G.R. No.
L-54334 January 22, 1986 the Bureau of Labor Relations to certify the case to the National Labor
KIOK LOY, doing business under the name and style SWEDEN ICE
CREAM PLANT, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and
PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN), respondents.
Ablan and Associates for petitioner.
Abdulcadir T. Ibrahim for private respondent.
CUEVAS, J.:
Petition for certiorari to annul the decision 1 of the National Labor Relations
Commission (NLRC) dated July 20, 1979 which found petitioner Sweden Ice
Cream guilty of unfair labor practice for unjustified refusal to bargain, in
violation of par. (g) of Article 2492 of the New Labor Code, 3 and declared the
draft proposal of the Union for a collective bargaining agreement as the
governing collective bargaining agreement between the employees and the
management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang
Paggawa (Union for short), a legitimate late labor federation, won and was
subsequently certified in a resolution dated November 29, 1978 by the Bureau
of Labor Relations as the sole and exclusive bargaining agent of the rank-and-
file employees of Sweden Ice Cream Plant (Company for short). The
Company's motion for reconsideration of the said resolution was denied on
January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union
furnished 4 the Company with two copies of its proposed collective bargaining
agreement. At the same time, it requested the Company for its counter
proposals. Eliciting no response to the aforesaid request, the Union again
wrote the Company reiterating its request for collective bargaining negotiations
and for the Company to furnish them with its counter proposals. Both requests
were ignored and remained unacted upon by the Company.
Left with no other alternative in its attempt to bring the Company to the
bargaining table, the Union, on February 14, 1979, filed a "Notice of Strike",
with the Bureau of Labor Relations (BLR) on ground of unresolved economic
issues in collective bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-
off period. But all attempts towards an amicable settlement failed, prompting
Relations Commission (NLRC) for compulsory arbitration pursuant to
Presidential Decree No. 823, as amended. The labor arbiter, Andres Fidelino,
to whom the case was assigned, set the initial hearing for April 29, 1979. For
failure however, of the parties to submit their respective position papers as
required, the said hearing was cancelled and reset to another date.
Meanwhile, the Union submitted its position paper. The Company did not, and
instead requested for a resetting which was granted. The Company was
directed anew to submit its financial statements for the years 1976, 1977, and
1978.
The case was further reset to May 11, 1979 due to the withdrawal of the
Company's counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty.
Fortunato Panganiban formally entered his appearance as counsel for the
Company only to request for another postponement allegedly for the purpose
of acquainting himself with the case. Meanwhile, the Company submitted its
position paper on May 28, 1979.
When the case was called for hearing on June 4, 1979 as scheduled, the
Company's representative, Mr. Ching, who was supposed to be examined,
failed to appear. Atty. Panganiban then requested for another postponement
which the labor arbiter denied. He also ruled that the Company has waived its
right to present further evidence and, therefore, considered the case submitted
for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the
National Labor Relations Commission. On July 20, 1979, the National Labor
Relations Commission rendered its decision, the dispositive portion of which
reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty
of unjustified refusal to bargain, in violation of Section (g) Article 248 (now
Article 249), of P.D. 442, as amended. Further, the draft proposal for a
collective bargaining agreement (Exh. "E ") hereto attached and made an
integral part of this decision, sent by the Union (Private respondent) to the
respondent (petitioner herein) and which is hereby found to be reasonable
under the premises, is hereby declared to be the collective agreement which
should govern the relationship between the parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending
that the National Labor Relations Commission acted without or in excess of its
jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction
in rendering the challenged decision. On August 4, 1980, this Court dismissed
the petition for lack of merit. Upon motion of the petitioner, however, the
Resolution of dismissal was reconsidered and the petition was given due
course in a Resolution dated April 1, 1981.
Petitioner Company now maintains that its right to procedural due process has
been violated when it was precluded from presenting further evidence in
support of its stand and when its request for further postponement was denied.
Petitioner further contends that the National Labor Relations Commission's
finding of unfair labor practice for refusal to bargain is not supported by law
and the evidence considering that it was only on May 24, 1979 when the Union
furnished them with a copy of the proposed Collective Bargaining Agreement
and it was only then that they came to know of the Union's demands; and
finally, that the Collective Bargaining Agreement approved and adopted by the
National Labor Relations Commission is unreasonable and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective
agreement,6 is one of the democratic frameworks under the New Labor Code,
designed to stabilize the relation between labor and management and to
create a climate of sound and stable industrial peace. It is a mutual
responsibility of the employer and the Union and is characterized as a legal
obligation. So much so that Article 249, par. (g) of the Labor Code makes it an
unfair labor practice for an employer to refuse "to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work, and all other terms and conditions of
employment including proposals for adjusting any grievance or question
arising under such an agreement and executing a contract incorporating such
agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however,
is not under any legal duty to initiate contract negotiation.7 The mechanics of
collective bargaining is set in motion only when the following jurisdictional
preconditions are present, namely, (1) possession of the status of majority
representation of the employees' representative in accordance with any of the
means of selection or designation provided for by the Labor Code; (2) proof of
majority representation; and (3) a demand to bargain under Article 251, par.
(a) of the New Labor Code . ... all of which preconditions are undisputedly
present in the instant case.
From the over-all conduct of petitioner company in relation to the task of
negotiation, there can be no doubt that the Union has a valid cause to complain
against its (Company's) attitude, the totality of which is indicative of the latter's
disregard of, and failure to live up to, what is enjoined by the Labor Code — to
bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that
petitioner Company is GUILTY of unfair labor practice. It has been indubitably
established that (1) respondent Union was a duly certified bargaining agent;
(2) it made a definite request to bargain, accompanied with a copy of the
proposed Collective Bargaining Agreement, to the Company not only once but
twice which were left unanswered and unacted upon; and (3) the Company
made no counter proposal whatsoever all of which conclusively indicate lack
of a sincere desire to negotiate. 8 A Company's refusal to make counter
proposal if considered in relation to the entire bargaining process, may indicate
bad faith and this is specially true where the Union's request for a counter
proposal is left unanswered. 9 Even during the period of compulsory
arbitration before the NLRC, petitioner Company's approach and attitude-
stalling the negotiation by a series of postponements, non-appearance at the
hearing conducted, and undue delay in submitting its financial statements,
lead to no other conclusion except that it is unwilling to negotiate and reach an
agreement with the Union. Petitioner has not at any instance, evinced good
faith or willingness to discuss freely and fully the claims and demands set forth
by the Union much less justify its opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery
Carriers Union (PAFLU) vs. Herald Publications 11 the rule had been laid
down that "unfair labor practice is committed when it is shown that the
respondent employer, after having been served with a written bargaining
proposal by the petitioning Union, did not even bother to submit an answer or
reply to the said proposal This doctrine was reiterated anew in Bradman vs.
Court of Industrial Relations 12 wherein it was further ruled that "while the law
does not compel the parties to reach an agreement, it does contemplate that
both parties will approach the negotiation with an open mind and make a
reasonable effort to reach a common ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be
reviewed, petitioner capitalizes on the issue of due process claiming, that it
was denied the right to be heard and present its side when the Labor Arbiter
denied the Company's motion for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various
postponements granted in its behalf, the claimed denial of due process
appeared totally bereft of any legal and factual support. As herein earlier
stated, petitioner had not even honored respondent Union with any reply to the
latter's successive letters, all geared towards bringing the Company to the
bargaining table. It did not even bother to furnish or serve the Union with its
counter proposal despite persistent requests made therefor. Certainly, the
moves and overall behavior of petitioner-company were in total derogation of
the policy enshrined in the New Labor Code which is aimed towards expediting
settlement of economic disputes. Hence, this Court is not prepared to affix its
imprimatur to such an illegal scheme and dubious maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective
Bargaining Agreement which was approved and adopted by the NLRC is a
total nullity for it lacks the company's consent, much less its argument that
once the Collective Bargaining Agreement is implemented, the Company will
face the prospect of closing down because it has to pay a staggering amount
of economic benefits to the Union that will equal if not exceed its capital. Such
a stand and the evidence in support thereof should have been presented
before the Labor Arbiter which is the proper forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of
a labor controversy to precipitately accept or agree to the proposals of the
other. But an erring party should not be tolerated and allowed with impunity to
resort to schemes feigning negotiations by going through empty
gestures.13 More so, as in the instant case, where the intervention of the
National Labor Relations Commission was properly sought for after
conciliation efforts undertaken by the BLR failed. The instant case being a
certified one, it must be resolved by the NLRC pursuant to the mandate of P.D.
873, as amended, which authorizes the said body to determine the
reasonableness of the terms and conditions of employment embodied in any
Collective Bargaining Agreement. To that extent, utmost deference to its
findings of reasonableness of any Collective Bargaining Agreement as the
governing agreement by the employees and management must be accorded
due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining
order issued on August 27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED
. G.R. No. 211145
SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD rep. by its
President, ALFIE ALIPIO, Petitioner
vs.
BUREAU OF LABOR RELATIONS, HANJIN HEAVY INDUSTRIES AND
CONSTRUCTION CO., LTD. (HHIC-PIDL.),, Respondents
DECISION
mendoza, J.:
The right to self-organization is not limited to unionism. Workers may also form
or join an association for mutual aid and protection and for other legitimate
purposes.
This is a petition for review on certiorari seeking to reverse and set aside the
July 4, 2013 Decision1 and the January 28, 2014 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 123397, which reversed the November 28,
2011 Resolution3 of the Bureau of Labor Relations (BLR) and reinstated the
April 20, 2010 Decision 4 of the Department of Labor and Employment (DOLE)
Regional Director, cancelling the registration of Samahan ng Manggagawa sa
Hanjin Shipyard (Samahan) as a worker's association under Article 243 (now
Article 249) of the Labor Code.
The Facts
On February 16, 2010, Samahan, through its authorized representative, Alfie
F. Alipio, filed an application for registration 5 of its name "Samahan ng Mga
Manggagawa sa Hanjin Shipyard" with the DOLE. Attached to the application
were the list of names of the association's officers and members, signatures
of the attendees of the February 7, 2010 meeting, copies of their Constitution
and By-laws. The application stated that the association had a total of 120
members.
On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando,
Pampanga (DOLE-Pampanga), issued the corresponding certificate of
registration6 in favor of Samahan.
On March 15, 2010, respondent Hanjin Heavy Industries and Construction
Co., Ltd. Philippines (Hanjin), with offices at Greenbeach 1, Renondo
Peninsula, Sitio Agustin, Barangay Cawag, Subic Bay Freeport Zone, filed a
petition7 with DOLE-Pampanga praying for the cancellation of registration of
Samahan' s association on the ground that its members did not fall under any
of the types of workers enumerated in the second sentence of Article 243 (now
249).
Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-
employed, and those without definite employers may form a workers'
association. It further posited that one third (1/3) of the members of the
association had definite employers and the continued existence and
registration of the association would prejudice the company's goodwill.
On March 18, 2010, Hanjin filed a supplemental petition,8 adding the
alternative ground that Samahan committed a misrepresentation in connection
with the list of members and/or voters who took part in the ratification of their
constitution and by-laws in its application for registration. Hanjin claimed that
Samahan made it appear that its members were all qualified to become
members of the workers' association.
On March 26, 2010, DOLE-Pampanga called for a conference, wherein
Samahan requested for a 10-day period to file a responsive pleading. No
pleading, however, was submitted. Instead, Samahan filed a motion to dismiss
on April 14, 2010.9
The Ruling of the DOLE Regional Director
On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of
Hanjin. He found that the preamble, as stated in the Constitution and By-Laws
of Samahan, was an admission on its part that all of its members were
employees of Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay
naglalayong na isulong ang pagpapabuti ng kondisyon sa paggawa at
katiyakan sa hanapbuhay sa pamamagitan ng patuloy na pagpapaunlad ng
kasanayan ng para sa mga kasapi nito. Naniniwala na sa pamamagitan ng
aming mga angking lakas, kaalaman at kasanayan ay aming maitataguyod at
makapag-aambag sa kaunlaran ng isang lipunan. Na mararating at makakamit
ang antas ng pagkilala, pagdakila at pagpapahalaga sa mga tulad naming mga
manggagawa.
XXX10
The same claim was made by Samahan in its motion to dismiss, but it failed
to adduce evidence that the remaining 63 members were also employees of
Hanjin. Its admission bolstered Hanjin's claim that Samahan committed
misrepresentation in its application for registration as it made an express
representation that all of its members were employees of the former. Having a
definite employer, these 57 members should have formed a labor union for
collective bargaining.11 The dispositive portion of the decision of the Dole
Regional Director, reads:
WHEREFORE, premises considered, the petition is hereby GRANTED.
Consequently, the Certificate of Registration as Legitimate Workers
Association (LWA) issued to the SAMAHAN NG MGA MANGGAGAWA SA
HANJIN SHIPYARD (SAMAHAN) with Registration Numbers R0300-1002-
WA-009 dated February 26, 2010 is hereby CANCELLED, and said
association is dropped from the roster of labor organizations of this Office.
SO DECIDED.12
The Ruling of the Bureau of Labor Relations
Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin had
no right to petition for the cancellation of its registration. Samahan pointed out
that the words "Hanjin Shipyard," as used in its application for registration,
referred to a workplace and not as employer or company. It explained that
when a shipyard was put up in Subic, Zambales, it became known as Hanjin
Shipyard. Further, the remaining 63 members signed the Sama-Samang
Pagpapatunay which stated that they were either working or had worked at
Hanjin. Thus, the alleged misrepresentation committed by Samahan had no
leg to stand on.14
In its Comment to the Appeal,15 Hanjin averred that it was a party-ininterest. It
reiterated that Samahan committed misrepresentation in its application for
registration before DOLE Pampanga. While Samahan insisted that the
remaining 63 members were either working, or had at least worked in Hanjin,
only 10 attested to such fact, thus, leaving its 53 members without any
workplace to claim.
On September 6, 2010, the BLR granted Samahan's appeal and reversed the
ruling of the Regional Director. It stated that the law clearly afforded the right
to self-organization to all workers including those without definite
employers.16 As an expression of the right to self-organization, industrial,
commercial and self-employed workers could form a workers' association if
they so desired but subject to the limitation that it was only for mutual aid and
protection.17 Nowhere could it be found that to form a workers' association was
prohibited or that the exercise of a workers' right to self-organization was
limited to collective bargaining.18
The BLR was of the opinion that there was no misrepresentation on the part
of Samahan. The phrase, "KAMI, ang mga Manggagawa sa Hanjin
Shipyard," if translated, would be: "We, the workers at Hanjin Shipyard." The
use of the preposition "at" instead of "of' would indicate that "Hanjin Shipyard"
was intended to describe a place.19 Should Hanjin feel that the use of its name
had affected the goodwill of the company, the remedy was not to seek the
cancellation of the association's registration. At most, the use by Samahan of
the name "Hanjin Shipyard" would only warrant a change in the name of the
association.20 Thus, the dispositive portion of the BLR decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region
III Director Ernesto C. Bihis dated 20 April 2010 is REVERSED and SET
ASIDE.
Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain
in the roster of legitimate workers' association.21
On October 14, 2010, Hanjin filed its motion for reconsideration.22
In its Resolution,23 dated November 28, 2011, the BLR affirmed its September
6, 2010 Decision, but directed Samahan to remove the words "Hanjin
Shipyard" from its name. The BLR explained that the Labor Code had no
provision on the use of trade or business name in the naming of a worker's
association, such matters being governed by the Corporation Code. According
to the BLR, the most equitable relief that would strike a balance between the
contending interests of Samahan and Hanjin was to direct Samahan to drop
the name "Hanjin Shipyard" without delisting it from the roster of legitimate
labor organizations. The fallo reads:
WHEREFORE, premises considered, our Decision dated 6 September 2010
is hereby AFFIRMED with a DIRECTIVE for SAMAHAN to remove "HANJIN
SHIPYARD" from its name.
SO RESOLVED.24
Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before the
CA, docketed as CA-G.R. SP No. 123397.
In its March 21, 2012 Resolution,26 the CA dismissed the petition because of
Samahan's failure to file a motion for reconsideration of the assailed November
28, 2011 Resolution.
On April 17, 2012, Samahan filed its motion for reconsideration 27 and on July
18, 2012, Hanjin filed its comment28 to oppose the same. On October 22, 2012,
the CA issued a resolution granting Samahan's motion for reconsideration and
reinstating the petition. Hanjin was directed to file a comment five (5) days from
receipt of notice.29
On December 12, 2012, Hanjin filed its comment on the petition,30
arguing that
to require Samahan to change its name was not tantamount to interfering with
the workers' right to self-organization.31 Thus, it prayed, among others, for the
dismissalof the petition for Samahan's failure to file the required motion for
reconsideration.32
On January 17, 2013, Samahan filed its reply.33
On March 22, 2013, Hanjin filed its memorandum.34
The Ruling of the Court of Appeals
On July 4, 2013, the CA rendered its decision, holding that the registration of
Samahan as a legitimate workers' association was contrary to the provisions
of Article 243 of the Labor Code.35 It stressed that only 57 out of the 120
members were actually working in Hanjin while the phrase in the preamble of
Samahan's Constitution and By-laws, "KAMI, ang mga Manggagawa sa Hanjin
Shipyard," created an impression that all its members were employees of
HHIC. Such unqualified manifestation which was used in its application for
registration, was a clear proof of misrepresentation which warranted the
cancellation of Samahan' s registration.
It also stated that the members of Samahan could not register it as a legitimate
worker's association because the place where Hanjin's industry was located
was not a rural area. Neither was there any evidence to show that the
members of the association were ambulant, intermittent or itinerant workers.36
At any rate, the CA was of the view that dropping the words "Hanjin Shipyard"
from the association name would not prejudice or impair its rightto self-
organization because it could adopt other appropriate names. The dispositive
portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering
that the words "Hanjin Shipyard" be removed from petitioner association's
name, is AFFIRMED. The Decision dated April 20, 2010 of the DOLE Regional
Director in Case No. Ro300-1003-CP-001, which ordered the cancellation of
petitioner association's registration is REINSTATED.
SO ORDERED.37
Hence, this petition, raising the following
ISSUES
I. THE COURT OF APPEALS SEfilOUSLY ERRED IN FINDING THAT
SAMAHAN CANNOT FORM A WORKERS' ASSOCIATION OF EMPLOYEES
IN HANJIN AND INSTEAD SHOULD HA VE FORMED A UNION, HENCE
THEIR REGISTRATION AS A WORKERS' ASSOCIATION SHOULD BE
CANCELLED.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE
REMOVAL/DELETION OF THE WORD "HANJIN" IN THE NAME OF THE
UNION BY REASON OF THE COMPANY'S PROPERTY RIGHT OVER THE
COMP ANY NAME "HANJIN."38
Samahan argues that the right to form a workers' association is not exclusive
to intermittent, ambulant and itinerant workers. While the Labor Code allows
the workers "to form, join or assist labor organizations of their own choosing"
for the purpose of collective bargaining, it does not prohibit them from forming
a labor organization simply for purposes of mutual aid and protection. All
members of Samahan have one common place of work, Hanjin Shipyard.
Thus, there is no reason why they cannot use "Hanjin Shipyard" in their
name.39
Hanjin counters that Samahan failed to adduce sufficient basis that all its
members were employees of Hanjin or its legitimate contractors, and that the
use of the name "Hanjin Shipyard" would create an impression that all its
members were employess of HHIC.40
Samahan reiterates its stand that workers with a definite employer can
organize any association for purposes of mutual aid and protection. Inherent
in the workers' right to self-organization is its right to name its own
organization. Samahan referred "Hanjin Shipyard" as their common place of
work. Therefore, they may adopt the same in their association's name.41
The Court's Ruling
The petition is partly meritorious.
Right to self-organization includes
right to form a union, workers ' expressly allows and even encourages the formation of labor organizations. A
association and labor management
councils
More often than not, the right to self-organization connotes unionism. Workers,
however, can also form and join a workers' association as well as labor-
management councils (LMC). Expressed in the highest law of the land is the
right of all workers to self-organization. Section 3, Article XIII of the 1987
Constitution states:
Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. It shall guarantee the rights of all workers to
self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law. xxx
[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. 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.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy. The State shall afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex,
race or creed and regulate the relations between workers and employers. The
State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.
[Emphasis Supplied]
As Article 246 (now 252) of the Labor Code provides, the right to self-
organization includes the right to form, join or assist labor organizations fer the
purpose of collective bargaining through representatives of their own choosing
and to engage in lawful concerted activities for the same purpose for their
mutual aid and protection. This is in line with the policy of the State to foster
the free and voluntary organization of a strong and united labor movement as
well as to make sure that workers participate in policy and decision-making
processes affecting their rights, duties and welfare.42
The right to form a union or association or to self-organization comprehends
two notions, to wit: (a) the liberty or freedom, that is, the absence of restraint
which guarantees that the employee may act for himself without being
prevented by law; and (b) the power, by virtue of which an employee may, as
he pleases, join or refrain from joining an association.43
In view of the revered right of every worker to self-organization, the law
labor organization is defined as "any union or association o[ employees which
exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment."44 A labor
organization has two broad rights: (1) to bargain collectively and (2) to deal
with the employer concerning terms and conditions of employment. To bargain
collectively is a right given to a union once it registers itself with the DOLE.
Dealing with the employer, on the other hand, is a generic description of
interaction between employer and employees concerning grievances, wages,
work hours and other terms and conditions of employment, even if the
employees' group is not registered with the DOLE.45
A union refers to any labor organization in the private sector organized for
collective bargaining and for other legitimate purpose,46 while a workers'
association is an organization of workers formed for the mutual aid and
protection of its members or for any legitimate purpose other than
collective bargaining.47
Many associations or groups of employees, or even combinations of only
several persons, may qualify as a labor organization yet fall short of
constituting a labor union. While every labor union is a labor organization, not
every labor organization is a labor union. The difference is one of organization,
composition and operation.48
Collective bargaining is just one of the forms of employee participation. Despite
so much interest in and the promotion of collective bargaining, it is incorrect to
say that it is the device and no other, which secures industrial democracy. It is
equally misleading to say that collective bargaining is the end-goal of
employee representation. Rather, the real aim is employee participation in
whatever form it may appear, bargaining or no bargaining, union or no
union.49 Any labor organization which may or may not be a union may deal
with the employer. This explains why a workers' association or organization
does not always have to be a labor union and why employer-employee
collective interactions are not always collective bargaining.50
To further strengthen employee participation, Article 255 (now 261) 51 of the
Labor Code mandates that workers shall have the right to participate in policy
and decision-making processes of the establishment where they are employed
insofar as said processes will directly affect their rights, benefits and welfare.
For this purpose, workers and employers may form LMCs.
A cursory reading of the law demonstrates that a common element between
unionism and the formation of LMCs is the existence of an employer-employee
relationship. Where neither party is an employer nor an employee of the other,
no duty to bargain collectively would exist.52 In the same manner, expressed
in Article 255 (now 261) is the requirement that such workers be employed in
the establishment before they can participate in policy and decision making
processes.
In contrast, the existence of employer-employee relationship is not mandatory
in the formation of workers' association. What the law simply requires is that
the members of the workers' association, at the very least, share the same
interest. The very definition of a workers' association speaks of "mutual aid
and protection."
Right to choose whether to form or
join a union or workers' association
belongs to workers themselves
In the case at bench, the Court cannot sanction the opinion of the CA that
Samahan should have formed a union for purposes of collective bargaining
instead of a workers' association because the choice belonged to it. The right
to form or join a labor organization necessarily includes the right to refuse or
refrain from exercising the 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.53 Also inherent in the right to self-
organization is the right to choose whether to form a union for purposes of
collective bargaining or a workers' association for purposes of providing mutual
aid and protection.
The right to self-organization, however, is subject to certain limitations as
provided by law. For instance, the Labor Code specifically disallows
managerial employees from joining, assisting or forming any labor union.
Meanwhile, supervisory employees, while eligible for membership in labor
organizations, are proscribed from joining the collective bargaining unit of the
rank and file employees.54 Even government employees have the right to self-
organization. It is not, however, regarded as existing or available for purposes
of collective bargaining, but simply for the furtherance and protection of their
interests.55
Hanjin posits that the members of Samahan have definite employers, hence,
they should have formed a union instead of a workers' association. The Court
disagrees. There is no provision in the Labor Code that states that employees
with definite employers may form, join or assist unions only.
The Court cannot subscribe either to Hanjin's position that Samahan's
members cannot form the association because they are not covered by the
second sentence of Article 243 (now 249), to wit:
Article 243. Coverage and employees' right to selforganization. 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 of collective bargaining.
Ambulant, intermittent and itinerant workers, selfemployed people, rural
workers and those without any definite employers may form labor
organizations for their mutual aid and protection. (As amended by Batas
Pambansa Bilang 70, May 1, 1980)
[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of Department Order
(D. 0.) No. 40-03, Series of 2003, which provides:
RULE II
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy. - It is the policy of the State to promote the free and
responsible exercise of the right to self-organization through the establishment
of a simplified mechanism for the speedy registration of labor unions and
workers associations, determination of representation status and resolution of
inter/intra-union and other related labor relations disputes. Only legitimate or
registered labor unions shall have the right to represent their members for
collective bargaining and other purposes. Workers' associations shall have the
right to represent their members for purposes other than collective bargaining.
Section 2. Who may join labor unions and workers' associations. - All persons
employed in commercial, industrial and agricultural enterprises, including
employees of government owned or controlled corporations without original
charters established under the Corporation Code, as well as employees of
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 unions for purposes of collective bargaining: provided, however, that
supervisory employees shall not be eligible for membership in a labor union of
the rank-and-file employees but may form, join or assist separate labor unions
of their own. Managerial employees shall not be eligible to form, join or assist
any labor unions for purposes of collective bargaining. Alien employees with
valid working permits issued by the Department may exercise the right to self-
organization and join or assist labor unions for purposes of collective
bargaining if they are nationals of a country which grants the same or similar
rights to Filipino workers, as certified by the Department of Foreign Affairs.
For purposes of this section, any employee, whether employed for a definite
period or not, shall beginning on the first day of his/her service, be eligible for
membership in any labor organization.
All other workers, including ambulant, intermittent and other workers, the
self-employed, rural workers and those without any definite employers may
form labor organizations for their mutual aid and protection and other legitimate
purposes except collective bargaining.
[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules which provides
that workers, with definite employers, cannot form or join a workers'
association for mutual aid and protection. Section 2 thereof even broadens the
coverage of workers who can form or join a workers' association. Thus, the
Court agrees with Samahan's argument that the right to form a workers'
association is not exclusive to ambulant, intermittent and itinerant workers.
The option to form or join a union or a workers' association lies with the workers
themselves, and whether they have definite employers or not.
No misrepresentation on the part
of Samahan to warrant cancellation
of registration
In this case, Samahan's registration was cancelled not because its members
were prohibited from forming a workers' association but because they
allegedly committed misrepresentation for using the phrase, "KAMI, ang mga
Manggagawa sa HANJIN Shipyard."
Misrepresentation, as a ground for the cancellation of registration of a labor
organization, is committed "in connection with the adoption, or ratification of
the constitution and by-laws or amendments thereto, the minutes of
ratification, the list of members who took part in the ratification of the
constitution and by-laws or amendments thereto, and those in connection with
the election of officers, minutes of the election of officers, and the list of voters,
xxx."56
In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director
granted the petition for the cancellation of certificate of registration of
Samahang Lakas Manggagawa sa Takata (Salamat) after finding that the
employees who attended the organizational meeting fell short of the 20%
union registration requirement. The BLR, however, reversed the ruling of the
DOLE Regional Director, stating that petitioner Takata Corporation (Takata)
failed to prove deliberate and malicious misrepresentation on the part of
respondent Salamat. Although Takata claimed that in the list of members,
there was an employee whose name appeared twice and another was merely
a project employee, such facts were not considered misrepresentations in the
absence of showing that the respondent deliberately did so for the purpose of
increasing their union membership. The Court ruled in favor of Salamat.
In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for
cancellation of certificate of registration was denied. The Court wrote:
If the union's application is infected by falsification and like serious
irregularities, especially those appearing on the face of the application and
its attachments, a union should be denied recognition as a legitimate
labor organization. Prescinding from these considerations, the issuance to
the Union of Certificate of Registration No. R0300-oo-02-UR-0003 necessarily
implies that its application for registration and the supporting documents
thereof are prima facie free from any vitiating irregularities. Another factor
which militates against the veracity of the allegations in the Sinumpaang
Petisyon is the lack of particularities on how, when and where respondent
union perpetrated the alleged fraud on each member. Such details are
crucial for in the proceedings for cancellation of union registration on
the ground of fraud or misrepresentation, what needs to be established is
that the specific act or omission of the union deprived the complaining
employees-members of their right to choose.
[Emphases Supplied]
Based on the foregoing, the Court concludes that misrepresentation, to be a
ground for the cancellation of the certificate of registration, must be done
maliciously and deliberately. Further, the mistakes appearing in the application
or attachments must be grave or refer to significant matters. The details as to
how the alleged fraud was committed must also be indubitably shown.
The records of this case reveal no deliberate or malicious intent to commit
misrepresentation on the part of Samahan.1âwphi1 The use of such words
"KAMI, ang mga Manggagawa sa HANJIN Shipyard" in the preamble of the
constitution and by-laws did not constitute misrepresentation so as to warrant
the cancellation of Samahan's certificate of registration. Hanjin failed to
indicate how this phrase constitutes a malicious and deliberate
misrepresentation. Neither was there any showing that the alleged
misrepresentation was serious in character. Misrepresentation is a devious
charge that cannot simply be entertained by mere surmises and conjectures.
Even granting arguendo that Samahan' s members misrepresented
themselves as employees or workers of Hanjin, said misrepresentation does
not relate to the adoption or ratification of its constitution and by-laws or to the
election of its officers.
Removal of the word "Hanjin Shipyard"
from the association 's name, however,
does not infringe on Samahan 's right to
self-organization
Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be
removed in the name of the association. A legitimate workers' association
refers to an association of workers organized for mutual aid and protection of
its members or for any legitimate purpose other than collective bargaining
registered with the DOLE.59Having been granted a certificate of registration,
Samahan's association is now recognized by law as a legitimate workers' JOSE CATRAL MENDOZA
association. Associate Justice
According to Samahan, inherent in the workers' right to selforganization is its
right to name its own organization. It seems to equate the dropping of words
"Hanjin Shipyard" from its name as a restraint in its exercise of the right to self-
organization. Hanjin, on the other hand, invokes that "Hanjin Shipyard" is a
registered trade name and, thus, it is within their right to prohibit its use.
As there is no provision under our labor laws which speak of the use of name
by a workers' association, the Court refers to the Corporation Code, which
governs the names of juridical persons. Section 18 thereof provides:
No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly
similar to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary to existing laws.
When a change in the corporate name is approved, the Commission shall
issue an amended certificate of incorporation under the amended name.
[Emphases Supplied]
The policy underlying the prohibition in Section 18 against the registration of a
corporate name which is "identical or deceptively or confusingly similar" to that
of any existing corporation or which is "patently deceptive" or "patently
confusing" or "contrary to existing laws," is the avoidance of fraud upon the
public which would have occasion to deal with the entity concerned, the
evasion of legal obligations and duties, and the reduction of difficulties of
administration and supervision over corporations.60
For the same reason, it would be misleading for the members of Samahan to
use "Hanjin Shipyard" in its name as it could give the wrong impression that
all of its members are employed by Hanjin.
Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:
The change of name of a labor organization shall not affect its legal
personality. All the rights and obligations of a labor organization under its old
name shall continue to be exercised by the labor organization under its new
name.
Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no
abridgement of Samahan's right to self-organization was committed.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013
Decision and the January 28, 2014 Resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The September 6, 2010 Resolution of
the Bureau of Labor Relations, as modified by its November 28, 2011
Resolution, is REINSTATED. SO ORDERED.
G.R. No. 111262 September 19, 1996
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented
by its President RAYMUNDO HIPOLITO, JR., petitioner,
vs.
HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor &
Employment, SAN MIGUEL CORPORATION, MAGNOLIA CORPORATION
(Formerly, Magnolia Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-
Meg Plant), respondents.
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the Secretary of Labor
rendered on February 15, 1993 involving a labor dispute at San Miguel
Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union
— PTGWO entered into a Collective Bargaining Agreement (CBA) with private
respondent San Miguel Corporation (SMC) to take effect upon the expiration
of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
Sec. 1. This Agreement which shall be binding upon the parties hereto and
their respective successors-in-interest, shall become effective and shall
remain in force and effect until June 30, 1992.
Sec. 2. In accordance with Article 253-A of the Labor Code as amended, the
term of this Agreement insofar as the representation aspect is concerned, shall
be for five (5) years from July 1, 1989 to June 30, 1994. Hence, the freedom
period for purposes of such representation shall be sixty (60) days prior to
June 30, 1994.
Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate
negotiations of all provisions of this Agreement, except insofar as the
representation aspect is concerned. If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in force up to the time
a subsequent agreement is reached by the parties. 1
In keeping with their vision and long term strategy for business expansion,
SMC management informed its employees in a letter dated August 13,
1991 2 that the company which was composed of four operating divisions
namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agri-business would undergo a restructuring. 3
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were
spun-off and became two separate and distinct corporations: Magnolia
Corporation (Magnolia) and San Miguel Foods, Inc. (SMFI). Notwithstanding
the spin-offs, the CBA remained in force and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms
of the CBA and Article 253-A of the Labor Code. Negotiations started
sometime in July, 1992 with the two parties submitting their respective
proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit
of SMC should still include the employees of the spun-off corporations:
Magnolia and SMFI; and that the renegotiated terms of the CBA shall be
effective only for the remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had
moved to Magnolia and SMFI, automatically ceased to be part of the
bargaining unit at the SMC. Furthermore, the CBA should be effective for three
years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and
duration of the CBA, petitioner-union declared a deadlock on September 29,
1990.
On October 2, 1992, a Notice of Strike was filed against SMC.
In order to avert a strike, SMC requested the National Conciliation and
Mediation Board (NCMB) to conduct preventive mediation. No settlement was
arrived at despite several meetings held between the parties.
On November 3, 1992, a strike vote was conducted which resulted in a "yes
vote" in favor of a strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a
petition with the Secretary of Labor praying that the latter assume jurisdiction
over the labor dispute in a vital industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor
dispute on November 10, 1992. 4Several conciliation meetings were held but
still no agreement/settlement was arrived at by both parties.
After the parties submitted their respective position papers, the Secretary of
Labor issued the assailed Order on February 15, 1993 directing, among
others, that the renegotiated terms of the CBA shall be effective for the period
of three (3) years from June 30, 1992; and that such CBA shall cover only the
employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order
of the Secretary of Labor.
Subsequently, on March 30, 1995, 5 petitioner-union filed a Motion for
Issuance of a Temporary Restraining Order or Writ of Preliminary Injunction to
enjoin the holding of the certification elections in the different companies,
maintaining that the employees of Magnolia and SMFI fall within the bargaining
unit of SMC.
On March 29, 1995, the Court issued a resolution granting the temporary
restraining order prayed for. 6
Meanwhile, an urgent motion for leave to intervene 7 in the case was filed by
the Samahan ng Malayang Manggagawa-San Miguel Corporation-Federation
of Free Workers (SMM-SMC-FFW) through its authorized representative,
Elmer S. Armando, alleging that it is one of the contending parties adversely
affected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido
B. Laguesma, 8 G.R. No. 101766, March 5, 1993, where the Court recognized
the separation of the employees of Magnolia from the SMC bargaining unit. It
then prayed for the lifting of the temporary restraining order.
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a
petition for the withdrawal/dismissal of the petition considering that the
temporary restraining order jeopardized the employees' right to conclude a
new CBA. At the same time, he challenged the legal personality of Mr.
Raymundo Hipolito, Jr. to represent the Union as its president when the latter
was already officially dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to be
effective for three years of for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of
the Magnolia and SMFI.
Petitioner-union contends that the duration for the non-representation
provisions of the CBA should be coterminous with the term of the bargaining
agency which in effect shall be for the remaining two years of the current CBA,
citing a previous decision of the Secretary of Labor on December 14, 1992 in
the matter of the labor dispute at Philippine Refining Company.
However, the Secretary of Labor, in her questioned Order of February 15, 1993
ruled that the renegotiated terms of the CBA at SMC should run for a period of
three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended which
reads:
Art. 253-A. Terms of a Collective Bargaining Agreement. — Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department
of Labor and Employment outside of the sixty-day period immediately before
the date of expiry of such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its execution. Any
agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement, shall
retroact to the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the duration of
retroactivity thereof. In case of a deadlock in the renegotiation of the collective
bargaining agreement, the parties may exercise their rights under this Code.
(Emphasis supplied.)
Article 253-A is a new provision. This was incorporated by Section 21 of
Republic Act No. 6715 (the Herrera-Veloso Law) which took effect on March
21, 1989. This new provision states that the CBA has a term of five (5) years
instead of three years, before the amendment of the law as far as the
representation aspect is concerned. All other provisions of the CBA shall be
negotiated not later than three (3) years after its execution. The
"representation aspect" refers to the identity and majority status of the union
that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. "All other provisions" simply refers to
the rest of the CBA, economic as well as non-economic provisions, except
representation. 10
As the Secretary of Labor herself observed in the instant case, the law is clear
and definite on the duration of the CBA insofar as the representation aspect is
concerned, but is quite ambiguous with the terms of the other provisions of the
CBA. It is a cardinal principle of statutory construction that the Court must
ascertain the legislative intent for the purpose of giving effect to any statute.
The history of the times and state of the things existing when the act was
framed or adopted must be followed and the conditions of the things at the
time of the enactment of the law should be considered to determine the
legislative intent. 11 We look into the discussions leading to the passage of the
law:
THE CHAIRMAN (REP. VELASCO): . . .the CBA, insofar as the economic
provisions are concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
THE CHAIRMAN (SEN. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three years pwede
nang magnegotiate in the CBA for the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two
years or three years but assuming three years which, I think, that's the
likelihood. . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming
there will be a change of agent, at least he has one year to administer and to
adjust, to develop rapport with the management. Yan ang importante.
You know, for us na nagne-negotiate, ang hazard talaga sa negotiation, when
we negotiate with somebody na hindi natin kilala, then, we are governed by
our biases na ito ay destroyer ng Labor; ang mga employer, ito bayaran ko
lang ito okay na.
'Yan ang nangyayari, but let us give that allowance for the one year to let them
know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial
peace if you encourage union to fight each other. 'Yan ang problema. 12
xxx xxx xxx
HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the
CBA seem to provide some doubts later on in the implementation. Sabi kasi
rito, insofar as representation issue is concerned, seven years and lifetime. . .
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and
conditions, not later than three years.
HON. ISIDRO: Not later than three years, so within three years you have to
make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the terms, three years
na naman iyan — then, seven years. . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period — three years
nang three years, but under this law with respect to representation — five
years, ano? Now, after three years, nagkaroon ng bagong terms, tapos na
iyong term, renewed na iyong terms, ang karapatan noon sa representation
issue mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang
lahat, three plus three.
HON. ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang
ang natatapos. So, another CBA was formed and this CBA mayroon na naman
siyang bagong five years with respect to representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and
conditions for three years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: One the third year you can start negotiating to
change the terms and conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status
now can be questioned, so baka puwedeng magkaroon ng certification
election. If the incumbent union loses, then the new union administers the
contract for one year to give him time to know his counterpart — the employer,
before he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect
to the terms and conditions and then, so you have to renew that in three years
— you renew for another three years, mayroon na naman another five years
iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the
contract. Then, voluntary arbitration na kayo and then mayroon ka nang
probisyon "retroact on the date of the expiry date". Pagnatalo ang incumbent
unyon, mag-aassume ang new union, administer the contract. As far as the
term and condition, for one year, and that will give him time and the employer
to know each other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification
election, it would not want to administer a CBA which has not been negotiated
by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what
is happening now in the country is that the term ng contract natin, duon din
mage-expire ang representation. Iyon ang nangyari. That is where you have
the gulo. Ganoon ang nangyari. So, ang nangyari diyan, pag-mayroon
certification election, expire ang contract, ano ang usual issue — company
union. I can you (sic) give you more what the incumbent union is giving. So
ang mangyayari diyan, pag-negotiate mo hardline na agad.
HON. CHAIRMAN VELOSO : Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and
the representation aspect — why do we have to distinguish between three and
five? What's wrong with having a uniform expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because
ang reality diyan, Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng
six months, that's the average, aabot pa minsan ng one year. Pagktapos ng
negotiation mo, signing kayo. There will be an allowed period of one year.
Third year na, uumpisahan naman ang organizations, papasok na ang ibang
unyon because the reality in Trade Union committee, they organize, we
organize. So, actually, you have only industrial peace for one year, effective
industrial peace. That is what we are trying to change. Otherwise, we will
continue to discourage the investors and the union will never grow because
every other year it has to use its money for the certification election. Ang grabe
pang practice diyan, mag-a-advance ang federation for three years union dues
para panggastos lang sa certification election. That is what we are trying to
avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon
ang mangyayari. And I think our responsibility here is to create a legal
framework to promote industrial peace and to develop responsible and fair
labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the
effectivity . . .
xxx xxx xxx
HON CHAIRMAN VELOSO. (continuing) . . . in other words, the longer the
period of effectivity of the CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
HON. CHAIRMAN VELOSO: Only on —
HON. CHAIRMAN HERRERA: — the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have
to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years, ang karamihan ng mga
mag-negotiate when the companyis (interrupted) 13
From the aforesaid discussions, the legislators were more inclined to have the
period of effectivity for three (3) years insofar as the economic as well as non-
economic provisions are concerned, except representation.
Obviously, the framers of the law wanted to maintain industrial peace and
stability by having both management and labor work harmoniously together
without any disturbance. Thus, no outside union can enter the establishment
within five (5) years and challenge the status of the incumbent union as the
exclusive bargaining agent. Likewise, the terms and conditions of employment
(economic and non-economic) can not be questioned by the employers or
employees during the period of effectivity of the CBA. The CBA is a contract
between the parties and the parties must respect the terms and conditions of
the agreement. 14Notably, the framers of the law did not give a fixed term as
to the effectivity of the terms and conditions of employment. It can be gleaned
from their discussions that it was left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of effectivity for the
non-representation provisions of the CBA. Taking it from the history of their
CBAs, SMC intended to have the terms of the CBA effective for three (3) years
reckoned from the expiration of the old or previous CBA which was on June
30, 1989, as it provides:
Sec. 1. This Agreement which shall be binding upon the parties hereto and
their respective successors-in-interest, shall become effective and shall
remain in force and effect until June 30, 1992.
The argument that the PRC case is applicable is indeed misplaced. We quote
with favor the Order of the Secretary of Labor in the light of SMC's peculiar
situation as compared with PRC's company situation.
It is true that in the Philippine Refining Company case (OS-AJ-0031-91) (sic),
Labor Dispute at Philippine Refining Company), we ruled that the term of the
renegotiated provisions of the CBA should coincide with the remaining term of
the agency. In doing so, we placed premium on the fact that PRC has only two
(2) unions and no other union had yet executed a renewed term of 3 years.
Nonetheless, in ruling for a shortened term, we were guided by our considered
perception that the said term would improve, rather than ruin, the general
welfare of both the workers and the company. It is equally true that once the
economic provisions of the CBA expire, the residual representative status of
the union is effective for only 2 more years. However, if circumstances warrant
that the contract duration which it is soliciting from the company for the benefit
of the workers, shall be a little bit longer than its lifespan, then this Office
cannot stand in the way of a more ideal situation. We must not lose sight of
the fact that the primordial purpose of a collective contract is to promote
industrial harmony and stability in the terms and conditions of employment. To
our mind, this objective cannot be achieved without giving due consideration
to the peculiarities and unique characteristics of the employer. In the case at
bar, there is no dispute that the mother corporation (SMC) spun-off two of its
divisions and thereby gave birth to two (2) other entities now known as
Magnolia Corporation and San Miguel Foods, Inc. In order to effect a smooth
transition, the companies concerned continued to recognize the existing
unions as the bargaining agents of their respective bargaining units. In the
meantime, the other unions in these companies eventually concluded their
CBA negotiations on the remaining term and all of them agreed on a 3-year
cycle. Notably, the following CBAs were forged incorporating a term of 3-years
on the renegotiated provisions, to wit:
1. SMC — daily-paid employees union (IBM)
2. SMFI — monthly-paid employees and daily-paid employees at the Cabuyao
Plant.
There is a direct link between the voluntary recognition by the company of the
continuing representative status of the unions after the aforementioned spin-
offs and the stand of the company for a 3-year renegotiated cycle when the
economic provisions of the existing CBAs expired, i.e., the maintain stability
and avoid confusion when the umbilical cord of the two divisions were severed
from their parent. These two cannot be considered independently of each
other for they were intended to reinforce one another. Precisely, the company
conceded to face the same union notwithstanding the spin-offs in order to
preserve industrial peace during the infancy of the two corporations. If the
union would insist on a shorter renegotiated term, then all the advantages
gained by both parties in this regard, would have gone to naught. With this in
mind, this office feels that it will betray its mandate should we order the parties
to execute a 2-year renegotiated term for then chaos and confusion, rather
than tranquillity, would be the order of the day. Worse, there is a strong
likelihood that such a ruling might spawn discontent and possible mass actions
against the company coming from the other unions who had already agreed to
a 3-year renegotiated terms. If this happens, the purpose of this Office's
intervention into the parties' controversy would have been defeated. 15
The issue as to the term of the non-representation provisions of the CBA need
not belabored especially when we take note of the Memorandum of the
Secretary of Labor dated February 24, 1994 which was mentioned in the
Resolution of Undersecretary Bienvenido Laguesma on January 16, 1995 in
the certification election case involving the SMC employees. 16 In said
memorandum, the Secretary of Labor had occasion to clarify the term of the
renegotiated terms of the CBA vis-a-vis the term of the bargaining agent, to
wit:
As a matter of policy the parties are encourages (sic) to enter into a
renegotiated CBA with a term which would coincide (sic) with the aforesaid
five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a
renegotiated contract with a term of three (3) years or one which does not
coincide with the said 5-year term, and said agreement is ratified by majority
of the members in the bargaining unit, the subject contract is valid and legal
and therefore, binds the contracting parties. The same will however not
adversely affect the right of another union to challenge the majority status of
the incumbent bargaining agent within sixty (60) days before the lapse of the
original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the part of the Secretary
of Labor in ruling that the effectivity of the renegotiated terms of the CBA shall
be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-
union's assertion that the employees of Magnolia and SMFI should still be
considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct companies on October
1, 1991. Management saw the need for these transformations in keeping with
its vision and long term strategy as it explained in its letter addressed to the
employees dated August 13, 1991:
. . . As early as 1986, we announced the decentralization program and spoke
of the need for structures that can react fast to competition, a changing
environment, shorter product life cycles and shifts in consumer preference. We
further stated in the 1987 Annual Report to Stockholders that San Miguel's
businesses will be more autonomous and self sufficient so as to better acquire
and master new technologies, cope with a labor force with different expertises
and expectations, and master and satisfy the changing needs of our customers
and end-consumers. As subsidiaries, Magnolia and FLD will gain better
industry focus and flexibility, greater awareness of operating results, and
speedier, more responsive decision making.
xxx xxx xxx
We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc.,
since this company was organized about ten years ago, to see the benefits
that arise from restructuring a division of San Miguel into a more competitive
organization. As a stand-alone enterprise, CCBPI engineered a dramatic
turnaround and has sustained its sales and market share leadership ever
since.
We are confident that history will repeat itself, and the transformation of
Magnolia and FLD will be successful as that of CCBPI. 17
Undeniably, the transformation of the companies was a management
prerogative and business judgment which the courts can not look into unless
it is contrary to law, public policy or morals. Neither can we impute any bad
faith on the part of SMC so as to justify the application of the doctrine of
piercing the corporate veil. 18Ever mindful of the employees' interests,
management has assured the concerned employees that they will be
absorbed by the new corporations without loss of tenure and retaining their
present pay and benefits according to the existing CBAs. 19 They were advised
that upon the expiration of the CBAs, new agreements will be negotiated
between the management of the new corporations and the bargaining
representatives of the employees concerned. As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different
management teams including separate human resource/personnel managers.
2. Each Company enforces its own administrative and operational rules and
policies and are not dependent on each other in their operations.
3. Each entity maintains separate financial statements and are audited
separately from each other. 20
Indubitably, therefore, Magnolia and SMFI became distinct entities with
separate juridical personalities. Thus, they can not belong to a single
bargaining unit as held in the case of Diatagon Labor Federation Local 110 of
the ULGWP v. Ople. 21 We elucidate:
The fact that their businesses are related and that the 236 employees of the
Georgia Pacific International Corporation were originally employees of Lianga
Bay Logging Co., Inc. is not a justification for disregarding their separate
personalities. Hence, the 236 employees, who are now attached to Georgia
Pacific International Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc. They should vote at
a separate certification election to determine the collective bargaining
representative of the employees of Georgia Pacific International Corporation.
Petition-union's attempt to include the employees of Magnolia and SMFI in the
SMC bargaining unit so as to have a bigger mass base of employees has,
therefore, no more valid ground.
Moreover, in determining an appropriate bargaining unit, the test of grouping
is mutuality or commonality of interests. The employees sought to be
represented by the collective bargaining agent must have substantial mutual
interests in terms of employment and working conditions as evinced by the
type of work they performed. 22 Considering the spin-offs, the companies
would consequently have their respective and distinctive concerns in terms of
the nature of work, wages, hours of work and other conditions of employment.
Interests of employees in the different companies perforce differ. SMC is
engaged in the business of the beer manufacturing. Magnolia is involved in
the manufacturing and processing of diary products 23 while SMFI is involved
in the production of feeds and the processing of chicken. 24 The nature of their
products and scales of business may require different skills which must
necessarily be commensurated by different compensation packages. The
different companies may have different volumes of work and different working
conditions. For such reason, the employees of the different companies see the
need to group themselves together and organize themselves into distinctive
and different groups. It would then be best to have separate bargaining units
for the different companies where the employees can bargain separately
according to their needs and according to their own working conditions.
We reiterate what we have explained in the case of University of the
Philippines v. Ferrer-Calleja 25 that:
[T]here are various factors which must be satisfied and considered in
determining the proper constituency of a bargaining unit. No one particular
factor is itself decisive of the determination. The weight accorded to any
particular factor varies in accordance with the particular question or questions
that may arise in a given case. What are these factors? Rothenberg mentions
a good number, but the most pertinent to our case are: (1) will of the employees
(Globe Doctrine); (2) affinity and unit of employees' interest, such as
substantial similarity of work and duties, or similarity of compensation and
working conditions; (3) prior collective bargaining history; and (4) employment
status, such as temporary, seasonal and probationary employees. . . .
xxx xxx xxx
An enlightening appraisal of the problem of defining an appropriate bargaining
unit is given in the 10th Annual Report of the National Labor Relations Board
wherein it is emphasized that the factors which said board may consider and
weigh in fixing appropriate units are: the history, extent and type of
organization of employees; the history of their collective bargaining; the
history, extent and type of organization of employees in other plants of the
same employer, or other employers in the same industry; the skill, wages,
work, and working conditions of the employees; the desires of the employees;
the eligibility of the employees for membership in the union or unions involved;
and the relationship between the unit or units proposed and the employer's
organization, management, and operation . . .
. . . In said report, it is likewise emphasized that the basic test in determining
the appropriate bargaining unit is that a unit, to be appropriate, must affect a
grouping of employees who have substantial, mutual interests in wages,
hours, working conditions and other subjects of collective bargaining [G.R. No. 81883. September 23, 1992.]
(citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162). . .
KNITJOY MANUFACTURING, INC., Petitioner, v. PURA FERRER-
Finally, we take note of the fact that the separate interests of the employees CALLEJA, Director of Bureau of Labor Relations, and KNITJOY
of Magnolia and SMFI from those of SMC has been recognized in the case MONTHLY EMPLOYEES UNION, Respondents.
of Daniel Borbon v. Laguesma. 26 We quote:
[G.R. No. 82111. September 23, 1992.]
Even assuming in gratia argumenti that at the time of the election they were
regular employees of San Miguel, nonetheless, these workers are no longer CONFEDERATION OF FILIPINO WORKERS (CFW), Petitioner, v.
connected with San Miguel Corporation in any manner because Magnolia has DIRECTOR PURA FERRER-CALLEJA and KNITJOY MONTHLY
ceased to be a division of San Miguel Corporation and has been formed into EMPLOYEES UNION (KMEU), Respondents.
a separate corporation with a personality of its own (p. 305, Rollo). This
development, which was brought to our attention by private respondents, V.E. Del Rosario & Associates for petitioner in G.R. No. 81883.
necessarily renders moot and academic any further discourse on the propriety
of the elections which petitioners impugn via the recourse (p. 319, Rollo). Rogelio R. Udarbe for petitioner in G.R. No. 82111.
In view of all the foregoing, we do not find any grave abuse of discretion on
the part of the Secretary of Labor in rendering the assailed Order. Banzuela, Flores, Miralles, Raneses, Sy, Taquio and Associates
for Private Respondent.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary
Restraining Order issued on March 29, 1995 is lifted.
SO ORDERED
SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR

