to work on a rotation basis allegedly to prevent financial losses thereby allowing the

G.R. No. 92009 February 17, 1993

workers only ten (10) working days a month (Rollo, p. 8). Thus, MILU requested
implementation of the grievance procedure which had also been agreed upon in the
MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CBA, but the Corporation ignored the request.
CABANA, LOPITO SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR
ARANES, ELY BORROMEO, DANIEL BACOLON, MATIAS PAJIMULA,
Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,
RESTITUTO PAYABYAB, MELCHOR BOSE, TEOFILO ANTOLIN, ROBERT
p. 54) with the Department of Labor and Employment. Upon the intervention of the
ASPURIA, JUSTINO BOTOR, ALFREDO FABROS, AGAPITO TABIOS, BENARDO
DOLE, through one Atty. Bobot Hernandez, the Corporation and MILU reached an
ALFON, BENIGNO BARCENA, BERNARDO NAVARRO, MOISES LABRADOR,
agreement whereby the Corporation acceded to give back the usual work to its
ERNESTO DELA CRUZ, EDUARDO ESPIRITU, IGNACIO PAGTAMA, BAYANI
regular employees who are members of MILU (Rollo, p. 55).
PEREZ, SIMPLICIO PUASO, EDWIN VELARDE, BEATO ABOGADO, DANILO
SAN ANTONIO, BERMESI BORROMEO, and JOSE BORROMEO, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND Notwithstanding said agreement, the Corporation continued the practice of hiring
CONSTRUCTION CORPORATION, respondents. outside workers. When the MILU president, Wilfredo Abulencia, insisted in doing his
regular work of cutting steel bars which was being done by casual workers, a
supervisor reprimanded him, charged him with insubordination and suspended him
The petition for certiorari before us seeks to annul and to set aside the decision of the
for three (3) days (Rollo, pp. 9 & 51-52). Upon the request of MILU, Francisco Jose of
National Labor Relations Commission (Second Division) dated July 12, 1986 which
the DOLE called for conciliation conferences. The Corporation, however, insisted that
affirmed that of Labor Arbiter Fernando V. Cinco declaring illegal the strike staged by
the hiring of casual workers was a management prerogative. It later ignored
petitioners and terminating the employment of the individual petitioners.
subsequent scheduled conciliation conferences (Rollo, pp. 51-52 & 57-58).

The Master Iron Works Construction Corporation (Corporation for brevity) is a duly
Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a)
organized corporate entity engaged in steel fabrication and other related business
violation of CBA; (b) discrimination; (c) unreasonable suspension of union officials;
activities. Sometime in February 1987, the Master Iron Labor Union (MILU) entered
and (d) unreasonable refusal to entertain grievance (Rollo,
into a collective barganing agreement (CBA) with the Corporation for the three-year
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road
period between December 1, 1986 and November 30, 1989 (Rollo, p. 7). Pertinent
leading to the Corporation's plant entrance and premises.
provisions of the CBA state:

Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown of
work, or any other interference with any of the operation of the COMPANY during
the term of this AGREEMENT, unless allowed and permitted by law.
Sec. 2. Service Allowance — The COMPANY agrees to continue the granting of
service allowance of workers assigned to work outside the company plant, in
addition to his daily salary, as follows:
(a) For those assigned to work outside the plant within Metro Manila, the
service allowance shall be P12.00;
(b) For those assigned to work outside Metro Manila, the service allowance
shall be P25.00/day;
(c) The present practice of conveying to and from jobsites of workers
assigned to work outside of the company plant shall be maintained.
At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been
summoned by the Corporation's counsel, came and arrested the picketers. They were
brought to Camp Karingal and, the following day, to the Caloocan City jail. Charges
for illegal possession of firearms and deadly weapons were lodged against them.
Later, however, those charges were dismissed for failure of the arresting CAPCOM
soldiers to appear at the investigation (Rollo, p. 10). The dispersal of the picketlines
by the CAPCOM also resulted in the temporary lifting of the strike.
On August 4, 1987, the Corporation filed with the NLRC National Capital Region
arbitration branch a petition to declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng
Manggagawa sa Valenzuela (AMVA), re-staged the strike. Consequently, the
Corporation filed a petition for injunction before the NLRC which, on September 24,
1987, issued an order directing the workers to remove the barricades and other
obstructions which prevented ingress to and egress from the company premises. The
workers obliged on October 1, 1987 (Rollo, p. 25). On October 22, 1987, through its
president, MILU offered to return to work in a letter which states:

22 Okt. 1987
Right after the signing of the CBA, the Corporation subcontracted outside workers to
Mr. Elieze Hao
do the usual jobs done by its regular workers including those done outside of the
Master Iron Works & Construction Corp.
company plant. As a result, the regular workers were scheduled by the management
790 Bagbagin, Caloocan City

