G.R. No.

209555

UNITED POL YRESINS, INC., et al, Petitioners

vs.
MARCELINO PINUELA, Respondent

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari1 assails the December 11, 2012 Decision2 and
October 10, 2013 Resolution3of the Court of Appeals (CA) in CA-G.R: SP No. 115402
which set aside the June 11, 2011 Decision4 of the National Labor Relations
Commission (NLRC) in NLRC-LAC Case No. 06- 001577-09.

Factual Antecedents

Petitioner United Polyresins, Inc. (UPI) is a registered domestic corporation doing

business in San Pedro, Laguna, while petitioners Ernesto Uy Soon, Jr. and Julito Uy
Soon are its corporate officers.

Respondent Marcelino Pinuela was employed by UPI in 1987. He became a member

of the labor union, Polyresins Rank and File Association (PORFA), and was elected
President thereof in May, 2005 and slated to serve until the end of 2007.

The collective bargaining agreement (CBA) then existing between UPI and PORFA
provided that:

Section 3. The Company shall grant to the Union the amount of Three Hundred
Thousand Pesos (₱300,000.00) free of interest as the union's capital for establishing a
cooperative to meet the needs of its members. Said loan shall fall due and become
payable at the same date that this Bargaining Agreement expires, to wit - December
31, 2007. In the event of non-payment, all officers and members will be personally
accountable. In case of additional funds, they can make a written request [addressed]
to the President of the company.5

The CBA likewise contained a union security clause which provided that employees
who cease to be PORFA members in good standing by reason of resignation or
expulsion shall not be retained in the employ of UPI.

Upon his assumption as union President, respondent wrote the former union President,
Geoffrey Cielo (Cielo), to turn over the records, papers, documents and financial
statements of the union. Cielo surrendered the union's bank account documents,
among others, which indicated that the union had an available ₱78,723.60 cash
balance. Cielo likewise submitted a Financial Report indicating that the union had
₱208,623.60 in cash and ₱l59,500.00 in receivables.

Finding that the bank documents and Cielo's report did not match, and Cielo unable to
explain the discrepancies, the union's Executive Committee, which was headed by
respondent, resolved to hire a certified public accountant to conduct an audit of the
union's finances. In a December 1, 2005 report, the accountant concluded that the
union's finances, income, and disbursements for the years 2003 and 2004 were not
properly documented, recorded, and reported.
1
He recommended that the union officers "take a seminar on basic bookkeeping and
accounting;"6 that the union adopt and/or install the necessary accounting and internal
control systems; that the union prepare the proper financial statements; and that the
officers take corrective measures in financial management as an integral part of sound
management.7

Meanwhile, during respondent's term as PORF A President, it appeared that UPI

automatically deducted from the respective salaries of PORFA members amounts
representing union membership dues and loan payments. These amounts, which
totalled ₱2,402,533.43, were then regularly turned over by UPI to PORFA in the form
of fifty eight (58) crossed checks, made payable to PORFA.8 These amounts were then
deposited and credited to PORFA's account.

On December 8, 2007, or several days before the ₱300,000.00 loan by UPI to PORFA
became due, petitioners, respondent, and the other union officers met to discuss the
proposed new CBA. Thereat, petitioners told respondent that until the ₱300,000.00 is
returned, the former shall not discuss the proposed CBA. Respondent explained that
the union did not have the finances and had only ₱78,723.60, which was the original
amount turned over by Cielo to respondent when the latter assumed office as union
President.

Petitioners then told respondent and the other union officers that if the amount is not
returned, the same will be deducted from the salaries of the union members.10

On January 7, 2008, respondent filed a complaint before the National Conciliation and
Mediation Board (NCMB), claiming that petitioners refused to bargain collectively.
During the scheduled conferences before the NCMB, petitioners raised the issue of
non-payment of the ₱300,000.00 owing to UPI and insisted on its payment; they also
threatened to deduct the amount of ₱l,500.00 from the respective salaries of the union
members.11

Because of the recurring threat of failed CBA negotiations and salary deductions as
means of recovering the ₱300,000.00 loaned to the union, union members began to
demand the holding of a special election of union officers. They likewise accused
respondent and the other union officers of mismanagement, unduly hanging on to their
positions, and lack of accountability.

Thus, in March 2008, special elections were held, and a new union President and set
of officers were elected.13

On March 29, 2008, the union's new set of officers conducted an investigation into the
fact that the union had little or no funds remaining in its bank account. Respondent
attended the investigation, and admitted that the union had no more funds as they
were "utilized in the prosecution of cases during his incumbency." He likewise failed to
make a formal turnover of documents to the new President. Respondent was required
to surrender union documents in his possession on the next scheduled meeting.15

On April 8, 2008, another inquiry was held where respondent was present. The
investigation centered on respondent's continued failure to account for the union's
bank accounts, documents, and deposits made during his incumbency, and his failure
to formally turn over union's papers to the new officers. After the meeting, respondent
and the new officers proceeded to the bank, where they discovered that the PORFA
account had already been closed.16
2
On April 10, 2008, the new set of union officers issued a Resolution17 expelling
respondent from PORF A for being guilty of the following violations:

1. No annual financial statement.

2. No listings or ledger of union member's [sic] emergency loans.

3. Unposted cheques on the Union's passbook collected from umon members [sic]
monthly dues.

4. Our union checking account at Security Bank were [sic] Zero balance/closed
account.

5. No receipts/cash disbursement presented for the union operational [sic] expenses.

6. Unable to return the ₱300,000.00 lent by the management free of interest. (Art.
XXVII, Section 3 of our CBA).

7. Unable to explain and present documents to support where the agency fees and
union dues collected from legitimate union members were used.18

The officers held that these violations constituted an infringement of the union's
Constitution, particularly Article XV, Section 1, paragraphs (e) and (f) thereof, which
specifically prohibit the misappropriation of union funds and property and give ground
for the impeachment and recall of union officers.

In an April 11, 2008 letter20 to petitioners, PORF A communicated respondent's

expulsion from the union.

On April 14, 2008, petitioners issued a letter of termination21 to respondent, to take

effect immediately.

Ruling of the Labor Arbiter

Respondent filed a complaint against petitioners before the Labor Arbiter for illegal
dismissal, with monetary claims and damages, which was docketed as NLRC Case
No. RAB-IV-08-27303-08-L. He claimed that his dismissal was effected in bad faith and
without due process and was thus illegal. Petitioners countered that respondent's
dismissal is valid under the union security clause of the CBA; that his failure to return
the ₱300,000.00 loan to the union due to mismanagement/misappropriation constitutes
just cause for his expulsion from the union, as well as dismissal from employment; that
he was accorded substantive and procedural due process; that the herein individual
petitioners may not be held liable for respondent's claims; and that accordingly, the
case should be dismissed.

On April 20, 2009, the Labor Arbiter issued a Decision dismissing respondent's
complaint on the finding that respondent was not illegally terminated, thus:

While complainant, as then Union President, denies any misappropriation of union

funds, it is undisputed that he failed to account for the missing union funds and to
return the ₱300,000.00 which the respondent company had lent for the union's
assistance upon the expiration of the CBA dated December 31, 2007.

3
More importantly, in the investigation conducted by the newly elected officers of the
union, it was uncovered that union funds were in fact personally used by the former
officers of PORF A which includes complainant.

Thus, the union passed a resolution expelling complainant from the PORFA union and
the corresponding letter was sent to the respondent company informing the latter of
complainant's expulsion coupled with a recommendation that complainant be
terminated from employment pursuant to the union security clause of the CBA.

Given the foregoing, we rule that complainant was validly dismissed since the
respondent company merely did its obligation under the CBA by terminating the
services of complainant who ceased to be a member in good standing of the PORF A
union by reason of expulsion.

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the

instant complaint for lack of merit.

SO ORDERED.23

Ruling of the National Labor Relations Commission

Respondent appealed before the NLRC, which initially overturned the Labor Arbiter in
a December 8, 2009 Decision,24 which decreed as follows:

WHEREFORE, the assailed Decision is hereby SET ASIDE and a NEW one is entered
declaring the complainant-appellant's dismissal to be illegal. Respondents Union [sic]
and respondent company are hereby declared jointly and severally liable to pay
complainant his full backwages from the date he was dismissed until date instant [sic]
and to pay his separation pay equivalent to one month salary per year of service
computed as follows:

BACKWAGES
04/14/08 - 10/14/09
₱396 x 26 days x 18 mos.
₱l0,296.00 x 18 days = ₱l85,328.00
SEPARATION PAY
₱396.00 x 26 x 22yrs.
₱l0,296 x 22yrs. = ₱226,512.00
13th Month Pay
₱185,328.00 I 12 = ₱15,444.00
Grand Total ₱427,284.00

SO ORDERED.25

However, on motion for reconsideration, the NLRC issued its June 11, 2011 Decision,
which held as follows:

What cannot escape from [sic] our attention and consideration are the following: (1)
there was an obligation x x x to return the amount of ₱300,000.00 to the respondent
upon termination of the CBA on December 31, 2007, (2) complainant, as the President
of the Union at the time the loan was due and demandable, failed to account for said
4
funds, and under the same provision, was to be held personally accountable, (3)
Pinuela actually participated x x x in the whole process of determining accountability
over the union funds, (4) denied knowledge over and receipt of the missing funds,
despite his being among those charged with its custody and safe-keep, as the Union
President.

It is also to be noted that the complainant as union president, could not explain nor
comment on the fact that their union's bank account is already a closed account. Even
if We assume and in fact complainant admitted that he had custody of ₱78,723.60 as
union funds as of June 3, 2005, still he could not account the whereabouts of the said
money. As a signatory to the said account, complainant cannot be considered as
entirely faultless since he was grossly negligent in the custody of the funds. There is
substantial basis in complainant's dismissal thus, the award of backwages and 13th
month pay should be deleted. However, even if We find complainant's dismissal to be
valid, there is equally no evidence showing that he pocketed the missing funds of the
union. In this regard since he had rendered a considerable number of years in the
service (21 years) complainant may be awarded separation pay at the rate of 'ii month
salary for every year of service (396 x 13 x 21 years) from the inception of his
employment till his dismissal in the interest of justice and compassion since his
infraction did not involve serious misconduct.

Further, We also hold that while complainant's dismissal was valid pursuant to the
enforcement of the Union Security Clause, respondents however did not comply with
the requisite procedural due process. As held in the case of Agabon vs. NLRC, x x x
the Supreme Court held that 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 x x x. Accordingly, for violating complainant's statutory
rights, respondents should indemnify him the amount of ₱30,000.00 as nominal
damages in addition to his separation pay.

WHEREFORE, premises considered, respondents-appellees' Motion for

Reconsideration is GRANTED, a new Decision is rendered finding complainant's
dismissal as valid. Respondents-appellees are however ordered to pay complainant
the amounts of ₱108,108.00 and ₱30,000.00 as separation pay and nominal damages.

All other claims whether monetary or otherwise are hereby DISMISSED.

SO ORDERED.26

Ruling of the Court of Appeals

In a Petition for Certiorari27 before the CA and docketed as CA-G.R. SP No. 115402,
respondent sought to reverse the above NLRC Decision and reinstate its December 8,
2009 Decision, arguing that the Commission gravely erred in concluding that he was
personally accountable for the missing funds, the closing of PORFA's bank account,
and that he was grossly negligent in the custody of the union funds. In their
Comment,28 petitioners countered that respondent's dismissal was attended by due
process; that he is guilty of the infractions for which he was dismissed; and that his
guilt had been proved by substantial evidence.

On December 11, 2012, the CA issued the assailed Decision containing the following
pronouncement:

5
Petitioner insists that he is innocent of the charges against him made by the PORF A
(the union), particularly the embezzlement of the union funds. He vehemently denied
misappropriation of the same and that the PORFA Union officers conspired with the
Respondents in removing him as a member in good standing of the said union and his
subsequent dismissal as employee pursuant to the CBA's union security clause.

Respondents on the other hand, denied the Petitioner's allegation of conspiracy and
that in fact, there was a series of conferences conducted jointly by the management
and the union on the matter of lost union funds and that the Petitioner was made aware
of the charges against him before he was terminated. They claim that the management
participated in the investigations and that it was shown that even if the Petitioner as
president of the union did not misappropriate the funds nevertheless he committed
omission/gross negligence for which reason he was expelled therefrom. The
Respondents also claim that Petitioner was accorded procedural due process during
the investigations.

It is basic in labor jurisprudence that the burden of proof rests upon management to
show that the dismissal of its worker was based on a just cause. When an employer
exercises its power to terminate an employee by enforcing the union security clause, it
needs to determine and prove the following: (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.

The dispute before Us does not raise any issue with respect to the first two requisites;
the issue being whether there was sufficient evidence to support Petitioner's expulsion
from PORFA. In arriving at any conclusion thereto, the Petitioner must first be
accorded due process of law.x x x

xxxx

On both questions of whether there exist[s] sufficient evidence to support Petitioner's

expulsion from the union (substantive due process), and whether Petitioner was
properly informed of the accusation against him and his dismissal from employment
(procedural due process), We answer in the negative.

An examination of the submitted evidence before the Labor Arbiter show [sic] that the
same are not enough to prove the alleged charges of misappropriation against the
Petitioner and neither was he properly informed thereof.

xxxx

On the other hand, the Petitioner have [sic] shown adequate explanation about the
funds of the union that came to his possession. The Memorandum of Ramon M.
Martinez, a Certified Public Accountant, show [sic] that he made an audit of the funds
of the union during the previous administration and that the actual funds the union had
was merely ₱34,344.25 when Petitioner took over. This amount was not even shown to
have been misappropriated by the Petitioner.

Compounding this want of substantive evidence is the lack of procedural due process
that Petitioner was entitled to. As [has] been previously discussed, the Petitioner was
not given the proper first notice. Thereafter, despite such lack of first notice, on the
mere letter of the union that he was expelled therefrom because of alleged causes, the
6
Petitioner was dismissed from employment by the Respondents in the termination
letter dated 14 April 2008 on the sole basis of union security clause. Such action
cannot be countenanced. In the same Inguillo case, the Supreme Court also ruled:

'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.'

In sum, the NLRC gravely abused its discretion in reconsidering its earlier Decision
which is more in accord with the evidence on record.

WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated 11 June
201029 is hereby SET ASIDE. The Decision dated 8 December 2009 is REINSTATED
with the MODIFICATION that the backwages shall be recomputed from the date of
Petitioner's dismissal to the finality of this Decision.

SO ORDERED.30 (Citations omitted)

Petitioners filed a Motion for Reconsideration,31 which was denied by the CA in its
October 10, 2013 Resolution.1âwphi1Hence, the instant Petition.

Issues

In a June 22, 2015 Resolution,32 the Court resolved to give due course to the Petition,
which contains the following assignment of errors:

I.

THE APPELLATE COURT ERRED IN RULING THAT THE CHARGES OF

MISAPPROPRIATION AGAINST THE RESPONDENT WERE INSUFFICIENT
(SUBSTANTIVE DUE PROCESS)

II.

THE APPELLATE COURT ERRED IN RULING THAT THE RESPONDENT WAS NOT
PROPERLY INFORMED OF THE CHARGES AGAINST HIM (PROCEDURAL DUE
PROCESS).

III.

THE APPELLATE COURT ERRED IN RULING THAT THE RESPONDENT IS

ENTITLED TO SEPARATION PAY, BACKWAGES FROM DISMISSAL TO THE
FINALITY OF ITS DECISION, AND 13TH MONTH PAY.33

Petitioners' Arguments

Praying that the assailed CA dispositions be set aside and that respondent's case be
dismissed instead, petitioners maintain in their Petition and Reply34 that substantive
and procedural due process were observed in respondent's case; that respondent was

7
apprised of the charges against him and given the opportunity to refute them; that the
evidence points to the conclusion that he misappropriated the union's funds and was
unable to explain the dissipation thereof; that for what he has done, respondent
violated Article XV, Section 1, paragraphs (e) and (f) of the union's Constitution; that
respondent's dismissal on the basis of the union security clause in the CBA was thus
valid, based on substantial proof, and in accord with the pronouncement in Carino v.
National Labor Relations Commission,35 where the dismissal of an employee was
upheld on the basis of the union security and expulsion clauses contained in the CBA;
and that since his dismissal is valid, then he is not entitled to his monetary claims.

Respondent's Arguments

In his Comment,36 respondent maintains that the CA did not err in finding that the
evidence against him was insufficient; that the CA was correct in ruling that his right to
procedural due process was violated when he was not properly informed of the
charges against him; and that for these reasons, he was illegally dismissed and thus
entitled to his monetary claims.

Our Ruling

The Court denies the Petition.

Respondent's expulsion from PORFA is grounded on Article XV, Section 1, paragraphs

(e) and (f) of the union's Constitution, which provides:

ARTICLE-XV
IMPEACHMENT AND RECALL

Section 1. Any of the following shall be ground for the impeachment or recall of the
union officers.

a. Committing or causing the commission directly or indirectly of acts

against the interest and welfare of the union;

b. Malicious attack against the union, its officers or against a fellow union
officer or member;

c. Failure to comply with the obligation to tum over and return to union
treasurer within three (3) days unexpanded [sic] sum of money received
from the money funds to answer for an authorized union purpose;

d. Gross misconduct unbecoming of a union officer;

e. Misappropriation of union funds and property. This is without prejudice to

the filing of an appropriate criminal or civil action against the responsible
officer/(s) by any interested party;

f. Willful violation of any provision of the constitution or rules, regulations,

measures, resolution(s) and decision of the union.37 (Emphasis supplied)

However, these provisions refer to impeachment and recall of union officers, and not
expulsion from union membership. This is made clear by Section 2(e) of the same
Article XV, which provides that "(t)he union officers impeached shall 'IPSO FACTO' to
8
[sic] be considered resigned or ousted from office and shall no longer be elected nor
appointed to any position in the union."

In short, any officer found guilty of violating these provisions shall simply be
removed, impeached or recalled, from office, but not expelled or stripped of
union membership.

It was therefore error on the part of PORFA and petitioners to terminate respondent's
employment based on Article XV, Section 1, paragraphs (e) and (f) of the union's
Constitution. Such a ground does not constitute just cause for termination.

A review of the PORFA Constitution itself reveals that the only provision authorizing
removal from the union is found in Article X, Section 6, that is, on the ground of failure
to pay union dues, special assessments, fines, and other mandatory
charges.38 On the other hand, grounds for disqualification from membership may be
found in Article IV, which states that-

Section 3. The following are not eligible neither [sic] for membership nor to election or
appointment to any position in the union:

a. Subversive or persons who profess subversive ideas.

b. Persons who have been convicted of crime involving moral turpitude.

c. Persons who are not employees of the company.39

These provisions do not apply in respondent's case.

Although he was eventually charged with estafa, a crime involving moral

turpitude, still, he has not been convicted of the crime. For this reason, he may
not be disqualified as union member.

Thus, for what he is charged with, respondent may not be penalized with expulsion
from the union, since this is not authorized and provided for under PORFA's
Constitution.

Contrary to petitioners' claim, Carino v. National Labor Relations Commission is

not applicable here. In that case, the employee was terminated on the basis
of existing suspension and expulsion provisions contained in the CBA and rules on
discipline found in the union's Constitution. There are no such provisions in PORFA's
Constitution; neither has it been shown that there are similar stipulations in the parties'
CBA.

The matter of respondent's alleged failure to return petitioners' ₱300,000.00 which was
lent to PORFA is immaterial as well.

It may not be used as a ground to terminate respondent's employment; under the

Labor Code, such a contribution by petitioners to PORFA is illegal and
constitutes unfair labor practice.

ART. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to
commit any of the following unfair labor practice:

9
xxxx

(d) To initiate, dominate, assist or otherwise interfere with the formation or

administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;42(Emphasis supplied)

This could be an opportune time for the union to consider amending its Constitution in
order to provide for specific rules on the discipline of its members, not just its officers.
After all, it is given the right under the Labor Code, "to prescribe its own rules with
respect to the acquisition or retention of membership."

But it may not insist on expelling respondent from PORF A and assist in his
dismissal from UPI without just cause, since it is an unfair labor practice for a
labor organization 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 which
membership or continuation of membership is made available to other
members."

On account of the foregoing disquisition, the other issues raised by the parties need
not be discussed.

WHEREFORE, for the foregoing reasons, the Petition is hereby DENIED. The
December 11, 2012 Decision and October 10, 2013 Resolution of the Court of Appeals
in CA-G.R. SP No. 115402 are AFFIRMED.

SO ORDERED.

G.R. No. 168583 July 26, 2010

ATTY. ALLAN S. MONTAÑO, Petitioner,

vs.
ATTY. ERNESTO C. VERCELES, Respondent.

DECISION

DEL CASTILLO, J.:

The Federation/Union’s Constitution and By-Laws govern the relationship between and
among its members. They are akin to ordinary contracts in that their provisions have
obligatory force upon the federation/ union and its member. What has been expressly
stipulated therein shall be strictly binding on both.

By this Petition for Review on Certiorari,1 petitioner Atty. Allan S. Montaño (Atty.
Montaño) assails the Decision2dated May 28, 2004 and Resolution3 dated June 28,
2005 of the Court of Appeals (CA) in CA-G.R. SP No. 71731, which declared as null
and void his election as the National Vice-President of Federation of Free Workers
(FFW), thereby reversing the May 8, 2002 Decision4 of the Bureau of Labor Relations
(BLR) in BLR-O-TR-66-7-13-01.

Factual Antecedents

10
Atty. Montaño worked as legal assistant of FFW Legal Center on October 1,
1994.5 Subsequently, he joined the union of rank-and-file employees, the FFW Staff
Association, and eventually became the employees’ union president in July 1997. In
November 1998, he was likewise designated officer-in-charge of FFW Legal Center.6

During the 21st National Convention and Election of National Officers of FFW, Atty.
Montaño was nominated for the position of National Vice-President. In a letter dated
May 25, 2001,7 however, the Commission on Election (FFW COMELEC), informed him
that he is not qualified for the position as his candidacy violates the 1998 FFW
Constitution and By-Laws, particularly Section 76 of Article XIX8 and Section 25 (a) of
Article VIII,9 both in Chapter II thereof. Atty. Montaño thus filed an Urgent Motion for
Reconsideration10 praying that his name be included in the official list of candidates.

Election ensued on May 26-27, 2001 in the National Convention held at Subic
International Hotel, Olongapo City. Despite the pending motion for reconsideration with
the FFW COMELEC, and strong opposition and protest of respondent Atty. Ernesto C.
Verceles (Atty. Verceles), a delegate to the convention and president of University of
the East Employees’ Association (UEEA-FFW) which is an affiliate union of FFW, the
convention delegates allowed Atty. Montaño’s candidacy. He emerged victorious and
was proclaimed as the National Vice-President.

On May 28, 2001, through a letter11 to the Chairman of FFW COMELEC, Atty. Verceles
reiterated his protest over Atty. Montaño’s candidacy which he manifested during the
plenary session before the holding of the election in the Convention. On June 18,
2001, Atty. Verceles sent a follow-up letter12 to the President of FFW requesting for
immediate action on his protest.

Proceedings before the Bureau of Labor Relations

On July 13, 2001, Atty. Verceles, as President of UEEA-FFW and officer of the
Governing Board of FFW, filed before the BLR a petition13 for the nullification of the
election of Atty. Montaño as FFW National Vice-President. He alleged that, as already
ruled by the FFW COMELEC, Atty. Montaño is not qualified to run for the position
because Section 76 of Article XIX of the FFW Constitution and By-Laws prohibits
federation employees from sitting in its Governing Board. Claiming that Atty. Montaño’s
premature assumption of duties and formal induction as vice-president will cause
serious damage, Atty. Verceles likewise prayed for injunctive relief.14

Atty. Montaño filed his Comment with Motion to Dismiss15 on the grounds that the
Regional Director of the Department of Labor and Employment (DOLE) and not the
BLR has jurisdiction over the case; that the filing of the petition was premature due to
the pending and unresolved protest before the FFW COMELEC; and that, Atty.
Verceles has no legal standing to initiate the petition not being the real party in interest.

Meanwhile, on July 16, 2001, the FFW COMELEC sent a letter to FFW National
President, Bro. Ramon J. Jabar, in reference to the election protest filed before it by
Atty. Verceles. In this correspondence, which was used by Atty. Verceles as an
additional annex to his petition before the BLR, the FFW COMELEC intimated its firm
stand that Atty. Montaño’s candidacy contravenes the FFW’s Constitution, by stating:

At the time Atty. Verceles lodged his opposition in the floor before the holding of the
election, we, the Comelec unanimously made the decision that Atty. Montaño and

11
others are disqualified and barred from running for any position in the election of the
Federation, in view of pertinent provisions of the FFW Constitution.

Our decision which we repeated several times as final was however further deliberated
upon by the body, which then gave the go signal for Atty. Montaño’s candidacy
notwithstanding our decision barring him from running and despite the fact that several
delegates took the floor [stating] that the convention body is not a constitutional
convention body and as such could not qualify to amend the FFW’s present
constitution to allow Atty. Montaño to run.

We would like to reiterate what we stated during the plenary session that our decision
was final in view of the cited pertinent provisions of the FFW Constitution and we
submit that the decision of the convention body in allowing Atty. Montaño’s candidacy
is not valid in view of the fact that it runs counter to the FFW Constitution and the body
at that time was not acting as a Constitutional Convention body empowered to amend
the FFW Constitution on the spot.

Our having conducted the election does not depart from the fact that we did not
change our decision disqualifying candidates such as Atty. Allan S. Montaño, and
others from running. The National Convention as a co-equal constitutional body of the
Comelec was not given the license nor the authority to violate the Constitution. It
therefore, cannot reverse the final decision of the Comelec with regard to the
candidacy of Atty. Allan Montaño and other disqualified candidates.16

The BLR, in its Order dated August 20, 2001,17 did not give due course to Atty.
Montaño’s Motion to Dismiss but ordered the latter to submit his answer to the petition
pursuant to the rules. The parties thereafter submitted their respective pleadings and
position papers.

On May 8, 2002, the BLR rendered a Decision18 dismissing the petition for lack of
merit. While it upheld its jurisdiction over the intra-union dispute case and affirmed, as
well, Atty. Verceles’ legal personality to institute the action as president of an affiliate
union of FFW, the BLR ruled that there were no grounds to hold Atty. Montaño
unqualified to run for National Vice-President of FFW. It held that the applicable
provision in the FFW Constitution and By-Laws to determine whether one is qualified to
run for office is not Section 76 of Article XIX19 but Section 26 of Article VIII20 thereof.
The BLR opined that there was sufficient compliance with the requirements laid down
by this applicable provision and, besides, the convention delegates unanimously
decided that Atty. Montaño was qualified to run for the position of National Vice-
President.

Atty. Verceles filed a Motion for Reconsideration but it was denied by the BLR.

Proceedings before the Court of Appeals

Atty. Verceles thus elevated the matter to the CA via a petition for certiorari,21 arguing
that the Convention had no authority under the FFW Constitution and By-Laws to
overrule and set aside the FFW COMELEC’s Decision rendered pursuant to the latter’s
power to screen candidates.

On May 28, 2004, the CA set aside the BLR’s Decision. While it agreed that jurisdiction
was properly lodged with the BLR, that Atty. Verceles has legal standing to institute the
petition, and that the applicable provision of FFW Constitution and By-Laws is Section
12
26 of Article VIII and not Section 76 of Article XIX, the CA however ruled that Atty.
Montaño did not possess the qualification requirement under paragraph (d) of Section
26 that candidates must be an officer or member of a legitimate labor organization.
According to the CA, since Atty. Montaño, as legal assistant employed by FFW, is
considered as confidential employee, consequently, he is ineligible to join FFW Staff
Association, the rank-and-file union of FFW. The CA, thus, granted the petition and
nullified the election of Atty. Montaño as FFW National Vice-President.

Atty. Montaño moved for reconsideration claiming that the CA seriously erred in
granting Atty. Verceles’ petition on the ground that FFW Staff Association, of which he
is an officer and member, is not a legitimate labor organization. He asserted that the
legitimacy of the union was never raised as an issue. Besides, the declaration of the
CA that FFW Staff Association is not a legitimate labor organization amounts to a
collateral attack upon its legal personality, which is proscribed by law. Atty. Montaño
also reiterated his allegations of lack of jurisdiction and lack of cause of action due to a
pending protest. In addition, he claimed violation of the mandatory requirement on
certification against forum shopping and mootness of the case due to the appointment
of Atty. Verceles as Commissioner of the National Labor Relations Commission
(NLRC), thereby divesting himself of interest in any matters relating to his affiliation
with FFW.

Believing that it will be prejudiced by the CA Decision since its legal existence was put
at stake, the FFW Staff Association, through its president, Danilo A. Laserna, sought
intervention.

On June 28, 2005, the CA issued a Resolution22 denying both Atty. Montaño’s motion
for reconsideration23 and FFW Staff Association’s motion for intervention/clarification.24

Issues

Hence, this petition anchored on the following grounds:

I.

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION,

AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, IN RENDERING THE
ASSAILED DECISION, IN THAT:

A.) THE SOLE GROUND USED AND/OR INVOKED IN GRANTING THE

PETITION A QUOWAS NOT EVEN RAISED AND/OR INVOKED BY
PETITIONER;

B.) THE DECLARATION THAT "FFW STAFF ASSOCIATION IS NOT A

LEGITIMATE LABOR ORGANIZATION", WITHOUT GIVING SAID
ORGANIZATION A ‘DAY IN COURT’ AMOUNTS TO A COLLATERAL ATTACK
PROSCRIBED UNDER THE LAW; AND

C.) THE COURT OF APPEALS FAILED AND/OR REFUSED TO PASS UPON

OTHER LEGAL ISSUES WHICH HAD BEEN TIMELY RAISED, SPECIFICALLY
ON THE PREMATURITY OF THE COMPLAINT AND THE LACK OF
CERTIFICATION AGAINST FORUM SHOPPING OF THE PETITION A QUO.

II.
13
THE COURT OF APPEALS ERRED IN UPHOLDING THE EXERCISE OF
JURISDICTION BY HEREIN RESPONDENT BUREAU AND IN NOT ORDERING THE
DISMISSAL OF THE CASE, DESPITE EXPRESS PROVISION OF LAW GRANTING
SAID JURISDICTION OVER CASES INVOLVING PROTESTS AND PETITIONS FOR
ANNULMENT OF RESULTS OF ELECTIONS TO THE REGIONAL DIRECTORS OF
THE DEPARTMENT OF LABOR AND EMPLOYMENT.

III.

IN THE ALTERNATIVE, THE COURT OF APPEALS LIKEWISE ERRED IN NOT

ORDERING THE DISMISSAL OF THE PETITION A QUO, IN THAT:

A.) THE FILING OF THE PETITION FOR NULLIFICATION OF THE RESULT OF

ELECTION IS PREMATURE, IN VIEW OF PENDENCY OF HEREIN
RESPONDENT ATTY. VERCELES’ PROTEST BEFORE THE COMMISSION
ON ELECTION OF THE FEDERATION OF FREE WORKERS (FFW
COMELEC) AT THE TIME OF THE FILING OF THE SAID PETITION, HENCE,
HE HAS NO CAUSE OF ACTION; AND

B.) HEREIN RESPONDENT ATTY. VERCELES HAS VIOLATED SECTION 5,

RULE 7 OF THE 1997 RULES ON CIVIL PROCEDURE, AS HIS PETITION A
QUO HAS NO CERTIFICATION AGAINST FORUM SHOPPING, WHICH IS A
MANDATORY REQUIREMENT. IT IS ALSO IN UTTER DISREGARD AND IN
GROSS VIOLATION OF SUPREME COURT CIRCULAR NO. 04-94.

IV.

FINALLY, ASSUMING ARGUENDO THAT HEREIN RESPONDENT BUREAU ACTED

WITH JURISDICTION OVER THE CASE; AND ASSUMING FURTHER THAT HEREIN
RESPONDENT ATTY. VERCELES HAS A CAUSE OF ACTION, DESPITE THE
PENDENCY OF HIS PROTEST BEFORE FFW’S COMELEC AT THE TIME HE FILED
HIS PETITION A QUO; AND ASSUMING FINALLY, THAT HEREIN RESPONDENT
ATTY. VERCELES BE EXCUSED IN DISREGARDING THE MANDATORY
REQUIREMENT ON CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS
TIMELY OBJECTED TO, THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, IN
NOT ORDERING THE DISMISSAL OF THE CASE FOR HAVING BEEN RENDERED
MOOT AND ACADEMIC BY A SUPERVENING EVENT –THAT WAS, WHEN HEREIN
RESPONDENT ATTY. VERCELES SOUGHT APPOINTMENT AND WAS
APPOINTED AS COMMISSIONER OF THE NATIONAL LABOR RELATIONS
COMMISSION (NLRC), THUS, DIVESTING HIMSELF WITH ANY INTEREST WITH
MATTERS RELATING TO HIS FORMER MEMBERSHIP AND AFFILIATION WITH
THE FEDERATION OF FREE WORKERS (FFW), HENCE, HE IS NO LONGER A
REAL PARTY IN INTEREST, AS HE DOES NOT STAND TO BE INJURED OR
BENEFITED BY THE JUDGMENT IN THE INSTANT CASE.25

Atty. Montaño contends that the CA gravely erred in upholding the jurisdiction of the
BLR; in not declaring as premature the petition in view of the pending protest before
FFW COMELEC; in not finding that the petition violated the rule on non-forum
shopping; in not dismissing the case for being moot in view of the appointment of Atty.
Verceles as NLRC Commissioner; and in granting the petition to annul his election as

14
FFW National Vice-President on the ground that FFW Staff Association is not a
legitimate labor organization.

Our Ruling

The petition is devoid of merit.

The BLR has jurisdiction over intra-union disputes involving a federation.

We find no merit in petitioner’s claim that under Section 6 of Rule

XV26 in relation to Section 1 of Rule XIV27 of Book V of the Omnibus Rules

Implementing the Labor Code, it is the Regional Director of the DOLE and not the BLR
who has jurisdiction over election protests.

Section 226 of the Labor Code28 clearly provides that the BLR and the Regional
Directors of DOLE have concurrent jurisdiction over inter-union and intra-union
disputes. Such disputes include the conduct or nullification of election of union and
workers’ association officers.29 There is, thus, no doubt as to the BLR’s jurisdiction over
the instant dispute involving member-unions of a federation arising from disagreement
over the provisions of the federation’s constitution and by-laws.

We agree with BLR’s observation that:

Rule XVI lays down the decentralized intra-union dispute settlement mechanism.
Section 1 states that any complaint in this regard ‘shall be filed in the Regional Office
where the union is domiciled.’ The concept of domicile in labor relations regulation is
equivalent to the place where the union seeks to operate or has established a
geographical presence for purposes of collective bargaining or for dealing with
employers concerning terms and conditions of employment.

The matter of venue becomes problematic when the intra-union dispute involves a
federation, because the geographical presence of a federation may encompass more
than one administrative region. Pursuant to its authority under Article 226, this Bureau
exercises original jurisdiction over intra-union disputes involving federations. It is well-
settled that FFW, having local unions all over the country, operates in more than one
administrative region. Therefore, this Bureau maintains original and exclusive
jurisdiction over disputes arising from any violation of or disagreement over any
provision of its constitution and by-laws.30

The petition to annul Atty. Montaño’s election as VP was not prematurely filed.

There is likewise no merit to petitioner’s argument that the petition should have been
immediately dismissed due to a pending and unresolved protest before the FFW
COMELEC pursuant to Section 6, Rule XV, Book V of the Omnibus Rules
Implementing the Labor Code.31

It is true that under the Implementing Rules, redress must first be sought within the
organization itself in accordance with its constitution and by-laws. However, this
requirement is not absolute but yields to exception under varying circumstances. 32 In
the case at bench, Atty. Verceles made his protest over Atty. Montaño’s candidacy
during the plenary session before the holding of the election proceedings. The FFW
COMELEC, notwithstanding its reservation and despite objections from certain
15
convention delegates, allowed Atty. Montaño’s candidacy and proclaimed him winner
for the position. Under the rules, the committee on election shall endeavor to settle or
resolve all protests during or immediately after the close of election proceedings and
any protest left unresolved shall be resolved by the committee within five days after the
close of the election proceedings.33 A day or two after the election, Atty. Verceles made
his written/formal protest over Atty. Montaño’s candidacy/proclamation with the FFW
COMELEC. He exhausted the remedies under the constitution and by-laws to have his
protest acted upon by the proper forum and even asked for a formal hearing on the
matter. Still, the FFW COMELEC failed to timely act thereon. Thus, Atty. Verceles had
no other recourse but to take the next available remedy to protect the interest of the
union he represents as well as the whole federation, especially so that Atty. Montaño,
immediately after being proclaimed, already assumed and started to perform the duties
of the position. Consequently, Atty. Verceles properly sought redress from the BLR so
that the right to due process will not be violated. To insist on the contrary is to render
the exhaustion of remedies within the union as illusory and vain.34

The allegation regarding certification against forum shopping was belatedly raised.

Atty. Montaño accuses Atty. Verceles of violating the rules on forum shopping. We
note however that this issue was only raised for the first time in Atty. Montaño’s motion
for reconsideration of the Decision of the CA, hence, the same deserves no merit. It is
settled that new issues cannot be raised for the first time on appeal or on motion for
reconsideration.35 While this allegation is related to the ground of forum shopping
alleged by Atty. Montaño at the early stage of the proceedings, the latter, as a ground
for the dismissal of actions, is separate and distinct from the failure to submit a proper
certificate against forum shopping.36

There is necessity to resolve the case despite the issues having become moot.

During the pendency of this case, the challenged term of office held and served by
Atty. Montaño expired in 2006, thereby rendering the issues of the case moot. In
addition, Atty. Verceles’ appointment in 2003 as NLRC Commissioner rendered the
case moot as such supervening event divested him of any interest in and affiliation with
the federation in accordance with Article 213 of the Labor Code. However, in a number
of cases,37 we still delved into the merits notwithstanding supervening events that
would ordinarily render the case moot, if the issues are capable of repetition, yet
evading review, as in this case.

As manifested by Atty. Verceles, Atty. Montaño ran and won as FFW National
President after his challenged term as FFW National Vice-President had expired. It
must be stated at this juncture that the legitimacy of Atty. Montaño’s leadership as
National President is beyond our jurisdiction and is not in issue in the instant case. The
only issue for our resolution is petitioner’s qualification to run as FFW National Vice-
President during the May 26-27, 2001 elections. We find it necessary and imperative to
resolve this issue not only to prevent further repetition but also to clear any doubtful
interpretation and application of the provisions of FFW Constitution & By-laws in order
to ensure credible future elections in the interest and welfare of affiliate unions of FFW.

Atty. Montaño is not qualified to run as FFW National Vice-President in view of the
prohibition established in Section 76, Article XIX of the 1998 FFW Constitution and By-
Laws.1awph!1

16
Section 76, Article XIX of the FFW Constitution and By-laws provides that no member
of the Governing Board shall at the same time be an employee in the staff of the
federation. There is no dispute that Atty. Montaño, at the time of his nomination and
election for the position in the Governing Board, is the head of FFW Legal Center and
the President of FFW Staff Association. Even after he was elected, albeit challenged,
he continued to perform his functions as staff member of FFW and no evidence was
presented to show that he tendered his resignation.38 On this basis, the FFW
COMELEC disqualified Atty. Montaño. The BLR, however, overturned FFW
COMELEC’s ruling and held that the applicable provision is Section 26 of Article VIII.
The CA subsequently affirmed this ruling of the BLR but held Atty. Montaño unqualified
for the position for failing to meet the requirements set forth therein.

We find that both the BLR and CA erred in their findings.

To begin with, FFW COMELEC is vested with authority and power, under the FFW
Constitution and By-Laws, to screen candidates and determine their qualifications and
eligibility to run in the election and to adopt and promulgate rules concerning the
conduct of elections.39 Under the Rules Implementing the Labor Code, the Committee
shall have the power to prescribe rules on the qualification and eligibility of candidates
and such other rules as may facilitate the orderly conduct of elections.40 The
Committee is also regarded as the final arbiter of all election protests. 41 From the
foregoing, FFW COMELEC, undeniably, has sufficient authority to adopt its own
interpretation of the explicit provisions of the federation’s constitution and by-laws and
unless it is shown to have committed grave abuse of discretion, its decision and ruling
will not be interfered with. The FFW Constitution and By-laws are clear that no member
of the Governing Board shall at the same time perform functions of the rank-and-file
staff. The BLR erred in disregarding this clear provision. The FFW COMELEC’s ruling
which considered Atty. Montaño’s candidacy in violation of the FFW Constitution is
therefore correct.

We, thus, concur with the CA that Atty. Montaño is not qualified to run for the position
but not for failure to meet the requirement specified under Section 26 (d) of Article VIII
of FFW Constitution and By-Laws. We note that the CA’s declaration of the illegitimate
status of FFW Staff Association is proscribed by law, owing to the preclusion of
collateral attack.42 We nonetheless resolve to affirm the CA’s finding that Atty. Montaño
is disqualified to run for the position of National Vice-President in view of the
proscription in the FFW Constitution and By-Laws on federation employees from sitting
in its Governing Board. Accordingly, the election of Atty. Montaño as FFW Vice-
President is null and void.

WHEREFORE, the petition is DENIED. The assailed May 28, 2004 Decision of the
Court of Appeals in CA-G.R. SP No. 71731 nullifying the election of Atty. Allan S.
Montaño as FFW National Vice-President and the June 28, 2005 Resolution denying
the Motion for Reconsideration are AFFIRMED.

SO ORDERED.

G.R. No. 78131 January 20, 1988

EDUARDO TANCINCO, OSCAR E. BARTOLO, DANIEL DE LEON, EDDIE POE,

VIRGILIO SAN PEDRO, MA. LUISA QUIBIN, FE MUDLONG and HENRY
MADRIAGA, petitioners,

17
vs.
DIRECTOR PURA FERRER-CALLEJA, EDWIN LACANILAO, BOYET DALMACIO,
JOSEFINO ESGUERRA, TESSIE GATCHALIAN, LITO CUDIA and DING
PAGAYON, respondents.

GANCAYCO, J.:

This special civil action for certiorari seeks to annul the Resolution of February 12,
1987 and the Decision of December 10, 1986 of the Bureau of Labor Relations *in BLR
Case No. A922186, setting aside the order of July 25, 1986 which decreed the
inclusion and counting of the 56 segregated votes for the determination of the results
of the election of officers of Imperial Textile Mills Inc. Monthly Employees Association
(ITM-MEA).

Private respondents are the prime organizers of ITM-MEA. While said respondents
were preparing to file a petition for direct certification of the Union as the sole and
exclusive bargaining agent of ITM's bargaining unit, the union's Vice-President, Carlos
Dalmacio was promoted to the position of Department Head, thereby disqualifying him
for union membership. Said incident, among others led to a strike spearheaded by
Lacanilao group, respondents herein. Another group however, led by herein petitioners
staged a strike inside the company premises. After four (4) days the strike was settled.
On May 10, 1986 an agreement was entered into by the representatives of the
management, Lacanilao group and the Tancinco group the relevant terms of which are
as follows:

"1. That all monthly-paid employees shall be United under one union, the
ITM Monthly Employees Association (ITM-MEA), to be affiliated with
ANGLO;

2. That the management of ITM recognizes ANGLO as the sole and

exclusive bargaining agent of all the monthly-paid employees;

3. That an election of union officers shall be held on 26 May l986, from 8:00
a.m. to 5:00 p.m.;

4. That the last day of filing of candidacy shall be on l9 May l986 at 4:00
p.m.;

5. That a final pre-election conference to finalize the list of qualified voters

shall be held on 19 May 1986, at 5:00 p.m.;" 1

On May 19, 1986, a pre-election conference was held, but the parties failed to agree
on the list of voters. During the May 21, 1986 pre-election conference attended by
MOLE officers, ANGLO through its National Secretary, a certain Mr. Cornelio A. Sy
made a unilateral ruling excluding some 56 employees consisting of the Manila office
employees, members of Iglesia ni Kristo, non-time card employees, drivers of Mrs.
Salazar and the cooperative employees of Mrs. Salazar. Prior to the holding of the
election of union officers petitioners, 2 through a letter addressed to the Election
Supervisor, MOLE San Fernando Pampanga, protested said ruling but no action was
taken. On May 26, 1986, the election of officers was conducted under the supervision
of MOLE wherein the 56 employees in question participated but whose votes were
18
segregated without being counted. Lacanilao's group won. Lacanilao garnered 119
votes with a margin of three (3) votes over Tancinco prompting petitioners to make a
protest. Thereafter, petitioners filed a formal protest with the Ministry of Labor Regional
Office in San Fernando, Pampanga 3 claiming that the determination of the qualification
of the 56 votes is beyond the competence of ANGLO. Private respondents maintain
the contrary on the premise that definition of union's membership is solely within their
jurisdiction.

On the basis of the position papers submitted by the parties MOLE's Med
Arbiter 4 issued an order dated July 25, 1986 directing the opening and counting of the
segregated votes. 5 From the said order private respondents appealed to the Bureau of
Labor Relations (BLR) justifying the disenfranchisement of the 56 votes. Private
respondents categorized the challenged voters into four groups namely, the Manila
Employees, that they are personal employees of Mr. Lee; the Iglesia ni Kristo, that
allowing them to vote will be anomalous since it is their policy not to participate in any
form of union activities; the non-time card employees, that they are managerial
employees; and the employees of the cooperative as non-ITM employees. 6 On
December 10, 1986, BLR rendered a decision 7 holding the exclusion of the 56
employees as arbitrary, whimsical, and wanting in legal basis 8 but set aside the
challenged order of July 26, 1986 on the ground that 51 ** of 56 challenged voters
were not yet union members at the time of the election per April 24, 1986 list submitted
before the Bureau. 9 The decision directed among others the proclamation of
Lacanilao's group as the duly elected officers and for ITM-MEA to absorb in the
bargaining unit the challenged voters unless proven to be managerial
employees. 10 Petitioners' motion for reconsideration was likewise denied.

Dissatisfied with the turn of events narrated above petitioners elevated the case to this
Court by way of the instant petition for certiorari under Rule 65 of the Rules of Court.
Petitioners allege that public respondent director of Labor Relations committed grave
abuse of discretion in ordering the Med-Arbiter to disregard the 56 segregated votes
and proclaim private respondents as the duly elected officers of ITM-MEA whereas
said respondent ruled that the grounds relied upon by ANGLO for the exclusion of
voters are arbitrary, whimsical and without legal basis.

The petition is impressed with merit. The record of the case shows that public
respondent categorically declared as arbitrary, whimsical and without legal basis the
grounds 11 relied upon by ANGLO in disenfranchising the 56 voters in question.
However, despite said finding public respondent ruled to set aside the Resolution of
July 25, 1986 of the Med-Arbiter based on its own findings 12 that 51 of the 56
disenfranchised voters were not yet union members at the time of the election of union
officers on May 26, 1986 on the ground that their names do not appear in the records
of the Union submitted to the Labor Organization Division of the Bureau of Labor on
April 24, 1986.

The finding does not have a leg to stand on. Submission of the employees names with
the BLR as qualified members of the union is not a condition sine qua non to enable
said members to vote in the election of union's officers. It finds no support in fact and in
law. Per public respondent's findings, the April 24, 1986 list consists of 158 union
members only 13 wherein 51 of the 56 challenged voters' names do not appear.
Adopting however a rough estimate of a total number of union members who cast their
votes of some 333 14 and excluding therefrom the 56 challenged votes, if the list is to
be the basis as to who the union members are then public respondent should have
19
also disqualified some 175 of the 333 voters. It is true that under article 242(c) of the
Labor Code, as amended, only members of the union can participate in the election of
union officers. The question however of eligibility to vote may be determined through
the use of the applicable payroll period and employee's status during the applicable
payroll period. The payroll of the month next preceding the labor dispute in case of
regular employees 15 and the payroll period at or near the peak of operations in case of
employees in seasonal industries. 16

In the case before Us, considering that none of the parties insisted on the use of the
payroll period-list as voting list and considering further that the 51 remaining
employees were correctly ruled to be qualified for membership, their act of joining the
election by casting their votes on May 26, 1986 after the May 10, 1986 agreement is a
clear manifestation of their intention to join the union. They must therefore be
considered ipso facto members thereof Said employees having exercised their right to
unionism by joining ITM-MEA their decision is paramount. Their names could not have
been included in the list of employee submitted on April 24, 1986 to the Bureau of
Labor for the agreement to join the union was entered into only on May 10, 1986.
Indeed the election was supervised by the Department of Labor where said 56
members were allowed to vote. Private respondents never challenged their right to
vote then.

The Solicitor General in his manifestation agreed with petitioners that public
respondent committed a grave abuse of discretion in deciding the issue on the basis of
the records of membership of the union as of April 24, 1986 when this issue was not
put forward in the appeal.

It is however the position of private respondents that since a collective bargaining

agreement (CBA) has been concluded between the local union and ITM management
the determination of the legal question raised herein may not serve the purpose which
the union envisions and may destroy the cordial relations existing between the
management and the union.

