Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 110007 October 18, 1996

HOLY CROSS OF DAVAO COLLEGE, INC., petitioner,

vs.
HON. JEROME JOAQUIN, in his capacity as Voluntary Arbitrator, and HOLY CROSS OF
DAVAO COLLEGE UNION-KALIPUNAN NG MANGGAGAWANG PILIPINO
(KAMAPI), respondents.

NARVASA, C.J.:p

A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into
between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an educational
institution, and the affiliate labor organization representing its employees, respondent Holy Cross of
Davao College Union-KAMAPI (hereafter KAMAPI). Shortly before the expiration of the agreement,
KAMAPI President, Jose Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his
union's desire to renew the agreement, withal seeking its extension for two months, or until July 31,
1989, on the ground that the teachers were still on summer vacation and union activities necessary
or incident to the negotiation of a new agreement could not yet be conducted. 1 Holy Cross President
Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being allowable under the
collective bargaining agreement. 2

On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for the purpose of
electing a new set of union officers, at which Rodolfo Gallera won election as president. To the
surprise of many, and with resultant dissension among the membership, Gallera forthwith initiated
discussions for the union's disaffiliation from the KAMAPI Federation.

Gallera's group subsequently formed a separate organization known as the Holy Cross of Davao
College Teachers Union, and elected its own officers. For its part, the existing union, KAMAPI, sent
to the School its proposals for a new collective bargaining contract; this it did on July 31, 1989, the
expiry date of the two-month extension it had sought. 3

Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees
the corresponding union dues and special assessments (payable by union members), and agency
fees (payable by non-members), in accordance with the check-off clause of the CBA, 4 prompting
KAMAPI, on September 1, 1989, to demand an explanation.

In the meantime, there ensued between the two unions a full-blown action on the basic issue of
representation, which was to last for some two years. It began with the filing by the new union
(headed by Gallera) of a petition for certification election in the Office of the Med-Arbiter. 5 KAMAPI
responded by filing a motion asking the Med-Arbiter to dismiss the petition. On August 31, 1989, KAMAPI
also advised Holy Cross of the election of a new set officers who would also comprise its negotiating
panel. 6
The Med-Arbiter denied KAMAPI's motion to dismiss, and ordered the holding of a certification
election. On appeal, however, the Secretary of Labor reversed the Med-Arbiter's ruling and ordered
the dismissal of the petition for certification election, which action was eventually sustained by this
Court in appropriate proceedings.

After its success in the certification election case KAMAPI presented, on April 11, 1991, revised
bargaining proposals to Holy Cross; 7 and on July 11, 1991, it sent a letter to the School asking for its
counter-proposals. The School replied, that it did not know if the Supreme Court had in fact affirmed the
Labor Secretary's decision in favor of KAMAPI as the exclusive bargaining representative of the School
employees, whereupon KAMAPI's counsel furnished it with a copy of the Court's resolution to that effect;
and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its counter-proposals as
regards the terms of a new CBA.

In response, Holy Cross declared that it would take no action towards a new CBA without a
"definitive ruling" on the proper interpretation of Article I of the old CBA which should have expired
on May 31, 1989 (but, as above stated, had been extended for two months at the KAMAPI's
request). Said Article provides inter alia for the automatic extension of the CBA for another period of
three (3) years counted from its expiration, if the parties fail to agree on a renewal, modification or
amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the
meaning and import of said Article I had earlier been sought by the College president, Emilio Palma
Gil. 8

KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for
refusing to bargain despite the former's repeated demands; and on the following day, it filed a notice
of strike with the National Mediation and Conciliation Board. 9

KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator Agapito J. Adipen on
October 2, 1991. Several conciliation meetings were thereafter held between them, and when these
failed to bring about any amicable settlement, the parties agreed to submit the case to voluntary
arbitration. 10 Both parties being of the view that the dispute did indeed revolve around the interpretation
of 1 and 2 of Article I of the CBA, they submitted position papers explicitly dealing with the following
issues presented by them for resolution to the voluntary arbitrator:

a. Whether or not the CBA which expired on May 31, 1989 was automatically
renewed and did not serve merely as a holdover CBA; and

b. Whether or not there was refusal to negotiate on the part of the Holy Cross of
Davao College.

On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI.

Respecting the matter of the automatic renewal of the bargaining agreement, the Voluntary
Arbitrator ruled that the request for extension filed by KAMAPI constituted seasonable notice of its
intention to renew, modify or amend the agreement, which it could not however pursue because of
the absence of the teachers who were then on summer vacation. 11 He rejected the contention of Holy
Cross that KAMAPI had unreasonably delayed (until July 31, 1989) the submission of bargaining
proposals, opining that the delay was partly attributable to the School's prolonged inaction on KAMAPI's
request for extension of the CBA. He also ruled that Holy Cross was estopped from claiming automatic
renewal of the CBA because it ceased to implement the check-off provision embodied in the CBA,
declaring said School's argument that a "definitive ruling" by the DOLE on the correct interpretation of
the automatic-extension clause of the old CBA was a condition precedent to negotiations for a new CBA
to be a mere afterthought set up to justify its refusal to bargain with KAMAPI after the latter had proven
that it was the legally-empowered bargaining agent of the school employees. In the dispositive portion of
his award, the Voluntary Arbitrator ordered Holy Cross to:

1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao
College Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains
the collective bargaining agent of the permanent and regular teachers of said
educational institution; (and)

2. pay to the Union the amount equivalent to the uncollected union dues from August
1989 up to the time respondent shall have concluded a new CBA with the Union, it
appearing that respondent stopped complying with the CBA's check-off provisions as
of said date. 12

The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, Region XI, Davao
City, to make the proper computation of the union dues to be paid by management to the
complainant union.

Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary Arbitrator's decision on the
following grounds, viz.: 13

1. That the voluntary arbitrator erred and acted in grave abuse of discretion
amounting to lack or excess of jurisdiction in ordering petitioner to pay the union the
uncollected union dues to private respondent which was not even an issue submitted
for voluntary arbitration, resulting in serious violation of due process.

2. That the voluntary arbitrator erred in considering that petitioner refused to

negotiate with (the) Union, contrary to the records and evidence presented in the
case.

The Voluntary Arbitrator's conclusion that petitioner Holy Cross had, in light of the evidence on
record, failed to negotiate with KAMAPI, adjudged as the collective bargaining agent of the school's
permanent and regular
teachers is a conclusion of fact that the Court will not review, the inquiry at bar being limited to the
issue of whether or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or
with grave abuse of discretion; nor does the Court see its way clear, after analyzing the record, to
pronouncing that reasoned conclusion to have been made so whimsically, capriciously,
oppressively, or unjustifiably in other words, attended by grave abuse of discretion amounting to
lack or excess of jurisdiction as to call for extension of the Court's correcting hand through the
extraordinary writ of certiorari. Said finding should therefore be, and is hereby, sustained.

Now, concerning its alleged failure to observe the check-off provisions of the collective bargaining
agreement, Holy Cross contends that this was not one of the issues raised in the arbitration
proceedings; that said issue was therefore extraneous and improper; and that even assuming the
contrary, it (Holy Cross) had not in truth violated the CBA.

Holy Cross asserts that it could not comply with the check-off provision because contrary to
established practice prior to August, 1989, KAMAPI failed to submit to the college comptroller every
8th day of the month, a list of employees from whom union dues and the corresponding agency fees
were to be deducted; further, that there was an uncertainty as to the recognized bargaining agent
with whom it would deal a matter settled only upon its receipt of a copy of this Court's Resolution
on July 18, 1991 and in any case, the Voluntary Arbitrator's order for it to pay to the union the
uncollected employees' dues or agency fees would amount to the union's unjust enrichment. 14
KAMAPI maintains, on the other hand, that the check-off issue was raised in the position paper it
submitted in the voluntary arbitration proceedings; and that in any case, the issue was intimately
connected with those submitted for resolution and necessary for complete adjudication of the rights
and obligations of the parties; 15 and that said position paper had alleged the manifest bad faith of
management in not providing information as to who were regular employees, thereby precluding
determination of teachers eligible for union membership.

Disregarding the objection of failure to seasonably set up the check-off question the factual
premises thereof not being indisputable, and technical objections of this sort being generally
inconsequential in quasi-judicial proceedings the issues here ultimately boil down to whether or
not an employer is liable to pay to the union of its employees, the amounts it failed to deduct from
their salaries as union dues (with respect to union members) or agency fees (as regards those
not union members) in accordance with the check-off provisions of the collective bargaining
contract (CBA) which it claims to have been automatically extended.

A check-off is a process or device whereby the employer, on agreement with the union recognized
as the proper bargaining representative, or on prior authorization from its employees, deducts union
dues or agency fees from the latter's wages and remits them directly to the union. 16 Its desirability to
a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Court has
acknowledged that the system of check-off is primarily for the benefit of the union and, only indirectly, of
the individual laborers. 17 When so stipulated in a collective bargaining agreement, or authorized in
writing by the employees concerned the Labor Code and its Implementing Rules recognize it to be the
duty of the employer to deduct sums equivalent to the amount of union dues from the employees' wages
for direct remittance to the union, in order to facilitate the collection of funds vital to the role of the union
as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be
mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the
local union which continues to represent the employees under the terms of a CBA, and not to the parent
association from which it has disaffiliated. 18

The legal basis of check-off is thus found in statute or in contract. 19

Statutory limitations on check-offs
generally require written authorization from each employee to deduct wages; however, a resolution
approved and adopted by a majority to the union members at a general meeting will suffice when the right
to check-off has been recognized by the employer, including collection of reasonable assessments in
connection with mandatory activities of the union, or other special assessments and extraordinary fees. 20

Authorization to effect a check-off of union dues is co-terminous with the union affiliation or
membership of employees. 21 On the other hand, the collection of agency fees in an amount equivalent
to union dues and fees, from employees who are not union members, is recognized by Article 248 (e) of
the Labor Code. No requirement of written authorization from the non-union employee is imposed. The
employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction
of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the
union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the
established principle that non-union employees may not unjustly enrich themselves by benefiting from
employment conditions negotiated by the bargaining union. 22

No provision of law makes the employer directly liable for the payment to the labor organization of
union dues and assessments that the former fails to deduct from its employees' salaries and wages
pursuant to a check-off stipulation. The employer's failure to make the requisite deductions may
constitute a violation of a contractual commitment for which it may incur liability for unfair labor
practice. 23 But it does not by that omission, incur liability to the union for the aggregate of dues or
assessments uncollected from the union members, or agency fees for non-union employees.
Check-offs in truth impose an extra burden on the employer in the form of additional administrative
and bookkeeping costs. It is a burden assumed by management at the instance of the union and for
its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance.
But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but
the individual employee. It is a personal obligation not demandable from the employer upon default
or refusal of the employee to consent to a check-off. The only obligation of the employer under a
check-off is to effect the deductions and remit the collections to the union. The principle of unjust
enrichment necessarily precludes recovery of union dues or agency fees from the employer,
these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining union.
Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate
that the union itself undertake the collection of union dues and assessments from its members (and
agency fees from non-union employees); this, of course, without prejudice to suing the employer for
unfair labor practice.

There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the
union dues and assessments, and agency fees that it had failed to deduct from its employees'
salaries on the proffered plea that contrary to established practice, KAMAPI had failed to submit to
the college comptroller every 8th day of the month, a list of employees from whose pay union dues
and the corresponding agency fees were to be deducted.

WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the
Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent to the uncollected union
dues and agency fees from August 1989 up to the time a new collective bargaining agreement is
concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the Voluntary
Arbitrator is hereby AFFIRMED.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Melo, Francisco and Panganiban, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. 113204-05 September 16, 1996

BARBIZON PHILIPPINES, INC., petitioner,

vs.
NAGKAKAISANG SUPERVISOR NG BARBIZON PHILIPPINES, INC. NAFLU AND THE HON.
UNDERSECRETARY OF LABOR BIENVENIDO E. LAGUESMA, respondents.

KAPUNAN, J.:

This is a petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court to set
aside and annul the decision and orders of the public respondent dated 11 February 1993, 4 March
1993, 16 June 1993 and 25 November 1993, respectively.

The facts which gave rise to the present petition are as follows:

On 27 June 1988, petitioner (formerly the Philippine Lingerie Corporation) filed a petition for
certification election among its rank-and-file employees (docketed as NCR-OD-M-6-349-88). As a
consequence thereof, two (2) unions sought recognition, namely: PHILIPPINE LINGERIE
WORKERS UNION-ALAB and BUKLOD NG MANGGAGAWA NG PHILIPPINE LINGERIE
CORPORATION.

In one of the pre-election conferences, PHILIPPINE LINGERIE WORKERS UNION-ALAB moved for
the exclusion of a number of employees who were allegedly holding supervisory positions.

Only 28 July 1988, Med-Arbiter Rasidali C. Abdullah issued an order denying the motion of
PHILIPPINE LINGERIE CORPORATION WORKERS UNION-ALAB for lack of merit. Said order was
appealed to the Bureau of Labor Relations (BLR) which issued an Order on 16 November 1988, the
dispositive portion of which declares:

WHEREFORE, premises considered, the Order dated 28 July 1988 is

hereby affirmed. Accordingly, to ensure fairness to all the parties and in order to
hasten the proceedings, let the election be conducted under the supervision of the
Labor Organization Division, this Office, which is hereby directed to immediately set
this case for pre-election conference.

SO ORDERED. 1

PHILIPPINE LINGERIE WORKERS UNION-ALAB filed two (2) separate motions for reconsideration
of the above order which were consolidated and treated in an Order dated 22 December 1988, the
decretal portion of which reads:
 WHEREFORE, premises considered, the twin motions for reconsideration are hereby
deemed denied for lack of merit. Accordingly, let the pre-election conference
preparatory to the certification election proceed without further delay.

No further motion of similar nature shall be hereafter entertained.

SO ORDERED. 2

No further appeal of the above-quoted order was interposed, thus it became final and executory.

On 3 May 1989, a certification election was conducted with the votes of "supervisors and
confidential" employees being challenged. Thus, the certification election showed the following
results:

1. Philippine Lingerie Workers Union-ALAB 318 votes

2. Buklod Ng Manggagawa Ng Philippine
Lingerie Corporation 412 votes
3 No Union 17 votes
4. Challenged Supervisors/Confidential
Employees 99 votes

TOTAL VALID VOTES CAST 855 votes

SPOILED BALLOTS 12 votes

PHILIPPINE LINGERIE WORKERS UNION-ALAB filed an election protest which was later
formalized on 25 May 1989. In the meantime, on 9 May 1989, BUKLOD moved for the opening of
the challenged ballots.

On 20 July 1989, the BLR, through its director Pura Ferrer-Calleja, issued an Order, the dispositive
portion of which reads:

WHEREFORE, premises considered, the protest and challenged (sic) of the

Alyansang Likha Ng Mga Anak Ng Bayan (ALAB) are hereby denied for lack of merit.

Accordingly, let the challenged votes of the supervisors and confidential employees
be opened in the presence of the parties under the supervision of the Labor
Organization Division (LOD) on 26 July 1989 at 9:00 A.M., Bureau of Labor
Relations.

SO ORDERED. 3

With the above-quoted order, the challenged votes were opened on 3 August 1989 and the results
were as follows:

Philippine Lingerie Workers Union-ALAB 4 votes

Buklod Ng Manggagawa Ng Phil. Lingerie
Corp. 84 votes
No Union 6 votes
Spoiled 5 votes
 TOTAL VOTES CAST 99 votes

PHILIPPINE LINGERIE WORKERS UNION-ALAB filed a motion for reconsideration of the BLR's
Order of 20 July 1989 which, however, was denied in an Order dated 22 August 1989, the pertinent
portion of which states:

xxx xxx xxx

This time movant should now be convinced that the alleged supervisory and
confidential employees are more rank-and-file employees.

As early as Resolution dated 16 November 1988, the Bureau had already ruled that
the alleged supervisors are not managerial employees (rec. p. 154, First Folder). On
motion for reconsideration the Bureau affirmed the aforementioned Resolution in its
Order dated 22 December 1988 (rec. p. 302. First Folder). And on 20 July 1989,
when R.A. 6715 was already in full force and effect, the Bureau in resolving the
protest of ALAB declared that the job descriptions of the alleged supervisors and
confidential employees do not in any way suggest that they are indeed supervisors or
managerial employees (rec. p. 39, Second Folder).

xxx xxx xxx

WHEREFORE, the motion for reconsideration is hereby denied and the Buklod Ng
Manggagawa Ng Philippine Lingerie Corporation (now, Barbizon Philippines, Inc.) is
hereby certified as the sole and exclusive bargaining representative of all the regular
rank-and-file employees of Barbizon Philippines, Inc. (formerly Philippine Lingerie
Corporation).

The management of Barbizon Philippines, Inc. is hereby directed to immediately start

negotiating for a collective bargaining agreement (CBA) with the said union.

No further motion of any nature shall hereinafter be entertained by this Office.

SO ORDERED. 4

Not satisfied with the aforequoted order, PHILIPPINE LINGERIE WORKERS UNION-ALAB
appealed to the Secretary of Labor but on 26 September 1989, the same was withdrawn and a
motion to dismiss appeal with prejudice was filed by the same union. There being no more obstacle
to collective bargaining, petitioner negotiated with BUKLOD as the sole and exclusive bargaining
representative.

A Collective Bargaining Agreement (CBA) was signed by petitioner and BUKLOD which was
effective for five (5) years or until 18 November 1994. 5

While the CBA was still in force, several employees organized themselves into the Nagkakaisang
Supervisors Ng Barbizon Philippines, Inc. (NSBPI) and the 0Nagkakaisang Excluded Monthly Paid
Employees Ng Barbizon, Philippines, Inc. (NEMPEBPI) allegedly because they were excluded from
the coverage of the existing CBA between petitioner and BUKLOD.
Two (2) separate petitions for certification election were filed by NSBPI and NEMPEBPI. The petition
of the former was raffled to Med-Arbiter Renato D. Parungo and the latter to Med-Arbiter Paterno D.
Adap. Both cases were dismissed 6

NSBPI appealed to the Office of the Secretary of Labor. On 29 December 1992, public respondent
Undersecretary Bienvenido Laguesma denied the same for lack of merit. NSBPI moved for
reconsideration on 15 January 1993.

On 11 February 1993, the Office of the Secretary of Labor, through public respondent rendered the
questioned Decision, the dispositive portion of which reads:

WHEREFORE the Motion for Reconsideration of Nagkakaisang Superbisor ng

Barbizon Philippines, Inc. (NSBPI) and the appeal of Nagkakaisang Excluded
Monthly Paid Employees ng Barbizon Philippines, Inc. (NEMPEBPI) are hereby
granted and the Orders of this Office and the Med-Arbiter dated 29 December 1992
and 01 September 1992, respectively, are hereby SET ASIDE.

Accordingly, a new Order is hereby entered in the above-captioned cases directing

the conduct of certification election among the subject employees excluded from the
coverage of the bargaining unit of the existing CBA of rank and file employees
aforestated, not otherwise excluded/disqualified by law. The choices are as follows:

1. Nagkakaisang Superbisor ng Barbizon Philippines, Inc. (NSBPI)

2. Nagkakaisang Excluded Monthly Paid Employees ng Barbizon Philippines, Inc.

(NEMPEBPI); and,

3. No Union.

Let, therefore, the entire records of these consolidated cases be forwarded to the
Regional Office of origin for the immediate conduct of certification election, subject to
the usual pre-election conference.

SO ORDERED. 7

Petitioner filed a motion for reconsideration but the same was denied 8 A second motion for
reconsideration was filed by petitioner but it was likewise denied, this time, with finality. 9 Undaunted,
petitioner filed a third motion for reconsideration which was also denied for lack of merit. 10

Hence, this petition wherein the following issues were raised:

THE RESPONDENT "SUPERVISORS" LOCAL UNION CANNOT FORM A

SUPERVISORS UNION, WHEN THEIR MEMBERS ARE INCOMPATIBLY "RANK-
AND-FILE EMPLOYEES"; MUCH LESS, CAN IT SEEK REPRESENTATION
STATUS FOR SUPERVISORS, WHEN THE EMPLOYEES THEY WANT TO
REPRESENT FOR COLLECTIVE BARGAINING PURPOSES BELONG IN THE
"APPROPRIATE BARGAINING UNIT" OF RANK-AND-FILE EMPLOYEES ON THE
"EMPLOYER WIDE UNIT", WHICH ALREADY HAS A CERTIFIED BARGAINING
 AGENT: BUKLOD NG MANGGAGAWA NG PHILIPPINE LINGERIE
CORPORATION.

WORSE, SINCE THE MEMBERS OF THE RESPONDENT LOCAL UNION BELONG

TO THE APPROPRIATE BARGAINING UNIT OF RANK-AND-FILE EMPLOYEES,
THE EXISTING COLLECTIVE BARGAINING AGREEMENT WHICH COVERS
THEM, IS (A) "BAR" TO ITS CERTIFICATION ELECTION PETITION 11

Barbizon Philippines, Inc. alleges that this petition only assails the resolution of the public
respondent regarding NSBPI and does not include the NEMPEBPI, the union of the excluded
monthly paid employees because the separate motion for reconsideration it filed in connection with
the latter has not yet been resolved by the NLRC.

On 8 February 1994, this Court issued a temporary restraining order, enjoining the Bureau of Labor
Relations from setting the pre-election conference in Case No. OS-MA-A-215-92-93 entitled "In Re:
Petition for Certification Election among the Supervisory Employees of Barbizon Philippines, Inc.,
Nagkakaisang Supervisor Ng Barbizon Philippines, Inc. OBRERO" and from conducting further
proceedings in the aforesaid cases. 12

During the pendency of the petition, the CBA expired. However, no other agreement between the
parties was made known to this Court, thus, in accordance with Article XX of the CBA, it continues to
be in force and shall govern the relations between the parties thereto. 13

We find no merit in the petition.

Petitioner maintains its stance that the petition for certification election filed by the Nagkakaisang
Supervisor ng Barbizon Philippines, Inc. NAFLU (NSBPI) must necessarily fail because the
employees designated as "supervisors" cannot legally form a supervisors' union by virtue of the
BLR's final decision dated 22 August 1989 declaring the abovementioned employees mere rank and
file workers. Being part of the rank and file, petitioner avers that said employees belong to the
"employer wide unit," which is the appropriate bargaining unit of all its rank and file employees and
which is represented by the Buklod ng Manggagawa ng Philippine Lingerie Corporation (BUKLOD)
as the sole certified bargaining agent.

Petitioner further asserts that the Undersecretary of Labor committed grave abuse of discretion in
granting NSBPI's petition for certification election as this was tantamount to an unjustifiable reversal
of the BLR's final ruling that the subject employees are not supervisory employees, but merely rank
and file, due to the nature of their duties and functions.

Petitioner's reasoning is flawed, proceeding as it does from the wrong premise. Petitioner obstinately
believes that NSBPI's petition for certification election was granted because the employees carrying
the appellation "supervisor" were deemed supervisory employees. The status of the subject
employees, however, is not the issue in the case at bar. Their status as "supervisors" is not in
dispute. The aforestated decision of the BLR dated 22 August 1989 has settled with finality that said
employees are merely rank and file and this fact has been accepted by the petitioning union
NSBPI. 14 NSBPI's petition for certification election was granted because the subject employees,
including petitioner's monthly paid employees, were expressly excluded from the bargaining unit and from
the coverage of the CBA executed between petitioner and BUKLOD, as clearly stated therein. 15 This is
the real reason behind the certification election in question. Unfortunately, this was not successfully
debunked by petitioner, which chose to focus, albeit erroneously, on the status of the subject employees.
The exclusion of petitioner's "supervisors" from the bargaining unit of the rank-and-file employees
indiscriminately curtailed the right to these employees to self-organization and representation for
purposes of collective bargaining, a right explicitly mandated by our labor laws 16 and "accorded the
17
highest consideration." In the recent case of Golden Farms, Inc. v. Secretary of Labor, 18 we aptly
declared:

In the case at bench, the evidence established that the monthly paid rank-and-file
employees of petitioner primarily perform administrative or clerical work. In
contradistinction, the petitioner's daily paid rank-and-file employees mainly work in
the cultivation of bananas in the fields. It is crystal clear the monthly paid rank-and-
file employees of petitioner have very little in common with its daily paid rank-and file
employees in terms of duties and obligations, working conditions, salary rates, and
skills. To be sure, the said monthly paid rank-and-file employees have even been
excluded from the bargaining unit of the daily paid rank-and-file employees. This
dissimilarity of interests warrants the formation of a separate and distinct bargaining
unit for the monthly paid rank-and-file employees of the petitioner. To rule otherwise
would deny this distinct class of employees the right to self-organization for purposes
of collective bargaining. Without the shield of an organization, it will also expose
them to the exploitations of management. . . . (Emphasis ours)

In the case at bar, BUKLOD cannot successfully act as the bargaining agent of and duly represent
petitioner's "supervisor" employees since the latter were expressly excluded from the appropriate
bargaining unit.

Petitioner's reliance on the case of Pagkakaisa ng mga Manggagawa sa Triumph Int'l.-United

Lumber and General Workers of the Phils. v. Ferrer-Calleja 19 is misplaced. The aforecited case
upholds the "one union-one company" policy, thus:

Once again, we enunciate that the proliferation of unions in an employer unit is

discouraged as a matter of policy unless compelling reasons exist which deny a
certain and distinct class of employees the right to self-organization for purpose of
collective bargaining. (See General Rubber & Footwear Corporation v. Bureau of
Labor Relations, 155 SCRA 283 [1987].) 20 (Emphasis ours.)

As clearly indicated in the aforequoted decision, the "one union one company" rule is not without
exception. The exclusion of the subject employees from the rank-and-file bargaining unit and the
CBA is indefinitely a "compelling reason" for it completely deprived them of the chance to bargain
collectively with petitioner and are thus left with no recourse but to group themselves into a separate
and distinct bargaining unit and form their own organization. The rationale behind the exception to
the aforementioned policy is further elucidated in Knitjoy Manufacturing, Inc. v. Ferrer-Calleja: 21

1. The suggested bias of the Labor Code in favor of the one company-one union
policy, anchored on the greater mutual benefits which the parties could derive,
especially in the case of employees whose bargaining strength could undeniably be
enhanced by their unity and solidarity but diminished by their disunity, division and
dissension, is not without exceptions.

xxx xxx xxx

The usual exception, of course, is where the employer unit has to give way to the
other units like the craft unit, plant unit, or a subdivision thereof; the recognition of
these exceptions takes into accountant the policy to assure employees of the fullest
 freedom in exercising their rights. Otherwise stated, the one company-one union
policy must yield to the right of the employees to form unions or associations for
purposes not contrary to law, to self-organization and to enter into collective
bargaining negotiations, among others, which the Constitution guarantees.
(Emphasis ours.)

The receipt by petitioner's "supervisor" employees of certain benefits under the CBA between
BUKLOD and petitioner is not sufficient to deny the petition for certification election filed by the labor
organization formed by the excluded employees. It is not equivalent to and does not compensate for
the denial of the right of the excluded employees to self-organization and collective bargaining. We
concur with the findings of the Undersecretary of Labor, thus:

It is not disputed that the members of both petitioning unions NSBPI and NEMPEBPI
are excluded from the coverage of the existing CBA entered into between the
respondent BPI and Buklod ng mga Manggagawa ng Barbizons Philippines, Inc.
(BUKLOD) (pp. 84-85, folder II, records). Thus, respondent BPI being privy to the
said exclusion has to accept the inescapable consequences of its act of depriving the
excluded employees of their right to self-organization for the purpose of collective
bargaining. We find immaterial and irrelevant the allegation of hereby respondent BPI
to the effect that the benefit being enjoyed by the rank and file employees covered by
the existing CBA are extended/accorded to the excluded employees. Indeed, what is
crucial and of paramount consideration is the fact that the excluded rank and file
employees are afforded the right to bargain collectively.

The Supreme Court in the cases of General Rubber and Footwear Corporation vs.
Bureau of Labor Relations, et al., G.R. No. 74262, October 29, 1987; and Manila Bay
Spinning Mills, J and P Coats, Manila Bay, Inc. vs. Hon. Pura Ferrer-Calleja, G.R.
No. 80910, August 1, 1988, ruled that the employees excluded from the coverage of
the CBA, who not being excluded by law, have the right to bargain collectively.
Further, the Supreme Court aptly stated that:

The allegation that some benefits under the existing CBA were
extended to the monthly paid employees, even if true will not
preclude them from entering into a CBA of their own. Neither is the
inconvenience that may befall petitioner for having to administer two
CBAs an excuse for depriving the monthly paid employees of their
constitutionally guaranteed right to collective bargaining. (Emphasis
supplied.) 22

The petition for certification election cannot likewise be deterred by the "contract-bar rule," 23 which
finds no application in the present case. The petitioning union NSBPI is not questioning the majority
status of Buklod as the incumbent bargaining agent of petitioner's rank and file employees. The petition
for certification election is addressed to a separate bargaining unit the excluded employees of
petitioner. We agree with the ruling of the Undersecretary of Labor, thus:

Certainly, one who has been instrumental in the denial of a right otherwise enjoyable
by a rank and file, as in membership in its appropriate bargaining unit, cannot now
say that he ought to be included in the existing bargaining unit of the rank and file
just because that "rank and file" employee is now seeking representation for himself
as well as those who like him were specifically excluded from the coverage of the
CBA. A rank and file employee, irrespective of his job designation and in whatever
form his wages are paid has the unbridled right to the exercise of self-organization.
 This right cannot, like a chattel, be compromised in the bargaining table so as to
deprive him of the same in violation of the constitutional mandate. In this wise, the
claim as to the applicability of the contract bar doctrine could have not gained
ground. A contract bar applies in a situation where the petition is directed towards
one and the same bargaining unit. This does not appear to be so in the case
considering the built-in-limitation in the CBA excluding the workers sought to be
represented by herein petitioner from its coverage, albeit, their being admittedly rank
and file employees. On the same line of reasoning, neither would the substantial
mutual interest test hold. So too, is the claim against union turncoatism. In the latter
case, the emergence thereof is farfetched considering the defined boundaries of the
bargaining units concerned. Let it be stressed, that the certification election as
ordered would only affect those rank and file employees who are excluded from the
coverage of the existing CBA. Those who are already represented in the existing
collective bargaining agreement may rest secured in the bargaining unit that
considers them as members of its family. 24 (Emphasis ours.)

The right to self organization and collective bargaining is an integral part of the protection to labor
provision embodied in our Constitution, the essence of which is aptly expressed in Tropical Hut
Employees' Union-CGW v.Tropical Hut Food Market, Inc.: 25

All employees enjoy the right to self-organization and to form and join labor
organizations of their own choosing for the purpose of collective bargaining and to
engage in concerted activities for their mutual aid or protection. This is a fundamental
right of labor that derives its existence from the Constitution. In interpreting the
protection to labor and social justice provisions of the Constitution and the labor laws
or rules or regulations, we have always adopted the liberal approach which favors
the exercise of labor rights.

Finally, we take this opportunity to reiterate the standing rule that a certification election is the sole
concern of the workers, hence, an employer lacks the personality to dispute the same. In Golden
Farms, Inc. v. Secretary of Labor, 26 we held:

Finally, we note that it was petitioner company that filed the motion to dismiss the
petition for election. The general rule is that an employer has no standing to question
a certification election since this is the sole concern of the workers. Law and policy
demand that employers take a strict, hands-off stance in certification elections. The
bargaining representative of employees should be chosen free from any extraneous
influence of management. A labor bargaining representative, to be effective, must
owe its loyalty to the employees alone and to no other.