Dear Sir:
Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi,
nagsusuhestiyon o nag-oofer sa inyong pangasiwaan ng aming kahilingan na
bumalik na sa trabaho dahilan din lang sa kalagayan na tuloy tuloy ang ating
pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto naming manatili ang
ating magandang pagtitinginan bilang magkasangga para sa ika-uunlad ng ating
kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.
Gumagalang,
(Sgd.)
WILFREDO ABULENCIA
Pangulo
(Rollo, p. 590)
On October 30, 1987, MILU filed a position paper with counter-complaint before the
NLRC. In said counter-complaint, the workers charged the Corporation with unfair
labor practice for subcontracting work that was normally done by its regular workers
thereby causing the reduction of the latter's workdays; illegal suspension of Abulencia
without any investigation; discrimination for hiring casual workers in violation of the
CBA, and illegal dispersal of the picket lines by CAPCOM agents (Rollo, pp. 26-27).
In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter
Fernando Cinco declaring illegal the strike staged by MILU. The dispositive portion of
the decision reads:
WHEREFORE, in the light of the foregoing premises, judgment is hereby
rendered, as follows:
1. Declaring the strike by the respondents illegal and unlawful;
2. Ordering the cancellation of the registered permit of respondent union MILU
for having committed an illegal strike;
3. Ordering the termination of employment status of the individual respondents,
including the forfeiture of whatever benefits are due them under the law, for
having actively participated in an illegal strike, namely: Wilfredo Abulencia,
President; Rogelio Cabana, Vice-President; Lopito Saranilla, Secretary; Jesus
Moises, Treasurer; Basilio dela Cruz, Auditor; as Members of the Board: Edgar
Aranes, Melchor Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon,
and Ely Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria,
Justino Botor, Alfredo Fabros, Agapito Tabios, Bernardo Alfon, Benigno Barcena,
Bernardo Navaro, Moises Labrador, Ernesto dela Cruz, Eduardo Espiritu, Ignacio
Pagtama, Bayani Perez, Simplicio Puaso, Edwin Velarde, Beato Abogado,
Danila San Antonio, Bermes Borromeo and Jose Borromeo.
The respondents as appearing in Annex "A" of the Petition, but not included as
among those whose employment status were not terminated as above-
mentioned, are given priority of reinstatement, without backwages, in the event
petitioner starts its normal operations, or shall be paid their separation pay
according to law.
4. Ordering the respondents to cease and desist from further committing the
illegal acts complained of;
5. Ordering Respondent Union to pay the amount of P10,000.00 to Petitioner's
Counsel as attorney's fees;
6. Ordering the dismissal of the claim for damages for lack of merit; and
7. Ordering the dismissal of the counter-complaint in view of the filing of a
separate complaint by the respondents.
SO ORDERED. (pp. 35-36, Rollo.)
On appeal to the NLRC, MILU and the individual officers and workers named in Labor
Arbiter Cinco's decision alleged that said labor arbiter gravely abused his discretion
and exhibited bias in favor of the Corporation in disallowing their request to cross-
examine the Corporation's witnesses, namely, Corporate Secretary Eleazar Hao,
worker Daniel Ignacio and foreman Marcial Barcelon, who all testified on the manner
in which the strike was staged and on the coercion and intimidation allegedly
perpetrated by the strikers (Rollo,
p. 151).
The Second Division of the NLRC affirmed with modifications the decision of the labor
arbiter. The decision, which was promulgated on July 12, 1989 with Commissioners
Domingo H. Zapanta and Oscar N. Abella concurring and Commissioner Daniel M.
Lucas, Jr. dissenting, disagreed with the labor arbiter on the "summary execution of
the life of Master Iron Labor Union (MILU)" on the grounds that the Corporation did
not specifically pray for the cancellation of MILU's registration and that pursuant to
Articles 239 and 240 of the Labor Code, only the Bureau of Labor Relations may
cancel MILU's license or certificate of registration. It also deleted the award of
P10,000.00 as attorney's fees for lack of sufficient basis but it affirmed the labor
arbiter with regard to the declaration of illegality of the strike and the termination of
employment of certain employees and the rest of the dispositive portion of the labor
arbiter's decision (Rollo, pp. 48-49).
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the
decision appealed from, and remanding of the case to the labor arbiter of origin,
considering the respondent's countercharge or complaint for unfair labor practice was
not resolved on the merits" (Rollo, p. 49).
MILU filed a motion for the reconsideration but the same was denied by the NLRC for
lack of merit in its Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant
petition.1
Petitioners contend that notwithstanding the non-strike provision in the CBA, the
strike they staged was legal because the reasons therefor are non-economic in
nature. They assert that the NLRC abused its discretion in holding that there was
"failure to exhaust the provision on grievance procedure" in view of the fact that they
themselves sought grievance meetings but the Corporation ignored such requests.
They charge the NLRC with bias in failing to give weight to the fact that the criminal
charges against the individual petitioners were dismissed for failure of the CAPCOM
soldiers to testify while the same individual strikers boldly faced the charges against
them. Lastly, they aver that the NLRC abused its discretion in holding that the
workers' offer to return to work was conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-
lockout provision of the CBA aforequoted. As this Court has held in Philippine Metal
Foundries, Inc. vs. CIR (90 SCRA 135 [1979]), a no-strike clause in a CBA is
applicable only to economic strikes. Corollarily, if the strike is founded on an unfair
labor practice of the employer, a strike declared by the union cannot be considered a
violation of the no-strike clause.
An economic strike is defined as one which is to force wage or other concessions
from the employer which he is not required by law to grant (Consolidated Labor
Association of the Philippines vs. Marsman & Co., Inc., 11 SCRA 589 [1964]). In this
case, petitioners enumerated in their notice of strike the following grounds: violation of
the CBA or the Corporation's practice of subcontracting workers; discrimination;
coercion of employees; unreasonable suspension of union officials, and unreasonable
refusal to entertain grievance.
Private respondent contends that petitioner's clamor for the implementation of Section
2, Article VIII of the CBA on service allowances granted to workers who are assigned
outside the company premises is an economic issue (Rollo, p. 70). On the contrary,
petitioners decry the violation of the CBA, specifically the provision granting them
service allowances. Petitioners are not, therefore, already asking for an economic
benefit not already agreed upon, but are merely asking for the implementation of the
same. They aver that the Corporation's practice of hiring subcontractors to do jobs
outside of the company premises was a way "to dodge paying service allowance to
the workers" (Rollo, pp. 61 & 70).
Much more than an economic issue, the said practice of the Corporation was a
blatant violation of the CBA — and unfair labor practice on the part of the employer
under Article 248(i) of the Labor Code. Although the end result, should the
Corporation be required to observe the CBA, may be economic in nature because the
workers would then be given their regular working hours and therefore their just pay,
not one of the said grounds is an economic demand within the meaning of the law on
labor strikes. Professor Perfecto Fernandez, in his
book Law on Strikes, Picketing and Lockouts (1981 edition, pp. 144-145), states that
an economic strike involves issues relating to demands for higher wages, higher
pension or overtime rates, pensions, profit sharing, shorter working hours, fewer work
days for the same pay, elimination of night work, lower retirement age, more healthful
working conditions, better health services, better sanitation and more safety
appliances. The demands of the petitioners, being covered by the CBA, are definitely
within the power of the Corporation to grant and therefore the strike was not an
economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union officials
and unreasonable refusal to entertain grievance, had been ventilated before the
Labor Arbiter. They are clearly unfair labor practices as defined in Article 248 of the
Labor Code.2 The subsequent withdrawal of petitioners' complaint for unfair labor
practice (NLRC-NCR Case No. 00-11-04132-87) which was granted by Labor Arbiter
Ceferina Diosana who also considered the case closed and terminated (Rollo, pp. 97
& 109) may not, therefore, be considered as having converted their other grievance
into economic demands.
Moreover, petitioners staged the strike only after the Corporation had failed to abide
by the agreement forged between the parties upon the intervention of no less than the
DOLE after the union had complained of the Corporation's unabated subcontracting
of workers who performed the usual work of the regular workers. The Corporation's
insistence that the hiring of casual employees is a management prerogative betrays
its attempt to coat with legality the illicit curtailment of its employees' rights to work
under the terms of the contract of employment and to a fair implementation of the
CBA.
While it is true that an employer's exercise of management prerogatives, with or
without reason, does not per seconstitute unjust discrimination, such exercise, if
clearly shown to be in grave abuse of discretion, may be looked into by the courts
(National Federation of Labor Unions vs. NLRC, 202 SCRA 346 [1991]). Indeed, the
hiring, firing, transfer, demotion, and promotion of employees are traditionally
identified as management prerogatives. However, they are not absolute prerogatives.
They are subject to limitations found in law, a collective bargaining agreement, or
general principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190
SCRA 758 [1990] citing Abbott Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713
[1987]). The Corporation's assertion that it was exercising a management prerogative
in hiring outside workers being contrary to the contract of employment which, of
necessity, states the expected wages of the workers, as well as the CBA, is therefore
untenable.
Private respondent's failure to traverse petitioners' allegations that the NLRC abused
its discretion in holding that the provision on grievance procedure had not been
exhausted clearly sustains such allegation and upholds the petitioners' contention that
the Corporation refused to undergo said procedure. It should be remembered that a
grievance procedure is part of the continuous process of collective bargaining
(Republic Savings Bank. vs. CIR, et al., 21 SCRA 226 [1967]). It is intended to
promote a friendly dialogue between labor and management as a means of
maintaining industrial peace. The Corporation's refusal to heed petitioners' request to
undergo the grievance procedure clearly demonstrated its lack of intent to abide by
the terms of the CBA.
Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a
cursory reading of the letter aforequoted would reveal that no conditions had been set
by petitioners. It is incongruous to consider as a "condition" the statement therein that
the parties would continue talks for a peaceful working relationship ("tuloy tuloy ang
ating pag-uusap sa ikatitiwasay ng ating relasyon"). Conferences form part of the
grievance procedure and their mere mention in Abulencia's letter did not make the
same "conditional".
In the same manner, the following findings of the Labor Arbiter showed the illegal
breakup of the picket lines by the CAPCOM:
d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at the picket
line of respondents and searches were made on reported deadly weapons and
firearms in the possession of the strikers. Several bladed weapons and firearms in the
possession of the strikers were confiscated by the CAPCOM soldiers, as a result of
which, the apprehended strikers were brought to Camp Tomas Karingal in Quezon
City for proper investigation and filing of the appropriate criminal charges against
them. The strikers who were charged of illegal possession of deadly weapon and
firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato Abogado,
Lopito Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana. Criminal
informations were filed by Inquest Fiscal, marked as Exhibits "E", "E-1 to E-8". These
strikers were jailed for sometime until they were ordered release after putting up the
required bail bond. Other strikers were also arrested and brought to Camp Tomas
Karingal, and after proper investigation as to their involvement in the offense charged,
they were released for lack of prima facie evidence. They were Edwin Velarde,
Bayani Perez, Daniel Bacolon, Jesus Moises, Robert Aspurias and Benigno Barcena.
After the strikers who were arrested were brought to Camp Tomas Karingal on 28
July 1987, the rest of the strikers removed voluntarily their human and material
barricades which were placed and posted at the road leading to the premises of the
Company. (Rollo, p. 32)
The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported
outbreak of violence, was clearly in violation of the following prohibited activity under
Article 264 of the Labor Code:
(d) No public official or employee, including officers and personnel of the New Armed
Forces of the Philippines or the Integrated National Police, or armed person, shall
bring in, introduce or escort in any manner any individual who seeks to replace
strikers in entering or leaving the premises of a strike area, or work in place of the
strikers. The police force shall keep out of the picket lines unless actual violence or
other criminal acts occur therein; Provided, That nothing herein shall be interpreted to
prevent any public officer from taking any measure necessary to maintain peace and
order, protect life and property, and/or enforce the law and legal order. (Emphasis
supplied.)
As the Labor Arbiter himself found, no pervasive or widespread coercion or violence
were perpetrated by the petitioners as to warrant the presence of the CAPCOM
soldiers in the picket lines. In this regard, worth quoting is the following excerpt of the
decision in Shell Oil Workers' Union vs. Shell Company of the Philippines, Ltd., 39
SCRA 276 [1971], which was decided by the Court under the old Industrial Peace Act
but which excerpt still holds true:
. . . What is clearly within the law is the concerted activity of cessation of work in order
that . . . employer cease and desist from an unfair labor practice. That the law
recognizes as a right. There is though a disapproval of the utilization of force to attain
such an objective. For implicit in the very concept of the legal order is the
maintenance of peaceful ways. A strike otherwise valid, if violent in character, may be
placed beyond the pale. Care is to be taken, however, especially where an unfair
labor practice is involved, to avoid stamping it with illegality just because it is tainted
with such acts. To avoid rendering illusory the recognition of the right to strike,
responsibility in such a case should be individual and not collective. A different
conclusion would be called for, of course, if the existence of force while the strike
lasts is pervasive and widespread, consistently and deliberately resorted to as a
matter of policy. It could be reasonably concluded then that even if justified as to
ends, it becomes illegal because of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have
been called to offset what the strikers believed in good faith to be unfair labor
practices on the part of the employer (Ferrer, et al. vs. Court of Industrial Relations, et
al., 17 SCRA 352 [1966]). Verily, such presumption of legality prevails even if the
allegations of unfair labor practices are subsequently found out to be untrue (People's
Industrial and Commercial Employees and Workers Org. [FFW] vs. People's Industrial
and Commercial Corporation, 112 SCRA 440 [1982]). Consonant with these
jurisprudential pronouncements, is Article 263 of the Labor Code which clearly states
"the policy of the State to encourage free trade unionism and free collective
bargaining". Paragraph (b) of the same article guarantees the workers' "right to
engage in concerted activities for purposes of collective bargaining or for their mutual
benefit and protection" and recognizes the "right of legitimate labor organizations to
strike and picket and of employers to lockout" so long as these actions are "consistent
with the national interest" and the grounds therefor do not involve inter-union and
intra-union disputes.
The strike being legal, the NLRC gravely abused its discretion in terminating the
employment of the individual petitioners, who, by operation of law, are entitled to
reinstatement with three years backwages. Republic Act No. 6715 which amended
Art. 279 of the Labor Code by giving "full backwages inclusive of allowances" to
reinstated employees, took effect fifteen days from the publication of the law on
March 21, 1989. The decision of the Labor Arbiter having been promulgated on
March 16, 1988, the law is not applicable in this case. WHEREFORE, the questioned
decision and resolution of the NLRC as well as the decision of the Labor Arbiter are
hereby SET ASIDE and the individual petitioners are reinstated to their positions, with
three years backwages and without loss of seniority rights and other privileges.
Further, respondent corporation is ordered to desist from subcontracting work usually
performed by its regular workers. SO ORDERED.
G.R. No. 123782 September 16, 1997
CALTEX REFINERY EMPLOYEES ASSOCIATION (CREA), petitioner, vs. HON.
JOSE S. BRILLANTES, in his capacity as Acting Secretary of the Department of
Labor and Employment, and CALTEX (PHILIPPINES), Inc., respondents.
Unless shown to be clearly whimsical, capricious or arbitrary, the orders or
resolutions of the secretary of labor and employment resolving conflicts on what
should be the contents of a collective bargaining agreement will be respected by this
Court. We realize that, oftentimes, such orders and resolutions are based neither on
definitive shades of black or white, nor on what is legally right or wrong. Rather, they
are grounded largely on what is possible, fair and reasonable under the peculiar
circumstances of each case.
Statement of the Case
Petitioner Caltex Refinery Employees Association (CREA) seeks through Rule 65 of
the Rules of Court "reversal or modification" of three orders of public respondent, then
Acting Secretary of Labor and Employment Jose S. Brillantes, in Case No. OS-AJ-
0044-951 entitled "In re: Labor Dispute at Caltex (Phils.), Inc." The disposition of the
first assailed Order2 of public respondent dated October 9, 1995 reads:3
WHEREFORE, ON THE BASIS OF THE FOREGOING, the Caltex Refinery
Employees Association and Caltex Philippines, Inc. are hereby directed to
execute a new collective bargaining agreement embodying therein the
appropriate dispositions above spelled out including those subject of previous
agreements.
Provisions in the old CBA, or existing benefits subject of Company policy or
