1.) SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP.
BY ITS Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-
PRESIDENT, ALFIE ALIPIO, Petitioner, v. BUREAU OF LABOR RELATIONS,
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO., LTD. (HHIC-
PHIL.), Respondents. G.R. No. 211145, October 14, 2015
DECISION
MENDOZA, J.:
The right to self-organization is not limited to unionism. Workers may also form or
join an association for mutual aid and protection and for other legitimate purposes.
This is a petition for review on certiorari seeking to reverse and set aside the July 4,
2013 Decision1 and the January 28, 2014 Resolution 2 of the Court of Appeals (CA) in
CA-G.R. SP No. 123397, which reversed the November 28, 2011 Resolution 3 of the
Bureau of Labor Relations (BLR) and reinstated the April 20, 2010 Decision 4 of the
Department of Labor and Employment (DOLE) Regional Director, cancelling the
registration of Samahan ng Manggagawa sa Hanjin Shipyard (Samahan) as a worker's
association under Article 243 (now Article 249) of the Labor Code.
The Facts
On February 16, 2010, Samahan, through its authorized representative, Alfie F.
Alipio, filed an application for registration 5 of its name "Samahan ng Mga
Manggagawa sa Hanjin Shipyard" with the DOLE. Attached to the application were
the list of names of the association's officers and members, signatures of the
attendees of the February 7, 2010 meeting, copies of their Constitution and By-laws.
The application stated that the association had a total of 120 members.
On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando,
Pampanga (DOLE-Pampanga), issued the corresponding certificate of registration 6 in
favor of Samahan.
On March 15, 2010, respondent Hanjin Heavy Industries and Construction Co., Ltd.
Philippines (Hanjin), with offices at Greenbeach 1, Renondo Peninsula, Sitio Agustin,
Barangay Cawag, Subic Bay Freeport Zone, filed a petition 7 with DOLE-Pampanga
praying for the cancellation of registration of Samahan's association on the ground
that its members did not fall under any of the types of workers enumerated in the
second sentence of Article 243 (now 249).
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employed, and those without definite employers may form a workers' association. It
further posited that one third (1/3) of the members of the association had definite
employers and the continued existence and registration of the association would
prejudice the company's goodwill.
On March 18, 2010, Hanjin filed a supplemental petition, 8 adding the alternative
ground that Samahan committed a misrepresentation in connection with the list of
members and/or voters who took part in the ratification of their constitution and by-
laws in its application for registration. Hanjin claimed that Samahan made it appear
that its members were all qualified to become members of the workers' association.
On March 26, 2010, DOLE-Pampanga called for a conference, wherein Samahan
requested for a 10-day period to file a responsive pleading. No pleading, however,
was submitted. Instead, Samahan filed a motion to dismiss on April 14, 2010.9
The Ruling of the DOLE Regional Director
On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of Hanjin. He
found that the preamble, as stated in the Constitution and By-Laws of Samahan, was
an admission on its part that all of its members were employees of Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay naglalayong na
isulong ang pagpapabuti ng kondisyon sa paggawa at katiyakan sa hanapbuhay sa
pamamagitan ng patuloy na pagpapaunlad ng kasanayan ng para sa mga kasapi
nito. Naniniwala na sa pamamagitan ng aming mga angking lakas, kaalaman at
kasanayan ay anting maitataguyod at makapag-aambag sa kaunlaran ng isang
lipunan. Na mararating at makakamit ang antas ng pagkilala, pagdakila at
pagpapahalaga sa mga tulad naming mga manggagawa.
x x x10
The same claim was made by Samahan in its motion to dismiss, but it failed to adduce
evidence that the remaining 63 members were also employees of Hanjin. Its
admission bolstered Hanjin's claim that Samahan committed misrepresentation in
its application for registration as it made an express representation that all of its
members were employees of the former. Having a definite employer, these 57
members should have formed a labor union for collective bargaining.11 The
dispositive portion of the decision of the Dole Regional Director, reads:
WHEREFORE, premises considered, the petition is hereby GRANTED. Consequently,
the Certificate of Registration as Legitimate Workers Association (LWA) issued to the
SAMAHAN NG MGA MANGGAGAWA SA HANJIN SHIPYARD (SAMAHAN) with
Registration Numbers R0300-1002-WA-009 dated February 26, 2010 is hereby
CANCELLED, and said association is dropped from the roster of labor organizations
of this Office. Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain in the
roster of legitimate workers' association.21
SO DECIDED.12
On October 14, 2010, Hanjin filed its motion for reconsideration. 22
The Ruling of the Bureau of Labor Relations
In its Resolution,23 dated November 28, 2011, the BLR affirmed its September 6, 2010
Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin had no Decision, but directed Samahan to remove the words "Hanjin Shipyard" from its
right to petition for the cancellation of its registration. Samahan pointed out that the name. The BLR explained that the Labor Code had no provision on the use of trade
words "Hanjin Shipyard," as used in its application for registration, referred to a or business name in the naming of a worker's association, such matters being
workplace and not as employer or company. It explained that when a shipyard was governed by the Corporation Code. According to the BLR, the most equitable relief
put up in Subic, Zambales, it became known as Hanjin Shipyard. Further, the that would strike a balance between the contending interests of Samahan and Hanjin
remaining 63 members signed the Sama-Samang Pagpapatunay which stated that was to direct Samahan to drop the name "Hanjin Shipyard" without delisting it from
they were either working or had worked at Hanjin. Thus, the alleged the roster of legitimate labor organizations. The fallo reads:
misrepresentation committed by Samahan had no leg to stand on. 14 WHEREFORE, premises considered, our Decision dated 6 September 2010 is hereby
AFFIRMED with a DIRECTIVE for SAMAHAN to remove "HANJIN SHIPYARD" from its
In its Comment to the Appeal,15 Hanjin averred that it was a party-in-interest. It name.
reiterated that Samahan committed misrepresentation in its application for
registration before DOLE Pampanga. While Samahan insisted that the remaining 63 SO RESOLVED.24
members were either working, or had at least worked in Hanjin, only 10 attested to
Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before the CA,
such fact, thus, leaving its 53 members without any workplace to claim.
docketed as CA-G.R. SP No. 123397.
On September 6, 2010, the BLR granted Samahan's appeal and reversed the ruling of
In its March 21, 2012 Resolution,26 the CA dismissed the petition because of
the Regional Director. It stated that the law clearly afforded the right to self-
Samahan's failure to file a motion for reconsideration of the assailed November 28,
organization to all workers including those without definite employers.16 As an
2011 Resolution.
expression of the right to self-organization, industrial, commercial and self-
employed workers could form a workers' association if they so desired but subject
On April 17, 2012, Samahan filed its motion for reconsideration 27 and on July 18,
to the limitation that it was only for mutual aid and protection. 17 Nowhere could it
2012, Hanjin filed its comment28 to oppose the same. On October 22, 2012, the CA
be found that to form a workers' association was prohibited or that the exercise of a
issued a resolution granting Samahan's motion for reconsideration and reinstating
workers' right to self-organization was limited to collective bargaining.18
the petition. Hanjin was directed to file a comment five (5) days from receipt of
notice.29
The BLR was of the opinion that there was no misrepresentation on the part of
Samahan. The phrase, "KAMI, ang mga Manggagawa sa Hanjin Shipyard" if
On December 12, 2012, Hanjin filed its comment on the petition, 30 arguing that to
translated, would be: "We, the workers at Hanjin Shipyard." The use of the
require Samahan to change its name was not tantamount to interfering with the
preposition "at" instead of "of " would indicate that "Hanjin Shipyard" was intended
workers' right to self-organization.31 Thus, it prayed, among others, for the dismissal
to describe a place.19 Should Hanjin feel that the use of its name had affected the
of the petition for Samahan's failure to file the required motion for reconsideration. 32
goodwill of the company, the remedy was not to seek the cancellation of the
association's registration. At most, the use by Samahan of the name "Hanjin
On January 17, 2013, Samahan filed its reply. 33
Shipyard" would only warrant a change in the name of the association.20 Thus, the
dispositive portion of the BLR decision reads:
On March 22, 2013, Hanjin filed its memorandum.34
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III Director
Ernesto C. Bihis dated 20 April 2010 is REVERSED and SET ASIDE.
The Ruling of the Court of Appeals

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 purpose of collective bargaining, it does not prohibit them from forming a labor
On July 4, 2013, the CA rendered its decision, holding that the registration of organization simply for purposes of mutual aid and protection. All members of
Samahan as a legitimate workers' association was contrary to the provisions of Samahan have one common place of work, Hanjin Shipyard. Thus, there is no reason
Article 243 of the Labor Code.35 It stressed that only 57 out of the 120 members were why they cannot use "Hanjin Shipyard" in their name. 39
actually working in Hanjin while the phrase in the preamble of Samahan's
Constitution and By-laws, "KAMI, ang mga Manggagawa sa Hanjin Shipyard" Hanjin counters that Samahan failed to adduce sufficient basis that all its members
created an impression that all its members were employees of HHIC. Such were employees of Hanjin or its legitimate contractors, and that the use of the name
unqualified manifestation which was used in its application for registration, was a "Hanjin Shipyard" would create an impression that all its members were employess
clear proof of misrepresentation which warranted the cancellation of Samahan's of HHIC.40
registration.
Samahan reiterates its stand that workers with a definite employer can organize any
It also stated that the members of Samahan could not register it as a legitimate association for purposes of mutual aid and protection. Inherent in the workers' right
worker's association because the place where Hanjin's industry was located was not to self-organization is its right to name its own organization. Samahan referred
a rural area. Neither was there any evidence to show that the members of the "Hanjin Shipyard" as their common place of work. Therefore, they may adopt the
association were ambulant, intermittent or itinerant workers. 36 same in their association's name.41

At any rate, the CA was of the view that dropping the words "Hanjin Shipyard" from
the association name would not prejudice or impair its right to self-organization
because it could adopt other appropriate names. The dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering that the
words "Hanjin Shipyard" be removed from petitioner association's name, is
AFFIRMED. The Decision dated April 20, 2010 of the DOLE Regional Director in Case
No. R0300-1003-CP-001, which ordered the cancellation of petitioner association's
registration is REINSTATED.
SO ORDERED.37
Hence, this petition, raising the following
ISSUES
I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT SAMAHAN CANNOT
FORM A WORKERS' ASSOCIATION OF EMPLOYEES IN HANJIN AND INSTEAD
SHOULD HAVE FORMED A UNION, HENCE THEIR REGISTRATION AS A WORKERS'
ASSOCIATION SHOULD BE CANCELLED.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE
REMOVAL/DELETION OF THE WORD "HANJIN" IN THE NAME OF THE UNION BY
REASON OF THE COMPANY'S PROPERTY RIGHT OVER THE COMPANY NAME
"HANJIN."38
Samahan argues that the right to form a workers' association is not exclusive to
intermittent, ambulant and itinerant workers. While the Labor Code allows the
workers "to form, join or assist labor organizations of their own choosing" for the
The Court's Ruling
The petition is partly meritorious.
Right to self-organization includes right to form a union, workers' association and
labor management councils
More often than not, the right to self-organization connotes unionism. Workers,
however, can also form and join a workers' association as well as labor-management
councils (LMC). Expressed in the highest law of the land is the right of all workers to
self-organization. Section 3, Article XIII of the 1987 Constitution states:
Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. It shall guarantee the rights of all workers to self-
organization,
collective bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. xxx
[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in the public and private
sectors, to form unions, associations, or societies for purposes not contrary to law
shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:

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Article 3. Declaration of basic policy. The State shall afford protection to labor, is a labor union. The difference is one of organization, composition and operation. 48
promote full employment, ensure equal work opportunities regardless of sex, race
or creed and regulate the relations between workers and employers. The State shall Collective bargaining is just one of the forms of employee participation. Despite so
assure the rights of workers to self-organization, collective bargaining, security of much interest in and the promotion of collective bargaining, it is incorrect to say that
tenure, and just and humane conditions of work. it is the device and no other, which secures industrial democracy. It is equally
misleading to say that collective bargaining is the end-goal of employee
[Emphasis Supplied] representation. Rather, the real aim is employee participation in whatever form it
may appear, bargaining or no bargaining, union or no union. 49 Any labor organization
As Article 246 (now 252) of the Labor Code provides, the right to self-organization
which may or may not be a union may deal with the employer. This explains why a
includes the right to form, join or assist labor organizations for the purpose of
workers' association or organization does not always have to be a labor union and
collective bargaining through representatives of their own choosing and to engage
why employer-employee collective interactions are not always collective
in lawful concerted activities for the same purpose for their mutual aid and
bargaining.50
protection. This is in line with the policy of the State to foster the free and voluntary
organization of a strong and united labor movement as well as to make sure that
To further strengthen employee participation, Article 255 (now 261) 51 of the Labor
workers participate in policy and decision-making processes affecting their rights,
Code mandates that workers shall have the right to participate in policy and decision-
duties and welfare.42
making processes of the establishment where they are employed insofar as said
processes will directly affect their rights, benefits and welfare. For this purpose,
The right to form a union or association or to self-organization comprehends two
workers and employers may form LMCs.
notions, to wit: (a) the liberty or freedom, that is, the absence of restraint which
guarantees that the employee may act for himself without being prevented by law;
A cursory reading of the law demonstrates that a common element between
and (b) the power, by virtue of which an employee may, as he pleases, join or refrain
unionism and the formation of LMCs is the existence of an employer-employee
from joining an association.43
relationship. Where neither party is an employer nor an employee of the other, no
duty to bargain collectively would exist.52 In the same manner, expressed in Article
In view of the revered right of every worker to self-organization, the law expressly
255 (now 261) is the requirement that such workers be employed in the
allows and even encourages the formation of labor organizations. A labor
establishment before they can participate in policy and decision making processes.
organization is defined 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
In contrast, the existence of employer-employee relationship is not mandatory in the
concerning terms and conditions of employment." 44 A labor organization has two
formation of workers' association. What the law simply requires is that the members
broad rights: (1) to bargain collectively and (2) to deal with the employer concerning
of the workers' association, at the very least, share the same interest. The very
terms and conditions of employment. To bargain collectively is a right given to a
definition of a workers' association speaks of "mutual aid and protection."
union once it registers itself with the DOLE. Dealing with the employer, on the other
hand, is a generic description of interaction between employer and employees
Right to choose whether to form or join a union or workers' association belongs to
concerning grievances, wages, work hours and other terms and conditions of
workers themselves
employment, even if the employees' group is not registered with the DOLE. 45
In the case at bench, the Court cannot sanction the opinion of the CA that Samahan
A union refers to any labor organization in the private sector organized for collective
should have formed a union for purposes of collective bargaining instead of a
bargaining and for other legitimate purpose,46 while a workers' association is an
workers' association because the choice belonged to it. The right to form or join a
organization of workers formed for the mutual aid and protection of its members or
labor organization necessarily includes the right to refuse or refrain from exercising
for any legitimate purpose other than collective bargaining. 47
the said right. It is self-evident that just as no one should be denied the exercise of a
right granted by law, so also, no one should be compelled to exercise such a
Many associations or groups of employees, or even combinations of only several
conferred right.53 Also inherent in the right to self-organization is the right to choose
persons, may qualify as a labor organization yet fall short of constituting a labor
whether to form a union for purposes of collective bargaining or a workers'
union. While every labor union is a labor organization, not every labor organization

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association for purposes of providing mutual aid and protection. other than collective bargaining.

The right to self-organization, however, is subject to certain limitations as provided
by law. For instance, the Labor Code specifically disallows managerial employees
from joining, assisting or forming any labor union. Meanwhile, supervisory
employees, while eligible for membership in labor organizations, are proscribed from
joining the collective bargaining unit of the rank and file employees.54 Even
government employees have the right to self-organization. It is not, however,
regarded as existing or available for purposes of collective bargaining, but simply for
the furtherance and protection of their interests.55
Hanjin posits that the members of Samahan have definite employers, hence, they
should have formed a union instead of a workers' association. The Court disagrees.
There is no provision in the Labor Code that states that employees with definite
employers may form, join or assist unions only.
The Court cannot subscribe either to Hanjin's position that Samahan's members
cannot form the association because they are not covered by the second sentence
of Article 243 (now 249), to wit:
Article 243. Coverage and employees' right to self-organization. All persons
employed in commercial, industrial and agricultural enterprises and in religious,
charitable, medical, or educational institutions, whether operating for profit or not,
shall have the right to self-organization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining. Ambulant, intermittent
and itinerant workers, self-employed people, rural workers and those without any
definite employers may form labor organizations for their mutual aid and
protection. (As amended by Batas Pambansa Bilang 70, May 1, 1980)
[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of Department Order (D.O.)
No. 40-03, Series of 2003, which provides:
RULE II
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy. - It is the policy of the State to promote the free and responsible
exercise of the right to self-organization through the establishment of a simplified
mechanism for the speedy registration of labor unions and workers associations,
determination of representation status and resolution of inter/intra-union and other
related labor relations disputes. Only legitimate or registered labor unions shall have
the right to represent their members for collective bargaining and other purposes.
Workers' associations shall have the right to represent their members for purposes
Section 2. Who may join labor unions and workers' associations. - All persons
employed in commercial, industrial and agricultural enterprises, including
employees of government owned or controlled corporations without original
charters established under the Corporation Code, as well as employees of religious,
charitable, medical or educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join or assist labor unions for
purposes of collective bargaining: provided, however, that supervisory employees
shall not be eligible for membership in a labor union of the rank-and-file employees
but may form, join or assist separate labor unions of their own. Managerial
employees shall not be eligible to form, join or assist any labor unions for purposes
of collective bargaining. Alien employees with valid working permits issued by the
Department may exercise the right to self-organization and join or assist labor unions
for purposes of collective bargaining if they are nationals of a country which grants
the same or similar rights to Filipino workers, as certified by the Department of
Foreign Affairs.
For purposes of this section, any employee, whether employed for a definite period
or not, shall beginning on the first day of his/her service, be eligible for membership
in any labor organization.
All other workers, including ambulant, intermittent and other workers, the self-
employed, rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection and other legitimate
purposes except collective bargaining.
[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules which provides that
workers, with definite employers, cannot form or join a workers' association for
mutual aid and protection. Section 2 thereof even broadens the coverage of workers
who can form or join a workers' association. Thus, the Court agrees with Samahan's
argument that the right to form a workers' association is not exclusive to ambulant,
intermittent and itinerant workers. The option to form or join a union or a workers'
association lies with the workers themselves, and whether they have definite
employers or not.
No misrepresentation on the part of Samahan to warrant cancellation of registration
In this case, Samahan's registration was cancelled not because its members were
prohibited from forming a workers' association but because they allegedly
committed misrepresentation for using the phrase, "KAMI, ang mga Manggagawa

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sa HAN JIN Shipyard."
Misrepresentation, as a ground for the cancellation of registration of a labor
organization, is committed "in connection with the adoption, or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, the list
of members who took part in the ratification of the constitution and by-laws or
amendments thereto, and those in connection with the election of officers, minutes
of the election of officers, and the list of voters, xxx." 56
In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director granted
the petition for the cancellation of certificate of registration of Samahang Lakas
Manggagawa sa Takata (Salamat) after finding that the employees who attended the
organizational meeting fell short of the 20% union registration requirement. The BLR,
however, reversed the ruling of the DOLE Regional Director, stating that petitioner
Takata Corporation (Takata) failed to prove deliberate and malicious
misrepresentation on the part of respondent Salamat. Although Takata claimed that
in the list of members, there was an employee whose name appeared twice and
another was merely a project employee, such facts were not considered
misrepresentations in the absence of showing that the respondent deliberately did
so for the purpose of increasing their union membership. The Court ruled in favor of
Salamat.
In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for
cancellation of certificate of registration was denied. The Court wrote:
If the union's application is infected by falsification and like serious irregularities,
especially those appearing on the face of the application and its attachments, a
union should be denied recognition as a legitimate labor organization. Prescinding
from these considerations, the issuance to the Union of Certificate of Registration
No. RO300-00-02-UR-0003 necessarily implies that its application for registration
and the supporting documents thereof are prima facie free from any vitiating
irregularities. Another factor which militates against the veracity of the allegations
in the Sinumpaang Petisyon is the lack of particularities on how, when and where
respondent union perpetrated the alleged fraud on each member. Such details are
crucial for in the proceedings for cancellation of union registration on the ground
of fraud or misrepresentation, what needs to be established is that the specific act
or omission of the union deprived the complaining employees-members of their
right to choose.
[Emphases Supplied]
Based on the foregoing, the Court concludes that misrepresentation, to be a ground
for the cancellation of the certificate of registration, must be done maliciously and
deliberately. Further, the mistakes appearing in the application or attachments must
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be grave or refer to significant matters. The details as to how the alleged fraud was
committed must also be indubitably shown.
The records of this case reveal no deliberate or malicious intent to commit
misrepresentation on the part of Samahan. The use of such words "KAMI, ang mga
Manggagawa sa HANJIN Shipyard" in the preamble of the constitution and by-laws
did not constitute misrepresentation so as to warrant the cancellation of Samahan's
certificate of registration. Hanjin failed to indicate how this phrase constitutes a
malicious and deliberate misrepresentation. Neither was there any showing that the
alleged misrepresentation was serious in character. Misrepresentation is a devious
charge that cannot simply be entertained by mere surmises and conjectures.
Even granting arguendo that Samahan's members misrepresented themselves as
employees or workers of Hanjin, said misrepresentation does not relate to the
adoption or ratification of its constitution and by-laws or to the election of its
officers.
Removal of the word "Hanjin Shipyard" from the association's name, however, does
not infringe on Samahan's right to self-organization
Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be removed
in the name of the association. A legitimate workers' association refers to an
association of workers organized for mutual aid and protection of its members or for
any legitimate purpose other than collective bargaining registered with the
DOLE.59 Having been granted a certificate of registration, Samahan's association is
now recognized by law as a legitimate workers' association.
According to Samahan, inherent in the workers' right to self-organization is its right
to name its own organization. It seems to equate the dropping of words "Hanjin
Shipyard" from its name as a restraint in its exercise of the right to self-organization.
Hanjin, on the other hand, invokes that "Hanjin Shipyard" is a registered trade name
and, thus, it is within their right to prohibit its use.
As there is no provision under our labor laws which speak of the use of name by a
workers' association, the Court refers to the Corporation Code, which governs the
names of juridical persons. Section 18 thereof provides:
No corporate name may be allowed by the Securities and Exchange Commission if
the proposed name is identical or deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing laws. When a change in the corporate
name is approved, the Commission shall issue an amended certificate of
incorporation under the amended name.
[Emphases Supplied]
The policy underlying the prohibition in Section 18 against the registration of a
These petitions have a common origin and raise identical issues. They were ordered
corporate name which is "identical or deceptively or confusingly similar" to that of
consolidated on 23 November 1988.
any existing corporation or which is "patently deceptive" or "patently confusing" or
"contrary to existing laws," is the avoidance of fraud upon the public which would
In G.R. No. 81883, the 1 December 1987 Decision of respondent Director of the
have occasion to deal with the entity concerned, the evasion of legal obligations and
Bureau of Labor Relations in BLR Case No. A-10-315-87, which reversed the Order of
duties, and the reduction of difficulties of administration and supervision over
Med-Arbiter-Designate Rolando S. dela Cruz dated 4 September 1987 and ordered
corporations.60
the holding of a certification election among the regular rank-and-file monthly-paid
employees of Knitjoy Manufacturing, Inc. (KNITJOY), is assailed by the latter.
For the same reason, it would be misleading for the members of Samahan to use
"Hanjin Shipyard" in its name as it could give the wrong impression that all of its
The Med-Arbiter’s order dismissed the petition of private respondent Knitjoy
members are employed by Hanjin.
Monthly Employees Union (KMEU) for such certification election and directed the
parties "to work out (sic) towards the formation of a single union in the
Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:
company."cralaw virtua1aw library
The change of name of a labor organization shall not affect its legal personality. All
the rights and obligations of a labor organization under its old name shall continue
The antecedent material operative facts in these petitions are as follows:chanrob1es
to be exercised by the labor organization under its new name.
virtual 1aw library
Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no
abridgement of Samahan's right to self-organization was committed. Petitioner KNITJOY had a collective bargaining agreement (CBA) with the Federation
of Filipino Workers (FFW). The bargaining unit covered only the regular rank-and-file
WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision and the employees of KNITJOY paid on a daily or piece-rate basis. It did not include regular
January 28, 2014 Resolution of the Court of Appeals are hereby REVERSED and SET rank-and-file office and production employees paid on a monthly basis. The CBA
ASIDE. The September 6, 2010 Resolution of the Bureau of Labor Relations, as expired on 15 June 1987. Prior to its expiration, the FFW was split into two (2)
modified by its November 28, 2011 Resolution, is REINSTATED. factions — the Johnny Tan and the Aranzamendez factions. The latter eventually
became the Confederation of Filipino Workers (CFW), herein petitioner in G.R. No.
SO ORDERED.chanroblesvirtuallawlibrary 82111.

Also prior to the expiration of the CBA, the Trade Union of the Philippines and Allied
[G.R. No. 81883. September 23, 1992.] Services (TUPAS) filed a petition for the holding of a certification election among
KNITJOY’s regular rank-and-file employees paid on a daily and piece-rate basis.
2.) KNITJOY MANUFACTURING, INC., Petitioner, v. PURA FERRER-CALLEJA, Director Excluded were the regular rank-and-file employees paid on a monthly basis. In the
of Bureau of Labor Relations, and KNITJOY MONTHLY EMPLOYEES certification election conducted on 10 June 1987, CFW emerged as the winner;
UNION, Respondents. thereafter, negotiations for a new CBA between CFW and KNITJOY
commenced.chanroblesvirtualawlibrary
[G.R. No. 82111. September 23, 1992.]
On 24 June 1987, during the pendency of the said negotiations, private respondent
CONFEDERATION OF FILIPINO WORKERS (CFW), Petitioner, v. DIRECTOR PURA KMEU filed a petition for certification election among KNITJOY’s regular rank-and-
file monthly-paid employees with Regional Office No. IV of the Department of Labor
FERRER-CALLEJA and KNITJOY MONTHLY EMPLOYEES UNION
and Employment (DOLE) which docketed the same as R-04-OD-M-6-75-87. The
(KMEU), Respondents.
Knitjoy Monthly Employees Association and Confederation of Citizens Labor Union
DAVIDE, JR., J.: (KMEA-CCLU), another union existing in the said company, and petitioner CFW

7|P age
intervened therein. perhaps unusual for management to have to deal with two (2) collective bargaining
unions but there is no one to blame except management for creating the situation it
The petition was dismissed in the Order of 4 September 1987 of Med-Arbiter is in. From the beginning of the existence of the CBA, management had sought to
Rolando S. de la Cruz, the dispositive portion of which reads:jgc:chanrobles.com.ph indiscriminately suppress the members of the petitioners’ right (sic) to self-
organization. Respondents’ argument that the incumbent collective bargaining
"WHEREFORE, premises considered, the petition is hereby Dismissed, but the parties agent is willing to accommodate herein petitioner is of no moment since the option
are instructed to work out (sic) towards the formation of a single union in the now rests upon the petitioner as to whether or not they desire to join the existing
company." 1 collective bargaining agent or remain as separate (sic) union." 3

KMEU filed a motion to reconsider this order, which was treated as an appeal by the KNITJOY and CFW separately moved to reconsider the said decision alleging, as
Bureau of Labor Relations (BLR). principal underpinning therefor, the conclusion and signing between them, allegedly
on 27 November 1987 — before the rendition of the challenged decision — of a CBA
On 1 December 1987, public respondent Pura Ferrer-Calleja. Director of the BLR, which includes in its coverage the monthly-paid rank-and-file employees. It is
handed down a Decision 2 reversing the order of Med-Arbiter de la Cruz. The averred that said CBA has rendered the case moot and academic; moreover, to
dispositive portion of the Decision reads:jgc:chanrobles.com.ph remove the monthly-paid employees from their present bargaining unit would lead
to the fragmentation thereof, contrary to existing labor policies favoring larger
"WHEREFORE, premises considered, the Appeal of Knitjoy Monthly Employees is units.chanrobles virtual lawlibrary
hereby granted subject to the exclusion of the monthly paid employees who are
deemed managerial. In her Decision of 8 February 1988, respondent Director denied for lack of merit the
motion for reconsideration on the principal ground that although the monthly-paid
Let, therefore, the certification election proceed without delay, with the following as rank-and-file employees were allegedly included within the scope of the new CBA,
choices:chanrob1es virtual 1aw library they are not barred from forming a separate bargaining unit considering that: (a)
since the petition for certification election was filed as early as 24 June 1987, there
1. Knitjoy Monthly Employees Union (KMEU); and already existed a pending. representation issue when KNITJOY and CFW commenced
negotiations for a new CBA; nevertheless, KMEU was not brought into the said
2. No Union. negotiations and was therefore not a privy to the CBA; (b) members of KMEU did not
participate in the ratification of the CBA; contrary to KNITJOY s claim that the same
The company’s latest payroll shall be the basis in determining the list of eligible was unanimously ratified by the members of the bargaining unit, the CBA failed to
voters. mention even one monthly-paid employee who participated in the ratification
process, and (c) while it is true that the policy of the DOLE is to favor a one company-
SO ORDERED."cralaw virtua1aw library one union scenario which finds basis in Section 2, Rule V, Book V of the Rules
Implementing the Labor Code, there are, nonetheless, some exceptions thereto, as
Respondent Director brushed aside KNITJOY’s arguments that the monthly-paid where the bargaining history requires the formation of another bargaining unit.
employees have the same working incentives as their counterparts, the daily-paid Besides, such a policy must yield to an employee’s Constitutional right to form unions
workers; that the existing collective bargaining agent (CFW) is willing to include the which includes the freedom to join a union of one’s choice. 4
monthly-paid employees, and that out of the 212 monthly-paid employees, 116
qualify as managerial employees while the rest who are holding confidential or The new CBA, which KMEU claims to have been signed on 12 December 1987, and
technical positions should likewise be excluded. In finding for KMEU, said Director not on 27 November 1987 as both KNITJOY and CFW boldly assert, defines the
declared that:jgc:chanrobles.com.ph bargaining unit covered as follows:jgc:chanrobles.com.ph

"As pointed out by the Supreme Court in the similar case of General Rubber and "SECTION 2. The bargaining unit covered by this Agreement consists of all regular
Footwear Corporation v. Bureau of Labor Relations, Et Al., G.R. No. 74262, it is and permanent rank-and-file employees of the COMPANY employed in its

8|P age
production plants and paid on a daily or piece-rate basis and regular, rank-and-file
monthly paid office employees, excluding managerial, supervisory, casual,
temporary and probationary employees, and security guards." 5
Unfazed by their defeat before the BLR, KNITJOY and CFW separately filed the instant
petitions. The former imputes upon respondent Director grave abuse of discretion
in holding that (a) the scope of the bargaining unit agreed upon in the new CBA does
not bind KMEU because it is not a party thereto, (b) the acceptance by all the
members of KMEU of all benefits of the CBA did not constitute an overt act of
ratification and (c) the CBA was concluded on 12 December 1987 and not on 27
November 1987. It further contends that respondent Director contumaciously
violated the one company-one union policy of the Labor Code and disregarded the
ruling of this Court in Bulletin Publishing Corp. v. Hon. Sanchez, 6 reiterated in part
in General Rubber and Footwear Corp. v. Bureau of Labor Relations. 7 Upon the other
hand, CFW contends that respondent Director committed grave abuse of discretion
in (a) allowing the creation of a unit separate from the existing bargaining unit
defined in the new CBA thus abetting the proliferation of unions, (b) disregarding the
CBA provisions which consider the CFW as the sole and exclusive bargaining agent of
all rank-and-file employees and (c) excluding CFW from the choices of unions to be
voted upon. 8 Even Section 2(c), Rule V, Book V of the Implementing Rules and Regulations of the
On 24 August 1988, 9 this Court gave due course to the petition in G.R. No. 81883
after both the public and private respondents filed their separate comments and the
petitioner filed its consolidated reply thereto. 10
On 23 November 1988, G.R. No. 82111 was consolidated with G.R. No. 81883 and
the petitioner in the former was ordered to file a consolidated reply to the separate
comments of both respondents. 11
The principal issues raised in these petitions are:chanrob1es virtual 1aw library
1. Whether or not petitioner KNITJOY’s monthly-paid regular rank-and-file
employees can constitute an appropriate bargaining unit separate and distinct from
the existing unit composed of daily or piece-rate paid regular rank-and-file
employees, and
2. Whether or not the inclusion in the coverage of the new CBA between KNITJOY
and CFW of the monthly-paid rank-and-file employees bars the holding of a
certification election among the said monthly paid employees.
We decide for the respondents.
9|P age
1. The suggested bias of the Labor Code in favor of the one company-one union
policy, anchored on the greater mutual benefits which the parties could derive,
especially in the case of employees whose bargaining strength could undeniably be
enhanced by their unity and solidarity but diminished by their disunity, division and
dissension, is not without exceptions.
The present Article 245 of the Labor Code expressly allows supervisory employees
who are not performing managerial functions to join, assist or form their separate
union but bars them from membership in a labor organization of the rank-and-file
employees. It reads:jgc:chanrobles.com.ph
"ARTICLE 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."cralaw virtua1aw library
This provision obviously allows more than one union in a company.
Labor Code, which seeks to implement the policy, also recognizes exceptions. It
reads:chanrobles virtual lawlibrary
"SECTION 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:chanrob1es virtual 1aw library
x x x
(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; . . . ." (Emphasis supplied)
The usual exception, of course, is where the employer unit has to give way to the
other units like the craft unit, plant unit, or a subdivision thereof, the recognition of
these exceptions takes into account the policy to assure employees of the fullest
freedom in exercising their rights. 12 Otherwise stated, the one company-one union
policy must yield to the right of the employees to form unions or associations for
purposes not contrary to law, to self-organization and to enter into collective
bargaining negotiations, among others, which the Constitution guarantees. 13