RELATIONS; ONE COMPANY-ONE UNION POLICY; EXCEPTION. — 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. The present Article
245 of the Labor Code expressly allows supervisory employees who are not
performing managerial functions to join, assist or form their separate union but
bars them from membership in a labor organization of the rank-and-file
employees. Even Section 2(c), Rule V, Book V of the Implementing Rules and
Regulations of the Labor Code, which seeks to implement the policy, also
recognizes exceptions. 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 account 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.
2. CONSTITUTIONAL LAW; BILL OF RIGHTS; RIGHT TO FROM UNION OR
ASSOCIATIONS; SCOPE. — The right to form a union or association or to
self-organization comprehends two (2) broad notions, to wit: (a) the liberty or
freedom, i.e., the absence of restraint which guarantees that the employee
may act for himself without being prevented by law, and (b) the power, by virtue
of which an employee may, as he pleases, join or refrain from joining an
association. (Victoriano v. Elizalde Rope Workers’ Union, 59 SCRA 54).
3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR
RELATIONS; ONE COMPANY-ONE UNION POLICY; NOT APPLICABLE
WHERE EXISTING UNION COVERED ONLY ONE CLASS OF
EMPLOYEES; CASE AT BAR. — in the bargaining history of KNITJOY, the
CBA has been consistently limited to the regular rank-and-file employees paid
on a daily or piece-rate basis. On the other hand, the rank-and-file employees
paid on a monthly basis were never included within its scope. Respondent
KMEU’s membership is limited to the latter class of employees, KMEU does
not seek to dislodge CFW as the exclusive bargaining representative for the
former. The records further disclose that in the certification solicited by TUPAS
and during the elections which followed thereafter, resulting in the certification
of CFW as the exclusive bargaining representative, the monthly-paid
employees were expressly excluded. Thus, the negotiations between CFW
and KNITJOY following such a certification could only logically refer to the
rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore,
KNITJOY and CFW recognize that insofar as the monthly-paid employees are
concerned, the latter’s constituting a separate bargaining unit with the
appropriate union as sole bargaining representative, can neither be prevented
nor avoided without infringing on these employees’ rights to form a union and
to enter into collective bargaining negotiations. Stated differently, KNITJOY
and CFW recognize the fact that the existing bargaining unit in the former is
not — and has never been — the employer unit. Given this historical and
factual setting, KMEU had the unquestioned and undisputed right to seek
certification as the exclusive bargaining representative for the monthly-paid
rank-and-file employees; both KNITJOY and CFW cannot block the same on
the basis of this Court’s declaration in Bulletin Publishing Corp. v. Hon.
Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor
Relations (155 SCRA 283 [1987]) regarding the one-company-one union
concept.
4. ID.; ID.; ID.; CERTIFICATION ELECTION; RESULTS THEREOF
CONFINED ONLY TO THE GROUP IT REPRESENTS; CBA ENTERED
DOES NOT BAR HOLDING OF ANOTHER CERTIFICATION ELECTION
FOR THE OTHER GROUP; CASE AT BAR. — Considering that (a) the
TUPAS solicited certification election was strictly confined to the rank-and-file
employees who are paid on a daily or piece-rate basis, (b) the results of the
election must also necessarily confine the certified union’s representation to
the group it represents and (c) the issue of the plight of the monthly-paid
employees was still pending, KNITJOY and CFW clearly acted with palpable
bad faith and malice in including within the scope of the new CBA these
monthly-paid employees. Thus was effected a conspiracy to defeat and
suppress the right of the KMEU and its members to bargain collectively and
negotiate for themselves, to impose upon the latter a contract the negotiation
for which they were not even given notice of, consulted or allowed to
participate in, and to oust from the BLR the pending appeal on the certification
issue. In the latter case, KNITJOY and CFW are guilty of contumacious
conduct. It goes without saying then that the new CBA cannot validly include
in its scope or coverage the monthly-paid rank-and-file employees of
KNITJOY. It does not bar the holding of a certification election to determine
their sole bargaining agent, and the negotiation for and the execution of a
subsequent CBA between KNITJOY and the eventual winner in said election
(Section 4, Rule V, Book V of the Rules Implementing the Labor Code).
DECISION
DAVIDE, JR., J.:
These petitions have a common origin and raise identical issues. They were
ordered consolidated on 23 November 1988.
In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of
the Bureau of Labor Relations in BLR Case No. A-10-315-87, which reversed
the Order of Med-Arbiter-Designate Rolando S. dela Cruz dated 4 September
1987 and ordered the holding of a certification election among the regular rank-
and-file monthly-paid employees of Knitjoy Manufacturing, Inc. (KNITJOY), is
assailed by the latter.
The Med-Arbiter’s order dismissed the petition of private respondent Knitjoy
Monthly Employees Union (KMEU) for such certification election and directed
the parties "to work out (sic) towards the formation of a single union in the
company."cralaw virtua1aw library
The antecedent material operative facts in these petitions are as
follows:chanrob1es virtual 1aw library

Petitioner KNITJOY had a collective bargaining agreement (CBA) with the
Federation of Filipino Workers (FFW). The bargaining unit covered only the
regular rank-and-file employees of KNITJOY paid on a daily or piece-rate
basis. It did not include regular rank-and-file office and production employees
paid on a monthly basis. The CBA expired on 15 June 1987. Prior to its
expiration, the FFW was split into two (2) factions — the Johnny Tan and the
Aranzamendez factions. The latter eventually became the Confederation of
Filipino Workers (CFW), herein petitioner in G.R. No. 82111.
Also prior to the expiration of the CBA, the Trade Union of the Philippines and
Allied Services (TUPAS) filed a petition for the holding of a certification election
among KNITJOY’s regular rank-and-file employees paid on a daily and piece-
rate basis. Excluded were the regular rank-and-file employees paid on a
monthly basis. In the certification election conducted on 10 June 1987, CFW
emerged as the winner; thereafter, negotiations for a new CBA between CFW
and KNITJOY commenced.chanroblesvirtualawlibrary
On 24 June 1987, during the pendency of the said negotiations, private
respondent KMEU filed a petition for certification election among KNITJOY’s
regular rank-and-file monthly-paid employees with Regional Office No. IV of
the Department of Labor and Employment (DOLE) which docketed the same
as R-04-OD-M-6-75-87. The Knitjoy Monthly Employees Association and
Confederation of Citizens Labor Union (KMEA-CCLU), another union existing
in the said company, and petitioner CFW intervened therein.
The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter
Rolando S. de la Cruz, the dispositive portion of which
reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the petition is hereby Dismissed, but
the parties are instructed to work out (sic) towards the formation of a single
union in the company." 1 as principal underpinning therefor, the conclusion and signing between them,
KMEU filed a motion to reconsider this order, which was treated as an appeal
by the Bureau of Labor Relations (BLR).
On 1 December 1987, public respondent Pura Ferrer-Calleja. Director of the
BLR, handed down a Decision 2 reversing the order of Med-Arbiter de la Cruz.
The dispositive portion of the Decision reads:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the Appeal of Knitjoy Monthly
Employees is hereby granted subject to the exclusion of the monthly paid
employees who are deemed managerial.
Let, therefore, the certification election proceed without delay, with the
following as choices:chanrob1es virtual 1aw library
1. Knitjoy Monthly Employees Union (KMEU); and
2. No Union.
The company’s latest payroll shall be the basis in determining the list of eligible
voters.
SO ORDERED."cralaw virtua1aw library
Respondent Director brushed aside KNITJOY’s arguments that the monthly-
paid employees have the same working incentives as their counterparts, the
daily-paid workers; that the existing collective bargaining agent (CFW) is
willing to include the monthly-paid employees, and that out of the 212 monthly-
paid employees, 116 qualify as managerial employees while the rest who are
holding confidential or technical positions should likewise be excluded. In
finding for KMEU, said Director declared that:jgc:chanrobles.com.ph
"As pointed out by the Supreme Court in the similar case of General Rubber
and Footwear Corporation v. Bureau of Labor Relations, Et Al., G.R. No.
74262, it is perhaps unusual for management to have to deal with two (2)
collective bargaining unions but there is no one to blame except management
for creating the situation it is in. From the beginning of the existence of the
CBA, management had sought to indiscriminately suppress the members of
the petitioners’ right (sic) to self-organization. Respondents’ argument that the
incumbent collective bargaining agent is willing to accommodate herein
petitioner is of no moment since the option now rests upon the petitioner as to
whether or not they desire to join the existing collective bargaining agent or
remain as separate (sic) union." 3
KNITJOY and CFW separately moved to reconsider the said decision alleging,
allegedly on 27 November 1987 — before the rendition of the challenged
decision — of a CBA which includes in its coverage the monthly-paid rank-
and-file employees. It is averred that said CBA has rendered the case moot
and academic; moreover, to remove the monthly-paid employees from their
present bargaining unit would lead to the fragmentation thereof, contrary to
existing labor policies favoring larger units.chanrobles virtual lawlibrary
In her Decision of 8 February 1988, respondent Director denied for lack of
merit the motion for reconsideration on the principal ground that although the
monthly-paid rank-and-file employees were allegedly included within the
scope of the new CBA, they are not barred from forming a separate bargaining
unit considering that: (a) since the petition for certification election was filed as
early as 24 June 1987, there already existed a pending. representation issue
when KNITJOY and CFW commenced negotiations for a new CBA;
nevertheless, KMEU was not brought into the said negotiations and was On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No. 81883
therefore not a privy to the CBA; (b) members of KMEU did not participate in and the petitioner in the former was ordered to file a consolidated reply to the
the ratification of the CBA; contrary to KNITJOY s claim that the same was separate comments of both respondents. 11
unanimously ratified by the members of the bargaining unit, the CBA failed to
mention even one monthly-paid employee who participated in the ratification The principal issues raised in these petitions are:chanrob1es virtual 1aw
process, and (c) while it is true that the policy of the DOLE is to favor a one library
company-one union scenario which finds basis in Section 2, Rule V, Book V
of the Rules Implementing the Labor Code, there are, nonetheless, some 1. Whether or not petitioner KNITJOY’s monthly-paid regular rank-and-file
exceptions thereto, as where the bargaining history requires the formation of employees can constitute an appropriate bargaining unit separate and distinct
another bargaining unit. Besides, such a policy must yield to an employee’s from the existing unit composed of daily or piece-rate paid regular rank-and-
Constitutional right to form unions which includes the freedom to join a union file employees, and
of one’s choice. 4
2. Whether or not the inclusion in the coverage of the new CBA between
The new CBA, which KMEU claims to have been signed on 12 December KNITJOY and CFW of the monthly-paid rank-and-file employees bars the
1987, and not on 27 November 1987 as both KNITJOY and CFW boldly assert, holding of a certification election among the said monthly paid employees.
defines the bargaining unit covered as follows:jgc:chanrobles.com.ph
We decide for the respondents.
"SECTION 2. The bargaining unit covered by this Agreement consists of all
regular and permanent rank-and-file employees of the COMPANY employed 1. The suggested bias of the Labor Code in favor of the one company-one
in its production plants and paid on a daily or piece-rate basis and regular, union policy, anchored on the greater mutual benefits which the parties could
rank-and-file monthly paid office employees, excluding managerial, derive, especially in the case of employees whose bargaining strength could
supervisory, casual, temporary and probationary employees, and security undeniably be enhanced by their unity and solidarity but diminished by their
guards." 5 disunity, division and dissension, is not without exceptions.

Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed The present Article 245 of the Labor Code expressly allows supervisory
the instant petitions. The former imputes upon respondent Director grave employees who are not performing managerial functions to join, assist or form
abuse of discretion in holding that (a) the scope of the bargaining unit agreed their separate union but bars them from membership in a labor organization of
upon in the new CBA does not bind KMEU because it is not a party thereto, the rank-and-file employees. It reads:jgc:chanrobles.com.ph
(b) the acceptance by all the members of KMEU of all benefits of the CBA did
not constitute an overt act of ratification and (c) the CBA was concluded on 12 "ARTICLE 245. Ineligibility of managerial employees to join any labor
December 1987 and not on 27 November 1987. It further contends that organization; right of supervisory employees. — Managerial employees are
respondent Director contumaciously violated the one company-one union not eligible to join, assist or form any labor organization. Supervisory
policy of the Labor Code and disregarded the ruling of this Court in Bulletin employees shall not be eligible for membership in a labor organization of the
Publishing Corp. v. Hon. Sanchez, 6 reiterated in part in General Rubber and rank-and-file employees but may join, assist or form separate labor
Footwear Corp. v. Bureau of Labor Relations. 7 Upon the other hand, CFW organizations of their own."cralaw virtua1aw library
contends that respondent Director committed grave abuse of discretion in (a)
allowing the creation of a unit separate from the existing bargaining unit This provision obviously allows more than one union in a company.
defined in the new CBA thus abetting the proliferation of unions, (b)
disregarding the CBA provisions which consider the CFW as the sole and Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations
exclusive bargaining agent of all rank-and-file employees and (c) excluding of the Labor Code, which seeks to implement the policy, also recognizes
CFW from the choices of unions to be voted upon. 8 exceptions. It reads:chanrobles virtual lawlibrary

On 24 August 1988, 9 this Court gave due course to the petition in G.R. No. "SECTION 2. Who may file. — Any legitimate labor organization or the
81883 after both the public and private respondents filed their separate employer, when requested to bargain collectively, may file the petition.
comments and the petitioner filed its consolidated reply thereto. 10
The petition, when filed by a legitimate labor organization shall contain, among
others:chanrob1es virtual 1aw library
x x x on a daily or piece-rate basis. On the other hand, the rank-and-file employees
(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; . . . ." (Emphasis supplied)
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 account the policy to assure
employees of the fullest freedom in exercising their rights. 12 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. 13
The right to form a union or association or to self-organization comprehends
two (2) broad notions, to wit: (a) the liberty or freedom, i.e., the absence of
restraint which guarantees that the employee may act for himself without being
prevented by law, and (b) the power, by virtue of which an employee may, as
he pleases, join or refrain from joining an association. In Victoriano v. Elizalde
Rope Workers’ Union, 14 this Court stated:jgc:chanrobles.com.ph
". . . 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 without being prevented
by law; and 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, he himself makes up his mind as to which association he would
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 v. 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. v. PHILAME
(KG) Employees Union, Et Al., L-19912, January 30, 1965, 13 SCRA 120, 123,
quoting Rothenberg, Labor Relations]. Inasmuch as what both the Constitution
and the Industrial Peace Act have recognized, and 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."cralaw virtua1aw library
Furthermore, it is not denied that in the bargaining history of KNITJOY, the
CBA has been consistently limited to the regular rank-and-file employees paid
paid on a monthly basis were never included within its scope. Respondent
KMEU’s membership is limited to the latter class of employees, KMEU does
not seek to dislodge CFW as the exclusive bargaining representative for the
former. The records further disclose that in the certification solicited by TUPAS
and during the elections which followed thereafter, resulting in the certification
of CFW as the exclusive bargaining representative, the monthly-paid
employees were expressly excluded. Thus, the negotiations between CFW
and KNITJOY following such a certification could only logically refer to the
rank-and-file employees paid on a daily or piece-rate basis. Clearly therefore,
KNITJOY and CFW recognize that insofar as the monthly-paid employees are
concerned, the latter’s constituting a separate bargaining unit with the
appropriate union as sole bargaining representative, can neither be prevented
nor avoided without infringing on these employees’ rights to form a union and
to enter into collective bargaining negotiations. Stated differently, KNITJOY
and CFW recognize the fact that the existing bargaining unit in the former is
not — and has never been — the employer unit. Given this historical and
factual setting, KMEU had the unquestioned and undisputed right to seek
certification as the exclusive bargaining representative for the monthly-paid
rank-and-file employees; both KNITJOY and CFW cannot block the same on
the basis of this Court’s declaration in Bulletin Publishing Corp. v. Hon.
Sanchez 15 and General Rubber and Footwear Corp. v. Bureau of Labor
Relations 16 regarding the one company-one union concept. Petitioners have
obviously misread these cases. In the first, We stated that" [t]he crux of the
dispute . . . is whether or not supervisors in petitioner company therein 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," 17 and ruled that the members of the Bulletin Supervisory Union,
wholly composed of supervisors, are not qualified to form a union of their own
under the law and rules then existing, considering that" [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;" 18 hence, under Article 246 19 of the Labor
Code, they cannot form, join and assist labor organizations. It should be
stressed that the statement therein that supervisors "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" 20
is no longer legally feasible under existing laws. As earlier noted, the present
Article 245 of the Labor Code allows supervisory employees who are not
exercising managerial functions to join, assist or form separate labor
organizations of their own but prohibits them from joining a labor organization
composed of the rank-and-file employees.chanrobles lawlibrary : rednad
The second case on the other hand, demolishes the stand of KNITJOY and
CFW for, as correctly contended by the respondents, it in fact recognizes an
exception to the one company-one union concept.
Thus:jgc:chanrobles.com.ph
"Perhaps it is unusual for the petitioner to have to deal with two (2) collective
bargaining unions but there is no one to blame except petitioner itself for
creating the situation it is in. From the beginning of the existence in 1963 of a
bargaining unit for the employees up to the present, petitioner had sought to
indiscriminately suppress the members of the private respondent’s right (sic)
to self-organization provided for by law. Petitioner, in justification of its action,
maintained that the exclusion of the members of the private respondent from
the bargaining union of the rank-and-file or from forming their own union was
agreed upon by petitioner corporation with the previous bargaining
representatives . . . Such posture has no leg to stand on. It has not been shown
that private respondent was privy to this agreement. And even if it were so, it
can never bind subsequent federations and unions particularly private
respondent-union because it is a curtailment of the right to self-organization
guaranteed by the labor laws. However, to prevent any difficulty and to avoid
confusion to all concerned and, more importantly, to fulfill the policy of the New
Labor Code as well as to be consistent with Our ruling in the Bulletin case,
supra, the monthly-paid rank-and-file employees should be allowed to join the
union of the daily-paid-rank-and-file employees of petitioner so that they can
also avail of the CBA benefits or to form their own rank-and-file union, without
prejudice to the certification election that has been ordered." 21 (Emphasis
supplied)
2. Regardless of the date when the new CBA was executed - whether on 27
November 1987 as contended by KNITJOY and CFW or 12 December 1967
as claimed by the respondents — the fact remains that it was executed before
the resolution of KMEU’s petition for certification election among the monthly
paid employees became final. This Court, however, sustains the respondents’
claim for indeed if it was executed by the parties on 27 November 1987, both
KNITJOY and CFW would have immediately filed the appropriate pleading
with the BLR informing it of such execution and moving for the dismissal of the
appeal on the ground that it has been rendered moot and academic. Moreover,
public respondent’s finding on this point is supported by substantial evidence,
thus:jgc:chanrobles.com.ph
"The parties could not have signed the said CBA on 27 November 1987,
contrary to their allegation, because from 4:00 - 10:00 p.m. on the same day,
27 November 1987, the parties still attended a conciliation conference before
Assistant Director Maximo L. Lim of the NCR (see Annex "F" of respondent’s
Supplemental Motion for Reconsideration) and agreed in principle on nine (9)
items or provisions to be included in said CBA. Said minutes do not state that
these nine items are the remaining unresolved issues in the negotiation of the
CBA." 22 It was only in their motion for the reconsideration of public
respondent’s decision of 1 December 1987 that the existence of the new CBA
was made known.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
Considering that (a) the TUPAS solicited certification election was strictly
confined to the rank-and-file employees who are paid on a daily or piece-rate
basis, (b) the results of the election must also necessarily confine the certified
union’s representation to the group it represents and (c) the issue of the plight
of the monthly-paid employees was still pending, KNITJOY and CFW clearly
acted with palpable bad faith and malice in including within the scope of the
new CBA these monthly-paid employees. Thus was effected a conspiracy to
defeat and suppress the right of the KMEU and its members to bargain
collectively and negotiate for themselves, to impose upon the latter a contract
the negotiation for which they were not even given notice of, consulted or
allowed to participate in, and to oust from the BLR the pending appeal on the
certification issue. In the latter case, KNITJOY and CFW are guilty of
contumacious conduct. It goes without saying then that the new CBA cannot
validly include in its scope or coverage the monthly-paid rank-and-file
employees of KNITJOY. It does not bar the holding of a certification election
to determine their sole bargaining agent, and the negotiation for and the
execution of a subsequent CBA between KNITJOY and the eventual winner in
said election. Section 4, Rule V, Book V of the Rules Implementing the Labor
Code expressly provides:jgc:chanrobles.com.ph
"SECTION 4. Effects of early agreements. — The representation case shall
not, however, be adversely affected by a collective bargaining agreement
registered before or during the last 60 days of a subsisting agreement or during
the pendency of the representation case." (Emphasis supplied)
The public respondent then committed no abuse of discretion ordering a
certification election among the monthly-paid rank-and-file employees, except
managerial employees, of KNITJOY. The choice however, should not be, as
correctly contended by CFW, limited to merely (a) KMEU and (b) no union.
The records disclose that the intervenors in the petition for certification are the
KMEA-CCLU and CFW. They should be included as among the choices in the
certification election.cralawnad
WHEREFORE, the instant petitions are DISMISSED. However, the challenged
decision of public respondent of 1 December 1987 is modified to include in the
choices for the certification election petitioner Confederation of Filipino
Workers (CFW) and the Knitjoy Monthly Employees Association and
Confederation of Citizens Labor Unions (KMEU-CCLU).
 REPUBLIC OF THE PHILIPPINES, G.R. No. 160352
Costs against petitioners.
represented by Department of
SO ORDERED. Labor
and Employment (DOLE), Present:
Petitioner,
QUISUMBING,* J.,
YNARES-SANTIAGO,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
NACHURA, and
REYES, JJ.
KAWASHIMA TEXTILE
MFG., PHILIPPINES, INC., Promulgated:
Respondent. July 23, 2008
x-------------------------------------------------------
---x

DECISION

AUSTRIA-MARTINEZ, J.:

The Republic of the Philippines assails by way of Petition for Review

on Certiorari under Rule 45 of the Rules of Court, the December 13, 2002
Decision[1] of the Court of Appeals (CA), which reversed the August 18, 2000
Decision[2] of the Department of Labor and Employment (DOLE), and
reinstated the May 17, 2000 Order[3] of Med-Arbiter Anastacio L. Bactin,
dismissing the petition of Kawashima Free Workers Union-PTGWO Local
Chapter No. 803 (KFWU) for the conduct of a certification election in
Kawashima Textile Mfg. Phils., Inc. (respondent); and the October 7, 2003 CA
Resolution[4] which denied the motion for reconsideration.

The relevant facts are of record.


On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition
for Certification Election to be conducted in the bargaining unit composed of
145 rank-and-file employees of respondent.[5] Attached to its petition are a
Certificate of Creation of Local/Chapter[6] issued on January 19, 2000 by
DOLE Regional Office No. IV, stating that it [KFWU] submitted to said office a
Charter Certificate issued to it by the national federation Phil. Transport &
General Workers Organization (PTGWO), and a Report of Creation of
Local/Chapter.[7]
Respondent filed a Motion to Dismiss[8] the petition on the ground that KFWU
did not acquire any legal personality because its membership of mixed rank-
and-file and supervisory employees violated Article 245 of the Labor Code,
and its failure to submit its books of account contravened the ruling of the Court
in Progressive Development Corporation v. Secretary, Department of Labor
and Employment.[9]
In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWUs legal
personality defective and dismissed its petition for certification election, thus:
We scrutinize the facts and evidences presented by the parties and arrived at
a decision that at least two (2) members of [KFWU], namely: Dany I.
Fernandez and Jesus R. Quinto, Jr. are supervisory employees, having a
number of personnel under them. Being supervisory employees, they are
prohibited under Article 245 of the Labor Code, as amended, to join the union
of the rank and file employees. Dany I. Fernandez and Jesus R. Quinto, Jr.,
Chief Engineers of the Maintenance and Manufacturing Department,
respectively, act as foremen to the line engineers, mechanics and other non-
skilled workers and responsible [for] the preparation and organization of
maintenance shop fabrication and schedules, inventory and control of
materials and supplies and tasked to implement training plans on line
engineers and evaluate the performance of their subordinates. The above-
stated actual functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear
manifestation that they are supervisory employees.
xxxx
status of a legitimate labor organization. The above judgment is supported
by the decision of the Supreme Court in the Toyota Case[10] wherein the High
Tribunal ruled:
As respondent unions membership list contains the names of at least twenty
seven (27) supervisory employees in Level Five Positions, the union could not
prior to purging itself of its supervisory employee members, attain the status
of a legitimate labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification election. (Underscoring
omitted.)
xxxx
Furthermore, the commingling of rank and file and supervisory employees in
one (1) bargaining unit cannot be cured in the exclusion-inclusion proceedings
[at] the pre-election conference. The above ruling is supported by the Decision
of the Supreme Court in Dunlop Slazenger (Phils.), Inc. vs. Honorable
Secretary of Labor and Employment, et al., G.R. No. 131248 dated December
11, 1998[11] x x x.
xxxx
WHEREFORE, premises considered, the petition for certification election is
hereby dismissed for lack of requisite legal status of petitioner to file this instant
petition.
SO ORDERED.[12] (Emphasis supplied)
On the basis of the aforecited decision, respondent filed with DOLE Regional
Office No. IV a Petition for Cancellation of Charter/Union Registration of
KFWU,[13] the final outcome of which, unfortunately, cannot be ascertained
from the records.

Meanwhile, KFWU appealed[14] to the DOLE which issued a Decision

Since petitioners members are mixture of rank and file and supervisory
on August 18, 2000, the dispositive portion of which reads:
employees, petitioner union, at this point [in] time, has not attained the
status of a legitimate labor organization. Petitioner should first exclude
the supervisory employees from it membership before it can attain the
WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the
Med-Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire records
of the case be remanded to the office of origin for the immediate conduct of
certification election, subject to the usual pre-election conference, among the
rank-and-file employees of Kawashima Textile Manufacturing Philippines, Inc.
with the following choices:
1. Kawashima Free Workers Union-PTGWO Local Chapter No. 803;
and
2. No union.
Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the
employer is hereby directed to submit to the office of origin the certified list of
current employees in the bargaining unit for the last three months prior to the
issuance of this decision.
SO DECIDED.[15]
The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court
in Toyota Motor Philippines Corporation v. Toyota Motor Philippines
Corporation Labor Union[16] and Dunlop Slazenger, Inc. v. Secretary of Labor
and Employment[17] was misplaced, for while Article 245 declares supervisory
employees ineligible for membership in a labor organization for rank-and-file
employees, the provision did not state the effect of such prohibited
membership on the legitimacy of the labor organization and its right to file for
certification election. Neither was such mixed membership a ground for
cancellation of its registration. Section 11, Paragraph II, Rule XI of Department
Order No. 9 provides for the dismissal of a petition for certification election
based on lack of legal personality of a labor organization only on the following
grounds: (1) [KFWU] is not listed by the Regional Office or the Bureau of Labor
Relations in its registry of legitimate labor organizations; or (2) [KFWU's] legal
personality has been revoked or canceled with finality.[18] The DOLE noted that
neither ground existed; on the contrary, KFWU's legal personality was well-
established, for it held a certificate of creation and had been listed in the
registry of legitimate labor organizations.
As to the failure of KFWU to file its books of account, the DOLE held that such
omission was not a ground for revocation of union registration or dismissal of
petition for certification election, for under Section 1, Rule VI of Department
Order No. 9, a local or chapter like KFWU was no longer required to file its
books of account.[19]
Respondent filed a Motion for Reconsideration[20] but the DOLE denied the
same in its September 28, 2000 Resolution.[21]
However, on appeal by respondent, the CA rendered the December 13,
2002 Decision assailed herein, reversing the August 18, 2000 DOLE Decision,
thus:
Since respondent union clearly consists of both rank and file and
supervisory employees, it cannot qualify as a legitimate labor
organization imbued with the requisite personality to file a petition for
certification election. This infirmity in union membership cannot be
corrected in the inclusion-exclusion proceedings during the pre-election
conference.
Finally, contrary to the pronouncement of public respondent, the application of
the doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota
Motor Philippines Corporation Labor Union was not construed in a way that
effectively denies the fundamental right of respondent union to organize and
seek bargaining representation x x x.
For ignoring jurisprudential precepts on the matter, the Court finds that the
Undersecretary of Labor, acting under the authority of the Secretary of Labor,
acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, premises considered, the Petition is hereby GRANTED. The
Decision dated 18 August 2000 of the Undersecretary of Labor, acting under
the authority of the Secretary, is hereby REVERSED and SET ASIDE. The
Order dated 17 May 2000 of the Med-Arbiter dismissing the petition for
certification election filed by Kawashima Free Workers Union-PTGWO Local
Chapter No. 803 is REINSTATED.
SO ORDERED.[22] (Emphasis supplied)
KFWU filed a Motion for Reconsideration[23] but the CA denied it.
The Republic of the Philippines (petitioner) filed the present petition to
seek closure on two issues:
First, whether a mixed membership of rank-and-file and supervisory
employees in a union is a ground for the dismissal of a petition for certification
election in view of the amendment brought about by D.O. 9, series of 1997,
which deleted the phraseology in the old rule that [t]he appropriate bargaining
unit of the rank-and-file employee shall not include the supervisory employees
and/or security guards; and
Second, whether the legitimacy of a duly registered labor organization can be
collaterally attacked in a petition for a certification election through a motion to
dismiss filed by an employer such as Kawashima Textile Manufacturing Phils.,
Inc.[24]
The petition is imbued with merit.
The key to the closure that petitioner seeks could have been Republic Act
(R.A.) No. 9481.[25] Sections 8 and 9 thereof provide:
Section 8. Article 245 of the Labor Code is hereby amended 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 the collective bargaining unit of the rank-and-file
employees but may join, assist or form separate collective bargaining units
and/or legitimate labor organizations of their own. The rank and file union and
the supervisors' union operating within the same establishment may join the
same federation or national union."
Section 9. A new provision, Article 245-A is inserted into the Labor Code to
read as follows:
"Art. 245-A. Effect of Inclusion as Members of Employees Outside the
Bargaining Unit. - The inclusion as union members of employees outside
the bargaining unit shall not be a ground for the cancellation of the
registration of the union. Said employees are automatically deemed
removed from the list of membership of said union." (Emphasis supplied)
Moreover, under Section 4, a pending petition for cancellation of registration
will not hinder a legitimate labor organization from initiating a certification
election, viz:
Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-
A to read as follows:
"Art. 238-A. Effect of a Petition for Cancellation of Registration. - A petition
for cancellation of union registration shall not suspend the proceedings
for certification election nor shall it prevent the filing of a petition for
certification election.
In case of cancellation, nothing herein shall restrict the right of the union to
seek just and equitable remedies in the appropriate courts."
(Emphasis supplied)
Furthermore, under Section 12 of R.A. No. 9481, employers have no
personality to interfere with or thwart a petition for certification election filed by
a legitimate labor organization, to wit:
Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code
to read as follows:
"Art. 258-A. Employer as Bystander. - In all cases, whether the petition for
certification election is filed by an employer or a legitimate labor
organization, the employer shall not be considered a party thereto with a
concomitant right to oppose a petition for certification election. The
employer's participation in such proceedings shall be limited to: (1)
being notified or informed of petitions of such nature; and (2) submitting
the list of employees during the pre-election conference should the Med-
Arbiter act favorably on the petition." (Emphasis supplied)

However, R.A. No. 9481 took effect only on June 14, 2007;[26] hence, it applies
only to labor representation cases filed on or after said date.[27] As the petition
for certification election subject matter of the present petition was filed by
KFWU on January 24, 2000,[28] R.A. No. 9481 cannot apply to it. There may
have been curative labor legislations[29] that were given retrospective
effect,[30] but not the aforecited provisions of R.A. No. 9481, for otherwise,
substantive rights and interests already vested would be impaired in the
process.[31]
Instead, the law and rules in force at the time of the filing by KFWU of the
petition for certification election on January 24, 2000 are R.A. No.
6715,[32] amending Book V of Presidential Decree (P.D.) No. 442 (Labor
Code),[33] as amended, and the Rules and Regulations Implementing R.A. No.
6715,[34] as amended by Department Order No. 9, series of 1997.[35]
It is within the parameters of R.A. No. 6715 and the Implementing Rules that
the Court will now resolve the two issues raised by petitioner.
If there is one constant precept in our labor laws be it Commonwealth Act No.
213 (1936),[36] R.A. No. 875 (1953),[37] P.D. No. 442 (1974), Executive Order
(E.O.) No. 111 (1986)[38] or R.A. No. 6715 (1989) - it is that only a legitimate
labor organization may exercise the right to be certified as the exclusive
representative of all the employees in an appropriate collective bargaining unit
for purposes of collective bargaining.[39]What has varied over the years has
been the degree of enforcement of this precept, as reflected in the shifting
scope of administrative and judicial scrutiny of the composition of a labor
organization before it is allowed to exercise the right of representation.
One area of contention has been the composition of the membership of a labor
organization, specifically whether there is a mingling of supervisory and rank-
and-file employees and how such questioned mingling affects its legitimacy.
It was in R.A. No. 875, under Section 3, that such questioned mingling was
first prohibited,[40] to wit:
Sec. 3. Employees right to self-organization. Employees shall have the right to
self-organization and to form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining through representatives of
their own choosing and to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection. Individuals
employed as supervisors shall not be eligible for membership in a labor
organization of employees under their supervision but may form
separate organizations of their own. (Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the questioned mingling can
affect the legitimacy of the labor organization. Under Section 15, the only
instance when a labor organization loses its legitimacy is when it violates its
duty to bargain collectively; but there is no word on whether such mingling
would also result in loss of legitimacy. Thus, when the issue of whether the
membership of two supervisory employees impairs the legitimacy of a rank-
and-file labor organization came before the Court En Banc in Lopez v.
Chronicle Publication Employees Association,[41] the majority pronounced:
It may be observed that nothing is said of the effect of such ineligibility upon
the union itself or on the status of the other qualified members thereof should
such prohibition be disregarded. Considering that the law is specific where it
intends to divest a legitimate labor union of any of the rights and privileges
granted to it by law, the absence of any provision on the effect of the
disqualification of one of its organizers upon the legality of the union,
may be construed to confine the effect of such ineligibility only upon the
membership of the supervisor. In other words, the invalidity of
membership of one of the organizers does not make the union illegal,
where the requirements of the law for the organization thereof are,
nevertheless, satisfied and met.[42](Emphasis supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of
R.A. No. 875. The provision in the Labor Code closest to Sec. 3 is Article
290,[43] which is deafeningly silent on the prohibition against supervisory
employees mingling with rank-and-file employees in one labor
organization. Even the Omnibus Rules Implementing Book V of the Labor
Code[44] (Omnibus Rules) merely provides in Section 11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security guards to cease
operation. 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. However, existing
collective agreements with such unions, the life of which extends beyond the
date of effectivity of the Code shall be respected until their expiry date insofar
as the economic benefits granted therein are concerned.
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 organization. The determination of who are managerial employees
and who are not shall be the subject of negotiation between representatives of
supervisory union and the employer. If no agreement s reached between the
parties, either or both of them ma bring the issue to the nearest Regional Office
for determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the
Court to declare in Bulletin v. Sanchez[45] that supervisory employees who do
not fall under the category of managerial employees may join or assist in the
formation of a labor organization for rank-and-file employees, but they may not
form their own labor organization.
While amending certain provisions of Book V of the Labor Code, E.O. No. 111
and its implementing rules[46] continued to recognize the right of supervisory
employees, who do not fall under the category of managerial employees, to
join a rank-and-file labor organization.[47]
Effective 1989, R.A. No. 6715 restored the prohibition against the questioned
mingling in one labor organization, viz:
Sec. 18. Article 245 of the same Code, as amended, is hereby further
amended 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 supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the
exact effect any violation of the prohibition would bring about on the
legitimacy of a labor organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
Omnibus Rules) which supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
Sec. 1. Who may join unions. x x x 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; Provided, that those supervisory employees who
are included in an existing rank-and-file bargaining unit, upon the effectivity of
Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the
Omnibus Rules, viz:
Sec. 1. Where to file. A petition for certification election may be filed with the
Regional Office which has jurisdiction over the principal office of the employer.
The petition shall be in writing and under oath.
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:
xxxx
(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. (Emphasis
supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate
and duly registered labor organization from exercising its right to file a petition
for certification election.
Thus, when the issue of the effect of mingling was brought to the fore
in Toyota,[48] the Court, citing Article 245 of the Labor Code, as amended by
R.A. No. 6715, held:
Clearly, based on this provision, a labor organization composed of both rank-
and-file and supervisory employees is no labor organization at all. It cannot,
for any guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor
organization, including the right to file a petition for certification election
for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification
election, to inquire into the composition of any labor organization
whenever the status of the labor organization is challenged on the basis
of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names
of at least twenty-seven (27) supervisory employees in Level Five positions,
the union could not, prior to purging itself of its supervisory employee
members, attain the status of a legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a petition for certification
election.[49] (Emphasis supplied)
In Dunlop,[50] in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership
included rank-and-file employees, the Court reiterated that such labor
organization had no legal right to file a certification election to represent a
bargaining unit composed of supervisors for as long as it counted rank-and-
file employees among its members.[51]
It should be emphasized that the petitions for certification election involved
in Toyota and Dunlop were filed on November 26, 1992 and September 15,
1995, respectively; hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further
amended by Department Order No. 9, series of 1997 (1997 Amended
Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989
Amended Omnibus Rules - that the petition for certification election indicate
that the bargaining unit of rank-and-file employees has not been mingled with
supervisory employees - was removed. Instead, what the 1997 Amended
Omnibus Rules requires is a plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and
under oath and shall contain, among others, the following:
x x x (c) The description of the bargaining unit.[52]
In Pagpalain Haulers, Inc. v. Trajano,[53] the Court had occasion to uphold the
validity of the 1997 Amended Omnibus Rules, although the specific provision
involved therein was only Sec. 1, Rule VI, to wit:
Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation
or national union may directly create a local/chapter by submitting to the
Regional Office or to the Bureau two (2) copies of the following: a) a charter
certificate issued by the federation or national union indicating the creation or
establishment of the local/chapter; (b) the names of the local/chapters officers,
their addresses, and the principal office of the local/chapter; and (c) the
local/chapters constitution and by-laws; provided that where the local/chapters
constitution and by-laws is the same as that of the federation or national union,
this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.
which does not require that, for its creation and registration, a local or chapter
submit a list of its members.
Then came Tagaytay Highlands Intl. Golf Club, Inc. v. Tagaytay Highlands
Employees Union-PGTWO[54] in which the core issue was whether mingling
affects the legitimacy of a labor organization and its right to file a petition for
certification election. This time, given the altered legal milieu, the Court
abandoned the view in Toyota and Dunlop and reverted to its pronouncement
in Lopez that while there is a prohibition against the mingling of supervisory
and rank-and-file employees in one labor organization, the Labor Code does
not provide for the effects thereof.[55] Thus, the Court held that after a labor
organization has been registered, it may exercise all the rights and privileges
of a legitimate labor organization. Any mingling between supervisory and rank-
and-file employees in its membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration, unless such mingling
was brought about by misrepresentation, false statement or fraud under Article
239 of the Labor Code.[56]
In San Miguel Corp. (Mandaue Packaging Products Plants)
v. Mandaue Packing Products Plants-San Miguel Packaging Products-San
Miguel Corp. Monthlies Rank-and-File Union-FFW,[57] the Court explained that The amendments to the Labor Code and its implementing rules have
since the 1997 Amended Omnibus Rules does not require a local or chapter buttressed that policy even more.
to provide a list of its members, it would be improper for the DOLE to deny
recognition to said local or chapter on account of any question pertaining to its
individual members.[58] WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision
and October 7, 2003 Resolution of the Court of Appeals and the May 17, 2000
More to the point is Air Philippines Corporation v. Bureau of Labor Order of Med-
Relations,[59] which involved a petition for cancellation of union registration Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE, while the
filed by the employer in 1999 against a rank-and-file labor organization on the August 18, 2000 Decision and September 28, 2000 Resolution of the
ground of mixed membership:[60] the Court therein reiterated its ruling Department of Labor and Employment are REINSTATED.
in Tagaytay Highlands that the inclusion in a union of disqualified employees
is not among the grounds for cancellation, unless such inclusion is due to
misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) and (c) of Article 239 of the Labor Code.[61] No costs.

All said, while the latest issuance is R.A. No. 9481, the 1997 Amended
Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San
SO ORDERED.
Miguel and Air Philippines, had already set the tone for
it. Toyota and Dunlop no longer hold sway in the present altered state of the
law and the rules.

Consequently, the Court reverses the ruling of the CA and reinstates that of
the DOLE granting the petition for certification election of KFWU.

Now to the second issue of whether an employer like respondent may

collaterally attack the legitimacy of a labor organization by filing a motion to
dismiss the latters petition for certification election.