WHEREFORE, premises considered, the petition for certiorari is DISMISSED and the Temporary
Restraining Order issued on 8 February 1994 is hereby LIFTED.

SO ORDERED.

Padilla, Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 74425 October 7, 1986

BULLETIN PUBLISHING CORPORATION, petitioner,

vs.
HON. AUGUSTO S. SANCHEZ, CRESENCIANO B. TRAJANO, PRIMITIVA C. BATERBONIA,
ROLANDO G. OLALIA, ISIDRO S. MOLINA, EDUARDO C. MORALES, ZACARIAS F. FLORES,
JR., PEDRO M. GALLO, LORETO F. MIJARES, LUIS B. ILAGAN, ERNESTO O. VALDEZ,
EUGENIO L. RIVERA, BENJAMIN B. BERNAS, LORETO D. DE LOS REYES, BONIFACIO A.
SOTELO, FE F. ARRE, FELIPE R. OLARTE, RAYMOND T. RIVERA, STEWART C. CACHO,
DOMINADOR V. CURAY, FERNANDO S. LAZARO, ERNESTO L. BAUTISTA, VICENTE O.
ABANILLA, JOSE B. BERNAL, RAMIRO A. NEBRES, ALCANTARA S. DE LA PAZ and LUIS F.
GARCIA, respondents.

Guillermo S. Santos for petitioner.

Mildred Ramos for respondent Bulletin Publishing Corporation Supervisors Union.

Olalia, Dimapilis & Associates for private respondents.

ALAMPAY, J.:

Petitioner Bulletin Publishing Corporation invokes the equity jurisdiction of this Court in this case for
certiorari, prohibition, and for preliminary injunction, with a plea for the issuance of an ex-
parte restraining order prohibiting private respondents from declaring a strike. The purpose of
Petitioner is to prevent the private respondents, members of the Bulletin Publishing Corporation
Supervisors Union (BSU), from staging a strike against the said publishing company.

Petitioner also prays that this Court declare null and void Registration Certificate No. 10547 issued
by the Ministry of Labor and Employment to the aforestated Supervisors Union or BSU.

The crux of the dispute in the present case is whether or not supervisors in petitioner company may,
for purposes of collective bargaining, form a union separate and distinct from the existing union
organized by the rank-and-file employees of the same company.

Petitioner corporation has been engaged in the business of newspaper and magazine publishing for
over half a century. its current publications include the national daily "Bulletin Today" (now Manila
Daily Bulletin), the tabloid "Tempo", and a weekly magazine called "Panorama". The total number of
the personnel complement of the said firm (exclusive of the editorial staff, contract workers and
casuals, etc.), constituting the rank-and-file regular members, is said to be over three hundred
persons. The supervisory employees number forty-eight. About three hundred employees belonging
to the rank-and-file had previously formed the Bulletin Employees Union. This labor organization
(BEU) presently administers their current Collective Bargaining Agreement which began on July 15,
1984 and remain effective up to July 15, 1987. Ever since, there has been only one bargaining unit
in the petitioner company and this is the BEU - the union of the rank-and-file employees. Supervisory
employees were never included in said bargaining unit nor had they ever sought inclusion in the said
BEU labor union, much less registered any protest or challenged to their non-inclusion therein.

On March 12, 1986, 25 out of 48 supervisors in the Bulletin Publishing Corporation formed a labor
union and adopted a charter therefor, calling themselves members of the "Bulletin Publishing
Corporation Supervisors Union" or BSU. A petition for registration of BSU, was filed with the Ministry
of Labor and Employment. On March 26, 1986, Registration Certificate No. 10547-LC was issued.
On March 31, 1986, a letter was sent to the management of petitioner corporation by BSU giving
notice of the registration of the BSU and demanding its recognition as the sole bargaining agent of
all the supervisors in the company. BSU supervisors union, is, at present, an affiliate of the National
Federation of Labor Unions (NAFLU) and the Kilusang Mayo Union (KMU). BSU is alleged to be
supported in its strike move by the said groups. (Petition, p. 13, Rollo, p. 10).

On April 8, 1986, a petition for direct certification was filed by the BSU as the bargaining
representative of the supervisors. On April 12, 1986, a notice of strike by BSU was filed with the
Ministry of Labor due to certain acts allegedly performed by petitioner which BSU claims, in effect, to
be union busting and unfair labor practices. Refusing to recognize the BSU, the Bulletin Publishing
Corporation filed a petition dated April 25, 1986, seeking cancellation of the registration of the BSU
on the ground that Article 246 of the Labor Code and Section 11 of Rule II, Book V of the
Implementing Rules thereof, prohibit supervisors from forming labor organizations.

As the supervisors threatened to strike on May 12, 1986, following the expiration of the fifteen-day
cooling-off period, petitioner was prompted to file a petition with the Ministry of Labor, urging therein
that said office assume jurisdiction in the matter of the impending strike. When the Minister of Labor
failed to exercise his jurisdiction or act on the matter, petitioner then felt that the remedy it seeks
should be sought from this Court because, further resort to the Ministry of Labor may be construed
as a tacit recognition by petitioner of the supervisors union (BSU) which would be inconsistent with
petitioner's challenge to the assertion of BSU to exist as a legitimate labor union.

Petitioner invokes the equity jurisdiction of this Court, claiming that a strike by the BSU which it
considers a bogus union and whose registration and operation is challenged as against public policy
and legal prohibitions, will cause untold harm on herein petitioner which is engaged in publishing
daily periodicals.

In accordance with our Resolution dated May 12, 1986, a hearing of petitioner's motion for
preliminary injunction was scheduled for May 14, 1986, with a temporary restraining order being then
issued. This Court enjoined the private respondents from proceeding with their contemplated strike.
Respondents were likewise required to comment on the petition. The corresponding separate
Comment of the public and private respondents were later timely submitted to the Court.

Considering the allegations contained in the petition, the issues raised, and the arguments adduced
by the parties, the Court resolves to give due course to the petition, and to consider the separate
Comment of both private and public respondents as their Answer to the petition.

In the light of the factual background of this case, We are constrained to hold that the supervisory
employees of petitioner firm may not, under the law, form a supervisors union, separate and distinct
from the existing bargaining unit (BEU), composed of the rank-and-file employees of the Bulletin
Publishing Corporation. It is evident that most of the private respondents are considered managerial
employees. Also it is distinctly stated in Section 11, Rule I I, of the Ommibus Rules Implementing the
Labor Code, that supervisory unions are presently no longer recognized nor allowed to exist and
operate as such.
Article 246 of the Labor Code explicitly excludes managerial employees from the right of self-
organization, the right to form, join and assist labor organizations. A perusal of the job descriptions
corresponding to the private respondents as outlined in the petition, clearly reveals the private
respondents to be managers, purchasing officers, personnel officers, property officers, supervisors,
cashiers, heads of various sections and the like. The nature of their duties gives rise to the
irresistible conclusion that most of the herein private respondents are performing managerial
functions (Petition, pp. 5-6; Rollo, pp. 6-7). Their responsibilities inherently require the exercise' of
discretion and independent judgment as supervisors. They possess the power and authority to lay
down or exercise management policies. Managerial employees are those vested with powers or
prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees, or to effectively recommend such managerial
actions. All employees not falling within this definition are considered rank-and file employees
(Article 212 (k), Labor Code). We further find very plainly stressed in Section 11, Rule II, Book V of
the Omnibus Rules implementing the same Labor Code, that "All existing supervisory unions and
unions of security guards shall, upon the effectivity of the Code, cease to operate as such and their
registration certificates shall be deemed automatically cancelled ... Members of supervisory unions
who do not fall within the definition of managerial employees shall become eligible to join or assist
the rank-and- file labor organization and if none exists, to form or assist in the forming of such rank-
and-file organizations." (Emphasis supplied).

It is, therefore, evident that while mention is made of supervisors unions with reference to those
existing before the enactment of the Labor Code, greater significance must attach to the fact that
under the present Labor Code all these supervisory unions should, after the effectivity of the Labor
Code on January 1, 1975, cease to operate and that the registration certificate of any such
supervisors union should even be deemed to be automatically cancelled. It is also clear that such of
those supervisory employees who do not assume any managerial function may join or assist an
existing rank-and-file union or if none exists, to join or assist in the formation of such rank-and-file
organization.

It follows as a logical conclusion that the members of the Bulletin Supervisory Union, wholly
composed of supervisors employed by petitioner corporation, are not QUALIFIED to organize a
Labor Union of their own. Aside from this reason, is the fact that there is already an existing
legitimate labor union, the BEU, which enjoys a current collective bargaining agreement with the
petitioner publishing company.

What is pointed out under the law, is that employees who discharge managerial functions, as well as
the supervisory employees who do not yet fall within the definition of managerial employees, are
prohibited from organizing themselves into a labor union constituted for the purpose of acting as a
collective bargaining unit. To sanction the recognition of the Supervisors Union of private
respondents, which paradoxically or inadvertently received a registration certificate from the Ministry
of Labor, would be for this Court to accept and tolerate a manifest violation of the Labor Code. The
rationale for this inhibition has been stated to be, because if these managerial employees would
belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in
view of evident conflict of interests. The Union can also become company- dominated with the
presence of managerial employees in Union membership.

The submission of the private respondents that they do not actually perform duties which are
managerial in character is untenable. Firstly, the status of respondents as "managerial employees" is
readily reflected by their long years of acquiescence to their exclusion: (a) from the rank-and-file unit
of employees and from membership in the Bulletin Publishing Corporation Employees Union; and (b)
from their coverage in the current and past Collective Bargaining Agreements.
Acquiescence by private respondents to a classification and situation far different from the rank-and-
file employees for a long and unceasing period of time obviously indicates that their exclusion from
the rank-and-file union was upon their awareness that their duties place them in a category different
from those to which the rank-and-file employees pertain. It is significant that only 25 of
the 48 employees who are said to be managers and/or supervisors, belatedly insist in forming a new
and separate union.

Petitioner surmises that the motivation behind this belated move is possibly because private
respondents herein are apprehensive that they might be adversely affected by policies which the
new management of petitioner corporation introduced to streamline its business operation and
eliminates weaknesses in the corporate structure affecting revenue and profitability. Understandably,
the purpose behind the formation of the Union would be to gain leverage to pressure Management to
desist from the contemplated measures.

Private respondents are incorrect when they manifest in their comment to the petition that they
"could be appropriately classified as supervisory employees and, therefore, are eligible to organize
their own union but are ineligible to join the union of their subordinates", citing Adamson and
Adamson versus CIR, L-35120, January 31, 1984, 127 SCRA 268 (Private Respondents' Comment
to the Petition, p. 2, dated May 23, 1986, Rollo, p. 83).

The reference made by private respondents to said case of Adamson and Adamson versus CIR
(supra), and the pronouncements made therein that "supervisory employees of an employer cannot
join any labor organization of employees under their supervision but may validly form a separate
organization of their own" no longer can be invoked for the benefit of private respondents. As aptly
countered by the petitioner in its manifestation dated June 2, 1986, submitted through its counsel:

2. Adamson & Adamson vs. CIR, 127 SCRA 268. In quoting from this decision of this
Honorable Court, private respondents intentionally deleted the phrase "under the
Industrial Peace Act" obviously to mislead this Honorable Court into believing that up
to now supervisors still have the right to form unions. This right has been disallowed,
disauthorized and discontinued under Article 246 of the New Labor Code and
Section 11, Rule II. Book Five of the Implementing Rules. (Rollo, p. 106)

Indeed, the Industrial Peace Act or Republic Act 875, referred to in said Adamson, et al. vs. CIR
case, became effective on January 17, 1953. It has, however, been superseded and supplanted by
the present Labor Code which took effect on January 1, 1975. What should be applied now are the
specific provisins of the Omnibus Rules Implementing the Labor Code which have been already
above-quoted (supra). In fact, no less than the public respondents herein, represented by the
present Solicitor General, in this regard, even state in their Comment to the Petition, the following:

The only issue determinative of the present controversy is whether or not the
supervisors in petitioner company may form a union for purposes of collective
bargaining separate and distinct from that of the rank-and-file unit.

It is our submission that they may not. The New Labor Code recognizes two principal
groups of employees, namely, managerial and the rank-and- file group. Thus, Art.
212 (k) provides:

Managerial employee' is one who is vested with powers or prerogatives to lay down
and execute management policies and/or to hire, transfer, suspend, lay-off, recall,,
discharge, assign or discipline employees, or to effectively recommend such
 managerial actions. All employees not falling within this definition are considered
rank and file employees for purposes of this Book. (Emphasis supplied)

In amplification of the aforequoted provisions of the law, Sec. 11 of Rule II, Book V of
the Omnibus Rules Implementing the Labor Code did away with existing Supervisors
Union, classifying the members thereof as neither managerial or rank-and-file
employees depending on the work they perform. If they discharge managerial
functions they are prohibited from forming or joining any labor organization. If they do
not perform managerial work, they may join or assist the rank- and-file union and, if
none exists, they may form one such rank-and-file organization. From these, one can
readily infer that the law no longer recognizes supervisory Unions.

A perusal of the job descriptions of private respondents as outlined in the petition

shows that most of them do not perform managerial work. Hence, although not
qualified to organize a labor union of their own, they may join the certified rank-and-
file organization in the Company, which has a current collective bargaining
agreement to expire on July 15, 1987.

On the query of this Honorable Court regarding the new policy of the MOLE, if any,
with respect to Supervisory Unions, the BLR Director in his reply letter dated May 21,
1986 to our letter of May 14, 1986 (copy of said letter is hereto attached as Annex
"A") supports the view that under the Labor Code and its implementing rules,
supervisory unions cannot organize as a labor unit separate from that of the rank-
and-file organization. (Emphasis supplied)

However, he points out that on a number of occasions, the Bureau has allowed the
registration of certain categories of non-managerial employees which include
supervisors who are not performing managerial functions similar to that of the non-
managerial members of the Bulletin Publishing Corporation Supervisors Union
(BPCSU) At any rate, he states that "there is as yet no decree, executive order or
issuance, whether draft or in force, which expressly modified the provision of the
Labor Code on supervisory unions. (Rollo, pp. 89-91)

The foregoing discussion of public respondents will reflect and emphasize the lack of any legal basis
of the assumption made by private respondents that they may organize a supervisory union of their
own, distinct and separate from the existing union of the rank-and-file employees of the Bulletin
Publishing Corporation.

In view of these premises, and considering the stand taken no less by respondent director
Cresenciano B. Trajano, in his aforestated reply-letter to Assistant Solicitor General Amado D.
Aquino, dated May 21, 1986 (Rollo, pp. 93-' 95), as disclosed to this Court, the petition for
cancellation of Certificate No. 10547, issued on March 26, 1986 by the Ministry of Labor and
Employment, said to be still pending in that office, ought therefore to be now acted upon thereat.

Finally, it is averred by petitioner that the resort to strike by private respondents is untimely and
premature because of the pendency of a case with the Ministry of Labor docketed as NCR-LRD-4-
166-88 which private respondents themselves filed and which is for direct certification of said
supervisors union as the bargaining representative of the supervisors. This assertion of petitioner
should be up held. Article 265, paragraph 2 of the Labor Code expressly provides that "no stake or
lock-out shall be declared ... during the pendency of cases involving the same grounds for the strike
or lock-out." (Emphasis supplied).
Private respondents declare that the primary reasons which prompted their filing of a notice of strike
on April 8, 1986, are the arbitrary and discriminatory retirement of four (4) members of the
supervisors union effective April 17, 1986, namely: Jose B. Bernal, Ramiro A. Nebres, Alcantara S.
de la Paz and Luis F. Garcia, who were among those who initiated the formation of their union; as
well as the immediate promotion of some members of the union to executive positions in order to
remove the said persons promoted from the coverage of, or membership from the supervisory union.
Private respondents charge that these acts are tantamount to union busting tactics and constitute
unfair labor practices that warrant a strike.

Furthermore, private respondents claim that petitioner does not have any definite policy governing
the retirement of supervisory employees as distinguished from rank-and-file employees. Under the
Collective Bargaining Agreement currently in effect, rank-and- file employees may be retired upon
reaching 25 years of service or 60 years of age, at the management's option. It is claimed that this
policy cannot or has never been applied to supervisors who are not members of the rank-and-file
Bulletin Employees union.

We are not persuaded by private respondents' submissions. The main issues in this case are the
legality of a supervisory union and the certificate of registration issued therefor, and the validity of a
threatened strike by members of such union. The matter of the retirement of the four retirees is only
an incident to the case. It may not be used to skirt the real question of the legality of the organization
of a supervisors union. Parenthetically, it is said that three out of the retirees, Messrs. Garcia, de la
Paz and Bernal collected their retirement benefits (Rollo, p. 65), rendering the alleged ill-motives
behind their retirement untenable. This matter cannot be invoked by private respondents herein as
an indication of union busting practice of petitioner, absent any showing of protest by the said
retirees themselves.

Respondents make much ado that petitioner does not have a definite policy regarding the retirement
of supervisory employees. Petitioner has satisfactorily shown to this Court that it has been
management policy to likewise apply the provisions of the Collective Bargaining Agreement (CBA)
between petitioner and the rank-and-file union (BEU), also to supervisors. According to the
uncontroverted submission of petitioner, the provisions of Section 4 in relation to Section 1 of Article
X of the said CBA, have been repeatedly applied to supervisory personnel even if they are not
included in the scope of the CBA. The pertinent. provisions on retirement are as follows:

Section 4. The COMPANY, at its option retire an employee or worker who has
rendered 25 years of service or who has reached the age of 60 years in his last
birthday by paying him full benefits provided in Section 1 of this Article.

Section 1. Any employee in the active service of the COMPANY as of the date of
signing of this Agreement whose service with the COMPANY is terminated for any
reason other than those enumerated in A article 283 of Presidential Decree No.
442 as amended, shall be entitled to gratuity pay in an amount equivalent to one
month's pay for every year of continuous service based on the salary as of the date
of termination. Such gratuity shall not be in addition to, but shall be in lieu of, the
termination pay benefits to which the employee or worker is entitled under the Labor
Code of the Philippines, or any similar legislation, provided that if the benefits to
which the employee or worker may be entitled under such statute are greater than
that provided in the Article, the employee or worker shall receive the greater amount.
(Emphasis ours).

The aforestated sections explicitly declare, in no uncertain terms, that retirement of an employee
may be done upon initiative and option of the management. And where there are cases of voluntary
retirement, the same is effective only upon the approval of management. The fact that there are
some supervisory employees who have not yet been retired after 25 years with the company or have
reached the age of sixty merely confirms that it is the singular prerogative of management, at its
option, to retired supervisors or rank-and-file members when it deems fit. There should be no unfair
labor practice committed by management if the retirement of private respondents were made in
accord with the agreed option. That there were numerous instances wherein management exercised
its option to retire employees pursuant to the aforementioned provisions, appears to be a fact which
private respondents have not controverted. It seems only now when the question of the legality of a
supervisors union has arisen that private respondents attempt to inject the dubious theory that the
private respondents are entitled to form a union or go on strike because there is allegedly no
retirement policy provided for their benefit. As above noted, this assertion does not appear to have
any factual basis.

It is even more untenable for private respondents to suggest that the "sudden promotion" of the
supervisors union members to executive positions was intended to remove them from the coverage
of or from membership in the supervisory union. The promotion of employees to managerial or
executive positions rests upon the discretion of management. Managerial positions are offices which
can only be held by persons who have the trust of the corporation and its officers. It is the
prerogative of management to promote any individual working within the company to a higher
position. It should not be inhibited or prevented from doing so. A promotion which is manifestely
beneficial to an employee should not give rise to a gratuitous speculation that such a promotion was
made simply to deprive the union of the membership of the promoted employee, who after all
appears to have accepted his promotion.

We find nothing improper in the promotions made by the petitioner company. These were but in
implementation of petitioner's well-considered policy on retirement and promotions intended to
improve the morale of lower and middle management ranks by promoting those specially deserving
before they are eventually retired. This then would allow subsequent promotions of their
replacements from lower ranks. As petitioner explains, these retirements and promotions were but in
accord with a carefully studied and pre-established policy which had been implemented during the
past years and unrelated to and without connection with the organization of private respondents'
Union, BSU.

In sum, where concerted activities are aimed at compelling an employer to ignore the clear mandate
of the Labor Code, as in the instant case, grounds based on equity may be invoked from the courts
in order to restrain the questioned activities. We cannot remain oblivious to the fact that a strike, as
that contemplated by the supervisors union against petitioner can cause irreparable injury to its
publications, diminish goodwill and seriously affect its continuity with its regular readers.

Trade unionism and strikes are legitimate weapons of labor granted by our statutes. But when these
instruments are utilized by managerial/supervisory employees in violation of existing labor laws, the
misuse of these tactics can be the subject of judicial intervention to forestall grave injury to a
business enterprise.

WHEREFORE, the temporary restraining order issued by this Court, dated May 12, 1986, enjoining
the private respondents from declaring or staging a strike against the petitioner herein, in all its
forms, including walk-out, mass leave, or any kind of activity that will lead to a work stoppage, is
hereby made permanent. The public respondents are also directed to act upon and resolve, at the
earliest possible time and in the light of the discussion and pronouncements made by the Court in
this case, the petition dated April 25, 1986, submitted by the petitioner herein for the cancellation of
Bulletin Publishing Corporation Supervisors Union Registration Certificate No. 105-47-LC.
SO ORDERED.

Fernan, Narvasa, * Gutierrez, Jr. and Paras, JJ., concur.

Feria, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 79025. December 29, 1989.

BENGUET ELECTRIC COOPERATIVE, INC., petitioner,

vs.
HON. PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, and BENECO
EMPLOYEES LABOR UNION, respondents.

E.L. Gayo & Associates for petitioner.

CORTES, J.:

On June 21, 1985 Beneco Worker's Labor Union-Association of Democratic Labor Organizations
(hereinafter referred to as BWLU- ADLO) filed a petition for direct certification as the sole and
exclusive bargaining representative of all the rank and file employees of Benguet Electric
Cooperative, Inc. (hereinafter referred to as BENECO) at Alapang, La Trinidad, Benguet alleging,
inter alia, that BENECO has in its employ two hundred and fourteen (214) rank and file employees;
that one hundred and ninety-eight (198) or 92.5% of these employees have supported the filing of
the petition; that no certification election has been conducted for the last 12 months; that there is no
existing collective bargaining representative of the rank and file employees sought to represented by
BWLU- ADLO; and, that there is no collective bargaining agreement in the cooperative.

An opposition to the petition was filed by the Beneco Employees Labor Union (hereinafter referred to
as BELU) contending that it was certified as the sole and exclusive bargaining representative of the
subject workers pursuant to an order issued by the med-arbiter on October 20,1980; that pending
resolution by the National Labor Relations Commission are two cases it filed against BENECO
involving bargaining deadlock and unfair labor practice; and, that the pendency of these cases bars
any representation question.

BENECO, on the other hand, filed a motion to dismiss the petition claiming that it is a non-profit
electric cooperative engaged in providing electric services to its members and patron-consumers in
the City of Baguio and Benguet Province; and, that the employees sought to be represented by
BWLU-ADLO are not eligible to form, join or assist labor organizations of their own choosing
because they are members and joint owners of the cooperative.
On September 2, 1985 the med-arbiter issued an order giving due course to the petition for
certification election. However, the med-arbiter limited the election among the rank and file
employees of petitioner who are non-members thereof and without any involvement in the actual
ownership of the cooperative. Based on the evidence during the hearing the med-arbiter found that
there are thirty-seven (37) employees who are not members and without any involvement in the
actual ownership of the cooperative. The dispositive portion of the med-arbiter's order is as follows:

WHEREFORE, premises considered, a certification election should be as it is hereby

ordered to be conducted at the premises of Benguet, Electric Cooperative, Inc., at
Alapang, La Trinidad, Benguet within twenty (20) days from receipt hereof among all
the rank and file employees (non-members/consumers and without any involvement
in the actual ownership of the cooperative) with the following choices:

1. BENECO WORKERS LABOR UNION-ADLO

2. BENECO EMPLOYEES LABOR UNION

3. NO UNION

The payroll for the month of June 1985 shall be the basis in determining the qualified
voters who may participate in the certification election to be conducted.

SO ORDERED. [Rollo, pp. 22-23.]

BELU and BENECO appealed from this order but the same was dismissed for lack of merit on
March 25,1986. Whereupon BENECO filed with this Court a petition for certiorari with prayer for
preliminary injunction and /or restraining order, docketed as G.R. No. 74209, which the Supreme
Court dismissed for lack of merit in a minute resolution dated April 28, 1986.

The ordered certification election was held on October 1, 1986. Prior to the conduct thereof
BENECO's counsel verbally manifested that "the cooperative is protesting that employees who are
members-consumers are being allowed to vote when . . . they are not eligible to be members of any
labor union for purposes of collective bargaining; much less, to vote in this certification election."
[Rollo, p. 28]. Petitioner submitted a certification showing that only four (4) employees are not
members of BENECO and insisted that only these employees are eligible to vote in the certification
election. Canvass of the votes showed that BELU garnered forty-nine (49) of the eighty-three (83)
"valid" votes cast.

Thereafter BENECO formalized its verbal manifestation by filing a Protest. Finding, among others,
that the issue as to whether or not member-consumers who are employees of BENECO could form,
assist or join a labor union has been answered in the affirmative by the Supreme Court in G.R. No.
74209, the med-arbiter dismissed the protest on February 17, 1987. On June 23, 1987, Bureau of
Labor Relations (BLR) director Pura Ferrer-Calleja affirmed the med-arbiter's order and certified
BELU as the sole and exclusive bargaining agent of all the rank and file employees of BENECO.

Alleging that the BLR director committed grave abuse of discretion amounting to lack or excess of
jurisdiction BENECO filed the instant petition for certiorari. In his Comment the Solicitor General
agreed with BENECO's stance and prayed that the petition be given due course. In view of this
respondent director herself was required by the Court to file a Comment. On April 19, 1989 the Court
gave due course to the petition and required the parties to submit their respective memoranda.
The main issue in this case is whether or not respondent director committed grave abuse of
discretion in certifying respondent BELU as the sole and exclusive bargaining representtative of the
rank and file employees of BENECO.

Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid certification election, "at least
a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the
majority of the valid votes cast shall be certified as the exclusive bargaining agent of all workers in
the unit." Petitioner BENECO asserts that the certification election held on October 1, 1986 was null
and void since members-employees of petitioner cooperative who are not eligible to form and join a
labor union for purposes of collective bargaining were allowed to vote therein.

Respondent director and private respondent BELU on the other hand submit that members of a
cooperative who are also rank and file employees are eligible to form, assist or join a labor union
[Comment of Respondent Director, p. 4; Rollo, p. 125; Comment of BELU, pp. 9-10; Rollo pp. 99-
100].

The Court finds the present petition meritorious.

The issue of whether or not employees of a cooperative are qualified to form or join a labor
organization for purposes of collective bargaining has already been resolved and clarified in the case
of Cooperative Rural Bank of Davao City, Inc. vs. Ferrer Calleja, et al. [G.R. No. 7795, September
26,1988] and reiterated in the cases ofBatangas-Electric Cooperative Labor Union v. Young, et
al. [G.R. Nos. 62386, 70880 and 74560 November 9, 1988] and San Jose City Electric Service
Cooperative, Inc. v. Ministry of Labor and Employment, et al. [G.R. No. 77231, May 31, 1989]
wherein the Court had stated that the right to collective bargaining is not available to an employee of
a cooperative who at the same time is a member and co-owner thereof. With respect, however, to
employees who are neither members nor co-owners of the cooperative they are entitled to exercise
the rights to self-organization, collective bargaining and negotiation as mandated by the 1987
Constitution and applicable statutes.

Respondent director argues that to deny the members of petitioner cooperative the right to form,
assist or join a labor union of their own choice for purposes of collective bargaining would amount to
a patent violation of their right to self-organization. She points out that:

Albeit a person assumes a dual capacity as rank and file employee and as member
of a certain cooperative does not militate, as in the instant case, against his/her
exercise of the right to self-organization and to collective bargaining guaranteed by
the Constitution and Labor Code because, while so doing, he/she is acting in his/her
capacity as rank and file employee thereof. It may be added that while the
employees concerned became members of petitioner cooperative, their status
employment as rank and filers who are hired for fixed compensation had not
changed. They still do not actually participate in the management of the cooperative
as said function is entrusted to the Board of Directors and to the elected or appointed
officers thereof. They are not vested with the powers and prerogatives to lay down
and execute managerial policies; to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees; and/or to effectively recommend such managerial
functions [Comment of Respondent Director, p. 4; Rollo, p. 125.]

Private respondent BELU concurs with the above contention of respondent director and, additionally,
claims that since membership in petitioner cooperative is only nominal, the rank and file employees
who are members thereof should not be deprived of their right to self-organization.
The above contentions are untenable. Contrary to respondents' claim, the fact that the members-
employees of petitioner do not participate in the actual management of the cooperative does not
make them eligible to form, assist or join a labor organization for the purpose of collective bargaining
with petitioner. The Court's ruling in the Davao City case that members of cooperative cannot join a
labor union for purposes of collective bargaining was based on the fact that as members of the
cooperative they are co-owners thereof. As such, they cannot invoke the right to collective
bargaining for "certainly an owner cannot bargain with himself or his co-owners." [Cooperative Rural
Bank of Davao City, Inc. v. Ferrer-Calleja, et al., supra]. It is the fact of ownership of the cooperative,
and not involvement in the management thereof, which disqualifies a member from joining any labor
organization within the cooperative. Thus, irrespective of the degree of their participation in the
actual management of the cooperative, all members thereof cannot form, assist or join a labor
organization for the purpose of collective bargaining.

Respondent union further claims that if nominal ownership in a cooperative is "enough to take away
the constitutional protections afforded to labor, then there would be no hindrance for employers to
grant, on a scheme of generous profit sharing, stock bonuses to their employees and thereafter
claim that since their employees are not stockholders [of the corporation], albeit in a minimal and
involuntary manner, they are now also co-owners and thus disqualified to form unions." To allow this,
BELU argues, would be "to allow the floodgates of destruction to be opened upon the rights of labor
which the Constitution endeavors to protect and which welfare it promises to promote." [Comment of
BELU, p. 10; Rollo, p. 100].

The above contention of respondent union is based on the erroneous presumption that membership
in a cooperative is the same as ownership of stocks in ordinary corporations. While cooperatives
may exercise some of the rights and privileges given to ordinary corporations provided under
existing laws, such cooperatives enjoy other privileges not granted to the latter [See Sections 4, 5, 6,
and 8, Pres. Decree No. 175; Cooperative Rural Bank of Davao City v. Ferrer-Calleja, supra].
Similarly, members of cooperatives have rights and obligations different from those of stockholders
of ordinary corporations. It was precisely because of the special nature of cooperatives, that the
Court held in the Davao City case that members-employees thereof cannot form or join a labor union
for purposes of collective bargaining. The Court held that:

A cooperative ... is by its nature different from an ordinary business concern being
run either by persons, partnerships, or corporations. Its owners and/or members are
the ones who run and operate the business while the others are its employees. As
above stated, irrespective of the number of shares owned by each member they are
entitled to cast one vote each in deciding upon the affairs of the cooperative. Their
share capital earn limited interest. They enjoy special privileges as-exemption from
income tax and sales taxes, preferential right to supply their products to State
agencies and even exemption from the minimum wage laws.

An employee therefore of such a cooperative who is a member and co-owner thereof

cannot invoke the right to collective bargaining for certainly an owner cannot bargain
with himself or his co-owners.