The right to form a union or association or to self-organization comprehends two (2)
broad notions, to wit: (a) the liberty or freedom, i.e., the absence of restraint which
guarantees that the employee may act for himself without being prevented by law,
and (b) the power, by virtue of which an employee may, as he pleases, join or refrain
from joining an association. In Victoriano v. Elizalde Rope Workers’ Union, 14 this
Court stated:jgc:chanrobles.com.ph
". . . Notwithstanding the different theories propounded by the different schools of
jurisprudence regarding the nature and contents of a ‘right’, it can be safely said that
whatever theory one subscribes to, a right comprehends at least two broad notions,
namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an
employee may act for himself without being prevented by law; and second, power,
whereby an employee may, as he pleases, join or refrain from joining an association.
It is, therefore, the employee who should decide for himself whether he should join
or not an association, and should he choose to join, he himself makes up his mind as
to which association he would join; and even after he has joined, he still retains the
liberty and the power to leave and cancel his membership with said organization at
any time [Pagkakaisa Samahang Manggagawa ng San Miguel Brewery v. Enriquez, Et
Al., 108 Phil., 1010, 1019]. It is clear, therefore, that the right to join a union includes
the right to abstain from joining any union [Abo, Et. Al. v. PHILAME (KG) Employees
Union, Et Al., L-19912, January 30, 1965, 13 SCRA 120, 123, quoting Rothenberg,
Labor Relations]. Inasmuch as what both the Constitution and the Industrial Peace
Act have recognized, and guaranteed to the employee, is the ‘right’ to join
associations of his choice, it would be absurd to say that the law also imposes, in the
same breath, upon the employee the duty to join associations. The law does not
enjoin an employee to sign up with any association."cralaw virtua1aw library
Furthermore, it is not denied that in the bargaining history of KNITJOY, the CBA has
been consistently limited to the regular rank-and-file employees paid on a daily or
piece-rate basis. On the other hand, the rank-and-file employees paid on a monthly
basis were never included within its scope. Respondent KMEU’s membership is
limited to the latter class of employees, KMEU does not seek to dislodge CFW as the
exclusive bargaining representative for the former. The records further disclose that
in the certification solicited by TUPAS and during the elections which followed
thereafter, resulting in the certification of CFW as the exclusive bargaining
representative, the monthly-paid employees were expressly excluded. Thus, the
negotiations between CFW and KNITJOY following such a certification could only
logically refer to the rank-and-file employees paid on a daily or piece-rate basis.
Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly-paid
employees are concerned, the latter’s constituting a separate bargaining unit with
the appropriate union as sole bargaining representative, can neither be prevented
10 | P a g e
nor avoided without infringing on these employees’ rights to form a union and to
enter into collective bargaining negotiations. Stated differently, KNITJOY and CFW
recognize the fact that the existing bargaining unit in the former is not — and has
never been — the employer unit. Given this historical and factual setting, KMEU had
the unquestioned and undisputed right to seek certification as the exclusive
bargaining representative for the monthly-paid rank-and-file employees; both
KNITJOY and CFW cannot block the same on the basis of this Court’s declaration in
Bulletin Publishing Corp. v. Hon. Sanchez 15 and General Rubber and Footwear Corp.
v. Bureau of Labor Relations 16 regarding the one company-one union concept.
Petitioners have obviously misread these cases. In the first, We stated that" [t]he
crux of the dispute . . . is whether or not supervisors in petitioner company therein
may, for purposes of collective bargaining, form a union separate and distinct from
the existing union organized by the rank-and-file employees of the same company,"
17 and ruled that the members of the Bulletin Supervisory Union, wholly composed
of supervisors, are not qualified to form a union of their own under the law and rules
then existing, considering that" [a] perusal of the job descriptions corresponding to
the private respondents as outlined in the petition, clearly reveals the private
respondents to be managers, purchasing officers, personnel officers, property
officers, supervisors, cashiers, heads of various sections and the like. The nature of
their duties gives rise to the irresistible conclusion that most of the herein private
respondents are performing managerial functions;" 18 hence, under Article 246 19
of the Labor Code, they cannot form, join and assist labor organizations. It should be
stressed that the statement therein that supervisors "who do not assume any
managerial function may join or assist an existing rank-and-file union or if none
exists, to join or assist in the formation of such rank-and-file organization" 20 is no
longer legally feasible under existing laws. As earlier noted, the present Article 245
of the Labor Code allows supervisory employees who are not exercising managerial
functions to join, assist or form separate labor organizations of their own but
prohibits them from joining a labor organization composed of the rank-and-file
employees.chanrobles lawlibrary : rednad
The second case on the other hand, demolishes the stand of KNITJOY and CFW for,
as correctly contended by the respondents, it in fact recognizes an exception to the
one company-one union concept. Thus:jgc:chanrobles.com.ph
"Perhaps it is unusual for the petitioner to have to deal with two (2) collective
bargaining unions but there is no one to blame except petitioner itself for creating
the situation it is in. From the beginning of the existence in 1963 of a bargaining unit
for the employees up to the present, petitioner had sought to indiscriminately
suppress the members of the private respondent’s right (sic) to self-organization
provided for by law. Petitioner, in justification of its action, maintained that the
exclusion of the members of the private respondent from the bargaining union of
the rank-and-file or from forming their own union was agreed upon by petitioner
corporation with the previous bargaining representatives . . . Such posture has no leg
to stand on. It has not been shown that private respondent was privy to this
agreement. And even if it were so, it can never bind subsequent federations and
unions particularly private respondent-union because it is a curtailment of the right
to self-organization guaranteed by the labor laws. However, to prevent any difficulty
and to avoid confusion to all concerned and, more importantly, to fulfill the policy of
the New Labor Code as well as to be consistent with Our ruling in the Bulletin case,
supra, the monthly-paid rank-and-file employees should be allowed to join the union
of the daily-paid-rank-and-file employees of petitioner so that they can also avail of
the CBA benefits or to form their own rank-and-file union, without prejudice to the
certification election that has been ordered." 21 (Emphasis supplied)
2. Regardless of the date when the new CBA was executed - whether on 27
November 1987 as contended by KNITJOY and CFW or 12 December 1967 as claimed
by the respondents — the fact remains that it was executed before the resolution of
KMEU’s petition for certification election among the monthly paid employees
became final. This Court, however, sustains the respondents’ claim for indeed if it
was executed by the parties on 27 November 1987, both KNITJOY and CFW would
have immediately filed the appropriate pleading with the BLR informing it of such
execution and moving for the dismissal of the appeal on the ground that it has been
rendered moot and academic. Moreover, public respondent’s finding on this point is
supported by substantial evidence, thus:jgc:chanrobles.com.ph
"The parties could not have signed the said CBA on 27 November 1987, contrary to
their allegation, because from 4:00 - 10:00 p.m. on the same day, 27 November 1987,
the parties still attended a conciliation conference before Assistant Director Maximo
L. Lim of the NCR (see Annex "F" of respondent’s Supplemental Motion for
Reconsideration) and agreed in principle on nine (9) items or provisions to be
included in said CBA. Said minutes do not state that these nine items are the
remaining unresolved issues in the negotiation of the CBA." 22 It was only in their
motion for the reconsideration of public respondent’s decision of 1 December 1987
that the existence of the new CBA was made known.
Considering that (a) the TUPAS solicited certification election was strictly confined to
the rank-and-file employees who are paid on a daily or piece-rate basis, (b) the
results of the election must also necessarily confine the certified union’s
representation to the group it represents and (c) the issue of the plight of the
monthly-paid employees was still pending, KNITJOY and CFW clearly acted with
palpable bad faith and malice in including within the scope of the new CBA these
monthly-paid employees. Thus was effected a conspiracy to defeat and suppress the
right of the KMEU and its members to bargain collectively and negotiate for
11 | P a g e
themselves, to impose upon the latter a contract the negotiation for which they were
not even given notice of, consulted or allowed to participate in, and to oust from the
BLR the pending appeal on the certification issue. In the latter case, KNITJOY and
CFW are guilty of contumacious conduct. It goes without saying then that the new
CBA cannot validly include in its scope or coverage the monthly-paid rank-and-file
employees of KNITJOY. It does not bar the holding of a certification election to
determine their sole bargaining agent, and the negotiation for and the execution of
a subsequent CBA between KNITJOY and the eventual winner in said election.
Section 4, Rule V, Book V of the Rules Implementing the Labor Code expressly
provides:jgc:chanrobles.com.ph
"SECTION 4. Effects of early agreements. — The representation case shall not,
however, be adversely affected by a collective bargaining agreement registered
before or during the last 60 days of a subsisting agreement or during the pendency
of the representation case." (Emphasis supplied)
The public respondent then committed no abuse of discretion ordering a
certification election among the monthly-paid rank-and-file employees, except
managerial employees, of KNITJOY. The choice however, should not be, as correctly
contended by CFW, limited to merely (a) KMEU and (b) no union. The records
disclose that the intervenors in the petition for certification are the KMEA-CCLU and
CFW. They should be included as among the choices in the certification
election.cralawnad
WHEREFORE, the instant petitions are DISMISSED. However, the challenged decision
of public respondent of 1 December 1987 is modified to include in the choices for
the certification election petitioner Confederation of Filipino Workers (CFW) and the
Knitjoy Monthly Employees Association and Confederation of Citizens Labor Unions
(KMEU-CCLU).
Costs against petitioners.
SO ORDERED.
3.) DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner, v. COMMISSION ON
AUDIT, Respondent.
G.R. No. 210838, July 03, 2018
DECISION
TIJAM, J.:
In this Petition for Certiorari1 under Rule 64, in relation to Rule 65, petitioner
Development Bank of the Philippines (DBP) seeks the nullification of the following
issuances of the Commission on Audit (COA):
a. Decision2 No. 2012-207 dated November 15, 2012, which denied DBP's Petition
for Review, thereby sustaining the disallowance of the payment of Governance
Forum Productivity Award to DBP's officials and employees in the total amount of
P170,893,689.00; and
b. Resolution3 dated December 6, 2013, which denied with finality DBP's subsequent
Motion for Reconsideration.
The Antecedent Facts
DBP, a government financial institution created and operating under its own
charter4, was faced with labor unrest in 2003 due to its employees' insistence that
they be paid their benefits which includes Amelioration Allowance (AA), Cost of
Living Allowance (COLA) and the Bank Equity Benefit Differential Pay (BEBDP), for the
year that the Department of Budget and Management Corporate Compensation
Circular No. 10 (DBM CCC No. 10) was declared ineffective by this Court for non-
publication.5
After a series of conferences referred to as a governance forum, the employees'
group and DBP arrived at an agreement to put an end to the division causing
disruptions in bank operations. The DBP Board of Directors (BOD) adopted Board
Resolution No. 01336 dated May 9, 2003, approving a one-time grant called the
Governance Forum Productivity Award (GFPA) to DBP's officers and employees. The
total amount distributed was PhP170,893,689.00.7
An audit team was subsequently constituted to look into the legality of the GFPA
pursuant to Office Order No. 2003-078 of the COA Legal and Adjudication Office. As
a result, Audit Observation Memorandum (AOM) No. 001 8 dated January 7, 2005
found the grant of the GFPA without legal basis and recommended its refund. 9
Meanwhile, the Executive Committee (Execom) of the DBP adopted Resolution No.
015110 dated November 16, 2005, which granted the payment of Amelioration
Allowance (AA) to bank employees. The amount due as AA for individual employees
was offset against the GFPA already received by them, in the following manner:
12 | P a g e
To finally settle both the AA and GFPA issues, it will be better to pay the AA, to be
offset from the amount already paid as GFPA with the following suggested
conditions:
a. If the amount of the AA is more than the GFPA, the differential amount will be paid
to the employees.
b. If the AA is less than the GFPA, concerned employees shall no longer be required
to return the amount.
c. Those who did not receive the GFPA will get their AA in full.
d. Retirees/resignees without the usual waiver will likewise receive their AA in full.
Those with waivers, do not get anything more.11 (Emphasis ours.)
On January 3, 2007, DBP received Notice of Disallowance (ND) No. LAS-OGC-2006-
00112 dated December 18, 2006, disallowing the grant of the GFPA. According to
COA's Legal and Adjudication Team, industrial peace may not be used as a legal and
sufficient basis in granting monetary awards. Furthermore, the GFPA partakes the
nature of a compromise agreement and circumvents the rule that only a settled
claim may be a subject of compromise.13
In its Motion for Reconsideration 14 on February 28, 2007, DBP assailed the ND by
arguing that payment of the GFPA was made pursuant to the power of its Board of
Directors (BOD) to enter into a compromise agreement for settlement of employees'
claims; that industrial peace is a valid consideration for a compromise agreement;
and that the GFPA was superseded and rendered inexistent by the grant of the AA
to DBP's employees.15
COA's Fraud Audit and Investigation Office (FAIO) treated DBP's Motion for
Reconsideration (MR) as an appeal and upheld the disallowance thru the Decision
No. 2010-005 dated October 7, 2010.16 The FAIO ruled that the power of DBP's Board
to fix the remuneration and emoluments of its officials and employees is not
absolute and is subject to Sections 5 and 6 of Presidential Decree (PD) No. 159717 and
Section 3 of Memorandum Order (MO) No. 20 of the Office of the President dated
June 25, 2001 requiring prior presidential approval. It held that the power of DBP's
BOD to enter into a compromise agreement has no basis in law. Furthermore, the
subsequent payment of the AA was a separate matter that does not render the
disallowance of the GFPA moot and academic.
Aggrieved, on January 21, 2011, DBP filed a Petition for Review 18 arguing that: PD
No. 1597 and MO No. 20 requiring prior approval of the President, are not applicable
to its case; reiterating its contention that subsequent payment of the AA rendered
the grant of GFPA moot and academic as it was already converted part of the AA;
and, that the employees received the GFPA in good faith and with honest belief that
the same was valid, hence, they should not be required to refund the amount.
On March 10, 2011, DBP filed its Reply raising lack of due process for not citing PD
No. 1597 and MO No. 20 as grounds for disallowance of GFPA in the ND.
On November 15, 2012, the Commission in its Decision No. 2012-207 denied the
Petition for Review and held that there was no denial of due process as the COA's
general audit power does not restrict itself on the grounds relied upon by the
agency's auditor. It further stated that matters relating to salaries, allowances and
benefits of employees in the public sector cannot be a valid subject of a compromise
or negotiation because these are governed and fixed by laws. It debunked the notion
that the subsequent grant of the AA rendered the case moot and academic, and
argued that good faith is not a valid defense under the principle of solutio indebiti.
On December 6, 2013, the Motion for Reconsideration of DBP was thereafter denied
with finality. Hence, the present petition dated February 4, 2014.
The Court's Ruling
On June 20, 2014, the Office of the Solicitor General, as counsel for respondent COA
filed its Comment19on the instant petition.
Acting on DBP's Manifestation with Motion to Resolve filed on July 17, 2014, this
Court issued a Temporary Restraining Order (TRO) on September 16, 2014,
restraining the COA from enforcing the assailed Decision and Resolution relating to
the grant of the GFPA.20
In compliance with our June 6, 2017 Resolution 21, DBP filed its Reply22 on August 4,
2017. DBP insists that under its charter, the BOD was authorized to settle its
employees' claims, which it did, by way of the grant of GFPA. It reiterated its
exemption from RA No. 6758, otherwise known as the Compensation and Position
Classification Act of 1989 or popularly known as the Salary Standardization
Law (SSL). DBP also maintains that the GFPA recipients and DBP Directors who
approved the disbursement all acted in good faith; consequently, should the
disallowance be upheld, they may not be held liable for the return of the disallowed
13 | P a g e
amount. Finally, DBP invites our attention to the fact that COA's ND against the AA,
subject of another case docketed as G.R. No. 213126, also entitled DBP v. COA, was
finally upheld on November 18, 2014, the refund of which is presently the subject of
execution proceedings.23
It bears recalling that the grant of GFPA on May 9, 2003 was subsequently offset
against the AA granted on November 16, 2005. Considering that the COA is currently
implementing a refund of the AA pursuant to the final decision in G.R. No. 213126,
it is now argued that DBP should not be asked to return the same amount twice.
We now resolve.
The ultimate issue for this Court's resolution is whether or not the COA acted without
or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, when it disallowed the GFPA on the basis that it was in the
nature of a compromise agreement to settle a labor dispute, allegedly an ultra
vires act of DBP's BOD.
There is no quibbling over the fact that labor unrest impelled the DBP, in the interest
of industrial peace, to grant the GFPA to its employees. In the COA's view, it was not
within the board's powers to grant a monetary award or benefit as a result of labor
negotiations. The DBP, on the other hand, points to Section 9 of its charter in arguing
that its BOD was authorized to compromise claims against it, pertinently:
Sec. 9. Powers and Duties of the Board of Directors. The Board of Directors shall have,
among others, the following duties, powers and authority:
xxxx
(e)
To compromise or release, in whole or in part, any claim of or settled liability to the
Bank regardless of the amount involved, under such terms and conditions it may
impose to protect the interests of the Bank. This authority to compromise shall
extend to claims against the Bank.xxx (Emphasis supplied)
Emphasizing further that its charter grants it a free hand in the fixing of
compensation and allowances of its officers and employees, DBP cites Section 13
thereof:
Sec. 13. Other Officers and Employees. -The Board of Directors shall provide for an
organization and staff of officers and employees of the Bank and upon
recommendation of the President of the Bank, fix their remunerations and other
emoluments. All positions in the Bank shall be governed by the compensation,
position classification system and qualification standards approved by the Board of
Directors based on a comprehensive job analysis of actual duties and responsibilities.
The compensation plan shall be comparable with the prevailing compensation plans
in the private sector and shall be subject to periodic review by the Board of Directors
once every two (2) years, without prejudice to yearly merit or increases based on the
Bank's productivity and profitability. The Bank shall, therefore, be exempt from
existing laws, rules, and regulations on compensation, position classification and
qualification standard. The Bank shall however, endeavor to make its system
conform as closely as possible with the principles under Compensation and
Position Classification Act of 1989 (Republic Act No. 6758, as amended). (Emphasis
supplied.)
Notably, while Sec. 13 of DBP's charter as amended on February 14, 1998, exempts
it from existing laws on compensation and position classification, it concludes by
expressly stating that DBP's system of compensation shall nonetheless conform to
the principles under the SSL. From this, there is no basis to conclude that the DBP's
BOD was conferred unbridled authority to fix the salaries and allowances of its
officers and employees. The authority granted DBP to freely fix its compensation
structure under which it may grant allowances and monetary awards remains
circumscribed by the SSL; it may not entirely depart from the spirit of the guidelines
therein.
The policy requiring prior Presidential approval upon recommendation from the
Secretary of Budget as provided in PD 1597, with respect to the grant of allowances
and benefits, was re-affirmed by the Congress in 2009 through Joint Resolution No.
4, also known as the Salary Standardization Law III which provides that the
"coverage, conditions for the grant, including the rates of allowances, benefits, and
incentives to all government employees, shall be rationalized in accordance with the
policies to be issued by the President upon recommendation of the Department of
Budget and Management." This policy mirrors MO No. 20 issued earlier in 2001,
which directed the heads of government-owned and controlled corporations,
government financial institutions (GFIs), and subsidiaries exempted from the SSL to
implement pay rationalization in all senior officer positions.
What made the GFPA granted by the DBP to its officers and employees in 2003
unique was that it was the product of a compromise arrived at after negotiations
14 | P a g e
between DBP employees and management referred to as a governance forum. The
COA considered the process undertaken as labor negotiations.
It appears that DBP misconstrued its authority to compromise. Sec. 9 (e) of its charter
authorizes its BOD to compromise or release any claim or settled liability to or
against the bank. To interpret the provision as including contested benefits that are
demanded by employees of a chartered GFI such as the DBP is a wide stretch. To
reiterate, its officers and employees' remunerations may only be granted in the
manner provided under Sec. 13 of its charter and conformably with the SSL.
The COA's insistence that industrial peace is not a determining factor under the
principles of the SSL in fixing the compensation of DBP's employees, is correct. The
grant of a wider latitude to DBP's BOD in fixing remunerations and emoluments does
not include an abrogation of the principle that employees in the civil service "cannot
use the same weapons employed by the workers in the private sector to secure
concessions from their employees."24 While employees of chartered GFIs enjoy the
constitutional right to bargain collectively, they may only do so for non economic
benefits and those not fixed by law, and may not resort to acts amounting to work
stoppages or interruptions. There is no other way to view the GFPA, other than as a
monetary benefit collectively wrung by DBP's employees under threat of disruption
to the bank's smooth operations. We held in Dulce M. Abanilla v. Commission On
Audit, reiterating Alliance of Government Workers v. Minister of Labor and
Employment25:
Subject to the minimum requirements of wage laws and other labor and welfare
legislation, the terms and conditions of employment in the unionized private sector
are settled through the process of collective bargaining. In government employment,
however, it is the legislature and, where properly given delegated power, the
administrative heads of government which fix the terms and conditions of
employment. And this is effected through statutes or administrative circulars, rules,
and regulations, not through collective bargaining agreements.26 (Emphasis in the
original)
All told, the grant of GFPA was indeed an ultra vires act or beyond the authority of
DBP's BOD. There was no grave abuse of discretion on the part of COA when it
disallowed the GFPA on the basis of a compromise agreement to settle a labor
dispute. We thus, sustain the disallowance.
We take judicial notice of the fact that this Court in another case docketed as G.R.
No. 213126 entitled DBP v. COA had already sustained the disallowance of the AA
granted by the DBP and which was offset against the GFPA earlier distributed, for
being contrary to the SSL. In this regard, DBP argued that it cannot be ordered to
refund the same amount twice. A careful scrutiny of the records of the said related
case, however, revealed that the AA disallowed and is now the subject of execution
proceedings only covered the difference in the amount between the GFPA already
distributed and the subsequent AA granted. There is no merit in the contention that
ordering a refund of the GFPA would result in double recovery.
Notwithstanding the foregoing, We hold that a refund of the GFPA would not be in
order. A refund of the AA was considered proper by this Court in G.R. No. 213126
not only on the basis of solutio indebiti, but more significantly because there was a
determination of bad faith on the part of DBP's Execom. There was a finding that
DBP patently disregarded DBM Budget Circular No. 2001-03 dated November 12,
2001 clearly prohibiting the payment of AA and other inflation connected allowance.
DBP also remained indifferent on the settled decision of the Executive Secretary that
the AA was already considered integrated into the basic salary of DBP's employees.
The same does not hold true in the case of the GFPA.
We find the records of the present petition bereft of findings of bad faith on the part
of the DBP with regard to the grant of the GFPA. Even the COA argued that the
disallowance of the GFPA was a distinct matter from the legality of the AA because
the disallowance of the GFPA boiled down to the propriety of the compromise
between DBP and its employees. To remedy an ongoing labor dispute in 2003, the
DBP's BOD relied in good faith on its interpretation of statutory authority to fix the
compensation structure of the bank's officials and employees vis-a-vis its statutory
power to enter into a compromise in protection of the bank's interests. It acted
under the honest belief that its charter conferred its authority to settle contested
employees' benefits in the interest of the bank. Hence, in line with settled
jurisprudence on disbursements subsequently disallowed by the COA, which
provides that recipients or payees need not refund disallowed amounts when
received in good faith,27 We hold that the DBP is no longer required to refund the
GFPA distributed.
It is settled that Government officials and employees who received benefits or
allowances, which were disallowed, may keep the amounts received if there is no
finding of bad faith and the disbursement was made in good faith. On the other hand,
officers who participated in the approval of the disallowed allowances or benefits
are required to refund only the amounts received when they are found to be in bad
faith or grossly negligent amounting to bad faith.28
WHEREFORE, We AFFIRM the Commission on Audit's disallowance of the payment
of Governance Forum Productivity Award to DBP's officials and employees in the
15 | P a g e
total amount of PhP170,893,689.00 as contained in its Decision No. 2012-207 dated
November 15, 2012 subject to the MODIFICATION that the DBP's officials and
employees are no longer required to refund the said amount.
SO ORDERED.
4.) UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner, vs. HON.
BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES,
INC. respondents.
G.R. No. 122226. March 25, 1998]
DECISION
MENDOZA, J.:
Petitioner is a union of supervisory employees. It appears that on March 20,
1995 the union filed a petition for certification election on behalf of the route
managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied
by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on
the ground that the route managers are managerial employees and, therefore,
ineligible for union membership under the first sentence of Art. 245 of the Labor
Code, which provides:
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.
Petitioner brought this suit challenging the validity of the order dated August
31, 1995, as reiterated in the order dated September 22, 1995, of the Secretary of
Labor and Employment. Its petition was dismissed by the Third Division for lack of
showing that respondent committed grave abuse of discretion. But petitioner filed a
motion for reconsideration, pressing for resolution its contention that the first
sentence of Art. 245 of the Labor Code, so far as it declares managerial employees
to be ineligible to form, assist or join unions, contravenes Art. III 8 of the Constitution
which provides:
The right of the people, including those employed in the public and private sectors, ____________________
to form unions, associations, or societies for the purposes not contrary to law shall
not be abridged. ____________________

For this reason, the petition was referred to the Court en banc. Operatives

Or Operating Employees
The Issues in this Case

FIRST-LINE MANAGERS The lowest level in an organization at which individuals are

Two question are presented by the petition: (1) whether the route managers
at Pepsi-Cola Products Philippines, Inc. are managerial employees and (2) whether
Art. 245, insofar as it prohibits managerial employees from forming, joining or
assisting labor unions, violates Art. III, 8 of the Constitution.
In resolving these issues it would be useful to begin by defining who are
managerial employees and considering the types of managerial employees.
Types of Managerial Employees
The term manager generally refers to anyone who is responsible for
subordinates and other organization resources.[1] As a class, managers constitute
three levels of a pyramid:
Top Management
_________________
Middle Management
_________________
First Line
Management
responsible for the work of others is called first-line or first-level management. First-
line managers direct operating employees only; they do not supervise other
managers. Example of first-line managers are the foreman or production supervisor
in a manufacturing plant, the technical supervisor in a research department, and the
clerical supervisor in a large office. First-level managers are often called supervisors.
MIDDLE MANAGERS The term middle management can refer to more than one level
in an organization. Middle managers direct the activities of other managers and
sometimes also those of operating employees. Middle managers principal
responsibilities are to direct the activities that implement their organizations policies
and to balance the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronics firm is an example of a middle
manager.
TOP MANAGERS Composed of a comparatively small group of executives, top
management is responsible for the overall management of the organization. It
establishes operating policies and guides the organizations interactions with its
environment. Typical titles of top managers are chief executive officer, president,
and senior vice-president. Actual titles vary from one organization to another and
are not always a reliable guide to membership in the highest management
classification.[2]
As can be seen from this description, a distinction exist between those who
have the authority to devise, implement and control strategic and operational
policies (top and middle managers) and those whose task is simply to ensure that
such polices are carried out by the rank-and-file employees of an organization (first-
level managers/supervisors). What distinguishes them from the rank-and file
employees is that they act in the interest of the employer in supervising such rank-
and-file employees.

Managerial employees may therefore be said to fall into two distinct

(also called Supervisor)
categories: the managers per se, who compose the former group described above,

16 | P a g e
and the supervisors who form the latter group. Whether they belong to the first or
second category, managers, vis--vis employers, are, likewise, employees.[3]
The first question is whether route managers are managers are managerial
employees or supervisors.
Previous Administrative Determinations of the Question Whether Route Managers are Managerial Employees
It appears that this question was the subject of two previous determinations
by the Secretary of Labor and Employment, in accordance with which this case was
decided by the med-arbiter.
In Case No. OS-MA-10318-91, entitled Workerss Alliance Trade Union (WATU)
v. Pepsi-Cola Products Philippines, Inc., decided on November 13, 1991, the
Secretary of Labor found:
We examined carefully the pertinent job description of the subject employees and
other documentary evidence on record vis--vis paragraph (m), Article 212 of the
Labor Code, as amended, and we find that only those employees occupying the
position of route manager and accounting manager are managerial employees. The
rest i.e. quality control manager, yard/transport manager and warehouse operations
manager are supervisory employees.
To qualify as managerial employee, there must be a clear showing of the exercise of
managerial attributes under paragraph (m), Article 212 of the Labor Code as
amended. Designations or titles of positions are not controlling. In the instant case,
nothing on record will support the claim that the quality control manager,
yard/transport manager and warehouse operations manager are vested with said
attributes. The warehouse operations manager, for example, merely assists the
plant finance manager in planning, organizing, directing and controlling all activities
relative to development and implementation of an effective management control
information system at the sale offices. The exercise of authority of the quality control
manager, on the other hand, needs the concurrence of the manufacturing manager
As to the route managers and accounting manager, we are convinced that they are
managerial employees. Their job descriptions clearly reveal so.
17 | P a g e
On July 6, 1992, this finding was reiterated in Case No. OS-A-3-71-92, entitled
In Re: Petition for Direct Certification and/or Certification Election-Route
Managers/Supervisory Employees of Pepsi-Cola Products Phils. Inc., as follows:
The issue brought before us is not of first impression. At one time, we had the
occasion to rule upon the status of route manager in the same company vis a vis the
issue as to whether or not it is supervisory employee or a managerial employee. In
the case of Workers Alliance Trade Unions (NATU) vs. Pepsi Cola Products, Phils.,
Inc. (OS-MA-A-10-318-91), 15 November 1991, we ruled that a route manager is a
managerial employee within the context of the definition of the law, and hence,
ineligible to join, form or assist a union. We have once more passed upon the logic
of our Decision aforecited in the light of the issues raised in the instant appeal, as
well as the available documentary evidence on hand, and have come to the view that
there is no cogent reason to depart from our earlier holding. Route Managers are,
by the very nature of their functions and the authority they wield over their
subordinates, managerial employees. The prescription found in Art. 245 of the Labor
Code, as amended therefore, clearly applies to them.[4]4
Citing our ruling in Nasipit Lumber Co. v. National Labor Relations
Commission,[5]5 however, petitioner argues that these previous administrative
determinations do not have the effect of res judicata in this case, because "labor
relations proceedings" are "non-litigious and summary in nature without regard to
legal technicalities."[6] Nasipit Lumber Co. involved a clearance to dismiss an
employee issued by the Department of Labor. The question was whether in a
subsequent proceeding for illegal dismissal, the clearance was res judicata. In
holding it was not, this Court made it clear that it was referring to labor relations
proceedings of a non-adversary character, thus:
The requirement of a clearance to terminate employment was a creation of the
Department of labor to carry out the Labor Code provisions on security of tenure and
termination of employment. The proceeding subsequent to the filing of an
application for clearance to terminate employment was outlined in Book V, Rule XIV
of the Rules and Regulations Implementing the Labor Code. The fact that said rule
allowed a procedure for the approval of the clearance with or without the opposition
of the employee concerned (Secs. 7 & 8), demonstrates the non-litigious and
summary nature of the proceeding. The clearance requirement was therefore
necessary only as an expeditious shield against arbitrary dismissal without the
knowledge and supervision of the Department of Labor.Hence, a duly approved
clearance implied that the dismissal was legal or for cause (Sec. 2).[7]v. National Labor
Relations Commission, 177 SCRA 93, 100 (1989).7
 But the doctrine of res judicata certainly applies to adversary administrative
proceedings. As early as 1956, in Brillantes v. Castro,[8]8 we sustained the dismissal
of an action by a trial court on the basis of a prior administrative determination of
the same case by the Wage Administration Service, applying the principle of res
judicata. Recently, in Abad v. NLRC[9]9 we applied the related doctrine of stare decisis
in holding that the prior determination that certain jobs at the Atlantic Gulf and
Pacific Co. were project employments was binding in another case involving another
group of employees of the same company. Indeed, in Nasipit Lumber Co., this Court
clarified toward the end of its opinion that "the doctrine of res judicata applies . . .
to judicial or quasi judicial proceedings and not to the exercise of administrative
powers."[10]v. National Labor Relations Commission, supra note 7.10 Now
proceedings for certification election, such as those involved in Case No. OS-M-A-10-
318-91 and Case No. OS-A-3-71-92, are quasi judicial in nature and, therefore,
decisions rendered in such proceedings can attain finality.[11]v. B.F. Goodrich
(Marikina Factory) Confidential and Salaries Employees Union-NATU, 49 SCRA 532
(1973).11
Thus, we have in this case an expert's view that the employees concerned are
managerial employees within the purview of Art. 212 which provides:
The Court now finds that the job evaluation made by the Secretary of Labor is
indeed supported by substantial evidence. The nature of the job of route managers
is given in a four-page pamphlet, prepared by the company, called "Route Manager
Position Description," the pertinent parts of which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you
achieve this objective through the skillful MANAGEMENT OF YOUR JOB
AND THE MANAGEMENT OF YOUR PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within
these functions - managing your job and managing your people - you are
accountable to your District Manager for the execution and completion
of various tasks and activities which will make it possible for you to
achieve your sales objectives.