We do not agree. Existence of a CBA and cordial relationship developed between the
union and the management should not be a justification to frustrate the decision of the
union members as to who should properly represent them in the bargaining unit.
Neither may the inclusion and counting of the 56 segregated votes serve to disturb the
existing relationship with management as feared by herein private respondents.
Respondents themselves pointed out that petitioners joined the negotiating panel in the
recently concluded CBA. This fact alone is conclusive against herein petitioners and
hence will estop them later if ever, from questioning the CBA which petitioners
concurred with. Furthermore, the inclusion and counting of the 56 segregated votes
would not necessarily mean success in favor of herein petitioners as feared by private
respondents herein. Otherwise, could this be the very reason behind their fears why
they made it a point to nullify said votes?

WHEREFORE, premises considered, the petition for certiorari is GRANTED. The

temporary restraining order issued by this Court on May 13, 1987 is hereby made
permanent. The questioned Resolution of February 12, 1987 and the Decision of
December 10, 1986 are hereby set aside for being null and void and the Order of July
25, 1986 of the Mediator Arbiter is hereby declared immediately executory.

Cost against private respondents.

20
SO ORDERED.

G.R. No. 72772-73 June 28, 1989

RICARDO R. MANALAD, et al, petitioners,

vs.
DIRECTOR CRESENCIANO B. TRAJANO, et al, respondents.*

Remberto Z. Evio for petitioners.

De Jesus, Paguio & Manimtim for private respondents.

REGALADO, J.:

The parties herein are employees of United Dockhandlers, Inc. They are members of
rival groups in the Associated Port Checkers and Workers' Union (APCWU for short) in
said company, the petitioners' faction being led by petitioner Ricardo R. Manalad, with
respondent Pablo B. Babula heading the group of private respondents.

From their submissions, it appears that sometime in 1982, the petitioners were
disqualified from running as candidates in the election of APCWU officers by the Med-
Arbiter, which election had theretofore been scheduled for November 17, 1981 but was
enjoined and ordered reset. 1 However, on appeal, said order was set aside by the
Director of the Bureau of Labor Relations on October 31, 1984. Thereafter, the election
of officers and board members of the union was held on November 26, 1984, with the
candidates of the petitioners, that is, Manalad, Leano and Puerto, winning over those
of the private respondents, who were Babula, Mijares and Navarro, for the positions of
president, treasurer and auditor, respectively. As a consequence, the latter group filed
a petition for review with this Court assailing the aforesaid order of October 31, 1984 of
the Bureau of Labor Relations which had declared the aforesaid petitioners eligible to
run for said union offices. 2 This case, entitled "Associated Port Checkers and Workers
Union, et al. vs. Ricardo R. Manalad, et al." was docketed as G.R. Nos. 69684-85.

On July 3, 1985, the Court promulgated a resolution therein, which was immediately
executory, as follows:

1. To DISMISS the petition for lack of merit and to DENY all

pending motions incident thereto;

2. (a) To DECLARE VACANT all the offices of the Associated

Port Checkers and Workers Union, and (b) to ORDER that the
petitioners headed by Pablo B. Babula who has held over as
acting president since 1981, and all other persons acting as
officers of the said union, to cease acting as such upon receipt
of this resolution, and to turn over immediately the management
of the union affairs to respondent Director of the Bureau of
Labor Relations, who shall act as caretaker until after a new set
of union officers shall have been elected and duly qualified as
provided in the next succeeding paragraph, and accordingly, (c)
to GRANT the motion to transfer the union funds to said
respondent Director of the Bureau of Labor Relations as such
21
 caretaker, which funds may not be disbursed by him except for
urgent union purposes and for necessary expenses of the
election and which funds shall be turned over by him to the new
set of union officers to be duly elected and qualified, as herein
provided; and

3. To ORDER the holding of a special election of union officers

under the supervision of the National Capital Region Labor
Office not later than Saturday, July 20, 1985, which shall be
governed by the union's 1978 Constitution and By-Laws as
amended in 1981 (disregarding all subsequent amendments)
and the outcome of which shall be immediately certified as to
the president and officers of the union who shall forthwith
assume and discharge the functions of the respective offices to
which they shall have been thus elected.3

Pursuant thereto, the Director of the Bureau of Labor Relations issued an order on July
10, 1985 to the effect that he was taking over the management of the affairs of said
union, ordering private respondents Babula and all other persons to cease acting as
officers of the union, and requiring them to turn over the union funds to said
director. 4Subsequently, the Court's aforesaid resolution of July 3, 1985 was modified
on July 17, 1985 by providing that the special election scheduled on July 20, 1985 shall
be held under the personal supervision of respondent Director Trajano, with the
assistance of his staff, under the usual rules and applying suppletorily the union's 1978
constitution and by-laws.5

Meanwhile, on July 13, 1985, a motion was filed by the petitioners with this Court in
G.R. No. 69684-85 asking that the private respondents be cited in contempt and for
their disqualification from running in the projected special election due to their alleged
refusal to comply with the resolution above quoted. 6 The petitioner also wrote a letter
to the Director on July 18, 1985 objecting to the candidacy of private respondents. 7

Nevertheless, the scheduled special election was held resulting in the victory of the
candidates of the private respondents. Petitioner then filed a motion with the Court for
the annulment of the special election, repeating their allegation that there was non-
compliance with the Court's resolution of July 3, 1985 by private respondents. 8

On July 26, 1985, respondent Director issued a resolution proclaiming private

respondents as the winners in the special election and duly elected officers of APCWU,
with the following observation: "The submission that Mr. Babula failed to completely
turn over management of the union to the undersigned is within the competence and
authority of the Supreme Court to pass upon considering that the mandate for such a
turn-over came from the Court. 9

Petitioners filed with respondent director a motion for reconsideration on August 2,

1985 seeking he reversal of said resolution of July 26, 1985. This motion having been
denied, petitioner filed a second motion for reconsideration on August 28, 1985 but the
same was likewise denied on October 14, 1985. 10

In the meantime, this Court in a resolution dated September 1, 1985 denied the motion
of the petitioner to annul the special election of July 20, 1985, but without prejudice to
the filing of a proper petition with the Bureau of Labor Relations. 11

22
The instant petition was thereafter filed, principally praying:

1. That the questioned Resolution dated July 26, 1985 (Annex

'A'), Order dated August 19, 1985 (Annex 'B'), and Order dated
October 4, 1986 (Annex 'C') of public respondent Cresenciano
B. Trajano, Director of Bureau of Labor Relations be reversed
and set aside;

2. That respondents Pablo B. Babula and his group be

disqualified for not complying with the Resolution dated July 3,
1985 (Annex 'D') of this Honorable Court and the votes cast in
their favor in the July 20, 1985 election be invalidated and the
candidates who received the next highest number of votes in
said election be declared the winner thereof;

3. Or in the alternative, that the election held in (sic) July 20,

1985 be annulled and a new election be called three weeks
after respondents Pablo Babula, et al. have complied with the
conditions imposed by the Resolution dated July 3, 1985 of this
Honorable Court and an audit has been made of the different
funds of the Union for the year 1985; 12

xxx xxx xxx

We gave due course to this petition on April 9, 1986 but petitioners' motion for a writ of
preliminary injunction was denied. 13

In an urgent motion, dated November 18, 1987, petitioners prayed that "in the event
that they win the present case this Honorable Court upholds the November 24, (sic)
1984 election, the three-year term of office of petitioners should commence only after
the finality of the resolution/decision to be rendered in the case at bar; that a
restraining order be issued enjoining the holding of the new election of union officers
until the final disposition of the instant case so as not to render the issue raised herein
moot and academic." 14 We denied this motion on May 25, 1988 for lack of merit,
considering that "(w)hen this Court, through its First Division called for the holding of
special elections of union officers in G.R. Nos. 69684-85, there was an implied
nullification of the refusal of the November 26, 1984 elections. This being the case, and
petitioners having participated in the special elections held on July 20, 1985, they
cannot now claim a right to the positions under consideration on the basis of said
voided November 26, 1984 elections. 15

Meanwhile, the three-year term of the private respondents under the disputed July 20,
1985 elections expired on July 20, 1988, hence We resolved to require the petitioners
to show cause why these cases should not be dismissed for being moot and
academic. 16 Responding thereto, petitioners reiterated their position stated in their
urgent motion, dated November 27, 1987, that they be declared the winners is said
election with their terms of three (3) years to commence from the time they assume
office in execution of a final and executory resolution this Court. 17 On November 17,
1988, petitioners filed a motion to restrain the holding of a new election of officers of
the union scheduled on November 28, 1988. However, before any action could be
taken on said motion the election was held as scheduled, hence the petitioner filed a
motion, dated December 1, 1988, to annul said election.

23
After a careful consideration of the facts of this case, We are of the considered view
that the expiration of the terms of office of the union officers and the election of officers
on November 28, 1988 have rendered the issues raised by petitioners in this case
moot and academic. It is pointless and unrealistic to insist on annulling an election of
officers whose terms had already expired. We would have thereby a judgment on a
matter which cannot have any practical legal effect upon a controversy, even if
existing, 18 and which, in the nature of things, cannot be enforced. We must
consequently abide by our consistent ruling that where certain events or circumstances
have taken place during the pendency of the case which would render the case moot
and academic, the petition should be dismissed. 19

Moreover, it is the better part of conventional or pragmatic solutions in cases of this

nature, absent overriding considerations to the contrary, to respect the will of the
majority of the workers who voted in the November 28, 1988 elections. Although
decreed under a different setting, it is apropos to recall in this case Our ruling that
where the people have elected a man to office, it must be assumed that they did this
with knowledge of his life and character, and that they disregarded or forgave his faults
or misconduct, if he had been guilty of any. 20

We agree with the petitioners that disobedience to a resolution of this Court should not
be left unpunished. However, before the alleged disobedient party may be cited for
contempt, the allegations against him should be clearly established. The contentions of
petitioners, even disregarding some evidential deficiencies, do not adequately
establish the basis for contempt. On the contrary, respondents have satisfactorily
answered the averments thereon.

At this juncture, it would further be appropriate to remind petitioners that even if the
disqualification of private respondents could be justified, the candidates of petitioners
certainly cannot be declared as the winners in the disputed election. The mere fact that
they obtained the second highest number of votes does not mean that they will thereby
be considered as the elected officers if the true winners are disqualified.

ACCORDINGLY, this case is DISMISSED for being moot and academic.

SO ORDERED.

G.R. No. 174316 June 23, 2009

TEODORICO S. MIRANDA, JR., Petitioner,

vs.
ASIAN TERMINALS, INC. (ATI) and COURT OF APPEALS, Respondents.

DECISION

PUNO, C.J.:

At bar is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking
the review and reversal of the amended decision,1 dated August 31, 2005, and
resolution,2 dated August 25, 2006, of the Court of Appeals in two separate but
consolidated petitions for certiorari docketed as CA G.R. SP No. 68283 and CA G.R.
SP No. 77174, both entitled Teodorico S. Miranda, Jr. v. National Labor Relations
Commission (NLRC) and Asian Terminals, Inc. (ATI or the company). The amended
decision of the Court of Appeals dismissed the petitioner’s consolidated petitions for
24
being moot and academic and the motion for reconsideration of the petitioner was
denied by the Court of Appeals.

In this petition for review on certiorari, the petitioner seeks the reinstatement of the
decision3 of the Court of Appeals, dated June 27, 2005, which reversed and set aside
the resolutions of the NLRC. The NLRC resolutions that were set aside by the Court of
Appeals remanded the case to the Labor Arbiter for clarification of his decision and
ordered the issuance of a temporary restraining order against the execution of the
judgment.

Let us examine the facts.

Petitioner Teodorico S. Miranda, Jr. was employed by respondent ATI in 1991 as

Checker I. He also became a member of the Associated Port Checkers and Workers
Union (APCWU or the union).4 On April 10, 1992, the petitioner, who was then the Vice
President of the union, was appointed to the position of Shop Steward which is a union
position under the payroll of the company.5 The Collective Bargaining Agreement
(CBA) between the union and ATI provided for the appointment of a Shop Steward
from among the union members, upon the recommendation of the union president. The
Shop Steward is a field representative of both the company and the union and acts as
an independent arbiter of all complaints brought to his attention.6

On December 28, 1993, Roger P. Silva, the President of APCWU, wrote a letter7 to the
petitioner regarding the recall of his designation as the union Shop Steward. The union
president explained that the petitioner was recalled as union Shop Steward due to loss
of trust and confidence in him, pursuant to the "Agreement Amending the MPSI
(Marina Port Services, Inc.) - APCWU CBA." The letter further stated that the petitioner
refused to heed the union president’s reminders concerning his "chronic absenteeism"
that "is hurting the interest of the Union members as they are left with no responsible
union officer when summoned for investigation concerning alleged infractions of
company rules."8 The union president further wrote that the decision to dismiss the
petitioner came only after a series of personal dialogues and after the petitioner had
been given ample opportunity to efficiently perform the duties and obligations of a
Shop Steward assigned to the night shift. The union president then gave the petitioner
five days from receipt of the letter to explain why he should not be recalled as Shop
Steward for chronic absenteeism which started from the second week of September
1993 until December 28, 1993.

A rift then developed between the union leadership and certain union members,
including the petitioner.9 In June 1994, the petitioner and some of the members of
APCWU sent an undated letter to ATI protesting the manner in which the APCWU
leadership handled the affairs of the union.10 This led to the formation of a grievance
committee to investigate the complaints against the union officers, including the
petitioner. The petitioner, however, refused to participate in the investigation.11

Upon the conclusion of the investigation, the grievance committee issued its report
recommending to ATI the recall of the petitioner as Shop Steward and for his reversion
to his former position of Checker I, in accordance with the CBA. 12 The petitioner
questioned his recall as union Shop Steward, and the union president, Roger P. Silva,
issued a letter which reasoned that the petitioner’s recall as Shop Steward was
pursuant to Section 13 of the Agreement Amending the MPSI-APCWU CBA, amending
Section 2, Article V of the MPSI-APCWU CBA which required that the term of office of
25
the Shop Steward shall be based on trust and confidence and favorable
recommendation of the duly elected president of the Union.

Acting on the recommendation of the union, respondent ATI issued a

Memorandum13 to the petitioner regarding his transfer on January 11, 1994. The
Memorandum cited the provision of the CBA, viz.:

Acting on the two letters dated 10 December 1993 of the APCWU-ATI (Local Chapter)
and pursuant to Section 13 of the Agreement Amending of [sic] the APCWU-MPSI
(now ATI) CBA which provides that:

"SECTION 13. - Article V, Section 2 is hereby amended to read as follows:

Section 2. The Shop Steward shall be an independent arbiter of all complaints and
grievances brought before him as a field representative both of the COMPANY and the
UNION. Only bonafide [sic] members of the UNION shall be designated as Shop
Steward whose designation and term of office shall be based on trust and confidence
and upon the favorable recommendation of the duly elected president of the UNION. In
like manner shall the designation of the Union rotation representative posted in the
hiring shall be based. [emphasis supplied]

"Section 2-A. Upon the recall of the designation as Shop Steward, or union
representative, as the case maybe [sic], the party concerned shall revert back to his
position occupied prior to the designation and shall receive the salary that corresponds
to that particular office/position." [emphasis supplied]

[T]he management EFFECTIVE IMMEDIATELY hereby recalls the designation of Mr.

Teodorico Miranda as Shop Steward and Mr. Rolando de Luna as Union Rotation
Representative and designate[s] Mr. Hipolito Cruz as Shop Steward vice Teodorico
Miranda, Jr. and Mr. Elpidio Valdez as Union Rotation Representative vice Mr.
Rolando de Luna.

As per amendment quoted above, Messrs. Miranda and de Luna shall revert back to
their position as Checker I and shall receive the salary that corresponds therefor.

The abovementioned personnel are directed to report to the Operations Department for
further instructions and/or eventual deployment.

(Sgd.)
R.G. CORVITE, JR.14

The petitioner first filed a complaint against Roger Silva as the President of APCWU,
Marina Local Chapter with the Department of Labor and Employment (DOLE), National
Capital Region, docketed as Case No. NCR-OD-M-0403-005, praying for his
reinstatement as Shop Steward. In an Order issued by the Mediation Arbiter (Med-
Arbiter) on August 1, 1994, the petitioner was ordered reinstated to the position of
Shop Steward. The Med-Arbiter found that the union president did not have the
authority to recall the petitioner as Shop Steward for lack of approval of the Board of
Directors of the union. The Order of the Med-Arbiter was affirmed by the Secretary of
Labor in a Resolution15 dated February 23, 1995,16 viz.:

It is noted that appellant Roger P. Silva relied heavily on the provisions of Article V,
Section 2 of its CBA which provides that:
26
"Section 2. The shop steward shall be an independent arbiter of all complaints and
grievances brought before him as a field representative both of the company and the
union. Only bonafide [sic] members of the union shall be designated as shop steward
whose designation and term of office shall be based on trust and confidence and upon
the favorable recommendation of the duly elected president of the union. In like
manner shall the designation of the union rotation representative posted in the hiring
shall be based."

A close scrutiny of [t]he said provision however, would reveal that the designation of a
shop steward and union rotation representative is only upon the favorable
recommendation of the union president. In other words, it is not the union president
who makes the appointment. The union president merely recommends.

Further, the union constitution and by-laws confers upon the Board of Directors the
power "to approve appointments made by the President." The two (2) provisions taken
together, would bring us to the conclusion that appointments or recommendations
made by the union president needs [sic] the approval of the Board for validity.
Consequently, recall of appointments likewise requires the imprimatur of the Board.

In the present case, the recall of appointment was made by the union president. It was
not shown to be approved by the Board. Hence, it is clear that the recall is invalid,
having been made by one unauthorized to do so.

Even assuming arguendo, that the union president has the power to recall
appointments, still the action may not be upheld for being violative of complainants’
right to due process.

Teodorico Miranda, Jr. was removed due to loss of trust and confidence primarily
arising from alleged absenteeism. Except for such general allegation, no evidence was
presented to substantiate the same. In fact, Miranda’s subordinates executed affidavits
to the effect that he never failed to assist them x x x. [T]he removal was effected
without affording complainants the opportunity to present their side. There was no
showing that an investigation was conducted prior to the removal of the
complainants.17 [emphasis supplied]

On October 3, 1995, the petitioner filed another complaint before the Med-Arbiter
involving money claims in the form of allowances, 13th month pay, and attorney’s fees.
The complaint was dismissed by the Med-Arbiter, ruling that the Mediation Office of the
DOLE has no jurisdiction over money claims, which must be brought before the
company.18

The petitioner also filed a series of complaints before the NLRC. On January 1, 1995,
the petitioner filed a complaint for unfair labor practice, which was later amended to
illegal demotion with a claim for reduction or diminution in pay, against respondent ATI
and/or Richard Barclay, the President of the respondent, and APCWU and/or Roger
Silva, which was docketed as NLRC NCR Case No. 01-00881-95 and assigned to
Labor Arbiter Donato Quinto, Jr. (Quinto). On July 3, 1996, Labor Arbiter Quinto issued
a Decision19 which dismissed the case against ATI for lack of cause of action
reasoning that the petitioner "should institute the appropriate charges/complaint
against the erring union official/leadership."20 And since the petitioner has already
obtained a favorable decision from the Secretary of Labor, then he should have the

27
said judgment enforced and should compel the union president to have him designated
as Shop Steward, under pain of contempt.21

While the cases filed by the petitioner were pending, on July 10, 1995, the petitioner
was re-assigned from the position of Checker I to Checker I Mobile, which is lower in
rank than Checker I.22 He was further re-assigned to Vessel Operation Checker, which
is designated only to Checker Grades II and III and which positions were only assigned
to casual Checkers.23

The petitioner then filed a second complaint in the NLRC against the respondent for
unfair labor practice, illegal demotion and reduction and diminution of pay, docketed as
NLRC NCR Case No. 00-02-01192-96, which was assigned to Labor Arbiter Fatima
Jambaro-Franco (Jambaro-Franco). On June 18, 1996, Labor Arbiter Jambaro-Franco
issued an Order24 and dismissed the complaint as the case pending before Labor
Arbiter Quinto involved the same parties and the same cause of action.

On December 12, 1996, a third complaint for Unfair Labor Practice and Illegal
Demotion was filed by the petitioner against union president Roger Silva, the President
of ATI, Richard Barclay, and the Operations Manager, Bonifacio Lomotan, which was
docketed as NLRC-NCR Case No. 00-12-07641-96. The cause of action of the
complaint was later amended on January 23, 199725 to illegal demotion in rank and
discrimination, amounting to constructive dismissal. 26 The complaint was dismissed by
Labor Arbiter Felipe T. Garduque II (Garduque) in an Order27 issued on March 24,
1997 on the ground that the claim is barred by prior judgment since the decision of
Labor Arbiter Quinto and the order of Labor Arbiter Jambaro-Franco were not appealed
and have become final.28 The petitioner appealed the order of Labor Arbiter Garduque
before the Third Division of the NLRC on April 28, 1997. The Third Division of the
NLRC issued an Order29 remanding the case to the office of origin for further
proceedings, reasoning that the principle of res judicata cannot be applied because the
earlier decision and order rendered by Labor Arbiter Quinto and Labor Arbiter
Jambaro-Franco were not decided on the merits of the case but were dismissed based
on jurisdictional grounds.30

Upon remand of the case to the Arbitration Office of the NLRC, the case was re-raffled
to Labor Arbiter Arthur L. Amansec (Amansec). On August 20, 1999, Labor Arbiter
Amansec rendered a Decision31 which ruled that the demotion from union Shop
Steward to Checker 1 was for cause but was effected without observance of
procedural due process. He ordered the respondent to pay the petitioner indemnity in
consonance with the Wenphil Doctrine,32which was then the prevailing doctrine with
respect to separation for a valid cause but through an invalid procedure. The
dispositive portion of the decision made matters confusing for the parties since it
declared the petitioner to be constructively dismissed and ordered the petitioner to be
reinstated.

Labor Arbiter Amansec’s decision states:

Regarding his appointment to the position of Shop Steward, subsequent recall

therefrom and reversion to Checker 1, the management’s approval of his recall and
termination as Shop Steward cannot be adjudged as one constitutive of constructive
dismissal. This is because when complainant was recalled as Shop Steward, he was
immediately reverted to Checker 1, his original position. In other words, he continued
to work with the company. He did not quit his employment.
28
While complainant cannot validly say that the Union President had no authority to
recall him since under the CBA, the Union President was clearly so authorized, the
manner of his recall and termination as Shop Steward did not meet the stringent
requirements of due process.

It seems clear that the company approved his recall without providing the complainant
an opportunity to explain why he should not be recalled. It is true that the union,
through its Union President, sent him a show-cause letter prior to his recall, a due
process compliance no doubt, but the company was not empowered to skirt due
process by automatically affirming said recall. Being complainant’s employer, the
company had the primordial duty to provide the complainant an opportunity to explain
why the company should not affirm, approve and adopt the union’s recall prior to
removing him as Shop Steward. Thus, the company’s failure to observe due process in
his recall as Shop Steward and concomitant reversion to Checker 1 entitles
complainant to a reasonable indemnity, following the Wenphil doctrine.

Regarding complainant’s assignment, despite being Checker 1, as Checker 1 Mobile,

then as Priority Receiving Checker, it will be observed that the position of Checker 1,
[sic] Mobile and Priority Receiving Checker are inferior in rank and salary as
complainant’s position of Checker 1.

Complainant had the right to refuse complainant’s transfer to an inferior position since
there appears no justifiable basis therefor. There is no competent evidence at all that
he did not perform well as Checker 1.

On the other hand, the respondent company’s adamant refusal to allow complainant to
perform his duties as Checker 1 amounts to a constructive form of dismissal because
there is no convincing basis for the demotion and that complainant could not take the
psychological shock and discomfort of performing the duties of an inferior position.
[emphasis supplied]

xxxx

WHEREFORE, judgment is hereby rendered finding complainant to have been

demoted from the position of Shop Steward to the position of Checker 1 without due
process in 1994 and concomitantly, the respondent company is ordered to pay
complainant P1,000.00 by way of indemnity. Judgment is likewise made finding
complainant to have been constructively dismissed from employment in February,
1996 and therefore the respondent company is ordered to reinstate complainant with
backwages.

SO ORDERED. 33

Confusion followed the decision of Labor Arbiter Amansec when the petitioner filed a
motion to be reinstated to the position of union Shop Steward. This was resolved by
Labor Arbiter Ramon Valentin C. Reyes (Reyes) in the petitioner’s favor; denying the
motion to quash of the respondent and directing the Sheriff to proceed with the process
of execution.34 But the respondent filed a Petition for Prohibition, Issuance of a
Temporary Restraining Order (TRO) and/or Writ of Permanent Injunction on March 20,
2000, claiming that the petitioner should merely be reinstated to his previous position
of Checker I.35

29
Pending the resolution of the Petition for Prohibition, Labor Arbiter Reyes issued an
Order, dated September 21, 2000, which denied the Motion to Quash the Writ of
Execution filed by the respondent and ordered the assigned sheriff to proceed with the
execution and further ordered the respondent to pay the petitioner backwages. A
second Writ of Execution was issued on December 22, 2000 and a Notice of Public
Auction Sale over the levied properties of the respondent company was issued. But the
public auction did not take place due to a third party claim over the levied properties.

The respondent appealed the decision of Labor Arbiter Amansec to the NLRC arguing
that the controversy between the petitioner and the other officers and members of the
union is an intra-union dispute that must be resolved within the union itself. The
respondent company argued that all it "has to do is to RESPECT the decision arrived
at by the union – that is, to effect the recall of the complainant IN ACCORDANCE
WITH THE CBA. Otherwise, respondent ATI runs the risk of being accused of violating
the CBA x x x."36

On March 30, 2001 the Third Division of the NLRC issued a Resolution37 which
remanded the case to Labor Arbiter Amansec for clarification of his decision. The
resolution of the NLRC noted the ambiguities of the decision of Labor Arbiter Amansec.
While on the one hand, the body of the arbiter’s decision mentioned that "the petitioner
continued to work with the respondent company"38 and thus, "the management’s
approval of his recall and termination as Shop Steward cannot be adjudged as one
constitutive of constructive dismissal";39 the dispositive part of the decision, on the
other hand, rendered the judgment "finding complainant to have been constructively
dismissed from employment in February, 1996"40 and ordered the respondent
company "to reinstate complainant with backwages."41 The NLRC ordered that the
case be "remanded to the sala of Labor Arbiter Amansec for clarification of his
decision,"42 and issued a temporary restraining order on Labor Arbiter Reyes from
further proceeding with the execution of the case.

Pending the respondent’s appeal before the Court of Appeals, the petitioner then
sought the execution of the reinstatement aspect of the decision of Labor Arbiter
Amansec, praying to be reinstated to the position of union Shop Steward. He also filed
a Motion for Issuance of a Break Open Order, which was granted on June 26, 2002 by
Labor Arbiter Reyes. On the same day, the respondent filed an Appeal with a Prayer
for Issuance of a Temporary Restraining Order and/or Writ of Permanent Injunction
with the Third Division of the NLRC. The NLRC issued a Resolution43 restraining Labor
Arbiter Reyes, the Sheriff and the petitioner from further implementing the
reinstatement aspect of the order.

Despite the NLRC order restraining the execution of the case, Labor Arbiter Reyes
directed the garnishment of respondent’s bank deposit in the amount of ₱874,756.92,
and ordered the release of such amount to petitioner.44

On August 23, 2002, the respondent appealed Labor Arbiter Reyes’ Order of
garnishment and prayed for the issuance of a Temporary Restraining Order and/or a
Writ of Preliminary Injunction. The Third Division of the NLRC issued the Temporary
Restraining Order on October 23, 2002, and declared the Break Open Order as null
and void.

The petitioner filed a Petition before the Court of Appeals, docketed as CA G.R. SP
No. 77174, alleging that the NLRC erred in declaring the Break Open Order as null and
30
void, and in restraining Labor Arbiter Reyes from implementing Labor Arbiter
Amansec’s Order for reinstatement.

While the respondent’s appeal of the decision of Labor Arbiter Amansec was pending
before the NLRC, the petitioner was retrenched by ATI from his position then as a
Vessel Operation Checker. Consequently, the petitioner filed a separate case
questioning the validity of his retrenchment. The case was terminated upon the
execution of a Quit Claim and Release45 on February 26, 2003, which was duly
executed by the parties before the Second Division of the NLRC in NLRC CA No.
032809-02. The Quit Claim and Release provides, to wit:

COMES NOW, the undersigned complainant(s)/petitioner(s) in the above-entitled

case(s) before this Office respectfully manifest:

That for and in consideration of the sum of P350,000.00 plus 5% attorney’s fees or a
total amount of P367,500.00 to me/us paid by ASIAN TERMINALS, INC. in settlement
as of the above-entitled case receipt of which is hereby acknowledged to my/our
complete and full satisfaction. I/we hereby release or discharge the said ASIAN
TERMINAL[S], INC. and its officer(s) from any claims arising from the above entitled
case. It is understood that the settlement of this case is without prejudice to the other
labor cases filed by complainant (CA-12858-97, NLRC Third Division).46

On March 22, 2005, the Special Third Division of the NLRC issued a
Decision47 resolving the consolidated appeals of the respondent on the issues of
whether Labor Arbiter Reyes had correctly computed the awards and, thereafter
proceeded with the execution of the dispositive portion of Labor Arbiter Amansec’s
decision which is pending appeal in the NLRC. The Special Third Division of the NLRC
ruled that there is no need to execute the reinstatement aspect of the decision of Labor
Arbiter Amansec since it has been rendered moot and academic by the petitioner’s re-
employment as Checker I prior to the rendition of Labor Arbiter Amansec’s decision up
to the time of his admitted retrenchment on October 21, 2001.

Thus, the petitioner filed a Petition for Certiorari under Rule 65 of the Rules of Court
before the Court of Appeals, docketed as CA G.R. SP No. 68283. The petitioner
contends that the NLRC erred when it declared that he is not entitled to be reinstated
to the position of Shop Steward, despite its order to remand the case for clarification of
the arbiter’s decision. The petitioner further asserts that the NLRC abused its discretion
in issuing a Temporary Restraining Order, enjoining Labor Arbiter Reyes from further
proceeding with the execution of the reinstatement order.48

The Third Division of the Court of Appeals consolidated the two petitions, namely CA
G.R. SP No. 68283 and CA G.R. SP No. 77174, and reversed the assailed Resolutions
of the NLRC in a Decision,49 promulgated on June 27, 2005. It ruled that the
reinstatement aspect of the labor arbiter’s decision is immediately executory and not
even the filing of an appeal or the posting of a bond could forestall the same. However,
the confusion remained as to which position the petitioner should be
reinstated.1avvphi1

ATI filed a Motion for Reconsideration, praying that the petitions be dismissed for
having been rendered moot and academic since the petitioner was already reinstated
to the position of Checker I. The Court of Appeals issued an Amended Decision50 on
August 31, 2005, which vacated its earlier decision rendered on June 27, 2005, and

31
ruled that the petitions at bar had been rendered moot and academic. It took note of
the reinstatement of the petitioner to the position of Checker I and the March 22, 2005
Decision of the NLRC which dissolved all writs of execution and orders issued by the
Labor Arbiter.51

The petitioner filed a Motion for Reconsideration before the former First Division of the
Court of Appeals, praying that the amended decision, dated August 31, 2005 be
vacated and set aside and the original decision dated June 27, 2005 be reinstated. The
Court of Appeals reiterated that the factual findings of the NLRC with respect to the
dismissal, reinstatement and retrenchment of the petitioner are predicated on
substantial evidence and provide sufficient basis for considering the petitions moot and
academic. Consequently, the Court of Appeals also held that the NLRC did not act with
grave abuse of discretion in restraining the execution aspect of the Labor Arbiter’s
decision.52

Hence, this petition before us.

The petitioner argues that he is entitled to claim reinstatement as Shop Steward as

well as the payment of his backwages pending the respondent’s appeal. He further
contends that the Court of Appeals erred in dismissing his consolidated petitions which
prayed for the enforcement of his reinstatement as Shop Steward for being moot and
academic.53

The respondent, on the other hand, maintains that both the NLRC and the Court of
Appeals relied on substantial evidence in arriving at their decision that the consolidated
petitions are already moot and academic in view of the previous reinstatement of the
petitioner to Checker I and his retrenchment and separation from ATI since October
31, 2001.54

This case presents two issues: (1) whether the petitioner should be reinstated to the
position of Shop Steward and (2) whether the case has been rendered moot and
academic.

Before going into a discussion of these issues, we must clarify and provide a better
understanding of the position of the union Shop Steward. The parties of this case, the
NLRC and the Court of Appeals have assumed that the union Shop Steward is a
company position, employed by respondent ATI. Thus, much of the discussion of the
appellate court and the administrative agency has revolved around the supposed
demotion of the petitioner from union Shop Steward to Checker I and whether there
was cause for and due process in such demotion.

Union Shop Steward: A position within the union

The premise that the union Shop Steward is a position within the respondent company
provides a faulty foundation to an already convoluted case. A cursory look at the
responsibilities of a shop steward leads to the conclusion that it is a position within the
union, and not within the company. A shop steward is appointed by the union in a
shop, department, or plant and serves as representative of the union, charged with
negotiating and adjustment of grievances of employees with the supervisor of the
employer.55 He is the representative of the union members in a building or other
workplace.56 Black's Law Dictionary defines a shop steward as a union official elected
to represent members in a plant or particular department. His duties include collection

32
of dues, recruitment of new members and initial negotiations for the settlement of
grievances.57

The position of the shop steward has been acknowledged to be a position within the
union; and even in Section 2 of Rule XIX of the Implementing Rules of Book V of the
Labor Code, as amended by DOLE Order 40-03,58 the shop steward is understood to
be a union officer who plays an important role in the grievance procedure. The shop
steward is responsible for receiving complaints and grievances of the employees and
for bringing these complaints to the immediate supervisor of the employee concerned.
If the grievance is not settled through the efforts of the shop steward, it is referred to
the grievance committee.

In the case of Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers
Phils., Inc.,59 Section 501(a) 60and (b)61 and Section 3(q)62 of the Landrum Griffin Act of
1959 were used as the bases to conclude that the Shop Steward is an officer of the
union. These provisions confirm that the Shop Steward occupies a position of trust
within the union. It may be an elective official within the union or key administrative
personnel, and it is considered to be within the same class as union officers, agents
and representatives. We have ruled in the case of Santa Rosa Coca-Cola Plant
Employees Union that:

x x x, a shop steward is appointed by the Union in a shop, department, or plant serves

as representative of the Union, charged with negotiating and adjustment of grievances
of employees with the supervisor of the employer. He is the representative of the Union
members in a building or other workplace. Black's Law Dictionary defines a shop
steward as a union official who represents members in a particular department. His
duties include the conduct of initial negotiations for settlement of grievances. He is to
help other members when they have concerns with the employer or other work-related
issues. He is the first person that workers turn to for assistance or information. If
someone has a problem at work, the steward will help them sort it out or, if necessary,
help them file a complaint. In the performance of his duties, he has to take cognizance
of and resolve, in the first instance, the grievances of the members of the Union. He is
empowered to decide for himself whether the grievance or complaint of a member of
the petitioner Union is valid, and if valid, to resolve the same with the supervisor failing
which, the matter would be elevated to the Grievance Committee.1avvphi1

It is quite clear that the jurisdiction of shop stewards and the supervisors includes the
determination of the issues arising from the interpretation or even implementation of a
provision of the CBA, or from any order or memorandum, circular or assignments
issued by the appropriate authority in the establishment. In fine, they are part and
parcel of the continuous process of grievance resolution designed to preserve and
maintain peace among the employees and their employer. They occupy positions of
trust and laden with awesome responsibilities.63

In the case at bar, the duties and responsibilities of the Shop Steward stated in the
CBA between the union and the respondent company, as well as the manner of the
appointment and designation of the Shop Steward show that the shop steward is a
union position and not a position within the company.

Intra-union Dispute

33
Since the Shop Steward is a union position, the controversy surrounding his recall from
his position as Shop Steward becomes a dispute within the union.

An "Internal Union Dispute" or intra-union conflict refers to a conflict within or inside a

labor union. It includes all disputes or grievances arising from any violation of or
disagreement over any provision of the constitution and by-laws of a union, including
any violation of the rights and conditions of union membership provided for in the
Code.64Article 226 of the Labor Code of the Philippines65 vests on the Bureau of Labor
Relations and the Labor Relations Division jurisdiction to act on all inter-union or intra-
union conflicts.

The records show that sometime after the appointment of the petitioner to union Shop
Steward, the petitioner, along with other union members, had complaints with the
manner in which the union leadership was handling the affairs of the union. At the
same time, there were also complaints about the petitioner’s habitual absenteeism and
his inability to perform his duties as union Shop Steward. When a grievance committee
was created to investigate these complaints, the petitioner refused to participate. This
led to the recall of petitioner as the union Shop Steward.

The actions of the petitioner bolster the conclusion that his grievances were directed
against the union and not the respondent company, making the dispute an intra-union
dispute. The first Complaints filed by the petitioner were against the union and the
Union President for illegal recall of his designation as Shop Steward. A Complaint was
then filed before the DOLE Med-Arbiter praying for reinstatement to union Shop
Steward and for the award of the salary differential while he was allegedly illegally
demoted. But the money claims could not be brought before the union since the
salaries of the petitioner were paid by the respondent company; thus, a Complaint for
illegal demotion amounting to constructive dismissal was filed before the Labor Arbiter,
against the union, union president and this time including respondent company and the
president of the company.

Ruling of the Med-Arbiter Prevails: Invalid Recall

The Med-Arbiter, as affirmed by the Secretary of Labor, ruled that there was neither
cause nor due process in the recall of the petitioner from the position of union Shop
Steward. He found that the claim of loss of trust and confidence due to the petitioner’s
alleged absenteeism was not substantiated and that the recall was not approved by the
Board of Directors of the union, as required by the APCWU Constitution and By-Laws.

The facts and findings of the Med-Arbiter and the Secretary of Labor are generally
conclusive on appeal. This Court is not a trier of facts and it is not its function to
examine and evaluate the probative value of all evidence presented to the concerned
tribunal which formed the basis of its impugned decision, resolution or order. Following
this, it is inappropriate to review the factual findings of the Med-Arbiter and the
Secretary of Labor regarding the invalidity of the petitioner’s recall due to a violation of
the APCWU Constitution and By-Laws which requires that the recall must be approved
by the union Board of Directors. They are binding on this Court as we are satisfied that
they are supported by substantial evidence.

The Labor Arbiter’s decision is

void for want of jurisdiction

34
The Labor Arbiter incorrectly assumed jurisdiction over the case due to his confused
understanding of the relationship between and among the petitioner, respondent
company and the union and his decision on the merits of the case is void for lack of
jurisdiction. His disposition of the case, ordering the respondent to pay indemnity for
failure to observe due process in the supposed demotion of the petitioner from union
Shop Steward to Checker I, cannot be upheld.

The Labor Arbiter held that the respondent company should not have merely affirmed
the recommendation of the union to recall the petitioner and return him to Checker I,
his previous position. He reasons that the respondent should have conducted its own
investigation before it supposedly demoted petitioner from union Shop Steward to
Checker I. The requirements imposed on an employer for the valid demotion of an
employee do not apply to the reversion of petitioner from union Shop Steward to
Checker I because the decision to recall the petitioner from union Shop Steward to
Checker I is for the union, not the respondent company, to make. The respondent
cannot and should not conduct its own investigation to determine whether the union
had cause to recall the petitioner from union Shop Steward because the dispute is an
intra-union dispute.

Petitioner cannot be reinstated to Shop Steward due to his valid retrenchment

Notwithstanding the determination of the Med-Arbiter, as affirmed by the Secretary of

Labor, that the petitioner should be reinstated to the position of Shop Steward, which is
binding on this Court, the petitioner could not be reinstated to the position of Shop
Steward because his eventual separation from respondent ATI made reinstatement
unfeasible. Employment with respondent ATI and membership in the union are
required in order to occupy the position of Shop Steward. But the petitioner is neither a
member of the union nor employed with respondent ATI. He was already retrenched
from respondent ATI since October 21, 2001, and his retrenchment was finally settled
through the execution of a Quit Claim and Release which was executed before the
Second Division of the NLRC in NLRC CA No. 032809-02. The Quit Claim and
Release provides that in consideration of the receipt of ₱367,500.00, the petitioner
discharges respondent ATI and its officers from any claims arising from his
retrenchment, without prejudice to the present labor case filed by the petitioner.

The present labor case proceeded despite the execution of the Quit Claim and
Release. However, the resolution of this petition is inevitably affected by the
retrenchment of the petitioner from respondent ATI. Because of the petitioner’s
retrenchment, which was finally settled through the Quit Claim and Release, any order
for the reinstatement of the petitioner to the position of union Shop Steward can no
longer be executed by the union since the petitioner had been retrenched by the
company. The petitioner cannot also be reinstated to the position of Checker I, since
he was already retrenched by the respondent from such position and he released the
company from any and all claims with respect to his retrenchment.

It may seem that the outcome of this case provides no relief for the petitioner despite
his invalid removal from the position of union Shop Steward, but the reinstatement of
the petitioner could not be forced into the present circumstances because the petitioner
is no longer employed by the respondent company. It is a fact that we cannot avoid
and must consider in resolving this case. He was already compensated for his
retrenchment from ATI, and he released respondent ATI from any and all claims or
liability with respect to his separation from employment due to retrenchment. To order
35
the respondent company to reinstate the petitioner to his employment in ATI would
render the Quit Claim and Release nugatory.

The events which have taken place during the pendency of the case have rendered the
present petition moot and academic. So also in the case of Honesto B. Villarosa v.
Hon. Cresenciano B. Trajano66 it was held that the case to determine who won in an
election of union officers was rendered moot and academic by the expiration of the
term of the private respondents by operation of law. Citing the case of Manalad v.
Trajano,67 this Court ruled that:

x x x x It is pointless and unrealistic to insist on annulling an election of officers whose

terms had already expired. We would have thereby a judgment on a matter which
cannot have any practical legal effect upon a controversy, even if existing, and which,
in the nature of things, cannot be enforced. We must consequently abide by our
consistent ruling that where certain events or circumstances have taken place during
the pendency of the case which would render the case moot and academic, the
petition should be dismissed.68

So also in the case at bar, a judgment of reinstatement of the petitioner to the position
of union Shop Steward would have no practical legal effect since it cannot be enforced.
Based on the requirements imposed by law and the APCWU-ATI CBA, and in the
nature of things, the subsequent separation of the petitioner from employment with
respondent ATI has made his reinstatement to union Shop Steward incapable of being
enforced.

IN VIEW WHEREOF, the petition is DISMISSED for being MOOT and ACADEMIC. No
costs.

SO ORDERED.

G.R. No. L-24864 April 30, l985

FORTUNATO HALILI, doing business under the name and style HALILI TRANSIT
(substituted by EMILIA DE VERA DE HALILI), petitioner
vs.
COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS and
CONDUCTORS UNION (PTGWO), respondents.

RESOLUTION

MAKASIAR, J.:

Before Us for resolution is the urgent motion to cite Atty. Benjamin C. Pineda, Ricardo
Capuno and Manila Bank (Cubao Branch) in contempt for the alleged continued failure
of aforenamed parties to comply with the temporary mandatory restraining order issued
36
by this Court on September 1, 1983 and with the resolution dated September 13, 1983
which again directed Atty. Pineda and union administrator Capuno to comply with the
aforesaid mandatory restraining order and which ordered the Manila Bank to transfer
the funds allocated for the workers to the NLRC (p. 376, L-24864, rec.; p. 301,
L027773 rec.).

The issuance of the temporary mandatory restraining order stemmed from the
questioned orders of September 23, 1982 and February 9, 1983 issued by Labor
Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC which orders
respectively allowed the sale of the property awarded to satisfy or answer for the
claims of the union members in these four cases and authorized the distribution of the
proceeds of the purchase.

For a better appreciation of the aforesaid motion for contempt, We must recall certain
prefatory facts which the Solicitor General has so aptly summed up. Thus:

The above-entitled cases involve disputes regarding claims for overtime of

more than five hundred bus drivers and conductors of Halili Transit.
Litigation initially commenced with the filing of a complaint for overtime with
the defunct Court of Industrial Relations on August 20, 1958 docketed as
CIR Case No. 1099-V. The disputes were eventually settled when the
contending parties reached an Agreement on December 23, 1974, the
pertinent portions of which are as follows:

WHEREAS, in the face of this strong urging on the part of the Supreme
Court Justices upon the parties to put an immediate end to this case by
amicable settlement, the parties repeatedly came to conference,
conscientiously explored all avenues of settlement, and finally arrived at the
tentative agreement (tentative because of the condition that the same be
sanctioned by the court in the estate case) whereby the Administratrix
would transfer to the employees title to that tract of land, covered by TCT
No. 36389, containing an area of approximately 33,952 square meters,
situated in the Barrio of San Bartolome, Municipality of Caloocan, Province
of Rizal, and pay in addition the cash amount of P25,000.00 in full and final
satisfaction of all the claims and causes of action of all of the employees
against the estate of Fortunato F. Halili subject of CIR Case No. 1099-V.

xxx xxx xxx

NOW, THEREFORE, for and in consideration of the foregoing and of the

covenants, stipulations and undertakings hereinafter contained, the parties
have agreed as follows:

l. The UNION, its officers and members-claimants relative to CIR Case No.
1099-V, shall withdraw and dismiss with prejudice Case No. 1099-V filed by
the UNION in behalf of its members-claimants before the Court of Industrial
Relations and all its incidents thereto.

2. The ESTATE shall deliver or cause to be delivered, to the UNION the

following:

(a) Deed of Transfer of a parcel of land situated in Barrio San Bartolome,

Caloocan City, containing an area of THIRTY-THREE THOUSAND NINE
37
HUNDRED FIFTY-TWO (33,952) Square Meters, more or less, and
covered by Transfer Certificate of Title No. 35389 of the Registry of Deeds
of Rizal, to be made, upon authority and approval granted by the Court of
First of Rizal, Branch IV, at Quezon City, in Proc. No. Q-10852 in the name
of the Halili Bus Drivers & Conductors Union (PTGWO), free from any and
all liens encumbrances, and any and all claims whatsoever.

(b) Negotiable Check for TWENTY-FIVE THOUSAND (P25,000.00)

PESOS in the name of Domingo D. Cabading, President of the UNION.

3. The transfer of the above-described parcel of land and receipt of the

amount of P25,000.00 constitute the full and final satisfaction of the claims
and award in said CIR Case No. 1099-V, as well as any and all attorney's
liens in said case, for and in consideration of which the UNION members-
claimants in CIR Case No. 1099-V by these present now and forever
release and quitclaim Halili Enterprises, Halili Transit, Fortunato F. Halili his
estate, heirs and successors by reason of CIR Case No. 1099-V, it being
their intention that they be absolutely, completely and finally absolved and
released from any and all liability in said case, including attorneys' liens the
transfer of the property and payment of the amount hereinabove stated
constituting for all intents and purposes a full, final and complete settlement
and satisfaction of the award in CIR Case No. 1099-V and all incidents
thereto.

4. The UNION and its undersigned officers hereby warrant that the UNION
is a duly registered labor organization and that in a special meeting called
for the purpose they were duly authorized on December 22, 1974, by all the
members- claimants in CIR Case No. 1099-V to sign this Memorandum of
Agreement with Release and Quitclaim which was unanimously approved
and ratified by said members-claimants as evidenced by a Resolution
dated December 22, 1974, a copy of which is attached hereto and made a
part hereof as Annex "B", and hereby jointly and severally hold the estate
and heirs of Fortunato F. Halili free and harness from, and undertake to
indemnify them for, any and all liability for any claims by members of the
UNION, their heirs, assigns and agents relating to CIR Case No. 1099-V or
attorneys' liens in connection therewith (69 SCRA 509-510).

On January 6, 1975, pursuant to the Agreement, the administratrix of the

estate of Fortunato F, Halili executed a Deed of Conveyance of Real
Property, transferring the aforementioned parcel of land to the Halili Bus
and Conductors Union (PTGWO) in trust for the members of the union
claimants. The parcel of land was eventually registered in the name of the
Union on February 14, 1975. Hence, on February 10, 1976, the contending
parties moved for the dismissal of G.R. No. L-30110 and G.R. No. L-38655,
which this Honorable Court granted on February 27, 1976 (69 SCRA 505).
The two other cases, G.R. No. L-24864 and G.R. No. L- 27773, were
previously disposed of on February 26, 1968 and December 28, 1970,
respectively (22 SCRA 785. and 36 SCRA 522).

On August 9, 1982, the Union, through Atty. Benjamin C. Pineda, filed an

urgent motion with the Ministry of Labor and Employment (MOLE)
requesting for authority to sell and dispose of the property. The motion was
38
 granted in an order dated September 23, 1982. A prospective buyer, the
Manila Memorial Park Cemetery, inc. expressed its misgivings on the
authority of the Union to sell the property in view of sec. 66 of PD 1529
which requires no less than an order from a court of competent jurisdiction
as authority to sell property in trust. So, Atty. Pineda filed a motion with the
Supreme Court on December 1, 1982 requesting for authority to sell the
property, This Honorable Court, however, merely noted the motion in a
resolution dated December 8, 1982.