Except when it is requested to bargain collectively, [62] an employer is a mere

bystander to any petition for certification election; such proceeding is non-
adversarial and merely investigative, for the purpose thereof is to determine
which organization will represent the employees in their collective bargaining
with the employer.[63] The choice of their representative is the exclusive
concern of the employees; the employer cannot have any partisan interest
therein; it cannot interfere with, much less oppose, the process by filing a
motion to dismiss or an appeal from it;[64] not even a mere allegation that some
employees participating in a petition for certification election are actually
managerial employees will lend an employer legal personality to block the
certification election.[65] The employer's only
right in the proceeding is to be notified or informed thereof.[66]
G.R. No. 77395 November 29, 1988
BELYCA CORPORATION, petitioner,
vs.
DIR. PURA FERRER CALLEJA, LABOR RELATIONS, MANILA, MINISTRY
OF LABOR AND EMPLOYMENT; MED-ARBITER, RODOLFO S. MILADO,
MINISTRY OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 10
AND ASSOCIATED LABOR UNION (ALU-TUCP), MINDANAO REGIONAL
OFFICE, CAGAYAN DE ORO CITY, respondents.
Soriano and Arana Law Offices for petitioner.
The Solicitor General for public respondent.
Francisco D. Alas for respondent Associated Labor Unions-TUCP.
PARAS, J.:
This is a petition for certiorari and prohibition with preliminary injunction
seeking to annul or to set aside the resolution of the Bureau of Labor Relations
dated November 24, 1986 and denying the appeal, and the Bureau's resolution
dated January 13, 1987 denying petitioner's motion for reconsideration.
The dispositive portion of the questioned resolution dated November 24, 1986
(Rollo, p. 4) reads as follows:
WHEREFORE, in view of all the foregoing considerations, the Order is
affirmed and the appeal therefrom denied.
Let, therefore, the pertinent records of the case be remanded to the office of
origin for the immediate conduct of the certification election.
The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92)
reads, as follows:
WHEREFORE, the Motion for Reconsideration filed by respondent Belyca
Corporation (Livestock Agro-Division) is hereby dismissed for lack of merit and
the Bureau's Resolution dated 24 November 1986 is affirmed. Accordingly, let
the records of this case be immediately forwarded to the Office of origin for the
holding of the certification elections.
No further motion shall hereafter be entertained.
The antecedents of the case are as follows:
On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a
legitimate labor organization duly registered with the Ministry of Labor and
Employment under Registration Certificate No. 783-IP, filed with the Regional
Office No. 10, Ministry of Labor and Employment at Cagayan de Oro City, a
petition for direct certification as the sole and exclusive bargaining agent of all
the rank and file employees/workers of Belyca Corporation (Livestock and
Agro-Division), a duly organized, registered and existing corporation engaged
in the business of poultry raising, piggery and planting of agricultural crops
such as corn, coffee and various vegetables, employing approximately 205
rank and file employees/workers, the collective bargaining unit sought in the
petition, or in case of doubt of the union's majority representation, for the
issuance of an order authorizing the immediate holding of a certification
election (Rollo, p. 18). Although the case was scheduled for hearing at least
three times, no amicable settlement was reached by the parties. During the
scheduled hearing of July 31, 1986 they, however, agreed to submit
simultaneously their respective position papers on or before August 11, 1986
(rollo. p. 62).
Petitioner ALU-TUCP, private respondent herein, in its petition and position
paper alleged, among others, (1) that there is no existing collective bargaining
agreement between the respondent employer, petitioner herein, and any other
existing legitimate labor unions; (2) that there had neither been a certification
election conducted in the proposed bargaining unit within the last twelve (12)
months prior to the filing of the petition nor a contending union requesting for
certification as the. sole and exclusive bargaining representative in the
proposed bargaining unit; (3) that more than a majority of respondent
employer's rank-and-file employees/workers in the proposed bargaining unit
or one hundred thirty-eight (138) as of the date of the filing of the petition, have
signed membership with the ALU-TUCP and have expressed their written
consent and authorization to the filing of the petition; (4) that in response to
petitioner union's two letters to the proprietor/ General Manager of respondent
employer, dated April 21, 1986 and May 8, 1 986, requesting for direct
recognition as the sole and exclusive bargaining agent of the rank-and-file
workers, respondent employer has locked out 119 of its rank-and-file
employees in the said bargaining unit and had dismissed earlier the local union
president, vice-president and three other active members of the local unions
for which an unfair labor practice case was filed by petitioner union against
respondent employer last July 2, 1986 before the NLRC in Cagayan de Oro
City (Rollo, pp. 18; 263).<äre||anº•1àw>
Respondent employer, on the other hand, alleged in its position paper, among
others, (1) that due to the nature of its business, very few of its employees are
permanent, the overwhelming majority of which are seasonal and casual and
regular employees; (2) that of the total 138 rank-and-file employees who
authorized, signed and supported the filing of the petition (a) 14 were no longer
working as of June 3, 1986 (b) 4 resigned after June, 1986 (c) 6 withdrew their
membership from petitioner union (d) 5 were retrenched on June 23, 1986 (e)
12 were dismissed due to malicious insubordination and destruction of
property and (f) 100 simply abandoned their work or stopped working; (3) that
the 128 incumbent employees or workers of the livestock section were merely
transferred from the agricultural section as replacement for those who have
either been dismissed, retrenched or resigned; and (4) that the statutory
requirement for holding a certification election has not been complied with by
the union (Rollo, p. 26).
The Labor Arbiter granted the certification election sought for by petitioner
union in his order dated August 18, 1986 (Rollo, p. 62).
On February 4, 1987, respondent employer Belyca Corporation, appealed the
order of the Labor Arbiter to the Bureau of Labor Relations in Manila (Rollo, p.
67) which denied the appeal (Rollo, p. 80) and the motion for reconsideration
(Rollo, p. 92). Thus, the instant petition received in this Court by mail on
February 20, 1987 (Rollo, p. 3).
In the resolution of March 4, 1987, the Second Division of this Court required
respondent Union to comment on the petition and issued a temporary
restraining order (,Rollo, p. 95).
Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public
respondents filed its comment on April 8, 1987 (Rollo, p. 218).
On May 4, 1987, the Court resolved to give due course to the petition and to
require the parties to submit their respective memoranda within twenty (20)
days from notice (Rollo, p. 225).
The Office of the Solicitor General manifested on June 11, 1987 that it is
adopting the comment for public respondents as its memorandum (Rollo, p.
226); memorandum for respondent ALU was filed on June 30, 1987 (Rollo, p.
231); and memorandum for petitioner, on July 30, 1987 (Rollo, p. 435).
The issues raised in this petition are:
I Under the circumstances of that case, the Court stressed the importance of
WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN
APPROPRIATE BARGAINING UNIT.
II
WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW
20%) OF THE EMPLOYEES IN THE PROPOSED BARGAINING UNIT,
ASKING FOR A CERTIFICATION ELECTION HAD BEEN STRICTLY
COMPLIED WITH.
In the instant case, respondent ALU seeks direct certification as the sole and
exclusive bargaining agent of all the rank-and-file workers of the livestock and
agro division of petitioner BELYCA Corporation (Rollo, p. 232), engaged in
piggery, poultry raising and the planting of agricultural crops such as corn,
coffee and various vegetables (Rollo, p. 26). But petitioner contends that the
bargaining unit must include all the workers in its integrated business concerns
ranging from piggery, poultry, to supermarts and cinemas so as not to split an
otherwise single bargaining unit into fragmented bargaining units (Rollo, p.
435).<äre||anº•1àw>
The Labor Code does not specifically define what constitutes an appropriate
collective bargaining unit. Article 256 of the Code provides:
Art. 256. Exclusive bargaining representative.—The labor organization
designated or selected by the majority of the employees in an appropriate
collective bargaining unit shall be exclusive representative of the employees
in such unit for the purpose of collective bargaining. However, an individual
employee or group of employee shall have the right at any time to present
grievances to their employer.
According to Rothenberg, a proper bargaining unit maybe said to be a group
of employees of a given employer, comprised of all or less than all of the entire
body of employees, which the collective interests of all the employees,
consistent with equity to the employer, indicate to be best suited to serve
reciprocal rights and duties of the parties under the collective bargaining
provisions of the law (Rothenberg in Labor Relations, p. 482).
This Court has already taken cognizance of the crucial issue of determining
the proper constituency of a collective bargaining unit.
Among the factors considered in Democratic Labor Association v. Cebu
Stevedoring Co. Inc. (103 Phil 1103 [1958]) are: "(1) will of employees (Glove
Doctrine); (2) affinity and unity of employee's interest, such as substantial
similarity of work and duties or similarity of compensation and working
conditions; (3) prior collective bargaining history; and (4) employment status,
such as temporary, seasonal and probationary employees".
the fourth factor and sustained the trial court's conclusion that two separate
bargaining units should be formed in dealing with respondent company, one
consisting of regular and permanent employees and another consisting of
casual laborers or stevedores. Otherwise stated, temporary employees should
be treated separately from permanent employees. But more importantly, this
Court laid down the test of proper grouping, which is community and mutuality
of interest.
Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al.
v. Alhambra Employees' Association 107 Phil. 28 [1960]) where the
employment status was not at issue but the nature of work of the employees
concerned; the Court stressed the importance of the second factor otherwise
known as the substantial-mutual-interest test and found no reason to disturb
the finding of the lower Court that the employees in the administrative, sales
and dispensary departments perform work which has nothing to do with
production and maintenance, unlike those in the raw leaf, cigar, cigarette and
packing and engineering and garage departments and therefore community of
interest which justifies the format or existence as a separate appropriate
collective bargaining unit.
Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment
status of the employees concerned was again challenged, the Court reiterating
the rulings, both in Democratic Labor Association v. Cebu Stevedoring Co. Inc.
supra and Alhambra Cigar and Cigarette Co. et al. v. Alhambra Employees'
Association (supra) held that among the factors to be considered are:
employment status of the employees to be affected, that is the positions and
categories of work to which they belong, and the unity of employees' interest
such as substantial similarity of work and duties.
In any event, whether importance is focused on the employment status or the
mutuality of interest of the employees concerned "the basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their
collective bargaining rights (Democratic Labor Association v. Cebu
Stevedoring Co. Inc. supra)
Hence, still later following the substantial-mutual interest test, the Court ruled
that there is a substantial difference between the work performed by musicians
and that of other persons who participate in the production of a film which
suffice to show that they constitute a proper bargaining unit. (LVN Pictures,
Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).
Coming back to the case at bar, it is beyond question that the employees of
the livestock and agro division of petitioner corporation perform work entirely
different from those performed by employees in the supermarts and cinema.
Among others, the noted difference are: their working conditions, hours of
work, rates of pay, including the categories of their positions and employment
status. As stated by petitioner corporation in its position paper, due to the
nature of the business in which its livestock-agro division is engaged very few
of its employees in the division are permanent, the overwhelming majority of
which are seasonal and casual and not regular employees (Rollo, p. 26).
Definitely, they have very little in common with the employees of the
supermarts and cinemas. To lump all the employees of petitioner in its
integrated business concerns cannot result in an efficacious bargaining unit
comprised of constituents enjoying a community or mutuality of interest.
Undeniably, the rank and file employees of the livestock-agro division fully
constitute a bargaining unit that satisfies both requirements of classification
according to employment status and of the substantial similarity of work and
duties which will ultimately assure its members the exercise of their collective
bargaining rights.
II
It is undisputed that petitioner BELYCA Corporation (Livestock and Agro
Division) employs more or less two hundred five (205) rank-and-file employees
and workers. It has no existing duly certified collective bargaining agreement
with any legitimate labor organization. There has not been any certification
election conducted in the proposed bargaining unit within the last twelve (12)
months prior to the filing of the petition for direct certification and/or certification
election with the Ministry of Labor and Employment, and there is no contending
union requesting for certification as the sole and exclusive bargaining
representative in the proposed bargaining unit.
The records show that on the filing of the petition for certification and/or
certification election on June 3, 1986; 124 employees or workers which are
more than a majority of the rank-and-file employees or workers in the proposed
bargaining unit had signed membership with respondent ALU-TUCP and had
expressed their written consent and authorization to the filing of the petition.
Thus, the Labor Arbiter ordered the certification election on August 18, 1986
on a finding that 30% of the statutory requirement under Art. 258 of the Labor
Code has been met.
But, petitioner corporation contends that after June 3, 1986 four (4) employees
resigned; six (6) subsequently withdrew their membership; five (5) were
retrenched; twelve (12) were dismissed for illegally and unlawfully barricading
the entrance to petitioner's farm; and one hundred (100) simply abandoned
their work.
Petitioner's claim was however belied by the Memorandum of its personnel
officer to the 119 employees dated July 28, 1986 showing that the employees
were on strike, which was confirmed by the finding of the Bureau of Labor
Relations to the effect that they went on strike on July 24, 1986 (Rollo, p. 419).
Earlier the local union president, Warrencio Maputi; the Vice-president, Gilbert
Redoblado and three other active members of the union Carmen Saguing,
Roberto Romolo and Iluminada Bonio were dismissed and a complaint for
unfair labor practice, illegal dismissal etc. was filed by the Union in their behalf
on July 2, 1986 before the NLRC of Cagayan de Oro City (Rollo, p.
415).<äre||anº•1àw> The complaint was amended on August 20, 1986 for
respondent Union to represent Warrencio Maputi and 137 others against
petitioner corporation and Bello Casanova President and General Manager for
unfair labor practice, illegal dismissal, illegal lockout, etc. (Rollo, p. 416).
Under Art. 257 of the Labor Code once the statutory requirement is met, the
Director of Labor Relations has no choice but to call a certification election
(Atlas Free Workers Union AFWU PSSLU Local v. Noriel, 104 SCRA 565
[1981]; Vismico Industrial Workers Association (VIWA) v. Noriel, 131 SCRA
569 [1984]) It becomes in the language of the New Labor Code "Mandatory
for the Bureau to conduct a certification election for the purpose of determining
the representative of the employees in the appropriate bargaining unit and
certify the winner as the exclusive bargaining representative of all employees
in the unit." (Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas v. Noriel, 72 SCRA 24 [1976]; Kapisanan Ng Mga
Manggagawa v. Noriel, 77 SCRA 414 [1977]); more so when there is no
existing collective bargaining agreement. (Samahang Manggagawa Ng Pacific was requested to bargain collectively. But thereafter the role of the employer
Mills, Inc. v. Noriel, 134 SCRA 152 [1985]); and there has not been a in the certification process ceases. The employer becomes merely a bystander
certification election in the company for the past three years (PLUM Federation (Trade Union of the Phil. and Allied Services (TUPAS) v. Trajano, 120 SCRA
of Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]) as in the 64 [1983]).
instant case.
There is no showing that the instant case falls under the above mentioned
It is significant to note that 124 employees out of the 205 employees of the exception. However, it will be noted that petitioner corporation from the outset
Belyca Corporation have expressed their written consent to the certification has actively participated and consistently taken the position of adversary in the
election or more than a majority of the rank and file employees and workers; petition for direct certification as the sole and exclusive bargaining
much more than the required 30% and over and above the present representative and/or certification election filed by respondent Associated
requirement of 20% by Executive Order No. 111 issued on December 24, 1980 Labor Unions (ALU)-TUCP to the extent of filing this petition for certiorari in
and applicable only to unorganized establishments under Art. 257, of the Labor this Court. Considering that a petition for certification election is not a litigation
Code, to which the BELYCA Corporation belong (Ass. Trade Unions (ATU) v. but a mere investigation of a non-adversary character to determining the
Trajano, G.R. No. 75321, June 20, 1988).) More than that, any doubt cast on bargaining unit to represent the employees (LVN Pictures, Inc. v. Philippine
the authenticity of signatures to the petition for holding a certification election Musicians Guild, supra; Bulakena Restaurant & Caterer v. Court of Industrial
cannot be a bar to its being granted (Filipino Metals Corp. v. Ople 107 SCRA Relations, 45 SCRA 88 [1972]; George Peter Lines, Inc. v. Associated Labor
211 [1981]). Even doubts as to the required 30% being met warrant holding of Union, 134 SCRA 82 [1986]; Tanduay Distillery Labor Union v. NLRC, 149
the certification election (PLUM Federation of Industrial and Agrarian Workers SCRA 470 [1987]), and its only purpose is to give the employees true
v. Noriel, 119 SCRA 299 [1982]). In fact, once the required percentage representation in their collective bargaining with an employer (Confederation
requirement has been reached, the employees' withdrawal from union of Citizens Labor Unions CCLU v. Noriel, 116 SCRA 694 [1982]), there
membership taking place after the filing of the petition for certification election appears to be no reason for the employer's objection to the formation of subject
will not affect said petition. On the contrary, the presumption arises that the union, much less for the filing of the petition for a certification election.
withdrawal was not free but was procured through duress, coercion or for a
valuable consideration (La Suerte Cigar and Cigarette Factory v. Director of PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b)
the Bureau of Labor Relations, 123 SCRA 679 [1983]). Hence, the subsequent resolution of the Bureau of Labor Relations dated Nov. 24, 1986 is AFFIRMED;
disaffiliation of the six (6) employees from the union will not be counted against and the temporary restraining order issued by the Court on March 4, 1987 is
or deducted from the previous number who had signed up for certification LIFTED permanently.
elections Vismico Industrial Workers Association (VIWA) v. Noriel 131 SCRA SO ORDERED.
569 [1984]).<äre||anº•1àw> Similarly, until a decision, final in character, has
been issued declaring the strike illegal and the mass dismissal or retrenchment
valid, the strikers cannot be denied participation in the certification election
notwithstanding, the vigorous condemnation of the strike and the fact that the
picketing were attended by violence. Under the foregoing circumstances, it
does not necessarily follow that the strikers in question are no longer entitled
to participate in the certification election on the theory that they have
automatically lost their jobs. (Barrera v. CIR, 107 SCRA 596 [1981]). For
obvious reasons, the duty of the employer to bargain collectively is nullified if
the purpose of the dismissal of the union members is to defeat the union in the
consent requirement for certification election. (Samahang Manggagawa Ng
Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed by this Court, the holding
of a certification election is a statutory policy that should not be circumvented.
(George and Peter Lines Inc. v. Associated Labor Unions (ALU), 134 SCRA
82 [1986]).
Finally, as a general rule, a certification election is the sole concern of the
workers. The only exception is where the employer has to file a petition for
certification election pursuant to Art. 259 of the Labor Code because the latter
 BANK OF THE PHILIPPINE ISLANDS, G.R. No. 164301 (CBA)[2] of BPI with respondent BPI Employees Union-Davao Chapter-
Petitioner, Federation of Unions in BPI Unibank (the Union).

Present: To recall, the Union Shop Clause involved in this long standing controversy
provided, thus:
CORONA, C.J.,
CARPIO, ARTICLE II
VELASCO, JR.,
LEONARDO-DE CASTRO, xxxx
BRION,
PERALTA, Section 2. Union Shop - New employees falling
- versus - BERSAMIN,* within the bargaining unit as defined in Article I of this
DEL CASTILLO,** Agreement, who may hereafter be regularly employed by
ABAD, the Bank shall, within thirty (30) days after they become
VILLARAMA, JR., regular employees, join the Union as a condition of their
PEREZ,** continued employment. It is understood that membership in
MENDOZA, good standing in the Union is a condition of their continued
SERENO, employment with the Bank.[3] (Emphases supplied.)
REYES,*** and
PERLAS-BERNABE, JJ.
The bone of contention between the parties was whether or not the
BPI EMPLOYEES UNION-DAVAO CHAPTER- absorbed FEBTC employees fell within the definition of new employees under
FEDERATION OF UNIONS IN BPI UNIBANK, Promulgated: the Union Shop Clause, such that they may be required to join respondent
Respondent. union and if they fail to do so, the Union may request BPI to terminate their
employment, as the Union in fact did in the present case. Needless to state,
BPI refused to accede to the Unions request. Although BPI won the initial
October 19, 2011 battle at the Voluntary Arbitrator level, BPIs position was rejected by the Court
x--------------------------------------------------x of Appeals which ruled that the Voluntary Arbitrators interpretation of the Union
Shop Clause was at war with the spirit and rationale why the Labor Code
allows the existence of such provision. On review with this Court, we upheld
the appellate courts ruling and disposed of the case as follows:

WHEREFORE, the petition is hereby DENIED, and

the Decision dated September 30, 2003 of the Court of
Appeals is AFFIRMED, subject to the thirty (30) day notice
RESOLUTION requirement imposed herein. Former FEBTC employees who
opt not to become union members but who qualify for
retirement shall receive their retirement benefits in
LEONARDO-DE CASTRO, J.: accordance with law, the applicable retirement plan, or the
CBA, as the case may be.[4]

In the present incident, petitioner Bank of the Philippine Islands (BPI)

moves for reconsideration[1] of our Decision dated August 10, 2010, holding Notwithstanding our affirmation of the applicability of the Union Shop
that former employees of the Far East Bank and Trust Company (FEBTC) Clause to former FEBTC employees, for reasons already extensively
absorbed by BPI pursuant to the two banks merger in 2000 were covered by discussed in the August 10, 2010 Decision, even now BPI continues to protest
the Union Shop Clause in the then existing collective bargaining agreement the inclusion of said employees in the Union Shop Clause.

In seeking the reversal of our August 10, 2010 Decision, petitioner insists that
the parties to the CBA clearly intended to limit the application of the Union
Shop Clause only to new employees who were hired as non-regular
employees but later attained regular status at some point after hiring. FEBTC
employees cannot be considered new employees as BPI merely stepped into
the shoes of FEBTC as an employer purely as a consequence of the merger.[5]
Petitioner likewise relies heavily on the dissenting opinions of our
respected colleagues, Associate Justices Antonio T. Carpio and Arturo D.
Brion. From both dissenting opinions, petitioner derives its contention that the
situation of absorbed employees can be likened to old employees of BPI,
insofar as their full tenure with FEBTC was recognized by BPI and their
salaries were maintained and safeguarded from diminution but such absorbed
employees cannot and should not be treated in exactly the same way as old
BPI employees for there are substantial differences between them.[6] Although
petitioner admits that there are similarities between absorbed and new
employees, they insist there are marked differences between them as
well. Thus, adopting Justice Brions stance, petitioner contends that the
absorbed FEBTC employees should be considered a sui generis group of
employees whose classification will not be duplicated until BPI has another
merger where it would be the surviving corporation.[7] Apparently borrowing
from Justice Carpio, petitioner propounds that the Union Shop Clause should
be strictly construed since it purportedly curtails the right of the absorbed
employees to abstain from joining labor organizations.[8]
Pursuant to our directive, the Union filed its Comment[9] on the Motion for
Reconsideration. In opposition to petitioners arguments, the Union, in turn,
adverts to our discussion in the August 10, 2010 Decision regarding the
voluntary nature of the merger between BPI and FEBTC, the lack of an
express stipulation in the Articles of Merger regarding the transfer of
employment contracts to the surviving corporation, and the consensual nature
of employment contracts as valid bases for the conclusion that former FEBTC
employees should be deemed new employees.[10] The Union argues that the
creation of employment relations between former FEBTC employees and BPI
(i.e., BPIs selection and engagement of former FEBTC employees, its
payment of their wages, power of dismissal and of control over the employees
conduct) occurred after the merger, or to be more precise, after the Securities
and Exchange Commissions (SEC) approval of the merger. [11] The Union
likewise points out that BPI failed to offer any counterargument to the Courts
reasoning that:
The rationale for upholding the validity of union shop
clauses in a CBA, even if they impinge upon the individual
employee's right or freedom of association, is not to protect
the union for the union's sake. Laws and jurisprudence
promote unionism and afford certain protections to the
certified bargaining agent in a unionized company because a
strong and effective union presumably benefits all employees
in the bargaining unit since such a union would be in a better
position to demand improved benefits and conditions of work
from the employer. x x x.
x x x Nonetheless, settled jurisprudence has already
swung the balance in favor of unionism, in recognition that
ultimately the individual employee will be benefited by that
policy. In the hierarchy of constitutional values, this Court has
repeatedly held that the right to abstain from joining a labor
organization is subordinate to the policy of encouraging
unionism as an instrument of social justice.[12]
While most of the arguments offered by BPI have already been thoroughly
addressed in the August 10, 2010 Decision, we find that a qualification of our
ruling is in order only with respect to the interpretation of the provisions of the
Articles of Merger and its implications on the former FEBTC employees
security of tenure.
Taking a second look on this point, we have come to agree with Justice Brions
view that it is more in keeping with the dictates of social justice and the State
policy of according full protection to labor to deem employment contracts as
automatically assumed by the surviving corporation in a merger, even in the
absence of an express stipulation in the articles of merger or the merger plan.
In his dissenting opinion, Justice Brion reasoned that:
To my mind, due consideration of Section 80 of the
Corporation Code, the constitutionally declared policies on
work, labor and employment, and the specific FEBTC-BPI
situation i.e., a merger with complete "body and soul" transfer
of all that FEBTC embodied and possessed and where both
participating banks were willing (albeit by deed, not by their
written agreement) to provide for the affected human
resources by recognizing continuity of employment should
point this Court to a declaration that in a complete merger
situation where there is total takeover by one corporation over
another and there is silence in the merger agreement on what
the fate of the human resource complement shall be, the latter
should not be left in legal limbo and should be properly
provided for, by compelling the surviving entity to absorb
these employees. This is what Section 80 of the Corporation
Code commands, as the surviving corporation has the legal
obligation to assume all the obligations and liabilities of the
merged constituent corporation.
 Not to be forgotten is that the affected employees
managed, operated and worked on the transferred assets and
properties as their means of livelihood; they constituted a
basic component of their corporation during its existence. In a
merger and consolidation situation, they cannot be treated
without consideration of the applicable constitutional
declarations and directives, or, worse, be simply disregarded.
If they are so treated, it is up to this Court to read and interpret
the law so that they are treated in accordance with the legal
requirements of mergers and consolidation, read in light of the
social justice, economic and social provisions of our
Constitution. Hence, there is a need for the surviving
corporation to take responsibility for the affected employees
and to absorb them into its workforce where no appropriate
provision for the merged corporation's human resources
component is made in the Merger Plan.[13]
By upholding the automatic assumption of the non-surviving corporations
existing employment contracts by the surviving corporation in a merger, the
Court strengthens judicial protection of the right to security of tenure of
employees affected by a merger and avoids confusion regarding the status of
their various benefits which were among the chief objections of our dissenting
colleagues. However, nothing in this Resolution shall impair the right of an
employer to terminate the employment of the absorbed employees for a lawful
or authorized cause or the right of such an employee to resign, retire or
otherwise sever his employment, whether before or after the merger,
subject to existing contractual obligations. In this manner, Justice Brions
theory of automatic assumption may be reconciled with the majoritys concerns
with the successor employers prerogative to choose its employees and the
prohibition against involuntary servitude.
Notwithstanding this concession, we find no reason to reverse our previous
pronouncement that the absorbed FEBTC employees are covered by the
Union Shop Clause.
Even in our August 10, 2010 Decision, we already observed that the legal
fiction in the law on mergers (that the surviving corporation continues the
corporate existence of the non-surviving corporation) is mainly a tool to
adjudicate the rights and obligations between and among the merged
corporations and the persons that deal with them.[14] Such a legal fiction cannot
be unduly extended to an interpretation of a Union Shop Clause so as to defeat
its purpose under labor law. Hence, we stated in the Decision that:
In any event, it is of no moment that the former FEBTC
employees retained the regular status that they possessed
while working for their former employer upon their absorption
by petitioner. This fact would not remove them from the scope
of the phrase "new employees" as contemplated in the Union
Shop Clause of the CBA, contrary to petitioner's insistence
that the term "new employees" only refers to those who are
initially hired as non-regular employees for possible regular
employment.
The Union Shop Clause in the CBA simply states that
"new employees" who during the effectivity of the CBA "may
be regularly employed" by the Bank must join the union within
thirty (30) days from their regularization. There is nothing in
the said clause that limits its application to only new
employees who possess non-regular status, meaning
probationary status, at the start of their employment.
Petitioner likewise failed to point to any provision in the CBA
expressly excluding from the Union Shop Clause new
employees who are "absorbed" as regular employees from
the beginning of their employment. What is indubitable from
the Union Shop Clause is that upon the effectivity of the CBA,
petitioner's new regular employees (regardless of the manner
by which they became employees of BPI) are required to join
the Union as a condition of their continued employment.[15]
Although by virtue of the merger BPI steps into the shoes of FEBTC as a
successor employer as if the former had been the employer of the latters
employees from the beginning it must be emphasized that, in reality, the legal
consequences of the merger only occur at a specific date, i.e., upon its
effectivity which is the date of approval of the merger by the SEC. Thus, we
observed in the Decision that BPI and FEBTC stipulated in the Articles of
Merger that they will both continue their respective business operations until
the SEC issues the certificate of merger and in the event no such certificate is
issued, they shall hold each other blameless for the non-consummation of the
merger.[16] We likewise previously noted that BPI made its assignments of the
former FEBTC employees effective on April 10, 2000, or after the SEC
approved the merger.[17] In other words, the obligation of BPI to pay the
salaries and benefits of the former FEBTC employees and its right of discipline
and control over them only arose with the effectivity of the
merger. Concomitantly, the obligation of former FEBTC employees to render
service to BPI and their right to receive benefits from the latter also arose upon
the effectivity of the merger. What is material is that all of these legal
consequences of the merger took place during the life of an existing and valid
CBA between BPI and the Union wherein they have mutually consented to
include a Union Shop Clause.
 From the plain, ordinary meaning of the terms of the Union Shop
Clause, it covers employees who (a) enter the employ of BPI during the term
of the CBA; (b) are part of the bargaining unit (defined in the CBA as comprised
of BPIs rank and file employees); and (c) become regular employees without
distinguishing as to the manner they acquire their regular
status. Consequently, the number of such employees may adversely affect the
majority status of the Union and even its existence itself, as already amply
explained in the Decision.
Indeed, there are differences between (a) new employees who are hired as
probationary or temporary but later regularized, and (b) new employees who,
by virtue of a merger, are absorbed from another company as regular and
permanent from the beginning of their employment with the surviving
corporation. It bears reiterating here that these differences are too
insubstantial to warrant the exclusion of the absorbed employees from the
application of the Union Shop Clause. In the Decision, we noted that:
Verily, we agree with the Court of Appeals that there
are no substantial differences between a newly hired non-
regular employee who was regularized weeks or months after
his hiring and a new employee who was absorbed from
another bank as a regular employee pursuant to a merger, for
purposes of applying the Union Shop Clause. Both employees
were hired/employed only after the CBA was signed. At the
time they are being required to join the Union, they are both
already regular rank and file employees of BPI. They belong
to the same bargaining unit being represented by the Union.
They both enjoy benefits that the Union was able to secure for
them under the CBA. When they both entered the employ of
BPI, the CBA and the Union Shop Clause therein were
already in effect and neither of them had the opportunity to
express their preference for unionism or not. We see no
cogent reason why the Union Shop Clause should not be
applied equally to these two types of new employees, for they
are undeniably similarly situated.[18]
Again, it is worthwhile to highlight that a contrary interpretation of the
Union Shop Clause would dilute its efficacy and put the certified union that is
supposedly being protected thereby at the mercy of management. For if the
former FEBTC employees had no say in the merger of its former employer with
another bank, as petitioner BPI repeatedly decries on their behalf, the Union
likewise could not prevent BPI from proceeding with the merger which
undisputedly affected the number of employees in the bargaining unit that the
Union represents and may negatively impact on the Unions majority status. In
this instance, we should be guided by the principle that courts must place a
practical and realistic construction upon a CBA, giving due consideration to
the context in which it is negotiated and purpose which it is intended to
serve.[19]
We now come to the question: Does our affirmance of our ruling that
former FEBTC employees absorbed by BPI are covered by the Union Shop
Clause violate their right to security of tenure which we expressly upheld in
this Resolution? We answer in the negative.
In Rance v. National Labor Relations Commission,[20] we held that:
It is the policy of the state to assure the right of
workers to "security of tenure" (Article XIII, Sec. 3 of the New
Constitution, Section 9, Article II of the 1973 Constitution).
The guarantee is an act of social justice. When a person has
no property, his job may possibly be his only possession or
means of livelihood. Therefore, he should be protected
against any arbitrary deprivation of his job. Article 280 of the
Labor Code has construed security of tenure as meaning
that "the employer shall not terminate the services of an
employee except for a just cause or when authorized by"
the Code. x x x (Emphasis supplied.)
We have also previously held that the fundamental guarantee of
security of tenure and due process dictates that no worker shall be dismissed
except for a just and authorized cause provided by law and after due process
is observed.[21] Even as we now recognize the right to continuous, unbroken
employment of workers who are absorbed into a new company pursuant to a
merger, it is but logical that their employment may be terminated for any
causes provided for under the law or in jurisprudence without violating their
right to security of tenure. As Justice Carpio discussed in his dissenting
opinion, it is well-settled that termination of employment by virtue of a union
security clause embodied in a CBA is recognized in our jurisdiction. [22] In Del
Monte Philippines, Inc. v. Saldivar,[23] we explained the rationale for this policy
in this wise:
Article 279 of the Labor Code ordains that "in cases
of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when
authorized by [Title I, Book Six of the Labor
Code]." Admittedly, the enforcement of a closed-shop or
union security provision in the CBA as a ground for
termination finds no extension within any of the
provisions under Title I, Book Six of the Labor Code. Yet
jurisprudence has consistently recognized, thus: "It
is State policy to promote unionism to enable workers to
 negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and
separately bargain with the employer. For this reason, the law
has allowed stipulations for 'union shop' and 'closed shop' as
means of encouraging workers to join and support the union
of their choice in the protection of their rights and interests vis-
a-vis the employer."[24] (Emphasis supplied.)
Although it is accepted that non-compliance with a union security
clause is a valid ground for an employees dismissal, jurisprudence dictates
that such a dismissal must still be done in accordance with due process. This
much we decreed in General Milling Corporation v. Casio,[25] to wit:
The Court reiterated in Malayang Samahan ng mga
Manggagawa sa M. Greenfield v. Ramos that:
While respondent company may
validly dismiss the employees expelled by the
union for disloyalty under the union security
clause of the collective bargaining agreement
upon the recommendation by the union, this
dismissal should not be done hastily and
summarily thereby eroding the employees'
right to due process, self-organization and
security of tenure. The enforcement of union
security clauses is authorized by
law provided such enforcement is not
characterized by arbitrariness, and
always with due process. Even on the
assumption that the federation had valid
grounds to expel the union officers, due
process requires that these union officers be
accorded a separate hearing by
respondent company.
The twin requirements of notice and hearing
constitute the essential elements of procedural due process.
The law requires the employer to furnish the employee sought
to be dismissed with two written notices before termination of
employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for
which his dismissal is sought in order to afford him an
opportunity to be heard and to defend himself with the
assistance of counsel, if he desires, and (2) a subsequent
notice informing the employee of the employer's decision to
dismiss him. This procedure is mandatory and its absence
taints the dismissal with illegality.
Irrefragably, GMC cannot dispense with the
requirements of notice and hearing before dismissing
Casio, et al. even when said dismissal is pursuant to the
closed shop provision in the CBA. The rights of an
employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy
with either the company or his own union are not wiped away
by a union security clause or a union shop clause in a
collective bargaining agreement. x x x [26] (Emphases
supplied.)
In light of the foregoing, we find it appropriate to state that, apart from
the fresh thirty (30)-day period from notice of finality of the Decision given to
the affected FEBTC employees to join the Union before the latter can request
petitioner to terminate the formers employment, petitioner must still accord
said employees the twin requirements of notice and hearing on the possibility
that they may have other justifications for not joining the Union. Similar to our
August 10, 2010 Decision, we reiterate that our ruling presupposes there has
been no material change in the situation of the parties in the interim.
WHEREFORE, the Motion for Reconsideration is DENIED. The
Decision dated August 10, 2010 is AFFIRMED, subject to the qualifications
that:
(a) Petitioner is deemed to have assumed the employment contracts
of the Far East Bank and Trust Company (FEBTC) employees upon effectivity
of the merger without break in the continuity of their employment, even
without express stipulation in the Articles of Merger; and
(b) Aside from the thirty (30) days, counted from notice of finality of the
August 10, 2010 Decision, given to former FEBTC employees to join the
respondent, said employees shall be accorded full procedural due process
before their employment may be terminated.
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 NATIONAL UNION OF WORKERS IN
Officer-in-Charge of the Bureau of Labor Relations dated December 21, 1987 HOTELS, RESTAURANTS AND ALLIED
(affirming the Order of the Med-Arbiter dated July 22, 1988) is ANNULLED and INDUSTRIES- MANILA PAVILION HOTEL G.R. No. 181531
SET ASIDE; and the petitioners are DECLARED to have legally exercised their CHAPTER,
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 Petitioner, Present:
private respondents.
SO ORDERED. - versus - QUISUMBING, J., Chairperson,
CARPIO MORALES,
CHICO-NAZARIO,*
SECRETARY OF LABOR AND LEONARDO-DE CASTRO,** and
EMPLOYMENT, BUREAU OF LABOR
RELATIONS, HOLIDAY INN MANILA PERALTA,*** JJ.
PAVILION HOTEL LABOR UNION AND
ACESITE PHILIPPINES HOTEL
CORPORATION,
Respondents.

Promulgated:
July 31, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

National Union of Workers in Hotels, Restaurants and Allied Industries Manila
Pavilion Hotel Chapter (NUWHRAIN-MPHC), herein petitioner, seeks the
reversal of the Court of Appeals November 8, 2007 Decision[1] and of the
Secretary of Labor and Employments January 25, 2008 Resolution[2] in OS-A-
9-52-05 which affirmed the Med-Arbiters Resolutions dated January 22,
2007[3] and March 22, 2007.[4]
A certification election was conducted on June 16, 2006 among the rank-and-
file employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with
the following results:
EMPLOYEES IN VOTERS LIST = 353
TOTAL VOTES CAST = 346
NUWHRAIN-MPHC = 151
HIMPHLU = 169
NO UNION = 1
SPOILED = 3
SEGREGATED = 22
In view of the significant number of segregated votes, contending unions,
petitioner, NUHWHRAIN-MPHC, and respondent Holiday Inn Manila Pavillion
Hotel Labor Union (HIMPHLU), referred the case back to Med-Arbiter Ma.
Simonette Calabocal to decide which among those votes would be opened
and tallied. Eleven (11) votes were initially segregated because they were cast
by dismissed employees, albeit the legality of their dismissal was still pending
before the Court of Appeals.Six other votes were segregated because the
employees who cast them were already occupying supervisory positions at
the time of the election. Still five other votes were segregated on the ground
that they were cast by probationary employees and, pursuant to the existing
Collective Bargaining Agreement (CBA), such employees cannot vote. It bears
noting early on, however, that the vote of one Jose Gatbonton (Gatbonton), a
probationary employee, was counted.
By Order of August 22, 2006, Med-Arbiter Calabocal ruled for the opening of
17 out of the 22 segregated votes, specially those cast by the 11 dismissed
employees and those cast by the six supposedly supervisory employees of the
Hotel.
Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and
Employment (SOLE), arguing that the votes of the probationary employees
should have been opened considering that probationary employee Gatbontons
vote was tallied. And petitioner averred that respondent HIMPHLU, which
garnered 169 votes, should not be immediately certified as the bargaining
agent, as the opening of the 17 segregated ballots would push the number of
valid votes cast to 338 (151 + 169 + 1 + 17), hence, the 169 votes which
HIMPHLU garnered would be one vote short of the majority which would then
become 169.
By the assailed Resolution of January 22, 2007, the Secretary of Labor and
Employment (SOLE), through then Acting Secretary Luzviminda Padilla,
affirmed the Med-Arbiters Order. It held that pursuant to Section 5, Rule IX of
the Omnibus Rules Implementing the Labor Code on exclusion and inclusion
of voters in a certification election, the probationary employees cannot vote,
as at the time the Med-Arbiter issued on August 9, 2005 the Order granting
the petition for the conduct of the certification election, the six probationary
employees were not yet hired, hence, they could not vote.
The SOLE further held that, with respect to the votes cast by the 11 dismissed
employees, they could be considered since their dismissal was still pending
appeal.
As to the votes cast by the six alleged supervisory employees, the SOLE held
that their votes should be counted since their promotion took effect months
after the issuance of the above-said August 9, 2005 Order of the Med-Arbiter,
hence, they were still considered as rank-and-file.
Respecting Gatbontons vote, the SOLE ruled that the same could be the basis
to include the votes of the other probationary employees, as the records show
that during the pre-election conferences, there was no disagreement as to his
inclusion in the voters list, and neither was it timely challenged when he voted
on election day, hence, the Election Officer could not then segregate his vote.
The SOLE further ruled that even if the 17 votes of the dismissed and
supervisory employees were to be counted and presumed to be in favor of
petitioner, still, the same would not suffice to overturn the 169 votes garnered
by HIMPHLU.
In fine, the SOLE concluded that the certification of HIMPHLU as the exclusive
bargaining agent was proper.
Petitioners motion for reconsideration having been denied by the SOLE by
Resolution of March 22, 2007, it appealed to the Court of Appeals.
By the assailed Decision promulgated on November 8, 2007, the appellate
court affirmed the ruling of the SOLE. It held that, contrary to petitioners
assertion, the ruling in Airtime Specialist, Inc. v. Ferrer Calleja[5] stating that in
a certification election, all rank-and-file employees in the appropriate
bargaining unit, whether probationary or permanent, are entitled to vote, is
inapplicable to the case at bar. For, the appellate court continued, the six
probationary employees were not yet employed by the Hotel at the time
the August 9, 2005 Order granting the certification election was issued. It thus
held that Airtime Specialist applies only to situations wherein the probationary
employees were already employed as of the date of filing of the petition for
certification election.
Respecting Gatbontons vote, the appellate court upheld the SOLEs finding
that since it was not properly challenged, its inclusion could no longer be
questioned, nor could it be made the basis to include the votes of the six
probationary employees.
The appellate court brushed aside petitioners contention that the opening of
the 17 segregated votes would materially affect the results of the election as
there would be the likelihood of a run-off election in the event none of the
contending unions receive a majority of the valid votes cast. It held that the
majority contemplated in deciding which of the unions in a certification election
is the winner refers to the majority of valid votes cast, not the simple majority
of votes cast, hence, the SOLE was correct in ruling that even if the 17 votes
were in favor of petitioner, it would still be insufficient to overturn the results of
the certification election.
Petitioners motion for reconsideration having been denied by Resolution of
January 25, 2008, the present recourse was filed.
Petitioners contentions may be summarized as follows:
1. Inclusion of Jose Gatbontons vote but excluding the vote of the six
other probationary employees violated the principle of equal protection and is
not in accord with the ruling in Airtime Specialists, Inc. v. Ferrer-Calleja;
2. The time of reckoning for purposes of determining when the
probationary employees can be allowed to vote is not August 9, 2005 the date
of issuance by Med-Arbiter Calabocal of the Order granting the conduct of
certification elections, but March 10, 2006 the date the SOLE Order affirmed
the Med-Arbiters Order.
3. Even if the votes of the six probationary employees were included,
still, HIMPHLU could not be considered as having obtained a majority of the
valid votes cast as the opening of the 17 ballots would increase the number of
valid votes from 321 to 338, hence, for HIMPHLU to be certified as the
exclusive bargaining agent, it should have garnered at least 170, not 169,
votes.
Petitioner justifies its not challenging Gatbontons vote because it was precisely
its position that probationary employees should be allowed to vote. It thus
avers that justice and equity dictate that since Gatbontons vote was counted,
then the votes of the 6 other probationary employees should likewise be
included in the tally.
Petitioner goes on to posit that the word order in Section 5, Rule 9 of
Department Order No. 40-03 reading [A]ll employees who are members of the
appropriate bargaining unit sought to be represented by the petitioner at the
time of the issuance of the order granting the conduct of certification election
shall be allowed to vote refers to an order which has already become final and
executory, in this case the March 10, 2002 Order of the SOLE.
Petitioner thus concludes that if March 10, 2006 is the reckoning date for the
determination of the eligibility of workers, then all the segregated votes cast by
the probationary employees should be opened and counted, they having
already been working at the Hotel on such date.
Respecting the certification of HIMPHLU as the exclusive bargaining agent,
petitioner argues that the same was not proper for if the 17 votes would be
counted as valid, then the total number of votes cast would have been 338,
not 321, hence, the majority would be 170; as such, the votes garnered by
HIMPHLU is one vote short of the majority for it to be certified as the exclusive
bargaining agent.
The relevant issues for resolution then are first, whether employees on
probationary status at the time of the certification elections should be allowed
to vote, and second, whether HIMPHLU was able to obtain the required
majority for it to be certified as the exclusive bargaining agent.
On the first issue, the Court rules in the affirmative.
The inclusion of Gatbontons vote was proper not because it was not
questioned but because probationary employees have the right to vote in a
certification election. The votes of the six other probationary employees should
thus also have been counted. As Airtime Specialists, Inc. v. Ferrer-
Calleja holds:
In a certification election, all rank and file employees in the appropriate
bargaining unit, whether probationary or permanent 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 purposes 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
status as basis for eligibility in supporting the petition 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. (Emphasis supplied)
Rule II, Sec. 2 of Department Order No. 40-03, series of 2003, which amended
Rule XI of the Omnibus Rules Implementing the Labor Code, provides:
Rule II
Section 2. Who may join labor unions and workers' associations. - All
persons employed in commercial, industrial and agricultural enterprises,
including employees of government owned or controlled corporations without
original charters established under the Corporation Code, as well as
employees of 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 unions for purposes of collective bargaining: provided,
however, that supervisory employees shall not be eligible for membership in a
labor union of the rank-and-file employees but may form, join or assist
separate labor unions of their own. Managerial employees shall not be eligible
to form, join or assist any labor unions for purposes of collective bargaining.
Alien employees with valid working permits issued by the Department may
exercise the right to self-organization and join or assist labor unions for
purposes of collective bargaining if they are nationals of a country which grants
the same or similar rights to Filipino workers, as certified by the Department of
Foreign Affairs.
For purposes of this section, any employee, whether employed for a
definite period or not, shall beginning on the first day of his/her service,
be eligible for membership in any labor organization.
All other workers, including ambulant, intermittent and other workers, the self-
employed, rural workers and those without any definite employers may form
labor organizations for their mutual aid and protection and other legitimate
purposes except collective bargaining. (Emphasis supplied)
The provision in the CBA disqualifying probationary employees from voting
cannot override the Constitutionally-protected right of workers to self-
organization, as well as the provisions of the Labor Code and its Implementing
Rules on certification elections and jurisprudence thereon.
A law is read into, and forms part of, a contract. Provisions in a contract are
valid only if they are not contrary to law, morals, good customs, public order or
public policy.[6]
Rule XI, Sec. 5 of D.O. 40-03, on which the SOLE and the appellate court rely
to support their position that probationary employees hired after the issuance
of the Order granting the petition for the conduct of certification election must
be excluded, should not be read in isolation and must be harmonized with the
other provisions of D.O. Rule XI, Sec. 5 of D.O. 40-03, viz:

Rule XI
xxxx
Section 5. Qualification of voters; inclusion-exclusion. - All employees who
are members of the appropriate bargaining unit sought to be represented
by the petitioner at the time of the issuance of the order granting the
conduct of a certification election shall be eligible to vote. An employee
who has been dismissed from work but has contested the legality of the
dismissal in a forum of appropriate jurisdiction at the time of the issuance of
the order for the conduct of a certification election shall be considered a
qualified voter, unless his/her dismissal was declared valid in a final judgment
at the time of the conduct of the certification election. (Emphasis supplied)
xxxx
Section 13. Order/Decision on the petition. - Within ten (10) days from the date
of the last hearing, the Med-Arbiter shall issue a formal order granting the
petition or a decision denying the same. In organized establishments,
however, no order or decision shall be issued by the Med-Arbiter during the
freedom period.
The order granting the conduct of a certification election shall state the
following:
(a) the name of the employer or establishment;
(b) the description of the bargaining unit;
(c) a statement that none of the grounds for dismissal enumerated in the
succeeding paragraph exists;
(d) the names of contending labor unions which shall appear as follows:
petitioner union/s in the order in which their petitions were filed, forced
intervenor, and no union; and
(e) a directive upon the employer and the contending union(s) to submit
within ten (10) days from receipt of the order, the certified list of
employees in the bargaining unit, or where necessary, the payrolls covering
the members of the bargaining unit for the last three (3) months prior to the
issuance of the order. (Emphasis supplied)
xxxx
Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15)
days from receipt of the entire records of the petition within which to decide
the appeal. The filing of the memorandum of appeal from the order or
decision of the Med-Arbiter stays the holding of any certification
election.
The decision of the Secretary shall become final and executory after ten
(10) days from receipt thereof by the parties. No motion for reconsideration
of the decision shall be entertained. (Emphasis supplied)
In light of the immediately-quoted provisions, and prescinding from the
principle that all employees are, from the first day of their employment, eligible
for membership in a labor organization, it is evident that
the period of reckoning in determining who shall be included in the list of
eligible voters is, in cases where a timely appeal has been
filed from the Order of the Med-
Arbiter, the date when the Order of the Secretary of Labor and Employm
ent,
whether affirming ordenying the appeal, becomes final and executory.
The filing of an appeal to the SOLE from the Med-Arbiters Order stays its
execution, in accordance with Sec. 21, and rationally, the Med-Arbiter cannot
direct the employer to furnish him/her with the list of eligible voters pending the
resolution of the appeal.
During the pendency of the appeal, the employer may hire additional
employees. To exclude the employees hired after the issuance of the Med-
Arbiters Order but before the appeal has been resolved would violate the
guarantee that every employee has the right to be part of a labor organization
from the first day of their service.

In the present case, records show that the probationary employees, including
Gatbonton, were included in the list of employees in the bargaining unit
submitted by the Hotel on May 25, 2006 in compliance with the directive of the
Med-Arbiter after the appeal and subsequent motion for reconsideration have
been denied by the SOLE, rendering the Med-Arbiters August 22, 2005 Order
final and executory 10 days after the March 22, 2007 Resolution (denying the
motion for reconsideration of the January 22 Order denying the appeal), and
rightly so. Because, for purposes of self-organization, those employees are, in
light of the discussion above, deemed eligible to vote.
A certification election is the process of determining the sole and exclusive
bargaining agent of the employees in an appropriate bargaining unit for
purposes of collective bargaining. Collective bargaining, refers to the
negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit.[7]
The significance of an employees right to vote in a certification election cannot
thus be overemphasized. For he has considerable interest in the determination
of who shall represent him in negotiating the terms and conditions of his
employment.
Even if the Implementing Rules gives the SOLE 20 days to decide the appeal
from the Order of the Med-Arbiter, experience shows that it sometimes takes
months to be resolved. To rule then that only those employees hired as of the
date of the issuance of the Med-Arbiters Order are qualified to vote would
effectively disenfranchise employees hired during the pendency of the
appeal. More importantly, reckoning the date of the issuance of the Med-
Arbiters Order as the cut-off date would render inutile the remedy of appeal to
the SOLE.
But while the Court rules that the votes of all the probationary employees
should be included, under the particular circumstances of this case and the
period of time which it took for the appeal to be decided, the votes of the six
supervisory employees must be excluded because at the time the certification
elections was conducted, they had ceased to be part of the rank and file, their
promotion having taken effect two months before the election.
As to whether HIMPHLU should be certified as the exclusive bargaining agent,
the Court rules in the negative. It is well-settled that under the so-called double
majority rule, for there to be a valid certification election, majority of the
bargaining unit must have voted AND the winning union must have
garnered majority of the valid votes cast.
Prescinding from the Courts ruling that all the probationary employees votes
should be deemed valid votes while that of the supervisory employees should
be excluded, it follows that the number of valid votes cast would increase from
321 to 337. Under Art. 256 of the Labor Code, the union obtaining the majority
of the valid votes cast by the eligible voters shall be certified as the sole and
exclusive bargaining agent of all the workers in the appropriate bargaining
unit. This majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at least 170.
HIMPHLU obtained 169 while petitioner received 151 votes. Clearly,
HIMPHLU was not able to obtain a majority vote. The position of both the
SOLE and the appellate court that the opening of the 17 segregated ballots
will not materially affect the outcome of the certification election as for, so they
contend, even if such member were all in favor of petitioner, still, HIMPHLU
would win, is thus untenable.
It bears reiteration that the true importance of ascertaining the number of valid
votes cast is for it to serve as basis for computing the required majority, and
not just to determine which union won the elections. The opening of the
segregated but valid votes has thus become material. To be sure, the
conduct of a certification election has a two-fold objective: to determine
the appropriate bargaining unit and to ascertain the majority
representation of the bargaining representative, if the employees desire
to be represented at all by anyone. It is not simply the determination of who
between two or more contending unions won, but whether it effectively
ascertains the will of the members of the bargaining unit as to whether they
want to be represented and which union they want to represent them.
Having declared that no choice in the certification election conducted obtained
the required majority, it follows that a run-off election must be held to determine
which between HIMPHLU and petitioner should represent the rank-and-file
employees.
A run-off election refers to an election between the labor unions receiving the
two (2) highest number of votes in a certification or consent election with three
(3) or more choices, where such a certified or consent election results in none MILAGROS PANUNCILLO, G.R. No. 161305
of the three (3) or more choices receiving the majority of the valid votes cast; Petitioner,
provided that the total number of votes for all contending unions is at least fifty Present:
percent (50%) of the number of votes cast.[8] With 346 votes cast, 337 of which
are now deemed valid and HIMPHLU having only garnered 169 and petitioner QUISUMBING, Chairperson,
having obtained 151 and the choice NO UNION receiving 1 vote, then the CARPIO,
holding of a run-off election between HIMPHLU and petitioner is in order. -versus- CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
WHEREFORE, the petition is GRANTED. The Decision dated November 8,
2007 and Resolution dated January 25, 2008 of the Court of Appeals affirming
the Resolutions dated January 22, 2007 and March 22, 2007, respectively, of CAP PHILIPPINES, INC., Promulgated:
the Secretary of Labor and Employment in OS-A-9-52-05 Respondent.
are ANNULLED and SETASIDE. February 9, 2007

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
The Department of Labor and Employment-Bureau of Labor Relations
is DIRECTED to cause the holding of a run-off election between petitioner,
CARPIO MORALES, J.:
National Union of Workers in Hotels, Restaurants and Allied Industries-Manila
Pavilion Hotel Chapter (NUWHRAIN-MPC), and respondent Holiday Inn
Assailed via Petition for Review[1] are the Decision dated May 16, 2003[2] and
Manila Pavilion Hotel Labor Union (HIMPHLU).
Resolution dated November 17, 2003[3] of the Court of Appeals in CA-G.R. SP
No. 74665 which declared valid the dismissal of Milagros Panuncillo
(petitioner) by CAP Philippines, Inc. (respondent).
SO ORDERED.
Petitioner was hired on August 28, 1980 as Office Senior Clerk by
respondent. At the time of her questioned separation from respondent on April
23, 1999, she was receiving a monthly salary of P16,180.60.
In order to secure the education of her son, petitioner procured an educational
plan (the plan) from respondent which she had fully paid but which she later
sold to Josefina Pernes (Josefina) for P37,000. Before the actual transfer of
the plan could be effected, however, petitioner pledged it for P50,000 to John
Chua who, however, sold it to Benito Bonghanoy. Bonghanoy in turn sold the
plan to Gaudioso R. Uy for P60,000.

Having gotten wind of the transactions subsequent to her purchase of the plan,
Josefina, by letter of February 10, 1999,[4] informed respondent that petitioner
had swindled her but that she was willing to settle the case amicably as long
as petitioner pay the amount involved and the interest. She expressed her
appreciation if [respondent] could help her in anyway.