practice not otherwise modified or improved herein are deemed maintained.
New demands not otherwise touched upon or disposed of are hereby denied.
The motions for reconsideration and clarification of the above Order filed by both
petitioner and private respondent were denied in the second assailed Order dated
November 21, 1995, which disposed:4
WHEREFORE, except the modifications hereinabove set forth, the Order dated 9
October 1995 is hereby affirmed.
Moreover, pursuant to the Agreement reached by the parties on 13 September
1995 for this Office to commence the proceedings concerning the legality of
strike and the termination of the union officers, after the resolution of the CBA
issues, both parties are hereby directed to submit their position papers and
evidence within ten (10) days from receipt of a copy of this Order. For this
purpose, Atty. Tito F. Genilo is hereby designated as Hearing Officer and
authorized as such, to immediately conduct hearings and receive evidence and,
thereafter, submit his report and recommendations thereon.
Petitioner's second motion for reconsideration of the above Order was likewise denied
by the third assailed Order dated January 9, 1996, as follows:5
WHEREFORE, PREMISES CONSIDERED, our Order of 21 November 1995 is
hereby affirmed en toto, subject to the afore-mentioned clarification on the issue
of Sunday work.
No further motions of this nature shall be entertained by this Office.
The parties are given another ten (10) days from receipt hereof to submit their
respective position papers and evidences (sic) relative to the issue of the legality
of strike and termination of the union officers.
The Facts
Anticipating the expiration of their Collective Bargaining Agreement on July 31, 1995,
petitioner and private respondent negotiated the terms and conditions of employment
to be contained in a new CBA. The negotiation between the two parties was
participated in by the National Conciliation and Mediation Board (NCMB) and the
Office of the Secretary of Labor and Employment. Some items in the new CBA were
amicably arrived at and agreed upon, but others were unresolved.
To settle the unresolved issues, eight meetings between the parties were conducted.
Because the parties failed to reach any significant progress in these meetings,
petitioner declared a deadlock. On July 24, 1995, petitioner filed a notice of strike. Six
(6) conciliation meetings conducted by the NCMB failed to settle the parties'
differences. Then, the parties held marathon meetings at the plant level, but this
remedy proved also unavailing.
During a strike vote on August 16, 1995, the members of petitioner opted for a
walkout. Private respondent then filed with the Department of Labor and Employment
(DOLE) a petition for assumption of jurisdiction in accordance with Article 263 (g) of
the Labor Code.
In an Order dated August 22, 1995, public respondent assumed jurisdiction "over the
entire labor dispute at Caltex (Philippines) Inc.," with the following disposition: 6
WHEREFORE ABOVE PREMISES CONSIDERED, this Office hereby assumes
jurisdiction over the entire labor dispute at Caltex (Philippines) Inc. pursuant to
Article 263 (g) of the Labor Code, as amended.
Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined.
 The parties are further directed to cease and desist from committing any and all
acts which might exacerbate the situation.
To expedite the resolution of the instant dispute, the parties are further directed
to submit their respective position papers and evidence within ten (10) days from
receipt hereof.
In defiance of the above Order expressly restraining any strike or lockout, petitioner
began a strike and set up a picket in the premises of private respondent on August
25, 1995. Thereafter, several company notices directing the striking employees to
return to work were issued, but the members of petitioner defied them and continued
their mass action.
In the course of the strike, DOLE Undersecretary Bienvenido Laguesma interceded
and conducted several conciliation meetings between the contending parties. He was
able to convince the members of the union to return to work and to enter into a
memorandum of agreement with private respondent. On September 9, 1995, the
picket lines were finally lifted. Thereafter, the contending parties filed their position
papers pertaining to unresolved issues.7
Because of the strike, private respondent terminated the employment of some officers
of petitioner union. The legality of these dismissals brought additional contentious
issues.8
Again, the parties tried to resolve their differences through conciliation. Failing to
come to any substantial agreement, the parties stopped further negotiation and, on
September 13, 1995, decided to refer the problem to the secretary of labor and
employment:9
It appearing that the possibility of an amicable settlement appears remote, the
parties agreed to submit their respective position paper and evidence
simultaneously on 27 September 1995 at the Office of the Secretary. The parties
further agreed that there will be no extension of time for filing and no further
pleading will be filed.
The decision of the Secretary of Labor and Employment will be rendered on or
before October 9, 1995.
The proceedings concerning the legal issues involving the legality of strike and
the termination of the Union officers will be commenced by the Office of the
Secretary after the resolution of the CBA issues.
As already stated, public respondent issued as scheduled on October 9, 1995 the
assailed Order resolving the deadlock, followed by two more assailed Orders on
November 21, 1995 and January 16, 1996 disposing of the motions for
reconsideration/clarification of both parties. Dissatisfied with these Orders issued by
public respondent, petitioner sought remedy from this Court.
After realizing the urgency of the case and after meticulously reviewing
the Petition dated February 23, 1996; Comment by the private respondent dated April
16, 1996 which was adopted as its own by the public respondent; Reply by the
petitioner dated September 7, 1996; Rejoinder dated October 3, 1996 and Sur-
Rejoinder dated November 12, 1996, the Court resolved to give due course to the
petition and to consider the case submitted for resolution without requiring
memoranda from the parties.
The Issues
Petitioner does not specifically pinpoint the issues it wants the Court to rule upon. It
appears, however, that petitioner questions public respondent's resolution of five
issues in the CBA, specifically on wage increase, union security clause, retirement
benefits or application of the new retirement plan, signing bonus and grievance and
arbitration machineries.
10
Private respondent, on the other hand, submits this lone issue:
Whether or not the Honorable Secretary of Labor and Employment committed
grave abuse of discretion in resolving the instant labor dispute.
The Court's Ruling
The petition is partly meritorious.
Preliminary Matter: Certiorari in Labor Cases
At the outset, we must reiterate several settled rules in a petition for certiorari
involving labor cases.
First, the factual findings of quasi-judicial agencies (such as the Department of Labor
and Employment), when supported by substantial evidence, are binding on this Court
and entitled to great respect, considering the expertise of these agencies in their
respective fields. 11 It is well-established that findings of these administrative agencies
are generally accorded not only respect but even finality. 12
Second, substantial evidence in labor cases is such amount of relevant evidence
which a reasonable mind will accept as adequate to justify a conclusion. 13
Third, in Flores vs. National Labor Relations Commission 14 we explained the role and
function of Rule 65 as an extraordinary remedy:
It should be noted, in the first place, that the instant petition is a special civil
action for certiorari under Rule 65 of the Revised Rules of Court. An
extraordinary remedy, its use is available only and restrictively in truly
exceptional cases — those wherein the action of an inferior court, board or officer
 performing judicial or quasi-judicial acts is challenged for being wholly void on
grounds of jurisdiction. The sole office of the writ of certiorari is the correction of
errors of jurisdiction including the commission of grave abuse of discretion
amounting to lack or excess of jurisdiction. It does not include correction of public
respondent NLRC's evaluation of the evidence and factual findings based
thereon, which are generally accorded not only great respect but even finality.
No question of jurisdiction whatsoever is being raised and/or pleaded in the case
at bench. Instead, what is being sought is a judicial re-evaluation of the adequacy
or inadequacy of the evidence on record, which is certainly beyond the province
of the extraordinary writ of certiorari. Such demand is impermissible for it would
involve this Court in determining what evidence is entitled to belief and the weight
to be assigned it. As we have reiterated countless times, judicial review by this
Court in labor cases does not go so far as to evaluate the sufficiency of the
evidence upon which the proper labor officer or office based his or its
determination but is limited only to issues of jurisdiction or grave abuse of
discretion amounting to lack of jurisdiction.
We shall thus use the foregoing time-tested standards in deciding this petition.
1. Wage Increase
The main assailed Order dated October 9, 1995 resolved the ticklish demand for
wage increase as follows: 15
With this in mind and taking into view similar factors as financial capacity,
position in the industry, package of existing benefits, inflation rate, seniority, and
maintenance of the wage differentiation between and among the various classes
of employees within the entire Company, this Office hereby finds the following
improved benefits fair, reasonable and equitable:
1. Wage increases
Effective August 1, 1995 — 14%
Effective August 1, 1996 — 14%
Effective August 1, 1997 — 13%
2. meal subsidy — P 15.00
In denying the motions for reconsideration/clarification of the above award, public
respondent ruled in the challenged Order dated November 21, 1995: 16
First, on the matter of wages, we find no compelling reasons to alter or modify
our award after having sufficiently passed upon the same arguments raised by
both parties in our previous Order. The subsequent agreement on a package of
wage increases at Shell Company, adverted to by the Union as the usual
yardstick for purposes of developing its own package of improved wage
increases, would not be sufficient basis to grant the same increases to the Union
members herein considering that other factors, among which is employment size,
were carefully taken into account. While it is true that inflation has direct impact
on wage increases, it is not quite accurate to state that inflation "as of September
1995" is already registered at 11.8%. The truth of the matter is that the average
inflation for the first ten (10) months was only 7.496% and Central Bank
projections indicate that it will take a 13.5% inflation for November and December
to record an average inflation of 8.5% for the year. We, therefore, maintain the
reasonableness of the package of wage increases that we awarded.
Petitioner belittles the awarded increases. It insists that the increase should be ruled
on the basis of four factors: "(a) the economic needs of the [u]nion's members; (b) the
[c]ompany's financial capacity; (c) the bargaining history between the [u]nion and the
[c]ompany; and (d) the traditional parity in wages between Caltex and Shell Refinery
Employees." 17
Petitioner contends that the "inflation rate rose to 11.8% in September [1995], rose
further in October, and is still a double-digit figure at the time of this writing."
Therefore, public respondent's so-called "improved benefits" are in reality
"retrogressive." 18
Petitioner tries to show private respondent's "immense financial capacity" by citing
Caltex's "Banaba Housing Up-grading" which would cost "not less than
P200,000,000.00" 19 Petitioner does "not begrudge" private respondent's "pampering
of its [r]efinery [m]anagers and supervisors," but asks that the rank and file employees
be "not left too far behind." 20
Petitioner maintains that the salaries of Shell Refinery employees be used as a
"reference point" in upgrading the compensation of private respondent's employees
because these two companies are in the "same industry and their refineries are both
in Batangas." Thus, the wage increase of petitioner's members should be
"15%/15%/15%." 21
Private respondent counters with a "proposed 9% 7% 7% increase for the same
period with automatic adjustment should the increase fall short of the inflation rate."
Hence, the Secretary's award of "14% 14% 13%" increase really comes "closer to the
Union's position." 22
Petitioner's arguments fail to impress us. First, the matter of inflation rate was clearly
addressed in public respondent's Order dated November 21, 1995. Contrary to
petitioners undocumented claim of 11.8% inflation in September of 1995, the "truth of
the matter is that the average inflation for the first ten (10) months was only 7.496%,
and Central Bank projections indicate that it will take a 13.5% inflation for November
and December to record an average inflation of 8.5% for the year." 23 Second, private
respondent's financial capacity has been insufficiently explained in its Comment dated
April 16, 1996 in which it stated that the Banaba "upgrading" should not be construed
as a yardstick of its financial standing: 24
 It is equally amazing how the Union (petitioner) desperately justifies their
demands by comparing the "upgrading cost" of the Company's (private
respondent) Banaba Housing Facilities, a matter totally unrelated to the
case, to the cost of their demands. The Union not only errs in its choice of
yardstick of the Company's capacity to pay, it likewise displays its ignorance
of the Banaba Housing Program .
The Banaba Housing Facility is not a benefit. It is an integral part of an
indispensable requirement for smooth Plant operations and assurance of an
emergency response crew in times of calamities and accidents. Employees
who are required to stay in the housing facility are members of the Refinery's
emergency response organization. It is also not a case of "upgrading." The
Banaba Housing Facility was built in 1954. A significant number of its
structure are dilapidated and in dire need of rehabilitation and preservation.
Finally, Banaba is not a yardstick of the Company's capacity to pay, but
rather, an eloquent demonstration of the Company's will to survive and
remain globally competitive.
The above reasoning convinces us that such upgrading should not be equated
with private respondent's financial capacity to pay the proposed wage increase,
but should be evaluated as a business judgment "to survive and remain globally
competitive." We believe that the standard proof of a company's financial
standing is its financial statements duly audited by independent and credible
external auditors. 25 Third, the traditional parity in wages used by petitioner to
justify its proposal is flimsy and trivial. Aside from its bare allegation of "similarity"
in salaries and locations, petitioner did not proffer any substantial reason to
impute grave abuse of discretion on the part of the public respondent. On the
other hand, we find private respondent's discussion of this matter reasonable, as
the following shows: 26
It is further amazing that the Union continues to use an outmoded concept of
the "Shell yardstick" and "relative parities in wages" to justify an imperative
need for them to keep their traditional edge in pay over their industry
counterparts. It is not just a matter of being above the rest. Sound
compensation principle of higher productivity equals higher pay, as well as,
recent developments in the industry have negated this argument. Both Shell
and Petron continue to benefit from increasing manpower productivity. Shell,
for instance, produces 155,000 barrels per day on a 120 manpower
complement of operatives and rank and file; while the Company only
produces 65,000 barrels per day with its 221 manpower complement. In
addition, the counterpart union at Shell incurs an average overtime rate of
37%, as a percentage of base pay; the Union's overtime rate is 102%.
Thus, the issue is productivity, not sales, and so far, the Company's Refinery
is not as productive as Shell's or Petron's. To ask for relative parity in the
face of this reality is not only unreasonable, it is likewise illogical.
As it is, the wage increase of 14%, 14% and 13% will result in an average
basic salary of P23,510,00 at the end of the three-year cycle. The resulting
pay is excessive and disproportionately high compared with the value of the
jobs within the bargaining unit. Stated differently, this average salary will be
unreasonably high for the skills and qualifications needed for the job.
Even now, with an average monthly salary (prior to the DOLE awarded CBA
increases) of P16,010 plusovertime, holiday and other premiums way above
those mandated by law, the Union members are already the highest paid in
the Philippines, in terms of gross income.
The alleged "similarity" in the situation of Caltex and Shell cannot be considered a
valid ground for a demand of wage increase, in the absence of a showing that the two
companies are also similar in "substantial aspects," as discussed above. Private
respondent is merely asking that an employee should be paid on the basis of work
done. If such employee is absent on a certain day, he should not, as a rule, be paid
wages for that day. And if the employee has worked only for a portion of a day, he is
not entitled to the pay corresponding to a full day. A contrary precept would ultimately
result in the financial ruin of the employer. The age-old general rule governing
relations between labor and capital, or management and employee, is "a fair day's
wage for a fair day's work." If no work is performed by the employee, there can be no
wage or pay unless, of course, the laborer was ready, willing and able to work but
was locked out, dismissed, suspended or otherwise illegally prevented from
working. 27 True, union members have the right to demand wage increases through
their collective force; but it is equally cogent that they should also be able to justify an
appreciable increase in wages. We observe that private respondent's detailed
allegations on productivity are unrebutted. It is noteworthy that petitioner ignored this
argument of private respondent and based its demand for wage increase not on the
ground that they were as productive as the Shell employees. Thus, we cannot
attribute grave abuse of discretion to public respondent.
2. Union Security Clause
In the impugned Order dated October 9, 1995, public respondent's contested
resolution on the "union [security] clause" reads: 28
The relevant provisions found in Article III of the CBA, which hereby read, thus:
Sec. 1. Employees of the COMPANY who at the signing of this Agreement are
members of the UNION and those who subsequently become members thereof
shall maintain their membership with the UNION for the duration of this
Agreement as a condition of employment.
Sec. 2. Members of the UNION who cease to be members of the UNION in good
standing by reason of resignation or expulsion shall not be retained in the
employment of the COMPANY.
 xxx xxx xxx
are sought to be amended by the Union, to read as follows:
Sec. 1. Employees of the Company who at the signing of this Agreement are
members of the Union and those who subsequently become members thereof
shall maintain their membership in GOOD STANDING with the Union for the
duration of this Agreement as a condition of CONTINUOUS employment.
Sec. 2. PURSUANT TO THE FOREGOING, ANY UNION MEMBER WHO
CEASES TO BE SUCH MEMBER ON GROUNDS PROVIDED IN ITS
CONSTITUTION AND BY-LAWS SHALL, UPON PRIOR WRITTEN NOTICE BY
THE UNION TO THE COMPANY, BUT SUBJECT TO THE OBSERVANCE OF
DUE PROCESS AND THE EXPRESS RATIFICATION OF THE MAJORITY OF
THE UNION MEMBERSHIP, BE DISMISSED FROM EMPLOYMENT BY THE
COMPANY; PROVIDED, HOWEVER, THAT THE UNION SHALL HOLD THE
COMPANY FREE AND BLAMELESS FROM ANY LIABILITY IN THE EVENT
THAT THE EMPLOYEE IN ANY MANNER QUESTIONS HIS DISMISSAL.
The proposed amendment of the Union gives the same substantial effect as the
existing provision. Rather, the same tackles more on procedure which, to our
belief, is already sufficiently provided under its constitution and by-laws. Insofar
as Union security is concerned, this is sufficiently addressed by the present
provisions in the CBA. Hence, we find we are not competent to arbitrarily
incorporate any modification thereof. We are convinced that any amendment on
this matter should be a product of mutual concern and agreement. 29
Petitioner contends that the foregoing disposition leaving to the parties the decision
on the union security clause issue is "contrary to the whole idea of assumption of
jurisdiction." Petitioner argues that in spite of the provisions on the "union security
clause," it may expel a member only on any of three grounds: non-payment of dues,
subversion, or conviction for a crime involving moral turpitude. If the employee's act
does not constitute any of these three grounds, the member would continue to be
employed by private respondent. Thus, the disagreement between petitioner and
private respondent on this issue is not only "procedural" but also "substantial." 30
On the other hand, private respondent argues that nothing prevents petitioner from
expelling its members; however, termination of employment should be based only on
these three grounds agreed upon in the existing CBA. Further, private respondent
explains that petitioner's citation of Article 249 (a) 31 of the Labor Code is out of
context. It adds that the cited section provides only for the right of a union to prescribe
its own rules with respect to the acquisition and retention of membership, and that
upholding the arguments of petitioner would make the private respondent a
policeman of the union. 32
We agree with petitioner. The disagreement between petitioner and private
respondent on the union security clause should have been definitively resolved by
public respondent. The labor secretary should take cognizance of an issue which is
not merely incidental to but essentially involved in the labor dispute itself, or which is
otherwise submitted to him for resolution. 33 In this case, the parties have submitted
the issue of the union security clause for public respondent's disposition. But the
secretary of labor has given no valid reason for avoiding the said issue; he merely
points out that this issue is a procedural matter. Such vacillation clearly sidesteps the
nature of the union security clause as one intended to strengthen the contracting
union and to protect it from the fickleness or perfidy of its own members. Without such
safeguard, group solidarity becomes uncertain; the union becomes gradually
weakened and increasingly vulnerable to company machinations. In this security
clause lies the strength of the union during the enforcement of the collective
bargaining agreement. It is this clause that provides labor with substantial power in
collective bargaining. The secretary of labor assumed jurisdiction over this labor
dispute in an industry indispensable to national interest, precisely to settle once and
for all the disputes over which he has jurisdiction at his level. In not performing his
duty, the secretary of labor committed a grave abuse of discretion.
3. New Retirement Plan
Public respondent's contested resolution on "retirement benefits (application of the
new retirement plan)" in the Order dated November 21, 1995 reads: 34
Third, the matter of retirement benefits deserves a second look considering that
the concerned employees were already previously granted the option to choose
between the old and the new plan at the time the latter was initiated and they
chose to be covered under the Old Plan. To accede to the Union's demand to
cover them under the new plan entails a different arrangement under a new
scheme and likewise requires the approval of a Board of Trustees. It is,
therefore, understood that the new Retirement Plan does not apply to the more
or less 40 employees being sought by the Union to be covered under the New
Plan.
Petitioner contends that "40 of its members who are still covered by the Old
Retirement Plan because they were not able to exercise the option to shift to the New
Retirement Plan, for one reason or another, when such option was given in the past"
are included in the New Retirement Plan. Petitioner argues that the exclusion of forty
employees from the New Plan constitutes grave abuse of discretion for three
reasons. First, "it is a case of the left hand taking away, so to speak, what the right
hand had given." Second, the change "was done for a very shallow reason." The new
scheme was no longer new, "as the New Retirement Plan had been in place for at
least two years." Third, in not applying the New Retirement Plan to the 40 employees,
public respondent was perpetrating his department's discriminatory practice. 35
Private respondent counters that "these 40 or so employees have opted to remain
covered by the old plan despite opportunities given them in 1985 to shift to the New
Plan." 36
We hold that public respondent did not commit grave abuse of discretion in respecting
the free and voluntary decision of the employees in regard to the Provident Plan and
the irrevocable one-time option provided for in the New Retirement Plan. Although the
union has every right to represent its members in the negotiation regarding the terms
and conditions of their employment, it cannot negate their wishes on matters which
are purely personal and individual to them. In this case, the forty employees freely
opted to be covered by the Old Plan; their decision should be respected. The
company gave them every opportunity to choose, and they voluntarily exercised their
choice. The union cannot pretend to know better; it cannot impose its will on them.
4. Grievance Machinery and Arbitration
The public respondent's contested resolution on "grievance and arbitration
machineries" in the Order dated November 21, 1995 reads: 37
Seventh, we are constrained to take a closer look at the existing procedure
concerning grievance in relation to the modifications being proposed by the
Union. In this regard, we affirm our resolution to shorten the periods to
process/resolve grievances based on existing practice from (45) days to (30)
days at the first step and (10) days to seven (7) days at the second step which is
the level of the VP for Manufacturing. We further reviewed the steps through
which a grievance may be processed and in line with the principle to expedite the
early resolution of grievances, we find that the establishment of a joint Council as
an additional step in the grievance procedure, may only serve to protract the
proceeding and, therefore, no longer necessary. Instead, the unresolved
grievance, if, not settled within (7) days at the level of the VP for Manufacturing,
shall automatically be referred by both parties to voluntary arbitration in
accordance with R.A. 6715. As to the number of Arbitrators for which the Union
proposes to employ only one instead of a panel of three Arbitrators, we find it
best to leave the matter to the agreement of both parties. Finally, we hereby
advise the parties that the list of accredited voluntary arbitrators is now being
maintained and disseminated by the National Conciliation and Mediation Board
and no longer by the Bureau of Labor Relations.
Petitioner contends that public respondent "derailed the grievance and arbitration
scheme proposed by the Union." 38 Petitioner argues that the proposed "Grievance
Settlement Council" is intended to "supplement the effort of the Vice President for
Manufacturing in reviewing the grievance elevated to him, so that instead of acting
alone . . . he will be obliged to convoke a conference of the Council to afford the
grievant a thorough hearing." Petitioner's recommendation for a "single arbitrator is
based on the proposition that if voluntary arbitration should be resorted to at all, this
recourse should entail the least possible expense." 39
Private respondent counters that the disposition on the grievance machinery is
likewise "fair and reasonable under the circumstances and in fact was merely a
reiteration of the (u)nion's position during the conciliation meetings conducted by
Undersecretary Bienvenido Laguesma." 40
No particular setup for a grievance machinery is mandated by law. Rather, Article 260
of the Labor Code, as incorporated by RA 6715, provides for only a single grievance
machinery in the company to settle problems arising from "interpretation or
implementation of their collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies." Article 260, as
amended, reads:
Art. 260. Grievance Machinery and Voluntary Arbitration. The parties to a
Collective Bargaining Agreement shall include therein provisions that will ensure
the mutual observance of its terms and conditions. They shall establish a
machinery for the adjustment and resolution of grievances arising from the
interpretation or implementation of their Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel
policies.
All grievances submitted to the grievance machinery which are not settled within
seven (7) calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the Collective Bargaining
Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and
designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or
include in the agreement a procedure for the selection of such Voluntary
Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified
Voluntary Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection procedure agreed upon in the Collective
Bargaining Agreement, which shall act with same force and effect as if the
Arbitrator or panel of Arbitrators has been selected by the parties as described
above.
We believe that the procedure described by public respondent sufficiently complies
with the minimum requirement of the law. Public respondent even provided for two
steps in hearing grievances prior to their referral to arbitration. The parties will decide
on the number of arbitrators who may hear a dispute only when the need for it arises.
Even the law itself does not specify the number of arbitrators. Their alternatives —
whether to have one or three arbitrators — have their respective advantages and
disadvantages. In this matter, cost is not the only consideration; full deliberation on
the issues is another, and it is best accomplished in a hearing conducted by three
arbitrators. In effect, the parties are afforded the latitude to decide for themselves the
composition of the grievance machinery as they find appropriate to a particular
situation. At bottom, we cannot really impute grave abuse of discretion to public
respondent on this issue.
5. Signing Bonus
The public respondent's contested resolution on the "signing bonus" in the Order
dated November 21, 1995 reads: 41
 Fifth, specifically on the issue of whether the signing bonus is covered under the
"maintenance of existing benefits" clause, we find that a clarification is indeed
imperative. Despite the expressed provision for a signing bonus in the previous
CBA, we uphold the principle that the award for a signing bonus should partake
the nature of an incentive and premium for peaceful negotiations and amicable
resolution of disputes which apparently are not present in the instant case. Thus,
we are constrained to rule that the award of signing bonus is not covered by the
"maintenance of existing benefits" clause.
Petitioner asseverates that the "signing bonus is an existing benefit embodied in the
old CBA." 42 It explains that public respondent erred in removing the award of a
signing bonus which is "given not only as an incentive for peaceful negotiations and
amicable settlement of disputes but also as an extra award to the workers following
the settlement of a CBA dispute by whatever means." 43
Private respondent disagrees, contending that a signing bonus is not awarded when
CBA negotiations "result in a strike." There are two reasons therefor: First, "the grant
of a signing bonus is a matter of discretion and cannot be demanded as a matter of
right;" and second the signing bonus is meant as an incentive for a peaceful
negotiation. Once these negotiations result in a strike, an illegal one at that, the basis
or rationale for such an award is lost." 44
Although proposed by petitioner, 45 the signing bonus was not accepted by private
respondent. 46 Besides, a signing bonus is not a benefit which may be demanded
under the law. Rather, it is now claimed by petitioner under the principle of
"maintenance of existing benefits" of the old CBA. However, as clearly explained by
private respondent, a signing bonus may not be demanded as a matter of right. If it is
not agreed upon by the parties or unilaterally offered as an additional incentive by
private respondent, the condition for awarding it must be duly satisfied. In the present
case, the condition sine qua non for its grant — a non-strike — was not complied
with. In fact, private respondent categorically sated in its counter-proposal — to the
exclusion of those agreed upon before — that the new collective bargaining
agreement would constitute the only agreement between the parties, as follows:
Sec. 4. Scope of Agreement. — The terms and conditions of employment of the
employees within the appropriate bargaining unit are embodied in this
Agreement. On the other hand, all such benefits which are not expressly
provided for in this Agreement, but which are now being accorded, may in the
future be accorded, or might have been previously accorded to employees, by
the COMPANY shall be deemed as purely discretionary or pure acts of grace
and magnanimity on the part of the COMPANY in each particular case, and the
continuance or repetition thereof now or in the future, no matter how long or how
often, shall not be construed as establishing a right for the employee and/or
obligation on the part of the COMPANY. 47
This provision on the scope of the agreement is further buttressed by the clause on
waiver: 48
The parties acknowledge that during the negotiations which resulted in the
execution of this Agreement, each of them had the unlimited opportunity to make
demands and proposals with respect to any and all subjects and matters proper
for collective bargaining and not prohibited by law; and the parties further
acknowledge that the understandings and agreements arrived at by them after
the exercise of that right and unlimited opportunity are fully set forth in this
Agreement. Therefore, the COMPANY and the UNION during the life of this
Agreement, each voluntarily and unqualifiedly waives the right and each agrees
that the other shall not be obligated to bargain collectively with respect to any
subject or matter referred to or covered in this Agreement or with respect to any
subject or matter not specifically referred to or covered in this Agreement even
though such subject or matter may not have been within the knowledge or
contemplation of either or both parties at the time they negotiated or signed this
Agreement.
Epilogue
We have carefully reviewed the assailed Orders. Other than his failure to rule on the
issue of union security, the secretary of labor cannot be indicted for grave abuse of
discretion amounting to want or excess of jurisdiction.
Basically, there is grave abuse of discretion amounting to lack of jurisdiction
where the respondent board, tribunal or officer exercising judicial functions
exercised its judgment in a capricious, whimsical, arbitrary or despotic manner.
However, it has also been said that grave abuse is committed when "the lower
court acted capriciously, and whimsically or the petitioner's contention appears td
be clearly tenable or the broader interest of justice or public policy [so] require . .
. ." Also, grave abuse of discretion is committed when the board, tribunal or
officer exercising judicial function fails to consider evidence adduced by the
parties. 49
In Saballa vs. National Labor Relations Commission, 50 we ruled on how a decision of
an administrative body must be drawn:
The Court has previously held that judges and arbiters should draw up their
decisions and resolutions with due care, and make certain that
they truly and accurately reflect their conclusions and their final dispositions. . . .
The same thing goes for the findings of fact made by the NLRC, as it is a settled
rule that such findings are entitled to great respect and even finality when
supported by substantial evidence, otherwise, they shall be struck down for being
whimsical and capricious and arrived at with grave abuse of discretion. It is a
requirement of due process and fair play that the parties to a litigation be
informed of how it was decided, with an explanation of the factual and legal
reasons that led to the conclusions of the court. A decision that does not clearly
and distinctly state the facts and the law of which it is based leaves the parties in
the dark as to how it was reached and is especially prejudicial to the losing party,
who is unable to pinpoint the possible errors of the court for review by a higher
tribunal.
In the present case, the foregoing requirement has been sufficiently met. Petitioner's
claim of grave abuse of discretion is anchored on the simple fact that public
respondent adopted largely the proposals of private respondent. It should be
understood that bargaining is not equivalent to an adversarial litigation where rights
and obligations are delineated and remedies applied. It is simply a process of finding
a reasonable solution to a conflict and harmonizing opposite positions into a fair and
reasonable compromise. When parties agree to submit unresolved issues to the
secretary of labor for his resolution, they should not expect their positions to be
adopted in toto. It is understood that they defer to his wisdom and objectivity in
insuring industrial peace. And unless they can clearly demonstrate bias, arbitrariness,
capriciousness or personal hostility on the part of such public officer, the Court will not
interfere or substitute the said officer's judgment with its own. In this case, it is
possible that this Court, or some its members at least, may even agree with the
wisdom of petitioner's claims. But unless grave abuse of discretion is cogently shown,
this Court will refrain from using its extraordinary power of certiorari to strike down
decisions and orders of quasi-judicial officers specially tasked by law to settle
administrative questions and disputes. This is particularly true in the resolution of
controversies in collective bargaining agreements where the question is rarely one of
legal right or wrong — nay, of black and white — but one of wisdom, cogency and
compromise as to what is possible, fair and reasonable under the circumstances.