(m) "managerial employee" is one who is vested with powers or prerogatives to lay
B. PRINCIPAL ACCOUNTABILITIES
down and execute management policies and/or to hire, transfer, suspend, lay off,
recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions 1.0 MANAGING YOUR JOB
if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of The Route Manager is accountable for the following:
the above definitions are considered rank-and-file employees for purposes of this
Book. 1.1 SALES DEVELOPMENT

At the very least, the principle of finality of administrative determination compels 1.1.1 Achieve the sales plan.
respect for the finding of the Secretary of Labor that route managers are managerial
employees as defined by law in the absence of anything to show that such
1.1.2 Achieve all distribution and new account objectives.
determination is without substantial evidence to support it. Nonetheless, the Court,
concerned that employees who are otherwise supervisors may wittingly or
unwittingly be classified as managerial personnel and thus denied the right of self- 1.1.3 Develop new business opportunities thru personal contacts
organization, has decided to review the record of this case. with dealers.

1.1.4 Inspect and ensure that all merchandizing [sic] objectives are
DOLE's Finding that Route Managers are Managerial Employees Supported by Substantial Evidence in the Record
achieved in all outlets.

1.1.5 maintain and improve productivity of all cooling equipment

and kiosks.

18 | P a g e
 1.1.6 Execute and control all authorized promotions.
1.1.7 Develop and maintain dealer goodwill.
1.1.8 Ensure all accounts comply with company suggested retail
pricing.
1.1.9 Study from time to time individual route coverage and
productivity for possible adjustments to maximize
utilization of resources.
1.2 Administration
1.2.1 Ensure the proper loading of route trucks before check-out
and the proper sorting of bottles before check-in.
1.2.2 Ensure the upkeep of all route sales reports and all other
related reports and forms required on an accurate and
timely basis.
1.2.3 Ensure proper implementation of the various company
policies and procedures incl. but not limited to
shakedown; route shortage; progressive discipline;
sorting; spoilages; credit/collection; accident;
attendance.
1.2.4 Ensure collection of receivables and delinquent accounts.
2.0 MANAGING YOUR PEOPLE
The Route Manager is accountable for the following:
2.1 Route Sales Team Development
2.1.1 Conduct route rides to train, evaluate and develop all
assigned route salesmen and helpers at least 3 days a
week, to be supported by required route ride
documents/reports & back check/spot check at least 2
19 | P a g e
days a week to be supported by required
documents/reports.
2.1.2 Conduct sales meetings and morning huddles. Training
should focus on the enhancement of effective sales
and merchandizing [sic] techniques of the salesmen
and helpers.Conduct group training at least 1 hour
each week on a designated day and of specific topic.
2.2 Code of Conduct
2.2.1 Maintain the company's reputation through strict adherence
to PCPPI's code of conduct and the universal standards
of unquestioned business ethics.[12]12
Earlier in this opinion, reference was made to the distinction between
managers per se (top managers and middle managers) and supervisors (first-line
managers). That distinction is evident in the work of the route managers which sets
them apart from supervisors in general. Unlike supervisors who basically merely
direct operating employees in line with set tasks assigned to them, route managers
are responsible for the success of the company's main line of business through
management of their respective sales teams. Such management necessarily involves
the planning, direction, operation and evaluation of their individual teams and areas
which the work of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors
because their work does not only involve, but goes far beyond, the simple direction
or supervision of operating employees to accomplish objectives set by those above
them. They are not mere functionaries with simple oversight functions but business
administrators in their own right. An idea of the role of route managers as
managers per se can be gotten from a memo sent by the director of metro sales
operations of respondent company to one of the route managers. It reads:[13]
03 April 1995
To : CESAR T. REOLADA
From : REGGIE M. SANTOS
Subj : SALARY INCREASE
 Effective 01 April 1995, your basic monthly salary of P11,710 will be increased
to P12,881 or an increase of 10%. This represents the added managerial
responsibilities you will assume due to the recent restructuring and
streamlining of Metro Sales Operations brought about by the continuous
losses for the last nine (9) months.
Let me remind you that for our operations to be profitable, we have to sustain
the intensity and momentum that your group and yourself have shown last
March. You just have to deliver the desired volume targets, better negotiated
concessions, rationalized sustaining deals, eliminate or reduced overdues,
improved collections, more cash accounts, controlled operating
expenses, etc. Also, based on the agreed set targets, your monthly
performance will be closely monitored.
You have proven in the past that your capable of achieving your targets thru
better planning, managing your group as a fighting team, and thru
aggressive selling. I am looking forward to your success and I expect that you
just have to exert your doubly best in turning around our operations from a
losing to a profitable one!
Happy Selling!!
(Sgd.) R.M. SANTOS
The plasticized card given to route managers, quoted in the separate opinion
of Justice Vitug, although entitled "RM's Job Description," is only a summary of
performance standards. It does not show whether route managers are managers per
se or supervisors. Obviously, these performance standards have to be related to the
specific tasks given to route managers in the four-page "Route Manager Position
Description," and, when this is done, the managerial nature of their jobs is fully
revealed. Indeed, if any, the card indicates the great latitude and discretion given to
route managers - from servicing and enhancing company goodwill to supervising and
auditing accounts, from trade (new business) development to the discipline, training
and monitoring of performance of their respective sales teams, and so forth, - if they
are to fulfill the company's expectations in the "key result areas."
Article 212(m) says that "supervisory employees are those who, in the interest
of the employer, effectively recommend such managerial actions if the exercise of
such authority is not merely routinary or clerical in nature but requires the use of
independent judgment." Thus, their only power is to recommend. Certainly, the
route managers in this case more than merely recommend effective management
20 | P a g e
action. They perform operational, human resource, financial and marketing
functions for the company, all of which involve the laying down of operating policies
for themselves and their teams. For example, with respect to marketing, route
managers, in accordance with B.1.1.1 to B.1.1.9 of the Route Managers Job
Description, are charged, among other things, with expanding the dealership base of
their respective sales areas, maintaining the goodwill of current dealers, and
distributing the company's various promotional items as they see fit. It is difficult to
see how supervisors can be given such responsibility when this involves not just the
routine supervision of operating employees but the protection and expansion of the
company's business vis-a-vis its competitors.
While route managers do not appear to have the power to hire and fire people
(the evidence shows that they only "recommended" or "endorsed" the taking of
disciplinary action against certain employees), this is because this is a function of the
Human Resources or Personnel Department of the company. [14]14 And neither
should it be presumed that just because they are given set benchmarks to observe,
they are ipso facto supervisors. Adequate control methods (as embodied in such
concepts as "Management by Objectives [MBO]" and "performance appraisals")
which require a delineation of the functions and responsibilities of managers by
means of ready reference cards as here, have long been recognized in management
as effective tools for keeping businesses competitive.
This brings us to the second question, whether the first sentence of Art. 245 of
the Labor Code, prohibiting managerial employees from forming, assisting or joining
any labor organization, is constitutional in light of Art. III, 8 of the Constitution which
provides:
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.
As already stated, whether they belong to the first category (managers per se)
or the second category (supervisors), managers are employees. Nonetheless, in the
United States, as Justice Puno's separate opinion notes, supervisors have no right to
form unions. They are excluded from the definition of the term "employee" in 2(3)
of the Labor-Management Relations Act of 1947.[15]v. Bell Aerospace Co., 416 U.S.
281, n 11, 40 L.Ed.2d 134, 147, n. 11 (1974), thus:
Supervisors are management people. They have distinguished themselves in
their work. They have demonstrated their ability to take care of themselves without
depending upon the pressure of collective action. No one forced them to become
supervisors. They abandoned the "collective security" of the rank and file voluntarily,
because they believed the opportunities thus opened to them to be more valuable
to them than such "security". It seems wrong, and it is wrong, to subject people of
this kind, who have demonstrated their initiative, their ambition and their ability to
get ahead, to the leveling processes of seniority, uniformity and standardization that
the Supreme Court recognizes as being fundamental principles of unionism. (J.I. Case
Co. v. National Labor Relations Board, 321 U.S. 332, 88 L.Ed. 762, 64 S. Ct. 576
(1994). It is wrong for the foremen, for it discourages the things in them that made
them foremen in the first place. For the same reason, that it discourages those best
qualified to get ahead, it is wrong for industry, and particularly for the future strength
and productivity of our country.15 In the Philippines, the question whether
managerial employees have a right of self-organization has arisen with respect to
first-level managers or supervisors, as shown by a review of the course of labor
legislation in this country.
Right of Self-Organization of Managerial Employees under Pre-Labor Code Laws
Before the promulgation of the Labor Code in 1974, the field of labor relations
was governed by the Industrial Peace Act (R.A. No. 875).
In accordance with the general definition above, this law defined "supervisor"
as follows:
SECTION 2. . . .
(k) "Supervisor" means any person having authority in the interest of an employer,
to hire, transfer, suspend, lay-off, recall, discharge, assign, recommend, or discipline
other employees, or responsibly to direct them, and to adjust their grievances, or
effectively to recommend such acts, if, in connection with the foregoing, the exercise
of such authority is not of a merely routinary or clerical nature but requires the use
of independent judgment.[16]16
The right of supervisors to form their own organizations was affirmed:
SEC. 3. Employees' Right to Self-Organization. -- Employees shall have the right to
self-organization and to form, join or assist labor organizations of their own choosing
for the purpose of collective bargaining through representatives of their own
choosing and to engage in concerted activities for the purpose of collective
bargaining and other mutual aid and 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.[17]
21 | P a g e
For its part, the Supreme Court upheld in several of its decisions the right of
supervisors to organize for purposes of labor relations.[18]v. Filoil Supervisory and
Confidential Employees Association, 6 SCRA 522 (1972); Kapisanan ng mga
Manggagawa sa Manila Railroad Co. v. CIR, 106 Phil 607 (1959).18
Although it had a definition of the term "supervisor," the Industrial Peace Act
did not define the term "manager." But, using the commonly-understood concept of
"manager," as above stated, it is apparent that the law used the term "supervisors"
to refer to the sub-group of "managerial employees" known as front-line managers.
The other sub-group of "managerial employees," known as managers per se, was not
covered.
However, in Caltex Filipino Managers and Supervisors Association v. Court of
Industrial Relations,[19]J.)19 the right of all managerial employees to self-
organization was upheld as a general proposition, thus:
It would be going too far to dismiss summarily the point raised by respondent
Company - that of the alleged identity of interest between the managerial staff and
the employing firm. That should ordinarily be the case, especially so where the
dispute is between management and the rank and file. It does not necessarily follow
though that what binds the managerial staff to the corporation forecloses the
possibility of conflict between them. There could be a real difference between what
the welfare of such group requires and the concessions the firm is willing to
grant. Their needs might not be attended to then in the absence of any organization
of their own. Nor is this to indulge in empty theorizing. The record of respondent
Company, even the very case cited by it, is proof enough of their uneasy and troubled
relationship. Certainly the impression is difficult to erase that an alien firm failed to
manifest sympathy for the claims of its Filipino executives. To predicate under such
circumstances that agreement inevitably marks their relationship, ignoring that
discord would not be unusual, is to fly in the face of reality.
. . . The basic question is whether the managerial personnel can organize. What
respondent Company failed to take into account is that the right to self-organization
is not merely a statutory creation. It is fortified by our Constitution. All are free to
exercise such right unless their purpose is contrary to law. Certainly it would be to
attach unorthodoxy to, not to say an emasculation of, the concept of law if managers
as such were precluded from organizing. Having done so and having been duly
registered, as did occur in this case, their union is entitled to all the rights under
Republic Act No. 875. Considering what is denominated as unfair labor practice
under Section 4 of such Act and the facts set forth in our decision, there can be only
one answer to the objection raised that no unfair labor practice could be committed
by respondent Company insofar as managerial personnel is concerned. It is, as is Purchasing Assistant
quite obvious, in the negative.[20]20
Jr. Construction Engineer
Actually, the case involved front-line managers or supervisors only, as the
plantilla of employees, quoted in the main opinion,[21]J.) (emphasis added).21 clearly St. Sales Supervisor
indicates:
Deport Supervisor A
CAFIMSA members holding the following Supervisory Payroll Position Title are
Recognized by the Company
Terminal Accountant B

Payroll Position Title

Merchandiser

Assistant to Mgr. - National Acct. Sales

Dist. Sales Prom. Supvr.

Jr. Sales Engineer

Instr. - Merchandising

Retail Development Asst.

Asst. Dist. Accountant B

Staff Asst. - 0 Marketing

Sr. Opers. Supervisor

Sales Supervisor
Jr. Sales Engineer A

Supervisory Assistant
Asst. Bulk Ter. Supt.

Jr. Supervisory Assistant

Sr. Opers. Supvr.

Credit Assistant
Credit Supervisor A

Lab. Supvr. - Pandacan

Asst. Stores Supvr. A

Jr. Sales Engineer B

Ref. Supervisory Draftsman

Operations Assistant B
Refinery Shift Supvr. B

Field Engineer
Asst. Supvr. A - Operations (Refinery)

Sr. Opers. Supvr. - MIA A/S

Refinery Shift Supvr. B

22 | P a g e
Asst. Lab. Supvr. A (Refinery)
St. Process Engineer B (Refinery)
Asst. Supvr. A - Maintenance (Refinery)
Asst. Supvr. B - Maintenance (Refinery)
Supervisory Accountant (Refinery)
Communications Supervisor (Refinery)
Finally, also deemed included are all other employees excluded from the rank
and file unions but not classified as managerial or otherwise excludable by law
or applicable judicial precedents.
Right of Self-Organization of Managerial Employees under the Labor Code
Thus, the dictum in the Caltex case which allowed at least for the theoretical
unionization of top and middle managers by assimilating them with the supervisory
group under the broad phrase "managerial personnel," provided the lynchpin for
later laws denying the right of self-organization not only to top and middle
management employees but to front line managers or supervisors as well. Following
the Caltex case, the Labor Code, promulgated in 1974 under martial law, dropped
the distinction between the first and second sub-groups of managerial
employees. Instead of treating the terms "supervisor" and "manager" separately, the
law lumped them together and called them "managerial employees," as follows:
ART. 212. Definitions . . . .
(k) "Managerial Employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay off,
recall, discharge, assign or discipline employees, or to effectively recommend such
managerial actions. All employees not falling within this definition are considered
rank and file employees for purposes of this Book.[22]22
23 | P a g e
The definition shows that it is actually a combination of the commonly understood
definitions of both groups of managerial employees, grammatically joined by the
phrase "and/or."
This general definition was perhaps legally necessary at that time for two
reasons. First, the 1974 Code denied supervisors their right to self-organize as
theretofore guaranteed to them by the Industrial Peace Act. Second, it stood the
dictum in the Caltex case on its head by prohibiting all types of managers from
forming unions. The explicit general prohibition was contained in the then Art. 246
of the Labor Code.
The practical effect of this synthesis of legal concepts was made apparent in
the Omnibus Rules Implementing the Labor Code which the Department of Labor
promulgated on January 19, 1975. Book V, Rule II, 11 of the Rules provided:
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 labor organization,
and if none exists, to form or assist in the forming of such rank and file
organization. The determination of who are managerial employees and who are not
shall be the subject of negotiation between representatives of the supervisory union
and the employer. If no agreement is reached between the parties, either or both of
them may bring the issue to the nearest Regional Office for determination.
The Department of Labor continued to use the term "supervisory unions"
despite the demise of the legal definition of "supervisor" apparently because these
were the unions of front line managers which were then allowed as a result of the
statutory grant of the right of self-organization under the Industrial Peace Act. Had
the Department of Labor seen fit to similarly ban unions of top and middle managers
which may have been formed following the dictum in Caltex, it obviously would have
done so. Yet it did not, apparently because no such unions of top and middle
managers really then existed.
Real Intent of the 1986 Constitutional Commission
This was the law as it stood at the time the Constitutional
Commission considered the draft of Art. III, 8. Commissioner Lerum sought to amend
the draft of what was later to become Art. III, 8 of the present Constitution:
MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert
between the words "people" and "to" the following: WHETHER EMPLOYED BY THE
STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will now read as
follows: "The right of the people WHETHER EMPLOYED BY THE STATE OR PRIVATE
ESTABLISHMENTS to form associations, unions, or societies for purposes not
contrary to law shall not be abridged."[23]23
Explaining his proposed amendment, he stated:
MR. LERUM. Under the 1935 Bill of Rights, the right to form associations is granted
to all persons whether or not they are employed in the government. Under that
provision, we allow unions in the government, in government-owned and controlled
corporations and in other industries in the private sector, such as the Philippine
Government Employees' Association, unions in the GSIS, the SSS, the DBP and other
government-owned and controlled corporations. 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.
And we have been fighting against this abolition. In every tripartite conference
attended by the government, management and workers, we have always been
insisting on the return of these rights.However, both the government and employers
opposed our proposal, so nothing came out of this until this week when we approved
a provision which states:
Notwithstanding any provision of this article, the right to self-organization shall not
be denied to government employees.
We are afraid that without any corresponding provision covering the private sector,
the security guards, the supervisory employees or majority employees [sic] will still
be excluded, and that is the purpose of this amendment.
24 | P a g e
I will be very glad to accept any kind of wording as long as it will amount to absolute
recognition of private sector employees, without exception, to organize.
THE PRESIDENT. What does the Committee say?
FR. BERNAS. Certainly, the sense is very acceptable, but the point raised by
Commissioner Rodrigo is well-taken. Perhaps, we can lengthen this a little bit more
to read: "The right of the people WHETHER UNEMPLOYED OR EMPLOYED BY STATE
OR PRIVATE ESTABLISHMENTS."
I want to avoid also the possibility of having this interpreted as applicable only to the
employed.
MR. DE LOS REYES. Will the proponent accept an amendment to the amendment,
Madam President?
MR. LERUM. Yes, as long as it will carry the idea that the right of the employees in
the private sector is recognized.[24]
Lerum thus anchored his proposal on the fact that (1) government employees,
supervisory employees, and security guards, who had the right to organize under the
Industrial Peace Act, had been denied this right by the Labor Code, and (2) there was
a need to reinstate the right of these employees. In consonance with his objective to
reinstate the right of government, security, and supervisory employees to organize,
Lerum then made his proposal:
MR. LERUM. Mr. Presiding Officer, after a consultation with several Members of this
Commission, my amendment will now read as follows: "The right of the people
INCLUDING THOSE EMPLOYED IN THE PUBLIC AND PRIVATE SECTORS to form
associations, unions, or societies for purposes not contrary to law shall not be
abridged. In proposing that amendment I ask to make of record that I want the
following provisions of the Labor Code to be automatically abolished, which read:
ART. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be eligible
for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.
THE PRESIDING OFFICER (Mr. Bengzon). What does the Committee say?
FR. BERNAS. The Committee accepts.
THE PRESIDING OFFICER. (Mr. Bengzon) The Committee has accepted the
amendment, as amended.
Is there any objection? (Silence) The Chair hears none; the amendment, as amended,
is approved.[25]
The question is what Commissioner Lerum meant in seeking to "automatically
abolish" the then Art. 246 of the Labor Code. Did he simply want "any kind of
wording as long as it will amount to absolute recognition of private sector
employees, without exception, to organize"?[26] Or, did he instead intend to have his
words taken in the context of the cause which moved him to propose the
amendment in the first place, namely, the denial of the right of supervisory
employees to organize, because he said, "We are afraid that without any
corresponding provision covering the private sector, security guards, supervisory
employees or majority [of] employees will still be excluded, and that is the purpose
of this amendment"?[27]
It would seem that Commissioner Lerum simply meant to restore the right of
supervisory employees to organize. For even though he spoke of the need to
"abolish" Art. 246 of the Labor Code which, as already stated, prohibited "managerial
employees" in general from forming unions, the fact was that in explaining his
proposal, he repeatedly referred to "supervisory employees" whose right under the
Industrial Peace Act to organize had been taken away by Art. 246. It is noteworthy
that Commissioner Lerum never referred to the then definition of "managerial
employees" in Art. 212(m) of the Labor Code which put together, under the broad
phrase "managerial employees," top and middle managers and supervisors. Instead,
his repeated use of the term "supervisory employees," when such term then was no
longer in the statute books, suggests a frame of mind that remained grounded in the
language of the Industrial Peace Act.
Nor did Lerum ever refer to the dictum in Caltex recognizing the right of all
managerial employees to organize, despite the fact that the Industrial Peace Act did
not expressly provide for the right of top and middle managers to organize. If Lerum
was aware of the Caltex dictum, then his insistence on the use of the term
"supervisory employees" could only mean that he was excluding other managerial
employees from his proposal. If, on the other hand, he was not aware of the Caltex
statement sustaining the right to organize to top and middle managers, then the
25 | P a g e
more should his repeated use of the term "supervisory employees" be taken at face
value, as it had been defined in the then Industrial Peace Act.
At all events, that the rest of the Commissioners understood his proposal to
refer solely to supervisors and not to other managerial employees is clear from the
following account of Commissioner Joaquin G. Bernas, who writes:
In presenting the modification on the 1935 and 1973 texts, Commissioner Eulogio R.
Lerum explained that the modification included three categories of workers: (1)
government employees, (2) supervisory employees, and (3) security guards. Lerum
made of record the explicit intent to repeal provisions of P.D. 442, the Labor Code.
The provisions referred to were:
ART. 245. Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employers shall not be eligible
for membership in a labor organization.
ART. 246. Managerial employees are not eligible to join, assist, and form any labor
organization.[28]28
Implications of the Lerum Proposal
In sum, Lerum's proposal to amend Art. III, 8 of the draft Constitution by
including labor unions in the guarantee of organizational right should be taken in the
context of statements that his aim was the removal of the statutory ban against
security guards and supervisory employees joining labor organizations. The approval
by the Constitutional Commission of his proposal can only mean, therefore, that the
Commission intended the absolute right to organize of government workers,
supervisory employees, and security guards to be constitutionally guaranteed. By
implication, no similar absolute constitutional right to organize for labor purposes
should be deemed to have been granted to top-level and middle managers. As to
them the right of self-organization may be regulated and even abridged conformably
to Art. III, 8.
Constitutionality of Art. 245
 Finally, the question is whether the present ban against managerial
employees, as embodied in Art. 245 (which superseded Art. 246) of the Labor
Code, is valid. This provision reads:
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.[29]29
This provision is the result of the amendment of the Labor Code in 1989 by R.A.
No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the Industrial Peace
Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides
separate definitions of the terms "managerial" and "supervisory employees," as
follows:
ART. 212. Definitions. . . .
(m) "managerial employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire transfer, suspend, lay off,
recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions
if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of
the above definitions are considered rank-and-file employees for purposes of this
Book.
Although the definition of "supervisory employees" seems to have been
unduly restricted to the last phrase of the definition in the Industrial Peace Act, the
legal significance given to the phrase "effectively recommends" remains the same. In
fact, the distinction between top and middle managers, who set management policy,
and front-line supervisors, who are merely responsible for ensuring that such policies
are carried out by the rank and file, is articulated in the present
definition.[30]30 When read in relation to this definition in Art. 212(m), it will be seen
that Art. 245 faithfully carries out the intent of the Constitutional Commission in
framing Art. III, 8 of the fundamental law.
Nor is the guarantee of organizational right in Art. III, 8 infringed by a ban
against managerial employees forming a union. The right guaranteed in Art. III, 8 is
subject to the condition that its exercise should be for purposes "not contrary to
law." In the case of Art. 245, there is a rational basis for prohibiting managerial
26 | P a g e
employees from forming or joining labor organizations. As Justice Davide, Jr., himself
a constitutional commissioner, said in his ponencia in Philips Industrial
Development, Inc. v. NLRC:[31]31
In the first place, all these employees, with the exception of the service engineers
and the sales force personnel, are confidential employees. Their classification as
such is not seriously disputed by PEO-FFW; the five (5) previous CBAs between PIDI
and PEO-FFW explicitly considered them as confidential employees. By the very
nature of their functions, they assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions in the
field of labor relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or joint a labor union equally applies to them.
In Bulletin Publishing Co., Inc. v. Hon. Augusto Sanchez, this Court elaborated on this
rationale, thus:
". . . The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the latter might
not be assured of their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated with the presence of
managerial employees in Union membership."[32]
To be sure, the Court in Philips Industrial was dealing with the right of
confidential employees to organize. But the same reason for denying them the right
to organize justifies even more the ban on managerial employees from forming
unions. After all, those who qualify as top or middle managers are executives who
receive from their employers information that not only is confidential but also is not
generally available to the public, or to their competitors, or to other employees. It is
hardly necessary to point out that to say that the first sentence of Art. 245 is
unconstitutional would be to contradict the decision in that case.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
5.) REPUBLIC OF THE PHILIPPINES, represented by Department of Labor and
Employment (DOLE), Petitioner,
vs. KAWASHIMA TEXTILE MFG., PHILIPPINES, INC., Respondent.
G.R. No. 160352 July 23, 2008
DECISION
AUSTRIA-MARTINEZ, J.:
The Republic of the Philippines assails by way of Petition for Review
on Certiorari under Rule 45 of the Rules of Court, the December 13, 2002
Decision1 of the Court of Appeals (CA), which reversed the August 18, 2000
Decision2 of the Department of Labor and Employment (DOLE), and reinstated the
May 17, 2000 Order3 of Med-Arbiter Anastacio L. Bactin, dismissing the petition of
Kawashima Free Workers Union-PTGWO Local Chapter No. 803 (KFWU) for the
conduct of a certification election in Kawashima Textile Mfg. Phils., Inc. (respondent);
and the October 7, 2003 CA Resolution 4 which denied the motion for
reconsideration.
The relevant facts are of record.
On January 24, 2000, KFWU filed with DOLE Regional Office No. IV, a Petition for
Certification Election to be conducted in the bargaining unit composed of 145 rank-
and-file employees of respondent.5 Attached to its petition are a Certificate of
Creation of Local/Chapter6 issued on January 19, 2000 by DOLE Regional Office No.
IV, stating that it [KFWU] submitted to said office a Charter Certificate issued to it by
the national federation Phil. Transport & General Workers Organization (PTGWO),
and a Report of Creation of Local/Chapter.7
Respondent filed a Motion to Dismiss 8 the petition on the ground that KFWU did not
acquire any legal personality because its membership of mixed rank-and-file and
supervisory employees violated Article 245 of the Labor Code, and its failure to
submit its books of account contravened the ruling of the Court in Progressive
Development Corporation v. Secretary, Department of Labor and Employment. 9
In an Order dated May 17, 2000, Med-Arbiter Bactin found KFWU’s legal personality
defective and dismissed its petition for certification election, thus:
27 | P a g e
We scrutinize the facts and evidences presented by the parties and arrived at a
decision that at least two (2) members of [KFWU], namely: Dany I. Fernandez and
Jesus R. Quinto, Jr. are supervisory employees, having a number of personnel under
them. Being supervisory employees, they are prohibited under Article 245 of the
Labor Code, as amended, to join the union of the rank and file employees. Dany I.
Fernandez and Jesus R. Quinto, Jr., Chief Engineers of the Maintenance and
Manufacturing Department, respectively, act as foremen to the line engineers,
mechanics and other non-skilled workers and responsible [for] the preparation and
organization of maintenance shop fabrication and schedules, inventory and control
of materials and supplies and tasked to implement training plans on line engineers
and evaluate the performance of their subordinates. The above-stated actual
functions of Dany I. Fernandez and Jesus R. Quinto, Jr. are clear manifestation that
they are supervisory employees.
xxxx
Since petitioner’s members are mixture of rank and file and supervisory
employees, petitioner union, at this point [in] time, has not attained the status of
a legitimate labor organization. Petitioner should first exclude the supervisory
employees from it membership before it can attain the status of a legitimate labor
organization. The above judgment is supported by the decision of the Supreme
Court in the Toyota Case10 wherein the High Tribunal ruled:
"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." (Underscoring omitted.)
xxxx
Furthermore, the commingling of rank and file and supervisory employees in one (1)
bargaining unit cannot be cured in the exclusion-inclusion proceedings [at] the pre-
election conference. The above ruling is supported by the Decision of the Supreme
Court in Dunlop Slazenger (Phils.), Inc. vs. Honorable Secretary of Labor and
Employment, et al., G.R. No. 131248 dated December 11, 1998 11 x x x.
xxxx
WHEREFORE, premises considered, the petition for certification election is hereby
dismissed for lack of requisite legal status of petitioner to file this instant petition.
SO ORDERED.12 (Emphasis supplied)
On the basis of the aforecited decision, respondent filed with DOLE Regional Office
No. IV a Petition for Cancellation of Charter/Union Registration of KFWU, 13 the final
outcome of which, unfortunately, cannot be ascertained from the records.
Meanwhile, KFWU appealed14 to the DOLE which issued a Decision on August 18,
2000, the dispositive portion of which reads:
WHEREFORE, the appeal is GRANTED. The Order dated 17 May 2000 of the Med-
Arbiter is REVERSED and SET ASIDE. Accordingly, let the entire records of the case be
remanded to the office of origin for the immediate conduct of certification election,
subject to the usual pre-election conference, among the rank-and-file employees of
Kawashima Textile Manufacturing Philippines, Inc. with the following choices:
1. Kawashima Free Workers Union-PTGWO Local Chapter No. 803; and
2. No union.
Pursuant to Rule XI, Section 11.1 of the New Implementing Rules, the employer is
hereby directed to submit to the office of origin the certified list of current
employees in the bargaining unit for the last three months prior to the issuance of
this decision.
SO DECIDED.15
The DOLE held that Med-Arbiter Bactin's reliance on the decisions of the Court
in Toyota Motor Philippines Corporation v. Toyota Motor Philippines Corporation
Labor Union16 and Dunlop Slazenger, Inc. v. Secretary of Labor and
Employment17 was misplaced, for while Article 245 declares supervisory employees
ineligible for membership in a labor organization for rank-and-file employees, the
provision did not state the effect of such prohibited membership on the legitimacy
of the labor organization and its right to file for certification election. Neither was
such mixed membership a ground for cancellation of its registration. Section 11,
Paragraph II, Rule XI of Department Order No. 9 "provides for the dismissal of a
petition for certification election based on lack of legal personality of a labor
organization only on the following grounds: (1) [KFWU] is not listed by the Regional
28 | P a g e
Office or the Bureau of Labor Relations in its registry of legitimate labor
organizations; or (2) [KFWU's] legal personality has been revoked or canceled with
finality."18 The DOLE noted that neither ground existed; on the contrary, KFWU's
legal personality was well-established, for it held a certificate of creation and had
been listed in the registry of legitimate labor organizations.
As to the failure of KFWU to file its books of account, the DOLE held that such
omission was not a ground for revocation of union registration or dismissal of
petition for certification election, for under Section 1, Rule VI of Department Order
No. 9, a local or chapter like KFWU was no longer required to file its books of
account.19
Respondent filed a Motion for Reconsideration 20 but the DOLE denied the same in
its September 28, 2000 Resolution.21
However, on appeal by respondent, the CA rendered the December 13, 2002
Decision assailed herein, reversing the August 18, 2000 DOLE Decision, thus:
Since respondent union clearly consists of both rank and file and supervisory
employees, it cannot qualify as a legitimate labor organization imbued with the
requisite personality to file a petition for certification election. This infirmity in
union membership cannot be corrected in the inclusion-exclusion proceedings
during the pre-election conference.
Finally, contrary to the pronouncement of public respondent, the application of the
doctrine enunciated in Toyota Motor Philippines Corporation vs. Toyota Motor
Philippines Corporation Labor Union was not construed in a way that effectively
denies the fundamental right of respondent union to organize and seek bargaining
representation x x x.
For ignoring jurisprudential precepts on the matter, the Court finds that the
Undersecretary of Labor, acting under the authority of the Secretary of Labor, acted
with grave abuse of discretion amounting to lack or excess of jurisdiction.
WHEREFORE, premises considered, the Petition is hereby GRANTED. The Decision
dated 18 August 2000 of the Undersecretary of Labor, acting under the authority of
the Secretary, is hereby REVERSED and SET ASIDE. The Order dated 17 May 2000 of
the Med-Arbiter dismissing the petition for certification election filed by Kawashima
Free Workers Union-PTGWO Local Chapter No. 803 is REINSTATED.
SO ORDERED.22 (Emphasis supplied)
KFWU filed a Motion for Reconsideration23 but the CA denied it.
The Republic of the Philippines (petitioner) filed the present petition to
seek closure on two issues:
First, whether a mixed membership of rank-and-file and supervisory employees in a
union is a ground for the dismissal of a petition for certification election in view of
the amendment brought about by D.O. 9, series of 1997, which deleted the
phraseology in the old rule that "[t]he appropriate bargaining unit of the rank-and-
file employee shall not include the supervisory employees and/or security guards;"
and
Second, whether the legitimacy of a duly registered labor organization can be
collaterally attacked in a petition for a certification election through a motion to
dismiss filed by an employer such as Kawashima Textile Manufacturing Phils., Inc. 24
The petition is imbued with merit.
The key to the closure that petitioner seeks could have been Republic Act (R.A.) No.
9481.25 Sections 8 and 9 thereof provide:
Section 8. Article 245 of the Labor Code is hereby amended to read as follows:
"Art. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right
of Supervisory Employees. - Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in the collective bargaining unit of the rank-and-file employees but may
join, assist or form separate collective bargaining units and/or legitimate labor
organizations of their own. The rank and file union and the supervisors' union
operating within the same establishment may join the same federation or national
union."
Section 9. A new provision, Article 245-A is inserted into the Labor Code to read as
follows:
"Art. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining
Unit. - The inclusion as union members of employees outside the bargaining unit
29 | P a g e
shall not be a ground for the cancellation of the registration of the union. Said
employees are automatically deemed removed from the list of membership of said
union." (Emphasis supplied)
Moreover, under Section 4, a pending petition for cancellation of registration
will not hinder a legitimate labor organization from initiating a certification
election, viz:
Sec. 4. A new provision is hereby inserted into the Labor Code as Article 238-A to
read as follows:
"Art. 238-A. Effect of a Petition for Cancellation of Registration. - A petition for
cancellation of union registration shall not suspend the proceedings for
certification election nor shall it prevent the filing of a petition for certification
election.
In case of cancellation, nothing herein shall restrict the right of the union to seek just
and equitable remedies in the appropriate courts." (Emphasis supplied)
Furthermore, under Section 12 of R.A. No. 9481, employers have no personality to
interfere with or thwart a petition for certification election filed by a legitimate labor
organization, to wit:
Sec. 12. A new provision, Article 258-A is hereby inserted into the Labor Code to read
as follows:
"Art. 258-A. Employer as Bystander. - In all cases, whether the petition for
certification election is filed by an employer or a legitimate labor organization, the
employer shall not be considered a party thereto with a concomitant right to
oppose a petition for certification election. The employer's participation in such
proceedings shall be limited to: (1) being notified or informed of petitions of such
nature; and (2) submitting the list of employees during the pre-election conference
should the Med-Arbiter act favorably on the petition." (Emphasis supplied)
However, R.A. No. 9481 took effect only on June 14, 2007; 26 hence, it applies only to
labor representation cases filed on or after said date. 27 As the petition for
certification election subject matter of the present petition was filed by KFWU on
January 24, 2000,28 R.A. No. 9481 cannot apply to it. There may have been curative
labor legislations29that were given retrospective effect,30 but not the aforecited
provisions of R.A. No. 9481, for otherwise, substantive rights and interests already
vested would be impaired in the process.31
Instead, the law and rules in force at the time of the filing by KFWU of the petition
for certification election on January 24, 2000 are R.A. No. 6715, 32 amending Book V
of Presidential Decree (P.D.) No. 442 (Labor Code),33 as amended, and the Rules and
Regulations Implementing R.A. No. 6715,34 as amended by Department Order No. 9,
series of 1997.35
It is within the parameters of R.A. No. 6715 and the Implementing Rules that the
Court will now resolve the two issues raised by petitioner.
If there is one constant precept in our labor laws – be it Commonwealth Act No. 213
(1936),36 R.A. No. 875 (1953),37 P.D. No. 442 (1974), Executive Order (E.O.) No. 111
(1986)38 or R.A. No. 6715 (1989) - it is that only a legitimate labor organization may
exercise the right to be certified as the exclusive representative of all the employees
in an appropriate collective bargaining unit for purposes of collective
bargaining.39 What has varied over the years has been the degree of enforcement of
this precept, as reflected in the shifting scope of administrative and judicial scrutiny
of the composition of a labor organization before it is allowed to exercise the right
of representation.
One area of contention has been the composition of the membership of a labor
organization, specifically whether there is a mingling of supervisory and rank-and-
file employees and how such questioned mingling affects its legitimacy.
It was in R.A. No. 875, under Section 3, that such questioned mingling was first
prohibited,40 to wit:
Sec. 3. Employees’ right to self-organization. – Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for
the purpose of collective bargaining through representatives of their own choosing
and to engage in concerted activities for the purpose of collective bargaining and
other mutual aid or protection. Individuals employed as supervisors shall not be
eligible for membership in a labor organization of employees under their supervision
but may form separate organizations of their own. (Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the questioned mingling can affect
the legitimacy of the labor organization. Under Section 15, the only instance when a
labor organization loses its legitimacy is when it violates its duty to bargain
30 | P a g e
collectively; but there is no word on whether such mingling would also result in loss
of legitimacy. Thus, when the issue of whether the membership of two supervisory
employees impairs the legitimacy of a rank-and-file labor organization came before
the Court En Banc in Lopez v. Chronicle Publication Employees Association, 41 the
majority pronounced:
It may be observed that nothing is said of the effect of such ineligibility upon the
union itself or on the status of the other qualified members thereof should such
prohibition be disregarded. Considering that the law is specific where it intends to
divest a legitimate labor union of any of the rights and privileges granted to it by law,
the absence of any provision on the effect of the disqualification of one of its
organizers upon the legality of the union, may be construed to confine the effect of
such ineligibility only upon the membership of the supervisor. In other words, the
invalidity of membership of one of the organizers does not make the union illegal,
where the requirements of the law for the organization thereof are, nevertheless,
satisfied and met.42 (Emphasis supplied)
Then the Labor Code was enacted in 1974 without reproducing Sec. 3 of R.A. No.
875. The provision in the Labor Code closest to Sec. 3 is Article 290,43 which is
deafeningly silent on the prohibition against supervisory employees mingling with
rank-and-file employees in one labor organization. Even the Omnibus Rules
Implementing Book V of the Labor Code44 (Omnibus Rules) merely provides in
Section 11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security guards to cease operation. – All
existing supervisory unions and unions of security guards shall, upon the effectivity
of the Code, cease to operate as such and their registration certificates shall be
deemed automatically cancelled. However, existing collective agreements with such
unions, the life of which extends beyond the date of effectivity of the Code shall be
respected until their expiry date insofar as the economic benefits granted therein
are concerned.
Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file organization. The
determination of who are managerial employees and who are not shall be the
subject of negotiation between representatives of supervisory union and the
employer. If no agreement s reached between the parties, either or both of them ma
bring the issue to the nearest Regional Office for determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A. No. 875 prompted the Court to
declare in Bulletin v. Sanchez45that 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 rules46continued to recognize the right of supervisory employees, who
do not fall under the category of managerial employees, to join a rank-and-file labor
organization.47
Effective 1989, R.A. No. 6715 restored the prohibition against the questioned
mingling in one labor organization, viz:
Sec. 18. Article 245 of the same Code, as amended, is hereby further amended to
read as follows
"Art. 245. Ineligibility of managerial employees to join any labor organization; right
of supervisory employees. Managerial employees are not eligible to join, assist or
form any labor organization. Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join,
assist or form separate labor organizations of their own." (Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715 omitted specifying the exact
effect any violation of the prohibition would bring about on the legitimacy of a labor
organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended
Omnibus Rules) which supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
Sec. 1. Who may join unions. – x x x Supervisory employees and security guards shall
not be eligible for membership in a labor organization of the rank-and-file employees
but may join, assist or form separate labor organizations of their own; Provided, that
those supervisory employees who are included in an existing rank-and-file bargaining
unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x.
(Emphasis supplied)
and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus
Rules, viz:
31 | P a g e
Sec. 1. Where to file. – A petition for certification election may be filed with the
Regional Office which has jurisdiction over the principal office of the employer. The
petition shall be in writing and under oath.
Sec. 2. Who may file. – Any legitimate labor organization or the employer, when
requested to bargain collectively, may file the petition.
The petition, when filed by a legitimate labor organization, shall contain, among
others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless
circumstances otherwise require; and provided further, that the appropriate
bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and
duly registered labor organization from exercising its right to file a petition for
certification election.
Thus, when the issue of the effect of mingling was brought to the fore in
Toyota,48 the Court, citing Article 245 of the Labor Code, as amended by R.A. No.
6715, held:
Clearly, based on this provision, a labor organization composed of both rank-and-file
and supervisory employees is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory employees cannot possess any
of the rights of a legitimate labor organization, including the right to file a petition
for certification election for the purpose of collective bargaining. It becomes
necessary, therefore, anterior to the granting of an order allowing a certification
election, to inquire into the composition of any labor organization whenever the
status of the labor organization is challenged on the basis of Article 245 of the Labor
Code.
xxxx
In the case at bar, as respondent union's membership list contains the names of at
least twenty-seven (27) supervisory employees in Level Five positions, the union
could not, prior to purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot possess the
requisite personality to file a petition for certification election.49 (Emphasis supplied)
In Dunlop,50 in which the labor organization that filed a petition for certification
election was one for supervisory employees, but in which the membership included
rank-and-file employees, the Court reiterated that such labor organization had no
legal right to file a certification election to represent a bargaining unit composed of
supervisors for as long as it counted rank-and-file employees among its members.51
It should be emphasized that the petitions for certification election involved in
Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995,
respectively; hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended
by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules).
Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules -
that the petition for certification election indicate that the bargaining unit of rank-
and-file employees has not been mingled with supervisory employees - was
removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain
description of the bargaining unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under
oath and shall contain, among others, the following: x x x (c) The description of the
bargaining unit.52
In Pagpalain Haulers, Inc. v. Trajano,53 the Court had occasion to uphold the validity
of the 1997 Amended Omnibus Rules, although the specific provision involved
therein was only Sec. 1, Rule VI, to wit:
Sec. 1. Chartering and creation of a local/chapter.- A duly registered federation or
national union may directly create a local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the following: a) a charter certificate issued
by the federation or national union indicating the creation or establishment of the
local/chapter; (b) the names of the local/chapter’s officers, their addresses, and the
32 | P a g e
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-PGTWO54 in which the core issue was whether mingling affects the legitimacy
of a labor organization and its right to file a petition for certification election. This
time, given the altered legal milieu, the Court abandoned the view in Toyota and
Dunlop and reverted to its pronouncement in Lopez that while there is a prohibition
against the mingling of supervisory and rank-and-file employees in one labor
organization, the Labor Code does not provide for the effects thereof.55 Thus, the
Court held that after a labor organization has been registered, it may exercise all the
rights and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot affect its
legitimacy for that is not among the grounds for cancellation of its registration,
unless such mingling was brought about by misrepresentation, false statement or
fraud under Article 239 of the Labor Code.56
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing
Products Plants-San Miguel Packaging Products-San Miguel Corp. Monthlies Rank-
and-File Union-FFW,57 the Court explained that 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.58
More to the point is Air Philippines Corporation v. Bureau of Labor Relations, 59 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:60 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.61lavvphil
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.
Consequently, the Court reverses the ruling of the CA and reinstates that of the DOLE
granting the petition for certification election of KFWU.
Now to the second issue of whether an employer like respondent may collaterally
attack the legitimacy of a labor organization by filing a motion to dismiss the latter’s
petition for certification election.
Except when it is requested to bargain collectively, 62 an employer is a mere
bystander to any petition for certification election; such proceeding is non-
adversarial and merely investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective bargaining with the
employer.63 The choice of their representative is the exclusive concern of the
employees; the employer cannot have any partisan interest therein; it cannot
interfere with, much less oppose, the process by filing a motion to dismiss or an
appeal from it;64 not even a mere allegation that some employees participating in a
petition for certification election are actually managerial employees will lend an
employer legal personality to block the certification election.65 The employer's only
right in the proceeding is to be notified or informed thereof.66
The amendments to the Labor Code and its implementing rules have buttressed that
policy even more.
WHEREFORE, the petition is GRANTED. The December 13, 2002 Decision and
October 7, 2003 Resolution of the Court of Appeals and the May 17, 2000 Order of
Med-Arbiter Anastacio L. Bactin are REVERSED and SET ASIDE,while the August 18,
2000 Decision and September 28, 2000 Resolution of the Department of Labor and
Employment are REINSTATED.
G.R. No. 110399. August 15, 1997]
33 | P a g e
6.) SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO
L. PONCE, President, petitioners, vs. HONARABLE BIENVENIDO E.
LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS
MED-ARBITER AND SAN MIGUEL CORPORATION, respondents.
DECISION
ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary
Injunction seeking to reverse and set aside the Order of public respondent,
Undersecretary of the Department of Labor and Employment, Bienvenido E.
Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91[1] entitled In Re:
Petition for Certification Election Among the Supervisory and Exempt Employees of
the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernando and
Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner. The Order
excluded the employees under supervisory levels 3 and 4 and the so-called exempt
employees from the proposed bargaining unit and ruled out their participation in the
certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor and
Employment (DOLE) a Petition for District Certification or Certification Election
among the supervisors and exempt employees of the SMC Magnolia Poultry
Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order
ordering the conduct of certification among the supervisors and exempt employees
of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis as
one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of
Appeal with Memorandum on Appeal, pointing out, among others, the Med-Arbiters
error in grouping together all three (3) separate plants, Otis, Cabuyao and San
Fernando, into one bargaining unit, and in including supervisory levels 3 and above
whose positions are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted
respondent companys Appeal and ordered the remand of the case to the Med-
Arbiter of origin for determination of the true classification of each of the employees
sought to be included in the appropriate bargaining unit.
 Upon petitioner-unions motion dated August 7, 1991, Undersecretary
Laguesma granted the reconsideration prayed for on September 3, 1991 and
directed the conduct of separate certification elections among the supervisors
ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt employees in each of
the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed a
Motion for Reconsideration with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting the
Motion, citing the doctrine enunciated in Philips Industrial Development, Inc. v.
NLRC[2] case. Said Order reads in part:
x x x Confidential employees, like managerial employees, are not allowed to form,
join or assist a labor union for purposes of collective bargaining.
In this case, S3 and S4 and the so-called exempt employees are admittedly
confidential employees and therefore, they are not allowed to form, join or assist a
labor union for purposes of collective bargaining following the above courts
ruling. Consequently, they are not allowed to participate in the certification election.
WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03
September 1991 is hereby modified to the extent that employees under supervisory
levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to
join the proposed bargaining unit and are therefore excluded from those who could
participate in the certification election.[3]
Hence this petition.
For resolution in this case are the following issues:
1. Whether Supervisory employees 3 and 4 and the exempt employees
of the company are considered confidential employees, hence
ineligible from joining a union.
2. If they are not confidential employees, do the employees of the three
plants constitute an appropriate single bargaining unit.
On the first issue, this Court rules that said employees do not fall within the
term confidential employees who may be prohibited from joining a union.
There is no question that the said employees, supervisors and the exempt
employees, are not vested with the powers and prerogatives to lay down and
34 | P a g e
execute management policies and/or to hire, transfer, suspend, layoff, recall,
discharge or dismiss employees. They are, therefore, not qualified to be classified as
managerial employees who, under Article 245 [4] of the Labor Code, are not eligible
to join, assist or form any labor organization. In the very same provision, they are not
allowed membership in a labor organization of the rank-and-file employees but may
join, assist or form separate labor organizations of their own. The only question that
need be addressed is whether these employees are properly classified as confidential
employees or not.
Confidential employees are those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management
policies in the field of labor relations.[5]The two criteria are cumulative, and both
must be met if an employee is to be considered a confidential employee that is, the
confidential relationship must exist between the employees and his supervisor, and
the supervisor must handle the prescribed responsibilities relating to labor
relations.[6]
The exclusion from bargaining units of employees who, in the normal course
of their duties, become aware of management policies relating to labor relations is
a principal objective sought to be accomplished by the confidential employee
rule. The broad rationale behind this rule is that employees should not be placed in a
position involving a potential conflict of interests.[7] Management should not be
required to handle labor relations matters through employees who are represented
by the union with the company is required to deal and who in the normal
performance of their duties may obtain advance information of the companys
position with regard to contract negotiations, the disposition of grievances, or other
labor relations matters.[8]
There have been ample precedents in this regard, thus in Bulletin Publishing
Company v. Hon. Augusto Sanchez,[9] the Court held that if these managerial
employees would belong to or be affiliated with a Union, the latter might not be
assured of their loyalty to the Union in view of evident conflict of interest. The Union
can also become company-dominated with the presence of managerial employees
in Union membership. The same rationale was applied to confidential employees in
Golden Farms, Inc. v. Ferrer-Calleja[10] and in the more recent case of Philips
Industrial Development, Inc. v. NLRC[11] which held that confidential employees, by
the very nature of their functions, assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions in the
field of labor relations. Therefore, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union was held equally applicable to
them.[12]
 An important element of the confidential employee rule is the employees need
to use labor relations information. Thus, in determining the confidentiality of certain
employees, a key questions frequently considered is the employees necessary access
to confidential labor relations information.[13]
It is the contention of respondent corporation that Supervisory employees 3
and 4 and the exempt employees come within the meaning of the term confidential
employees primarily because they answered in the affirmative when asked Do you
handle confidential data or documents? in the Position Questionnaires submitted by
the Union.[14] In the same questionnaire, however, it was also stated that the
confidential information handled by questioned employees relate to product
formulation, product standards and product specification which by no means relate
to labor relations.[15]
Granting arguendo that an employee has access to confidential labor relations
information but such is merely incidental to his duties and knowledge thereof is not
necessary in the performance of such duties, said access does not render the
employee a confidential employee.[16] If access to confidential labor relations
information is to be a factor in the determination of an employees confidential
status, such information must relate to the employers labor relations policies. Thus,
an employee of a labor union, or of a management association, must have access to
confidential labor information with respect to his employer, the union, or the
association, to be regarded a confidential employee, and knowledge of labor
relations information pertaining to the companies with which the union deals, or
which the association represents, will not clause an employee to be excluded from
the bargaining unit representing employees of the union or association. [17] Access to
information which is regarded by the employer to be confidential from the business
standpoint, such as financial information [18] or technical trade secrets, will not
render an employee a confidential employee.[19]
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift
operations when situations require.
2. To effectively oversee the quality control function at the processing
lines in the storage of chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct
manufacturing materials.
5. To recommend and initiate actions in the maintenance of sanitation
and hygiene throughout the plant.[20]
35 | P a g e
It is evident that whatever confidential data the questioned employees may
handle will have to relate to their functions. From the foregoing functions, it can be
gleaned that the confidential information said employees have access to concern the
employers internal business operations. As held in Westinghouse Electric
Corporation v. National Labor Relations Board,[21] an employee may not be excluded
from appropriate bargaining unit merely because he has access to confidential
information concerning employers internal business operations and which is not
related to the field of labor relations.
It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution
mandates the State to guarantee to all workers the right to self-organization. Hence,
confidential employees who may be excluded from bargaining unit must be strictly
defined so as not to needlessly deprive many employees of their right bargain
collectively through representatives of their choosing.[22]
In the case at bar, supervisors 3 and above may not be considered confidential
employees merely because they handle confidential data as such must first be strictly
classified as pertaining to labor relations for them to fall under said restrictions. The
information they handle are properly classifiable as technical and internal business
operations data which, to our mind, has no relevance to negotiations and settlement
of grievances wherein the interests of a union and the management are invariably
adversarial. Since the employees are not classifiable under the confidential type, this
Court rules that they may appropriately form a bargaining unit for purposes of
collective bargaining. Furthermore, even assuming that they are confidential
employees, jurisprudence has established that there is no legal prohibition against
confidential employees who are not performing managerial functions to form and
join a union.[23]
In this connection, the issue of whether the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis
constitute a single bargaining unit needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3)
separate bargaining units, one each for Cabuyao Otis and San Fernando as ruled by
the respondent Undersecretary, is contrary to the one-company, one-union policy. It
adds that Supervisors level 1 to 4 and exempt employees of the three plants have a
similarity or a community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as a group of employees of a
given employer, comprised of all or less than all of the entire body of employees,
which the collective interest of all the employees, consistent with equity to the
employer, indicate to be best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of the law.[24]