Nevertheless, Atty. Pineda, without authority from the Supreme Court but
relying on the earlier authority given him by the Ministry of Labor, filed
another urgent motion with the latter, praying that the Union be authorized
to sell the lot to the Manila Memorial Park Cemetery, Inc. and to make
arrangements with it such that payment will be advanced for the real estate
taxes inclusive of penalties, attorney's lien which is equivalent to a thirty-
five percent (35%) of the total purchase price, and home developer's fee of
P69,000.00. Apparently, the prospective purchaser had decided to
withdraw its objection regarding the Union's authority to sell. In an Order
dated February 9, 1983, Labor Arbiter Raymundo R. Valenzuela granted
the motion. So, the sale was finally consummated on June 7, 1983,
resulting in the execution of an escrow agreement on June 8, 1983 wherein
the purchase price was deposited under escrow with the Manila Bank-
Cubao Branch. The Bank then released the amounts due the claimants in
accordance with the escrow agreement" (pp. 352- 356, L-24864 rec.).

The dispositive portion in L-24864 is re-stated hereunder:

WHEREFORE, the appealed order and resolution en banc are hereby

affirmed and the Court of Industrial Relations is hereby enjoined to make a
judicial determination of the union membership of the claimants, while the
Examining Division of said court shall proceed with its computation of the
compensable hours of work rendered by, and the corresponding
compensation payable to, the drivers and conductors admitted by both
parties to be union members since October 1, 1956 and those contended
by the union to be such members but disputed by the employer. No costs.
So ordered (p. 186, L-24864 rec.).

When Atty. Jose C. Espinas (herein movant and alleged original counsel for the Union)
learned of the sale and apportionment of the proceeds from past Union president
Amado Lopez, he requested Labor Arbiter Raymundo Valenzuela to allow him to look
into the records of Case No. 1099-V. The latter, however, told him that the records of
the aforecited case were missing. Thereupon, Atty. Espinas requested Director
Pascual Reyes of the NLRC to locate the records (p. 356, L24864 rec.).

Hence, Atty. Espinas filed the urgent motion with prayer for a temporary mandatory
restraining order on August 26, 1983 and the supplement thereto on August 29, 1983
(pp. 215, 227, L-24864 rec.).

On August 30, 1983, the records of Case No. 1099-V were finally found and Atty.
Espinas was dully informed of the development,

39
The above two motions question the legality of the orders dated September 23, 1982
and February 9, 1983 issued by Labor Arbiter Raymundo Valenzuela in Case No.
1099-V before the NLRC which authorized the sale of the awarded property and the
distribution of the proceeds from such purchase.

Movants Union and counsel Espinas upon filing of the motions urgently pray of thisourt
to:

1. Require Atty. Benjamin C. Pineda to deposit with the NLRC the amount of
P712,992.00 paid to him or deposited to his account at Manila Bank, Cubao
Branch,allegedly representing 35% attorney's fees on the sale of 33,952 square meters
of the lot registered in the name of the Union;

2. Require the Halili Drivers and Conductors Union through Domingo Cabading or any
of his representatives to deposit with the NIRC the 6% alleged union expenses paid to
them or similarly deposited to their account;

3. Implead with leave of court this Manila Bank Cubao Branch to require the said bank
to prevent further withdrawals of amount deposited in the name of Atty. Pineda and/or
the Halili Drivers and Conductors Union or any of its officers and to turn over any
remaining deposits to the NLRC for proper disposition;

4. Should Atty. Pineda and the Union officers have already withdrawn the deposits or
parts thereof, require them to post a bond in the equivalent amounts of 35% (attorney's
fee), 6% (union expenses), and 5% (broker's fee) respectively of the total proceeds of
the sale of the property, solidarity (p. 219, L-24864 rec.; p. 160, L-27773 rec.).

Likewise, and after due consideration of the merits, movants prayed that—

1. the order of Arbiter Valenzuela dated February 9, 983 be nullified insofar as it allows
Atty. Pineda 35% attorney's fees;

2. the NLRC be directed to locate the records of Case No. 1099-V or reconstitute the
same and thereafter to equitably dispose 20% as fees to all lawyers who participated in
the proceedings and any excess amounts to be again distributed to the workers; and

3. these cases be remanded to the NLRC with instructions as above-stated and that
the proper penalty be imposed on those involved and who have acted fraudulently and
illegally (p. 220, L-24864 rec.; p. 165, L-27773 rec.).

The succeeding pleadings and developments which are common to all these cases are
now presented chronologically.

On August 29, 1983, Atty. Espinas, for himself and members of the respondent Union,
filed a supplement to urgent motion stating that the prayers in the urgent motion of
August 26, 1983 are reiterated and praying for the nullification of Arbiter Valenzuela's
order not only on the award of attorney's fees but also on the allowance of payment of
"union obligations" not previously authorized nor approved by the NLRC (p. 227, L-
24864, rec.; p. 176, L-27773 rec.).

In its resolution dated September 1, 1983, this Court impleaded the Manila Bank,
Cubao Branch as party respondent and directed the issuance of a temporary
mandatory restraining order (p. 234, L-24864 rec. & p. 187, L-27773 rec.). This Court
40
correspondingly issued a temporary mandatory restraining order on the same date
which enjoined Atty. Benjamin C. Pineda or his agents or any person acting in his
stead to deposit with the NLRC the amount of P712,992.00 paid to him or deposited in
his account at Manila Bank, Cubao Branch allegedly representing 35% attorney's fees
on the sale of 33,952 square meters of the lot registered in the name of Halili Drivers
and Conductors Union; directed the Union thru Domingo Cabading or his agents to
deposit with the NLRC 6% alleged union expenses paid to the Union or similarly
deposited to its account; and ordered the NLRC and Manila Bank, Cubao Branch, or
their agents or persons in their stead not to allow withdrawals of amounts deposited in
the name of Atty. Benjamin C. Pineda and/or the Union or any of its officers (P. 235, L-
24864; p. 188, L-27773 rec.).

On September 6, 1983, respondent Union, thru Atty. Pineda, filed its comment, in
compliance with the resolution of September 1, 1983, on the urgent motion and the
supplement thereto both filed by counsel Espinas, alleging therein that the subject
matter sought to be enjoined or mandated by the restraining order ceased to exist
rendering the same moot and academic, and thus praying for the dismissal of the said
motion and the supplement thereto (p. 237, L-24864 rec.; p. 191, L-27773 rec.).

On September 7, 1983, Atty. Pedro Lopez, an original associate of Atty. Espinas, filed
his motion for leave to intervene, with the submission that the lawyers involved should
only divide 20% fees as per the workers' contract and the rest refunded by Atty. Pineda
and the alleged "union officers" for redistribution to the members (p. 265, L-24864, rec.;
p. 219. L-27773 rec.).

Atty. Espinas, in behalf of the workers, filed a manifestation and motion to require Atty,
Pineda and the union to comply with the temporary mandatory restraining order on
September 9, 1983, with prayer that the Manila Bank be ordered to transfer the funds
allocated for the workers to the NLRC, which should be instructed to pay the workers
upon proper Identification (without prejudice to additional shares) or to mail such
amounts by money order or manager's check to the workers' addresses as furnished to
the NLRC (p. 274, L-24864, rec.; p. 231, L-27773 rec.).

On September 12, 1983, petitioner filed a manifestation in compliance with the

resolution of September 2, 1983 stating, among other things, that its liability had been
completely extinguished with the approval of the Memorandum of Agreement with
Release and Quitclaim in L-38655 and L-30110; that said agreement operated as an
absolute and complete release of petitioner from any liability to the Union; and that
petitioner had not been given any notice of any proceedings respecting cases
subsequent to the promulgation of the decisions aforestated (p. 281, L-24864, rec.; p.
237, L-27773 rec.).

Counsel Espinas (for the workers involved) filed his reply to comments of respondent
Union on September 14, 1983 praying for this Court to:

1. nullify the order of February 9, 1983 issued by Arbiter Raymundo Valenzuela in CIR
Case No. 1099-V and others connected therewith regarding the distribution of
proceeds of the sale of the land belonging to the members-claimants for lack of due
process and for being contrary to law;

2. nullify the 35% attorney's fees of Atty. Benjamin Pineda as illegal and
unconscionable and in disregard of other lawyers in the case;

41
3. require reimbursement to the members-from the Union P101,856.00 allocated
without their consent as Union expenses; P101,856 unreceipted brokers' fees less
P4,020.40 expenses for the transfer of title; to refund the 1 % of the net proceeds,
P9,596.18, for named claimants; and to secure a refund of P308,000.00 from the
P712,992.00 fees of Atty. Pineda (the excess of 20% fees for all lawyers);

4. subject the balance of P404,992.00 of the remainder of Atty. Pineda's 35% fees for
distribution among the three lawyers as may be determined by the NLRC; and

5. should this Court so decides, fix the fees (p. 285, L- 24864 rec.; p. 240, L-27773
rec.).

On September 13, 1983, the Solicitor General filed his comment on the urgent motion
and the supplement thereto dated August 25, 1983 and August 29, 1983, respectively
with the recommendations that (1) the orders of Arbiter Valenzuela dated September
23, 1982 and February 9, 1983 be nullified for having been issued without due
process; (2) the case must be remanded to the NLRC for further proceedings; and (3)
the temporary restraining order issued by this Court on September 1, 1983 be
maintained, pending final resolution by the NLRC (p. 351, L-24864 rec.).

The Solicitor General, on October 6, 1983, filed his manifestation and motion in lieu of
comment on the motion of Atty. Pedro Lopez for leave to intervene in L-24864 and L-
27773 (p. 360, L-24864 rec.; p. 289, L-27773 rec.).

On October 6, 1983, counsel Espinas filed his comment on the intervention of Atty.
Pedro Lopez wherein he offers no objection to the latter's intervention and states that
said counsel is also entitled to attorney's fees in accordance with his participation (p.
364, L-24864 rec.; p. 292, L-27773 rec.).

Atty. Pineda filed his comment and manifestation on October 7, 1983, in compliance
with the resolution of September 13, 1983, alleging therein that as per Retainer's
Contract dated January 1, 1967, he handled Case No. 1099-V before the Court of
Industrial Relations alone. On the mandatory restraining order, Atty. Pineda claims that
as of October 4, 1983, he had a balance of P2,022.70 in his account with the Manila
Bank (p. 370, L-24864 rec.; p. 295, L-27773 rec.).

In its resolution dated October 18, 1983, this Court (1) set, aside as null and void the
orders of September 23, 1982 and February 9, 1983 of Arbiter Raymundo R.
Valenzuela; (2) allowed the intervention of Atty. Pedro Lopez; (3) directed the Manila
Bank (Cubao Branch), Atty. Benjamin Pineda, and the Halili Drivers and Conductors
Union through Domingo Cabading or any of his representatives, to comply with the
temporary mandatory restraining order issued on September 1, 1983 and the
resolution dated September 13, 1983, within ten [10] days from receipt thereof; and (4)
remanded these cases to the NLRC for further proceedings (p. 374, L-24864 rec.; p.
299, L-27773 rec.).

The day before or on October 17, 1983, Sergio de Pedro, as representative of the
workers and assisted by Atty. Espinas, thus fided the urgent motion to cite Atty.
Pineda, Ricardo Capuilo and Manila Bank (Cubao Branch) in contempt, alleging
therein that after two letters dated October 6 and October l4, l983 to the NLRC which
inquired as to whether or not compliant, with the restraining order had been made, the
Commission certified that as of October 14, 1983, no deposits had been effected by
the parties so (directed (p. 376, L-24864 rec.; p. 301, L-27773 rec.).
42
In its manifestation and motion filed on November 2, 1983, respondent Manila Banking
Corporation (Rustan-Cubao Branch), in compliance with this Court's resolution of
September 13, 1983, stated that it transmitted or paid to the NLRC the amount of
P417,380.64 under Cashier's Check No. 34084190 for the account of the Union and
P2,022.70 under Cashier's Check No. 34084191 for the account of Atty. Pineda and
thus prayed therein that the aforesaid transmittals be deemed as sufficient compliance
with the aforecited resolution and that the urgent motion to cite respondents in
contempt dated October 17, 1983 be considered moot and academic (p. 390, L-24864
rec.).

On November 8, 1983, respondent Atty. Pineda filed his manifestation and motion in
lieu of comment in compliance with this Court's resolution of October 20, 1983, stating
that he and respondent Union thereby adopt the aforecited manifestation and motion of
respondent Manila Banking Corporation and thus prayed that since they have complied
with this Court's resolution of September 13, 1983, the urgent motion to cite them for
contempt be considered moot and academic (p. 394, L-24864 rec.; p. 310, L-27773
rec.).

On November 10, 1983, respondent Manila Banking Corporation filed another

manifestation and motion in lieu of commence, by way of compliance with the Court's
resolution of October 20, 1983 with prayer that its previous manifestation and motion
dated October 28, 1983 and filed on November 2, 1983 be considered as sufficient
compliance with the resolution of September 13, 1983 which would render the urgent
motion to cite respondents in contempt moot and academic (p. 396, L-24864 rec. p.
312, L-27773 rec.).

On the foregoing manifestations and motions, representative Sergio de Pedro, with the
assistance of Atty. Espinas, filed a comment on November 16,1983 wherein he alleged
that out of the P2,037,120.00 purchase price, only Pl,940,127.29 was deposited with
the Manila Bank; that Atty. Pineda has yet to return the balance of P710,969,30; and
that the Union has still to account for P111,452.18 (p. 399, L- 24864 rec.; p. 315, L-
27773 rec.).

December 14, 1983, respondent Union filed its reply to Mr. de Pedro's above unsigned
comment therein stating among other things that the alleged missing amount of
P96.992.71 was used for the payment of outstanding real estate taxes on real property
of said Union covered by TCT No. 205755 and that the amount of P2,022.70 only was
remitted by Manila Bank to the NLRC for the account of Atty. Pineda (p. 323, L-27773
rec.)

On December 20, 1983, Mr. de Pedro and Atty. Espinas, for the workers involved, filed
their rejoinder to the comment of Atty. Pineda and Mr. Capuno reiterating therein their
plea to declare Atty. Pineda and Mr. Capuno in contempt of court and to mete out the
proper penalty (p. 328, L-27773 rec.).

The Manila Banking Corporation filed its compliance with the Court resolution of
November 22, 1983 on February 3, 1984, praying that its report to the NLRC on the
amount of withdrawals be considered as sufficient compliance with the said resolution
(p. 343, L-27773 rec.).

Atty. Espinas filed his comment and motion on March 15, 1984, stating among other
things that as per report of the Manila Bank to the NLRC, Atty. Pineda has not yet

43
complied with the said order. He thus moved that Atty. Pineda be required to post a
bond on the undeposited balance in the amounts of P710,969.30 and that Mr. Capuno
be also required to post a bond before the NLRC on the undeposited balance of
P52,236.04 during the pendency of the motion for contempt (p. 373, L-27773 rec.).

On April 4, 1984, Mr. Sergio de Pedro filed his reply to the aforesaid comment of the
Union administrator and Atty. Pineda stating therein that there are still questions to be
resolved on the merits before the NLRC and hence, prays that Arbiter Antonio Tirona
be required to continue hearing the merits of the case pending in the said Commission
(p. 377, L-27773 rec.).

Before We resolve the motion for contempt, certain crucial facts which have surfaced
and which precipitated Our issuance of the resolution of October 18, 1983 declaring
the two questioned orders of Arbiter Valenzuela as null and void, must be retraced.

Then Union President Amado Lopez, in a letter dated August 21, 1958, informed J.C.
Espinas and Associates that the general membership of the said Union had authorized
a 20% contingent fee for the law firm based on whatever amount would be awarded
the Union (p. 267, L-24864 rec.).

Atty. Jose C. Espinas, the original counsel, established the award of 897 workers'
claim in the main cases before the defunct CIR and the Supreme Court. In L-24864,
the Notice of Judgment of this Court dated February 26, 1968 was served on Messrs.
J.C. Espinas & Associates (p. 188, L-24864 rec.). In L-27773, the Notice of Judgment
dated December 29, 1970 was sent to Atty. B.C. Pineda & Associates under same
address-716 Puyat Bldg., Suit 404 at Escolta, Manila (p. 147, L-27773 rec.) Note that
this is the same address of Atty. J.C. Espinas & Associates.

When Atty. 'Pineda appeared for the Union in these cases, still an associate of the law
firm, his appearance carried the firm name B.C. Pineda and Associates," giving the
impression that he was the principal lawyer in these cases.

Atty. Pineda joined the law firm of Atty. Espinas in 1965 when these cases were
pending resolution. He always held office in the firm's place at Puyat Building, Escolta
until 1974, except in 1966 to 1967 when he transferred to the Lakas ng Manggagawa
Offices. During this one-year stint at the latter office, Atty. Pineda continued handling
the case with the arrangement that he would report the developments to the Espinas
firm. When he rejoined the law firm in 1968, he continued working on these cases and
using the Puyat Building office as his address in the pleadings.

When Atty. Pineda rejoined the Espinas firm in 1968, he did not reveal to his partners
(he was made the most senior partner) that he had a retainer's contract entered into on
January 1, 1967 which allegedly took effect in 1966. He stayed with the law firm until
1974 and still did not divulge the 1967 retainer's contract. Only the officers of the Union
knew of the contract.

The alleged retainer's contract between Atty. Pineda and the Union appears
anomalous and even illegal as well as unethical considering that-

1. The contract was executed only between Atty. Pineda and the officers of the Union
chosen by about 125 members only. It was not a contract with the general
membership, Only 14% of the total membership of 897 was represented. This violates
Article 242 (d) of the Labor Code which provides:
44
 The members shall determine by secret ballot, after due deliberation, any
question of major policy affecting the entire membership of the
organization, unless the nature of the organization or force majeure renders
such secret ballot impractical, in which case the board of directors of the
organization may make the decision in behalf of the general membership
(emphasis supplied).

2. The contingent fee of 30% for those who were still working with Halili Transit and the
45% fee for those who were no longer working worked to the prejudice of the latter
group who should and were entitled to more benefits. Thus, too, when the alleged
retainer's contract was executed in 1967, the Halili Transit had already stopped
operations in Metro Manila. By then, Atty. Pineda knew that all the workers would be
out of work which would mean that the 45% contingent fee would apply to all.

3. The contract which retroactively took effect on January 1, 1966, was executed when
Atty. Espinas was still handling the appeal of Halili Transit in the main case before the
Supreme Court. Atty. Pineda would have but did not substitute himself in place of Atty.
Espinas or the law firm on the basis of such contract.

4. When Atty. Pineda filed his motion for approval of his attorney's lien with Arbiter
Valenzuela on February 8, 1983, he did not attach the retainer's contract.

5. The retainer's contract was not even notarized (p. 248, L-24864 rec.).

The Manila Memorial Park Cemetery, Inc., as the prospective buyer, initially expresses
its misgivings over the authority of the Union to sell subject property conformably with
Section 66 of P.D. No. 1529, which requires an order from a court of competent
jurisdiction authorizing the sale of a property in trust. The pertinent portion of Section
66 provides:

No instruments which transfers or mortgages or in any way deals with

registered land in trust shall be registered, unless the enabling power
thereto is expressly conferred in the trust instrument, or unless a final
judgment or order of a court of competent jurisdiction has construed the
instrument in favor of the power, in which case a certified copy of such
judgment or order may be registered.

The decision of aforenamed purchaser to stop questioning the Union's authority to sell
and the expeditious manner by which Arbiter Valenzuela granted Atty. Pineda's motion
for such authority to sell the property make the entire transaction dubious and irregular.

Thus, without notice to the other lawyers and parties, Atty. Pineda commenced the
proceeds before the NLRC with the filing of a motion and manifestation on August 9,
1982 with Arbiter Valenzuela of the NLRC Office of the Labor Ministry wherein he
asked for authority to sell the property. On September 23, 1983 or just over a month,
Arbiter Valenzuela approved the motion per order of the same date. Notably, only Atty.
Pineda and the lawyers of the purchaser were informed of such order.

On February 4, 1983, again without notice to Atty. Espinas and Atty. Lopez, Atty.
Pineda filed a motion with Arbiter Valenzuela wherein he asked for authority to
distribute the proceeds of the sale of the property. This distribution would include his
attorney's fee which was allegedly the subject of a retainer contract entered into
between him and the alleged Union officers, On February 9, 1983, or barely five days
45
from the day the motion was filed, Arbiter Valenzuela, without informing the other
lawyers and relying exclusively on the unverified motion of Atty. Pineda (the records of
the case were not on hand), approved the said motion which authorized the
appointment.

This Court, as earlier stated, nullified said orders dated September 23, 1982 and
February 9, 1983 of Labor Arbiter Valenzuela as violative of the due process clause. It
is a settled rule that in administrative proceedings, or cases coming before
administrative tribunals exercising quasi-judicial powers, due process requires not only
notice and hearing, but also the consideration by the administrative tribunal of the
evidence presented; the existence of evidence to support the decision; its substantiality
a decision based thereon or at least contained in the record and disclosed to the
parties; such decision by the administrative tribunal resting on its own independent
consideration of the law and facts of the controversy; and such decision acquainting
the parties with the various issued involved and the reasons therefore (Ang Tibay vs.
Court, 69 Phil. 635, cited on p. 84, Philippine Constitutional Law, Fernando, 1984 ed.)

Significantly Atty. Pineda's act of filing a motion with this Court on December 1, 1982
praying for authority to sell was by itself an admission on his part that he did not
possess the authority to sell the property and that this Court was the proper body
which had the power to grant such authority. He could not and did not even wait for
such valid authority but instead previously obtained the same from the labor arbiter
whom he knew was not empowered to so authorize. Under Article 224 (a) of the Labor
Code, only final decisions or awards of the NLRC, the Labor Arbiter, or compulsory or
voluntary arbitrators may be implemented or may be the subject of implementing
orders by aforenamed body or officers.

When Atty. Espinas discovered the sale of the property, he went to Arbiter Valenzuela
to look into the transaction who told him that the records of CIR Case No. 1099-V were
missing. It took director Pascual Reyes of the NLRC to locate the records.

The 45% attorney's lien on the award of those union members who were no longer
working and the 30% lien on the benefits of those who were still working as provided
for in the alleged retainer's contract are very exorbitant and unconscionable in view of
Section 11, Rule VIII of Book III which explicitly provides:

Sec. 11. Attorney's fees—Attorney's fees on any judicial or administrative

proceedings for the recovery of wages shall not exceed 10% of the amount
awarded. The fees may be deducted from the total amount due the winning
party.

The amount of P101,856.00 which Atty. Pineda donated to the Union and which
actually corresponds to 5% of the total 35% attorney's fees taken from the proceeds (p.
263, L-24864, rec.) appears improper since it amounts to a rebate or commission. This
amount was subsequently treated as union miscellaneous operating expenses without
the consent of the general membership.

Thus, in the case of Amalgamated Laborers' Association vs. Court of Industrial

Relations (L-23467, 22 SCRA 1267 [March 27, 1968]), We declared:

We strike down the alleged oral agreement that the union president should
share in the attorney's fees. Canon 34 of Legal Ethics condemns this
arrangement in terms clear and explicit. It says: 'No division of fees for legal
46
 services is proper, except with another lawyer, based upon a division of
service or responsibility.' The union president is not the attorney for the
laborers. He may seek compensation only as such president. An
agreement whereby a union president is allowed to share in attorney's fees
is immoral. Such a contract we emphatically reject. It cannot be justified.

A contingent fee contract specifying the percentage of recovery an attorney

is to receive in a suit 'should be reasonable under all the circumstances of
the case, including the risk and uncertainty of the compensation, but should
always be subject to the supervision of a court, as to its reasonableness.
(emphasis supplied).

A deeper scrutiny of the pleadings in L-24864 notably indicates a fraudulent or

deceitful pattern in the actuations of Atty. Pineda. Thus, in his motion for execution of
judgment filed on September 18, 1965 in this case, he signed for and in behalf of "J.C.
Espinas & Associates" (p. 323, rec.). In his manifestation dated December 10, 1968,
he signed as "B.C. Pineda," lone counsel for petitioner (p. 327, rec.); and yet, he
carried the address of Espinas & Associates at 716 G. Puyat Building, Escolta.

However, in the October 29, 1968 resolution of this Court, a copy thereof was served
on "Messrs. J.C. Espinas, B.C Pineda, J.J. dela Rosa & Associates" at Puyat Building,
Escolta (p. 324, rec.). In the notice of judgment dated December 29, 1970, this Court
addressed the said pleading to "Attys. B.C. Pineda & Associates with the same Puyat
Building address (p. 325, rec.). Notably also, then Union President Amado Lopez
addressed his letter dated August 21, 1958 to J.C. Espinas & Associates" wherein he
informed the latter that the general membership of the Union had authorized them a
20%, contingent fee on whatever award would be given the workers (p. 267, rec.).

The Manila Banking Corporation (Cubao Branch) has manifested that it turned over to
the NLRC the amount of P417,380.64 for the Union's account, which appears to be the
balance of P950,021.76 corresponding to the net proceeds for distribution to the
workers after deducting P525,480.40, the total payments to claimants. The amount of
P417,380.64 appears lacking, since accurately computed, the balance should
be P424,541,36.

However, the Union has yet to account for P101,856.00, the 5% donation or share
from Atty. Pineda's attorney's fee of 35%.

For the account of Atty. Pineda, the Manila Banking Corporation has remitted to the
NLRC the amount of P2,022.70 only. This means that Atty. Pineda is still accountable
for the amount of P710,969.30. He is directed to return the amount of P712,992.00
representing the 35% attorney's fees he unlawfully received.

In view of Our resolution of October 18, 1983, which set aside as null and void the
questioned orders dated September 23, 1982 and February 9, 1983 issued by Arbiter
Raymundo Valenzuela, the sale of the Union property and the distribution of the
proceeds therefrom had been effected without authority and, therefore, illegal
Consequently. Atty. Pineda and Arbiter Valenzuela become liable for their
unauthorized acts,

Atty. Pineda should be cited for indirect contempt under paragraphs (b), (c) and (d) of
Section 3, Rule 71 of the Revised Rules of Court, The said paragraphs read thus:

47
 Sec. 3. indirect contempts to be punished after charge and hearing.—

xxx xxx xxx

(b) Disobedience of or resistance to a lawful writ, process, order, judgment,

or company court, or injunction granted by a court or judge, including the
act of a person who, after being dispossessed or ejected from any real
property by the judgment or process of any court of competent jurisdiction,
enters or attempts or induces another to enter into or upon such real
property, for the purpose of executing acts of ownership or possession, or
in any manner disturbs the possession given to the person adjudged to be
entitled thereto;

(c) Any abuse of or any interference with the process or proceedings of a

court not constituting direct contempt under section 1 of this rule;

(d) Any improper conduct tending, directly or indirectly to impede, obstruct,

or degrade the administration of justice.

Contempt of court is a defiance of the authority, justice or dignity of the court; such
conduct as tends to bring the authority and administration of the law into disrespect or
to interfere with or prejudice parties litigant or their witnesses during litigation (12 Am.
jur. 389, cited in 14 SCRA 813).

Contempt of court is defined as a disobedience to the court by acting in opposition to

its authority, justice and dignity. It signifies not only a willful disregard or disobedience
of the court's orders, but such conduct as tends to bring the authority of 'the court and
the administration of law into disrepute or in some manner to impede the due
administration of justice (17 C.J.S. 4).

This Court has thus repeatedly declared that the power to punish for contempt is
inherent in all courts and is essential to the preservation of order in judicial proceedings
and to the enforcement of judgments, orders, and mandates of the court, and
consequently, to the due administration of justice (Slade Perkins vs. Director of
Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs.
Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1).

In the matter of exercising the power to punish contempts, this Court enunciated in the
Slade Perkins case that "the exercise of the power to punish contempts has a twofold
aspect, namely (1) the proper punishment of the guilty party for his disrespect to the
court or its order; and (2) to compel his performance of some act or duty required of
him by the court which he refuses to perform. Due to this twofold aspect of the exercise
of the power to punish them, contempts are classified as civil or criminal. A civil
contempt is the failure to do something ordered to be done by a court or a judge for the
benefit of the opposing party therein; and a criminal contempt, is conduct directed
against the authority and dignity of a court or of a judge, as in unlawfully assailing or
discrediting the authority or dignity of the court or judge, or in doing a duly forbidden
act. Where the punishment imposed, whether against a party to a suit or a stranger, is
wholly or primarily to protect or vindicate the dignity and power of the court, either by
fine payable to the government or by imprisonment, or both, it is deemed a judgment in
a criminal case. Where the punishment is by fine directed to be paid to a party in the
nature of damages for the wrong inflicted, or by imprisonment as a coercive measure
to enforce the performance of some act for the benefit of the party or in aid of the final
48
judgment or decree rendered in his behalf, the contempt judgment will, if made before
final decree, be treated as in the nature of an interlocutory order, or, if made after final
decree, as remedial in nature, and may be reviewed only on appeal from the final
decree, or in such other mode as is appropriate to the review of judgments in civil
cases. ... The question of whether the contempt committed is civil or criminal, does not
affect the jurisdiction or the power of a court to punish the same. ... (58 Phil. 271, 272).

For civil contempt, Section 7, Rule 71 of the Revised Rules of Court explicitly provides:

Sec. 7, Rule 71. Imprisonment until order obeyed. When the contempt
consists in the omission to do an act which is yet in the power of the
accused to perform, he may be imprisoned by order of a superior court until
he performs it.

Thus, in the case of Harden vs. Director of Prisons (L-2349, 81 Phil. 741 [Oct. 22,
1948]), where petitioner was confined in prison for contempt of court, this Court, in
denying the petition and resolving the question of petitioner's indefinite confinement,
had the occasion to apply and clarify the aforequoted provision in the following tenor:

The penalty complained of is neither cruel unjust nor excessive. In Ex-parte

Kemmler 136 U.S. 436, the United States Supreme Court said that
'punishments are cruel when they involve torture or a lingering death, but
the punishment of death is not cruel, within the meaning of that word as
used in the constitution. It implies there something inhuman and barbarous,
something more than the extinguishment of life.

The punishment meted out to the petitioner is not excessive. It is suitable

and adapted to its objective; and it accords with section 7, Rule 64 of the
Rules of Court which provides that "when the contempt consists in the
omission to do an act which is yet in the power of the accused to perform,
he may be imprisoned by order of a superior court until he performs it."

If the term of imprisonment in this case is indefinite and might last through
the natural life of the petitioner, yet by the terms of the sentence the way is
left open for him to avoid serving any part of it by complying with the orders
of the court, and in this manner put an end to his incarceration. In these
circumstances, the judgment cannot be said to be excessive or unjust.
(Davis vs. Murphy [1947], 188 P., 229- 231.) As stated in a more recent
case (De Wees [1948], 210 S.W., 2d, 145-147), 'to order that one be
imprisoned for an indefinite period in a civil contempt is purely a remedial
measure. Its purpose is to coerce the contemner to do an act within his or
her power to perform. He must have the means by which he may purge
himself of the contempt . The latter decision cites Staley vs. South Jersey
Realty Co., 83 N.J. Eq., 300, 90 A., 1042, 1043, in which the theory is
expressed in this language:

In a "civil contempt" the proceeding is remedial, it is a step in

the case the object of which is to coerce one party for the
benefit of the other party to do or to refrain from doing some act
specified in the order of the court. Hence, if imprisonment be
ordered, it is remedial in purpose and coercive in character, and
to that end must relate to something to be done by the

49
 defendant by the doing of which he may discharge himself. As
quaintly expressed, the imprisoned man carries the keys to his
prison in his own pocket (pp. 747-748).

Likewise. American courts had long enunciated these rulings:

The commitment of one found in contempt of a court order only until the
contemnor shall have purged himself of such contempt by complying with
the order is a decisive characteristic of civil contempt. Maggio v. Zeitz, 333
US 56, 92 L. ed. 476, 68 S Ct 401.

Civil or quasi-criminal contempt is contemplated by a statute providing that

if any person refused to obey or perform any rule, order, or judgment of
court, such court shall have power to fine and imprison such person until
the rule, order, or judgment shall be complied with. Evans v. Evans, 193
Miss 468, 9 So 2d. 641. (17 Am. Jur. 2d.)

The reason for the inherent power of courts to punish for contempt is that respect of
the courts guarantees the stability of the judicial institution. Without such guarantee
said institution would be resting on a very shaky foundation (Salcedo vs. Hernandez,
61 Phil. 724; Cornejo vs. Tan, 85 Phil. 722),

Likewise, Atty. Pineda should be subject to disbarment proceedings under Section 27

of Rule 138 of the Revised Rules of Court which provides:

Sec. 27. Attorneys removed or suspended by Supreme Court on what

grounds.—A member of the bar may be removed or suspended from his
office as attorney by the Supreme Court for any deceit, malpractice, or
other gross misconduct in such office, grossly immoral conduct, or by
reason of his conviction of a crime involving moral turpitude, or for any
violation of the oath which he is required to take before admission to
practice, or for a willful disobedience of any lawful order of a superior court,
or for corrupt or willfully appearing as an attorney for a party to a case
without authority so to do. The practice of soliciting cases at law for the
purpose of gain, either personally or through paid agents or brokers,
constitutes malpractice.

The Court may suspend or disbar a lawyer for any conduct on his part showing his
unfitness for the confidence and trust which characterize the attorney and client
relations, and the practice of law before the courts, or showing such a lack of personal
honesty or of good moral character as to render him unworthy of public confidence (7
C.J.S. 733).

It is a well-settled rule that the statutory grounds for disbarment or suspension are not
to be taken as a limitation on the general power of the courts in this respect. The
inherent powers of the court over its officers cannot be restricted (In re Pelaez, 44 Phil.
567).

Finally, Atty. Pineda could be prosecuted for betrayal of trust by an attorney under
Article 209 of the Revised Penal Code. Said article provides:

Art. 209. Betrayal of must by an attorney or solicitor. Revelation of

secrets.—In addition of the proper administrative action , the penalty
50
 of prision correccional in its minimum period, or a fine ranging from 200 to
1,000 pesos, or both shall be imposed upon any attorney-at-law or solicitor
(procurador judicial) who, by any malicious breach of professional duty or
inexcusable negligence or ignorance, shall prejudice his client, or reveal
any of the secrets of the latter learned by him in his professional capacity
(emphasis supplied).

The aforequoted criminal sanction for unprofessional conduct of an attorney is without

prejudice to proper administrative action, such as disbarment or suspension of
attorneys (p. 503, Criminal Law Annotated, Padilla, 1972 Ed.).

Labor Arbiter Raymundo Valenzuela should be made to answer for having acted
without or beyond his authority in proper administrative charges. He could also be
prosecuted before the Tanodbayan under the provisions of the Anti-Graft Law.
Independently of his liabilities as a government officer, he could be the subject of
disbarment proceedings under Section 27, Rule 138 of the Revised Rules of Court.

Atty. Benjamin Pineda could also be held liable under Section 4(b) of R.A. No. 3019
(Anti-Graft and Corrupt Practices Act) which makes it unlawful for any person
knowingly to induce or cause any public official to commit any of the offenses defined
in Section 3 of said act. Section 3 enumerates the corrupt practices which public
officers may be prosecuted for. Atty. Pineda knowingly induced or caused Labor
Arbiter Valenzuela to issue the questioned orders without or beyond the latter's
authority and to which orders the former was not entitled, considering that he was not
the sole and proper representative.

The Manila Banking Corporation (Cubao Branch) per manifestation and motion dated
October 28, 1983 and reiterated on November 10, 1983, had transmitted to the NLRC
the remaining balance of P417,380.64 and P2,022.70 for the account of the Union and
Atty. Pineda, respectively. This turnover of the aforecited amounts is a sufficient
compliance with Our restraining order and resolution of September 13, 1983 and
hence, the Manila Banking Corporation can no longer be liable for contempt of court.

Very recently, on August 23, 1984, respondent Union, thru Acting Administrator
Ricardo Capuno, filed its motion to drop Halili Bus Drivers and Conductors Union from
the contempt charge in view of these reasons:

1. The Manila Bank has already turned over to the NLRC the amount of P59,716.14
which represents the remaining balance of 5% earmarked for Union expenses incurred
in the case aside from the amounts deposited in escrow for the workers. The amount
of P42,140.00 was spent legitimately by the Union for administration purposes relative
to the subject property. The Union asserts that it is ready and willing to account for all
expenses and withdrawals from the bank before the NLRC.

2. The alleged 5% donation of Atty. Pineda to the Union taken from the 35% attorneys'
fees was given to and received by then President Domingo Cabading alone, who
thereafter left for the United States.

3. The 1% allocated for unknown claimants or those not previously listed in the amount
of P9,596.18 can easily be accounted for by the Union before the NLRC.

In the same motion, Mr. Capuno clarifies that with regard to attorneys' fees, Atty.
Pineda made the Union officers believe that he would be the one to pay the fees of
51
Attys. Espinas and Lopez for which reason, the 35% increased fees was approved by
the Union's board in good faith. The Union likewise confirms that Atty. Pineda came
into the picture only when he was assigned by Atty. Espinas in, 1965 to execute the
CIR decision which, thru Atty. Espinas handling, was upheld by this Court in L-24864 in
1968. The Union officers were aware that Atty. Espinas was the principal counsel even
after Atty. Pineda's assignment. They also knew of the original contract for 20%
attorney's fees which was increased to 35% by Atty. Pineda upon the arrangement that
with the increase, he would answer for the payment of Attys. Espinas and Lopez' fees
and for necessary representation expenses (p. 450, L-24864 rec.).

Acting on the aforesaid motion, this Court in its resolution of August 28, 1964, dropped
the Union and its officers from the within contempt charge (p. 455, L-24864 rec.).

WHEREFORE, ATTY. BENJAMIN PINEDA IS HEREBY FOUND GUILTY OF

INDIRECT CONTEMPT OF COURT FOR WHICH HE IS HEREBY SENTENCED TO
IMPRISONMENT IN THE MANILA CITY JAIL UNTIL THE ORDERS OF THIS COURT
DATED SEPTEMBER 1 AND SEPTEMBER 13, 1983 ARE COMPLIED WITH.

ATTY. BENJAMIN PINEDA IS ALSO DIRECTED TO SHOW CAUSE WHY HE

SHOULD NOT BE DISBARRED UNDER RULE 138 OF THE REVISED RULES OF
COURT.

LET COPIES OF THIS RESOLUTION AND THE RESOLUTION OF OCTOBER 18,

1983 BE FURNISHED THE MINISTRY OF LABOR AND THE TANODBAYAN FOR
APPROPRIATE ACTION.

SO ORDERED.

PACIFIC BANKING CORPORATION, Petitioner, v. JACOBO C. CLAVE,

Presidential Executive Assistant, JOAQUIN T. VENUS, JR., Deputy
Presidential Executive Assistant, PACIFIC BANKING CORPORATION
EMPLOYEES ORGANIZATION and JUANITO M.
SAAVEDRA, Respondents.

Sycip, Salazar, Feliciano and Hernandez for Petitioner.

The Solicitor General for public Respondent.

Andres I. Fernandez for Intervenors.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR DISPUTES; APPEALS TO

OFFICE OF THE PRESIDENT; NO JURISDICTION TO ADJUDICATE ON
ATTORNEYS FEES WHERE APPEAL WAS WITH RESPECT TO COLLECTIVE
BARGAINING AGREEMENT TERMS AND CONDITIONS; CASE AT BAR. —
Where the case was appealed to the Office of the President with respect to
the CBA terms and conditions, not with respect to attorney’s fees, the
Presidential Executive Assistant had no jurisdiction to make an adjudication
52
on Saavedra’s attorney’s fees. Although the fees were a mere incident,
nevertheless, the jurisdiction to fix the same and to order the payment
thereof was outside the pale of the Office of the President’s appellate
jurisdiction. Presidential Executive Assistant Clave was right in adopting a
hands-off attitude in his first resolution and holding that the payment of the
fees was a question between the lawyer and the union.

2. ID.; LABOR CODE; ATTORNEY’S FEES; RECOVERY THEREOF UNDER

ARTICLE III, LABOR CODE, REFERS TO A PROCEEDING FOR RECOVERY OF
WAGES; CASE AT BAR. — Presidential Executive Assistant Clave should
have noticed that Article III which provides for payment of attorney’s fees
refers to a proceeding for the recovery of wages and not to CBA
negotiations. The two are different or distinct proceedings.

3. ID.; ID.; ID.; LIABILITY THEREFOR OF UNION FUNDS IN CASE AT BAR

PURSUANT TO ARTICLE 222, LABOR CODE. — The case is covered squarely
by the mandatory and explicit prescription of article 222 which is another
guarantee intended to protect the employee against unwarranted practices
that would diminish his compensation without his knowledge and consent.
(See National Power Corporation Supervisors’ Union v. National Power
Corporation, L-28805, August 10, 1981, 106 SCRA 556). Other provisions
of the Labor Code animated by the same intention are the following: Article
242, paragraphs (n) and (o); 288, PD 442; 291, PD 570-A; 240, PD 626;
241, PD 850. There is no doubt that lawyer Saavedra is entitled to the
payment of his fees but Article 222 ordains that union funds should be used
for that purpose. The amount of P345,000 does not constitute union funds.
It is money of the employees. The union, not the employees, is obligated to
Saavedra.

DECISION

AQUINO, J.:

This case is about the legality of deducting from the monetary benefits
awarded in a collective bargaining agreement the attorney’s fees of the
lawyer who assisted the union president in negotiating the agreement. It
also involves the jurisdiction of the Office of the President of the Philippines
to order such deduction.

Since January, 1979, there had been negotiations between the Pacific
Banking Corporation and the Pacific Banking Corporation Employees
Organization (PABECO) for a collective bargaining agreement for 1979 to
1981. Because of a deadlock, the Minister of Labor assumed jurisdiction
over the controversy. On July 10, 1979, the Deputy Minister rendered a
decision directing the parties to execute a CBA in accordance with the terms
and conditions set forth in his decision (pp. 16-01, Rollo).
53
The union was represented in the negotiations by its president, Paula S.
Paug, allegedly assisted as consultant by Jose P. Umali, Jr., the president of
the National Union of Bank Employees (NUBE) with which it was formerly
affiliated (p. 209, Rollo). Lawyer Juanito M. Saavedra’s earliest recorded
participation in the case was on July 15 and 27, 1979 when he filed a
motion for reconsideration and a supplemental motion. No action was taken
on said motions (p. 121, Rollo).chanrobles virtual lawlibrary

The parties appealed to the Office of the President of the Philippines. The
CBA negotiations were resumed. The union president took part in the
second phase of the negotiations. Saavedra filed a memorandum. He
claimed he exerted much effort to expedite the decision. The Office of the
President issued on March 18, 1980 a resolution directing the parties to
execute a CBA containing the terms and conditions of employment
embodied in the resolution.

The CBA was ultimately finalized on June 3, 1980. Monetary benefits of

more than fourteen million pesos were involved in the three-year CBA,
according to the bank’s counsel.

Even before the formalization of the CBA on June 3, 1980, Saavedra on

March 24, 1980 filed in the case his notice of attorney ‘s lien. On May 20,
1980, the bank’s vice-president in a reply to the letter of the union
president stated that he had serious doubts about paying the attorney’s
fees (pp. 144-145, Rollo).

The union officials requested the bank to withhold around P345,000 out of
the total benefits as ten percent attorney’s fees of Saavedra. At first, the
bank interposed no objection to the request in the interest of harmonious
labor-management relations (p. 145, Rollo). In theory, the actual ten
percent attorney’s fees may amount to more than one million pesos (p.
281, Rollo).

For nearly a year, the Office of the President in four resolutions wrestled
with the propriety of Saavedra’s ten percent attorney’s fees. In a resolution
dated May 29, 1980, Presidential Executive Assistant Jacobo C. Clave
refused to intervene in the matter. He ruled that the payment of attorney’s
fees was a question that should be settled by the union and its lawyer
themselves (p. 24, Rollo).

Then, he "clarified" that ruling in a second resolution wherein he directed

that the attorney’s fees may be deducted from the total benefits and paid to
Saavedra in accordance with the following provisions of the Labor
Code:chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph

"Art. 111. Attorney’s fees. — (a) In cases of unlawful withholding of wages

the culpable party may be assessed attorney’s fees equivalent to ten
percent of the amount of wages recovered.
54
"(b) It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of wages, attorney’s fees
which exceed ten percent of the amount of wages recovered."cralaw
virtua1aw library

Article 161 is implemented in Rule VIII, Book III of the Implementing Rules
and Regulations as follows:jgc:chanrobles.com.ph

"Sec. 11. Attorney’s fees. — Attorney’s fees in any judicial or administrative

proceedings for the recovery of wages shall not exceed 10% of the amount
awarded. The fees may be deducted from the total amount due the winning
party."cralaw virtua1aw library

Presidential Executive Assistant Clave should have noticed that article 111
refers to a proceeding for the recovery of wages and not to CBA
negotiations. The two are different or distinct proceedings. Not satisfied
with the clarificatory resolution, Clave issued a third resolution wherein he
held that it is the legal obligation of the bank to turn over to the union
treasurer ten percent of the award as Saavedra’s fees.

Finally, in a fourth resolution dated April 13, 1981 Deputy Presidential

Executive Assistant Joaquin T. Venus, Jr. ordered the bank to pay the union
treasurer the said attorney’s fees less the amounts corresponding to the
protesting employees. He held that the following article 222 of the Labor
Code, as amended by Presidential Decree No. 1691, effective May 1, 1980
(before the formalization of the CBA award) had no retroactive effect to the
case:jgc:chanrobles.com.ph

"ART. 222. Appearances and Fees. — . . . (b) No attorney’s fees,

negotiation fees or similar charges of any kind arising from any collective
bargaining negotiations or conclusion 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 union 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." (271, PD
442; 220, PD 626; 222, PD 1691).

The bank assailed in this Court the said resolutions by means of certiorari.
On February 5, 1982, the NUBE and thirteen employees of the bank,
members of the PABECO, (p. 202, Rollo) intervened in this case and prayed
that the said resolutions be declared void and that said sum of P345,000 be
paid directly to the employees or union members (p. 214, Rollo).

We hold that, under the circumstances, the Office of the President had no
jurisdiction to make an adjudication on Saavedra’s attorney’s fees. The case
was appealed with respect to the CBA terms and conditions, not with
respect to attorney’s fees. Although the fees were a mere incident,
nevertheless, the jurisdiction to fix the same and to order the payment
55
thereof was outside the pale of Clave’s appellate jurisdiction. He was right
in adopting a hands-off attitude in his first resolution and holding that the
payment of the fees was a question between the lawyer and the union.

Moreover, the case is covered squarely by the mandatory and explicit

prescription of article 222 which is another guarantee intended to protect
the employee against unwarranted practices that would diminish his
compensation without his knowledge and consent. (See National Power
Corporation Supervisors’ Union v. National Power Corporation, L-28805,
August 10, 1981, 106 SCRA 556). Other provisions of the Labor Code
animated by the same intention are the following:chanrobles virtual
lawlibrary

"ART. 242. Rights and conditions of membership in a labor organization. —

The following are the rights and conditions of membership in a labor
organization:jgc:chanrobles.com.ph

"x x x

"(n) No special assessment or other extraordinary fees may be levied upon

the members of a labor organization unless authorized by a written
resolution of a majority of all the members at a general membership
meeting duly called for the purpose. The secretary of the organization shall
record the minutes of the meeting including the list of all members present,
the votes cast, the purpose of the special assessment or fees and the
recipient of such assessment or fees. The record shall be attested to by the
president;.

"(o) 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 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; and.

. . . (288, PD 442; 291, PD 570-A; 240, PD 626; 241, PD 850).

There is no doubt that lawyer Saavedra is entitled to the payment of his

fees but article 222 ordains that union funds should be used for that
purpose. The amount of P345,000 does not constitute union funds. It is
money of the employees. The union, not the employees, is obligated to
Saavedra.

WHEREFORE, the petition is granted. The resolutions dated August 12 and

December 15, 1980 and April 13, 1981 are reversed and set aside. The
questioned amount of about P345,000, with its increments, if any, should
be paid by the bank directly to its employees. No costs.

SO ORDERED
56
G.R. No. 149763 July 7, 2009

EDUARDO J. MARIÑO, JR., MA. MELVYN P. ALAMIS, NORMA P. COLLANTES,

and FERNANDO PEDROSA,Petitioners,
vs.
GIL Y. GAMILLA, RENE LUIS TADLE, NORMA S. CALAGUAS, MA. LOURDES C.
MEDINA, EDNA B. SANCHEZ, REMEDIOS GARCIA, MAFEL YSRAEL, ZAIDA
GAMILLA, and AURORA DOMINGO, Respondents.

DECISION

CHICO-NAZARIO, J.:

Assailed in this Petition for Review on Certiorari,1 under Rule 45 of the Rules of Court,
are (1) the Decision2 dated 16 March 2001 of the Court of Appeals in CA-G.R. SP No.
60657, dismissing petitioners’ Petition for Certiorari under Rule 65 of the Rules of
Court; and (2) the Resolution3 dated 30 August 2001 of the appellate court in the same
case denying petitioners’ Motion for Reconsideration.

I
FACTS

The Petition at bar arose from the following factual and procedural antecedents.