WHEREFORE, premises considered, the petition is partly GRANTED. The assailed

Orders are AFFIRMED with the modification that the issue on the union security
clause be REMANDED to the Department of Labor and Employment for definite
resolution within one month from the finality of this Decision. No costs.

SO ORDERED.
G.R. No. L-54334 January 22, 1986
KIOK LOY, doing business under the name and style SWEDEN ICE CREAM
PLANT, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC)
and PAMBANSANG KILUSAN NG PAGGAWA (KILUSAN), respondents.
Petition for certiorari to annul the decision 1 of the National Labor Relations
Commission (NLRC) dated July 20, 1979 which found petitioner Sweden Ice Cream
guilty of unfair labor practice for unjustified refusal to bargain, in violation of par. (g) of
Article 2492 of the New Labor Code, 3 and declared the draft proposal of the Union for
a collective bargaining agreement as the governing collective bargaining agreement
between the employees and the management.
The pertinent background facts are as follows:
In a certification election held on October 3, 1978, the Pambansang Kilusang
Paggawa (Union for short), a legitimate late labor federation, won and was
subsequently certified in a resolution dated November 29, 1978 by the Bureau of
Labor Relations as the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant (Company for short). The Company's motion
for reconsideration of the said resolution was denied on January 25, 1978.
Thereafter, and more specifically on December 7, 1978, the Union furnished 4 the
Company with two copies of its proposed collective bargaining agreement. At the
same time, it requested the Company for its counter proposals. Eliciting no response
to the aforesaid request, the Union again wrote the Company reiterating its request
for collective bargaining negotiations and for the Company to furnish them with its
counter proposals. Both requests were ignored and remained unacted upon by the
Company.
Left with no other alternative in its attempt to bring the Company to the bargaining
table, the Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of
Labor Relations (BLR) on ground of unresolved economic issues in collective
bargaining. 5
Conciliation proceedings then followed during the thirty-day statutory cooling-off
period. But all attempts towards an amicable settlement failed, prompting the Bureau
of Labor Relations to certify the case to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Presidential Decree No. 823, as
amended. The labor arbiter, Andres Fidelino, to whom the case was assigned, set the
initial hearing for April 29, 1979. For failure however, of the parties to submit their
respective position papers as required, the said hearing was cancelled and reset to
another date. Meanwhile, the Union submitted its position paper. The Company did
not, and instead requested for a resetting which was granted. The Company was
directed anew to submit its financial statements for the years 1976, 1977, and 1978.
The case was further reset to May 11, 1979 due to the withdrawal of the Company's
counsel of record, Atty. Rodolfo dela Cruz. On May 24, 1978, Atty. Fortunato
Panganiban formally entered his appearance as counsel for the Company only to
request for another postponement allegedly for the purpose of acquainting himself
with the case. Meanwhile, the Company submitted its position paper on May 28,
1979.
When the case was called for hearing on June 4, 1979 as scheduled, the Company's
representative, Mr. Ching, who was supposed to be examined, failed to appear. Atty.
Panganiban then requested for another postponement which the labor arbiter denied.
He also ruled that the Company has waived its right to present further evidence and,
therefore, considered the case submitted for resolution.
On July 18, 1979, labor arbiter Andres Fidelino submitted its report to the National
Labor Relations Commission. On July 20, 1979, the National Labor Relations
Commission rendered its decision, the dispositive portion of which reads as follows:
WHEREFORE, the respondent Sweden Ice Cream is hereby declared guilty of
unjustified refusal to bargain, in violation of Section (g) Article 248 (now Article
249), of P.D. 442, as amended. Further, the draft proposal for a collective
bargaining agreement (Exh. "E ") hereto attached and made an integral part of
this decision, sent by the Union (Private respondent) to the respondent (petitioner
herein) and which is hereby found to be reasonable under the premises, is
hereby declared to be the collective agreement which should govern the
relationship between the parties herein.
SO ORDERED. (Emphasis supplied)
Petitioner now comes before Us assailing the aforesaid decision contending that the
National Labor Relations Commission acted without or in excess of its jurisdiction or
with grave abuse of discretion amounting to lack of jurisdiction in rendering the
challenged decision. On August 4, 1980, this Court dismissed the petition for lack of
merit. Upon motion of the petitioner, however, the Resolution of dismissal was
reconsidered and the petition was given due course in a Resolution dated April 1,
1981.
Petitioner Company now maintains that its right to procedural due process has been
violated when it was precluded from presenting further evidence in support of its
stand and when its request for further postponement was denied. Petitioner further
contends that the National Labor Relations Commission's finding of unfair labor
practice for refusal to bargain is not supported by law and the evidence considering
that it was only on May 24, 1979 when the Union furnished them with a copy of the
proposed Collective Bargaining Agreement and it was only then that they came to
know of the Union's demands; and finally, that the Collective Bargaining Agreement
approved and adopted by the National Labor Relations Commission is unreasonable
and lacks legal basis.
The petition lacks merit. Consequently, its dismissal is in order.
Collective bargaining which is defined as negotiations towards a collective
agreement,6 is one of the democratic frameworks under the New Labor Code,
designed to stabilize the relation between labor and management and to create a
climate of sound and stable industrial peace. It is a mutual responsibility of the
employer and the Union and is characterized as a legal obligation. So much so that
Article 249, par. (g) of the Labor Code makes it an unfair labor practice for an
employer to refuse "to meet and convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect to wages, hours of work, and all
other terms and conditions of employment including proposals for adjusting any
grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the employer, however, is not
under any legal duty to initiate contract negotiation.7 The mechanics of collective
bargaining is set in motion only when the following jurisdictional preconditions are
present, namely, (1) possession of the status of majority representation of the
employees' representative in accordance with any of the means of selection or
designation provided for by the Labor Code; (2) proof of majority representation; and
(3) a demand to bargain under Article 251, par. (a) of the New Labor Code . ... all of
which preconditions are undisputedly present in the instant case.
From the over-all conduct of petitioner company in relation to the task of negotiation,
there can be no doubt that the Union has a valid cause to complain against its
(Company's) attitude, the totality of which is indicative of the latter's disregard of, and
failure to live up to, what is enjoined by the Labor Code — to bargain in good faith.
We are in total conformity with respondent NLRC's pronouncement that petitioner
Company is GUILTY of unfair labor practice. It has been indubitably established that
(1) respondent Union was a duly certified bargaining agent; (2) it made a definite
request to bargain, accompanied with a copy of the proposed Collective Bargaining
Agreement, to the Company not only once but twice which were left unanswered and
unacted upon; and (3) the Company made no counter proposal whatsoever all of
which conclusively indicate lack of a sincere desire to negotiate. 8 A Company's
refusal to make counter proposal if considered in relation to the entire bargaining
process, may indicate bad faith and this is specially true where the Union's request for
a counter proposal is left unanswered. 9 Even during the period of compulsory
arbitration before the NLRC, petitioner Company's approach and attitude-stalling the
negotiation by a series of postponements, non-appearance at the hearing conducted,
and undue delay in submitting its financial statements, lead to no other conclusion
except that it is unwilling to negotiate and reach an agreement with the Union.
Petitioner has not at any instance, evinced good faith or willingness to discuss freely
and fully the claims and demands set forth by the Union much less justify its
opposition thereto. 10
The case at bar is not a case of first impression, for in the Herald Delivery Carriers
Union (PAFLU) vs. Herald Publications 11 the rule had been laid down that "unfair
labor practice is committed when it is shown that the respondent employer, after
having been served with a written bargaining proposal by the petitioning Union, did
not even bother to submit an answer or reply to the said proposal This doctrine was
reiterated anew in Bradman vs. Court of Industrial Relations 12 wherein it was further
ruled that "while the law does not compel the parties to reach an agreement, it does
contemplate that both parties will approach the negotiation with an open mind and
make a reasonable effort to reach a common ground of agreement
As a last-ditch attempt to effect a reversal of the decision sought to be reviewed,
petitioner capitalizes on the issue of due process claiming, that it was denied the right
to be heard and present its side when the Labor Arbiter denied the Company's motion
for further postponement.
Petitioner's aforesaid submittal failed to impress Us. Considering the various
postponements granted in its behalf, the claimed denial of due process appeared
totally bereft of any legal and factual support. As herein earlier stated, petitioner had
not even honored respondent Union with any reply to the latter's successive letters,
all geared towards bringing the Company to the bargaining table. It did not even
bother to furnish or serve the Union with its counter proposal despite persistent
requests made therefor. Certainly, the moves and overall behavior of petitioner-
company were in total derogation of the policy enshrined in the New Labor Code
which is aimed towards expediting settlement of economic disputes. Hence, this
Court is not prepared to affix its imprimatur to such an illegal scheme and dubious
maneuvers.
Neither are WE persuaded by petitioner-company's stand that the Collective
Bargaining Agreement which was approved and adopted by the NLRC is a total nullity
for it lacks the company's consent, much less its argument that once the Collective
Bargaining Agreement is implemented, the Company will face the prospect of closing
down because it has to pay a staggering amount of economic benefits to the Union
that will equal if not exceed its capital. Such a stand and the evidence in support
thereof should have been presented before the Labor Arbiter which is the proper
forum for the purpose.
We agree with the pronouncement that it is not obligatory upon either side of a labor
controversy to precipitately accept or agree to the proposals of the other. But an
erring party should not be tolerated and allowed with impunity to resort to schemes
feigning negotiations by going through empty gestures.13 More so, as in the instant
case, where the intervention of the National Labor Relations Commission was
properly sought for after conciliation efforts undertaken by the BLR failed. The instant
case being a certified one, it must be resolved by the NLRC pursuant to the mandate
of P.D. 873, as amended, which authorizes the said body to determine the
reasonableness of the terms and conditions of employment embodied in any
Collective Bargaining Agreement. To that extent, utmost deference to its findings of
reasonableness of any Collective Bargaining Agreement as the governing agreement
by the employees and management must be accorded due respect by this Court.
WHEREFORE, the instant petition is DISMISSED. The temporary restraining order
issued on August 27, 1980, is LIFTED and SET ASIDE.
No pronouncement as to costs.SO ORDERED.
G.R. No. 128845 June 1, 2000
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor
and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the
Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his
capacity as the Superintendent of International School-Manila; and
INTERNATIONAL SCHOOL, INC., respondents.
Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires
are paid more than their colleagues in other schools is, of course, beside the point.
The point is that employees should be given equal pay for work of equal value. That
is a principle long honored in this jurisdiction. That is a principle that rests on
fundamental notions of justice. That is the principle we uphold today.1âwphi1.nêt
Private respondent International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents. 1 To
enable the School to continue carrying out its educational program and improve its
standard of instruction, Section 2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected by it either locally or
abroad, from Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment, except laws
that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School
employs four tests to determine whether a faculty member should be classified as a
foreign-hire or a local hire:
a. What is one's domicile?
b. Where is one's home economy?
c. To which country does one owe economic allegiance?
d. Was the individual hired abroad specifically to work in the School and was the
School responsible for bringing that individual to the Philippines?2
Should the answer to any of these queries point to the Philippines, the faculty
member is classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local-
hires.1avvphi1 These include housing, transportation, shipping costs, taxes, and
home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five
percent (25%) more than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to endure, namely: (a) the
"dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his home country,
leave his family and friends, and take the risk of deviating from a promising
career path — all for the purpose of pursuing his profession as an educator, but
this time in a foreign land. The new foreign hire is faced with economic realities:
decent abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children, adequate insurance
against illness and death, and of course the primary benefit of a basic
salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same
economic reality after his term: that he will eventually and inevitably return to his
home country where he will have to confront the uncertainty of obtaining suitable
employment after along period in a foreign land.
The compensation scheme is simply the School's adaptive measure to remain
competitive on an international level in terms of attracting competent
professionals in the field of international education. 3
When negotiations for a new collective bargaining agreement were held on June
1995, petitioner International School Alliance of Educators, "a legitimate labor union
and the collective bargaining representative of all faculty members"4 of the School,
contested the difference in salary rates between foreign and local-hires. This issue,
as well as the question of whether foreign-hires should be included in the appropriate
bargaining unit, eventually caused a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the
Department of Labor and Employment (DOLE) to assume jurisdiction over the
dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano,
issued an Order resolving the parity and representation issues in favor of the School.
Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's
motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks
relief in this Court.
Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.
The School disputes these claims and gives a breakdown of its faculty members,
numbering 38 in all, with nationalities other than Filipino, who have been hired locally
and classified as local hires.5 The Acting Secretary of Labor found that these non-
Filipino local-hires received the same benefits as the Filipino local-hires.
The compensation package given to local-hires has been shown to apply to all,
regardless of race. Truth to tell, there are foreigners who have been hired locally
and who are paid equally as Filipino local hires. 6
The Acting secretary upheld the point-of-hire classification for the distinction in salary
rates:
The Principle "equal pay for equal work" does not find applications in the present
case. The international character of the School requires the hiring of foreign
personnel to deal with different nationalities and different cultures, among the
student population.
We also take cognizance of the existence of a system of salaries and benefits
accorded to foreign hired personnel which system is universally recognized. We
agree that certain amenities have to be provided to these people in order to
entice them to render their services in the Philippines and in the process remain
competitive in the international market.
 Furthermore, we took note of the fact that foreign hires have limited contract of
employment unlike the local hires who enjoy security of tenure. To apply parity
therefore, in wages and other benefits would also require parity in other terms
and conditions of employment which include the employment which include the
employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and
provisions for salary and professional compensation wherein the parties agree as
follows:
All members of the bargaining unit shall be compensated only in accordance
with Appendix C hereof provided that the Superintendent of the School has
the discretion to recruit and hire expatriate teachers from abroad, under
terms and conditions that are consistent with accepted international practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas Recruited
Staff (OSRS) salary schedule. The 25% differential is reflective of the agreed
value of system displacement and contracted status of the OSRS as
differentiated from the tenured status of Locally Recruited Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition of the
difference in the status of two types of employees, hence, the difference in
their salaries.
The Union cannot also invoke the equal protection clause to justify its claim
of parity. It is an established principle of constitutional law that the guarantee
of equal protection of the laws is not violated by legislation or private
covenants based on reasonable classification. A classification is reasonable
if it is based on substantial distinctions and apply to all members of the same
class. Verily, there is a substantial distinction between foreign hires and local
hires, the former enjoying only a limited tenure, having no amenities of their
own in the Philippines and have to be given a good compensation package
in order to attract them to join the teaching faculty of the School. 7
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our
Constitution and laws reflect the policy against these evils. The Constitution 8 in the
Article on Social Justice and Human Rights exhorts Congress to "give highest priority
to the enactment of measures that protect and enhance the right of all people to
human dignity, reduce social, economic, and political inequalities." The very broad
Article 19 of the Civil Code requires every person, "in the exercise of his rights and in
the performance of his duties, [to] act with justice, give everyone his due, and observe
honesty and good faith.
International law, which springs from general principles of law,9 likewise proscribes
discrimination. General principles of law include principles of equity, 10 i.e., the
general principles of fairness and justice, based on the test of what is
reasonable. 11 The Universal Declaration of Human Rights, 12 the International
Covenant on Economic, Social, and Cultural Rights, 13 the International Convention
on the Elimination of All Forms of Racial Discrimination, 14 the Convention against
Discrimination in Education, 15 the Convention (No. 111) Concerning Discrimination in
Respect of Employment and Occupation 16 — all embody the general principle
against discrimination, the very antithesis of fairness and justice. The Philippines,
through its Constitution, has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in
favor of capital, inequality and discrimination by the employer are all the more
reprehensible.
The Constitution 17 specifically provides that labor is entitled to "humane conditions of
work." These conditions are not restricted to the physical workplace — the factory, the
office or the field — but include as well the manner by which employers treat their
employees.
The Constitution 18 also directs the State to promote "equality of employment
opportunities for all." Similarly, the Labor Code 19 provides that the State shall "ensure
equal work opportunities regardless of sex, race or creed." It would be an affront to
both the spirit and letter of these provisions if the State, in spite of its primordial
obligation to promote and ensure equal employment opportunities, closes its eyes to
unequal and discriminatory terms and conditions of employment. 20
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 135, for example, prohibits and penalizes 21 the payment of lesser
compensation to a female employee as against a male employee for work of equal
value. Article 248 declares it an unfair labor practice for an employer to discriminate in
regard to wages in order to encourage or discourage membership in any labor
organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra,
in Article 7 thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the
enjoyment of just and favourable conditions of work, which ensure, in particular:
a. Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of
work not inferior to those enjoyed by men, with equal pay for equal work;
xxx xxx xxx
The foregoing provisions impregnably institutionalize in this jurisdiction the long
honored legal truism of "equal pay for equal work." Persons who work with
substantially equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries. 22 This rule applies to the School, its
"international character" notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires
perform work equal to that of foreign-hires. 23 The Court finds this argument a little
cavalier. If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This presumption is borne
by logic and human experience. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others
receive more. That would be adding insult to injury. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated
unfairly.
The employer in this case has failed to discharge this burden. There is no evidence (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4)
here that foreign-hires perform 25% more efficiently or effectively than the local-hires. similarity of employment status. 30 The basic test of an asserted bargaining unit's
Both groups have similar functions and responsibilities, which they perform under acceptability is whether or not it is fundamentally the combination which will best
similar working conditions. assure to all employees the exercise of their collective bargaining rights. 31
The School cannot invoke the need to entice foreign-hires to leave their domicile to It does not appear that foreign-hires have indicated their intention to be grouped
rationalize the distinction in salary rates without violating the principle of equal work together with local-hires for purposes of collective bargaining. The collective
for equal pay. bargaining history in the School also shows that these groups were always treated
separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for
Although foreign-hires perform similar functions under the same working conditions
services performed." Similarly, the Philippine Legal Encyclopedia states that "salary"
as the local-hires, foreign-hires are accorded certain benefits not granted to local-
is the "[c]onsideration paid at regular intervals for the rendering of services."
hires. These benefits, such as housing, transportation, shipping costs, taxes, and
In Songco v. National Labor Relations Commission, 24 we said that:
home leave travel allowance, are reasonably related to their status as foreign-hires,
"salary" means a recompense or consideration made to a person for his pains or and justify the exclusion of the former from the latter. To include foreign-hires in a
industry in another man's business. Whether it be derived from "salarium," or bargaining unit with local-hires would not assure either group the exercise of their
more fancifully from "sal," the pay of the Roman soldier, it carries with it the respective collective bargaining rights.
fundamental idea of compensation for services rendered. (Emphasis supplied.)
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby
While we recognize the need of the School to attract foreign-hires, salaries should not GRANTED IN PART. The Orders of the Secretary of Labor and Employment dated
be used as an enticement to the prejudice of local-hires. The local-hires perform the June 10, 1996 and March 19, 1997, are hereby REVERSED and SET ASIDE insofar
same services as foreign-hires and they ought to be paid the same salaries as the as they uphold the practice of respondent School of according foreign-hires higher
latter. For the same reason, the "dislocation factor" and the foreign-hires' limited salaries than local-hires.
tenure also cannot serve as valid bases for the distinction in salary rates. The
SO ORDERED.
dislocation factor and limited tenure affecting foreign-hires are adequately
compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel
allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their
welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and
duty to regulate the relations between labor and capital. 27These relations are not
merely contractual but are so impressed with public interest that labor contracts,
collective bargaining agreements included, must yield to the common good. 28 Should
such contracts contain stipulations that are contrary to public policy, courts will not
hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by respondent School to
justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by
foreign-hires and local-hires. The practice of the School of according higher salaries
to foreign-hires contravenes public policy and, certainly, does not deserve the
sympathy of this Court.1avvphi1
We agree, however, that foreign-hires do not belong to the same bargaining unit as
the local-hires.
A bargaining unit is "a group of employees of a given employer, comprised of all or
less than all of the entire body of employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties of the parties
under the collective bargaining provisions of the law." 29 The factors in determining the
appropriate collective bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions
G.R. No. 110399 August 15, 1997
SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND
ERNESTO L. PONCE, President, petitioners, vs. HONORABLE 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.
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-2-70-911 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 Direct 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 election 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-Arbiter's 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 company's 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-union's 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:
. . . 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 Supervisors 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 court's 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 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 employee 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 which the company is required to deal and who in the normal performance of
their duties may obtain advance information of the company's position with regard to
contract negotiations, the disposition of grievances, or other labor relations matters." 8
There have been precedents in this regards, 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 employee's need to
use labor relations information. Thus, in determining the confidentiality of certain
employees, a key question frequently considered is the employee's necessary access
to confidential labor relations information. 13
It is the contention of respondent corporation that Supervisor 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 employee's confidential status,
such information must relate to the employer's labor relations policies. Thus, an
employee of a labor union, or of a management association, must have access to
confidential labor relations 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 cause 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
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 employer's
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 employer's 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 to 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.
The fact that the three plants are located in three different places, namely, in
Cabuyao, Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga
is immaterial. Geographical location can be completely disregarded if the communal
or mutual interests of the employees are not sacrificed as demonstrated in UP
v. Calleja-Ferrer where all non-academic rank and file employee of the University of
the Philippines in Diliman, Quezon City, Padre Faura, Manila, Los Baños, Laguna and
the Visayas were allowed to participate in a certification election. We rule that the
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.
WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the
Order of the Med-Arbiter on December 19, 1990 is REINSTATED under which a
certification election among the supervisors (level 1 to 4) and exempt employees of
the San Miguel Corporation Magnolia Poultry Products Plants of Cabuyao, San
Fernando, and Otis as one bargaining unit is ordered conducted.
SO ORDERED.

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 of collective
bargaining. 25

It is readily seen that the employees in the instant case have "community or mutuality
of interests," 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
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
activities.

In light of these considerations, the Solicitor General has opined that separate
bargaining units in the three different plants of the division will fragmentize the
employees of the said division, thus greatly diminishing their bargaining 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 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 provisions of the Labor Code
and the mandate of the Constitution. 27
G.R. No. 100485 September 21, 1994 THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE
ABUSE OF DISCRETION WHEN HE IGNORED AND TOTALLY
SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE BIENVENIDO E. DISREGARDED PETITIONER'S VALID AND JUSTIFIABLE GROUNDS WHY
LAGUESMA and NORTH LUZON MAGNOLIA SALES LABOR UNION- THE ERROR MADE IN GOOD FAITH BY PETITIONER'S COUNSEL BE
INDEPENDENT, respondents. CORRECTED, AND INSTEAD RULED:

Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19,
1991 and the Order dated April 12, 1991 of public respondent Undersecretary
Bienvenido E. Laguesma declaring respondent union as the sole and exclusive
bargaining agent of all the Magnolia sales personnel in northern Luzon be set aside
for having been issued in excess of jurisdiction and/or with grave abuse of discretion.
A THAT PRIVATE RESPONDENT IS "THE SOLE AND EXCLUSIVE
BARGAINING AGENT FOR ALL THE REGULAR SALES OFFICES OF
MAGNOLIA DAIRY PRODUCTS, NORTH LUZON SALES AREA",
COMPLETELY IGNORING THE ESTABLISHED BARGAINING HISTORY
OF PETITIONER SMC.

On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for B THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE
brevity) filed with the Department of Labor a petition for certification election among "AGREEMENT" ENTERED INTO AT THE HEARING ON
all the regular sales personnel of Magnolia Dairy Products in the North Luzon Sales 9 NOVEMBER 1990, IN CONTRAVENTION OF THE ESTABLISHED
Area. 1 FACTS OF THE CASE AND THE APPLICABLE LAW ON THE MATTER.

Petitioner opposed the petition and questioned the appropriateness of the bargaining We find no merit in the petition.
unit sought to be represented by respondent union. It claimed that its bargaining
history in its sales offices, plants and warehouses is to have a separate bargaining The issues for resolution are: (1) whether or not respondent union represents an
unit for each sales office. appropriate bargaining unit, and (2) whether or not petitioner is bound by its lawyer's
act of agreeing to consider the sales personnel in the north Luzon sales area as one
The petition was heard on November 9, 1990 with petitioner bargaining unit.
being represented by Atty. Alvin C. Batalla of the Siguion Reyna law office. Atty.
Batalla withdrew petitioner's opposition to a certification election and agreed to Petitioner claims that in issuing the impugned Orders, public respondent disregarded
consider all the sales offices in northern Luzon as one bargaining unit. At the pre- its collective bargaining history which is to have a separate bargaining unit for each
election conference, the parties agreed inter alia, on the date, time and place of the sales office. It insists that its prior collective bargaining history is the most persuasive
consent election. Respondent union won the election held on November 24, 1990. In criterion in determining the appropriateness of the collective bargaining unit.
an Order dated December 3, 1990, 2 Mediator-Arbiter Benalfre J. Galang certified
respondent union as the sole and exclusive bargaining agent for all the regular sales There is no merit in the contention.
personnel in all the sales offices of Magnolia Dairy Products in the North Luzon Sales
Area.
A bargaining unit is a "group of employees of a given employer, comprised of all or
less than all of the entire body of employees, consistent with equity to the employer,
Petitioner appealed to the Secretary of Labor. It claimed that indicate to be the best suited to serve the reciprocal rights and duties of the parties
Atty. Batalla was only authorized to agree to the holding of certification elections under the collective bargaining provisions of the law." 5
subject to the following conditions: (1) there would only be one general election; (2) in
this general election, the individual sales offices shall still comprise separate
bargaining units. 3 The fundamental factors in determining the appropriate collective bargaining unit are:
(1) the will of the employees (Globe Doctrine); 6 (2) affinity and unity of the
employees' interest, such as substantial similarity of work and duties, or similarity of
In a Resolution dated March 19, 1991, 4 public respondent, by authority of the compensation and working conditions (Substantial Mutual Interests Rule); (3) prior
Secretary of Labor, denied SMC's appeal and affirmed the Order of the Med- Arbiter. collective bargaining history; and (4) similarity of employment status. 7

Hence this petition for certiorari. Contrary to petitioner's assertion, this Court has categorically ruled that the existence
of a prior collective bargaining history is neither decisive nor conclusive in the
Petitioner claims that: determination of what constitutes an appropriate bargaining unit. 8
Indeed, the test of grouping is mutuality or commonality of interests. The employees
sought to be represented by the collective bargaining agent must have substantial
mutual interests in terms of employment and working conditions as evinced by the
type of work they perform.
In the case at bench, respondent union sought to represent the sales personnel in the
various Magnolia sales offices in northern Luzon. There is similarity of employment
status for only the regular sales personnel in the north Luzon area are covered. They
have the same duties and responsibilities and substantially similar compensation and
working conditions. The commonality of interest among he sales personnel in the
north Luzon sales area cannot be gainsaid. In fact, in the certification election held on
November 24, 1990, the employees concerned accepted respondent union as their
exclusive bargaining agent. Clearly, they have expressed their desire to be one.
Petitioner cannot insist that each of the sales office of Magnolia should constitute only
one bargaining unit. What greatly militates against this position is the meager number
of sales personnel in each of the Magnolia sales office in northern Luzon. Even the
bargaining unit sought to be represented by respondent union in the entire north
Luzon sales area consists only of approximately
fifty-five (55) employees. 9 Surely, it would not be for the best interest of these
employees if they would further be fractionalized. The adage "there is strength in
number" is the very rationale underlying the formation of a labor union.
In the case at bench, petitioner insists that each of the sales offices in northern Luzon
should be considered as a separate bargaining unit for negotiations would be more
expeditious. Petitioner obviously chooses to follow the path of least resistance. It is
not, however, the convenience of the employer that constitutes the determinative
factor in forming an appropriate bargaining unit. Equally, if not more important, is the
interest of the employees. In choosing and crafting an appropriate bargaining unit,
extreme care should be taken to prevent an employer from having any undue
advantage over the employees' bargaining representative. Our workers are weak
enough and it is not our social policy to further debilitate their bargaining
representative.
In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to
public respondents certification of respondent union as the sole and exclusive
bargaining agent of all the regular Magnolia sales personnel of the north Luzon sales
area.
WHEREFORE, premises considered, the challenged Resolution and Order of public
respondent are hereby AFFIRMED in toto, there being no showing of grave abuse of
discretion or lack of jurisdiction.
SO ORDERED.

Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute
lawyer for Atty. Christine Ona, who got stranded in Legaspi City. Atty. Batalla was
allegedly unfamiliar with the collective bargaining history of its establishment.
Petitioner claims it should not be bound by the mistake committed by its substitute
lawyer.

We are not persuaded. As discussed earlier, the collective bargaining history of a

company is not decisive of what should comprise the collective bargaining unit.
Insofar as the alleged "mistake" of the substitute lawyer is concerned, we find that this
mistake was the direct result of the negligence of petitioner's lawyers. It will be noted
that Atty. Ona was under the supervision of two (2) other lawyers, Attys. Jacinto de la
Rosa, Jr. and George C. Nograles. There is nothing in the records to show that these
two (2) counsels were likewise unavailable at that time. Instead of deferring the
hearing, petitioner's counsels chose to proceed therewith. Indeed, prudence dictates
that, in such case, the lawyers allegedly actively involved in SMC's labor case should
have adequately and sufficiently briefed the substitute lawyer with respect to the
matters involved in the case and the specific limits of his authority. Unfortunately, this
was not done in this case. The negligence of its lawyers binds petitioner. As held by
this Court in the case of Villa Rhecar Bus v. De la Cruz: 10

. . . As a general rule, a client is bound by the mistakes of his counsel. Only when
the application of the general rule would result in serious injustice should an
exception thereto be called for.
G.R. No. 96189 July 14, 1992
UNIVERSITY OF THE PHILIPPINES, petitioner, vs. HON. PURA FERRER-
CALLEJA, Director of the Bureau of Labor Relations, Department of Labor and
Employment, and THE ALL U.P. WORKERS' UNION, represented by its
President, Rosario del Rosario, respondent.
In this special civil action of certiorari the University of the Philippines seeks the
nullification of the Order dated October 30, 1990 of Director Pura Ferrer-Calleja of the
Bureau of Labor Relations holding that "professors, associate professors and
assistant professors (of the University of the Philippines) are . . rank-and-file
employees . . ;" consequently, they should, together with the so-called non-academic,
non-teaching, and all other employees of the University, be represented by only one
labor organization. 1 The University is joined in this undertaking by the Solicitor
General who "has taken a position not contrary to that of petitioner and, in fact, has
manifested . . that he is not opposing the petition . . ." 2
The case 3 was initiated in the Bureau of Labor Relations by a petition filed on March
2, 1990 by a registered labor union, the "Organization of Non-Academic Personnel of
UP" (ONAPUP). 4 Claiming to have a membership of 3,236 members — comprising
more than 33% of the 9,617 persons constituting the non-academic personnel of UP-
Diliman, Los Baños, Manila, and Visayas, it sought the holding of a certification
election among all said non-academic employees of the University of the Philippines.
At a conference thereafter held on March 22, 1990 in the Bureau, the University
stated that it had no objection to the election.
On April 18, 1990, another registered labor union, the "All UP Workers' Union," 5 filed
a comment, as intervenor in the certification election proceeding. Alleging that its
membership covers both academic and non-academic personnel, and that it aims to
unite all UP rank-and-file employees in one union, it declared its assent to the holding
of the election provided the appropriate organizational unit was first clearly defined. It
observed in this connection that the Research, Extension and Professional Staff
(REPS), who are academic non-teaching personnel, should not be deemed part of
the organizational unit.
For its part, the University, through its General Counsel, 6 made of record its view that
there should be two (2) unions: one for academic, the other for non-academic or
administrative, personnel considering the dichotomy of interests, conditions and rules
governing these employee groups.
Director Calleja ruled on the matter on August 7, 1990. 7 She declared that "the
appropriate organizational unit . . should embrace all the regular rank-and-file
employees, teaching and non-teaching, of the University of the Philippines, including
all its branches" and that there was no sufficient evidence "to justify the grouping of
the non-academic or administrative personnel into an organization unit apart and
distinct from that of the academic or teaching personnel." Director Calleja adverted to
Section 9 of Executive Order No. 180, viz.:
Sec. 9. The appropriate organizational unit shall be the employer unit consisting
of rank-and-file employees, unless circumstances otherwise require.
and Section 1, Rule IV of the Rules Implementing said EO 180 (as amended by
SEC. 2, Resolution of Public Sector Labor Management Council dated May 14,
1989, viz.:
xxx xxx xxx
For purposes of registration, an appropriate organizational unit may refer to:
xxx xxx xxx
d. State universities or colleges, government-owned or controlled corporations
with original charters.
She went on to say that the general intent of EO 180 was "not to fragmentize the
employer unit, as "can be gleaned from the definition of the term "accredited
employees' organization," which refers to:
. . a registered organization of the rank-and-file employees as defined in these
rules recognized to negotiate for the employees in an organizational unit headed
by an officer with sufficient authority to bind the agency, such as . . . . . . state
colleges and universities.
The Director thus commanded that a certification election be "conducted among rank-
and-file employees, teaching and non-teaching" in all four autonomous campuses of
the UP, and that management appear and bring copies of the corresponding payrolls
for January, June, and July, 1990 at the "usual pre-election conference . . ."
At the pre-election conference held on March 22, 1990 at the Labor Organizational
Division of the DOLE, 8 the University sought further clarification of the coverage of
the term, "rank-and-file" personnel, asserting that not every employee could properly
be embraced within both teaching and non-teaching categories since there are those
whose positions are in truth managerial and policy-determining, and hence, excluded
by law.
At a subsequent hearing (on October 4, 1990), the University filed a Manifestation
seeking the exclusion from the organizational unit of those employees holding
supervisory positions among non-academic personnel, and those in teaching staff
with the rank of Assistant Professor or higher, submitting the following as grounds
therefor:
1) Certain "high-level employees" with policy-making, managerial, or confidential
functions, are ineligible to join rank-and-file employee organizations under Section 3,
EO 180:
Sec. 3. High-level employees whose functions are normally considered as policy-
making or managerial or whose duties are of a highly confidential nature shall not
be eligible to join the organization of rank-and file government employees;
2) In the University hierarchy, not all teaching and non-teaching personnel belong the
rank-and file: just as there are those occupying managerial positions within the non-
teaching roster, there is also a dichotomy between various levels of the teaching or
academic staff;
3) Among the non-teaching employees composed of Administrative Staff and
Research personnel, only those holding positions below Grade 18 should be
regarded as rank-and-file, considering that those holding higher grade positions, like
Chiefs of Sections, perform supervisory functions including that of effectively
recommending termination of appointments or initiating appointments and
promotions; and
4) Not all teaching personnel may be deemed included in the term, "rank-and-file;"
only those holding appointments at the instructor level may be so considered,
because those holding appointments from Assistant Professor to Associate Professor
to full Professor take part, as members of the University Council, a policy-making
body, in the initiation of policies and rules with respect to faculty tenure and
promotion. 9
The ONAPUP quite categorically made of record its position; that it was not opposing
the University's proferred classification of rank-and file employees. On the other hand,
the "All UP Workers' Union" opposed the University's view, in a Position Paper
presented by it under date of October 18, 1990.
Director Calleja subsequently promulgated an Order dated October 30, 1990,
resolving the "sole issue" of "whether or not professors, associate professors and
assistant professors are included in the definition of high-level employee(s)" in light of
Rule I, Section (1) of the Implementing Guidelines of Executive Order No. 180,
defining "high level employee" as follows:
1. High Level Employee — is one whose functions are normally considered
policy determining, managerial or one whose duties are highly confidential in
nature. A managerial function refers to the exercise of powers such as:
1. To effectively recommend such managerial actions;
2. To formulate or execute management policies and decisions; or
3. To hire, transfer, suspend, lay-off, recall, dismiss, assign or discipline
employees.
The Director adjudged that said teachers are rank-and-file employees "qualified to
join unions and vote in certification elections." According to her —
A careful perusal of the University Code . . shows that the policy-making powers
of the Council are limited to academic matters, namely, prescribing courses of
study and rules of discipline, fixing student admission and graduation
requirements, recommending to the Board of Regents the conferment of
degrees, and disciplinary power over students. The policy-determining functions
contemplated in the definition of a high-level employee pertain to managerial,
executive, or organization policies, such as hiring, firing, and disciplining of
employees, salaries, teaching/working hours, other monetary and non-monetary
benefits, and other terms and conditions of employment. They are the usual
issues in collective bargaining negotiations so that whoever wields these powers
would be placed in a situation of conflicting interests if he were allowed to join the
union of rank-and-file employees.
The University seasonably moved for reconsideration, seeking to make the following
points, to wit:
1) UP professors do "wield the most potent managerial powers: the power to rule on
tenure, on the creation of new programs and new jobs, and conversely, the abolition
of old programs and the attendant re-assignment of employees.
2) To say that the Council is "limited to (acting on) academic matters" is error, since
academic decisions "are the most important decisions made in a University . . (being,
as it were) the heart, the core of the University as a workplace.
3) Considering that the law regards as a "high level" employee, one who performs
either policy-determining, managerial, or confidential functions, the Director erred in
applying only the "managerial functions" test, ignoring the "policy-determining
functions" test.
4) The Director's interpretation of the law would lead to absurd results, e.g.: "an
administrative officer of the College of Law is a high level employee, while a full
Professor who has published several treatises and who has distinguished himself in
argument before the Supreme Court is a mere rank-and-file employee. A dormitory
manager is classified as a high level employee, while a full Professor or Political
Science with a Ph. D. and several Honorary doctorates is classified as rank-and-
file." 10
The motion for reconsideration was denied by Director Calleja, by Order dated
November 20, 1990.
The University would now have this Court declare void the Director's Order of October
30, 1990 as well as that of November 20, 1990. 11 A temporary restraining order was
issued by the Court, by Resolution dated December 5, 1990 conformably to the
University's application therefor.
Two issues arise from these undisputed facts. One is whether or not professors,
associate professors and assistant professors are "high-level employees" "whose
functions are normally considered policy determining, managerial or . . highly
confidential in nature." The other is whether or not, they, and other employees
performing academic functions, 12 should comprise a collective bargaining unit distinct
and different from that consisting of the non-academic employees of the
University, 13 considering the dichotomy of interests, conditions and rules existing
between them.
As regards the first issue, the Court is satisfied that it has been correctly resolved by
the respondent Director of Bureau Relations. In light of Executive Order No. 180 and
its implementing rules, as well as the University's charter and relevant regulations, the
professors, associate professors and assistant professors (hereafter simply referred
to as professors) cannot be considered as exercising such managerial or highly
confidential functions as would justify their being categorized as "high-level
employees" of the institution.
The Academic Personnel Committees, through which the professors supposedly
exercise managerial functions, were constituted "in order to foster greater
involvement of the faculty and other academic personnel in appointments,
promotions, and other personnel matters that directly affect them." 14 Academic
Personnel Committees at the departmental and college levels were organized
"consistent with, and demonstrative of the very idea of consulting the faculty and
other academic personnel on matters directly affecting them" and to allow "flexibility in
the determination of guidelines peculiar to a particular department or college." 15
Personnel actions affecting the faculty and other academic personnel should,
however, "be considered under uniform guidelines and consistent with the Resolution
of the Board (of Regents) adopted during its 789th Meeting (11-26-69) creating the
University Academic Personnel Board." 16 Thus, the Departmental Academic
Personnel Committee is given the function of "assist(ing) in the review of the
recommendations initiated by the Department Chairman with regard to recruitment,
selection, performance evaluation, tenure and staff development, in accordance with
the general guidelines formulated by the University Academic Personnel Board and
the implementing details laid down by the College Academic Personnel
Committee;" 17 while the College Academic Personnel Committee is entrusted with
the following functions: 18
1. Assist the Dean in setting up the details for the implementation of policies,
rules, standards or general guidelines as formulated by the University Academic
Personnel Board;
2. Review the recommendation submitted by the DAPCs with regard to
recruitment, selection, performance evaluation, tenure, staff development, and
promotion of the faculty and other academic personnel of the College;
3. Establish departmental priorities in the allocation of available funds for
promotion;
4. Act on cases of disagreement between the Chairman and the members of the
DAPC particularly on personnel matters covered by this Order;
5. Act on complaints and/or protests against personnel actions made by the
Department Chairman and/or the DAPC.
The University Academic Personnel Board, on the other hand, performs the following
functions: 19
1. Assist the Chancellor in the review of the recommendations of the CAPC'S.
2. Act on cases of disagreement between the Dean and the CAPC.
3. Formulate policies, rules, and standards with respect to the selection,
compensation, and promotion of members of the academic staff.
4. Assist the Chancellor in the review of recommendations on academic
promotions and on other matters affecting faculty status and welfare.
From the foregoing, it is evident that it is the University Academic Personnel
Committee, composed of deans, the assistant for academic affairs and the chief of
personnel, which formulates the policies, rules and standards respecting selection,
compensation and promotion of members of the academic staff. The departmental
and college academic personnel committees' functions are purely recommendatory in
nature, subject to review and evaluation by the University Academic Personnel Board.
In Franklin Baker Company of the Philippines vs. Trajano, 20 this Court reiterated the
principle laid down in National Merchandising Corp. vs. Court of Industrial
Relations, 21 that the power to recommend, in order to qualify an employee as a
supervisor or managerial employee "must not only be effective but the exercise of
such authority should not be merely of a routinary or clerical nature but should require
the use of independent judgment." Where such recommendatory powers, as in the
case at bar, are subject to evaluation, review and final action by the department
heads and other higher executives of the company, the same, although present, are
not effective and not an exercise of independent judgment as required by law.
Significantly, the personnel actions that may be recommended by the departmental
and college academic personnel committees must conform with the general
guidelines drawn up by the university personnel academic committee. This being the
case, the members of the departmental and college academic personnel committees
are not unlike the chiefs of divisions and sections of the National Waterworks and
Sewerage Authority whom this Court considered as rank-and-file employees
in National Waterworks & Sewerage Authority vs. NWSA Consolidated
Unions, 22because "given ready policies to execute and standard practices to observe
for their execution, . . . they have little freedom of action, as their main function is
merely to carry out the company's orders, plans and policies."
The power or prerogative pertaining to a high-level employee "to effectively
recommend such managerial actions, to formulate or execute management policies
or decisions and/or to hire, transfer, suspend, lay-off, recall, dismiss, assign or
discipline employees" 23 is exercised to a certain degree by the university academic
personnel board/committees and ultimately by the Board of Regents in accordance
with Section 6 of the University
Charter, 24 thus:
(e) To appoint, on the recommendation of the President of the University,
professors, instructors, lecturers and other employees of the University; to fix
their compensation, hours of service, and such other duties and conditions as it
may deem proper; to grant them in its discretion leave of absence under such
regulations as it may promulgate, any other provision of law to the contrary
notwithstanding, and to remove them for cause after investigation and hearing
shall have been had.
Another factor that militates against petitioner's espousal of managerial employment
