would render nugatory the purpose of a wage exemption, not to mention the possibility that employees may be unwittinglyput
in a position to accept a lower wage.
The cases that petitioner relies on are simply inapplicable because, unlike the present case w hich involves a stipulation in the CBA
in contravention of law , they are concerned with compromise settlements as a means to end labor disputes recognized by Art. 227
of the Labor Code and considered not against public policy by doctrinal rules established by this Court.
Disposition Petition is dismissed.

G.R. No. 117878 November 13, 1996

MANILA FASHIONS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG
MANGGAGAWA NG MANILA FASHIONS, INC., respondents.
BELLOSILLO, J.:
On 15 March 1993 respondent Nagkakaisang Manggagawa ng Manila Fashions, Inc., through its
president, respondent Nonito Zamora, filed a complaint before the Labor Arbiter on behalf of its one
hundred and fifty (150) members who were regular employees of petitioner Manila Fashions, Inc.
The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A

The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A
mandating a P12- increase in wages effective 8 January 1991. As a result, complainants' basic pay,
13th month pay, service incentive leave pay, legal holiday pay, night shift differential and overtime
pay were all underpaid.
Petitioner countered that the failure to comply with the pertinent Wage Order was brought about by
the tremendous losses suffered by it which were aggravated when the workers staged a strike on
account of the non-adjustment of their basic pay. To forestall continuous suspension/closure of
business operations, which petitioner did for three (3) months, the strikers sent a notice that they
were willing to condone the implementation of the increase. The condonation was distinctly stated in
Sec. 3, Art. VIII, of the Collective Bargaining Agreement (CBA) dated 4 February 1992, which was
voluntarily entered into by the parties and represents a reasonable settlement —
Sec. 3. The Union realizes the company's closeness to insolvency and, as such, sympathizes with
the company's financial condition. Therefore, the Union has agreed, as it hereby agrees, to condone
the implementation of Wage Order No. NCR-02 and 02-A.
The complainants admitted the existence of the aforementioned provision in the CBA; however they
denied the validity thereof inasmuch as it was not reached after due consultation with the members.
The Labor Arbiter sustained the claim that the subject provision of the CBA was void but based its
conclusion on a different ground —
. . . While it is true that both union officers/members and (petitioner) signed the agreement, however, the
same is not enforceable since said agreement is null and void, it being contrary to law. It is only the
Tripartite Wage Productivity Board of (the) Department of Labor and Employment (DOLE) that could
approve exemption (of) an establishment from coverage of (a) Wage Order . . . 1
Thus on 30 June 1993 petitioner was adjudged liable to each of the complainants for underpayment
of salary, 13th month pay, vacation leave pay and legal holiday pay in the total amount of
P900,012.00. All other claims were dismissed for lack of merit. 2
Both parties were unsatisfied with the decision, prompting them to seek relief from respondent
National Labor Relations Commission (NLRC). The basis of petitioner's appeal was that the ruling
was not in accordance with the facts and the law. On the part of the private respondents, they
assailed the computation of the award erroneous.
Respondent NLRC was not persuaded by petitioner. On the other hand, the appeal of private
respondents was no longer considered as it was filed beyond the reglementary period. Thus on 31
May 1994 the disputed decision was affirmed. 3
Was the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec.
3, Art. VIII, of the CBA valid?
Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by this
Court applying the rule that if the agreement was voluntarily entered into and represents a
reasonable settlement it is binding on the parties and may not be disowned simply because of a
change of mind. 4 Granting the CBA provision is indeed void, petitioner offers the alternative
argument that the computation of the award was erroneous and arbitrary.
We sustain the decision of the Labor Arbiter as affirmed by respondent NLRC that the condonation
appearing in Sec. 3, Art. VIII, of the CBA did not exempt petitioner from compliance with Wage Order
No. NCR-02 and 02-A..
A Collective Bargaining Agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit, including mandatory provisions for grievances and arbitration
machineries. 5 As in all other contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided they are not contrary to law,
morals, good customs, public order or public policy. 6 Section 3, Art. VIII, of the CBA is a void
provision because by agreeing to condone the implementation of the Wage Order the parties
thereby contravened its mandate on wage increase of P12.00 effective 8 January 1991. Also, as
stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could
approve exemption of an establishment from coverage of a Wage Order.
If petitioner is a financially distressed company then it should have applied for a wage exemption so
that it could meet its labor costs without endangering its viability or its very existence upon which
both management and labor depend for a living. 7 The Office of the Solicitor General emphasizes the
point that parties to a CBA may not by themselves, set a wage lower than the minimum wage. To do
so would render nugatory the purpose of a wage exemption, not to mention the possibility that
employees may be unwittingly put in a position to accept a lower wage. 8
The cases that petitioner relies on are simply inapplicable because, unlike the present case which
involves a stipulation in the CBA in contravention of law, they are concerned with compromise
settlements as a means to end labor disputes recognized by Art. 227 of the Labor Code and
considered not against public policy by doctrinal rules established by this Court. 9
As regards the alternative argument of petitioner that the computation of the award was erroneous

considered not against public policy by doctrinal rules established by this Court. 9
As regards the alternative argument of petitioner that the computation of the award was erroneous
and arbitrary, it must be rejected outright as it was apparently never brought to the attention of
respondent NLRC. Consequently, it cannot be raised for the first time before this Court since that
would be offensive to the basic rule of fair play, justice and due process. 10 Moreover, the original
end exclusive jurisdiction of this Court to review a decision of respondent NLRC in a petition
for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation
of the evidence but confined merely to issues of jurisdiction or grave abuse of discretion. 11
WHEREFORE, the petition is DISMISSED. The order of respondent National Labor Relations
Commission which affirmed the decision of the Labor Arbiter awarding the total amount of
P900,012.00 to the complainants is likewise AFFIRMED.
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1 Rollo, p. 29.
2 Decision penned by Labor Arbiter Fatima Jambaro-Franco; Rollo, pp. 30-33.
3 Decision penned by Presiding Commissioner Edna Bonto-Perez, concurred in by Commissioner
Rogelio I. Rayala; Rollo, p. 26.
4 Cruz v. NLRC, G.R. No. 98273, 28 October 1991, 203 SCRA 286; Olaybar v. NLRC, G.R. No.
108713, 28 October 1994, 237 SCRA 819; Siangco v. NLRC, G.R. No. 110261, 4 August 1994, 235
SCRA 96; and, Jag & Haggar Jeans and Sportswear Corporation v. NLRC, G.R. No. 105710, 23
February 1995, 241 SCRA 635.
5 Sec. jj, Rule I, Bk. V, Omnibus Rules Implementing the Labor Code.
6 Art. 1306, Civil Code.
7 Radio Communications of the Philippines, Inc. v. National Wages Council, G.R. No. 93044, 26
March 1992, 207 SCRA 581.
8 Rollo, p. 90.
9 See note 4.
10 Huang v. CA, G.R. No. 108525, 13 September 1994, 236 SCRA 420.
11 Sta. Fe Construction Co. v. NLRC, G.R. No. 101280, 2 March 1994, 230 SCRA 593.
Pasted from <http://www.lawphil.net/judjuris/juri1996/nov1996/gr_117878_1996.html>