It is important to note that, in her order dated September 2, 1985, med-arbiter Elnora V. Balleras
made a specific finding that there are only thirty-seven (37) employees of petitioner who are not
members of the cooperative and who are, therefore, the only employees of petitioner cooperative
eligible to form or join a labor union for purposes of collective bargaining [Annex "A" of the Petition,
p. 12; Rollo, p. 22]. However, the minutes of the certification election [Annex "C" of the Petition:
Rollo, p. 28] show that a total of eighty-three (83) employees were allowed to vote and of these,
forty-nine (49) voted for respondent union. Thus, even if We agree with respondent union's
contention that the thirty seven (37) employees who were originally non-members of the cooperative
can still vote in the certification election since they were only "forced and compelled to join the
cooperative on pain of disciplinary action," the certification election held on October 1, 1986 is still
null and void since even those who were already members of the cooperative at the time of the
issuance of the med-arbiter's order, and therefore cannot claim that they were forced to join the
union were allowed to vote in the election.

Article 256 of the Labor Code provides, among others, that:

To have a valid, election, at least a majority of all eligible voters in the unit must have
cast their votes. The labor union receiving the majority of the valid votes cast shall be
certified as the exclusive bargaining agent of all workers in the unit . . . [Italics
supplied.]

In this case it cannot be determined whether or not respondent union was duly elected by the eligible
voters of the bargaining unit since even employees who are ineligible to join a labor union within the
cooperative because of their membership therein were allowed to vote in the certification election.
Considering the foregoing, the Court finds that respondent director committed grave abuse of
discretion in certifying respondent union as the sole and exclusive bargaining representative of the
rank and file employees of petitioner cooperative.

WHEREFORE, the petition is hereby GRANTED and the assailed resolution of respondent director
is ANNULLED. The certification election conducted on October 1, 1986, is SET ASIDE. The
Regional Office No. 1 of San Fernando, La Union is hereby directed to immediately conduct new
certification election proceedings among the rank and file employees of the petitioner who are not
members of the cooperative.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., and Bidin, JJ., concur.

Feliciano, J., on leave.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 91902 May 20, 1991

MANILA ELECTRIC COMPANY, petitioner,

vs.
THE HON. SECRETARY OF LABOR AND EMPLOYMENT, STAFF AND TECHNICAL
EMPLOYEES ASSOCIATION OF MERALCO, and FIRST LINE ASSOCIATION OF MERALCO
SUPERVISORY EMPLOYEES,respondents.

Rolando R. Arbues, Atilano S. Guevarra, Jr. and Gil S. San Diego for petitioner.
The Solicitor General for public respondent.
Felipe Gojar for STEAM-PCWF.
Wakay & Wakay Legal Services for First Line Association of Meralco Supervisory Employees.

MEDIALDEA, J.:

This petition seeks to review the Resolution of respondent Secretary of Labor and Employment
Franklin M. Drilon dated November 3, 1989 which affirmed an Order of Med-Arbiter Renato P.
Parungo (Case No. NCR-O-D-M-1-70), directing the holding of a certification election among certain
employees of petitioner Manila Electric Company (hereafter "MERALCO") as well as the Order dated
January 16, 1990 which denied the Motion for Reconsideration of MERALCO.

The facts are as follows:

On November 22, 1988, the Staff and Technical Employees Association of MERALCO (hereafter
"STEAM-PCWF") a labor organization of staff and technical employees of MERALCO, filed a petition
for certification election, seeking to represent regular employees of MERALCO who are: (a) non-
managerial employees with Pay Grades VII and above; (b) non-managerial employees in the Patrol
Division, Treasury Security Services Section, Secretaries who are automatically removed from the
bargaining unit; and (c) employees within the rank and file unit who are automatically disqualified
from becoming union members of any organization within the same bargaining unit.

Among others, the petition alleged that "while there exists a duly-organized union for rank and file
employees in Pay Grade I-VI, which is the MERALCO Employees and Worker's Association
(MEWA) which holds a valid CBA for the rank and file employees, 1 there is no other labor
organization except STEAM-PCWF claiming to represent the MERALCO employees.

The petition was premised on the exclusion/disqualification of certain MERALCO employees

pursuant to Art. I, Secs. 2 and 3 of the existing MEWA CBA as follows:

ARTICLE I

SCOPE
 xxx xxx xxx

Sec. 2. Excluded from the appropriate bargaining unit and therefore outside the scope of this
Agreement are:

(a) Employees in Patrol Division;

(b) Employees in Treasury Security Services Section;

(c) Managerial Employees; and

(d) Secretaries.

Any member of the Union who may now or hereafter be assigned or transferred to Patrol
Division or Treasury Security Services Section, or becomes Managerial Employee or a
Secretary, shall be considered automatically removed from the bargaining unit and excluded
from the coverage of this agreement. He shall thereby likewise be deemed automatically to
have ceased to be member of the union, and shall desist from further engaging in union
activity of any kind.

Sec. 3. Regular rank-and-file employees in the organization elements herein below listed
shall be covered within the bargaining unit, but shall be automatically disqualified from
becoming union members:

1. Office of the Corporate Secretary

2. Corporate Staff Services Department

3. Managerial Payroll Office

4. Legal Service Department

5. Labor Relations Division

6. Personnel Administration Division

7. Manpower Planning & Research Division

8. Computer Services Department

9. Financial Planning & Control Department

10. Treasury Department, except Cash Section

11. General Accounting Section

xxx xxx xxx

(p. 19, Rollo)

MERALCO moved for the dismissal of the petition on the following grounds:

The employees sought to be represented by petitioner are either 1) managerial who are
prohibited by law from forming or joining supervisory union; 2) security services personnel
who are prohibited from joining or assisting the rank-and-file union; 3) secretaries who do not
consent to the petitioner's representation and whom petitioner can not represent; and 4)
rank-and-file employees represented by the certified or duly recognized bargaining
representative of the only rank-and-file bargaining unit in the company, the Meralco
Employees Workers Association (MEWA), in accordance with the existing Collective
Bargaining Agreement with the latter.

II

The petition for certification election will disturb the administration of the existing Collective
Bargaining Agreement in violation of Art. 232 of the Labor Code.

III

The petition itself shows that it is not supported by the written consent of at least twenty
percent (20%) of the alleged 2,500 employees sought to be represented. (Resolution, Sec. of
Labor, pp. 223-224, Rollo)

Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay Grades VII and
above are classified as managerial employees who, under the law, are prohibited from forming,
joining or assisting a labor organization of the rank and file. As regards those in the Patrol Division
and Treasury Security Service Section, MERALCO maintains that since these employees are tasked
with providing security to the company, they are not eligible to join the rank and file bargaining unit,
pursuant to Sec. 2(c), Rule V, Book V of the then Implementing Rules and Regulations of the Labor
Code (1988) which reads as follows:

Sec. 2. Who may file petition. The employer or any legitimate labor organization may file
the petition.

The petition, when filed by a legitimate labor organization, shall contain, among others:

xxx xxx xxx

(c) description of the bargaining unit which shall be the employer unit unless circumstances
otherwise require, and provided, further: that the appropriate bargaining unit of the rank and
file employees shall not include security guards (As amended by Sec. 6, Implementing Rules
of EO 111)

xxx xxx xxx

(p. 111, Labor Code, 1988 Ed.)

As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO contends that
since they are already beneficiaries of the MEWA-CBA, they may not be treated as a separate and
distinct appropriate bargaining unit.
MERALCO raised the same argument with respect to employees sought to be represented by
STEAM-PCWF, claiming that these were already covered by the MEWA-CBA.

On March 15, 1989, the Med-Arbiter ruled that having been excluded from the existing Collective
Bargaining Agreement for rank and file employees, these employees have the right to form a union
of their own, except those employees performing managerial functions. With respect to those
employees who had resented their alleged involuntary membership in the existing CBA, the Med-
Arbiter stated that the holding of a certification election would allow them to fully translate their
sentiment on the matter, and thus directed the holding of a certification election. The dispositive
portion of the Resolution provides as follows:

WHEREFORE, premises considered, a certification election is hereby ordered conducted

among the regular rank-and-file employees of MERALCO to wit:

1. Non-managerial employees with Pay Grades VII and above;

2. Non-managerial employees of Patrol Division, Treasury Security Services Section and

Secretaries; and

3. Employees prohibited from actively participating as members of the union.

within 20 days from receipt hereof, subject to the usual pre-election conference with the
following choices:

1. Staff and Technical, Employees Association of MERALCO (STEAM-PCWF);

2. No Union.

SO ORDERED. (p. 222, Rollo)

On April 4, 1989, MERALCO appealed, contending that "until such time that a judicial finding is
made to the effect that they are not managerial employee, STEAM-PCWF cannot represent
employees from Pay Grades VII and above, additionally reiterating the same reasons they had
advanced for disqualifying respondent STEAM-PCWF.

On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as follows:

A. The Order of the Med-Arbiter is null and void for being in violation of Article 245 of the
Labor Code;

B. The Order of the Med-Arbiter violates Article 232 of the Labor Code; and

C. The Order is invalid because the bargaining unit it delineated is not an appropriated (sic)
bargaining unit.

On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.

With the enactment of RA 6715 and the rules and regulations implementing the same, STEAM-
PCWF renounced its representation of the employees in Patrol Division, Treasury Security Services
Section and rank-and-file employees in Pay Grades I-VI.
On September 13, 1989, the First Line Association of Meralco

Supervisory Employees. (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-731-89) seeking

to represent those employees with Pay Grades VII to XIV, since "there is no other supervisory union
at MERALCO." (p. 266,Rollo). The petition was consolidated with that of STEAM-PCWF.

On November 3, 1989, the Secretary of Labor affirmed with modification, the assailed order of the
Med-Arbiter, disposing as follows:

WHEREFORE, premises considered, the Order appealed from is hereby affirmed but
modified as far as the employees covered by Section 3, Article I of the exist CBA in the
Company are concerned. Said employees shall remain in the unit of the rank-and-file already
existing and may exercise their right to self organization as above enunciated.

Further, the First Line Association of Meralco Supervisory Employees (FLAMES) is included
as among the choices in the certification election.

Let, therefore, the pertinent records of the case be immediately forwarded to the Office of
origin for the conduct of the certification election.

SO ORDERED. (p. 7, Rollo)

MERALCO's motion for reconsideration was denied on January 16, 1990.

On February 9, 1990, MERALCO filed this petition, premised on the following ground:

RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF DISCRETION AND/OR IN

EXCESS OF JURISDICTION AMOUNTING TO LACK OF JURISDICTION IN RULING
THAT:

I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE ESTABLISHED

INDEPENDENT, DISTINCT AND SEPARATE FROM THE EXISTING RANK-AND-FILE
BARGAINING UNIT.

II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE RANK-AND-FILE
EMPLOYEES.

III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED TOGETHER WITH THE
RANK-AND-FILE UNION AND/OR THE SUPERVISORY UNION. (p. 8, Rollo)

On February 26, 1990, We issued a temporary restraining order (TRO) against the implementation
of the disputed resolution.

In its petition, MERALCO has relented and recognized respondents STEAM-PCWF and FLAMES'
desired representation of supervisory employees from Grades VII up. However, it believes that all
that the Secretary of Labor has to do is to establish a demarcation line between supervisory and
managerial rank, and not to classify outright the group of employees represented by STEAM-PCWF
and FLAMES as rank and file employees.

In questioning the Secretary of Labor's directive allowing security guards (Treasury/Patrol Services
Section) to be represented by respondents, MERALCO contends that this contravenes the
provisions of the recently passed RA 6715 and its implementing rules (specifically par. 2, Sec. 1,
Rule II, Book V) which disqualifies supervisory employees and security guards from membership in a
labor organization of the rank and file (p. 11, Rollo).

The Secretary of Labor's Resolution was obviously premised on the provisions of Art. 212, then par.
(k), of the 1988 Labor Code defining "managerial" and "rank and file" employees, the law then in
force when the complaint was filed. At the time, only two groups of employees were recognized, the
managerial and rank and file. This explains the absence of evidence on job descriptions on who
would be classified managerial employees. It is perhaps also for this reason why the Secretary of
Labor limited his classification of the Meralco employees belonging to Pay Grades VII and up, to
only two groups, the managerial and rank and file.

However, pursuant to the Department of Labor's goal of strenghthening the constitutional right of
workers to self-organization, RA 6715 was subsequently passed which reorganized the employee-
ranks by including a third group, or the supervisory employees, and laying down the distinction
between supervisory employees and those of managerial ranks in Art. 212, renumbered par. [m],
depending on whether the employee concerned has the power to lay down and execute
management policies, in the case of managerial employees, or merely to recommend them, in case
of supervisory employees.

In this petition, MERALCO has admitted that the employees belonging to Pay Grades VII and up are
supervisory (p. 10, Rollo). The records also show that STEAM-PCWF had "renounced its
representation of the employees in Patrol Division, Treasury Security Service Section and rank and
file employees in Pay Grades I-VI" (p. 6, Rollo); while FLAMES, on the other hand, had limited its
representation to employees belonging to Pay Grades VII-XIV,generally accepted as supervisory
employees, as follows:

It must be emphasized that private respondent First Line Association of Meralco Supervisory
Employees seeks to represent only the Supervisory Employees with Pay Grades VII to XIV.

Supervisory Employees with Pay Grades VII to XIV are not managerial employees. In fact
the petition itself of petitioner Manila Electric Company on page 9, paragraph 3 of the petition
stated as follows, to wit:

There was no need for petitioner to prove that these employees are not rank-and-file.
As adverted to above, the private respondents admit that these are not the rank-and-
file but the supervisory employees, whom they seek to represent. What needs to be
established is the rank where supervisory ends and managerial begins.

and First Line Association of Meralco Supervisory Employees herein states that Pay Grades
VII to XIV are not managerial employees. In fact, although employees with Pay Grade XV
carry the Rank of Department Managers, these employees only enjoys (sic) the Rank
Manager but their recommendatory powers are subject to evaluation, review and final action
by the department heads and other higher executives of the company. (FLAMES'
Memorandum, p. 305, Rollo)

Based on the foregoing, it is clear that the employees from Pay Grades VII and up have been
recognized and accepted as supervisory. On the other hand, those employees who have been
automatically disqualified have been directed by the Secretary of Labor to remain in the existing
labor organization for the rank and file, (the condition in the CBA deemed as not having been written
into the contract, as unduly restrictive of an employee's exercise of the right to self-organization). We
shall discuss the rights of the excluded employees (or those covered by Sec. 2, Art. I, MEWA-CBA
later.

Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore represent
supervisory employees only. In this regard, the authority given by the Secretary of Labor for the
establishment of two labor organizations for the rank and file will have to be disregarded since We
hereby uphold certification elections only for supervisory employees from Pay Grade VII and up, with
STEAM-PCWF and FLAMES as choices.

As to the alleged failure of the Secretary of Labor to establish a demarcation line for purposes of
segregating the supervisory from the managerial employees, the required parameter is really not
necessary since the law itself, Art. 212-m, (as amended by Sec. 4 of RA 6715) has already laid
down the corresponding guidelines:

Art. 212. Definitions. . . .

(m) "Managerial employee" is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of to Book.

In his resolution, the Secretary of Labor further elaborated:

. . . Thus, the determinative factor in classifying an employee as managerial, supervisory or

rank-and-file is the nature of the work of the employee concerned.

In National Waterworks and Sewerage Authority vs. National Waterworks and Sewerage
Authority Consolidated Unions (11 SCRA 766) the Supreme Court had the occasion to come
out with an enlightening dissertation of the nature of the work of a managerial employees as
follows:

. . . that the employee's primary duty consists of the management of the

establishment or of a customarily recognized department or subdivision thereof, that
he customarily and regularly directs the work of other employees therein, that he has
the authority to hire or discharge other employees or that his suggestions and
recommendations as to the hiring and discharging and or to the advancement and
promotion or any other change of status of other employees are given particular
weight, that he customarily and regularly exercises discretionary powers . . . (56 CJS,
pp. 666-668. (p. 226, Rollo)

We shall now discuss the rights of the security guards to self-organize. MERALCO has
questioned the legality of allowing them to join either the rank and file or the supervisory
union, claiming that this is a violation of par. 2, Sec. 1, Rule II, Book V of the Implementing
Rules of RA 6715, which states as follows:

Sec 1. Who may join unions. . . .

xxx xxx xxx

 Supervisory employees and security guards shall not be eligible for membership in a
labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own; . . .

xxx xxx xxx

(emphasis ours)

Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c), Rule V, also of Book V of the
implementing rules of RA 6715:

Rule V.
REPRESENTATION CASES AND
INTERNAL-UNION CONFLICTS

Sec. 1. . . .

Sec. 2. Who may file.Any legitimate labor organization or the employer, when
requested to bargain collectively, may file the petition.

The petition, when filed by a legitimate labor-organization shall contain, among

others:

(a) . . .

(b) . . .

(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; and provided further, that the appropriate
bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards;

xxx xxx xxx

(emphasis ours)

Both rules, barring security guards from joining a rank and file organization, appear to have been
carried over from the old rules which implemented then Art. 245 of the Labor Code, and which
provided thus:

Art. 245. Ineligibility of security personnel to join any labor organization.Security guards
and other personnel employed for the protection and security of the person, properties and
premises of the employer shall not be eligible for membership in any labor organization.

On December 24, 1986, Pres. Corazon C. Aquino issued E.O. No. 111 which eliminated the above-
cited provision on the disqualification of security guards. What was retained was the disqualification
of managerial employees, renumbered as Art. 245 (previously Art. 246), as follows:

Art. 245. Ineligibility of managerial employees to joint any labor organization.Managerial

employees are not eligible to join, assist or form any labor organization.
With the elimination, security guards were thus free to join a rank and file organization.

On March 2, 1989, the present Congress passed RA 6715. 2 Section 18 thereof amended Art. 245,
to read as follows:

Art. 245. Ineligibility of managerial employees to join any labor organization; right of
supervisory employees.Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist, or form separate labor
organizations of their own. (emphasis ours)

As will be noted, the second sentence of Art. 245 embodies an amendment disqualifying supervisory
employeesfrom membership in a labor organization of the rank-and-file employees. It does not
include security guards in the disqualification.

The implementing rules of RA 6715, therefore, insofar as they disqualify security guards from joining
a rank and file organization are null and void, for being not germane to the object and purposes of
EO 111 and RA 6715 upon which such rules purportedly derive statutory moorings. In Shell
Philippines, Inc. vs. Central Bank, G.R. No. 51353, June 27, 1988, 162 SCRA 628, We stated:

The rule-making power must be confined to details for regulating the mode or proceeding to
carry into effect the law as it has been enacted. The power cannot be extended to amending
or expanding the statutory requirements or to embrace matters not covered by the statute.
Rules that subvert the statute cannot be sanctioned. (citing University of Sto. Tomas vs.
Board of Tax Appeals, 93 Phil. 376).

While therefore under the old rules, security guards were barred from joining a labor organization of
the rank and file, under RA 6715, they may now freely join a labor organization of the rank and file or
that of the supervisory union, depending on their rank. By accommodating supervisory employees,
the Secretary of Labor must likewise apply the provisions of RA 6715 to security guards by favorably
allowing them free access to a labor organization, whether rank and file or supervisory, in
recognition of their constitutional right to self-organization.

We are aware however of possible consequences in the implementation of the law in allowing
security personnel to join labor unions within the company they serve. The law is apt to produce
divided loyalties in the faithful performance of their duties. Economic reasons would present the
employees concerned with the temptation to subordinate their duties to the allegiance they owe the
union of which they are members, aware as they are that it is usually union action that obtains for
them increased pecuniary benefits.

Thus, in the event of a strike declared by their union, security personnel may neglect or outrightly
abandon their duties, such as protection of property of their employer and the persons of its officials
and employees, the control of access to the employer's premises, and the maintenance of order in
the event of emergencies and untoward incidents.

It is hoped that the corresponding amendatory and/or suppletory laws be passed by Congress to
avoid possible conflict of interest in security personnel.
1wphi1

ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the Resolution of
the Secretary of Labor dated November 3, 1989 upholding an employee's right to self-organization.
A certification election is hereby ordered conducted among supervisory employees of MERALCO,
belonging to Pay Grades VII and above, using as guideliness an employee's power to either
recommend or execute management policies, pursuant to Art. 212 (m), of the Labor Code, as
amended by Sec. 4 of RA 6715, with respondents STEAM-PCWF and FLAMES as choices.

Employees of the Patrol Division, Treasury Security Services Section and Secretaries may freely join
either the labor organization of the rank and file or that of the supervisory union depending on their
employee rank. Disqualified employees covered by Sec. 3, Art. I of the MEWA-CBA, shall remain
with the existing labor organization of the rank and file, pursuant to the Secretary of Labor's directive:

By the parties' own agreement, they find the bargaining unit, which includes the positions
enumerated in Section 3, Article I of their CBA, appropriate for purposes of collective
bargaining. The composition of the bargaining unit should be left to the agreement of the
parties, and unless there are legal infirmities in such agreement, this Office will not substitute
its judgment for that of the parties. Consistent with the story of collective bargaining in the
company, the membership of said group of employees in the existing rank-and-file unit
should continue, for it will enhance stability in that unit already well establish. However, we
cannot approve of the condition set in Section 3, Article I of the CBA that the employees
covered are automatically disqualified from becoming union members. The condition unduly
restricts the exercise of the right to self organization by the employees in question. It is
contrary to law and public policy and, therefore, should be considered to have not been
written into the contract. Accordingly, the option to join or not to join the union should be left
entirely to the employees themselves. (p. 229, Rollo)

The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby LIFTED. Costs
against petitioner.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla,
Bidin, Sarmiento, Grio-Aquino, Regalado and Davide, Jr., JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 170132 December 6, 2006

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and WINSTON F. GARCIA, in his

capacity as GSIS President & General Manager, petitioners,
vs.
KAPISANAN NG MGA MANGGAGAWA SA GSIS, respondents.

DECISION

GARCIA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, the Government Service
Insurance System (GSIS) and its President and General Manager Winston F. Garcia (Garcia, for
short) assail and seek to nullify the Decision1 dated June 16, 2005 of the Court of Appeals (CA)
in CA-G.R. SP No. 87220, as reiterated in its Resolution2 of October 18, 2005 denying Garcia's
motion for reconsideration.

The recourse is cast against the following setting:

A four-day October 2004 concerted demonstration, rallies and en masse walkout waged/held in front
of the GSIS main office in Roxas Boulevard, Pasay City, started it all. Forming a huge part of the
October 4 to October 7, 2004 mass action participants were GSIS personnel, among them members
of the herein respondent Kapisanan Ng Mga Manggagawa sa GSIS ("KMG" or the "Union"), a public
sector union of GSIS rank-and-file employees. Contingents from other government agencies joined
causes with the GSIS group. The mass action's target appeared to have been herein petitioner
Garcia and his management style. While the Mayor of Pasay City allegedly issued a rally permit, the
absence of the participating GSIS employees was not covered by a prior approved leave. 3

On or about October 10, 2004, the manager of the GSIS Investigating Unit issued a memorandum
directing 131 union and non-union members to show cause why they should not be charged
administratively for their participation in said rally. In reaction, KMG's counsel, Atty. Manuel Molina,
sought reconsideration of said directive on the ground, among others, that the subject employees
resumed work on October 8, 2004 in obedience to the return-to-work order thus issued. The plea for
reconsideration was, however, effectively denied by the filing, on October 25, 2004, of administrative
charges against some 110 KMG members for grave misconduct and conduct prejudicial to the best
interest of the service.4

What happened next is summarized by the CA in its challenged decision of June 16, 2005, albeit the
herein petitioners would except from some of the details of the appellate court's narration:
 Ignoring said formal charges, KMG, thru its President, Albert Velasco, commenced the
instant suit on November 2, 2004, with the filing of the Petition for Prohibition at bench. On
the ground that its members should not be made to explain why they supported their union's
cause, petitioner [KMG] faulted respondent [Garcia] with blatant disregard of Civil Service
Resolution No. 021316, otherwise known as the Guidelines for Prohibited Mass Action,
Section 10 of which exhorts government agencies to "harness all means within their capacity
to accord due regard and attention to employees' grievances and facilitate their speedy and
amicable disposition through the use of grievance machinery or any other modes of
settlement sanctioned by law and existing civil service rules." Two supplements to the
foregoing petition were eventually filed by KMG. The first, apprised [the CA] of the
supposed fact that its Speaker, Atty. Molina, had been placed under preventive suspension
for 90 days and that the formal charges thus filed will not only deprive its members of the
privileges and benefits due them but will also disqualify them from promotion, step increment
adjustments and receipt of monetary benefits, including their 13th month pay and Christmas
bonuses. The second, xxx manifested that, on December 17, 2004, respondent [Garcia]
served a spate of additional formal charges against 230 of KMG's members for their
participation in the aforesaid grievance demonstrations.

In his December 14, 2004 comment to the foregoing petition, respondent [Garcia] averred
that the case at bench was filed by an unauthorized representative in view of the fact that
Albert Velasco had already been dropped from the GSIS rolls and, by said token, had
ceased to be a member much less the President of KMG. Invoking the rule against forum
shopping, respondent [Garcia] called [the CA's] attention to the supposed fact that the
allegations in the subject petition merely duplicated those already set forth in two petitions for
certiorari and prohibition earlier filed by Albert Velasco . Because said petitions are, in
point of fact, pending before this court as CA-G.R. SP Nos. 86130 and 86365, respondent
[Garcia] prayed for the dismissal of the petition at bench . 5 (Words in bracket added.)

It appears that pending resolution by the CA of the KMG petition for prohibition in this case, the
GSIS management proceeded with the investigation of the administrative cases filed. As
represented in a pleading before the CA, as of May 18, 2005, two hundred seven (207) out of the
two hundred seventy eight (278) cases filed had been resolved, resulting in the exoneration of
twenty (20) respondent-employees, the reprimand of one hundred eighty two (182) and the
suspension for one month of five (5). 6

On June 16, 2005, the CA rendered the herein assailed decision7 holding that Garcia's "filing of
administrative charges against 361 of [KMG's] members is tantamount to grave abuse of discretion
which may be the proper subject of the writ of prohibition." Dispositively, the decision reads:

WHEREFORE, premises considered, the petition [of KMG] is GRANTED and respondent
[Winston F. Garcia] is hereby PERPETUALLY ENJOINED from implementing the issued
formal charges and from issuing other formal charges arising from the same facts and
events.

SO ORDERED. (Emphasis in the original)

Unable to accept the above ruling and the purported speculative factual and erroneous legal
premises holding it together, petitioner Garcia sought reconsideration. In its equally assailed
Resolution8 of October 18, 2005, however, the appellate court denied reconsideration of its decision.

Hence, this recourse by the petitioners ascribing serious errors on the appellate court in granting the
petition for prohibition absent an instance of grave abuse of authority on their part.
We resolve to GRANT the petition.

It should be stressed right off that the civil service encompasses all branches and agencies of the
Government, including government-owned or controlled corporations (GOCCs) with original
charters, like the GSIS,9 or those created by special law.10 As such, employees of covered GOCCs
are part of the civil service system and are subject to circulars, rules and regulations issued by the
Civil Service Commission (CSC) on discipline, attendance and general terms/conditions of
employment, inclusive of matters involving self-organization, strikes, demonstrations and like
concerted actions. In fact, policies established on public sector unionism and rules issued on mass
action have been noted and cited by the Court in at least a case. 11 Among these issuances is
Executive Order (EO) No. 180, series of 1987, providing guidelines for the exercise of the right to
organize of government employees. Relevant also is CSC Resolution No. 021316 which provides
rules on prohibited concerted mass actions in the public sector.

There is hardly any dispute about the formal charges against the 278 affected GSIS employees a
mix of KMG union and non-union members - having arose from their having gone on unauthorized
leave of absence (AWOL) for at least a day or two in the October 4 to 7, 2004 stretch to join the
ranks of the demonstrators /rallyists at that time. As stated in each of the formal charges, the
employee's act of attending, joining, participating and taking part in the strike/rally is a transgression
of the rules on strike in the public sector. The question that immediately comes to the fore, therefore,
is whether or not the mass action staged by or participated in by said GSIS employees partook of a
strike or prohibited concerted mass action. If in the affirmative, then the denounced filing of the
administrative charges would be prima facie tenable, inasmuch as engaging in mass actions
resulting in work stoppage or service disruption constitutes, in the minimum, the punishable offense
of acting prejudicial to the best interest of the service.12 If in the negative, then such filing would
indeed smack of arbitrariness and justify the issuance of a corrective or preventive writ.

Petitioners assert that the filing of the formal charges are but a natural consequence of the service-
disrupting rallies and demonstrations staged during office hours by the absenting GSIS employees,
there being appropriate issuances outlawing such kinds of mass action. On the other hand, the CA,
agreeing with the respondent's argument, assumed the view and held that the organized
demonstrating employees did nothing more than air their grievances in the exercise of their "broader
rights of free expression"13 and are, therefore, not amenable to administrative sanctions. For
perspective, following is what the CA said:

Although the filing of administrative charges against [respondent KMG's] members is well
within [petitioner Garcia's] official [disciplinary] prerogatives, [his] exercise of the power
vested under Section 45 of Republic Act No. 8291 was tainted with arbitrariness and
vindictiveness against which prohibition was sought by [respondent]. xxx the fact that the
subject mass demonstrations were directed against [Garcia's] supposed mismanagement of
the financial resources of the GSIS, by and of itself, renders the filing of administrative
charges against [KMG's] member suspect. More significantly, we find the gravity of the
offenses and the sheer number of persons charged administratively to be, at the very
least, antithetical to the best interest of the service.

It matters little that, instead of the 361 alleged by petitioner, only 278 charges were actually
filed [and] in the meantime, disposed of and of the said number, 20 resulted to exoneration,
182 to reprimand and 5 to the imposition of a penalty of one month suspension. Irrespective
of their outcome, the severe penalties prescribed for the offense with which petitioner's
members were charged, to our mind, bespeak of bellicose and castigatory reaction . The
fact that most of the employees [Garcia] administratively charged were eventually meted with
 what appears to be a virtual slap on the wrist even makes us wonder why respondent even
bothered to file said charges at all. xxx.

Alongside the consequences of the right of government employees to form, join or assist
employees organization, we have already mentioned how the broader rights of free
expression cast its long shadow over the case. xxx we find [petitioner Garcia's] assailed acts,
on the whole, anathema to said right which has been aptly characterized as preferred, one
which stands on a higher level than substantive economic and other liberties, the matrix of
other important rights of our people. xxx. 14 (Underscoring and words in bracket added;
citations omitted.)