status for all its professors through membership in the departmental and college
academic personnel committees is that not all professors are members thereof.
Membership and the number of members in the committees are provided as
follows: 25
Sec. 2. Membership in Committees. — Membership in committees may be made
either through appointment, election, or by some other means as may be
determined by the faculty and other academic personnel of a particular
department or college.
Sec. 3. Number of Members. — In addition to the Chairman, in the case of a
department, and the Dean in the case of a college, there shall be such number of
members representing the faculty and academic personnel as will afford a fairly
representative, deliberative and manageable group that can handle evaluation of
personnel actions.
Neither can membership in the University Council elevate the professors to the status
of high-level employees. Section 6 (f) and 9 of the UP Charter respectively provide: 26
Sec. 6. The Board of Regents shall have the following powers and duties . . . ;
xxx xxx xxx
(f) To approve the courses of study and rules of discipline drawn up by the
University Council as hereinafter provided; . . .
Sec. 9. There shall be a University Council consisting of the President of the
University and of all instructors in the university holding the rank of professor,
associate professor, or assistant professor. The Council shall have the power to
prescribe the courses of study and rules of discipline, subject to the approval of
the Board of Regents. It shall fix the requirements for admission to any college of
the university, as well as for graduation and the receiving of a degree. The
 Council alone shall have the power to recommend students or others to be individual employee or group of employees shall have the right at any time to
recipients of degrees. Through its president or committees, it shall have present grievances to their employer.
disciplinary power over the students within the limits prescribed by the rules of
Although said Section 12 of the Industrial Peace Act was subsequently incorporated
discipline approved by the Board of Regents. The powers and duties of the
into the Labor Code with minor changes, no guidelines were included in said Code for
President of the University, in addition to those specifically provided in this Act
determination of an appropriate bargaining unit in a given case. 30 Thus, apart from
shall be those usually pertaining to the office of president of a university.
the single descriptive word "appropriate," no specific guide for determining the proper
It is readily apparent that the policy-determining functions of the University Council collective bargaining unit can be found in the statutes.
are subject to review, evaluation and final approval by the Board of Regents. The
Even Executive Order No. 180 already adverted to is not much help. All it says, in its
Council's power of discipline is likewise circumscribed by the limits imposed by the
Section 9, is that "(t)he appropriate organizational unit shall be the employer unit
Board of Regents. What has been said about the recommendatory powers of the
consisting of rank-and-file employees, unless circumstances otherwise require." Case
departmental and college academic personnel committees applies with equal force to
law fortunately furnishes some guidelines.
the alleged policy-determining functions of the University Council.
When first confronted with the task of determining the proper collective bargaining
Even assuming arguendo that UP professors discharge policy-determining functions
unit in a particular controversy, the Court had perforce to rely on American
through the University Council, still such exercise would not qualify them as high-level
jurisprudence. In Democratic Labor Association vs. Cebu Stevedoring Company,
employees within the context of E.O. 180. As correctly observed by private
Inc., decided on February 28, 1958, 31 the Court observed that "the issue of how to
respondent, "Executive Order No. 180 is a law concerning public sector unionism. It
determine the proper collective bargaining unit and what unit would be appropriate to
must therefore be construed within that context. Within that context, the University of
be the collective bargaining
the Philippines represents the government as an employer. 'Policy-determining' refers
agency" . . . "is novel in this jurisdiction; however, American precedents on the matter
to policy-determination in university mattes that affect those same matters that may
abound . . (to which resort may be had) considering that our present Magna Carta
be the subject of negotiation between public sector management and labor. The
has been patterned after the American law on the subject." Said the Court:
reason why 'policy-determining' has been laid down as a test in segregating rank-and-
file from management is to ensure that those who lay down policies in areas that are . . . Under these precedents, there are various factors which must be satisfied
still negotiable in public sector collective bargaining do not themselves become part of and considered in determining the proper constituency of a bargaining unit. No
those employees who seek to change these policies for their collective welfare." 27 one particular factor is itself decisive of the determination. The weight accorded
to any particular factor varies in accordance with the particular question or
The policy-determining functions of the University Council refer to academic
questions that may arise in a given case. What are these factors? Rothenberg
matters, i.e. those governing the relationship between the University and its students,
mentions a good number, but the most pertinent to our case are: (1) will of the
and not the University as an employer and the professors as employees. It is thus
employees (Globe Doctrine); (2) affinity and unit of employees' interest, such as
evident that no conflict of interest results in the professors being members of the
substantial similarity of work and duties, or similarity of compensation and
University Council and being classified as rank-and-file employees.
working conditions; (3) prior collective bargaining history; and (4) employment
Be that as it may, does it follow, as public respondent would propose, that all rank- status, such as temporary, seasonal probationary employees. . . .
and-file employees of the university are to be organized into a single collective
xxx xxx xxx
bargaining unit?
An enlightening appraisal of the problem of defining an appropriate bargaining
A "bargaining unit" has been defined as a group of employees of a given employer,
unit is given in the 10th Annual Report of the National Labor Relations Board
comprised of all or less than all of the entire body of employees, which the collective
wherein it is emphasized that the factors which said board may consider and
interest of all the employees, consistent with equity to the employer, indicate to be the
weigh in fixing appropriate units are: the history, extent and type of organization
best suited to serve the reciprocal rights and duties of the parties under the collective
of employees; the history of their collective bargaining; the history, extent and
bargaining provisions of the law. 28
type of organization of employees in other plants of the same employer, or other
Our labor laws do not however provide the criteria for determining the proper employers in the same industry; the skill, wages, work, and working conditions of
collective bargaining unit. Section 12 of the old law, Republic Act No. 875 otherwise the employees; the desires of the employees; the eligibility of the employees for
known as the Industrial Peace Act, simply reads as follows: 29 membership in the union or unions involved; and the relationship between the
unit or units proposed and the employer's organization, management, and
Sec. 12. Exclusive Collective Bargaining Representation for Labor Organizations.
operation. . . .
— The labor organization designated or selected for the purpose of collective
bargaining by the majority of the employees in an appropriate collective . . In said report, it is likewise emphasized that the basic test in determining the
bargaining unit shall be the exclusive representative of all the employees in such appropriate bargaining unit is that a unit, to be appropriate, must affect a
unit for the purpose of collective bargaining in respect to rates of pay, wages, grouping of employees who have substantial, mutual interests in wages, hours,
hours of employment, or other conditions of employment; Provided, That any working conditions and other subjects of collective bargaining (citing Smith on
Labor Laws, 316-317; Francisco, Labor Laws, 162). . . .
The Court further explained that "(t)he test of the grouping is community or mutuality dissimilarity in the nature of the work and duties as well as in the compensation and
of interests. And this is so because 'the basic test of an asserted bargaining unit's working conditions of the academic and non-academic personnel dictate the
acceptability is whether or not it is fundamentally the combination which will best separation of these two categories of employees for purposes of collective
assure to all employees the exercise of their collective bargaining rights' (Rothenberg bargaining. The formation of two separate bargaining units, the first consisting of the
on Labor Relations, 490)." Hence, in that case, the Court upheld the trial court's rank-and-file non-academic personnel, and the second, of the rank-and-file academic
conclusion that two separate bargaining units should be formed, one consisting of employees, is the set-up that will best assure to all the employees the exercise of
regular and permanent employees and another consisting of casual laborers or their collective bargaining rights. These special circumstances, i.e., the dichotomy of
stevedores. interests and concerns as well as the dissimilarity in the nature and conditions of
work, wages and compensation between the academic and non-academic personnel,
Since then, the "community or mutuality of interests" test has provided the standard in
bring the case at bar within the exception contemplated in Section 9 of Executive
determining the proper constituency of a collective bargaining unit. In Alhambra Cigar
Order No. 180. It was grave abuse of discretion on the part of the Labor Relations
& Cigarette Manufacturing Company, et al. vs. Alhambra Employees' Association
Director to have ruled otherwise, ignoring plain and patent realities.
(PAFLU), 107 Phil. 23, the Court, noting that the employees in the administrative,
sales and dispensary departments of a cigar and cigarette manufacturing firm perform WHEREFORE, the assailed Order of October 30, 1990 is hereby AFFIRMED in so far
work which have nothing to do with production and maintenance, unlike those in the as it declares the professors, associate professors and assistant professors of the
raw lead (malalasi), cigar, cigarette, packing (precintera) and engineering and garage University of the Philippines as rank-and-file employees. The Order of August 7, 1990
departments, authorized the formation of the former set of employees into a separate is MODIFIED in the sense that the non-academic rank-and-file employees of the
collective bargaining unit. The ruling in the Democratic Labor Association case, supra, University of the Philippines shall constitute a bargaining unit to the exclusion of the
was reiterated in Philippine Land-Air-Sea Labor Unit vs. Court of Industrial Relations, academic employees of the institution — i.e., full professors, associate professors,
110 Phil. 176, where casual employees were barred from joining the union of the assistant professors, instructors, and the research, extension and professorial staff,
permanent and regular employees. who may, if so minded, organize themselves into a separate collective bargaining
unit; and that, therefore, only said non-academic rank-and-file personnel of the
Applying the same "community or mutuality of interests" test, but resulting in the
University of the Philippines in Diliman, Manila, Los Baños and the Visayas are to
formation of only one collective bargaining units is the case of National Association of
participate in the certification election.
Free Trade Unions vs. Mainit Lumber Development Company Workers Union-United
Lumber and General Workers of the Phils., G.R. No. 79526, December 21, 1990, 192 SO ORDERED.
SCRA 598. In said case, the Court ordered the formation of a single bargaining unit
consisting of the Sawmill Division in Butuan City and the Logging Division in Zapanta
Valley, Kitcharao, Agusan Norte of the Mainit Lumber Development Company. The
Court reasoned:
Certainly, there is a mutuality of interest among the employees of the Sawmill
Division and the Logging Division. Their functions mesh with one another. One
group needs the other in the same way that the company needs them both.
There may be difference as to the nature of their individual assignments but the
distinctions are not enough to warrant the formation of a separate bargaining
unit.
In the case at bar, the University employees may, as already suggested, quite easily
be categorized into two general classes: one, the group composed of employees
whose functions are non-academic, i.e., janitors, messengers, typists, clerks,
receptionists, carpenters, electricians, grounds-keepers, chauffeurs, mechanics,
plumbers; 32 and two, the group made up of those performing academic
functions, i.e., full professors, associate professors, assistant professors, instructors
— who may be judges or government executives — and research, extension and
professorial staff. 33 Not much reflection is needed to perceive that the community or
mutuality of interests which justifies the formation of a single collective bargaining unit
is wanting between the academic and non-academic personnel of the university. It
would seem obvious that teachers would find very little in common with the University
clerks and other non-academic employees as regards responsibilities and functions,
working conditions, compensation rates, social life and interests, skills and intellectual
pursuits, cultural activities, etc. On the contrary, the dichotomy of interests, the
G.R. No. 151326 November 23, 2005
ST. JAMES SCHOOL OF QUEZON CITY, Petitioner, vs. SAMAHANG
MANGGAGAWA SA ST. JAMES SCHOOL OF QUEZON CITY, Respondent.
The Case
Before the Court is a petition for review1 assailing the 5 September 2001 Decision
and 3 January 2002 Resolution of the Court of Appeals 2 in CA-G.R. SP No. 60197.
The Court of Appeals sustained the Decision of the Department of Labor and
Employment ("DOLE") directing the opening of the challenged ballots cast during the
certification election.
The Antecedent Facts
The Samahang Manggagawa sa St. James School of Quezon City ("Samahang
Manggagawa") filed a petition for certification election to determine the collective
bargaining representative of the motor pool, construction and transportation
employees of St. James School of Quezon City ("St. James"). On 26 June 1999, the
certification election was held at the DOLE office in Intramuros, Manila. There were
149 eligible voters and 84 voters cast their votes. St. James filed a certification
election protest challenging the 84 votes. St. James alleged that it had 179 rank and
file employees, none of whom voted in the certification election. St. James argued
that those who voted were not its regular employees but construction workers of an
independent contractor, Architect Conrado Bacoy ("Architect Bacoy").
In an Order dated 6 January 2000,3 Med-Arbiter Tomas F. Falconitin ("Med-Arbiter
Falconitin") ruled that at the time of the certification election, the 84 voters were no
longer working at St. James. Med-Arbiter Falconitin supported his ruling using the
roster of rank and file employees submitted by St. James, which did not include the
names of the 84 voters. Med-Arbiter Falconitin also ruled that since the construction
projects have ceased, some of the workers were no longer entitled to vote in the
certification election. Finally, Med-Arbiter Falconitin ruled that even if the 84 workers
were to be included in the 179 rank and file employees of St. James, the total number
of voters would be 263. Thus, the 84 votes cast would not be sufficient to constitute a
majority of all eligible voters to have a valid certification election. The dispositive
portion of the Order reads:
WHEREFORE, premises considered, the certification election protest is hereby given
due course.
Accordingly, judgment is hereby rendered, declaring the certification election for the
rank and file employees of respondent/protestant St. James School of Quezon City
conducted on June 26, 1999, a failure; and null and void ab initio.
SO ORDERED.4
Samahang Manggagawa appealed to the Secretary of Labor. In its Decision5 dated 5
May 2000, the DOLE6reversed the ruling of Med-Arbiter Falconitin. The DOLE ruled
that Samahang Manggagawa seeks to represent the non-academic personnel or the
rank and file employees from the motor pool, construction and transportation
departments, and not all the rank and file employees of St. James. According to the
DOLE, Med-Arbiter Falconitin erred in including all the rank and file employees of St.
James, whether teaching or non-teaching personnel, in the computation of the total
number of employees. The DOLE ruled that the list submitted by St. James contained
only the administrative, teaching and office personnel of the school. The dispositive
portion of the Decision reads:
WHEREFORE, the appeal is hereby GRANTED and the order dated 06 January 2000
of the Med-Arbiter is REVERSED and SET ASIDE. In lieu thereof, an order is hereby
issued directing the Election Officer, Lilibeth Cagara, DOLE-National Capital Region
to open and canvass the 84 challenged ballots within ten (10) days from receipt
hereof, subject to usual notice and representation by the parties and thereafter to
issue the corresponding certification of the results.
SO DECIDED.7
St. James filed a motion for reconsideration. The DOLE8 denied the motion in its 19
June 2000 Resolution.9 St. James filed a special civil action before the Court of
Appeals.
In a Decision10 dated 5 September 2001, the Court of Appeals dismissed the petition
and ruled that the DOLE did not commit grave abuse of discretion in reversing the
ruling of Med-Arbiter Falconitin. In its 3 January 2002 Resolution, 11 the Court of
Appeals denied St. James’ motion for reconsideration.
Hence, the petition before this Court.
The Issues
St. James questions the validity of the formation of the labor union and the validity of
the certification election.12
The Ruling of the Court
The petition has no merit.
The Validity of the Formation of the Labor Union
St. James argues that majority of the members of Samahang Manggagawa are not its
employees but employees of Architect Bacoy, an independent contractor.