REPUBLIC SAVINGS BANK v. CIR
12:14 AM
REPUBLIC SAVINGS BANK v. CIR

21 SCRA 226
CASTRO; September 27, 1967
NATURE
Appeal of CIR decision
FACTS
- Republic Savings Bank (now Republic Bank or RB) discharged/terminated private respondents Resuello, Jola et al, for having
w ritten and published "a patently libelous letter, tending to cause the dishonor, discredit or contempt not only of officers and
employees of this bank, but also of your employer, the bank itself." Respondents had w ritten to the bank president, Ramon Racelis,
a letter-charge, demanding his resignation on the grounds of immorality, nepotism in the appointment and favoritism as w ell as
discrimination in the promotion of RB employees.
- CIR ruled that RB’s act of dismissing the 8 respondent employees constituted an unfair labor practice w ithin the meaning and
intendment of the Industrial Peace Act (RA 875). RB appealed. It still maintains that the discharge w as for cause.
- RB’s defense: CIR should have dismissed the complaint because the discharge of the respondents had nothing to do w ith their
union activities as the latter in fact admitted at the hearing that the w riting of the letter-charge w as not a "union action" but merely
their "individual" act.
ISSUE
WON the dismissal of the 8 employees by RB constituted unfair labor practice w ithin the meaning and intendment of the Industrial
Peace Act
HELD
YES.
- Even assuming that respondents acted in their individual capacities w hen they w rote the letter-charge they were nonetheless
protected for they w ere engaged in concerted activity, in the exercise of their right of self-organization that includes concerted
activity for mutual aid and protection, interference w ith which constitutes an unfair labor practice. The joining in protests or demands,
even by a small group of employees, if in furtherance of their interests, is a concerted activity protected by the IndustrialPeace Act.
It is not necessary that union activity be involved or that collective bargaining be contemplated.
- NLRC v. Phoenix Mutual Life Insurance Co is case in point. Held: An insurance company w as guilty of an unfair labor practice in
interfering w ith this right of concerted activity by discharging two agents employed in a branch office. The agents acts of meeting
and joining in a letter to the home office objecting to the transfer to their branch office of a cashier from another branch,for further
discussion, approval and signature, is a concerted activity that is protected.
Re Meaning of Duty to Bargain
- What the RB should have done w as to refer the letter-charge to the grievance committee. This w as its duty, failing w hich it
committed an unfair labor practice RA 875 w hich makes it an unfair labor practice for an employer "to dismiss, discharge or
otherw ise prejudice or discriminate against an employee for having filed charges or for having given or being about to give testimony
under this Act."
- Collective bargaining does not end with the execution of an agreement. It is a continuous process. The duty to bargain imposes on
the parties during the term of their agreement the mutual obligation “to meet and confer promptly and expeditiously and in good faith
for the purpose of adjusting any grievances or question arising under such agreement” and a violation of this obligation is an unfair
labor practice.
- Instead of stifling criticism, RB should have allow ed the respondents to air their grievances. Good faith bargaining requiredof the
Bank an open mind and a sincere desire to negotiate over grievances. The grievance committee, created in the CBA, w ould have
been an appropriate forum for such negotiation. Indeed, the grievance procedure is a part of the continuous process of collective
bargaining. It is intended to promote a friendly dialogue betw een labor and management as a means of maintaining industrial peace.
Disposition Appealed decision is AFFIRMED
FERNANDO, CONCURRING
- Collective bargaining presupposes the give-and-take of discussion. No party adopts, at least in its initial stages, a hard-line
position, from w hich there can be no retreat. That w as not the situation here. Respondents as labor leaders w ere quite certain that
the President of RB had offended most grievously. They w anted him out. There w as no room for discussion.
- That for me is not bargaining as traditionally and commonly understood. It is for that reason that I find it difficult to agree fully w ith
the view that their dismissal could be construed as a refusal to bargain collectively. Moreover, they did not as adverted to in the
opinion of the Court, follow the procedure set forth for adjusting grievances. It is my view therefore that the dismissal amounted to
"interference, restraint or coercion" as prohibited in the Industrial Peace Act, and not refusal to bargain collectively.

G.R. No. L-20303 September 27, 1967

REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN JARA,
FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S. MENDIOLA, TEODORO DE LA
CRUZ, NARCISO MACARAEG and MAURO A. ROVILLOS, respondents.
Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.
G. E. Fajardo for respondents.