(1) Case No. NCR-OD-M-9412-022

At the time when the numerous controversies in the instant case first came about,
petitioners Atty. Eduardo J. Mariño, Jr., Ma. Melvyn P. Alamis, Norma P. Collantes,
and Fernando Pedrosa were among the executive officers and directors (collectively
called the Mariño Group) of the University of Sto. Tomas Faculty Union (USTFU), a
labor union duly organized and registered under the laws of the Republic of the
Philippines and the bargaining representative of the faculty members of the University
of Santo Tomas (UST).4

Respondents Gil Y. Gamilla, Rene Luis Tadle, Norma S. Calaguas, Ma. Lourdes C.
Medina, Edna B. Sanchez, Remedios Garcia, Mafel Ysrael, Zaida Gamilla, and Aurora
Domingo were UST professors and USTFU members.

The 1986 Collective Bargaining Agreement (CBA) between UST and USTFU expired
on 31 May 1988. Thereafter, bargaining negotiations ensued between UST and the
Mariño Group, which represented USTFU. As the parties were not able to reach an
agreement despite their earnest efforts, a bargaining deadlock was declared and
USTFU filed a notice of strike. Subsequently, then Secretary of the Department of
Labor and Employment (DOLE) Franklin Drilon assumed jurisdiction over the dispute,
which was docketed as NCMB-NCR-NS-02-117-89. The DOLE Secretary issued an
Order on 19 October 1990, laying the terms and conditions for a new CBA between the
UST and USTFU. In accordance with said Order, the UST and USTFU entered into a
CBA in 1991, which was to be effective for the period of 1 June 1988 to 31 May 1993
(hereinafter 1988-1993 CBA). In keeping with Article 253-A5of the Labor Code, as
amended, the economic provisions of the 1988-1993 CBA were subject to
renegotiation for the fourth and fifth years.

57
Accordingly, on 10 September 1992, UST and USTFU executed a Memorandum of
Agreement (MOA),6 whereby UST faculty members belonging to the collective
bargaining unit were granted additional economic benefits for the fourth and fifth years
of the 1988-1993 CBA, specifically, the period from 1 June 1992 up to 31 May 1993.
The relevant portions of the MOA read:

MEMORANDUM OF AGREEMENT

xxxx

1.0. The University hereby grants additional benefits to Faculty Members

belonging to the collective bargaining unit as defined in Article I, Section 1 of the
Collective Bargaining Agreement entered into between the parties herein over
and above the benefits now enjoyed by the said faculty members, which
additional benefits shall amount in the aggregate to ₱42,000,000.00[.]

2.0. Under this Agreement the University shall grant salary increases, to wit:

2.1. THIRTY (₱30.00) PESOS per lecture unit per month to covered faculty
members retroactive to June 1, 1991;

2.2. Additional THIRTY (₱30.00) PESOS per lecture unit per month on top of the
salary increase granted in [paragraph] 2.1 hereof to the said faculty members
effective June 1, 1992;

2.3. In the case of a covered faculty member whose compensation is computed

on a basis other than lecture unit per month, he shall receive salary increases
that are equivalent to those provided in paragraphs 2.1 and 2.2 hereof, with the
amount of salary increases being arrived at by using the usual method of
computing the said faculty member’s basic pay;

3.0. The UNIVERSITY shall likewise restore to the faculty members the amounts
corresponding to the deductions in salary that were taken from the pay checks in
the second half of June, 1989 and in the first half of July, 1989, provided that said
deductions in salary relate to the union activities that were held in the aforestated
payroll periods, and provided further that the amounts involved shall be taken
from the ₱42 Million (sic) economic package.

4.0. A portion of the ₱42,000,000.00 economic package amounting to

₱2,000,000.00 shall be used to satisfy all obligations that remained outstanding
and unpaid in the May 17, 1986 Collective Bargaining Agreement.

5.0. Any unspent balance of the aggregate of ₱42,000,000.00 as of October 15,

1992, shall, within two weeks, be remitted to the Union[:]

5.1. The unspent balance mentioned in paragraph 5.0 inclusive of earnings but
exclusive of check-offs, shall be used for the salary increases herein granted up
to May 31, 1993, for increases in hospitalization, educational and retirement
benefits, and for other economic benefits.

6.0. The benefits herein granted constitute the entire and complete package of
economic benefits granted by the UNIVERSITY to the covered faculty members
for the balance of the term of the existing collective bargaining agreement.
58
7.0. It is clearly understood and agreed upon that the aggregate sum of ₱42
million is chargeable against the share of the faculty members in the incremental
proceeds of tuition fees collected and still to be collected; Provided, however,
that he (sic) commitment of the UNIVERSITY to pay the aggregate sum of ₱42
million shall subsist even if the said amount exceeds the proportionate share that
may accrue to the faculty members in the tuition fee increases that the
UNIVERSITY may be authorized to collect in School-Year 1992-1993, and,
Provided, finally, that the covered faculty members shall still be entitled to their
proportionate share in any undistributed portion of the incremental proceeds of
the tuition fee increases in School-Year 1992-1993, and incremental proceeds
are, by law and pertinent Department of Education Culture and Sports (DECS)
regulations, required to be allotted for the payment of salaries, wages,
allowances and other benefits of teaching and non-teaching personnel for the
UNIVERSITY.

8.0. With this Agreement, the parties confirm that[:]

8.1. the University has complied with the requirements of the law relative to the
release and distribution of the incremental proceeds of tuition fee increases as
these incremental proceeds pertain to the faculty share in the tuition fee increase
collected during the School-Year 1991-1992; and,

8.2. the economic benefits herein granted constitute the full and complete
financial obligation of the UNIVERSITY to the members of its faculty for the
period June 1, 1991 to May 31, 1993, pursuant to the provisions of the existing
Collective Bargaining Agreement.

9.0. Subject to the provisions of law, and without reducing the amounts of salary
increases granted under paragraphs 2.0, 2.1, 2.2 and 2.3[,] the UNION shall
have the right to a pro-rata lump sum check-off of all sums of money due and
payable to it from the package of economic benefits granted under this
Agreement, provided that there is an authorization of a majority of the members
of the UNION and provided, further, that the ₱42 million economic package
herein granted shall not in any way be exceeded.

10.0. This Agreement shall be effective for a period of two (2) years, starting
June 1, 1991 and ending on May 31, 1993, provided, however, that if for any
reason no new collective bargaining agreement is entered into at the expiration
date hereof, this Agreement, together with the March 18, 1991 Collective
Bargaining Agreement, shall remain in full force and effect until such time as a
new collective bargaining agreement shall have been executed by the parties.

xxxx

UNIVERSITY OF SANTO TOMAS UST FACULTY UNION

BY: BY:
(signed) (signed)
FR. TERESO M. CAMPILLO, JR., O.P. ATTY. EDUARDO J.
Treasurer MARINO, JR.
President

59
 Attested by[:]

(signed)
REV. FR. ROLANDO DELA ROSA, O.P. (Emphasis ours.)

On 12 September 1992, the majority of USTFU members signed individual instruments

of ratification,7 which purportedly signified their consent to the economic benefits
granted under the MOA. Said instruments uniformly recited:

RATIFICATION OF THE UST-USTFU MEMORANDUM OF AGREEMENT DATED

SEPTEMBER 10, 1992 GRANTING A PACKAGE OF THE ₱42 MILLION FACULTY
BENEFITS WITH PROVISION FOR CHECK-OFF.

September 12, 1992

Date

TO WHOM IT MAY CONCERN:

I, the undersigned UST faculty member, aware that the law requires ratification and
that without ratification by majority of all faculty members belonging to the collective
bargaining unit, the Memorandum of Agreement between the University of Santo
Tomas and the UST Faculty Union (or USTFU) dated September 10, 1992 may be
questioned and all the faculty benefits granted therein may be cancelled, do hereby
ratify the said agreement.

Under the Agreement, the University shall pay ₱42 million over a period of two (2)
years from June 1, 1991 up to May 31, 1992.

In consideration of the efforts of the UST Faculty Union as the faculty members’ sole
and exclusive collective bargaining representative in obtaining the said ₱42 million
package of economic benefits, a check-off of ten percent thereof covering union dues,
and special assessment for Labor Education Fund and attorney’s fees from USTFU
members and agency fee from non-members for the period of the Agreement is hereby
authorized to be made in one lump sum effective immediately, provided that two per
cent (sic) shall be for [the] administration of the Agreement and the balance of eight
per cent (sic) shall be for attorney’s fees to be donated, as pledged by the USTFU
lawyer to the Philippine Foundation for the Advancement of the Teaching Profession,
Inc. whose principal purpose is the advancement of the teaching profession and
teacher’s welfare, and provided further that the deductions shall not be taken from my
individual monthly salary but from the total package of ₱42 million due under the
Agreement.

_________________________
Signature of Faculty Member (Emphasis ours.)

USTFU, through its President, petitioner Atty. Mariño, wrote a letter8 dated 1 October
1992 to the UST Treasurer requesting the release to the union of the sum of ₱4.2
million, which was 10% of the ₱42 million economic benefits package granted by the
MOA to faculty members belonging to the collective bargaining unit. The ₱4.2 million
was sought by USTFU in consideration of its efforts in obtaining the said ₱42 million
economic benefits package. UST remitted the sum of ₱4.2 million to USTFU on 9
October 1992.9

60
After deducting from the ₱42 million economic benefits package the ₱4.2 million
check-off to USTFU, the amounts owed to UST, and the salary increases and bonuses
of the covered faculty members, a net amount of ₱6,389,145.04 remained. The
remaining amount was distributed to the faculty members on 18 November 1994.

On 15 December 1994, respondents10 filed with the Med-Arbiter, DOLE-National

Capital Region (NCR), a Complaint for the expulsion of the Mariño Group as USTFU
officers and directors, which was docketed as Case No. NCR-OD-M-9412-
022.11 Respondents alleged in their Complaint that the Mariño Group violated the rights
and conditions of membership in USTFU, particularly by: 1) investing the unspent
balance of the ₱42 million economic benefits package given by UST without prior
approval of the general membership; 2) simultaneously holding elections viva voce; 3)
ratifying the CBA involving the ₱42 million economic benefits package; and 4)
approving the attorney’s/agency fees worth ₱4.2 million in the form of check-off.
Respondents prayed that the Mariño Group be declared jointly and severally liable for
refunding all collected attorney’s/agency fees from individual members of USTFU and
the collective bargaining unit; and that, after due hearing, the Mariño group be expelled
as USTFU officers and directors.

(2) Case No. NCR-OD-M-9510-028

On 16 December 1994, UST and USTFU, represented by the Mariño Group, entered
into a new CBA, effective 1 June 1993 to 31 May 1998 (1993-1998 CBA). This new
CBA was registered with the DOLE on 20 February 1995.

Respondents12 filed with the Med-Arbiter, DOLE-NCR, on 18 October 1995, another

Complaint against the Mariño Group for violation of the rights and conditions of union
membership, which was docketed as Case No. NCR-OD-M-9510-028.13 The Complaint
primarily sought to invalidate certain provisions of the 1993-1998 CBA negotiated by
the Mariño Group for USTFU and the registration of said CBA with the DOLE.

(3) Case No. NCR-OD-M-9610-001

On 24 September 1996, petitioner Norma Collantes, as USTFU Secretary-General,

posted notices in some faculty rooms at UST, informing the union members of a
general assembly to be held on 5 October 1996. Part of the agenda for said date was
the election of new USTFU officers. The following day, 25 September 1996,
respondents wrote a letter14 to the USTFU Committee on Elections, urging the latter to
re-schedule the elections to ensure a free, clean, honest, and orderly election and to
afford the union members the time to prepare themselves for the same. The USTFU
Committee on Elections failed to act positively on respondents’ letter, and neither did
they adopt and promulgate the rules and regulations for the conduct of the scheduled
election.

Thus, on 1 October 1996, respondents15 filed with the Med-Arbiter, DOLE-NCR, an

Urgent Ex-Parte Petition/Complaint, which was docketed as Case No. NCR-OD-M-
9610-001.16 Respondents alleged in their Petition/Complaint that the general
membership meeting called by the USTFU Board of Directors on 5 October 1996, the
agenda of which included the election of union officers, was in violation of the
provisions of the Constitution and By-Laws of USTFU. Respondents prayed that the
DOLE supervise the conduct of the USTFU elections, and that they be awarded
attorney’s fees.

61
On 4 October 1996, the Med-Arbiter DOLE-NCR, issued a Temporary Restraining
Order (TRO) enjoining the holding of the USTFU elections scheduled the next day.

(4) Case No. NCR-OD-M-9610-016

Also on 4 October 1996, the UST Secretary General headed a general faculty
assembly attended by USTFU members, as well as USTFU non-members, but who
were members of the collective bargaining unit. During said assembly, respondents
were among the elected officers of USTFU (collectively referred to as the Gamilla
Group). Petitioners filed with the Med-Arbiter, DOLE-NCR, a Petition seeking injunctive
reliefs and the nullification of the results of the 4 October 1994 election. The Petition
was docketed as Case No. NCR-OD-M-9610-016.

In a Decision dated 11 February 1997 in Case No. NCR-OD-M-9610-016, the Med-

Arbiter DOLE-NCR, nullified the election of the Gamilla Group as USTFU officers on 4
October 1996 for having been conducted in violation of the Constitution and By-Laws
of the union. This ruling of the Med-Arbiter was affirmed on appeal by the Bureau of
Labor Relations (BLR) in a Resolution issued on 15 August 1997. Respondents were,
thus, prompted to file a Petition for Certiorari before this Court, docketed as G.R. No.
131235.

While G.R. No. 131235 was pending, the term of office of the Gamilla Group as
USTFU officers expired on 4 October 1999. The Gamilla Group then scheduled the
next election of USTFU officers on 14 January 2000.

On 16 November 1999, the Court promulgated its Decision in G.R. No. 131235,
affirming the BLR Resolution dated 15 August 1997 which ruled that the purported
election of USTFU officers held on 4 October 1996 was void for violating the
Constitution and By-Laws of the union.17

(5) Case No. NCR-OD-M-9611-009

On 15 November 1996, respondents18 filed before the Med-Arbiter, DOLE-NCR, a

fourth Complaint/Petition against the Mariño Group, as well as the Philippine
Foundation for the Advancement of the Teaching Profession, Inc., Security Bank
Corporation, and Bank of the Philippine Islands, which was docketed as Case No.
NCR-OD-M-9611-009.19 Respondents claimed in their latest Complaint/Petition that
they were the legitimate USTFU officers, having been elected on 4 October 1996. They
prayed for an order directing the Mariño Group to cease and desist from using the
name of USTFU and from performing acts for and on behalf of the USTFU and the rest
of the members of the collective bargaining unit.

DOLE Department Order No. 9 took effect on 21 June 1997, amending the Rules
Implementing Book V of the Labor Code, as amended. Thereunder, jurisdiction over
the complaints for any violation of the union constitution and by-laws and the
conditions of union membership was vested in the Regional Director of the
DOLE.20 Pursuant to said Department Order, all four Petitions/Complaints filed by
respondents against the Mariño Group, particularly, Case No. NCR-OD-M-9412-022,
Case No. NCR-OD-M-9510-028, Case No. NCR-OD-M-9610-001, and Case No. NCR-
OD-M-9611-009 were consolidated and indorsed to the Office of the Regional Director
of the DOLE-NCR.

62
On 27 May 1999, the DOLE-NCR Regional Director rendered a Decision21 in the
consolidated cases in respondents’ favor.

In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028, the DOLE-

NCR Regional Director adjudged the Mariño Group, as the executive officers of
USTFU, guilty of violating the provisions of the USTFU Constitution and By-laws by
failing to collect union dues and to conduct a general assembly every three months.
The DOLE-NCR Regional Director also ruled that the Mariño Group violated Article
241(c)22 and (l)23 of the Labor Code when they did not submit a list of union officers to
the DOLE; when they did not submit/provide DOLE and the USTFU members with
copies of the audited financial statements of the union; and when they invested in a
bank, without prior consent of USTFU members, the sum of ₱9,766,570.01, which
formed part of the ₱42 million economic benefits package.

Additionally, the DOLE-NCR Regional Director declared that the check-off of ₱4.2
million collected by the Mariño Group, as negotiation fees, was invalid. According to
the MOA executed on 10 September 1992 by UST and USTFU, the ₱42 million
economic benefits package was chargeable against the share of the faculty members
in the incremental proceeds of tuition fees collected and still to be collected. Under
Republic Act No. 6728,24 70% of the tuition fee increases should be allotted to
academic and non-academic personnel. Given that the records were silent as to how
much of the ₱42 million economic benefits package was obtained through negotiations
and how much was from the statutory allotment of 70% of the tuition fee increases, the
DOLE-NCR Regional Director held that the entire amount was within the statutory
allotment, which could not be the subject of negotiation and, thus, could not be
burdened by negotiation fees.

The DOLE-NCR Regional Director further found that the principal subject of Case No.
NCR-OD-M-9610-001 (i.e., violation by the Mariño Group of the provisions on election
of officers in the Labor Code and the USTFU Constitution and By-Laws) had been
superseded by the central event in Case No. NCR-OD-M-9611-009 (i.e., the
subsequent election of another set of USTFU officers consisting of the Gamilla Group).
While there were two sets of USTFU officers vying for legitimacy, the eventual ruling of
the DOLE-NCR Regional Director, for the expulsion of the Mariño Group from their
positions as USTFU officers, practically extinguished Case No. NCR-OD-M-9611-009.

The decretal portion of the 27 May 1999 Decision of the DOLE-NCR Regional Director
reads:

WHEREFORE, premises considered, judgment is hereby rendered:

a) Expelling [the Mariño Group] from their positions as officers of USTFU, and
hereby order them under pain of contempt, to cease and desist from performing
acts as such officers;

b) Ordering [the Mariño Group] to jointly and severally refund to USTFU the
amount of P4.2 M checked-off as attorney’s fees from the P42 M economic
package;

c) Ordering [the Mariño Group] to account for:

c.1. P2.0 M paid to USTFU in satisfaction of the remaining obligation of the

University under the 1986 CBA;
63
 c.2. P7.0 M as consideration of the Compromise Agreement entered into by
USTFU involving certain labor cases;

c.3. Interest/earnings of the P9,766,570.01 balance of the P42 M

invested/deposited by [the Mariño Group] with the PCI Capital Corporation.

d) Ordering conduct of election of Union officers under the supervision of this

Department.25

Petitioners interposed an appeal26 before the BLR, which was docketed as BLR-A-TR-
52-25-10-99.

In the meantime, the election of USTFU officers was held as scheduled on 14 January
2000,27 in which the Gamilla Group claimed victory.28 On 3 March 2000, the Gamilla
group, as the new USTFU officers, entered into a Memorandum of Agreement29 with
the UST, which provided for the economic benefits to be granted to the faculty
members of the UST for the years 1999-2001. Said Agreement was ratified by the
USTFU members on 9 March 2000.

On the same day, 9 March 2000, the BLR promulgated its Decision30 in BLR-A-TR-52-
25-10-99, the fallo of which provides:

WHEREFORE, the appeal is GRANTED IN PART. Accordingly, the decision appealed

from is hereby MODIFIED to the effect that appellant USTFU officers are hereby
ordered to return to the general membership the amount of P4.2 million they have
collected by way of attorney’s fees.

Let the entire records of this case be remanded to the Regional Office of origin for the
immediate conduct of election of officers of USTFU. The election shall be held under
the control and supervision of the Regional Office, in accordance with Section 1 (b),
Rule XV of Department Order No. 9, unless the parties mutually agree to a different
procedure consistent with ensuring integrity and fairness in the electoral exercise.

The BLR found no basis for the order of the DOLE-NCR Regional Director to the
Mariño Group to account for the amounts of ₱2 million and ₱7 million supposedly paid
by UST to USTFU. The BLR clarified that UST paid USTFU a lump sum of ₱7 million.
The ₱2 million of this lump sum was the payment by UST of its outstanding obligations
to USTFU under the 1986 CBA. This amount was subsequently donated by USTFU
members to the Philippine Foundation for the Advancement of the Teaching
Profession, Inc. The remaining ₱5 million of the lump sum was the consideration for
the settlement of an illegal dismissal case between UST and the Mariño Group. Hence,
the ₱5 million legally belonged to the Mariño Group, and there was no need to make it
account for the same. As to the interest earnings of the sum of ₱9,766,570.01 that was
invested by the Mariño Group in a bank, the BLR ruled that the same was included in
the amount of ₱6,389,145.04 that was distributed to the faculty members on 18
November 1994.

The BLR, however, agreed in the finding of the DOLE-NCR Regional Director that the
₱42 million economic benefits package was sourced from the faculty members’ share
in the tuition fee increases under Republic Act No. 6728. Under said law, 70% of tuition
fee increases shall go to the payment of salaries, wages, allowances, and other
benefits of teaching and non-teaching personnel. As was held in the decision31 and
subsequent resolution32 of the Supreme Court in Cebu Institute of Technology v. Ople,
64
the law has already provided for the minimum percentage of tuition fee increases to be
allotted for teachers and other school personnel. This allotment is mandatory and
cannot be diminished, although it may be increased by collective bargaining. It follows
that only the amount beyond that mandated by law shall be subject to negotiation fees
and attorney's fees for the simple reason that it was only this amount that the school
employees had to bargain for.

The BLR further reasoned that the ₱4.2 million collected by the Mariño Group was in
the nature of attorney’s fees or negotiation fees and, therefore, fell under the general
prohibition against such fees in Article 222(b)33 of the Labor Code, as amended. Also,
the exception to charging against union funds was not applicable because the ₱42
million economic benefits package under the 10 September 1992 MOA was not union
fund, as the same was intended not for the union coffers, but for the members of the
entire bargaining unit. The fact that the ₱4.2 million check-off was approved by the
majority of USTFU members was immaterial in view of the clear command of Article
222(b) that any contract, agreement, or arrangement of any sort, contrary to the
prohibition contained therein, shall be null and void.

Lastly, as to the alleged failure of the Mariño Group to perform some of its duties, the
BLR held that the change of USTFU officers can best be decided, not by outright
expulsion, but by the general membership through the actual conduct of elections.

Petitioners’ Motion for Partial Reconsideration34 of the foregoing Decision was denied
by the BLR in a Resolution35dated 13 June 2000.

Aggrieved once again, petitioners filed with the Court of Appeals a Petition for
Certiorari36 under Rule 65 of the Rules of Court, which was docketed as CA-G.R. SP
No. 60657. In a Resolution dated 26 September 2000, the Court of Appeals directed
respondents to file their Comment; and, in order not to render moot and academic the
issues in the Petition, enjoined respondents and all those acting for and on their behalf
from enforcing, implementing, and effecting the BLR Decision dated 9 March 2000.

On 16 March 2001, the Court of Appeals rendered its Decision in CA-G.R. SP No.
60657, favoring respondents.

According to the Court of Appeals, the BLR did not commit grave abuse of discretion,
amounting to lack or excess of jurisdiction, in ruling that the ₱42 million economic
benefits package was merely the share of the faculty members in the tuition fee
increases pursuant to Republic Act No. 6728. The appellate court explained:

It is too plain to see that the 60% of the proceeds is to be allocated specifically for
increase in salaries or wages of the members of the faculty and all other employees of
the school concerned. Under Section 5(2) of Republic Act 6728, the amount had been
increased to 70% of the tuition fee increases which was specifically allocated to the
payment of salaries, wages, allowances and other benefits of teaching and non-
teaching personnel of the school[,] except administrators who are principal
stockholders of the school and to cover increases as provided for in the collective
bargaining agreements existing or in force at the time the law became effective[.]

xxxx

It is too plain to see, too, that under the "Memorandum of Agreement" between UST
and the Union, x x x, the ₱42,000,000.00 economic package granted by the UST to the
65
Union was in compliance with the mandates of the law and pertinent Department of
Education, Culture and Sports regulation (sic) required to be allotted following the
payment of salaries, wages, allowances and other benefits of teaching and non-
teaching personnel of the University[.]

xxxx

Whether or not UST implemented the mandate of Republic Act 6728 voluntarily or
through the efforts and prodding of the Union does not and cannot change or alter a
whit the nature of the economic package or the purpose or purposes of the allocation
of the said amount. For, if we acquiesced to and sustained Petitioners’ stance, we will
thereby be leaving the compliance by the private educational institutions of the
mandate of Republic Act 6728 at the will, mercy, whims and caprices of the Union and
the private educational institution. This cannot and should not come to pass.

With our foregoing findings and disquisitions, We thus agree with the [BLR] that the
aforesaid amount of ₱42,000,000.00 should not answer for any attorney’s fees claimed
by the Petitioners. x x x.

xxxx

Moreover, [Section 5 of Rule X of] the CBL of the Union provides that:

Section 5. Special assessments or other extraordinary fees such as for payment of

attorney’s fees shall be made only upon such a resolution duly ratified by the general
membership by secret balloting. x x x.

Also, Article 241(n)37 of the Labor Code, as amended, provides that no special
assessment shall be levied upon the members of the union unless authorized by a
written resolution of a majority of all the members at a general membership meeting
duly called for the purpose[.]

xxxx

In "ABS-CBN Supervisors-Employees Union Members versus ABS-CBN Broadcasting

Corporation, 304 SCRA 489", our Supreme Court declared that Article 241(n) of the
Labor Code, as amended, speaks of three (3) requisites, to wit: (1) authorization by a
written resolution of the majority of all 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 employee concerned.

Contrary to the provisions of Articles 222(b) and 241(n) of the Labor Code, as
amended, and Section 5, Rule X of [the] CBL of the Union, no resolution ratified by the
general membership of [the] USTFU through secret balloting which embodied the
award of attorney’s fees was submitted. Instead, the Petitioners submitted copies of
the form for the ratification of the MOA and the check-off for attorney’s fees.

xxxx

The aforementioned "ratification with check-off" form embodied the: (a) ratification of
the MOA; (b) check-off of union dues; and (c) check-off of a special assessment, i.e.,
attorney’s fees and labor education fund. x x x. Patently, the CBL was not complied
with.
66
Worse, the check-off for union dues and attorney’s fees were included in the ratification
of the MOA. The members were thus placed in a situation where, upon ratification of
the MOA, not only the check-off of union dues and special assessment for labor
education fund but also the payment of attorney’s fees were (sic) authorized.38

In like manner, the Court of Appeals found no grave abuse of discretion, amounting to
lack or excess of jurisdiction, on the part of the BLR in ordering the conduct of
elections under the control and supervision of the DOLE-NCR. Said the appellate
court:

We agree with the Petitioners that the elections of officers of the Union, before the
Decision of the [BLR], had been unfettered by any intervention of the DOLE. However,
We agree with the Decision of the [BLR] for two (2) specific reasons, namely: (a) the
parties are given an opportunity to first agree on a different procedure to ensure the
integrity and fairness of the electoral exercise, before the DOLE, may supervise the
election[.]

xxxx

Under Article IX of the CBL, the Board of Officers of the Union shall create a
Committee on Elections, Comelec for brevity, composed of a chairman and two (2)
members appointed by the Board of Officers[.]

xxxx

It, however, appears that the term of office of the Petitioners had already expired in
September of 1996. In fact, an election of officers was scheduled on October 6, 1996.
However, on October 4, 1996, [respondents] and the members of the faculty of UST,
both union member and non-union member, elected [respondents] as the new officers
of the USTFU. The same was, however, (sic) nullified by the Supreme Court, on
November 16, 1999. However, as the term of office of the [respondents] had expired,
on October 4, 1999, there is nothing to nullify anymore. By virtue of an election, held
on January 14, 2000, the [respondents] were elected as the new officers of the Union,
which election was not contested by the Petitioners or any other group in the union.

xxxx

We are thus faced with a situation where one set of officers claim to be the legitimate
and incumbent officers of the Union, pursuant to the CBL of the Union, and another set
of officers who claim to have been elected by the members of the faculty of the Union
thru an election alleged to have been supervised by the DOLE which situation partakes
of and is akin to the nature of an intra-union dispute[.] x x x.

Undeniably, the CBL gives the Board of Officers the right to create and appoint
members of the Comelec. However, the CBL has no application to a situation where
there are two (2) sets of officers, one set claiming to be the legitimate incumbent
officers holding over to their positions who have not exercised their powers and
functions therefor and another claiming to have been elected in an election supervised
by the DOLE and, at the same time, exercising the powers and functions appended to
their positions. In such a case, the BLR, which has jurisdiction over the intra-union
dispute, can validly order the immediate conduct of election of officers, otherwise,
internecine disputes and blame-throwing will derail an orderly and fair election. Indeed,
Section 1(b), [Rule XV], Book V of the Implementing Rules and Regulations of the
67
Labor Code, as amended, by Department Order No. 09, Series of 1997,39 provides
that, in the absence of any agreement among the members or any provision in the
constitution and by-laws of the labor organization, in an election ordered by the
Regional Director, the chairman of the committee shall be a representative of the Labor
Relations Division of the Regional Office[.]40

Ultimately, the Court of Appeals decreed:

IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due course and is
hereby DISMISSED.41

Petitioners moved for reconsideration42 of the Decision dated 16 March 2001 of the
Court of Appeals, but it was denied by the said court in its Resolution43 dated 30
August 2001.

Petitioners elevated the case to this Court via the instant Petition, invoking the
following assignment of errors:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS ERROR AND GRAVELY ABUSED ITS DISCRETION WHEN IT UPHELD
THE APPLICATION BY THE HONORABLE DIRECTOR OF THE BUREAU OF LABOR
RELATIONS OF THE PROVISIONS OF REPUBLIC ACT NO. 6728 TO THE P42
MILLION CBA PACKAGE OF ECONOMIC BENEFITS OBTAINED BY THE UST
FACULTY UNION FROM THE UNIVERSITY OF SANTO TOMAS.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS ERROR AND GRAVELY ABUSED ITS DISCRETION WHEN IT
DISALLOWED THE LUMP-SUM CHECK-OFF AMOUNTING TO P4.2 MILLION BY
RULING THAT THE P42 MILLION CBA ECONOMIC PACKAGE OBTAINED BY THE
UST FACULTY UNION WAS MERELY AN ALLOCATION OF THE SEVENTY PER
CENT (70%) OF THE TUITION INCREASES AUTHORIZED BY LAW AND THE
DEPARTMENT OF EDUCATION, CULTURE AND SPORTS.

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS ERROR AND GRAVELY ABUSED ITS DISCRETION WHEN IT
DISREGARDED THE PROVISIONS ON ELECTION OF UNION OFFICERS IN THE
CONSTITUTION AND BY-LAWS OF THE UST FACULTY UNION AND INSTEAD
UPHELD THE DIRECTIVE OF THE HONORABLE DIRECTOR OF THE BUREAU OF
LABOR RELATIONS TO CONDUCT THE ELECTION OF UNION OFFICERS UNDER
THE CONTROL AND SUPERVISION OF THE REGIONAL DIRECTOR FOR THE
NATIONAL CAPITAL REGION OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT.

Essentially, in order to arrive at a final disposition of the instant case, this Court is
tasked to determine the following: (1) the nature of the ₱42 million economic benefits
package granted by UST to USTFU; (2) the legality of the 10% check-off collected by
the Mariño Group from the ₱42 million economic benefits package; and (3) the validity
68
of the BLR order for USTFU to conduct election of union officers under the control and
supervision of the DOLE-NCR Regional Director.

II
RULING

(1) The ₱42 million economic benefits package

Petitioners argue that the ₱42 million economic benefits package granted to the
covered faculty members were additional benefits, which resulted from a long and
arduous process of negotiations between the Mariño Group and UST. The BLR and
the Court of Appeals were in error for considering the said amount as purely sourced
from the allocation by UST of 70% percent of the incremental proceeds of tuition fee
increases, in accordance with Republic Act No. 6728. Said law was improperly applied
as a general law that decrees the allocation by all private schools of 70% of their tuition
fee increases to the payment of salaries, wages, allowances and other benefits of their
teaching & non-teaching personnel. It is clear from the title of the law itself that it only
covers government assistance to students and teachers in private education. Section 5
of Republic Act No. 6728 unequivocally limits the scope of the law to tuition fee
supplements and subsidies extended by the Government to students in private high
schools. Thus, the petitioners maintain that Republic Act No. 6728 has no application
to the MOA executed on 10 September 1992 between UST and USTFU, through the
efforts of the Mariño Group.

The Court disagrees with petitioners’ stance.

The provisions of Republic Act No. 6728 were not arbitrarily applied by the DOLE-NCR
Regional Director, the BLR, or the Court of Appeals to the ₱42 million economic
benefits package granted by UST to USTFU, considering that the parties themselves
stipulated in Section 7 of the MOA they signed on 10 September 1992 that:

7.0. It is clearly understood and agreed upon that the aggregate sum of ₱42 million is
chargeable against the share of the faculty members in the incremental proceeds of
tuition fees collected and still to be collected[;] Provided, however, that he (sic)
commitment of the UNIVERSITY to pay the aggregate sum of ₱42 million shall subsist
even if the said amount exceeds the proportionate share that may accrue to the faculty
members in the tuition fee increases that the UNIVERSITY may be authorized to
collect in School–Year 1992-1993, and, Provided, finally, that the covered faculty
members shall still be entitled to their proportionate share in any undistributed portion
of the incremental proceeds of the tuition fee increases in School-Year 1992-1993, and
which incremental proceeds are, by law and pertinent Department of Education Culture
and Sports (DECS) regulations, required to be allotted for the payment of salaries,
wages, allowances and other benefits of teaching and non-teaching personnel for the
UNIVERSITY.44 (Emphases supplied.)

The "law" in the aforequoted Section 7 of the MOA can only refer to Republic Act No.
6728, otherwise known as the "Government Assistance to Students and Teachers in
Private Education Act." Republic Act No. 6728 was enacted in view of the declared
policy of the State, in conformity with the mandate of the Constitution, to promote and
make quality education accessible to all Filipino citizens, as well as the recognition of
the State of the complementary roles of public and private educational institutions in
the educational system and the invaluable contribution that the private schools have

69
made and will make to education.45 The said statute primarily grants various forms of
financial aid to private educational institutions such as tuition fee supplements,
assistance funds, and scholarship grants.46

One such form of financial aid is provided under Section 5 of Republic Act No. 6728,
which states:

SEC. 5. Tuition Fee Supplement for Student in Private High School. –

(1) Financial assistance for tuition for students in private high schools shall be
provided by the government through a voucher system in the following manner:

(a) For students enrolled in schools charging less than one thousand five
hundred pesos (₱1,500) per year in tuition and other fees during school
year 1988-89 or such amount in subsequent years as may be determined
from time to time by the State Assistance Council: The Government shall
provide them with a voucher equal to two hundred ninety pesos
₱290.00: Provided, That the student pays in the 1989-1990 school year,
tuition and other fees equal to the tuition and other fees paid during the
preceding academic year: Provided, further, That the Government shall
reimburse the vouchers from the schools concerned within sixty (60) days
from the close of the registration period: Provided, furthermore, That the
student's family resides in the same city or province in which the high
school is located unless the student has been enrolled in that school during
the previous academic year.

(b) For students enrolled in schools charging above one thousand five
hundred pesos (₱1,500) per year in tuition and other fees during the school
year 1988-1989 or such amount in subsequent years as may be
determined from time to time by the State Assistance Council, no
assistance for tuition fees shall be granted by the
Government: Provided, however, That the schools concerned may raise
their tuition fee subject to Section 10 hereof.

(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted
and tuition fees under subparagraph (c) may be increased, on the condition that
seventy percent (70%) of the amount subsidized, allotted for tuition fee or of the
tuition fee increases shall go to the payment of salaries, wages, allowances and
other benefits of teaching and non-teaching personnel except administrators who
are principal stockholders of the school, and may be used to cover increases as
provided for in the collective bargaining agreements existing or in force at the
time when this Act is approved and made effective: Provided, That government
subsidies are not used directly for salaries of teachers of nonsecular subjects. At
least twenty percent (20%) shall go to the improvement or modernization of
buildings, equipment, libraries, laboratories, gymnasia and similar facilities and to
the payment of other costs of operation. For this purpose, schools shall maintain
a separate record of accounts for all assistance received from the government,
any tuition fee increase, and the detailed disposition and use thereof, which
record shall be made available for periodic inspection as may be determined by
the State Assistance Council, during business hours, by the faculty, the non-
teaching personnel, students of the school concerned, and Department of

70
 Education, Culture and Sports and other concerned government agencies.
(Emphases ours.)

Although Section 5 of Republic Act No. 6728 does speak of government assistance to
students in private high schools, it is not limited to the same. Contrary to petitioners’
puerile claim, Section 5 likewise grants an unmistakable authority to private high
schools to increase their tuition fees, subject to the condition that seventy (70%)
percent of the tuition fee increases shall go to the payment of the salaries, wages,
allowances, and other benefits of their teaching and non-teaching personnel. The said
allocation may also be used to cover increases in the salaries, wages, allowances, and
other benefits of school employees as provided for in the CBAs existing or in force at
the time when Republic Act No. 6728 was approved and made effective.

Contrary to petitioners’ argument, the right of private schools to increase their tuition
fee -- with their corresponding obligation to allocate 70% of said increase to the
payment of the salaries, wages, allowances, and other benefits of their employees -- is
not limited to private high schools. Section 947 of Republic Act No. 6728, on "Further
Assistance to Students in Private Colleges and Universities," is crystal clear in
providing that:

d) Government assistance and tuition increases as described in this Section shall be

governed by the same conditions as provided under Section 5 (2).

Indeed, a private educational institution under Republic Act No. 6728 still has the
discretion on the disposition of 70% of the tuition fee increase. It enjoys the privilege of
determining how much increase in salaries to grant and the kind and amount of
allowances and other benefits to give. The only precondition is that 70% percent of the
incremental tuition fee increase goes to the payment of salaries, wages, allowances
and other benefits of teaching and non-teaching personnel.48

In this case, UST and USTFU stipulated in their 10 September 1992 MOA that the ₱42
million economic benefits package granted by UST to the members of the collective
bargaining unit represented by USTFU, was chargeable against the 70% allotment
from the proceeds of the tuition fee increases collected and still to be collected by UST.
As observed by the DOLE-NCR Regional Director, and affirmed by both the BLR and
the Court of Appeals, there is no showing that any portion of the ₱42 million economic
benefits package was derived from sources other than the 70% allotment from tuition
fee increases of UST.

Given the lack of evidence to the contrary, it can be conclusively presumed that the
entire ₱42 million economic benefits package extended to USTFU came from the 70%
allotment from tuition fee increases of UST. Preceding from this presumption, any
deduction from the ₱42 million economic benefits package, such as the ₱4.2 million
claimed by the Mariño Group as attorney’s/agency fees, should not be allowed,
because it would ultimately result in the reduction of the statutorily mandated 70%
allotment from the tuition fee increases of UST.

The other reasons for disallowing the ₱4.2 million attorney’s/agency fees collected by
the Mariño Group from the ₱42 million economic benefits package are discussed in the
immediately succeeding paragraphs.

(2) The ₱4.2 Million Check-off

71
Petitioners contend that the ₱4.2 million check-off, from the ₱42 million economic
benefits package, was lawfully made since the requirements of Article 222(b) of the
Labor Code, as amended, were complied with by the Mariño Group. The individual
paychecks of the covered faculty employees were not reduced and the ₱4.2 million
deducted from the ₱42 million economic benefits package became union funds, which
were then used to pay attorney’s fees, negotiation fees, and similar charges arising
from the CBA. In addition, the ₱4.2 million constituted a special assessment upon the
USTFU members, the requirements for which were properly observed. The special
assessment was authorized in writing by the general membership of USTFU during a
meeting in which it was included as an item in the agenda. Petitioners fault the Court of
Appeals for disregarding the authorization of the special assessment by USTFU
members. There is no law that prohibits the insertion of a written authorization for the
special assessment in the same instrument for the ratification of the 10 September
1992 MOA. Neither is there a law prescribing a particular form that needs to be
accomplished for the authorization of the special assessment. The faculty members
who signed the ratification of the MOA, which included the authorization for the special
assessment, have high educational attainment, and there is ample reason to believe
that they affixed their signatures thereto with full comprehension of what they were
doing.

Again, the Court is not persuaded.

The pertinent legal provisions on a check-off are found in Articles 222(b) and 241(n)
and (o) of the Labor Code, as amended.

Article 222(b) states:

(b) No attorney's fees, negotiation fees or similar charges of any kind arising from any
collective bargaining negotiations or conclusion 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.

Article 241(n) reads:

(n) No special assessment or other extraordinary fees may be levied upon the
members of a labor organization unless authorized by a written resolution of a majority
of all the members at a general membership meeting duly called for the purpose. The
secretary of the organization shall record the minutes of the meeting including the list
of all members present, the votes cast, the purpose of the special assessment or fees
and the recipient of such assessment or fees. The record shall be attested to by the
president.

And Article 241(o) provides:

(o) Other than for mandatory activities under the Code, no special assessments,
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.

72
Article 222(b) of the Labor Code, as amended, prohibits the payment of attorney's fees
only when it is effected through forced contributions from the employees from their own
funds as distinguished from union funds.49 Hence, the general rule is that attorney’s
fees, negotiation fees, and other similar charges may only be collected from union
funds, not from the amounts that pertain to individual union members. As an exception
to the general rule, special assessments or other extraordinary fees may be levied
upon or checked off from any amount due an employee for as long as there is proper
authorization by the employee.

A check-off is a process or device whereby the employer, on agreement with the

Union, recognized as the proper bargaining representative, or on prior authorization
from the employees, deducts union dues or agency fees from the latter's wages and
remits them directly to the Union. Its desirability in a labor organization is quite evident.
The Union is assured thereby of continuous funding. 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.50

The Court finds that, in the instant case, the ₱42 million economic benefits package
granted by UST did not constitute union funds from whence the ₱4.2 million could have
been validly deducted as attorney’s fees. The ₱42 million economic benefits package
was not intended for the USTFU coffers, but for all the members of the bargaining unit
USTFU represented, whether members or non-members of the union. A close reading
of the terms of the MOA reveals that after the satisfaction of the outstanding
obligations of UST under the 1986 CBA, the balance of the ₱42 million was to be
distributed to the covered faculty members of the collective bargaining unit in the form
of salary increases, returns on paycheck deductions; and increases in hospitalization,
educational, and retirement benefits, and other economic benefits. The deduction of
the ₱4.2 million, as alleged attorney’s/agency fees, from the ₱42 million economic
benefits package effectively decreased the share from said package accruing to each
member of the collective bargaining unit.

Petitioners’ line of argument – that the amount of ₱4.2 million became union funds
after its deduction from the ₱42 million economic benefits package and, thus, could
already be used to pay attorney’s fees, negotiation fees, or similar charges from the
CBA – is absurd. Petitioners’ reasoning is evidently flawed since the attorney’s fees
may only be paid from union funds; yet the amount to be used in paying for the same
does not become union funds until it is actually deducted as attorney’s fees from the
benefits awarded to the employees. It is just a roundabout argument. What the law
requires is that the funds be already deemed union funds even before the attorney’s
fees are deducted or paid therefrom; it does not become union funds after the
deduction or payment. To rule otherwise will also render the general prohibition stated
in Article 222(b) nugatory, because all that the union needs to do is to deduct from the
total benefits awarded to the employees the amount intended for attorney’s fees and,
thus, "convert" the latter to union funds, which could then be used to pay for the said
attorney’s fees.

The Court further determines that the requisites for a valid levy and check-off of special
assessments, laid down by Article 241(n) and (o), respectively, of the Labor Code, as
amended, have not been complied with in the case at bar. To recall, these requisites
are: (1) an authorization by a written resolution of the majority of all the union members
at the general membership meeting duly called for the purpose; (2) secretary's record

73
of the minutes of the meeting; and (3) individual written authorization for check-off duly
signed by the employee concerned.51

Additionally, Section 5, Rule X of the USTFU Constitution and By-Laws mandates that:

Section 5. Special assessments or other extraordinary fees such as for payment of

attorney’s fees shall be made only upon a resolution duly ratified by the general
membership by secret balloting.

In an attempt to comply with the foregoing requirements, the Mariño Group caused the
majority of the general membership of USTFU to individually sign a document, which
embodied the ratification of the MOA between UST and USTFU, dated 10 September
1992, as well as the authorization for the check-off of ₱4.2 million, from the ₱42 million
economic benefits package, as payment for attorney’s fees. As held by the Court of
Appeals, however, the said documents constitute unsatisfactory compliance with the
requisites set forth in the Labor Code, as amended, and in the USTFU Constitution and
By-Laws, even though individually signed by a majority of USTFU members.1avvphi1

The inclusion of the authorization for a check-off of union dues and special
assessments for the Labor Education Fund and attorney’s fees, in the same document
for the ratification of the 10 September 1992 MOA granting the ₱42 million economic
benefits package, necessarily vitiated the consent of USTFU members. For sure, it is
fairly reasonable to assume that no individual member of USTFU would casually turn
down the substantial and lucrative award of ₱42 million in economic benefits under the
MOA. However, there was no way for any individual union member to separate his or
her consent to the ratification of the MOA from his or her authorization of the check-off
of union dues and special assessments. As it were, the ratification of the MOA carried
with it the automatic authorization of the check-off of union dues and special
assessments in favor of the union. Such a situation militated against the legitimacy of
the authorization for the ₱4.2 million check-off by a majority of USTFU membership.
Although the law does not prescribe a particular form for the written authorization for
the levy or check-off of special assessments, the authorization must, at the very least,
embody the genuine consent of the union member.

The failure of the Mariño Group to strictly comply with the requirements set forth by the
Labor Code, as amended, and the USTFU Constitution and By-Laws, invalidates the
questioned special assessment. Substantial compliance is not enough in view of the
fact that the special assessment will diminish the compensation of the union members.
Their express consent 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.52

Viewed in this light, the Court does not hesitate to declare as illegal the check-off of
₱4.2 million, from the ₱42 million economic benefits package, for union dues and
special assessments for the Labor Education Fund and attorney’s fees. Said amount
rightfully belongs to and should be returned by petitioners to the intended beneficiaries
thereof, i.e., members of the collective bargaining unit, whether or not members of
USTFU. This directive is without prejudice to the right of petitioners to seek
reimbursement from the other USTFU officers and directors, who were part of the
Mariño Group, and who were equally responsible for the illegal check-off of the
aforesaid amount.

74
(3) Election of new officers

Having been overtaken by subsequent events, the Court need no longer pass upon the
issue of the validity of the order of BLR for USTFU to conduct its long overdue election
of union officers, under the control and supervision of the DOLE-NCR Regional
Director.

The BLR issued such an order since USTFU then had two groups, namely, the Mariño
Group and the Gamilla Group, each claiming to be the legitimate officers of USTFU.

The DOLE-NCR Regional Director, in his Decision dated 27 May 1999, decreed that
the Mariño Group be expelled from their positions as USTFU officers. But then, the
BLR, in its Decision promulgated on 9 March 2000, declared that the change of officers
could best be decided, not by expulsion, but by the general membership of the union
through the conduct of election, under the control and supervision of the DOLE-NCR
Regional Director. In its assailed Decision dated 16 March 2001, the Court of Appeals
agreed with the BLR judgment in its ruling that the conduct of an election, under the
control and supervision of the DOLE-NCR Regional Director, is necessary to settle the
question of who, as between the officers of the Mariño Group and of the Gamilla
Group, are the legitimate officers of the USTFU.

The Court points out, however, that neither the Decision of the BLR nor of the Court of
Appeals took into account the fact that an election of USTFU officers was already
conducted on 14 January 2000, which was won by the Gamilla Group. There is nothing
in the records to show that the said election was contested or made the subject of
litigation. The Gamilla Group had exercised their powers as USTFU officers during
their elected term. Since the term of union officers under the USTFU Constitution and
By-Laws was only for three years, then the term of the Gamilla Group already expired
in 2003. It is already beyond the jurisdiction of this Court, in the present Petition, to still
look into the subsequent elections of union officers held after 2003.

The election of the Gamilla Group as union officers in 2000 should have already been
recognized by the BLR and the Court of Appeals. The order for USTFU to conduct
another election was only a superfluity. The issue of who between the officers of the
Mariño Group and of the Gamilla Group are the legitimate USTFU officers has been
rendered moot by the succeeding events in the case.

WHEREFORE, premises considered, the Petition for Review under Rule 45 of the
Rules of Court is hereby DENIED. The Decision dated 16 March 2001 and the
Resolution dated 30 August 2001 of the Court of Appeals in CA-G.R. SP No. 60657,
are hereby AFFIRMED WITH MODIFICATIONS. Petitioners are hereby ORDERED to
reimburse, jointly and severally, to the faculty members of the University of Sto.
Tomas, belonging to the collective bargaining unit, the amount of ₱4.2 million checked-
off as union dues and special assessments for the Labor Education Fund and
attorney’s fees, with legal interest of 6% per annum from 15 December 1994, until the
finality of this decision. The order for the conduct of election for the officers of the
University of Sto. Tomas Faculty Union, under the control and supervision of the
Regional Director of the Department of Labor and Employment-National Capital
Region, is hereby DELETED. No costs.

SO ORDERED.

G.R. No. 115949 March 16, 2000

75
EVANGELINE J. GABRIEL, et al, petitioners,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT et
al, 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.

76
 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
77
 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 the
payment of attorney's fees only when it is effected through forced contributions
78
 from workers from their own funds as distinguished from the union funds. The
purpose of the provision is to prevent imposition on the workers of the duty to
individually contribute their respective shares in the fee to be paid the attorney for
his services on behalf of the union in its negotiations with management. The
obligation to pay the attorney's fees belongs to the union and cannot be shunted
to the workers as their direct responsibility. Neither the lawyer nor the union itself
may require the individual worker to assume the obligation to pay attorney's fees
from their own pockets. So 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

From all the foregoing, we are of the considered view that public respondent did not act
with grave abuse of discretion in ruling that the workers through 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 union's general fund or account. No
deduction can be made from the salaries of the concerned employees other than those
mandated by law.