While its decision and resolution do not explicitly say so, the CA equated the right to form
associations with the right to engage in strike and similar activities available to workers in the private
sector. In the concrete, the appellate court concluded that inasmuch as GSIS employees are not
barred from forming, joining or assisting employees' organization, petitioner Garcia could not validly
initiate charges against GSIS employees waging or joining rallies and demonstrations
notwithstanding the service-disruptive effect of such mass action. Citing what Justice Isagani Cruz
said in Manila Public School Teachers Association [MPSTA] v. Laguio, Jr.,15 the appellate court
declared:

It is already evident from the aforesaid provisions of Resolution No. 021316 that employees
of the GSIS are not among those specifically barred from forming, joining or assisting
employees organization such as [KMG]. If only for this ineluctable fact, the merit of the
petition at bench is readily discernible. 16

We are unable to lend concurrence to the above CA posture. For, let alone the fact that it ignores
what the Court has uniformly held all along, the appellate court's position is contrary to what Section
4 in relation to Section 5 of CSC Resolution No. 02131617 provides. Besides, the appellate court's
invocation of Justice Cruz's opinion inMPSTA is clearly off-tangent, the good Justice's opinion
thereat being a dissent. It may be, as the appellate court urged that the freedom of expression and
assembly and the right to petition the government for a redress of grievances stand on a level higher
than economic and other liberties. Any suggestion, however, about these rights as including the right
on the part of government personnel to strike ought to be, as it has been, trashed. We have made
this abundantly clear in our past determinations. For instance, in Alliance of Government Workers v.
Minister of Labor and Employment,18 a case decided under the aegis of the 1973 Constitution, an en
banc Court declared that it would be unfair to allow employees of government corporations to resort
to concerted activity with the ever present threat of a strike to wring benefits from Government. Then
came the 1987 Constitution expressly guaranteeing, for the first time, the right of government
personnel to self-organization19 to complement the provision according workers the right to engage
in "peaceful concerted activities, including the right to strike in accordance with law."20

It was against the backdrop of the aforesaid provisions of the 1987 Constitution that the Court
resolvedBangalisan v. Court of Appeals.21 In it, we held, citing MPSTA v. Laguio, Jr.,22 that
employees in the public service may not engage in strikes or in concerted and unauthorized
stoppage of work; that the right of government employees to organize is limited to the formation of
unions or associations, without including the right to strike.

Jacinto v. Court of Appeals23 came next and there we explained:

Specifically, the right of civil servants to organize themselves was positively recognized in
Association of Court of Appeals Employees vs. Ferrer-Caleja. But, as in the exercise of the
rights of free expression and of assembly, there are standards for allowable
 limitations such as the legitimacy of the purpose of the association, [and] the overriding
considerations of national security . . . .

As regards the right to strike, the Constitution itself qualifies its exercise with the provision "in
accordance with law." This is a clear manifestation that the state may, by law, regulate the
use of this right, or even deny certain sectors such right. Executive Order 180 which provides
guidelines for the exercise of the right of government workers to organize, for instance,
implicitly endorsed an earlier CSC circular which "enjoins under pain of administrative
sanctions, all government officers and employees from staging strikes, demonstrations,
mass leaves, walkouts and other forms of mass action which will result in temporary
stoppage or disruption of public service" by stating that the Civil Service law and rules
governing concerted activities and strikes in government service shall be observed.
(Emphasis and words in bracket added; citations omitted)

And in the fairly recent case of Gesite v. Court of Appeals,24 the Court defined the limits of the right
of government employees to organize in the following wise:

It is relevant to state at this point that the settled rule in this jurisdiction is that employees in
the public service may not engage in strikes, mass leaves, walkouts, and other forms of
mass action that will lead in the temporary stoppage or disruption of public service. The right
of government employees to organize is limited to the formation of unions or associations
only, without including the right to strike,

adding that public employees going on disruptive unauthorized absences to join concerted mass
actions may be held liable for conduct prejudicial to the best interest of the service.

Significantly, 1986 Constitutional Commission member Eulogio Lerum, answering in the negative the
poser of whether or not the right of government employees to self-organization also includes the
right to strike, stated:

When we proposed this amendment providing for self organization of government

employees, it does not mean that because they have the right to organize, they have also
the right to strike. That is a different matter. xxx25

With the view we take of the events that transpired on October 4-7, 2004, what respondent's
members launched or participated in during that time partook of a strike or, what contextually
amounts to the same thing, a prohibited concerted activity. The phrase "prohibited concerted activity"
refers to any collective activity undertaken by government employees, by themselves or through
their employees' organization, with the intent of effecting work stoppage or service disruption in order
to realize their demands or force concessions, economic or otherwise; it includes mass leaves,
walkouts, pickets and acts of similar nature. 26 Indeed, for four straight days, participating KMG
members and other GSIS employees staged a walk out and waged or participated in a mass protest
or demonstration right at the very doorstep of the GSIS main office building. The record of
attendance27 for the period material shows that, on the first day of the protest, 851 employees,
or forty eight per cent (48%) of the total number of employees in the main office (1,756) took to the
streets during office hours, from 6 a.m. to 2 p.m.,28leaving the other employees to fend for
themselves in an office where a host of transactions take place every business day. On the second
day, 707 employees left their respective work stations, while 538 participated in the mass action on
the third day. A smaller number, i.e., 306 employees, but by no means an insignificant few, joined
the fourth day activity.
To say that there was no work disruption or that the delivery of services remained at the usual level
of efficiency at the GSIS main office during those four (4) days of massive walkouts and wholesale
absences would be to understate things. And to place the erring employees beyond the reach of
administrative accountability would be to trivialize the civil service rules, not to mention the
compelling spirit of professionalism exacted of civil servants by the Code of Conduct and Ethical
Standards for Public Officials and Employees. 29

The appellate court made specific reference to the "parliament of the streets," obviously to lend
concurrence to respondent's pretension that the gathering of GSIS employees on October 4-7, 2004
was an "assembly of citizens" out only to air grievances, not a striking crowd. According to the
respondent, a strike presupposes a mass action undertaken to press for some economic demands
or secure additional material employment benefits.

We are not convinced.

In whatever name respondent desires to call the four-day mass action in October 2004, the stubborn
fact remains that the erring employees, instead of exploring non-crippling activities during their free
time, had taken a disruptive approach to attain whatever it was they were specifically after. As
events evolved, they assembled in front of the GSIS main office building during office hours and
staged rallies and protests, and even tried to convince others to join their cause, thus provoking work
stoppage and service-delivery disruption, the very evil sought to be forestalled by the prohibition
against strikes by government personnel. 30

The Court can concede hypothetically that the protest rally and gathering in question did not involve
some specific material demand. But then the absence of such economic-related demand, even if
true, did not, under the premises, make such mass action less of a prohibited concerted activity. For,
as articulated earlier, any collective activity undertaken by government employees with the intent of
effecting work stoppage or service disruption in order to realize their demands or force concessions,
economic or otherwise, is a prohibited concerted mass action31 and doubtless actionable
administratively. Bangalisan even went further to say the following: "[i]n the absence of statute,
public employees do not have the right to engage in concerted work stoppages for any purpose."

To petitioner Garcia, as President and General Manager of GSIS, rests the authority and
responsibility, under Section 45 of Republic Act No. 8291, the GSIS Act of 1997, to remove, suspend
or otherwise discipline GSIS personnel for cause. 32 At bottom then, petitioner Garcia, by filing or
causing the filing of administrative charges against the absenting participants of the October 4-7,
2004 mass action, merely performed a duty expected of him and enjoined by law. Regardless of the
mood petitioner Garcia was in when he signed the charge sheet, his act can easily be sustained as
legally correct and doubtless within his jurisdiction.

It bears to reiterate at this point that the GSIS employees concerned were proceeded against - and
eventually either exonerated, reprimanded or meted a one-month suspension, as the case may be -
not for the exercise of their right to assemble peacefully and to petition for redress of grievance, but
for engaging in what appeared to be a prohibited concerted activity. Respondent no less admitted
that its members and other GSIS employees might have disrupted public service. 33

To be sure, arbitrariness and whimsical exercise of power or, in fine, grave abuse of discretion on
the part of petitioner Garcia cannot be simplistically inferred from the sheer number of those charged
as well as the gravity or the dire consequences of the charge of grave misconduct and conduct
prejudicial to the best interest of the service, as the appellate court made it to appear. The principle
of accountability demands that every erring government employee be made answerable for any
malfeasance or misfeasance committed. And lest it be overlooked, the mere filing of formal
administrative case, regardless of the gravity of the offense charged, does not overcome the
presumptive innocence of the persons complained of nor does it shift the burden of evidence to
prove guilt of an administrative offense from the complainant.

Moreover, the Court invites attention to its holding in MPSTA v. Laguio, Jr., a case involving over
800 public school teachers who took part in mass actions for which the then Secretary of Education
filed administrative complaints on assorted charges, such as gross misconduct. Of those charged,
650 were dismissed and 195 suspended for at least six (6) months The Court, however, did not
consider the element of number of respondents thereat and/or the dire consequences of the
charge/s as fatally vitiating or beclouding the bona fidesof the Secretary of Education's challenged
action. Then as now, the Court finds the filing of charges against a large number of persons and/or
the likelihood that they will be suspended or, worse, dismissed from the service for the offense as
indicating a strong and clear case of grave abuse of authority to justify the issuance of a writ of
prohibition.

The appellate court faulted petitioner Garcia for not first taping existing grievance machinery and
other modes of settlement agreed upon in the GSIS-KMG Collective Negotiations Agreement (CAN)
before going full steam ahead with his formal charges.34

The Court can plausibly accord cogency to the CA's angle on grievance procedure but for the fact
that it conveniently disregarded what appears to be the more relevant provision of the CNA. We refer
to Article VI which reads:

The GSIS Management and the KMG have mutually agreed to promote the principle of
shared responsibility on all matters and decisions affecting the rights, benefits and
interests of all GSIS employees . Accordingly, the parties also mutually agree that the
KMG shall not declare a strike nor stage any concerted action which will disrupt public
service and the GSIS management shall not lockoutemployees who are members of the
KMG during the term of this agreement. GSIS Management shall also respect the rights of
the employees to air their sentiments through peaceful concerted activities during allowable
hours, subject to reasonable office rules .... 35 (Underscoring added)

If the finger of blame, therefore, is to be pointed at someone for non-exhaustion of less

confrontational remedies, it should be at the respondent union for spearheading a concerted mass
action without resorting to available settlement mechanism. As it were, it was KMG, under Atty.
Alberto Velasco, which opened fire first. That none of the parties bothered to avail of the grievance
procedures under the GSIS-KMG CNA should not be taken against the GSIS. At best, both GSIS
management and the Union should be considered as in pari delicto.

With the foregoing disquisitions, the Court finds it unnecessary to discuss at length the legal
standing of Alberto Velasco to represent the herein respondent union and to initiate the underlying
petition for prohibition. Suffice it to state that Velasco, per Joint Resolution No. 04-10-01 approved
on October 5, 2004 by the KMG Joint Executive-Legislative Assembly, had ceased to be member,
let alone president, of the KMG, having previously been dropped from the rolls of GSIS
employees.36 While the dropping from the rolls is alleged to have been the subject of a CA-issued
temporary restraining order (TRO), the injunction came after Atty. Velasco had in fact been
separated from the service and it appears that the TRO had already expired.

As a final consideration, the Court notes or reiterates the following relevant incidents surrounding the
disposition of the case below:
 1. The CA had invoked as part of its ratio decidendi a dissenting opinion in MPSTA, even
going to the extent of describing as "instructive and timely" a portion, when the majority
opinion thereat, which the appellate court ignored, is the controlling jurisprudence.

2. The CA gave prominence to dispositions and rattled off holdings 37 of the Court, which
appropriately apply only to strikes in the private industry labor sector, and utilized the same
as springboard to justify an inference of grave abuse of discretion. On the other hand, it only
gave perfunctory treatment if not totally ignored jurisprudence that squarely dealt with strikes
in the public sector, as if the right to strike given to unions in private corporations/entities is
necessarily applicable to civil service employees.

3. As couched, the assailed CA decision perpetually bars respondent Garcia and

necessarily whoever succeeds him as GSIS President not only from implementing the
formal charges against GSIS employees who participated in the October 4 - 7, 2004 mass
action but also from issuing other formal charges arising from the same events. The
injunction was predicated on a finding that grave abuse of discretion attended the exercise of
petitioner Garcia's disciplinary power vested him under Section 45 of RA 8291. 38 At bottom
then, the assailed decision struck down as a nullity, owing to the alleged attendant
arbitrariness, not only acts that have already been done, but those yet to be done. In net
effect, any formal charge arising from the October 4-7, 2004 incident is, under any and all
circumstances, prejudged as necessarily tainted with arbitrariness to be slain at sight.

The absurdities and ironies easily deducible from the foregoing situations are not lost on the Court.

We close with the observation that the assailed decision and resolution, if allowed to remain
undisturbed, would likely pave the way to the legitimization of mass actions undertaken by civil
servants, regardless of their deleterious effects on the interest of the public they have sworn to serve
with loyalty and efficiency. Worse still, it would permit the emergence of a system where public
sector workers are, as the petitioners aptly put it, "immune from the minimum reckoning for acts that
[under settled jurisprudence] are concededly unlawful." This aberration would be intolerable.

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals

are REVERSED and SET ASIDE and the writ of prohibition issued by that court is NULLIFIED.

No Cost.

SO ORDERED.

Puno, J., Chairperson, Sandoval-Gutierrez, and Azcuna, JJ., concur.

Corona, J., On Leave.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 101738 April 12, 2000

PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES, petitioner,

vs.
HON. BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment, HON. HENRY
PABEL, Director of the Department of Labor and Employment Regional Office No. XI and/or
the Representation Officer of the Industrial Relations Division who will act for and in his
behalf, PCOP- BISLIG SUPERVISORY AND TECHNICAL STAFF EMPLOYEES UNION,
ASSOCIATED LABOR UNION and FEDERATION OF FREE WORKERS, respondents.

DE LEON, JR., J.:

Before us is a petition for certiorari seeking to annul the Resolution1 and the Order2 dated April 17,
1991 and August 7, 1991, respectively, of public respondent Bienvenido E. Laguesma, acting then
as Undersecretary, now the Secretary, of the Department of Labor and Employment (DOLE), which
reversed the Order dated March 27, 19903 of Med-Arbiter Phibun D. Pura declaring that supervisors
and section heads of petitioner under its new organizational structure are managerial employees and
should be excluded from the list of voters for the purpose of a certification election among
supervisory and technical staff employees of petitioner.4

The facts of the case are the following:

Petitioner Paper Industries Corporation of the Philippines (PICOP) is engaged in the manufacture of
paper and timber products, with principal place of operations at Tabon, Bislig, Surigao del Sur. It has
over 9,0005employees, 9446 of whom are supervisory and technical staff employees. More or less
487 of these supervisory and technical staff employees are signatory members of the private
respondent PICOP-Bislig Supervisory and Technical Staff Employees Union (PBSTSEU). 7

On August 9, 1989, PBSTSEU instituted a Petition8 for Certification Election to determine the sole
and exclusive bargaining agent of the supervisory and technical staff employees of PICOP for
collective bargaining agreement (CBA) purposes.

In a Notice9 dated August 10, 1989, the initial hearing of the petition was set on August 18, 1989 but
it was reset to August 25, 1989, at the instance of PICOP, as it requested a fifteen (15) day period
within which to file its comments and/or position paper. But PICOP failed to file any comment or
position paper. Meanwhile, private respondents Federation of Free Workers (FFW) and Associated
Labor Union (ALU) filed their respective petitions for intervention.
On September 14, 1989, Med-Arbiter Arturo L. Gamolo issued an Order 10 granting the petitions for
interventions of the FFW and ALU. Another Order 11 issued on the same day set the holding of a
certification election among PICOP's supervisory and technical staff employees in Tabon, Bislig,
Surigao del Sur, with four (4) choices, namely: (1) PBSTSEU; (2) FFW; (3) ALU; and (4) no union.

On September 21, 1989, PICOP appealed 12 the Order which set the holding of the certification
election contending that the Med-Arbiter committed grave abuse of discretion in deciding the case
without giving PICOP the opportunity to file its comments/answer, and that PBSTSEU had no
personality to file the petition for certification election.

After PBSTSEU filed its Comments 13 to petitioner's appeal, the Secretary of the Labor 14 issued a
Resolution 15dated November 17, 1989 which upheld the Med-Arbiter's Order dated September 17,
1989, with modification allowing the supervising and staff employees in Cebu, Davao and Iligan City
to participate in the certification election.

During the pre-election conference on January 18, 1990, PICOP questioned and objected to the
inclusion of some section heads and supervisors in the list of voters whose positions it averred were
reclassified as managerial employees in the light of the reorganization effected by it. 16 Under the
Revised Organizational Structure of the PICOP, the company was divided into four (4) main
business groups, namely: Paper Products Business, Timber Products Business, Forest Resource
Business and Support Services Business. A vice- president or assistant vice-president heads each
of these business groups. A division manager heads the divisions comprising each business group.
A department manager heads the departments comprising each division. Section heads and
supervisors, now called section managers and unit managers, head the sections and independent
units, respectively, comprising each department. 17 PICOP advanced the view that considering the
alleged present authority of these section managers and unit managers to hire and fire, they are
classified as managerial employees, and hence, ineligible to form or join any labor organization. 18

Following the submission by the parties of their respective position papers 19 and evidence 20 on this
issue, Med-Arbiter Phibun D. Pura issued an Order 21 dated March 27, 1990, holding that
supervisors and section heads of the petitioner are managerial employees and therefore excluded
from the list of voters for purposes of certification election.

PBSTSEU appealed 22 the Order of the Med-Arbiter to the Office of the Secretary, DOLE. ALU
likewise appealed.23 PICOP submitted evidence militating against the appeal. 24 Public respondent
Bienvenido E. Laguesma, acting as the then Undersecretary of Labor, issued the assailed
Order 25 dated April 17, 1991 setting aside the Order dated March 27, 1990 of the Med-Arbiter and
declaring that the subject supervisors and section heads are supervisory employees eligible to vote
in the certification election.

PICOP sought 26 reconsideration of the Order dated April 7, 1991. However, public respondent in his
Order 27dated August 7, 1991 denied PICOP's motion for reconsideration.

Hence, this petition.

PICOP anchors its petition on two (2) grounds, to wit:

I.

THE PUBLIC RESPONDENT HONORABLE BIENVENIDO E. LAGUESMA,

UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS, ARBITRARY
AND WHIMSICAL EXERCISE OF POWER ERRED AND COMMITTED GRAVE ABUSE OF
 DISCRETION, TANTAMOUNT TO ACTING WITHOUT OR IN EXCESS OF JURISDICTION
WHEN HE DENIED YOUR PETITIONER'S PLEA TO PRESENT ADDITIONAL EVIDENCE
TO PROVE THAT SOME OF ITS MANAGERIAL EMPLOYEES ARE DISQUALIFIED FROM
JOINING OR FORMING A UNION REPRESENTED BY CO-RESPONDENT PBSTSEU, IN
VIEW OF A SUPERVENING EVENT BROUGHT ABOUT BY THE CHANGES IN THE
ORGANIZATIONAL STRUCTURE OF YOUR PETITIONER WHICH WAS FULLY
IMPLEMENTED IN JANUARY 1991 AFTER THE CASE WAS ELEVATED ON APPEAL
AND SUBMITTED FOR DECISION.

II.

THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA, ALSO ERRED

AND COMMITTED GRAVE ABUSE OF DISCRETION, TANTAMOUNT TO ARBITRARILY
ACTING WITHOUT OR IN EXCESS OF JURISDICTION WHEN HE TOTALLY
DISREGARDED THE DOCUMENTARY EVIDENCE SO FAR SUBMITTED BY YOUR
PETITIONER AND RELIED MAINLY ON THE UNSUBSTANTIATED CLAIM AND MERE
ALLEGATIONS OF PRIVATE RESPONDENT, PBSTSEU, THAT THE REORGANIZATION
OF YOUR PETITIONER WAS A SHAM AND CALCULATED MERELY TO FRUSTRATE
THE UNIONIZATION OF YOUR PETITIONER'S SUPERVISORY PERSONNEL; AND
SOLELY ON THIS BASIS, DENIED YOUR PETITIONER'S URGENT MOTION FOR
RECONSIDERATION. 28

PICOP's main thesis is that the positions Section Heads and Supervisors, who have been
designated as Section Managers and Unit Managers, as the case may be, were converted to
managerial employees under the decentralization and reorganization program it implemented in
1989. Being managerial employees, with alleged authority to hire and fire employees, they are
ineligible for union membership under Article 245 29 of the Labor Code. Furthermore, PICOP
contends that no malice should be imputed against it for implementing its decentralization program
only after the petition for certification election was filed inasmuch as the same is a valid exercise of
its management prerogative, and that said program has long been in the drawing boards of the
company, which was realized only in 1989 and fully implemented in 1991. PICOP emphatically
stresses that it could not have conceptualized the decentralization program only for the purpose of
"thwarting the right of the concerned employees to self-organization."

The petition, not being meritorious, must fail and the same should be as it is hereby dismissed.

First. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, 30 we had occasion to elucidate
on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle
Managers and First Line Managers. Top and Middle Managers have the authority to devise,
implement and control strategic and operational policies while the task of First-Line Managers is
simply to ensure that such policies are carried out by the rank-and- file employees of an
organization. Under this distinction, "managerial employees" therefore fall in two (2) categories,
namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors"
composed of First-Line Managers. 31 Thus, the mere fact that an employee is designated "manager"
does notipso facto make him one. Designation should be reconciled with the actual job description of
the employee, 32 for it is the job description that determines the nature of employment. 33

In the petition before us, a thorough dissection of the job description 34 of the concerned supervisory
employees and section heads indisputably show that they are not actually managerial but only
supervisory employees since they do not lay down company policies. PICOP's contention that the
subject section heads and unit managers exercise the authority to hire and fire 35 is ambiguous and
quite misleading for the reason that any authority they exercise is not supreme but merely advisory
in character. Theirs is not a final determination of the company policies inasmuch as any action
taken by them on matters relative to hiring, promotion, transfer, suspension and termination of
employees is still subject to confirmation and approval by their respective superior. 36 Thus, where
such power, which is in effect recommendatory in character, is subject to evaluation, review and final
action by the department heads and other higher executives of the company, the same, although
present, is not effective and not an exercise of independent judgment as required by law. 37

Second. No denial of due process can be ascribed to public respondent Undersecretary Laguesma
for the latter's denial to allow PICOP to present additional evidence on the implementation of its
program inasmuch as in the appeal before the said public respondent, PICOP even then had already
submitted voluminous supporting documents. 38 The record of the case is replete with position
papers and exhibits that dealt with the main thesis it relied upon. What the law prohibits is the lack of
opportunity to be heard. 39 PICOP has long harped on its contentions and these were dealt upon and
resolved in detail by public respondent Laguesma. We see no reason or justification to deviate from
his assailed resolutions for the reason that law and jurisprudence aptly support them. 1wphi1

Finally, considering all the foregoing, the fact that PICOP voiced out its objection to the holding of
certification election, despite numerous opportunities to ventilate the same, only after respondent
Undersecretary of Labor affirmed the holding thereof, simply bolstered the public respondents'
conclusion that PICOP raised the issue merely to prevent and thwart the concerned section heads
and supervisory employees from exercising a right granted them by law. Needless to stress, no
obstacle must be placed to the holding of certification elections, for it is a statutory policy that should
not be circumvented. 40

WHEREFORE, the petition is hereby DISMISSED, and the Resolution and Order of public
respondent Bienvenido E. Laguesma dated April 17, 1991 and August 17, 1991, respectively, finding
the subject supervisors and section heads as supervisory employees eligible to vote in the
certification election are AFFIRMED. Costs against petitioner.

SO ORDERED. 1wphi1.nt

Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 102084 August 12, 1998

DE LA SALLE UNIVERSITY MEDICAL CENTER AND COLLEGE OF MEDICINE, petitioner,

vs.
HON. BIENVENIDO E. LAGUESMA, Undersecretary of Labor and Employment; ROLANDO S.
DE LA CRUZ, Med-Arbiter Regional Office No. IV, DE LA SALLE UNIVERSITY MEDICAL
CENTER AND COLLEGE OF MEDICINE SUPERVISORY UNION-FEDERATION OF FREE
WORKERS, respondents.

MENDOZA, J.:

Petitioner De La Salle University Medical Center and College of Medicine (DLSUMCCM) is a hospital and medical school at Dasmarias,
Cavite. Private respondent Federation of Free Workers-De La Salle University Medical Center and College of Medicine Supervisory Union
Chapter (FFW-DLSUMCCMSUC), on the other hand, is a labor organization composed of the supervisory employees of petitioner
DLSUMCCM.

On April 17, 1991, the Federation of Free Workers (FFW), a national federation of labor unions,
issued a certificate to private respondent FFW-DLSUMCCMSUC recognizing it as a local chapter.
On the same day, it filed on behalf of private respondent FFW-DLSUMCCMSUC a petition for
certification election among the supervisory employees of petitioner DLSUMCCM. Its petition was
opposed by petitioner DLSUMCCM on the grounds that several employees who signed the petition
for certification election were managerial employees and that the FFW-DLSUMCCMSUC was
composed of both supervisory and rank-and-file employees in the company. 1

In its reply dated May 29, 1991, private respondent FFW-DLSUMCCMSUC denied petitioner's
allegations. It contended that

2. Herein petition seeks for the holding of a certification election among the
supervisory employees of herein respondent. It does not intend to include managerial
employees.

xxx xxx xxx

6. It is not true that supervisory employees are joining the rank-and-file employees'
union. While it is true that both regular rank-and-file employees and supervisory
employees of herein respondent have affiliated with FFW, yet there are two separate
unions organized by FFW. The supervisory employees have a separate charter
certificate issued by FFW. 2

On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the Department of Labor and
Employment Regional Office No. IV, issued an order granting respondent union's petition for certification
election. He said;
 . . . [petitioner] . . . claims that based on the job descriptions which will be presented
at the hearing, the covered employees who are considered managers occupy the
positions of purchasing officers, personnel officers, property officers, cashiers, heads
of various sections and the like.

[Petitioner] also argues that assuming that some of the employees concerned are not
managerial but mere supervisory employees, the Federation of Free Workers (FFW)
cannot extend a charter certificate to this group of employees without violating the
express provision of Article 245 which provides that "supervisory employees shall not
be eligible for membership in a labor organization of the rank-and-file employees but
may join, assist or form separate labor organizations of their own" because the FFW
had similarly issued a charter certificate to its rank-and-file employees.

xxx xxx xxx

In its position paper, [petitioner] stated that most, if not all, of the employees listed in .
. . the petition are considered managerial employees, thereby admitting that it has
supervisory employees who are undoubtedly qualified to join or form a labor
organization of their own. The record likewise shows that [petitioner] promised to
present the job descriptions of the concerned employees during the hearing but
failed to do so. Thus, this office has no basis in determining at this point in time who
among them are considered managerial or supervisory employees. At any rate, there
is now no question that [petitioner] has in its employ supervisory employees who are
qualified to join or form a labor union. Consequently, this office is left with no
alternative but to order the holding of certification election pursuant to Article 257 of
the Labor Code, as amended, which mandates the holding of certification election if a
petition is filed by a legitimate labor organization involving an unorganized
establishment, as in the case of herein respondent.

As to the allegation of [petitioner] that the act of the supervisory employees in

affiliating with FFW to whom the rank-and-file employees are also affiliated is
violative of Article 245 of the Labor Code, suffice it to state that the two groups are
considered separate bargaining units and local chapters of FFW. They are, for all
intents and purposes, separate with each other and their affiliation with FFW would
not make them members of the same labor union. This must be the case because it
is settled that the locals are considered the basic unit or principal with the labor
federation assuming the role of an agent. The mere fact, therefore, that they are
represented by or under the same agent is of no moment. They are still considered
separate with each other. 3

On July 30, 1991, petitioner DLSUMCCM appealed to the Secretary of Labor and
Employment, citing substantially the same arguments it had raised before the med-arbiter. However, its
appeal was dismissed. In his resolution, dated August 30, 1991, respondent Undersecretary of Labor and
Employment Bienvenido E. Laguesma found the evidence presented by petitioner DLSUMCCM
concerning the alleged managerial status of several employees to be insufficient. He also held that,
following the ruling of this Court in Adamson & Adamson, Inc. v. CIR, 4 unions formed independently by
supervisory and rank-and-file employees of a company may legally affiliate with the same national
federation.

Petitioner moved for a reconsideration but its motion was denied. In his order dated September 19,
1991, respondent Laguesma stated:
 We reviewed the records once more, and find that the issues and arguments
adduced by movant have been squarely passed upon in the Resolution sought to be
reconsidered. Accordingly, we find no legal justification to alter, much less set aside,
the aforesaid resolution. Perforce, the motion for reconsideration must fail.

WHEREFORE, the instant motion for reconsideration is hereby denied for lack of
merit and the resolution of this office dated 30 August 1991 STANDS.

No further motions of a similar nature shall hereinafter be entertained. 5

Hence, this petition for certiorari.

Petitioner DLSUMCCM contends that respondent Laguesma gravely abused his discretion. While it
does not anymore insist that several of those who joined the petition for certification election are
holding managerial positions in the company, petitioner nonetheless pursues the question whether
unions formed independently by supervisory and rank-and-file employees of a company may validly
affiliate with the same national federation. With respect to this question, it argues:

THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E. LAGUESMA,

UNDERSECRETARY OF LABOR AND EMPLOYMENT, IN A CAPRICIOUS,
ARBITRARY AND WHIMSICAL EXERCISE OF POWER ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO ACTING WITHOUT OR IN
EXCESS OF JURISDICTION WHEN HE DENIED THE PETITIONER'S APPEAL
AND ORDERED THE HOLDING OF A CERTIFICATION ELECTION AMONG THE
MEMBERS OF THE SUPERVISORY UNION EMPLOYED IN PETITIONER'S
COMPANY DESPITE THE FACT THAT SAID SUPERVISORY UNION WAS
AFFILIATED WITH THE FEDERATION OF FREE WORKERS TO WHICH THE
RANK-AND-FILE EMPLOYEES OF THE SAME COMPANY ARE LIKEWISE
AFFILIATED, CONTRARY TO THE EXPRESS PROVISIONS OF ARTICLE 245 OF
THE LABOR CODE, AS AMENDED. 6

The contention has no merit.

Supervisory employees have the right to self-organization as do other classes of employees save
only managerial ones. The Constitution states that "the right of the people, including those employed
in the public and private sectors, to form unions, associations or societies for purposes not contrary
to law, shall not be abridged." 7 As we recently held in United Pepsi-Cola Supervisory Union v.
Loguesma, 8 the framers of the Constitution intended, by this provision, to restore the right of supervisory
employees to self-organization which had been withdrawn from them during the period of martial law.
Thus:

Commissioner Lerum sought to amend the draft of what was later to become Art.
111, 8 of the present Constitution:

xxx xxx xxx

MR. LERUM. . . . Also, we have unions of supervisory employees and

of security guards. But what is tragic about this is that after the 1973
Constitution was approved and in spite of an express recognition of
the right to organize in P.D. No. 442, known as the Labor Code, the
right of government workers, supervisory employees and security
guards to form unions was abolished.
 xxx xxx xxx

We are afraid that without any corresponding provision covering the

private sector, the security guards, the supervisory employees . . . will
still be excluded and that is the purpose of this amendment.

xxx xxx xxx

In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by including
labor unions in the guarantee of organizational right should be taken in the context of
statements that his aim was the removal of the statutory ban against security guards
and supervisory employees joining labor organizations. The approval by the
Constitutional Commission of his proposal can only mean, therefore, that the
Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. 9

Conformably with the constitutional mandate, Art. 245 of the Labor Code now provides for the right of
supervisory employees to self-organization, subject to the limitation that they cannot join an organization
of rank-and-file employees:

Supervisory employees shall not be eligible for membership in a labor organization of

the rank-and-file employees but may join, assist or form separate labor organizations
of their own.

The reason for the segregation of supervisory and rank-and-file employees of a company with
respect to the exercise of the right to self-organization is the difference in their interests. Supervisory
employees are more closely identified with the employer than with the rank-and-file employees. If
supervisory and rank-and-file employees in a company are allowed to form a single union, the
conflicting interests of these groups impair their relationship and adversely affect discipline,
collective bargaining and strikes. 10 These consequences can obtain not only in cases where
supervisory and rank-and-file employees in the same company belong to a single union but also where
unions formed independently by supervisory and rank-and-file employees of a company are allowed to
affiliate with the same national federation. Consequently, this Court has held in Atlas Lithographic
Services Inc. v. Laguesma 11 that

To avoid a situation where supervisors would merge with the rank-and-file or where
the supervisors' labor organization would represent conflicting interests, then a local
supervisors' union should not be allowed to affiliate with a national federation of
unions of rank-and-file employees where that federation actively participates in union
activities in the company.