Acting on Josefinas letter, the Integrated Internal Audit Operations (IIAO) of

respondent required petitioner to explain in writing why the plan had not been
transferred to Josefina and was instead sold to another. Complying, petitioner
proffered the following explanation:
Because of extreme need of money, I was constrained to sell
my CAP plan of my son to J. Pernes last July, 1996, in the
amount of Thirty Seven Thousand Pesos (P37,000.) The plan
was not transferred right away because of lacking
requirement on the part of the buyer (birth certificate). The
birth certificate came a month later. While waiting for the birth
certificate, again because of extreme need of money, I was
tempted to pawned [sic] the plan, believing I can redeemed
[sic] it later when the birth certificate will come.
Last year, I was already pressured by J. Pernes for the
transfer of the plan. But before hand, she already knew the
present situation. I was trying to find means to redeemed [sic]
the plan but to no avail. I cannot borrow anymore from my
creditors because of outstanding loans which remains unpaid.
As of the present, I am heavily debtladen and I dont know
where to run.
I cant blame the person whom I pawned the plan if he had
sold it. I cant redeemed [sic] it anymore. Everybody needs
money and besides, I have given them my papers.
I admit, I had defrauded Ms. J. Pernes, but I didnt do it
intentionally. At first, I believe I can redeem the plan hoping
I can still borrow from somebody.
With my more than 18 years stay with the company, I dont
have the intention of ruining my image as well as the
companys. I think I am just a victim of
circumstances.[5] (Emphasis and underscoring supplied)
A show-cause memorandum[6] dated February 23, 1999 was thereupon sent
to petitioner, giving her 48 hours from receipt thereof to explain why she should
not be disciplinarily dealt with. Petitioner did not comply, however.
The IIAO of respondent thus conducted an investigation on the matter. By
Memorandum of April 5, 1999,[7] the IIAO recommended that, among other
things, administrative action should be taken against petitioner for violating
Section 8.4 of respondents Code of Discipline reading:
Committing or dealing any act or conniving with co-employees
or anybody to defraud the company or customer/sales
associates.
In the same memorandum, the IIAO reported other matters bearing on
petitioners duties as an employee, to wit:
OTHERS:
We also received a copy of demand letter of a certain Evelia
Casquejo addressed to Ms. Panuncillo requiring the latter to
pay the amount of P54,870.00 for the supposed transfer of the
lapsed plan of Subscriber Corazon Lintag with SFA # 25-67-
40-01-00392. Ms. Panuncillo received the payment of
P25,000.00 and P29,870.00 on July 17, 1997 and July 18,
1997 respectively (Exhibits L&M).
Ms. Panuncillo verbally admitted that she was the one who
sold the plan to Ms. Casquejo but with the authorization from
Ms. Lintag. However, the transfer was not effected because
she had misappropriated a portion of the money until the plan
was terminated. Ms. Casquejo, however, did not file a
complaint because Ms. Panuncillo executed a Special Power
of Attorney authorizing the former to receive P68,000 of Ms.
Panuncillos retirement pay (Exhibit N).[8] (Emphasis in the
original; underscoring supplied))
On April 7, 1999, another show-cause memorandum was sent to
petitioner by Renato M. Daquiz (Daquiz), First Vice President of respondent,
giving her another 48 hours to explain why she should not be disciplinarily
dealt with in connection with the complaints of Josefina and Evelia Casquejo
(Evelia). Complying with the directive, petitioner, by letter of April 10, 1999, on
top of reiterating her admission of having defrauded Josefina, admitted having
received from Evelia the payment for a lapsed plan, thus:
With regards to [Evelias] case, yes its [sic] true I had received
the payment but it was accordingly given to the owner or
Subscriber Ms. C. Lintag. The plan was not transferred
because it was already forfeited and we, Ms. Lintag, [Evelia]
and I already made settlement of the case.
I think I have violated Sec. 8.4 of the companys Code of
Discipline. I admit it is my wrongdoing. I was only forced to
do this because of extreme needs to pay for my debts. I am
open for whatever disciplinary action that will be
sanctioned againts [sic] me. I hope it is not termination
from my job. How can I pay for obligations if that will happen
to me.
 As for [Josefina], I have the greatest desire to pay for my
indebtedness but my capability at the moment is nil. (space) I
have been planning to retire early just to pay my obligations.
That is why I had written to you last year inquiring tax
exemption when retiring. I have been with the company for
almost 19 years already and I never intend [sic] to smear its
name as well as mine. I was only forced by circumstances.
Although it hurts to leave CAP, I will be retiring on April 30,
1999.
x x x x[9] (Emphasis and underscoring supplied)
Respondent thereupon terminated the services of petitioner by Memorandum
dated April 20, 1999.[10]
Petitioner sought reconsideration of her dismissal, by letter of April 23,
1999 addressed to Daquiz, imploring as follows:
. . . Please consider my retirement letter I sent to you. I would
like to avail [of] the retirement benefit of the company. The
proceeds of my retirement could help me pay some of my
obligations as well as the needs of my family. My husband is
jobless and I am the breadwinner of the family. If I will be
terminated, I dont know what will happen to us.
Sir, I am enclosing the affidavit of Ms. Evelia Casquejo proving
that we have already settled the case.
x x x x[11] (Underscoring supplied)
Pending resolution of petitioners motion for reconsideration, respondent
received a letter dated April 28, 1999[12] from one Gwendolyn N. Dinoro
(Gwendolyn) who informed that she had been paying her quarterly dues
through petitioner but found out that none had been remitted to respondent, on
account of which she (Gwendolyn) was being penalized with interest charges.
Acting on petitioners motion for reconsideration, Daquiz, by letter-
memorandum of May 5, 1999, denied the same in this wise:
A review of your case was made per your request, and we
note that it was not just a single case but multiple cases,
that of Ms. Casquejo, Ms. Pernes, and newly reported Ms.
Dinoro. Furthermore, the cases happened way back in July
1996 and 1997, and were just discovered recently. In addition,
the misappropriation of money/or act to defraud the company
or customer was deliberate and intentional. There were
several payments received over a period of time. While you
plead for your retirement benefit to help you pay some of your
obligations, as well as the need of your family (your husband
being jobless and being the breadwinner), these thoughts
should have crossed your mind before you committed the
violations rather than now. To allow you to retire with benefits,
is to tolerate and encourage others to do the same in the
future, as it will be a precedent that will surely be invoked in
similar situations in the future, as it will be a precedent that will
surely be invoked in similar situations in the future. It is also
unfair to others who do their jobs faithfully and honestly. If we
let you have your way, it will appear that we let you scot-
free and even reward you with retirement someone who
deliberately violated trust and confidence of the company
and customers.
Premises considered, the decision to terminate your services
for cause stays and the request for reconsideration is denied.
x x x x[13] (Emphasis and underscoring supplied)
Petitioner thus filed a complaint[14] for illegal dismissal, 13th month pay,
service incentive leave pay, damages and attorneys fees against respondent.
The Labor Arbiter, while finding that the dismissal was for a valid cause, found
the same too harsh. He thus ordered the reinstatement of petitioner to a
position one rank lower than her previous position, and disposed as follows:
WHEREFORE, the foregoing considered, judgement [sic] is
hereby rendered directing the respondent to pay
complainants 13th Month pay and Service Incentive Leave
Pay for 1999 in proportionate amount computed as follows:
13th Month Pay
January 1, 1999 to April 1, 1999
= 3 months
= P16,180.60/12 mos. x 3 mos. P4,045.14
Service Incentive Leave
= P16,180.60/26 days
=P622.30 per day x 5 days/12 months. 777.87
TOTAL --------------------------------P4,823.01
 Plus P482.30 ten (10%) Attorneys Fees or a total aggregate
amount of PESOS: FIVE THOUSAND THREE HUNDRED
FIVE & 31/100 (P5,305.31).
Respondent is likewise, directed to reinstate the complainant
to a position one rank lower without
backwages.[15] (Underscoring supplied)
On appeal, the National Labor Relations Commission (NLRC), by Decision
of October 29, 2001, reversed that of the Labor Arbiter, it finding that
petitioners dismissalwas illegal and accordingly ordering her reinstatement to
her former position. Thus it disposed:
WHEREFORE, the Decision in the main case dated February
18, 2000 of the Labor Arbiter declaring the dismissal of the
complainant valid, and his Order dated June 26, 2000
declaring the Motion to Declare Respondent-appellant in
Contempt as prematurely filed and ordering the issuance of
an alias writ of execution are hereby SET ASIDE, and a new
one is rendered DECLARING the dismissal of the
complainant illegal, and ORDERING the respondent, CAP
PHILIPPINES, INCORPORATED, the following:
1. to reinstate the complainant MILAGROS B. PANUNCILLO to
her former position without loss of seniority rights and with full
backwages from the date her compensation was withheld from
her on April 20, 1999 until her actual reinstatement;
2. to pay to the same complainant P4,045.14 as 13th month
pay, and P777.89 as service incentive leave pay;
3. to pay to the same complainant moral damages of FIFTY
THOUSAND PESOS (P50,000.00), and exemplary damages
of another FIFTY THOUSAND PESOS (P50,000.00);
4. to pay attorneys fees equivalent to ten percent (10%) of the
total award exclusive of moral and exemplary damages.
Further, the complainants Motion to Declare Respondent in
Contempt dated May 3, 2000 is denied and rendered moot by
virtue of this Decision.
All other claims are dismissed for lack of
merit.[16] (Underscoring supplied)
In so deciding, the NLRC held that the transaction between petitioner
and Josefina was private in character and, therefore, respondent did not suffer
any damage, hence, it was error to apply Section 8.4 of respondents Code of
Discipline.
Respondent challenged the NLRC Decision before the appellate court via
Petition for Certiorari.[17] By Decision of May 16, 2003,[18] the appellate court
reversed the NLRC Decision and held that the dismissal was valid and that
respondent complied with the procedural requirements of due process before
petitioners services were terminated.
Hence, the present petition, petitioner faulting the appellate court
I
x x x IN REVIEWING THE FINDINGS OF FACT OF THE
LABOR ARBITER AND THE NATIONAL LABOR
RELATIONS COMMISSION THAT RESPONDENT CAP
PHILIPPINES, INC., HAS NOT BEEN DEFRAUDED NOR
DAMAGED IN THE TRANSACTION/S ENTERED INTO BY
PETITIONER RELATING TO HER FULLY PAID
EDUCATIONAL PLAN.
II
x x x IN HOLDING THAT RESPONDENT CAP PHILIPPINES,
INC. IS THE INSURER OF PETITIONERS FULLY PAID
EDUCATIONAL PLAN UNDER THE INSURANCE CODE.
III
x x x IN HOLDING THAT PETITIONER WAS DULY
AFFORDED DUE PROCESS BEFORE DISMISSAL[,]
and maintaining that she
IV
x x x IS ENTITLED TO HER FULL BACKWAGES FROM
THE DATE HER COMPENSATION WAS WITHHELD FROM
HER ON APRIL 20, 1999 PURSUANT TO THE DECISION
OF THE NLRC REINSTATING HER TO HER PREVIOUS
POSITION WITH FULL BACKWAGES AND SETTING ASIDE
THE DECISION OF THE LABOR ARBITER REINSTATING
HER TO A POSITION NEXT LOWER IN RANK, UNTIL THE
 REVERSAL OF THE NLRC DECISION BY THE
HONORABLE COURT OF APPEALS.[19] (Emphasis and
underscoring supplied)
The petition is not meritorious.
Whether respondent did not suffer any damage resulting from the
transactions entered into by petitioner, particularly that with Josefina, is
immaterial. As Lopez v. National Labor Relations Commission instructs:
That the [employer] suffered no damage resulting from the
acts of [the employee] is inconsequential. In Glaxo Wellcome
Philippines, Inc. v. Nagkakaisang Empleyado ng Wellcome-
DFA (NEW-DFA), we held that deliberate disregard or
disobedience of company rules could not be countenanced,
and any justification that the disobedient employee might put
forth would be deemed inconsequential. The lack of resulting
damage was unimportant, because the heart of the charge is
the crooked and anarchic attitude of the employee towards his
employer. Damage aggravates the charge but its absence
does not mitigate nor negate the employees liability. x x
x[20] (Italics in the original; underscoring supplied)
The transaction with Josefina aside, there was this case of misappropriation
by petitioner of the amounts given to her by Evelia representing payment for
the lapsed plan of Corazon Lintag. While a settlement of the case between
the two may have eventually been forged, that did not obliterate the
misappropriation committed by petitioner against a client of respondent.
Additionally, there was still another complaint lodged before respondent by
Gwendolyn against petitioner for failure to remit the cash payments she had
made to her, a complaint she was apprised of but on which she was silent.
In fine, by petitioners repeated violation of Section 8.4 of respondents Code
of Discipline, she violated the trust and confidence of respondent and its
customers. To allow her to continue with her employment puts respondent
under the risk of being embroiled in unnecessary lawsuits from customers
similarly situated as Josefina, et al. Clearly, respondent exercised its
management prerogative when it dismissed petitioner.
. . . [T]ime and again, this Court has upheld a companys
management prerogatives so long as they are exercised in
good faith for the advancement of the employers interest and
not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements.
Deliberate disregard or disobedience of rules by the
employees cannot be countenanced. Whatever maybe the
justification behind the violations is immaterial at this point,
because the fact still remains that an infraction of the
company rules has been committed.
Under the Labor Code, the employer may terminate an
employment on the ground of serious misconduct or willful
disobedience by the employee of the lawful orders of his
employer or representative in connection with his
work. Infractions of company rules and regulations have
been declared to belong to this category and thus are valid
causes for termination of employment by the employer.
xxxx
The employer cannot be compelled to continue the
employment of a person who was found guilty of maliciously
committing acts which are detrimental to his interests. It will
be highly prejudicial to the interests of the employer to
impose on him the charges that warranted his dismissal from
employment. Indeed, it will demoralize the rank and file if the
undeserving, if not undesirable, remain in the service. It may
encourage him to do even worse and will render a mockery
of the rules of discipline that employees are required to
observe. This Court was more emphatic in holding that in
protecting the rights of the laborer, it cannot authorize the
oppression or self-destruction of the employer.[21] x x
x(Underscoring supplied)
Petitioner nevertheless argues that she was not afforded due process
before her dismissal as she was merely required to answer a show-cause
memorandum dated April 7, 1999 and there was no actual investigation
conducted in which she could have been heard.
Before terminating the services of an employee, the law requires two written
notices: (1) one to apprise him of the particular acts or omissions for which
his dismissal is sought; and (2) the other to inform him of his employers
decision to dismiss him. As to the requirement of a hearing, the essence of
due process lies in an opportunity to be heard, and not always and
indispensably in an actual hearing.[22]
When respondent received the letter-complaint of Josefina, petitioner was
directed to comment and explain her side thereon. She did comply, by letter
of February 22, 1999 wherein she admitted that she had defrauded Ms. J.
Pernes, but [that she] didnt do it intentionally.
Respondent subsequently sent petitioner a show-cause memorandum giving
her 48 hours from receipt why she should not be disciplinarily sanctioned.
Despite the 48-hour deadline, nothing was heard from her until April 10,
1999 when she complied with the second show-cause memorandum
dated April 7, 1999.
On April 20, 1999, petitioner was informed of the termination of her services
to which she filed a motion for reconsideration.
There can thus be no doubt that petitioner was given ample
opportunity to explain her side. Parenthetically, when an employee admits
the acts complained of, as in petitioners case, no formal hearing is even
necessary.[23]
Finally, petitioner argues that even if the order of reinstatement of the NLRC
was reversed on appeal, it is still obligatory on the part of an employer to
reinstate and pay the wages of a dismissed employee during the period of
appeal, citing Roquero v. Philippine Airlines,[24] the third paragraph of Article
223[25] of the Labor Code, and the last paragraph of Section 16, [26] Rule V of
the then 1990 New Rules of Procedure of the NLRC.
Petitioner adds that respondent made clever moves to frustrate [her] from
enjoying the reinstatement aspect of the decision starting from that of the
Labor Arbiter (although to a next lower rank), [to that] of the NLRC to her
previous position without loss of seniority rights until it was caught up by the
decision of the Honorable Court of Appeals reversing the decision of the
NLRC and declaring the dismissal of petitioner as based on valid grounds.
Respondent, on the other hand, maintains that Roquero and the legal
provisions cited by petitioner are not applicable as they speak of
reinstatement on order of the Labor Arbiter and not of the NLRC.
The Labor Arbiter ordered the reinstatement of petitioner to a lower position.
The third paragraph of Article 223 of the Labor Code is clear, however the
employee, who is ordered reinstated, must be accepted back to work under
the same terms and conditions prevailing prior to his dismissal or
separation.
Petitioners being demoted to a position one rank lower than her
original position is certainly not in accordance with the said third paragraph
provision of Article 223. Besides, the provision contemplates a finding that
the employee was illegally dismissed or there was no just cause for her
dismissal. As priorly stated, in petitioners case, the Labor Arbiter found that
there was just cause for her dismissal, but that dismissal was too harsh,
hence, his order for her reinstatement to a lower position.
The order to reinstate is incompatible with a finding that the dismissal
is for a valid cause. Thus this Court declared in Colgate Palmolive
Philippines, Inc. v. Ople:
The order of the respondent Minister to reinstate the
employees despite a clear finding of guilt on their part is not
in conformity with law. Reinstatement is simply
incompatible with a finding of guilt. Where the totality of
the evidence was sufficient to warrant the dismissal of the
employees the law warrants their dismissal without making
any distinction between a first offender and a habitual
delinquent. Under the law, respondent Minister is duly
mandated to equally protect and respect not only the labor or
workers side but also the management and/or employers
side. The law, in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the
employer. x x x As stated by Us in the case of San Miguel
Brewery vs. National Labor Union, an employer cannot legally
be compelled to continue with the employment of a person
who admittedly was guilty of misfeasance or malfeasance
towards his employer, and whose continuance in the service
of the latter is patently inimical to his interest.[27] (Emphasis
and underscoring supplied)
The NLRC was thus correct when it ruled that it was erroneous for the
Labor Arbiter to order the reinstatement of petitioner, even to a position one
rank lower than that which she formerly held.[28]
Now, on petitioners argument that, following the third paragraph of
Article 223 of the Labor Code, the order of the NLRC to reinstate her and to
pay her wages was immediately executory even while the case was on
appeal before the higher courts: The third paragraph of Article 223 of the
Labor Code directs that the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal.
In Roquero, the Labor Arbiter upheld the dismissal of Roquero, along with
another employee, albeit he found both the two and employer Philippine
Airlines (PAL) at fault. The Labor Arbiter thus ordered the payment
of separation pay and attorneys fees to the complainant. No order for
reinstatement was issued by the Labor Arbiter, precisely because the
dismissal was upheld.
On appeal, the NLRC ruled in favor of Roquero and his co-
complainant as it also found PAL guilty of instigation. The NLRC thus ordered
the reinstatement of Roquero and his co-complainant to their former
positions, but without backwages.
PAL appealed the NLRC decision via Petition for Review before this
Court. Roquero and his co-complainant did not. They instead filed before the
Labor Arbiter a Motion for Execution of the NLRC order for their reinstatement
which the Labor Arbiter granted.
Acting on PALs Petition for Review, this Court referred it to the Court
of Appeals pursuant to St. Martin Funeral Home v. NLRC.[29]
The appellate court reversed the NLRC decision and ordered the
reinstatement of the decision of the Labor Arbiter but only insofar as
it upheld the dismissal of Roquero.
Back to this Court on Roqueros Petition for Review, the following
material issues were raised:
xxxx
2. Can the executory nature of the decision, more so the
reinstatement aspect of a labor tribunals order be
halted by a petition having been filed in higher courts
without any restraining order or preliminary injunction
having been ordered in the meantime?
3. Would the employer who refused to reinstate an
employee despite a writ duly issued be held liable to
pay the salary of the subject employee from the time
that he was ordered reinstated up to the time that the
reversed decision was handed down?[30]
Resolving these issues, this Court held in Roquero:
Article 223 (3rd paragraph) of the Labor Code as amended by
Section 12 of Republic Act No. 6715, and Section 2 of the
NLRC Interim Rules on Appeals under RA No. 6715,
Amending the Labor Code, provide that an order of
reinstatement by the Labor Arbiter is immediately executory
even pending appeal. The rationale of the law has been
explained in Aris (Phil.) Inc. vs. NLRC:
In authorizing execution pending appeal of the
reinstatement aspect of a decision of the Labor
Arbiter reinstating a dismissed or separated
employee, the law itself has laid down a
compassionate policy which, once more, vivifies and
enhances the provisions of the 1987 Constitution on
labor and the working man.
xxxx
These duties and responsibilities of the State are
imposed not so much to express sympathy for the
workingman as to forcefully and meaningfully
underscore labor as a primary social and economic
force, which the Constitution also expressly affirms
with equal intensity. Labor is an indispensable partner
for the nations progress and stability.
xxxx
The order of reinstatement is immediately executory. The
unjustified refusal of the employer to reinstate a dismissed
employee entitles him to payment of his salaries effective
from the time the employer failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining
order issued, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he
is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of
this Court.
We reiterate the rule that technicalities have no room in labor
cases where the Rules of Court are applied only in a
suppletory manner and only to effectuate the objectives of the
Labor Code and not to defeat them. Hence, even if the order
of reinstatement of the Labor Arbiter is reversed on appeal,
it is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period
of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with
finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more
 so if he actually rendered services during the period.[31] (Italics
in the original, emphasis and underscoring supplied)
In the present case, since the NLRC found petitioners dismissal illegal
and ordered her reinstatement, following the provision of the sixth paragraph
of Article 223, viz:
The [National Labor Relations] Commission shall decide all
cases within twenty (20) calendar days from receipt of the
answer of the appellee. The decision of the Commissionshall
be final and executory after ten (10) calendar days from
receipt thereof by the parties. (Emphasis and underscoring
supplied),
the NLRC decision became final and executory after ten calendar days from
receipt of the decision by the parties for reinstatement.
In view, however, of Article 224 of the Labor Code which provides:
ART. 224. Execution of decisions, orders or awards. (a) The
Secretary of Labor and Employment or any Regional Director,
the Commission or any Labor Arbiter, or med-arbiter or
voluntary arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment
within five (5) years from the date it becomes final and
executory, requiring a sheriff or a duly deputized officer to
execute or enforce final decisions, orders or awards of the
Secretary of Labor and Employment or regional director, the
Commission, the Labor Arbiter or med-arbiter, or voluntary
arbitrators. In any case, it shall be the duty of the responsible
officer to separately furnish immediately the counsels of
record and the parties with copies of said decisions, orders or
awards. Failure to comply with the duty prescribed herein shall
subject such responsible officer to appropriate administrative
sanctions.
x x x x (Emphasis and underscoring supplied),
there was still a need for the issuance of a writ of execution of the NLRC
decision.
Unlike then the order for reinstatement of a Labor Arbiter which is self-
executory, that of the NLRC is not. There is still a need for the issuance of a
writ of execution. Thus this Court held in Pioneer Texturizing Corp. v. NLRC:[32]
x x x The provision of Article 223 is clear that an
award [by the Labor Arbiter] for reinstatement shall
be immediately executory even pending appeal and the
posting of a bond by the employer shall not stay the execution
for reinstatement. The legislative intent is quite obvious, i.e.,
to make an award of reinstatement immediately enforceable,
even pending appeal. To require the application for and
issuance of a writ of execution as prerequisites for the
execution of a reinstatement award would certainly betray and
run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order. The reason is
simple. An application for a writ of execution and its issuance
could be delayed for numerous reasons. A mere continuance
or postponement of a scheduled hearing, for instance, or an
inaction on the part of the Labor Arbiter or the NLRC could
easily delay the issuance of the writ thereby setting at naught
the strict mandate and noble purpose envisioned by Article
223. In other words, if the requirements of Article
224[including the issuance of a writ of execution] were to
govern, as we so declared in Maranaw, then the executory
nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to
have ordained a valid and sensible law, one which operates
no further than may be necessary to achieve its specific
purpose. Statutes, as a rule, are to be construed in the light of
the purpose to be achieved and the evil sought to be
remedied. x x x In introducing a new rule on the reinstatement
aspect of a labor decision under Republic Act No. 6715,
Congress should not be considered to be indulging in mere
semantic exercise. On appeal, however, the appellate tribunal
concerned may enjoin or suspend the reinstatement order in
the exercise of its sound discretion.[33] (Italics in the original,
emphasis and underscoring supplied)
If a Labor Arbiter does not issue a writ of execution of the NLRC order
for the reinstatement of an employee even if there is no restraining order, he
could probably be merely observing judicial courtesy, which is advisable if
there is a strong probability that the issues before the higher court would be
rendered moot and moribund as a result of the continuation of the
proceedings in the lower court.[34] In such a case, it is as if a temporary
restraining order was issued, the effect of which Zamboanga City Water
District v. Buhat explains:
 The issuance of the temporary restraining order did not nullify
the rights of private respondents to their reinstatement and to
collect their wages during the period of the effectivity of the order
but merely suspended the implementation thereof pending the
determination of the validity of the NLRC resolutions subject of
the petition. Naturally, a finding of this Court that private
respondents were not entitled to reinstatement would
mean that they had no right to collect any back wages. On
the other hand, where the Court affirmed the decision of the
NLRC and recognized the right of private respondents to
reinstatement, private respondents are entitled to the wages
accruing during the effectivity of the temporary restraining
order.[35] (Emphasis and underscoring supplied)
While Zamboanga was decided prior to St. Martin Funeral and,
therefore, the NLRC decisions were at the time passed upon by this Court to
the exclusion of the appellate court, it is still applicable.
Since this Court is now affirming the challenged decision of the Court
of Appeals finding that petitioner was validly dismissed and accordingly
reversing the NLRC Decision that petitioner was illegally dismissed and should
be reinstated, petitioner is not entitled to collect any backwages from the time
the NLRC decision became final and executory up to the time the Court of
Appeals reversed said decision.
It does not appear that a writ of execution was issued for the implementation
of the NLRC order for reinstatement. Had one been issued, respondent would
have been obliged to reinstate petitioner and pay her salary until the said order
of the NLRC for her reinstatement was reversed by the Court of Appeals, and
following Roquero, petitioner would not have been obliged to reimburse
respondent for whatever salary she received in the interim.
While it is true that compassion and human consideration
should guide the disposition of cases involving termination of
employment since it affects ones source or means of
livelihood, it should not be overlooked that the benefits
accorded to labor do not include compelling an employer to
retain the services of an employee who has been shown to be
a gross liability to the employer. The law in protecting the
rights of the employees authorizes neither oppression
nor self-destruction of the employer. It should be made
clear that when the law tilts the scale of justice in favor of
labor, it is but a recognition of the inherent economic inequality
between labor and management. The intent is to balance the
scale of justice; to put the two parties on relatively equal
positions. There may be cases where the circumstances
warrant favoring labor over the interests of management
but never should the scale be so tilted if the result is an
injustice to the employer. Justitia nemini neganda
est (Justice is to be denied to none).[36] (Italics in the original;
emphasis and underscoring supplied)
WHEREFORE, the petition is DENIED. The assailed Court of Appeals
Decision dated May 16, 2003 and Resolution dated November 17,
2003 are AFFIRMED.
SO ORDERED.

IN SUM, while under the sixth paragraph of Article 223 of the Labor Code, the
decision of the NLRC becomes final and executory after the lapse of ten
calendar days from receipt thereof by the parties, the adverse party is not
precluded from assailing it via Petition for Certiorari under Rule 65 before the
Court of Appeals and then to this Court via a Petition for Review under Rule
45. If during the pendency of the review no order is issued by the courts
enjoining the execution of a decision of the Labor Arbiter or NLRC which is
favorable to an employee, the Labor Arbiter or the NLRC must exercise
extreme prudence and observe judicial courtesy when the circumstances so
warrant if we are to heed the injunction of the Court in Philippine Geothermal,
Inc v. NLRC:
 PICOP RESOURCES, G.R. No. 160828 Resolution[2] dated October 23, 2003 of the Court of Appeals in CA-G.R. SP
INCORPORATED (PRI), No. 71760, setting aside the Resolutions dated October 8, 2001 [3] and April
29, 2002[4] of the National Labor Relations Commission in NLRC CA No. M-
Petitioner, 006309-2001 and reinstating the Decision[5] dated March 16, 2001 of the Labor
Present:
Arbiter.

- versus
The facts, as culled from the records, are as follows:
CARPIO, J., Chairperson,
ANACLETO L. TAECA, GEREMIAS
S. TATO, JAIME N. CAMPOS, NACHURA,
On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph
MARTINIANO A. MAGAYON, PERALTA Balgoa, Jaime Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay
JOSEPH B. BALGOA, MANUEL G. and fourteen (14) others filed a Complaint for unfair labor practice, illegal
ABUCAY, MOISES M. ABAD, and dismissal and money claims against petitioner PICOP Resources,
ALBARAN, MARGARITO G. Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice
ALICANTE, JERRY ROMEO T. MENDOZA, JJ.
President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's
AVILA, LORENZO D. CANON, RAUL Manager of Legal/Labor), Southern Philippines Federation of Labor (SPFL),
P. DUERO, DANILO Y. ILAN, Atty. Wilbur T. Fuentes (in his capacity as Secretary General of SPFL),
MANUEL M. MATURAN, JR., Pascasio Trugillo (in his capacity as Local President of Nagkahiusang
LUISITO R. POPERA, CLEMENTINO Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty.
C. QUIMAN, ROBERTO Q. SILOT, Promulgated:
Proculo Fuentes, Jr.[6] (in his capacity as National President of SPFL).
CHARLITO D. SINDAY, REMBERT
B. SUZONALLAN J. TRIMIDAL, and
NAMAPRI-SPFL, August 9, 2010 Respondents were regular rank-and-file employees of PRI and bona
Respondents. fide members of Nagkahiusang Mamumuo sa PRI Southern Philippines
Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining
agent for the rank-and-file employees of petitioner PRI.

x----------------------------------------------------------------------------------------x PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a
period of five (5) years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

DECISION

Article II- Union Security and Check-Off

PERALTA, J.:

Section 6. Maintenance of membership.

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeking the reversal of the Decision[1] dated July 25, 2003 and
6.1 All employees within the appropriate bargaining unit who are
members of the UNION at the time of the signing of this AGREEMENT
shall, as a condition of continued employment by the COMPANY,
maintain their membership in the UNION in good standing during the
effectivity of this AGREEMENT.
6.2 Any employee who may hereinafter be employed to occupy a position
covered by the bargaining unit shall be advised by the COMPANY that they
are required to file an application for membership with the UNION within thirty
(30) days from the date his appointment shall have been made regular.
6.3 The COMPANY, upon the written request of the UNION and after
compliance with the requirements of the New Labor Code, shall give
notice of termination of services of any employee who shall fail to fulfill
the condition provided in Section 6.1 and 6.2 of this Article, but it assumes
no obligation to discharge any employee if it has reasonable grounds to believe
either that membership in the UNION was not available to the employee on
the same terms and conditions generally applicable to other members, or that
membership was denied or terminated for reasons other than voluntary
resignation or non-payment of regular union dues. Separation under the
Section is understood to be for cause, consequently, the dismissed employee
is not entitled to separation benefits provided under the New Labor Code and
in this AGREEMENT.[7]
On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the
management of PRI demanding the termination of employees who allegedly
campaigned for, supported and signed the Petition for Certification Election of
the Federation of Free Workers Union (FFW) during the effectivity of the
CBA.NAMAPRI-SPFL considered said act of campaigning for and signing the
petition for certification election of FFW as an act of disloyalty and a valid basis
for termination for a cause in accordance with its Constitution and By-Laws,
and the terms and conditions of the CBA, specifically Article II, Sections 6.1
and 6.2 on Union Security Clause.
In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the
management of PRI to investigate those union members who signed the
Petition for Certification Election of FFW during the existence of their CBA.
NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the
authorization letters dated March 19, 20 and 21, 2000, which contained the
names and signatures of employees.
Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty.
Romero A. Boniel issued a memorandum addressed to the concerned
employees to explain in writing within 72 hours why their employment should
not be terminated due to acts of disloyalty as alleged by their Union.
Within the period from May 26 to June 2, 2000, a number of employees who
were served explanation memorandum submitted their explanation, while
some did not.
In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of
the employees to Atty. Fuentes for evaluation and final disposition in
accordance with the CBA.
After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the
management of PRI that the Union found the member's explanations to be
unsatisfactory. He reiterated the demand for termination, but only of 46
member-employees, including respondents.
On October 16, 2000, PRI served notices of termination for causes to the 31
out of the 46 employees whom NAMAPRIL-SPFL sought to be terminated on
the ground of acts of disloyalty committed against it when respondents
allegedly supported and signed the Petition for Certification Election of FFW
before the freedom period during the effectivity of the CBA. A Notice dated
October 21, 2000 was also served on the Department of Labor and
Employment Office (DOLE), Caraga Region.
Respondents then accused PRI of Unfair Labor Practice punishable under
Article 248 (a), (b), (c), (d) and (e) of the Labor Code, while Atty. Fuentes and
Wilbur T. Fuentes and Pascasio Trujillo were accused of violating Article 248
(a) and (b) of the Labor Code.
Respondents alleged that none of them ever withdrew their membership from
NAMAPRI-SPFL or submitted to PRI any union dues and check-off
disauthorizations against NAMAPRI-SPFL. They claimed that they continue to
remain on record as bona fide members of NAMAPRI-SPFL. They pointed out
that a patent manifestation of ones disloyalty would have been the explicit
resignation or withdrawal of membership from the Union accompanied by an
advice to management to discontinue union dues and check-off deductions.
They insisted that mere affixation of signature on such authorization to file a
petition for certification election was not per se an act of disloyalty. They
claimed that while it may be true that they signed the said authorization before
the start of the freedom period, the petition of FFW was only filed with the
DOLE on May 18, 2000, or 58 days after the start of the freedom period.
Respondents maintained that their acts of signing the authorization signifying
support to the filing of a Petition for Certification Election of FFW was merely
prompted by their desire to have a certification election among the rank-and-
file employees of PRI with hopes of a CBA negotiation in due time; and not to
cause the downfall of NAMAPRI-SPFL.
Furthermore, respondents contended that there was lack of procedural due
process. Both the letter dated May 16, 2000 of Atty. Fuentes and the follow-
up letter dated May 23, 2000 of Trujillo addressed to PRI did not mention their
names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to
investigate union members who supported the Petition for Certification
Election of FFW. Respondents claimed that they should have been summoned
individually, confronted with the accusation and investigated accordingly and
from where the Union may base its findings of disloyalty and, thereafter,
recommend to management the termination for causes.
Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded
their termination, it was no longer the bargaining representative of the rank-
and-file workers of PRI, because the CBA had already expired on May 22,
2000. Hence, there could be no justification in PRIs act of dismissing
respondents due to acts of disloyalty.
Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel
in giving in to the wishes of the Union in discharging them on the ground of
disloyalty to the Union amounted to interference with, restraint or coercion of
respondents exercise of their right to self-organization. The act indirectly
required petitioners to support and maintain their membership with NAMAPRI-
SPFL as a condition for their continued employment. The acts of NAMAPRI-
SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of
the petitioners in the exercise of their rights to self-organization and constituted
acts of unfair labor practice.
In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the
respondents dismissal to be illegal and ordered PRI to reinstate respondents
to their former or equivalent positions without loss of seniority rights and to
jointly and solidarily pay their backwages. The dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby entered:
1. Declaring complainants dismissal illegal; and
2. Ordering respondents Picop Resources Inc. (PRI) and
NAMAPRI-SPFL to reinstate complainants to their former or equivalent
positions without loss of seniority rights and to jointly and solidarily pay their
backwages in the total amount of P420,339.30 as shown in the said Annex A
plus damages in the amount of P10,000.00 each, or a total of P210,000.00
and attorneys fees equivalent to 10% of the total monetary award.
SO ORDERED.[9]
PRI and NAMAPRI-SPFL appealed to the National Labor Relations
Commission (NLRC), which reversed the decision of the Labor Arbiter; thus,
declaring the dismissal of respondents from employment as legal.
Respondents filed a motion for reconsideration, but it was denied on April 29,
2001 for lack of merit.
Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the
Court of Appeals and sought the nullification of the Resolution of the NLRC
dated October 8, 2001 which reversed the Decision dated March 16. 2001 of
Labor Arbiter and the Resolution dated April 29, 2002, which denied
respondents motion for reconsideration.
On July 25, 2003, the Court of Appeals reversed and set aside the assailed
Resolutions of the NLRC and reinstated the Decision dated March 16, 2001 of
the Labor Arbiter.
Thus, before this Court, PRI, as petitioner, raised the following issues:
I pursuant to the Union Security Clause of the CBA.
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING
AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN
ALL ITS TERMS AND CONDITION INCLUDING ITS UNION SECURITY
CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS
YET BEEN ENTERED INTO.
II
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION
AND/OR CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE
EXTRAORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED
RULES OF COURT.[10]
We will first delve on the technical issue raised.
PRI perceived a patent error in the mode of appeal elected by respondents for
the purpose of assailing the decision of the NLRC. It claimed that assuming
that the NLRC erred in its judgment on the legal issues, its error, if any, is not
tantamount to abuse of discretion falling within the ambit of Rule 65.
Petitioner is mistaken.
The power of the Court of Appeals to review NLRC decisions via Rule 65 or
Petition for Certiorari has been settled as early as in our decision in St. Martin
Funeral Home v. National Labor Relations Commission.[11] This Court held that
the proper vehicle for such review was a Special Civil Action
for Certiorari under Rule 65 of the Rules of Court, and that this action should
be filed in the Court of Appeals in strict observance of the doctrine of the
hierarchy of courts.[12] Moreover, it is already settled that under Section 9
of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An
Act Expanding the Jurisdiction of the Court of Appeals, amending for the
purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as
the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to
the exercise of its original jurisdiction over Petitions for Certiorari is specifically
given the power to pass upon the evidence, if and when necessary, to resolve
factual issues. [13]
We now come to the main issue of whether there was just cause to terminate
the employment of respondents.
PRI argued that the dismissal of the respondents was valid and legal. It
claimed to have acted in good faith at the instance of the incumbent union
Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the
CBA, they are enjoined to keep the status quo and continue in full force and
effect the terms and conditions of the existing CBA during the 60-day period
and/or until a new agreement is reached by the parties.
Petitioner's argument is untenable.
Union security" is a generic term, which is applied to and comprehends "closed
shop," union shop," "maintenance of membership," or any other form of
agreement which imposes upon employees the obligation to acquire or retain
union membership as a condition affecting employment. There is union shop
when all new regular employees are required to join the union within a certain
period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must
maintain union membership as a condition for continued employment until they
are promoted or transferred out of the bargaining unit, or the agreement is
terminated. A closed shop, on the other hand, may be defined as an enterprise
in which, by agreement between the employer and his employees or their
representatives, no person may be employed in any or certain agreed
departments of the enterprise unless he or she is, becomes, and, for the
duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.[15]
However, in terminating the employment of an employee by enforcing the
union security clause, the employer needs to determine and prove that: (1) the
union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is
sufficient evidence to support the decision of the union to expel the employee
from the union. These requisites constitute just cause for terminating an
employee based on the union security provision of the CBA.[16]

