Heritage Hotel Manila v.

NUWHRAIN-HHMSC*
January 20, 2011; Nachura J
*National Union of Workers in the Hotel, Restaurant and Allied Industries
Heritage Hotel Manila Supervisors Chapter

SUMMARY:
Union filed petition for certification election. During the pendency
of the election, the Hotel filed a pet. to cancel registration of Union
on ground of non-submission of documents required by law. Union
won the election and was certified as SEBA. Hotel appealed the
certification. Pet was dismissed. SC affirmed the dismissal of
petition.
DOCTRINE: Labor authorities should bear in mind that registration
confers 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 in or ask for
certification election in a bargaining unit. Thus, the cancellation of
a 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 Labor Code.
There are more substantive considerations involved [in cancellation
of registration] such as constitutionally guaranteed freedom of
association and right of workers to self-organization; public policy
to promote free trade unionism and collective bargaining as
instruments of industrial peace. Overly stringent interpretation of
the
statute
governing
cancellation
would
lead
to
an
unconstitutional application of the statute and emasculation of
public policy objectives and might render nugatory protection to
labor and social justice causes.
FACTS:
NUWRAIN-HHMSC [Union] filed a petition for certification
election with DOLE. Med Arbiter granted the petition and set the
date for pre-election conference. The actual pre-election conference
was delayed due to non-appearance of the Union. It resumed only
on Jan. 20, 2000.
Subsequent to said date, Heritage Hotel discovered that the Union
failed to submit its 1)annual financial report and 2) list of members
for several years since its registration in 1995. So on May 2000 it
filed a petition for cancellation of registration of union (with
prayer for cancellation of creation of local chapter and its name
deleted from list of legitimate labor organizations.)

After its filing, Heritage requested the suspension of the

certification election proceedings.
It argued that since the legitimacy of the Union is being
challenged then the proceedings should be dismissed or at
least suspended, given that the resolution of WON Union is a
legitimate labor org is crucial to issue of WON it can be
certified as sole and exclusive bargaining agent (SEBA) of
the covered EEs.
Despite Heritages motion, election pushed thru and the Union
emerged as the winner in the election.
Heritage filed Protest with Motion to Defer Certification of
Election Results and Winner
Heritage argued that election results should be deferred
until the petition for cancellation is resolved since it would
be an exercise in futility because once the Unions
registration is cancelled then it is no longer entitled to be
SEBA of the covered EEs
It also claimed that some of the Unions members were
confidential or managerial EEs and as such they should be
excluded from the supervisors bargaining unit.
[RE: Protest on Election]
Med-Arbiter: Pendency of petition for cancellation not a bar to
holding of election hence protest is dismissed Union certified as
SEBA.
SOLE: Dismissed appeal.
[RE: Petition for Cancellation of Registration]
Regional Director Maraan: petition denied. Freedom of
association and the EEs' right to self-organization are more
substantive considerations than belated of reports (treated as
substantial compliance)
SOLE (Since BLR Director inhibited being former counsel of Union):
Dismissed appeal. Constitutionally guaranteed freedom of
association and right of workers to self-organization outweighed
respondent's noncompliance with the statutory requirements
Heritage Hotel filed pet for certiorari with CA questioning
SOLEs jurisdiction and cognizance of the appeal since it was BLR
which had jurisdiction.

CA: Petitioned denied. SOLE may assume jurisdiction over appeal

from Regional Director since BLR Director inhibited. No GAD in
decision because in accord with constitutionally protected right of
workers to self-organization
Heritage Hotel MR: Abbott Labs. Phils., Inc. v. Abbott Labs.
Employees Union,[21] categorically declared that the DOLE Secretary
has no authority to review the decision of the Regional Director in a
petition for cancellation of union registration, and Section 4, Rule
VIII, Book V of the Omnibus Rules Implementing the Labor Code.
CA: In Abbott BLR Director did not inhibit unlike in this case so
SOLE is justified.
ISSUES/HELD:
1) WON SOLE properly assumed jurisdiction over Heritages Appeal
in the pet. For cancellation YES.
2) WON Unions registration should be cancelled NO.
RATIO:
I. SOLE properly took over the case. Abbott not applicable.
Jurisdiction to review the decision of the Regional Director lies with
the BLR. This is clearly provided in the Implementing Rules of the
Labor Code and enunciated by the Court in Abbott.
But as pointed out by the CA, the present case involves a peculiar
circumstance that was not present or covered by the ruling in
Abbott. In this case, the BLR Director inhibited himself from the
case because he was a former counsel of respondent
In Abbott the appeal was directly filed with the SOLE hence, it was
said that SOLE had no jurisdiction.
Here it was filed with BLR who acquired jurisdiction. This jurisdiction
remained with BLR despite Directors Inhibition. SOLE therefore
merely stepped in the shoes of the BLR Director and
performed a function that the latter could not himself
perform. She did so pursuant to her power of supervision and
control over the BLR.
Power of control
Araneta v. Gatmaitan whatever power is vested by law on
Department Heads then said power may also be exercised directly
by President who exercises supervision and control over