As we explained in that case, however, such a situation would obtain only where two conditions
concur: First, the rank-and-file employees are directly under the authority of supervisory
employees. 12 Second, the national federation is actively involved in union activities in the
company. 13 Indeed, it is the presence of these two conditions which distinguished Atlas Lithographic
Services, Inc. v. Laguesma from Adamson & Adamson, Inc. v. CIR 14 where a different conclusion was
reached.

The affiliation of two local unions in a company with the same national federation is not by itself a
negation of their independence since in relation to the employer, the local unions are considered as
the principals, while the federation is deemed to be merely their agent. This conclusion is in accord
with the policy that any limitation on the exercise by employees of the right to self-organization
guaranteed in the Constitution must be construed strictly. Workers should be allowed the practice of
this freedom to the extent recognized in the fundamental law. As held in Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, Inc.: 15

The locals are separate and distinct units primarily designed to secure and maintain
an equality of bargaining power between the employer and their employee members
in the economic struggle for the fruits of the joint productive effort of labor and
capital; and the association of locals into the national union . . . was in furtherance of
the same end. These associations are consensual entities capable of entering into
such legal relations with their members. The essential purpose was the affiliation of
the local unions into a common enterprise to increase by collective action the
common bargaining power in respect of the terms and conditions of labor. Yet the
locals remained the basic units of association, free to serve their own and the
common interest of all, . . . and free also to renounce the affiliation for mutual welfare
upon the terms laid down in the agreement which brought it to existence. 16

The questions in this case, therefore, are whether the rank-and-file employees of petitioner DLSUMCCM
who compose a labor union are directly under the supervisory employees whose own union is affiliated
with the same national federation (Federation of Free Workers) and whether such national federation is
actively involved in union activities in the company so as to make the two unions in the same company, in
reality, just one union.

Although private respondent FFW-DLSUMCCMSUC and another union composed of rank-and-file

employees of petitioner DLSUMCCM are indeed affiliated with the same national federation, the
FFW, petitioner DLSUMCCM has not presented any evidence showing that the rank-and-file
employees composing the other union are directly under the authority of the supervisory employees.
As held in Adamson & Adamson, Inc. v. CIR, 17 the fact that the two groups of workers are employed by
the same company and the fact that they are affiliated with a common national federation are not
sufficient to justify the conclusion that their organizations are actually just one. Their immediate
professional relationship must be established. To borrow the language of Adamson & Adamson, Inc. v.
CIR: 18

We find without merit the contention of petitioner that if affiliation will be allowed, only
one union will in fact represent both supervisors and rank-and-file employees of the
petitioner; that there would be an indirect affiliation of supervisors and rank-and-file
employees with one labor organization; that there would be a merging of the two
bargaining units; and that the respondent union will lose its independence because it
becomes an alter ego of the federation. 19

Mention has already been made of the fact that the petition for certification election in this case was filed
by the FFW on behalf of the local union. This circumstance, while showing active involvement by the FFW
in union activities at the company, is by itself insufficient to justify a finding of violation of Art. 245 since
there is no proof that the supervisors who compose the local union have direct authority over the rank-
and-file employees composing the other local union which is also affiliated with the FFW. This fact
differentiates the case from Atlas Lithographic Services. Inc. v. Laguesma, 20 in which, in addition to the
fact that the petition for certification election had been filed by the national federation, it was shown that
the rank-and-file employees were directly under the supervisors organized by the same federation.

It follows that respondent labor officials did not gravely abuse their discretion.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.
Regalado, Melo and Martinez, JJ., concur.

Puno, J., took no part.

epublic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 144315 July 17, 2006

PHILCOM EMPLOYEES UNION, petitioner,

vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the Court of Appeals in CA-
G.R. SP No. 53989. The Court of Appeals affirmed the assailed portions of the 2 October 1998 and
27 November 1998 Orders of the Secretary of Labor and Employment in OS-AJ-0022-97.

The Facts

The facts, as summarized by the Court of Appeals, are as follows:

Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner
Philcom Employees Union (PEU or union, for brevity) and private respondent Philippine
Global Communications, Inc. (Philcom, Inc.) on June 30, 1997, the parties started
negotiations for the renewal of their CBA in July 1997. While negotiations were ongoing,
PEU filed on October 21, 1997 with the National Conciliation and Mediation Board (NCMB)
National Capital Region, a Notice of Strike, docketed as NCMB-NCR-NS No. 10-435-97, due
to perceived unfair labor practice committed by the company (Annex "1", Comment, p.
565, ibid.). In view of the filing of the Notice of Strike, the company suspended negotiations
on the CBA which moved the union to file on November 4, 1997 another Notice of Strike,
docketed as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining deadlock (Annex
"2", Comment, p. 566, ibid.)

On November 11, 1997, at a conciliation conference held at the NCMB-NCR office, the
parties agreed to consolidate the two (2) Notices of Strike filed by the union and to maintain
the status quo during the pendency of the proceedings (Annex "3", Comment, p. 567, ibid.).

On November 17, 1997, however, while the union and the company officers and
representatives were meeting, the remaining union officers and members staged a strike at
the company premises, barricading the entrances and egresses thereof and setting up a
stationary picket at the main entrance of the building. The following day, the company
immediately filed a petition for the Secretary of Labor and Employment to assume jurisdiction
over the labor dispute in accordance with Article 263(g) of the Labor Code.

On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued an
Order assuming jurisdiction over the dispute, enjoining any strike or lockout, whether
threatened or actual, directing the parties to cease and desist from committing any act that
may exacerbate the situation, directing the striking workers to return to work within twenty-
four (24) hours from receipt of the Secretary's Order and for management to resume normal
operations, as well as accept the workers back under the same terms and conditions prior to
the strike. The parties were likewise required to submit their respective position papers and
evidence within ten (10) days from receipt of said order (Annex "4", Comment, pp. 610-
611, ibid.). On November 28, 1997, a second order was issued reiterating the previous
directive to all striking employees to return to work immediately.

On November 27, 1997, the union filed a Motion for Reconsideration assailing, among
others, the authority of then Acting Secretary Trajano to assume jurisdiction over the labor
dispute. Said motion was denied in an Order dated January 7, 1998.

As directed, the parties submitted their respective position papers. In its position paper, the
union raised the issue of the alleged unfair labor practice of the company hereunder
enumerated as follows:

"(a) PABX transfer and contractualization of PABX service and position;

"(b) Massive contractualization;

"(c) Flexible labor and additional work/function;

"(d) Disallowance of union leave intended for union seminar;

"(e) Misimplementation and/or non-implementation of employees' benefits like shoe

allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance,
driving allowance, motorcycle award and full-time physician;

"(f) Non-payment, discrimination and/or deprivation of overtime, restday work,

waiting/stand by time and staff meetings;

"(g) Economic inducement by promotion during CBA negotiation;

"(h) Disinformation scheme, surveillance and interference with union affairs;

"(i) Issuance of memorandum/notice to employees without giving copy to union,

change in work schedule at Traffic Records Section and ITTO policies; and

"(j) Inadequate transportation allowance, water and facilities."

(Annex A, Petition; pp. 110-182, ibid.)

The company, on the other hand, raised in its position paper the sole issue of the illegality of
the strike staged by the union (Annex B, Petition; pp. 302-320, ibid.).
 On the premise that public respondent Labor Secretary cannot rule on the issue of the strike
since there was no petition to declare the same illegal, petitioner union filed on March 4,
1998 a Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position
Paper for being irrelevant, immaterial and impertinent to the issues assumed for resolution
(Annex C, Petition; pp. 330-333, ibid.).

In opposition to PEU's Manifestation/Motion, the company argued that it was precisely due to
the strike suddenly staged by the union on November 17, 1997 that the dispute was
assumed by the Labor Secretary. Hence, the case would necessarily include the issue of the
legality of the strike (Opposition to PEU'S Motion to Strike Out; Annex F, Petition; pp. 389-
393, ibid.).3

On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first assailed
order. The pertinent parts of the Order read:

Going now to the first issue at hand, a reading of the complaints charged by the Union as
unfair labor practices would reveal that these are not so within the legal connotation of Article
248 of the Labor Code. On the contrary, these complaints are actually mere grievances
which should have been processed through the grievance machinery or voluntary arbitration
outlined under the CBA. The issues of flexible labor and additional functions,
misimplementation or non-implementation of employee benefits, non-payment of overtime
and other monetary claims and inadequate transportation allowance, are all a matter of
implementation or interpretation of the economic provisions of the CBA subject to the
grievance procedure.

Neither do these complaints amount to gross violations which, thus, may be treated as unfair
labor practices outside of the coverage of Article 261. The Union failed to convincingly show
that there is flagrant and/or malicious refusal by the Company to comply with the economic
provisions stipulated in the CBA.

With respect to the charges of contractualization and economic inducement, this Office is
convinced that the acts of said company qualify as a valid exercise of management
prerogative. The act of the Company in contracting out work or certain services being
performed by Union members should not be seen as an unfair labor practice act per se.
First, the charge of massive contractualization has not been substantiated while the
contractualization of the position of PABX operator is an isolated instance. Secondly, in the
latter case, there was no proof that such contracting out interfered with, restrained or
coerced the employees in the exercise of their right to self-organization. Thus, it is not unfair
labor practice to contract out work for reason of reduction of labor cost through the
acquisition of automatic machines.

Likewise, the promotion of certain employees, who are incidentally members of the Union, to
managerial positions is a prerogative of management. A promotion which is manifestly
beneficial to an employee should not give rise to a gratuitous speculation that such a
promotion was made simply to deprive the union of the membership of the promoted
employee (Bulletin Publishing Co. v. Sanchez, et. al., G.R. No. 74425, October 7, 1986).

There remains the issue on bargaining deadlock. The Company has denied the existence of
any impasse in its CBA negotiations with the Union and instead maintains that it has been
negotiating with the latter in good faith until the strike was initiated. The Union, on the other
hand, contends otherwise and further prays that the remaining CBA proposals of the Union
 be declared reasonable and equitable and thus be ordered incorporated in the new CBA to
be executed.

As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the
parties during the CBA negotiations even before these were suspended. Prior to this Office's
assumption over the case, the Company furnished the Union its improved CBA counter-
proposal on the matter of promotional and wage increases which however was rejected by
the Union as divisive. Even as the Union has submitted its remaining CBA proposals for
resolution, the Company remains silent on the matter. In the absence of any basis, other
than the Union's position paper, on which this Office may make its determination of the
reasonableness and equitableness of these remaining CBA proposals, this Office finds it
proper to defer deciding on the matter and first allow the Company to submit its position
thereon.

We now come to the question of whether or not the strike staged by the Union on November
17, 1997 is illegal. The Company claims it is, having been held on grounds which are non-
strikeable, during the pendency of preventive mediation proceedings in the NCMB, after this
Office has assumed jurisdiction over the dispute, and with the strikers committing prohibited
and illegal acts. The Company further prays for the termination of some 20 Union officers
who were positively identified to have initiated the alleged illegal strike. The Union, on the
other hand, refuses to submit this issue for resolution.

Considering the precipitous nature of the sanctions sought by the Company, i.e., declaration
of illegality of the strike and the corresponding termination of the errant Union officers, this
Office deems it wise to defer the summary resolution of the same until both parties have
been afforded due process. The non-compliance of the strikers with the return-to-work
orders, while it may warrant dismissal, is not by itself conclusive to hold the strikers liable.
Moreover, the Union's position on the alleged commission of illegal acts by the strikers
during the strike is still to be heard. Only after a full-blown hearing may the respective
liabilities of Union officers and members be determined. The case of Telefunken
Semiconductors Employees Union-FFW v. Secretary of Labor and Employment and Temic
Telefunken Micro-Electronics (Phils.), Inc. (G.R. No. 122743 and 127215, December 12,
1997) is instructive on this point:

It may be true that the workers struck after the Secretary of Labor and Employment
had assumed jurisdiction over the case and that they may have failed to immediately
return to work even after the issuance of a return-to-work order, making their
continued strike illegal. For, a return-to-work order is immediately effective and
executory notwithstanding the filing of a motion for reconsideration. But, the liability
of each of the union officers and the workers, if any, has yet to be determined. xxx
xxx xxx.4

The dispositive portion of the Order reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:

The Union's Manifestation/Motion to Implead Philcom Corporation is hereby granted. Let

summons be issued to respondent Philcom Corporation to appear before any hearing that
may hereafter be scheduled and to submit its position paper as may be required.

The Union's Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's

Position Paper is hereby denied for lack of merit.
 The Union's charges of unfair labor practice against the Company are hereby dismissed.

Pending resolution of the issues of illegal strike and bargaining deadlock which are yet to be
heard, all the striking workers are directed to return to work within twenty-four (24) hours
from receipt of this Order and Philcom and/or Philcom Corporation are hereby directed to
unconditionally accept back to work all striking Union officers and members under the same
terms and conditions prior to the strike. The parties are directed to cease and desist from
committing any acts that may aggravate the situation.

Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is hereby
designated as the Hearing Officer to hear and receive evidence on all matters and issues
arising from the present labor dispute and, thereafter, to submit a report/recommendation
within twenty (20) days from the termination of the proceedings.

The parties are further directed to file their respective position papers with Atty. Lita V.
Aglibut within ten (10) days from receipt of this Order.

SO ORDERED.5

Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for
reconsideration of the Order impleading it as party-litigant in the present case and directing it to
accept back to work unconditionally all the officers and members of the union who participated in the
strike.6 Philcom also filed a Motion to Certify Labor Dispute to the National Labor Relations
Commission for Compulsory Arbitration.7

For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration. PEU asked
the Secretary to "partially reconsider" the 2 October 1998 Order insofar as it dismissed the unfair
labor practices charges against Philcom and included the illegal strike issue in the labor dispute. 8

The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed Order of
27 November 1998. The pertinent parts of the Order read:

The question of whether or not Philcom Corporation should be impleaded has been properly
disposed of in the assailed Order. We reiterate that neither the Company herein nor its
predecessor was able to convincingly establish that each is a separate entity in the absence
of any proof that there was indeed an actual closure and cessation of the operations of the
predecessor-company. We would have accommodated the Company for a hearing on the
matter had it been willing and prepared to submit evidence to controvert the finding that there
was a mere merger. As it now stands, nothing on record would prove that the two (2)
companies are separate and distinct from each other.

Having established that what took place was a mere merger, we correspondingly conclude
that the employer-employee relations between the Company and the Union officers and
members was never severed. And in merger, the employees of the merged companies or
entities are deemed absorbed by the new company (Filipinas Port Services, Inc. v. NLRC, et.
al., G.R. No. 97237, August 16, 1991). Considering that the Company failed miserably to
adduce any evidence to provide a basis for a contrary ruling, allegations to the effect that
employer-employee relations and positions previously occupied by the workers no longer
exist remain just that mere allegations. Consequently, the Company cannot now exempt
itself from compliance with the Order. Neither can it successfully argue that the employees
were validly dismissed. As held in Telefunken Semiconductor Employees Union-FFW v.
Secretary of Labor and Employment (G.R. Nos. 122743 and 122715, December 12, 1997),
 to exclude the workers without first ascertaining the extent of their individual participation in
the strike or non-compliance with the return-to-work orders will be tantamount to dismissal
without due process of law.

With respect to the unfair labor practice charges against the Company, we have carefully
reviewed the records and found no reason to depart from the findings previously rendered.
The issues now being raised by the Union are the same issues discussed and passed upon
in our earlier Order.

Finally, it is our determination that the issue of the legality of the strike is well within the
jurisdiction of this Office. The same has been properly submitted and assumed jurisdiction by
the Office for resolution.9

The dispositive portion of the Order reads:

WHEREFORE, there being no merit in the remaining Motions for Reconsideration filed by
both parties, the same are hereby DENIED. Our 2 October 1998 Order STANDS. To
expedite the resolution of the Motion to Certify Labor Dispute to the NLRC for Compulsory
Arbitration, Philcom Employees Union is hereby directed to submit its Opposition thereto
within ten (10) days from receipt of the copy of this Order.

SO ORDERED.10

PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court
assailing the Secretary's Orders of 2 October 1998 and 27 November 1998. This Court, in
accordance with its Decision of 10 March 1999 in G.R. No. 123426 entitled National Federation of
Labor (NFL) vs. Hon. Bienvenido E. Laguesma, Undersecretary of the Department of Labor and
Employment, and Alliance of Nationalist Genuine Labor Organization, Kilusang Mayo Uno (ANGLO-
KMU),11 referred the case to the Court of Appeals. 12

The Ruling of the Court of Appeals

On 31 July 2000, the Court of Appeals rendered judgment as follows:

WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed

portions of the Orders of the Secretary of Labor and Employment dated October 2, 1998 and
November 27, 1998 are AFFIRMED.

SO ORDERED.13

The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take cognizance of an
issue, even only incidental to the labor dispute, provided the issue must be involved in the labor
dispute itself or otherwise submitted to him for resolution.

The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor dispute
upon Philcom's petition as a consequence of the strike that PEU had declared and not because of
the notices of strike that PEU filed with the National Conciliation and Mediation Board (NCMB).

The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction over the
labor dispute was the staging of the strike. Consequently, any issue regarding the strike is not
merely incidental to the labor dispute between PEU and Philcom, but also part of the labor dispute
itself. Thus, the Court of Appeals held that it was proper for the Secretary to take cognizance of the
issue on the legality of the strike.

The Court of Appeals also ruled that for an employee to claim an unfair labor practice by the
employer, the employee must show that the act charged as unfair labor practice falls under Article
248 of the Labor Code. The Court of Appeals held that the acts enumerated in Article 248 relate to
the workers' right to self-organization. The Court of Appeals stated that if the act complained of has
nothing to do with the acts enumerated in Article 248, there is no unfair labor practice.

The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor practices,
were not in any way related to the workers' right to self-organization under Article 248 of the Labor
Code. The Court of Appeals held that PEU's complaint constitutes an enumeration of mere
grievances which should have been threshed out through the grievance machinery or voluntary
arbitration outlined in the Collective Bargaining Agreement (CBA).

The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the provisions of
the CBA, still those acts do not constitute unfair labor practices under Article 248 of the Labor Code.
The Court of Appeals held that PEU failed to show that those violations were gross or that there was
flagrant or malicious refusal on the part of Philcom to comply with the economic provisions of the
CBA.

The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC, 14 violations of
CBAs will no longer be deemed unfair labor practices, except those gross in character. Violations of
CBAs, except those gross in character, are mere grievances resolvable through the appropriate
grievance machinery or voluntary arbitration as provided in the CBAs.

Hence, this petition.

The Issues

In assailing the Decision of the Court of Appeals, petitioner contends that:

1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions of the
Supreme Court when it affirmed the order/resolution of the Secretary of Labor denying the
Union's Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position
Paper and including the issue of illegal strike notwithstanding the absence of any petition to
declare the strike illegal.

2. The Honorable Court of Appeals has decided a question of substance in a way not in
accord with law and jurisprudence when it affirmed the order/resolution of the Secretary of
Labor dismissing the Union's charges of unfair labor practices.

3. The Honorable Court of Appeals has departed from the edict of applicable law and
jurisprudence when it failed to issue such order mandating/directing the issuance of a writ of
execution directing the Company to unconditionally accept back to work the Union officers
and members under the same terms and conditions prior to the strike and as well as to pay
their salaries/backwages and the monetary equivalent of their other benefits from October 6,
1998 to date.15
 The Ruling of the Court

The petition must fail.

PEU contends that the Secretary should not have taken cognizance of the issue on the alleged
illegal strike because it was not properly submitted to the Secretary for resolution. PEU asserts that
after Philcom submitted its position paper where it raised the issue of the legality of the strike, PEU
immediately opposed the same by filing its Manifestation/Motion to Strike Out Portions of and
Attachments in Philcom's Position Paper. PEU asserts that it stated in its Manifestation/Motion that
certain portions of Philcom's position paper and some of its attachments were "irrelevant, immaterial
and impertinent to the issues assumed for resolution." Thus, PEU asserts that the Court of Appeals
should not have affirmed the Secretary's order denying PEU's Manifestation/Motion.

PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's assumption
of jurisdiction over the labor dispute was based on the two notices of strike that PEU filed with the
NCMB. PEU asserts that only the issues on unfair labor practice and bargaining deadlock should be
resolved in the present case.

PEU insists that to include the issue on the legality of the strike despite its opposition would convert
the case into a petition to declare the strike illegal.

PEU's contentions are untenable.

The Secretary properly took cognizance of the issue on the legality of the strike. As the Court of
Appeals correctly pointed out, since the very reason of the Secretary's assumption of jurisdiction was
PEU's declaration of the strike, any issue regarding the strike is not merely incidental to, but is
essentially involved in, the labor dispute itself.

Article 263(g) of the Labor Code provides:

When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it or certify the same to the Commission
for compulsory arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the
employer shall immediately resume operations and readmit all workers under the same
terms and conditions prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement agencies to
ensure the compliance with this provision as well as with such orders as he may issue to
enforce the same.

x x x x.

The powers granted to the Secretary under Article 263(g) of the Labor Code have been
characterized as an exercise of the police power of the State, with the aim of promoting public
good.16 When the Secretary exercises these powers, he is granted "great breadth of discretion"
in order to find a solution to a labor dispute. The most obvious of these powers is the automatic
enjoining of an impending strike or lockout or its lifting if one has already taken place. 17
In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry
indispensable to the national interest. As noted by the Secretary.

[T]he Company has been a vital part of the telecommunications industry for 73 years. It is
particularly noted for its expertise and dominance in the area of international
telecommunications. Thus, it performs a vital role in providing critical services indispensable
to the national interest. It is for this very reason that this Office strongly opines that any
concerted action, particularly a prolonged work stoppage is fraught with dire consequences.
Surely, the on-going strike will adversely affect not only the livelihood of workers and their
dependents, but also the company's suppliers and dealers, both in the public and private
sectors who depend on the company's facilities in the day-to-day operations of their
businesses and commercial transactions. The operational viability of the company is likewise
adversely affected, especially its expansion program for which it has incurred debts in the
approximate amount of P2 Billion. Any prolonged work stoppage will also bring about
substantial losses in terms of lost tax revenue for the government and would surely pose a
serious set back in the company's modernization program.

At this critical time when government is working to sustain the economic gains already
achieved, it is the paramount concern of this Office to avert any unnecessary work stoppage
and, if one has already occurred, to minimize its deleterious effect on the workers, the
company, the industry and national economy as a whole. 18

It is of no moment that PEU never acquiesced to the submission for resolution of the issue on the
legality of the strike. PEU cannot prevent resolution of the legality of the strike by merely refusing to
submit the issue for resolution. It is also immaterial that this issue, as PEU asserts, was not properly
submitted for resolution of the Secretary.

The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to national interest includes and extends to all
questions and controversies arising from such labor dispute. The power is plenary and
discretionary in nature to enable him to effectively and efficiently dispose of the dispute.19

Besides, it was upon Philcom's petition that the Secretary immediately assumed jurisdiction over the
labor dispute on 19 November 1997.20 If petitioner's notices of strike filed on 21 October and 4
November 1997 were what prompted the assumption of jurisdiction, the Secretary would have
issued the assumption order as early as those dates.

Moreover, after an examination of the position paper 21 Philcom submitted to the Secretary, we see
no reason to strike out those portions which PEU seek to expunge from the records. A careful study
of all the facts alleged, issues raised, and arguments presented in the position paper leads us to
hold that the portions PEU seek to expunge are necessary in the resolution of the present case.

On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-22
inclusive22 which deal with the supposed consolidation of Philippine Global Communications, Inc.
and Philcom Corporation, we find the other annexes relevant and material in the resolution of the
issues that have emerged in this case.

PEU also claims that Philcom has committed several unfair labor practices. PEU asserts that there
are "factual and evidentiary bases" for the charge of unfair labor practices against Philcom.

On unfair labor practices of employers, Article 248 of the Labor Code provides:
 Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of
the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;

(b) To require as a condition of employment that a person or an employee shall not join a
labor organization or shall withdraw from one to which he belongs;

(c) To contract out services or functions being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their rights to self-organization;

(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of
any labor organization, including the giving of financial or other support to it or its organizers
or supporters;

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization. x x x

(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for

having given or being about to give testimony under this Code;

(g) To violate the duty to bargain collectively as prescribed by this Code;

(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute; or

(i) To violate a collective bargaining agreement.

Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are
related to the workers' right to self-organization and to the observance of a CBA. Without that
element, the acts, no matter how unfair, are not unfair labor practices.23 The only exception is Article
248(f), which in any case is not one of the acts specified in PEU's charge of unfair labor practice.

A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not
fall under any of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The
issues of misimplementation or non-implementation of employee benefits, non-payment of overtime
and other monetary claims, inadequate transportation allowance, water, and other facilities, are all a
matter of implementation or interpretation of the economic provisions of the CBA between Philcom
and PEU subject to the grievance procedure.

We find it pertinent to quote certain portions of the assailed Decision, thus

A reading of private respondent's justification for the acts complained of would reveal that
they were actually legitimate reasons and not in anyway related to union busting. Hence, as
to compelling employees to render flexible labor and additional work without additional
compensation, it is the company's explanation that the employees themselves voluntarily
took on work pertaining to other assignments but closely related to their job description when
there was slack in the business which caused them to be idle. This was the case of the
International Telephone Operators who tried telemarketing when they found themselves with
so much free time due to the slowdown in the demand for international line services. With
respect to the Senior Combination Technician at the Cebu branch who was allegedly made
to do all around work, the same happened only once when the lineman was absent and the
lineman's duty was his ultimate concern. Moreover, the new assignment of the technicians at
CTSS who were promoted to QCE were based on the job description of QCE, while those of
the other technicians were merely temporary due to the promotion of several technicians to
QCE (pars. 9-12, Philcom's Reply to PEU's Position Paper; Annex "E", Petition; pp. 350-351,
ibid.).

On the alleged misimplementation and/or non-implementation of employees' benefits, such

as shoe allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance,
driving allowance, motorcycle award and full-time physician, the company gave the following
explanation which this Court finds plausible, to wit:

16. The employees at CTSS were given One Thousand Pesos (P1,000.00) cash or
its equivalent in purchase orders because it was their own demand that they be given
the option to buy the pair of leather boots they want. For the Cebu branch, the
employees themselves failed to include these benefits in the list of their demands
during the preparation of the budget for the year 1997 despite the instruction given to
them by the branch manager. According to the employees, they were not aware that
they were entitled to these benefits. They thought that because they have been
provided with two vans to get to their respective assignments, these benefits are
available only to collectors, messengers and technicians in motorcycles.

17. The P450.00 monthly allowance was provided by the CBA to be given to counter
clerks. However, the position of counter clerks had been abolished in accordance
with the reorganization plan undertaken by the company in April 1995, with the full
knowledge of the Union membership. As a result of the abolition of the position of
counter clerks, there was no more reason for granting the subject allowance.

18. The company more than satisfied the provision in the CBA to engage the
services of a physician and provided adequate medical services. Aside from a part
time physician who reports for duty everyday, the company has secured the services
of Prolab Diagnostics, which has complete medical facilities and personnel, to serve
the medical needs of the employees. x x x

19. The Union demands that a full-time physician to be assigned at the Head Office.
This practice, is not provided in the CBA and, moreover is too costly to maintain. The
medical services offered by Prolab [D]iagnostics are even better and more
comprehensive than any full time physician can give. It places at the employees'
disposal numerous specialists in various fields of medicine. It is beyond
understanding why the Union would insist on having a full-time physician when they
could avail of better services from Prolab Diagnostics.

(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)

On the issue of non-payment, discrimination and/or deprivation of overtime, restday work,

waiting/stand by time and staff meeting allowance, suffice it to state that there is nothing on
record to prove the same. Petitioner did not present evidence substantial enough to support
its claim.

As to the alleged inadequate transportation allowance and facilities, the company posits that:
 30. The transportation allowances given to the Dasmarinas and Pinugay employees
are more than adequate to defray their daily transportation cost. Hence, there is
absolutely no justification for an increase in the said allowance. In fact, said
employees at Dasmarinas and Pinugay, who are only residing in areas near their
place of work, are more privileged as they receive transportation expenses while the
rest of the company workers do not.

31. As to the demand for clean drinking water, the company has installed sufficient
and potable water inside the Head Office even before the strike was staged by the
Union. Any person who visits the Makati Head Office can attest to this fact.

(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)

Anent the allegation of PABX transfer and contractualization of PABX service and position,
these were done in anticipation of the company to switch to an automatic PABX machine
which requires no operator. This cannot be treated as ULP since management is at liberty,
absent any malice on its part, to abolish positions which it deems no longer necessary
(Arrieta vs. National Labor Relations Commission, 279 SCRA 326, 332). Besides, at the time
the company hired a temporary employee to man the machine during daytime, the subject
position was vacant while the assumption of the function by the company guard during
nighttime was only for a brief period.

With respect to the perceived massive contractualization of the company, said charge cannot
be considered as ULP since the hiring of contractual workers did not threaten the security of
tenure of regular employees or union members. That only 160 employees out of 400
employees in the company's payroll were considered rank and file does not of itself indicate
unfair labor practice since this is but a company prerogative in connection with its business
concerns.

Likewise, the offer or promotions to a few union members is neither unlawful nor an
economic inducement. These offers were made in accordance with the legitimate need of the
company for the services of these employees to fill positions left vacant by either retirement
or resignation of other employees. Besides, a promotion is part of the career growth of
employees found competent in their work. Thus, in Bulletin Publishing Corporation vs.
Sanchez (144 SCRA 628, 641), the Supreme Court held that "(T)he promotion of employees
to managerial or executive positions rests upon the discretion of management. Managerial
positions are offices which can only be held by persons who have the trust of the corporation
and its officers. It is the prerogative of management to promote any individual working within
the company to a higher position. It should not be inhibited or prevented from doing so. A
promotion which is manifestly beneficial to an employee should not give rise to a gratuitous
speculation that such a promotion was made simply to deprive the union of the membership
of the promoted employee, who after all appears to have accepted his promotion."

That the promotions were made near or around the time when CBA negotiations were about
to be held does not make the company's action an unfair labor practice. As explained by the
company, these promotions were based on the availability of the position and the
qualification of the employees promoted (p. 6, Annex "4", Philcom's Reply to PEU's Position
Paper; p. 380, ibid.)

On the union's charge that management disallowed leave of union officers and members to
attend union seminar, this is belied by the evidence submitted by the union itself. In a letter
to PEU's President, the company granted the leave of several union officers and members to
 attend a seminar notwithstanding that its request to be given more details about the affair
was left unheeded by the union (Annex "Y", PEU's Position Paper; p. 222, ibid.). Those who
were denied leave were urgently needed for the operation of the company.

On the ULP issue of disinformation scheme, surveillance and interference with union affairs,
these are mere allegations unsupported by facts. The charge of "black propaganda"
allegedly committed by the company when it supposedly posted two (2) letters addressed to
the Union President is totally baseless. Petitioner presents no proof that it was the company
which was behind the incident. On the purported disallowance of union members to observe
the July 27, 1997 CBA meeting, the company explained that it only allowed one (1)
employee from ITTO, instead of two (2), as it would adversely affect the operation of the
group. It also took into consideration the fact that ITTO members represent only 20% of the
union. Other union members from other departments of the company should have equal
representation (Annex "L", Position Paper for the Union; pp. 205-206, ibid.). As to the alleged
surveillance of the company guards during a union seminar, We find the idea of sending
guards to spy on a mere union seminar quite preposterous. It is thus not likely for the
company which can gain nothing from it to waste its resources in such a scheme.