G. E. Fajardo for respondents.
CASTRO, J.:
The vital issue in this case is whether the dismissal of the eight (8) respondent employees by
the petitioner Republic Bank (hereinafter referred to as the Bank) constituted an unfair labor practice
within the meaning and intendment of the Industrial Peace Act (Republic Act 875). The Court of
Industrial Relations (CIR) found it did and its decision is now on appeal before us. The Bank
maintains that the discharge was for cause.
The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin Jara, Florencio
Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la Cruz, Narciso Macaraeg and Mauro
A. Rovillos. On July 12, 1958 it discharged Jola and, a few days after (July 18, 1958), the rest of
respondents, for having written and published "a patently libelous letter . . . tending to cause the
dishonor, discredit or contempt not only of officers and employees of this bank, but also of your
employer, the bank itself."
The letter referred to was a letter-charge which the respondents had written to the bank
president, demanding his resignation on the grounds of immorality, nepotism in the appointment and
favoritism as well as discrimination in the promotion of bank employees. The letter, dated July 9,
1958, is hereunder reproduced in full:
Mr. Ramon Racelis
President, Republic Savings Bank
Man ila
"Dear Mr. President:
We, the undersigned, on behalf of all our members and employees of the Republic
Savings Bank, who have in our hearts only the most honest and sincere motive to conserve
and protect the interest of the institution and its 200,000 depositors, do hereby, demand the
much needed resignation of His Excellency, Mr. Ramon Racelis as President and Member of
the Board of Directors of the Bank.
Mr. President, you have already, in so many occasions, placed the Bank on the verge of
danger, that now we deem it right and justifiable for you to leave this Bank and let other more
capable presidents continue the work you have not well accomplished.
In the above instance, we are presenting charges which in our humble contention
properly justifies incapacity on your part to continue and assume the position as top executive
of the huge institution:
(1) That you Mr. President, have tolerated and practiced immorality in this Bank. We have
been expecting you to do something about this malpractice which is very disgraceful and
affects the morale of the hundreds of your employees. But so far, Mr. President, you have just
let this thing passed through. As a matter of fact, you have even promoted these women like
Misses Pacita Mato and Edita Castro. These women are of questionable characters, Mr.
President, and should have had no place in the Bank as managers or even as mere
employees. We know Mr. President, because it is an open secret in the Bank, that you have
illicit relations with one of them — Miss Edita Castro. As top officer and as father of the
employees of the Bank, you have shown this bad example to your employees. Mr. President,
we are really ashamed of you.
(2) That you have allowed the practice of nepotism in this Bank. You have employed relatives
of yours like Honorio Ravida; Bienvenido Ravida; Antonio Racelis; Jesus Antonio; and
Argentina Racelis. Not only that Mr. President. You have also given those nieces and nephews
of yours good positions at the expense of the more capable employees. Mr. President, if we
have to mention all of them, one page will not be enough.
(3) With regards to promotion, you have given more preferences to your close relatives. When
the Bank advocated the sending of pensionados to States, you have only limited your choice
among your nieces, nephews, and querida, namely, Miss Argentina Racelis, Mr. Jesus
Antonio, Miss Edita Castro, and her brother-in-law, Mr. Pedro Garcia, Jr. In doing this, Mr.
President, you have only lowered the reputation and standing of the Republic Savings Bank.
There is really no sense in sending high school and B.S.E. graduates to States to study
advanced banking. Because of this silly decision, it took one pensionado six months and cost
the Bank a total of P10,000.00 just to study Christmas savings. That subject is very simple;
one need not go to States to study savings; that you know full well, Mr. President. The reason
why you sent Miss Castro to States was because you were also there. Are we not right?
(4) That you Mr. President, tolerated and still tolerating grave dishonesty in this Bank as
evidenced by the following irregularities and anomalies;
(a) In one of our branches, around P200,000.00 was mulcted and embezzled by a certain
Maximo Donado by doctoring the ledgers and records of that particular office. To the present,
the amount is still increasing and some more are being dug up from the records everyday ever

the amount is still increasing and some more are being dug up from the records everyday ever
since its discovery in February 1957. In this case you dismissed Mr. M. Donado, immediately.
But this was all that you did. If you have to go back to the history of the case, you will find out
that your beloved nieces and nephews are also involved having been managers of that
particular office. Another nephew, the Vice President-Operations, then Vice President,
Personnel, was also involved for valid reasons that he did not even shift this particular
employee to other branches or departments since the beginning when it has been the policy of
the Bank to reshuffle its personnel. If you want to know why your good nephew did not transfer
this employee, we will tell you. "Your good nephew has eaten too many baskets of delicious
alimango." Mr. President, if there is someone to be blamed in this particular case, it is your
good nephews and nieces for their gross negligence.
(b) Aside from the one mentioned above, we have also Mr. Rodolfo Francisco, who in April
1955, maliciously withdraw (sic) P970.00 in two withdrawal slips from the account of one
depositor in one of our provincial offices, inserting his name as co-depositor in the savings
account ledger.
(c) In January 1958, Mr. Jose de los Santos expended and approved representation expense
in the amount of P300.00 in one of our provincial offices.
(d) Mr. Federico M. Dabu, the ex-cashier and now Personnel Manager, incurred a shortage in
the amount of P1,240.00 in the course of the audit on August 3, 1954.
(e) Mr. Jose S. Guevara, Vice-President on Personnel have (sic) been accepting bribe
moneys. One of these amounts to P4,000.00 which was delivered by a messenger sometime
during the last quarter of 1957.
Mr. President, the anomalies are only a partial list of the irregularities which so far you
have not acted upon. This type of people should have been fired out from the Bank; yet on the
contrary, you promoted them to higher and responsible positions, thus, resulting in the
demoralization of the more capable employees.
Mr. President, we hope that you have still a little sense of decency and propriety left. So,
for goodsake and for the welfare of the Bank, DO RESIGN NOW as President and as Member
of the Board of Directors of the Republic Savings Bank.
Very respectfully yours,
(Sgd.) Rosendo T. Resuello
President, RSB Supervisors' Union (FFW),
(Sgd.) Benjamin Jara
Vice-President RSB Supervisors' Union (FFW)
(Sgd.) Florencio Allasas
Treasurer, RSB Supervisors' Union (FFW)
(Sdg) Domingo B. Jola
Chairman, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Diosdado S. Mendiola
Vice-President, RSB Employees Union (FFW)
(Sgd.) Teodoro de la Cruz
Member, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Angelino Quiambao
President, RSB Security Guard Union (FFW)
(Sgd.) Narciso Macaraeg
Vice-President, RSB Security Guard Union (FFW)
(Sgd.) Alfredo Bautista
Treasurer, RSB Security Guard Union (FFW)
(Sgd.) Pacifico A. Argao
PRO, RSB Employees' Union (FFW)
(Sgd.) Toribio B. Garcia
Secretary, RSB Security Guard Union (FFW)
(Sgd.) Mauro A. Rovillos
Member, Executive Committee, RSB Supervisors' Union (FFW)
Copies of this letter were admittedly given to the chairman of the board of directors of the
Bank, and the Governor of the Central Bank.
At the instance of the respondents, prosecutor A. Tirona filed a complaint in the CIR on
September 15, 1958, alleging that the Bank's conduct violated section 4(a) (5) of the Industrial
Peace Act which makes it an unfair labor practice for an employer "to dismiss, discharge or
otherwise prejudice or discriminate against an employee for having filed charges or for having given
or being about to give testimony under this Act."
The Bank moved for the dismissal of the complaint, contending that respondents were
discharged not for union activities but for having written and published a libelous letter against the