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

SO ORDERED.

G.R. No. 74453 May 5, 1989

AMBROCIO VENGCO, RAMON MOISES, EUGENIA REYES, RAFAEL WAGAS and

80 others per attached list, petitioners
vs.
HON. CRESENCIANO B. TRAJANO, in his capacity as Director of the Bureau of
Labor Relations and EMMANUEL TIMBUNGCO, respondents.

Jose T. Maghari for petitioners.

Benjamin C. Sebastian for private respondent.

MEDIALDEA, J.:

This is a petition for certiorari which seeks to annul: (1) the Order of respondent
Director of the Bureau of Labor Relations dated May 23, 1983 in BLR Case No. A-
0179-82 entitled "Ambrocio Vengco, et al. vs. Emmanuel Timbungco" setting aside the
decision dated December 29, 1982; and (2) the Order dated April 2, 1986 denying the
motion for reconsideration of the Order dated May 23, 1983.

The antecedent facts are as follows:

Sometime in the latter part of 1981, the Management of the Anglo-American Tobacco
Corporation and the Kapisanan ng Manggagawa sa Anglo-American Tobacco
Corporation (FOITAF) entered into a compromise agreement whereby the company
will pay to the union members the sum of P150,000.00 for their claims arising from the
unpaid emergency cost of living allowance (ECOLA) and other benefits which were the
79
subject of their complaint before the Ministry of Labor. Respondent Emmanuel
Timbungco (Timbungco, for short) who is the union president received the money
which was paid in installments. Thereafter, he distributed the amount among the union
members. Petitioners Ambrocio Vengco, Ramon Moises, Rafael Wagas and 80 others
(Vengco, et al., for short) who are union members noted that Timbungco was not
authorized by the union workers to get the money; and that ten percent (10%) of the
P150,000.00 had been deducted to pay for attorney's fees without their written
authorization in violation of Article 242(o) of the Labor Code. So, they demanded from
Timbungco an accounting of how the P150,000.00 was distributed to the members.
Timbungco did not give in to their demand. Thus Vengco, et al. filed a complaint with
the Ministry of Labor praying for: "(1) the expulsion of Emmanuel Timbungco as
president of the union for violation of (the) union constitution and by-laws and the rights
and conditions of union members under the Labor Code; (2) an order to require
Timbungco to render an accounting of how the P150,000.00 was distributed; and (3)
an order to require private respondent to publish in the bulletin board the list of the
members and the corresponding amount they each received from the P150,000.00."
(Memorandum for Petitioners, p. 150, (Rollo).

In his answer with counterclaim, Timbungco alleged among others, that he was
authorized by a resolution signed by the majority of the union members to receive and
distribute the P150,000.00 among the workers; that the computation of the benefits
was based on the payroll of the company; that the ten percent (10%) attorney's fees
was in relation to the claim of the local union for payment of emergency cost of living
allowance before the Ministry of Labor which is totally distinct and separate from the
negotiation of the CBA; and that the ten percent (10%) deduction was in accordance
with Section II, Rule No. VIII, Book No. III of the Rules and Regulations implementing
the Labor Code and therefore, no authorization from the union members is required.

On July 19, 1982, Med-Arbiter Willie B. Rodriguez issued an Order dismissing the
complaint for lack of merit. (p. 33, Rollo)

Vengco, et al. appealed the aforesaid order to the Bureau of Labor Relations.

On December 29, 1982, respondent Director of the Bureau of Labor Relations

Cresenciano B. Trajano (Trajano, for short) rendered a decision, the dispositive portion
of which states:

Wherefore, premises considered, the instant appeal is hereby granted and

the Med-Arbiter's Order dated 19 July 1982 hereby set aside. Accordingly,
respondent Emmanuel Timbungco is hereby ordered to render a full
accounting of the One Hundred Fifty Thousand Pesos (P150,000.00) he
received from the management of Anglo-American Tobacco Corporation in
behalf of the members of the Kapisanan ng mga Manggagawa sa
Associated Anglo-American Tobacco Corporation (FOITAF) and to publish
in the union's bulletin board the list of all recipient union members and the
respective amounts they have received, within ten (10) days from receipt
hereof. Further, respondent is hereby expelled as president of the
Kapisanan ng Manggagawa sa Anglo American Tobacco Corporation
(FOITAF). Lastly, the counterclaim interposed by the respondent's counsel,
Atty. Benjamin Sebastian is hereby ordered dismissed.

So decided. (P. 50, Rollo.)

80
Timbungco filed a motion for reconsideration of the abovequoted decision while
Vengco, et al. filed their opposition to the said motion.

On May 23, 1983, Officer-in-Charge Victoriano R. Calaycay issued an Order which

held, thus:

Wherefore premises considered, our resolution dated 29 December 1982 is

hereby set aside. However, an audit examination of the Books of Account
of Kapisanan ng Manggagawa sa Associated Anglo-American Tobacco
Corporation (FOITAF) is hereby ordered.

SO RESOLVED. (p. 62, Rollo)

Vengco, et al, sought reconsideration of the aforementioned order. They contended

that the examination of the books of accounts of the union is irrelevant considering that
the issue involved in the case does not consist of union funds but back pay received by
the union members from the company. Likewise, they pointed out that Timbungco did
not give the money to the union treasurer and consequently, the amount was not
entered in the records of the union.

On April 2, 1986, Trajano issued an order which affirmed the resolution of May 23,
1983 and denied the motion for reconsideration for lack of merit. (p. 58, Rollo)

Hence, the present recourse by Vengco, et al.

The issues raised in this case are as follows:

(1) Whether or not Timbungco is guilty of illegally deducting 10% attorneys'

fees from petitioners' backwages; and

(2) Whether or not Trajano gravely abused his discretion amounting to lack
of jurisdiction in ordering examination of union books instead of affirming
his previous Order expelling Timbungco from the union and ordering him to
render an accounting of P150,000.00 received by him. (p. 151, Rollo)

In the resolution of June 4, 1986, We required the respondents to comment on the

petition.

In his comment, Timbungco reiterates the defenses he raised in his answer to the
complaint filed against him before the Med-Arbiter In addition, he claims that he
already filed an accounting report on the P150,000.00 with the Bureau of Labor
Relations which enumerated the names of the workers and the corresponding amounts
they received with their respective signatures opposite their names, the sub-total of the
amount of benefits received per department and the grand total of the amount
distributed duly certified by the Union Treasurer and Secretary and duly noted by
Timbungco as Union President. (p. 73, Rollo)

The Solicitor General, in his comment, agrees with Vengco, et al. and recommends
that the petition be given due course. (p. 100, Rollo)

Timbungco filed a reply to the aforesaid comment of the solicitor General which
restates the arguments raised in his comment. (p. 121, Rollo)

81
The petition is meritorious.

Article 241 (o) of the Labor Code provides:

ART. 241. Rights and conditions of membership in a labor organization. —

The following are the rights and conditions of membership in a labor
organization.

x x x.

(o) 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 an employee without an
individual written authorization duly signed by an employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deduction.

x x x.

It is very clear from the above-quoted provision that attorney's fees may not be
deducted or checked off from any amount due to an employee without his written
consent except for mandatory activities under the Code. A mandatory activity has been
defined as a judicial process of settling dispute laid down by the law. (Carlos P.
Galvadores, et al. vs. Cresenciano B. Trajano, Director of the Bureau of Labor
Relations, et al., G.R. No. L-70067, September 15, 1986, 144 SCRA 138). In the
instant case, the amicable settlement entered into by the management and the union
can not be considered as a mandatory activity under the Code. It is true that the union
filed a claim for emergency cost of living allowance and other benefits before the
Ministry of Labor. But this case never reached its conclusion in view of the parties'
agreement. It is not also shown from the records that Atty. Benjamin Sebastian was
instrumental in forging the said agreement on behalf of the union members.

Timbungco maintains that the "Kapasiyahan" gave him the authority to make the
deduction This contention is unfounded. Contrary to his claim, the undated
"Kapasiyahan" or resolution did not confer upon him the power to deduct 10% of the
P150,000.00 despite the alleged approval of the majority of the union workers. A
reading of the said resolution (p. 75, Rollo) yields the same conclusion arrived at by
Trajano who declared it defective. We quote with approval Trajano's findings on this
point:

Further, a cursory examination of the alleged resolution shows that it is

quite defective. Not only that it is not dated but also that, with the exception
of the first page, the remaining pages were not captioned and did not state
the very purpose for which it was prepared. Thus, the alleged signatories
were not properly apprised thereof. There is, therefore, truth in
complainant's contention that they never authorized, more so, they had no
knowledge of the deduction of 10% attorney's fees until it was actually
effected. Consequently, the deduction was not valid. (p. 45, Rollo)

Moreover, the law is explicit. It requires the individual written authorization of each
employee concerned, to make the deduction of attorney's fees valid. Likewise, We find
that the other "Kapasiyahan" dated September 18,1981 submitted by Timbungco

82
belied his claim that he was authorized by the union workers to receive the sum of
P150,000.00 on their behalf The pertinent portion of the said "Kapasiyahan" provides:

3. Na sa dahilang hindi bigla ang pagbabayad sa nasabing "CLAIM" bukod

pa sa marami kaming naghati-hati sa nasabing halaga ipinapasiya naming
na kusang-loob na kunin ang aming bahagi sa aming kapisanan sa unang
linggo ng Disyembre, 1981 at ito'y ipinaalam namin sa Pangulo ng
Kapisanan na si Ginoong Emmanuel Timbungco. (p. 47, Rollo)

The above-quoted statement merely indicated the intention of the workers to get their
claim on the first week of December, 1981 and to inform Timbungco of their intention.
Clearly, this statement can not be construed to confer upon Timbungco the authority to
receive the fringe benefits for the workers. Absent such authority, Timbungco should
not have kept the money to himself but should have turned it over to the Union
Treasurer. He, therefore, exceeded his authority as President of the Union.

Moreover, Book III, Rule VIII, Section II of the Implementing Rules cited by Timbungco
which dispenses with the required written authorization from the employees concerned
does not apply in this case. This provision envisions a situation where there is a judicial
or administrative proceedings for recovery of wages. Upon termination of the
proceedings, the law allows a deduction for attorney's fees of 10% from the total
amount due to a winning party. In the herein case, the fringe benefits received by the
union members consist of back payments of their unpaid emergency cost of living
allowances which are totally distinct from their wages. Allowances are benefits over
and above the basic salaries of the employees (University of Pangasinan Faculty
Union vs. University of Pangasinan, G.R. No. L-63122, February 20, 1984, 127 SCRA
691). We have held that such allowances are excluded from the concept of salaries or
wages (Cebu Institute of Technology (CIT) vs. Ople, G.R. No. L-58870, December 18,
1987, 156 SCRA 629). In addition, the payment of the fringe benefits were effected
through an amicable settlement and not in an administrative proceeding.

The submission by Timbungco of an accounting report on the distribution of P

150,000.00 is of no moment in the face of our findings that the deduction of 10% for
attorney's fees is illegal and void for failure to comply with the requirements of the law.

Considering the aforestated violations of Timbungco, there can be no question that he

should bear the consequences of his acts. We find that the penalty of expulsion from
the union presidency imposed upon Timbungco is justified.

In view of the foregoing, We hold that the Orders dated May 23, 1983 and April 2, 1986
were issued with grave abuse of discretion. The herein controversy involves the
propriety of the 10% deduction from the fringe benefits of the union workers which they
received from the management in settlement of their claims. Such issue does not touch
on union dues or funds. Besides, the sum of P150,000.00 was not entered into the
records of the Union since, as earlier stated, the money was not turned over by
Timbungco to the Union Treasurer. Consequently the said Orders have no basis.

ACCORDINGLY, the petition is granted. The assailed Orders dated May 23, 1983 of
Officer-in-Charge Victoriano R. Calaycay of the Bureau of Labor Relations, and April 2,
1986 of respondent Director Cresenciano B. Trajano of the same Bureau are
REVERSED and SET ASIDE and the latter's decision dated December 29, 1982 is
hereby reinstated. No costs.

83
SO ORDERED.

G.R. No. 51544 August 30, 1990

CONTINENTAL CEMENT CORPORATION LABOR UNION (NLU) petitioner,

vs.
CONTINENTAL CEMENT CORPORATION and the DEPUTY MINISTER OF
LABOR, respondents.

Eulogio K. Lerum for petitioner.

Oliver A. Raymundo for private respondents.

GANCAYCO, J.:

This petition addresses the question of dismissal from the service of the officers and
the suspension of some members of petitioner union by the public respondent and the
National Labor Relations Commission (NLRC).

On April 21, 1975, the NLRC issued an arbitration award in NLRC Cases No. 2406 and
No. 3053 resolving certain demands of the petitioner respecting the working terms and
conditions that should be observed in the establishment of private respondent.
However, due to disagreement on the interpretation of the provisions of the award
concerning vacation, sick leaves and standardization of wages, compliance therewith
was delayed. In order to compel private respondent to immediately implement the
award, petitioner staged a strike on October 25, 1975. It was, however, lifted after the
private respondent agreed to pay the disputed employees' leaves during the period
July 1, 1974 to June 30, 1975 in three installments, that is, 50% on December 20,
1975, 25% on February 25, 1976 and 25% on March 15, 1976.

Meanwhile, private respondent sought clarification from the labor arbiter on whether a
group of 91 workers who were unable to complete 300 days of work within a 12-month
period was entitled to proportionate payment of vacation and sick leave benefits. On
March 19, 1976, the labor arbiter ruled that the award required private respondent to
make proportionate payments in favor of the workers in question. This ruling was
appealed by private respondent but on April 7, 1976 petitioner filed a notice of strike
against private respondent for its refusal to make the proportionate payments
mentioned. Petitioner carried out its threatened strike on May 16, 1976. The strike was
settled on May 22, 1976 with private respondent agreeing inter alia, to pay the 91
workers concerned P25,000.00 for "humanitarian reasons." Private respondent,
however, reserved the right to seek clarification of its obligations under the NLRC
award. Payment was made on May 25, 1976.

The obligation of private respondent to pay the employees their vacation and sick
leaves for the period July 1, 1975 to June 30, 1976 developed into a new issue
between the parties. Prior to the payment becoming due, private respondent
negotiated with petitioner for a staggered form of payment as before due to its financial
difficulties and planned shutdown of the plant in July. Petitioner at first insisted that its
members be paid full; however, it subsequently agreed to installment payments but
gave warning on July 11, 1976, a Sunday, to the private respondent that payment of
50% of the benefits should be made not later than July 12, 1976 and the remaining
84
50%., not later than the end of the month. Private respondent requested an extension
up to July 13, 1976 within which to consider the counter-proposal but this was rejected
by petitioner.

Petitioner staged a strike in the early of July 12, 1976, picketing the entrance of the
premises of private respondent. Among the officers and members of petitioner who
were identified on the picket line were Rosauro Ancheta, Lauro Bartolome, Abundio
Cruz, Edwin Hugo, Manuel Sobrenilla, Antonio Mendoza, Alfredo Urtula, Lorenzo
Hormadal, Nicolas Sobrenilla, Dioscoro Sergio, Velasco Reyes, Fortunato Mendoza,
Floro Villano, Lauro Francisco, Salva Nelson, Antonio Cruz, Augusto Lopez and
Francisco Sarmiento. Other workers at the roadblocks were not positively identified.

On July 13, 1976, the Minister of Labor issued an order thru the Director of the Bureau
of Labor Relations, directing the striking workers to resume work under the terms and
conditions prevailing prior to the work stoppage. 1 The order was served on the parties
in the afternoon of the same date.

Nevertheless, on July 14, 1976, only 11 out of the total work force of about 120
workers in one shift reported for work and were admitted by the company. On July 15,
1976, petitioner filed a motion for reconsideration of the return-to-work order or its
suspension pending compliance by private respondent with the 1975 NLRC award in
favor of petitioner. Picketing was resumed despite the presence of military personnel
who were called to assist in the implementation of the return-to-work order.

On July 23, 1976, the Minister of Labor certified the dispute between the parties to the
NLRC for compulsory arbitration in NLRC Certified Case No. 039. Under the Labor
Code, this certification had the effect of automatically enjoining any strike by the Union
or lockout by the private respondent. Nonetheless, some 110 striking workers did not
return to work. Consequently, on July 26, 1976, private respondent filed with the
Department of Labor reports on the dismissal of those who failed to comply with the
return-to-work order with copies of the reports furnished workers affected.

On July 29, 1976, the president of petitioner and 7 other officers requested admission
to work but were informed that their employment had been terminated by the company.

After due hearing, on March 10, 1977, the NLRC rendered judgment, the dispositive
portion of which reads as follows:

WHEREFORE, this Commission hereby orders:

1. That the Union officers, together with its Board of Directors, namely:
Rosauro Ancheta, Lauro Bartolome, Alejandro Bernabe, Ireneo Bernabe,
Romulo Buluran, Fortunato Mendoza, Rodolfo L. Santiago, Guillermo
Roque, Dioscoro Sergio, Manuel Sobrenilla, Sergio Panel, Antonio
Mendoza; Isaias Mendoza, Abundio Cruz, Edwin Hugo and Aquilino
Sarmiento, be considered, as they are hereby considered, separated from
the service of the Company, and from their positions as officers of the
Union, as of 12 July 1976;

2. That the Union members who participated in the strike be considered, as

they are hereby considered, under suspension, by way of penalty, for the
duration of their absence from work in the Company as a consequence of
their strike;
85
 3. That the Union members referred to in the immediately preceding
paragraph return to their work in the Company, and that the latter take
them back, at the same terms and conditions of employment obtaining
before 12 July 1976, within five (5) days from receipt of this Decision;

4. That the Company pay within ten (10) days from receipt of this Decision
the vacation and sick leave benefits of qualified employees for the period
from 1 July 1975 to 30 June 1976, as well as the 13th month pay and
increased minimum wages, unless the Company has been duly exempted
from the payment of the same;

5. That the Company comply immediately and fully with the terms and
conditions of the Award of Voluntary Arbitrator Francisco Fuentes dated 12
September 1974 (NLRC Case Nos. 2406 and 3053);

6. That the Union and Company incorporate in their collective bargaining

agreement all includible terms and conditions in the Award referred to in
paragraph 5 of this dispositive part; and

7. That, it appearing that the Union is officially affiliated with the National
Labor Union (NLU) and since the officers of the Union are, by virtue hereof,
no longer holding their positions as such, the NLU temporarily handle the
affairs of the Union, in a trusteeship capacity, until the Union shall have
reorganized in accordance with its Constitution and By-Laws, or in the
absence of applicable internal rules, in accordance with the will of the
majority of its members, but not more than three (3) months from the
promulgation of this Decision. 2

On July 22, 1977, the petitioner appealed the above decision of the NLRC to the
Minister of Labor but the latter affirmed it on March 6, 1979. 3 A motion for
reconsideration filed by the Union was denied by the Minister of Labor on August 1,
1979. 4

Hence, this special civil action for certiorari, wherein the issues raised are (1) whether
or not the strike staged by petitioner on June 12, 1976 until its lifting was illegal; and (2)
in the affirmative, whether or not the penalties meted out by the NLRC to the Union
officers and the members are warranted by the circumstances and the law.

Presidential Decree No. 823, as amended, provides:

Sec. 1. It is the policy of the State to encourage trade unionism and free
collective bargaining within the framework of compulsory and voluntary
arbitration. Therefore, all forms of strikes, picketing and lockouts are hereby
strictly prohibited in vital industries . . .

Letter of Instruction No. 368 of the President provides:

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

xxx xxx xxx

86
 2. Companies or firms engaged in the manufacture or processing of the
following essential commodities:

xxx xxx xxx

B. Cement.

Private respondent was engaged in the manufacture of cement which is no doubt a

vital industry in which a strike or lockout is prohibited under the foregoing aforestated
decree. And even assuming that private respondent was not engaged in a vital
industry, the strike that was staged by petitioner was nonetheless illegal. It was not in
connection with any unresolved economic issue in collective bargaining which is the
only ground for which a lawful strike can be held.

Section 7 of the Rules and Regulations implementing Presidential Decree No. 823, as
amended, provides:

Section 7. Requirements for strikes and lockouts. — Strikes and lockouts

may be declared only upon compliance with the following requirements:

(a) Ground for strike — A strike may be declared by a legitimate labor

organization which is the recognized bargaining agent of the appropriate
bargaining agent of the appropriate bargaining unit in connection with
unresolved economic issues in collective bargaining in non-vital industries.

(b) Ground for lockout — A lockout may be declared only by an employer in

connection with unresolved economic issues in collective bargaining in
non-vital industries.

xxx xxx xxx

(d) Unauthorized strikes or lockouts. — Notices of strikes or lockouts

involving industries, establishments or issues not covered or authorized
under paragraphs (a) and (b) shall be dismissed, and the party filing the
notice of strike or lockout shall be advised thereof.

The issue between the petitioner and the private respondent at the time of the strike
concerned merely the implementation of an arbitration award of the NLRC. The
petitioner had a remedy by applying for a writ of execution to enforce that award. Its
resort to a strike was without lawful basis.

Moreover, under Section 1 of Presidential Decree No. 823, there is a requirement of

notice, as follows:

However, any legitimate labor union may strike and any employer may
lockout in establishments not covered by General Order No. 5 only on
grounds of unresolved economic issues in collective bargaining, in which
case the union or the employer shall file a notice with the Bureau of Labor
Relations at least 30 days before the intended strike or lockout. . . .

Petitioner claims that it filed a notice of strike on April 7, 1976. That notice was in
connection with a dispute that had been settled by the Memorandum Agreement
between the parties dated May 22, 1976. A notice of strike is intended to enable the
87
Bureau of Labor Relations to try to settle the dispute amicably. The strike on July 12,
1976 denied the Bureau this opportunity.

Petitioner invokes the right to strike as a measure of self-defense as it had been driven
to the wall by the unjust refusal of private respondent to comply with the NLRC award.

The non-compliance by the private respondent with the said award did not threaten the
existence of petitioner or that of its members. The dispute did not concern the right of
the Union to organize nor the employees' right to work. It merely involved the non-
payment of the vacation and sick leaves of the employees for the past years' services.

Furthermore, petitioner could have applied with the Bureau of Labor Relations for a writ
of execution to enforce the award that was already final and executory.

As to the second issue, petitioner assails as too harsh the suspension meted out by
the NLRC to its members.

The strikers in question did not only violate the no-strike policy of the state in regard to
vital industries; instead, they repeatedly defied the orders of the Director of Labor
Relations and the Minister of Labor for them to return to work. Their dismissal was
recommended by the labor arbiter. However, out of compassion, the NLRC and the
Minister of Labor only suspended them.

Petitioner then contends that the separation from work of the officers of the union is
quite severe. The officers had the duty to guide their members to respect the law.
Instead, they urged them to violate the law and defy the duly constituted authorities.
Their responsibility is greater than that of the members. Their dismissal from the
service is a just penalty for their unlawful acts.

It is within the power of the NLRC to order the removal of the officers of petitioner. This
is provided for in the labor law.

Art. 242. 5 Rights and conditions of membership in a labor organization. —

The following are the rights and conditions of membership in a labor
organization:

xxx xxx xxx

(p) It shall be the duty of any labor organization and its officers to inform its
members on provisions of the constitution and by-laws, collective
bargaining agreement, the prevailing labor relations system and all their
rights and obligations under existing labor laws. For this purpose,
registered labor organizations may assess reasonable dues to finance
labor relations seminars and other labor education activities.

Any violation of the above rights and conditions of membership shall be a

ground for cancellation of union registration or expulsion of an officer from
office, which ever is appropriate. At least 30 per cent of all the members of
a union or any member or members specifically concerned may report such
violation to the Bureau. The Bureau shall have the power to hear and
decide any reported violation and to mete out the appropriate penalty.

88
The officers of petitioner misinformed the members and led them into staging an illegal
strike. If the NLRC is to attain the objective of the Labor Code to ensure a stable but
dynamic and just industrial peace 6 the removal of undesirable labor leaders must be
effected.

WHEREFORE, the petition is DISMISSED as it has not been shown that the public
respondent committed any grave abuse of discretion in rendering the orders dated
March 6, 1979 and August 1, 1979 affirming the decision of the NLRC dated March 10,
1977.

SO ORDERED.

G.R. No. L-47775 July 5, 1980

JULIAN DUYAG, ARMANDO OLIVARES, JOSE ECHEVARIA, ALEJANDRO

SEVILLA and FELIMON GUINGON, petitioners,
vs.
HON. AMANDO G. INCIONG, as Acting Director of Labor Relation CARMELO C.
NORIEL, as Director of Labor Relations, RICA R. MANALAD, HONORATO K.
LEANO, EDUARDO AMPARO and SANTOS PUERTO, respondents.

AQUINO, J.:

This case is about the removal of private respondents as union officers due to alleged
irregularities and anomalies in the administration of the affairs of the union.

On January 14, 1977, the five petitioners, who are arrastre checkers of E. Razon, Inc.
in the South Harbor, Port Area, Manila as well as bona fide members of the Associated
Port Checkers and Workers Union, filed with Regional Office No. 4 of the Department
of Labor a complaint containing several charges against the four private respondents,
who, respectively, are the president (for more than twenty years), treasurer, vice-
president and auditor of the union.

The record reveals the following facts, some of which are admitted or not denied by the
private respondents, whiny the other facts are supported by substantial evidence which
is summarized in the decisions of the med-arbiter and the Director of Labor Relations:

Unauthorized increases in union dues. — for arrastre checkers, the monthly union
dues amount to ten pesos, as fixed in section 2(b), article VI of the union's constitution
and bylaws approved on September 5,1969.

The monthly union dues were increased by two pesos in the resolution of September
1, 1970 and by five pesos in the resolution of March 14, 1972. However, those two
resolutions are void because they were not approved by three-fourths of all the
members of the board of directors, as required in article VII of the union's constitution
and by-laws, dealing with amendments.

For March, April and May, 1973, the respondents without the benefit of any board
resolution caused to be collected an additional one peso, thus increasing the union
dues to eighteen pesos.

89
For April and May, 1975, the respondents caused to be collected monthly union dues
amounting to nineteen pesos or another increase of one peso.

And for the first semester of 1976, a deduction of eight pesos and fifty centavos was
made from the mid-year bonus without any board resolution authorizing such
deduction. In prior years, no deduction for union dues was made from the mid-year
bonus.

The med-arbiter concluded that the increases in union dues and the deduction from the
mid-year bonus are void because the same were collected in contravention of the
constitution and by-laws.

Moreover, their collection was not covered by any check-off authorization nor
evidenced by any receipt and was in contravention of the Labor Code. The amounts
collected were not duly accounted for. The Labor Code provides:

ART. 242. Rights and conditions of membership in a labor organization. —

The following are the rights and conditions of membership in a labor
organization:

xxxxxxxxx

(g) No officer, agent or member of a labor organization shall collect any

fees, dues, or other contributions in its behalf or make any disbursement of
its money or funds unless he is duly authorized pursuant to its constitution
and by-laws;

(h) Every payment of fees, dues or other contributions by a member shall

be evidenced by a receipt signed by the officer or agent making the
collection and entered into the record of the organization to be kept and
maintained for the purpose;

xxx xxx xxx

(n) No special assessment or other extraordinary fees may be levied upon

the members of a labor organization unless authorized by a written
resolution of a majority of all the members at a general membership
meeting duly caned for the purpose. The secretary of the organization shall
record the minutes of the meeting including the list of all members present,
the votes cast, the purpose of the special assessment or fees and the
recipient of such assessments or fees. The record shall be attested to by
the president;

(o) Other than for mandatory activities under the Code, no special
assessments, 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; and

xxx xxx xxx.

90
The foregoing legal provisions apply squarely to the unauthorized deductions from the
wages of the arrastre checkers.

For such unauthorized collection of union dues, the responsibility of respondent

Ricardo R. Manalad, as union president, is not denied.

Withholding of union members' share in the profits amounting to P18,640.09. — E.

Razon, Inc., the arrastre operator, paid to the union on December 18. 1973 the sum of
P25,684.61 as its share of the profits (profit-share) for the period from May to October,
1973. Instead of distributing the whole amount to the union members, the dents paid to
them only P19,974 and retained the of P5,710.61 which had not been accounted for.

The Labor Arbiter found that other amounts were withheld by the respondents from the
union's profit-shares for subsequent periods. The total amount withheld is P18,640.09
or P18.570.63, as shown in page 8 of private respondents' memorandum.

With specific reference to the profit-share amounting to P22,559.50 paid by E. Razon,

Inc. for the period from November, 1973 to February, 1974, the respondents deposited
the amount in the account of the union's Cooperative Credit Union of which respondent
Manalad was also the president. Later, the respondents withdrew the said amount,
distributed among the union members the sum of P20,848 and withheld the balance of
P1,711.50, which respondent Manalad and the union treasurer, respondent Honorato
K. Leano appropriated as follows:

Manalad — Filipinas Bank and Trust Com pany, Manila Hilton Branch
Chock No. 352966 dated March 22, 1975, drawn to cash.................
P1.000.00

Leaño — Filipinos Rank and Trust Company, Manila Hilton Branch Chock
No. 352967 dated March 22, 1975, drawn to cash............................ 559.50

Leaño — Filipinos Bank and Trust Company Manila Hilton Branch Check
No. 352968 dated March 22,1975, drawn to cash............................. 152.00

TOTAL ......................................... P1, 711.50

The med-arbiter found that the modus operandi resorted to by the respondents with
respect to the profit-share amounting to P22,559.50 was followed by them as to the
deductions from the profit-shares for the other periods.

He surmised that the union officers must have deducted a considerable amount from
the profit-shares because they started that practice in 1966 when E. Razon, Inc. and
Guacods Marine Terminals, Inc. commenced the profit-share program

However, during the pendency of the case in this Court, the private respondents
submitted a resolution dated November 25, 1977 wherein more than ninety percent of
the union members allegedly ratified the deductions from the mid-year bonus and
profit-shares and authorized future deductions (pp. 921 and 1615-6, Rollo).

Although the said resolution rendered this aspect of the case moot, it cannot obliterate
the violations of the constitution and by-laws and the Labor Code already committed by
respondents Manalad and Leano The deduction of union dues from the mid-year

91
bonus and the withholding of part of the profit-shares were illegal and improper at the
time they were made.

Disbursements exceeding P500 which were not authorized by the board of directors.
— Section 4(d), article IV of the union's constitution and by-laws provides that the
board of directors may "authorize and approve all disbursements from union fund
where the amount involved is more than P500 and without that authorization or
approval in due form, no such disbursements will be allowed by the Treasurer

Respondent Manalad made the following disbursements of union funds in an amount

exceeding P500 without the requisite authorization of the board of directors:

Evidence Date Amount

disbursed
Annex S March P1,400.00
26, 1969
Annex T June 1, 1,000.00
1970
Annexes July 13, 3,111.40
U to W August 6
and Sept.
24, 1971
Annexes March 5
Y,X,Z and 30
and Z I April 10,
and AA May 18
to CC Aug. 30,
Sept. 20
and Dec. 7,028.00
31, 1973
Annex D Dec. 6, 1,000.00
1974
Annex R June 12, 900.00
1976

Respondents Manalad and Leaño, also without prior board authorization, withdrew on
twenty-three occasions union funds in the aggregate sum of P43,026.80 deposited in
Savings Account No. 5953 of the Manila Hilton Branch of the Filipinos Bank and Trust
Company (Annexes GG to GG-22).

The sum of P3,500 was paid to respondent Amparo pursuant to a resolution dated July
12, 1971 which was approved by only six members of the board of directors, instead of
fourteen members, as required in the constitution and by-laws of the union.

92
Maladministration of welfare fund. — Respondent Manalad allowed the application of
the funds of the union's Welfare Plan to the following extraneous purposes:

1. On March 31, and April 6 and 14, 1973, the sum of P5,000 was taken
from the Pacific Memorial Plan collections and loaned to the union's
Cooperative Credit Union, Inc.

2. On October 7, 1973, the sum of P1,500 was loaned to the same

cooperative for organizational expenses.

3. On August 7, 1971, the sum of P200 was taken from the welfare fund for
advance representation expenses of Manalad.

4. On December 18, 1971, the sum of P1,600 was taken from the welfare
fund to cover cash advances to Marcelino Melegrito to be repaid upon the
release of his credit union loan on March 8, 1973.

According to the complainants, those disbursements were not authorized by the board
of directors.

Respondents Manalad, Amparo and Puerto approved the payment of retirement

benefits amounting to (1) P3,500 to Miguel de Leon on June 21, 1976; (2) P7,000 to
Eduardo Topacio on July 30, 1976 and (3) P7,000 to Roberto Victoria on August 4,
1976.

According to the complainants, the three employees did not deserve retirement
benefits because they had been dismissed for prolonged absences and they had
ceased to be members of the Welfare Plan.

Membership in another union. — Respondents Manalad, Amparo and Puerto are also
officers of the Philippine Technical Clerical Commercial Employees Association,
another labor union.

Their membership in the latter union is manifestly violative of section 9, article III of the
constitution and by-laws of the arrastre checkers' union which provides that an elected
officer shall be deemed disqualified if he becomes a member of another organization.

In this connection, the complainants presented evidence to prove that because of that
interlocking stewardship of the arrastre checkers' union and the other union, the
respondents improperly channeled to the latter funds of the arrastre checkers' union.

Thus, on December 17, 1976 and March 29, June 9 and August 31, 1976, Manalad
approved payments by the arrastre checkers' union to the other union of the sums of
P1,000, P250 and P1,250.

Conflict of interest on the part of Manalad. — Respondent Manalad organized a family

corporation known as the Comet Integrated Stevedoring Services, Inc. whose rank-
and-file employees are also members of the arrastre checkers' union. Thus, Manalad
has functioned in the dual capacity of labor leader and employer, not to mention the
fact that he is also an officer of another labor union, PTCCEA.

93
As head of the arrastre checkers' union, he issued customs passes for the checkers of
his family-owned stevedoring firm to facilitate their rendition of services to some
shipping companies.

The complainants contend that such a situation has involved Manalad in a conflict of
interest: if he favors his stevedoring firm, he is bound to jeopardize the interests of the
arrastre checkers' union of which he is the president.

Under these facts, the med-arbiter in his decision of August 29, 1977 ordered the
removal of the private respondents as officers of the union and directed them to
reimburse to the members thereof the amounts illegally collected from them.

The private respondents appealed to the Director of Labor Relations who in his
decision of November 9, 1977 reversed the is not necessary and that the five com tsn
have the right and personality to institute the proceeding for the removal of the
respondents, to recover the amounts illegally collective or decision of the med-arbiter.

The Director held that resort to intra-union remedies is not necessary and that the five
complainants have the rights and personality to institute the proceedings for the
removal of the respondents, to recover the amount illegally collected orwithheld from
them and to question illegal disbursements and expenditure of union funds.

However, the Director ruled that the power to remove the union officers rests in the
members and that the Bureau of Labor Relations generally has nothing to do with the
tenure of union officers which "is a political question".

The Director further ruled that his office has jurisdiction to look into the charge of illegal
disbursements of union funds. He directed the Labor Organization Division of the
Bureau to examine the books of account and financial records of the union and to
submit a report on such examination.

The motions for reconsideration filed by the parties were denied by the Undersecretary
of Labor in his resolution of January 25, 1978 (he was then Acting Director of Labor
Relations). He ruled that the expulsion of union officers is the prerogative of the
members of the union.

That decision of the Director is assailed in these special civil actions of certiorari and
prohibition filed on February 10, 1978. The petitioners pray that the four union officers
be expelled.

The case has been simplified by the admission of the private respondents in page 13
of their memorandum that the Bureau of Labor Relations has unquestionably the
power to remove erring union officers under the last paragraph of Article 242 of the
Labor Code.

That paragraph provides that any violation of the rights and conditions of union
membership as enumerated in paragraphs (a) to (p) of Article 242, "shall be a ground
for cancellation of union registration or expulsion of officer from office, whichever is
appropriate. At least thirty percent (30%) of all the members of a union or any member
or members specially concerned may report such violation to the Bureau (of labor
Relations). The Bureau shall have the power to hear and decide any reported violation
to mete the appropriate penal

94
Nevertheless, the private respondents qualify their admission with the opinion that the
Bureau of Labor Relations should remove the guilty union officers only when the
members could not do so under the union's constitution and by-laws and that the
removal should be subject to review by the Minister of Labor.

The Office of the Solicitor General, as amicus curiae, has taken the unqualified stand
that the Bureau is empowered to expel from the union any officer found guilty of
violating any of the rights and conditions of union membership specified in article 242.

In this appeal, the Director of Labor Relations maintains his view that the power of
removal belongs to the union members, since the power to choose the officers belongs
to them, and that the med-arbiter and the Director should simply assist the union
members in enforcing its constitution and by-laws.

We hold that the Labor Arbiter did not err in removing the respondents as union
officers. The membership of Manalad and Puerto in another union is a sufficient
ground for their removal under the constitution and by-laws of the union. In Manalad's
case, his organization of a family-owned corporation competing with. the union headed
by him renders it untenable that he should remain as union president.

We hold further that Med Puerto and Leano violated the rights and conditions of
membership in the union within the meaning of Article 242. Hence, on that ground their
expulsion from office is also justified.

The petitioners are entitled to the refund of the union dues illegally collected from them.
The union should be the proper refund.

The Director of Labor Relations erred in holding that, as a matter of policy, the tenure
of union office being a "political question is, generally, a matter outside his Bureau's
jurisdiction and should be pa upon by the union members themselves.

After hearing and even without submitting the matter to the union members, e union
officials may be removed by the Director of Labor decisions as clearly provided him
"we 242.

The Director should apply the law and not make policy considerations prevail over its
clear intent and meaning. "The majority of the laws need no interpretation or
construction. They require only application, and if there were more application and less
construction, there would be more stability in the law, and more people would know
what the law is." Lizarraga Hermanos vs. Yap Tico 24 Phil. 504, 513).

The labor officials should not hesitate to enforcement strictly the law and regulations
governing trade unions even if that course of action would curtail the so-called union
autonomy and freedom from government interference.

For the protection of union members and in order that the affairs of the union may be
administered honestly, labor officials should be vigilant and watchful in monitoring and
checking the administration of union affairs.

Laxity, permissiveness, neglect and apathy in supervising and regulating the activities
of union officials would result in corruption and oppression. Internal safeguards within
the union can easily be ignored or swept aside by abusive, arrogant and unscrupulous
union officials to the prejudice of the members.
95
It is necessary and desirable that the Bureau of Labor Relations and the Ministry of
Labor should exercise close and constant supervision over labor unions, particularly
the handling of their funds, so as to forestall abuses and venalities.

Hence, the Director acted correctly in ordering an examination of the books and
records of the union. The examination should include a verification of the charge that
the petty loans extended by the union to its members were usurious and that the fee
for the issuance of cheeks is unwarranted since the loans were made in cash.

WHEREFORE, (1) that portion of the decision of the med-arbiter, removing

respondents Manalad, Leano and Puerto as union officers, is affirmed. (Respondent
Amparo is no longer an officer of the union.)

(2) We also affirm that portion of the decision of the Director of Labor Relations,
directing the Bureau's Labor Organization Division to examine the books of accounts
and records of the Associated Port Checkers and Workers Union and to submit a
report on such examination within a reasonable time.

(3) We declare that the five petitioners are entitled to a refund of the union dues
illegally collected from them. The Director of Labor Relations is ordered to require the
union to make the refund within twenty days from notice to his counsel of the entry of
judgment in this case. Costs against the private respondents.

SO ORDERED.

G.R. No. 181357 February 2, 2010

MALAYAN EMPLOYEES ASSOCIATION-FFW and RODOLFO

MANGALINO, Petitioners,
vs.
MALAYAN INSURANCE COMPANY, INC., Respondent.

DECISION

BRION, J.:

The petitioner Malayan Employees Association-FFW (union) asks us in this petition

for certiorari,1 to set aside the June 26, 2007 decision2 and the November 29, 2007
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 80691, ruling that the
suspension imposed by the respondent Malayan Insurance Company, Inc. (company)
on union member Rodolfo Mangalino (Mangalino) is valid. Mangalino was suspended
for taking a union leave without the prior authority of his department head and despite
a previous disapproval of the requested leave.

BACKGROUND FACTS

The union is the exclusive bargaining agent of the rank-and-file employees of the
company. A provision in the union’s collective bargaining agreement (CBA) with the
company allows union officials to avail of union leaves with pay for a total of "ninety-
man" days per year for the purpose of attending grievance meetings, Labor-
Management Committee meetings, annual National Labor Management Conferences,
labor education programs and seminars, and other union activities.

96
The company issued a rule in November 2002 requiring not only the prior notice that
the CBA expressly requires, but prior approval by the department head before the
union and its members can avail of union leaves. The rule was placed into effect in
November 2002 without any objection from the union until a union officer, Mangalino,
filed union leave applications in January and February, 2004. His department head
disapproved the applications because the department was undermanned at that time.

Despite the disapproval, Mangalino proceeded to take the union leave. He said he
believed in good faith that he had complied with the existing company practice and with
the procedure set forth in the CBA. The company responded by suspending him for
one week and, thereafter, for a month, for his second offense in February 2004.

The union raised the suspensions as a grievance issue and went through all the
grievance processes, including the referral of the matter to the company’s president,
Yvonne Yuchengco. After all internal remedies failed, the union went to the National
Conciliation and Mediation Board for preventive mediation. When this recourse also
failed, the parties submitted the dispute to voluntary arbitration4 on the following issues:

1. whether or not Mangalino’s suspensions were valid; and

2. whether or not Mangalino should be paid backwages for the duration of the
suspensions.

The Voluntary Arbitrators decided the submitted dispute on November 26, 2004,5 ruling
as follows:

WHEREFORE, in view of the foregoing, this Honorable Office adjudged the

suspension of Mr. Rodolfo Mangalino’s on first availment of union leave invalid while
the second suspension valid but illicit in terms of penalty of thirty (30) days suspension.
We consider the honesty of the same as mitigating circumstances, for the Chairman of
this panel of Arbitrators attested that complainant attended labor matter in the Office of
Voluntary Arbitrator last January 19, 2004 and February 5, 2004. However, it is good to
note the wisdom of Justice Narvasa in the aforecited Supreme Court Ruling of obey
first before you complain.

In view thereof, this Honorable Office reduced the suspension from thirty seven (37)
days to ten (10) days only. Henceforth, the Complainant is entitled to twenty seven (27)
days backwages.

Proof of payment of backwages should be submitted to the chairman of this Panel of

Arbitrators within ten (10) days from receipt hereof.

Parties are hereby enjoined to comply in this Award as provided in the submission
Agreement.

SO ORDERED.

Notably, the decision was not unanimous. Voluntary Arbitrator dela Fuente submitted
the following dissent:6

The act of any employee that can only be interpreted to be an open and utter display of
arrogance and unconcern for the welfare of his Company thru the use of what he

97
pretends to believe to be an unbridled political right cannot be allowed to pass without
sanction lest the employer desires anarchy and chaos to reign in its midst.

Hence, having failed to comply with the requirements for availment of union leaves and
for going on such leave despite the express disapproval of his superior, Mr.
Mangalino’s two suspensions are valid and he is not entitled to any backwages for the
duration of his suspensions.

The company appealed the decision to the CA on May 12, 2005 through a petition for
review under Rule 43 of the Rules of Court (Rules). In a decision promulgated on June
26, 2007, the CA granted the company’s petition and upheld the validity of Mangalino’s
suspension on the basis of the company’s prerogative to prescribe reasonable rules to
regulate the use of union leaves.7

The union moved for the reconsideration of the CA decision and received the CA’s
denial (through its resolution of November 29, 2007) on December 8, 2007.8

THE PETITION

The union seeks relief from this Court against the CA decision through its Rule 65
petition for certiorari filed on February 6, 2008.9 It alleged that the CA committed grave
abuse of discretion when, despite the clear terms of the CBA grant of union leaves, it
disregarded the evidence on record and recognized that the company’s use of its
management prerogative as justification was proper.

In our Resolution of March 5, 2008, we resolved to treat the Rule 65 petition as a

petition for review on certiorari under Rule 45 of the Rules, and required the
respondent company to comment.10 After comment, we required the union to file its
reply.11 Thereafter, the parties submitted their respective memoranda.12

In its comment, the company raised both procedural and substantive objections.

It questioned the petition’s compliance with the Rules, particularly the use of a petition
for certiorari under Rule 65 to question the CA decision, when the appropriate remedy
is a petition for review on certiorari under Rule 45. The company also asserted that the
union violated Section 2, Rule 45 when it failed to attach the material portions of the
record as would support its petition, such as the company’s pleadings and the entirety
of the company’s evidence. More importantly, it posited that the petition is barred by
time limitation and has lapsed to finality as it was filed sixty-two (62) days after the
union’s receipt of the CA decision.

On the substantive aspect, the company mainly contended that the regulation of the
use of union leaves is within the company’s management prerogative, and the
company was simply exercising its management prerogative when it required its
employees to first obtain the approval of either the department head or the human
resource manager before making use of any union leave. Thus, Mangalino committed
acts of insubordination when he insisted on going on leave despite the disapproval of
his leave applications.

In its reply and subsequent memorandum, the union presented its justification for the
technical deficiencies the company cited (quoted below), and maintained as well that
the use of management prerogative was improper because the CBA grant of the union
leave benefit did not require prior company approval as a condition; any change in the
98
CBA grant requires union conformity. The union posited as well that any unilateral
change in the CBA terms violates Article 255 of the Labor Code, which guarantees the
right of employees to participate in the company’s policy and decision-making
processes on matters directly affecting their interests. It argued against the company
position that it had not objected to the company rule and is now in estoppel.

THE COURT’S RULING

We deny the petition for lack of merit.

The company position that the union should have filed an appeal under Rule 45 of the
Rules and not a petition for certiorari is correct. Section 1, Rule 45 of the Rules states
that:

SECTION 1. Filing of petition with Supreme Court. – A party desiring to appeal by

certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law,
may file with the Supreme Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set forth. [Emphasis supplied.]

Complementing this Rule is Section 1, Rule 65 which provides that a special civil
action for certiorari under Rule 65 lies only when "there is no appeal, nor plain, speedy
and adequate remedy in the ordinary course of law." From this Rule proceeds the
established jurisprudential ruling that a petition for certiorari cannot be allowed when a
party fails to appeal a judgment despite the availability of that remedy, as certiorari is
not a substitute for a lost appeal.13

In our Resolution of March 5, 2008, we opted to liberally apply the rules and to treat the
petition as a petition for review on certiorari under Rule 45 in order to have a total view
of the merits of the petition in light of the importance of a ruling on the presented
issues. The union – which did not present any justification at the outset for the
petition’s deficiencies, particularly for the late filing – had this to say:

9) In a resolution dated 05 March 2008, this Honorable Court resolved to treat

the petition in the above-captioned case as a petition for review on certiorari
under Rule 45 of the Rules of Civil Procedure. All along the petitioner thought
that the filing of the petition for certiorari under Rule 65 is appropriate considering
that the ground raised is grave abuse of discretion by the Honorable Court of
Appeals for reversing the decision of the majority decision of the Panel of
Voluntary Arbitration in arbitrary and whimsical manner.

10) For having treated this petition under Rule 45 of the Rules of Civil Procedure,
petitioner humbly admits that delay was incurred in the filing thereof, such delay
was caused by several factors beyond control such as the transfer of handling
legal assistant to another office and the undersigned had to reassign the case for
the preparation of the petition. Furthermore, the undersigned counsel, other than
being the Chief of FFW LEGAL CENTER is also the Vice President of the
Federation of Free Workers (FFW), who has to attend similar and urgent
pressing problems of local affiliates arising from the effects of contracting out and
closure of companies.

11) Considering the issue to be resolved requires only two CBA provisions – (1)
the recognition of management prerogative (Section 1, Article III of the CBA), and
99
 union leave (Section 3, Article XV of the CBA) to guide the Honorable Court
reached (sic) a decision, petitioner honestly thought that the other pleadings
referred to by respondent are not relevant.

With this kind and tenor of justification, we appear to have acted with extreme liberality
in recognizing the petition as a Rule 45 petition and in giving it due course. We cannot
extend the same liberality, however, with respect to the union’s violation of the
established rules on timelines in the filing of petitions, which violations the company
has kept alive by its continuing objection. While we can be liberal in considering the
mode of review of lower court decisions (and even in the contents of the petition which
the company insists are deficient), we cannot do the same with respect to the time
requirements that govern the finality of these decisions. A final judgment can no longer
be disturbed under the combined application of the principles of immutability of final
judgments14 and res judicata,15subject only to very exceptional circumstances not at all
present in this case.16

Under Rule 45, a petition for review on certiorari should be filed within 15 days from
notice of judgment, extendible in meritorious cases for a total of another 30
days.17 Given that a Rule 45 petition is appropriate in the present case, the period of
60 days after notice of judgment is way past the deadline allowed, so that the CA
decision had lapsed to finality by the time the petition with us was filed. This reason
alone – even without considering the company’s other technical objection based on the
union’s failure to attach relevant documents in support of the petition – amply supports
the denial of the petition.