On the issuance of memorandum/notice to employees without giving copy to union, change

in work schedule at Traffic Records Section and ITTO policies, the company has sufficiently
rebutted the same, thus:

27. The Union also whines about the failure of the company to furnish copies of
memoranda or notices sent to employees and change of work schedules at the
Traffic Records Section and ITTO policies. The CBA, however, does not obligate the
Company to give the Union a copy of each and every memorandum or notice sent to
employees. This would be unreasonable and impractical. Neither did the Union
demand that they be furnished copies of the same. This is clearly a non-issue as
copies of all memoranda or notices issued by management are readily available
upon request by any employee or the Union.

28. Contrary to the allegations of the Union, the rationale and mechanics for the
abolishment of the midnight schedule at the Traffic Record Services had been
thoroughly and adequately discussed with the Union's President, Robert Benosa,
and the staff of Traffic Record Services in the meeting held on May 9, 1997. The
midnight services were abolished for purely economic reasons. The company
realized that the midnight work can be handled in the morning without hampering
normal operations. At the same time, the company will be able to save on cost. For
this objective, the employees concerned agreed to create a manning and shifting
schedule starting at 6:00 a.m. up to 10:00 p.m., with each employee rendering only
eight hours of work every day without violating any provision of the labor laws or the
CBA.24

The Court has always respected a company's exercise of its prerogative to devise means to improve
its operations. Thus, we have held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work assignments, supervision
and transfer of employees, working methods, time, place and manner of work. 25

This is so because the law on unfair labor practices is not intended to deprive employers of their
fundamental right to prescribe and enforce such rules as they honestly believe to be necessary to
the proper, productive and profitable operation of their business. 26
Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no
showing that the same was a flagrant or malicious refusal to comply with its economic provisions.
The law mandates that such violations should not be treated as unfair labor practices.27

PEU also asserts that the Court of Appeals should have issued an order directing the issuance of a
writ of execution ordering Philcom to accept back to work unconditionally the striking union officers
and members under the same terms and conditions prevailing before the strike. PEU asserts that
the union officers and members should be paid their salaries or backwages and monetary equivalent
of other benefits beginning 6 October 1998 when PEU received a copy of the Secretary's 2 October
1998 return-to-work order.

PEU claims that even if the "issue of illegal strike can be included in the assailed orders and that the
union officers and members have been terminated as a result of the alleged illegal strike, still, the
Secretary has to rule on the illegality of the strike and the liability of each striker." PEU asserts that
the union officers and members should first be accepted back to work because a return-to-work
order is immediately executory.28

We rule on the legality of the strike if only to put an end to this protracted labor dispute. The facts
necessary to resolve the legality of the strike are not in dispute.

The strike and the strike activities that PEU had undertaken were patently illegal for the following
reasons:

1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD 823), as
amended by Presidential Decree No. 849, from strikes and lockouts. PD 823, as amended, provides:

Sec. 1. It is the policy of the State to encourage free trade unionism and free collective
bargaining within the framework of compulsory and voluntary arbitration. Therefore, all forms
of strikes, picketings and lockouts are hereby strictly prohibited in vital industries, such as in
public utilities, including transportation andcommunications, x x x. (Emphasis supplied)

Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:

For the guidance of workers and employers, some of whom have been led into filing notices
of strikes and lockouts even in vital industries, you are hereby instructed to consider the
following as vital industries and companies or firms under PD 823 as amended:

1. Public Utilities:

xxxx

B. Communications:

1) Wire or wireless telecommunications such as telephone, telegraph,

telex, and cable companies or firms; (Emphasis supplied)

xxxx

It is therefore clear that the striking employees violated the no-strike policy of the State in regard to
vital industries.
2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the
return-to-work orders dated 19 November and 28 November 1997, the striking employees
failed to return to work and continued with their strike.

Regardless of their motives, or the validity of their claims, the striking employees should have
ceased or desisted from all acts that would undermine the authority given the Secretary under Article
263(g) of the Labor Code. They could not defy the return-to-work orders by citing Philcom's alleged
unfair labor practices to justify such defiance. 29

PEU could not have validly anchored its defiance to the return-to-work orders on the motion for
reconsideration that it had filed on the assumption of jurisdiction order. A return-to-work order is
immediately effective and executory despite the filing of a motion for reconsideration. It must
be strictly complied with even during the pendency of any petition questioning its validity.30

The records show that on 22 November 1997, Philcom published in the Philippine Daily Inquirer a
notice to striking employees to return to work. 31 These employees did not report back to work but
continued their mass action. In fact, they lifted their picket lines only on 22 December
1997.32 Philcom formally notified twice these employees to explain in writing why they should not be
dismissed for defying the return-to-work order.33 Philcom held administrative hearings on these
disciplinary cases.34 Thereafter, Philcom dismissed these employees for abandonment of work in
defiance of the return-to-work order.35

A return-to-work order imposes a duty that must be discharged more than it confers a right that may
be waived. While the workers may choose not to obey, they do so at the risk of severing their
relationship with their employer.36

The following provision of the Labor Code governs the effects of defying a return-to-work order:

ART. 264. Prohibited activities. (a) x x x x

No strike or lockout shall be declared after assumption of jurisdiction by the President

or the Minister or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or
lockout x x x x

Any union officer who knowingly participates in 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, shall not constitute sufficient ground for termination of his
employment, even if a replacement had been hired by the employer during such lawful strike.
(Emphasis supplied)

A strike undertaken despite the Secretary's issuance of an assumption or certification order

becomes aprohibited activity, and thus, illegal, under Article 264(a) of the Labor Code. The union
officers who knowingly participate in the illegal strike are deemed to have lost their employment
status. The union members, including union officers, who commit specific illegal acts or who
knowingly defy a return-to-work order are also deemed to have lost their employment
status.37 Otherwise, the workers will simply refuse to return to their work and cause a standstill in the
company operations while retaining the positions they refuse to discharge and preventing
management to fill up their positions.38
Hence, the failure of PEU's officers and members to comply immediately with the return-to-work
orders dated 19 November and 28 November 1997 cannot be condoned. Defiance of the return-to-
work orders of the Secretary constitutes a valid ground for dismissal.39

3. PEU staged the strike using unlawful means and methods.

Even if the strike in the present case was not illegal per se, the strike activities that PEU had
undertaken, especially the establishment of human barricades at all entrances to and egresses from
the company premises and the use of coercive methods to prevent company officials and other
personnel from leaving the company premises, were definitely illegal. 40 PEU is deemed to have
admitted that its officers and members had committed these illegal acts, as it never disputed
Philcom's assertions of PEU's unlawful strike activities in all the pleadings that PEU submitted to the
Secretary and to this Court.

PEU's picketing officers and members prohibited other tenants at the Philcom building from entering
and leaving the premises. Leonida S. Rabe, Country Manager of Societe Internationale De
Telecommunications Aeronautiques (SITA), a tenant at the Philcom building, wrote two letters
addressed to PEU President Roberto B. Benosa. She told Benosa that PEU's act of obstructing the
free ingress to and egress from the company premises "has badly disrupted normal operations of
their organization."41

The right to strike, while constitutionally recognized, is not without legal constrictions. Article 264(e)
of the Labor Code, on prohibited activities, provides:

No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employer's premises for lawful purposes, or
obstruct public thoroughfares.

The Labor Code is emphatic against the use of violence, coercion, and intimidation during a strike
and to this end prohibits the obstruction of free passage to and from the employer's premises for
lawful purposes. A picketing labor union has no right to prevent employees of another company from
getting in and out of its rented premises, otherwise, it will be held liable for damages for its acts
against an innocent by-stander.42

The sanction provided in Article 264(a) is so severe that 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.43

By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the
resumption of company operations, the striking employees have forfeited their right to be
readmitted.44

4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB.

On 17 November 1997, while a conciliation meeting was being held at the NCMB in NCMB-NCR-NS
10-435-97, PEU went on strike. It should be noted that in their meeting on 11 November 1997, both
Philcom and PEU were even "advised to maintain the status quo." 45 Such disregard of the mediation
proceedings was a blatant violation of Section 6, Book V, Rule XXII of the Omnibus Rules
Implementing the Labor Code, which explicitly obliges the parties to bargain collectively in good faith
and prohibits them from impeding or disrupting the proceedings.46 The relevant provision of the
Implementing Rules provides:
 Section 6. Conciliation. x x x x

During the proceedings, the parties shall not do any act which may disrupt or impede the
early settlement of dispute. They are obliged, as part of their duty, to bargain collectively in
good faith, to participate fully and promptly in the conciliation meetings called by the regional
branch of the Board. x x x x

Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike "during the
pendency of cases involving the same grounds for the same strike."

Lamentably, PEU defiantly proceeded with their strike during the pendency of the conciliation
proceedings.

5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA.

By PEU's own admission, "the Union's complaints to the management began in June 1997 even
before the start of the 1997 CBA renegotiations."47 Their CBA expired on 30 June 1997.48 PEU could
have just taken up their grievances in their negotiations for the new CBA. This is what a Philcom
officer had suggested to the Dasmarias staff when the latter requested on 16 June 1997 for an
increase in transportation allowance. 49 In fact, when PEU declared the strike, Philcom and PEU had
already agreed on 37 items in their negotiations for the new CBA. 50

The bottom line is that PEU should have immediately resorted to the grievance machinery provided
for in the CBA.51 In disregarding this procedure, the union leaders who knowingly participated in the
strike have acted unreasonably. The law cannot interpose its hand to protect them from the
consequences of their illegal acts. 52

A strike declared on the basis of grievances which have not been submitted to the grievance
committee as stipulated in the CBA of the parties is premature and illegal. 53

Having held the strike illegal and having found that PEU's officers and members have committed
illegal acts during the strike, we hold that no writ of execution should issue for the return to work of
PEU officers who participated in the illegal strike, and PEU members who committed illegal acts or
who defied the return-to-work orders that the Secretary issued on 19 November 1997 and 28
November 1997. The issue of who participated in the illegal strike, committed illegal acts, or defied
the return-to-work orders is a question of fact that must be resolved in the appropriate proceedings
before the Secretary of Labor.

WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-
G.R. SP No. 53989, with the MODIFICATION that the Secretary of Labor is directed to determine
who among the Philcom Employees Union officers participated in the illegal strike, and who among
the union members committed illegal acts or defied the return-to-work orders of 19 November 1997
and 28 November 1997. No pronouncement as to costs.

SO ORDERED.

Quisumbing, Chairman, Carpio-Morales, Tinga, Velasco, Jr., J.J., concur.

 Republic of the Philippines
SUPREME COURT
Baguio City

FIRST DIVISION

G.R. No. 118506 April 18, 1997

NORMA MABEZA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, PETER NG/HOTEL SUPREME, respondents.

KAPUNAN, J.:

This petition seeking the nullification of a resolution of public respondent National Labor Relations
Commission dated April 28, 1994 vividly illustrates why courts should be ever vigilant in the
preservation of the constitutionally enshrined rights of the working class. Without the protection
accorded by our laws and the tempering of courts, the natural and historical inclination of capital to
ride roughshod over the rights of labor would run unabated.

The facts of the case at bar, culled from the conflicting versions of petitioner and private respondent,
are illustrative.

Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-
employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an
instrument attesting to the latter's compliance with minimum wage and other labor standard
provisions of law. 1 The instrument provides: 2

JOINT AFFIDAVIT

We, SYLVIA IGANA, HERMINIGILDO AQUINO, EVELYN OGOY, MACARIA

JUGUETA, ADELAIDA NONOG, NORMA MABEZA, JONATHAN PICART and JOSE
DIZON, all of legal ages (sic), Filipinos and residents of Baguio City, under oath,
depose and say:

1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No.
416 Magsaysay Ave., Baguio City.

2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;

3. That we are all (8) employees in the hotel and assigned in each respective shifts;

4. That we have no complaints against the management of the Hotel Supreme as we

are paid accordingly and that we are treated well.

5. That we are executing this affidavit voluntarily without any force or intimidation and
for the purpose of informing the authorities concerned and to dispute the alleged
 report of the Labor Inspector of the Department of Labor and Employment conducted
on the said establishment on February 2, 1991.

IN WITNESS WHEREOF, we have hereunto set our hands this 7th day of May, 1991
at Baguio City, Philippines.

(Sgd.) (Sgd.) (Sgd.)

SYLVIA IGAMA HERMINIGILDO AQUINO EVELYN OGOY

(Sgd.) (Sgd.) (Sgd.)

MACARIA JUGUETA ADELAIDA NONOG NORMA MABEZA.

(Sgd.) (Sgd.)
JONATHAN PICART JOSE DIZON

SUBSCRIBED AND SWORN to before me this 7th day of May, 1991, at Baguio City, Philippines.

Asst. City Prosecutor

Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the
veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless
submitted on the same day to the Regional Office of the Department of Labor and Employment in
Baguio City.

As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting
findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February
2, 1991) apparently adverse to the private respondent. 3

After she refused to proceed to the City Prosecutor's Office on the same day the affidavit was
submitted to the Cordillera Regional Office of DOLE petitioner avers that she was ordered by the
hotel management to turn over the keys to her living quarters and to remove her belongings from the
hotel
premises. 4 According to her, respondent strongly chided her for refusing to proceed to the City
Prosecutor's Office to attest to the affidavit. 5 She thereafter reluctantly filed a leave of absence from her
job which was denied by management. When she attempted to return to work on May 10, 1991, the
hotel's cashier, Margarita Choy, informed her that she should not report to work and, instead, continue
with her unofficial leave of absence. Consequently, on May 13, 1991, three days after her attempt to
return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National
Labor Relations Commission CAR Baguio City. In addition to her complaint for illegal dismissal, she
alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month
pay, night differential and other benefits. The complaint was docketed as NLRC Case No. RAB-CAR-05-
0198-91 and assigned to Labor Arbiter Felipe P. Pati.

Responding to the allegations made in support of petitioner's complaint for illegal dismissal, private
respondent Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job)
without notice to the management" 6 and that she actually abandoned her work. He maintained that
there was no basis for the money claims for underpayment and other benefits as these were paid in the
form of facilities to petitioner and the hotel's other employee. 7Pointing to the Affidavit of May 7, 1991, the
private respondent asserted that his employees actually have no problems with management. In a
supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal was
filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal
complaint for Qualified Theft he filed before the prosecutor's office of the City of Baguio against petitioner
on July 4, 1991. 8

On May 14, 1993, Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the
ground of loss of confidence. His disquisitions in support of his conclusion read as follows:

It appears from the evidence of respondent that complainant carted away or stole
one (1) blanket, 1 piece bedsheet, 1 piece thermos, 2 pieces towel (Exhibits "9", "9-
A," "9-B," "9-C" and "10" pages 12-14 TSN, December 1, 1992).

In fact, this was the reason why respondent Peter Ng lodged a criminal complaint
against complainant for qualified theft and perjury. The fiscal's office finding a prima
facie evidence that complainant committed the crime of qualified theft issued a
resolution for its filing in court but dismissing the charge of perjury (Exhibit "4" for
respondent and Exhibit "B-7" for complainant). As a consequence, complainant was
charged in court for the said crime (Exhibit "5" for respondent and Exhibit "B-6" for
the complainant).

With these pieces of evidence, complainant committed serious misconduct against

her employer which is one of the just and valid grounds for an employer to terminate
an employee (Article 282 of the Labor Code as amended). 9

On April 28, 1994, respondent NLRC promulgated its assailed

Resolution 10 affirming the Labor Arbiter's decision. The resolution substantially incorporated the
findings of the Labor Arbiter. 11 Unsatisfied, petitioner instituted the instant special civil action
for certiorari under Rule 65 of the Rules of Court on the following grounds: 12

1. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS

COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING
TO GRAVE ABUSE OF DISCRETION IN ITS FAILURE TO CONSIDER THAT THE
ALLEGED LOSS OF CONFIDENCE IS A FALSE CAUSE AND AN
AFTERTHOUGHT ON THE PART OF THE RESPONDENT-EMPLOYER TO
JUSTIFY, ALBEIT ILLEGALLY, THE DISMISSAL OF THE COMPLAINANT FROM
HER EMPLOYMENT;

2. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS

COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING
TO GRAVE ABUSE OF DISCRETION IN ADOPTING THE RULING OF THE LABOR
ARBITER THAT THERE WAS NO UNDERPAYMENT OF WAGES AND BENEFITS
ON THE BASIS OF EXHIBIT "8" (AN UNDATED SUMMARY OF COMPUTATION
PREPARED BY ALLEGEDLY BY RESPONDENT'S EXTERNAL ACCOUNTANT)
WHICH IS TOTALLY INADMISSIBLE AS AN EVIDENCE TO PROVE PAYMENT OF
WAGES AND BENEFITS;

3. WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS

COMMISSION COMMITTED A PATENT AND PALPABLE ERROR AMOUNTING
TO GRAVE ABUSE OF DISCRETION IN FAILING TO CONSIDER THE EVIDENCE
ADDUCED BEFORE THE LABOR ARBITER AS CONSTITUTING UNFAIR LABOR
PRACTICE COMMITTED BY THE RESPONDENT.
The Solicitor General, in a Manifestation in lieu of Comment dated August 8, 1995 rejects private
respondent's principal claims and defenses and urges this Court to set aside the public respondent's
assailed resolution. 13

We agree.

It is settled that in termination cases the employer bears the burden of proof to show that the
dismissal is for just cause, the failure of which would mean that the dismissal is not justified and the
employee is entitled to reinstatement. 14

In the case at bar, the private respondent initially claimed that petitioner abandoned her job when
she failed to return to work on May 8, 1991. Additionally, in order to strengthen his contention that
there existed sufficient cause for the termination of petitioner, he belatedly included a complaint for
loss of confidence, supporting this with charges that petitioner had stolen a blanket, a bedsheet and
two towels from the hotel. 15 Appended to his last complaint was a suit for qualified theft filed with the
Baguio City prosecutor's office.

From the evidence on record, it is crystal clear that the circumstances upon which private
respondent anchored his claim that petitioner "abandoned" her job were not enough to constitute just
cause to sanction the termination of her services under Article 283 of the Labor Code. For
abandonment to arise, there must be concurrence of two things: 1) lack of intention to work; 16 and 2)
the presence of overt acts signifying the employee's intention not to work.17

In the instant case, respondent does not dispute the fact that petitioner tried to file a leave of
absence when she learned that the hotel management was displeased with her refusal to attest to
the affidavit. The fact that she made this attempt clearly indicates not an intention to abandon but an
intention to return to work after the period of her leave of absence, had it been granted, shall have
expired.

Furthermore, while absence from work for a prolonged period may suggest abandonment in certain
instances, mere absence of one or two days would not be enough to sustain such a claim. The overt
act (absence) ought
to unerringly point to the fact that the employee has no intention to return to work, 18 which is patently
not the case here. In fact, several days after she had been advised to take an informal leave, petitioner
tried to resume working with the hotel, to no avail. It was only after she had been repeatedly rebuffed that
she filed a case for illegal dismissal. These acts militate against the private respondent's claim that
petitioner abandoned her job. As the Solicitor General in his manifestation observed:

Petitioner's absence on that day should not be construed as abandonment of her job.
She did not report because the cashier told her not to report anymore, and that
private respondent Ng did not want to see her in the hotel premises. But two days
later or on the 10th of May, after realizing that she had to clarify her employment
status, she again reported for work. However, she was prevented from working by
private respondents. 19

We now come to the second cause raised by private respondent to support his contention that
petitioner was validly dismissed from her job.

Loss of confidence as a just cause for dismissal was never intended to provide employers with a
blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of
confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to barren
form the words of the constitutional guarantee of security of tenure. Having this in mind, loss of
confidence should ideally apply only to cases involving employees occupying positions of trust and
confidence or to those situations where the employee is routinely charged with the care and custody
of the employer's money or property. To the first class belong managerial employees, i.e., those
vested with the powers or prerogatives to lay down management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such
managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or
those who, in the normal and routine exercise of their functions, regularly handle significant amounts
of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other
hotel property from the property custodian each day and who has to account for each and every
towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of
these two classes of employees for which loss of confidence, if ably supported by evidence, would
normally apply. Illustrating this distinction, this Court in Marina Port Services, Inc. vs. NLRC, 20has
stated that:

To be sure, every employee must enjoy some degree of trust and confidence from
the employer as that is one reason why he was employed in the first place. One
certainly does not employ a person he distrusts. Indeed, even the lowly janitor must
enjoy that trust and confidence in some measure if only because he is the one who
opens the office in the morning and closes it at night and in this sense is entrusted
with the care or protection of the employer's property. The keys he holds are the
symbol of that trust and confidence.

By the same token, the security guard must also be considered as enjoying the trust
and confidence of his employer, whose property he is safeguarding. Like the janitor,
he has access to this property. He too, is charged with its care and protection.

Notably, however, and like the janitor again, he is entrusted only with
the physical task of protecting that property. The employer's trust and confidence in
him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's
words, with the duties of safekeeping and safeguarding company policies,
management instructions, and company secrets such as operation devices. He is not
privy to these confidential matters, which are shared only in the higher echelons of
management. It is the persons on such levels who, because they discharge these
sensitive duties, may be considered holding positions of trust and confidence. The
security guard does not belong in such category. 21

More importantly, we have repeatedly held that loss of confidence should not be simulated in order
to justify what would otherwise be, under the provisions of law, an illegal dismissal. "It should not be
used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a
mere afterthought to justify an earlier action taken in bad faith." 22

In the case at bar, the suspicious delay in private respondent's filing of qualified theft charges
against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations as
employer under the Labor Code) by her act of filing illegal dismissal charges against the private
respondent would hardly warrant serious consideration of loss of confidence as a valid ground for
dismissal. Notably, the Solicitor General has himself taken a position opposite the public respondent
and has observed that:

If petitioner had really committed the acts charged against her by private
respondents (stealing supplies of respondent hotel), private respondents should have
confronted her before dismissing her on that ground. Private respondents did not do
so. In fact, private respondent Ng did not raise the matter when petitioner went to see
 him on May 9, 1991, and handed him her application for leave. It took private
respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal
complaint against petitioner, in an obvious attempt to build a case against her.

The manipulations of private respondents should not be countenanced. 23

Clearly, the efforts to justify petitioner's dismissal on top of the private respondent's scheme of
inducing his employees to sign an affidavit absolving him from possible violations of the Labor Code
taints with evident bad faith and deliberate malice petitioner's summary termination from
employment.

Having said this, we turn to the important question of whether or not the dismissal by the private
respondent of petitioner constitutes an unfair labor practice.

The answer in this case must inevitably be in the affirmative.

The pivotal question in any case where unfair labor practice on the part of the employer is alleged is
whether or not the employer has exerted pressure, in the form of restraint, interference or coercion,
against his employee's right to institute concerted action for better terms and conditions of
employment. Without doubt, the act of compelling employees to sign an instrument indicating that
the employer observed labor standards provisions of law when he might have not, together with the
act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes
unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better
terms and conditions of employment through concerted action.

We agree with the Solicitor General's observation in his manifestation that "[t]his actuation . . . is
analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code" 24 which
distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or discriminate
against an employee for having given or being about to give testimony" 25 under the Labor Code. For in
not giving positive testimony in favor of her employer, petitioner had reserved not only her right to dispute
the claim and proffer evidence in support thereof but also to work for better terms and conditions of
employment.

For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as
an example to all of the hotel's employees, that they could only cause trouble to management at
great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing
of charges against her was the warning that they would not only be deprived of their means of
livelihood, but also possibly, their personal liberty.

This Court does not normally overturn findings and conclusions of quasi-judicial agencies when the
same are ably supported by the evidence on record. However, where such conclusions are based
on a misperception of facts or where they patently fly in the face of reason and logic, we will not
hesitate to set aside those conclusions. Going into the issue of petitioner's money claims, we find
one more salient reason in this case to set things right: the labor arbiter's evaluation of the money
claims in this case incredibly ignores existing law and jurisprudence on the matter. Its blatant one-
sidedness simply raises the suspicion that something more than the facts, the law and jurisprudence
may have influenced the decision at the level of the Arbiter.

Labor Arbiter Pati accepted hook, line and sinker the private respondent's bare claim that the reason
the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage
was because petitioner did not factor in the meals, lodging, electric consumption and water she
received during the period in her computations. 26 Granting that meals and lodging were provided and
indeed constituted facilities, such facilities could not be deducted without the employer complying first
with certain legal requirements. Without satisfying these requirements, the employer simply cannot
deduct the value from the employee's ages. First, proof must be shown that such facilities are customarily
furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in
writing by the employee. Finally, facilities must be charged at fair and reasonable value. 27

These requirements were not met in the instant case. Private respondent "failed to present any
company policy or guideline to show that the meal and lodging . . . (are) part of the salary;" 28 he
failed to provide proof of the employee's written authorization; and, he failed to show how he arrived at
the valuations. 29

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision
were figures furnished by the private respondent's own accountant, without corroborative evidence.
On the pretext that records prior to the July 16, 1990 earthquake were lost or destroyed, respondent
failed to produce payroll records, receipts and other relevant documents, where he could have, as
has been pointed out in the Solicitor General's manifestation, "secured certified copies thereof from
the nearest regional office of the Department of Labor, the SSS or the BIR." 30

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were
not facilities but supplements. A benefit or privilege granted to an employee for the convenience of
the employer is not a facility. The criterion in making a distinction between the two not so much lies
in the kind (food, lodging) but the purpose. 31 Considering, therefore, that hotel workers are required to
work different shifts and are expected to be available at various odd hours, their ready availability is a
necessary matter in the operations of a small hotel, such as the private respondent's hotel.

It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages
equivalent to the fullwage applicable from May 13, 1988 up to the date of her illegal dismissal.

Additionally, petitioner is entitled to payment of service incentive leave pay, emergency cost of living
allowance, night differential pay, and 13th month pay for the periods alleged by the petitioner as the
private respondent has never been able to adduce proof that petitioner was paid the aforestated
benefits.

However, the claims covering the period of October 1987 up to the time of filing the case on May 13,
1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money
claims arising out of employer-employee relationship to three (3) years from the time the cause of
action accrues. 32

We depart from the settled rule that an employee who is unjustly dismissed from work normally
should be reinstated without loss of seniority rights and other privileges. Owing to the strained
relations between petitioner and private respondent, allowing the former to return to her job would
only subject her to possible harassment and future embarrassment. In the instant case, separation
pay equivalent to one month's salary for every year of continuous service with the private respondent
would be proper, starting with her job at the Belfront Hotel.

In addition to separation pay, backwages are in order. Pursuant to R.A. 6715 and our decision
in Osmalik Bustamante, et al. vs. National Labor Relations Commission, 33 petitioner is entitled to full
backwages from the time of her illegal dismissal up to the date of promulgation of this decision without
qualification or deduction.

Finally, in dismissal cases, the law requires that the employer must furnish the employee sought to
be terminated from employment with two written notices before the same may be legally effected.
The first is a written notice containing a statement of the cause(s) for dismissal; the second is a
notice informing the employee of the employer's decision to terminate him stating the basis of the
dismissal. During the process leading to the second notice, the employer must give the employee
ample opportunity to be heard and defend himself, with the assistance of counsel if he so desires.

Given the seriousness of the second cause (qualified theft) of the petitioner's dismissal, it is
noteworthy that the private respondent never even bothered to inform petitioner of the charges
against her. Neither was petitioner given the opportunity to explain the loss of the articles. It was only
almost two months after petitioner had filed a complaint for illegal dismissal, as an afterthought, that
the loss was reported to the police and added as a supplemental answer to petitioner's complaint.
Clearly, the dismissal of petitioner without the benefit of notice and hearing prior to her termination
violated her constitutional right to due process. Under the circumstance an award of One Thousand
Pesos (P1,000.00) on top of payment of the deficiency in wages and benefits for the period
aforestated would be proper.

WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations

Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the
economic benefits due the petitioner are hereby summarized as follows:

1) Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of petitioner's
illegal dismissal;

2) Service incentive leave pay; night differential pay and 13th month pay for the same period;

3) Separation pay equal to one month's salary for every year of petitioner's continuous service with
the private respondent starting with her job at the Belfront Hotel;

4) Full backwages, without qualification or deduction, from the date of petitioner's illegal dismissal up
to the date of promulgation of this decision pursuant to our ruling in Bustamante vs. NLRC. 34

5) P1,000.00.

ORDERED.

Padilla, Bellosillo and Vitug, JJ., concur.

Hermosisima, Jr., J., is on leave.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 75037 April 30, 1987

TANDUAY DISTILLERY LABOR UNION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LAMBERTO SANTOS, PEDRO ESTERAL,
ROMAN CHICO, JOSELITO ESTANISLAO, JOSE DELGADO, JUANITO ARGUELLES,
RICARDO CAJOLES, and JOSEFINO PAGUYO, respondents.

No. 75055 April 30, 1987

TANDUAY DISTILLERY, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), LAMBERTO SANTOS, PEDRO
ESTERAL, ROMAN CHICO, JOSELITO ESTANISLAO, JOSE DELGADO, JUANITO
ARGUELLES, RICARDO CAJOLES, and JOSEFINO PAGUYO, respondents.

Jaime G. de Leon for petitioner in G.R. No. 75037.

Pacifico de Ocampo and Benjamin C. Gascon for petitioner in G.R. No. 75055.

GUTIERREZ, JR.:

These consolidated petitions for certiorari seek the review and setting aside of respondent National
Labor Relations Commission's decision in NLRC Case No. AB-6-11685-81 dated May 26, 1986,
affirming the October 12, 1984 decision of the Labor Arbiter, and of the NLRC resolution dated June
28, 1986, which denied the motion for reconsideration of the petitioners.

The facts of the case are as follows:

Private respondents were all employees of Tanduay Distillery, Inc., (TDI) and members of the
Tanduay Distillery Labor Union (TDLU), a duly organized and registered labor organization and the
exclusive bargaining agent of the rank and file employees of the petitioner company.

On March 11, 1980, a Collective Bargaining Agreement (CBA), was executed between TDI and
TDLU. The CBA was duly ratified by a majority of the workers in TDI including herein private
respondents, and a copy was filed with the Ministry of Labor and Employment (MOLE) on October
29, 1980 for certification. The CBA had a term of three (3) years from July 1, 1979 to June 30, 1982.
It also contained a union security clause. which provides:

All workers who are or may during the effectivity of this Contract, become members
of the Union in accordance with its Constitution and By-Laws shall, as a condition of
their continued employment, maintain membership in good standing in the Union for
the duration of the agreement.

On or about the early part of October 1980, while the CBA was in effect and within the contract bar
period the private respondents joined another union, the Kaisahan Ng Manggagawang
Pilipino KAMPIL) and organized its local chapter in TDI, with private respondents Pedro Esteral and
Lamberts Santos being elected President and Vice-President, respectively.

On November 7, 1980, KAMPIL filed a petition for certification election to determine union
representation in TDI, which development compelled TDI to file a grievance with TDLU on November
7, 1980 pursuant to Article XV of the CBA.
Acting on the grievance of TDI, TDLU wrote the private respondents on December 23, 1980
requiring them to explain why TDLU should not take disciplinary action against them for, among
other things

Disloyalty to the Tanduay Distillery Labor Union (T.D.L.U.) by forming and joining
another union with a complete takeover intent as the sole and exclusive bargaining
representative of all rank and file employees at TDI. (p. 16, Rollo)

TDLU created a committee to investigate its erring members in accordance with its by-laws which
are not disputed by the private respondents. Except for Josefino Paguyo who, despite due notice,
was absent during the investigation conducted on January 2, 1981, all the private respondents were
present and given a chance to explain their side. Thereafter, in a resolution dated January 9, 1981,
TDLU, through the Investigating Committee and approved by TDLU's Board of Directors, expelled
the private respondents from TDLU for disloyalty to the Union effective January 16, 1981. By letter
dated January 10, 1981, TDLU notified TDI that private respondents had been expelled from TDLU
and demanded that TDI terminate the employment of private, respondents because they had lost
their membership with TDLU.