discharged not for union activities but for having written and published a libelous letter against the
bank president. The court denied the motion on the basis of its decision in another case 1 in which it
ruled that section 4(a) (5) applies to cases in which an employee is dismissed or discriminated
against for having filed "any charges against his employer." Whereupon the case was heard.
In 1960, however, this Court overruled the decision of the CIR in the Royal Interocean case
and held that "the charge, the filing of which is the cause of the dismissal of the employee, must be
related to his right to self-organization in order to give rise to unfair labor practice on the part of the
employer," because "under subsection 5 of section 4(a), the employee's (1) having filed charges or
(2) having given testimony or (3) being about to give testimony, are modified by 'under this Act'
appearing after the last item."2 The Bank therefore renewed its motion to dismiss, but the court held
the motion in abeyance and proceeded with the hearing.
On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair labor practice
and ordering it to reinstate the respondents, with full back wages and without loss of seniority and
other privileges. This decision was affirmed by the courten banc on August 9, 1962.
Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter Paul v.
CIR,4 the Bank argues that the court should have dismissed the complaint because the discharge of
the respondents had nothing to do with their union activities as the latter in fact admitted at the
hearing that the writing of the letter-charge was not a "union action" but merely their "individual" act.
It will avail the Bank none to gloat over this admission of the respondents. Assuming that the
latter acted in their individual capacities when they wrote the letter-charge they were nonetheless
protected for they were engaged in concerted activity, in the exercise of their right of self-
organization that includes concerted activity for mutual aid and protection, 5interference with which
constitutes an unfair labor practice under section 4(a)(1). This is the view of some members of this
Court. For, as has been aptly stated, the joining in protests or demands, even by a small group of
employees, if in furtherance of their interests as such, is a concerted activity protected by the
Industrial Peace Act. It is not necessary that union activity be involved or that collective bargaining
be contemplated.6
Indeed, when the respondents complained against nepotism, favoritism and other
management practices, they were acting within an area marked out by the Act as a proper sphere of
collective bargaining. Even the reference to immorality was not irrelevant as it was made to support
the respondents' other charge that the bank president had failed to provide wholesome working
conditions, let alone a good moral example, for the employees by practicing discrimination and
favoritism in the appointment and promotion of certain employees on the basis of illicit relations or
blood relationship with them.
In many respects, the case at bar is similar to National Labor Relations Board v. Phoenix
Mutual Life Insurance Co.7 The issue in that case was whether an insurance company was guilty of
an unfair labor practice in interfering with this right of concerted activity by discharging two agents
employed in a branch office. The cashier of that office had resigned. The ten agents employed there
held a meeting and agreed to join in a letter to the home office objecting to the transfer to their
branch office of a cashier from another branch office to fill the position. They discussed also the
question whether to recommend the promotion of the assistant cashier of their office as the proper
alternative. They then chose one of their number to compose a draft of the letter and submit it to
them for further discussion, approval and signature. The agent selected to write the letter and
another were discharged for their activities in this respect as being, so their notices stated,
completely unpleasant and far beyond the periphery of their responsibility. In holding the company
liable for unfair labor practice, the Circuit Court of Appeals said:
A proper construction is that the employees shall have the right to engage in concerted
activities for their mutual aid or protection even though no union activity be involved, for collective
bargaining be contemplated. Here Davis and Johnson and other salesmen were properly concerned
with the identity and capability of the new cashier. Conceding they had no authority to appoint a new
cashier or even recommend anyone for the appointment, they had a legitimate interest in acting
concertedly in making known their views to management without being discharged for that interest.
The moderate conduct of Davis and Johnson and the others bore a reasonable relation to conditions
of their employment. It was therefore an unfair labor practice for respondent to interfere with the
exercise of the right of Davis and Johnson and the other salesmen to engage in concerted activities
for their mutual aid or protection.
Other members of this Court agreed with the CIR that the Bank's conduct violated section 4(a)
(5) which makes it an unfair labor practice for an employer to dismiss an employee for having filed
charges under the Act.
Some other members of this Court believe, without necessarily expressing approval of the
way the respondents expressed their grievances, that what the Bank should have done was to refer
the letter-charge to the grievance committee. This was its duty, failing which it committed an unfair
labor practice under section 4(a) (6). For collective bargaining does not end with the execution of an