The lack of merit of the petition likewise precludes us from resolving it in the union’s
favor. In short, we see no reversible error in the CA’s ruling.

While it is true that the union and its members have been granted union leave
privileges under the CBA, the grant cannot be considered separately from the other
provisions of the CBA, particularly the provision on management prerogatives where
the CBA reserved for the company the full and complete authority in managing and
running its business.18 We see nothing in the wordings of the union leave provision that
removes from the company the right to prescribe reasonable rules and regulations to
govern the manner of availing of union leaves, particularly the prerogative to require
prior approval. Precisely, prior notice is expressly required under the CBA so that the
company can appropriately respond to the request for leave. In this sense, the rule
requiring prior approval only made express what is implied in the terms of the CBA.

In any event, any doubt in resolving any interpretative conflict is settled by subsequent
developments in the course of the parties’ implementation of the CBA, specifically, by
the establishment of the company regulation in November 2002 requiring prior
approval before the union leave can be used. The union accepted this regulation
without objection since its promulgation (or more than a year before the present
dispute arose), and the rule on its face is not unreasonable, oppressive, nor violative of
CBA terms. Ample evidence exists in the records indicating the union’s acquiescence
to the rule.19 Notably, no letter from the union complaining about the unilateral change
in policy or any request for a meeting to discuss this policy appears on record. The
union and its members have willingly applied for approval as the rule requires.20 Even
Mangalino himself, in the past, had filed applications for union leave with his
department manager, and willingly complied with the disapproval without protest of any
kind.21Thus, when Mangalino asserted his right to take a leave without prior approval,
100
the requirement for prior approval was already in place and established, and could no
longer be removed except with the company’s consent or by negotiation and express
agreement in future CBAs.

The "prior approval" policy fully supported the validity of the suspensions the company
imposed on Mangalino. We point out additionally that as an employee, Mangalino had
the clear obligation to comply with the management disapproval of his requested leave
while at the same time registering his objection to the company regulation and action.
That he still went on leave, in open disregard of his superior’s orders, rendered
Mangalino open to the charge of insubordination, separately from his absence without
official leave.22 This charge, of course, can no longer prosper even if laid today, given
the lapse of time that has since transpired.

In light of the petition’s procedural infirmities, particularly its late filing that rendered the
CA decision final, and the petition’s lack of substantive merit, denial of the petition
necessarily follows.

WHEREFORE, premises considered, we DENY the petition for lack of merit. Costs
against the petitioners.

SO ORDERED.

G.R. Nos. 174040-41 September 22, 2010

INSULAR HOTEL EMPLOYEES UNION-NFL, Petitioner,

vs.
WATERFRONT INSULAR HOTEL DAVAO, Respondent.

DECISION

PERALTA, J.:

Before this Court is a petition for review on certiorari,1 under Rule 45 of the Rules of
Court, seeking to set aside the Decision2 dated October 11, 2005, and the
Resolution3 dated July 13, 2006 of the Court of Appeals (CA) in consolidated labor
cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No. 83657. Said Decision
reversed the Decision4 dated the April 5, 2004 of the Accredited Voluntary Arbitrator
Rosalina L. Montejo (AVA Montejo).

The facts of the case, as culled from the records, are as follows:

On November 6, 2000, respondent Waterfront Insular Hotel Davao (respondent) sent

the Department of Labor and Employment (DOLE), Region XI, Davao City, a Notice of
Suspension of Operations5 notifying the same that it will suspend its operations for a
period of six months due to severe and serious business losses. In said notice,
respondent assured the DOLE that if the company could not resume its operations
within the six-month period, the company would pay the affected employees all the
benefits legally due to them.

During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao
Insular Hotel Free Employees Union (DIHFEU-NFL), the recognized labor organization
in Waterfront Davao, sent respondent a number of letters asking management to
reconsider its decision.
101
In a letter6 dated November 8, 2000, Rojas intimated that the members of the Union
were determined to keep their jobs and that they believed they too had to help
respondent, thus:

xxxx

Sir, we are determined to keep our jobs and push the Hotel up from sinking. We
believe that we have to help in this (sic) critical times. Initially, we intend to suspend the
re-negotiations of our CBA. We could talk further on possible adjustments on economic
benefits, the details of which we are hoping to discuss with you or any of your
emissaries. x x x7

In another letter8 dated November 10, 2000, Rojas reiterated the Union's desire to help
respondent, to wit:

We would like to thank you for giving us the opportunity to meet [with] your
representatives in order for us to air our sentiments and extend our helping hands for a
possible reconsideration of the company's decision.

The talks have enabled us to initially come up with a suggestion of solving the high
cost on payroll.

We propose that 25 years and above be paid their due retirement benefits and put their
length of service to zero without loss of status of employment with a minimum hiring
rate.

Thru this scheme, the company would be able to save a substantial amount and
reduce greatly the payroll costs without affecting the finance of the families of the
employees because they will still have a job from where they could get their income.

Moreover, we are also open to a possible reduction of some economic benefits as our
gesture of sincere desire to help.

We are looking forward to a more fruitful round of talks in order to save the hotel.9

In another letter10 dated November 20, 2000, Rojas sent respondent more proposals
as a form of the Union's gesture of their intention to help the company, thus:

1) Suspension of [the] CBA for ten years, No strike no lock-out shall be enforced.

2) Pay all the employees their benefits due, and put the length of service to zero
with a minimum hiring rate. Payment of benefits may be on a staggered basis or
as available.

3) Night premium and holiday pays shall be according to law. Overtime hours
rendered shall be offsetted as practiced.

4) Reduce the sick leaves and vacation leaves to 15 days/15days.

5) Emergency leave and birthday off are hereby waived.

6) Duty meal allowance is fixed at ₱30.00 only. No more midnight snacks and
double meal allowance. The cook drinks be stopped as practiced.

102
 7) We will shoulder 50% of the group health insurance and family medical
allowance be reduced to 1,500.00 instead of 3,000.00.

8) The practice of bringing home our uniforms for laundry be continued.

9) Fixed manning shall be implemented, the rest of manpower requirements

maybe sourced thru WAP and casual hiring. Manpower for fixed manning shall
be 145 rank-and-file union members.

10) Union will cooperate fully on strict implementation of house rules in order to
attain desired productivity and discipline. The union will not tolerate problem
members.

11) The union in its desire to be of utmost service would adopt multi-tasking for
the hotel to be more competitive.

It is understood that with the suspension of the CBA renegotiations, the same existing
CBA shall be adopted and that all provisions therein shall remain enforced except for
those mentioned in this proposal.

These proposals shall automatically supersede the affected provisions of the CBA.11

In a handwritten letter12 dated November 25, 2000, Rojas once again appealed to
respondent for it to consider their proposals and to re-open the hotel. In said letter,
Rojas stated that manpower for fixed manning shall be one hundred (100) rank-and-file
Union members instead of the one hundred forty-five (145) originally proposed.

Finally, sometime in January 2001, DIHFEU-NFL, through Rojas, submitted to

respondent a Manifesto13concretizing their earlier proposals.

After series of negotiations, respondent and DIHFEU-NFL, represented by its

President, Rojas, and Vice-Presidents, Exequiel J. Varela Jr. and Avelino C. Bation,
Jr., signed a Memorandum of Agreement14 (MOA) wherein respondent agreed to re-
open the hotel subject to certain concessions offered by DIHFEU-NFL in its Manifesto.

Accordingly, respondent downsized its manpower structure to 100 rank-and-file

employees as set forth in the terms of the MOA. Moreover, as agreed upon in the
MOA, a new pay scale was also prepared by respondent.

The retained employees individually signed a "Reconfirmation of Employment"15 which

embodied the new terms and conditions of their continued employment. Each
employee was assisted by Rojas who also signed the document.

On June 15, 2001, respondent resumed its business operations.

On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local
officers of the National Federation of Labor (NFL), filed a Notice of Mediation16 before
the National Conciliation and Mediation Board (NCMB), Region XI, Davao City. In said
Notice, it was stated that the Union involved was "DARIUS JOVES/DEBBIE PLANAS
ET. AL, National Federation of Labor." The issue raised in said Notice was the
"Diminution of wages and other benefits through unlawful Memorandum of
Agreement."

103
On August 29, 2002, the NCMB called Joves and respondent to a conference to
explore the possibility of settling the conflict. In the said conference, respondent and
petitioner Insular Hotel Employees Union-NFL (IHEU-NFL), represented by Joves,
signed a Submission Agreement17 wherein they chose AVA Alfredo C. Olvida (AVA
Olvida) to act as voluntary arbitrator. Submitted for the resolution of AVA Olvida was
the determination of whether or not there was a diminution of wages and other benefits
through an unlawful MOA. In support of his authority to file the complaint, Joves,
assisted by Atty. Danilo Cullo (Cullo), presented several Special Powers of Attorney
(SPA) which were, however, undated and unnotarized.

On September 2, 2002, respondent filed with the NCMB a Manifestation with Motion
for a Second Preliminary Conference,18 raising the following grounds:

1) The persons who filed the instant complaint in the name of the Insular Hotel
Employees Union-NFL have no authority to represent the Union;

2) The individuals who executed the special powers of attorney in favor of the
person who filed the instant complaint have no standing to cause the filing of the
instant complaint; and

3) The existence of an intra-union dispute renders the filing of the instant case
premature.19

On September 16, 2002, a second preliminary conference was conducted in the

NCMB, where Cullo denied any existence of an intra-union dispute among the
members of the union. Cullo, however, confirmed that the case was filed not by the
IHEU-NFL but by the NFL. When asked to present his authority from NFL, Cullo
admitted that the case was, in fact, filed by individual employees named in the SPAs.
The hearing officer directed both parties to elevate the aforementioned issues to AVA
Olvida.20

The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA
Olvida. Respondent again raised its objections, specifically arguing that the persons
who signed the complaint were not the authorized representatives of the Union
indicated in the Submission Agreement nor were they parties to the MOA. AVA Olvida
directed respondent to file a formal motion to withdraw its submission to voluntary
arbitration.

On October 16, 2002, respondent filed its Motion to Withdraw.21 Cullo then filed an
Opposition22 where the same was captioned:

NATIONAL FEDERATION OF LABOR

And 79 Individual Employees, Union Members,
Complainants,

-versus-

Waterfront Insular Hotel Davao,

Respondent.

In said Opposition, Cullo reiterated that the complainants were not representing IHEU-
NFL, to wit:

104
xxxx

2. Respondent must have been lost when it said that the individuals who executed
the SPA have no standing to represent the union nor to assail the validity of
Memorandum of Agreement (MOA). What is correct is that the individual
complainants are not representing the union but filing the complaint through
their appointed attorneys-in-fact to assert their individual rights as workers who
are entitled to the benefits granted by law and stipulated in the collective
bargaining agreement.23

On November 11, 2002, AVA Olvida issued a Resolution24 denying respondent's

Motion to Withdraw. On December 16, 2002, respondent filed a Motion for
Reconsideration25 where it stressed that the Submission Agreement was void because
the Union did not consent thereto. Respondent pointed out that the Union had not
issued any resolution duly authorizing the individual employees or NFL to file the notice
of mediation with the NCMB.

Cullo filed a Comment/Opposition26 to respondent's Motion for Reconsideration. Again,

Cullo admitted that the case was not initiated by the IHEU-NFL, to wit:

The case was initiated by complainants by filling up Revised Form No. 1 of the NCMB
duly furnishing respondent, copy of which is hereto attached as Annex "A" for
reference and consideration of the Honorable Voluntary Arbitrator. There is no mention
there of Insular Hotel Employees Union, but only National Federation of Labor (NFL).
The one appearing at the Submission Agreement was only a matter of filling up the
blanks particularly on the question there of Union; which was filled up with Insular Hotel
Employees Union-NFL. There is nothing there that indicates that it is a complainant as
the case is initiated by the individual workers and National Federation of Labor, not by
the local union. The local union was not included as party-complainant considering that
it was a party to the assailed MOA.27

On March 18, 2003, AVA Olvida issued a Resolution28 denying respondent's Motion for
Reconsideration. He, however, ruled that respondent was correct when it raised its
objection to NFL as proper party-complainant, thus:

Anent to the real complainant in this instant voluntary arbitration case, the respondent
is correct when it raised objection to the National Federation of Labor (NFL) and as
proper party-complainants.

The proper party-complainant is INSULAR HOTEL EMPLOYEES UNION-NFL, the

recognized and incumbent bargaining agent of the rank-and-file employees of the
respondent hotel. In the submission agreement of the parties dated August 29, 2002,
the party complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not
the NATIONAL FEDERATION OF LABOR and 79 other members.

However, since the NFL is the mother federation of the local union, and signatory to
the existing CBA, it can represent the union, the officers, the members or union and
officers or members, as the case may be, in all stages of proceedings in courts or
administrative bodies provided that the issue of the case will involve labor-
management relationship like in the case at bar.

The dispositive portion of the March 18, 2003 Resolution of AVA Olvida reads:

105
WHEREFORE, premises considered, the motion for reconsideration filed by
respondent is DENIED. The resolution dated November 11, 2002 is modified in so far
as the party-complainant is concerned; thus, instead of "National Federation of Labor
and 79 individual employees, union members," shall be "Insular Hotel Employees
Union-NFL et. al., as stated in the joint submission agreement dated August 29, 2002.
Respondent is directed to comply with the decision of this Arbitrator dated November
11, 2002,

No further motion of the same nature shall be entertained.29

On May 9, 2003, respondent filed its Position Paper Ad Cautelam,30 where it declared,
among others, that the same was without prejudice to its earlier objections against the
jurisdiction of the NCMB and AVA Olvida and the standing of the persons who filed the
notice of mediation.

Cullo, now using the caption "Insular Hotel Employees Union-NFL, Complainant," filed
a Comment31 dated June 5, 2003. On June 23, 2003, respondent filed its Reply.32

Later, respondent filed a Motion for Inhibition33 alleging AVA Olvida's bias and
prejudice towards the cause of the employees. In an Order34 dated July 25, 2003, AVA
Olvida voluntarily inhibited himself out of "delicadeza" and ordered the remand of the
case to the NCMB.

On August 12, 2003, the NCMB issued a Notice requiring the parties to appear before
the conciliator for the selection of a new voluntary arbitrator.

In a letter35 dated August 19, 2003 addressed to the NCMB, respondent reiterated its
position that the individual union members have no standing to file the notice of
mediation before the NCMB. Respondent stressed that the complaint should have
been filed by the Union.

On September 12, 2003, the NCMB sent both parties a Notice36 asking them to appear
before it for the selection of the new voluntary arbitrator. Respondent, however,
maintained its stand that the NCMB had no jurisdiction over the case. Consequently, at
the instance of Cullo, the NCMB approved ex parte the selection of AVA Montejo as
the new voluntary arbitrator.

On April 5, 2004, AVA Montejo rendered a Decision37 ruling in favor of Cullo, the
dispositive portion of which reads:

WHEREOF, in view of the all the foregoing, judgment is hereby rendered:

1. Declaring the Memorandum of Agreement in question as invalid as it is

contrary to law and public policy;

2. Declaring that there is a diminution of the wages and other benefits of the
Union members and officers under the said invalid MOA.

3. Ordering respondent management to immediately reinstate the workers wage

rates and other benefits that they were receiving and enjoying before the signing
of the invalid MOA;

106
 4. Ordering the management respondent to pay attorney’s fees in an amount
equivalent to ten percent (10%) of whatever total amount that the workers union
may receive representing individual wage differentials.

As to the other claims of the Union regarding diminution of other benefits, this
accredited voluntary arbitrator is of the opinion that she has no authority to entertain,
particularly as to the computation thereof.

SO ORDERED.38

Both parties appealed the Decision of AVA Montejo to the CA. Cullo only assailed the
Decision in so far as it did not categorically order respondent to pay the covered
workers their differentials in wages reckoned from the effectivity of the MOA up to the
actual reinstatement of the reduced wages and benefits. Cullos' petition was docketed
as CA-G.R. SP No. 83831. Respondent, for its part, questioned among others the
jurisdiction of the NCMB. Respondent maintained that the MOA it had entered into with
the officers of the Union was valid. Respondent's petition was docketed as CA-G.R. SP
No. 83657. Both cases were consolidated by the CA.

On October 11, 2005, the CA rendered a Decision39 ruling in favor of respondent, the
dispositive portion of which reads:

WHEREFORE, premises considered, the petition for review in CA-G.R. SP No. 83657
is hereby GRANTED, while the petition in CA-G.R. SP No. 83831 is DENIED.
Consequently, the assailed Decision dated April 5, 2004 rendered by AVA Rosalina L.
Montejo is hereby REVERSED and a new one entered declaring the Memorandum of
Agreement dated May 8, 2001 VALID and ENFORCEABLE. Parties are DIRECTED to
comply with the terms and conditions thereof.

SO ORDERED.40

Aggrieved, Cullo filed a Motion for Reconsideration, which was, however, denied by
the CA in a Resolution41 dated July 13, 2006.

Hence, herein petition, with Cullo raising the following issues for this Court's resolution,
to wit:

I.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS ERRORS IN FINDING THAT THE ACCREDITED VOLUNTARY
ARBITRATOR HAS NO JURISDICTION OVER THE CASE SIMPLY BECAUSE THE
NOTICE OF MEDIATION DOES NOT MENTION THE NAME OF THE LOCAL UNION
BUT ONLY THE AFFILIATE FEDERATION THEREBY DISREGARDING THE
SUBMISSION AGREEMENT DULY SIGNED BY THE PARTIES AND THEIR LEGAL
COUNSELS THAT MENTIONS THE NAME OF THE LOCAL UNION.

II.

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED

SERIOUS ERROR BY DISREGARDING THE PROVISIONS OF THE CBA SIMPLY
BECAUSE IT BELIEVED THE UNPROVEN ALLEGATIONS OF RESPONDENT
HOTEL THAT IT WAS SUFFERING FROM FINANCIAL CRISIS.
107
III.

THE HONORABLE COURT OF APPEALS MUST HAVE SERIOUSLY ERRED IN

CONCLUDING THAT ARTICLE 100 OF THE LABOR CODE APPLIES ONLY TO
BENEFITS ENJOYED PRIOR TO THE ADOPTION OF THE LABOR CODE WHICH,
IN EFFECT, ALLOWS THE DIMINUTION OF THE BENEFITS ENJOYED BY
EMPLOYEES FROM ITS ADOPTION HENCEFORTH.42

The petition is not meritorious.

Anent the first error raised, Cullo argues that the CA erred when it overlooked the fact
that before the case was submitted to voluntary arbitration, the parties signed a
Submission Agreement which mentioned the name of the local union and not only
NFL. Cullo, thus, contends that the CA committed error when it ruled that the voluntary
arbitrator had no jurisdiction over the case simply because the Notice of Mediation did
not state the name of the local union thereby disregarding the Submission Agreement
which states the names of local union as Insular Hotel Employees Union-NFL.43

In its Memorandum,44 respondent maintains its position that the NCMB and Voluntary
Arbitrators had no jurisdiction over the complaint. Respondent, however, now also
contends that IHEU-NFL is a non-entity since it is DIHFEU-NFL which is considered by
the DOLE as the only registered union in Waterfront Davao.45 Respondent argues that
the Submission Agreement does not name the local union DIHFEU-NFL and that it had
timely withdrawn its consent to arbitrate by filing a motion to withdraw.

A review of the development of the case shows that there has been much confusion as
to the identity of the party which filed the case against respondent. In the Notice of
Mediation46 filed before the NCMB, it stated that the union involved was "DARIUS
JOVES/DEBBIE PLANAS ET. AL., National Federation of Labor." In the Submission
Agreement,47 however, it stated that the union involved was "INSULAR HOTEL
EMPLOYEES UNION-NFL."

Furthermore, a perusal of the records would reveal that after signing the Submission
Agreement, respondent persistently questioned the authority and standing of the
individual employees to file the complaint. Cullo then clarified in subsequent
documents captioned as "National Federation of Labor and 79 Individual Employees,
Union Members, Complainants" that the individual complainants are not representing
the union, but filing the complaint through their appointed attorneys-in-fact.48 AVA
Olvida, however, in a Resolution dated March 18, 2003, agreed with respondent that
the proper party-complainant should be INSULAR HOTEL EMPLOYEES UNION-NFL,
to wit:

x x x In the submission agreement of the parties dated August 29, 2002, the party
complainant written is INSULAR HOTEL EMPLOYEES UNION-NFL and not the
NATIONAL FEDERATION OF LABOR and 79 other members.49

The dispositive portion of the Resolution dated March 18, 2003 of AVA Olvida reads:

WHEREFORE, premises considered, the motion for reconsideration filed by

respondent is DENIED. The resolution dated November 11, 2002, is modified in so far
as the party complainant is concerned, thus, instead of "National Federation of Labor
and 79 individual employees, union members," shall be "Insular Hotel Employees
Union-NFL et. al., as stated in the joint submission agreement dated August 29, 2002.
108
Respondent is directed to comply with the decision of this Arbitrator dated November
11, 2002.50

After the March 18, 2003 Resolution of AVA Olvida, Cullo adopted "Insular Hotel
Employees Union-NFL et. al., Complainant" as the caption in all his subsequent
pleadings. Respondent, however, was still adamant that neither Cullo nor the individual
employees had authority to file the case in behalf of the Union.

While it is undisputed that a submission agreement was signed by respondent and

"IHEU-NFL," then represented by Joves and Cullo, this Court finds that there are two
circumstances which affect its validity: first, the Notice of Mediation was filed by a party
who had no authority to do so; second, that respondent had persistently voiced out its
objection questioning the authority of Joves, Cullo and the individual members of the
Union to file the complaint before the NCMB.

Procedurally, the first step to submit a case for mediation is to file a notice of
preventive mediation with the NCMB. It is only after this step that a submission
agreement may be entered into by the parties concerned.

Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of
preventive mediation, to wit:

Who may file a notice or declare a strike or lockout or request preventive mediation. -

Any certified or duly recognized bargaining representative may file a notice or

declare a strike or request for preventive mediation in cases of bargaining
deadlocks and unfair labor practices. The employer may file a notice or declare a
lockout or request for preventive mediation in the same cases. In the absence of a
certified or duly recognized bargaining representative, any legitimate labor organization
in the establishment may file a notice, request preventive mediation or declare a strike,
but only on grounds of unfair labor practice.

From the foregoing, it is clear that only a certified or duly recognized bargaining agent
may file a notice or request for preventive mediation. It is curious that even Cullo
himself admitted, in a number of pleadings, that the case was filed not by the Union but
by individual members thereof. Clearly, therefore, the NCMB had no jurisdiction to
entertain the notice filed before it.

Even though respondent signed a Submission Agreement, it had, however,

immediately manifested its desire to withdraw from the proceedings after it became
apparent that the Union had no part in the complaint. As a matter of fact, only four days
had lapsed after the signing of the Submission Agreement when respondent called the
attention of AVA Olvida in a "Manifestation with Motion for a Second Preliminary
Conference"51 that the persons who filed the instant complaint in the name of Insular
Hotel Employees Union-NFL had no authority to represent the Union. Respondent
cannot be estopped in raising the jurisdictional issue, because it is basic that the issue
of jurisdiction may be raised at any stage of the proceedings, even on appeal, and is
not lost by waiver or by estoppel.

In Figueroa v. People,52 this Court explained that estoppel is the exception rather than
the rule, to wit:

109
Applying the said doctrine to the instant case, the petitioner is in no way estopped by
laches in assailing the jurisdiction of the RTC, considering that he raised the lack
thereof in his appeal before the appellate court. At that time, no considerable period
had yet elapsed for laches to attach. True, delay alone, though unreasonable, will not
sustain the defense of "estoppel by laches" unless it further appears that the party,
knowing his rights, has not sought to enforce them until the condition of the party
pleading laches has in good faith become so changed that he cannot be restored to his
former state, if the rights be then enforced, due to loss of evidence, change of title,
intervention of equities, and other causes. In applying the principle of estoppel by
laches in the exceptional case of Sibonghanoy, the Court therein considered the patent
and revolting inequity and unfairness of having the judgment creditors go up their
Calvary once more after more or less 15 years.The same, however, does not obtain in
the instant case.

We note at this point that estoppel, being in the nature of a forfeiture, is not favored by
law. It is to be applied rarely—only from necessity, and only in extraordinary
circumstances. The doctrine must be applied with great care and the equity must be
strong in its favor.When misapplied, the doctrine of estoppel may be a most effective
weapon for the accomplishment of injustice. x x x (Italics supplied.)53

The question to be resolved then is, do the individual members of the Union have the
requisite standing to question the MOA before the NCMB? On this note, Tabigue v.
International Copra Export Corporation (INTERCO)54 is instructive:

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.

Petitioners have not, however, been duly authorized to represent the union. Apropos is
this Court’s pronouncement in Atlas Farms, Inc. v. National Labor Relations
Commission, 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
110
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. (Emphasis and underscoring supplied.)55

If the individual members of the Union have no authority to file the case, does the
federation to which the local union is affiliated have the standing to do so? On this
note, Coastal Subic Bay Terminal, Inc. v. Department of Labor and Employment56 is
enlightening, thus:

x x x A local union does not owe its existence to the federation with which it is affiliated.
It is a separate and distinct voluntary association owing its creation to the will of its
members. Mere affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act independently of the
local union. It only gives rise to a contract of agency, where the former acts in
representation of the latter. Hence, local unions are considered principals while the
federation is deemed to be merely their agent. x x x57

Based on the foregoing, this Court agrees with approval with the disquisition of the CA
when it ruled that NFL had no authority to file the complaint in behalf of the individual
employees, to wit:

Anent the first issue, We hold that the voluntary arbitrator had no jurisdiction over the
case. Waterfront contents that the Notice of Mediation does not mention the name of
the Union but merely referred to the National Federation of Labor (NFL) with which the
Union is affiliated. In the subsequent pleadings, NFL's legal counsel even confirmed
that the case was not filed by the union but by NFL and the individual employees
named in the SPAs which were not even dated nor notarized.

Even granting that petitioner Union was affiliated with NFL, still the relationship
between that of the local union and the labor federation or national union with which
the former was affiliated is generally understood to be that of agency, where the local
is the principal and the federation the agency. Being merely an agent of the local
union, NFL should have presented its authority to file the Notice of Mediation. While
We commend NFL's zealousness in protecting the rights of lowly workers, We cannot,
however, allow it to go beyond what it is empowered to do.

As provided under the NCMB Manual of Procedures, only a certified or duly recognized
bargaining representative and an employer may file a notice of mediation, declare a
strike or lockout or request preventive mediation. The Collective Bargaining Agreement
(CBA), on the other, recognizes that DIHFEU-NFL is the exclusive bargaining
representative of all permanent employees. The inclusion of the word "NFL" after the
name of the local union merely stresses that the local union is NFL's affiliate. It does
not, however, mean that the local union cannot stand on its own. The local union owes
its creation and continued existence to the will of its members and not to the federation
to which it belongs. The spring cannot rise higher than its source, so to speak.58

In its Memorandum, respondent contends that IHEU-NFL is a non-entity and that

DIHFEU-NFL is the only recognized bargaining unit in their establishment. While the
resolution of the said argument is already moot and academic given the discussion
above, this Court shall address the same nevertheless.

111
While the November 16, 2006 Certification59 of the DOLE clearly states that "IHEU-
NFL" is not a registered labor organization, this Court finds that respondent is estopped
from questioning the same as it did not raise the said issue in the proceedings before
the NCMB and the Voluntary Arbitrators. A perusal of the records reveals that the main
theory posed by respondent was whether or not the individual employees had the
authority to file the complaint notwithstanding the apparent non-participation of the
union. Respondent never put in issue the fact that DIHFEU-NFL was not the same as
IHEU-NFL. Consequently, it is already too late in the day to assert the same.

Anent the second issue raised by Cullo, the same is again without merit.

Cullo contends that respondent was not really suffering from serious losses as found
by the CA. Cullo anchors his position on the denial by the Wage Board of respondent's
petition for exemption from Wage Order No. RTWPB-X1-08 on the ground that it is a
distressed establishment.60 In said denial, the Board ruled:

A careful analysis of applicant's audited financial statements showed that during the
period ending December 31, 1999, it registered retained earnings amounting to
₱8,661,260.00. Applicant's interim financial statements for the quarter ending
June 30, 2000 cannot be considered, as the same was not audited. Accordingly,
this Board finds that applicant is not qualified for exemption as a distressed
establishment pursuant to the aforecited criteria.61

In its Decision, the CA held that upholding the validity of the MOA would mean the
continuance of the hotel's operation and financial viability, to wit:

x x x We cannot close Our eyes to the impending financial distress that an employer
may suffer should the terms of employment under the said CBA continue.

If indeed We are to tilt the balance of justice to labor, then We would be inclined to
favor for the nonce petitioner Waterfront. To uphold the validity of the MOA would
mean the continuance of the hotel's operation and financial viability. Otherwise, the
eventual permanent closure of the hotel would only result to prejudice of the
employees, as a consequence thereof, will necessarily lose their jobs.62

In its petition before the CA, respondent submitted its audited financial
statements63 which show that for the years 1998, 1999, until September 30, 2000, its
total operating losses amounted to ₱48,409,385.00. Based on the foregoing, the CA
was not without basis when it declared that respondent was suffering from impending
financial distress. While the Wage Board denied respondent's petition for exemption,
this Court notes that the denial was partly due to the fact that the June 2000 financial
statements then submitted by respondent were not audited. Cullo did not question nor
discredit the accuracy and authenticity of respondent's audited financial statements.
This Court, therefore, has no reason to question the veracity of the contents thereof.
Moreover, it bears to point out that respondent's audited financial statements covering
the years 2001 to 2005 show that it still continues to suffer losses.64

Finally, anent the last issue raised by Cullo, the same is without merit.

Cullo argues that the CA must have erred in concluding that Article 100 of the Labor
Code applies only to benefits already enjoyed at the time of the promulgation of the
Labor Code.

112
Article 100 of the Labor Code provides:

PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS- Nothing in

this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of the promulgation of this Code.

On this note, Apex Mining Company, Inc. v. NLRC65 is instructive, to wit:

Clearly, the prohibition against elimination or diminution of benefits set out in Article
100 of the Labor Code is specifically concerned with benefits already enjoyed at the
time of the promulgation of the Labor Code. Article 100 does not, in other words,
purport to apply to situations arising after the promulgation date of the Labor Code x x
x.66

Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees
with respondent that the same does not prohibit a union from offering and agreeing to
reduce wages and benefits of the employees. In Rivera v. Espiritu,67 this Court ruled
that the right to free collective bargaining, after all, includes the right to suspend it,
thus:

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." 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. 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.

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 latter’s 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.1awphi1 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 PAL’s 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 union’s
exercise of its right to collective bargaining. The right to free collective bargaining,
after all, includes the right to suspend it.68

Lastly, this Court is not unmindful of the fact that DIHFEU-NFL's Constitution and By-
Laws specifically provides that "the results of the collective bargaining negotiations
shall be subject to ratification and approval by majority vote of the Union members at a
meeting convened, or by plebiscite held for such special purpose."69 Accordingly, it is
undisputed that the MOA was not subject to ratification by the general membership of

113
the Union. The question to be resolved then is, does the non-ratification of the MOA in
accordance with the Union's constitution prove fatal to the validity thereof?

It must be remembered that after the MOA was signed, the members of the Union
individually signed contracts denominated as "Reconfirmation of Employment."70 Cullo
did not dispute the fact that of the 87 members of the Union, who signed and accepted
the "Reconfirmation of Employment," 71 are the respondent employees in the case at
bar. Moreover, it bears to stress that all the employees were assisted by Rojas,
DIHFEU-NFL's president, who even co-signed each contract.

Stipulated in each Reconfirmation of Employment were the new salary and benefits
scheme. In addition, it bears to stress that specific provisions of the new contract also
made reference to the MOA. Thus, the individual members of the union cannot feign
knowledge of the execution of the MOA. Each contract was freely entered into and
there is no indication that the same was attended by fraud, misrepresentation or
duress. To this Court's mind, the signing of the individual "Reconfirmation of
Employment" should, therefore, be deemed an implied ratification by the Union
members of the MOA.

In Planters Products, Inc. v. NLRC,71 this Court refrained from declaring a CBA invalid
notwithstanding that the same was not ratified in view of the fact that the employees
had enjoyed benefits under it, thus:

Under Article 231 of the Labor Code and Sec. 1, Rule IX, Book V of the Implementing
Rules, the parties to a collective [bargaining] agreement are required to furnish copies
of the appropriate Regional Office with accompanying proof of ratification by the
majority of all the workers in a bargaining unit. This was not done in the case at bar.
But we do not declare the 1984-1987 CBA invalid or void considering that the
employees have enjoyed benefits from it. They cannot receive benefits under
provisions favorable to them and later insist that the CBA is void simply because other
provisions turn out not to the liking of certain employees. x x x. Moreover, the two
CBAs prior to the 1984-1987 CBA were not also formally ratified, yet the employees
are basing their present claims on these CBAs. It is iniquitous to receive benefits
from a CBA and later on disclaim its validity.72

Applied to the case at bar, while the terms of the MOA undoubtedly reduced the
salaries and certain benefits previously enjoyed by the members of the Union, it cannot
escape this Court's attention that it was the execution of the MOA which paved the way
for the re-opening of the hotel, notwithstanding its financial distress. More importantly,
the execution of the MOA allowed respondents to keep their jobs. It would certainly be
iniquitous for the members of the Union to sign new contracts prompting the re-
opening of the hotel only to later on renege on their agreement on the fact of the non-
ratification of the MOA.

In addition, it bears to point out that Rojas did not act unilaterally when he negotiated
with respondent's management. The Constitution and By-Laws of DIHFEU-NFL clearly
provide that the president is authorized to represent the union on all occasions and in
all matters in which representation of the union may be agreed or
required.73 Furthermore, Rojas was properly authorized under a Board of Directors
Resolution74 to negotiate with respondent, the pertinent portions of which read:

SECRETARY's CERTIFICATE

114
I, MA. SOCORRO LISETTE B. IBARRA, x x x, do hereby certify that, at a meeting of
the Board of Directors of the DIHFEU-NFL, on 28 Feb. 2001 with a quorum duly
constituted, the following resolutions were unanimously approved:

RESOLVED, as it is hereby resolved that the Manifesto dated 25 Feb. 2001 be

approved ratified and adopted;

RESOLVED, FURTHER, that Mr. Domy R. Rojas, the president of the DIHFEU-
NFL, be hereby authorized to negotiate with Waterfront Insular Hotel Davao and
to work for the latter's acceptance of the proposals contained in DIHFEU-NFL
Manifesto; and

RESOLVED, FINALLY, that Mr. Domy R. Rojas is hereby authorized to sign any
and all documents to implement, and carry into effect, his foregoing authority.75

Withal, while the scales of justice usually tilt in favor of labor, the peculiar
circumstances herein prevent this Court from applying the same in the instant petition.
Even if our laws endeavor to give life to the constitutional policy on social justice and
on the protection of labor, it does not mean that every labor dispute will be decided in
favor of the workers. The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play.76

WHEREFORE, premises considered, the petition is DENIED. The Decision dated

October 11, 2005, and the Resolution dated July 13, 2006 of the Court of Appeals in
consolidated labor cases docketed as CA-G.R. SP No. 83831 and CA-G.R. SP No.
83657, are AFFIRMED.

SO ORDERED.

G.R. No. 171153 September 12, 2007

SAN MIGUEL CORPORATION EMPLOYEES UNION–PHILIPPINE TRANSPORT

AND GENERAL WORKERS ORGANIZATION (SMCEU–PTGWO), petitioner,
vs.
SAN MIGUEL PACKAGING PRODUCTS EMPLOYEES UNION–PAMBANSANG
DIWA NG MANGGAGAWANG PILIPINO (SMPPEU–PDMP), respondent1.

DECISION

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court,
petitioner SAN MIGUEL CORPORATION EMPLOYEES UNION-PHILIPPINE
TRANSPORT AND GENERAL WORKERS ORGANIZATION (SMCEU-PTGWO) prays
that this Court reverse and set aside the (a) Decision2 dated 9 March 2005 of the Court
of Appeals in CA-G.R. SP No. 66200, affirming the Decision3 dated 19 February 2001
of the Bureau of Labor Relations (BLR) of the Department of Labor and Employment
(DOLE) which upheld the Certificate of Registration of respondent SAN MIGUEL
PACKAGING PRODUCTS EMPLOYEES UNION–PAMBANSANG DIWA NG
MANGGAGAWANG PILIPINO (SMPPEU–PDMP); and (b) the Resolution4 dated 16
January 2006 of the Court of Appeals in the same case, denying petitioner's Motion for
Reconsideration of the aforementioned Decision.

115
The following are the antecedent facts:

Petitioner is the incumbent bargaining agent for the bargaining unit comprised of the
regular monthly-paid rank and file employees of the three divisions of San Miguel
Corporation (SMC), namely, the San Miguel Corporate Staff Unit (SMCSU), San
Miguel Brewing Philippines (SMBP), and the San Miguel Packaging Products (SMPP),
in all offices and plants of SMC, including the Metal Closure and Lithography Plant in
Laguna. It had been the certified bargaining agent for 20 years – from 1987 to 1997.

Respondent is registered as a chapter of Pambansang Diwa ng Manggagawang

Pilipino (PDMP). PDMP issued Charter Certificate No. 112 to respondent on 15 June
1999.5 In compliance with registration requirements, respondent submitted the
requisite documents to the BLR for the purpose of acquiring legal personality.6 Upon
submission of its charter certificate and other documents, respondent was issued
Certificate of Creation of Local or Chapter PDMP-01 by the BLR on 6 July
1999.7 Thereafter, respondent filed with the Med-Arbiter of the DOLE Regional Officer
in the National Capital Region (DOLE-NCR), three separate petitions for certification
election to represent SMPP, SMCSU, and SMBP.8 All three petitions were dismissed,
on the ground that the separate petitions fragmented a single bargaining unit.9

On 17 August 1999, petitioner filed with the DOLE-NCR a petition seeking the
cancellation of respondent's registration and its dropping from the rolls of legitimate
labor organizations. In its petition, petitioner accused respondent of committing fraud
and falsification, and non-compliance with registration requirements in obtaining its
certificate of registration. It raised allegations that respondent violated Articles 239(a),
(b) and (c)10 and 234(c)11 of the Labor Code. Moreover, petitioner claimed that PDMP
is not a legitimate labor organization, but a trade union center, hence, it cannot directly
create a local or chapter. The petition was docketed as Case No. NCR-OD-9908-007-
IRD.12

On 14 July 2000, DOLE-NCR Regional Director Maximo B. Lim issued an Order

dismissing the allegations of fraud and misrepresentation, and irregularity in the
submission of documents by respondent. Regional Director Lim further ruled that
respondent is allowed to directly create a local or chapter. However, he found that
respondent did not comply with the 20% membership requirement and, thus, ordered
the cancellation of its certificate of registration and removal from the rolls of legitimate
labor organizations.13 Respondent appealed to the BLR. In a Decision dated 19
February 2001, it declared:

As a chartered local union, appellant is not required to submit the number of

employees and names of all its members comprising at least 20% of the
employees in the bargaining unit where it seeks to operate. Thus, the revocation
of its registration based on non-compliance with the 20% membership
requirement does not have any basis in the rules.

Further, although PDMP is considered as a trade union center, it is a holder of

Registration Certificate No. FED-11558-LC issued by the BLR on 14 February
1991, which bestowed upon it the status of a legitimate labor organization with all
the rights and privileges to act as representative of its members for purposes of
collective bargaining agreement. On this basis, PDMP can charter or create a
local, in accordance with the provisions of Department Order No. 9.

116
 WHEREFORE, the appeal is hereby GRANTED. Accordingly, the decision of the
Regional Director dated July 14, 2000, canceling the registration of appellant San
Miguel Packaging Products Employees Union-Pambansang Diwa ng
Manggagawang Pilipino (SMPPEU-PDMP) is REVERSED and SET ASIDE.
Appellant shall hereby remain in the roster of legitimate labor organizations.14

While the BLR agreed with the findings of the DOLE Regional Director dismissing the
allegations of fraud and misrepresentation, and in upholding that PDMP can directly
create a local or a chapter, it reversed the Regional Director's ruling that the 20%
membership is a requirement for respondent to attain legal personality as a labor
organization. Petitioner thereafter filed a Motion for Reconsideration with the BLR. In a
Resolution rendered on 19 June 2001 in BLR-A-C-64-05-9-00 (NCR-OD-9908-007-
IRD), the BLR denied the Motion for Reconsideration and affirmed its Decision dated
19 February 2001.15

Invoking the power of the appellate court to review decisions of quasi-judicial agencies,
petitioner filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the
1997 Rules of Civil Procedure docketed as CA-G.R. SP No. 66200. The Court of
Appeals, in a Decision dated 9 March 2005, dismissed the petition and affirmed the
Decision of the BLR, ruling as follows:

In Department Order No. 9, a registered federation or national union may directly

create a local by submitting to the BLR copies of the charter certificate, the local's
constitution and by-laws, the principal office address of the local, and the names
of its officers and their addresses. Upon complying with the documentary
requirements, the local shall be issued a certificate and included in the roster of
legitimate labor organizations. The [herein respondent] is an affiliate of a
registered federation PDMP, having been issued a charter certificate. Under the
rules we have reviewed, there is no need for SMPPEU to show a membership of
20% of the employees of the bargaining unit in order to be recognized as a
legitimate labor union.

xxxx

In view of the foregoing, the assailed decision and resolution of the BLR are
AFFIRMED, and the petition is DISMISSED.16

Subsequently, in a Resolution dated 16 January 2006, the Court of Appeals denied

petitioner's Motion for Reconsideration of the aforementioned Decision.

Hence, this Petition for Certiorari under Rule 45 of the Revised Rules of Court where
petitioner raises the sole issue of:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED

REVERSIBLE ERROR IN RULING THAT PRIVATE RESPONDENT IS NOT
REQUIRED TO SUBMIT THE NUMBER OF EMPLOYEES AND NAMES OF ALL
ITS MEMBERS COMPRISING AT LEAST 20% OF THE EMPLOYEES IN THE
BARGAINING UNIT WHERE IT SEEKS TO OPERATE.

The present petition questions the legal personality of respondent as a legitimate labor
organization.

117
Petitioner posits that respondent is required to submit a list of members comprising at
least 20% of the employees in the bargaining unit before it may acquire legitimacy,
citing Article 234(c) of the Labor Code which stipulates that any applicant labor
organization, association or group of unions or workers shall acquire legal personality
and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration based on the following
requirements:

a. Fifty pesos (P50.00) registration fee;

b. The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;

c. The names of all its members comprising at least twenty percent (20%) of all
the employees in the bargaining unit where it seeks to operate;

d. If the applicant union has been in existence for one or more years, copies of its
annual financial reports; and

e. Four (4) copies of the constitution and by-laws of the applicant union, minutes
of its adoption or ratification and the list of the members who participated in it.17

Petitioner also insists that the 20% requirement for registration of respondent must be
based not on the number of employees of a single division, but in all three divisions of
the company in all the offices and plants of SMC since they are all part of one
bargaining unit. Petitioner refers to Section 1, Article 1 of the Collective Bargaining
Agreement (CBA),18 quoted hereunder:

ARTICLE 1

SCOPE

Section 1. Appropriate Bargaining Unit. The appropriate bargaining unit covered

by this Agreement consists of all regular rank and file employees paid on the
basis of fixed salary per month and employed by the COMPANY in its Corporate
Staff Units (CSU), San Miguel Brewing Products (SMBP) and San Miguel
Packaging Products (SMPP) and in different operations existing in the City of
Manila and suburbs, including Metal Closure and Lithography Plant located at
Canlubang, Laguna subject to the provisions of Article XV of this Agreement
provided however, that if during the term of this Agreement, a plant within the
territory covered by this Agreement is transferred outside but within a radius of
fifty (50) kilometers from the Rizal Monument, Rizal Park, Metro Manila, the
employees in the transferred plant shall remain in the bargaining unit covered by
this Agreement. (Emphasis supplied.)

Petitioner thus maintains that respondent, in any case, failed to meet this 20%
membership requirement since it based its membership on the number of employees
of a single division only, namely, the SMPP.

There is merit in petitioner's contentions.

118
A legitimate labor organization19 is defined as "any labor organization duly registered
with the Department of Labor and Employment, and includes any branch or local
thereof."20 The mandate of the Labor Code is to ensure strict compliance with the
requirements on registration because a legitimate labor organization is entitled to
specific rights under the Labor Code,21 and are involved in activities directly affecting
matters of public interest. Registration requirements are intended to afford a measure
of protection to unsuspecting employees who may be lured into joining unscrupulous or
fly-by-night unions whose sole purpose is to control union funds or use the labor
organization for illegitimate ends.22 Legitimate labor organizations have exclusive rights
under the law which cannot be exercised by non-legitimate unions, one of which is the
right to be certified as the exclusive representative23 of all the employees in an
appropriate collective bargaining unit for purposes of collective bargaining.24 The
acquisition of rights by any union or labor organization, particularly the right to file a
petition for certification election, first and foremost, depends on whether or not the
labor organization has attained the status of a legitimate labor organization.25

A perusal of the records reveals that respondent is registered with the BLR as a "local"
or "chapter" of PDMP and was issued Charter Certificate No. 112 on 15 June 1999.
Hence, respondent was directly chartered by PDMP.

The procedure for registration of a local or chapter of a labor organization is provided

in Book V of the Implementing Rules of the Labor Code, as amended by Department
Order No. 9 which took effect on 21 June 1997, and again by Department Order No. 40
dated 17 February 2003. The Implementing Rules as amended by D.O. No. 9 should
govern the resolution of the petition at bar since respondent's petition for certification
election was filed with the BLR in 1999; and that of petitioner on 17 August 1999. 26

The applicable Implementing Rules enunciates a two-fold procedure for the creation of
a chapter or a local. The first involves the affiliation of an independent union with a
federation or national union or industry union. The second, finding application in the
instant petition, involves the direct creation of a local or a chapter through the process
of chartering.27

A duly registered federation or national union may directly create a local or chapter by
submitting to the DOLE Regional Office or to the BLR two 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.28

The Implementing Rules stipulate that a local or chapter may be directly created by
a federation or national union. A duly constituted local or chapter created in
accordance with the foregoing shall acquire legal personality from the date of filing of
the complete documents with the BLR.29 The issuance of the certificate of registration
119
by the BLR or the DOLE Regional Office is not the operative act that vests legal
personality upon a local or a chapter under Department Order No. 9. Such legal
personality is acquired from the filing of the complete documentary requirements
enumerated in Section 1, Rule VI.30

Petitioner insists that Section 3 of the Implementing Rules, as amended by Department

Order No. 9, violated Article 234 of the Labor Code when it provided for less stringent
requirements for the creation of a chapter or local. This Court disagrees.

Article 234 of the Labor Code provides that an independent labor

organization acquires legitimacy only upon its registration with the BLR:

Any applicant labor organization, association or group of unions or workers shall

acquire legal personality and shall be entitled to the rights and privileges granted
by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the
workers who participated in such meetings;

(c) The names of all its members comprising at least twenty percent (20%) of all
the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of
its annual financial reports; and

(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes
of its adoption or ratification, and the list of the members who participated in it.
(Italics supplied.)

It is emphasized that the foregoing pertains to the registration of an independent labor

organization, association or group of unions or workers.

However, the creation of a branch, local or chapter is treated differently. This Court, in
the landmark case of Progressive Development Corporation v. Secretary, Department
of Labor and Employment,31 declared that when an unregistered union becomes a
branch, local or chapter, some of the aforementioned requirements for registration are
no longer necessary or compulsory. Whereas an applicant for registration of an
independent union is mandated to submit, among other things, the number of
employees and names of all its members comprising at least 20% of the employees in
the bargaining unit where it seeks to operate, as provided under Article 234 of the
Labor Code and Section 2 of Rule III, Book V of the Implementing Rules, the same is
no longer required of a branch, local or chapter.32 The intent of the law in imposing less
requirements in the case of a branch or local of a registered federation or national
union is to encourage the affiliation of a local union with a federation or national union
in order to increase the local union's bargaining powers respecting terms and
conditions of labor.33

120
Subsequently, in Pagpalain Haulers, Inc. v. Trajano34 where the validity of Department
Order No. 9 was directly put in issue, this Court was unequivocal in finding that there is
no inconsistency between the Labor Code and Department Order No. 9.

As to petitioner's claims that respondent obtained its Certificate of Registration through

fraud and misrepresentation, this Court finds that the imputations are not impressed
with merit. In the instant case, proof to declare that respondent committed fraud and
misrepresentation remains wanting. This Court had, indeed, on several occasions,
pronounced that registration based on false and fraudulent statements and documents
confer no legitimacy upon a labor organization irregularly recognized, which, at best,
holds on to a mere scrap of paper. Under such circumstances, the labor organization,
not being a legitimate labor organization, acquires no rights.35

This Court emphasizes, however, that a direct challenge to the legitimacy of a labor
organization based on fraud and misrepresentation in securing its certificate of
registration is a serious allegation which deserves careful scrutiny. Allegations thereof
should be compounded with supporting circumstances and evidence. The records of
the case are devoid of such evidence. Furthermore, this Court is not a trier of facts,
and this doctrine applies with greater force in labor cases. Findings of fact of
administrative agencies and quasi-judicial bodies, such as the BLR, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only great respect but even finality.36

Still, petitioner postulates that respondent was not validly and legitimately created, for
PDMP cannot create a local or chapter as it is not a legitimate labor organization, it
being a trade union center.