Acting on the demand of TDLU, TDI, in a Memorandum dated January 13, 1981, notified "that
effective January 16, 1981, we shall file the usual application for clearance (with preventive
suspension to take effect on the same day) to terminate your services on the basis of the union
security clause of our CBA.

Accordingly, TDI filed with the MOLE on January 14, 1981 its application for clearance to terminate
the employment of private respondents. This application docketed as Case No. NCR-AC-1-435-81
specifically stated that the action applied for was preventive suspension which will result in
termination of employment, ... due to (T)hreat to (P)roduction traceable to rival (U)nion activity. The
private respondents then filed with the MOLE a complaint for illegal dismissal against TDI and
Benjamin Agaloos, in his capacity as President of TDLU, which complaint was docketed as Case
No. STF-1-333-91. The cases were jointly heard and tried by Labor Arbiter Teodorico Dogelio.

However, on January 26, 1981, the Med-Arbiter granted the private respondents' petition calling for a
certification election among the rank and file employees of TDI. The Med-Arbiter's Order
stated, inter-alia that the existence of an uncertified CBA cannot be availed of as a bar to the holding
of a certification election (Emphasis supplied). On appeal of TDI and TDLU to the Bureau of Labor
Relations (BLR), the order for the holding of a certification election was reversed and set aside by
the BLR on July 8,1982, thus:

A careful perusal of the records of the case will reveal that the uncertified CBA was
duly filed and submitted on 29 October 1980, to last until June 30, 1982. Indeed, said
CBA is certifiable for havingcomplied with all the necessary requirements for
certification. Consistent with the intent and spirit of P.D. 1391 and its implementing
rules, the contract bar rule should have been applied in this case. The representation
issue cannot be entertained except within the last sixty (60) days of the collective
agreement. (Emphasis supplied) (p. 243, Rollo)

The last 60 days in a collective bargaining agreement is referred to as the "freedom period" when
rival union representation can be entertained during the existence of a valid CBA. In this case, the
"freedom period" was May 1 to June 30, 1982. After the term of the CBA lapsed, KAMPIL moved for
a reconsideration of the July 8, 1982 decision of the BLR on July 23, 1982 on the same ground that
since the CBA then in question was uncertified, the contract bar rule could not be made to apply. On
December 3, 1982, the BLR reversed itself, but for a different reason and held that:
 Movant union (Kampil) now seeks for the reconsideration of that Order on the
ground, among others, that the CBA in question is not certifiable and, hence, the
contract bar rule cannot properly apply in this case.

After a more careful examination of the records, this Bureau is of the view that
the instant motion should be given due course, not necessarily for the arguments
raised by herein movant.

It should be noted that the alleged CBA has now expired. Its expiry date being 30
June 1982. Consequently; there appears to be no more obstacle in allowing a
certification election to be conducted among the rank and file of respondent. The
contract bar rule will no longer apply in view of the supervening event, that is, the
expiration of the contract. (Emphasis supplied) (pp. 244-245, Rollo)

TDLU filed a petition for review of the BLR decision with the Supreme Court, docketed as Case No.
G.R. No. 63995 TDI argued that KAMPIL did not have a cause of action when the petition for
certification was filed on November 7, 1980 because the freedom period was not yet in effect. The
fact that the BLR issued its order when the 60-day freedom period had supervened, did not cure this
defect. Moreover, the BLR decision completely overlooked or ignored the fact that on September 21,
1982, a new CBA had been executed between the TDLU and TDI so that when the BLR allowed a
certification election in its order dated December 3, 1982, the contract bar rule was applicable again.
This Court denied TDLU's petition in a minute resolution on November 14,1983.

Using the foregoing as relevant and applicable to the consolidated cases for the clearance
application for termination filed by TDI and the illegal dismissal case filed by the private respondents
on October 12, 1984, Labor Arbiter Teodorico Dogelio rendered a decision denying TDI's application
to terminate the private respondents and ordering TDI to reinstate the complainants with backwages.
It should be noted that the Labor Arbiter rendered the decision even before the petitioner company
could file its memorandum, formal offer of exhibits and its manifestation and motion to correct
tentative markings of exhibits. This decision of the arbiter was upheld by the respondent NLRC in
NLRC Case No. AB-6-11685-81 in its decision dated May 20,1986.

TDI and TDLU moved for reconsideration of the questioned decision, In its motion, TDI alleged, inter
alia, that respondent NLRC did not rule on the validity of the CBA as a contract, neither did it resolve
squarely the validity of the enforcement of the union security clause of the CBA. TDI stated further
that respondent NLRC failed to consider the fact that at the time the private respondents were
expelled by TDLU and consequently terminated by TDI, the union security clause of the CBA was in
full force and effect, binding TDI and TDLU.

For its part, TDLU said that the decision of the Supreme Court in the certification case could not be
used by respondent NLRC to justify its decision in the dismissal case because the issues on the
cases are entirely different and miles apart. It is for this reason that there are two (2) cases that are
involved. TDLU explained that the Supreme Court decided to dismiss the petition for certiorari of TDI
and TDLU in the certification case because the original CBA existing at the time the private
respondents formed and joined KAMPIL had already expired. However, TDLU made it clear that
when the private respondents organized KAMPIL in TDI, the same CBA was still in force and the
disaffiliation did not take place within the freedom period. Hence, at that point in time, the private
respondents committed disloyalty against the union.

On June 26, 1986, respondent NLRC denied the motion for reconsideration filed by TDI and TDLU
for lack of merit. In its petition, TDI alleged that:
 I

RESPONDENT COMMISSION ACTED IN EXCESS AND WITH GRAVE ABUSE OF

ITS DISCRETION AND IN A MANNER CONTRARY TO LAW IN RENDERING ITS
DECISION EN BANC OF MAY 20, 1986 AND IN DENYING PETITIONER'S
MOTION FOR RECONSIDERATION THEREOF IN ITS RESOLUTION SOLUTION
DATED JUNE 26, 1986 BECAUSE

1. THE RESPONDENT COMMISSION HAS IGNORED THE FACT

THAT THE PRIVATE RESPONDENTS WERE EXPELLED BY TDLU
FROM ITS MEMBERSHIP ON JANUARY 16, 1981 AND,
CONSEQUENTLY, TDLU HAD DEMANDED OF THE PETITIONER
OF THE ENFORCEMENT OF THE UNION SECURITY CLAUSE OF
THE CBA, THE SAID CBA WAS AN EXISTING AND A VALID
CONTRACT BETWEEN THE PETITIONER AND TDLU, AND
EFFECTIVE BETWEEN THE PARTIES;

2. IT IS FUNDAMENTAL THAT A UNION SECURITY CLAUSE

PROVISION IN COLLECTIVE BARGAINING AGREEMENT IS
BINDING BETWEEN THE PARTIES TO THE CBA UNDER THE
LAWS;

3. THE EXPULSION OF THE PRIVATE RESPONDENTS FROM

TDLU WAS THE UNION'S OWN DECISION. HENCE, WHEN TDLU
DEMANDED OF THE PETITIONER THE ENFORCEMENT OF THE
SECURITY CLAUSE PROVISION OF THE CBA BY SEPARATING
PRIVATE RESPONDENTS FROM THEIR EMPLOYMENT, FOR
HAVING LOST THEIR MEMBERSHIP IN THE UNION, THE
PETITIONER WAS DUTY BOUND TO DO SO;

4. THE ALLUSION THAT THE CBA WAS NOT CERTIFIED BY THE

BUREAU OF LABOR RELATIONS (BLR) HAS NOTHING TO DO
WITH ITS EFFECTIVENESS AS A VALID CONTRACT BETWEEN
ALL PARTIES THERETO.

II

RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION

AND IN EXCESS OF ITS JURISDICTION IN HOLDING THAT PRIVATE
RESPONDENTS DID NOT COMMIT ACTS PREJUDICIAL TO THE PETITIONER'S
PRODUCTION EFFORTS TO BE SUFFICIENT BASIS FOR THEIR PREVENTIVE
SUSPENSION AND EVENTUAL REMOVAL.

On the other hand, petitioner TDLU in essence contends that:

THE CBA IS VALID AND BINDING NOT ONLY ON TDI AND TDLU BUT LIKEWISE ON PRIVATE
RESPONDENTS WHO HAVE RATIFIED THE SAME IN THEIR INDIVIDUAL CAPACITIES AS
MEMBERS OF TDLU; HENCE, THE UNION SECURITY CLAUSE IS VALID AND BINDING ON
THEM;
THE ACTION OF TDLU IN REQUESTING FOR THE ENFORCEMENT OF THE UNION SECURITY
CLAUSE OF THE CBA BETWEEN TDI AND TDLU IS PART OF THE INHERENT RIGHT TO SELF-
ORGANIZATION;

TDLU CANNOT BE MADE LIABLE FOR THE PAYMENT OF BACKWAGES BECAUSE ALL THAT
IT DID WAS ASK FOR THE ENFORCEMENT OF A CBA, WHICH CBA HAS NEVER BEEN
DECLARED NULL AND VOID AND THE UNION SECURITY CLAUSE SOUGHT TO BE
ENFORCED WAS NOT ALSO DECLARED NULL AND VOID;

PRIVATE RESPONDENTS DISAFFILIATED THEMSELVES FROM TDLU BY ORGANIZING THE

LOCAL CHAPTER OF KAMPIL IN TDI IN OCTOBER 1980, BUT THE ACT OF DISAFFILIATION
WAS COMMITTED OUTSIDE THE FREEDOM PERIOD PROVIDED UNDER PRESIDENTIAL
DECREE 1391 WHICH LIMIT ALL PETITIONS FOR CERTIFICATION ELECTION,
DISAFFILIATION AND INTERVENTION TO THE 60 DAY FREEDOM PERIOD PRECEDING THE
EXPIRATION OF THE CBA. HENCE, PRIVATE RESPONDENTS COULD BE EXPELLED FROM
MEMBERSHIP FOR DISLOYALTY AND OTHER INIMICAL ACTS AGAINST THE INTEREST OF
TDLU.

The private respondents admit that the root of the whole controversy in the instant case is the
organization of a Local Union Chapter of KAMPIL at TDI and the subsequent filing of a petition for
certification election with the MOLE by said local chapter. This local chapter of KAMPIL was
organized with the help of, among others, the private respondents some of whom were elected union
officers of said chapter. They contend that their act of organizing a local chapter of KAMPIL and
eventual filing of a petition for certification election was pursuant to their constitutional right to self-
organization.

The issues to be resolved are the following: (a) whether or not TDI was justified in terminating
private respondents' employment in the company on the basis of TDLU's demand for the
enforcement of the Union Security Clause of the CBA between TDI and TDLU; and (b) whether or
not TDI is guilty of unfair labor practice in complying with TDLU's demand for the dismissal of private
respondents.

We enforce basic principles essential to a strong and dynamic labor movement. An established
postulate in labor relations firmly rooted in this jurisdiction is that the dismissal of an employee
pursuant to a demand of the majority union in accordance with a union security agreement following
the loss of seniority rights is valid and privileged and does not constitute an unfair labor practice.

Article 249 (e) of the Labor Code as amended specifically recognizes the closed shop arrangement
as a form of union security. The closed shop, the union shop, the maintenance of membership shop,
the preferential shop, the maintenance of treasury shop, and check-off provisions are valid forms of
union security and strength. They do not constitute unfair labor practice nor are they violations of the
freedom of association clause of the Constitution. (See Pascual, Labor Relations Law, 1986 Edition,
pp. 221-225 and cases cited therein.) There is no showing in these petitions of any arbitrariness or a
violation of the safeguards enunciated in the decisions of this Court interpreting union security
arrangements brought to us for review.

In this light, the petitioner points out that embedded at the very core and as raison d'etre for the
doctrine which enforces the closed-shop, the union shop, and other forms of union security clauses
in the collective bargaining agreement is the principle of sanctity and inviolability of contracts
guaranteed by the Constitution.
This Court speaking thru Mr. Justice Labrador, in Victorias Milling Co., Inc., v. Victorias-Manapia
Workers Organization (9 SCRA 154), ruled:

Another reason for enforcing the closed-shop agreement is the principle of sanctity or
inviolability of contracts guaranteed by the Constitution. As a matter of principle the
provision of the Industrial Peace Act relating freedom to employees to organize
themselves and set their representative for entering into bargaining agreements,
should be subordinate to the constitutional provision protecting the sanctity of
contracts. We can not conceive how freedom to contract, which should be allowed to
be exercised without limitation may be subordinated to the freedom of laborers to
choose the organization they desire to represent them. And even if the legislature
had intended to do so and made such freedom of the laborer paramount to the
sanctity of obligation of contracts, such attempt to override the constitutional
provision would necessarily and ipso facto be null and void.

xxx xxx xxx

[T]he action of the respondent company in enforcing the terms of the closed-shop
agreement is a valid exercise of its rights and obligations under the contract. The
dismissal by virtue thereof cannot constitute an unfair labor practice, as it was in
pursuance of an agreement that has been found to be regular and of a closed-shop
agreement which under our laws is valid and binding.

In the instant case, the CBA in question provides for a Union Security Clause requiring:

(c) All workers who are or may during the effectivity of this contract become
members of the union in accordance with its constitution and by-laws shall as a
condition of their continued employment, maintain membership in good standing in
the union for the duration of the agreement. (Emphasis supplied)

Having ratified that CBA and being then members of the TDLU, the private respondents owe fealty
and are required under the Union Security Clause to maintain their membership in good standing
with it during the term thereof, a requirement which ceases to be binding only during the 60-day
freedom period immediately preceding the expiration of the CBA. When the private respondents
organized and joined the KAMPIL Chapter in TDI and filed the corresponding petition for certification
election in November 1980, there was no freedom period to speak of yet. For under Presidential
Decree No. 1391, promulgated May 29, 1978, the law applicable in this instance provides:

No petition for certification election for intervention disaffiliation shall be entertained

or given due course except within the 60 day freedom period immediately preceding
the execution of the Collective Bargaining Agreement.

and under Section 21, Rule 3 of the Rules Implementing PD 1391 "... pending certification of a duly
filed collective bargaining agreement no petition for certification election in the same bargaining unit
shall be entertained or processed." (promulgated September 19, 1978). The Labor Code further
mandates that "no certification election shall be entertained if a Collective Bargaining Agreement
which has been submitted in accordance with Article 231 of the Code exists between the employer
and a legitimate labor organization except within sixty (60) days prior to the expiration of the life of
such collective agreement (Art. 257).

The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act on TDLU's
request for certification of the CBA in question is of no moment to the resolution of the issues
presented in this case. The BLR itself found in its order of July 8, 1982 that "the certified CBA was
duly filed and submitted on October 29, 1980, to last until June 30, 1982 is certifiable for having
complied with all the requirements for certification.

The validity of the CBA is not here assailed by private respondents. They admitted having organized
the local chapter of KAMPIL at TDI, although it is claimed that this was done when there was no
certified CBA between TDI and TDLU that would constitute a bar to the certification election. Of
significance is the ruling in Manalang v. Artex Development Co., Inc., (21 SCRA 561, 569) decided
on a factual setting where the petitioners had affiliated themselves with another labor union, Artex
Free Workers, without first terminating their membership with Bagong Buhay Labor Union (BBLU)
and without the knowledge of the officers of the latter union, for which reason the petitioners were
expelled from the BBLU for acts of disloyalty; and the company, upon the behest of BBLU dismissed
them from employment pursuant to the closed-shop stipulation in a Collective Bargaining
Agreement. This Court ruled:

The validity of the Collective Bargaining Agreement of March 4, 1960 is not assailed
by the petitioners. Nor do they deny that they were members of the BBLU prior to
March 4, 1960 and until they were expelled from the union. ...

The petitioners further contention that the closed-shop provision in the collective
Bargaining Agreement is illegal because it is unreasonable,restrictive of right of
freedom of association guaranteed by the Constitution is a futile exercise in
argumentation of this Court has in a number of cases sustained closed-shop as valid
union security.

Finally, even if we assume, in gratia argumenti,that the petition were unaware of the
stipulation set forth in the collective bargaining agreement since their membership in
the BBLU prior to t the expulsion thereform is undenied there can be no question that
as long as the agreement with closed-shop provision was in force they were bound
by it. Neither their ignorance of,nor their dissatisfaction with, its terms and condition
would justify breach thereof or the formation by them of a union of their own.As has
been aptly said the collective bargaining agreement entered into by officers of a
union as agent of the member,and an employer,gives rise to valid inforcible
contractual relation against the individual union members in matters that affect the
entire membership or large classes of its member who employed under an
agreement between the union and his employer is bound by the provision
thereof,since it is a joint and several contract of the members of the union and
entered into by the union as their agent.

In an earlier case, this Court held:

Nor can it be said that the stipulation providing that the employer may dismiss an
employee whenever the union recommends his expulsion either for disloyalty or for
any violation of its by-laws and constitution is illegal or constitute of unfair labor
practice, for such is one of the matters on which management and labor can agree in
order to bring about harmonious relations between them and the union, and cohesion
and integrity of their organization And as an act of loyalty a union may certainly
require its members not to affiliate with any other labor union and to consider its
infringement as a reasonable cause for separation. This is what was done by
respondent union. And the respondent employer did nothing but to put in force their
agreement when it separated the herein complainants upon the recommendation of
said union. Such a stipulation is not only necessary to maintain loyalty and preserve
 the integrity of the union but is allowed by the Magna Charta of Labor when it
provided that while it is recognized that an employee shall have the right to self-
organization, it is at the same time postulated that such right shall not injure the right
of the labor organization to prescribe its own rules with respect to the acquisition or
retention of membership therein (Section 41(b) par. 1, Republic Act 875). This
provision is significant. It is an indirect restriction on the right of an employee to self-
organization. It is a solemn pronouncement of a policy that while an employee is
given the right to join a labor organization, such right should only be asserted in a
manner that will not spell the destruction of the same organization The law requires
loyalty to the union on the part of its members in order to obtain to the full extent its
cohesion and integrity. We therefore, see nothing improper in the disputed provisions
of the collective bargaining agreement entered into between the parties. (Ang
Malayang Manggagawa ng Ang Tibay Enterprises, et al. v. Ang Tibay, et al. 102 Phil.
669) (Emphasis supplied)

We agree with petitioner TDLU that the dismissal of the petition for certiorari in G.R. No. 63995
entitled TDLU v. Kaisahan ng Manggagawang Pilipina could not be construed as to extinguish the
right of TDLU to expel private respondents for acts of disloyalty when they organized a local chapter
of KAMPIL in October 1980 in TDI. The subject matter brought to this Court in G.R. No. 63995 was
the decision of the Bureau of Labor Relations dated December 3, 1982 requiring the holding of
certification election in TDI within twenty (20) days from receipt of said BLR's decision which reads:

Movant union (KAMPIL) now seeks for the reconsideration of that order on the
ground, among others, that the CBA in question is not certifiable and, hence, the
contract bar rule cannot properly apply to this case.

After a careful examination of the records, this Bureau is of the view that the instant
motion should be given due course, not necessarily for the arguments raised by
herein movant.

It should be noted that alleged CBA has now expired, its expiry date being 30 June
1982. Consequently, there appears to be no more obstacle in allowing a certification
election to be conducted among the rank and file of respondent. The contract bar
rule will no longer apply in view of the supervening even that is, the expiration of the
contract. (ANNEX C, TDI's Memorandum dated November 28,1986; Emphasis
supplied).

It is clearly apparent that the BLR aforesaid Order which this Court upheld in G.R. No. 63995 when it
dismissed TDLU's petition in a minute resolution, did not pass upon the question of legality or
illegality of the dismissal of private respondents from TDI by reason of their expulsion from TDLU for
disloyalty. That question was neither raised nor passed upon in the certification case, and was not a
proper issue therein because a petition for certification election is not a litigation but a mere
investigation of a non-adversary character to determine the bargaining unit to represent the
employees (George Peter Lines, Inc. v. Associated Labor Union, 134 SCRA 82). Hence, no
inference could be derived from the dismissal of said petition that either the BLR or this Court has
decided in favor of private respondents insofar as the question of union disloyalty and their
suspension and termination from employment of TDI is concerned.

Simply put, the BLR ordered the holding of a certification election because the CBA in question had
already expired, its expiry date being June 30, 1982. Consequently, there appears to be no more
obstacle in allowing a certification election. "... [T]he contract bar rule will not apply in view of the
supervening event, that is, the expiration of the CBA."
But the fact that the CBA had expired on June 30, 1982 and the BLR, because of such supervening
event, ordered the holding of a certification election could not and did not wipe out or cleanse private
respondents from the acts of disloyalty committed in October 1980 when they organized KAMPIL's
local chapter in TDI while still members of TDLU. The ineluctable fact is that private respondents
committed acts of disloyalty against TDLU while the CBA was in force and existing for which they
have to face the necessary sanctions lawfully imposed by TDLU.

In Villar v. Inciong (121 SCRA 444), we held that "petitioners, although entitled to disaffiliation from
their union and to form a new organization of their own must however, suffer the consequences of
their separation from the union under the security clause of the CBA: "

Inherent in every labor union, or any organization for that matter, is the right of self-
preservation. When members of a labor union, therefore, sow the seeds of
dissension and strife within the union; when they seek the disintegration and
destruction of the very union to which they belong; they thereby forfeit their rights to
remain as members of the union which they seek to destroy. Prudence and equity,
as well as the dictates of law and justice, therefore, compelling mandate the adoption
by the labor union of such corrective and remedial measures, in keeping with its laws
and regulations, for its preservation and continued existence; lest by its folly and
inaction, the labor union crumble and fall. (Idem., p. 458)

The private respondents cannot, therefore, escape the effects of the security clause of their own
applicable collective bargaining agreement.

WHEREFORE, the decision dated May 26, 1986 and the resolution dated June 26, 1986 of
respondent National Labor Relations Commission in NLRC Case No. AB-11685-81 are hereby SET
ASIDE. The expulsion of private respondents from TANDUAY DISTILLERY LABOR UNION and
their consequent suspension and termination from employment with TANDUAY DISTILLERY, INC.,
without reinstatement and backwages, are hereby SUSTAINED. No cost.

SO ORDERED.

Paras, Padilla, Bidin and Cortes, JJ., concur.

Fernan (Chairman), J., took no part.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-27029 November 12, 1981

LIRAG TEXTILE MILLS, INC., petitioner,

vs.
EPIFANIO D. BLANCO and COURT OF INDUSTRIAL RELATIONS, respondents.
MELENCIO-HERRERA, J.:

Submitted for review is the Resolution of the Court of Industrial Relations en banc affirming the
Decision in Case No. 4219-ULP finding petitioner Lirag Textile Mills, Inc. (LITEX, for brevity) to have
committed an unfair labor practice act in dismissing its employee, respondent Epifanio D. Blanco, for
union activities and ordering his restatement with back wages.

The records disclose that since 1957 there had existed in LITEX a union known as Litex Employees
Association (LEA, for short). Private respondent Epifanio D. Blanco, who was employed by LITEX on
April 3, 1959, joined that union a few months thereafter. On January 2, 1960, LEA entered into its
first collective bargaining agreement with LITEX for a period of two (2) years, which was
subsequently renewed for three (3) years, or up to March 31, 1965. The agreement contained a
closed-shop provision as follows:

Section 1. Union Security. The COMPANY recognizes the UNION AS THE SOLE
and exclusive collective bargaining representative of all its employees and/or
members.

Section 2. Union Shop. It is mutually agreed between the COMPANY and the
UNION that newly-hired employees on probationary basis in accordance with Section
2, Article III of this AGREEMENT, are required as a condition or prerequisite of
continued employment on a regular basis to join and be member of the UNION in
good standing. It is a continuing condition of employment with the COMPANY that
employees coming under this AGREEMENT should be and must remain as good
standing members of the UNION. The UNION therefore may from time to time
recommend to the COMPANY, the separation from the service of any of its members
for reasons that he or she is no longer a member of the UNION in good standing.
Accordingly, those losing their membership in the UNION could not be retained in the
employ of the COMPANY.

The constitution and by-laws of the union also provided, inter alia:

Sec. 5, Art. III Expulsion By a majority vote of the Board of Officers, including
the President's, any member of the union may be expelled therefrom for any of the
following grounds:

1. Being affiliated with other labor union.

2. Refusal to obey constitution and by-laws and the duly enacted rules and
regulations of the union.

3. Acts prejudicial to the interest of the union and/or its members.

xxx xxx xxx 1

Sometime in January, 1964, BLANCO and several employees organized the Confederation of
Industrial and Allied Labor Organization (CIALO). On April 1, 1964, CIALO filed a petition for
certification election at LITEX before the Court of Industrial Relations (Case No. 1332-MC) The
petition was dismissed, however, and said Court certified LEA as the sole bargaining representative
of the rank and file employees of LITEX. 2
In the same month of April, 1964, LEA's grievance committee conducted an investigation of its
members suspected of having joined CIALO.

On April 24, 1964, BLANCO was dismissed by LITEX for violation of company rules and regulations
in a letter reading as follows:

Dear Mr. Blanco,

This is to inform you that as per report of the Security Guards, dated April 10, 1964,
you were a) found distributing leaflets and reading materials inside the Service Bus,
b) subsequently apprehended at the gate with several other leaflets and an envelope
with leaflets for distribution to company employees and c) refused to be searched
upon entrance at the gate, in violation of existing company rules and regulations.

Inasmuch as you were previously warned for misconduct and inefficiency on

September 27, 1961 and June 1, 1963, respectively, and suspended twice on June
29, 1961 for act of f resulting in injury to a co-employee and on July 29, 1963 for
refusal to be searched and utterance of bad words against the guards and other
offenses contained in our letter of July 10, 1963, we have decided after giving you a
definite last warning on July 11, 1963, to terminate your services effective on Friday,
April 24, 1964.

Very
truly
yours,

KHRIS
NAMU
RTI A.
AFRIC
ANO

P
e
r
s
o
n
n
e
l
O
f
f
i
c
e
r
3

On April 27, 1964, LEA addressed a letter to LITEX recommending the immediate dismissal of 18
members named therein, who had been found to have violated the Union's constitution and by laws
and the Revised Collective Bargaining Agreement by joining CIALO 4, attaching thereto the minutes of
a meeting held by the Board of Officers of LEA on April 24, 1964 adopting a resolution of
expulsion. 5 BLANCO's name was not included in the list presumably because he had been dismissed by
the company on April 24, 1964, or three days before.

On April 27, 1964, LITEX advised LEA of its reluctance to effect the termination from the service of
the 18 employees, and asked for reconsideration. 6 LEA insisted on the dismissal of the 18 employees
threatening to go to Court should LITEX refuse to honor its commitment under their collective bargaining
agreement. 7

The 18 employees were dismissed on different dates. They filed separate complaints against LITEX.
After investigation, Case No. 4219-ULP for Unfair Labor Practice against LITEX was filed before the
CIR on behalf of BLANCO and six others upon the following allegations:

4. That the respondent company thru Khrisnamurti Africano, discriminated against

the complaints with regards to their tenure of employment by dismissing them on the
dates appearing opposite their names listed hereunder for no other reason than their
willingness to join the complainant union and/or affiliation therein and union activities
so as to discourage membership thereto, as follows:

1) Francisco Pineda April 24, 1964

2) Antonio S. Lalucis April 29, 1964

3) Eduardo Canlas April 28, 1964

4) Leovigildo Roldan April 28, 1964

5) Romeo Florentino April 28, 1964

6) Daniel Fontaina April 28, 1964

7) Epifanio Blanco April 24, 1964 8

In its Answer, LITEX denied the charge and raised defenses. The case was subsequently heard on
the merits.

LEA endeavored to intervene but its Motion was denied by respondent Court for lack of legal basis.

On October 17, 1966, the Court of Industrial Relations rendered judgment, the dispositive portion of
which reads:

WHEREFORE, in the case of complainant Epifanio Blanco, the court finds

respondents to have violated the Industrial Peace Act and hereby orders them to
cease and desist from committing the censurable acts herein found, to reinstate him
to his former or equivalent position without loss of seniority and other privileges, and
to pay him backwages at the rate of fifty (50) per cent from the time of his dismissal
up to his reinstatement.

With respect to all the other complainants, for lack of merit and insufficiency of
evidence, the complaint is hereby DISMISSED.
Respondent court rationalized its holding in respect of BLANCO, thus:

Exhibit "A Blanco", an unobjected piece of material evidence, shows beyond

doubt that the consequent act of respondent company interfered with the exercise of
the employee's right to self-organization. Blanco was not even investigated by the
company to find out whether or not he did refuse to be searched, as this is the only
regulation alleged to have been violated (Exhibit "A-Blanco"). Under the
circumstances, the concurrence of other grounds, stale as they were, reeks with
pretext and cannot justify the dismissal. It is explicitly clear that the prevailing reason
for his separation from the service was his union activities. 9

LITEX moved for reconsideration, but this was denied by respondent Court en banc on November
16, 1966. LITEX appealed to this instance assigning the following errors to respondent CIR:

The Respondent Court erred in holding that the Litex Employees Association (LEA)
did not demand the dismissal of the respondent Epifanio Blanco pursuant to the
Union Shop provision of the Collective Bargaining Contract (Exhibit 2) just because
his name did not appear in the letter (Exhibit 4) in spite of sufficient testimonial and
documentary evidence to the contrary.

II

The Respondent Court erred in holding that the dismissal of respondent Epifanio
Blanco for violation of company rules was an unfair labor practice just because the
violation was at the same time a union activity, and in justifying this holding to
consider a just warning for inefficiency and post violations for misconduct for which
he was warned the first time, and for subsequent misconducts for which he was twice
suspended, as a result of which he was given a definite last warning, as "stale"
grounds although the last violation for which he was dismissed occurred within nine
(9) months from the time the definite last warning was issued to him.

The petition is meritorious.

Respondent Court ruled that the five other complainants (Lalucis, Canlas, Roldan, Florentino and
Fontaina) were legally separated from the service pursuant to the closed- shop agreement and the
constitution and by-laws of LEA, which have binding effect on the parties, but ruled as unfair labor
practice the dismissal of BLANCO, his name not having been included in the list of member-
employees who were expelled from the union and recommended to the company for dismissal from
the service.

There is no justifiable reason to single out BLANCO. He was in an Identical position as the five other
complainants. If his name was not included in the list of 18 employees recommended for dismissal it
was because he had been dismissed three days before by the company. And if he had not been
dismissed by the company, his dismissal would have been demanded by LEA considering that he
was one of those investigated by LEA's grievance committee which had approved the
recommendation to dismiss them on the charge of being members of another union. In fact, in
paragraph 4 of the Complaint (supra) BLANCO made common cause with the other complainants for
having been dismissed "for no other reason than their willingness to join the CIALO union and/or
affiliation therein and union activities so as to discourage membership thereto ... ." BLANCO
admitted his affiliation with CIALO. There is evidence, too, that he, together with his co-employees
organized a rival union, CIALO, in contravention of the collective bargaining agreement and the
constitution and by-laws of LEA, of which they were then members. These acts of BLANCO and his
co-workers of organizing a rival union and distributing leaflets and propaganda papers, clearly
constituted a ground for expulsion under Section 5 of LEA's constitution and by-laws, quoted
hereinabove.