labor practice under section 4(a) (6). For collective bargaining does not end with the execution of an
agreement. It is a continuous process. The duty to bargain imposes on the parties during the term of
their agreement the mutual obligation "to meet and confer promptly and expeditiously and in good
faith . . . for the purpose of adjusting any grievances or question arising under such agreement" 8 and
a violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair labor practice. 9 As Professors
Cox and Dunlop point out:
Collective bargaining . . . normally takes the form of negotiations when major conditions of
employment to be written into an agreement are under consideration and of grievance committee
meetings and arbitration when questions arising in the administration of an agreement are at stake. 10
Instead of stifling criticism, the Bank should have allowed the respondents to air their
grievances. Good faith bargaining required of the Bank an open mind and a sincere desire to
negotiate over grievances.11 The grievance committee, created in the collective bargaining
agreements, would have been an appropriate forum for such negotiation. Indeed, the grievance
procedure is a part of the continuous process of collective bargaining. 12 It is intended to promote, as
it were, a friendly dialogue between labor and management as a means of maintaining industrial
peace.
The Bank defends its action by invoking its right to discipline for what it calls the respondents'
libel in giving undue publicity to their letter-charge. To be sure, the right of self-organization of
employees is not unlimited,13 as the right of an employer to discharge for cause 14 is undenied. The
Industrial Peace Act does not touch the normal exercise of the right of an employer to select his
employees or to discharge them. It is directed solely against the abuse of that right by interfering
with the countervailing right of self-organization.15 But the difficulty arises in determining whether in
fact the discharges are made because of such a separable cause or because of some other
activities engaged in by employees for the purpose of collective bargaining. 16
It is for the CIR, in the first instance, to make the determination, "to weigh the employer's
expressed motive in determining the effect on the employees of management's otherwise equivocal
act."17 For the Act does not undertake the impossible task of specifying in precise and unmistakable
language each incident which constitutes an unfair labor practice. Rather, it leaves to the court the
work of applying the Act's general prohibitory language in the light of infinite combinations of events
which may be charged as violative of its terms.18 As the Circuit Court of Appeals puts it:
Determining the legality of a dismissal necessarily involves an appraisal of the employer's
motives. In these cases motivations are seldom expressly avowed and avowals are not always
candid. There thus must be a measure of reliance on the administrative agency knowledgeable in
labor-management relations and on the Trial Examiner who receives the evidence firsthand and is
therefore in a unique position to determine the credibility of the witnesses. Where Examiner and
Board are in agreement there is an increased presumption in favor of their resolution of the issue. 19
What we have just essayed underscores at once the difference between Royal
Interocean and Lakas ng Pagkakaisa on the one hand and this case on the other. In Royal
Interocean, the employee's letter to the home office, for writing which she was dismissed,
complained of the local manager's "inconsiderate and untactful attitude" 20 — a grievance which, the
court found, "had nothing to do with or did not arise from her union activities." Nor did the court find
evidence of discriminatory discharge in Lakas ng Pagkakaisa as the letter, which the employee
wrote to the mother company in violation of the local company's rule, denounced "wastage of
company funds." In contrast, the express finding of the court in this case was that the dismissal of
the respondents was made on account of the letter they had written, in which they demanded the
resignation of the bank president for a number of reasons touching labor-management relations —
reasons which not even the Bank's judgment that the respondents had committed libel could excuse
it for making summary discharges21 in disregard of its duty to bargain collectively.
In final sum and substance, this Court is in unanimity that the Bank's conduct, identified as an
interference with the employees' right of self-organization, or as a retaliatory action, and/or as a
refusal to bargain collectively, constituted an unfair labor practice within the meaning and intendment
of section 4(a) of the Industrial Peace Act.
ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962 of the
Court of Industrial Relations are affirmed, at petitioner's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ., concur.
Bengzon, J.P., J., took no part.
Separate Opinions
FERNANDO, J., concurring:
The opinion of the Court in this highly significant unfair labor practice case, one of first
impression, easily commends itself for approval. The relevant facts are set forth in all fullness and
with due care. The position of the Court united as it is on an unfair labor practice having been
committed, but not quite fully agreed as to which particular subsection of the legal provision was
violated, is delineated with precision. With the explicit acknowledgement there made that some

violated, is delineated with precision. With the explicit acknowledgement there made that some
members of the Court are of the belief that what was done by the Republic Bank here amounted to
"interference" and with the writer being of the persuasion that it could be categorized in line with the
statute as "interference, restraint or coercion," a few words as to why this view is entertained may
not be inappropriate.
No one can doubt that we are in the process of evolving an indigenous labor jurisprudence.
Notwithstanding the clearly American background of the Industrial Peace Act, based as it is mainly
on the Wagner Act,1 labor relations in the Philippines with their peculiar problems and the ingenuity
of Filipino lawyers have resulted in a growing body of decisions notable for their suitability to local
condition and their distinctly local flavor. This is as it should be.
The present case affords one such instance. The wealth of adjudication by both judicial and
administrative agencies in the United States notwithstanding the diligent and earnest search for a
ruling based on a similar fact-situation yielded no case precisely in point. What does it signify? At the
very least, it may indicate that while the problem posed could have arisen there, this particular
response of labor was quite unique. On the assumption which I have here hypothetically made that
there was indeed a valid cause for grievance, a more diplomatic approach could have been
attempted. Or at the very least the procedure indicated for the adjustment of a grievance could have
been followed. That was not done. What respondents did was to issue an ultimatum.
Collective bargaining whether in its formative stage preparatory to a labor contract or in the
adjustment of a labor problem in accordance with the procedure set forth in an existing agreement
presupposes the give-and-take of discussion. No party adopts, at least in its initial stages, a hard-
line position, from which there can be no retreat. That was not the situation here. Respondents as
labor leaders appeared adamantine in their attitude to terminate the services of the then president of
the Republic Savings Bank. Nor did they mince words in describing his alleged misdeeds. They were
quite certain that he had offended most grievously. They wanted him out. There was no room for
discussion.
That for me is not bargaining as traditionally and commonly understood. It is for that reason
that I find it difficult to agree fully with the view that their dismissal could be construed as a refusal to
bargain collectively. Moreover, they did not as adverted to in the opinion of the Court, follow the
procedure set forth for adjusting grievances. Nor considering the explicit language of the Industrial
Peace Act may such dismissal fall within the prohibition against dismissing employees for having
filed charges or about to give testimony "under the Act." As a matter of fact, if the letter were indeed
libelous, their dismissal would not have been unjustified. There was an admission as noted in the
opinion "that the writing of the letter charged was not a 'union' action but merely their 'individual' act."
Nonetheless, concurrence with the decision arrived at by the Court is called for in view of their
mass dismissal. Under the circumstances, the supervisors union, the Republic Savings Bank
employees union, the Republic Savings Bank security guards union, and the Republic Savings Bank
supervisors union were left leaderless. For collective bargaining to be meaningful, there must be two
parties, one representing management and the other representing the union. Nor could management
select who would represent the latter or with whom to deal, otherwise in effect there would be only
one party. Obviously there would then be no bargaining. 1awphîl .n
èt
It is my view therefore that the dismissal amounted to "interference, restraint or coercion" as

prohibited in the Industrial Peace Act. To repeat, this Section 4(a), with the exception of subsection
(2), was taken from the Wagner Act. There is as stated by Bufford in his treatise for the Wagner Act
"an overlap" as this particular subsection deals "with additional labor practice besides containing
incidental provisions concerning related matters."2 As noted further by such commentator: "As
expressed by the Senate Committee: 'The four succeeding unfair labor practices are designed not to
impose limitations or restrictions upon the general guarantees of the first, but rather to spell out with
particularity some of the practices that have been most prevalent and most troublesome.'"
Teller is in agreement. This subsection according to him "involves the widest varieties of
activities." The other unfair labor practices condemned fall within its terms. Thus: "That the Board
has taken this position is evidenced both by the Board decisions and by express statement to such
effect contained in its first annual report, the language of which in this connection is as follows: 'At
the outset it should be explained that the Board has held that a violation by an employer of any of
the other four subdivisions of Section 8 of the act is, by the same token, a violation of Section 8(1).
Such a conclusion is too obvious to require explanation. In fact, almost all of the cases in which the
Board has found a violation of Section 8(1) are cases in which the principal offense charged fell
within some other subdivision of Section 8. The explanation for this is, apparently, that even though
an employer may be engaging in anti-union activities in violation of Section 8(1), unions do not seek
protection of the act until such activities take such drastic form as bring them within the provisions of
some other subdivisions, as, for example, the discriminatory discharge of union members (which
comes within subdivision [3]), the domination of or interference with the formation or administration
of a labor organization (which comes within subdivision [2]). or a refusal to bargain collectively