A unit to be appropriate must effect a grouping of employees who have

substantial, mutual interests in wages, hours, working conditions and other subjects 7.) ASIAN INSTITUTE OF MANAGEMENT, Petitioner,
of collective bargaining.[25] vs. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION, Respondent.

It is readily seen that the employees in the instant case have community or G.R. No. 207971
mutuality of interest, which is the standard in determining the proper constituency
of a collective bargaining unit.[26] It is undisputed that they all belong to the Magnolia
DECISION
Poultry Division of San Miguel Corporation. This means that, although they belong
to three different plants, they perform work of the same nature, receive the same
wages and compensation, and most importantly, share a common stake in concerted DEL CASTILLO, J.:
activities.
This Petition for Review on Certiorari1assails the January 8, 2013 Decision 2 of the
In light of these considerations, the Solicitor General has opined that separate Court of Appeals (CA) which dismissed the Petition for Certiorari3in CA-G.R. SP No.
bargaining units in the three different plants of the division will fragmentize the 114122, and its subsequent June 27, 2013 Resolution 4denying herein petitioner's
employees of the said division, thus greatly diminishing their bargaining Motion for Reconsideration. 5
leverage. Any concerted activity held against the private respondent for a labor
grievance in one bargaining unit will, in all probability, not create much impact on
the operations of the private respondent. The two other plants still in operation can Factual Antecedents
well step up their production and make up for the slack caused by the bargaining
unit engaged in the concerted activity. This situation will clearly frustrate the Petitioner Asian Institute of Management (AIM) is a duly registered non-stock, non-
provisions of the Labor Code and the Mandate of the Constitution. [27] profit educational institution. Respondent Asian Institute of Management Faculty
Association (AFA) is a labor organization composed of members of the AIM faculty,
The fact that the three plants are located in three different places, namely, in duly registered under Certificate of Registration No. NCR-UR-12-4076-2004.
Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga
is immaterial. Geographical location can be completely disregarded if the communal
On May 16, 2007, respondent filed a petition for certification election6 seeking to
or mutual interests of the employees are not sacrificed as demonstrated in UP v.
represent a bargaining unit in AIM consisting of forty (40) faculty members. The case
Calleja-Ferrer where all non-academic rank and file employees of the University of
was docketed as DOLE Case No. NCR-OD-M-0705-007. Petitioner opposed the
the Philippines inDiliman, Quezon City, Padre Faura, Manila, Los Baos, Laguna and
petition, claiming that respondent's members are neither rank-and-file nor
the Visayas were allowed to participate in a certification election. We rule that the
supervisory, but rather, managerial employees.7
distance among the three plants is not productive of insurmountable difficulties in
the administration of union affairs. Neither are there regional differences that are
likely to impede the operations of a single bargaining representative. On July 11, 2007, petitioner filed a petition for cancellation of respondent's
certificate of registration8 - docketed as DOLE Case No. NCROD-0707-001-LRD - on
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the grounds of misrepresentation in registration and that respondent is composed
the Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a of managerial employees who are prohibited from organizing as a union.
certification election among the supervisors (level 1 to 4) and exempt employees of
the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San
On August 30, 2007, the Med-Arbiter in DOLE Case No. NCR-OD-M-0705-007 issued
Fernando, and Otis as one bargaining unit is ordered conducted.
an Order9 denying the petition for certification election on the ground that AIM' s
SO ORDERED. faculty members are managerial employees. This Order was appealed by respondent
before the Secretary of the Department of Labor and Employment (DOLE), 10 who
Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

36 | P a g e
reversed foe same via a February 20, 2009 Decision 11 and May 4, 2009
Resolution, 12 decreeing thus:
WHEREFORE, the appeal filed by the Asian Institute of Management Faculty
Association (AIMFA) is GRANTED. The Order dated 30 August 2007 of DOLE-NCR
Mediator-Arbiter Michael T. Parado is hereby REVERSED and SET ASIDE.
Accordingly, let the entire records of the case be remanded to DOLEN CR for the
conduct of a certification election among the faculty members of the Asian Institute
of Management (AIM), with the following choices:
1. ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION (AIMFA); and
2. No Union.
SO ORDERED.13
Meanwhile, in DOLE Case No. NCR-OD-0707-001-LRD, an Order14 dated February 16,
2009 was issued by DOLE-NCR Regional Director Raymundo G. Agravante granting
AIM's petition for cancellation of respondent's certificate of registration and
ordering its delisting from the roster of legitimate labor organizations. 1bis Order
was appealed by respondent before the Bureau labor Relations 15 (BLR), which, in a
December 29, 2009 Decision,16 reversed the same and ordered respondent's
retention in the roster of legitimate labor organizations. The BLR held that the
grounds relied upon in the petition for cancellation are not among the grounds
authorized under Article 239 of the Labor Code, 17 and that respondent's members
are not managerial employees. Petitioner moved to reconsider, but was rebuffed in
a March 18, 2010 Resolution. 18
CA-G.R. SP No.109487 and G.R. No.197089
Petitioner filed a Petition for Certiorari before the CA, questioning the DOLE
Secretary's February 20, 2009 Decision and May 4, 2009 Resolution relative to DOLE
Case No. NCR-OD-M-0705-007, or respondent's petition for certification election.
Docketed as CA-G.R. SP No. 109487, the petition is based on the arguments that 1)
the bargaining unit within AIM sought to be represented is composed of managerial
employees who are not eligible to join, assist, or form any labor organization, and 2)
respondent is not a legitimate labor organization that may conduct a certification
election.
37 | P a g e
On October 22, 2010, the CA rendered its Decision19 containing the following
pronouncement:
AIM insists that the members of its tenure-track faculty are managerial employees,
and therefore, ineligible to join, assist or form a labor organization. It ascribes grave
abuse of discretion on SOLE20 for its rash conclusion that the members of said
tenure-track faculty are not managerial employees solely because the faculty's
actions are still subject to evaluation, review or final approval by the board of
trustees ("BOT'). AIM argues that the BOT does not manage the day-to-day affairs,
nor the making and implementing of policies of the Institute, as such functions are
vested with the tenure-track faculty.
We agree.
Article 212(m) of the Labor Code defines managerial employees as:
'ART. 212. Definitions. – x x x
(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline employees. Supervisory employees are those
who, in the interest of the employer, effectively recommend such managerial actions
if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of
the above definitions are considered rank-and-file employees for purposes of this
Book.'
There are, therefore, two (2) kinds of managerial employees under Art. 212(m) of
the Labor Code. Those who 'lay down x x x management policies', such as the Board
of Trustees, and those who 'execute management policies and/or hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees'.
xxxx
On its face, the SOLE's opinion is already erroneous because in claiming that the 'test
of 'supervisory' or 'managerial status' depends on whether a person possesses
authority to act in the interest of his employer in the matter specified in Article
212(m) of the Labor Code and Section l(m) of its Implementing Rules', he obviously
was referring to the old definition of a managerial employee. Such is evident in his
use of 'supervisory or managerial status', and reference to 'Section l(m) of its
Implementing Rules'. For presently, as aforequoted in Article 212(m) of the Labor
Code and as amended by Republic Act 6715 which took effect on March 21, 1989, a
managerial employee is already different from a supervisory employee. x x x
xxxx
In further opining that a managerial employee is one whose 'authority is not merely
routinary or clerical in nature but requires the use of independent judgment', a
description which fits now a supervisory employee under Section l(t), Rule I, Book
V of the Omnibus Rules Implementing the Labor Code, it then follows that the SOLE
was not aware of the change in the law and thus gravely abused its discretion
amounting to lack of jurisdiction in concluding that AIM's 'tenure-track' faculty
are not managerial employees.
SOLE further committed grave abuse of discretion when it concluded that said
tenure-track faculty members are not managerial employees on the basis of a
'footnote' in AIM's Policy Manual, which provides that 'the policy[-] making
authority of the faculty members is merely recommendatory in nature considering
that the faculty standards they formulate are still subject to evaluation, review or
final approval by the [AIM]'s Board of Trustees'. x x x
xxxx
Clearly, AIM's tenure-track faculty do not merely recommend faculty
standards.1âwphi1 They 'determine all faculty standards', and are thus managerial
employees. The standards' being subjected to the approval of the Board of Trustees
would not make AIM's tenure-track faculty non-managerial because as earlier
mentioned, managerial employees are now of two categories: (1) those who 'lay
down policies', such as the members of the Board of Trustees, and (2) those
who 'execute management policies (etc.)’, such as AIM's tenure-track faculty.
xxxx
It was also grave abuse of discretion on the part of the SOLE when he opined that
AIM' s tenure-track faculty members are not managerial employees, relying on an
impression that they were subjected to rigid observance of regular hours of work as
professors. x x x
xxxx
38 | P a g e
More importantly, it behooves the SOLE to deny AFA's appeal in light of the
February 16, 2009 Order of Regional Director Agravante delisting AFA from the
roster of legitimate labor organizations. For, only legitimate labor organizations
are given the right to be certified as sole and exclusive bargaining agent in an
establishment.
xxxx
Here, the SOLE committed grave abuse of discretion by giving due course to AFA's
petition for certification election, despite the fact that: (1) AFA's members are
managerial employees; and (2) AFA is not a legitimate labor organization. 'These
facts rendered AFA ineligible, and without any right to file a petition for certification
election, the object of which is to determine the sole and exclusive bargaining
representative of qualified AIM employees.
WHEREFORE, the instant petition is GRANTED. The assailed Decision dated February
20, 2009 and Resolution dated May 4, 2009 are hereby REVERSED and SET ASIDE.
The Order dated August 30, 2007 of Mediator-Arbiter Parado is hereby REINSTATED.
SO ORDERED.21 (Emphasis in the original)
Respondent sought reconsideration, but was denied. It thus instituted a Petition for
Review on Certiorari before this Court on July 4, 2011. The Petition, docketed as G.R.
No. 197089, remains pending to date.
The Assailed Ruling of the Court of Appeals
Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or petitioner AIM's
petition for cancellation of respondent's certificate of registration, petitioner filed on
May 24, 20 l 0 a Petition for Certiorari22before the CA, questioning the BLR's
December 29, 2009 decision and March 18, 2010 resolution. The petition, docketed
as CA-G.R. SP No. 114122, alleged that the BLR committed grave abuse of discretion
in granting respondent's appeal and affirming its certificate of registration
notwithstanding that its members are managerial employees who may not join,
assist, or form a labor union or organization.
On January 8, 2013, the CA rendered the assailed Decision, stating as follows:
The petition lacks merit
xxxx
It is therefore incumbent upon the Institute to prove that the BLR committed grave
abuse of discretion in issuing the questioned Decision.1âwphi1 Towards this end,
AIM must lay the basis by showing that any of the grounds provided under Article
239 of the Labor Code, exists, to wit:
Article 239. Grounds for cancellation of union registration. - The following may
constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification;
(b) Misrepresentation, false statements or fraud in connection with the election of
officers, minutes of the election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
Article 238 of the Labor Code provides that the enumeration of the grounds for
cancellation of union registration, is exclusive; in other words, no other grow1ds for
cancellation is acceptable, except for the three (3) grounds stated in Article 239. The
scope of the grounds for cancellation has been explained-
For the purpose of de-certifying a union such as respondent, it must be shown that
there was misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments thereto; the
minutes of ratification; or, in connection with the election of officers, the minutes of
the election of officers, the list of voters, or failure to submit these documents
together with the list of the newly elected-appointed officers and their postal
addresses to the BLR.
The bare fact that two signatures appeared twice on the list of those who
participated in the organizational meeting would not, to our mind, provide a valid
reason to cancel respondent's certificate of registration. The cancellation of a union's
registration doubtless has an impairing dimension on the right of labor to self-
organization. For fraud and misrepresentation to be grounds for cancellation of
union registration under the Labor Code, the nature of the fraud
andmisrepresentation must be grave and compelling enough to
39 | P a g e
vitiate the consent of a majority of union members.23
In this regard, it has also been held that:
Another factor which militates against the veracity of the allegations in
the Sinumpaang Petisyon is the lack of particularities on how, when and where
respondent union perpetrated the alleged fraud on each member. Such details are
crucial for, in the proceedings for cancellation of union registration on the ground of
fraud or misrepresentation, what needs to be established is that the specific act or
omission of the union deprived the complaining employees-members of their right
to choose.24
A cursory reading of the Petition shows that AIM did NOT allege any specific act of
fraud or misrepresentation committed by AFA. What is clear is that the Institute
seeks the cancellation of the registration of AFA based on Article 245 of the Labor
Code on the ineligibility of managerial employees to form or join labor unions.
Unfortunately for the petitioner, even assuming that there is a violation of Article
245, such violation will not result in the cancellation of the certificate of registration
of a labor organization.
It should be stressed that a Decision had already been issued by the DOLE in the
Certification Election case; and the Decision ordered the conduct of a certification
election among the faculty members of the Institute, basing its directive on the
finding that the members of AFA were not managerial employees and are therefore
eligible to form, assist and join a labor union. As a matter of fact, the certification
election had already been held on October 16, 2009, albeit the results have not yet
been resolved as inclusion/exclusion proceedings are still pending before the DOLE.
The remedy available to the Institute is not the instant Petition, but to question the
status of the individual union members of the AFA in the inclusion/exclusion
proceedings pursuant to Article 245-A of the Labor Code, which reads:
Article 245-A. Effect of inclusion as members of employees outside the bargaining
unit. - The inclusion as union members of employees outside the bargaining unit shall
not be a ground for the cancellation of the registration of the union. Said employees
are automatically deemed removed from the list of membership of said union.
Petitioner insists that Article 245-A is not applicable to this case as all AF A members
are managerial employees. We are not persuaded.
The determination of whether any or all of the members of AFA should be considered
as managerial employees is better left to the DOLE because,
It has also been established that in the determination of whether or not certain
employees are managerial employees, this Court accords due respect and therefore
sustains the findings of fact made by quasi-judicial agencies which are supported by
substantial evidence considering their expertise in their respective fields. 25
From the discussion, it is manifestly clear that the petitioner foiled to prove that the
BLR committed grave abuse of discretion; consequently, the Petition must fail.
WHEREFORE, the Petition is hereby DENIED. The Decision and Resolution of public
respondent Bureau of Labor Relations in BLR-A-C-19-3-6-09 (NCR-OD-0707-001) are
hereby AFFIRMED.
SO ORDERED.26 (Emphasis in the original)
Petitioner filed its Motion for Reconsideration, which was denied by the CA via its
June 27, 2013 Resolution. Hence, the instant Petition.
In a November 10, 2014 Resolution,27 the Court resolved to give due course to the
Petition.
Issue
Petitioner claims that the CA seriously erred in affirming the dispositions of the BLR
and thus validating the respondent's certificate of registration notwithstanding the
fact that its members are all managerial employees who are disqualified from
joining, assisting, or forming a labor organization.
Petitioner's Arguments
Praying that the assailed CA dispositions be set aside and that the DOLE-NCR
Regional Director's February 16, 2009 Order granting AIM's petition for cancellation
of respondent's certificate of registration and ordering its delisting from the roster
of legitimate labor organizations be reinstated instead, petitioner maintains in its
Petition and Reply28that respondent's members are all managerial employees; that
the CA erred in declaring that even if respondent's members are all managerial
employees, this alone is not a ground for cancellation of its certificate of registration;
40 | P a g e
that precisely, the finding in DOLE Case No. NCR-ODM- 0705-007, which the CA
affirmed in CA-G.R. SP No. 109487, is that respondent's members are managerial
employees; that respondent's declaration that its members are eligible to join, assist,
or form a labor organization is an act of misrepresentation, given the finding in CA-
G.R. SP No. 109487 that they are managerial employees; and that the grounds for
cancellation of union registration enumerated in Article 239 of the Labor Code are
not exclusive.
Respondent's Arguments
In its Comment,29 respondent maintains that the CA was right to treat petitioner’s
case for cancellation of its union registration with circumspection; that petitioner's
ground for filing the petition for cancellation is not recognized under Article 239; that
petitioner's accusation of misrepresentation is unsubstantiated, and is being raised
for the first time at this stage; that its members are not managerial employees; and
that petitioner's opposition to respondent's attempts at self-organization
constitutes harassment, oppression, and violates the latter's rights under the Labor
Code and the Constitution.
Our Ruling
In Holy Child Catholic School v. Hon. Sto. Tomas,30this Court declared that "[i]n 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."
On the basis of the ruling in the above-cited case, it can be said that petitioner was
correct in filing a petition for cancellation of respondent's certificate of registration.
Petitioner's sole ground for seeking cancellation of respondent's certificate of
registration - that its members are managerial employees and for this reason, its
registration is thus a patent nullity for being an absolute violation of Article 245 of
the Labor Code which declares that managerial employees are ineligible to join any
labor organization --- is, in a sense, an accusation that respondent is guilty of
misrepresentation for registering under the claim that its members are not
managerial employees.
However, the issue of whether respondent's members are managerial employees is
still pending resolution by way of petition for review on certiorari in G.R. No. 197089,
which is the culmination of all proceedings in DOLE Case No. NCR-OD-M-0705-007 -
- where the issue relative to the nature of respondent's membership was first raised
by petitioner itself and is there fiercely contested. The resolution of this issue cannot
be pre-empted; until it is determined with finality in G.R. No. l 97089, the petition
for cancellation of respondent's certificate of registration on the grounds alleged by
petitioner cannot be resolved. As a matter of courtesy and in order to avoid
conflicting decisions, We must await the resolution of the petition in G.R. No.
197089.
x x x If a particular point or question is in issue in the second action, and the judgment
will depend on the determination of that particular point or question, a former
judgment between the same parties or their privies will be final and conclusive in the
second if that same point or question was in issue and adjudicated in the first suit. x
x x Identity of cause of action is not required, but merely identity of issues.31 (Citation
omitted)
WHEREFORE, considering that the outcome of this case depends on the resolution
of the issue relative to the nature of respondent's membership pending in G.R. No.
197089, this case is ordered CONSOLIDATED with G.R. No. 197089.
SO ORDERED.
8.) COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner, v. ILOCOS PROFESSIONAL
AND TECHNICAL EMPLOYEES UNION (IPTEU), Respondent.
G.R. No. 193798, September 09, 2015
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure (Rules) seeks to reverse and set aside the March 17, 2010 Decision 1 and
September 16, 2010 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No.
104043, which affirmed the May 6, 2008 Resolution 3 of the Secretary of Labor and
Employment (SOLE) dismissing petitioner's appeal that assailed the Decision (On the
Challenged Voters)4 and Proclamation of the Winner,5 both dated October 22, 2007,
of the Mediator-Arbiter.
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation duly
organized and operating under the Philippine laws. It is primarily engaged in the
41 | P a g e
beverage business, which includes the manufacture of carbonated soft drinks. On
the other hand, respondent Ilocos Professional and Technical Employees Union
(IPTEU) is a registered independent labor organization with address at CCBPI Ilocos
Plant in Barangay Catuguing, San Nicolas, Ilocos Norte.
On July 9, 2007, IPTEU filed a verified Petition 6 for certification election seeking to
represent a bargaining unit consisting of approximately twenty-two (22) rank-and-
file professional and technical employees of CCBPI Ilocos Norte Plant. CCBPI prayed
for the denial and dismissal of the petition, arguing that the Sales Logistics
Coordinator and Maintenance Foreman are supervisory employees, while the eight
(8) Financial Analysts, five (5) Quality Assurance Specialists, Maintenance Manager
Secretary, Trade Promotions and Merchandising Assistant (TPMA), Trade Asset
Controller and Maintenance Coordinator (TACMC), Sales Information Analyst (SIA),
Sales Logistics Assistant, Product Supply Coordinator, Buyer, Inventory Planner, and
Inventory Analyst are confidential employees;7 hence, ineligible for inclusion as
members of IPTEU. It also sought to cancel and revoke the registration of IPTEU for
failure to comply with the twenty percent (20%) membership requirement based on
all the supposed employees in the bargaining unit it seeks to operate.
A preliminary hearing of the petition was scheduled and held on July 19, 2007. The
possibility of voluntary recognition or consent election was not acceded to by CCBPI.
Convinced that the union members are rank-and-file employees and not occupying
positions that are supervisory or confidential in nature, Mediator-Arbiter Florence
Marie A. Gacad-Ulep granted IPTEU'S petition. The dispositive portion of the August
23, 2007 Decision8 ordered:
WHEREFORE, premises considered, the Petition is GRANTED. The bargaining unit
shall be all the rank-and-file Exempt (Professional and Technical) Workers of CCBPI
who are now excluded from the existing bargaining units of the Coca-Cola Bottlers
Philippines, Inc. - Ilocos Plant. The choices in the election shall be:
ILOCOS PROFESSIONAL AND TECHNICAL [EMPLOYEES] UNION (IPTEU)
No Union
The Labor Relations Division of this office is hereby directed to conduct the Pre-
election Conference(s) within the periods set by law. The CCBPI is hereby ordered to
submit, not later than the date of the first pre-election conference, its Certified List
of Exempt (Professional and Technical) rank-and-file workers, or in its absence, the
employee payrolls from May to June 2007. In case Management fails or refuses to
submit the same, the Union's list shall be allowed, as provided for under the Rules.