This Court has held that closed-shop is a valid form of union security and such provision in a
collective bargaining agreement is not a restriction of the right of freedom of association guaranteed
by the Constitution. 10 Respondent Court upheld the validity of the closed-shop agreement of LEA and
LITEX, when it ruled as legal the dismissal of complainants except respondent, pursuant thereto.
Respondent Court should have also upheld as legal the separation from the service of BLANCO on the
same ground in the face of evidence that he committed the same violation.

The case of Manalang vs. Artex Development Company, Inc., supra, is authority for the view that:

Even if we assume, in gratia argumentis, that the petitioners were unaware of the
stipulations set forth in the collective bargaining agreement, since their membership
in the BBLU prior to their expulsion therefrom is undenied, there can be no question
that as long as the agreement with closed-shop provision was in force, they are
bound by it. Neither their ignorance of, nor their dissatisfaction with, its terms and
conditions would justify breach thereof or the formation by them of a union of their
own.

In his Answer to the present Petition, BLANCO claimed that the closed-shop provision applies only
to newly hired employees and not to old employees like himself. He abandoned this argument in his
Brief, however. Suffice it to say that he was already a member of LEA when the collective bargaining
agreement containing the closed- shop provision was executed, and therefore, he was bound by the
same.

As a general rule, the findings of facts of the Industrial Court are final and conclusive when
supported by substantial evidence. 11 However, where, as in this case, respondent Court ignored the
evidence adduced by the parties, it is guilty of grave abuse of discretion as to warrant a review by this
Court of its findings of fact. 12

We come now to the second assigned error. Respondent Court ruled that the prevailing reason for
BLANCO's separation from the service was his union activities, and it considered as "stale" the other
grounds for which he was dismissed, namely, previous misconduct and violations of company rules
and regulations. Again, this is reversible error.

BLANCO himself admitted that he was suspended for mischief on June 21, 1961; warned for
misconduct and inefficiency on September 27, 1961 and June 1, 1963; suspended on June 25,
1963 13 ; nearly dismissed on July 13, 1963 pursuant to a letter of dismissal, dated July 10, 1963, but
through LEA's intercession was given a last warning instead on July 11, 1963, as follows:

We are giving a reconsideration to the case of Mr. Epifanio Blanco, on the

representation of the Litex Employees Association although the facts of the case
warrant immediate termination.

Mr. Blanco, is however, to be given a maximum suspension of six (6) working days
with a last warning that any other offense will be subject to outright dismissal for
cause.
 KHRIS
NAMU
RTI A.
AFRIC
ANO

P
e
r
s
o
n
n
e
l
O
f
f
i
c
e
r

ACCEPTED:

EPIFANIO D. BLANCO 14

Accordingly, a suspension order for six days, from July 29 to August 3, 1963, was duly approved by
LITEX. 15

It is noteworthy that one of the grounds of dismissal cited by LITEX in its letter of April 23, 1964 was
BLANCO's refusal to be searched upon entrance at the company gate in violation of company rules
and regulations. This was the same offense for which he was almost dismissed on July 13, 1963.

Prior violations, misconduct or misdemeanors form part of an employee's record. BLANCO's present
infraction coupled with his blemished employment record, with a last warning given some nine
months before, inevitably led to his dismissal on April 24, 1964. An employee may be dismissed on
the ground of willful disobedience to rules, orders and instructions of the employer, which must be
reasonable and lawful, known to the employee and pertain to duties which the employee
discharges. 16

It is true that BLANCO denied that he refused to be searched. 17 Even granting, however, that he could
not be dismissed on the ground of refusal to be searched for lack of sufficient proof, he can still be legally
dismissed for his affiliation with CIALO which is specifically prohibited by the CBA and the Constitution
and by-laws of LEA, in respect of which, evidence had been satisfactorily adduced.

WHEREFORE, the appealed Decision in so far as it held that petitioner violated the Industrial Peace
Act in dismissing respondent Epifanio D. Blanco and ordering his reinstatement by petitioner, is
hereby set aside.

No costs.
SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez arid Guerrero, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 58768-70 December 29, 1989

LIBERTY FLOUR MILLS EMPLOYEES, ANTONIO EVARISTO and POLICARPIO

BIASCAN, petitioners,
vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE LABOR ALLIANCE COUNCIL (PLAC) and
NATIONAL LABOR RELATIONS COMMISSION, (NLRC), respondents.

Julius A. Magno for petitioners.

De Leon, Diokno & Associates for respondent Liberty Flour Mills, Inc.

CRUZ, J.:

In this petition for certiorari, the resolution of the public respondent dated August 3, 1978, is faulted
for: (a) affirming the decision of the labor arbiter dismissing the employees' claim for emergency
allowance for lack of jurisdiction; and (b) modifying the said decision by disallowing the award of
back wages to petitioners Policarpio Biascan and Antonio Evaristo.

The basic facts are as follows:

On February 6, 1974, respondent Philippine Labor Alliance Council (PLAC) and respondent Liberty
Flour Mills, Inc. entered into a three-year collective bargaining agreement effective January 1, 1974,
providing for a daily wage increase of P2.00 for 1974, Pl.00 for 1975 and another Pl.00 for 1976. The
agreement contained a compliance clause, which will be explained later in this opinion. Additionally,
the parties agreed to establish a union shop by imposing "membership in good standing for the
duration of the CBA as a condition for continued employment" of workers. 1

On October 18, 1974, PLAC filed a complaint against the respondent company for non-payment of
the emergency cost of living allowance under P.D. No. 525. 2 A similar complaint was filed on March 4,
1975, this time by the petitioners, who apparently were already veering away from PLAC. 3

On March 20, 1975, petitioners Evaristo and Biascan, after organizing a union caged the Federation
of National Democratic Labor Unions, filed with the Bureau of Labor Relations a petition for
certification election among the rank-and-file employees of the respondent company 4 PLAC then
expelled the two for disloyalty and demanded their dismissal by the respondent company, which complied
on May 20, 1975. 5
The objection of Evaristo and Biascan to their termination were certified for compulsory arbitration
and assigned to Labor Arbiter Apolinario N. Lomabao, Jr. Meanwhile, the claims for emergency
allowance were referred for voluntary arbitration to Edmundo Cabal, who eventually dismissed the
same on the ground that the allowances were already absorbed by the wage increases. This latter
case was ultimately also certified for compulsory arbitration and consolidated with the termination
case being heard by Lomabao. His decision was, on appeal, dealt with by the NLRC as above
stated, 6 and the motion for reconsideration was denied on August 26, 1981. 7

At the outset, we note that the petitioners are taking an ambivalent position concerning the CBA
concluded in 1974. While claiming that this was entered into in bad faith and to forestall the payment
of the emergency allowances expected to be decreed, they nonetheless invoke the same agreement
to support their contention that their complaint for emergency allowances was invalidly referred to
voluntary arbitrator Cabal rather than Froilan M. Bacungan.

We find there was no such violation as the choice of the voluntary arbitrator was not limited to
Bacungan although he was probably the first preference. Moreover, the petitioners are estopped
from raising this objection now because they did not seasonably interpose it and instead willingly
submitted to Cabal's jurisdiction when he undertook to hear their complaint.

In sustaining Labor Arbiter Lomabao, the NLRC agreed that the decision of voluntary Arbiter Cabal
was final and unappealable under Article 262-A of the Labor Code and so could no longer be
reviewed by it. True enough. However, it is equally true that the same decision is not binding on this
Court, as we held in Oceanic Bic Division (FFW) v. Romero 8 and reiterated in Mantrade/FMMC
Division Employees and Workers Union v. Bacungan. 9 The rule as announced in these cases is reflected
in the following statements:

In spite of statutory provisions making "final" the decision of certain administrative

agencies, we have taken cognizance of petitions questioning these decisions where
want of jurisdiction, grave abuse of discretion, violation of due process, denial of
substantial justice, or erroneous interpretation of the law were brought to our
attention.

xxx xxx xxx

A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity.

There is no reason why her decisions involving interpretation of law should be
beyond this Court's review. Administrative officials are presumed to act in
accordance with law and yet we do not hesitate to pass upon their work where a
question of law is involved or where a showing of abuse of authority or discretion in
their official acts is properly raised in petitions for certiorari.

Accordingly, the validity of the voluntary arbiter's finding that the emergency allowance sought by the
petitioners are already absorbed in the stipulated wage increases will now be examined by the Court
itself.

The position of the company is that the emergency allowance required by P.D. No. 525 is already
covered by the wage increases prescribed in the said CBA. Furthermore, pursuant to its Article VIII,
such allowances also include all other statutory minimum wage increases that might be decreed
during the lifetime of the said agreement.

That agreement provided in Section 2 thereof as follows:

 Section 2. The wage increase in the amounts and during the period above set forth
shall, in the event of any statutory increase of the minimum wage, either as
allowance or as basic wage, during the life of this Agreement, be considered
compliance and payment of such required statutory increase as far as it will go and
under no circumstances will it be cumulative nor duplication to the differential amount
involved consequent to such statutory wage increase.

The Court holds that such allowances are indeed absorbed by the wage increases required under
the agreement. This is because Section 6 of the Interpretative Bulletin on LOI No. 174 specifically
provides:

Sec. 6. Allowances under LOI. -All allowances, bonuses, wage adjustments and
other benefits given by employers to their employees shall be treated by the
Department of Labor as in substantial compliance with the minimum standards set
forth in LOI No. 174 if:

(a) they conform with at least the minimum allowances scales

specified in the immediately preceding Section; and

(b) they are given in response to the appeal of the President in his
speech on 4 January 1974, or to countervail the quantum jump in the
cost of living as a result of the energy crisis starting in November
1973, or pursuant to Presidential Decree No. 390; Provided, That the
payment is retroactive to 18 February 1974 or earlier.

The allowances and other benefits may be granted unilaterally by the employer or
through collective bargaining, and may be paid at the same time as the regular
wages of the employees.

Allowances and other benefits which are not given in substantial compliance with the
LOI as interpreted herein shall not be treated by the Department of Labor as
emergency allowances in the contemplation of the LOI unless otherwise shown by
sufficient proof. Thus, without such proof, escalation clauses in collective bargaining
agreements concluded before the appeal of the President providing for automatic or
periodic wage increases shall not be considered allowances for purposes of the LOI.
(Emphasis supplied.)

The "immediately preceding section" referred to above states:

SEC. 5. Determination of Amount of Allowances. In determining the amount of allowances that

should be given by employers to meet the recommended minimum standards, the LOI has classified
employers into three general categories. As an implementation policy, the Department of Labor shall
consider as sufficient compliance with the scales of allowances recommended by the LOI if the
following monthly allowances are given by employers:

(a) P50.00 or higher where the authorized capital stock of the

corporation, or the total assets in the case of other undertakings,
exceeds P 1 million;

(b) P 30.00 or higher where the authorized capital stock of the

corporation, or the total assets in the case of other undertakings, is
not less than P100,000.00 but not more than P1million; and
 (c) P15.00 or higher where the authorized capital stock or total
assets, as the case may be, is less than P100,000.00.

It is not denied that the company falls under paragraph (a), as it has a capitalization of more than P l
million, 10and so must pay a minimum allowance of P50.00 a month. This amount is clearly covered by
the increases prescribed in the CBA, which required a monthly increase (on the basis of 30 days) of
P60.00 for 1974, to be increased by P30.00 in 1975 (to P90.00) and another P 30.00 in 1976 (to
P120.00). The first increase in 1974 was already above the minimum allowance of P50.00, which was
exceeded even more with the increases of Pl.00 for each of the next two years.

Even if the basis used were 26 days a month (excluding Sundays), the conclusion would remain
unchanged as the raise in wage would be P52.00 for 1974, which amount was increased to P78.00
in 1975 and to P104.00 in 1976.

But the petitioners contend that the wage increases were the result of negotiation undertaken long
before the promulgation of P.D. No. 525 and so should not be considered part of the emergency
allowance decreed. In support of this contention, they cite Section 15 of the Rules implementing P.D.
No. 525, providing as follows:

Nothing herein shall prevent the employer and his employees, from entering into any
agreement with terms more favorable to the employees than those provided herein,
or be construed to sanction the diminution of any benefits granted to the employees
under existing laws, agreements, and voluntary practice.

Obviously, this section should not be read in isolation but must be related to the other sections
above-quoted, to give effect to the intent and spirit of the decree. The meaning of the section simply
is that any benefit over and above the prescribed allowances may still be agreed upon by the
employees and the employer or, if already granted, may no longer be withdrawn or diminished.

The petitioners also maintain that the above-quoted Section 2 of CBA is invalid because it
constitutes a waiver by the laborers of future benefits that may be granted them by law. They
contend this cannot be done because it is contrary to public policy.

While the principle is correct, the application is not, for there are no benefits being waived under the
provision. The benefits are already included in the wage increases. It is the law itself that considers
these increases, under the conditions prescribed in LOI No. 174, as equivalent to, or in lieu of, the
emergency allowance granted by P.D. No. 525.

In fact, the company agreed to grant the emergency allowance even before the obligation was
imposed by the government. What the petitioners claim they are being made to waive is the
additional P50.00 allowance but the truth is that they are not entitled to this because they are already
enjoying the stipulated increases. There is no waiver of these increases.

Moreover, Section 2 provides that the wage increase shall be considered payment of any statutory
increase of the minimum wage "as far as it will go," which means that any amount not covered by
such wage increase will have to be made good by the company. In short, the difference between the
stipulated wage increase and the statutory minimum wage will have to be paid by the company
notwithstanding and, indeed, pursuant to the said article. There is no waiver as to this.

Curiously, Article 2 was produced verbatim in the collective bargaining agreement concluded by the
petitioners with the company in 1977 after PLAC had been replaced by the new labor union formed
by petitioners Evaristo and Biascan. 11 It is difficult to understand the petitioners' position when they
blow hot and cold like this.

Coming now to the second issue, we find that it must also be resolved against the petitioners.

Evaristo and Biascan claim they were illegally dismissed for organizing another labor union opposed
to PLAC, which they describe as a company union. Arguing that they were only exercising the right
to self organization as guaranteed by the Constitution, they insist they are entitled to the back wages
which the NLRC disallowed while affirming their reinstatement.

In its challenged decision, the public respondent held that in demanding the dismissal of Evaristo
and Biascan, PLAC had acted prematurely because the 1974 CBA providing for union shop and
pursuant to which the two petitioners were dismissed had not yet been certified. 12 The implication is
that it was not yet in effect and so could not be the basis of the action taken against the two petitioners.
This conclusion is erroneous. It disregards the ruling of this Court in Tanduay Distillery Labor Union v.
NLRC, 13 were we held:

The fact, therefore, that the Bureau of Labor Relations (BLR) failed to certify or act
on TDLU's request for certification of the CBA in question is of no moment to the
resolution of the issues presented in this case. The BLR itself found in its order of
July 8, 1982, that the (un)certified CBA was duly filed and submitted on October 29,
1980, to last until June 30, 1982 is certifiable for having complied with all the
requirements for certification. (Emphasis supplied.)

The CBA concluded in 1974 was certifiable and was in fact certified on April 11, 1975, It bears
stressing that Evaristo and Biascan were dismissed only on May 20, 1975, more than a month after
the said certification.

The correct view is that expressed by Commissioner Cecilio P. Seno in his concurring and
dissenting opinion, 14viz.:

I cannot however subscribe to the majority view that the 'dismissal of complainants
Biascan and Evaristo, ... was, to say the least, a premature action on the part of the
respondents because at the time they were expelled by PLAC the contract containing
the union security clause upon which the action was based was yet to be certified
and the representation status of the contracting union was still in question.

Evidence on record show that after the cancellation of the registration certificate of
the Federation of Democratic Labor Unions, no other union contested the exclusive
representation of the Philippine Labor Alliance Council (PLAC), consequently, there
was no more legal impediment that stood on the way as to the validity and
enforceability of the provisions of the collective bargaining agreement entered into by
and between respondent corporation and respondent union. The certification of the
collective bargaining agreement by the Bureau of Labor Relations is not required to
put a stamp of validity to such contract. Once it is duly entered into and signed by the
parties, a collective bargaining agreement becomes effective as between the parties
regardless of whether or not the same has been certified by the BLR.

To be fair, it must be mentioned that in the certification election held at the Liberty Flour Mills, Inc. on
December 27, 1976, the Ilaw at Buklod ng Manggagawa, with which the union organized by Biascan
and Evaristo was affiliated, won overwhelmingly with 441 votes as against the 5 votes cast for
PLAC. 15 However, this does not excuse the fact that the two disaffiliated from PLAC as early as March
1975 and thus rendered themselves subject to dismissal under the union shop clause in the CBA.

The petitioners say that the reinstatement issue of Evaristo and Biascan has become academic
because the former has been readmitted and the latter has chosen to await the resolution of this
case. However, they still insist on the payment of their back wages on the ground that their dismissal
was illegal. This claim must be denied for the reasons already given. The union shop clause was
validly enforced against them and justified the termination of their services.

It is the policy of the State to promote unionism to enable the workers to negotiate with management
on the same level and with more persuasiveness than if they were to individually and independently
bargain for the improvement of their respective conditions. To this end, the Constitution guarantees
to them the rights "to self-organization, collective bargaining and negotiations and peaceful
concerted actions including the right to strike in accordance with law." There is no question that
these purposes could be thwarted if every worker were to choose to go his own separate way
instead of joining his co-employees in planning collective action and presenting a united front when
they sit down to bargain with their employers. It is for this reason that the law has sanctioned
stipulations for the union shop and the closed shop as a means of encouraging the workers to join
and support the labor union of their own choice as their representative in the negotiation of their
demands and the protection of their interest vis-a-vis the employer.

The Court would have preferred to resolve this case in favor of the petitioners, but the law and the
facts are against them. For all the concern of the State, for the well-being of the worker, we must at
all times conform to the requirements of the law as long as such law has not been shown to be
violative of the Constitution. No such violation has been shown here.

WHEREFORE, the petition is DISMISSED, without any pronouncement as to costs. It is so ordered.

Narvasa, Gancayco, Grio-Aquino Medialdea, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 84433 June 2, 1992

ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138 others, petitioners,
vs.
CRESENCIANO B. TRAJANO, as Officer-in-Charge, Bureau of Labor Relations, Med. Arbiter
PATERNO ADAP, and TRI-UNION EMPLOYEES UNION, et al., respondent.

NARVASA, C.J.:
The officer-in-charge of the Bureau of Labor Relations (Hon. Cresenciano Trajano) sustained the
denial by the Med Arbiter of the right to vote of one hundred forty-one (141) members of the "Iglesia
ni Kristo" (INK), all employed in the same company, at a certification election at which two (2) labor
organizations were contesting the right to be the exclusive representative of the employees in the
bargaining unit. That denial is assailed as having been done with grave abuse of discretion in the
special civil action of certiorari at bar, commenced by the INK members adversely affected thereby.

The certification election was authorized to be conducted by the Bureau of Labor Relations among
the employees of Tri-Union Industries Corporation on October 20, 1987. The competing unions were
Tri-Union Employees Union-Organized Labor Association in Line Industries and Agriculture (TUEU-
OLALIA), and Trade Union of the Philippines and Allied Services (TUPAS). Of the 348 workers
initially deemed to be qualified voters, only 240 actually took part in the election, conducted under
the provision of the Bureau of Labor Relations. Among the 240 employees who cast their votes were
141 members of the INK.

The ballots provided for three (3) choices. They provided for votes to be cast, of course, for either of
the two (2) contending labor organizations, (a) TUPAS and (b) TUEU-OLALIA; and, conformably
with established rule and practice, 1 for (c) a third choice: "NO UNION."

The final tally of the votes showed the following results:

TUPAS 1

TUEU-OLALIA 95

NO UNION 1

SPOILED 1

CHALLENGED 141

The challenged votes were those cast by the 141 INK members. They were segregated and
excluded from the final count in virtue of an agreement between the competing unions,
reached at the pre-election conference, that the INK members should not be allowed to vote
"because they are not members of any union and refused to participate in the previous
certification elections."

The INK employees promptly made known their protest to the exclusion of their votes. They filed f a
petition to cancel the election alleging that it "was not fair" and the result thereof did "not reflect the
true sentiments of the majority of the employees." TUEU-OLALIA opposed the petition. It contended
that the petitioners "do not have legal personality to protest the results of the election," because
"they are not members of either contending unit, but . . . of the INK" which prohibits its followers, on
religious grounds, from joining or forming any labor organization . . . ."

The Med-Arbiter saw no merit in the INK employees 1 petition. By Order dated December 21, 1987, he
certified the TUEU-OLALIA as the sole and exclusive bargaining agent of the rank-and-file employees. In
that Order he decided the fact that "religious belief was (being) utilized to render meaningless the rights of
the non-members of the Iglesia ni Kristo to exercise the rights to be represented by a labor organization
as the bargaining agent," and declared the petitioners as "not possessed of any legal personality to
institute this present cause of action" since they were not parties to the petition for certification election.
The petitioners brought the matter up on appeal to the Bureau of Labor Relations. There they argued
that the Med-Arbiter had "practically disenfranchised petitioners who had an overwhelming majority,"
and "the TUEU-OLALIA certified union cannot be legally said to have been the result of a valid
election where at least fifty-one percent of all eligible voters in the appropriate bargaining unit shall
have cast their votes." Assistant Labor Secretary Cresenciano B. Trajano, then Officer-in-Charge of
the Bureau of Labor Relations, denied the appeal in his Decision of July 22, 1988. He opined that
the petitioners are "bereft of legal personality to protest their alleged disenfrachisement" since they
"are not constituted into a duly organized labor union, hence, not one of the unions which vied for
certification as sole and exclusive bargaining representative." He also pointed out that the petitioners
"did not participate in previous certification elections in the company for the reason that their
religious beliefs do not allow them to form, join or assist labor organizations."

It is this Decision of July 22, 1988 that the petitioners would have this Court annul and set aside in
the present special civil action of certiorari.

The Solicitor General having expressed concurrence with the position taken by the petitioners, public
respondent NLRC was consequently required to file, and did thereafter file, its own comment on the
petition. In that comment it insists that "if the workers who are members of the Iglesia ni Kristo in the
exercise of their religious belief opted not to join any labor organization as a consequence of which
they themselves can not have a bargaining representative, then the right to be representative by a
bargaining agent should not be denied to other members of the bargaining unit."

Guaranteed to all employees or workers is the "right to self-organization and to form, join, or assist
labor organizations of their own choosing for purposes of collective bargaining." This is made plain
by no less than three provisions of the Labor Code of the Philippines. 2 Article 243 of the Code
provides as follows: 3

ART. 243. Coverage and employees right to self-organization. All persons

employed in commercial, industrial and agricultural enterprises and in religious,
charitable, medical, or educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join, or assist labor organizations
of their own choosing for purposes or collective bargaining.Ambulant, intermittent
and itinerant workers, self-employed people, rural workers and those without any
definite employers may form labor organizations for their mutual aid and protection.

Article 248 (a) declares it to be an unfair labor practice for an employer, among others, to "interfere
with, restrain or coerce employees in the exercise of their right to self-organization." Similarly, Article
249 (a) makes it an unfair labor practice for a labor organization to "restrain or coerce employees in
the exercise of their rights to self-organization . . . "

The same legal proposition is set out in the Omnibus Rules Implementing the Labor Code, as
amended, as might be expected Section 1, Rule II (Registration of Unions), Book V (Labor
Relations) of the Omnibus Rules provides as follows; 4

Sec. 1. Who may join unions; exception. All persons employed in commercial,
industrial and agricultural enterprises, including employees of government
corporations established under the Corporation Code as well as employees of
religious, medical or educational institutions, whether operating for profit or not,
except managerial employees, shall have the right to self-organization and to form,
join or assist labor organizations for purposes of collective bargaining. Ambulant,
intermittent and without any definite employers people, rural workers and those
 without any definite employers may form labor organizations for their mutual aid and
protection.

xxx xxx xxx

The right of self-organization includes the right to organize or affiliate with a labor union or determine
which of two or more unions in an establishment to join, and to engage in concerted activities with
co-workers for purposes of collective bargaining through representatives of their own choosing, or
for their mutual aid and protection, i.e., the protection, promotion, or enhancement of their rights and
interests. 5

Logically, the right NOT to join, affiliate with, or assist any union, and to disaffiliate or resign from a
labor organization, is subsumed in the right to join, affiliate with, or assist any union, and to maintain
membership therein. The right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising said right. It is self-evident that just as no one should be denied the
exercise of a right granted by law, so also, no one should be compelled to exercise such a conferred
right. The fact that a person has opted to acquire membership in a labor union does not preclude his
subsequently opting to renounce such membership. 6

As early as 1974 this Court had occasion to expatiate on these self-evident propositions
in Victoriano v. Elizalde Rope Workers' Union, et al., 7 viz.:

. . .What the Constitution and Industrial Peace Act recognize and guarantee is the
"right" to form or join associations. Notwithstanding the different theories propounded
by the different schools of jurisprudence regarding the nature and contents of a
"right," it can be safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the
absence of legal restraint, whereby an employee may act for himself being prevented
by law; second, power, whereby an employee may, as he pleases, join or refrain
from joining an association. It is therefore the employee who should decide for
himself whether he should join or not an association; and should he choose to join;
and even after he has joined, he still retains the liberty and the power to leave and
cancel his membership with said organization at any time (Pagkakaisa Samahang
Manggagawa ng San Miguel Brewery vs. Enriquez, et al., 108 Phil. 1010, 1019). It is
clear, therefore, that the right to join a union includes the right to abstain from joining
any union (Abo, et al. vs. PHILAME [KG] Employees Union, et al., L-19912, January
20, 1965, 13 SCRA 120, 123, quoting Rothenberg, Labor Relations). Inasmuch as
what both the Constitution and the Industrial Peace Act have recognized, the
guaranteed to the employee, is the "right" to join associations of his choice, it would
be absurd to say that the law also imposes, in the same breath, upon the employee
the duty to join associations. The law does not enjoin an employee to sign up with
any association.

The right to refuse to join or be represented by any labor organization is recognized not only by law
but also in the rules drawn up for implementation thereof. The original Rules on Certification
promulgated by the defunct Court of Industrial Relations required that the ballots to be used at a
certification election to determine which of two or more competing labor unions would represent the
employees in the appropriate bargaining unit should contain, aside from the names of each union,
an alternative choice of the employee voting, to the effect that he desires not to which of two or more
competing labor unions would represent the employees in the appropriate bargaining unit should
contain, aside from the names of each union, an alternative choice of the employee voting, to the
effect that he desires not to be represented by any union. 8 And where only one union was involved, the ballots were
required to state the question "Do you desire to be represented by said union?" as regards which the employees voting would mark an
appropriate square, one indicating the answer, "Yes" the other, "No."

To be sure, the present implementing rules no longer explicitly impose the requirement that the
ballots at a certification election include a choice for "NO UNION" Section 8 (rule VI, Book V of the
Omnibus Rules) entitled"Marketing and canvassing of votes," pertinently provides that:

. . . (a) The voter must write a cross (X) or a check (/) in the square opposite the
union of his choice. If only one union is involved, the voter shall make his cross or
check in the square indicating "YES" or "NO."

xxx xxx xxx

Withal, neither the quoted provision nor any other in the Omnibus Implementing Rules expressly
bars the inclusion of the choice of "NO UNION" in the ballots. Indeed it is doubtful if the employee's
alternative right NOT to form, join or assist any labor organization or withdraw or resign from one
may be validly eliminated and he be consequently coerced to vote for one or another of the
competing unions and be represented by one of them. Besides, the statement in the quoted
provision that "(i)f only one union is involved, the voter shall make his cross or check in the square
indicating "YES" or "NO," is quite clear acknowledgment of the alternative possibility that the "NO"
votes may outnumber the "YES" votes indicating that the majority of the employees in the
company do not wish to be represented by any union in which case, no union can represent the
employees in collective bargaining. And whether the prevailing "NO" votes are inspired by
considerations of religious belief or discipline or not is beside the point, and may not be inquired into
at all.

The purpose of a certification election is precisely the ascertainment of the wishes of the majority of
the employees in the appropriate bargaining unit: to be or not to be represented by a labor
organization, and in the affirmative case, by which particular labor organization. If the results of the
election should disclose that the majority of the workers do not wish to be represented by any union,
then their wishes must be respected, and no union may properly be certified as the exclusive
representative of the workers in the bargaining unit in dealing with the employer regarding wages,
hours and other terms and conditions of employment. The minority employees who wish to have
a union represent them in collective bargaining can do nothing but wait for another suitable
occasion to petition for a certification election and hope that the results will be different. They may
not and should not be permitted, however, to impose their will on the majority who do not desire
to have a union certified as the exclusive workers' benefit in the bargaining unit upon the plea that
they, the minority workers, are being denied the right of self-organization and collective bargaining.
As repeatedly stated, the right of self-organization embraces not only the right to form, join or assist
labor organizations, but the concomitant, converse right NOT to form, join or assist any labor union.

That the INK employees, as employees in the same bargaining unit in the true sense of the term, do
have the right of self-organization, is also in truth beyond question, as well as the fact that when they
voted that the employees in their bargaining unit should be represented by "NO UNION," they were
simply exercising that right of self-organization, albeit in its negative aspect.

The respondents' argument that the petitioners are disqualified to vote because they "are not
constituted into a duly organized labor union" "but members of the INK which prohibits its
followers, on religious grounds, from joining or forming any labor organization" and "hence, not
one of the unions which vied for certification as sole and exclusive bargaining representative," is
specious. Neither law, administrative rule nor jurisprudence requires that only employees affiliated
with any labor organization may take part in a certification election. On the contrary, the plainly
discernible intendment of the law is to grant the right to vote to all bona fide employees in the
bargaining unit, whether they are members of a labor organization or not. As held in Airtime
Specialists, Inc. v. Ferrer-Calleja: 9

In a certification election all rank-and-file employees in the appropriate bargaining

unit are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code
which states that the "labor organization designated or selected by the majority of the
employees in an appropriate bargaining unit shall be the exclusive representative of
the employees in such unit for the purpose of collective bargaining." Collective
bargaining covers all aspects of the employment relation and the resultant CBA
negotiated by the certified union binds all employees in the bargaining unit. Hence,
all rank-and-file employees, probationary or permanent, have a substantial interest in
the selection of the bargaining representative. The Code makes no distinction as to
their employment for certification election. The law refers to "all" the employees in the
bargaining unit. All they need to be eligible to support the petition is to belong to the
"bargaining unit".

Neither does the contention that petitioners should be denied the right to vote because they "did not
participate in previous certification elections in the company for the reason that their religious beliefs
do not allow them to form, join or assist labor organizations," persuade acceptance. No law,
administrative rule or precedent prescribes forfeiture of the right to vote by reason of neglect to
exercise the right in past certification elections. In denying the petitioners' right to vote upon these
egregiously fallacious grounds, the public respondents exercised their discretion whimsically,
capriciously and oppressively and gravely abused the same.

WHEREFORE, the petition for certiorari is GRANTED; the Decision of the then Officer-in-Charge of
the Bureau of Labor Relations dated December 21, 1987 (affirming the Order of the Med-Arbiter
dated July 22, 1988) is ANNULLED and SET ASIDE; and the petitioners are DECLARED to have
legally exercised their right to vote, and their ballots should be canvassed and, if validly and properly
made out, counted and tallied for the choices written therein. Costs against private respondents.

SO ORDERED.

Paras, Padilla and Regalado, JJ., concur.

Nocon, J., is on leave.