of a labor organization (which comes within subdivision [2]). or a refusal to bargain collectively
(which comes within subdivision [5]."3
In the Philippines as in the United States then, the first subsection on "interference, restraint or
coercion" covering as it does such a broad range of undesirable practices on the part of employers
could easily be seized upon, where a borderline case, inimical to the right of self-organization or to
collective bargaining, presents itself as justifying a finding of an unfair labor practice.
1awphî l.nè
t
Footnotes
1
Mariano v. Royal Interocean Lines, Case 527-ULP.
2Royal Interocean Lines v. CIR, L-11745, Oct. 31, 1960.
3Note 2, supra.
4
L-10130, Sept. 30, 1957.
5Section 3 of the industrial Peace Act provides: "Employees' Right to Self-Organization. —
Employees shall have the right to self-organization and to form, join or assist labor organizations of
their own choosing for the purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective bargaining and other
mutual aid or protection. Individuals employed as supervisors shall not be eligible for membership in
a labor organization of employees under their supervision but may form separate organizations of
their own."
6
Annot., 6 A.L.R. 2d 416 (1949).
7167 F. 2d 983 (7th Cir 1948).
8Industrial Peace Act, sec. 13.
9
NLRB v. Highland Shoe, Inc., 119 F. 2d 218 (1st Cir. 1941); NLRB v. Bachelder, 120 F. 2d 574 (7th
Cir. 1941).
10The Duty to Bargain Collectively During the Term of an Existing Agreement, 63 Harv. L. Rev. 1097,
1105 (1950).
11
Cf. id. at 1110.
12
United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); accord,
United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960).
13Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).
14
E.g., Philippine Educ. Co. v. Union of Phil. Educ. Employees, L-13773, April 29, 1960.
15
Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941).
16NLRB v. Local 1229, IBEW, 346 U.S. 464 (1953).
17NLRB v. Stowe Spinning Co., 336 U.S. 226 (1949).
18
Republic Aviation Corp. v. NLRB, supra note 13.
19NLRB v. M & B Headwear Co., 349 F. 2d 170 (4th Cir. 1965).
20See second Royal Interocean case, L-12429, Feb. 27, 1961.
21
"Considering the actualities of the collective bargaining and grievance procedures, we think the
employer must realize that far-fetched and overstated claims, easily dissuadable, are often made
initially by one side in a labor dispute (especially when it is inexperienced in labor relations). Such
claims may well evaporate on discussion and negotiation, and never become an integral part of the
union's real purposes. We think that the employer cannot seize upon this kind of claim — made by
ignorant workers in their initial demands — in order to justify retaliatory measures against them. He
must make some effort to find out if the employees mean in fact to pursue these claims, to stick to
demands which are not protected by sec. 7. Summary discharge seems especially premature here."
NLRB v. Electronics Equip. Co., 194 F. 2d 650 (2nd Cir. 1952).
Cf. Abaya v. Villegas, L-25641, Dec. 17, 1966.
FERNANDO, J., concurring:
1The National Labor Relations Act (1935) 49 Stat. 457.
2
Bufford on the Wagner Act (1941), 169.
3
2 Teller, Labor disputes and Collective Bargaining (1940), 762.
Pasted from <http://www.lawphil.net/judjuris/juri1967/sep1967/gr_l-20303_1967.html>

NESTLE PHIL V NLRC (Union of FIL-IPRO Employees)
12:15 AM
NESTLE PHIL V NLRC (Union of FIL-IPRO Employees)

193 SCRA 504
GRINO-AQUINO; February 4, 1999
NATURE
Petition for certiorari
FACTS
- Four CBAs w ith Nestle Philippines (Nestle) expired on June 30, 1987. While the parties w ere negotiating, the employees resorted
to a "slow down" and w alk-outs prompting Nestle to shut dow n the factory. Marathon collective bargaining negotiations betw een the
parties ensued.
- The UFE declared a bargaining deadlock. The Secretary of Labor assumed jurisdiction and issued a return to w ork order. In spite
of that order, the union struck, w ithout notice. Nestle retaliated by dismissing the union officers and members of the negotiating
panel w ho participated in the illegal strike. The NLRC affirmed the dismissals. UFE filed a notice of strike on the same ground of
CBA deadlock and ULP.
- After conciliation efforts of the NCMB yielded negative results, the dispute w as certified to the NLRC by the Secretary of Labor.
The NLRC issued a resolution regarding the union's demand for liberalization of the company's retirement plan for its w orkers. Both
the parties’ MFR w ere denied.
- Nestle filed this petition for certiorari alleging that since its retirement plan is non-contributory, it has the sole and exclusive
prerogative to define the terms of the plan because the w orkers have no vested and demandable rights there under, the grant being
not a contractual obligation but merely gratuitous. At most the company can only be directed to maintain the same but not to change
its terms. It should be left to the discretion of the company on how to improve or modify the same.
ISSUE
WON the Retirement Plan is a collective bargaining issue
HELD
YES.
Ratio The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to the operation of the plan,
does not make it a non-issue in the CBA negotiations.
Reasoning Almost all of the benefits granted to its employees under the CBA (salary increases, rice allow ances, midyear bonuses,
13th & 14th month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation, sick & other leaves
w ith pay) are non-contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the Union's
demand to increase the benefits due the employees under said plan is a valid CBA issue.
- The improvement of the existing Retirement Plan w as one of the original CBA proposals submitted by the UFE to Nestle. The
union's original proposal w as to modify the existing plan by including a provision for early retirement. The company did not question
the validity of that proposal as a collective bargaining issue but merely offered to maintain the existing noncontributory retirement
plan w hich it believed to be still adequate for the needs of its employees and competitive w ith those existing in the industry. The
union thereafter modified its proposal, but the company w as adamant. Consequently, the impasse on the retirement plan became
one of the issues certified to the NLRC for compulsory arbitration.
- The inclusion of the retirement plan in the CBA as part of the package of economic benefits extended by the company to its
employees gives it "a consensual character" so that it may not be terminated or modified at w ill by either party. Employees have a
vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally
w ithdraw, eliminate or diminish such benefits.
Disposition Petition is DISMISSED.