SO ORDERED9
On September 3, 2007, CCBPI filed an appeal before the SOLE. 10 The Mediator-
Arbiter acknowledged having received the Memorandum of Appeal but informed
that, pursuant to the Implementing Rules and Regulations of the Labor Code, as
amended, "[the] order granting the conduct of a certification election in an
unorganized establishment shall not be subject to appeal. Any issue arising therefrom
may be raised by means of protest on the conduct and results of the certification
election."11 On September 5, 2007, CCBPI then filed an Urgent Motion to Suspend
Proceedings,12 alleging that the notice issued by the Assistant Regional Director for
the conduct of pre-election conference is premature since the decision of the
Mediator-Arbiter is not yet final and executory and that the Mediator-Arbiter already
lost jurisdiction over the case with the filing of an appeal. Two days after, CCBPI filed
a Manifestation,13stating that its participation in the pre-election conference,
certification election, and other proceedings is not a waiver, withdrawal or
abandonment of the pending appeal and motion to suspend proceedings.
In the Pre-election Conference held on September 10, 2007, CCBPI and IPTEU
mutually agreed to conduct the certification election on September 21, 2007. On
election day, only sixteen (16) of the twenty-two (22) employees in the IPTEU list
voted. However, no votes were canvassed. CCBPI filed and registered a
Protest14 questioning the conduct and mechanics of the election and a Challenge to
Votes15on the ground that the voters are supervisory and confidential employees.
By agreement, the parties met on September 26, 2007 for the opening and counting
of the challenged votes. On said date, CCBPI filed a motion for inhibition, which the
Mediator-Arbiter verbally denied on the grounds that it was not verified and would
cause undue delay on the proceedings as there are no other Mediators-Arbiters in
the Region. The parties were informed that their agreement to have the ballots
opened could not bind the Mediator-Arbiter. Instead, they were directed to submit
additional evidence that would aid in the resolution of the challenged votes.
On October 22, 2007, the Mediator-Arbiter denied CCBPI's challenge to the 16 votes.
She found that the voters are rank-and-file employees holding positions that are not
confidential in nature, and who are not, or used to be, members of Ilocos Monthlies
Union (IMU) due to the reclassification of their positions by CCBPI and have been
excluded from the CBA entered into by IMU and CCBPI from 1997 to 2005.
Consequently, the challenged votes were opened and canvassed. After garnering 14
out of the 16 votes cast, IPTEU was proclaimed as the sole and exclusive bargaining
agent of the rank-and-file exempt workers in CCBPI Ilocos Norte Plant.
CCBPI elevated the case to the SOLE, raising the following grounds:
42 | P a g e
1. The Honorable public [appellee] erred in disregarding the fact
that there is already an existing bargaining representative of the
rank-and-file professional and technical employees at the Ilocos
Plant of appellant, namely, the Ilocos Monthlies Union (IMU) [to]
which the sixteen (16) challenged voters should be members as
long as they are not disqualified by law [for] being confidential
employees.
2. The Honorable public appellee erred in denying the challenge to
the sixteen (16) actual voters, and subsequently declaring that
private aippellee is the sole and exclusive [bargaining] agent of
the rank-and-file exempt employees.
3. The Honorable public appellee erred in disregarding the fact that
there is a pending earlier appeal filed by appellant with the
Honorable Secretary of Labor, and so the Regional Office No. 1
of the Department of Labor and Employment lost jurisdiction
over the case including the certification election conducted by
the Election Officer.
4. The Honorable public appellee erred in disregarding the fact that
there is a pending Motion to Suspend Proceedings filed by
appellant with the Department of Labor and Employment,
Regional Office No. 1, San Fernando City, La Union[,] due to the
pendency of its appeal with the Honorable Secretary of Labor,
and the same is not yet resolved.
5. The Honorable public appellee erred in disregarding the fact that
there is a need to suspend the conduct of election and other
proceedings to await for the final result of the earlier appeal
made by herein appellant.
6. The Honorable public appellee erred in not declaring the
certification election on September 21, 2007 null and void. 16
On May 6, 2008, the appeal of CCBP1 was denied. The SOLE held that, as shown by
the certification of the IMU President and the CBAs forged between CCBPI and IMU
from 1997 to 2007, the 22 employees sought to be represented by IPTEU are not
part of IMU and are excluded from its CBA coverage; that even if the 16 challenged
voters may have access to information which are confidential from the business
standpoint, the exercise of their right to self-organization could not be defeated
because their common functions do not show that there exist a confidential
relationship within the realm of labor relations; and that the order granting the
certification election and sustaining its validity despite the pendency of appeal and
motion to suspend is proper in view of Section 17, Rule VIII of Department Order No.
40, Series of 2003, which states that the order granting the conduct of a certification
election in an unorganized establishment is not subject to appeal and that any issue
arising therefrom may be raised by means of protest on the conduct and results of
the certification election.
Confronted with an adverse ruling, CCBPI filed before the CA a petition
for certiorari with prayer for temporary restraining order and writ of preliminary
injunction.17 It reiterated that:
a. There is already an existing and incumbent sole and exclusive
bargaining agent in the bargaining unit which respondent IPTEU
seeks to represent, namely, the Ilocos Monthlies Union (IMU).
The bargaining unit which IPTEU seeks to represent is rank-and-
file professional and technical employees which the incumbent
union, the IMU, presently represents.
b. Respondent IPTEU never sought to represent the alleged rank-
and-file Exempt employees because it is clearly indicated in its
petition for certification election that it seeks to represent rank-
and-file professional and technical employees only. Its
Constitution and by laws includes solely and only professional
and technical employees of CCBPI-ILOCOS PLANT to its
membership, and nothing more.
c. The sixteen (16) voters are not eligible for Union membership
because they are confidential employees occupying confidential
positions.
d. The bargaining unit is organized due to the presence of the IMU,
the sole and exclusive bargaining unit of the rank-and-file
professional and technical employees at the Ilocos Plant of
petitioner, and so the appeal of the earlier decision of the
respondent Med-Arbiter dated August 23, 2007 is in order,
proper, valid and should have been given due course in
accordance with Sec. 17, Rule [VIII] of the Rules Implementing
Book V of the Labor Code.
43 | P a g e
e. The earlier appeal x x x together with the motion for suspension
of the proceedings x x x filed by petitioner on September 5, 2007
remain unresolved to date, and there is a need to await for their
final resolution before any further action including the
certification election could validly proceed.18
On March 17, 2010, the Court of Appeals denied the petition. CCBPI filed a motion
for reconsideration,19which was also denied in the September 16, 2010 Resolution;
hence, this petition.
CCBPI contends that the CA Decision and Resolution are based on misapprehension
of facts relative to the proceedings before the Mediator-Arbiter and that its
pronouncement consists of inferences which are manifestly mistaken and without
factual/legal basis. It is argued that a petition for certiorari was filed before the CA
because the orders of the SOLE and Mediator-Arbiter were issued in patent disregard
of established facts and existing jurisprudence, thus, tainted with grave abuse of
discretion -
1) In considering respondent IPTEU as the sole and exclusive bargaining agent of the
purported rank-and-file exempt employees in the Ilocos
Plant;ChanRoblesVirtualawlibrary
2) In not declaring the certification election held on September 21, 2007 improper
and void;ChanRoblesVirtualawlibrary
3) In disregarding the fact that the Ilocos Monthlies Union (IMU) is the existing sole
bargaining agent of the rank-and-[file] professional and technical employees at the
Ilocos Plant, to which the sixteen (16) challenged voters should be members, if
allowed by law[;] and
4) [In] ruling that the concerned employees should not be prohibited by joining any
union.20
The petition is unmeritorious.
As proven by the certification of the IMU President as well as the CBAs executed
between IMU and CCBPI, the 22 employees sought to be represented by IPTEU are
not IMU members and are not included in the CBAs due to reclassification of their
positions. If these documents were false, the IMU should have manifested its
vigorous opposition. In fact, the Mediator-Arbiter noted:
The most tenacious resistance to the granting of the Petition as well as the holding
of the CE has been Management. On the other hand, the existing unions at CCBPI,
especially the IMU of which most of the IPTEU members were once part (until they
were considered outside the ambit of its existing bargaining unit) never once were presented by CCBPI before the Mediator-Arbiter, the SOLE, and the CA. Despite
opposed the Petition and the Certification election, whether verbally or in written these, the Mediator-Arbiter ruled that employees who encounter or handle trade
Opposition. secrets and financial information are not automatically classified as confidential
employees. It was admitted that the subject employees encounter and handle
Between Management and IMU, it is the latter which has more to lose, as the financial as well as physical production data and other information which are
creation of a separate bargaining unit would reduce the scope of IMU's bargaining considered vital and important from the business operations' standpoint.
unit. Yet through all these proceedings, we take note of the substantial moral Nevertheless, it was opined that such information is not the kind of information that
support that has been extended to the Petitioner by the other Unions of CCBPI, so is relevant to collective bargaining negotiations and settlement of grievances as
much so that, until objected to by Management, they were even willing to be present would classify them as confidential employees. The SOLE, which the CA affirmed,
during the Certification Election of 21 September 2007.21 likewise held that the questioned voters do not have access to confidential labor
relations information.
As to whether the 16 voters sought to be excluded from the appropriate bargaining
unit are confidential employees,22 such query is a question of fact, which is not a
We defer to the findings of fact of the Mediator-Arbiter, the SOLE, and the CA.
proper issue in a petition for review under Rule 45 of the Rules.23 This holds more
Certainly, access to vital labor information is the imperative consideration. An
true in the present case in view of the consistent findings of the Mediator-Arbiter,
employee must assist or act in a confidential capacity and obtain confidential
the SOLE, and the CA.
information relating to labor relations policies. Exposure to internal business
operations of the company is not per se a ground for the exclusion in the bargaining
We reiterate that:
unit.26 The Court sees no need to belabor the effects of the unresolved notice of
[T]he office of a petition for review on certiorari under Rule 45 of the Rules of Court
appeal and motion to suspend proceedings filed by CCBPI in September 2007. Suffice
requires that it shall raise only questions of law. The factual findings by quasi-judicial
it to say that the substantial merits of the issues raised in said pleadings are the same
agencies, such as the Department of Labor and Employment, when supported by
as what were already brought to and passed upon by the Mediator-Arbiter, the SOLE,
substantial evidence, are entitled to great respect in view of their expertise in their
and the CA.
respective fields. Judicial review of labor cases does not go so far as to evaluate the
sufficiency of evidence on which the labor official's findings rest. It is not our function
WHEREFORE, premises considered, the petition is DENIED. The March 17, 2010
to assess and evaluate all over again the evidence, testimonial and documentary,
Decision and September 16, 2010 Resolution of the Court of Appeals in CA-G.R. SP
adduced by the parties to an appeal, particularly where the findings of both the trial
No. 104043, which affirmed the May 6, 2008 Resolution of the Secretary of Labor
court (here, the DOLE Secretary) and the appellate court on the matter coincide, as
and Employment, dismissing petitioner's appeal that assailed the Decision (On the
in this case at bar. The Rule limits that function of the Court to the review or revision
Challenged Voters) and Proclamation of the Winner, both dated October 22, 2007,
of errors of law and not to a second analysis of the evidence, x x x Thus, absent any
of the Mediator-Arbiter, are hereby AFFIRMED.
showing of whimsical or capricious exercise of judgment, and unless lack of any basis
for the conclusions made by the appellate court be amply demonstrated, we may
SO ORDERED.chanroblesvirtuallawlibrary
not disturb such factual findings.24

The determination of factual issues is vested in the Mediator-Arbiter and the

Department of Labor and Employment. Pursuant to the doctrine of primary
jurisdiction, the Court should refrain from resolving such controversies unless the
case falls under recognized and well-established exceptions. The doctrine of primary
jurisdiction does not warrant a court to arrogate unto itself the authority to resolve
a controversy the jurisdiction over which is initially lodged with an administrative
body of special competence.25cralawred
9.) THE HERITAGE HOTEL MANILA, ACTING THROUGH ITS OWNER, GRAND PLAZA
HOTEL CORPORATION, Petitioner, v. SECRETARY OF LABOR AND EMPLOYMENT;
MED-ARBITER TOMAS F. FALCONITIN; AND NATIONAL UNION OF WORKERS IN THE
HOTEL, RESTAURANT AND ALLIED INDUSTRIES–HERITAGE HOTEL MANILA
SUPERVISORS CHAPTER (NUWHRAIN-HHMSC), Respondents.

In this case, organizational charts, detailed job descriptions, and training programs G.R. No. 172132, July 23, 2014

44 | P a g e
DECISION certification election.

BERSAMIN, J.: On May 12, 2000, the petitioner filed a petition for the cancellation of NUWHRAIN-
HHMSC’s registration as a labor union for failing to submit its annual financial reports
and an updated list of members as required by Article 238 and Article 239 of
Although case law has repeatedly held that the employer was but a bystander in
the Labor Code, docketed as Case No. NCR-OD-0005-004-IRD entitled The Heritage
respect of the conduct of the certification election to decide the labor organization
Hotel Manila, acting through its owner, Grand Plaza Hotel Corporation v. National
to represent the employees in the bargaining unit, and that the pendency of the
Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel
cancellation of union registration brought against the labor organization applying for
Manila Supervisors Chapter (NUWHRAIN-HHSMC).7 It filed another motion on June
the certification election should not prevent the conduct of the certification
1, 2000 to seek either the dismissal or the suspension of the proceedings on the basis
election, this review has to look again at the seemingly never-ending quest of the
of its pending petition for the cancellation of union registration. 8cralawlawlibrary
petitioner employer to stop the conduct of the certification election on the ground
of the pendency of proceedings to cancel the labor organization’s registration it had
The following day, however, the Department of Labor and Employment (DOLE)
initiated on the ground that the membership of the labor organization was a mixture
issued a notice scheduling the certification elections on June 23,
of managerial and supervisory employees with the rank-and-file employees.
2000.9cralawlawlibrary
Under review at the instance of the employer is the decision promulgated on
Dissatisfied, the petitioner commenced in the CA on June 14, 2000 a special civil
December 13, 2005,1whereby the Court of Appeals (CA) dismissed its petition
action for certiorari,10alleging that the DOLE gravely abused its discretion in not
for certiorari to assail the resolutions of respondent Secretary of Labor and
suspending the certification election proceedings. On June 23, 2000, the CA
Employment sanctioning the conduct of the certification election initiated by
dismissed the petition for certiorari for non-exhaustion of administrative
respondent labor organization.2cralawlawlibrary
remedies.11cralawlawlibrary

Antecedents The certification election proceeded as scheduled, and NUWHRAIN-HHMSC

obtained the majority vote of the bargaining unit. 12 The petitioner filed a protest
On October 11, 1995, respondent National Union of Workers in Hotel Restaurant and (with motion to defer the certification of the election results and the
Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC) winner),13 insisting on the illegitimacy of NUWHRAIN-HHMSC.
filed a petition for certification election,3seeking to represent all the supervisory
employees of Heritage Hotel Manila. The petitioner filed its opposition, but the
Ruling of the Med-Arbiter
opposition was deemed denied on February 14, 1996 when Med-Arbiter Napoleon
V. Fernando issued his order for the conduct of the certification election.
On January 26, 2001, Med-Arbiter Tomas F. Falconitin issued an order,14 ruling that
the petition for the cancellation of union registration was not a bar to the holding of
The petitioner appealed the order of Med-Arbiter Fernando, but the appeal was also
the certification election, and disposing thusly:chanRoblesvirtualLawlibrary
denied. A pre-election conference was then scheduled. On February 20, 1998,
however, the pre-election conference was suspended until further notice because of
WHEREFORE, premises considered, respondent employer/protestant’s protest with
the repeated non-appearance of NUWHRAIN-HHMSC.4cralawlawlibrary
motion to defer certification of results and winner is hereby dismissed for lack of
merit.
On January 29, 2000, NUWHRAIN-HHMSC moved for the conduct of the pre-election
conference. The petitioner primarily filed its comment on the list of employees
Accordingly, this Office hereby certify pursuant to the rules that
submitted by NUWHRAIN-HHMSC, and simultaneously sought the exclusion of some
petitioner/protestee, National Union of Workers in Hotels, Restaurants and Allied
from the list of employees for occupying either confidential or managerial
Industries-Heritage Hotel Manila Supervisory Chapter (NUWHRAIN-HHSMC) is the
positions.5 The petitioner filed a motion to dismiss on April 17, 2000,6 raising the
sole and exclusive bargaining agent of all supervisory employees of the Heritage
prolonged lack of interest of NUWHRAIN-HHMSC to pursue its petition for
Hotel Manila acting through its owner, Grand Plaza Hotel Corporation for purposes

45 | P a g e
of collective bargaining with respect to wages, and hours of work and other terms
and conditions of employment.
SO ORDERED.
The petitioner timely appealed to the DOLE Secretary claiming that: (a) the
membership of NUWHRAIN-HHMSC consisted of managerial, confidential, and rank-
and-file employees; (b) NUWHRAIN-HHMSC failed to comply with the reportorial
requirements; and (c) Med-Arbiter Falconitin simply brushed aside serious questions
on the illegitimacy of NUWHRAIN-HHMSC.15 It contended that a labor union of mixed
membership of supervisory and rank-and-file employees had no legal right to
petition for the certification election pursuant to the pronouncements in Toyota
Motor Philippines Corporation v. Toyota Motor Philippines Corporation Labor
Union16(Toyota Motor) and Dunlop Slazenger (Phils.) v. Secretary of Labor and
Employment17(Dunlop Slazenger).
Ruling of the DOLE Secretary
dismissal of the petition for the certification election based on the legitimacy of the
petitioning union would be inappropriate because it would effectively allow a
collateral attack against the union’s legal personality; and that a collateral attack
against the personality of the labor organization was prohibited under Section 5,
Rule V of Department Order No. 9, Series of 1997. 21cralawlawlibrary
Upon denial of its motion for reconsideration, the petitioner elevated the matter to
the CA by petition for certiorari.22cralawlawlibrary
Ruling of the CA
On December 13, 2005,23 the CA dismissed the petition for certiorari, giving its
following disquisition:chanRoblesvirtualLawlibrary
The petition for certiorari filed by the petitioner is, in essence, a continuation of the
debate on the relevance of the Toyota Motor, Dunlop Slazenger and Progressive
Developmentcases to the issues raised.

On August 21, 2002, then DOLE Secretary Patricia A. Sto. Tomas issued a resolution Toyota Motor and Dunlop Slazenger are anchored on the provisions of Article 245 of
denying the appeal,18 and affirming the order of Med-Arbiter the Labor Code which prohibit managerial employees from joining any labor union
Falconitin, viz:chanRoblesvirtualLawlibrary and permit supervisory employees to form a separate union of their own. The
language naturally suggests that a labor organization cannot carry a mixture of
supervisory and rank-and-file employees. Thus, courts have held that a union cannot
WHEREFORE, the appeal is DENIED. The order of the Med-Arbiter dated 26 January
become a legitimate labor union if it shelters under its wing both types of
2001 is hereby AFFIRMED.
employees. But there are elements of an elliptical reasoning in the holding of these
two cases that a petition for certification election may not prosper until the
SO RESOLVED.
composition of the union is settled therein. Toyota Motor, in particular, makes the
blanket statement that a supervisory union has no right to file a certification election
DOLE Secretary Sto. Tomas observed that the petitioner’s reliance on Toyota Motor for as long as it counts rank-and-file employees among its ranks. More than four
and Dunlop Slazenger was misplaced because both rulings were already overturned years after Dunlop Slazenger, the Court clarified in Tagaytay Highlands International
by SPI Technologies, Inc. v. Department of Labor and Employment,19 to the effect Golf Club Inc vs Tagaytay Highlands Employees Union-PTGWO that while Article 245
that once a union acquired a legitimate status as a labor organization, it continued prohibits supervisory employees from joining a rank-and-file union, it does not
as such until its certificate of registration was cancelled or revoked in an independent provide what the effect is if a rank-and-file union takes in supervisory employees as
action for cancellation. members, or vice versa. Toyota Motor and Dunlop Slazenger jump into an
unnecessary conclusion when they foster the notion that Article 245 carries with it
The petitioner moved for reconsideration. the authorization to inquire collaterally into the issue wherever it rears its ugly head.

In denying the motion on October 21, 2002, the DOLE Secretary declared that the
mixture or co-mingling of employees in a union was not a ground for dismissing a
petition for the certification election under Section 11, par. II, Rule XI of Department
Order No. 9; that the appropriate remedy was to exclude the ineligible employees
from the bargaining unit during the inclusion-exclusion proceedings;20that the
Tagaytay Highlands proclaims, in the light of Department Order 9, that after a
certificate of registration is issued to a union, its legal personality cannot be subject
to a collateral attack. It may be questioned only in an independent petition for
cancellation. In fine, Toyota and Dunlop Slazenger are a spent force. Since Tagaytay
Highlands was handed down after these two cases, it constitutes the latest

46 | P a g e
expression of the will of the Supreme Court and supersedes or overturns previous
rulings inconsistent with it. From this perspective, it is needless to discuss
whether SPI Technologies as a mere resolution of the Court may prevail over a full-
blown decision that Toyota Motor or Dunlop Slazenger was. The ruling in SPI
Technologies has been echoed in Tagaytay Highlands, for which reason it is
with Tagaytay Highlands, not SPI Technologies, that the petitioner must joust.
The fact that the cancellation proceeding has not yet been resolved makes it obvious
that the legal personality of the respondent union is still very much in force. The
DOLE has thus every reason to proceed with the certification election and commits
no grave abuse of discretion in allowing it to prosper because the right to be certified
as collective bargaining agent is one of the legitimate privileges of a registered
union. It is for the petitioner to expedite the cancellation case if it wants to put an
end to the certification case, but it cannot place the issue of the union’s legitimacy
in the certification case, for that would be tantamount to making the collateral attack
the DOLE has staunchly argued to be impermissible.
The reference made by the petitioner to another Progressive Development case that
it would be more prudent for the DOLE to suspend the certification case until the
issue of the legality of the registration is resolved, has also been satisfactorily
answered. Section 11, Rule XI of Department Order 9 provides for the grounds for
the dismissal of a petition for certification election, and the pendency of a petition
for cancellation of union registration is not one of them. Like Toyota
Motor and Dunlop Slazenger, the second Progressive case came before Department
Order 9.
IN VIEW OF THE FOREGOING, the disputed resolutions of the Secretary of Labor and
Employment are AFFIRMED, and the petition is DISMISSED.
SO ORDERED.
The petitioner sought reconsideration,24 but its motion was denied.
Issues
Hence, this appeal, with the petitioner insisting that:chanRoblesvirtualLawlibrary
I statements and the list of members in the period from 1996 to 1999 constituted a
THE COURT OF APPEALS ERRED IN RULING THAT TAGAYTAY HIGHLANDS APPLIES TO
THE CASE AT BAR
47 | P a g e
II
[THE HONORABLE COURT OF APPEALS] SERIOUSLY ERRED WHEN IT
DISREGARDED PROGRESSIVE DEVELOPMENT CORPORATION – PIZZA HUT V.
LAGUESMA WHICH HELD THAT IT WOULD BE MORE PRUDENT TO SUSPEND THE
CERTIFICATION CASE UNTIL THE ISSUE OF THE LEGALITY OF THE REGISTRATION OF
THE UNION IS FINALLY RESOLVED
III
BECAUSE OF THE PASSAGE OF TIME, RESPONDENT UNION NO LONGER POSSESSES
THE MAJORITY STATUS SUCH THAT A NEW CERTIFICATION ELECTION IS IN
ORDER25chanrobleslaw
The petitioner maintains that the ruling in Tagaytay Highlands International Golf
Club Inc v. Tagaytay Highlands Employees Union-PTGWO26 (Tagaytay Highlands) was
inapplicable because it involved the co-mingling of supervisory and rank-and-file
employees in one labor organization, while the issue here related to the mixture of
membership between two employee groups — one vested with the right to self-
organization (i.e., the rank-and-file and supervisory employees), and the other
deprived of such right (i.e., managerial and confidential employees); that suspension
of the certification election was appropriate because a finding of “illegal mixture” of
membership during a petition for the cancellation of union registration determined
whether or not the union had met the 20% representation requirement under Article
234(c) of the Labor Code; 27 and that in holding that mixed membership was not a
ground for canceling the union registration, except when such was done through
misrepresentation, false representation or fraud under the circumstances
enumerated in Article 239(a) and (c) of the Labor Code, the CA completely ignored
the 20% requirement under Article 234(c) of the Labor Code.
The petitioner posits that the grounds for dismissing a petition for the certification
election under Section 11, Rule XI of Department Order No. 9, Series of 1997, were
not exclusive because the other grounds available under the Rules of Court could be
invoked; that in Progressive Development Corporation v. Secretary, Department of
Labor and Employment,28 the Court ruled that prudence could justify the suspension
of the certification election proceedings until the issue of the legality of the union
registration could be finally resolved; that the non-submission of the annual financial
serious challenge to NUWHRAIN-HHMSC’s right to file its petition for the certification
election; and that from the time of the conduct of the certification election on June
23, 2000, the composition of NUWHRAIN-HHMSC had substantially changed,
thereby necessitating another certification election to determine the true will of the
bargaining unit.
In short, should the petition for the cancellation of union registration based on mixed
membership of supervisors and managers in a labor union, and the non-submission
of reportorial requirements to the DOLE justify the suspension of the proceedings
for the certification elections or even the denial of the petition for the certification
election?
Ruling
We deny the petition for review on certiorari.
Basic in the realm of labor union rights is that the certification election is the sole
concern of the workers,29 and the employer is deemed an intruder as far as the
certification election is concerned.30Thus, the petitioner lacked the legal personality
to assail the proceedings for the certification election, 31and should stand aside as a
mere bystander who could not oppose the petition, or even appeal the Med-
Arbiter’s orders relative to the conduct of the certification election. 32 As the Court
has explained in Republic v. Kawashima Textile Mfg., Philippines,
Inc.33 (Kawashima):chanRoblesvirtualLawlibrary
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 petitioner’s meddling in the conduct of the certification election among its
employees unduly gave rise to the suspicion that it intended to establish a company
union.34 For that reason, the challenges it posed against the certification election
proceedings were rightly denied.
Under the long established rule, too, the filing of the petition for the cancellation of
NUWHRAIN-HHMSC’s registration should not bar the conduct of the certification
election.35 In that respect, only a final order for the cancellation of the registration
48 | P a g e
would have prevented NUWHRAIN-HHMSC from continuing to enjoy all the rights
conferred on it as a legitimate labor union, including the right to the petition for the
certification election.36 This rule is now enshrined in Article 238-A of the Labor Code,
as amended by Republic Act No. 9481,37 which reads:chanRoblesvirtualLawlibrary
Article 238-A. Effect of a Petition for Cancellation of Registration. – A petition for
cancellation of union registration shall not suspend the proceedings for certification
election nor shall it prevent the filing of a petition for certification election.
xxxx
Still, the petitioner assails the failure of NUWHRAIN-HHMSC to submit its periodic
financial reports and updated list of its members pursuant to Article 238 and Article
239 of the Labor Code. It contends that the serious challenges against the legitimacy
of NUWHRAIN-HHMSC as a union raised in the petition for the cancellation of union
registration should have cautioned the Med-Arbiter against conducting the
certification election.
The petitioner does not convince us.
In The Heritage Hotel Manila v. National Union of Workers in the Hotel, Restaurant
and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-
HHMSC),38 the Court declared that the dismissal of the petition for the cancellation
of the registration of NUWHRAIN-HHMSC was proper when viewed against the
primordial right of the workers to self-organization, collective bargaining
negotiations and peaceful concerted actions, viz:chanRoblesvirtualLawlibrary
x x x x
[Articles 238 and 239 of the Labor Code] give the Regional Director ample discretion
in dealing with a petition for cancellation of a union's registration, particularly,
determining whether the union still meets the requirements prescribed by law. It is
sufficient to give the Regional Director license to treat the late filing of required
documents as sufficient compliance with the requirements of the law. After all, the
law requires the labor organization to submit the annual financial report and list of
members in order to verify if it is still viable and financially sustainable as an
organization so as to protect the employer and employees from fraudulent or fly-by-
night unions. With the submission of the required documents by respondent, the
purpose of the law has been achieved, though belatedly.
We cannot ascribe abuse of discretion to the Regional Director and the DOLE
Secretary in denying the petition for cancellation of respondent's registration. The
union members and, in fact, all the employees belonging to the appropriate (c) Voluntary dissolution by the members.
bargaining unit should not be deprived of a bargaining agent, merely because of the
R.A. No. 9481 also inserted in the Labor Code Article 242-A, which
negligence of the union officers who were responsible for the submission of the
provides:chanroblesvirtuallawlibrary
documents to the BLR.
ART. 242-A. Reportorial Requirements.--The following are documents required to be
submitted to the Bureau by the legitimate labor organization
Labor authorities should, indeed, act with circumspection in treating petitions for
concerned:chanRoblesvirtualLawlibrary
cancellation of union registration, lest they be accused of interfering with union
activities. In resolving the petition, consideration must be taken of the fundamental
(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification,
rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all
and the list of members who took part in the ratification of the constitution and by-
workers to self-organization, collective bargaining and negotiations, and peaceful
laws within thirty (30) days from adoption or ratification of the constitution and by-
concerted activities. Labor authorities should bear in mind that registration confers
laws or amendments thereto;
upon a union the status of legitimacy and the concomitant right and privileges
granted by law to a legitimate labor organization, particularly the right to participate
(b) Its list of officers, minutes of the election of officers, and list of voters within thirty
in or ask for certification election in a bargaining unit. Thus, the cancellation of a
(30) days from election;
certificate of registration is the equivalent of snuffing out the life of a labor
organization. For without such registration, it loses - as a rule - its rights under the
(c) Its annual financial report within thirty (30) days after the close of every fiscal
Labor Code.
year; and
It is worth mentioning that the Labor Code's provisions on cancellation of union
(d) Its list of members at least once a year or whenever required by the Bureau.
registration and on reportorial requirements have been recently amended by
Republic Act (R.A.) No. 9481, An Act Strengthening the Workers’ Constitutional Right
Failure to comply with the above requirements shall not be a ground for
to Self-Organization, Amending for the Purpose Presidential Decree No. 442, As
cancellation of union registration but shall subject the erring officers or members
Amended, Otherwise Known as the Labor Code of the Philippines, which lapsed into
to suspension, expulsion from membership, or any appropriate penalty.
law on May 25, 2007 and became effective on June 14, 2007. The amendment sought
to strengthen the workers’ right to self-organization and enhance the Philippines'
xxxx
compliance with its international obligations as embodied in the International Labor
Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers’
organizations by administrative authority. Thus, R.A. No. 9481 amended Article 239 The ruling thereby wrote finis to the challenge being posed by the petitioner against
to read:chanRoblesvirtualLawlibrary the illegitimacy of NUWHRAIN-HHMSC.