As to the first requisite, there is no question that the CBA between PRI and
respondents included a union security clause, specifically, a maintenance of
membership as stipulated in Sections 6 of Article II, Union Security and Check-
Off. Following the same provision, PRI, upon written request from the Union,
can indeed terminate the employment of the employee who failed to maintain
its good standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions
demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate
the employment of respondents due to their acts of disloyalty to the Union.
However, as to the third requisite, we find that there is no sufficient evidence
to support the decision of PRI to terminate the employment of the respondents.
PRI alleged that respondents were terminated from employment based on the
alleged acts of disloyalty they committed when they signed an authorization
for the Federation of Free Workers (FFW) to file a Petition for Certification
Election among all rank-and-file employees of PRI. It contends that the acts of
respondents are a violation of the Union Security Clause, as provided in their
Collective Bargaining Agreement.
We are unconvinced.
We are in consonance with the Court of Appeals when it held that the mere
signing of the authorization in support of the Petition for Certification Election
of FFW on March 19, 20 and 21, or before the freedom period, is not sufficient
ground to terminate the employment of respondents inasmuch as the petition
itself was actually filed during the freedom period. Nothing in the records would
show that respondents failed to maintain their membership in good standing
in the Union. Respondents did not resign or withdraw their membership from
the Union to which they belong. Respondents continued to pay their union
dues and never joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from the
latter's act of signing an authorization letter to file a petition for certification
election as they signed it outside the freedom period. However, we are
constrained to believe that an authorization letter to file a petition for
certification election is different from an actual Petition for Certification
Election. Likewise, as per records, it was clear that the actual Petition for
Certification Election of FFW was filed only on May 18, 2000.[17] Thus, it was
within the ambit of the freedom period which commenced from March 21, 2000
until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition
for certification election outside the 60-day freedom period.[18] This is not the
situation in this case. If at all, the signing of the authorization to file a
certification election was merely preparatory to the filing of the petition for
certification election, or an exercise of respondents right to self-organization.
Moreover, PRI anchored their decision to terminate respondents employment
on Article 253 of the Labor Code which states that it shall be the duty of both
parties to keep the status quo and to continue in full force and effect the
terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties. It claimed that they
are still bound by the Union Security Clause of the CBA even after the
expiration of the CBA; hence, the need to terminate the employment of
respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is particularly enlightening. It
reads:
Article 256. Representation issue in organized establishments. - In organized
establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and
Employment within the sixty-day period before the expiration of a collective
bargaining agreement, the Med-Arbiter shall automatically order an election
by secret ballot when the verified petition is supported by the written consent
of at least twenty-five percent (25%) of all the employees in the bargaining unit
to ascertain the will of the employees in the appropriate bargaining unit. 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 the workers in
the unit. When an election which provides for three or more choices results in
no choice receiving a majority of the valid votes cast, a run-off election shall
be conducted between the labor unions receiving the two highest number of
votes: Provided, That the total number of votes for all contending unions is at
least fifty per cent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to
recognize the majority status of the incumbent bargaining agent where
no petition for certification election is filed.[19]
Applying the same provision, it can be said that while it is incumbent for the
employer to continue to recognize the majority status of the incumbent
bargaining agent even after the expiration of the freedom period, they could
only do so when no petition for certification election was filed. The reason is,
with a pending petition for certification, any such agreement entered into by
management with a labor organization is fraught with the risk that such a labor
union may not be chosen thereafter as the collective bargaining
representative.[20] The provision for status quo is conditioned on the fact that
no certification election was filed during the freedom period.Any other view
would render nugatory the clear statutory policy to favor certification election
as the means of ascertaining the true expression of the will of the workers as
to which labor organization would represent them.[21]
In the instant case, four (4) petitions were filed as early as May 12, 2000. In
fact, a petition for certification election was already ordered by the Med-Arbiter
of DOLE Caraga Region on August 23, 2000.[22] Therefore, following Article
256, at the expiration of the freedom period, PRI's obligation to recognize
NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when
petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic
renewal pertains only to the economic provisions of the CBA, and does not
include representational aspect of the CBA. An existing CBA cannot constitute
a bar to a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await
the creation of a new agreement will not apply. Otherwise, it will create an
absurd situation where the union members will be forced to maintain
membership by virtue of the union security clause existing under the CBA and,
thereafter, support another union when filing a petition for certification election.
If we apply it, there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The holding of a
certification election is a statutory policy that should not be circumvented, [23] or
compromised.
Time and again, we have ruled that we adhere to the policy of enhancing the
welfare of the workers. Their freedom to choose who should be their
bargaining representative is of paramount importance. The fact that there
already exists a bargaining representative in the unit concerned is of no
moment as long as the petition for certification election was filed within the
freedom period. What is imperative is that by such a petition for certification
election the employees are given the opportunity to make known of who shall
have the right to represent them thereafter. Not only some, but all of them
should have the right to do so. What is equally important is that everyone be
given a democratic space in the bargaining unit concerned.[24]
We will emphasize anew that the power to dismiss is a normal prerogative of
the employer. This, however, is not without limitations. The employer is bound
to exercise caution in terminating the services of his employees especially so
when it is made upon the request of a labor union pursuant to the Collective
Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee, because it affects not
only his position but also his means of livelihood. Employers should, therefore,
respect and protect the rights of their employees, which include the right to
labor.[25]
An employee who is illegally dismissed is entitled to the twin reliefs of full
backwages and reinstatement. If reinstatement is not viable, separation pay is
awarded to the employee. In awarding separation pay to an illegally dismissed
employee, in lieu of reinstatement, the amount to be awarded shall be
equivalent to one month salary for every year of service. Under Republic Act
No. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits, or their monetary
equivalent, computed from the time their actual compensation was withheld
from them up to the time of their actual reinstatement. But if reinstatement is
no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Moreover, respondents,
having been compelled to litigate in order to seek redress for their illegal
dismissal, are entitled to the award of attorneys fees equivalent to 10% of the
total monetary award.[26]
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and
the Resolution dated October 23, 2003 of the Court of Appeals in CA-G.R. SP
No. 71760, which set aside the Resolutions dated October 8, 2001 and April
29, 2002 of the National Labor Relations Commission in NLRC CA No. M-
006309-2001, are AFFIRMED accordingly. Respondents are hereby awarded
full backwages and other allowances, without qualifications and diminutions,
computed from the time they were illegally dismissed up to the time they are
actually reinstated. Let this case be remanded to the Labor Arbiter for proper
computation of the full backwages due respondents, in accordance with Article
279 of the Labor Code, as expeditiously as possible.
SO ORDERED
G.R. No. 169717 March 16, 2011
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF
UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS
(SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union
President,Petitioner,
vs.
CHARTER CHEMICAL and COATING CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
The right to file a petition for certification election is accorded to a labor
organization provided that it complies with the requirements of law for proper
registration. The inclusion of supervisory employees in a labor organization
seeking to represent the bargaining unit of rank-and-file employees does not
divest it of its status as a legitimate labor organization. We apply these
principles to this case.
This Petition for Review on Certiorari seeks to reverse and set aside the Court
of Appeal’s March 15, 2005 Decision1 in CA-G.R. SP No. 58203, which
annulled and set aside the January 13, 2000 Decision 2 of the Department of
Labor and Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and
the September 16, 2005 Resolution3 denying petitioner union’s motion for
reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical
Solidarity of Unions in the Philippines for Empowerment and Reforms
(petitioner union) filed a petition for certification election among the regular
rank-and-file employees of Charter Chemical and Coating Corporation
(respondent company) with the Mediation Arbitration Unit of the DOLE,
National Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to
Dismiss4 on the ground that petitioner union is not a legitimate labor
organization because of (1) failure to comply with the documentation
requirements set by law, and (2) the inclusion of supervisory employees within
petitioner union.5
Med-Arbiter’s Ruling
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a
Decision6 dismissing the petition for certification election. The Med-Arbiter
ruled that petitioner union is not a legitimate labor organization because the
Charter Certificate, "Sama-samang Pahayag ng Pagsapi at Authorization,"
and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-
ayon at Nagratipika sa Saligang Batas" were not executed under oath and
certified by the union secretary and attested to by the union president as
required by Section 235 of the Labor Code7 in relation to Section 1, Rule VI of
Department Order (D.O.) No. 9, series of 1997. The union registration was,
thus, fatally defective.
The Med-Arbiter further held that the list of membership of petitioner union
consisted of 12 batchman, mill operator and leadman who performed
supervisory functions. Under Article 245 of the Labor Code, said supervisory
employees are prohibited from joining petitioner union which seeks to
represent the rank-and-file employees of respondent company.
As a result, not being a legitimate labor organization, petitioner union has no
right to file a petition for certification election for the purpose of collective
bargaining.
Department of Labor and Employment’s Ruling
On July 16, 1999, the DOLE initially issued a Decision8 in favor of respondent
company dismissing petitioner union’s appeal on the ground that the latter’s
petition for certification election was filed out of time. Although the DOLE ruled,
contrary to the findings of the Med-Arbiter, that the charter certificate need not
be verified and that there was no independent evidence presented to establish
respondent company’s claim that some members of petitioner union were
holding supervisory positions, the DOLE sustained the dismissal of the petition
for certification after it took judicial notice that another union, i.e., Pinag-isang
Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously
filed a petition for certification election on January 16, 1998. The Decision
granting the said petition became final and executory on September 16, 1998
and was remanded for immediate implementation. Under Section 7, Rule XI of
D.O. No. 9, series of 1997, a motion for intervention involving a certification
election in an unorganized establishment should be filed prior to the finality of
the decision calling for a certification election. Considering that petitioner union
filed its petition only on February 14, 1999, the same was filed out of time.
On motion for reconsideration, however, the DOLE reversed its earlier ruling.
In its January 13, 2000 Decision, the DOLE found that a review of the records
indicates that no certification election was previously conducted in respondent
company. On the contrary, the prior certification election filed by Pinag-isang
Lakas Manggagawa sa Charter Chemical and Coating Corporation was,
likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the
DOLE for being filed out of time. Hence, there was no obstacle to the grant of
petitioner union’s petition for certification election, viz:
WHEREFORE, the motion for reconsideration is hereby GRANTED and the
decision of this Office dated 16 July 1999 is MODIFIED to allow the
certification election among the regular rank-and-file employees of Charter
Chemical and Coating Corporation with the following choices:
1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the
Philippines for Empowerment and Reform (SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional Office of origin for
the immediate conduct of a certification election, subject to the usual pre-
election conference.
SO DECIDED.9
Court of Appeal’s Ruling
On March 15, 2005, the CA promulgated the assailed Decision, viz:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and
Resolution dated January 13, 2000 and February 17, 2000 are hereby
[ANNULLED] and SET ASIDE.
SO ORDERED.10
In nullifying the decision of the DOLE, the appellate court gave credence to
the findings of the Med-Arbiter that petitioner union failed to comply with the
documentation requirements under the Labor Code. It, likewise, upheld the
Med-Arbiter’s finding that petitioner union consisted of both rank-and-file and
supervisory employees. Moreover, the CA held that the issues as to the
legitimacy of petitioner union may be attacked collaterally in a petition for
certification election and the infirmity in the membership of petitioner union
cannot be remedied through the exclusion-inclusion proceedings in a pre-
election conference pursuant to the ruling in Toyota Motor Philippines v.
Toyota Motor Philippines Corporation Labor Union.11 Thus, considering that
petitioner union is not a legitimate labor organization, it has no legal right to file
a petition for certification election.
Issues
I pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor
Whether x x x the Honorable Court of Appeals committed grave abuse of
discretion tantamount to lack of jurisdiction in granting the respondent
[company’s] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the
fact that the issues subject of the respondent company[’s] petition was already
settled with finality and barred from being re-litigated.
II
Whether x x x the Honorable Court of Appeals committed grave abuse of
discretion tantamount to lack of jurisdiction in holding that the alleged mixture
of rank-and-file and supervisory employee[s] of petitioner [union’s]
membership is [a] ground for the cancellation of petitioner [union’s] legal
personality and dismissal of [the] petition for certification election.
III
Whether x x x the Honorable Court of Appeals committed grave abuse of
discretion tantamount to lack of jurisdiction in holding that the alleged failure
to certify under oath the local charter certificate issued by its mother federation
and list of the union membership attending the organizational meeting [is a
ground] for the cancellation of petitioner [union’s] legal personality as a labor
organization and for the dismissal of the petition for certification election.12
Petitioner Union’s Arguments
Petitioner union claims that the litigation of the issue as to its legal personality
to file the subject petition for certification election is barred by the July 16, 1999
Decision of the DOLE. In this decision, the DOLE ruled that petitioner union
complied with all the documentation requirements and that there was no
independent evidence presented to prove an illegal mixture of supervisory and
rank-and-file employees in petitioner union. After the promulgation of this
Decision, respondent company did not move for reconsideration, thus, this
issue must be deemed settled.
Petitioner union further argues that the lack of verification of its charter
certificate and the alleged illegal composition of its membership are not
grounds for the dismissal of a petition for certification election under Section
11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds
for the cancellation of a union’s registration under Section 3, Rule VIII of said
issuance. It contends that what is required to be certified under oath by the
local union’s secretary or treasurer and attested to by the local union’s
president are limited to the union’s constitution and by-laws, statement of the
set of officers, and the books of accounts.
Finally, the legal personality of petitioner union cannot be collaterally attacked
but may be questioned only in an independent petition for cancellation
Code and the doctrine enunciated in Tagaytay Highlands International Golf
Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO.13
Respondent Company’s Arguments
Respondent company asserts that it cannot be precluded from challenging the
July 16, 1999 Decision of the DOLE. The said decision did not attain finality
because the DOLE subsequently reversed its earlier ruling and, from this
decision, respondent company timely filed its motion for reconsideration.
On the issue of lack of verification of the charter certificate, respondent
company notes that Article 235 of the Labor Code and Section 1, Rule VI of
the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997,
expressly requires that the charter certificate be certified under oath.
It also contends that petitioner union is not a legitimate labor organization
because its composition is a mixture of supervisory and rank-and-file
employees in violation of Article 245 of the Labor Code. Respondent company
maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor
Philippines Labor Union14 continues to be good case law. Thus, the illegal
composition of petitioner union nullifies its legal personality to file the subject
petition for certification election and its legal personality may be collaterally
attacked in the proceedings for a petition for certification election as was done
here.
Our Ruling
The petition is meritorious.
The issue as to the legal personality of petitioner union is not barred by the
July 16, 1999 Decision of the DOLE.
A review of the records indicates that the issue as to petitioner union’s legal
personality has been timely and consistently raised by respondent company
before the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999
Decision, the DOLE found that petitioner union complied with the
documentation requirements of the Labor Code and that the evidence was
insufficient to establish that there was an illegal mixture of supervisory and
rank-and-file employees in its membership. Nonetheless, the petition for
certification election was dismissed on the ground that another union had
previously filed a petition for certification election seeking to represent the
same bargaining unit in respondent company.
Upon motion for reconsideration by petitioner union on January 13, 2000, the
DOLE reversed its previous ruling. It upheld the right of petitioner union to file
the subject petition for certification election because its previous decision was
based on a mistaken appreciation of facts.15 From this adverse decision,
respondent company timely moved for reconsideration by reiterating its
previous arguments before the Med-Arbiter that petitioner union has no legal
personality to file the subject petition for certification election.
The July 16, 1999 Decision of the DOLE, therefore, never attained finality
because the parties timely moved for reconsideration. The issue then as to the
legal personality of petitioner union to file the certification election was properly
raised before the DOLE, the appellate court and now this Court.
The charter certificate need not be certified under oath by the local union’s
secretary or treasurer and attested to by its president.
Preliminarily, we must note that Congress enacted Republic Act (R.A.) No.
948116 which took effect on June 14, 2007.17 This law introduced substantial
amendments to the Labor Code. However, since the operative facts in this
case occurred in 1999, we shall decide the issues under the pertinent legal
provisions then in force (i.e., R.A. No. 6715,18 amending Book V of the Labor
Code, and the rules and regulations19 implementing R.A. No. 6715, as
amended by D.O. No. 9,20
series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg.,
Philippines, Inc.21
In the main, the CA ruled that petitioner union failed to comply with the requisite
documents for registration under Article 235 of the Labor Code and its
implementing rules. It agreed with the Med-Arbiter that the Charter Certificate,
Sama-samang Pahayag ng Pagsapi at Authorization, and Listahan ng mga
Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa
Saligang Batas were not executed under oath. Thus, petitioner union cannot
be accorded the status of a legitimate labor organization.
We disagree.
The then prevailing Section 1, Rule VI of the Implementing Rules of Book V,
as amended by D.O. No. 9, series of 1997, provides:
Section 1. Chartering and creation of a local chapter — A duly registered
federation or national union may directly create a local/chapter by submitting
to the Regional Office or to the Bureau two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicating
the creation or establishment of the local/chapter;
(b) The names of the local/chapter’s officers, their addresses, and the principal
office of the local/chapter; and
(c) The local/chapter’s constitution and by-laws provided that where the
local/chapter’s constitution and by-laws [are] the same as [those] of the
federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its President.
As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and
Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at
Nagratipika sa Saligang Batas are not among the documents that need to be
submitted to the Regional Office or Bureau of Labor Relations in order to
register a labor organization. As to the charter certificate, the above-quoted
rule indicates that it should be executed under oath. Petitioner union concedes
and the records confirm that its charter certificate was not executed under
oath. However, in San Miguel Corporation (Mandaue Packaging Products
Plants) v. Mandaue Packing Products Plants-San Miguel Corporation
Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFU-
FFW),22 which was decided under the auspices of D.O. No. 9, Series of 1997,
we ruled –
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil.
356 (1996), the Court ruled that it was not necessary for the charter certificate
to be certified and attested by the local/chapter officers. Id. While this ruling
was based on the interpretation of the previous Implementing Rules
provisions which were supplanted by the 1997 amendments, we believe
that the same doctrine obtains in this case. Considering that the charter
certificate is prepared and issued by the national union and not the
local/chapter, it does not make sense to have the local/chapter’s officers x
x x certify or attest to a document which they had no hand in the
preparation of.23 (Emphasis supplied)
In accordance with this ruling, petitioner union’s charter certificate need not be
executed under oath. Consequently, it validly acquired the status of a
legitimate labor organization upon submission of (1) its charter certificate,24 (2)
the names of its officers, their addresses, and its principal office, 25 and (3) its
constitution and by-laws26— the last two requirements having been executed
under oath by the proper union officials as borne out by the records.
The mixture of rank-and-file and supervisory employees in petitioner union
does not nullify its legal personality as a legitimate labor organization.
The CA found that petitioner union has for its membership both rank-and-file
and supervisory employees. However, petitioner union sought to represent the
bargaining unit consisting of rank-and-file employees. Under Article 24527 of
the Labor Code, supervisory employees are not eligible for membership in a
labor organization of rank-and-file employees. Thus, the appellate court ruled
that petitioner union cannot be considered a legitimate labor organization
pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation
Labor Union28 (hereinafter Toyota).
Preliminarily, we note that petitioner union questions the factual findings of the
Med-Arbiter, as upheld by the appellate court, that 12 of its members,
consisting of batchman, mill operator and leadman, are supervisory
employees. However, petitioner union failed to present any rebuttal evidence
in the proceedings below after respondent company submitted in evidence the
job descriptions29 of the aforesaid employees. The job descriptions indicate
that the aforesaid employees exercise recommendatory managerial actions
which are not merely routinary but require the use of independent judgment,
hence, falling within the definition of supervisory employees under Article
212(m)30 of the Labor Code. For this reason, we are constrained to agree with
the Med-Arbiter, as upheld by the appellate court, that petitioner union
consisted of both rank-and-file and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner
union does not divest it of its status as a legitimate labor organization. The
appellate court’s reliance on Toyota is misplaced in view of this Court’s
subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines,
Inc.31 (hereinafter Kawashima). In Kawashima, we explained at length how
and why the Toyota doctrine no longer holds sway under the altered state of
the law and rules applicable to this case, viz:
R.A. No. 6715 omitted specifying the exact effect any violation of the
prohibition [on the co-mingling of supervisory and rank-and-file
employees] would bring about on the legitimacy of a labor organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
Omnibus Rules) which supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
"Sec. 1. Who may join unions. - x x x 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; Provided, that those supervisory employees who
are included in an existing rank-and-file bargaining unit, upon the effectivity of
Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and
Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus
Rules, viz:
"Sec. 1. Where to file. - A petition for certification election may be filed with the
Regional Office which has jurisdiction over the principal office of the employer.
The petition shall be in writing and under oath.
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:
xxxx
(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. (Emphasis
supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate
and duly registered labor organization from exercising its right to file a petition
for certification election.
Thus, when the issue of the effect of mingling was brought to the fore
in Toyota, the Court, citing Article 245 of the Labor Code, as amended by R.A.
No. 6715, held:
"Clearly, based on this provision, a labor organization composed of both rank-
and-file and supervisory employees is no labor organization at all. It cannot,
for any guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a legitimate labor
organization, including the right to file a petition for certification election
for the purpose of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order allowing a certification
election, to inquire into the composition of any labor organization
whenever the status of the labor organization is challenged on the basis
of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names
of at least twenty-seven (27) supervisory employees in Level Five positions,
the union could not, prior to purging itself of its supervisory employee
members, attain the status of a legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a petition for certification
election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership
included rank-and-file employees, the Court reiterated that such labor
organization had no legal right to file a certification election to represent a
bargaining unit composed of supervisors for as long as it counted rank-and-
file employees among its members.
It should be emphasized that the petitions for certification election involved
in Toyota and Dunlop were filed on November 26, 1992 and September 15,
1995, respectively; hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further
amended by Department Order No. 9, series of 1997 (1997 Amended
Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989
Amended Omnibus Rules – that the petition for certification election indicate
that the bargaining unit of rank-and-file employees has not been mingled with
supervisory employees – was removed. Instead, what the 1997 Amended
Omnibus Rules requires is a plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and
under oath and shall contain, among others, the following: x x x (c) The
description of the bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the
validity of the 1997 Amended Omnibus Rules, although the specific provision
involved therein was only Sec. 1, Rule VI, to wit:
"Section. 1. Chartering and creation of a local/chapter.- A duly registered
federation or national union may directly create a local/chapter by submitting
to the Regional Office or to the Bureau two (2) copies of the following: a) a
charter certificate issued by the federation or national union indicating the
creation or establishment of the local/chapter; (b) the names of the
local/chapter's officers, their addresses, and the principal office of the
local/chapter; and (c) the local/ chapter's constitution and by-laws; provided
that where the local/chapter's constitution and by-laws is the same as that of
the federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the
Secretary or the Treasurer of the local/chapter and attested to by its
President."
which does not require that, for its creation and registration, a local or chapter
submit a list of its members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands
Employees Union-PGTWO in which the core issue was whether mingling
affects the legitimacy of a labor organization and its right to file a petition for
certification election. This time, given the altered legal milieu, the Court
abandoned the view in Toyota and Dunlopand reverted to its pronouncement
in Lopez that while there is a prohibition against the mingling of supervisory
and rank-and-file employees in one labor organization, the Labor Code does
not provide for the effects thereof. Thus, the Court held that after a labor
organization has been registered, it may exercise all the rights and privileges
of a legitimate labor organization. Any mingling between supervisory and rank-
and-file employees in its membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration, unless such mingling
was brought about by misrepresentation, false statement or fraud under Article
239 of the Labor Code.
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue
Packing Products Plants-San Miguel Packaging Products-San Miguel Corp.
Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997
Amended Omnibus Rules does not require a local or chapter to provide a list
of its members, it would be improper for the DOLE to deny recognition to said
local or chapter on account of any question pertaining to its individual
members.
More to the point is Air Philippines Corporation v. Bureau of Labor
Relations, which involved a petition for cancellation of union registration filed
by the employer in 1999 against a rank-and-file labor organization on the
ground of mixed membership: the Court therein reiterated its ruling
in Tagaytay Highlands that the inclusion in a union of disqualified employees NELSON A. CULILI, G.R. No. 165381
is not among the grounds for cancellation, unless such inclusion is due to Petitioner,
misrepresentation, false statement or fraud under the circumstances Present:
enumerated in Sections (a) and (c) of Article 239 of the Labor Code.
- versus - CORONA, C.J.,
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Chairperson,
Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San VELASCO, JR.,
Miguel and Air Philippines, had already set the tone for EASTERN TELECOMMUNICATIONS LEONARDO-DE CASTRO,
it. Toyota and Dunlop no longer hold sway in the present altered state of the PHILIPPINES, INC., SALVADOR HIZON DEL CASTILLO, and
law and the rules.32 [Underline supplied] (President and Chief Executive Officer), PEREZ, JJ.
The applicable law and rules in the instant case are the same as those EMILIANO JURADO (Chairman of the Promulgated:
in Kawashima because the present petition for certification election was filed Board), VIRGILIO GARCIA (Vice
in 1999 when D.O. No. 9, series of 1997, was still in effect. President) and STELLA GARCIA February 9, 2011
Hence, Kawashimaapplies with equal force here. As a result, petitioner union (Assistant Vice President),
was not divested of its status as a legitimate labor organization even if some Respondents.
of its members were supervisory employees; it had the right to file the subject x----------------------------------------------------x
petition for certification election.
The legal personality of petitioner union cannot be collaterally attacked by DECISION
respondent company in the certification election proceedings.
Petitioner union correctly argues that its legal personality cannot be collaterally
attacked in the certification election proceedings. As we explained LEONARDO-DE CASTRO, J.:
in Kawashima:
Before Us is a petition for review on certiorari[1] of the February 5, 2004
Except when it is requested to bargain collectively, an employer is a mere Decision[2] and September 13, 2004 Resolution[3] of the Court of Appeals
bystander to any petition for certification election; such proceeding is non- in CA-G.R. SP No. 75001, wherein the Court of Appeals set aside the March
adversarial and merely investigative, for the purpose thereof is to determine 1, 2002 Decision[4] and September 24, 2002 Resolution[5] of the National Labor
which organization will represent the employees in their collective bargaining Relations Commission (NLRC), which affirmed the Labor Arbiters
with the employer. The choice of their representative is the exclusive concern Decision[6] dated April 30, 2001.
of the employees; the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by filing a motion to Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a
dismiss or an appeal from it; not even a mere allegation that some employees telecommunications company engaged mainly in the business of establishing
participating in a petition for certification election are actually managerial commercial telecommunications systems and leasing of international datalines
employees will lend an employer legal personality to block the certification or circuits that pass through the international gateway facility (IGF). [7] The
election. The employer's only right in the proceeding is to be notified or other respondents are ETPIs officers: Salvador Hizon, President and Chief
informed thereof. Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia,
Vice President; and Stella Garcia, Assistant Vice President.
The amendments to the Labor Code and its implementing rules have
buttressed that policy even more.33 Petitioner Nelson A. Culili (Culili) was employed by ETPI as a
WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and Technician in its Field Operations Department on January 27, 1981. On
September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. December 12, 1996, Culili was promoted to Senior Technician in the Customer
58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of Premises Equipment Management Unit of the Service Quality Department and
the Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M- his basic salary was increased.[8]
9902-019) is REINSTATED.
As a telecommunications company and an authorized IGF operator,
No pronouncement as to costs.SO ORDERED. ETPI was required, under Republic Act. No. 7925 and Executive Order No.
109, to establish landlines in Metro Manila and certain provinces.[9] However,
due to interconnection problems with the Philippine Long Distance Telephone
Company (PLDT), poor subscription and cancellation of subscriptions, and
other business difficulties, ETPI was forced to halt its roll out of one hundred
twenty-nine thousand (129,000) landlines already allocated to a number of its
employees.[10]
In 1998, due to business troubles and losses, ETPI was compelled to
implement a Right-Sizing Program which consisted of two phases: the first
phase involved the reduction of ETPIs workforce to only those employees that
were necessary and which ETPI could sustain; the second phase entailed a
company-wide reorganization which would result in the transfer, merger,
absorption or abolition of certain departments of ETPI.[11]
As part of the first phase, ETPI, on December 10, 1998, offered to its
employees who had rendered at least fifteen years of service, the Special
Retirement Program, which consisted of the option to voluntarily retire at an
earlier age and a retirement package equivalent to two and a half (2) months
salary for every year of service.[12] This offer was initially rejected by the
Eastern Telecommunications Employees Union (ETEU), ETPIs duly
recognized bargaining agent, which threatened to stage a strike. ETPI
explained to ETEU the exact details of the Right-Sizing Program and the
Special Retirement Program and after consultations with ETEUs members,
ETEU agreed to the implementation of both programs.[13] Thus, on February
8, 1999, ETPI re-offered the Special Retirement Program and the
corresponding retirement package to the one hundred two (102) employees
who qualified for the program.[14] Of all the employees who qualified to avail of
the program, only Culili rejected the offer.[15]
After the successful implementation of the first phase of the Right-
Sizing Program, ETPI, on March 1, 1999 proceeded with the second phase
which necessitated the abolition, transfer and merger of a number of ETPIs
departments.[16]
Among the departments abolished was the Service Quality
Department. The functions of the Customer Premises Equipment
Management Unit, Culilis unit, were absorbed by the Business and Consumer
Accounts Department. The abolition of the Service Quality Department
rendered the specialized functions of a Senior Technician unnecessary. As a
result, Culilis position was abolished due to redundancy and his functions were
absorbed by Andre Andrada, another employee already with the Business and
Consumer Accounts Department.[17]
On March 5, 1999, Culili discovered that his name was omitted in
ETPIs New Table of Organization. Culili, along with three of his co-employees
who were similarly situated, wrote their union president to protest such
omission.[18]
In a letter dated March 8, 1999, ETPI, through its Assistant Vice
President Stella Garcia, informed Culili of his termination from employment
effective April 8, 1999. The letter reads:
March 8, 1999
To: N. Culili
Thru: S. Dobbin/G. Ebue
From: AVP-HRD
---------------------------------------------------------------------------------
---------
As you are aware, the current economic crisis has adversely
affected our operations and undermined our earlier plans to
put in place major work programs and activities. Because of
this, we have to implement a Rightsizing Program in order to
cut administrative/operating costs and to avoid losses. In line
with this program, your employment with the company shall
terminate effective at the close of business hours on April 08,
1999. However, to give you ample time to look for other
employment, provided you have amply turned over your
pending work and settled your accountabilities, you are no
longer required to report to work starting tomorrow. You will
be considered on paid leave until April 08, 1999.
You will likewise be paid separation pay in compliance with
legal requirements (see attached), as well as other benefits
accruing to you under the law, and the CBA. We take this
opportunity to thank you for your services and wish you well
in your future endeavors.
(Signed)
Stella J. Garcia[19]
This letter was similar to the memo shown to Culili by the union
president weeks before Culili was dismissed. The memo was dated December
7, 1998, and was advising him of his dismissal effective January 4, 1999 due
to the Right-Sizing Program ETPI was going to implement to cut costs and
avoid losses.[20]
Culili alleged that neither he nor the Department of Labor and
Employment (DOLE) were formally notified of his termination. Culili claimed
that he only found out about it sometime in March 1999 when Vice President
Virgilio Garcia handed him a copy of the March 8, 1999 letter, after he was
barred from entering ETPIs premises by its armed security personnel when he
tried to report for work.[21] Culili believed that ETPI had already decided to
dismiss him even prior to the March 8, 1999 letter as evidenced by the
December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI
had contracted out the services he used to perform to a labor-only contractor
which not only proved that his functions had not become unnecessary, but
which also violated their Collective Bargaining Agreement (CBA) and the
Labor Code. Aside from these, Culili also alleged that he was discriminated
against when ETPI offered some of his co-employees an additional benefit in
the form of motorcycles to induce them to avail of the Special Retirement
Program, while he was not.[22]
ETPI denied singling Culili out for termination. ETPI claimed that while
it is true that they offered the Special Retirement Package to reduce their
workforce to a sustainable level, this was only the first phase of the Right-
Sizing Program to which ETEU agreed. The second phase intended to simplify
and streamline the functions of the departments and employees of ETPI. The
abolition of Culilis department - the Service Quality Department - and the
absorption of its functions by the Business and Consumer Accounts
Department were in line with the programs goals as the Business and
Consumer Accounts Department was more economical and versatile and it
was flexible enough to handle the limited functions of the Service Quality
Department. ETPI averred that since Culili did not avail of the Special
Retirement Program and his position was subsequently declared redundant, it
had no choice but to terminate Culili.[23] Culili, however, continued to report for
work. ETPI said that because there was no more work for Culili, it was
constrained to serve a final notice of termination[24] to Culili, which Culili
ignored. ETPI alleged that Culili informed his superiors that he would agree to
his termination if ETPI would give him certain special work tools in addition to
the benefits he was already offered. ETPI claimed that Culilis counter-offer
was unacceptable as the work tools Culili wanted were worth almost a million
pesos. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of
Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos
(P859,033.99) consisting of his basic salary, leaves, 13th month pay and
separation pay.[25] ETPI claimed that Culili refused to accept his termination
and continued to report for work.[26] ETPI denied hiring outside contractors to
perform Culilis work and denied offering added incentives to its employees to
induce them to retire early. ETPI also explained that the December 7, 1998
letter was never given to Culili in an official capacity. ETPI claimed that it really
needed to reduce its workforce at that time and that it had to prepare several
letters in advance in the event that none of the employees avail of the Special
Retirement Program. However, ETPI decided to wait for a favorable response
from its employees regarding the Special Retirement Program instead of
terminating them.[27]
On February 8, 2000, Culili filed a complaint against ETPI and its
officers for illegal dismissal, unfair labor practice, and money claims before the
Labor Arbiter.
On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI
guilty of illegal dismissal and unfair labor practice, to wit:
WHEREFORE, decision is hereby rendered declaring the
dismissal of complainant Nelson A. Culili illegal for having
been made through an arbitrary and malicious declaration of
redundancy of his position and for having been done without
due process for failure of the respondent to give complainant
and the DOLE written notice of such termination prior to the
effectivity thereof.
In view of the foregoing, respondents Eastern
Telecommunications Philippines and the individual
respondents are hereby found guilty of unfair labor
practice/discrimination and illegal dismissal and ordered to
pay complainant backwages and such other benefits due him
if he were not illegally dismissed, including moral and
exemplary damages and 10% attorneys fees. Complainant
likewise is to be reinstated to his former position or to a
substantially equivalent position in accordance with the
pertinent provisions of the Labor Code as interpreted in the
case of Pioneer texturing [Pioneer Texturizing Corp. v.
National Labor Relations Commission], G.R. No. 11865[1], 16
October 1997. Hence, Complainant must be paid the total
amount of TWO MILLION SEVEN HUNDRED FORTY[-
]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-] NINE
and 41/100 (P2,744,379.41), computed as follows:
I. Backwages (from 16 March 1999 to 16 March
2001)
a. Basic Salary (P29,030 x 24
mos.) P696,720.96
b. 13th Month Pay
(P692,720.96/12) 58,060.88
c. Leave Benefits
1. Vacation Leave (30
days/annum)
P1,116.54 x 60 days 66,992.40
2. Sick Leave (30 days/annum)
 P1,116.54 x 60 days 66,992.40 WHEREFORE, the Decision appealed from
is AFFIRMED granting complainant the money claims prayed
3. Birthday Leave (1 day/annum) for including full backwages, allowances and other benefits or
P1,116.54 x 2 days 2,233.08 their monetary equivalent computed from the time of his illegal
dismissal on 16 March 1999 up to his actual reinstatement
d. Rice and Meal Subsidy except the award of moral and exemplary damages which is
16 March 31 July 1999 modified to P200,000.00 for moral and P100,000.00 for
(P1,750 x 4.5 mos. = P7,875.00) exemplary damages. For this purpose, this case
is REMANDED to the Labor Arbiter for computation of
01 August 1991 31 July 2000 backwages and other monetary awards to complainant.[29]
(P1,850 x 12 mos. = P22,200.00)

01 August 2000 16 March 2001
(P1,950 x 7.5 mos.
= P14,625.00) 44,700.00
e. Uniform Allowance
P7,000/annum x 2 years __14,000.00
P949,699.72
II. Damages
a. MoralP500,000.00
b. ExemplaryP250,000.00
III. Attorneys Fees (10% of award) __94,969.97
GRAND TOTAL: P2,744,379.41[28]
The Labor Arbiter believed Culilis claim that ETPI intended to dismiss
him even before his position was declared redundant. He found the December
7, 1998 letter to be a telling sign of this intention. The Labor Arbiter held that a
reading of the termination letter shows that the ground ETPI was actually
invoking was retrenchment and not redundancy, but ETPI stuck to redundancy
because it was easier to prove than retrenchment. He also did not believe that
Culilis functions were as limited as ETPI made it appear to be, and held that
ETPI failed to present any reasonable criteria to justify the declaration of Culilis
position as redundant. On the issue of unfair labor practice, the Labor Arbiter
agreed that the contracting out of Culilis functions to non-union members
violated Culilis rights as a union member.Moreover, the Labor Arbiter said that
ETPI was not able to dispute Culilis claims of discrimination and
subcontracting, hence, ETPI was guilty of unfair labor practice.
On appeal, the NLRC affirmed the Labor Arbiters decision but
modified the amount of moral and exemplary damages awarded, viz:
ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure
before the Court of Appeals on the ground of grave abuse of discretion. ETPI
prayed that a Temporary Restraining Order be issued against the NLRC from
implementing its decision and that the NLRC decision and resolution be set
aside.
The Court of Appeals, on February 5, 2004, partially granted ETPIs
petition. The dispositive portion of the decision reads as follows:
WHEREFORE, all the foregoing considered, the petition
is PARTIALLY GRANTED. The assailed Decision of public
respondent National Labor Relations Commission
is MODIFIED in that petitioner Eastern Telecommunications
Philippines Inc. (ETPI) is hereby ORDERED to pay
respondent Nelson Culili full backwages from the time his
salaries were not paid until the finality of this Decision plus
separation pay in an amount equivalent to one (1) month
salary for every year of service. The awards for moral and
exemplary damages are DELETED. The Writ of Execution
issued by the Labor Arbiter dated September 8, 2003
is DISSOLVED.[30]
The Court of Appeals found that Culilis position was validly abolished due to
redundancy. The Court of Appeals said that ETPI had been very candid with
its employees in implementing its Right-Sizing Program, and that it was highly
unlikely that ETPI would effect a company-wide reorganization simply for the
purpose of getting rid of Culili. The Court of Appeals also held that ETPI cannot
be held guilty of unfair labor practice as mere contracting out of services being
performed by union members does not per se amount to unfair labor practice
unless it interferes with the employees right to self-organization. The Court of
Appeals further held that ETPIs officers cannot be held liable absent a showing
of bad faith or malice. However, the Court of Appeals found that ETPI failed to
observe the standards of due process as required by our laws when it failed to
properly notify both Culili and the DOLE of Culilis termination. The Court of
Appeals maintained its position in its September 13, 2004 Resolution when it OF EXECUTION DATED 8 SEPTEMBER 2003 ISSUED BY
denied Culilis Motion for Reconsideration and Urgent Motion to Reinstate the THE LABOR ARBITER.
Writ of Execution issued by the Labor Arbiter, and ETPIs Motion for Partial
Reconsideration. IV

Culili is now before this Court praying for the reversal of the Court of Appeals THE COURT OF APPEALS DECIDED A QUESTION OF
decision and the reinstatement of the NLRCs decision based on the following SUBSTANCE NOT IN ACCORD WITH LAW AND
grounds: JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL
RESPONDENTS OF PERSONAL LIABILITY.
I

THE COURT OF APPEALS DECIDED A QUESTION OF

SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE
LAW AND JURISPRUDENCE WHEN IT REVERSED THE V
DECISIONS OF THE NLRC AND THE LABOR ARBITER
HOLDING THE DISMISSAL OF PETITIONER ILLEGAL IN CONTRARY TO APPLICABLE LAW AND
THAT: JURISPRUDENCE, THE COURT OF APPEALS, IN A
CERTIORARI PROCEEDING, REVIEWED THE FACTUAL
A. CONTRARY TO THE FINDINGS FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF
OF THE COURT OF APPEALS, THE LABOR ARBITER AND, THEREAFTER, ISSUED A
RESPONDENTS WRIT OF CERTIORARI REVERSING THE DECISIONS OF
CHARACTERIZATION OF THE NLRC AND THE LABOR ARBITER EVEN IN THE
PETITIONERS POSITION AS ABSENCE OF GRAVE ABUSE OF DISCRETION.[31]
REDUNDANT WAS TAINTED BY
BAD FAITH.
Procedural Issue: Court of Appeals
B. THERE WAS NO ADEQUATE Power to Review Facts in a Petition
JUSTIFICATION TO DECLARE For Certiorari under Rule 65
PETITIONERS POSITION AS
REDUNDANT. Culili argued that the Court of Appeals acted in contravention of applicable law
and jurisprudence when it reexamined the facts in this case and reversed the
II factual findings of the Labor Arbiter and the NLRC in a special civil action
THE COURT OF APPEALS DECIDED A QUESTION OF for certiorari.
SUBSTANCE NOT IN ACCORD WITH LAW AND
JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR This Court has already confirmed the power of the Court of Appeals, even on
PRACTICE ACTS WERE COMMITTED AGAINST THE a Petition for Certiorari under Rule 65,[32] to review the evidence on record,
PETITIONER. when necessary, to resolve factual issues:

The power of the Court of Appeals to review NLRC decisions

III
THE COURT OF APPEALS DECIDED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND
JURISPRUDENCE IN DELETING THE AWARD OF MORAL
AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IN
FAVOR OF PETITIONER AND IN DISSOLVING THE WRIT
via Rule 65 or Petition for Certiorari has been settled as early
as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission. This Court held that the proper
vehicle for such review was a Special Civil Action for Certiorari
under Rule 65 of the Rules of Court, and that this action
should be filed in the Court of Appeals in strict observance of
the doctrine of the hierarchy of courts. Moreover, it is already
 settled that under Section 9 of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902[10] (An Act Expanding
the Jurisdiction of the Court of Appeals, amending for the
purpose of Section Nine of Batas Pambansa Blg. 129 as
amended, known as the Judiciary Reorganization Act of
1980), the Court of Appeals pursuant to the exercise of its
original jurisdiction over Petitions for Certiorari is specifically
given the power to pass upon the evidence, if and when
necessary, to resolve factual issues.[33]
While it is true that factual findings made by quasi-judicial and
administrative tribunals, if supported by substantial evidence, are accorded
great respect and even finality by the courts, this general rule admits of
exceptions. When there is a showing that a palpable and demonstrable
mistake that needs rectification has been committed[34] or when the factual
findings were arrived at arbitrarily or in disregard of the evidence on record,
these findings may be examined by the courts.[35]
In the case at bench, the Court of Appeals found itself unable to
completely sustain the findings of the NLRC thus, it was compelled to review
the facts and evidence and not limit itself to the issue of grave abuse of
discretion.
With the conflicting findings of facts by the tribunals below now before
us, it behooves this Court to make an independent evaluation of the facts in
this case.
Main Issue: Legality of Dismissal
Culili asserted that he was illegally dismissed because there was no
valid cause to terminate his employment. He claimed that ETPI failed to prove
that his position had become redundant and that ETPI was indeed incurring
losses. Culili further alleged that his functions as a Senior Technician could
not be considered a superfluity because his tasks were crucial and critical to
ETPIs business.
Under our laws, an employee may be terminated for reasons involving
measures taken by the employer due to business necessities. Article 283 of
the Labor Code provides:
Art. 283. Closure of establishment and reduction of
personnel. - The employer may also terminate the
employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment
or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written
notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-
saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment
to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year.
There is redundancy when the service capability of the workforce is
greater than what is reasonably required to meet the demands of the business
enterprise. A position becomes redundant when it is rendered superfluous by
any number of factors such as over-hiring of workers, decrease in volume of
business, or dropping a particular product line or service activity previously
manufactured or undertaken by the enterprise.[36]
This Court has been consistent in holding that the determination of
whether or not an employees services are still needed or sustainable properly
belongs to the employer. Provided there is no violation of law or a showing that
the employer was prompted by an arbitrary or malicious act, the soundness or
wisdom of this exercise of business judgment is not subject to the discretionary
review of the Labor Arbiter and the NLRC.[37]
However, an employer cannot simply declare that it has become overmanned
and dismiss its employees without producing adequate proof to sustain its
claim of redundancy.[38] Among the requisites of a valid redundancy program
are: (1) the good faith of the employer in abolishing the redundant position;
and (2) fair and reasonable criteria in ascertaining what positions are to be
declared redundant,[39] such as but not limited to: preferred status, efficiency,
and seniority.[40]
This Court also held that the following evidence may be proffered to
substantiate redundancy: the new staffing pattern, feasibility studies/ proposal
on the viability of the newly created positions, job description and the approval
by the management of the restructuring.[41]
In the case at bar, ETPI was upfront with its employees about its plan
to implement a Right-Sizing Program. Even in the face of initial opposition from
and rejection of the said program by ETEU, ETPI patiently negotiated with
ETEUs officers to make them understand ETPIs business dilemma and its
need to reduce its workforce and streamline its organization. This evidently
rules out bad faith on the part of ETPI.
In deciding which positions to retain and which to abolish, ETPI chose
on the basis of efficiency, economy, versatility and flexibility. It needed to
reduce its workforce to a sustainable level while maintaining functions
necessary to keep it operating. The records show that ETPI had sufficiently
established not only its need to reduce its workforce and streamline its
organization, but also the existence of redundancy in the position of a Senior
Technician. ETPI explained how it failed to meet its business targets and the
factors that caused this, and how this necessitated it to reduce its workforce
and streamline its organization. ETPI also submitted its old and new tables of
organization and sufficiently described how limited the functions of the
abolished position of a Senior Technician were and how it decided on whom
to absorb these functions.
In his affidavit dated April 10, 2000,[42] Mr. Arnel D. Reyel, the Head of
both the Business Services Department and the Finance Department of ETPI,
described how ETPI went about in reorganizing its departments. Mr. Reyel
said that in the course of ETPIs reorganization, new departments were
created, some were transferred, and two were abolished. Among the
departments abolished was the Service Quality Department. Mr. Reyel said
that ETPI felt that the functions of the Service Quality Department, which
catered to both corporate and small and medium-sized clients, overlapped and
were too large for a single department, thus, the functions of this department
were split and simplified into two smaller but more focused and efficient
departments. In arriving at the decision to abolish the position of Senior
Technician, Mr. Reyel explained:
11.3. Thus, in accordance with the reorganization of
the different departments of ETPI, the Service Quality
Department was abolished and its functions were absorbed
by the Business and Consumer Accounts Department and the
Corporate and Major Accounts Department.
11.4. With the abolition and resulting simplification of the
Service Quality Department, one of the units thereunder, the
Customer Premises Equipment Maintenance (CPEM) unit
was transferred to the Business and Consumer Accounts
Department. Since the Business and Consumer Accounts
Department had to remain economical and focused yet
versatile enough to meet all the needs of its small and medium
sized clients, it was decided that, in the judgment of ETPI
management, the specialized functions of a Senior
Technician in the CPEM unit whose sole function was
essentially the repair and servicing of ETPIs
telecommunications equipment was no longer needed since
the Business and Consumer [Accounts] Department had to
remain economical and focused yet versatile enough to meet
all the multifarious needs of its small and medium sized
clients.
11.5. The business reason for the abolition of the position of
Senior Technician was because in ETPIs judgment, what was
needed in the Business and Consumer Accounts Department
was a versatile, yet economical position with functions which
were not limited to the mere repair and servicing of
telecommunications equipment. It was determined that what
was called for was a position that could also perform varying
functions such as the actual installation of
telecommunications products for medium and small scale
clients, handle telecommunications equipment inventory
monitoring, evaluation of telecommunications equipment
purchased and the preparation of reports on the daily and
monthly activation of telecommunications equipment by these
small and medium scale clients.
11.6. Thus, for the foregoing reasons, ETPI decided that the
position of Senior Technician was to be abolished due to
redundancy. The functions of a Senior Technician was to be
abolished due to redundancy. The functions of a Senior
Technician would then be absorbed by an employee assigned
to the Business and Consumer Accounts Department who
was already performing the functions of actual installation of
telecommunications products in the field and handling
telecommunications equipment inventory monitoring,
evaluation of telecommunications equipment purchased and
the preparation of reports on the daily and monthly activation
of telecommunications equipment. This employee would then
simply add to his many other functions the duty of repairing
and servicing telecommunications equipment which had been
previously performed by a Senior Technician.[43]
In the new table of organization that the management approved, one
hundred twelve (112) employees were redeployed and nine (9) positions were
declared redundant.[44] It is inconceivable that ETPI would effect a company-
wide reorganization of this scale for the mere purpose of singling out Culili and
terminating him.If Culilis position were indeed indispensable to ETPI, then it
would be absurd for ETPI, which was then trying to save its operations, to
abolish that one position which it needed the most. Contrary to Culilis
assertions that ETPI could not do away with his functions as long as it is in the
telecommunications industry, ETPI did not abolish the functions performed by
Culili as a Senior Technician. What ETPI did was to abolish the position itself
for being too specialized and limited. The functions of that position were then
added to another employee whose functions were broad enough to absorb the
tasks of a Senior Technician.
Culili maintains that ETPI had already decided to dismiss him even
before the second phase of the Right-Sizing Program was implemented as
evidenced by the December 7, 1998 letter.
The December 7, 1998 termination letter signed by ETPIs AVP Stella
Garcia hardly suffices to prove bad faith on the part of the company. The fact
remains that the said letter was never officially transmitted and Culili was not
terminated at the end of the first phase of ETPIs Right-Sizing Program. ETPI
had given an adequate explanation for the existence of the letter and
considering that it had been transparent with its employees, through their
union ETEU, so much so that ETPI even gave ETEU this unofficial letter, there
is no reason to speculate and attach malice to such act. That Culili would be
subsequently terminated during the second phase of the Right-Sizing Program
is not evidence of undue discrimination or singling out since not only Culilis
position, but his entire unit was abolished and absorbed by another
department.
Unfair Labor Practice
Culili also alleged that ETPI is guilty of unfair labor practice for violating
Article 248(c) and (e) of the Labor Code, to wit:
Art. 248. Unfair labor practices of employers. - It
shall be unlawful for an employer to commit any of the
following unfair labor practice:
xxxx
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;
xxxx
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. Nothing in this Code or in any other law shall
stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment,
except those employees who are already members of another
union at the time of the signing of the collective bargaining
agreement. Employees of an appropriate collective
bargaining unit who are not members of the recognized
collective bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by members of
the recognized collective bargaining agent, if such non-union
members accept the benefits under the collective agreement:
Provided, that the individual authorization required under
Article 242, paragraph (o) of this Code shall not apply to the
non-members of the recognized collective bargaining agent.
Culili asserted that ETPI is guilty of unfair labor practice because his
functions were sourced out to labor-only contractors and he was discriminated
against when his co-employees were treated differently when they were each
offered an additional motorcycle to induce them to avail of the Special
Retirement Program. ETPI denied hiring outside contractors and averred that
the motorcycles were not given to his co-employees but were purchased by
them pursuant to their Collective Bargaining Agreement, which allowed a
retiring employee to purchase the motorcycle he was assigned during his
employment.
The concept of unfair labor practice is provided in Article 247 of the
Labor Code which states:
Article 247. Concept of unfair labor practice and
procedure for prosecution thereof. -- Unfair labor practices
violate the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interest of both
labor and management, including their right to bargain
collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-
management relations.
In the past, we have ruled that 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.[45] We have
likewise declared that there should be no dispute that all the prohibited acts
constituting unfair labor practice in essence relate to the workers' right to self-
organization.[46] Thus, an employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in whatever manner the right of
his employees to self-organize.[47]
 There is no showing that ETPI, in implementing its Right-Sizing
Program, was motivated by ill will, bad faith or malice, or that it was aimed at
interfering with its employees right to self-organize. In fact, ETPI negotiated
and consulted with ETEU before implementing its Right-Sizing Program.
Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor
practice because of its failure to dispute Culilis allegations.
According to jurisprudence, basic is the principle that good faith is
presumed and he who alleges bad faith has the duty to prove the same.[48] By
imputing bad faith to the actuations of ETPI, Culili has the burden of proof to
present substantial evidence to support the allegation of unfair labor
practice. Culili failed to discharge this burden and his bare allegations deserve
no credit.
Observance of Procedural Due Process
Although the Court finds Culilis dismissal was for a lawful cause and
not an act of unfair labor practice, ETPI, however, was remiss in its duty to
observe procedural due process in effecting the termination of Culili.
We have previously held that there are two aspects which characterize
the concept of due process under the Labor Code: one is substantive whether
the termination of employment was based on the provision of the Labor Code
or in accordance with the prevailing jurisprudence; the other is procedural the
manner in which the dismissal was effected.[49]
Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code
provides:
(d) In all cases of termination of employment, the
following standards of due process shall be substantially
observed:
xxxx
For termination of employment as defined in Article
283 of the Labor Code, the requirement of due process shall
be deemed complied with upon service of a written notice to
the employee and the appropriate Regional Office of the
Department of Labor and Employment at least thirty days
before effectivity of the termination, specifying the ground or
grounds for termination.
In Mayon Hotel & Restaurant v. Adana,[50] we observed:
The requirement of law mandating the giving of
notices was intended not only to enable the employees to look
for another employment and therefore ease the impact of the
loss of their jobs and the corresponding income, but more
importantly, to give the Department of Labor and Employment
(DOLE) the opportunity to ascertain the verity of the alleged
authorized cause of termination.[51]
ETPI does not deny its failure to provide DOLE with a written notice regarding
Culilis termination. It, however, insists that it has complied with the
requirement to serve a written notice to Culili as evidenced by his admission
of having received it and forwarding it to his union president.
In Serrano v. National Labor Relations Commission,[52] we noted that a job is
more than the salary that it carries. There is a psychological effect or a stigma
in immediately finding ones self laid off from work.[53] This is exactly why our
labor laws have provided for mandating procedural due process clauses. Our
laws, while recognizing the right of employers to terminate employees it cannot
sustain, also recognize the employees right to be properly informed of the
impending severance of his ties with the company he is working for. In the
case at bar, ETPI, in effecting Culilis termination, simply asked one of its
guards to serve the required written notice on Culili. Culili, on one hand, claims
in his petition that this was handed to him by ETPIs vice president, but
previously testified before the Labor Arbiter that this was left on his
table.[54] Regardless of how this notice was served on Culili, this Court believes
that ETPI failed to properly notify Culili about his termination. Aside from the
manner the written notice was served, a reading of that notice shows that ETPI
failed to properly inform Culili of the grounds for his termination.
The Court of Appeals, in finding that Culili was not afforded procedural due
process, held that Culilis dismissal was ineffectual, and required ETPI to pay
Culili full backwages in accordance with our decision in Serrano v. National
Labor Relations Commission.[55] Over the years, this Court has had the
opportunity to reexamine the sanctions imposed upon employers who fail to
comply with the procedural due process requirements in terminating its
employees. In Agabon v. National Labor Relations Commission,[56] this Court
reverted back to the doctrine in Wenphil Corporation v. National Labor
Relations Commission[57] and held that where the dismissal is due to a just or
authorized cause, but without observance of the due process requirements,
the dismissal may be upheld but the employer must pay an indemnity to the
employee. The sanctions to be imposed however, must be stiffer than those
imposed in Wenphil to achieve a result fair to both the employers and the
employees.[58]
 In Jaka Food Processing Corporation v. Pacot,[59] this Court, taking a
cue from Agabon, held that since there is a clear-cut distinction between a
dismissal due to a just cause and a dismissal due to an authorized cause, the
legal implications for employers who fail to comply with the notice requirements
must also be treated differently:
Accordingly, it is wise to hold that: (1) if the dismissal
is based on a just cause under Article 282 but the employer
failed to comply with the notice requirement, the sanction to
be imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act imputable
to the employee; and (2) if the dismissal is based on an
authorized cause under Article 283 but the employer failed to
comply with the notice requirement, the sanction should be
stiffer because the dismissal process was initiated by the
employer's exercise of his management prerogative.[60]
Hence, since it has been established that Culilis termination was due to an
authorized cause and cannot be considered unfair labor practice on the part
of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with
the notice requirements under the Labor Code, Culili is entitled to nominal
damages in addition to his separation pay.
Personal Liability of ETPIs Officers
And Award of Damages
policy.[62] Exemplary damages may avail if the dismissal was effected in a
wanton, oppressive or malevolent manner to warrant an award for exemplary
damages.[63]
It is our considered view that Culili has failed to prove that his dismissal
was orchestrated by the individual respondents herein for the mere purpose of
getting rid of him. In fact, most of them have not even dealt with Culili
personally. Moreover, it has been established that his termination was for an
authorized cause, and that there was no bad faith on the part of ETPI in
implementing its Right-Sizing Program, which involved abolishing certain
positions and departments for redundancy. It is not enough that ETPI failed to
comply with the due process requirements to warrant an award of damages,
there being no showing that the companys and its officers acts were attended
with bad faith or were done oppressively.
WHEREFORE, the instant petition is DENIED and the assailed
February 5, 2004 Decision and September 13, 2004 Resolution of the Court
of Appeals in CA-G.R. SP No. 75001 are AFFIRMED with
the MODIFICATION that petitioner Nelson A. Culilis dismissal is declared
valid but respondent Eastern Telecommunications Philippines, Inc. is ordered
to pay petitioner Nelson A. Culili the amount of Fifty Thousand Pesos
(P50,000.00) representing nominal damages for non-compliance with
statutory due process, in addition to the mandatory separation pay required
under Article 283 of the Labor Code.
SO ORDERED.

Culili asserts that the individual respondents, Salvador

Hizon, Emiliano Jurado, Virgilio Garcia, and Stella Garcia, as ETPIs officers,
should be held personally liable for the acts of ETPI which were tainted with
bad faith and arbitrariness. Furthermore, Culili insists that he is entitled to
damages because of the sufferings he had to endure and the malicious
manner he was terminated.

As a general rule, a corporate officer cannot be held liable for acts

done in his official capacity because a corporation, by legal fiction, has a
personality separate and distinct from its officers, stockholders, and
members. To pierce this fictional veil, it must be shown that the corporate
personality was used to perpetuate fraud or an illegal act, or to evade an
existing obligation, or to confuse a legitimate issue. In illegal dismissal cases,
corporate officers may be held solidarily liable with the corporation if the
termination was done with malice or bad faith. [61]

In illegal dismissal cases, moral damages are awarded only where the
dismissal was attended by bad faith or fraud, or constituted an act oppressive
to labor, or was done in a manner contrary to morals, good customs or public
 SAN MIGUEL FOODS, G.R. No. 146206 regarding technical and internal business operations, supervisory employees
INCORPORATED, 3 and 4 and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI)
are not to be considered confidential employees, because the same do not
Petitioner, pertain to labor relations, particularly, negotiation and settlement of
Present:
grievances. Consequently, they were allowed to form an appropriate
bargaining unit for the purpose of collective bargaining. The Court also
declared that the employees belonging to the three different plants of San
CARPIO,* J., Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San
Fernando, and Otis, having community or mutuality of interests, constitute a
VELASCO, J., Chairperson,
single bargaining unit. They perform work of the same nature, receive the
PERALTA, same wages and compensation, and most importantly, share a common stake
-versus- in concerted activities. It was immaterial that the three plants have different
ABAD, and locations as they did not impede the operations of a single bargaining
representative.[2]
SERENO,**JJ.
Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor
and Employment National Capital Region (DOLE-NCR) conducted pre-
election conferences.[3] However, there was a discrepancy in the list of eligible
SAN MIGUEL CORPORATION voters, i.e., petitioner submitted a list of 23 employees for the San Fernando
SUPERVISORS and EXEMPT UNION, Promulgated: plant and 33 for the Cabuyao plant, while respondent listed 60 and 82,
respectively.[4]
Respondent.

On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an

August 1, 2011 Order[5] directing Election Officer Cynthia Tolentino to proceed with the
x---------------------------------------------------------------------------------x conduct of certification election in accordance with Section 2, Rule XII of
Department Order No. 9.

On September 30, 1998, a certification election was conducted and it yielded

DECISION the following results,[6] thus:

PERALTA, J.: Cabuyao San Fernando Total

Plant Plant

The issues in the present case, relating to the inclusion of employees in Yes 23 23 46
supervisor levels 3 and 4 and the exempt employees in the proposed
bargaining unit, thereby allowing their participation in the certification election; No 0 0 0
the application of the community or mutuality of interests test; and the Spoiled 2 0 2
determination of the employees who belong to the category of confidential
employees, are not novel. Segregated 41 35 76
In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Total Votes
Union v. Laguesma,[1] the Court held that even if they handle confidential data
Cast 66 58 124

On the date of the election, September 30, 1998, petitioner filed the Omnibus
Objections and Challenge to Voters,[7] questioning the eligibility to vote by
some of its employees on the grounds that some employees do not belong to
the bargaining unit which respondent seeks to represent or that there is no
existence of employer-employee relationship with petitioner. Specifically, it
argued that certain employees should not be allowed to vote as they are: (1)
confidential employees; (2) employees assigned to the live chicken operations,
which are not covered by the bargaining unit; (3) employees whose job grade
is level 4, but are performing managerial work and scheduled to be promoted;
(4) employees who belong to the Barrio Ugong plant; (5) non-SMFI employees;
and (6) employees who are members of other unions.
On October 21, 1998, the Med-Arbiter issued an Order directing respondent
to submit proof showing that the employees in the submitted list are covered
by the original petition for certification election and belong to the bargaining
unit it seeks to represent and, likewise, directing petitioner to substantiate the
allegations contained in its Omnibus Objections and Challenge to Voters. [8]
In compliance thereto, respondent averred that (1) the bargaining unit
contemplated in the original petition is the Poultry Division of San Miguel
Corporation, now known as San Miguel Foods, Inc.; (2) it covered the
operations in Calamba, Laguna, Cavite, and Batangas and its home base is
either in Cabuyao, Laguna or San Fernando, Pampanga; and (3) it submitted
individual and separate declarations of the employees whose votes were
challenged in the election.[9]
Adding the results to the number of votes canvassed during the September
30, 1998 certification election, the final tally showed that: number of eligible
voters 149; number of valid votes cast 121; number of spoiled ballots - 3; total
number of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) Yes votes and 3 No
votes.[10]
The Med-Arbiter issued the Resolution[11]dated February 17, 1999 directing
the parties to appear before the Election Officer of the Labor Relations Division
on March 9, 1999, 10:00 a.m., for the opening of the segregated
ballots. Thereafter, on April 12, 1999, the segregated ballots were opened,
showing that out of the 76 segregated
votes, 72 were cast for Yes and 3 for No, with one spoiled ballot.[12]
Based on the results, the Med-Arbiter issued the Order[13] dated April 13, 1999,
stating that since the Yes vote received 97% of the valid votes cast,
respondent is certified to be the exclusive bargaining agent of the supervisors
and exempt employees of petitioner's Magnolia Poultry Products Plants in
Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE Undersecretary, in the Resolution[14] dated
July 30, 1999, in OS-A-2-70-91 (NCR-OD-M-9010-017), affirmed the Order
dated April 13, 1999, with modification that George C. Matias, Alma Maria M.
Lozano, Joannabel T. Delos Reyes, and Marilyn G. Pajaron be excluded from
the bargaining unit which respondent seeks to represent. She opined that the
challenged voters should be excluded from the bargaining unit, because
Matias and Lozano are members of Magnolia Poultry Processing Plants
Monthly Employees Union, while Delos Reyes and Pajaron are employees of
San Miguel Corporation, which is a separate and distinct entity from petitioner.
Petitioners Partial Motion for Reconsideration[15] dated August 14, 1999 was
denied by the then Acting DOLE Undersecretary in the Order [16] dated August
27, 1999.
In the Decision[17] dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San
Miguel Foods, Inc. v. The Honorable Office of the Secretary of Labor, Bureau
of Labor Relations, and San Miguel Corporation Supervisors and Exempt
Union, the Court of Appeals (CA) affirmed with modification the Resolution
dated July 30, 1999 of the DOLE Undersecretary, stating that those holding
the positions of Human Resource Assistant and Personnel Assistant are
excluded from the bargaining unit.
Petitioners Motion for Partial Reconsideration[18] dated May 23, 2000 was
denied by the CA in the Resolution[19] dated November 28, 2000.
Hence, petitioner filed this present petition raising the following issues:
I.
WHETHER THE COURT OF APPEALS DEPARTED FROM
JURISPRUDENCE WHEN IT EXPANDED THE SCOPE OF THE
BARGAINING UNIT DEFINED BY THIS COURT'S RULING IN G.R. NO.
110399.