G.R. No. 91231 February 4, 1991

NESTLÉ PHILIPPINES, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO
EMPLOYEES, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondent.
GRIÑO-AQUINO, J.:p
Nestlé Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC),
Second Division, in Cert. Case No. 0522 entitled, "In Re: Labor Dispute of Nestlé Philippines, Inc."
insofar as it modified the petitioner's existing non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were

represented by the respondent, Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services
(TUPAS),
all expired on June 30, 1987.
Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office.
In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued.
On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the
Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the
union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro
factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the
union officers and members of the negotiating panel who participated in the illegal strike. The NLRC
affirmed the dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair
labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the
union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory
workers. The union assailed the validity of those agreements and filed a case of unfair labor practice
against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.
After the parties had filed their pleadings, the NLRC issued a resolution on June 5, 1989, whose
pertinent disposition regarding the union's demand for liberalization of the company's retirement plan
for its workers, provides as follows:
xxx xxx xxx
7. Retirement Plan
The company shall continue implementing its retirement plan modified as follows:
a) for fifteen years of service or less — an amount equal to 100% of the employee's monthly salary
for every year of service;
b) more than 15 but less than 20 years — 125% of the employee's monthly salary for every year of
service;
c) 20 years or more — 150% of the employee's monthly salary for every year of service. (pp.
58-59,Rollo.)
Both parties separately moved for reconsideration of the decision.
On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With
regard to the Retirement Plan, the NLRC held:
Anent management's objection to the modification of its Retirement Plan, We find no cogent reason
to alter our previous decision on this matter.
While it is not disputed that the plan is non-contributory on the part of the workers, tills does not
automatically remove it from the ambit of collective bargaining negotiations. On the contrary, the
plan is specifically mentioned in the previous bargaining agreements (Exhibits "R-1" and "R-4"),
thereby integrating or incorporating the provisions thereof to the agreement. By reason of its
incorporation, the plan assumes a consensual character which cannot be terminated or modified at
will by either party. Consequently, it becomes part and parcel of CBA negotiations.
However, We need to clarify Our resolution on this issue. When we increased the emoluments in the
plan, the conditions for the availment of the benefits set forth therein remain the same. (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this petition for certiorari, alleging that since its retirement
plan is non-contributory, it (Nestlé) has the sole and exclusive prerogative to define the terms of the
plan "because the workers have no vested and demandable rights thereunder, the grant thereof
being not a contractual obligation but merely gratuitous. At most the company can only be directed
to maintain the same but not to change its terms. It should be left to the discretion of the company on
how to improve or mollify the same" (p. 10, Rollo).
The Court agrees with the NLRC's finding that the Retirement Plan was "a collective bargaining
issue right from the start" (p. 109, Rollo) for the improvement of the existing Retirement Plan was
one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president
of Nestlé Philippines. The union's original proposal was to modify the existing plan by including a
provision for early retirement. The company did not question the validity of that proposal as a
collective bargaining issue but merely offered to maintain the existing non-contributory retirement
plan which it believed to be still adequate for the needs of its employees, and competitive with those
existing in the industry. The union thereafter modified its proposal, but the company was adamant.
Consequently, the impassé on the retirement plan become one of the issues certified to the NLRC

Consequently, the impassé on the retirement plan become one of the issues certified to the NLRC
for compulsory arbitration.
The company's contention that its retirement plan is non-negotiable, is not well-taken. The NLRC
correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as
part of the package of economic benefits extended by the company to its employees to provide them
a measure of financial security after they shall have ceased to be employed in the company, reward
their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual
character" to the plan so that it may not be terminated or modified at will by either party (p.
32, Rollo).
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to
the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact,
almost all of the benefits that the petitioner has granted to its employees under the CBA — salary
increases, rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other leaves with pay — are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue.
The deadlock between the company and the union on this issue was resolvable by the Secretary of
Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute (Art. 263,
subparagraph [i] of the Labor Code).
The petitioner's contention, that employees have no vested or demandable right to a non-
contributory retirement plan, has no merit for employees do have a vested and demandable right
over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally
withdraw, eliminate or diminish such benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon.
Leogardo, et al., 122 SCRA 267).
This Court ruled similarly in Republic Cement Corporation vs. Honorable Panel of Arbitrators, G.R.
No. 89766, Feb. 19, 1990:
. . . Petitioner's claim that retirement benefits, being noncontributory in nature, are not proper
subjects for voluntary arbitration is devoid of merit. The expired CBA previously entered into by the
parties included provisions for the implementation of a "Retirement and Separation Plan." it is only to
be expected that the parties would seek a renewal or an improvement of said item in the new CBA.
In fact, the parties themselves expressly included retirement benefits among the economic issues to
be resolved by voluntary arbitration. Petitioner is estopped from now contesting the validity of the
increased award granted by the arbitrators. (p. 145, Rollo.)
The NLRC's resolution of the bargaining deadlock between Nestlé and its employees is neither
arbitrary, capricious, nor whimsical. The benefits and concessions given to the employees were
based on the NLRC's evaluation of the union's demands, the evidence adduced by the parties, the
financial capacity of the Company to grant the demands, its longterm viability, the economic
conditions prevailing in the country as they affect the purchasing power of the employees as well as
its concommitant effect on the other factors of production, and the recent trends in the industry to
which the Company belongs (p. 57, Rollo). Its decision is not vitiated by abuse of discretion.
WHEREFORE, the petition for certiorari is dismissed, with costs against the petitioner.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.
Cruz, J., took no part.
Pasted from <http://www.lawphil.net/judjuris/juri1991/feb1991/gr_91231_1991.html>

LUZON DEVELOPMENT BANK V ASSOCIATION OF DEVELOPMENT
BANK EMPLOYEES
12:15 AM
LUZON DEVELOPMENT BANK V ASSOCIATION OF DEVELOPMENT BANK EMPLOYEES