ART. 239. Grounds for Cancellation of Union Registration.--The following may The remaining issue to be resolved is which among Toyota Motor, Dunlop
constitute grounds for cancellation of union Slazenger and Tagaytay Highlands applied in resolving the dispute arising from the
registration:chanRoblesvirtualLawlibrary mixed membership in NUWHRAIN-HHMSC.

(a) Misrepresentation, false statement or fraud in connection with the adoption or This is not a novel matter. In Kawashima,39 we have reconciled our rulings in Toyota
ratification of the constitution and by-laws or amendments thereto, the minutes of Motor, Dunlop Slazenger and Tagaytay Highlands by emphasizing on the laws
ratification, and the list of members who took part in the ratification; prevailing at the time of filing of the petition for the certification election.

(b) Misrepresentation, false statements or fraud in connection with the election of Toyota Motor and Dunlop Slazenger involved petitions for certification election filed
officers, minutes of the election of officers, and the list of voters; on November 26, 1992 and September 15, 1995, respectively. In both cases, we
applied the Rules and Regulations Implementing R.A. No. 6715 (also known as

49 | P a g e
the 1989 Amended Omnibus Rules), the prevailing rule then.
The 1989 Amended Omnibus Rules was amended on June 21, 1997 by Department
Order No. 9, Series of 1997. Among the amendments was the removal of the
requirement of indicating in the petition for the certification election that there was
no co-mingling of rank-and-file and supervisory employees in the membership of the
labor union. This was the prevailing rule when the Court promulgated Tagaytay
Highlands, declaring therein that mixed membership should have no bearing on the
legitimacy of a registered labor organization, unless the co-mingling was due to
misrepresentation, false statement or fraud as provided in Article 239 of the Labor
Code.40cralawlawlibrary
Presently, then, the mixed membership does not result in the illegitimacy of the
registered labor union unless the same was done through misrepresentation, false
statement or fraud according to Article 239 of the Labor Code. In Air Philippines
Corporation v. Bureau of Labor Relations,41 we categorically explained that—
Clearly, then, for the purpose of de-certifying a union, it is not enough to establish
that the rank-and-file union includes ineligible employees in its membership.
Pursuant to Article 239 (a) and (c) of the Labor Code, it must be shown that there
was misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, or in connection with the election of officers, minutes of the election of
officers, the list of voters, or failure to submit these documents together with the list
of the newly elected-appointed officers and their postal addresses to the BLR.
We note that NUWHRAIN-HHMSC filed its petition for the certification election on
October 11, 1995. Conformably with Kawashima, the applicable law was the 1989
Amended Omnibus Rules, and the prevailing rule was the pronouncement in Toyota
Motor and Dunlop Slazenger to the effect that a labor union of mixed membership
was not possessed with the requisite personality to file a petition for the certification
election.
Nonetheless, we still rule in favor of NUWHRAIN-HHMSC. We expound.
In both Toyota Motor and Dunlop Slazenger, the Court was convinced that the
concerned labor unions were comprised by mixed rank-and-file and supervisory
employees. In Toyota Motor, the employer submitted the job descriptions of the
concerned employees to prove that there were supervisors in the petitioning union
for rank-and-file employees. In Dunlop Slazenger, the Court observed that the labor
union of supervisors included employees occupying positions that apparently
belonged to the rank-and-file. In both Toyota Motor and Dunlop Slazenger, the
50 | P a g e
employers were able to adduce substantial evidence to prove the existence of the
mixed membership. Based on the records herein, however, the petitioner failed in
that respect. To recall, it raised the issue of the mixed membership in its comment
on the list of members submitted by NUWHRAIN-HHMSC, and in its protest. In the
comment, it merely identified the positions that were either confidential or
managerial, but did not present any supporting evidence to prove or explain the
identification. In the protest, it only enumerated the positions that were allegedly
confidential and managerial, and identified two employees that belonged to the
rank-and-file, but did not offer any description to show that the positions belonged
to different employee groups.
Worth reiterating is that the actual functions of an employee, not his job designation,
determined whether the employee occupied a managerial, supervisory or rank-and-
file position.42 As to confidential employees who were excluded from the right to
self-organization, they must (1) assist or act in a confidential capacity, in regard (2)
to persons who formulated, determined, and effectuated management policies in
the field of labor relations.43 In that regard, mere allegations sans substance would
not be enough, most especially because the constitutional right of workers to self-
organization would be compromised.
At any rate, the members of NUWHRAIN-HHSMC had already spoken, and elected it
as the bargaining agent. As between the rigid application of Toyota
Motors and Dunlop Slazenger, and the right of the workers to self-organization, we
prefer the latter. For us, the choice is clear and settled. “What is important is that
there is an unmistakeable intent of the members of [the] union to exercise their right
to organize. We cannot impose rigorous restraints on such right if we are to give
meaning to the protection to labor and social justice clauses of the
Constitution.” 44cralawlawlibrary
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
decision promulgated on December 13, 2005 by the Court of Appeals;
and ORDERS the petitioner to pay the costs of suit.
SO ORDERED
10.) MANILA ELECTRIC COMPANY, petitioner, vs. THE HON. SECRETARY OF LABOR
AND EMPLOYMENT, STAFF AND TECHNICAL EMPLOYEES ASSOCIATION OF
MERALCO, and FIRST LINE ASSOCIATION OF MERALCO SUPERVISORY
EMPLOYEES,respondents.
G.R. No. 91902 May 20, 1991
MEDIALDEA, J.: (a) Employees in Patrol Division;

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

Any member of the Union who may now or hereafter be assigned or

The facts are as follows:
On November 22, 1988, the Staff and Technical Employees Association of MERALCO
(hereafter "STEAM-PCWF") a labor organization of staff and technical employees of
MERALCO, filed a petition for certification election, seeking to represent regular
employees of MERALCO who are: (a) non-managerial employees with Pay Grades VII
and above; (b) non-managerial employees in the Patrol Division, Treasury Security
Services Section, Secretaries who are automatically removed from the bargaining
unit; and (c) employees within the rank and file unit who are automatically
disqualified from becoming union members of any organization within the same
bargaining unit.
transferred to Patrol Division or Treasury Security Services Section, or
becomes Managerial Employee or a Secretary, shall be considered
automatically removed from the bargaining unit and excluded from the
coverage of this agreement. He shall thereby likewise be deemed
automatically to have ceased to be member of the union, and shall desist
from further engaging in union activity of any kind.
Sec. 3. Regular rank-and-file employees in the organization elements
herein below listed shall be covered within the bargaining unit, but shall
be automatically disqualified from becoming union members:

1. Office of the Corporate Secretary

Among others, the petition alleged that "while there exists a duly-organized union
for rank and file employees in Pay Grade I-VI, which is the MERALCO Employees and
Worker's Association (MEWA) which holds a valid CBA for the rank and file 2. Corporate Staff Services Department
employees,1 there is no other labor organization except STEAM-PCWF claiming to
represent the MERALCO employees. 3. Managerial Payroll Office

The petition was premised on the exclusion/disqualification of certain MERALCO 4. Legal Service Department
employees pursuant to Art. I, Secs. 2 and 3 of the existing MEWA CBA as follows:
5. Labor Relations Division
ARTICLE I
6. Personnel Administration Division
SCOPE
7. Manpower Planning & Research Division
xxx xxx xxx
8. Computer Services Department
Sec. 2. Excluded from the appropriate bargaining unit and therefore
outside the scope of this Agreement are: 9. Financial Planning & Control Department

51 | P a g e
 10. Treasury Department, except Cash Section
11. General Accounting Section
xxx xxx xxx
(p. 19, Rollo)
MERALCO moved for the dismissal of the petition on the following grounds:
I
The employees sought to be represented by petitioner are either 1)
managerial who are prohibited by law from forming or joining supervisory
union; 2) security services personnel who are prohibited from joining or
assisting the rank-and-file union; 3) secretaries who do not consent to the
petitioner's representation and whom petitioner can not represent; and 4)
rank-and-file employees represented by the certified or duly recognized
bargaining representative of the only rank-and-file bargaining unit in the
company, the Meralco Employees Workers Association (MEWA), in
accordance with the existing Collective Bargaining Agreement with the
latter.
II
The petition for certification election will disturb the administration of the
existing Collective Bargaining Agreement in violation of Art. 232 of the
Labor Code.
III
The petition itself shows that it is not supported by the written consent of
at least twenty percent (20%) of the alleged 2,500 employees sought to be
represented. (Resolution, Sec. of Labor, pp. 223-224, Rollo)
Before Med-Arbiter R. Parungo, MERALCO contended that employees from Pay
Grades VII and above are classified as managerial employees who, under the law, are
prohibited from forming, joining or assisting a labor organization of the rank and file.
As regards those in the Patrol Division and Treasury Security Service Section,
52 | P a g e
MERALCO maintains that since these employees are tasked with providing security
to the company, they are not eligible to join the rank and file bargaining unit,
pursuant to Sec. 2(c), Rule V, Book V of the then Implementing Rules and Regulations
of the Labor Code (1988) which reads as follows:
Sec. 2. Who may file petition. — The employer or any legitimate labor
organization may file the petition.
The petition, when filed by a legitimate labor organization, shall contain,
among others:
xxx xxx xxx
(c) description of the bargaining unit which shall be the employer unit
unless circumstances otherwise require, and provided, further: that the
appropriate bargaining unit of the rank and file employees shall not include
security guards (As amended by Sec. 6, Implementing Rules of EO 111)
xxx xxx xxx
(p. 111, Labor Code, 1988 Ed.)
As regards those rank and file employees enumerated in Sec. 3, Art. I, MERALCO
contends that since they are already beneficiaries of the MEWA-CBA, they may not
be treated as a separate and distinct appropriate bargaining unit.
MERALCO raised the same argument with respect to employees sought to be
represented by STEAM-PCWF, claiming that these were already covered by the
MEWA-CBA.
On March 15, 1989, the Med-Arbiter ruled that having been excluded from the
existing Collective Bargaining Agreement for rank and file employees, these
employees have the right to form a union of their own, except those employees
performing managerial functions. With respect to those employees who had
resented their alleged involuntary membership in the existing CBA, the Med-Arbiter
stated that the holding of a certification election would allow them to fully translate
their sentiment on the matter, and thus directed the holding of a certification
election. The dispositive portion of the Resolution provides as follows:
 WHEREFORE, premises considered, a certification election is hereby
ordered conducted among the regular rank-and-file employees of
MERALCO to wit:
1. Non-managerial employees with Pay Grades VII and above;
2. Non-managerial employees of Patrol Division, Treasury Security Services
Section and Secretaries; and
3. Employees prohibited from actively participating as members of the
union.
within 20 days from receipt hereof, subject to the usual pre-election
conference with the following choices:
1. Staff and Technical, Employees Association of MERALCO (STEAM-PCWF);
2. No Union.
SO ORDERED. (p. 222, Rollo)
On April 4, 1989, MERALCO appealed, contending that "until such time that a judicial
finding is made to the effect that they are not managerial employee, STEAM-PCWF
cannot represent employees from Pay Grades VII and above, additionally reiterating
the same reasons they had advanced for disqualifying respondent STEAM-PCWF.
On April 7, 1989, MEWA filed an appeal-in-intervention, submitting as follows:
A. The Order of the Med-Arbiter is null and void for being in violation of
Article 245 of the Labor Code;
B. The Order of the Med-Arbiter violates Article 232 of the Labor Code; and
C. The Order is invalid because the bargaining unit it delineated is not an
appropriated (sic) bargaining unit.
On May 4, 1989, STEAM-PCWF opposed the appeal-in-intervention.
53 | P a g e
With the enactment of RA 6715 and the rules and regulations implementing the
same, STEAM-PCWF renounced its representation of the employees in Patrol
Division, Treasury Security Services Section and rank-and-file employees in Pay
Grades I-VI.
On September 13, 1989, the First Line Association of Meralco
Supervisory Employees. (hereafter FLAMES) filed a similar petition (NCR-OD-M-9-
731-89) seeking to represent those employees with Pay Grades VII to XIV, since
"there is no other supervisory union at MERALCO." (p. 266, Rollo). The petition was
consolidated with that of STEAM-PCWF.
On November 3, 1989, the Secretary of Labor affirmed with modification, the
assailed order of the Med-Arbiter, disposing as follows:
WHEREFORE, premises considered, the Order appealed from is hereby
affirmed but modified as far as the employees covered by Section 3, Article
I of the exist CBA in the Company are concerned. Said employees shall
remain in the unit of the rank-and-file already existing and may exercise
their right to self organization as above enunciated.
Further, the First Line Association of Meralco Supervisory Employees
(FLAMES) is included as among the choices in the certification election.
Let, therefore, the pertinent records of the case be immediately forwarded
to the Office of origin for the conduct of the certification election.
SO ORDERED. (p. 7, Rollo)
MERALCO's motion for reconsideration was denied on January 16, 1990.
On February 9, 1990, MERALCO filed this petition, premised on the following ground:
RESPONDENT SECRETARY ACTED WITH GRAVE ABUSE OF DISCRETION
AND/OR IN EXCESS OF JURISDICTION AMOUNTING TO LACK OF
JURISDICTION IN RULING THAT:
 I. ANOTHER RANK-AND-FILE BARGAINING UNIT CAN BE ESTABLISHED
INDEPENDENT, DISTINCT AND SEPARATE FROM THE EXISTING RANK-AND-
FILE BARGAINING UNIT.
II. THE EMPLOYEES FROM PAY GRADES VII AND ABOVE ARE RANK-AND-
FILE EMPLOYEES.
III. THE SECURITY GUARDS OR PERSONNEL MAY BE LUMPED TOGETHER
WITH THE RANK-AND-FILE UNION AND/OR THE SUPERVISORY UNION. (p.
8, Rollo)
On February 26, 1990, We issued a temporary restraining order (TRO) against the
implementation of the disputed resolution.
In its petition, MERALCO has relented and recognized respondents STEAM-PCWF and
FLAMES' desired representation of supervisory employees from Grades VII up.
However, it believes that all that the Secretary of Labor has to do is to establish a
demarcation line between supervisory and managerial rank, and not to classify
outright the group of employees represented by STEAM-PCWF and FLAMES as rank
and file employees.
In questioning the Secretary of Labor's directive allowing security guards
(Treasury/Patrol Services Section) to be represented by respondents, MERALCO
contends that this contravenes the provisions of the recently passed RA 6715 and its
implementing rules (specifically par. 2, Sec. 1, Rule II, Book V) which disqualifies
supervisory employees and security guards from membership in a labor organization
of the rank and file (p. 11, Rollo).
The Secretary of Labor's Resolution was obviously premised on the provisions of Art.
212, then par. (k), of the 1988 Labor Code defining "managerial" and "rank and file"
employees, the law then in force when the complaint was filed. At the time, only two
groups of employees were recognized, the managerial and rank and file. This
explains the absence of evidence on job descriptions on who would be classified
managerial employees. It is perhaps also for this reason why the Secretary of Labor
limited his classification of the Meralco employees belonging to Pay Grades VII and
up, to only two groups, the managerial and rank and file.
However, pursuant to the Department of Labor's goal of strenghthening the
constitutional right of workers to self-organization, RA 6715 was subsequently
passed which reorganized the employee-ranks by including a third group, or the
54 | P a g e
supervisory employees, and laying down the distinction between supervisory
employees and those of managerial ranks in Art. 212, renumbered par. [m],
depending on whether the employee concerned has the power to lay down and
execute management policies, in the case of managerial employees, or merely to
recommend them, in case of supervisory employees.
In this petition, MERALCO has admitted that the employees belonging to Pay Grades
VII and up are supervisory (p. 10, Rollo). The records also show that STEAM-PCWF
had "renounced its representation of the employees in Patrol Division, Treasury
Security Service Section and rank and file employees in Pay Grades I-VI" (p. 6, Rollo);
while FLAMES, on the other hand, had limited its representation to employees
belonging to Pay Grades VII-XIV, generally accepted as supervisory employees, as
follows:
It must be emphasized that private respondent First Line Association of
Meralco Supervisory Employees seeks to represent only the Supervisory
Employees with Pay Grades VII to XIV.
Supervisory Employees with Pay Grades VII to XIV are not managerial
employees. In fact the petition itself of petitioner Manila Electric Company
on page 9, paragraph 3 of the petition stated as follows, to wit:
There was no need for petitioner to prove that these employees
are not rank-and-file. As adverted to above, the private
respondents admit that these are not the rank-and-file but the
supervisory employees, whom they seek to represent. What
needs to be established is the rank where supervisory ends and
managerial begins.
and First Line Association of Meralco Supervisory Employees herein states
that Pay Grades VII to XIV are not managerial employees. In fact, although
employees with Pay Grade XV carry the Rank of Department Managers,
these employees only enjoys (sic) the Rank Manager but their
recommendatory powers are subject to evaluation, review and final action
by the department heads and other higher executives of the company.
(FLAMES' Memorandum, p. 305, Rollo)
Based on the foregoing, it is clear that the employees from Pay Grades VII and up
have been recognized and accepted as supervisory. On the other hand, those
employees who have been automatically disqualified have been directed by the
Secretary of Labor to remain in the existing labor organization for the rank and file,
(the condition in the CBA deemed as not having been written into the contract, as
unduly restrictive of an employee's exercise of the right to self-organization). We
shall discuss the rights of the excluded employees (or those covered by Sec. 2, Art. I,
MEWA-CBA later.
Anent the instant petition therefore, STEAM-PCWF, and FLAMES would therefore
represent supervisory employees only. In this regard, the authority given by the
Secretary of Labor for the establishment of two labor organizations for the rank and
file will have to be disregarded since We hereby uphold certification elections only
for supervisory employees from Pay Grade VII and up, with STEAM-PCWF and
FLAMES as choices.
As to the alleged failure of the Secretary of Labor to establish a demarcation line for
purposes of segregating the supervisory from the managerial employees, the
required parameter is really not necessary since the law itself, Art. 212-m, (as
amended by Sec. 4 of RA 6715) has already laid down the corresponding guidelines:
. . . that the employee's primary duty consists of the
management of the establishment or of a customarily
recognized department or subdivision thereof, that he
customarily and regularly directs the work of other employees
therein, that he has the authority to hire or discharge other
employees or that his suggestions and recommendations as to
the hiring and discharging and or to the advancement and
promotion or any other change of status of other employees are
given particular weight, that he customarily and regularly
exercises discretionary powers . . . (56 CJS, pp. 666-668. (p.
226, Rollo)
We shall now discuss the rights of the security guards to self-organize.
MERALCO has questioned the legality of allowing them to join either the
rank and file or the supervisory union, claiming that this is a violation of
par. 2, Sec. 1, Rule II, Book V of the Implementing Rules of RA 6715, which
states as follows:

Art. 212. Definitions. . . . Sec 1. Who may join unions. . . .

(m) "Managerial employee" is one who is vested with powers or xxx xxx xxx
prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees and security guards shall not be eligible
Supervisory employees are those who, in the interest of the employer, for membership in a labor organization of the rank-and-file
effectively recommend such managerial actions if the exercise of such employees but may join, assist or form separate labor
authority is not merely routinary or clerical in nature but requires the use organizations of their own; . . .
of independent judgment. All employees not falling within any of the
above definitions are considered rank-and-file employees for purposes of xxx xxx xxx
to Book.
(emphasis ours)
In his resolution, the Secretary of Labor further elaborated:
Paragraph 2, Sec. 1, Rule II, Book V, is similar to Sec. 2 (c), Rule V, also of
. . . Thus, the determinative factor in classifying an employee as Book V of the implementing rules of RA 6715:
managerial, supervisory or rank-and-file is the nature of the work of the
employee concerned.
Rule V.
REPRESENTATION CASES AND
In National Waterworks and Sewerage Authority vs. National Waterworks INTERNAL-UNION CONFLICTS
and Sewerage Authority Consolidated Unions (11 SCRA 766) the Supreme
Court had the occasion to come out with an enlightening dissertation of
Sec. 1. . . .
the nature of the work of a managerial employees as follows:

55 | P a g e
 Sec. 2. Who may file.—Any legitimate labor organization or the
employer, when requested to bargain collectively, may file the
petition.
The petition, when filed by a legitimate labor-organization shall
contain, among others:
(a) . . .
(b) . . .
(c) description of the bargaining unit which shall be the employer
unit unless circumstances otherwise require; and provided
further, that the appropriate bargaining unit of the rank-and-file
employees shall not include supervisory employees and/or
security guards;
xxx xxx xxx
(emphasis ours)
Both rules, barring security guards from joining a rank and file organization, appear
to have been carried over from the old rules which implemented then Art. 245 of the
Labor Code, and which provided thus:
Art. 245. Ineligibility of security personnel to join any labor organization.—
Security guards and other personnel employed for the protection and
security of the person, properties and premises of the employer shall not
be eligible for membership in any labor organization.
On December 24, 1986, Pres. Corazon C. Aquino issued E.O. No. 111
which eliminated the above-cited provision on the disqualification of security
guards. What was retained was the disqualification of managerial employees,
renumbered as Art. 245 (previously Art. 246), as follows:
Art. 245. Ineligibility of managerial employees to joint any labor
organization.—Managerial employees are not eligible to join, assist or
form any labor organization.
56 | P a g e
With the elimination, security guards were thus free to join a rank and file
organization.
On March 2, 1989, the present Congress passed RA 6715. 2 Section 18 thereof
amended Art. 245, to read as follows:
Art. 245. Ineligibility of managerial employees to join any labor
organization; right of supervisory employees.—Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of
the rank-and-file employees but may join, assist, or form separate labor
organizations of their own. (emphasis ours)
As will be noted, the second sentence of Art. 245 embodies an amendment
disqualifying supervisory employeesfrom membership in a labor organization of the
rank-and-file employees. It does not include security guards in the disqualification.
The implementing rules of RA 6715, therefore, insofar as they disqualify security
guards from joining a rank and file organization are null and void, for being not
germane to the object and purposes of EO 111 and RA 6715 upon which such rules
purportedly derive statutory moorings. In Shell Philippines, Inc. vs. Central Bank, G.R.
No. 51353, June 27, 1988, 162 SCRA 628, We stated:
The rule-making power must be confined to details for regulating the
mode or proceeding to carry into effect the law as it has been enacted. The
power cannot be extended to amending or expanding the statutory
requirements or to embrace matters not covered by the statute. Rules that
subvert the statute cannot be sanctioned. (citing University of Sto. Tomas
vs. Board of Tax Appeals, 93 Phil. 376).
While therefore under the old rules, security guards were barred from joining a labor
organization of the rank and file, under RA 6715, they may now freely join a labor
organization of the rank and file or that of the supervisory union, depending on their
rank. By accommodating supervisory employees, the Secretary of Labor must
likewise apply the provisions of RA 6715 to security guards by favorably allowing
them free access to a labor organization, whether rank and file or supervisory, in
recognition of their constitutional right to self-organization.
We are aware however of possible consequences in the implementation of the law
in allowing security personnel to join labor unions within the company they serve.
The law is apt to produce divided loyalties in the faithful performance of their duties.
Economic reasons would present the employees concerned with the temptation to
subordinate their duties to the allegiance they owe the union of which they are
members, aware as they are that it is usually union action that obtains for them
increased pecuniary benefits.
Thus, in the event of a strike declared by their union, security personnel may neglect
or outrightly abandon their duties, such as protection of property of their employer
and the persons of its officials and employees, the control of access to the employer's
premises, and the maintenance of order in the event of emergencies and untoward
incidents.
It is hoped that the corresponding amendatory and/or suppletory laws be passed by
Congress to avoid possible conflict of interest in security personnel.1âwphi1
ACCORDINGLY, the petition is hereby DISMISSED. We AFFIRM with modification the
Resolution of the Secretary of Labor dated November 3, 1989 upholding an
employee's right to self-organization. A certification election is hereby ordered
conducted among supervisory employees of MERALCO, belonging to Pay Grades VII
and above, using as guideliness an employee's power to either recommend or
execute management policies, pursuant to Art. 212 (m), of the Labor Code, as
amended by Sec. 4 of RA 6715, with respondents STEAM-PCWF and FLAMES as
choices.
Employees of the Patrol Division, Treasury Security Services Section and Secretaries
may freely join either the labor organization of the rank and file or that of the
supervisory union depending on their employee rank. Disqualified employees
covered by Sec. 3, Art. I of the MEWA-CBA, shall remain with the existing labor
organization of the rank and file, pursuant to the Secretary of Labor's directive:
By the parties' own agreement, they find the bargaining unit, which
includes the positions enumerated in Section 3, Article I of their CBA,
appropriate for purposes of collective bargaining. The composition of the
bargaining unit should be left to the agreement of the parties, and unless
there are legal infirmities in such agreement, this Office will not substitute
its judgment for that of the parties. Consistent with the story of collective
bargaining in the company, the membership of said group of employees in
the existing rank-and-file unit should continue, for it will enhance stability
in that unit already well establish. However, we cannot approve of the
condition set in Section 3, Article I of the CBA that the employees covered
are automatically disqualified from becoming union members. The
57 | P a g e
condition unduly restricts the exercise of the right to self organization by
the employees in question. It is contrary to law and public policy and,
therefore, should be considered to have not been written into the
contract. Accordingly, the option to join or not to join the union should be
left entirely to the employees themselves. (p. 229, Rollo)
The Temporary Restraining Order (TRO) issued on February 26, 1990 is hereby
LIFTED. Costs against petitioner.
SO ORDERED.
11.) CENTRAL NEGROS ELECTRIC COOPERATIVE, INC.
(CENECO), petitioner, vs.HONORABLE SECRETARY, DEPARTMENT OF LABOR AND
EMPLOYMENT, and CENECO UNION OF RATIONAL EMPLOYEES
(CURE), respondents.
G.R. No. 94045 September 13, 1991
REGALADO, J.:
In this special civil action for certiorari, petitioner Central Negros Electric
Cooperative, Inc. (CENECO) seeks to annul the order 1 issued by then Acting Secretary
of Labor Bienvenido E. Laguesma on June 6, 1990, declaring the projected
certification election unnecessary and directing petitioner CENECO to continue
recognizing private respondent CENECO Union of Rational Employees (CURE) as the
sole and exclusive bargaining representative of all the rank-and-file employees of
petitioner's electric cooperative for purposes of collective bargaining.
It appears from the records that on August 15, 1987, CENECO entered into a
collective bargaining agreement with CURE, a labor union representing its rank-and-
file employees, providing for a term of three years retroactive to April 1, 1987 and
extending up to March 31, 1990. On December 28, 1989, CURE wrote CENECO
proposing that negotiations be conducted for a new collective bargaining agreement
(CBA).
On January 18, 1990, CENECO denied CURE's request on the ground that, under
applicable decisions of the Supreme Court, employees who at the same time are
members of an electric cooperative are not entitled to form or join a union. 2
Prior to the submission of the proposal for CBA renegotiation, CURE members, in a
general assembly held on December 9, 1989, approved Resolution No. 35 whereby
it was agreed that 'tall union members shall withdraw, retract, or recall the union
members' membership from Central Negros Electric Cooperative, Inc. in order to
avail (of) the full benefits under the existing Collective Bargaining Agreement
entered into by and between CENECO and CURE, and the supposed benefits that our
union may avail (of) under the renewed CBA.3 This was ratified by 259 of the 362
union members. CENECO and the Department of Labor and Employment, Bacolod
District, were furnished copies of this resolution.
However, the withdrawal from membership was denied by CENECO on February 27,
1990 under Resolution No. 90 "for the reason that the basis of withdrawal is not
among the grounds covered by Board Resolution No. 5023, dated November 22,
1989 and that said request is contrary to Board Resolution No. 5033 dated December
13, 1989, ..."4
By reason of CENECO's refusal to renegotiate a new CBA, CURE filed a petition for
direct recognition or for certification election, supported by 282 or 72% of the 388
rank-and-file employees in the bargaining unit of CENECO.
CENECO filed a motion to dismiss on the ground that there are legal constraints to
the filing of the certification election, citing the ruling laid down by this Court
in Batangas I Electric Cooperative Labor Union vs. Romeo A. Young,5 (BATANGAS
case) to the effect that "employees who at the same time are members of an electric
cooperative are not entitled to form or join unions for purposes of collective
bargaining agreement, for certainly an owner cannot bargain with himself or his co-
owners."
Med-Arbiter Felizardo T. Serapio issued an order,6 granting the petition for
certification election which, in effect, was a denial of CENECO's motion to dismiss,
and directing the holding of a certification election between CURE and No Union.
CENECO appealed to the Department of Labor and Employment which issued the
questioned order modifying the aforestated order of the med-arbiter by directly
certifying CURE as the exclusive bargaining representative of the rank-and-file
employees of CURE.
Hence, this petition.
58 | P a g e
Petitioner CENECO argues that respondent Secretary committed a grave abuse of
discretion in not applying to the present case the doctrine enunciated in the
BATANGAS case that employees of an electric cooperative who at the same time are
members of the electric cooperative are prohibited from forming or joining labor
unions for purposes of a collective bargaining agreement. While CENECO recognizes
the employees' right to self-organization, it avers that this is not absolute. Thus, it
opines that employees of an electric cooperative who at the same time are members
thereof are not allowed to form or join labor unions for purposes of collective
bargaining. However, petitioner does not hesitate to admit that the prohibition does
not extend to employees of an electric cooperative who are not members of the
cooperative.
The issue, therefore, actually involves a determination of whether or not the
employees of CENECO who withdrew their membership from the cooperative are
entitled to form or join CURE for purposes of the negotiations for a collective
bargaining agreement proposed by the latter.
As culled from the records, it is the submission of CENECO that the withdrawal from
membership in the cooperative and, as a consequence, the employees' acquisition
of membership in the union cannot be allowed for the following reasons:
1. It was made as a subterfuge or to subvert the ruling in the BATANGAS
case:
2. To allow the withdrawal of the members of CENECO from the
cooperative without justifiable reason would greatly affect the objectives
and goals of petitioner as an electric cooperative;
3. The Secretary of Labor, as well as the Med-Arbiter, has no jurisdiction
over the issue of the withdrawal from membership which is vested in the
National Electrification Administration (NEA) which has direct control and
supervision over the operations of electric cooperatives; and
4. Assuming that the Secretary has jurisdiction, CURE failed to exhaust
administrative remedies by not referring the matter of membership
withdrawal to the NEA.
The petition is destitute of merit; certiorari will not lie.
We first rule on the alleged procedural infirmities affecting the instant case. CENECO
avers that the med-arbiter has no jurisdiction to rule on the issue of withdrawal from
membership of its employees in the cooperative which, it claims, is properly vested
in the NEA which has control and supervision over all electric cooperatives.
From a perusal of petitioner's motion to dismiss filed with the med-arbiter, it
becomes readily apparent that the sole basis for petitioner's motion is the illegality
of the employees' membership in respondent union despite the fact that they
allegedly are still members of the cooperative. Petitioner itself adopted the aforesaid
argument in seeking the dismissal of the petition for certification election filed with
the med-arbiter, and the finding made by the latter was merely in answer to the
arguments advanced by petitioner. Hence, petitioner is deemed to have submitted
the issue of membership withdrawal from the cooperative to the jurisdiction of the
med-arbiter and it is now estopped from questioning that same jurisdiction which it
invoked in its motion to dismiss after obtaining an adverse ruling thereon.
Under Article 256 of the Labor Code, to have a valid certification election at least a
majority of all eligible voters in the unit must have cast their votes. It is apparent that
incidental to the power of the med-arbiter to hear and decide representation cases
is the power to determine who the eligible voters are. In so doing, it is axiomatic that
the med-arbiter should determine the legality of the employees' membership in the
union. In the case at bar, it obviously becomes necessary to consider first the
propriety of the employees' membership withdrawal from the cooperative before a
certification election can be had.
Lastly, it is petitioner herein who is actually questioning the propriety of the
withdrawal of its members from the cooperative. Petitioner could have brought the
matter before the NEA if it wanted to and. if such remedy had really been available,
and there is nothing to prevent it from doing so. It would be absurd to fault the
employees for the neglect or laxity of petitioner in protecting its own interests.
The argument of CENECO that the withdrawal was merely to subvert the ruling of
this Court in the BATANGAS case is without merit. The case referred to merely
declared that employees who are at the same time members of the cooperative
cannot join labor unions for purposes of collective bargaining. However, nowhere in
said case is it stated that member-employees are prohibited from withdrawing their
membership in the cooperative in order to join a labor union.
As discussed by the Solicitor General, Article I, Section 9 of the Articles of
Incorporation and By- Laws of CENECO provides that "any member may withdraw
from membership upon compliance with such uniform terms and conditions as the
59 | P a g e
Board may prescribe." The same section provides that upon withdrawal, the member
is merely required to surrender his membership certificate and he is to be refunded
his membership fee less any obligation that he has with the cooperative. There
appears to be no other condition or requirement imposed upon a withdrawing
member. Hence, there is no just cause for petitioner's denial of the withdrawal from
membership of its employees who are also members of the union. 7
The alleged board resolutions relied upon by petitioner in denying the withdrawal of
the members concerned were never presented nor their contents disclosed either
before the med-arbiter or the Secretary of Labor if only to prove the ratiocination
for said denial. Furthermore, CENECO never averred non-compliance with the terms
and conditions for withdrawal, if any. It appears that the Articles of Incorporation of
CENECO do not provide any ground for withdrawal from membership which
accordingly gives rise to the presumption that the same may be done at any time
and for whatever reason. In addition, membership in the cooperative is on a
voluntary basis. Hence, withdrawal therefrom cannot be restricted unnecessarily.
The right to join an organization necessarily includes the equivalent right not to join
the same.
The right of the employees to self-organization is a compelling reason why their
withdrawal from the cooperative must be allowed. As pointed out by CURE, the
resignation of the member- employees is an expression of their preference for union
membership over that of membership in the cooperative. The avowed policy of the
State to afford fall protection to labor and to promote the primacy of free collective
bargaining mandates that the employees' right to form and join unions for purposes
of collective bargaining be accorded the highest consideration.
Membership in an electric cooperative which merely vests in the member a right to
vote during the annual meeting becomes too trivial and insubstantial vis-a-vis the
primordial and more important constitutional right of an employee to join a union of
his choice. Besides, the 390 employees of CENECO, some of whom have never been
members of the cooperative, represent a very small percentage of the cooperative's
total membership of 44,000. It is inconceivable how the withdrawal of a negligible
number of members could adversely affect the business concerns and operations of
CENECO.
We rule, however, that the direct certification ordered by respondent Secretary is
not proper. By virtue of Executive Order No. 111, which became effective on March
4, 1987, the direct certification originally allowed under Article 257 of the Labor Code
has apparently been discontinued as a method of selecting the exclusive bargaining
agent of the workers. This amendment affirms the superiority of the certification
election over the direct certification which is no longer available now under the G.R. No. 85750 September 28, 1990
change in said provision.8
G.R. No. 89331 September 28, 1990
We have said that where a union has filed a petition for certification election, the
mere fact that no opposition is made does not warrant a direct certification. 9 In said KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION
case which has similar features to that at bar, wherein the respondent Minister IN LINE INDUSTRIES AND AGRICULTURE, petitioner,
directly certified the union, we held that: vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
... As pointed out by petitioner in its petition, what the respondent Minister INSTITUTE, INC., respondents.
achieved in rendering the assailed orders was to make a mockery of the
procedure provided under the law for representation cases because: ... (c) Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.
By directly certifying a Union without sufficient proof of majority
representation, he has in effect arrogated unto himself the right, vested
Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.
naturally in the employee's to choose their collective bargaining
representative. (d) He has in effect imposed upon the petitioner the
obligation to negotiate with a union whose majority representation is Jimenez & Associates for IRRI.
under serious question. This is highly irregular because while the Union
enjoys the blessing of the Minister, it does not enjoy the blessing of the Alfredo L. Bentulan for private respondent in 85750.
employees. Petitioner is therefore under threat of being held liable for
refusing to negotiate with a union whose right to bargaining status has not
been legally established.