II.
WHETHER THE COURT OF APPEALS DEPARTED FROM
JURISPRUDENCE - SPECIFICALLY, THIS COURT'S DEFINITION OF A
CONFIDENTIAL EMPLOYEE - WHEN IT RULED FOR THE INCLUSION OF
THE PAYROLL MASTER POSITION IN THE BARGAINING UNIT.
III.
WHETHER THIS PETITION IS A REHASH OR A RESURRECTION OF THE
ISSUES RAISED IN G.R. NO. 110399, AS ARGUED BY PRIVATE
RESPONDENT.
Petitioner contends that with the Court's ruling in G.R. No.
110399[20] identifying the specific employees who can participate in the
certification election, i.e., the supervisors (levels 1 to 4) and exempt
employees of San Miguel Poultry Products Plants in Cabuyao, San Fernando,
and Otis, the CA erred in expanding the scope of the bargaining unit so as to
include employees who do not belong to or who are not based in its Cabuyao
or San Fernando plants. It also alleges that the employees of the Cabuyao,
San Fernando, and Otis plants of petitioners predecessor, San Miguel
Corporation, as stated in G.R. No. 110399, were engaged in dressed chicken
processing, i.e., handling and packaging of chicken meat, while the new
bargaining unit, as defined by the CA in the present case, includes employees
engaged in live chicken operations, i.e., those who breed chicks and grow
chickens.
Respondent counters that petitioners proposed exclusion of certain employees
from the bargaining unit was a rehashed issue which was already settled in
G.R. No. 110399. It maintains that the issue of union membership coverage
should no longer be raised as a certification election already took place on
September 30, 1998, wherein respondent won with 97% votes.
Petitioners contentions are erroneous. In G.R. No. 110399, the Court
explained that the employees of San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis constitute a single
bargaining unit, which is not contrary to the one-company, one-union
policy. An appropriate bargaining unit is defined as a group of employees of a
given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees, consistent with
equity to the employer, indicate to be best suited to serve the reciprocal rights
and duties of the parties under the collective bargaining provisions of the
law.[21]
In National Association of Free Trade Unions v. Mainit Lumber Development
Company Workers Union United Lumber and General Workers of the
Phils,[22]the Court, taking into account the community or mutuality of interests
test, ordered the formation of a single bargaining unit consisting of the Sawmill
Division in Butuan City and the Logging Division in Zapanta Valley, Kitcharao,
Agusan [Del] Norte of the Mainit Lumber Development Company. It held that
while the existence of a bargaining history is a factor that may be reckoned
with in determining the appropriate bargaining unit, the same is not decisive or
conclusive. Other factors must be considered. The test of grouping is
community or mutuality of interest. This is so because the basic test of an
asserted bargaining units acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their
collective bargaining rights.[23] Certainly, there is a mutuality of interest among
the employees of the Sawmill Division and the Logging Division. Their
functions mesh with one another. One group needs the other in the same way
that the company needs them both. There may be differences as to the nature
of their individual assignments, but the distinctions are not enough to warrant
the formation of a separate bargaining unit.[24]
Thus, applying the ruling to the present case, the Court affirms the finding of
the CA that there should be only one bargaining unit for
the employees in Cabuyao, San Fernando, and Otis [25] of Magnolia Poultry
Products Plant involved in dressed chicken processing and Magnolia Poultry
Farms engaged in live chicken operations. Certain factors, such as specific
line of work, working conditions, location of work, mode of compensation, and
other relevant conditions do not affect or impede their commonality of
interest. Although they seem separate and distinct from each other, the
specific tasks of each division are actually interrelated and there exists
mutuality of interests which warrants the formation of a single bargaining unit.
Petitioner asserts that the CA erred in not excluding the position of Payroll
Master in the definition of a confidential employee and, thus, prays that the
said position and all other positions with access to salary and compensation
data be excluded from the bargaining unit.
This argument must fail. Confidential employees are defined as those who (1)
assist or act in a confidential capacity, in regard (2) to persons who formulate,
determine, and effectuate management policies in the field of labor
relations.[26] The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee - that is, the confidential
relationship must exist between the employee and his supervisor, and the
supervisor must handle the prescribed responsibilities relating to labor
relations. The exclusion from bargaining units of employees who, in the normal
course of their duties, become aware of management policies relating to labor
relations is a principal objective sought to be accomplished by the confidential
employee rule.[27]
A confidential employee is one entrusted with confidence on delicate, or with
the custody, handling or care and protection of the employers
property.[28]Confidential employees, such as accounting personnel, should be
excluded from the bargaining unit, as their access to confidential information
may become the source of undue advantage.[29] However, such fact does not
apply to the position of Payroll Master and the whole gamut of employees who,
as perceived by petitioner, has access to salary and compensation data. The
CA correctly held that the position of Payroll Master does not involve dealing
with confidential labor relations information in the course of the performance
of his functions. Since the nature of his work does not pertain to company rules
and regulations and confidential labor relations, it follows that he cannot be
excluded from the subject bargaining unit.
Corollarily, although Article 245[30] of the Labor Code limits the ineligibility to
join, form and assist any labor organization to managerial employees,
jurisprudence has extended this prohibition to
confidential employees or those who by reason of their positions or nature of
work are required to assist or act in a fiduciary manner to managerial
employees and, hence, are likewise privy to sensitive and highly confidential
records.[31] Confidential employees are thus excluded from the rank-and-file
bargaining unit. The rationale for their separate category and disqualification
to join any labor organization is similar to the inhibition for managerial
employees, because if allowed to be affiliated with a union, the latter might not
be assured of their loyalty in view of evident conflict of interests and the union
can also become company-denominated with the presence of managerial
employees in the union membership.[32] Having access to confidential
information, confidential employees may also become the source of undue
advantage. Said employees may act as a spy or spies of either party to a
collective bargaining agreement.[33]
In this regard, the CA correctly ruled that the positions of Human Resource
Assistant and Personnel Assistant belong to the category of confidential
employees and, hence, are excluded from the bargaining unit, considering
their respective positions and job descriptions. As Human
Resource Assistant,[34] the scope of ones work necessarily involves labor
relations, recruitment and selection of employees, access to employees'
personal files and compensation package, and human resource
management. As regards a Personnel Assistant,[35] one's work includes the
recording of minutes for management during collective bargaining
negotiations, assistance to management during grievance meetings and
administrative investigations, and securing legal advice for labor issues from
the petitioners team of lawyers, and implementation of company
programs. Therefore, in the discharge of their functions, both gain access to
vital labor relations information which outrightly disqualifies them from union
membership.
The proceedings for certification election are quasi-judicial in nature and,
therefore, decisions rendered in such proceedings can attain
finality.[36] Applying the doctrine of res judicata, the issue in the
present case pertaining to the coverage of the employees who would
constitute the bargaining unit is now a foregone conclusion.
It bears stressing that a certification election is the sole concern of the workers;
hence, an employer lacks the personality to dispute the same. The general
rule is that an employer has no standing to question the process of certification
election, since this is the sole concern of the workers.[37] 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. [38] The
only exception is where the employer itself has to file the petition pursuant to
Article 258[39] of the Labor Code because of a request to bargain
collectively.[40]
With the foregoing disquisition, the Court writes finis to the issues raised so as
to forestall future suits of similar nature.
WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and
Resolution dated November 28, 2000 of the Court of Appeals, in CA-G.R. SP
No. 55510, which affirmed with modification the Resolutions dated July 30,
1999 and August 27, 1999 of the Secretary of Labor, are AFFIRMED.SO
ORDERED.
G.R. No. 115949 March 16, 2000
EVANGELINE J. GABRIEL, TERESITA C. LUALHATI, EVELYN SIA,
RODOLFO EUGENIO, ISAGANI MAKISIG, and DEMETRIO
SALAS, petitioners,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and
SIMEON SARMIENTO, JESUS CARLOS MARTINEZ III, ALBERT NAPIAL,
MARVIN ALMACIN, ROGELIO MATEO, GLENN SIAPNO, EMILIANO
CUETO, SALOME ATIENZA, NORMA V. GO, JUDITH DUDANG, MONINA
DIZON, EUSEBIO ROMERO, ISAGANI MORALES, ELISEO
BUENAVENTURA, CLEMENTE AGCAMARAN, CARMELITA NOLASCO,
JOVITA FERI, LULU ACOSTA, CAROL LAZARO, NIDA ARRIZA, ROMAN
BERNARDO, DOMINGO B. MACALDO, EUGENE PIDLAOAN, MA.
SOCORRO T. ANGOB, JOSEPHINE ALVAREZ, LOURDES FERRER,
JACQUILINE BAQUIRAN, GRACIA R. ESCUADRO, KRISTINA
HERNANDEZ, LOURDES IBEAS, MACARIO GARCIA, BILLY TECSON,
ALEX RECTO III, LEBRUDO, JOSE RICAFORTE, RODOLFO MORADA,
TERESA AMADO, ROSITA TRINIDAD, JEANETTE ONG, VICTORINO LAS-
AY, RANIEL DAYAO OSCAR SANTOS, CRISTINA SALAVER, VICTORIA
ARINO, A.H. SAJO, MICHAEL BIETE, RED RP, GLORIA JUAT,
ETHELINDA CASILAN, FAMER DIPASUPIL, MA. HIDELISA POMER, MA.
CHARLOTTE TAWATAO, GRACE REYES, ERNIE COLINA, ZENAIDA
MENDOZA, PAULITA ADORABLE, BERNARDO MADUMBA, NESTOR
NAVARRO, EASTER YAP, ALMA LIM, FELISA YU, TIMOTEO GANASTRA,
REVELITA CARTAJENAS, ANGELITO CABUAL, ROBERTA TAN,
DOMINADOR TAPO, GRACE LIM GADIANE JEMIE, CHRISTHDY DAUD,
BENEDICTO ACOSTA, JESUSA ACOSTA, MA. AVELINA ARYAP,
EVELYN BENITEZ, ESTERITA CHU, EVANGELINE CHU, BETTY CINCO,
RICARDO CONNEJO, MANULITO EVALO, FRANCIS LEONIDA,
GREGORIO NOBLEZA, RODOLFO RIVERAL, ELSA SIA, CLARA SUGBO,
EDGARDO TABAO, MANUEL VELOSO, MARLYN YU, ABSALON BUENA,
WILFREDO PUERTO, FLORENTINA PINGOL, MARILOU DAR, FE
MORALES, MALEN BELLO, LORENA TAMAYO, CESAR LIM, PAUL
BALTAZAR, ALFREDO GAYAGAS, DUMAGUETE EMPLOYEES, CEBU
EMPLOYEES, OZAMIZ EMPLOYEES, TACLOBAN EMPLOYEES AND ALL
OTHER SOLID BANK UNION MEMBERS, respondents.
QUISUMBING, J.:
Before us is a special civil action for certiorari seeking to reverse partially the
Order1 of public respondent dated June 3, 1994, in Case No. OS-MA-A-8-170-
92, which ruled that the workers through their union should be made to
shoulder the expenses incurred for the professional services of a lawyer in
connection with the collective bargaining negotiations and that the
reimbursement for the deductions from the workers should be charged to the
union's general fund or account.
The records show the following factual antecedents:
Petitioners comprise the Executive Board of the SolidBank Union, the duly
recognized collective bargaining agent for the rank and file employees of Solid
Bank Corporation. Private respondents are members of said union.
Sometime in October 1991, the union's Executive Board decided to retain
anew the service of Atty. Ignacio P. Lacsina (now deceased) as union counsel
in connection with the negotiations for a new Collective Bargaining Agreement
(CBA). Accordingly, on October 19, 1991, the board called a general
membership meeting for the purpose. At the said meeting, the majority of all
union members approved and signed a resolution confirming the decision of
the executive board to engage the services of Atty. Lacsina as union counsel.
As approved, the resolution provided that ten percent (10%) of the total
economic benefits that may be secured through the negotiations be given to
Atty. Lacsina as attorney's fees. It also contained an authorization for
SolidBank Corporation to check-off said attorney's fees from the first lump sum
payment of benefits to the employees under the new CBA and to turn over
said amount to Atty. Lacsina and/or his duly authorized representative.2
The new CBA was signed on February 21, 1992. The bank then, on request
of the union, made payroll deductions for attorney's fees from the CBA benefits
paid to the union members in accordance with the abovementioned resolution.
On October 2, 1992, private respondents instituted a complaint against the
petitioners and the union counsel before the Department of Labor and
Employment (DOLE) for illegal deduction of attorney's fees as well as for
quantification of the benefits in the 1992 CBA.3 Petitioners, in response, moved
for the dismissal of the complaint citing litis pendentia, forum shopping and
failure to state a cause of action as their grounds.4
On April 22, 1993, Med-Arbiter Paterno Adap of the DOLE-NCR issued the
following Order:
WHEREFORE, premises considered, the Respondents Union Officers and
Counsel are hereby directed to immediately return or refund to the
Complainants the illegally deducted amount of attorney's fees from the
package of benefits due herein complainants under the aforesaid new CBA.
Furthermore, Complainants are directed to pay five percent (5%) of the total
amount to be refunded or returned by the Respondent Union Officers and
Counsel to them in favor of Atty. Armando D. Morales, as attorney's fees, in
accordance with Section II, Rule VIII of Book II (sic) of the Omnibus Rules
Implementing the Labor Code.5
On appeal, the Secretary of Labor rendered a Resolution6 dated December 27,
1993, stating:
WHEREFORE, the appeal of respondents Evangeline Gabriel, et. al., is
hereby partially granted and the Order of the Med-Arbiter dated 22 April 1993
is hereby modified as follows: (1) that the ordered refund shall be limited to
those union members who have not signified their conformity to the check-off
of attorney's fees; and (2) the directive on the payment of 5% attorney's fees
should be deleted for lack of basis.
SO ORDERED.7
On Motion for Reconsideration, public respondent affirmed the said Order with
modification that the union's counsel be dropped as a party litigant and that
the workers through their union should be made to shoulder the expenses
incurred for the attorney's services. Accordingly, the reimbursement should be
charged to the union's general fund/account.8
Hence, the present petition seeking to partially annul the above-cited order of
the public respondent for being allegedly tainted with grave abuse of discretion
amounting to lack of jurisdiction.
The sole issue for consideration is, did the public respondent act with grave
abuse of discretion in issuing the challenged order?
Petitioners argue that the General Membership Resolution authorizing the
bank to check-off attorney's fee from the first lump sum payment of the legal
benefits to the employees under the new CBA satisfies the legal requirements
for such assessment.9 Private respondents, on the other hand, claim that the
check-off provision in question is illegal because it was never submitted for
approval at a general membership meeting called for the purpose and that it
failed to meet the formalities mandated by the Labor Code. 10
In check-off, the employer, on agreement with the Union, or on prior
authorization from employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the union. 11 It assures continuous
funding; for the labor organization. As this Court has acknowledged, the
system of check-off is primarily for the benefit of the union and only indirectly
for the individual employees. 12
The pertinent legal provisions on check-offs are found in Article 222 (b) and
Article 241 (o) of the Labor Code.
Art. 222 (b) states:
No attorney's fees, negotiation fees or similar charges of any kind arising from
any collective bargaining negotiations or conclusions of the collective
agreement shall be imposed on any individual member of the contracting
union: Provided, however, that attorney's fees may be charged against unions
funds in an amount to be agreed upon by the parties. Any contract, agreement
or arrangement of any sort to the contrary shall be null and void. (Emphasis
ours)
Art. 241 (o) provides:
Other than for mandatory activities under the Code, no special assessment,
attorney's fees, negotiation fees or any other extraordinary fees may be
checked off from any amount due to an employee without an individual written
authorization duly signed by the employee. The authorization should
specifically state the amount, purpose and beneficiary of the deduction.
(Emphasis ours).
Art. 241 has three (3) requisites for the validity of the special assessment for
union's incidental expenses, attorney's fees and representation expenses.
These are: 1) authorization by a written resolution of the majority of all the
members at the general membership meeting called for the purpose; (2)
secretary's record of the minutes of the meeting; and (3) individual written
authorization for check off duly signed by the employees concerned.
Clearly, attorney's fees may not be deducted or checked off from any amount
due to an employee without his written consent.
After a thorough review of the records, we find that the General Membership
Resolution of October 19, 1991 of the SolidBank Union did not satisfy the
requirements laid down by law and jurisprudence for the validity of the ten
percent (10%) special assessment for union's incidental expenses, attorney's
fees and representation expenses. There were no individual written check off
authorizations by the employees concerned and so the assessment cannot be
legally deducted by their employer.
Even as early as February 1990, in the case of Palacol vs. Ferrer-Calleja 13 we
said that the express consent of employees is required, and this consent must
be obtained in accordance with the steps outlined by law, which must be
followed to the letter. No shortcuts are allowed. In Stellar Industrial Services,
Inc. vs. NLRC 14 we reiterated that a written individual authorization duly
signed by the employee concerned is a condition sine qua non for such
deduction.
These pronouncements are also in accord with the recent ruling of this Court
in the case of ABS-CBN Supervisors Employees Union Members vs. ABS-
CBN Broadcasting Corporation, et. al., 15 which provides:
Premises studiedly considered, we are of the irresistible conclusion and, so
find that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against
attorney's fees in Article 222, paragraph (b) of the Labor Code applies only
when the payment of attorney's fees is effected through forced contributions
from the workers; and (2) that no deduction must be take from the workers
who did not sign the check-off authorization, applies to the case under
consideration. (Emphasis ours.)
We likewise ruled in Bank of the Philippine Islands Employees Union-
Association Labor Union (BPIEU-ALU) vs. NLRC, 16
. . . the afore-cited provision (Article 222 (b) of the Labor Code) as prohibiting TUNAY NA PAGKAKAISA NG G.R. No. 162025
the payment of attorney's fees only when it is effected through forced MANGGAGAWA
contributions from workers from their own funds as distinguished from the SA ASIABREWERY, Present:
union funds. The purpose of the provision is to prevent imposition on the Petitioner,
workers of the duty to individually contribute their respective shares in the fee CARPIO MORALES, J.,
to be paid the attorney for his services on behalf of the union in its negotiations Chairperson,
with management. The obligation to pay the attorney's fees belongs to the - versus - BRION,
union and cannot be shunted to the workers as their direct responsibility. BERSAMIN,
Neither the lawyer nor the union itself may require the individual worker to ABAD,* and
assume the obligation to pay attorney's fees from their own pockets. So VILLARAMA, JR., JJ.
categorical is this intent that the law makes it clear that any agreement to the
contrary shall be null and void ab initio. (Emphasis ours.)1âwphi1 ASIA BREWERY, INC., Promulgated:
Respondent.
From all the foregoing, we are of the considered view that public respondent August 3, 2010
did not act with grave abuse of discretion in ruling that the workers through x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
their union should be made to shoulder the expenses incurred for the services
of a lawyer. And accordingly the reimbursement should be charged to the DECISION
union's general fund or account. No deduction can be made from the salaries
of the concerned employees other than those mandated by law. VILLARAMA, JR., J.:
WHEREFORE, the petition is DENIED. The assailed Order dated June 3,
1994, of respondent Secretary of Labor signed by Undersecretary Bienvenido
E. Laguesma is AFFIRMED. No pronouncement as to costs.1âwphi1.nêt For resolution is an appeal by certiorari filed by petitioner under Rule 45 of
the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] dated
SO ORDERED. November 22, 2002 and Resolution[2] dated January 28, 2004 rendered by the
Court of Appeals (CA) in CA-G.R. SP No. 55578, granting the petition of
respondent company and reversing the Voluntary Arbitrators
Decision[3] dated October 14, 1999.

The facts are:

Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and
distribution of beer, shandy, bottled water and glass products. ABI entered into
a Collective Bargaining Agreement (CBA),[4] effective for five (5) years
from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng mga
Manggagawa sa Asia-Independent (BLMA-INDEPENDENT), the exclusive
bargaining representative of ABIs rank-and-file employees. On October 3,
2000, ABI and BLMA-INDEPENDENT signed a renegotiated CBA effective
from August 1, 2000 to 31 July 2003.[5]

Article I of the CBA defined the scope of the bargaining unit, as follows:

Section 1. Recognition. The COMPANY recognizes

the UNION as the sole and exclusive bargaining
representative of all the regular rank-and-file daily paid
employees within the scope of the appropriate bargaining unit
 with respect to rates of pay, hours of work and other terms
and conditions of employment. The UNION shall not
represent or accept for membership employees outside
the scope of the bargaining unit herein defined.
Section 2. Bargaining Unit. The bargaining unit shall
be comprised of all regular rank-and-file daily-paid employees
of the COMPANY. However, the following jobs/positions as
herein defined shall be excluded from the bargaining unit, to
wit:
1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control
Staff[6] [EMPHASIS SUPPLIED.]
Subsequently, a dispute arose when ABIs management stopped deducting
union dues from eighty-one (81) employees, believing that their membership
in BLMA-INDEPENDENT violated the CBA. Eighteen (18) of these affected
employees are QA Sampling Inspectors/Inspectresses and Machine Gauge
Technician who formed part of the Quality Control Staff. Twenty (20) checkers
are assigned at the Materials Department of the Administration Division, Full
Goods Department of the Brewery Division and Packaging Division. The rest
are secretaries/clerks directly under their respective division managers. [7]
BLMA-INDEPENDENT claimed that ABIs actions restrained the employees
right to self-organization and brought the matter to the grievance machinery.
As the parties failed to amicably settle the controversy, BLMA-INDEPENDENT
lodged a complaint before the National Conciliation and Mediation Board
(NCMB). The parties eventually agreed to submit the case for arbitration to
resolve the issue of [w]hether or not there is restraint to employees in the
exercise of their right to self-organization.[8]
In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-
INDEPENDENT after finding that the records submitted by ABI showed that
the positions of the subject employees qualify under the rank-and-file category
because their functions are merely routinary and clerical. He noted that the
positions occupied by the checkers and secretaries/clerks in the different
divisions are not managerial or supervisory, as evident from the duties and
responsibilities assigned to them. With respect to QA Sampling
Inspectors/Inspectresses and Machine Gauge Technician, he ruled that ABI
failed to establish with sufficient clarity their basic functions as to consider them
Quality Control Staff who were excluded from the coverage of the CBA.
Accordingly, the subject employees were declared eligible for inclusion within
the bargaining unit represented by BLMA-INDEPENDENT.[9]
On appeal, the CA reversed the Voluntary Arbitrator, ruling that:
WHEREFORE, foregoing premises considered, the
questioned decision of the Honorable Voluntary Arbitrator
Bienvenido De Vera is hereby REVERSED and SET ASIDE,
and A NEW ONE ENTERED DECLARING THAT:
a) the 81 employees are excluded from and
are not eligible for inclusion in the
bargaining unit as defined in Section 2,
Article I of the CBA;
b) the 81 employees cannot validly become
members of respondent and/or if already
members, that their membership is
violative of the CBA and that they should
disaffiliate from respondent; and
c) petitioner has not committed any act that
restrained or tended to restrain its
employees in the exercise of their right to
self-organization.
NO COSTS.
SO ORDERED.[10]
BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a
certification election was held on August 10, 2002 wherein petitioner Tunay na
Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent
bargaining representative of ABIs rank-and-file employees claiming interest in
the outcome of the case, petitioner filed with the CA an omnibus motion for
reconsideration of the decision and intervention, with attached petition signed
by the union officers.[11]Both motions were denied by the CA.[12]
The petition is anchored on the following grounds:
(1)
THE COURT OF APPEALS ERRED IN RULING THAT THE
81 EMPLOYEES ARE EXCLUDED FROM AND ARE NOT
ELIGIBLE FOR INCLUSION IN THE BARGAINING UNIT AS
DEFINED IN SECTION 2, ARTICLE 1 OF THE CBA[;]
bargaining unit.[18] Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v.
Roldan-Confesor,[19] we declared that legal secretaries who are tasked with,
among others, the typing of legal documents, memoranda and
correspondence, the keeping of records and files, the giving of and receiving
notices, and such other duties as required by the legal personnel of the
corporation, fall under the category of confidential employees and hence
excluded from the bargaining unit composed of rank-and-file employees.[20]

(2)
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
81 EMPLOYEES CANNOT VALIDLY BECOME UNION
MEMBERS, THAT THEIR MEMBERSHIP IS VIOLATIVE OF
THE CBA AND THAT THEY SHOULD DISAFFILIATE FROM
RESPONDENT;
Also considered having access to vital labor information are the executive
secretaries of the General Manager and the executive secretaries of the
Quality Assurance Manager, Product Development Manager, Finance
Director, Management System Manager, Human Resources Manager,
Marketing Director, Engineering Manager, Materials Manager and Production
Manager.[21]

(3) In the present case, the CBA expressly excluded Confidential and Executive
Secretaries from the rank-and-file bargaining unit, for which reason ABI seeks
THE COURT OF APPEALS SERIOUSLY ERRED IN their disaffiliation from petitioner. Petitioner, however, maintains that except for
HOLDING THAT PETITIONER (NOW PRIVATE Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had been promoted
RESPONDENT) HAS NOT COMMITTED ANY ACT THAT to monthly paid positions, the following secretaries/clerks are deemed included
RESTRAINED OR TENDED TO RESTRAIN ITS among the rank-and-file employees of ABI:[22]
EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO NAME DEPARTMENT IMMEDIATE SUPERIOR
SELF-ORGANIZATION.[13]
C1 ADMIN DIVISION

Although Article 245 of the Labor Code limits the ineligibility to join, form and 1. Angeles, Cristina Transportation Mr. Melito K. Tan
assist any labor organization to managerial employees, jurisprudence has C.
extended this prohibition to confidential employees or those who by reason of 2. Barraquio, Carina Transportation Mr. Melito K. Tan
their positions or nature of work are required to assist or act in a fiduciary P.
manner to managerial employees and hence, are likewise privy to sensitive 3. Cabalo, Marivic B. Transportation Mr. Melito K. Tan
and highly confidential records.[14] Confidential employees are thus excluded 4. Fameronag, Transportation Mr. Melito K. Tan
from the rank-and-file bargaining unit. The rationale for their separate category Leodigario C.
and disqualification to join any labor organization is similar to the inhibition for
managerial employees because if allowed to be affiliated with a Union, the 1. Abalos, Andrea A. Materials Mr. Andres G. Co
latter might not be assured of their loyalty in view of evident conflict of interests 2. Algire, Juvy L. Materials Mr. Andres G. Co
and the Union can also become company-denominated with the presence of 3. Anouevo, Shirley Materials Mr. Andres G. Co
managerial employees in the Union membership. [15] Having access to P.
confidential information, confidential employees may also become the source 4. Aviso, Rosita S. Materials Mr. Andres G. Co
of undue advantage. Said employees may act as a spy or spies of either party 5. Barachina, Pauline Materials Mr. Andres G. Co
to a collective bargaining agreement.[16] C.
6. Briones, Catalina Materials Mr. Andres G. Co
P.
In Philips Industrial Development, Inc. v. NLRC,[17] this Court held that 7. Caralipio, Juanita Materials Mr. Andres G. Co
petitioners division secretaries, all Staff of General Management, Personnel P.
and Industrial Relations Department, Secretaries of Audit, EDP and Financial
Systems are confidential employees not included within the rank-and-file
8. Elmido, Ma. Materials Mr. Andres G. Co 1. Magbag, Ma. Tank Farm/ Mr. Manuel Yu Liat
Rebecca S. Corazon C. Cella Services
9. Giron, Laura P. Materials Mr. Andres G. Co
10. Mane, Edna A. Materials Mr. Andres G. Co 1. Capiroso, Quality Ms. Regina Mirasol
Francisca A. Assurance
xxxx
1. Alconaba, Elvira C. Engineering Mr. Clemente Wong
C2 BREWERY 2. Bustillo, Bernardita Electrical Mr. Jorge Villarosa
DIVISION E.
3. Catindig, Ruel A. Civil Works Mr. Roger Giron
1. Laloon, Daisy S. Brewhouse Mr. William Tan 4. Sison, Claudia B. Utilities Mr. Venancio Alconaba

1. Arabit, Myrna F. Bottling Mr. Julius Palmares xxxx

Production
2. Burgos, Adelaida Bottling Mr. Julius Palmares C3 PACKAGING
D. Production DIVISION
3. Menil, Emmanuel Bottling Mr. Julius Palmares
S. Production 1. Alvarez, Ma. GP Ms. Susan Bella
4. Nevalga, Marcelo Bottling Mr. Julius Palmares Luningning L. Administration
G. Production 2. Caiza, Alma A. GP Technical Mr. Chen Tsai Tyan
3. Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez
1. Mapola, Ma. Bottling Mr. Ernesto 4. Castillo, Ma. Riza GP Production Mr. Tsai Chen Chih
Esraliza T. Maintenance Ang R.
2. Velez, Carmelito Bottling Mr. Ernesto Ang 5. Lamadrid, Susana GP Production Mr. Robert Bautista
A. Maintenance C.
6. Mendoza, Jennifer GP Technical Mr. Mel Oa
1. Bordamonte, Bottled Water Mr. Faustino Tetonche L.
Rhumela D.
2. Deauna, Edna R. Bottled Water Mr. Faustino Tetonche
3. Punongbayan, Bottled Water Mr. Faustino Tetonche As can be gleaned from the above listing, it is rather curious that there would
Marylou F. be several secretaries/clerks for just one (1) department/division performing
4. Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche tasks which are mostly routine and clerical. Respondent insisted they fall
under the Confidential and Executive Secretaries expressly excluded by the
1. Alcoran, Simeon Full Goods Mr. Tsoi Wah Tung CBA from the rank-and-file bargaining unit. However, perusal of the job
A. descriptions of these secretaries/clerks reveals that their assigned duties and
2. Cervantes, Ma. Full Goods Mr. Tsoi Wah Tung responsibilities involve routine activities of recording and monitoring, and other
Sherley Y. paper works for their respective departments while secretarial tasks such as
3. Diongco, Ma. Full Goods Mr. Tsoi Wah Tung receiving telephone calls and filing of office correspondence appear to have
Teresa M. been commonly imposed as additional duties.[23] Respondent failed to indicate
4. Mabilangan, Full Goods Mr. Tsoi Wah Tung who among these numerous secretaries/clerks have access to confidential
Evelyn M. data relating to management policies that could give rise to potential conflict
5. Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung of interest with their Union membership. Clearly, the rationale under our
6. Salandanan, Full Goods Mr. Tsoi Wah Tung previous rulings for the exclusion of executive secretaries or division
Nancy G. secretaries would have little or no significance considering the lack of or very
limited access to confidential information of these secretaries/clerks. It is not
even farfetched that the job category may exist only on paper since they are
all daily-paid workers. Quite understandably, petitioner had earlier expressed
the view that the positions were just being reclassified as these employees
actually discharged routine functions.
We thus hold that the secretaries/clerks, numbering about forty (40), are rank-
and-file employees and not confidential employees.
With respect to the Sampling Inspectors/Inspectresses and the Gauge
Machine Technician, there seems no dispute that they form part of the Quality
Control Staff who, under the express terms of the CBA, fall under a distinct
category. But we disagree with respondents contention that the twenty (20)
checkers are similarly confidential employees being quality control staff
entrusted with the handling and custody of company properties and sensitive
information.
Again, the job descriptions of these checkers assigned in the storeroom
section of the Materials Department, finishing section of the Packaging
Department, and the decorating and glass sections of the Production
Department plainly showed that they perform routine and mechanical tasks
preparatory to the delivery of the finished products.[24] While it may be argued
that quality control extends to post-production phase -- proper packaging of
the finished products -- no evidence was presented by the respondent to prove
that these daily-paid checkers actually form part of the companys Quality
Control Staff who as such were exposed to sensitive, vital and confidential
information about [companys] products or have knowledge of mixtures of the
products, their defects, and even their formulas which are considered trade
secrets. Such allegations of respondent must be supported by evidence.[25]
Consequently, we hold that the twenty (20) checkers may not be
considered confidential employees under the category of Quality Control Staff
who were expressly excluded from the CBA of the rank-and-file bargaining
unit.
Confidential employees are defined as those who (1) assist or act in a
confidential capacity, (2) to persons who formulate, determine, and effectuate
management policies in the field of labor relations. The two (2) criteria are
cumulative, and both must be met if an employee is to be considered a
confidential employee that is, the confidential relationship must exist between
the employee and his supervisor, and the supervisor must handle the prescribed
responsibilities relating to labor relations. The exclusion from bargaining units of
employees who, in the normal course of their duties, become aware of
management policies relating to labor relations is a principal objective sought to
be accomplished by the confidential employee rule.[26] There is no showing in
this case that the secretaries/clerks and checkers assisted or acted in a
confidential capacity to managerial employees and obtained confidential
information relating to labor relations policies. And even assuming that they had
exposure to internal business operations of the company, respondent claimed,
this is not per se ground for their exclusion in the bargaining unit of the daily-
paid rank-and-file employees.[27]
Not being confidential employees, the secretaries/clerks and checkers are not
disqualified from membership in the Union of respondents rank-and-file
employees. Petitioner argues that respondents act of unilaterally stopping the
deduction of union dues from these employees constitutes unfair labor practice
as it restrained the workers exercise of their right to self-organization, as
provided in Article 248 (a) of the Labor Code.
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. For a charge of unfair labor practice to prosper, it
must be shown that ABI was motivated by ill will, bad faith, or fraud, or was
oppressive to labor, or done in a manner contrary to morals, good customs, or
public policy, and, of course, that social humiliation, wounded feelings or grave
anxiety resulted x x x[28] from ABIs act in discontinuing the union dues
deduction from those employees it believed were excluded by the
CBA. Considering that the herein dispute arose from a simple disagreement in
the interpretation of the CBA provision on excluded employees from the
bargaining unit, respondent cannot be said to have committed unfair labor
practice that restrained its employees in the exercise of their right to self-
organization, nor have thereby demonstrated an anti-union stance.
WHEREFORE, the petition is GRANTED. The Decision dated November 22,
2002 and Resolution dated January 28, 2004 of the Court of Appeals in CA-
G.R. SP No. 55578 are hereby REVERSED and SET ASIDE. The checkers
and secretaries/clerks of respondent company are hereby declared rank-and-
file employees who are eligible to join the Union of the rank-and-file
employees.
No costs.
SO ORDERED.

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF
APPEALS, GENERAL MILLING CORPORATION INDEPENDENT
LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for certiorari assailing the decision[1] dated July 19,
2000, of the Court of Appeals in CA-G.R. SP No. 50383, which earlier reversed
the decision[2] dated January 30, 1998 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner
General Milling Corporation (GMC) employed 190 workers. They were all
members of private respondent General Milling Corporation Independent
Labor Union (union, for brevity), a duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining
agreement (CBA) which included the issue of representation effective for a
term of three years. The CBA was effective for three years retroactive to
December 1, 1988. Hence, it would expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union
sent GMC a proposed CBA, with a request that a counter-proposal be
submitted within ten (10) days.
As early as October 1991, however, GMC had received collective and
individual letters from workers who stated that they had withdrawn from their
union membership, on grounds of religious affiliation and personal
differences. Believing that the union no longer had standing to negotiate a
CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito
Mangubat and Victor Lastimoso. The letter stated that it felt there was no basis
to negotiate with a union which no longer existed, but that management was
nonetheless always willing to dialogue with them on matters of common
concern and was open to suggestions on how the company may improve its
operations.
In answer, the union officers wrote a letter dated December 19, 1991
disclaiming any massive disaffiliation or resignation from the union and
submitted a manifesto, signed by its members, stating that they had not
withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member,
on the ground of incompetence. The union protested and requested GMC to
submit the matter to the grievance procedure provided in the CBA. GMC,
however, advised the union to refer to our letter dated December 16, 1991.[3]
Thus, the union filed, on July 2, 1992, a complaint against GMC with the
NLRC, Arbitration Division, Cebu City. The complaint alleged unfair labor
practice on the part of GMC for: (1) refusal to bargain collectively; (2)
interference with the right to self-organization; and (3) discrimination. The labor
arbiter dismissed the case with the recommendation that a petition for
certification election be held to determine if the union still enjoyed the support
of the workers.
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters
decision. Citing Article 253-A of the Labor Code, as amended by Rep. Act No.
6715,[4] which fixed the terms of a collective bargaining agreement, the NLRC
ordered GMC to abide by the CBA draft that the union proposed for a period
of two (2) years beginning December 1, 1991, the date when the original CBA
ended, to November 30, 1993. The NLRC also ordered GMC to pay the
attorneys fees.[5]
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act
No. 6715, the duration of a CBA, insofar as the representation aspect is
concerned, is five (5) years which, in the case of GMC-Independent Labor
Union was from December 1, 1988 to November 30, 1993. All other provisions
of the CBA are to be renegotiated not later than three (3) years after its
execution. Thus, the NLRC held that respondent union remained as the
exclusive bargaining agent with the right to renegotiate the economic
provisions of the CBA. Consequently, it was unfair labor practice for GMC not
to enter into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the
union submitted by 13 of its members from February to June 1993 confirmed
the pressure exerted by GMC on its employees to resign from the union. Thus,
the NLRC also found GMC guilty of unfair labor practice for interfering with the
right of its employees to self-organization.
With respect to the unions claim of discrimination, the NLRC found the
claim unsupported by substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its decision of
January 30, 1998, through a resolution dated October 6, 1998. It found GMCs
doubts as to the status of the union justified and the allegation of coercion
exerted by GMC on the unions members to resign unfounded. Hence, the
union filed a petition for certiorari before the Court of Appeals. For failure of
the union to attach the required copies of pleadings and other documents and
material portions of the record to support the allegations in its petition, the CA
dismissed the petition on February 9, 1999. The same petition was
subsequently filed by the union, this time with the necessary documents. In its
resolution dated April 26, 1999, the appellate court treated the refiled petition
as a motion for reconsideration and gave the petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive
portion of which reads:
WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of
October 6, 1998 is hereby SET ASIDE, and its decision of January 30, 1998
is, except with respect to the award of attorneys fees which is hereby
deleted, REINSTATED.[6]
A motion for reconsideration was seasonably filed by GMC, but in a
resolution dated October 26, 2000, the CA denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I CBA on November 29, 1991, it was still the certified collective bargaining agent
THE COURT OF APPEALS DECISION VIOLATED THE
CONSTITUTIONAL RULE THAT NO DECISION SHALL BE
RENDERED BY ANY COURT WITHOUT EXPRESSING THEREIN
CLEARLY AND DISTINCTLY THE FACTS AND THE LAW ON
WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN REVERSING THE DECISION OF THE NATIONAL
LABOR RELATIONS COMMISSION IN THE ABSENCE OF ANY
FINDING OF SUBSTANTIAL ERROR OR GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
NOT APPRECIATING THAT THE NLRC HAS NO JURISDICTION
TO DETERMINE THE TERMS AND CONDITIONS OF A
COLLECTIVE BARGAINING AGREEMENT.[7]
Thus, in the instant case, the principal issue for our determination is
whether or not the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in (1) finding GMC guilty of unfair
labor practice for violating the duty to bargain collectively and/or interfering
with the right of its employees to self-organization, and (2) imposing upon GMC
the draft CBA proposed by the union for two years to begin from the expiration
of the original CBA.
On the first issue, Article 253-A of the Labor Code, as amended by Rep.
Act No. 6715, states:
ART. 253-A. Terms of a collective bargaining agreement. Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department
of Labor and Employment outside of the sixty-day period immediately before
the date of expiry of such five year term of the Collective Bargaining
Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its execution....
The law mandates that the representation provision of a CBA should last
for five years. The relation between labor and management should be
undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that
when the union requested for a renegotiation of the economic terms of the
of the workers, because it was seeking said renegotiation within five (5) years
from the date of effectivity of the CBA on December 1, 1988. The unions
proposal was also submitted within the prescribed 3-year period from the date
of effectivity of the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in good faith with
the union. For refusing to send a counter-proposal to the union and to bargain
anew on the economic terms of the CBA, the company committed an unfair
labor practice under Article 248 of the Labor Code, which provides that:
ART. 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practice:
...
(g) To violate the duty to bargain collectively as prescribed by this Code;
...
Article 252 of the Labor Code elucidates the meaning of the phrase duty
to bargain collectively, thus:
ART. 252. Meaning of duty to bargain collectively. The duty to bargain
collectively means the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement....
 We have held that the crucial question whether or not a party has met his
statutory duty to bargain in good faith typically turn$ on the facts of the
individual case.[8] There is no per se test of good faith in bargaining.[9] Good
faith or bad faith is an inference to be drawn from the facts.[10] The effect of an
employers or a unions actions individually is not the test of good-faith
bargaining, but the impact of all such occasions or actions, considered as a
whole.[11]
Under Article 252 abovecited, both parties are required to perform their
mutual obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement. The union lived up to this
obligation when it presented proposals for a new CBA to GMC within three (3)
years from the effectivity of the original CBA. But GMC failed in its duty under
Article 252. What it did was to devise a flimsy excuse, by questioning the
existence of the union and the status of its membership to prevent any
negotiation.
It bears stressing that the procedure in collective bargaining prescribed
by the Code is mandatory because of the basic interest of the state in ensuring
lasting industrial peace. Thus:
ART. 250. Procedure in collective bargaining. The following procedures
shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written
notice upon the other party with a statement of its proposals. The other
party shall make a reply thereto not later than ten (10) calendar days from
receipt of such notice. (Underscoring supplied.)
GMCs failure to make a timely reply to the proposals presented by the
union is indicative of its utter lack of interest in bargaining with the union. Its
excuse that it felt the union no longer represented the workers, was mainly
dilatory as it turned out to be utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the unions
proposal for CBA negotiation is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the bargaining proposals
of the union, there is a clear evasion of the duty to bargain collectively.[12]
Failing to comply with the mandatory obligation to submit a reply to the
unions proposals, GMC violated its duty to bargain collectively, making it liable
for unfair labor practice. Perforce, the Court of Appeals did not commit grave
abuse of discretion amounting to lack or excess of jurisdiction in finding that
GMC is, under the circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees right to self-organization? The CA
found that the letters between February to June 1993 by 13 union members
signifying their resignation from the union clearly indicated that GMC exerted
pressure on its employees. The records show that GMC presented these
letters to prove that the union no longer enjoyed the support of the workers.
The fact that the resignations of the union members occurred during the
pendency of the case before the labor arbiter shows GMCs desperate attempts
to cast doubt on the legitimate status of the union. We agree with the CAs
conclusion that the ill-timed letters of resignation from the union members
indicate that GMC had interfered with the right of its employees to self-
organization. Thus, we hold that the appellate court did not commit grave
abuse of discretion in finding GMC guilty of unfair labor practice for interfering
with the right of its employees to self-organization.
Finally, did the CA gravely abuse its discretion when it imposed on GMC
the draft CBA proposed by the union for two years commencing from the
expiration of the original CBA?
The Code provides:
ART. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. ....It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and conditions of
the existing agreement during the 60-day period [prior to its expiration date]
and/or until a new agreement is reached by the parties. (Underscoring
supplied.)
The provision mandates the parties to keep the status quo while they are
still in the process of working out their respective proposal and counter
proposal. The general rule is that when a CBA already exists, its provision shall
continue to govern the relationship between the parties, until a new one is
agreed upon. The rule necessarily presupposes that all other things are equal.
That is, that neither party is guilty of bad faith. However, when one of the
parties abuses this grace period by purposely delaying the bargaining process,
a departure from the general rule is warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner therein, Sweden Ice
Cream Plant, refused to submit any counter proposal to the CBA proposed by
its employees certified bargaining agent. We ruled that the former had thereby
lost its right to bargain the terms and conditions of the CBA. Thus, we did not
hesitate to impose on the erring company the CBA proposed by its employees
union - lock, stock and barrel. Our findings in Kiok Loy are similar to the facts
in the present case, to wit:
petitioner Companys approach and attitude stalling the negotiation by a series
of postponements, non-appearance at the hearing conducted, and undue
delay in submitting its financial statements, lead to no other conclusion except
that it is unwilling to negotiate and reach an agreement with the Union.
Petitioner has not at any instance, evinced good faith or willingness to discuss
freely and fully the claims and demands set forth by the Union much less justify
its objection thereto.[14]
Likewise, in Divine Word University of Tacloban vs. Secretary of Labor
and Employment,[15] petitioner therein, Divine Word University of Tacloban,
refused to perform its duty to bargain collectively. Thus, we upheld the
unilateral imposition on the university of the CBA proposed by the Divine Word
University Employees Union. We said further:
of the duration of the original CBA. Fairness, equity, and social justice are best
served in this case by sustaining the appellate courts decision on this issue.
WHEREFORE, the petition is DISMISSED and the assailed decision
dated July 19, 2000, and the resolution dated October 26, 2000, of the Court
of Appeals in CA-G.R. SP No. 50383, are AFFIRMED. Costs against
petitioner.
SO ORDERED.

That being the said case, the petitioner may not validly assert that its consent
should be a primordial consideration in the bargaining process. By its acts, no
less than its action which bespeak its insincerity, it has forfeited whatever rights
it could have asserted as an employer.[16]

Applying the principle in the foregoing cases to the instant case, it would
be unfair to the union and its members if the terms and conditions contained
in the old CBA would continue to be imposed on GMCs employees for the
remaining two (2) years of the CBAs duration. We are not inclined to gratify
GMC with an extended term of the old CBA after it resorted to delaying tactics
to prevent negotiations. Since it was GMC which violated the duty to bargain
collectively, based on Kiok Loy and Divine Word University of Tacloban, it had
lost its statutory right to negotiate or renegotiate the terms and conditions of
the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of
this case, there was no pre-existing CBA between the parties in Kiok
Loy and Divine Word University of Tacloban. Nonetheless, we deem it proper
to apply in this case the rationale of the doctrine in the said two cases. To rule
otherwise would be to allow GMC to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a
labor controversy to precipitately accept or agree to the proposals of the other.
But an erring party should not be allowed to resort with impunity to schemes
feigning negotiations by going through empty gestures.[17] Thus, by imposing
on GMC the provisions of the draft CBA proposed by the union, in our view,
the interests of equity and fair play were properly served and both parties
regained equal footing, which was lost when GMC thwarted the negotiations
for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the
reasonableness of the draft CBA proposed by the union should not be
disturbed since they are supported by substantial evidence. On this score, we
see no cogent reason to rule otherwise. Hence, we hold that the Court of
Appeals did not commit grave abuse of discretion amounting to lack or excess
of jurisdiction when it imposed on GMC, after it had committed unfair labor
practice, the draft CBA proposed by the union for the remaining two (2) years
 BANK OF THE PHILIPPINE G.R. No. 164301 bargaining agreement.[1] This case which involves the application of a
ISLANDS, collective bargaining agreement with a union shop clause should be resolved
Petitioner, Present: principally from the standpoint of the clear provisions of our labor laws, and
the express terms of the CBA in question, and not by inference from the
CORONA, C.J., general consequence of the merger of corporations under the Corporation
CARPIO, Code, which obviously does not deal with and, therefore, is silent on the terms
CARPIO MORALES, and conditions of employment in corporations or juridical entities.
VELASCO, JR.,*
NACHURA, This issue must be resolved NOW, instead of postponing it to a future
LEONARDO-DE CASTRO, time when the CBA is renegotiated as suggested by the Honorable Justice
- versus - BRION, Arturo D. Brion because the same issue may still be resurrected in the
PERALTA, renegotiation if the absorbed employees insist on their privileged status of
BERSAMIN, being exempt from any union shop clause or any variant thereof.
DEL CASTILLO,
ABAD, We find it significant to note that it is only the employer, Bank of the Philippine
VILLARAMA, JR., Islands (BPI), that brought the case up to this Court via the instant petition for
PEREZ, and review; while the employees actually involved in the case did not pursue the
MENDOZA, JJ. same relief, but had instead chosen in effect to acquiesce to the decision of
BPI EMPLOYEES UNION- the Court of Appeals which effectively required them to comply with the union
DAVAO CHAPTER- shop clause under the existing CBA at the time of the merger of BPI with Far
FEDERATION OF UNIONS Promulgated: East Bank and Trust Company (FEBTC), which decision had already
IN BPI UNIBANK, become final and executory as to the aforesaid employees. By not
Respondent. August 10, 2010 appealing the decision of the Court of Appeals, the aforesaid employees are
x------------------------------------------------x bound by the said Court of Appeals decision to join BPIs duly certified labor
union. In view of the apparent acquiescence of the affected FEBTC employees
in the Court of Appeals decision, BPI should not have pursued this petition for
DECISION review. However, even assuming that BPI may do so, the same still cannot
prosper.