249 SCRA 162
ROMERO; October 6, 1995
NATURE
Petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing
the same
FACTS
-Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees (ALDBE) submitted to arbitration to
resolve WON the company has violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated
April 1994, on promotion
-The parties agreed to submit their respective Position Papers on December 1-15, 1994.
-Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995.
-LDB, on the other hand, failed to submit its Position Paper
-On May 24, 1995, w ithout LDB's Position Paper, the Voluntary Arbitrator rendered a decision finding that the Bank has not adhered
to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion.
-Hence, this petition
ISSUE
WON the Voluntary Arbitrator erred in finding that the Bank has not adhered to the Collective Bargaining Agreement provision nor
the Memorandum of Agreement on promotion
(the Court referred the case to the CA so the issue w asn’t resolved…it said that elevating a decision or aw ard of a voluntary
arbitrator to the Supreme Court on a petition for certiorari is in effect equating the voluntary arbitrator with the NLRC or the Court of
Appeals, w hich in its view is illogical and imposes an unnecessary burden upon it)
HELD
(only obiter… pertaining to topic)
-In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of
evidence and arguments presented by such parties w ho have bound themselves to accept the decision of the arbitrator as finaland
binding.
-Arbitration may either be compulsory or voluntary.
-Compulsory arbitration is a system w hereby the parties to a dispute are compelled by the government to forego their right to strike
and are compelled to accept the resolution of their dispute through arbitration by a third party.
-Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary

-Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary
arbitration clause in their collective agreement, to an im partial third person for a final and binding resolution.
-Ideally, arbitration aw ards are supposed to be complied w ith by both parties w ithout delay, such that once an aw ard has been
rendered by an arbitrator, nothing is left to be done by both parties but to comply w ith the same. After all, they are presumed to have
freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually
acceptable arbitrator w ho shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's
decision.
-In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein provisions
for a m achinery for the resolution of grievances arising from the interpretation or implementation of the CBA or company
personnel policies.
-For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a
procedure for their selection, preferably from those accredited by the National Conciliation and Mediation Board (NCMB).
Disposition
The Court resolved to REFER this case to the Court of Appeals

G.R. No. 120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement provision and the
Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position
Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining
Agreement provision nor the Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their dispute
through arbitration by a third party. 1The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution. 2Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done
by both parties but to comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen
a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. 3 For this purpose,
parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or
include a procedure for their selection, preferably from those accredited by the National Conciliation
and Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive
original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or

original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or
implementation of the CBA and (2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over
other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders." 6 Hence, while there is an express
mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to
an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and
imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that
the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:
xxx xxx xxx
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards
of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions,
including the Securities and Exchange Commission, the Employees Compensation Commission and
the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission, 11 that the broader term "instrumentalities" was purposely included in the
above-quoted provision.

above-quoted provision.
An "instrumentality" is anything used as a means or agency. 12 Thus, the terms governmental
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a
government acts, or by which a certain government act or function is performed. 13 The word
"instrumentality," with respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function. 14 An individual person, like an
administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the same
manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court,16 and a
trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities 18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution
or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor
arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known
as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made,
apply to the court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
SO ORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and
Hermosisima, Jr., JJ., concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J. are on leave.
Footnotes
1 Seide, A Dictionary of Arbitration (1970).
2 Ibid.
3 Art. 260, Labor Code.
5 Art. 262-A, par. 4, Labor Code.
7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas,
Inc. v. Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as amended by Sec. 9, R.A. 6715.
11 Executive Order No. 1008.
12 Laurens Federal Sav. and Loan Ass'n v. South Carolina Tax Commission, 112 S.E. 2d 716, 719,
236 S.C. 2.
13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).
14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.

14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.
15 In re Turncock's Estate, 300 N.W. 155, 156, 238 Wis. 438.
16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.
17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.
18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).
19 Section 23, R.A. No. 876.
Pasted from <http://www.lawphil.net/judjuris/juri1995/oct1995/gr_120319_1995.html>

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PAL V.

PHIL. AIRLINES V NLRC (PALEA)

Republic of the Philippines

G.R. No. 85985 August 13, 1993

Labor Arbitration Page 1

Labor Arbitration Page 2

Labor Arbitration Page 3

Labor Arbitration Page 4

G.R. No. L-53515 February 8, 1989

Labor Arbitration Page 6

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Labor Arbitration Page 7

GTE Directories Corp. v. GTE Directories Corp. Employees Union (1991)

G.R. No. 76219 May 27, 1991

Labor Arbitration Page 8

Labor Arbitration Page 9

Labor Arbitration Page 10

Labor Arbitration Page 11

Labor Arbitration Page 12

Labor Arbitration Page 13

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Labor Arbitration Page 14

Republic of the Philippines

G.R. No. 127598 January 27, 1999

Labor Arbitration Page 15

Labor Arbitration Page 16

Labor Arbitration Page 17

Labor Arbitration Page 18

Labor Arbitration Page 19

Labor Arbitration Page 20

Labor Arbitration Page 21

Labor Arbitration Page 22

Labor Arbitration Page 23

Based on the above-quoted table, specifically under the column "RANK-AND-FILE," it is

Labor Arbitration Page 24

Labor Arbitration Page 25

Labor Arbitration Page 26

Labor Arbitration Page 27

Labor Arbitration Page 28

Labor Arbitration Page 29

Labor Arbitration Page 30

Labor Arbitration Page 31

Labor Arbitration Page 32

Labor Arbitration Page 33

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Labor Arbitration Page 34

San Miguel Corp. Employees Union-PTGWO v. Bersamira (1990)

SAN MIGUEL EMPLOYEES UNION V BERSAMIRA

Re: ER Functions and ULP (p30 of Outline)

Disposition Petition is GRANTED.

G.R. No. 87700 June 13, 1990

Labor Arbitration Page 35

Labor Arbitration Page 36

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Labor Arbitration Page 38

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Labor Arbitration Page 39

Gold City Integrated Port Service, Inc. v. NLRC (1995)

G.R. No. 103560 July 6, 1995

Labor Arbitration Page 40

Labor Arbitration Page 41

Labor Arbitration Page 42

Labor Arbitration Page 43