MELENCIO-HERRERA, J.:
While there may be some factual variances, the rationale therein is applicable to the
present case in the sense that it is not alone sufficient that a union has the support
of the majority. What is equally important is that everyone be given a democratic Consolidated on 11 December 1989, these two cases involve the validity of the claim
space in the bargaining unit concerned. The most effective way of determining which of immunity by the International Catholic Migration Commission (ICMC) and the
labor organization can truly represent the working force is by certification election.10 International Rice Research Institute, Inc. (IRRI) from the application of Philippine
labor laws.
WHEREFORE, the questioned order for the direct certification of respondent CURE
as the bargaining representative of the employees of petitioner CENECO is hereby I
ANNULLED and SET ASIDE. The med-arbiter is hereby ordered to conduct a
certification election among the rank-and- file employees of CENECO with CURE and Facts and Issues
No Union as the choices therein.
A. G.R. No. 85750 — the International Catholic Migration Commission
SO ORDERED. (ICMC) Case.

12.) INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from
vs HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR South Vietnam's communist rule confronted the international community.
RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES
(TUPAS) WFTU respondents.

60 | P a g e
In response to this crisis, on 23 February 1981, an Agreement was forged between
the Philippine Government and the United Nations High Commissioner for Refugees
whereby an operating center for processing Indo-Chinese refugees for eventual
resettlement to other countries was to be established in Bataan (Annex "A", Rollo,
pp. 22-32).
an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violated
ICMC's diplomatic immunity.
Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with
Preliminary Injunction assailing the BLR Order.

ICMC was one of those accredited by the Philippine Government to operate the On 28 November 1988, the Court issued a Temporary Restraining Order enjoining
refugee processing center in Morong, Bataan. It was incorporated in New York, USA, the holding of the certification election.
at the request of the Holy See, as a non-profit agency involved in international
humanitarian and voluntary work. It is duly registered with the United Nations
On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C.
Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II.
Coquia of the Court of Appeals, filed a Motion for Intervention alleging that, as the
As an international organization rendering voluntary and humanitarian services in
highest executive department with the competence and authority to act on matters
the Philippines, its activities are parallel to those of the International Committee for
involving diplomatic immunity and privileges, and tasked with the conduct of
Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE
Philippine diplomatic and consular relations with foreign governments and UN
Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. 1].
organizations, it has a legal interest in the outcome of this case.

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed
Over the opposition of the Solicitor General, the Court allowed DEFORAF
with the then Ministry of Labor and Employment a Petition for Certification Election
intervention.
among the rank and file members employed by ICMC The latter opposed the petition
on the ground that it is an international organization registered with the United
Nations and, hence, enjoys diplomatic immunity. On 12 July 1989, the Second Division gave due course to the ICMC Petition and
required the submittal of memoranda by the parties, which has been complied with.
On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed
the petition for lack of jurisdiction. As initially stated, the issue is whether or not the grant of diplomatic privileges and
immunites to ICMC extends to immunity from the application of Philippine labor
laws.
On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR),
reversed the Med-Arbiter's Decision and ordered the immediate conduct of a
certification election. At that time, ICMC's request for recognition as a specialized ICMC sustains the affirmative of the proposition citing (1) its Memorandum of
agency was still pending with the Department of Foreign Affairs (DEFORAF). Agreement with the Philippine Government giving it the status of a specialized
agency, (infra); (2) the Convention on the Privileges and Immunities of Specialized
Agencies, adopted by the UN General Assembly on 21 November 1947 and
Subsequently, however, on 15 July 1988, the Philippine Government, through the
concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949
DEFORAF, granted ICMC the status of a specialized agency with corresponding
(the Philippine Instrument of Ratification was signed by the President on 30 August
diplomatic privileges and immunities, as evidenced by a Memorandum of Agreement
1949 and deposited with the UN on 20 March 1950) infra; and (3) Article II, Section
between the Government and ICMC (Annex "E", Petition, Rollo, pp. 41-43), infra.
2 of the 1987 Constitution, which declares that the Philippines adopts the generally
accepted principles of international law as part of the law of the land.
ICMC then sought the immediate dismissal of the TUPAS Petition for Certification
Election invoking the immunity expressly granted but the same was denied by
Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an
respondent BLR Director who, again, ordered the immediate conduct of a pre-
affirmance of the DEFORAF determination that the BLR Order for a certification
election conference. ICMC's two Motions for Reconsideration were denied despite
election among the ICMC employees is violative of the diplomatic immunity of said
organization.

61 | P a g e
Respondent BLR Director, on the other hand, with whom the Solicitor General
agrees, cites State policy and Philippine labor laws to justify its assailed Order,
particularly, Article II, Section 18 and Article III, Section 8 of the 1987
Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, ibid. In
addition, she contends that a certification election is not a litigation but a mere
investigation of a non-adversary, fact-finding character. It is not a suit against ICMC
its property, funds or assets, but is the sole concern of the workers themselves.
B. G.R. No. 89331 — (The International Rice Research Institute [IRRI] Case).
Before a Decision could be rendered in the ICMC Case, the Third Division, on 11
December 1989, resolved to consolidate G.R. No. 89331 pending before it with G.R.
No. 85750, the lower-numbered case pending with the Second Division, upon
manifestation by the Solicitor General that both cases involve similar issues.
The facts disclose that on 9 December 1959, the Philippine Government and the Ford
and Rockefeller Foundations signed a Memorandum of Understanding establishing
the International Rice Research Institute (IRRI) at Los Baños, Laguna. It was intended
to be an autonomous, philanthropic, tax-free, non-profit, non-stock organization
designed to carry out the principal objective of conducting "basic research on the
rice plant, on all phases of rice production, management, distribution and utilization
with a view to attaining nutritive and economic advantage or benefit for the people
of Asia and other major rice-growing areas through improvement in quality and
quantity of rice."
Initially, IRRI was organized and registered with the Securities and Exchange
Commission as a private corporation subject to all laws and regulations. However, by
virtue of Pres. Decree No. 1620, promulgated on 19 April 1979, IRRI was granted the
status, prerogatives, privileges and immunities of an international organization.
The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a
legitimate labor organization with an existing local union, the Kapisanan ng
Manggagawa at TAC sa IRRI (Kapisanan, for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with
Region IV, Regional Office of the Department of Labor and Employment (DOLE).
IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the
status of an international organization and granting it immunity from all civil, criminal
and administrative proceedings under Philippine laws.
62 | P a g e
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis
of Pres. Decree No. 1620 and dismissed the Petition for Direct Certification.
On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside
the Med-Arbiter's Order and authorized the calling of a certification election among
the rank-and-file employees of IRRI. Said Director relied on Article 243 of the Labor
Code, as amended, infra and Article XIII, Section 3 of the 1987 Constitution, 1 and
held that "the immunities and privileges granted to IRRI do not include exemption
from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.
On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR
Director's Order, dismissed the Petition for Certification Election, and held that the
grant of specialized agency status by the Philippine Government to the IRRI bars
DOLE from assuming and exercising jurisdiction over IRRI Said Resolution reads in
part as follows:
Presidential Decree No. 1620 which grants to the IRRI the status,
prerogatives, privileges and immunities of an international
organization is clear and explicit. It provides in categorical terms
that:
Art. 3 — The Institute shall enjoy immunity from any penal, civil
and administrative proceedings, except insofar as immunity has
been expressly waived by the Director-General of the Institution
or his authorized representative.
Verily, unless and until the Institute expressly waives its
immunity, no summons, subpoena, orders, decisions or
proceedings ordered by any court or administrative or quasi-
judicial agency are enforceable as against the Institute. In the
case at bar there was no such waiver made by the Director-
General of the Institute. Indeed, the Institute, at the very first
opportunity already vehemently questioned the jurisdiction of
this Department by filing an ex-parte motion to dismiss the case.
Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of
discretion by respondent Secretary of Labor in upholding IRRI's diplomatic immunity.
The Third Division, to which the case was originally assigned, required the
respondents to comment on the petition. In a Manifestation filed on 4 August 1990,
the Secretary of Labor declared that it was "not adopting as his own" the decision of
the BLR Director in the ICMC Case as well as the Comment of the Solicitor General
sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.
Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying
that he be excused from filing a comment "it appearing that in the earlier case
of International Catholic Migration Commission v. Hon. Pura Calleja, G.R. No. 85750.
the Office of the Solicitor General had sustained the stand of Director Calleja on the
very same issue now before it, which position has been superseded by respondent
Secretary of Labor in G.R. No. 89331," the present case. The Court acceded to the
Solicitor General's prayer.
The Court is now asked to rule upon whether or not the Secretary of Labor
committed grave abuse of discretion in dismissing the Petition for Certification
Election filed by Kapisanan.
Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status,
privileges, prerogatives and immunities of an international organization, invoked by
the Secretary of Labor, is unconstitutional in so far as it deprives the Filipino workers
of their fundamental and constitutional right to form trade unions for the purpose
of collective bargaining as enshrined in the 1987 Constitution.
A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for
entertaining IRRI'S appeal from the Order of the Director of the Bureau of Labor
Relations directing the holding of a certification election. Kapisanan contends that
pursuant to Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules Implementing
the Labor Code, the Order of the BLR Director had become final and unappeable and
that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.
On the other hand, in entertaining the appeal, the Secretary of Labor relied on
Section 25 of Rep. Act. No. 6715, which took effect on 21 March 1989, providing for
the direct filing of appeal from the Med-Arbiter to the Office of the Secretary of Labor
and Employment instead of to the Director of the Bureau of Labor Relations in cases
involving certification election orders.
III
Findings in Both Cases.
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There can be no question that diplomatic immunity has, in fact, been granted ICMC
and IRRI.
Article II of the Memorandum of Agreement between the Philippine Government
and ICMC provides that ICMC shall have a status "similar to that of a specialized
agency." Article III, Sections 4 and 5 of the Convention on the Privileges and
Immunities of Specialized Agencies, adopted by the UN General Assembly on 21
November 1947 and concurred in by the Philippine Senate through Resolution No.
19 on 17 May 1949, explicitly provides:
Art. III, Section 4. The specialized agencies, their property and
assets, wherever located and by whomsoever held, shall enjoy
immunity from every form of legal process except insofar as in
any particular case they have expressly waived their immunity. It
is, however, understood that no waiver of immunity shall extend
to any measure of execution.
Sec. 5. — The premises of the specialized agencies shall be
inviolable. The property and assets of the specialized agencies,
wherever located and by whomsoever held shall be immune
from search, requisition, confiscation, expropriation and any
other form of interference, whether by executive,
administrative, judicial or legislative action. (Emphasis supplied).
IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of
immunity, thus:
Art. 3. Immunity from Legal Process. — The Institute shall enjoy
immunity from any penal, civil and administrative proceedings,
except insofar as that immunity has been expressly waived by
the Director-General of the Institute or his authorized
representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation
of immunity when in a Memorandum, dated 17 October 1988, it expressed the view
that "the Order of the Director of the Bureau of Labor Relations dated 21 September
1988 for the conduct of Certification Election within ICMC violates the diplomatic
immunity of the organization." Similarly, in respect of IRRI, the DEFORAF speaking
through The Acting Secretary of Foreign Affairs, Jose D. Ingles, in a letter, dated 17
June 1987, to the Secretary of Labor, maintained that "IRRI enjoys immunity from
the jurisdiction of DOLE in this particular instance."
The foregoing opinions constitute a categorical recognition by the Executive Branch
of the Government that ICMC and IRRI enjoy immunities accorded to international
organizations, which determination has been held to be a political question
conclusive upon the Courts in order not to embarrass a political department of
Government.
It is a recognized principle of international law and under our
system of separation of powers that diplomatic immunity is
essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is
recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts
to accept the claim of immunity upon appropriate suggestion by
the principal law officer of the government . . . or other officer
acting under his direction. Hence, in adherence to the settled
principle that courts may not so exercise their jurisdiction . . . as
to embarrass the executive arm of the government in conducting
foreign relations, it is accepted doctrine that in such cases the
judicial department of (this) government follows the action of
the political branch and will not embarrass the latter by
assuming an antagonistic jurisdiction. 3
A brief look into the nature of international organizations and specialized agencies is
in order. The term "international organization" is generally used to describe an
organization set up by agreement between two or more states. 4 Under
contemporary international law, such organizations are endowed with some degree
of international legal personality 5 such that they are capable of exercising specific
rights, duties and powers. 6 They are organized mainly as a means for conducting
general international business in which the member states have an interest. 7 The
United Nations, for instance, is an international organization dedicated to the
propagation of world peace.
"Specialized agencies" are international organizations having functions in particular
fields. The term appears in Articles 57 8 and 63 9 of the Charter of the United Nations:
The Charter, while it invests the United Nations with the general
task of promoting progress and international cooperation in
64 | P a g e
economic, social, health, cultural, educational and related
matters, contemplates that these tasks will be mainly fulfilled
not by organs of the United Nations itself but by autonomous
international organizations established by inter-governmental
agreements outside the United Nations. There are now many
such international agencies having functions in many different
fields, e.g. in posts, telecommunications, railways, canals, rivers,
sea transport, civil aviation, meteorology, atomic energy,
finance, trade, education and culture, health and refugees. Some
are virtually world-wide in their membership, some are regional
or otherwise limited in their membership. The Charter provides
that those agencies which have "wide international
responsibilities" are to be brought into relationship with the
United Nations by agreements entered into between them and
the Economic and Social Council, are then to be known as
"specialized agencies." 10
The rapid growth of international organizations under contemporary international
law has paved the way for the development of the concept of international
immunities.
It is now usual for the constitutions of international
organizations to contain provisions conferring certain
immunities on the organizations themselves, representatives of
their member states and persons acting on behalf of the
organizations. A series of conventions, agreements and
protocols defining the immunities of various international
organizations in relation to their members generally are now
widely in force; . . . 11
There are basically three propositions underlying the grant of international
immunities to international organizations. These principles, contained in the ILO
Memorandum are stated thus: 1) international institutions should have a status
which protects them against control or interference by any one government in the
performance of functions for the effective discharge of which they are responsible
to democratically constituted international bodies in which all the nations concerned
are represented; 2) no country should derive any national financial advantage by
levying fiscal charges on common international funds; and 3) the international
organization should, as a collectivity of States members, be accorded the facilities
for the conduct of its official business customarily extended to each other by its
individual member States. 12 The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with the status, dignity or
privileges of individuals, but with the elements of functional independence
necessary to free international institutions from national control and to enable them
to discharge their responsibilities impartially on behalf of all their
members. 13 The raison d'etre for these immunities is the assurance of unimpeded
performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated
by their international character and respective purposes. The objective is to avoid
the danger of partiality and interference by the host country in their internal
workings. The exercise of jurisdiction by the Department of Labor in these instances
would defeat the very purpose of immunity, which is to shield the affairs of
international organizations, in accordance with international practice, from political
pressure or control by the host country to the prejudice of member States of the
organization, and to ensure the unhampered performance of their functions.
ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its
basic rights, which are guaranteed by Article II, Section 18, 14 Article III, Section
8, 15 and Article XIII, Section 3 (supra), of the 1987 Constitution; and implemented by
Articles 243 and 246 of the Labor Code, 16 relied on by the BLR Director and by
Kapisanan.
For, ICMC employees are not without recourse whenever there are disputes to be
settled. Section 31 of the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations 17 provides that "each specialized agency
shall make provision for appropriate modes of settlement of: (a) disputes arising out
of contracts or other disputes of private character to which the specialized agency is
a party." Moreover, pursuant to Article IV of the Memorandum of Agreement
between ICMC the the Philippine Government, whenever there is any abuse of
privilege by ICMC, the Government is free to withdraw the privileges and immunities
accorded. Thus:
Art. IV. Cooperation with Government Authorities. — 1. The
Commission shall cooperate at all times with the appropriate
authorities of the Government to ensure the observance of
Philippine laws, rules and regulations, facilitate the proper
administration of justice and prevent the occurrences of any
abuse of the privileges and immunities granted its officials and
alien employees in Article III of this Agreement to the
Commission.
65 | P a g e
2. In the event that the Government determines that there has
been an abuse of the privileges and immunities granted under
this Agreement, consultations shall be held between the
Government and the Commission to determine whether any
such abuse has occurred and, if so, the Government shall
withdraw the privileges and immunities granted the Commission
and its officials.
Neither are the employees of IRRI without remedy in case of dispute with
management as, in fact, there had been organized a forum for better management-
employee relationship as evidenced by the formation of the Council of IRRI
Employees and Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual and beneficial
cooperation between IRRI and its employees." The existence of this Union factually
and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI
the status, privileges and immunities of an international organization, deprives its
employees of the right to self-organization.
The immunity granted being "from every form of legal process except in so far as in
any particular case they have expressly waived their immunity," it is inaccurate to
state that a certification election is beyond the scope of that immunity for the reason
that it is not a suit against ICMC. A certification election cannot be viewed as an
independent or isolated process. It could tugger off a series of events in the collective
bargaining process together with related incidents and/or concerted activities, which
could inevitably involve ICMC in the "legal process," which includes "any penal, civil
and administrative proceedings." The eventuality of Court litigation is neither
remote and from which international organizations are precisely shielded to
safeguard them from the disruption of their functions. Clauses on jurisdictional
immunity are said to be standard provisions in the constitutions of international
Organizations. "The immunity covers the organization concerned, its property and
its assets. It is equally applicable to proceedings in personam and proceedings in
rem." 18
We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p.
161, Rollo), wherein TUPAS calls attention to the case entitled "International
Catholic Migration Commission v. NLRC, et als., (G.R. No. 72222, 30 January 1989,
169 SCRA 606), and claims that, having taken cognizance of that dispute (on the issue
of payment of salary for the unexpired portion of a six-month probationary
employment), the Court is now estopped from passing upon the question of DOLE
jurisdiction petition over ICMC.
We find no merit to said submission. Not only did the facts of said controversy occur SO ORDERED.
between 1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a
specialized agency with corresponding immunities, but also because ICMC in that 13.) NUWHRAIN v. Sec. of Labor (2009)
case did not invoke its immunity and, therefore, may be deemed to have waived it,
assuming that during that period (1983-1985) it was tacitly recognized as enjoying
CARPIO MORALES, J.:
such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision
of the BLR Director, dated 15 February 1989, had not become final because of a
Motion for Reconsideration filed by IRRI Said Motion was acted upon only on 30
March 1989 when Rep. Act No. 6715, which provides for direct appeals from the
Orders of the Med-Arbiter to the Secretary of Labor in certification election cases
either from the order or the results of the election itself, was already in effect,
specifically since 21 March 1989. Hence, no grave abuse of discretion may be
imputed to respondent Secretary of Labor in his assumption of appellate jurisdiction,
contrary to Kapisanan's allegations. The pertinent portion of that law provides:
Art. 259. — Any party to an election may appeal the order or
results of the election as determined by the Med-
Arbiter directly to the Secretary of Labor and Employment on the
ground that the rules and regulations or parts thereof
established by the Secretary of Labor and Employment for the
conduct of the election have been violated. Such appeal shall be
decided within 15 calendar days (Emphasis supplied).
National Union of Workers in Hotels, Restaurants and Allied Industries Manila
Pavilion Hotel Chapter (NUWHRAIN-MPHC), herein petitioner, seeks the reversal of
the Court of Appeals November 8, 2007 Decision[1] and of the Secretary of Labor
and Employments January 25, 2008 Resolution[2] in OS-A-9-52-05 which affirmed
the Med-Arbiters Resolutions dated January 22, 2007[3] and March 22, 2007.[4]
A certification election was conducted on June 16, 2006 among the rank-and-file
employees of respondent Holiday Inn Manila Pavilion Hotel (the Hotel) with the
following results:
EMPLOYEES IN VOTERS LIST = 353
TOTAL VOTES CAST = 346
NUWHRAIN-MPHC = 151

En passant, the Court is gratified to note that the heretofore antagonistic positions
assumed by two departments of the executive branch of government have been
rectified and the resultant embarrassment to the Philippine Government in the eyes
of the international community now, hopefully, effaced.
WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order
of the Bureau of Labor Relations for certification election is SET ASIDE, and the
Temporary Restraining Order earlier issued is made PERMANENT.
In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of
discretion having been committed by the Secretary of Labor and Employment in
dismissing the Petition for Certification Election.
No pronouncement as to costs.
HIMPHLU = 169
NO UNION = 1
SPOILED = 3
SEGREGATED = 22
In view of the significant number of segregated votes, contending unions, petitioner,
NUHWHRAIN-MPHC, and respondent Holiday Inn Manila Pavillion Hotel Labor Union
(HIMPHLU), referred the case back to Med-Arbiter Ma. Simonette Calabocal to
decide which among those votes would be opened and tallied. Eleven (11) votes
were initially segregated because they were cast by dismissed employees, albeit the
legality of their dismissal was still pending before the Court of Appeals. Six other
votes were segregated because the employees who cast them were already
occupying supervisory positions at the time of the election. Still five other votes were

66 | P a g e
segregated on the ground that they were cast by probationary employees and,
pursuant to the existing Collective Bargaining Agreement (CBA), such employees
cannot vote. It bears noting early on, however, that the vote of one Jose Gatbonton
(Gatbonton), a probationary employee, was counted.
By Order of August 22, 2006, Med-Arbiter Calabocal ruled for the opening of 17 out
of the 22 segregated votes, specially those cast by the 11 dismissed employees and
those cast by the six supposedly supervisory employees of the Hotel.
Petitioner, which garnered 151 votes, appealed to the Secretary of Labor and
Employment (SOLE), arguing that the votes of the probationary employees should
have been opened considering that probationary employee Gatbontons vote was
tallied. And petitioner averred that respondent HIMPHLU, which garnered 169 votes,
should not be immediately certified as the bargaining agent, as the opening of the
17 segregated ballots would push the number of valid votes cast to 338 (151 + 169 +
1 + 17), hence, the 169 votes which HIMPHLU garnered would be one vote short of
the majority which would then become 169.
By the assailed Resolution of January 22, 2007, the Secretary of Labor and
Employment (SOLE), through then Acting Secretary Luzviminda Padilla, affirmed the
Med-Arbiters Order. It held that pursuant to Section 5, Rule IX of the Omnibus Rules
Implementing the Labor Code on exclusion and inclusion of voters in a certification
election, the probationary employees cannot vote, as at the time the Med-Arbiter
issued on August 9, 2005 the Order granting the petition for the conduct of the
certification election, the six probationary employees were not yet hired, hence,
they could not vote.
The SOLE further held that, with respect to the votes cast by the 11 dismissed
employees, they could be considered since their dismissal was still pending appeal.
As to the votes cast by the six alleged supervisory employees, the SOLE held that
their votes should be counted since their promotion took effect months after the
issuance of the above-said August 9, 2005 Order of the Med-Arbiter, hence, they
were still considered as rank-and-file.
Respecting Gatbontons vote, the SOLE ruled that the same could be the basis to
include the votes of the other probationary employees, as the records show that
during the pre-election conferences, there was no disagreement as to his inclusion
67 | P a g e
in the voters list, and neither was it timely challenged when he voted on election
day, hence, the Election Officer could not then segregate his vote.
The SOLE further ruled that even if the 17 votes of the dismissed and supervisory
employees were to be counted and presumed to be in favor of petitioner, still, the
same would not suffice to overturn the 169 votes garnered by HIMPHLU.
In fine, the SOLE concluded that the certification of HIMPHLU as the exclusive
bargaining agent was proper.
Petitioners motion for reconsideration having been denied by the SOLE by
Resolution of March 22, 2007, it appealed to the Court of Appeals.
By the assailed Decision promulgated on November 8, 2007, the appellate court
affirmed the ruling of the SOLE. It held that, contrary to petitioners assertion, the
ruling in Airtime Specialist, Inc. v. Ferrer Calleja[5] stating that in a certification
election, all rank-and-file employees in the appropriate bargaining unit, whether
probationary or permanent, are entitled to vote, is inapplicable to the case at bar.
For, the appellate court continued, the six probationary employees were not yet
employed by the Hotel at the time the August 9, 2005 Order granting the certification
election was issued. It thus held that Airtime Specialist applies only to situations
wherein the probationary employees were already employed as of the date of filing
of the petition for certification election.
Respecting Gatbontons vote, the appellate court upheld the SOLEs finding that since
it was not properly challenged, its inclusion could no longer be questioned, nor could
it be made the basis to include the votes of the six probationary employees.
The appellate court brushed aside petitioners contention that the opening of the 17
segregated votes would materially affect the results of the election as there would
be the likelihood of a run-off election in the event none of the contending unions
receive a majority of the valid votes cast. It held that the majority contemplated in
deciding which of the unions in a certification election is the winner refers to the
majority of valid votes cast, not the simple majority of votes cast, hence, the SOLE
was correct in ruling that even if the 17 votes were in favor of petitioner, it would
still be insufficient to overturn the results of the certification election.
Petitioners motion for reconsideration having been denied by Resolution of January
25, 2008, the present recourse was filed.