LEONARDO-DE CASTRO, J.:
May a corporation invoke its merger with another corporation as a valid ground
to exempt its absorbed employees from the coverage of a union shop clause
contained in its existing Collective Bargaining Agreement (CBA) with its own
certified labor union? That is the question we shall endeavor to answer in this
petition for review filed by an employer after the Court of Appeals decided in
favor of respondent union, which is the employees recognized collective
bargaining representative.
At the outset, we should call to mind the spirit and the letter of the
Labor Code provisions on union security clauses, specifically Article 248 (e),
which states, x x x Nothing in this Code or in any other law shall stop the
parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who are
already members of another union at the time of the signing of the collective
What is before us now is a petition for review under Rule 45 of the Rules of
Court of the Decision[2] dated September 30, 2003 of the Court of Appeals, as
reiterated in its Resolution[3] of June 9, 2004, reversing and setting aside the
Decision[4] dated November 23, 2001 of Voluntary Arbitrator Rosalina
Letrondo-Montejo, in CA-G.R. SP No. 70445, entitled BPI Employees Union-
Davao Chapter-Federation of Unions in BPI Unibank v. Bank of the Philippine
Islands, et al.
The antecedent facts are as follows:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of
Merger executed on January 20, 2000 by and between BPI, herein petitioner,
and FEBTC.[5] This Article and Plan of Merger was approved by the Securities
and Exchange Commission on April 7, 2000.[6]
Pursuant to the Article and Plan of Merger, all the assets and liabilities of
FEBTC were transferred to and absorbed by BPI as the surviving
corporation. FEBTC employees, including those in its different branches
across the country, were hired by petitioner as its own employees, with their
status and tenure recognized and salaries and benefits maintained.
Respondent BPI Employees Union-Davao Chapter - Federation of Unions in
BPI Unibank (hereinafter the Union, for brevity) is the exclusive bargaining
agent of BPIs rank and file employees in Davao City. The former FEBTC rank-
and-file employees in Davao City did not belong to any labor union at the time
of the merger. Prior to the effectivity of the merger, or on March 31, 2000,
respondent Union invited said FEBTC employees to a meeting regarding the
Union Shop Clause (Article II, Section 2) of the existing CBA between
petitioner BPI and respondent Union.[7]
The parties both advert to certain provisions of the existing CBA, which are
quoted below:
ARTICLE I
Section 1. Recognition and Bargaining Unit The BANK
recognizes the UNION as the sole and exclusive collective
bargaining representative of all the regular rank and file
employees of the Bank offices in Davao City.
Section 2. Exclusions
Section 3. Additional Exclusions
Section 4. Copy of Contract
ARTICLE II
Section 1. Maintenance of Membership All employees within
the bargaining unit who are members of the Union on the date
of the effectivity of this Agreement as well as employees within
the bargaining unit who subsequently join or become
members of the Union during the lifetime of this Agreement
shall as a condition of their continued employment with the
Bank, maintain their membership in the Union in good
standing.
Section 2. Union Shop - New employees falling within the
bargaining unit as defined in Article I of this Agreement, who
may hereafter be regularly employed by the Bank shall,
within thirty (30) days after they become regular employees,
join the Union as a condition of their continued employment. It
is understood that membership in good standing in the Union
is a condition of their continued employment with the
Bank.[8] (Emphases supplied.)
After the meeting called by the Union, some of the former FEBTC
employees joined the Union, while others refused. Later, however, some of
those who initially joined retracted their membership.[9]
Respondent Union then sent notices to the former FEBTC employees
who refused to join, as well as those who retracted their membership, and
called them to a hearing regarding the matter. When these former FEBTC
employees refused to attend the hearing, the president of the Union requested
BPI to implement the Union Shop Clause of the CBA and to terminate their
employment pursuant thereto.[10]
After two months of management inaction on the request, respondent
Union informed petitioner BPI of its decision to refer the issue of the
implementation of the Union Shop Clause of the CBA to the Grievance
Committee. However, the issue remained unresolved at this level and so it was
subsequently submitted for voluntary arbitration by the parties.[11]
Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision[12] dated
November 23, 2001, ruled in favor of petitioner BPIs interpretation that the
former FEBTC employees were not covered by the Union Security Clause of
the CBA between the Union and the Bank on the ground that the said
employees were not new employees who were hired and subsequently
regularized, but were absorbed employees by operation of law because
the former employees of FEBTC can be considered assets and liabilities of
the absorbed corporation. The Voluntary Arbitrator concluded that the
former FEBTC employees could not be compelled to join the Union, as it was
their constitutional right to join or not to join any organization.
Respondent Union filed a Motion for Reconsideration, but the
Voluntary Arbitrator denied the same in an Order dated March 25, 2002.[13]
Dissatisfied, respondent then appealed the Voluntary Arbitrators
decision to the Court of Appeals. In the herein assailed Decision dated
September 30, 2003, the Court of Appeals reversed and set aside the Decision
of the Voluntary Arbitrator.[14] Likewise, the Court of Appeals denied herein
petitioners Motion for Reconsideration in a Resolution dated June 9, 2004.
The Court of Appeals pertinently ruled in its Decision:
A union-shop clause has been defined as a form of
union security provision wherein non-members may be hired,
but to retain employment must become union members after
a certain period.
There is no question as to the existence of the union-
shop clause in the CBA between the petitioner-union and the
company. The controversy lies in its application to the
absorbed employees.
This Court agrees with the voluntary arbitrator that the
ABSORBED employees are distinct and different from NEW
employees BUT only in so far as their employment service is
concerned. The distinction ends there. In the case at bar, the
absorbed employees length of service from its former
employer is tacked with their employment with BPI.Otherwise
stated, the absorbed employees service is continuous and
there is no gap in their service record.
This Court is persuaded that the similarities of new
and absorbed employees far outweighs
the distinction between them. The similarities lies on the
following, to wit: (a) they have a new employer; (b) new
working conditions; (c) new terms of employment and; (d) new
company policy to follow. As such, they should be considered
as new employees for purposes of applying the provisions of
the CBA regarding the union-shop clause.
To rule otherwise would definitely result to a very
awkward and unfair situation wherein the absorbed
employees shall be in a different if not, better situation than
the existing BPI employees. The existing BPI employees by
virtue of the union-shop clause are required to pay the
monthly union dues, remain as members in good standing of
the union otherwise, they shall be terminated from the
company, and other union-related obligations. On the other
hand, the absorbed employees shall enjoy the fruits of labor
of the petitioner-union and its members for nothing in
exchange. Certainly, this would disturb industrial peace in the
company which is the paramount reason for the existence of
the CBA and the union.
The voluntary arbitrators interpretation of the
provisions of the CBA concerning the coverage of the union-
shop clause is at war with the spirit and the rationale why the
Labor Code itself allows the existence of such provision.
The Supreme Court in the case of Manila Mandarin
Employees Union vs. NLRC (G.R. No. 76989, September 29,
1987) rule, to quote:
This Court has held that a valid form
of union security, and such a provision in a
collective bargaining agreement is not a
restriction of the right of freedom of
association guaranteed by the Constitution.
A closed-shop agreement is an
agreement whereby an employer binds
himself to hire only members of the
contracting union who must continue to
remain members in good standing to keep
their jobs. It is THE MOST PRIZED
ACHIEVEMENT OF UNIONISM. IT ADDS
MEMBERSHIP AND COMPULSORY
DUES. By holding out to loyal members a
promise of employment in the closed-shop, it
wields group solidarity. (Emphasis
supplied)
Hence, the voluntary arbitrator erred in construing the
CBA literally at the expense of industrial peace in the
company.
With the foregoing ruling from this Court, necessarily,
the alternative prayer of the petitioner to require the individual
respondents to become members or if they refuse, for this
Court to direct respondent BPI to dismiss them, follows.[15]
Hence, petitioners present recourse, raising the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN RULING THAT THE FORMER FEBTC
EMPLOYEES SHOULD BE CONSIDERED NEW
EMPLOYEES OF BPI FOR PURPOSES OF APPLYING THE
UNION SHOP CLAUSE OF THE CBA
II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY
ERRED IN FINDING THAT THE VOLUNTARY
ARBITRATORS INTERPRETATION OF THE COVERAGE
 OF THE UNION SHOP CLAUSE IS AT WAR WITH THE
SPIRIT AND THE RATIONALE WHY THE LABOR CODE
ITSELF ALLOWS THE EXISTENCE OF SUCH
PROVISION[16]
In essence, the sole issue in this case is whether or not the former
FEBTC employees that were absorbed by petitioner upon the merger between
FEBTC and BPI should be covered by the Union Shop Clause found in the
existing CBA between petitioner and respondent Union.
Petitioner is of the position that the former FEBTC employees are not new
employees of BPI for purposes of applying the Union Shop Clause of the CBA,
on this note, petitioner points to Section 2, Article II of the CBA, which provides:
New employees falling within the bargaining
unit as defined in Article I of this Agreement, who may
hereafter be regularly employed by the Bank shall, within
thirty (30) days after they become
regular employees, join the Union as a condition of their
continued employment. It is understood that membership
in good standing in the Union is a condition of their continued
employment with the Bank.[17] (Emphases supplied.)
Petitioner argues that the term new employees in the Union Shop
Clause of the CBA is qualified by the phrases who may hereafter be regularly
employed and after they become regular employees which led petitioner to
conclude that the new employees referred to in, and contemplated by, the
Union Shop Clause of the CBA were only those employees who were new to
BPI, on account of having been hired initially on a temporary or probationary
status for possible regular employment at some future date. BPI argues that
the FEBTC employees absorbed by BPI cannot be considered as new
employees of BPI for purposes of applying the Union Shop Clause of the
CBA.[18]
According to petitioner, the contrary interpretation made by the Court
of Appeals of this particular CBA provision ignores, or even defies, what
petitioner assumes as its clear meaning and scope which allegedly contradicts
the Courts strict and restrictive enforcement of union security agreements.
We do not agree.
Section 2, Article II of the CBA is silent as to how one becomes a
regular employee of the BPI for the first time. There is nothing in the said
provision which requires that a new regular employee first undergo a
temporary or probationary status before being deemed as such under
the union shop clause of the CBA.
Union security is a generic term which is applied to and comprehends closed
shop, union shop, maintenance of membership or any other form of agreement
which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment. There is union shop when
all new regular employees are required to join the union within a certain period
for their continued employment. There is maintenance of membership shop
when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted
or transferred out of the bargaining unit or the agreement is terminated. A
closed-shop, on the other hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives,
no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised
of or of which the employees in interest are a part.[19]
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills,
Inc.,[20] we ruled that:
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--vis the
employer. (Emphasis ours.)
In other words, the purpose of a union shop or other union security
arrangement is to guarantee the continued existence of the union through
enforced membership for the benefit of the workers.
All employees in the bargaining unit covered by a Union Shop Clause in their
CBA with management are subject to its terms. However, under law and
jurisprudence, the following kinds of employees are exempted from its
coverage, namely, employees who at the time the union shop agreement
takes effect are bona fide members of a religious organization which prohibits
its members from joining labor unions on religious grounds; [21] employees
already in the service and already members of a union other than the
majority at the time the union shop agreement took effect;[22] confidential
employees who are excluded from the rank and file bargaining
unit;[23] and employees excluded from the union shop by express terms
of the agreement.
When certain employees are obliged to join a particular union as a
requisite for continued employment, as in the case of Union Security Clauses,
this condition is a valid restriction of the freedom or right not to join any labor
organization because it is in favor of unionism. This Court, on occasion, has
even held that a union security clause in a CBA is not a restriction of the right
of freedom of association guaranteed by the Constitution. [24]
Moreover, a closed shop agreement is an agreement whereby an employer
binds himself to hire only members of the contracting union who must continue
to remain members in good standing to keep their jobs. It is the most prized
achievement of unionism. It adds membership and compulsory dues. By
holding out to loyal members a promise of employment in the closed shop, it
wields group solidarity.[25]
Indeed, the situation of the former FEBTC employees in this case
clearly does not fall within the first three exceptions to the application of the
Union Shop Clause discussed earlier. No allegation or evidence of religious
exemption or prior membership in another union or engagement as a
confidential employee was presented by both parties. The sole category
therefore in which petitioner may prove its claim is the fourth recognized
exception or whether the former FEBTC employees are excluded by the
express terms of the existing CBA between petitioner and respondent.
To reiterate, petitioner insists that the term new employees, as the same is
used in the Union Shop Clause of the CBA at issue, refers only to employees
hired by BPI asnon-regular employees who later qualify for regular
employment and become regular employees, and not those who, as a legal
consequence of a merger, are allegedly automatically deemed regular
employees of BPI. However, the CBA does not make a distinction as to how a
regular employee attains such a status.Moreover, there is nothing in the
Corporation Law and the merger agreement mandating the automatic
employment as regular employees by the surviving corporation in the merger.
It is apparent that petitioner hinges its argument that the former
FEBTC employees were absorbed by BPI merely as a legal consequence of
a merger based on the characterization by the Voluntary Arbiter of these
absorbed employees as included in the assets and liabilities of the dissolved
corporation - assets because they help the Bank in its operation and liabilities
because redundant employees may be terminated and company benefits will
be paid to them, thus reducing the Banks financial status. Based on this
ratiocination, she ruled that the same are not new employees of BPI as
contemplated by the CBA at issue, noting that the Certificate of Filing of the
Articles of Merger and Plan of Merger between FEBTC and BPI stated that x
x x the entire assets and liabilities of FAR EASTERN BANK & TRUST
COMPANY will be transferred to and absorbed by the BANK OF THE
PHILIPPINE ISLANDS x x x (underlining supplied).[26] In sum, the Voluntary
Arbiter upheld the reasoning of petitioner that the FEBTC employees became
BPI employees by operation of law because they are included in the term
assets and liabilities.
Absorbed FEBTC Employees are
Neither Assets nor Liabilities
In legal parlance, however, human beings are never embraced in the
term assets and liabilities. Moreover, BPIs absorption of former FEBTC
employees was neither by operation of law nor by legal consequence of
contract. There was no government regulation or law that compelled the
merger of the two banks or the absorption of the employees of the dissolved
corporation by the surviving corporation. Had there been such law or
regulation, the absorption of employees of the non-surviving entities of the
merger would have been mandatory on the surviving corporation. [27] In the
present case, the merger was voluntarily entered into by both banks
presumably for some mutually acceptable consideration. In fact, the
Corporation Code does not also mandate the absorption of the
employees of the non-surviving corporation by the surviving corporation
in the case of a merger. Section 80 of the Corporation Code provides:
SEC. 80. Effects of merger or consolidation. The merger or
consolidation, as provided in the preceding sections shall
have the following effects:
1. The constituent corporations shall become a single
corporation which, in case of merger, shall be the surviving
corporation designated in the plan of merger; and, in case of
consolidation, shall be the consolidated corporation
designated in the plan of consolidation;
2. The separate existence of the constituent corporations
shall cease, except that of the surviving or the consolidated
corporation;
 3. The surviving or the consolidated corporation shall possess
all the rights, privileges, immunities and powers and shall be
subject to all the duties and liabilities of a corporation
organized under this Code;
4. The surviving or the consolidated corporation shall
thereupon and thereafter possess all the rights, privileges,
immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all
receivables due on whatever account, including subscriptions
to shares and other choses in action, and all and every other
interest of, or belonging to, or due to each constituent
corporation, shall be taken and deemed to be transferred to
and vested in such surviving or consolidated corporation
without further act or deed; and
5. The surviving or the consolidated corporation shall be
responsible and liable for all the liabilities and obligations of
each of the constituent corporations in the same manner as if
such surviving or consolidated corporation had itself incurred
such liabilities or obligations; and any claim, action or
proceeding pending by or against any of such constituent
corporations may be prosecuted by or against the surviving or
consolidated corporation, as the case may be. Neither the
rights of creditors nor any lien upon the property of any of such
constituent corporations shall be impaired by such merger or
consolidated.
Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000
did not contain any specific stipulation with respect to the employment
contracts of existing personnel of the non-surviving entity which is
FEBTC. Unlike the Voluntary Arbitrator, this Court cannot uphold the
reasoning that the general stipulation regarding transfer of FEBTC assets and
liabilities to BPI as set forth in the Articles of Merger necessarily includes the
transfer of all FEBTC employees into the employ of BPI and neither BPI nor
the FEBTC employees allegedly could do anything about it. Even if it is so, it
does not follow that the absorbed employees should not be subject to
the terms and conditions of employment obtaining in the surviving
corporation.
The rule is that unless expressly assumed, labor contracts
such as employment contracts and collective bargaining
agreements are not enforceable against a transferee of an
enterprise, labor contracts being in personam, thus binding
only between the parties. A labor contract merely creates an
action in personam and does not create any real right which
should be respected by third parties. This conclusion draws
its force from the right of an employer to select his employees
and to decide when to engage them as protected under our
Constitution, and the same can only be restricted by law
through the exercise of the police power.[28]
Furthermore, this Court believes that it is contrary to public policy to
declare the former FEBTC employees as forming part of the assets or liabilities
of FEBTC that were transferred and absorbed by BPI in the Articles of
Merger. Assets and liabilities, in this instance, should be deemed to refer only
to property rights and obligations of FEBTC and do not include the employment
contracts of its personnel. A corporation cannot unilaterally transfer its
employees to another employer like chattel. Certainly, if BPI as an employer
had the right to choose who to retain among FEBTCs employees, FEBTC
employees had the concomitant right to choose not to be absorbed by
BPI. Even though FEBTC employees had no choice or control over the merger
of their employer with BPI, they had a choice whether or not they would allow
themselves to be absorbed by BPI. Certainly nothing prevented the FEBTCs
employees from resigning or retiring and seeking employment elsewhere
instead of going along with the proposed absorption.
Employment is a personal consensual contract and absorption by BPI
of a former FEBTC employee without the consent of the employee is in
violation of an individuals freedom to contract. It would have been a different
matter if there was an express provision in the articles of merger that as a
condition for the merger, BPI was being required to assume all the employment
contracts of all existing FEBTC employees with the conformity of the
employees. In the absence of such a provision in the articles of merger, then
BPI clearly had the business management decision as to whether or not
employ FEBTCs employees. FEBTC employees likewise retained the
prerogative to allow themselves to be absorbed or not; otherwise, that would
be tantamount to involuntary servitude.
There appears to be no dispute that with respect to FEBTC employees
that BPI chose not to employ or FEBTC employees who chose to retire or be
separated from employment instead of being absorbed, BPIs assumed
liability to these employees pursuant to the merger is FEBTCs liability to them
in terms of separation pay,[29] retirement pay[30] or other benefits that may be
due them depending on the circumstances.
Legal Consequences of Mergers
Although not binding on this Court, American jurisprudence on the
consequences of voluntary mergers on the right to employment and seniority
rights is persuasive and illuminating. We quote the following pertinent
discussion from the American Law Reports:
Several cases have involved the situation where as a
result of mergers, consolidations, or shutdowns, one group of
employees, who had accumulated seniority at one plant or for
one employer, finds that their jobs have been discontinued
except to the extent that they are offered employment at the
place or by the employer where the work is to be carried on in
the future. Such cases have involved the question whether
such transferring employees should be entitled to carry with
them their accumulated seniority or whether they are to be
compelled to start over at the bottom of the seniority list in the
"new" job. It has been recognized in some cases that the
accumulated seniority does not survive and cannot be
transferred to the "new" job.
In Carver v Brien (1942) 315 Ill App 643, 43 NE2d
597, the shop work of three formerly separate railroad
corporations, which had previously operated separate
facilities, was consolidated in the shops of one of the
roads. Displaced employees of the other two roads were
given preference for the new jobs created in the shops of the
railroad which took over the work. A controversy arose
between the employees as to whether the displaced
employees were entitled to carry with them to the new jobs
the seniority rights they had accumulated with their prior
employers, that is, whether the rosters of the three
corporations, for seniority purposes, should be "dovetailed" or
whether the transferring employees should go to the bottom
of the roster of their new employer. Labor representatives of
the various systems involved attempted to work out an
agreement which, in effect, preserved the seniority status
obtained in the prior employment on other roads, and the
action was for specific performance of this agreement against
a demurring group of the original employees of the railroad
which was operating the consolidated shops. The relief
sought was denied, the court saying that, absent some
specific contract provision otherwise, seniority rights were
ordinarily limited to the employment in which they were
earned, and concluding that the contract for which specific
performance was sought was not such a completed and
binding agreement as would support such equitable relief,
since the railroad, whose concurrence in the arrangements
made was essential to their effectuation, was not a party to
the agreement.
Where the provisions of a labor contract provided that
in the event that a trucker absorbed the business of another
private contractor or common carrier, or was a party to
a merger of lines, the seniority of the
employees absorbed or affected thereby should be
determined by mutual agreement between the trucker and the
unions involved, it was held in Moore v International
Brotherhood of Teamsters, etc. (1962, Ky) 356 SW2d 241,
that the trucker was not required to absorb the affected
employees as well as the business, the court saying that they
could find no such meaning in the above clause, stating that
it dealt only with seniority, and not with initial
employment. Unless and until the absorbing company agreed
to take the employees of the company whose business was
being absorbed, no seniority problem was created, said the
court, hence the provision of the contract could have no
application. Furthermore, said the court, it did not require that
the absorbing company take these employees, but only that if
it did take them the question of seniority between the old
and new employees would be worked out by agreement or
else be submitted to the grievance procedure.[31] (Emphasis
ours.)
Indeed, from the tenor of local and foreign authorities, in voluntary
mergers, absorption of the dissolved corporations employees or the
recognition of the absorbed employees service with their previous employer
may be demanded from the surviving corporation if required by provision of
law or contract. The dissent of Justice Arturo D. Brion tries to make a
distinction as to the terms and conditions of employment of the absorbed
employees in the case of a corporate merger or consolidation which will, in
effect, take away from corporate management the prerogative to make purely
business decisions on the hiring of employees or will give it an excuse not to
apply the CBA in force to the prejudice of its own employees and their
recognized collective bargaining agent. In this regard, we disagree with Justice
Brion.
Justice Brion takes the position that because the surviving corporation
continues the personality of the dissolved corporation and acquires all the
latters rights and obligations, it is duty-bound to absorb the dissolved
corporations employees, even in the absence of a stipulation in the plan of
merger. He proposes that this interpretation would provide the necessary
protection to labor as it spares workers from being left in legal limbo.
However, there are instances where an employer can validly discontinue or
terminate the employment of an employee without violating his right to security
of tenure.Among others, in case of redundancy, for example, superfluous
employees may be terminated and such termination would be authorized
under Article 283 of the Labor Code.[32]
Moreover, assuming for the sake of argument that there is an obligation to hire
or absorb all employees of the non-surviving corporation, there is still no basis
to conclude that the terms and conditions of employment under a valid
collective bargaining agreement in force in the surviving corporation should
not be made to apply to the absorbed employees.
The Corporation Code and the
Subject Merger Agreement are
Silent on Efficacy, Terms and
Conditions of Employment
Contracts
The lack of a provision in the plan of merger regarding the transfer of
employment contracts to the surviving corporation could have very well been
deliberate on the part of the parties to the merger, in order to grant the
surviving corporation the freedom to choose who among the dissolved
corporations employees to retain, in accordance with the surviving
corporations business needs. If terminations, for instance due to redundancy
or labor-saving devices or to prevent losses, are done in good faith, they would
be valid. The surviving corporation too is duty-bound to protect the rights of its
own employees who may be affected by the merger in terms of seniority and
other conditions of their employment due to the merger. Thus, we are not
convinced that in the absence of a stipulation in the merger plan the surviving
corporation was compelled, or may be judicially compelled, to absorb all
employees under the same terms and conditions obtaining in the dissolved
corporation as the surviving corporation should also take into consideration
the state of its business and its obligations to its own employees, and to their
certified collective bargaining agent or labor union.
Even assuming we accept Justice Brions theory that in a merger situation the
surviving corporation should be compelled to absorb the dissolved
corporations employees as a legal consequence of the merger and as a social
justice consideration, it bears to emphasize his dissent also recognizes that
the employee may choose to end his employment at any time by voluntarily
resigning. For the employee to be absorbed by BPI, it requires the employees
implied or express consent. It is because of this human element in employment
contracts and the personal, consensual nature thereof that we cannot agree
that, in a merger situation, employment contracts are automatically
transferable from one entity to another in the same manner that a contract
pertaining to purely proprietary rights such as a promissory note or a deed of
sale of property is perfectly and automatically transferable to the surviving
corporation.
That BPI is the same entity as FEBTC after the merger is but a legal fiction
intended as a tool to adjudicate rights and obligations between and among the
merged corporations and the persons that deal with them. Although in a
merger it is as if there is no change in the personality of the employer, there is
in reality a change in the situation of the employee. Once an FEBTC employee
is absorbed, there are presumably changes in his condition of employment
even if his previous tenure and salary rate is recognized by BPI. It is
reasonable to assume that BPI would have different rules and regulations and
company practices than FEBTC and it is incumbent upon the former FEBTC
employees to obey these new rules and adapt to their new environment. Not
the least of the changes in employment condition that the absorbed FEBTC
employees must face is the fact that prior to the merger they were employees
of an unorganized establishment and after the merger they became
employees of a unionized company that had an existing collective bargaining
agreement with the certified union. This presupposes that the union who is
party to the collective bargaining agreement is the certified union that has, in
the appropriate certification election, been shown to represent a majority of the
members of the bargaining unit.
Likewise, with respect to FEBTC employees that BPI chose to employ
and who also chose to be absorbed, then due to BPIs blanket assumption of
liabilities and obligations under the articles of merger, BPI was bound to
respect the years of service of these FEBTC employees and to pay the same,
or commensurate salaries and other benefits that these employees previously
enjoyed with FEBTC.
As the Union likewise pointed out in its pleadings, there were benefits under
the CBA that the former FEBTC employees did not enjoy with their
previous employer. As BPI employees, they will enjoy all these CBA benefits
upon their absorption. Thus, although in a sense BPI is continuing FEBTCs
employment of these absorbed employees, BPIs employment of these
absorbed employees was not under exactly the same terms and conditions as
stated in the latters employment contracts with FEBTC. This further
strengthens the view that BPI and the former FEBTC employees voluntarily
contracted with each other for their employment in the surviving corporation.
Proper Appreciation of the Term
New Employees Under the CBA
In any event, it is of no moment that the former FEBTC employees
retained the regular status that they possessed while working for their former
employer upon their absorption by petitioner. This fact would not remove them
from the scope of the phrase new employees as contemplated in the Union
Shop Clause of the CBA, contrary to petitioners insistence that the term new
employees only refers to those who are initially hired as non-
regular employees for possible regular employment.
The Union Shop Clause in the CBA simply states that new employees
who during the effectivity of the CBA may be regularly employed by the Bank
must join the union within thirty (30) days from their regularization. There is
nothing in the said clause that limits its application to only new employees
who possess non-regular status, meaning probationary status, at the start
of their employment. Petitioner likewise failed to point to any provision in the
CBA expressly excluding from the Union Shop Clause new employees who
are absorbed as regular employees from the beginning of their
employment. What is indubitable from the Union Shop Clause is that upon the
effectivity of the CBA, petitioners new regular employees (regardless of the
manner by which they became employees of BPI) are required to join the
Union as a condition of their continued employment.
The dissenting opinion of Justice Brion dovetails with Justice Carpios
view only in their restrictive interpretation of who are new employees under the
CBA. To our dissenting colleagues, the phrase new employees (who are
covered by the union shop clause) should only include new employees who
were hired as probationary during the life of the CBA and were later granted
regular status. They propose that the former FEBTC employees who were
deemed regular employees from the beginning of their employment with BPI
should be treated as a special class of employees and be excluded from the
union shop clause.
Justice Brion himself points out that there is no clear, categorical definition of
new employee in the CBA. In other words, the term new employee as used in
the union shop clause is used broadly without any qualification or
distinction. However, the Court should not uphold an interpretation of the term
new employee based on the general and extraneous provisions of the
Corporation Code on merger that would defeat, rather than fulfill, the purpose
of the union shop clause. To reiterate, the provision of the Article 248(e) of
the Labor Code in point mandates that nothing in the said Code or any
other law should stop the parties from requiring membership in a
recognized collective bargaining agent as a condition of employment.
Significantly, petitioner BPI never stretches its arguments so far as to
state that the absorbed employees should be deemed old employees who are
not covered by the Union Shop Clause. This is not surprising.
By law and jurisprudence, a merger only becomes effective upon
approval by the Securities and Exchange Commission (SEC) of the articles of
merger. In Associated Bank v. Court of Appeals,[33] we held:
The procedure to be followed is prescribed under the
Corporation Code. Section 79 of said Code requires the
approval by the Securities and Exchange Commission (SEC)
of the articles of merger which, in turn, must have been duly
approved by a majority of the respective stockholders of the
constituent corporations. The same provision further states
that the merger shall be effective only upon the issuance by
the SEC of a certificate of merger. The effectivity date of the
merger is crucial for determining when the merged or
absorbed corporation ceases to exist; and when its
rights, privileges, properties as well as liabilities pass on
to the surviving corporation. (Emphasis ours.)
In other words, even though BPI steps into the shoes of FEBTC as the
surviving corporation, BPI does so at a particular point in time, i.e., the
effectivity of the merger upon the SECs issuance of a certificate of merger. In
fact, the articles of merger themselves provided that both BPI and FEBTC will
continue their respective business operations until the SEC issues the
certificate of merger and in the event SEC does not issue such a certificate,
they agree to hold each other blameless for the non-consummation of the
merger.
Considering the foregoing principle, BPI could have only become the
employer of the FEBTC employees it absorbed after the approval by the SEC
of the merger. If the SEC did not approve the merger, BPI would not be in the
position to absorb the employees of FEBTC at all. Indeed, there is evidence
on record that BPI made the assignments of its absorbed employees in BPI
effective April 10, 2000, or after the SECs approval of the merger. [34] In other
words, BPI became the employer of the absorbed employees only at some
point after the effectivity of the merger, notwithstanding the fact that the
absorbed employees years of service with FEBTC were voluntarily recognized
by BPI.
Even assuming for the sake of argument that we consider the
absorbed FEBTC employees as old employees of BPI who are not members
of any union (i.e., it is their date of hiring by FEBTC and not the date of
their absorption that is considered), this does not necessarily exclude them
from the union security clause in the CBA. The CBA subject of this case was
effective from April 1, 1996 until March 31, 2001. Based on the allegations of
the former FEBTC employees themselves, there were former FEBTC
employees who were hired by FEBTC after April 1, 1996 and if their date of
hiring by FEBTC is considered as their date of hiring by BPI, they would
undeniably be considered new employees of BPI within the contemplation of
the Union Shop Clause of the said CBA. Otherwise, it would lead to the absurd
situation that we would discriminate not only between new BPI employees
(hired during the life of the CBA) and former FEBTC employees (absorbed
during the life of the CBA) but also among the former FEBTC employees
themselves. In other words, we would be treating employees who are exactly
similarly situated (i.e., the group of absorbed FEBTC employees)
differently. This hardly satisfies the demands of equality and justice.
Petitioner limited itself to the argument that its absorbed employees
do not fall within the term new employees contemplated under the Union Shop
Clause with the apparent objective of excluding all, and not just some, of the
former FEBTC employees from the application of the Union Shop Clause.
However, in law or even under the express terms of the CBA, there is no
special class of employees called absorbed employees. In order for the Court
to apply or not apply the Union Shop Clause, we can only classify the former
FEBTC employees as either old or new. If they are not old employees, they
are necessarily new employees. If they are new employees, the Union Shop
Clause did not distinguish between new employees who are non-regular at
their hiring but who subsequently become regular and new employees who
are absorbed as regular and permanent from the beginning of their
employment. The Union Shop Clause did not so distinguish, and so neither
must we.
No Substantial Distinction Under
the CBA Between Regular
Employees Hired After
Probationary Status and Regular
Employees Hired After the Merger
Verily, we agree with the Court of Appeals that there are no substantial
differences between a newly hired non-regular employee who was regularized
weeks or months after his hiring and a new employee who was absorbed from
another bank as a regular employee pursuant to a merger, for purposes of
applying the Union Shop Clause. Both employees were hired/employed only
after the CBA was signed. At the time they are being required to join the Union,
they are both already regular rank and file employees of BPI. They belong to
the same bargaining unit being represented by the Union. They both enjoy
benefits that the Union was able to secure for them under the CBA. When they
both entered the employ of BPI, the CBA and the Union Shop Clause therein
were already in effect and neither of them had the opportunity to express their
preference for unionism or not. We see no cogent reason why the Union Shop
Clause should not be applied equally to these two types of new employees,
for they are undeniably similarly situated.
The effect or consequence of BPIs so-called absorption of former FEBTC
employees should be limited to what they actually agreed to, i.e. recognition
of the FEBTC employees years of service, salary rate and other benefits with
their previous employer. The effect should not be stretched so far as
to exempt former FEBTC employees from the existing CBA terms, company
policies and rules which apply to employees similarly situated. If the Union
Shop Clause is valid as to other new regular BPI employees, there is no reason
why the same clause would be a violation of the absorbed employees freedom
of association.
Non-Application of Union Shop
Clause Contrary to the Policy of
the Labor Code and Inimical to
Industrial Peace
It is but fair that similarly situated employees who enjoy the same
privileges of a CBA should be likewise subject to the same obligations the CBA
imposes upon them. A contrary interpretation of the Union Shop Clause will be
inimical to industrial peace and workers solidarity. This unfavorable situation
will not be sufficiently addressed by asking the former FEBTC employees to
simply pay agency fees to the Union in lieu of union membership, as the
dissent of Justice Carpio suggests. The fact remains that other new regular
employees, to whom the absorbed employees should be compared, do not
have the option to simply pay the agency fees and they must join the Union or
face termination.
Petitioners restrictive reading of the Union Shop Clause could also
inadvertently open an avenue, which an employer could readily use, in order
to dilute the membership base of the certified union in the collective bargaining
unit (CBU). By entering into a voluntary merger with a non-unionized company
that employs more workers, an employer could get rid of its existing union by
the simple expedient of arguing that the absorbed employees are not new
employees, as are commonly understood to be covered by a CBAs union
security clause. This could then lead to a new majority within the CBU that
could potentially threaten the majority status of the existing union and,
ultimately, spell its demise as the CBUs bargaining representative. Such a
dreaded but not entirely far-fetched scenario is no different from the ingenious
and creative union-busting schemes that corporations have fomented
throughout the years, which this Court has foiled time and again in order to
preserve and protect the valued place of labor in this jurisdiction consistent
with the Constitutions mandate of insuring social justice.
There is nothing in the Labor Code and other applicable laws or the
CBA provision at issue that requires that a new employee has to be of
probationary or non-regular status at the beginning of the employment
relationship. An employer may confer upon a new employee the status of
regular employment even at the onset of his engagement. Moreover, no law
prohibits an employer from voluntarily recognizing the length of service of a
new employee with a previous employer in relation to computation of benefits
or seniority but it should not unduly be interpreted to exclude them from the
coverage of the CBA which is a binding contractual obligation of the employer
and employees.
Indeed, a union security clause in a CBA should be interpreted to give
meaning and effect to its purpose, which is to afford protection to the certified
bargaining agent and ensure that the employer is dealing with a union that
represents the interests of the legally mandated percentage of the members
of the bargaining unit.
The union shop clause offers protection to the certified bargaining
agent by ensuring that future regular employees who (a) enter the employ of
the company during the life of the CBA; (b) are deemed part of the collective
bargaining unit; and (c) whose number will affect the number of members of
the collective bargaining unit will be compelled to join the union. Such
compulsion has legal effect, precisely because the employer by voluntarily
entering in to a union shop clause in a CBA with the certified bargaining agent
takes on the responsibility of dismissing the new regular employee who does
not join the union.
Without the union shop clause or with the restrictive interpretation thereof as
proposed in the dissenting opinions, the company can jeopardize the majority
status of the certified union by excluding from union membership all new
regular employees whom the Company will absorb in future mergers and all
new regular employees whom the Company hires as regular from the
beginning of their employment without undergoing a probationary period. In
this manner, the Company can increase the number of members of the
collective bargaining unit and if this increase is not accompanied by a
corresponding increase in union membership, the certified union may lose its
majority status and render it vulnerable to attack by another union who wishes
to represent the same bargaining unit.[35]
Or worse, a certified union whose membership falls below twenty percent
(20%) of the total members of the collective bargaining unit may lose its status
as a legitimate labor organization altogether, even in a situation where there
is no competing union.[36] In such a case, an interested party may file for the
cancellation of the unions certificate of registration with the Bureau of Labor
Relations.[37]
Plainly, the restrictive interpretation of the union shop clause would place the
certified unions very existence at the mercy and control of the
employer. Relevantly, only BPI, the employer appears to be interested in
pursuing this case. The former FEBTC employees have not joined BPI in this
appeal.
For the foregoing reasons, Justice Carpios proposal to simply require the
former FEBTC to pay agency fees is wholly inadequate to compensate the
certified union for the loss of additional membership supposedly guaranteed
by compliance with the union shop clause. This is apart from the fact that
treating these absorbed employees as a special class of new employees does
not encourage worker solidarity in the company since another class of new
employees (i.e. those whose were hired as probationary and later regularized
during the life of the CBA) would not have the option of substituting union
membership with payment of agency fees.
Justice Brion, on the other hand, appears to recognize the inherent unfairness
of perpetually excluding the absorbed employees from the ambit of the union
shop clause.He proposes that this matter be left to negotiation by the parties
in the next CBA. To our mind, however, this proposal does not sufficiently
address the issue. With BPI already taking the position that employees
absorbed pursuant to its voluntary mergers with other banks are exempt from
the union shop clause, the chances of the said bank ever agreeing to the
inclusion of such employees in a future CBA is next to nil more so, if BPIs
narrow interpretation of the union shop clause is sustained by this Court.
Right of an Employee not to Join a
Union is not Absolute and Must
Give Way to the Collective Good of
All Members of the Bargaining
Unit
The dissenting opinions place a premium on the fact that even if the
former FEBTC employees are not old employees, they nonetheless were
employed as regular and permanent employees without a gap in their
service. However, an employees permanent and regular employment status in
itself does not necessarily exempt him from the coverage of a union shop
clause.
In the past this Court has upheld even the more stringent type of union security
clause, i.e., the closed shop provision, and held that it can be made applicable
to old employees who are already regular and permanent but have chosen not
to join a union. In the early case of Juat v. Court of Industrial Relations,[38] the
Court held that an old employee who had no union may be compelled to join
the union even if the collective bargaining agreement (CBA) imposing the
closed shop provision was only entered into seven years after of the hiring of
the said employee. To quote from that decision:
A closed-shop agreement has been considered as one form
of union security whereby only union members can be hired
and workers must remain union members as a condition of
continued employment. The requirement for employees or
 workers to become members of a union as a condition for
employment redounds to the benefit and advantage of
said employees because by holding out to loyal members a
promise of employment in the closed-shop the union wields
group solidarity. In fact, it is said that "the closed-shop
contract is the most prized achievement of unionism."
xxxx
This Court had categorically held in the case of Freeman Shirt
Manufacturing Co., Inc., et al. vs. Court of Industrial Relations,
et al., G.R. No. L-16561, Jan. 28, 1961, that the closed-shop
proviso of a collective bargaining agreement entered into
between an employer and a duly authorized labor union
is applicable not only to the employees or laborers that
are employed after the collective bargaining agreement
had been entered into but also to old employees who are
not members of any labor union at the time the said
collective bargaining agreement was entered into. In other
words, if an employee or laborer is already a member of a
labor union different from the union that entered into a
collective bargaining agreement with the employer providing
for a closed-shop, said employee or worker cannot be obliged
to become a member of that union which had entered into a
collective bargaining agreement with the employer as a
condition for his continued employment. (Emphasis and
underscoring supplied.)
Although the present case does not involve a closed shop provision that
included even old employees, the Juat example is but one of the cases that
laid down the doctrine that the right not to join a union is not
absolute. Theoretically, there is nothing in law or jurisprudence to prevent an
employer and a union from stipulating that existing employees (who already
attained regular and permanent status but who are not members of any union)
are to be included in the coverage of a union security clause. Even Article
248(e) of the Labor Code only expressly exempts old employees who
already have a union from inclusion in a union security clause.[39]
Contrary to the assertion in the dissent of Justice Carpio, Juat has not been
overturned by Victoriano v. Elizalde Rope Workers Union[40] nor by Reyes v.
Trajano.[41]The factual milieus of these three cases are vastly different.
In Victoriano, the issue that confronted the Court was whether or not
employees who were members of the Iglesia ni Kristo (INK) sect could be
compelled to join the union under a closed shop provision, despite the fact that
their religious beliefs prohibited them from joining a union. In that case, the
Court was asked to balance the constitutional right to religious freedom against
a host of other constitutional provisions including the freedom of association,
the non-establishment clause, the non-impairment of contracts clause, the
equal protection clause, and the social justice provision. In the end, the Court
held that religious freedom, although not unlimited, is a fundamental personal
right and liberty, and has a preferred position in the hierarchy of values.[42]
However, Victoriano is consistent with Juat since they both affirm that the right
to refrain from joining a union is not absolute. The relevant portion
of Victoriano is quoted below:
The right to refrain from joining labor organizations
recognized by Section 3 of the Industrial Peace Act is,
however, limited. The legal protection granted to such right
to refrain from joining is withdrawn by operation of law,
where a labor union and an employer have agreed on a
closed shop, by virtue of which the employer may employ
only member of the collective bargaining union, and the
employees must continue to be members of the union for
the duration of the contract in order to keep their
jobs.Thus Section 4 (a) (4) of the Industrial Peace Act, before
its amendment by Republic Act No. 3350, provides
that although it would be an unfair labor practice for an
employer "to discriminate in regard to hire or tenure of
employment or any term or condition of employment to
encourage or discourage membership in any labor
organization" the employer is, however, not precluded
"from making an agreement with a labor organization to
require as a condition of employment membership
therein, if such labor organization is the representative of
the employees." By virtue, therefore, of a closed shop
agreement, before the enactment of Republic Act No. 3350, if
any person, regardless of his religious beliefs, wishes to be
employed or to keep his employment, he must become a
member of the collective bargaining union. Hence, the right
of said employee not to join the labor union is curtailed
and withdrawn.[43] (Emphases supplied.)
If Juat exemplified an exception to the rule that a person has the right not to
join a union, Victoriano merely created an exception to the exception on the
ground of religious freedom.
Reyes, on the other hand, did not involve the interpretation of any union
security clause. In that case, there was no certified bargaining agent yet since
the controversy arose during a certification election. In Reyes, the Court
highlighted the idea that the freedom of association included the right not to
associate or join a union in resolving the issue whether or not the votes of
members of the INK sect who were part of the bargaining unit could be
excluded in the results of a certification election, simply because they were not
members of the two contesting unions and were expected to have voted for
NO UNION in view of their religious affiliation. The Court upheld the inclusion
of the votes of the INK members since in the previous case of Victoriano we
held that INK members may not be compelled to join a union on the ground of
religious freedom and even without Victoriano every employee has the right to
vote no union in a certification election as part of his freedom of
association.However, Reyes is not authority for Justice Carpios proposition
that an employee who is not a member of any union may claim an exemption
from an existing union security clause because he already has regular and
permanent status but simply prefers not to join a union.
The other cases cited in Justice Carpios dissent on this point are likewise
inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas,[44] Anucension v. National Labor
Union, and Gonzales v. Central Azucarera de Tarlac Labor Union [46] all
[45]
involved members of the INK. In line with Victoriano, these cases upheld the
INK members claimed exemption from the union security clause on religious
grounds. In the present case, the former FEBTC employees never claimed any
religious grounds for their exemption from the Union Shop Clause. As
for Philips Industrial Development, Inc. v. National Labor Relations
Corporation[47] and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja,[48] the
employees who were exempted from joining the respondent union or who were
excluded from participating in the certification election were found to be not
members of the bargaining unit represented by respondent union and
were free to form/join their own union. In the case at bar, it is undisputed that
the former FEBTC employees were part of the bargaining unit that the Union
represented. Thus, the rulings in Philips and Knitjoy have no relevance to the
issues at hand.
Time and again, this Court has ruled that the individual employees
right not to join a union may be validly restricted by a union security clause in
a CBA[49] and such union security clause is not a violation of the employees
constitutional right to freedom of association.[50]
It is unsurprising that significant provisions on labor protection of the 1987
Constitution are found in Article XIII on Social Justice. The constitutional
guarantee given the right to form unions[51] and the State policy to promote
unionism[52] have social justice considerations. In Peoples Industrial and
Commercial Employees and Workers Organization v. Peoples Industrial and
Commercial Corporation,[53] we recognized that [l]abor, being the weaker in
economic power and resources than capital, deserve protection that is actually
substantial and material.
The rationale for upholding the validity of union shop clauses in a CBA,
even if they impinge upon the individual employees right or freedom of
association, is not to protect the union for the unions sake. Laws and
jurisprudence promote unionism and afford certain protections to the certified
bargaining agent in a unionized company because a strong and effective union
presumably benefits all employees in the bargaining unit since such a union
would be in a better position to demand improved benefits and conditions of
work from the employer. This is the rationale behind the State policy to
promote unionism declared in the Constitution, which was elucidated in the
above-cited case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.[54]
In the case at bar, since the former FEBTC employees are deemed covered
by the Union Shop Clause, they are required to join the certified bargaining
agent, which supposedly has gathered the support of the majority of workers
within the bargaining unit in the appropriate certification proceeding. Their
joining the certified union would, in fact, be in the best interests of the former
FEBTC employees for it unites their interests with the majority of employees
in the bargaining unit. It encourages employee solidarity and affords sufficient
protection to the majority status of the union during the life of the CBA which
are the precisely the objectives of union security clauses, such as the Union
Shop Clause involved herein. We are indeed not being called to balance the
interests of individual employees as against the State policy of promoting
unionism, since the employees, who were parties in the court below, no longer
contested the adverse Court of Appeals decision. Nonetheless, settled
jurisprudence has already swung the balance in favor of unionism, in
recognition that ultimately the individual employee will be benefited by that
policy. In the hierarchy of constitutional values, this Court has repeatedly held
that the right to abstain from joining a labor organization is subordinate to the
policy of encouraging unionism as an instrument of social justice.
Also in the dissenting opinion of Justice Carpio, he maintains that one of the
dire consequences to the former FEBTC employees who refuse to join the
union is the forfeiture of their retirement benefits. This is clearly not the case
precisely because BPI expressly recognized under the merger the length of
service of the absorbed employees with FEBTC. Should some refuse to
become members of the union, they may still opt to retire if they are qualified
under the law, the applicable retirement plan, or the CBA, based on their
combined length of service with FEBTC and BPI. Certainly, there is nothing in
the union shop clause that should be read as to curtail an employees eligibility
to apply for retirement if qualified under the law, the existing retirement plan,
or the CBA as the case may be.
In sum, this Court finds it reasonable and just to conclude that the
Union Shop Clause of the CBA covers the former FEBTC employees who were
hired/employed by BPI during the effectivity of the CBA in a manner which
petitioner describes as absorption. A contrary appreciation of the facts of this G.R. No. 165407
case would, undoubtedly, lead to an inequitable and very volatile labor
situation which this Court has consistently ruled against.

HERMINIGILDO INGUILLO AND Present:

In the case of former FEBTC employees who initially joined the union
but later withdrew their membership, there is even greater reason for the union ZENAIDA BERGANTE,
to request their dismissal from the employer since the CBA also contained a
Petitioners, YNARES-SANTIAGO, J.,
Maintenance of Membership Clause.
Chairperson,
A final point in relation to procedural due process, the Court is not
unmindful that the former FEBTC employees refusal to join the union and BPIs - versus - CARPIO,*
refusal to enforce the Union Shop Clause in this instance may have been
based on the honest belief that the former FEBTC employees were not CORONA,**
covered by said clause. In the interest of fairness, we believe the former
NACHURA, and
FEBTC employees should be given a fresh thirty (30) days from notice of
finality of this decision to join the union before the union demands BPI to PERALTA, JJ.
terminate their employment under the Union Shop Clause, assuming said
clause has been carried over in the present CBA and there has been no FIRST PHILIPPINE SCALES,
material change in the situation of the parties. INC. and/or AMPARO POLICARPIO,
MANAGER, Promulgated:
WHEREFORE, the petition is hereby DENIED, and the Decision dated Respondents. June 5, 2009
September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty
(30) day notice requirement imposed herein. Former FEBTC employees who x-----------------------------------------------------
opt not to become union members but who qualify for retirement shall receive x
their retirement benefits in accordance with law, the applicable retirement plan,
or the CBA, as the case may be.SO ORDERED.
DECISION

PERALTA, J.:

Assailed in this petition for review under Rule 45 of the Rules of Court are the
Court of Appeals (1) Decision[1] dated March 11, 2004 in CA-G.R. SP No.
73992, which dismissed the Petition for Certiorari of petitioners Zenaida
Bergante (Bergante) and Herminigildo Inguillo (Inguillo); and
(2) Resolution[2] dated September 17, 2004 denying petitioners' Motion for
Reconsideration. The appellate court sustained the ruling of the National
Labor Relations Commission (NLRC) that petitioners were validly dismissed
pursuant to a Union Security Clause in the collective bargaining agreement.
The facts of the case are as follows:
First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the
manufacturing of weighing scales, employed Bergante and Inguillo as
assemblers on August 15, 1977 and September 10, 1986, respectively.
In 1991, FPSI and First Philippine Scales Industries Labor Union
(FPSILU)[3] entered into a Collective Bargaining Agreement (CBA),[4] the
duration of which was for a period of five (5) years starting on September 12,
1991 until September 12, 1996. On September 19, 1991, the members of
FPSILU ratified the CBA in a document entitled RATIPIKASYON NG
KASUNDUAN.[5] Bergante and Inguillo, who were members of FPSILU, signed
the said document.[6]
During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees
joined another union, the Nagkakaisang Lakas ng Manggagawa (NLM), which
was affiliated with a federation called KATIPUNAN (NLM-KATIPUNAN, for
brevity). Subsequently, NLM-KATIPUNAN filed with the Department of Labor
and Employment (DOLE) an intra-union dispute[7] against FPSILU and
FPSI. In said case, the Med-Arbiter decided[8] in favor of FPSILU. It also
ordered the officers and members of NLM-KATIPUNAN to return to FPSILU
the amount of P90,000.00 pertaining to the union dues erroneously collected
from the employees. Upon finality of the Med-Arbiter's Decision, a Writ of
Execution[9] was issued to collect the adjudged amount from NLM-
KATIPUNAN. However, as no amount was recovered, notices of garnishment
were issued to United Coconut Planters Bank (Kalookan City Branch) [10] and
to FPSI[11] for the latter to hold for FPSILU the earnings of Domingo Grutas, Jr.
(Grutas) and Inguillo, formerly FPSILU's President and Secretary for Finance,
respectively, to the extent of P13,032.18. Resultantly, the amount
of P5,140.55 was collected,[12] P1,695.72 of which came from the salary of
Grutas, while the P3,444.83 came from that of Inguillo.
Meanwhile, on March 29, 1996, the executive board and members of the
FPSILU addressed a document dated March 18, 1996 denominated as
Petisyon[13] to FPSI's general manager, Amparo Policarpio (Policarpio),
seeking the termination of the services of the following employees,
namely: Grutas, Yolanda Tapang, Shirley Tapang, Gerry Trinidad, Gilbert
Lucero, Inguillo, Bergante, and Vicente Go, on the following grounds: [14] (1)
disloyalty to the Union by separating from it and affiliating with a rival Union,
the NLM-KATIPUNAN; (2) dereliction of duty by failing to call periodic
membership meetings and to give financial reports; (3) depositing Union funds
in the names of Grutas and former Vice-President Yolanda Tapang, instead of
in the name of FPSILU, care of the President; (4) causing damage to FPSI by
deliberately slowing down production, preventing the Union to even attempt to
ask for an increase in benefits from the former; and (5) poisoning the minds of
the rest of the members of the Union so that they would be enticed to join the
rival union.
On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or
Policarpio (respondents) for illegal withholding of salary and damages,
docketed as NLRC-NCR-Case No. 00-05-03036-96.[15]
On May 16, 1996, respondents terminated the services of the employees
mentioned in the Petisyon.
The following day, two (2) separate complaints for illegal dismissal,
reinstatement and damages were filed against respondents by: (1) NLM-
KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda Tapang, Go, Shirley
Tapang and Lucero[16] (Grutas complaint, for brevity); and (2)
Inguillo[17] (Inguillo complaint). Both complaints were consolidated with
Inguillo's prior complaint for illegal withholding of salary, which was pending
before Labor Arbiter Manuel Manansala. After the preliminary mandatory
conference, some of the complainants agreed to amicably settle their
cases. Consequently, the Labor Arbiter issued an Order [18] dated October 1,
1996, dismissing with prejudice the complaints of Go, Shirley Tapang, Yolanda
Tapang, Grutas, and Trinidad.[19] Lucero also settled the case after receiving
his settlement money and executing a Quitclaim and Release in favor of FPSI
and Policarpio.[20]
Bergante and Inguillo, the remaining complainants, were directed to submit
their respective position papers, after which their complaints were submitted
for resolution on February 20, 1997.[21]
In their Position Paper,[22] Bergante and Inguillo claimed that they were not
aware of a petition seeking for their termination, and neither were they
informed of the grounds for their termination. They argued that had they been
informed, they would have impleaded FPSILU in their complaints. Inguillo
could not think of a valid reason for his dismissal except the fact that he was a
very vocal and active member of the NLM-KATIPUNAN. Bergante, for her part,
surmised that she was dismissed solely for being Inguillo's sister-in-law. She
also reiterated the absence of a memorandum stating that she committed an
infraction of a company rule or regulation or a violation of law that would justify
her dismissal.
Inguillo also denounced respondents' act of withholding his salary, arguing that
he was not a party to the intra-union dispute from which the notice of
garnishment arose. Even assuming that he was, he argued that his salary was
exempt from execution.
 Total 44,064.00
In their Position Paper,[23] respondents maintained that Bergante and Inguillo's
dismissal was justified, as the same was done upon the demand of FPSILU,
and that FPSI complied in order to avoid a serious labor dispute among its 2. Directing the afore-named respondents to pay ten (10%) percent
officers and members, which, in turn, would seriously affect production. They attorney's fees based on the total monetary award to complainants Inguillo and
also justified that the dismissal was in accordance with the Union Security Bergante.
Clause in the CBA, the existence and validity of which was not disputed by
Bergante and Inguillo. In fact, the two had affixed their signatures to the
document which ratified the CBA. 3. Dismissing the claim for illegal withholding of salary of
complainant Inguillo for lack of merit as above discussed.