Petitioner's argument creates a predicament as it hinges on the legitimacy of PDMP as

a labor organization. Firstly, this line of reasoning attempts to predicate that a trade
union center is not a legitimate labor organization. In the process, the legitimacy of
PDMP is being impugned, albeit indirectly. Secondly, the same contention premises
that a trade union center cannot directly create a local or chapter through the process
of chartering.

Anent the foregoing, as has been held in a long line of cases, the legal personality of a
legitimate labor organization, such as PDMP, cannot be subject to a collateral attack.
The law is very clear on this matter. Article 212 (h) of the Labor Code, as amended,
defines a legitimate labor organization37 as "any labor organization duly registered with
the DOLE, and includes any branch or local thereof."38 On the other hand, a trade
union center is any group of registered national unions or federations organized for the
mutual aid and protection of its members; for assisting such members in collective
bargaining; or for participating in the formulation of social and employment policies,
standards, and programs, and is duly registered with the DOLE in accordance with
Rule III, Section 2 of the Implementing Rules.39

The Implementing Rules stipulate that a labor organization shall be deemed registered
and vested with legal personality on the date of issuance of its certificate of
registration. Once a certificate of registration is issued to a union, its legal personality
cannot be subject to collateral attack.40 It may be questioned only in an independent
petition for cancellation in accordance with Section 5 of Rule V, Book V of the
Implementing Rules. The aforementioned provision is enunciated in the following:

121
 Sec. 5. Effect of registration. The labor organization or workers' association shall
be deemed registered and vested with legal personality on the date of issuance
of its certificate of registration. Such legal personality cannot thereafter be
subject to collateral attack, but may be questioned only in an independent
petition for cancellation in accordance with these Rules.

PDMP was registered as a trade union center and issued Registration Certificate No.
FED-11558-LC by the BLR on 14 February 1991. Until the certificate of registration of
PDMP is cancelled, its legal personality as a legitimate labor organization subsists.
Once a union acquires legitimate status as a labor organization, it continues to be
recognized as such until its certificate of registration is cancelled or revoked in an
independent action for cancellation.41 It bears to emphasize that what is being directly
challenged is the personality of respondent as a legitimate labor organization and not
that of PDMP. This being a collateral attack, this Court is without jurisdiction to
entertain questions indirectly impugning the legitimacy of PDMP.

Corollarily, PDMP is granted all the rights and privileges appurtenant to a legitimate
labor organization,42 and continues to be recognized as such until its certificate of
registration is successfully impugned and thereafter cancelled or revoked in an
independent action for cancellation.

We now proceed to the contention that PDMP cannot directly create a local or a
chapter, it being a trade union center.

This Court reverses the finding of the appellate court and BLR on this ground, and
rules that PDMP cannot directly create a local or chapter.

After an exhaustive study of the governing labor law provisions, both statutory and
regulatory,43 we find no legal justification to support the conclusion that a trade union
center is allowed to directly create a local or chapter through chartering. Apropos, we
take this occasion to reiterate the first and fundamental duty of this Court, which is to
apply the law. The solemn power and duty of the Court to interpret and apply the law
does not include the power to correct by reading into the law what is not written
therein.44

Presidential Decree No. 442, better known as the Labor Code, was enacted in 1972.
Being a legislation on social justice,45 the provisions of the Labor Code and the
Implementing Rules have been subject to several amendments, and they continue to
evolve, considering that labor plays a major role as a socio-economic force. The Labor
Code was first amended by Republic Act No. 6715, and recently, by Republic Act No.
9481. Incidentally, the term trade union center was never mentioned under Presidential
Decree No. 442, even as it was amended by Republic Act No. 6715. The term trade
union center was first adopted in the Implementing Rules, under Department Order No.
9.

Culling from its definition as provided by Department Order No. 9, a trade union
center is any group of registered national unions or federations organized for the
mutual aid and protection of its members; for assisting such members in collective
bargaining; or for participating in the formulation of social and employment policies,
standards, and programs, and is duly registered with the DOLE in accordance with
Rule III, Section 2 of the Implementing Rules.46 The same rule provides that the

122
application for registration of an industry or trade union center shall be supported by
the following:

(a) The list of its member organizations and their respective presidents and, in
the case of an industry union, the industry where the union seeks to operate;

(b) The resolution of membership of each member organization, approved by the

Board of Directors of such union;

(c) The name and principal address of the applicant, the names of its officers and
their addresses, the minutes of its organizational meeting/s, and the list of
member organizations and their representatives who attended such meeting/s;
and

(d) A copy of its constitution and by-laws and minutes of its ratification by a
majority of the presidents of the member organizations, provided that where the
ratification was done simultaneously with the organizational meeting, it shall be
sufficient that the fact of ratification be included in the minutes of the
organizational meeting.47

Evidently, while a "national union" or "federation" is a labor organization with at least

ten locals or chapters or affiliates, each of which must be a duly certified or recognized
collective bargaining agent;48 a trade union center, on the other hand, is composed of a
group of registered national unions or federations.49

The Implementing Rules, as amended by Department Order No. 9, provide that "a duly
registered federation or national union" may directly create a local or chapter. The
provision reads:

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.50

Department Order No. 9 mentions two labor organizations either of which is allowed to
directly create a local or chapter through chartering – a duly registered federation or
a national union. Department Order No. 9 defines a "chartered local" as a labor
organization in the private sector operating at the enterprise level that acquired legal
personality through a charter certificate, issued by a duly registered federation or
national union and reported to the Regional Office in accordance with Rule III, Section
2-E of these Rules.51
123
Republic Act No. 9481 or "An Act Strengthening the Workers' Constitutional Right to
Self-Organization, Amending for the Purpose Presidential Decree No. 442, As
Amended, Otherwise Known as the Labor Code of the Philippines" lapsed52 into law on
25 May 2007 and became effective on 14 June 2007.53 This law further amends the
Labor Code provisions on Labor Relations.

Pertinent amendments read as follows:

SECTION 1. Article 234 of Presidential Decree No. 442, as amended, otherwise

known as the Labor Code of the Philippines, is hereby further amended to read
as follows:

ART. 234. Requirements of Registration. — A federation, national union or

industry or trade union center or an independent union shall acquire legal
personality and shall be entitled to the rights and privileges granted by law
to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:

(a) Fifty pesos (P50.00) registration fee;

(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list
of the workers who participated in such meetings;

(c) In case the applicant is an independent union, the names of all its
members comprising at least twenty percent (20%) of all the employees in
the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years,
copies of its annual financial reports; and

(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.

SECTION 2. A new provision is hereby inserted into the Labor Code as Article
234-A to read as follows:

ART. 234-A. Chartering and Creation of a Local Chapter. — A duly

registered federation or national union may directly create a local chapter
by issuing a charter certificate indicating the establishment of the local
chapter. The chapter shall acquire legal personality only for purposes of
filing a petition for certification election from the date it was issued a charter
certificate.

The chapter shall be entitled to all other rights and privileges of a legitimate
labor organization only upon the submission of the following documents in
addition to its charter certificate:

(a) The names of the chapter's officers, their addresses, and the principal
office of the chapter; and

124
 (b) The chapter's constitution and by-laws: Provided, That where the
chapter's constitution and by-laws are the same as that of the federation or
the national union, this fact shall be indicated accordingly.

The additional supporting requirements shall be certified under oath by the

secretary or treasurer of the chapter and attested by its president. (Emphasis
ours.)

Article 234 now includes the term trade union center, but interestingly, the provision
indicating the procedure for chartering or creating a local or chapter, namely Article
234-A, still makes no mention of a "trade union center."

Also worth emphasizing is that even in the most recent amendment of the
implementing rules,54 there was no mention of a trade union center as being among the
labor organizations allowed to charter.

This Court deems it proper to apply the Latin maxim expressio unius est exclusio
alterius. Under this maxim of statutory interpretation, the expression of one thing is the
exclusion of another. When certain persons or things are specified in a law, contract, or
will, an intention to exclude all others from its operation may be inferred. If a statute
specifies one exception to a general rule or assumes to specify the effects of a certain
provision, other exceptions or effects are excluded.55 Where the terms are expressly
limited to certain matters, it may not, by interpretation or construction, be extended to
other matters.56 Such is the case here. If its intent were otherwise, the law could have
so easily and conveniently included "trade union centers" in identifying the labor
organizations allowed to charter a chapter or local. Anything that is not included in the
enumeration is excluded therefrom, and a meaning that does not appear nor is
intended or reflected in the very language of the statute cannot be placed
therein.57 The rule is restrictive in the sense that it proceeds from the premise that the
legislating body would not have made specific enumerations in a statute if it had the
intention not to restrict its meaning and confine its terms to those expressly
mentioned.58 Expressium facit cessare tacitum.59 What is expressed puts an end to
what is implied. Casus omissus pro omisso habendus est. A person, object or thing
omitted must have been omitted intentionally.

Therefore, since under the pertinent status and applicable implementing rules, the
power granted to labor organizations to directly create a chapter or local through
chartering is given to a federation or national union, then a trade union center is
without authority to charter directly.

The ruling of this Court in the instant case is not a departure from the policy of the law
to foster the free and voluntary organization of a strong and united labor
movement,60 and thus assure the rights of workers to self-organization.61 The mandate
of the Labor Code in ensuring strict compliance with the procedural requirements for
registration is not without reason. It has been observed that the formation of a local or
chapter becomes a handy tool for the circumvention of union registration requirements.
Absent the institution of safeguards, it becomes a convenient device for a small group
of employees to foist a not-so-desirable federation or union on unsuspecting co-
workers and pare the need for wholehearted voluntariness, which is basic to free
unionism.62 As a legitimate labor organization is entitled to specific rights under the
Labor Code and involved in activities directly affecting public interest, it is necessary
that the law afford utmost protection to the parties affected.63 However, as this Court
125
has enunciated in Progressive Development Corporation v. Secretary of Department of
Labor and Employment, it is not this Court's function to augment the requirements
prescribed by law. Our only recourse, as previously discussed, is to exact strict
compliance with what the law provides as requisites for local or chapter formation. 64

In sum, although PDMP as a trade union center is a legitimate labor organization, it

has no power to directly create a local or chapter. Thus, SMPPEU-PDMP cannot be
created under the more lenient requirements for chartering, but must have complied
with the more stringent rules for creation and registration of an independent union,
including the 20% membership requirement.

WHEREFORE, the instant Petition is GRANTED. The Decision dated 09 March 2005
of the Court of Appeals in CA-GR SP No. 66200 is REVERSED and SET ASIDE. The
Certificate of Registration of San Miguel Packaging Products Employees Union–
Pambansang Diwa ng Manggagawang Pilipino is ORDERED CANCELLED, and
SMPPEU-PDMP DROPPED from the rolls of legitimate labor organizations.

Costs against petitioner.

SO ORDERED.

G.R. No. 179146 July 23, 2013

HOLY CHILD CATHOLIC SCHOOL, Petitioner,

vs.
HON. PATRICIA STO. TOMAS, in her official capacity as Secretary of the
Department of Labor and Employment, and PINAG-ISANG TINIG AT LAKAS NG
ANAKPAWIS – HOLY CHILD CATHOLIC SCHOOL TEACHERS AND EMPLOYEES
LABOR UNION (HCCS-TELU-PIGLAS), Respondents.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure are the April 18, 2007 Decision1 and July 31, 2007 Resolution2 of the Court
of Appeals in CA-G.R. SP No. 76175, which affirmed the December 27, 2002
Decision3 and February 13, 2003 Resolution4 of the Secretary of the Department of
Labor and Employment (SOLE) that set aside the August 10, 2002 Decision5 of the
Med-Arbiter denying private respondent’s petition for certification election.

The factual antecedents are as follows:

On May 31, 2002, a petition for certification election was filed by private respondent
Pinag-Isang Tinig at Lakas ng Anakpawis – Holy Child Catholic School Teachers and
Employees Labor Union (HCCS-TELUPIGLAS), alleging that: PIGLAS is a legitimate
labor organization duly registered with the Department of Labor and Employment
(DOLE) representing HCCS-TELU-PIGLAS; HCCS is a private educational institution
duly registered and operating under Philippine laws; there are approximately one
hundred twenty (120) teachers and employees comprising the proposed appropriate
bargaining unit; and HCCS is unorganized, there is no collective bargaining agreement
or a duly certified bargaining agent or a labor organization certified as the sole and
exclusive bargaining agent of the proposed bargaining unit within one year prior to the
126
filing of the petition.6 Among the documents attached to the petition were the certificate
of affiliation with Pinag-Isang Tinig at Lakas ng Anakpawis Kristiyanong Alyansa ng
Makabayang Obrero (PIGLAS-KAMAO) issued by the Bureau of Labor Relations
(BLR), charter certificate issued by PIGLASKAMAO, and certificate of registration of
HCCS-TELU as a legitimate labor organization issued by the DOLE.7

In its Comment8 and Position Paper,9 petitioner HCCS consistently noted that it is a
parochial school with a total of 156 employees as of June 28, 2002, broken down as
follows: ninety-eight (98) teaching personnel, twenty-five (25) non-teaching academic
employees, and thirty-three (33) non-teaching non-academic workers. It averred that of
the employees who signed to support the petition, fourteen (14) already resigned and
six (6) signed twice. Petitioner raised that members of private respondent do not
belong to the same class; it is not only a mixture of managerial, supervisory, and rank-
and-file employees – as three (3) are vice-principals, one (1) is a department
head/supervisor, and eleven (11) are coordinators – but also a combination of teaching
and non-teaching personnel – as twenty-seven (27) are non-teaching personnel. It
insisted that, for not being in accord with Article 24510 of the Labor Code, private
respondent is an illegitimate labor organization lacking in personality to file a petition
for certification election, as held in Toyota Motor Philippines Corporation v. Toyota
Motor Philippines Corporation Labor Union;11 and an inappropriate bargaining unit for
want of community or mutuality of interest, as ruled in Dunlop Slazenger (Phils.), Inc. v.
Secretary of Labor and Employment12 and De La Salle University Medical Center and
College of Medicine v. Laguesma.13

Private respondent, however, countered that petitioner failed to substantiate its claim
that some of the employees included in the petition for certification election holds
managerial and supervisory positions.14 Assuming it to be true, it argued that Section
11 (II),15 Rule XI of DOLE Department Order (D.O.) No. 9, Series of 1997, provided for
specific instances in which a petition filed by a legitimate organization shall be
dismissed by the Med-Arbiter and that "mixture of employees" is not one of those
enumerated. Private respondent pointed out that questions pertaining to qualifications
of employees may be threshed out in the inclusion-exclusion proceedings prior to the
conduct of the certification election, pursuant to Section 2,16 Rule XII of D.O. No. 9.
Lastly, similar to the ruling in In Re: Globe Machine and Stamping Company,17 it
contended that the will of petitioner’s employees should be respected as they had
manifested their desire to be represented by only one bargaining unit. To back up the
formation of a single employer unit, private respondent asserted that even if the
teachers may receive additional pay for an advisory class and for holding additional
loads, petitioner’s academic and non-academic personnel have similar working
conditions. It cited Laguna College v. Court of Industrial Relations, 18 as well as the
case of a union in West Negros College in Bacolod City, which allegedly represented
both academic and non-academic employees.

On August 10, 2002, Med-Arbiter Agatha Ann L. Daquigan denied the petition for
certification election on the ground that the unit which private respondent sought to
represent is inappropriate. She resolved:

A certification election proceeding directly involves two (2) issues namely: (a) the
proper composition and constituency of the bargaining unit; and (b) the validity of
majority representation claims. It is therefore incumbent upon the Med-Arbiter to rule
on the appropriateness of the bargaining unit once its composition and constituency is
questioned.
127
Section 1 (q), Rule I, Book V of the Omnibus Rules defines a "bargaining unit" as a
group of employees sharing mutual interests within a given employer unit comprised of
all or less than all of the entire body of employees in the employer unit or any specific
occupational or geographical grouping within such employer unit. This definition has
provided the "community or mutuality of interest" test as the standard in determining
the constituency of a collective bargaining unit. This is so because 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. The application of this test may either result in the formation of an
employer unit or in the fragmentation of an employer unit.

In the case at bar, the employees of petitioner, may, as already suggested, quite easily
be categorized into (2) general classes: one, the teaching staff; and two, the non-
teaching-staff. Not much reflection is needed to perceive that the community or
mutuality of interest is wanting between the teaching and the non-teaching staff. It
would seem obvious that the teaching staff would find very little in common with the
non-teaching staff as regards responsibilities and function, working conditions,
compensation rates, social life and interests, skills and intellectual pursuits, etc. These
are plain and patent realities which cannot be ignored. These dictate the separation of
these two categories of employees for purposes of collective bargaining. (University of
the Philippines vs. Ferrer-Calleja, 211 SCRA 451)19

Private respondent appealed before the SOLE, who, on December 27, 2002, ruled
against the dismissal of the petition and directed the conduct of two separate
certification elections for the teaching and the non-teaching personnel, thus:

We agree with the Med-Arbiter that there are differences in the nature of work, hours
and conditions of work and salary determination between the teaching and non-
teaching personnel of petitioner. These differences were pointed out by petitioner in its
position paper. We do not, however, agree with the Med-Arbiter that these differences
are substantial enough to warrant the dismissal of the petition. First, as pointed out by
private respondent, "inappropriateness of the bargaining unit sought to be represented
is not a ground for the dismissal of the petition." In fact, in the cited case of University
of the Philippines v. Ferrer-Calleja, supra, the Supreme Court did not order the
dismissal of the petition but ordered the conduct of a certification election, limiting the
same among the non-academic personnel of the University of the Philippines.

It will be recalled that in the U.P. case, there were two contending unions, the
Organization of Non-Academic Personnel of U.P. (ONAPUP) and All U.P. Workers
Union composed of both academic and nonacademic personnel of U.P. ONAPUP
sought the conduct of certification election among the rank-and-file non-academic
personnel only while the all U.P. Workers Union sought the conduct of certification
election among all of U.P.’s rank-and-file employees covering academic and
nonacademic personnel. While the Supreme Court ordered a separate bargaining unit
for the U.P. academic personnel, the Court, however, did not order them to organize a
separate labor organization among themselves. The All U.P. Workers Union was not
directed to divest itself of its academic personnel members and in fact, we take
administrative notice that the All U.P. Workers Union continue to exist with a combined
membership of U.P. academic and non-academic personnel although separate
bargaining agreements is sought for the two bargaining units. Corollary, private
respondent can continue to exist as a legitimate labor organization with the combined

128
teaching and non-teaching personnel in its membership and representing both classes
of employees in separate bargaining negotiations and agreements.

WHEREFORE, the Decision of the Med-Arbiter dated 10 August 2002 is hereby

REVERSED and SET ASIDE. In lieu thereof, a new order is hereby issued directing
the conduct of two certification elections, one among the non-teaching personnel of
Holy Child Catholic School, and the other, among the teaching personnel of the same
school, subject to the usual pre-election conferences and inclusion-exclusion
proceedings, with the following choices:

A. Certification Election Among Petitioner’s Teaching Personnel:

1. Holy Child Catholic School Teachers and Employees Labor Union; and

2. No Union.

B. Certification Election Among Petitioner’s Non-Teaching Personnel:

1. Holy Child Catholic School Teachers and Employees Labor Union; and

2. No Union.

Petitioner is hereby directed to submit to the Regional Office of origin within ten (10)
days from receipt of this Decision, a certified separate list of its teaching and non-
teaching personnel or when necessary a separate copy of their payroll for the last
three (3) months prior to the issuance of this Decision.20

Petitioner filed a motion for reconsideration21 which, per Resolution dated February 13,
2003, was denied. Consequently, petitioner filed before the CA a Petition for Certiorari
with Prayer for Temporary Restraining Order and Preliminary Injunction.22 The CA
resolved to defer action on the prayer for TRO pending the filing of private
respondent’s Comment.23 Later, private respondent and petitioner filed their
Comment24 and Reply,25 respectively.

On July 23, 2003, petitioner filed a motion for immediate issuance of a TRO, alleging
that Hon. Helen F. Dacanay of the Industrial Relations Division of the DOLE was set to
implement the SOLE Decision when it received a summons and was directed to submit
a certified list of teaching and non-teaching personnel for the last three months prior to
the issuance of the assailed Decision.26 Acting thereon, on August 5, 2003, the CA
issued the TRO and ordered private respondent to show cause why the writ of
preliminary injunction should not be granted.27 Subsequently, a Manifestation and
Motion28 was filed by private respondent, stating that it repleads by reference the
arguments raised in its Comment and that it prays for the immediate lifting of the TRO
and the denial of the preliminary injunction. The CA, however, denied the manifestation
and motion on November 21, 200329 and, upon motion of petitioner,30 granted the
preliminary injunction on April 21, 2005.31 Thereafter, both parties filed their respective
Memorandum.32

On April 18, 2007, the CA eventually dismissed the petition. As to the purported
commingling of managerial, supervisory, and rank-and-file employees in private
respondent’s membership, it held that the Toyota ruling is inapplicable because the
vice-principals, department head, and coordinators are neither supervisory nor
managerial employees. It reasoned:
129
x x x While it may be true that they wield power over other subordinate employees of
the petitioner, it must be stressed, however, that their functions are not confined with
policy-determining such as hiring, firing, and disciplining of employees, salaries,
teaching/working hours, other monetary and non-monetary benefits, and other terms
and conditions of employment. Further, while they may formulate policies or guidelines,
nonetheless, such is merely recommendatory in nature, and still subject to review and
evaluation by the higher executives, i.e., the principals or executive officers of the
petitioner. It cannot also be denied that in institutions like the petitioner, company
policies have already been pre-formulated by the higher executives and all that the
mentioned employees have to do is carry out these company policies and standards.
Such being the case, it is crystal clear that there is no improper commingling of
members in the private respondent union as to preclude its petition for certification of
(sic) election.33

Anent the alleged mixture of teaching and non-teaching personnel, the CA agreed with
petitioner that the nature of the former’s work does not coincide with that of the latter.
Nevertheless, it ruled that the SOLE did not commit grave abuse of discretion in not
dismissing the petition for certification election, since it directed the conduct of two
separate certification elections based on Our ruling in University of the Philippines v.
Ferrer-Calleja.34

A motion for reconsideration35 was filed by petitioner, but the CA denied the
same;36 hence, this petition assigning the alleged errors as follows:

I.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RULING

IN THE CASE OF TOYOTA MOTOR PHILIPPINES CORPORATION VS. TOYOTA
MOTOR PHILIPPINES CORPORATION LABOR UNION (268 SCRA 573) DOES NOT
APPLY IN THE CASE AT BAR DESPITE THE [COMMINGLING] OF BOTH
SUPERVISORY OR MANAGERIAL AND RANK-AND-FILE EMPLOYEES IN THE
RESPONDENT UNION;

II

THE HONORABLE COURT OF APPEALS ERRED IN ITS CONFLICTING RULING

ALLOWING THE CONDUCT OF CERTIFICATION ELECTION BY UPHOLDING THAT
THE RESPONDENT UNION REPRESENTED A BARGAINING UNIT DESPITE ITS
OWN FINDINGS THAT THERE IS NO MUTUALITY OF INTEREST BETWEEN THE
MEMBERS OF RESPONDENT UNION APPLYING THE TEST LAID DOWN IN THE
CASE OF UNIVERSITY OF THE PHILIPPINES VS. FERRER-CALLEJA (211 SCRA
451).37

We deny.

Petitioner claims that the CA contradicted the very definition of managerial and
supervisory employees under existing law and jurisprudence when it did not classify
the vice-principals, department head, and coordinators as managerial or supervisory
employees merely because the policies and guidelines they formulate are still subject
to the review and evaluation of the principal or executive officers of petitioner. It points
out that the duties of the vice-principals, department head, and coordinators include
the evaluation and assessment of the effectiveness and capability of the teachers
under them; that such evaluation and assessment is independently made without the
130
participation of the higher Administration of petitioner; that the fact that their
recommendation undergoes the approval of the higher Administration does not take
away the independent nature of their judgment; and that it would be difficult for the
vice-principals, department head, and coordinators to objectively assess and evaluate
the performances of teachers under them if they would be allowed to be members of
the same labor union.

On the other hand, aside from reiterating its previous submissions, private respondent
cites Sections 9 and 1238 of Republic Act (R.A.) No. 9481 to buttress its contention that
petitioner has no standing to oppose the petition for certification election. On the basis
of the statutory provisions, it reasons that an employer is not a party-in-interest in a
certification election; thus, petitioner does not have the requisite right to protect even
by way of restraining order or injunction.

First off, We cannot agree with private respondent’s invocation of R.A. No. 9481. Said
law took effect only on June 14, 2007; hence, its applicability is limited to labor
representation cases filed on or after said date.39 Instead, the law and rules in force at
the time private respondent filed its petition for certification election on May 31, 2002
are R.A. No. 6715, which amended Book V of Presidential Decree (P.D.) No. 442 (the
Labor Code), as amended, and the Rules and Regulations Implementing R.A. No.
6715, as amended by D.O. No. 9, which was dated May 1, 1997 but took effect on
June 21, 1997.40

However, note must be taken that even without the express provision of Section 12 of
RA No. 9481, the "Bystander Rule" is already well entrenched in this jurisdiction. It has
been consistently held in a number of cases that a certification election is the sole
concern of the workers, except when the employer itself has to file the petition
pursuant to Article 259 of the Labor Code, as amended, but even after such filing its
role in the certification process ceases and becomes merely a bystander. 41 The
employer clearly lacks the personality to dispute the election and has no right to
interfere at all therein.42 This is so since any uncalled-for concern on the part of the
employer may give rise to the suspicion that it is batting for a company union.43 Indeed,
the demand of the law and policy for an employer to take a strict, hands-off stance in
certification elections is based on the rationale that the employees’ bargaining
representative should be chosen free from any extraneous influence of the
management; that, to be effective, the bargaining representative must owe its loyalty to
the employees alone and to no other.44

Now, going back to petitioner’s contention, the issue of whether a petition for
certification election is dismissible on the ground that the labor organization’s
membership allegedly consists of supervisory and rank-and-file employees is actually
not a novel one. In the 2008 case of Republic v. Kawashima Textile Mfg., Philippines,
Inc.,45 wherein the employer-company moved to dismiss the petition for certification
election on the ground inter alia that the union membership is a mixture of rank-and-file
and supervisory employees, this Court had conscientiously discussed the applicability
of Toyota and Dunlop in the context of R.A. No. 6715 and D.O. No. 9, viz.:

It was in R.A. No. 875, under Section 3, that such questioned mingling was first
prohibited, 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
131
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, 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. (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, 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 (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 may 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 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 continued to recognize the right of supervisory employees, who do

132
not fall under the category of managerial employees, to join a rank- and-file labor
organization.

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.

133
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:

134
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/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-PTGWO 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. 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 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.

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 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.46

When a similar issue confronted this Court close to three years later, the above ruling
was substantially quoted in Samahang Manggagawa sa Charter Chemical Solidarity of
Unions in the Philippines for Empowerment and Reforms (SMCC-Super) v. Charter
Chemical and Coating Corporation.47 In unequivocal terms, We reiterated that the

135
alleged inclusionof 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.48

Indeed, Toyota and Dunlop no longer hold true under the law and rules governing the
instant case. 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 and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules)
was applied. In contrast, D.O. No. 9 is applicable in the petition for certification election
of private respondent as it was filed on May 31, 2002.

Following the doctrine laid down in Kawashima and SMCC-Super, it must be stressed
that petitioner cannot collaterally attack the legitimacy of private respondent by praying
for the dismissal of the petition for certification election:

Except when it is requested to bargain collectively, 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. 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; 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.
The employer's only right in the proceeding is to be notified or informed thereof.

The amendments to the Labor Code and its implementing rules have buttressed that
policy even more.49

Further, the determination of whether union membership comprises managerial and/or

supervisory employees is a factual issue that is best left for resolution in the inclusion-
exclusion proceedings, which has not yet happened in this case so still premature to
pass upon. We could only emphasize the rule that factual findings of labor officials,
who are deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only with respect but even finality by the courts when supported
by substantial evidence.50 Also, the jurisdiction of this Court in cases brought before it
from the CA via Rule 45 is generally limited to reviewing errors of law or jurisdiction.
The findings of fact of the CA are conclusive and binding. Except in certain recognized
instances,51 We do not entertain factual issues as it is not Our function to analyze or
weigh evidence all over again; the evaluation of facts is best left to the lower courts
and administrative agencies/quasi-judicial bodies which are better equipped for the
task.52

Turning now to the second and last issue, petitioner argues that, in view of the
improper mixture of teaching and non-teaching personnel in private respondent due to
the absence of mutuality of interest among its members, the petition for certification
election should have been dismissed on the ground that private respondent is not
qualified to file such petition for its failure to qualify as a legitimate labor organization,
the basic qualification of which is the representation of an appropriate bargaining unit.

We disagree.

136
The concepts of a union and of a legitimate labor organization are different from, but
related to, the concept of a bargaining unit:

Article 212(g) of the Labor Code defines a labor organization as "any union or
association of 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." Upon compliance with all the documentary requirements, the Regional
Office or Bureau shall issue in favor of the applicant labor organization a certificate
indicating that it is included in the roster of legitimate labor organizations. Any applicant
labor organization shall acquire legal personality and shall be entitled to the rights and
privileges granted by law to legitimate labor organizations upon issuance of the
certificate of registration.53

In case of alleged inclusion of disqualified employees in a union, the proper procedure

for an employer like petitioner is to directly file a petition for cancellation of the union’s
certificate of registration due to misrepresentation, false statement or fraud under the
circumstances enumerated in Article 239 of the Labor Code, as amended.54 To
reiterate, private respondent, having been validly issued a certificate of registration,
should be considered as having acquired juridical personality which may not be
attacked collaterally.

On the other hand, a bargaining unit has been 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 interests of all the employees, consistent with equity to the employer,
indicated to be best suited to serve reciprocal rights and duties of the parties under the
collective bargaining provisions of the law."55 In determining the proper collective
bargaining unit and what unit would be appropriate to be the collective bargaining
agency, the Court, in the seminal case of Democratic Labor Association v. Cebu
Stevedoring Company, Inc.,56 mentioned several factors that should be considered, to
wit: (1) will of employees (Globe Doctrine); (2) affinity and unity 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. We stressed, however, that
the test of the grouping is community or mutuality of interest, because "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."57

As the SOLE correctly observed, petitioner failed to comprehend the full import of Our
ruling in U.P. It suffices to quote with approval the apt disposition of the SOLE when
she denied petitioner’s motion for reconsideration:

Petitioner likewise claimed that we erred in interpreting the decision of the Supreme
Court in U.P. v. Ferrer-Calleja, supra. According to petitioner, the Supreme Court
stated that the non-academic rank-andfile employees of the University of the
Philippines shall constitute a bargaining unit to the exclusion of the academic
employees of the institution. Hence, petitioner argues, it sought the creation of
separate bargaining units, namely: (1) petitioner’s teaching personnel to the exclusion
of non-teaching personnel; and (2) petitioner’s non-teaching personnel to the exclusion
of teaching personnel.

137
Petitioner appears to have confused the concepts of membership in a bargaining unit
and membership in a union. In emphasizing the phrase "to the exclusion of academic
employees" stated in U.P. v. Ferrer-Calleja, petitioner believed that the petitioning
union could not admit academic employees of the university to its membership. But
such was not the intention of the Supreme Court.

A bargaining unit is a group of employees sought to be represented by a petitioning

union. Such employees need not be members of a union seeking the conduct of a
certification election. A union certified as an exclusive bargaining agent represents not
only its members but also other employees who are not union members. As pointed
out in our assailed Decision, there were two contending unions in the U.P. case,
namely, the Organization of Non-Academic Personnel of U.P. (ONAPUP) and the All
U.P. Worker’s Union composed of both U.P. academic and non-academic personnel.
ONAPUP sought the conduct of a certification election among the rank-and-file non-
academic personnel only, while the All U.P. Workers Union intended to cover all U.P.
rank-and-file employees, involving both academic and non-academic personnel.

The Supreme Court ordered the "non-academic rank-and-file employees of U.P. to

constitute a bargaining unit to the exclusion of the academic employees of the
institution", but did not order them to organize a separate labor organization. In the
U.P. case, the Supreme Court did not dismiss the petition and affirmed the order for
the conduct of a certification election among the non-academic personnel of U.P.,
without prejudice to the right of the academic personnel to constitute a separate
bargaining unit for themselves and for the All U.P. Workers Union to institute a petition
for certification election.

In the same manner, the teaching and non-teaching personnel of petitioner school
must form separate bargaining units.1âwphi1 Thus, the order for the conduct of two
separate certification elections, one involving teaching personnel and the other
involving non-teaching personnel. It should be stressed that in the subject petition,
private respondent union sought the conduct of a certification election among all the
rank-and-file personnel of petitioner school. Since the decision of the Supreme Court in
the U.P. case prohibits us from commingling teaching and non-teaching personnel in
one bargaining unit, they have to be separated into two separate bargaining units with
two separate certification elections to determine whether the employees in the
respective bargaining units desired to be represented by private respondent. In the
U.P. case, only one certification election among the non-academic personnel was
ordered, because ONAPUP sought to represent that bargaining unit only. No petition
for certification election among the academic personnel was instituted by All U.P.
Workers Union in the said case; thus, no certification election pertaining to its intended
bargaining unit was ordered by the Court.58

Indeed, the purpose of a certification election is precisely to ascertain the majority of

the employees’ choice of an appropriate bargaining unit – to be or not to be
represented by a labor organization and, if in the affirmative case, by which one.59

At this point, it is not amiss to stress once more that, as a rule, only questions of law
may be raised in a Rule 45 petition. In Montoya v. Transmed Manila Corporation, 60 the
Court discussed the particular parameters of a Rule 45 appeal from the CA’s Rule 65
decision on a labor case, as follows:

138
x x x In a Rule 45 review, we consider the correctness of the assailed CA decision, in
contrast with the review for jurisdictional error that we undertake under Rule 65.
Furthermore, Rule 45 limits us to the review of questions of law raised against the
assailed CA decision. In ruling for legal correctness, we have to view the CA decision
in the same context that the petition for certiorari it ruled upon was presented to it; we
have to examine the CA decision from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC decision before it, not
on the basis of whether the NLRC decision on the merits of the case was correct. In
other words, we have to be keenly aware that the CA undertook a Rule 65 review, not
a review on appeal, of the NLRC decision challenged before it. This is the approach
that should be basic in a Rule 45 review of a CA ruling in a labor case. In question
form, the question to ask is: Did the CA correctly determine whether the NLRC
committed grave abuse of discretion in ruling on the case?61

Our review is, therefore, limited to the determination of whether the CA correctly
resolved the presence or absence of grave abuse of discretion in the decision of the
SOLE, not on the basis of whether the latter's decision on the merits of the case was
strictly correct. Whether the CA committed grave abuse of discretion is not what is
ruled upon but whether it correctly determined the existence or want of grave abuse of
discretion on the part of the SOLE.

WHEREFORE, the pet1t1on is DENIED. The April 18, 2007 Decision and July 31,
2007, Resolution of the Court of Appeals in CA-G.R. SP No. 76175, which affirmed the
December 27, 2002 Decision of the Secretary of the Department of Labor and
Employment that set aside the

August 10, 2002 Decision of the Med-Arbiter denying private respondent's petition for
certification election are hereby AFFIRMED.

SO ORDERED.

G.R. No. 102084 August 12, 1998

DE LA SALLE UNIVERSITY MEDICAL CENTER AND COLLEGE OF

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

MENDOZA, J.:

Petitioner De La Salle University Medical Center and College of Medicine

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

139
On April 17, 1991, the Federation of Free Workers (FFW), a national federation of
labor unions, issued a certificate to private respondent FFW-DLSUMCCMSUC
recognizing it as a local chapter. On the same day, it filed on behalf of private
respondent FFW-DLSUMCCMSUC a petition for certification election among the
supervisory employees of petitioner DLSUMCCM. Its petition was opposed by
petitioner DLSUMCCM on the grounds that several employees who signed the petition
for certification election were managerial employees and that the FFW-
DLSUMCCMSUC was composed of both supervisory and rank-and-file employees in
the company. 1

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

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

xxx xxx xxx

6. It is not true that supervisory employees are joining the rank-and-file

employees' union. While it is true that both regular rank-and-file employees
and supervisory employees of herein respondent have affiliated with FFW,
yet there are two separate unions organized by FFW. The supervisory
employees have a separate charter certificate issued by FFW. 2

On July 5, 1991, respondent Rolando S. de la Cruz, med-arbiter of the Department of

Labor and Employment Regional Office No. IV, issued an order granting respondent
union's petition for certification election. He said;

. . . [petitioner] . . . claims that based on the job descriptions which will be

presented at the hearing, the covered employees who are considered
managers occupy the positions of purchasing officers, personnel officers,
property officers, cashiers, heads of various sections and the like.

[Petitioner] also argues that assuming that some of the employees

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

xxx xxx xxx

In its position paper, [petitioner] stated that most, if not all, of the
employees listed in . . . the petition are considered managerial employees,
thereby admitting that it has supervisory employees who are undoubtedly
qualified to join or form a labor organization of their own. The record
likewise shows that [petitioner] promised to present the job descriptions of
the concerned employees during the hearing but failed to do so. Thus, this
office has no basis in determining at this point in time who among them are
140
 considered managerial or supervisory employees. At any rate, there is now
no question that [petitioner] has in its employ supervisory employees who
are qualified to join or form a labor union. Consequently, this office is left
with no alternative but to order the holding of certification election pursuant
to Article 257 of the Labor Code, as amended, which mandates the holding
of certification election if a petition is filed by a legitimate labor organization
involving an unorganized establishment, as in the case of herein
respondent.

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

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

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

Petitioner moved for a reconsideration but its motion was denied. In his order dated
September 19, 1991, respondent Laguesma stated:

We reviewed the records once more, and find that the issues and
arguments adduced by movant have been squarely passed upon in the
Resolution sought to be reconsidered. Accordingly, we find no legal
justification to alter, much less set aside, the aforesaid resolution. Perforce,
the motion for reconsideration must fail.

WHEREFORE, the instant motion for reconsideration is hereby denied for

lack of merit and the resolution of this office dated 30 August 1991
STANDS.

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

Hence, this petition for certiorari.

Petitioner DLSUMCCM contends that respondent Laguesma gravely abused his

discretion. While it does not anymore insist that several of those who joined the petition
for certification election are holding managerial positions in the company, petitioner
nonetheless pursues the question whether unions formed independently by

141
supervisory and rank-and-file employees of a company may validly affiliate with the
same national federation. With respect to this question, it argues:

THE PUBLIC RESPONDENT, HONORABLE BIENVENIDO E.

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

The contention has no merit.

Supervisory employees have the right to self-organization as do other classes of

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

Commissioner Lerum sought to amend the draft of what was later to

become Art. 111, §8 of the present Constitution:

xxx xxx xxx

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

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

xxx xxx xxx

We are afraid that without any corresponding provision covering

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

xxx xxx xxx

In sum, Lerum's proposal to amend Art. III, § 8 of the draft Constitution by

including labor unions in the guarantee of organizational right should be
taken in the context of statements that his aim was the removal of the
142
 statutory ban against security guards and supervisory employees joining
labor organizations. The approval by the Constitutional Commission of his
proposal can only mean, therefore, that the Commission intended the
absolute right to organize of government workers, supervisory employees,
and security guards to be constitutionally guaranteed. 9

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

Supervisory employees shall not be eligible for membership in a labor

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

The reason for the segregation of supervisory and rank-and-file employees of a

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

To avoid a situation where supervisors would merge with the rank-and-file

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

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

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

The locals are separate and distinct units primarily designed to secure and
maintain an equality of bargaining power between the employer and their
employee members in the economic struggle for the fruits of the joint
productive effort of labor and capital; and the association of locals into the

143
 national union . . . was in furtherance of the same end. These associations
are consensual entities capable of entering into such legal relations with
their members. The essential purpose was the affiliation of the local unions
into a common enterprise to increase by collective action the common
bargaining power in respect of the terms and conditions of labor. Yet the
locals remained the basic units of association, free to serve their own and
the common interest of all, . . . and free also to renounce the affiliation for
mutual welfare upon the terms laid down in the agreement which brought it
to existence. 16

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

Although private respondent FFW-DLSUMCCMSUC and another union composed of

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

We find without merit the contention of petitioner that if affiliation will be

allowed, only one union will in fact represent both supervisors and rank-
and-file employees of the petitioner; that there would be an indirect
affiliation of supervisors and rank-and-file employees with one labor
organization; that there would be a merging of the two bargaining units; and
that the respondent union will lose its independence because it becomes
an alter ego of the federation. 19

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

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

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

144
G.R. No. 127374 January 31, 2002

PHILIPPINE SKYLANDERS, INC., MARILES C. ROMULO and FRANCISCO

DAKILA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER EMERSON
TUMANON, PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU)
SEPTEMBER (now UNIFIED PAFLU) and SERAFIN AYROSO, respondents.

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

G.R. No. 127431 January 31, 2002

PHILIPPINE SKYLANDERS AND WORKERS ASSOCIATION-NCW, MACARIO

CABANIAS, PEPITO RODILLAS, SHARON CASTILLO, DANILO CARBONEL,
MANUEL EDA, ROLANDO FELIX, JOCELYN FRONDA, RICARDO LUMBA,
JOSEPH MARISOL, NERISA MORTEL, TEOFILO QUIRONG, LEONARDO REYES,
MANUEL CADIENTE and HERMINIA RIOSA, petitioners,
vs.
PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) SEPTEMBER
(now UNIFIED PAFLU) and NATIONAL LABOR RELATIONS COMMISSION,
SECOND DIVISION, respondents.

BELLOSILLO, J.:

This is a petition for certiorari1 seeking to set aside the 31 July 1996 Decision2 of the
National Labor Relations Commission affirming the 30 June 1995 Decision of the
Labor Arbiter holding petitioners Philippine Skylanders, Inc., Mariles C. Romulo3 and
Francisco Dakila as well as the elected officers of the Philippine Skylanders
Employees and Workers Association-PAFLU4 guilty of unfair labor practice and
ordering them to pay private respondent Philippine Association of Free Labor Union
(PAFLU) September5 ₱150,000.00 as damages. Petitioners likewise seek the reversal
of the 31 October 1996 Resolution of the NLRC denying their Motion for
Reconsideration.

In November 1993 the Philippine Skylanders Employees Association (PSEA), a local

labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU)
September (PAFLU), won in the certification election conducted among the rank and
file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine
Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the
result of the election before the Secretary of Labor.

Several months later, pending settlement of the controversy, PSEA sent PAFLU a
notice of disaffiliation citing as reason PAFLU's supposed deliberate and habitual
dereliction of duty toward its members. Attached to the notice was a copy of the
resolution adopted and signed by the officers and members of PSEA authorizing their
local union to disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW),
changed its name to Philippine Skylanders Employees Association - National
Congress of Workers (PSEA-NCW), and to maintain continuity within the organization,
allowed the former officers of PSEA-PAFLU to continue occupying their positions as
elected officers in the newly-forged PSEA-NCW.
145
On 17 March 1994 PSEA-NCW entered into a collective bargaining agreement with
PSI which was immediately registered with the Department of Labor and Employment.

Meanwhile, apparently oblivious to PSEA's shift of allegiance, PAFLU Secretary

General Serafin Ayroso wrote Mariles C. Romulo requesting a copy of PSI's audited
financial statement. Ayroso explained that with the dismissal of PSEA-WATU's election
protest the time was ripe for the parties to enter into a collective bargaining agreement.

On 30 July 1994 PSI through its personnel manager Francisco Dakila denied the
request citing as reason PSEA's disaffiliation from PAFLU and its subsequent affiliation
with NCW.

Agitated by PSI's recognition of PSEA-NCW, PAFLU through Serafin Ayroso filed a

complaint for unfair labor practice against PSI, its president Mariles Romulo and
personnel manager Francisco Dakila. PAFLU alleged that aside from PSI's refusal to
bargain collectively with its workers, the company through its president and personnel
manager, was also liable for interfering with its employees' union activities.6

Two (2) days later or on 6 October 1994 Ayroso filed another complaint in behalf of
PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso PAFLU
claimed that Dakila was present in PSEA's organizational meeting thereby confirming
his illicit participation in union activities. Ayroso added that the members of the local
union had unwittingly fallen into the manipulative machinations of PSI and were lured
into endorsing a collective bargaining agreement which was detrimental to their
interests.7 The two (2) complaints were thereafter consolidated.

On 1 February 1995 PAFLU amended its complaint by including the elected officers of
PSEA-PAFLU as additional party respondents. PAFLU averred that the local officers of
PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo
Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph
Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and
Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed
themselves to be manipulated and influenced by petitioner Francisco Dakila.8

PSI, its president Mariles C. Romulo, and its personnel manager Dakila moved for the
dismissal of the complaint on the ground that the issue of disaffiliation was an inter-
union conflict which lay beyond the jurisdiction of the Labor Arbiter. On the other hand,
PSEA-NCW took the cudgels for its officers who were being sued in their capacities as
former officers of PSEA-PAFLU and asserted that since PSEA was no longer affiliated
with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant
complaint. In support of this assertion, PSEA-NCW submitted in evidence
a Katunayan signed by 111 out of 120 rank and file employees of PSI disauthorizing
Ayroso or PAFLU from instituting any action in their behalf.9

In a Decision rendered on 30 June 1995 the Labor Arbiter declared PSEA's

disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective
officers guilty of unfair labor practice. The Decision explained that despite PSEA-
PAFLU's status as the sole and exclusive bargaining agent of PSI's rank and file
employees, the company knowingly sanctioned and confederated with Dakila in
actively assisting a rival union. This, according to the Labor Arbiter, was a classic case
of interference for which PSI could be held responsible. As PSEA-NCW's personality
was not accorded recognition, its collective bargaining agreement with PSI was struck

146
down for being invalid. Ayroso's legal personality to file the complaint was sustained on
the ratiocination that under the Labor Code no petition questioning the majority status
of the incumbent bargaining agent shall be entertained outside of the sixty (60)-day
period immediately before the expiry date of such five (5)-year term of the collective
bargaining agreement that the parties may enter into. Accordingly, judgment was
rendered ordering PSI, PSEA-PAFLU and their officers to pay PAFLU ₱150,000.00 in
damages.10

PSI, PSEA and their respective officers appealed to the National Labor Relations
Commission (NLRC). But the NLRC upheld the Decision of the Labor Arbiter and
conjectured that since an election protest questioning PSEA-PAFLU's certification as
the sole and exclusive bargaining agent was pending resolution before the Secretary of
Labor, PSEA could not validly separate from PAFLU, join another national federation
and subsequently enter into a collective bargaining agreement with its employer-
company.11

Petitioners separately moved for reconsideration but both motions were denied.
Hence, these petitions for certiorari filed by PSI and PSEA-NCW together with their
respective officers pleading for a reversal of the NLRC's Decision which they claimed
to have been rendered in excess of jurisdiction. In due time, both petitions were
consolidated.

In these petitions, petitioner PSEA together with its officers argued that by virtue of
their disaffiliation PAFLU as a mere agent had no authority to represent them before
any proceedings. They further asserted that being an independent labor union PSEA
may freely serve the interest of all its members and readily disaffiliate from its mother
federation when circumstances so warrant. This right, they averred, was consistent
with the constitutional guarantee of freedom of association.12

For their part, petitioners PSI, Romulo and Dakila alleged that their decision to bargain
collectively with PSEA-NCW was actuated, to a large extent, by PAFLU's behavior.
Having heard no objections or protestations from PAFLU relative to PSEA's
disaffiliation, they reckoned that PSEA's subsequent association with NSW was
done bona fide.13

The Solicitor General filed a Manifestation in Lieu of Comment recommending that

both petitions be granted. In his Manifestation, the Solicitor General argued against the
Labor Arbiter's assumption of jurisdiction citing the following as reasons: first, there
was no employer-employee relationship between complainant Ayroso and PSI over
which the Labor Arbiter could rightfully assert his jurisdiction; second, since the case
involved a dispute between PAFLU as mother federation and PSEA as local union, the
controversy fell within the jurisdiction of the Bureau of Labor Relations; and lastly, the
relationship of principal-agent between PAFLU and PSEA had been severed by the
local union through the lawful exercise of its right of disaffiliation.14

Stripped of non-essentials, the fundamental issue tapers down to the legitimacy of

PSEA's disaffiliation. To be more precise, may PSEA, which is an independent and
separate local union, validly disaffiliate from PAFLU pending the settlement of an
election protest questioning its status as the sole and exclusive bargaining agent of
PSI's rank and file employees?

147
At the outset, let it be noted that the issue of disaffiliation is an inter-union conflict the
jurisdiction of which properly lies with the Bureau of Labor Relations (BLR) and not with
the Labor Arbiter.15 Nonetheless, with due recognition of this fact, we deem it proper to
settle the controversy at this instance since to remand the case to the BLR would only
mean intolerable delay for the parties.