Departments. This was incorporated in the Admin Code of 1987

[which defines "supervision and control" as including the authority
to act directly whenever a specific function is entrusted by law or
regulation to a subordinate.]
Expounding the Araneta doctrine SOLE having power and
supervision over BLR then it has authority to exercise the quasijudicial function entrusted by law to BLR director.
While the power of control and supervision is subject to certain
guidelines in this case, SOLEs taking over of the function of BLR
director was warranted given the latters inhibition.
Contrary to Heritages argument that BLR Directors subordinates
should have resolved the appeal citing a provision of Admin Code,
said provision does not apply in this case because the BLR Director
was neither absent nor suffering from disability. SOLE opted to
resolve the case to dispel suspicion of bias.
No denial of due process.
Heritage argues that it was denied due process when it was not
notified in advance of BLR Directors inhibition and SOLEs
assumption of the case.
It would be well to state that a critical component of due process is
a hearing before an impartial and disinterested tribunal, for all the
elements of due process, like notice and hearing, would be
meaningless if the ultimate decision would come from a partial and
biased judge. It was precisely to ensure a fair trial that moved the
BLR Director to inhibit himself from the case and the DOLE
Secretary to take over his function. Plus Heritage had chance to
question inhibition when it filed MR.
II. Cancellation of Unions Registration.
Heritage: Once it is determined that a ground enumerated in
Article 239 of the Labor Code is present, cancellation of registration
should follow; it becomes the ministerial duty of the Regional
Director to cancel the registration of the labor organization, hence,
the use of the word "shall."
SC:
Art 238 provides that xxx shall be cancelled by the Bureau if it
has reason to believe, after due hearing, that the said labor
organization no longer meets one or more of the
requirements xxx While Art 239 lists grounds for cancellation.

These provisions 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.
Submission of documents is made 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.
The union and members of the bargaining unit should not be
deprived of a bargaining agent merely because of the
negligence of union officers who were responsible for
submission of the documents.
Labor authorities shoul, wrt to cancellation proceedings
act with circumspection in treating petitions for cancellation
of union registration, lest they be accused of interfering with
union activities. Consideration must be taken of rights
guaranted by Art. XIII Sec. 3 i.e., the rights of all workers to
self-organization, collective bargaining and negotiations,
and peaceful concerted activities.

should bear in mind that registration confers 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 in or ask for certification
election in a bargaining unit. Thus, the cancellation of a
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 Labor Code.

Amendments and ILO Convention

Labor Codes provisions on cancellation of union registration has
been amended by RA 9481 (Ac Strengthening Workers
Constitutional Right to Self-Organization), which was enacted to

enhance PHs compliance with international oblgations under ILO

Convention 87 (non-dissolution of workers' organizations by
administrative authority) hence the amendment in Art 242-A
stating that Failure to comply with the above requirements shall
not be a ground for cancellation of union registration but shall
subject the erring officers or members to suspension, expulsion
from membership, or any appropriate penalty
ILO Convention 87:
Cancellation of union registration is tantamount to
dissolution of organization by administrative authority when
such measure would give rise to loss of legal personality
or of advantages necessary to carry out its activities
which is true in PH jurisdiction.
While ILO allows the cancellation, there has to be safeguards
provided like appeal mechanisms
Cancellation involves serious consequences and as such
should be taken only as last resort.
Court also quotes with approval SOLEs rationale for denying the
petition:
While Union failed to submit financial reports in accordance with
Art 239 existence of this ground should not necessarily lead to the
cancellation of union registration. Article 239 recognizes the
regulatory authority of the State to exact compliance with reporting
requirements. Yet there is more at stake in this case than merely
monitoring union activities and requiring periodic documentation
thereof. There are more substantive considerations involved constitutionally guaranteed freedom of association and right of
workers to self-organization; public policy to promote free trade
unionism and collective bargaining as instruments of industrial
peace. xxx overly stringent interpretation of the statute governing
cancellation would lead to an unconstitutional application of the
statute and emasculation of public policy objectives xx and render
nugatory protection to labor and social justice causes.
xxx It would be unreasonable for this Office to order the
cancellation of the union and penalize the entire union membership
on the basis of the negligence of its officers. xxx