In his Decision[24] dated November 27, 1997, the Labor Arbiter dismissed the
remaining complaints of Bergante and Inguillo and held that they were not 4. Dismissing the other money claims and/or other charges of
illegally dismissed. He explained that the two clearly violated the Union complainants Inguillo and Bergante for lack of factual and legal basis.
Security Clause of the CBA when they joined NLM-KATIPUNAN and
committed acts detrimental to the interests of FPSILU and respondents. The
dispositive portion of the said Decision states:
5. Dismissing the complaint of complainant Gilberto Lucero with
WHEREFORE, premises considered, judgment is hereby rendered: prejudice for having executed a Quitclaim and Release and voluntary
resignation in favor of respondents FPSI and Amparo Policarpio as above-
discussed where the former received the amount of P23,334.00 as financial
assistance/separation pay and legal holiday pay from the latter.
1. Declaring respondents First Philippines Scales, Inc. (First
Philippine Scales Industries [FPSI] and Amparo Policarpio, in her capacity as
President and General Manager of respondent FPSI, not guilty of illegal
dismissal as above discussed. However, considering the length of services SO ORDERED.[25]
rendered by complainants Herminigildo Inguillo and Zenaida Bergante as
employees of respondent FPSI, plus the fact that the other complainants in the
above-entitled cases were previously granted financial assistance/separation
pay through amicable settlement, the afore-named respondents are hereby
directed to pay complainants Herminigildo Inguillo and Zenaida Bergante Bergante and Inguillo appealed before the NLRC, which reversed the Labor
separation pay and accrued legal holiday pay, as earlier computed, to wit: Arbiter's Decision in a Resolution[26] dated June 8, 2001, the dispositive portion
of which provides:
Herminigildo Inguillo
WHEREFORE, the assailed decision is set aside. Respondents are hereby
Separation pay ................P22,490.00 ordered to reinstate complainants Inguillo and Bergante with full backwages
from the time of their dismissal up [to] their actual reinstatement. Further,
Legal Holiday Pay........... 839.00
respondents are also directed to pay complainant Inguillo the amount
Total 23,329.00 representing his withheld salary for the period March 15, 1998 to April 16,
1998. The sum corresponding to ten percent (10%) of the total judgment
award by way of attorney's fees is likewise ordered. All other claims are
ordered dismissed for lack of merit.
Zenaida Bergante
Separation pay.................P43,225.00
SO ORDERED.[27]
Legal Holiday Pay........... 839.00
In reversing the Labor Arbiter, the NLRC[28] ratiocinated that respondents
failed to present evidence to show that Bergante and Inguillo committed acts
inimical to FPSILU's interest. It also observed that, since the two (2) were not
informed of their dismissal, the justification given by FPSI that it was merely
constrained to dismiss the employees due to persistent demand from
the Union clearly proved the claim of summary dismissal and violation of the
employees' right to due process.
Respondents filed a Motion for Reconsideration, which was referred by the
NLRC to Executive Labor Arbiter Vito C. Bose for report and
recommendation. In its Resolution[29] dated August 26, 2002, the NLRC
adopted in toto the report and recommendation of Arbiter Bose which set aside
its previous Resolution reversing the Labor Arbiter's Decision. This time, the
NLRC held that Bergante and Inguillo were not illegally dismissed as
respondents merely put in force the CBA provision on the termination of the
services of disaffiliating Union members upon the recommendation of
the Union. The dispositive portion of the said Resolution provides:
WHEREFORE, the resolution of the Commission dated June 8, 2001 is set
aside. Declaring the dismissal of the complainants as valid, [t]his complaint for
illegal dismissal is dismissed. However, respondents are hereby directed to
pay complainant Inguillo the amount representing his withheld salary for the
period March 15, 1998 to April 16, 1998, plus ten (10%) percent as attorney's
fees.
All other claims are ordered dismissed for lack of merit.
SO ORDERED.[30]
Not satisfied with the disposition of their complaints, Bergante and Inguillo filed
a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals (CA). The CA dismissed the petition for lack of merit[31] and denied
the subsequent motion for reconsideration.[32] In affirming the legality of the
dismissal, the CA ratiocinated, thus:
x x x on the merits, we sustain the view adopted by the NLRC that:
x x x it cannot 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
constitutive of unfair labor practice, for such is one of the matters on which
management and labor can agree in order to bring about the 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.
The employer FPSI did nothing but to put in force their agreement when it
separated the disaffiliating union members, herein complainants, upon the
recommendation of the union. Such a stipulation is not only necessary to
maintain loyalty and preserve the integrity of the union, but is allowed by the
Magna Carta of Labor when it provided that while it is recognized that an
employee shall have the right of self-organization, it is at the same time
postulated that such rights shall not injure the right of the labor organization to
prescribe its own rules with respect to the acquisition or retention of
membership therein. Having ratified their CBA and being then members of
FPSILU, the complainants 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, which
was not present in this case.
x x x the dismissal of the complainants pursuant to the demand of the majority
union in accordance with their union security [clause] agreement following the
loss of seniority rights is valid and privileged and does not constitute unfair
labor practice or illegal dismissal.
Indeed, the Supreme Court has for so long a time already recognized a union
security clause in the CBA, like the one at bar, as a specie of closed-shop
arrangement and trenchantly upheld the validity of the action of the employer
in enforcing its terms as a lawful exercise of its rights and obligations under
the contract.
The collective bargaining agreement in this case contains a union security
clause-a closed-shop agreement.
A closed-shop agreement is an agreement whereby an employer binds himself
to hire only members of the contracting union who must continue to remain
members in good standing to keep their jobs. It is the most prized achievement
of unionism. It adds membership and compulsory dues. By holding out to loyal
members a promise of employment in the closed-shop, it welds group
solidarity. (National Labor Union v. Aguinaldo's Echague Inc., 97 Phil. 184). It
is a very effective form of union security agreement.
This Court has held that a closed-shop is a valid form of union security, and
such a provision in a collective bargaining agreement is not a restriction of the
right of freedom of association guaranteed by the Constitution. (Lirag Textile
Mills, Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development Company,
Inc., 21 SCRA 561.)[33]
Hence, the present petition.
Essentially, the Labor Code of the Philippines has several provisions under
which an employee may be validly terminated, namely: (1) just causes under
Article 282;[34] (2) authorized causes under Article 283;[35] (3) termination due
to disease under Article 284;[36] and (4) termination by the employee or
resignation under Article 285.[37] While the said provisions did not mention as
ground the enforcement of the Union Security Clause in the CBA, the dismissal
from employment based on the same is recognized and accepted in our
jurisdiction.[38]
Union security is a generic term, which is applied to and comprehends closed
shop, union shop, maintenance of membership or any other form of agreement
which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment.[39] There is union shop when
all new regular employees are required to join the union within a certain period
as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must
maintain union membership as a condition for continued employment until they
are promoted or transferred out of the bargaining unit or the agreement is
terminated.[40] A closed-shop, on the other hand, may be defined as an
enterprise in which, by agreement between the employer and his employees
or their representatives, no person may be employed in any or certain agreed
departments of the enterprise unless he or she is, becomes, and, for the
duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.[41]
In their Petition, Bergante and Inguillo assail the legality of their termination
based on the Union Security Clause in the CBA between FPSI and
FPSILU. Article II[42]of the CBA pertains to Union Security and
Representatives, which provides:
The Company hereby agrees to a UNION SECURITY [CLAUSE] with the
following terms:
1. All bonafide union members as of the effective date of this
agreement and all those employees within the bargaining unit who shall
subsequently become members of the UNION during the period of this
agreement shall, as a condition to their continued employment, maintain
their membership with the UNION under the FIRST PHIL. SCALES
INDUSTRIES LABOR UNION Constitution and By-laws and this Agreement;
2. Within thirty (30) days from the signing of this Agreement, all
workers eligible for membership who are not union members shall become
and to remain members in good standing as bonafide union members therein
as a condition of continued employment;
3. New workers hired shall likewise become members of the
UNION from date they become regular and permanent workers and shall
remain members in good standing as bonafide union members therein as a
condition of continued employment;
4. In case a worker refused to join the Union, the Union will
undertake to notify workers to join and become union members. If said worker
or workers still refuses, he or they shall be notified by the Company of his/her
dismissal as a consequence thereof and thereafter terminated after 30 days
notice according to the Labor Code.
5. Any employee/union member who fails to retain union
membership in good standing may be recommended for suspension or
dismissal by the Union Directorate and/or FPSILU Executive Council for
any of the following causes:
a) Acts of Disloyalty;
b) Voluntary Resignation or Abandonment from the UNION;
c) Organization of or joining another labor union or any labor group that would
work against the UNION;
d) Participation in any unfair labor practice or violation of the Agreement, or
activity derogatory to the UNION decision;
e) Disauthorization of, or Non-payment of, monthly membership dues, fees,
fines and other financial assessments to the Union;
f) Any criminal violation or violent conduct or activity against any UNION
member without justification and affecting UNION rights or obligations under
the said Agreement.
Verily, the aforesaid provision requires all members to maintain their
membership with FPSILU during the lifetime of the CBA. Failing so, and for
any of the causes enumerated therein, the Union Directorate and/or FPSILU
Executive Council may recommend to FPSI an employee/union member's
suspension or dismissal. Records show that Bergante and Inguillo were former
members of FPSILU based on their signatures in the document which ratified
the CBA. It can also be inferred that they disaffiliated from FPSILU when the
CBA was still in force and subsisting, as can be gleaned from the documents
relative to the intra-union dispute between FPSILU and NLM-KATIPUNAN. In
view of their disaffiliation, as well as other acts allegedly detrimental to the
interest of both FPSILU and FPSI, a Petisyon was submitted to Policarpio,
asking for the termination of the services of employees who failed to maintain
their Union membership.
The Court is now tasked to determine whether the enforcement of the
aforesaid Union Security Clause justified herein petitioners' dismissal from the
service.
In terminating the employment of an employee by enforcing the Union Security
Clause, the employer needs only to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of
the union security provision in the CBA; and (3) there is sufficient evidence to
support the union's decision to expel the employee from the union or
company.[43]
We hold that all the requisites have been sufficiently met and FPSI was
justified in enforcing the Union Security Clause, for the following reasons:
First. FPSI was justified in applying the Union Security Clause, as it was a valid
provision in the CBA, the existence and validity of which was not questioned
by either party. Moreover, petitioners were among the 93 employees who
affixed their signatures to the document that ratified the CBA. They cannot now
turn their back and deny knowledge of such provision.
Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal
of the members who failed to maintain their membership with the Union. Aside
from joining another rival union, FPSILU cited other grounds committed by
petitioners and the other employees which tend to prejudice FPSIs
interests, i.e., dereliction of duty - by failing to call periodic membership
meetings and to give financial reports; depositing union funds in the names of
Grutas and former Vice-President Yolanda Tapang, instead of in the name of
FPSILU care of the President; causing damage to FPSI by deliberately slowing
down production, preventing the Union from even attempting to ask for an
increase in benefits from the former; and poisoning the minds of the rest of the
members of the Union so that they would be enticed to join the rival union.
Third. FPSILU's decision to ask for the termination of the employees in the
Petisyon was justified and supported by the evidence on record. Bergante and
Inguillo were undisputably former members of FPSILU. In fact, Inguillo was the
Secretary of Finance, the underlying reason why his salary was garnished to
satisfy the judgment of the Med-Arbiter who ordered NLM-KATIPUNAN to
return the Union dues it erroneously collected from the employees. Their then
affiliation with FPSILU was also clearly shown by their signatures in the
document which ratified the CBA. Without a doubt, they committed acts of
disloyalty to the Union when they failed not only to maintain their membership
but also disaffiliated from it. They abandoned FPSILU and even joined another
union which works against the former's interests. This is evident from the intra-
union dispute filed by NLM-KATIPUNAN against FPSILU. Once affiliated with
NLM-KATIPUNAN, Bergante and Inguillo proceeded to recruit other
employees to disaffiliate from FPSILU and even collected Union dues from
them.
In Del Monte Philippines,[44] the stipulations in the CBA authorizing the
dismissal of employees are of equal import as the statutory provisions on
dismissal under the Labor Code, since a CBA is the law between the company
and the Union, and compliance therewith is mandated by the express policy to
give protection to labor. In Caltex Refinery Employees Association (CREA) v.
Brillantes,[45] the Court expounded on the effectiveness of union security
clause when it held that it is one intended to strengthen the contracting union
and to protect it from the fickleness or perfidy of its own members. For without
such safeguards, group solidarity becomes uncertain; the union becomes
gradually weakened and increasingly vulnerable to company machinations. In
this security clause lies the strength of the union during the enforcement of the
collective bargaining agreement. It is this clause that provides labor with
substantial power in collective bargaining.
Nonetheless, while We uphold dismissal pursuant to a union security clause,
the same is not without a condition or restriction. For to allow its untrammeled
enforcement would encourage arbitrary dismissal and abuse by the employer,
to the detriment of the employees. Thus, to safeguard the rights of the
employees, We have said time and again that dismissals pursuant to union
security clauses are valid and legal, subject only to the requirement of due
process, that is, notice and hearing prior to dismissal.[46] In like manner, We
emphasized that the enforcement of union security clauses is authorized by
law, provided such enforcement is not characterized by arbitrariness, and
always with due process.[47]
There are two (2) aspects which characterize the concept of due process
under the Labor Code: one is substantivewhether the termination of
employment was based on the provisions of the Labor Code or in accordance
with the prevailing jurisprudence; the other is procedural - the manner in which
the dismissal was effected.
The second aspect of due process was clarified by the Court in King of Kings
Transport v. Mamac,[48] stating, thus:
(1) The first written notice to be served on the employees should contain
the specific causes or grounds for termination against them, and a directive
that the employees are given the opportunity to submit their written explanation
within a reasonable period. x x x
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity
to: (1) explain and clarify their defenses to the charge against them;
(2) present evidence in support of their defenses; and (3) rebut the
evidence presented against them by the management. During the hearing or
conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers
shall serve the employees a written notice of termination indicating that:
(1) all circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of
their employment.
Corollarily, procedural due process in the dismissal of employees requires
notice and hearing. The employer must furnish the employee two written
notices before termination may be effected. The first notice apprises the
employee of the particular acts or omissions for which his dismissal is sought,
while the second notice informs the employee of the employers decision to
dismiss him.[49] The requirement of a hearing, on the other hand, is complied
with as long as there was an opportunity to be heard, and not necessarily that
an actual hearing was conducted.[50]
In the present case, the required two notices that must be given to herein
petitioners Bergante and Inguillo were lacking. The records are bereft of any
notice that would have given a semblance of substantial compliance on the
part of herein respondents. Respondents, however, aver that they had
furnished the employees concerned, including petitioners, with a copy of
FPSILU's Petisyon. We cannot consider that as compliance with the
requirement of either the first notice or the second notice.While the Petisyon
enumerated the several grounds that would justify the termination of the
employees mentioned therein, yet such document is only a recommendation
by the Union upon which the employer may base its decision. It cannot be
considered a notice of termination. For as agreed upon by FPSI and FPSILU
in their CBA, the latter may only recommend to the former a Union member's
suspension or dismissal. Nowhere in the controverted Union Security Clause
was there a mention that once the union gives a recommendation, the
employer is bound outright to proceed with the termination.
Even assuming that the Petisyon amounts to a first notice, the employer
cannot be deemed to have substantially complied with the procedural
requirements. True, FPSILU enumerated the grounds in said Petisyon. But a
perusal of each of them leads Us to conclude that what was stated were
general descriptions, which in no way would enable the employees to
intelligently prepare their explanation and defenses. In addition, the Petisyon
did not provide a directive that the employees are given opportunity to submit
their written explanation within a reasonable period. Finally, even if We are to
assume that the Petisyon is a second notice, still, the requirement of due
process is wanting. For as We have said, the second notice, which is aimed to
inform the employee that his service is already terminated, must state that the
employer has considered all the circumstances which involve the charge and
the grounds in the first notice have been established to justify the severance
of employment. After the claimed dialogue between Policarpio and the
employees mentioned in the Petisyon, the latter were simply told not to report
for work anymore.
These defects are bolstered by Bergante and Inguillo who remain steadfast in
denying that they were notified of the specific charges against them nor were
they given any memorandum to that effect. They averred that had they been
informed that their dismissal was due to FPSILU's demand/petition, they could
have impleaded the FPSILU together with the respondents. The Court has
always underscored the significance of the two-notice rule in dismissing an
employee and has ruled in a number of cases that non-compliance therewith
is tantamount to deprivation of the employees right to due process. [51]
As for the requirement of a hearing or conference, We hold that respondents
also failed to substantially comply with the same. Policarpio alleged that she
had a dialogue with the concerned employees; that she explained to them the
demand of FPSILU for their termination as well as the consequences of the
Petisyon; and that she had no choice but to act accordingly. She further
averred that Grutas even asked her to pay all the involved employees one (1)-
month salary for every year of service, plus their accrued legal holiday pay,
but which she denied. She informed them that it has been FPSI's practice to
give employees, on a case-to-case basis, only one-half () month salary for
every year of service and after they have tendered their voluntary
resignation. The employees refused her offer and told her that they will just file
their claims with the DOLE.[52]
Policarpio's allegations are self-serving. Except for her claim as stated in the
respondent's Position Paper, nowhere from the records can We find that
Bergante and Inguillo were accorded the opportunity to present evidence in
support of their defenses. Policarpio relied heavily on the Petisyon
of FPSILU. She failed to convince Us that during the dialogue, she was able
to ascertain the validity of the charges mentioned in the Petisyon. In her futile
attempt to prove compliance with the procedural requirement, she reiterated
that the objective of the dialogue was to provide the employees the opportunity
to receive the act of grace of FPSI by giving them an amount equivalent to
one-half () month of their salary for every year of service. We are not
convinced. We cannot even consider the demand and counter-offer for the
payment of the employees as an amicable settlement between the parties
because what took place was merely a discussion only of the amount which
the employees are willing to accept and the amount which the respondents are
willing to give. Such non-compliance is also corroborated by Bergante and
Inguillo in their pleadings denouncing their unjustified dismissal. In fine, We
hold that the dialogue is not tantamount to the hearing or conference
prescribed by law.
We reiterate, FPSI was justified in enforcing the Union Security Clause in the
CBA. However, We cannot countenance respondents' failure to accord herein
petitioners the due process they deserve after the former dismissed them
outright in order to avoid a serious labor dispute among the officers and
members of the bargaining agent.[53] In enforcing the Union Security Clause in
the CBA, We are upholding the sanctity and inviolability of contracts. But in
doing so, We cannot override an employees right to due process.[54] In Carino
v. National Labor Relations Commission,[55] We took a firm stand in holding
that:
The power to dismiss is a normal prerogative of the employer. However, this
is not without limitation. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made
upon the request of a labor union pursuant to the Collective Bargaining
Agreement x x x. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee because it
affects not only his position but also his means of livelihood. Employers
should respect and protect the rights of their employees, which include the
right to labor."
Thus, as held in that case, "the right of an employee to be informed of the
charges against him and to reasonable opportunity to present his side in a
controversy with either the company or his own Union is not wiped away by a
Union Security Clause or a Union Shop Clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company
which disregards his rights but also from his own Union, the leadership of
which could yield to the temptation of swift and arbitrary expulsion from
membership and mere dismissal from his job."[56]
In fine, We hold that while Bergante and Inguillo's dismissals were valid
pursuant to the enforcement of Union Security Clause, respondents however
did not comply with the requisite procedural due process. As in the case
of Agabon v. National Labor Relations Commission,[57] where the dismissal is
for a cause recognized by the prevailing jurisprudence, the absence of the
statutory due process should not nullify the dismissal or render it illegal, or
ineffectual. Accordingly, for violating Bergante and Inguillo's statutory rights,
respondents should indemnify them the amount of P30,000.00 each as
nominal damages.
In view of the foregoing, We see no reason to discuss the other matters raised
by petitioners.
WHEREFORE, premises considered, the instant Petition is DENIED. The
Court of Appeals Decision dated March 11, 2004 and Resolution
dated September 17, 2004, in CA-G.R. SP No. 73992, are hereby AFFIRMED
WITH MODIFICATION in that while there was a valid ground for dismissal, the
procedural requirements for termination, as mandated by law and
jurisprudence, were not observed. Respondents First Philippine Scales, Inc.
and/or Amparo Policarpio are hereby ORDEREDto PAY petitioners Zenaida
Bergante and Herminigildo Inguillo the amount of P30,000.00 each as nominal
damages. No pronouncement as to costs.
SO ORDERED.
G.R. No. 76989 September 29, 1987
MANILA MANDARIN EMPLOYEES UNION, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, and MELBA C.
BELONCIO, respondents.
GUTIERREZ, JR., J.:
This is a petition to review on certiorari the National Labor Relations
Commission's (NLRC) decision which modified the Labor Arbiter's decision
and ordered the Manila Mandarin Employees Union to pay the wages and
fringe benefits of Melba C. Beloncio from the time she was placed on forced
leave until she is actually reinstated, plus ten percent (10%) thereof as
attorney's fees. Manila Mandarin Hotel was ordered to reinstate Beloncio and
to pay her whatever service charges may be due her during that period, which
amount would be held in escrow by the hotel.
The petition was filed on January 19, 1987. The private respondent filed her
comment on March 7, 1987 while the Solicitor General filed a comment on
June 1, 1987 followed by the petitioner's reply on August 22, 1987. We treat
the comment as answer and decide the case on its merits.
The facts of the case are undisputed.
Herein private respondent, Melba C. Beloncio, an employee of Manila
Mandarin Hotel since 1976 and at the time of her dismissal, assistant head
waitress at the hotel's coffee shop, was expelled from the petitioner Manila
Mandarin Employees Union for acts allegedly inimical to the interests of the
union. The union demanded the dismissal from employment of Beloncio on
the basis of the union security clause of their collective bargaining agreement
and the Hotel acceded by placing Beloncio on forced leave effective August
10, 1984.
The union security clause of the collective bargaining agreement provides:
Section 2. Dismissals.
xxx xxx xxx
b) Members of the Union who cease to be such members and/or who fail to
maintain their membership in good standing therein by reason of
their resignation from the Union and/or by reason of their expulsion from the
Union in accordance with the Constitution and By-Laws of the Union, for non-
payment of union dues and other assessment for organizing, joining or forming
another labor organization shall, upon written notice of such cessation of
membership or failure to maintain membership in the Union and upon written
demand to the company by the Union, be dismissed from employment by the
Company after complying with the requisite due process requirement; ...
(Emphasis supplied) (Rollo, p. 114)
Two days before the effective date of her forced leave or on August 8, 1984,
Beloncio filed a complaint for unfair labor practice and illegal dismissal against
herein petitioner-union and Manila Mandarin Hotel Inc. before the NLRC,
Arbitration Branch.
Petitioner-union filed a motion to dismiss on grounds that the complainant had
no cause of action against it and the NLRC had no jurisdiction over the subject
matter of the complaint.
This motion was denied by the Labor Arbiter.
After the hearings that ensued and the submission of the parties' respective
position papers, the Labor Arbiter held that the union was guilty of unfair labor
practice when it demanded the separation of Beloncio. The union was then
ordered to pay all the wages and fringe benefits due to Beloncio from the time
she was on forced leave until actual reinstatement, and to pay P30,000.00 as
exemplary damages and P10,000.00 as attorney's fees. The charge against
the hotel was dismissed.
The Union then appealed to the respondent NLRC which modified the Labor
Arbiter's decision as earlier stated.
A subsequent motion for reconsideration and a second motion for
reconsideration were denied.
Hence, this present petition.
The petitioner raises the following assignment of errors:
I which membership or continuation of membership is made available to other
THAT RESPONDENT NLRC ERRED IN NOT DECLARING THAT THE
PRESENT CONTROVERSY INVOLVED INTRA-UNION CONFLICTS AND
THEREFOR IT HAS NO JURISDICTION OVER THE SUBJECT-MATTER
THEREOF.
II
THAT RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING
PETITIONER LIABLE FOR THE PAYMENT OF PRIVATE RESPONDENT'S
SALARY AND FRINGE BENEFITS, AND AWARD OF 10% ATTORNEY'S
FEES, AFTER FINDING AS UNMERITORIOUS HER PRETENDED CLAIMS
OR COMPLAINTS FOR UNFAIR LABOR PRACTICE, ILLEGAL DISMISSAL,
AND DAMAGES. (Rollo, pp. 6-9)
On the issue of the NLRC jurisdiction over the case, the Court finds no grave
abuse of discretion in the NLRC conclusion that the dispute is not purely intra-
union but involves an interpretation of the collective bargaining agreement
(CBA) provisions and whether or not there was an illegal dismissal. Under the
CBA, membership in the union may be lost through expulsion only if there is
non-payment of dues or a member organizes, joins, or forms another labor
organization. The charge of disloyalty against Beloncio arose from her
emotional remark to a waitress who happened to be a union steward, "Wala
akong tiwala sa Union ninyo." The remark was made in the course of a heated
discussion regarding Beloncio's efforts to make a lazy and recalcitrant waiter
adopt a better attitude towards his work.
We agree with the Solicitor General when he noted that:
... The Labor Arbiter explained correctly that "(I)f the only question is the
legality of the expulsion of Beloncio from the Union undoubtedly, the question
is one cognizable by the BLR (Bureau of Labor Relations). But, the question
extended to the dismissal of Beloncio or steps leading thereto. Necessarily,
when the hotel decides the recommended dismissal, its acts would be subject
to scrutiny. Particularly, it will be asked whether it violates or not the existing
CBA. Certainly, violations of the CBA would be unfair labor practice."
Article 250 of the Labor Code provides the following:
Art. 250. Unfair labor practices of labor organizations. — It shall be unfair labor
practice for a labor organization, its officers, agents or representatives:
xxx xxx xxx
(b) To cause or attempt to cause an employer to discriminate against an
employee, including discrimination against an employee with respect to whom
membership in such organization has been denied or to terminate an
employee on any ground other than the usual terms and conditions under
members. (Emphasis supplied)
Article 217 of the Labor Code also provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission — (a) The Labor
Arbiters shall have the original and exclusive jurisdiction to hear and decide ...
the following cases involving all workers, whether agricultural or
nonagricultural;
(1) Unfair labor practice cases;
xxx xxx xxx
(b) The Commission shall have exclusive appellate jurisdiction over all cases
decided by Labor Arbiters. (Rollo, pp. 155-157.)
The petitioner also questions the factual findings of the public respondent on
the reasons for Beloncio's dismissal and, especially, on the argument that she
was on forced leave; she was never dismissed; and not having worked, she
deserved no pay.
The Court finds nothing in the records that indicates reversible error, much
less grave abuse of discretion, in the NLRC's findings of facts.
It is a well-settled principle that findings of facts quasi-judicial agencies like the
NLRC, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect but at times even
finality if such findings are supported by substantial evidence. (Akay Printing
Press vs. Minister of Labor and Employment, 140 SCRA 381; Alba Patio de
Makati vs. Alba Patio de Makati Employees Association, 128 SCRA 253;
Dangan vs. National Labor Relations Commission, 127 SCRA 706; De la
Concepcion vs. Mindanao Portland Cement Corporation, 127 SCRA 647).
The petitioner now questions the decision of the National Labor Relations
Commission ordering the reinstatement of the private respondent and directing
the Union to pay the wages and fringe benefits which she failed to receive as
a result of her forced leave and to pay attorney's fees.
We find no error in the questioned decision.
The Hotel would not have compelled Beloncio to go on forced leave were it
not for the union's insistence and demand to the extent that because of the
failure of the hotel to dismiss Beloncio as requested, the union filed a notice of
strike with the Ministry of Labor and Employment on August 17, 1984 on the
issue of unfair labor practice. The hotel was then compelled to put Beloncio on
forced leave and to stop payment of her salary from September 1, 1984.
Furthermore, as provided for in the collective bargaining agreement between
the petitioner-the Union and the Manila Mandarin Hotel "the Union shall hold
the Company free and blameless from any and all liabilities that may arise"
should the employee question the dismissal, as has happened in the case at
bar.
It is natural for a union to desire that all workers in a particular company should
be its dues-paying members. Since it would be difficult to insure 100 percent
membership on a purely voluntary basis and practically impossible that such
total membership would continuously be maintained purely on the merits of
belonging to the union, the labor movement has evolved the system whereby
the employer is asked, on the strength of collective action, to enter into what
are now familiarly known as "union security" agreements.
The collective bargaining agreement in this case contains a union security
clause — a closed-shop agreement.
A closed-shop agreement is an agreement whereby an employer binds himself
to hire only members of the contracting union who must continue to remain
members in good standing to keep their jobs. It is "the most prized
achievement of unionism." It adds membership and compulsory dues. By
holding out to loyal members a promise of employment in the closed-shop, it
welds group solidarity. (National Labor Union vs. Aguinaldo's Echague, Inc.,
97 Phil. 184). It is a very effective form of union security agreement.
This Court has held that a closed-shop is a valid form of union security, and
such a provision in a collective bargaining agreement is not a restriction of the
right of freedom of association guaranteed by the Constitution. (Lirag Textile
Mills, Inc. vs. Blanco, 109 SCRA 87; Manalang vs. Artex Development
Company, Inc., 21 SCRA 561).
The Court stresses, however, that union security clauses are also governed
by law and by principles of justice, fair play, and legality. Union security clauses
cannot be used by union officials against an employer, much less their own
members, except with a high sense of responsibility, fairness, prudence, and
judiciousness.
A union member may not be expelled from her union, and consequently from
her job, for personal or impetuous reasons or for causes foreign to the closed-
shop agreement and in a manner characterized by arbitrariness and
whimsicality.
This is particularly true in this case where Ms. Beloncio was trying her best to
make a hotel bus boy do his work promptly and courteously so as to serve
hotel customers in the coffee shop expeditiously and cheerfully. Union
membership does not entitle waiters, janitors, and other workers to be sloppy
in their work, inattentive to customers, and disrespectful to supervisors. The
Union should have disciplined its erring and troublesome members instead of
causing so much hardship to a member who was only doing her work for the
best interests of the employer, all its employees, and the general public whom
they serve.
WHEREFORE, the petition is hereby DISMISSED. The questioned decision of
the National Labor Relations Commission is AFFIRMED. Costs against the
petitioner.
SO ORDERED.
GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD, DENNIS
R. ARANAS, DAVID SORIMA, JR., JORGE P. DELA ROSA, and ISAGANI
ALDEA, petitioners, vs. HON. EDGARDO ESPIRITU in his capacity as
Chairman of the PAL Inter-Agency Task Force created under
Administrative Order No. 16; HON. BIENVENIDO LAGUESMA in his
capacity as Secretary of Labor and Employment; PHILIPPINE AIRLINES
(PAL), LUCIO TAN, HENRY SO UY, ANTONIO V. OCAMPO, MANOLO E.
AQUINO, JAIME J. BAUTISTA, and ALEXANDER O.
BARRIENTOS, respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioners charge public
respondents with grave abuse of discretion amounting to lack or excess of
jurisdiction for acts taken in regard to the enforcement of the agreement dated
September 27, 1998, between Philippine Airlines (PAL) and its union, the PAL
Employees Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the
Philippines (ALPAP) went on a three-week strike, causing serious losses to
the financially beleaguered flag carrier. As a result, PALs financial situation
went from bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation
plan and downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the retrenchment measures
adopted by the airline, which affected 1,899 union members. The strike ended
four days later, when PAL and PALEA agreed to a more systematic reduction
in PALs work force and the payment of separation benefits to all retrenched
employees.
On August 28, 1998, then President Joseph E. Estrada issued Administrative
Order No. 16 creating an Inter-Agency Task Force (Task Force) to address
the problems of the ailing flag carrier. The Task Force was composed of the
Departments of Finance, Labor and Employment, Foreign Affairs,
Transportation and Communication, and Tourism, together with the Securities
and Exchange Commission (SEC). Public respondent Edgardo Espiritu, then
the Secretary of Finance, was designated chairman of the Task Force. It was
empowered to summon all parties concerned for conciliation, mediation (for)
the purpose of arriving at a total and complete solution of the
problem.[1] Conciliation meetings were then held between PAL management
and the three unions representing the airlines employees,[2] with the Task
Force as mediator.
On September 4, 1998, PAL management submitted to the Task Force an
offer by private respondent Lucio Tan, Chairman and Chief Executive Officer
of PAL, of a plan to transfer shares of stock to its employees. The pertinent
portion of said plan reads:
1. From the issued shares of stock within the group of Mr. Lucio Tans holdings,
the ownership of 60,000 fully paid shares of stock of Philippine Airlines with a
par value of PHP5.00/share will be transferred in favor of each employee of
Philippine Airlines in the active payroll as of September 15, 1998. Should any
share-owning employee leave PAL, he/she has the option to keep the shares
or sells (sic) his/her shares to his/her union or other employees currently
employed by PAL.
2. The aggregate shares of stock transferred to PAL employees will allow them
three (3) members to (sic) the PAL Board of Directors. We, thus, become
partners in the boardroom and together, we shall address and find solutions to
the wide range of problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are tackling its
problems, we would request for a suspension of the Collective Bargaining
Agreements (CBAs) for 10 years.[3]
On September 10, 1998, the Board of Directors of PALEA voted to accept
Tans offer and requested the Task Forces assistance in implementing the
same. Union members, however, rejected Tans offer. Under intense pressure
from PALEA members, the unions directors subsequently resolved to reject
Tans offer.
On September 17, 1998, PAL informed the Task Force that it was shutting
down its operations effective September 23, 1998, preparatory to liquidating
its assets and paying off its creditors. The airline claimed that given its labor
problems, rehabilitation was no longer feasible, and hence, the airline had no
alternative but to close shop.
On September 18, 1998, PALEA sought the intervention of the Office of the
President in immediately convening the parties, the PAL management,
PALEA, ALPAP, and FASAP, including the SEC under the direction of the
Inter-Agency Task Force, to prevent the imminent closure of PAL.[4]
On September 19, 1998, PALEA informed the Department of Labor and
Employment (DOLE) that it had no objection to a referendum on the Tans offer.
2,799 out of 6,738 PALEA members cast their votes in the referendum under
DOLE supervision held on September 21-22, 1998. Of the votes cast, 1,055
voted in favor of Tans offer while 1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent notices of
termination to its employees.
Two days later, the PALEA board wrote President Estrada anew, seeking his
intervention. PALEA offered a 10-year moratorium on strikes and similar
actions and a waiver of some of the economic benefits in the existing
CBA.[5] Tan, however, rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the President
proposing the following terms and conditions, subject to ratification by the
general membership:
1. Each PAL employee shall be granted 60,000 shares of stock with a par
value of P5.00, from Mr. Lucio Tans shareholdings, with three (3) seats in the
PAL Board and an additional seat from government shares as indicated by His
Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate
representation in committees or bodies which deal with matters affecting terms
and conditions of employment;
3. To enhance and strengthen labor-management relations, the existing
Labor-Management Coordinating Council shall be reorganized and revitalized,
with adequate representation from both PAL management and PALEA;
4. To assure investors and creditors of industrial peace, PALEA agrees,
subject to the ratification by the general membership, (to) the suspension of
the PAL-PALEA CBA for a period of ten (10) years, provided the following
safeguards are in place:
a. PAL shall continue recognizing PALEA as the duly certified bargaining
agent of the regular rank-and-file ground employees of the Company;
b. The union shop/maintenance of membership provision under the PAL-
PALEA CBA shall be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of
Agreement forged by and between PAL and PALEA, to those employees who
may opt to retire or be separated from the company.
6. PALEA members who have been retrenched but have not received
separation benefits shall be granted priority in the hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the provisions of
the Labor Code shall apply. [6]
Among the signatories to the letter were herein petitioners Rivera, Ramiso,
and Aranas, as officers and/or members of the PALEA Board of Directors. PAL
management accepted the PALEA proposal and the necessary referendum
was scheduled.
On October 2, 1998, 5,324 PALEA members cast their votes in a DOLE-
supervised referendum. Of the votes cast, 61% were in favor of accepting the
PAL-PALEA agreement, while 34% rejected it.
On October 7, 1998, PAL resumed domestic operations. On the same date,
seven officers and members of PALEA filed this instant petition to annul
the September 27, 1998agreement entered into between PAL and PALEA on
the following grounds:
I quasi-judicial or ministerial functions; and (2) there is no plain, speedy, and
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND
EXCEEDED THEIR JURISDICTION IN ACTIVELY PURSUING THE
CONCLUSION OF THE PAL-PALEA AGREEMENT AS THE
CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND COLLECTIVE
BARGAINING, BEING FOUNDED ON PUBLIC POLICY, MAY NOT BE
WAIVED, NOR THE WAIVER, RATIFIED.
II
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND
EXCEEDED THEIR JURISDICTION IN PRESIDING OVER THE
CONCLUSION OF THE PAL-PALEA AGREEMENT UNDER THREAT OF
ABUSIVE EXERCISE OF PALS MANAGEMENT PREROGATIVE TO CLOSE
BUSINESS USED AS SUBTERFUGE FOR UNION-BUSTING.
The issues now for our resolution are:
(1) Is an original action for certiorari and prohibition the proper remedy to annul
the PAL-PALEA agreement of September 27, 1998;
(2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the
suspension of the PAL-PALEA CBA unconstitutional and contrary to public
policy?
Anent the first issue, petitioners aver that public respondents as functionaries
of the Task Force, gravely abused their discretion and exceeded their
jurisdiction when they actively pursued and presided over the PAL-PALEA
agreement.
Respondents, in turn, argue that the public respondents merely served as
conciliators or mediators, consistent with the mandate of A.O. No. 16 and
merely supervised the conduct of the October 3, 1998 referendum during
which the PALEA members ratified the agreement. Thus, public respondents
did not perform any judicial and quasi-judicial act pertaining to
jurisdiction. Furthermore, respondents pray for the dismissal of the petition for
violating the hierarchy of courts doctrine enunciated in People v.
Cuaresma[7] and Enrile v. Salazar.[8]
Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules
of Civil Procedure. The essential requisites for a petition for certiorari under
Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer
exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer
has acted without or in excess of jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and (3) there is no appeal or any
plain, speedy, and adequate remedy in the ordinary course of law.[9] For writs
of prohibition, the requisites are: (1) the impugned act must be that of a
tribunal, corporation, board, officer, or person, whether exercising judicial,
adequate remedy in the ordinary course of law. [10]
The assailed agreement is clearly not the act of a tribunal, board, officer, or
person exercising judicial, quasi-judicial, or ministerial functions. It is not the
act of public respondents Finance Secretary Edgardo Espiritu and Labor
Secretary Bienvenido Laguesma as functionaries of the Task Force. Neither
is there a judgment, order, or resolution of either public respondents
involved. Instead, what exists is a contract between a private firm and one of
its labor unions, albeit entered into with the assistance of the Task Force. The
first and second requisites for certiorari and prohibition are therefore not
present in this case.
Furthermore, there is available to petitioners a plain, speedy, and adequate
remedy in the ordinary course of law. While the petition is denominated as one
for certiorari and prohibition, its object is actually the nullification of the PAL-
PALEA agreement. As such, petitioners proper remedy is an ordinary civil
action for annulment of contract, an action which properly falls under the
jurisdiction of the regional trial courts.[11] Neither certiorari nor prohibition is the
remedy in the present case.
Petitioners further assert that public respondents were partial towards PAL
management. They allegedly pressured the PALEA leaders into accepting the
agreement.Petitioners ask this Court to examine the circumstances that led to
the signing of said agreement. This would involve review of the facts and
factual issues raised in a special civil action for certiorari which is not the
function of this Court.[12]
Nevertheless, considering the prayer of the parties principally we shall look
into the substance of the petition, in the higher interest of justice [13] and in view
of the public interest involved, inasmuch as what is at stake here is industrial
peace in the nations premier airline and flag carrier, a national concern.
On the second issue, petitioners contend that the controverted PAL-PALEA
agreement is void because it abrogated the right of workers to self-
organization[14] and their right to collective bargaining.[15] Petitioners claim that
the agreement was not meant merely to suspend the existing PAL-PALEA
CBA, which expires on September 30, 2000, but also to foreclose any
renegotiation or any possibility to forge a new CBA for a decade or up to
2008. It violates the protection to labor policy[16] laid down by the Constitution.
Article 253-A of the Labor Code reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department
of Labor and Employment outside of the sixty-day period immediately before
the date of expiry of such five-year term of the Collective Bargaining
Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its execution. Any
agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such
other provisions as fixed in such Collective Bargaining Agreement, shall
retroact to the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the duration of the
retroactivity thereof. In case of a deadlock in the renegotiation of the collective
bargaining agreement, the parties may exercise their rights under this Code.
Under this provision, insofar as representation is concerned, a CBA has a term
of five years, while the other provisions, except for representation, may be
negotiated not later than three years after the execution.[17] Petitioners submit
that a 10-year CBA suspension is inordinately long, way beyond the maximum
statutory life of a CBA, provided for in Article 253-A. By agreeing to a 10-year
suspension, PALEA, in effect, abdicated the workers constitutional right to
bargain for another CBA at the mandated time.
We find the argument devoid of merit.
A CBA is a contract executed upon request of either the employer or the
exclusive bargaining representative incorporating the agreement reached after
negotiations with respect to wages, hours of work and all other terms and
conditions of employment, including proposals for adjusting any grievances or
questions arising under such agreement.[18] The primary purpose of a CBA is
the stabilization of labor-management relations in order to create a climate of
a sound and stable industrial peace.[19] In construing a CBA, the courts must
be practical and realistic and give due consideration to the context in which it
is negotiated and the purpose which it is intended to serve.[20]
The assailed PAL-PALEA agreement was the result of voluntary collective
bargaining negotiations undertaken in the light of the severe financial situation
faced by the employer, with the peculiar and unique intention of not merely
promoting industrial peace at PAL, but preventing the latters closure. We find
no conflict between said agreement and Article 253-A of the Labor
Code. Article 253-A has a two-fold purpose. One is to promote industrial
stability and predictability. Inasmuch as the agreement sought to promote
industrial peace at PAL during its rehabilitation, said agreement satisfies the
first purpose of Article 253-A. The other is to assign specific timetables wherein
negotiations become a matter of right and requirement. Nothing in Article 253-
A, prohibits the parties from waiving or suspending the mandatory timetables
and agreeing on the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive bargaining agent of PALs
ground employees, that voluntarily entered into the CBA with PAL. It was also
PALEA that voluntarily opted for the 10-year suspension of the CBA. Either
case was the unions exercise of its right to collective bargaining. The right to
free collective bargaining, after all, includes the right to suspend it.
The acts of public respondents in sanctioning the 10-year suspension of the
PAL-PALEA CBA did not contravene the protection to labor policy of the
Constitution. The agreement afforded full protection to labor; promoted the
shared responsibility between workers and employers; and the
exercised voluntary modes in settling disputes, including conciliation to foster
industrial peace."[21]
Petitioners further allege that the 10-year suspension of the CBA under the
PAL-PALEA agreement virtually installed PALEA as a company union for said
period, amounting to unfair labor practice, in violation of Article 253-A of the
Labor Code mandating that an exclusive bargaining agent serves for five years
only.
force and effect. In the instant case, the parties agreed to suspend the CBA
and put in abeyance the limit on the representation period.
In sum, we are of the view that the PAL-PALEA agreement dated September
27, 1998, is a valid exercise of the freedom to contract. Under the principle of
inviolability of contracts guaranteed by the Constitution, [25] the contract must
be upheld.
WHEREFORE, there being no grave abuse of discretion shown, the instant
petition is DISMISSED. No pronouncement as to costs.

The questioned proviso of the agreement reads: SO ORDERED.

a. PAL shall continue recognizing PALEA as the duly certified-bargaining

agent of the regular rank-and-file ground employees of the Company;
Said proviso cannot be construed alone. In construing an instrument with
several provisions, a construction must be adopted as will give effect to
all. Under Article 1374 of the Civil Code,[22] contracts cannot be construed by
parts, but clauses must be interpreted in relation to one another to give effect
to the whole. The legal effect of a contract is not determined alone by any
particular provision disconnected from all others, but from the whole read
together.[23] The aforesaid provision must be read within the context of the next
clause, which provides:
b. The union shop/maintenance of membership provision under the PAL-
PALEA CBA shall be respected.
The aforesaid provisions, taken together, clearly show the intent of the parties
to maintain union security during the period of the suspension of the CBA. Its
objective is to assure the continued existence of PALEA during the said
period. We are unable to declare the objective of union security an unfair labor
practice. It is State policy to promote unionism to enable workers to negotiate
with management on an even playing field and with more persuasiveness than
if they were to individually and separately bargain with the employer. For this
reason, the law has allowed stipulations for union shop and closed shop as
means of encouraging workers to join and support the union of their choice in
the protection of their rights and interests vis--vis the employer.[24]
Petitioners contention that the agreement installs PALEA as a virtual company
union is also untenable. Under Article 248 (d) of the Labor Code, a company
union exists when the employer acts [t]o 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. The case records are bare of any showing of such acts by PAL.
We also do not agree that the agreement violates the five-year representation
limit mandated by Article 253-A. Under said article, the representation limit for
the exclusive bargaining agent applies only when there is an extant CBA in full
 Petitioners soon sent union president Tan and respondents plant
manager Tangente a Notice to Arbitrate, citing the Revised Guidelines in the
Conduct of Voluntary Arbitration Procedure vis a vis Section 3, Article XII of
JUANITO TABIGUE, ALEX BIBAT, JECHRIS G.R. No. 183335 the CBA, furnishing the NCMB with a copy[4] thereof, which notice respondent
DASALLA, ANTONIO TANGON, ROLANDO opposed.[5]
PEDRIGAL, DANTE MAUL, ALFREDO IDUL, Present:
EDGAR RAMOS, RODERICK JAVIER, NOEL The parties having failed to arrive at a settlement,[6] NCMB Director
PONAYO, ROMEL ORAPA, REY JONE, ALMA PUNO, C.J., Chairperson, Teodorico O. Yosores wrote petitioner Alex Bibat and respondents plant
PATAY, JERIC BANDIGAN, DANILO JAYME, CARPIO MORALES, manager Tangente of the lack of willingness of both parties to submit to
ELENITA S. BELLEZA, JOSEPHINE COTANDA, LEONARDO-DE CASTRO, voluntary arbitration, which willingness is a pre-requisite to submit the case
RENE DEL MUNDO, PONCIANO ROBUCA, and BERSAMIN, and thereto; and that under the CBA forged by the parties, the union is an
MARLON MADICLUM, VILLARAMA, JR., JJ. indispensable party to a voluntary arbitration but that since Tan informed
Petitioners, respondent that the union had not authorized petitioners to represent it, it
would be absurd to bring the case to voluntary arbitration.
- versus - Promulgated:
December 23, 2009 The NCMB Director thus concluded that the demand of [petitioners] to
INTERNATIONAL COPRA EXPORT CORPORATION submit the issues . . . to voluntary arbitration CAN NOT BE GRANTED. He
(INTERCO), thus advised petitioners to avail of the compulsory arbitration process to
Respondent. enforce their rights.[7]
x--------------------------------------------------x
On petitioners Motion for Reconsideration,[8] the NCMB Director, by
DECISION letter of April 11, 2007 to petitioners counsel, stated that the NCMB has no
rule-making power to decide on issues [as it] only facilitates settlement among
CARPIO MORALES, J.: the parties to . . . labor disputes.
Petitioner Juanito Tabigue and his 19 co-petitioners, all employees of
respondent International Copra Export Corp-oration (INTERCO), filed a Notice Petitioners thus assailed the NCMB Directors decision via Petition for
of Preventive Mediation with the Department of Labor and Employment Review before the Court of Appeals[9] which dismissed it by Resolution[10] of
National Conciliation and Mediation Board (NCMB), Regional Branch No. XI, October 24, 2007 in this wise:
Davao City against respondent, for violation of Collective Bargaining
Agreement (CBA) and failure to sit on the grievance conference/meeting.[1] xxxx

As the parties failed to reach a settlement before the NCMB, petitioners
requested to elevate the case to voluntary arbitration. The NCMB thus set a
date for the parties to agree on a Voluntary Arbitrator.
Before the parties could finally meet, respondent presented before the
NCMB a letter[2] of Genaro Tan (Tan), president of the INTERCO
Employees/Laborers Union (the union) of which petitioners are members,
addressed to respondents plant manager Engr. Paterno C. Tangente
(Tangente), stating that petitioners are not duly authorized by [the] board or the
officers to represent the union, [hence] . . . all actions, representations or
agreements made by these people with the management will not be honored
or recognized by the union. Respondent thus moved to dismiss petitioners
complaint for lack of jurisdiction.[3]
Considering that NCMB is not a quasi-judicial agency
exercising quasi-judicial functions but merely a conciliatory
body for the purpose of facilitating settlement of disputes
between parties, its decisions or that of its authorized officer
cannot be appealed either through a petition for review under
Rule 43 or under Rule 65 of the Revised Rules of Court.
Further perusal of the petition reveals the following
infirmities:
1. Payment of the docket fees and other legal
fees is short by One Thousand Pesos (Php
1,000.00);
 2. Copy of the assailed Decision of the
Regional Director of the National Conciliation
and Mediation Board has not been properly
certified as the name and designation of the
certifying officer thereto are not indicated; and
3. Not all of the petitioners named in the
petition signed the verification and non-forum
shopping.[11] (emphasis and underscoring
supplied)
Their Motion for Reconsideration[12] having been denied,[13] petitioners
filed the present Petition for Review on Certiorari, [14] raising the following
arguments:
THIS PARTICULAR CASE XXX FALLS SQUARELY WITHIN
THE PURVIEW OF SECTION 6, RULE IV, IN RELATION TO
PARAGRAPH 3, SUB-PARAGRAPH 3.2, SECTION 4, RULE
IV, ALL OF THE REVISED PROCEDURAL GUIDELINES IN
THE CONDUCT OF VOLUNTARY ARBITRATION
PROCEEDINGS.[15]
THE NCMB, WHEN EXERCISING ADJUDICATIVE
POWERS, ACTS AS A QUASI-JUDICIAL AGENCY.[16]
FINAL JUDGMENTS, DECISIONS, RESOLUTIONS,
ORDERS, OR AWARDS OF REGIONAL TRIAL COURTS
AND QUASI-JUDICIAL BOARDS, LIKE THE NCMB,
COMMISSIONS, AGENCIES, INSTRUMENTALITIES,
ARE APPEALABLE BY PETITION FOR REVIEW TO
THE COURT OF APPEALS.[17] (emphasis in the original)
LABOR CASES, AS A GENERAL RULE, ARE NEVER
RESOLVED ON THE BASIS OF
TECHNICALITY ESPECIALLY SO WHEN SUBSTANTIAL
RIGHTS OF EMPLOYEES ARE AFFECTED.[18] (emphasis
and underscoring supplied)
The petition fails.
Section 7 of Rule 43 of the Rules of Court provides that
[t]he failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the docket
and other lawful fees, the deposit for costs, proof of service of
the petition, and the contents of and the documents which
should accompany the petition shall be sufficient ground
for the dismissal thereof. (underscoring and emphasis
supplied)
Petitioners claim that they had completed the payment of the appellate docket
fee and other legal fees when they filed their motion for reconsideration before
the Court of Appeals.[19] While the Court has, in the interest of justice, given due
course to appeals despite the belated payment of those fees,[20] petitioners
have not proffered any reason to call for a relaxation of the above-quoted
rule. On this score alone, the dismissal by the appellate court of petitioners
petition is in order.
But even if the above-quoted rule were relaxed, the appellate courts
dismissal would just the same be sustained. Under Section 9 (3) of the
Judiciary Reorganization Act of 1980,[21] the Court of Appeals exercises
exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions.
Rule 43 of the Rules of Court under which petitioners filed their petition
before the Court of Appeals[22] applies to awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of
its quasi-judicial functions.[23]
A[n agency] is said to be exercising judicial function
where [it] has the power to determine what the law is and what
the legal rights of the parties are, and then undertakes
to determine these questions and adjudicate upon the rights
of the parties. Quasi-judicial function is a term which applies
to the action, discretion, etc. of public administrative officers
or bodies, who are required to investigate facts or ascertain
the existence of facts, hold hearings, and draw conclusions
from them as a basis for their official action and to exercise
discretion of a judicial nature.[24] (underscoring supplied)
Given NCMBs following functions, as enumerated in Section 22 of Executive
Order No. 126 (the Reorganization Act of the Ministry of Labor and
Employment), viz:
(a) Formulate policies, programs, standards, procedures,
manuals of operation and guidelines pertaining to
effective mediation and conciliation of labor disputes;
(b) Perform preventive mediation and conciliation functions;
 (c) Coordinate and maintain linkages with other sectors or
institutions, and other government authorities
concerned with matters relative to the prevention and
settlement of labor disputes;
(d) Formulate policies, plans, programs, standards,
procedures, manuals of operation and guidelines
pertaining to the promotion of cooperative and non-
adversarial schemes, grievance handling, voluntary
arbitration and other voluntary modes of dispute
settlement;
(e) Administer the voluntary arbitration program;
maintain/update a list of voluntary arbitrations; compile
arbitration awards and decisions;
(f) Provide counseling and preventive mediation assistance
particularly in the administration of collective
agreements;
(g) Monitor and exercise technical supervision over the Board
programs being implemented in the regional offices;
and
(h) Perform such other functions as may be provided by law
or assigned by the Minister,
it can not be considered a quasi-judicial agency.
Respecting petitioners thesis that unsettled grievances should be
referred to voluntary arbitration as called for in the CBA, the same does not
lie. The pertinent portion of the CBA reads:
In case of any dispute arising from the interpretation
or implementation of this Agreement or any matter affecting
the relations of Labor and Management, the UNION and the
COMPANY agree to exhaust all possibilities of conciliation
through the grievance machinery. The committee shall
resolve all problems submitted to it within fifteen (15) days
after the problems ha[ve] been discussed by the members. If
the dispute or grievance cannot be settled by the Committee,
or if the committee failed to act on the matter within the period
of fifteen (15) days herein stipulated, the UNION and the
COMPANY agree to submit the issue to Voluntary Arbitration.
Selection of the arbitrator shall be made within seven (7) days
from the date of notification by the aggrieved party. The
Arbitrator shall be selected by lottery from four (4) qualified
individuals nominated by in equal numbers by both parties
taken from the list of Arbitrators prepared by the National
Conciliation and Mediation Board (NCMB). If the Company
and the Union representatives within ten (10) days fail to
agree on the Arbitrator, the NCMB shall name the
Arbitrator. The decision of the Arbitrator shall be final and
binding upon the parties. However, the Arbitrator shall not
have the authority to change any provisions of the
Agreement. The cost of arbitration shall be borne equally by
the parties.[25] (capitalization in the original, underscoring
supplied)
Petitioners have not, however, been duly authorized to represent the
union. Apropos is this Courts pronouncement in Atlas Farms, Inc. v. National
Labor Relations Commission,[26] viz:
x x x Pursuant to Article 260 of the Labor Code, the
parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the
grievance is unsettled in that level, it shall automatically be
referred to the voluntary arbitrators designated in advance by
parties to a CBA. Consequently only disputes involving the
union and the company shall be referred to the grievance
machinery or voluntary arbitrators.[27] (emphasis and
underscoring supplied)
Clutching at straws, petitioners invoke the first paragraph of Article 255
of the Labor Code which states:
Art. 255. The labor organization designated or
selected by the majority of the employees in an appropriate
collective bargaining unit shall be the exclusive representative
of the employees in such unit for the purpose of collective
bargaining. However, an individual employee or group of
employees shall have the right at any time to present
grievances to their employer.
x x x x (emphasis and underscoring supplied)
To petitioners, the immediately quoted provision is meant to be an exception to
the exclusiveness of the representative role of the labor organization/union. [28]
 This Court is not persuaded. The right of any employee or group of
employees to, at any time, present grievances to the employer does not imply
the right to submit the same to voluntary arbitration. G.R. No. 84433 June 2, 1992

WHEREFORE, the petition is DENIED.

ALEXANDER REYES, ALBERTO M. NERA, EDGARDO M. GECA, and 138
SO ORDERED. 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 union, hence, not one of the unions which vied for certification as sole and
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
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.