The right of a local union to disaffiliate from its mother federation is not a novel thesis
unillumined by case law. In the landmark case of Liberty Cotton Mills Workers Union
vs. Liberty Cotton Mills, Inc.16 we upheld the right of local unions to separate from their
mother federation on the ground that as separate and voluntary associations, local
unions do not owe their creation and existence to the national federation to which they
are affiliated but, instead, to the will of their members. The sole essence of affiliation is
to increase, by collective action, the common bargaining power of local unions for the
effective enhancement and protection of their interests. Admittedly, there are times
when without succor and support local unions may find it hard, unaided by other
support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own
interests subject to the restraints imposed by the constitution and by-laws of the
national federation, and free also to renounce the affiliation upon the terms laid down in
the agreement which brought such affiliation into existence.

Such dictum has been punctiliously followed since then.17

Upon an application of the aforecited principle to the issue at hand, the impropriety of
the questioned Decisions becomes clearly apparent. There is nothing shown in the
records nor is it claimed by PAFLU that the local union was expressly forbidden to
disaffiliate from the federation nor were there any conditions imposed for a valid
breakaway. As such, the pendency of an election protest involving both the mother
federation and the local union did not constitute a bar to a valid disaffiliation. Neither
was it disputed by PAFLU that 111 signatories out of the 120 members of the local
union, or an equivalent of 92.5% of the total union membership supported the claim of
disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their
behalf. Surely, this is not a case where one (1) or two (2) members of the local union
decided to disaffiliate from the mother federation, but it is a case where almost all local
union members decided to disaffiliate.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement
with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no
restrictions which could validly hinder it from subsequently affiliating with NCW and
entering into a collective bargaining agreement in behalf of its members.

There is a further consideration that likewise argues for the granting of the petitions. It
stands unchallenged that PAFLU instituted the complaint for unfair labor practice
against the wishes of workers whose interests it was supposedly protecting. The mere
act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU
the license to act independently of the local union. Recreant to its mission, PAFLU
cannot simply ignore the demands of the local chapter and decide for its welfare.
PAFLU might have forgotten that as an agent it could only act in representation of and
in accordance with the interests of the local union. The complaint then for unfair labor
practice lodged by PAFLU against PSI, PSEA and their respective officers, having

148
been filed by a party which has no legal personality to institute the complaint, should
have been dismissed at the first instance for failure to state a cause of action.

Policy considerations dictate that in weighing the claims of a local union as against
those of a national federation, those of the former must be preferred. Parenthetically
though, the desires of the mother federation to protect its locals are not altogether to
be shunned. It will however be to err greatly against the Constitution if the desires of
the federation would be favored over those of its members. That, at any rate, is the
policy of the law. For if it were otherwise, instead of protection, there would be
disregard and neglect of the lowly workingmen.

WHEREFORE, the petitions of Philippine Skylanders, Inc. and of Philippine Skylanders

and Workers Association-NCW, together with their respective officers, are GRANTED.
The Decision of the National Labor Relations Commission of 31 July 1996 affirming the
Decision of the Labor Arbiter of 30 June 1995 holding petitioners Philippine Skylanders
and Workers Association-NCW, Philippine Skylanders, Inc. and their respective
officers, guilty of unfair labor practice and ordering them to pay damages to private
respondent Philippine Association of Free Labor Unions (PAFLU) September (now
UNIFIED PAFLU) as well as the Resolution of 31 October 1996 denying
reconsideration is REVERSED and SET ASIDE. No costs.

SO ORDERED.

G.R. No.174287 August 12, 2013

NATIONAL UNION OF BANK EMPLOYEES (NUBE), PETITIONER,

vs.
PHILNABANK EMPLOYEES ASSOCIATION (PEMA) AND PHILIPPINE NATIONAL
BANK, RESPONDENTS.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure are the May 22, 2006 Decision1 and August 17, 2006 Resolution2 of the
Court of Appeals (CA) in CA-G.R. SP No. 84606, which reversed the May 27, 2004
Decision3 of the Secretary of Labor and Employment acting as voluntary arbitrator, the
dispositive portion of which states:

WHEREFORE, in light of the foregoing findings, the Bank is hereby ORDERED to

release all union dues withheld and to continue remitting to NUBE-PNB chapter the
members' obligations under the CBA, LESS the amount corresponding to the number
of non-union members including those who participated in the unsuccessful withdrawal
of membership from their mother union.

The parties are enjoined to faithfully comply with the above- mentioned resolution.

With respect to the URGENT MOTION FOR INTERVENTION filed by PEMA, the same
is hereby denied without prejudice to the rights of its members to bring an action to
protect such rights if deemed necessary at the opportune time.

SO ORDERED.4
149
We state the facts.

Respondent Philippine National Bank (PNB) used to be a government-owned and

controlled banking institution established under Public Act 2612, as amended by
Executive Order No. 80 dated December 3, 1986 (otherwise known as The 1986
Revised Charter of the Philippine National Bank). Its rank-and-file employees, being
government personnel, were represented for collective negotiation by the Philnabank
Employees Association (PEMA), a public sector union.

In 1996, the Securities and Exchange Commission approved PNB’s new Articles of
Incorporation and By-laws and its changed status as a private corporation. PEMA
affiliated with petitioner National Union of Bank Employees (NUBE), which is a labor
federation composed of unions in the banking industry, adopting the name NUBE-PNB
Employees Chapter (NUBE-PEC).

Later, NUBE-PEC was certified as the sole and exclusive bargaining agent of the PNB
rank-and-file employees. A collective bargaining agreement (CBA) was subsequently
signed between NUBE-PEC and PNB covering the period of January 1, 1997 to
December 31, 2001.

Pursuant to Article V on Check-off and Agency Fees of the CBA, PNB shall deduct the
monthly membership fee and other assessments imposed by the union from the salary
of each union member, and agency fee (equivalent to the monthly membership dues)
from the salary of the rank- and-file employees within the bargaining unit who are not
union members. Moreover, during the effectivity of the CBA, NUBE, being the
Federation union, agreed that PNB shall remit ₱15.00 of the ₱65.00 union dues per
month collected by PNB from every employee, and that PNB shall directly credit the
amount to NUBE’s current account with PNB.5

Following the expiration of the CBA, the Philnabank Employees Association-FFW

(PEMA-FFW) filed on January 2, 2002 a petition for certification election among the
rank-and-file employees of PNB. The petition sought the conduct of a certification
election to be participated in by PEMA-FFW and NUBE-PEC.

While the petition for certification election was still pending, two significant events
transpired – the independent union registration of NUBE- PEC and its disaffiliation with
NUBE.

With a legal personality derived only from a charter issued by NUBE, NUBE-PEC,
under the leadership of Mariano Soria, decided to apply for a separate registration with
the Department of Labor and Employment (DOLE). On March 25, 2002, it was
registered as an independent labor organization under Registration Certificate No.
NCR-UR-3-3790-2002.

Thereafter, on June 20, 2003, the Board of Directors of NUBE-PEC adopted a

Resolution6 disaffiliating itself from NUBE. Cited as reasons were as follows:

xxxx

WHEREAS, in the long period of time that the Union has been affiliated with NUBE, the
latter has miserably failed to extend and provide satisfactory services and support to
150
the former in the form of legal services, training assistance, educational seminars, and
the like;

WHEREAS, this failure by NUBE to provide adequate essential services and support to
union members have caused the latter to be resentful to NUBE and to demand for the
Union’s disaffiliation from the former[;]

WHEREAS, just recently, NUBE displayed its lack of regard for the interests and
aspirations of the union members by blocking the latter’s desire for the early
commencement of CBA negotiations with the PNB management[;]

WHEREAS, this strained relationship between NUBE and the Union is no longer
conducive to a fruitful partnership between them and could even threaten industrial
peace between the Union and the management of PNB.

WHEREAS, under the circumstances, the current officers of the Union have no choice
but to listen to the clamor of the overwhelming majority of union members for the Union
to disaffiliate from NUBE.7

The duly notarized Resolution was signed by Edgardo B. Serrana (President), Rico B.
Roma (Vice-President), Rachel C. Latorre (Secretary), Valeriana S. Garcia
(Director/Acting Treasurer), Ruben C. Medrano (Director), and Verlo C. Magtibay
(Director). It is claimed that said Resolution was overwhelmingly ratified by about
eighty-one percent (81%) of the total union membership.

On June 25, 2003, NUBE-PEC filed a Manifestation and Motion8 before the Med-
Arbitration Unit of DOLE, praying that, in view of its independent registration as a labor
union and disaffiliation from NUBE, its name as appearing in the official ballots of the
certification election be changed to "Philnabank Employees Association (PEMA)" or, in
the alternative, both parties be allowed to use the name "PEMA" but with PEMA-FFW
and NUBE-PEC be denominated as "PEMA-Bustria Group" and "PEMA-Serrana
Group," respectively.

On the same date, PEMA sent a letter to the PNB management informing its
disaffiliation from NUBE and requesting to stop, effective immediately, the check-off of
the ₱15.00 due for NUBE.9

Acting thereon, on July 4, 2003, PNB informed NUBE of PEMA’s letter and its decision
to continue the deduction of the ₱15.00 fees, but stop its remittance to NUBE effective
July 2003. PNB also notified NUBE that the amounts collected would be held in a trust
account pending the resolution of the issue on PEMA’s disaffiliation.10

On July 11, 2003, NUBE replied that: it remains as the exclusive bargaining
representative of the PNB rank-and-file employees; by signing the Resolution (on
disaffiliation), the chapter officers have abandoned NUBE-PEC and joined another
union; in abandoning NUBE-PEC, the chapter officers have abdicated their respective
positions and resigned as such; in joining another union, the chapter officers
committed an act of disloyalty to NUBE-PEC and the general membership; the
circumstances clearly show that there is an emergency in NUBE-PEC necessitating its
placement under temporary trusteeship; and that PNB should cease and desist from
dealing with Serrana, Roma, Latorre, Garcia, Medrano, and Magtibay, who are
expelled from NUBE-PEC.11 With regard to the issue of non-remittance of the union
dues, NUBE enjoined PNB to comply with the union check-off provision of the CBA;
151
otherwise, it would elevate the matter to the grievance machinery in accordance with
the CBA.

Despite NUBE’s response, PNB stood firm on its decision. Alleging unfair labor
practice (ULP) for non-implementation of the grievance machinery and procedure,
NUBE brought the matter to the National Conciliation and Mediation Board (NCMB) for
preventive mediation.12 In time, PNB and NUBE agreed to refer the case to the Office
of the DOLE Secretary for voluntary arbitration. They executed a Submission
Agreement on October 28, 2003.13

Meantime, the DOLE denied PEMA’s motion to change its name in the official ballots.
The certification election was finally held on October 17, 2003. The election yielded the
following results:

3,74
Number of eligible voters
2
2,99
Number of valid votes cast
3
Number of spoiled ballots 72
3,06
Total
5
Philnabank Employees Association-FFW 289
National Union of Bank Employees (NUBE)- 2,68
Philippine National Bank (PNB) Chapter 3
No Union 21
14
Total 2,993

On April 28, 2004, PEMA filed before the voluntary arbitrator an Urgent Motion for
Intervention,15 alleging that it stands to be substantially affected by whatever judgment
that may be issued, because one of the issues for resolution is the validity of its
disaffiliation from NUBE. It further claimed that its presence is necessary so that a
complete relief may be accorded to the parties. Only NUBE opposed the motion,
arguing that PEMA has no legal personality to intervene, as it is not a party to the
existing CBA; and that NUBE is the exclusive bargaining representative of the PNB
rank-and-file employees and, in dealing with a union other than NUBE, PNB is violating
the duty to bargain collectively, which is another form of ULP.16

Barely a month after, DOLE Acting Secretary Manuel G. Imson denied PEMA’s motion
for intervention and ordered PNB to release all union dues withheld and to continue
remitting the same to NUBE. The May 27, 2004 Decision opined:

Before we delve into the merits of the present dispute, it behooves [Us] to discuss in
passing the propriety of the MOTION FOR INTERVENTION filed by the Philnabank
Employees Association (PEMA) on April 28, 2004, the alleged [break-away] group of
NUBE- PNB Chapter.

A cursory reading of the motion reveals a denial thereof is not prejudicial to the
individual rights of its members. They are protected by law.
152
Coming now to the main issues of the case, suffice it to say that after an evaluative
review of the record of the case, taking into consideration the arguments and evidence
adduced by both parties, We find that indeed no effective disaffiliation took place.

It is well settled that [l]abor unions may disaffiliate from their mother federations to form
a local or independent union only during the 60-day freedom period immediately
preceding the expiration of the CBA. [Tanduay Distillery Labor Union v. National Labor
Relations Commission, et al.] However, such disaffiliation must be effected by a
majority of the members in the bargaining unit. (Volkschel Labor Union v. Bureau of
Labor Relations).

Applying the foregoing jurisprudence to the case at bar, it is difficult to believe that a
justified disaffiliation took place. While the record apparently shows that attempts at
disaffiliation occurred sometime in June of 2003 x x x the latest result of a certification
election dated 17 October 2003 mooted such disaffiliation.

Further, even if for the sake of argument an attempt at disaffiliation occurred, the
record is bereft of substantial evidence to support a finding of effective disaffiliation.
There might have been a mass withdrawal of the union members from the NUBE-PNB
Chapter. The record shows, however, that only 289 out of 3,742 members shifted their
allegiance from the mother union. Hence, they constituted a small minority for which
reason they could not have successfully severed the local union’s affiliation with
NUBE.

Thus, since only a minority of the members wanted disaffiliation as shown by the
certification election, it can be inferred that the majority of the members wanted the
union to remain an affiliate of the NUBE. [Villar, et al. v. Inciong, et al.]. There being no
justified disaffiliation that took place, the bargaining agent’s right under the provision of
the CBA on Check-Off is unaffected and still remained with the old NUBE-PNB
Chapter. x x x

While it is true that the obligation of an employee to pay union dues is co-terminus with
his affiliation [Philippine Federation of Petroleum Workers v. CIR], it is equally tenable
that when it is shown, as in this case, that the withdrawal from the mother union is not
supported by majority of the members, the disaffiliation is unjustified and the
disaffiliated minority group has no authority to represent the employees of the
bargaining unit. This is the import of the principle laid down in [Volkschel Labor Union
v. Bureau of Labor Relations supra] and the inverse application of the Supreme Court
decision in [Philippine Federation of Petroleum Workers v. CIR] regarding entitlement
to the check-off provision of the CBA.

As a necessary consequence to our finding that no valid disaffiliation took place, the
right of NUBE to represent its local chapter at the PNB, less those employees who are
no longer members of the latter, is beyond reproach.

However, the Bank cannot be faulted for not releasing union dues to NUBE at the time
when representation status issue was still being threshed out by proper governmental
authority. Prudence dictates the discontinuance of remittance of union dues to NUBE
under such circumstances was a legitimate exercise of management discretion
apparently in order to protect the Bank’s business interest. The suspension of the
check-off provision of the CBA, at the instance of the latter made in good faith, under
the present circumstances cannot give rise to a right of action. For having been

153
exercised without malice much less evil motive and for not causing actual loss to the
National Union of Bank Employees (NUBE), the same act of management [cannot] be
penalized.17

Aggrieved, PEMA filed before the CA a petition under Rule 43 of the Rules on Civil
Procedure with prayer for the issuance of a temporary restraining order (TRO) or writ of
preliminary injunction (WPI). On November 2, 2004, the CA denied the application for
WPI.18 PEMA’s motion for reconsideration was also denied on February 24, 2005,
noting PNB’s manifestation that it would submit to the judgment of the CA as to which
party it should remit the funds collected from the employees.19

On June 21, 2005, however, petitioner again filed an Urgent Motion for the Issuance of
a TRO against the June 10, 2005 Resolution of DOLE Acting Secretary Imson, which
ordered PNB to properly issue a check directly payable to the order of NUBE covering
the withheld funds from the trust account.20 Considering the different factual milieu, the
CA resolved to grant the motion.21

Subsequent to the parties’ submission of memoranda, the CA promulgated its May 22,
2006 Decision, declaring the validity of PEMA’s disaffiliation from NUBE and directing
PNB to return to the employees concerned the amounts deducted and held in trust for
NUBE starting July 2003 and to stop further deductions in favor of NUBE.22

As to the impropriety of denying PEMA’s motion for intervention, the CA noted:

x x x Among the rights of the [PEMA] as an affiliate of a federation is to disaffiliate from

it. Any case in which this is an issue is then one in which the union has a significant
legal interest and as to which it must be heard, irrespective of any residual rights of the
members after a decision that might deny a disaffiliation. It is a non-sequitur to make
the intervention of the union in this case dependent on the question of whether its
members can pursue their own agenda under the same constraints.23

On the validity of PEMA’s disaffiliation, the CA ratiocinated:

The power and freedom of a local union to disaffiliate from its mother union or
federation is axiomatic. As Volkschel vs. Bureau of Labor Relations [137 SCRA 42]
recognizes, a local union is, after all, a separate and voluntary association that under
the constitutional guarantee of freedom of expression is free to serve the interests of its
members. Such right and freedom invariably include the right to disaffiliate or declare
its autonomy from the federation or mother union to which it belongs, subject to
reasonable restrictions in the law or the federation’s constitution. [Malayang Samahan
ng mga Manggagawa sa M. Greenfield vs. Ramos, 326 SCRA 428]

Without any restrictive covenant between the parties, [Volkschel Labor Union vs.
Bureau of Labor Relations, supra, at 48,] it is instructive to look into the state of the law
on a union’s right to disaffiliate. The voluntary arbitrator alludes to a provision in PD
1391 allowing disaffiliation only within a 60-day period preceding the expiration of the
CBA. In Alliance of Nationalist and Genuine Labor Organization vs. Samahan ng mga
Manggagawang Nagkakaisa sa Manila Bay Spinning Mills, etc. [258 SCRA 371],
however, the rule was not held to be iron-clad. Volkschel was cited to support a more
flexible view that the right may be allowed as the circumstances warrant. In Associated
Workers Union-PTGWO vs. National Labor Relations Commission [188 SCRA 123],
the right to disaffiliate was upheld before the onset of the freedom period when it

154
became apparent that there was a shift of allegiance on the part of the majority of the
union members.

xxxx

As the records show, a majority, indeed a vast majority, of the members of the local
union ratified the action of the board to disaffiliate. Our count of the members who
approved the board action is, 2,638. If we divide this by the number of eligible voters
as per the certification election which is 3,742, the quotient is 70.5%, representing the
proportion of the members in favor of disaffiliation. The [PEMA] says that the action
was ratified by 81%. Either way, the groundswell of support for the measure was
overwhelming.

The respondent NUBE has developed the ingenious theory that if the disaffiliation was
approved by a majority of the members, it was neutered by the subsequent certification
election in which NUBE-PNB Chapter was voted the sole and exclusive bargaining
agent. It is argued that the effects of this change must be upheld as the latest
expression of the will of the employees in the bargaining unit. The truth of the matter is
that the names of PEMA and NUBE-PNB Chapter are names of only one entity, the
two sides of the same coin. We have seen how NUBE-PNB Employees Chapter
evolved into PEMA and competed with Philnabank Employees Association-FFW for
supremacy in the certification election. To realize that it was PEMA which entered into
the contest, we need only to remind ourselves that PEMA was the one which filed a
motion in the certification election case to have its name PEMA put in the official ballot.
DOLE insisted, however, in putting the name NUBE-PNB Chapter in the ballots
unaware of the implications of this seemingly innocuous act.24

NUBE filed a motion for reconsideration, but it was denied;25 hence, this petition raising
the following issues for resolution:

I.

The Secretary of Labor acted without error and without grave abuse of discretion in not
giving due course to the urgent motion for intervention filed by PEMA.

II.

The Secretary of Labor acted without grave abuse of discretion and without serious
error in ruling that PEMA’s alleged disaffiliation was invalid.

III.

The Secretary of Labor did not commit serious error in ordering the release of the
disputed union fees/dues to NUBE-PNB Chapter.

IV.

There is no substantial basis for the issuance of a preli minary injunction or temporary
restraining order.

V.

Under the Rules of Court, the appeal/petition of PEMA should have been dismissed.
155
VI.

PEMA and NUBE are not one and the same, and the denial by the Secretary of Labor
of the motion for intervention was proper.

VII.

NUBE-PNB Chapter, not PEMA, has been fighting for PNB rank-and-file interests and
rights since PNB’s privatization, which is further pro of that NUBE-PNB Chapter and
PEMA are not one and the same.

VIII.

The alleged disaffiliation was not valid as proper procedure was not followed.

IX.

NUBE is entitled to check-off.26

Stripped of the non-essential, the issue ultimately boils down on whether PEMA validly
disaffiliated itself from NUBE, the resolution of which, in turn, inevitably affects the
latter’s right to collect the union dues held in trust by PNB.

We deny the petition.

Whether there was a valid disaffiliation is a factual issue.27 It is elementary that a

question of fact is not appropriate for a petition for review on certiorari under Rule 45 of
the Rules of Court. The parties may raise only questions of law because the Supreme
Court is not a trier of facts. As a general rule, We are not duty-bound to analyze again
and weigh the evidence introduced in and considered by the tribunals below. When
supported by substantial evidence, the findings of fact of the CA are conclusive and
binding on the parties and are not reviewable by this Court, except: (1) When the
conclusion is a finding grounded entirely on speculation, surmises and conjectures; (2)
When the inference made is manifestly mistaken, absurd or impossible; (3) Where
there is a grave abuse of discretion; (4) When the judgment is based on a
misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the
CA, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both parties; (7) When the findings are contrary to those
of the trial court; (8) When the findings of fact are conclusions without citation of
specific evidence on which they are based; (9) When the facts set forth in the petition
as well as in the petitioner’s main and reply briefs are not disputed by the respondents;
and (10) When the findings of fact of the CA are premised on the supposed absence of
evidence and contradicted by the evidence on record.28The Court finds no cogent
reason to apply these recognized exceptions.

Even a second look at the records reveals that the arguments raised in the petition are
bereft of merit.

The right of the local union to exercise the right to disaffiliate from its mother union is
well settled in this jurisdiction. In MSMG-UWP v. Hon. Ramos,29 We held:

A local union has the right to disaffiliate from its mother union or declare its autonomy.
A local union, being a separate and voluntary association, is free to serve the interests
156
of all its members including the freedom to disaffiliate or declare its autonomy from the
federation which it belongs when circumstances warrant, in accordance with the
constitutional guarantee of freedom of association.

The purpose of affiliation by a local union with a mother union [or] a federation

"x x x is to increase by collective action the bargaining power in respect of the terms
and conditions of labor. Yet the locals remained the basic units of association, free to
serve their own and the common interest of all, subject to the restraints imposed by the
Constitution and By-Laws of the Association, and free also to renounce the affiliation
for mutual welfare upon the terms laid down in the agreement which brought it into
existence."

Thus, a local union which has affiliated itself with a federation is free to sever such
affiliation anytime and such disaffiliation cannot be considered disloyalty. In the
absence of specific provisions in the federation's constitution prohibiting disaffiliation or
the declaration of autonomy of a local union, a local may dissociate with its parent
union.30

Likewise, Philippine Skylanders, Inc. v. National Labor Relations

31
Commission restated:

The right of a local union to disaffiliate from its mother federation is not a novel thesis
unillumined by case law.1âwphi1 In the landmark case of Liberty Cotton Mills Workers
Union vs. Liberty Cotton Mills, Inc., we upheld the right of local unions to separate from
their mother federation on the ground that as separate and voluntary associations,
local unions do not owe their creation and existence to the national federation to which
they are affiliated but, instead, to the will of their members. The sole essence of
affiliation is to increase, by collective action, the common bargaining power of local
unions for the effective enhancement and protection of their interests. Admittedly, there
are times when without succor and support local unions may find it hard, unaided by
other support groups, to secure justice for themselves.

Yet the local unions remain the basic units of association, free to serve their own
interests subject to the restraints imposed by the constitution and by-laws of the
national federation, and free also to renounce the affiliation upon the terms laid down in
the agreement which brought such affiliation into existence.

Such dictum has been punctiliously followed since then.32

And again, in Coastal Subic Bay Terminal, Inc. v. Department of Labor and
Employment – Office of the Secretary,33this Court opined:

Under the rules implementing the Labor Code, a chartered local union acquires legal
personality through the charter certificate issued by a duly registered federation or
national union, and reported to the Regional Office in accordance with the rules
implementing the Labor Code. A local union does not owe its existence to the
federation with which it is affiliated. It is a separate and distinct voluntary association
owing its creation to the will of its members. Mere affiliation does not divest the local
union of its own personality, neither does it give the mother federation the license to
act independently of the local union. It only gives rise to a contract of agency, where
the former acts in representation of the latter. Hence, local unions are considered
principals while the federation is deemed to be merely their agent. As such principals,
157
the unions are entitled to exercise the rights and privileges of a legitimate labor
organization, including the right to seek certification as the sole and exclusive
bargaining agent in the appropriate employer unit.34

Finally, the recent case of Cirtek Employees Labor Union-Federation of Free Workers
v. Cirtek Electronics, Inc35ruled:

x x x [A] local union may disaffiliate at any time from its mother federation, absent any
showing that the same is prohibited under its constitution or rule. Such, however, does
not result in it losing its legal personality altogether. Verily, Anglo-KMU v. Samahan Ng
Mga Manggagawang Nagkakaisa Sa Manila Bar Spinning Mills At J.P. Coats
enlightens:

A local labor union is a separate and distinct unit primarily designed to secure and
maintain an equality of bargaining power between the employer and their employee-
members. A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to the will
of its members. The mere act of affiliation does not divest the local union of its own
personality, neither does it give the mother federation the license to act independently
of the local union. It only gives rise to a contract of agency where the former acts in
representation of the latter.36

These and many more have consistently reiterated the earlier view that the right of the
local members to withdraw from the federation and to form a new local union depends
upon the provisions of the union's constitution, by-laws and charter and, in the absence
of enforceable provisions in the federation's constitution preventing disaffiliation of a
local union, a local may sever its relationship with its parent.37 In the case at bar, there
is nothing shown in the records nor is it claimed by NUBE that PEMA was expressly
forbidden to disaffiliate from the federation nor were there any conditions imposed for a
valid breakaway. This being so, PEMA is not precluded to disaffiliate from NUBE after
acquiring the status of an independent labor organization duly registered before the
DOLE.

Also, there is no merit on NUBE’s contention that PEMA’s disaffiliation is invalid for
non-observance of the procedure that union members should make such determination
through secret ballot and after due deliberation, conformably with Article 241 (d) of the
Labor Code, as amended.38 Conspicuously, other than citing the opinion of a
"recognized labor law authority," NUBE failed to quote a specific provision of the law or
rule mandating that a local union’s disaffiliation from a federation must comply with
Article 241 (d) in order to be valid and effective.

Granting, for argument’s sake, that Article 241 (d) is applicable, still, We uphold
PEMA’s disaffiliation from NUBE. First, non-compliance with the procedure on
disaffiliation, being premised on purely technical grounds cannot rise above the
employees’ fundamental right to self-organization and to form and join labor
organizations of their own choosing for the purpose of collective bargaining.39 Second,
the Article nonetheless provides that when the nature of the organization renders such
secret ballot impractical, the union officers may make the decision in behalf of the
general membership. In this case, NUBE did not even dare to contest PEMA’s
representation that "PNB employees, from where [PEMA] [derives] its membership, are
scattered from Aparri to Jolo, manning more than 300 branches in various towns and
cities of the country," hence, "[to] gather the general membership of the union in a
158
general membership to vote through secret balloting is virtually impossible."40 It is
understandable, therefore, why PEMA’s board of directors merely opted to submit for
ratification of the majority their resolution to disaffiliate from NUBE. Third, and most
importantly, NUBE did not dispute the existence of the persons or their due execution
of the document showing their unequivocal support for the disaffiliation of PEMA from
NUBE. Note must be taken of the fact that the list of PEMA members (identifying
themselves as "PEMA-Serrana Group"41) who agreed with the board resolution was
attached as Annex "H" of PEMA’s petition before the CA and covered pages 115 to
440 of the CA rollo. While fully displaying the employees’ printed name, identification
number, branch, position, and signature, the list was left unchallenged by NUBE. No
evidence was presented that the union members’ ratification was obtained by mistake
or through fraud, force or intimidation. Surely, this is not a case where one or two
members of the local union decided to disaffiliate from the mother federation, but one
where more than a majority of the local union members decided to disaffiliate.

Consequently, by PEMA's valid disaffiliation from NUBE, the vinculum that previously
bound the two entities was completely severed. As NUBE was divested of any and all
power to act in representation of PEMA, any act performed by the former that affects
the interests and affairs of the latter, including the supposed expulsion of Serrana et
al., is rendered without force and effect.

Also, in effect, NUBE loses it right to collect all union dues held in its trust by PNB. The
moment that PEMA separated from and left NUBE and exists as an independent labor
organization with a certificate of registration, the former is no longer obliged to pay
dues and assessments to the latter; naturally, there would be no longer any reason or
occasion for PNB to continue making deductions.42 As we said in Volkschel Labor
Union v. Bureau of Labor Relations:43

x x x In other words, ALUMETAL [NUBE in this case] is entitled to receive the dues
from respondent companies as long as petitioner union is affiliated with it and
respondent companies are authorized by their employees (members of petitioner
union) to deduct union dues. Without said affiliation, the employer has no link to the
mother union. The obligation of an employee to pay union dues is coterminous with his
affiliation or membership. "The employees' check-off authorization, even if declared
irrevocable, is good only as long as they remain members of the union concerned." A
contract between an employer and the parent organization as bargaining agent for the
employees is terminated bv the disaffiliation ofthe local of which the employees are
members. x x x44

On the other hand, it was entirely reasonable for PNB to enter into a CBA with PEMA
as represented by Serrana et al. Since PEMA had validly separated itself from NUBE,
there would be no restrictions which could validly hinder it from collectively bargaining
with PNB.

WHEREFORE, the foregoing considered, the instant Petition is DENIED. The May 22,
2006 Decision and August 17, 2006 Resolution of the Court of Appeals in CA-G.R. SP
No. 84606, which reversed the May 27, 2004 Decision ofthe Secretary of Labor and
Employment, are AFFIRMED.

SO ORDERED.

G.R. No. L-41288 January 31, 1977

159
PHILIPPINES LABOR ALLIANCE COUNCIL (PLAC), petitioner,
vs.
BUREAU OF LABOR RELATIONS, FEDERATION OF FREE WORKERS-ORION
CHAPTER, GERARDO ROSANA and ORION MANILA, INC. respondents.

Fortunato Gupit, Jr. for petitioner.

Solicitor General Estelito P Mendoza, Assistant Solicitor General Reynato S. Puno and
Solicitor Romeo C. de la Cruz for respondent Bureau of Labor Relations.

F. F. Bonifacio, Jr. for respondent Union and Gerardo Rosana.

Cesar C. Cruz & Associates for respondent Orion Manila,

FERNANDO, J:

It would be to frustrate the hopes that inspired the present Labor Code 1 to minimize
judicial participation in the solution of employer- employee disputes resort to the courts
would remain unabated. Nevertheless, in view of the certiorari jurisdiction of this
Tribunal, 2 a grave abuse of discretion may be alleged as a grievance thus calling for
remedial action. So petitioner Philippine Labor Alliance Council did hope to achieve in
this certiorari and prohibition proceeding against respondent Bureau of Labor
Relations. 3 It would indict an order 4 for a certification election by respondent Bureau
as tainted by a jurisdictional infirmity in view of what is contended to be an existing duly
certified collective bargaining contract between it and private respondent Orion Manila,
Inc., the employer. It would thus ignore the withdrawal in the same order of such
certification based on a finding that there was a failure on the part of the majority of the
employees in the bargaining unit to ratify the collective contract, renewed nine months
before the termination of the previous agreement. Apparently, the difficulty confronting
it was due to the disaffiliation of many of its members. The order complained of
recognized that there was such a sentiment on the part of sizable number of
employees in the collective bargaining unit, thus making patent the desirability of
conducting a certification election. That was the method to determine the exclusive
bargaining representative followed even under the previous labor legislation .5 It would
thus appear rather obvious that the attempt to impute arbitrariness to respondent
Bureau cannot be attended with success. The petition must be dismissed.

It was a detailed narration of facts set forth in the petition, starting with the allegation
that there was a renewal of the collective bargaining agreement with a union shop
clause on March 9,1974 between petitioner union and respondent company to last for
another period of three (3) years incorporating therein new economic benefits to expire
on December 31, 1977. 6 The claim was that at that time it was the only bargaining
agent of the respondent company unchallenged by any labor organization. 7 Then
came the assertion that on May 27, 1974, with due notice to all the members of the
petitioner union, and with more than 1,500 of them present, such collective bargaining
agreement was ratified by a unanimous vote .8 It was then so certified by the former
National Labor Relations Commission on June 4, 1974. 9 It was further alleged that at
the time of such certification, there was no pending request for union recognition by
any other labor organization with management.10 Thereafter, on June 20, 1974,
respondent Federation of Free Workers, setting forth that its members represent more
than 60% out of 1,500 members, more or less, rank-and-file employees of respondent
160
company, sought a certification election. 11 Petitioner union, as could be expected,
opposed such a move as in its view the collective bargaining agreement entered into
with the respondent company had been certified. 12 It was sustained, the Secretary of
Labor to whom an appeal was taken concurring with the former National Labor
Relations Commission affirming the dismissal of such petition for certification, on the
ground of the existence of a certified collective bargaining agreement.13That did not
end the dispute, " respondent Federation on January 15, 1975, filed a complaint with
the respondent Bureau of Labor Relations, the present Labor Code having become
effective, alleging that some employees, numbering 848 in all, in a resolution attached
to the complaint disaffiliated from petitioner union and affiliated with it, characterizing
the certified agreement as having been entered into allegedly to thwart such
disaffiliation and seeking a declaration of the nullity thereof. 14 After both petitioner
union and respondent Federation of Free Workers had filed their pleadings, 15 the Med-
Arbiter, on March 20, 1975, dismissed the complaint.16 There was a motion for
reconsideration, then an opposition.17 On April 8, 1975, respondent Bureau of Labor
Relations issued an order setting aside the certification of the collective bargaining
agreement and ordering a certification election within 20 days from receipt of the order,
upon the following declaration: "In the instant case, it is not disputed that the collective
bargaining agreement certified by the National Labor Relations Commission was not
ratified by the majority of the employees within the bargaining unit. This is defective. It
is blatant non- observance of the basic requirement necessary to certification. ... With
respect to the complaint of the confirmation of disaffiliation of the members of
respondent Philippine Labor Alliance Council, the same should be resolved in the most
expedient and simple method of determining the exclusive bargaining representative—
the holding of a certification election"18 There was a motion for reconsideration as well
as a verified urgent petition filed with the Secretary of Labor by respondent Company,
but the order was affirmed on July 31, 1975, the motion to consider being denied. 19

From the very petition with its annexes, it is undisputed that there was a finding in the
challenged order by respondent Bureau of Labor Relations of the non-ratification by
the majority of the employees of the certified collective bargaining agreement, thus
calling for its decertification. It is also noteworthy that in the comment of respondent
labor union, considered as its answer, the allegation that there was such a ratification
was specifically denied. It cannot be taken as having proven. There is nothing in the
exhaustive memorandum of petitioner either that would justify the imputation that
respondent Bureau, in ordering decertification of the collective bargaining agreement
with petitioner to be followed by a certification election, committed a transgression of
the present Labor Code, much less one of such grievous character as to taint its
actuation with a jurisdictional infirmity. It is quite apparent therefore that with due
recognition of the ability and scholarship evident in the pleadings of Attorney Fortunate
Gupit, Jr. for the petitioner, the attempt to invoke our certiorari jurisdiction cannot
succeed..20 So it was noted at the outset.

1. It is indisputable that the present controversy would not have arisen if there were no
mass disaffiliation from petitioning Union. Such a phenomenon is nothing new in the
Philippine labor movement.21 Nor is it open to any legal objection. It is implicit in the
freedom of association explicitly ordained by the Constitution.22 There is then the
incontrovertible right of any individual to join an organization of his choice. That option
belongs to him. A workingman is not to be denied that liberty. 23 He may be, as a
matter of fact, more in need of it if the institution of collective bargaining as an aspect
of industrial democracy is to succeed. No obstacle that may possible thwart the
desirable objective of militancy in labor's struggle for better terms and conditions is
161
then to be placed on his way. Once the fact of disaffiliation has been demonstrated
beyond doubt, as in this case, a certification election is the most expeditious way of
determining which labor organization is to be the exclusive bargaining representative. It
is as simple as that. There is relevance to this excerpt from a recent
decision, Philippine Association of Free Labor Unions v. Bureau of Labor
Relations: 24 "Petitioner thus appears to be woefully lacking in awareness of the
significance of a certification election for the collective bargaining process. It is the
fairest and most effective way of determining which labor organization can truly
represent the working force. It is a fundamental postulate that the will of the majority, if
given expression in an honest election with freedom on the part of the voters to make
their choice, is controlling. No better device can assure the institution of industrial
democracy with the two parties to a business enterprise, managment and labor,
establishing a regime of self-rule. As was pointed out by Chief Justice Castro in Rivera
v. San Miguel Brewery Corporation, Inc., "a collective bargaining agreement is the law
of the plant." To the same effect is this explicit pronouncement in Mactan Workers
Union v. Aboitiz: 'The terms and conditions of a collective bargaining contract
constitute the law between the parties.' What could be aptly stressed then, as was
done in Compania Maritima v. Compania Maritima Labor Union, is "the primacy to
which the decision reached by the employees themselves is entitled." Further, it was
therein stated: 'That is in the soundest tradition of industrial democracy. For collective
bargaining implies that instead of a unilateral imposition by management, the terms
and conditions of employment should be the subject of negotiation between it and
labor. Thus the two parties indispensable to the economy are supposed to take care of
their respective interests. Moreover, the very notion of industrial self-rule negates the
assumption that what is good for either party should be left to the will of the other. On
the contrary, there is an awareness that labor can be trusted to promote its welfare
through the bargaining process. To it then must be left the choice of its agent for such
purpose.' To paraphrase an observation of the recently retired Chief Justice Makalintal
in Seno v. Mendoza, it is essential that there be an agreement to govern the relations
between labor marked by confusion, with resulting breaches of the law by either party.
There is, it would appear, a decidedly unsympathetic approach to the institution of
collective bargaining at war with what has so often and so consistently decided by this
Tribunal." 25

2. A different conclusion could have been reached had there been no

qqqdecertification The contract-bar rule could then be invoked by petitioner. It is, as
pointed out by Justice Fernandez in Confederation of Citizens Labor Unions v. National
Labor Relations Commission, 26 "a principle in labor law that a collective bargaining
agreement of reasonable duration is, in the interest of the stability of industrial
relations, a bar to certification elections." 27 Even then, as was pointed out in the just-
cited Philippine Association of Free Labor Unions decision, it "is not to be applied with
rigidity. ... The element of flexibility in its operation cannot be ignored." 28 In this
controversy, however, such a principle is not applicable. The collective bargaining
agreement entered into by petitioner with management on March 9, 1974 was
decertified in the chiallenged order of April 8, 1975 .29 The power to decertify by
respondent Bureau is not disputed. It was the exercise thereof that is now assailed. If
done arbitrarily, there is valid ground for complaint. The due process clause is a
guarantee against any actuation of that sort. lt stands for fairness and justice, That
standard was not ignored. It suffices to read the petition to disprove any allegation of
such failing, whether in its procedural or substantive aspect. Petitioner was heard by
respondent Bureau before the order of decertification was issued on April 8, 1975. The
denial of its motion for reconsideration came also after it had an opportunity to present
162
its side. Procedural due process was thus observed. Nor was there any denial of
substantive due process in the sense of such decertification being an act of
arbitrariness and caprice.

In the order of April 8, 1975, it was specifically pointed out; "In the instant case, it is not
disputed that the collective bargaining agreement certified by the National Labor
Relations Commission was not ratified by the majority of the employees within the
bargaining unit. This is defective. It is blatant non-observance of the basic requirement
necessary to certification. To allow it to remain uncorrected would allow circumvention
of what the law specifically ordained. We cannot countenance irregularities of the
highest order to exist in our very own eyes to be perpetuated. With respect to the
complaint of the confirmation of disaffiliation of the members of respondent Philippine
Labor Alliance counsel the same should be resolved in the most expedient and simple
method of determining the exclusive bargaining representative — the holding of a
certification election." 30 In the order denying the motion for reconsideration dated July
31, 1975, it was first noted: "On January 20, 1975, FFW and 848 Orion employees filed
with the Bureau a petition for the annulment of the 1974 collective bargaining
agreement and for the confirmation of the disaffiliation of the 848 employees from
PLAC and their affiliation with FFW. The petition alleged among others, that the new
agreement was concluded about ten months before the expiry date of the old
purposely to defeat the right of the covered employees to choose their bargaining
representative at the proper time appointed by law. It appears, indeed, that there
qqqas no urgency. for the premature renegotiations considering that the new
agreement provides for a 50-centavo salary increase effective yet on January 1,
1976." 31 Then, there was further clarification of the decision reached as to the holding
of a certification election being the appropriate mode of solving the dispute: "With the
decertification of the collective agreement, the representation issue comes back to the
fore. Petitioner wants this resolved by ruling on the affiliation and disaffiliation of the
union, The Bureau holds, however, that certification election can better reolve the
issue. parenthetically, it should be stated that a certification election can still be held
even if the collective agreement were certified, considering the peculiar facts of the
case. Good policy and equity demand that when an agreement is renegotiated before
the appointed 60-day period, its certification must still give way to any representation
issue that may be raised within 60-day period so that the right of employees to choose
a bargaining unit agent and the right, of unions to be chosen shall be preserved." 32

3. There is, finally, another insuperable obstacle success of this petition. There is no
need for a citation of authorities to show how well-settled and firmly-rooted is the
doctrine of the well- nigh conclusive respect for the findings of facts of administrative
tribunals, leaving to the judiciary, in the ultimate analysis, this Tribunal, to set forth the
correct legal norm applicable to the controversy. With specific reference to the
agencies at present dealing with labor relations, there is this excerpt from Justice
Aquino's opinion in Antipolo Highway Lines, Inc. v. Inciong: 33 "A dispassionate scrutiny
of the proceedings in the NLRC does not sustain petitioners' view that they were
denied due process and that the NLRC committed a grave abuse of discretion. (See
Maglasang v. Ople, L-38813, April 29, 1975 per Justice Fernando). We found no
justification for setting aside the factual findings of the NLRC, which like those of any
other administrative agency, are generally binding on the courts (Timbancaya v.
Vicente. 62 O.G. 9424, 9 SCRA 852). " 34

163
WHEREFORE, this petition for certiorari and prohibition is dismissed. The restraining
order issued by this Court in its resolution of September 8, 1975 is hereby lifted. No
costs.

G.R. No. 118562 July 5, 1996

ALLIANCE OF NATIONALIST AND GENUINE LABOR ORGANIZATION (ANGLO-

KMU), petitioner,
vs.
SAMAHAN NG MGA MANGGAGAWANG NAGKAKAISA SA MANILA BAY
SPINNING MILLS AT J.P. COATS (SAMANA BAY), GILBERT SUNGAYANN,
FERNANDO MELARPIS, ET AL), respondents.

RESOLUTION

FRANCISCO, J.:p

Petitioner Alliance of Nationalist and Genuine Labor Organization (ANGLO for brevity)
is a duly registered labor organization while respondent union Samahan Ng Mga
Manggagawang Nagkakaisa sa Manila Bay Spinning Mills and J.P. Coats (SAMANA
BAY for brevity) is its affiliate. In representation of SAMANA BAY, ANGLO entered and
concluded a Collective Bargaining Agreement (CBA) with Manila Bay Spinning Mills
and J.P. Coats Manila Bay, Inc. (hereinafter referred to as the corporations) on
November 1, 1991. On December 4, 1993, the Executive Committee of SAMANA BAY
decided to disaffiliate from ANGLO in view of the latter's dereliction of its duty to
promote and advance the welfare of SAMANA BAY and the alleged cases of
corruption involving the federation officers. Said disaffiliation was unanimously
confirmed by the members of SAMANA BAY.

On April 4, 1994, a petition to stop remittance of federation dues to ANGLO was filed
by SAMANA BAY with the Bureau of Labor Relations on the ground that the
corporations, despite having been furnished copies of the union resolution relating to
said disaffiliation, refused to honor the same. ANGLO counter-acted by unseating all
officers and board members of SAMANA BAY and appointing, in their stead, a new set
of officers who were duly recognized by the corporations.

In its position paper, ANGLO contended that the disaffiliation was void considering that
a collective bargaining agreement is still existing and the freedom period has not yet
set in. The Med-Arbiter resolved that the disaffiliation was void but upheld the illegality
of the ouster of the officers of SAMANA BAY. Both parties filed their respective
appeals with the Department of Labor and Employment. In a resolution dated
September 23, 1994, herein public respondent modified the order and ruled in favor of
respondent union, disposing as follows:

WHEREFORE, the appeal of respondent ANGLO is hereby denied for lack

of merit while the appeal of petitioners is hereby granted. Accordingly, the
order of the Med-Arbiter is modified by:

1) declaring the disaffiliation of petitioner union from respondent ANGLO as

valid;

164
 2) directing respondent Manila Bay Spinning Mills, Inc. and J.P. Coats to
stop remitting to ANGLO federation dues and instead to remit the whole
amount of union dues to the treasurer of petitioner union; and

3) enjoining ANGLO-KMU from interfering in the affairs of petitioner union.

SO ORDERED.1

ANGLO filed a motion for reconsideration but the same was denied for lack of merit.
Hence, this petition for certiorari under Rule 65.

The petition calls upon us to resolve two issues, to wit:

1) whether the disaffiliation was valid; and

2) whether petitioner can validly oust individual private respondents from

their positions.

We rule for the respondents.

For clarity, we shall first consider the issue respecting the validity of the
disaffiliation.

Petitioner ANGLO wants to impress on us that the disaffiliation was invalid for
two reasons, namely: that the procedural requirements for a valid disaffiliation
were not followed; and that it was made in violation of P.D 1391.

Anent the first ground, we reiterate the rule that all employees enjoy the right to
self-organization and to form and join labor organizations of their own choosing
for the purpose of collective bargaining. This is a fundamental right of labor and
derives its existence from the Constitution. In interpreting the protection to labor
and social justice provisions of the Constitution and the labor laws, rules or
regulations, we have always adopted the liberal approach which favors the
exercise of labor rights. 2

This Court is not ready to bend this principle to yield to a mere procedural defect,
to wit: failure to observe certain procedural requirements for a valid disaffiliation.
Non-compliance with the procedure on disaffiliation, being premised on purely
technical grounds cannot rise above the fundamental right of self-organization. 3

We quote, with approval, the findings of herein public respondent, that:

. . . the resolution of the general membership ratifying the disaffiliation

action initiated by the Board, substantially satisfies the procedural
requirements for disaffiliation. No doubt was raised on the support of the
majority of the union members on the decision to
4
disaffiliate.

This, to our mind, is clearly supported by the evidence. ANGLO's alleged acts
inimical to the interests of respondent union have not been sufficiently rebutted. It
is clear under the facts that respondent union's members have unanimously
decided to disaffiliate from the mother federation and ANGLO has nothing to offer

165
 in dispute other than the law prohibiting the disaffiliation outside the freedom
period.

In the same wise, We find no ground for ruling against the validity of the
disaffiliation in the light of recent jurisprudential rules.

Although P.D. 1391 provides:

Item No. 6. No petition for certification election, for intervention and

disaffiliation shall be entertained or given due course except within the 60-
day freedom period immediately preceeding the expiration of a collective
bargaining agreement,

said law is definitely not without exceptions. Settled is the rule that a local union
has the right to disaffiliate from its mother union when circumstances
warrant. 5 Generally, a labor union may disaffiliate from the mother union to form
a local or independent union only during the 60-day freedom period immediately
preceding the expiration of the CBA. However, even before the onset of the
freedom period, disaffiliation may be carried out when there is a shift of
allegiance on the part of the majority of the members of the union. 6

Coming now to the second issue, ANGLO contends that individual private
respondents were validly ousted as they have ceased to be officers of the
incumbent union (ANGLO-KMU) at the time of disaffiliation. In order to fill the
vacuum, it was deemed proper to appoint the individual replacements so as not
to put in disarray the organizational structure and to prevent chaos and confusion
among the general membership and within the company.

The contention is bereft of merit. A local labor union is a separate and distinct
unit primarily designed to secure and maintain an equality of bargaining power
between the employer and their employee-members. A local union does not owe
its existence to the federation with which it is affiliated. It is a separate and
distinct voluntary association owing its creation to the will of its members. 7 The
mere act of affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act independently of the
local union. It only gives rise to a contract of agency 8 where the former acts in
representation of the latter.

By SAMANA BAY's disaffiliation from ANGLO, the vinculum that previously

bound the two entities was completely severed. ANGLO was divested of any and
all power to act in representation of SAMANA BAY. Thus, any act performed by
ANGLO affecting the interests and affairs of SAMANA BAY, including the ouster
of herein individual private respondent, is rendered without force and effect.

WHEREFORE, premises considered, the petition is hereby DISMISSED.

Antonio, Aquino and Concepcion, Jr., JJ., concur.

166