Petitioners contentions may be summarized as follows:
1. Inclusion of Jose Gatbontons vote but excluding the vote of the six other
probationary employees violated the principle of equal protection and is not in
accord with the ruling in Airtime Specialists, Inc. v. Ferrer-Calleja;
2. The time of reckoning for purposes of determining when the probationary
employees can be allowed to vote is not August 9, 2005 the date of issuance by Med-
Arbiter Calabocal of the Order granting the conduct of certification elections, but
March 10, 2006 the date the SOLE Order affirmed the Med-Arbiters Order.
3. Even if the votes of the six probationary employees were included, still,
HIMPHLU could not be considered as having obtained a majority of the valid votes
cast as the opening of the 17 ballots would increase the number of valid votes from
321 to 338, hence, for HIMPHLU to be certified as the exclusive bargaining agent, it
should have garnered at least 170, not 169, votes.
Petitioner justifies its not challenging Gatbontons vote because it was precisely its
position that probationary employees should be allowed to vote. It thus avers that
justice and equity dictate that since Gatbontons vote was counted, then the votes of
the 6 other probationary employees should likewise be included in the tally.
Petitioner goes on to posit that the word order in Section 5, Rule 9 of Department
Order No. 40-03 reading [A]ll employees who are members of the appropriate
bargaining unit sought to be represented by the petitioner at the time of the issuance
of the order granting the conduct of certification election shall be allowed to vote
refers to an order which has already become final and executory, in this case the
March 10, 2002 Order of the SOLE.
Petitioner thus concludes that if March 10, 2006 is the reckoning date for the
determination of the eligibility of workers, then all the segregated votes cast by the
68 | P a g e
probationary employees should be opened and counted, they having already been
working at the Hotel on such date.
Respecting the certification of HIMPHLU as the exclusive bargaining agent, petitioner
argues that the same was not proper for if the 17 votes would be counted as valid,
then the total number of votes cast would have been 338, not 321, hence, the
majority would be 170; as such, the votes garnered by HIMPHLU is one vote short of
the majority for it to be certified as the exclusive bargaining agent.
The relevant issues for resolution then are first, whether employees on probationary
status at the time of the certification elections should be allowed to vote, and
second, whether HIMPHLU was able to obtain the required majority for it to be
certified as the exclusive bargaining agent.
On the first issue, the Court rules in the affirmative.
The inclusion of Gatbontons vote was proper not because it was not questioned but
because probationary employees have the right to vote in a certification election.
The votes of the six other probationary employees should thus also have been
counted. As Airtime Specialists, Inc. v. Ferrer-Calleja holds:
In a certification election, all rank and file employees in the appropriate bargaining
unit, whether probationary or permanent are entitled to vote. This principle is clearly
stated in Art. 255 of the Labor Code which states that the labor organization
designated or selected by the majority of the employees in an appropriate bargaining
unit shall be the exclusive representative of the employees in such unit for purposes
of collective bargaining. Collective bargaining covers all aspects of the employment
relation and the resultant CBA negotiated by the certified union binds all employees
in the bargaining unit. Hence, all rank and file employees, probationary or
permanent, have a substantial interest in the selection of the bargaining
representative. The Code makes no distinction as to their employment status as basis
for eligibility in supporting the petition for certification election. The law refers to all
the employees in the bargaining unit. All they need to be eligible to support the
petition is to belong to the bargaining unit. (Emphasis supplied)
Rule II, Sec. 2 of Department Order No. 40-03, series of 2003, which amended Rule
XI of the Omnibus Rules Implementing the Labor Code, provides:
Rule II
Section 2. Who may join labor unions and workers' associations. - All persons
employed in commercial, industrial and agricultural enterprises, including
employees of government owned or controlled corporations without original
charters established under the Corporation Code, as well as employees of religious,
charitable, medical or educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join or assist labor unions for
purposes of collective bargaining: provided, however, that supervisory employees
shall not be eligible for membership in a labor union of the rank-and-file employees
but may form, join or assist separate labor unions of their own. Managerial
employees shall not be eligible to form, join or assist any labor unions for purposes
of collective bargaining. Alien employees with valid working permits issued by the
Department may exercise the right to self-organization and join or assist labor unions
for purposes of collective bargaining if they are nationals of a country which grants
the same or similar rights to Filipino workers, as certified by the Department of
Foreign Affairs.
For purposes of this section, any employee, whether employed for a definite period
or not, shall beginning on the first day of his/her service, be eligible for membership
in any labor organization.
All other workers, including ambulant, intermittent and other workers, the self-
employed, rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection and other legitimate purposes
except collective bargaining. (Emphasis supplied)
The provision in the CBA disqualifying probationary employees from voting cannot
override the Constitutionally-protected right of workers to self-organization, as well
as the provisions of the Labor Code and its Implementing Rules on certification
elections and jurisprudence thereon.
A law is read into, and forms part of, a contract. Provisions in a contract are valid
only if they are not contrary to law, morals, good customs, public order or public
policy.[6]
Rule XI, Sec. 5 of D.O. 40-03, on which the SOLE and the appellate court rely to
support their position that probationary employees hired after the issuance of the
Order granting the petition for the conduct of certification election must be
excluded, should not be read in isolation and must be harmonized with the other
provisions of D.O. Rule XI, Sec. 5 of D.O. 40-03, viz:
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Rule Xi
xxxx
Section 5. Qualification of voters; inclusion-exclusion. - All employees who are
members of the appropriate bargaining unit sought to be represented by the
petitioner at the time of the issuance of the order granting the conduct of a
certification election shall be eligible to vote. An employee who has been dismissed
from work but has contested the legality of the dismissal in a forum of appropriate
jurisdiction at the time of the issuance of the order for the conduct of a certification
election shall be considered a qualified voter, unless his/her dismissal was declared
valid in a final judgment at the time of the conduct of the certification election.
(Emphasis supplied)
xxxx
Section 13. Order/Decision on the petition. - Within ten (10) days from the date of
the last hearing, the Med-Arbiter shall issue a formal order granting the petition or
a decision denying the same. In organized establishments, however, no order or
decision shall be issued by the Med-Arbiter during the freedom period.
The order granting the conduct of a certification election shall state the following:
(a) the name of the employer or establishment;
(b) the description of the bargaining unit;
(c) a statement that none of the grounds for dismissal enumerated in the succeeding
paragraph exists;
(d) the names of contending labor unions which shall appear as follows: petitioner
union/s in the order in which their petitions were filed, forced intervenor, and no
union; and
 (e) a directive upon the employer and the contending union(s) to submit within ten
(10) days from receipt of the order, the certified list of employees in the bargaining
unit, or where necessary, the payrolls covering the members of the bargaining unit
for the last three (3) months prior to the issuance of the order. (Emphasis supplied)
the SOLE, rendering the Med-Arbiters August 22, 2005 Order final and executory 10
days after the March 22, 2007 Resolution (denying the motion for reconsideration of
the January 22 Order denying the appeal), and rightly so. Because, for purposes of
self-organization, those employees are, in light of the discussion above, deemed
eligible to vote.

A certification election is the process of determining the sole and exclusive

xxxx bargaining agent of the employees in an appropriate bargaining unit for purposes of
collective bargaining. Collective bargaining, refers to the negotiated contract
between a legitimate labor organization and the employer concerning wages, hours
Section 21. Decision of the Secretary. - The Secretary shall have fifteen (15) days from
of work and all other terms and conditions of employment in a bargaining unit.[7]
receipt of the entire records of the petition within which to decide the appeal. The
filing of the memorandum of appeal from the order or decision of the Med-Arbiter
stays the holding of any certification election. The significance of an employees right to vote in a certification election cannot thus
be overemphasized. For he has considerable interest in the determination of who
shall represent him in negotiating the terms and conditions of his employment.
The decision of the Secretary shall become final and executory after ten (10) days
from receipt thereof by the parties. No motion for reconsideration of the decision
shall be entertained. (Emphasis supplied) Even if the Implementing Rules gives the SOLE 20 days to decide the appeal from the
Order of the Med-Arbiter, experience shows that it sometimes takes months to be
resolved. To rule then that only those employees hired as of the date of the issuance
In light of the immediately-quoted provisions, and prescinding from the principle
of the Med-Arbiters Order are qualified to vote would effectively disenfranchise
that all employees are, from the first day of their employment, eligible for
employees hired during the pendency of the appeal. More importantly, reckoning
membership in a labor organization, it is evident that the period of reckoning in
the date of the issuance of the Med-Arbiters Order as the cut-off date would render
determining who shall be included in the list of eligible voters is, in cases where a
inutile the remedy of appeal to the SOLE.
timely appeal has been filed from the Order of the Med-Arbiter, the date when the
Order of the Secretary of Labor and Employment, whether affirming or denying the
appeal, becomes final and executory. But while the Court rules that the votes of all the probationary employees should be
included, under the particular circumstances of this case and the period of time
which it took for the appeal to be decided, the votes of the six supervisory employees
The filing of an appeal to the SOLE from the Med-Arbiters Order stays its execution,
must be excluded because at the time the certification elections was conducted, they
in accordance with Sec. 21, and rationally, the Med-Arbiter cannot direct the
had ceased to be part of the rank and file, their promotion having taken effect two
employer to furnish him/her with the list of eligible voters pending the resolution of
months before the election.
the appeal.

As to whether HIMPHLU should be certified as the exclusive bargaining agent, the

During the pendency of the appeal, the employer may hire additional employees. To
Court rules in the negative. It is well-settled that under the so-called double majority
exclude the employees hired after the issuance of the Med-Arbiters Order but before
rule, for there to be a valid certification election, majority of the bargaining unit must
the appeal has been resolved would violate the guarantee that every employee has
have voted AND the winning union must have garnered majority of the valid votes
the right to be part of a labor organization from the first day of their service.
cast.

In the present case, records show that the probationary employees, including
Prescinding from the Courts ruling that all the probationary employees votes should
Gatbonton, were included in the list of employees in the bargaining unit submitted
be deemed valid votes while that of the supervisory employees should be excluded,
by the Hotel on May 25, 2006 in compliance with the directive of the Med-Arbiter
it follows that the number of valid votes cast would increase from 321 to 337. Under
after the appeal and subsequent motion for reconsideration have been denied by

70 | P a g e
Art. 256 of the Labor Code, the union obtaining the majority of the valid votes cast
by the eligible voters shall be certified as the sole and exclusive bargaining agent of
all the workers in the appropriate bargaining unit. This majority is 50% + 1. Hence,
50% of 337 is 168.5 + 1 or at least 170.
HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HIMPHLU was
not able to obtain a majority vote. The position of both the SOLE and the appellate
court that the opening of the 17 segregated ballots will not materially affect the
outcome of the certification election as for, so they contend, even if such member
were all in favor of petitioner, still, HIMPHLU would win, is thus untenable.
It bears reiteration that the true importance of ascertaining the number of valid
votes cast is for it to serve as basis for computing the required majority, and not just
to determine which union won the elections. The opening of the segregated but valid
votes has thus become material. To be sure, the conduct of a certification election
has a two-fold objective: to determine the appropriate bargaining unit and to
ascertain the majority representation of the bargaining representative, if the
employees desire to be represented at all by anyone. It is not simply the
determination of who between two or more contending unions won, but whether it
effectively ascertains the will of the members of the bargaining unit as to whether
they want to be represented and which union they want to represent them.
Having declared that no choice in the certification election conducted obtained the
required majority, it follows that a run-off election must be held to determine which
between HIMPHLU and petitioner should represent the rank-and-file employees.
A run-off election refers to an election between the labor unions receiving the two
(2) highest number of votes in a certification or consent election with three (3) or
more choices, where such a certified or consent election results in none of the three
(3) or more choices receiving the majority of the valid votes cast; provided that the
total number of votes for all contending unions is at least fifty percent (50%) of the
number of votes cast.[8] With 346 votes cast, 337 of which are now deemed valid
and HIMPHLU having only garnered 169 and petitioner having obtained 151 and the
choice NO UNION receiving 1 vote, then the holding of a run-off election between
HIMPHLU and petitioner is in order.
WHEREFORE, the petition is GRANTED. The Decision dated November 8, 2007 and
Resolution dated January 25, 2008 of the Court of Appeals affirming the Resolutions
dated January 22, 2007 and March 22, 2007, respectively, of the Secretary of Labor
and Employment in OS-A-9-52-05 are ANNULLED and SET ASIDE.
71 | P a g e
The Department of Labor and Employment-Bureau of Labor Relations is DIRECTED to
cause the holding of a run-off election between petitioner, National Union of
Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter
(NUWHRAIN-MPC), and respondent Holiday Inn Manila Pavilion Hotel Labor Union
(HIMPHLU).
SO ORDERED.
G.R. No. 201016, June 22, 2016
14.) LEONCIA A. YUMANG, Petitioner, v. RADIO PHILIPPINES NETWORK, INC. (RPN
9), MIA A. CONCIO, LEONOR C. LINAO, IDA BARRAMEDA AND LOURDES O.
ANGELES, Respondents.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 assailing the
decision2 dated July 8, 2011, and the resolution 3 dated February 22, 2012, of the
Court of Appeals in CA-G.R. CEB-SP No. 110266.
The Antecedents
On May 1, 1998, the petitioner Leoncia A. Yumang started her employment with
the respondent Radio Philippines Network, Inc. (RPN 9). She was a member of the
Radio Philippines Network Employees Union (RPNEU) which had a collective
bargaining agreement (CBA)4 with RPN 9 effective July 1, 2004 to June 30, 2009.
Allegedly, after the conclusion of the CBA, a new Toyota Revo driven by RPNEU
President Reynato Siozon, Jr., was found to be registered in the name of the RPN 9
General Manager. The petitioner and 14 other union members filed complaints with
the Department of Labor and Employment-National Capital Region (DOLE-NCR)
against the RPNEU officers and members of the Board of Directors (BOD) for:
impeachment, an audit of union funds, and the conduct of a snap election.
On August 17, 2005, Mediator-Arbiter Clarissa G. Beltran-Lerios (Med-Arbiter Lerios)
ordered the conduct of a referendum to determine whether the incumbent RPNEU
officers would be impeached. The union officers and the BOD appealed to the Bureau
of Labor Relations. BLR Director Henry Parel granted the appeal and reversed Med-
Arbiter Lerios' ruling.5ChanRoblesVirtualawlibrary
In the meantime or on June 1, 2005, two complaints were filed with the RPNEU
Executive Board against several union members, followed by a third complaint filed
with the Grievance and Investigation Committee (GIC) against the petitioner and the
fourteen (14) other union members.
The complaints, which were consolidated and referred to the GIC for investigation,
involved alleged violations of the RPNEU Constitution and Bylaws (CBL),6 principally:
(1) the commission of acts inimical to the interests of the union and the general
membership; (2) the attempt to form another union; and (3) an appeal to the general
membership urging them to commence legal action without exhausting remedies
under the RPNEU CBL.
On September 29, 2005, Jeric Salinas, the GIC chairperson, asked the union members
charged to attend the hearings; otherwise, they would be considered to have waived
their right to be heard. After attending the first three hearings, the petitioner and
the others moved to dismiss the charges for alleged noncompliance with certain
provisions of the CBL, the absence of substantial and procedural due process, and
the non-appearance of their accusers. They no longer attended the subsequent
hearings.
On November 9, 2005, the GIC submitted its report7 to the RPNEU Board of Directors
(BOD). It declared: "while respondents cannot be said to have violated Article IX,
Section 2.2 or forming another union outside the freedom period, they can be held
guilty of malicious attack against the union or the officers under Section 1 (d) of
Article XVIII."8They were found guilty "of violating Article IX, Section 2.5 of the CBL
for urging or advocating to the members the filing of cases with the DOLE without
availment (sic) or exhaustion of all remedies."9ChanRoblesVirtualawlibrary
The GIC recommended the expulsion of the charged union members. On December
21, 2005, the BOD approved the GIC recommendation. 10 The members affected
were then notified of their expulsion from RPNEU, to take effect on December 29,
2005.11 They assailed the board's action for being ultra vires.
In a letter12 dated January 24, 2006, the RPNEU officers and directors asked RPN 9 to
terminate the employment of the expelled union members, pursuant to the CBA's
Union Security Clause.13 On January 30, 2006, the petitioner and the 14 others wrote
RPN 9,14 claiming that their expulsion had been reversed by 118 union members or
more than 30% of RPNEU's General Membership Assembly (GMA). 15RPNEU would
72 | P a g e
later on say that the GMA could not have validly convened since the petitioner and
her group failed to appeal the BOD resolution expelling them from the union as
required by the RPNEU CBL.16ChanRoblesVirtualawlibrary
RPN 9 deferred action on RPNEU's request. In a memorandum 17 dated February 1,
2006, of respondent Mia A. Concio (Concio), RPN 9 President and CEO, it announced
that it will conduct an inquiry into the matter.
The inquiry commenced on February 6, 2006. At the proceedings 18 the following day,
the petitioner and her colleagues sensed that the RPN panel was conducting the
inquiry only to effect a reconciliation between them and the officers, not to
determine the validity of their expulsion. Nonetheless, they expressed no objection
to a reconciliation on condition that: (1) a referendum be held; (2) the union shoulder
their attorney's fees; and (3) they be paid damages. Siozon wanted all the cases
dropped. The next day, upon the advice of their lawyer, the expelled union members
informed the panel that they would no longer answer any questions.
Allegedly for this reason, the panel concluded the inquiry on February 15, 2006. In a
memorandum19 to Concio on the same day, the panel recommended that the RPN 9
management comply with the CBA's union security clause. Consequently, or on
February 17, 2006, RPN 9 notified 20 the petitioner and the 14 others of their
separation from the service effective March 20, 2006.
Meantime, or on March 6, 2006, the petitioner filed a complaint for unpaid CBA
benefits and applicable wage orders. On May 31, 2006, she filed a second complaint
for illegal dismissal (consolidated with the first case) against RPN 9, Concio, General
Manager Leonor Linao, Asst. General Manager for Finance Ida Barrameda, and HRD
Manager Lourdes Angeles.21ChanRoblesVirtualawlibrary
The Compulsory Arbitration Rulings
In a decision22 dated April 20, 2007, Labor Arbiter (LA) Manuel
M. Manansala declared that the petitioner had been illegally dismissed, and ordered
her reinstatement with backwages, payment of her accrued monetary benefits, plus
attorney's fees.
LA Manansala held that although the petitioner's dismissal was in compliance with
the CBA's union security clause, her expulsion from the union was without due
process. However, he absolved the respondent RPN 9 officers from liability as they
merely acted, he stressed, on the petitioner's dismissal in their official capacities.
On appeal by the respondents, the National Labor Relations Commission (NLRC), in
its November 28, 2008 decision,23 reversed LA Manansala's ruling and declared the
petitioner's dismissal valid as it was in implementation of the CBA's union security
clause. It also found that the petitioner had been afforded due process.
The petitioner moved for reconsideration, but the NLRC denied the motion.24 She
then sought relief from the CA through a petition for certiorari, charging the labor
tribunal with grave abuse of discretion when it (1) entertained the respondents'
appeal despite its non-perfection and (2) declared the termination of her
employment valid.
The petitioner faulted the NLRC for disregarding its own rules of procedure when it
admitted the respondents' appeal even in the absence of a joint declaration under
oath by the employer, his counsel and the bonding company attesting that the bond
posted is genuine and shall be in effect until the final disposition of the
case.25ChanRoblesVirtualawlibrary
On the merits of the case, she argued that while her employment was terminated in
compliance with the CBA's union security clause, she was not accorded due process
before she was dismissed. She assailed the supposed RPN 9 inquiry into her expulsion
from the union without the company investigating whether it was justified.
The inquiry, she claimed, was conducted for the sole purpose of reconciling the
officers and the complaining union members, not of determining whether they were
validly expelled from the union; instead, the RPN 9 inquiry panel merely questioned
the resolution of at least 30% of the union membership reversing their expulsion, to
the extent of calling some of the signatories to verify their "acquiescence" to the
resolution.
The petitioner denied the RPNEU's charges against her. She defended her actions to
be in accordance with her right to information as a union member under Article 241
of the Labor Code. This includes, she argued, the right to call for the investigation of
any irregularity within the union; thus, a complaint filed regarding such an
irregularity cannot be considered a misconduct or a disloyalty under the union CBL.
The CA Decision
In its decision of July 8, 2011, the CA-CEB denied the petition and affirmed the NLRC
ruling. It brushed aside the petitioner's procedural question, holding that the NLRC
committed no grave abuse of discretion in giving due course to the appeal, as it was
done in the interest of substantial justice.
On the substantive aspect of the case, the CA held that it was well within the NLRC's
73 | P a g e
jurisdiction to uphold the petitioner's dismissal since the respondents satisfied the
requisites for the observance of the CBA's union security clause.
On the due process issue, the CA pointed out that the petitioner and the other
complainants were given several opportunities to defend themselves, but they
responded with suspicion and animosity; thus, they were to blame if their right to
due process had been curtailed.
The petitioner moved for reconsideration. She again raised the matter of the non-
perfection of the respondents' appeal, and bewailed the CA's failure "to explain why
it departed from the established facts as ruled by the other Divisions of this
Honorable Court and affirmed by the Honorable Supreme Court in at least two
identical cases."26ChanRoblesVirtualawlibrary
The two cases she referred to are the: (1) Radio Philippines Network, Inc., (RPN) v.
National Labor Relations Commission, Ruth F. Yap, et al, where the CA 4th Division
dismissed RPN 9's petition for certiorari in CA-G.R. SP No. 10456727 eventually
affirmed by this Court in G.R. No. 188033,28 for which an Entry of Judgment29 was
issued on November 23, 2009; and (2) Radio Philippines Network v. National Labor
Relations Commission and Ibarra Delantar, 30 with the same results. The petitioner
argued that the identical decisions in the two cases constitute the law of the case and
must be applied in all pending cases involving the 15 dismissed RPNEU members.
The CA denied the motion, holding that the petitioner failed to raise new and
substantial matters in her plea for reconsideration. It stressed in particular that the
cases cited by the petitioner "are not entirely applicable here as those cases do not
exactly share similar set of facts with the instant case."31 It explained that in the cited
cases, the labor arbiter and the NLRC affirmed the illegality of the dismissal of the
complainants; whereas, in the present case, the labor arbiter found the petitioner's
dismissal illegal, but on appeal, the NLRC declared the dismissal valid.
The Petition
The petitioner now asks the Court to nullify the CA rulings because they were
rendered, she contends, with grave abuse of discretion and, for being contrary to
existing law and jurisprudence.
She insists that the issue of whether she was illegally dismissed has been put to rest
by this Court in the two cases she just cited and a third one, the Radio Philippines
Network, Inc., v. Melanie Marteja, G.R. No. 192988.32 These three cases, she points
out, involved 7 of the 15 employees subject of the present dispute and, no Court
decision contrary to the rulings in the three cases currently exists.
 officer could fill the vacancy in the committee. Assuming that union members could
Procedurally, the petitioner insists that the respondents' appeal to the NLRC should be appointed to the committee, the fact that they would be appointed by the
not have been allowed since it had not been perfected under the NLRC rules. She respondent union officers would taint the objectivity of the committee proceedings.
argues that the appeal bond is not merely a procedural, but also a jurisdictional,
requirement. The petitioner believes that while an administrative procedure is provided in the CBL
for the resolution of internal union disputes, it was not "readily available" to her and
With regard to her dismissal, the petitioner asserts that RPN 9 terminated her to the 14 others who were expelled from the union, in view of the nature of the
employment without ascertaining the validity of her expulsion from the union. She complaints and the reality that it was no less than the union officers who were
considers the inquiry RPN 9 conducted on the union request for her dismissal grossly subject of the complaints. She argues that under the CBL procedure, they would not
inadequate to satisfy the due process requirement. obtain an impartial resolution of the complaints; thus, their resort to the DOLE.

She maintains that had RPN 9 really inquired into whether her expulsion from the She cites, in support of her position, Book V, Rule XI, Section 6 (f) of the Labor Code's
union and that of the 14 other members was justified, it could have discovered the Implementing Rules and Regulations which allows non-exhaustion of administrative
invalidity of the union action. She strongly disputes the NLRC and the CA conclusion remedies within the union when such remedies are not readily available through no
that the charges against her and the others had been proven. fault of the complaining union member or members, or compliance with such
remedies does not apply to them. She posits that under the circumstances, she and
Thus, she denies that she joined in the formation of a union outside of the CBA's 60- the 14 other expelled union members had no choice but to go direct to the public
day freedom period. The GIC investigation, she reasons out, failed to show that such authorities for redress of their grievances.
was the case; rather, testimonies were given during the GIC proceedings that she
and the others were simply initiating the installation, of a new set of officers. In any The Respondents' Position
event, she was not identified as one of those soliciting signatures for a new set of
union officers. On August 28, 2012, the respondents RPN 9 and its responsible officers filed their
comment,33 praying for the petition's dismissal on the grounds that the CA correctly
On the charge of non-exhaustion of administrative remedies, the petitioner admits upheld the NLRC ruling.
that she was among the union members who filed the complaints before the DOLE
for the conduct of an audit of union funds and for the holding of a snap election of The respondents assail the petitioner's "mistaken belief" 34 that the inquiry RPN 9
union officers. She explains that while an internal union dispute is investigated by conducted into her expulsion from the union was aimed merely at reconciling the
the GIC under Art. XVII, Sec. 3 of the CBL, the final decision on the complaints lies differences between the expelled union members and the officers. They assert that
with the President and the BOD, the very respondents called upon to render an the inquiry was in reality an investigation which "they spurned and thereafter
accounting of union funds and who would be affected by a snap election. For this bewailed that they were deprived due process allegedly because there was no
reason, she doubts the impartiality of the union grievance procedure that is in place inquiry management conducted separate from that of the
to resolve her case. union."35ChanRoblesVirtualawlibrary

The same thing is true with the expelled union members' move for the impeachment The implementation of the union security clause in petitioner's case, the
of the union officers. Under the CBL's Art.VIII, Sec. 2, the petitioner points out, the respondents submit, was warranted because the validity of her expulsion had been
BOD shall convene an Ad Hoc Committee (committee) to hear the case. The established at the RPNEU hearings.
committee is composed of the Chairman of the BOD who is also the RPNEU
President, one board member, and two union members in good standing. Lastly, they maintain that the CA correctly ruled that the NLRC acted within its
discretion in entertaining RPN's appeal in the interest of substantial justice.
The problem, the petitioner bewails, is that if the President is the subject of the
proceedings, then the Vice-President shall convene the committee, but since all the The Court's Ruling
officers were respondents in the complaints before the DOLE-NCR, no other union

74 | P a g e
 jurisprudence. While the respondents insist that the inquiry conducted by the RPN 9
The procedural question panel was in reality an investigation, the records prove otherwise.

We find no reversible error in the CA's affirmation of the NLRC's acceptance of the
appeal despite its non-perfection as described by the petitioner. Article 227
(formerlyArt. 221) of the Labor Code (renumbered by R. A. No. 10151, An Act
Allowing the Employment of Night Workers),36 provides that "In any proceeding
before the Commission or any of the Labor Arbiters, the rules of evidence prevailing
in courts of law or equity shall not be controlling and it is the spirit and intention of
this Code that the Commission and its members and the Labor Arbiter shall use every
and all means to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of due process x x x."
Consistent with the law and, as aptly cited by the CA, "Technicality should not stand
in the way of equitably and completely resolving the rights and obligations of the
parties for the ends of justice are reached not only through the speedy disposal of
cases but, more importantly, through a meticulous and comprehensive evaluation of
the merits of the case."37ChanRoblesVirtualawlibrary
The substantive aspect of the case
At the outset, we note that the present case is only one of several complaints for
illegal dismissal filed against RPN 9, which arose from the termination of
employment of the petitioner and 14 other union members, following their
expulsion from the RPNEU.
In its memorandum42 dated February 15, 2006, addressed to Concio, the inquiry
panel headed by Atty. Marilyn Estaris of the Office of the Government Corporate
Counsel, reported to the RPN 9 management that the panel offered
reconciliation/amicable settlement and never once wavered to patch up the
differences between the parties."43 This is consistent with the minutes44 of the panel
meeting on February 7, 2006, where Atty. Estaris "informed the body that this
meeting was called primarily for the reconciliation of both
parties."45ChanRoblesVirtualawlibrary
On the expulsion issue, the inquiry panel reported:
"In the issue of the expulsion case which is paramount in the mind of the
management, we asked ourselves whether the so-called General Assembly
resolution that they tout as having reversed the expulsion case actually
occurred. When asked whether a General Assembly meeting was actually held to
discuss the reversal of the expulsion case, no categorical answer was given by Ms.
Ruth Yap, et al. In our search for truth, we called some members who signed and
asked them if indeed a General Assembly was called and if any deliberation on the
expulsion was discussed, the answer of the member-signatories that we called was
negative. In fact they said that one of the 15 in the group of Ms.Yap approached
them and appealed to them to sign lest they be expelled from the
union."46cralawred

Some of the complaints had already been resolved at the CA level, and at least three
After its inquiry on whether the RPNEU GMA reversed the expulsion of the petitioner
had reached this Court. In these three cases, the Court found no reversible error in
and the 14 others, the panel concluded its inquiry/investigation with the
the CA's affirmation of the NLRC ruling that the expelled union members in the three
recommendation: "Management has to comply with the Union Security
cases were illegally dismissed.
clause,"47 without any finding on whether the expulsions were justified or not.
Seven of the 15 expelled union members were the complainants in the
In the light of what the records reveal, we agree with the conclusions in RPN v. Yap,
aforementioned three cases, as follows: Ruth F. Yap, Ma. Fe Dayon, Minette Baptista,
et al, and RPN v. Delantar that the RPN management did not conduct an
Bannie Edsael San Miguel and Marisa Lemina in G.R. No. 188033; 38 Ibarra A. Delantar
investigation of its own as to whether the expulsion of the petitioner from the RPNEU
in G.R. No. 189535;39 and Melanie Marteja in G.R. 192988.40 In another case which
was justified.
found its way into the CA Visayas Station in Cebu City, Anna Liza M. Serrano v. NLRC,
et al.41 the CA 20th Division (the same Division which decided the present case) held
Notably, the CA 20th Division in Cebu City reached a similar conclusion when it said
that Serrano had been illegally dismissed by RPN 9.
in Serrano v. NLRC, et al.:48 "A perusal of the evidence of RPN-9 shows that it failed
to conduct its own independent determination of whether or not there is sufficient
The illegal dismissal finding in all the cited cases had been based on the failure of the
evidence to support the decision of the RPNEU's Board of Directors to expel the
respondents to conduct a separate inquiry into the validity of the expulsion from
petitioner from the union."49ChanRoblesVirtualawlibrary
RPNEU of the petitioner and the 14 others similarly situated, contrary to existing

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We wonder why the same CA division found the facts in the cases cited by the
petitioner and, by implication its ruling in Serrano, different from the facts of the
petitioner's case. The petitioner, Yap and five others in G.R. No. 188033, Delantar in
G.R. No. 189535, and Serrano in CA-G.R. No. 111145,, were all expelled from the
RPNEU. They all went through the same GIC investigation and the same RPN 9 inquiry
before they were dismissed. Needless to say, they were all "victims" of the absence
of an independent investigation by RPN-9 on whether they were validly expelled
from the union. This militates against the respondents' cause.
In case the President is under impeachment, the Vice-President shall convene the
Committee;55 but since all the officers, including the BOD, were all subject of the
impeachment case, there would be no officers left to constitute the committee.
Assuming that the officers could appoint union members (any officer under
impeachment is disqualified to become a member of the committee) to constitute
the committee, the petitioner feared that the arrangement would not ensure the
impartiality of the proceedings.

In Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos,50 the Court The petitioner thus submits that under the circumstances, she is allowed by Section
said: "While respondent company may validly dismiss the employees expelled by the 6 (f). Rule XI. Book V of the Labor Code's Implementing Rules and Regulations to
union for disloyalty under the union security clause of the collective bargaining directly petition the DOLE to rule on the complaints she and the 14 others brought
agreement upon recommendation of the union, this dismissal should not be done against the RPNEU officers.
hastily and summarily thereby eroding the employees' right to due process, self-
organization and security of tenure." We understand the petitioner's position. As we see it, obtaining justice from the
RPNEU grievance machinery would be illusory for her. In Kapisanang Manggagawa
Moreover, as the CA noted in RPN v. Yap, the respondents "should have been on sa MRR v. Hernandez,56 the Court said: "In the case at bar, noteworthy is the fact that
guard,"51 considering that the petitioner and her group sought to impeach the the complaint was filed against the union and its incumbent officers, some of whom
RPNEU officers and the BOD and to replace them with a new set of officers, as well were members of the board of directors. The constitution and bylaws of the union
as to make them account for the union funds. In short, given the charged atmosphere provide that charges for any violations thereof shall be filed before the said board.
within the union, the respondents should not have merely relied on the outcome of But as explained by the lower court, if the complainants had done so the board of
the RPNEU investigation as basis of its decision to terminate the petitioner's directors would in effect be acting as respondent investigator and judge at the same
employment. They should have exerted a genuine effort to find out whether the time. To follow the procedure indicated would be a farce under the circumstances;
petitioner's expulsion was arrived at fairly and with due concern for the rights of the where exhaustion of administrative remedies within the union itself would practically
expelled member. amount to a denial of justice or would be illusory or vain, it will not be insisted upon x
x x.57 (underscoring supplied). So it must be with the petitioner's case.
Is the petitioner guilty of non-exhaustion
of administrative remedies? Can the petitioner be held guilty of
malicious attack against the union
In the light of the fact that the expelled members sought to hold all the union officers?
officers, including the members of the BOD, accountable for mismanagement of the
union, we believe the petitioner had enough reason to be gravely apprehensive of The records show that there was no categorical finding of the petitioner's guilt on
going through the RPNEU dispute settlement machinery. She feared she would not this question.58 But we find the petitioner well within her rights as a union member
obtain a fair hearing from the union, considering that while the GIC investigates and when she took the officers to task for then-handling of the affairs of the union,
hears intra-union disputes,52 the final decision lies with the BOD,53 which was especially with respect to matters relating to the union funds and the quality of the
headed by no less than the President. union leadership. The union President's integrity was itself put in serious doubt when
he was seen using a vehicle registered in the name of the RPN9 General Manager
Further, on the matter of the impeachment of the union officers under the CBL after the conclusion of the July 1, 2004 to June 30, 2009 CBA.
provides that the BOD shall convene and create an Ad Hoc Committee on
Impeachment composed of the Chairman of the Executive Board (the President), the Under Article 250 of the Labor Code (formerly Article 241) cited by the petitioner and
Chairman of the GIC, a board member and two union which lists down the rights and conditions of membership in a labor organization, it
members.54ChanRoblesVirtualawlibrary is her right to be informed of what is going on within the union, especially in the

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handling of union funds, the negotiation and conclusion of the CBA, in labor
education, and in all the rights and obligations of union members under existing laws.

Apparently, the petitioner and the 14 other expelled union members were not
informed about these matters, prompting them to seek an investigation on how the
union affairs were being administered. The petitioner therefore cannot be made
answerable for "malicious attack" against the RPNEU and its officers as she was
merely exercising her right, as a union member, to ventilate before the public
authorities her perceived grievances against the union leadership; as earlier
discussed, she had no expectations that these would be fairly resolved within the
union.

In sum, we find merit in the petition. The petitioner was illegally dismissed as her
expulsion from the union had no basis.

WHEREFORE, premises considered, we GRANT the petition. The assailed decision

and resolution of the Court of Appeals are SET ASIDE. LA Manansala's decision of
April 20, 2007, is ordered REINSTATEDwith modification that in the event the
reinstatement of the petitioner Leoncia A. Yumang is no longer tenable, she shall be
paid backwages to be computed from the date her wages were withheld up to the
finality of this Decision, and separation pay computed at one-month's pay for every
year of service.

SO ORDERED.chanroblesvirtuallawlibrary

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