St. James may no longer question the validity of the formation of the labor union.
The records13 show that prior to the holding of the certification election, St. James
filed a petition for cancellation of Samahang Manggagawa’s union registration.
Among the grounds cited in the petition was the lack of employer-employee
relationship between St. James and Samahang Manggagawa’s members. The Med-
Arbiter recommended the cancellation of the union registration. DOLE Regional
Director IV Romeo Young ("Director Young") adopted the Med-Arbiter’s
recommendation and cancelled Samahang Manggagawa’s union registration.
Samahang Manggagawa filed an appeal before the Bureau of Labor Relations
("BLR"). In its Decision14 dated 22 January 1998, the BLR15 reversed Director
Young’s Decision. In its Resolution16 of 12 February 1998, the BLR denied St. James’
motion for reconsideration. St. James filed a special civil action before the Court of
Appeals. The case was docketed as CA-G.R. SP No. 50918. In its 9 February 2001
Decision,17 the Court of Appeals dismissed St. James’ petition and affirmed the BLR’s
Decision. The Court of Appeals ruled that the construction workers are actually St.
James’ regular employees in its motor pool, construction and transportation
departments. The Court of Appeals also ruled that Architect Bacoy is a labor-only
contractor and thus an agent of St. James, which is the real employer.
St. James filed a petition for certiorari before this Court. The case was docketed as A dismissed employee whose dismissal is being contested in a pending case shall be
G.R. No. 149648. In a Resolution dated 10 October 2001, this Court denied the allowed to vote in the election.
petition for St. James’ error in the choice or mode of appeal. 18 The Court’s 10 October
In case of disagreement over the voters’ list or over the eligibility of voters, all
2001 Resolution closed any issue on the validity of the formation of the labor union.
contested voters shall be allowed to vote. However, their votes shall be segregated
The Validity of the Certification Election and sealed in individual envelopes in accordance with Section 9 of these Rules.
Section 13, Rule XII, Book V of the Omnibus Rules Implementing the Labor Code The motor pool, construction and transportation employees of the Tandang Sora
("Omnibus Rules") provides: campus had 149 qualified voters at the time of the certification election. Hence, the
149 qualified voters should be used to determine the existence of a quorum. Since a
Section 13. Proclamation and certification of results by election officer; when
majority or 84 out of the 149 qualified voters cast their votes, a quorum existed in the
proper. – Upon completion of the canvass there being a valid election, the election
certification election.
officer shall proclaim and certify as winner the union which obtained a majority of the
valid votes cast under any of the following conditions: St. James further alleges that the names of the 84 voters are not on the list of its rank
and file employees. On this score, we sustain the factual finding of the DOLE that the
a) No protest had been filed or, even if one was filed, the same was not perfected
list submitted by St. James consists of its administrative, teaching and office
within the five-day period for perfection of the protest;
personnel. These administrative, teaching and office personnel are not members of
b) No challenge of eligibility issue was raised or even if one was raised, the resolution Samahang Manggagawa. They do not belong to the bargaining unit that Samahang
of the same will not materially change the result. Manggagawa seeks to represent. Hence, the list submitted by St. James may not be
used as basis to determine the members of Samahang Manggagawa.
For this purpose, the election officer shall immediately issue the corresponding
certification, copy furnished all parties, which shall form part of the records of the WHEREFORE, we DENY the petition. We AFFIRM the 5 September 2001 Decision
case. The winning union shall have the rights, privileges and obligations of a duly and the 3 January 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60197.
certified collective bargaining representative from the time the certification is issued.
SO ORDERED.
The proclamation and certification so issued shall not be appealable.
According to St. James, the certification election was conducted without quorum. St.
James alleges that it has 179 rank and file employees in its Quezon City Campus.
When the certification election was held, none of these qualified rank and file
employees cast their votes because they were all on duty in the school premises. The
84 voters who cast their votes are employees of Architect Bacoy. St. James also
alleges that it has 570 rank and file employees in all its campuses. Even if the 84
voters are its employees, the votes do not constitute a majority vote of its rank and file
employees because the quorum should be based on its 570 rank and file employees.
We cannot sustain the argument.
St. James has five campuses – the Philamlife and Scout Alcaraz, Quezon City
campuses which are pre-schools; the Parañaque City and Calamba, Laguna
campuses which offer elementary, secondary and college education; and the
Tandang Sora, Quezon City campus which offers elementary and secondary
education.19
The members of Samahang Manggagawa are employees in the Tandang Sora
campus. Under its constitution and by-laws, Samahang Manggagawa seeks to
represent the motor pool, construction and transportation employees of the Tandang
Sora campus.20 Thus, the computation of the quorum should be based on the rank
and file motor pool, construction and transportation employees of the Tandang Sora
campus and not on all the employees in St. James’ five campuses.
Section 2, Rule XII, Book V of the Omnibus Rules provides:
Section 2. Qualification of voters; inclusion-exclusion proceedings. – All employees
who are members of the appropriate bargaining unit sought to be represented by the
petitioner at the time of the certification or consent election shall be qualified to vote.
G.R. No. 85343 June 28, 1989
PHILTRANCO SERVICE ENTERPRISES, petitioner, vs. BUREAU OF LABOR
RELATIONS and KAPISANAN NG MGA KAWANI, ASSISTANT, MANGGAGAWA
AT KONPIDENSIYAL SA PHILTRANCO, respondents.
In this petition for certiorari, the petitioner assails the order of the Bureau of Labor
Relations (BLR) dated September 5, 1988. The dispositive portion of the order reads:
WHEREFORE, premises considered, the Order of the Med-Arbiter dated 4 April 1988
is hereby set aside and vacated and a new one entered ordering the conduct of a
certification election among regular rank-and-file professional, technical,
administrative and confidential employees of respondent company, with the following
choices:
1. Kapisanan ng mga Kawani, Assistant Manggagawa at Konpidensyal sa
Philtranco (KASAMA KO)
2. No Union.
Let, therefore the records of the case be remanded to the Office of origin for the
immediate conduct of the election.
SO ORDERED. (Rollo, p. 33)
The antecedent facts are as follows:
Petitioner Philtranco Service Enterprises, Inc. is a land transportation company
engaged in the business of carrying passengers and freight. The company employees
included field workers consisting of drivers, conductors, coach drivers, coach
stewards and mechanics and office employees like clerks, cashiers, programmers,
telephone operators, etc.
On February 15, 1988, the Kapisanan ng mga Kawani, Assistant, Manggagawa at
Konpidensyal sa Philtranco (KASAMA KO), a registered labor organization filed a
petition for certification election with the Department of Labor and Employment,
alleging among others that:
xxx xxx xxx
3. Petitioner desires to represent all professional, technical, administrative, and
confidential employees personnel of respondent at its establishments in Luzon,
Visayas and Mindanao for purposes of collective bargaining;
4. The aforementioned employees were always expressly excluded from
participating in the certification election conducted among the rank and file
employees (drivers, conductors, coach drivers, coach stewards, and mechanics)
of respondent and are excluded from the bargaining unit covered by the CBA
between respondent and its rank and file employees. In addition, there exist
substantial differences in the terms and conditions of employment between the
above-mentioned employees, hence, the former are covered by another
appropriate bargaining unit which is separate and distinct from that of the rank
and file employees of respondent and; which has been recognized by the Bureau
of Labor Relations and upheld by the Honorable Supreme Court. Attached hereto
as Annex 'A' and Annex 'B' are copies of the decision of the BLR and the
Supreme Court in support thereof;
xxx xxx xxx
6. The petition is supported by the signatures of more than twenty percent (20%)
of all covered employees as provided for by law and which shall be presented
during the initial hearing;
xxx xxx xxx
8. There has been no Consent Election or Certification Election held and
conducted by this Honorable Office for the past three (3) years prior to the filing
of this petition in the bargaining unit petitioner sought to represent, the last
Certification Election having been held last November 27, 1984. Attached hereto
as Annex "C" is a copy of the Order issued by this Honorable Office relative to
the result of the last certification election. (Rollo, pp. 4-5)
On February 24, 1988, the National Mines and Allied Workers Union (NAMAWU-MIF)
filed a motion for intervention alleging that it is the bargaining agent of the workers at
Philtranco and as such it has a substantial interest in the outcome of the petition.
On February 26, 1988, Arbiter Paterno Adap called the parties to a hearing.
Philtranco and NAMAWU were ordered to submit their respective position papers and
KASAMA KO was given the opportunity to submit a reply.
On April 4, 1988, a resolution was rendered with the following dispositive portion:
WHEREFORE, in the light of the foregoing premises, this petition is, as it is
hereby ordered DISMISSED. If there are still individual members of the herein
petitioner eligible to join a labor organization, it is hereby directed that all should
be included/incorporated in the existing bargaining unit.
Parties are further directed/enjoined to device a mechanism for the
implementation of the matter herein treated. (Rollo, pp. 29-30)
KASAMA KO appealed to the Bureau of Labor Relations (BLR) On September 5,
1988 the BLR reversed the resolution of the Med-Arbiter. A motion for reconsideration
was denied in an order dated October 10, 1988.
As prayed for by the petitioner, a temporary restraining order was issued by this Court
on November 7, 1988 restraining the BLR from enforcing and/or carrying out the
decision dated September 5, 1988 and the order dated October 10, 1988.
The Labor Code recognizes two (2) principal groups of employees, namely, the
managerial and the rank and file groups. Thus, Art. 212 (k) of the Code provides:
xxx xxx xxx
(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.
In implementation of the aforequoted provision of the law, Section 11 of Rule II, Book
V of the Omnibus Rules implementing the Labor Code did away with existing
supervisors' unions classifying the members either as managerial or rank and file
employees depending on the work they perform. If they discharge managerial
functions, supervisors are prohibited from forming or joining any labor organization. If
they do not perform managerial work, they may join the rank and file union and if
none exists, they may form one such rank and file organization. This rule was
emphasized in the case of Bulletin Publishing Corp. v. Sanchez, (144 SCRA 628
[1986]).
It, therefore, follows that the members of the KASAMA KO who are professional,
technical, administrative and confidential personnel of PHILTRANCO performing
managerial functions are not qualified to join, much less form a union. This
rationalizes the exclusion of managers and confidential employees exercising
managerial functions from the ambit of the collective bargaining unit. As correctly
observed by Med-Arbiter Adap:
... managerial and confidential employees were expressly excluded within the
operational ambit of the bargaining unit for the simple reason that under the law,
managers are disqualified to be members of a labor organization.
On the other hand, confidential workers were not included because either they
were performing managerial functions and/or their duties and responsibilities
were considered or may be categorized as part and parcel of management as
the primary reason for their exclusion in the bargaining unit. The other
categorized employees were likewise not included because parties have agreed
on the fact that the aforementioned group of workers are not qualified to join a
labor organization at the time the agreement was executed and that they were
classified as outside the parameter of the bargaining unit. (Rollo, pp. 28-29)
The respondents, on the other hand, aver that the members of the respondent union
are rank and file employees qualified to form a union. In fact their status as rank and
file employees was allegedly recognized by this Court in the case of Pantranco South
Express, Inc. v. NAMAWU, (G.R. No. 67475, July 30, 1984).
The reliance on the Pantranco South Express, Inc. case is misplaced. The petition
filed by Pantranco South Express Inc. simply asked for a ruling that certain
employees were performing managerial functions. We denied the petition for lack of
merit in a minute resolution. There was absolutely no discussion on the recognition of
another separate rank and file union in addition to the existing bargaining unit.
There is no conflict. The employees of Philtranco have been appraised and their
functions evaluated. Managers by any name may not join the rank and file union. On
the other hand, those who are rank and file workers may join the existing bargaining
unit instead of organizing another bargaining unit and compelling the employer to deal
with it.
We are constrained to disallow the formation of another union. There is no dispute
that there exists a labor union in the company, herein intervenor, the NAMAWU-MIF
which is the collective bargaining agent of the rank and file employees in
PHILTRANCO.
Article 2 of the Collective Bargaining Agreement between PHILTRANCO and
NAMAWU-MIF under the sub-title Appropriate Bargaining Unit provides:
Section 1 -The appropriate bargaining unit covered by this agreement consists of
all regular rank- and file employees of the company. Managerial, confidential,
casuals, temporary, probationary and contractual employees as well as trainees,
apprentices, security personnel and foreman are excluded from the bargaining
unit and therefore, not covered by this AGREEMENT. The job description outside
the bargaining unit are enumerated in the list hereto attached as Annex '1' and
made an integral part hereof (Emphasis supplied; Rollo, p. 27)
We see no need for the formation of another union in PHILTRANCO. The qualified
members of the KASAMA KO may join the NAMAWU-MIF if they want to be union
members, and to be consistent with the one-union, one-company policy of the
Department of Labor and Employment, and the laws it enforces. As held in the case
of General Rubber and Footwear Corp. v. Bureau of Labor Relations (155 SCRA 283
[1987]):
... It has been the policy of the Bureau to encourage the formation of an employer
unit 'unless circumstances otherwise require. The proliferation of unions in an
employer unit is discouraged as a matter of policy unless there are compelling
reasons which would deny a certain class of employees the right to self-
 organization for purposes of collective bargaining. This case does not fall
squarely within the exception. (Emphasis supplied).
There are no compelling reasons in this case such as a denial to the KASAMA KO
group of the right to join the certified bargaining unit or substantial distinctions
warranting the recognition of a separate group of rank and file workers. Precisely,
NAMAWU-MIF intervened to make it clear it has no objections to qualified rank and
file workers joining its union.
It is natural in almost all fairly sized companies to have groups of workers discharging
different functions. No company could possibly have all employees performing exactly
the same work. Variety of tasks is to be expected. It would not be in the interest of
sound labor-management relations if each group of employees assigned to a
specialized function or section would decide to break away from their fellow-workers
and form their own separate bargaining unit. We cannot allow one unit for typists and
clerks, one unit for accountants, another unit for messengers and drivers, and so on
in needless profusion. Where shall the line be drawn? The questioned decision of the
public respondent can only lead to confusion, discord and labor strife.
We quote with favor Med-Arbiter Adap's rationale, to wit:
... It is against the policy of the Department of Labor to dismember the already
wide existing bargaining unit because of its well established goal towards a
single employer wide unit which is more to the broader and greater benefit of the
employees working force.
The philosophy is to avoid fragmentation of the bargaining unit so as to
strengthen the employees bargaining power with the management. To do
otherwise, would be contrary, inimical and repugnant to the objectives of a strong
and dynamic unionism. Let there be a unified whole rather than a divisive one, let
them speak as one in a clear resonant voice unmarred by dissension towards
progressive unionism. (Rollo, p. 29)
WHEREFORE, the decision of the Bureau of Labor Relations, dated September 5,
1988 and the Order dated October 10, 1988 are hereby SET ASIDE. The resolution
of the Med-Arbiter dated April 4, 1988 is REINSTATED. The restraining order issued
by the Court on November 7, 1988 is made permanent.

The respondents state that this case is an exception to the general rule considering SO ORDERED.
that substantial differences exist between the office employees or professional,
technical, administrative and confidential employees vis-a-vis the field workers or
drivers, conductors and mechanics of the petitioner. Against this contention, we find
that the "substantial differences" in the terms and conditions of employment between
the private respondent's members and the rest of the company's rank and file
employees are more imagined than real. We agree with the petitioner that the
differences alleged are not substantial or significant enough to merit the formation of
another union.

PHILTRANCO is a large bus company engaged in the business of carrying

passengers and freight, servicing Luzon, Visayas and Mindanao. Certainly there is a
commonality of interest among filing clerks, dispatchers, drivers, typists, and field
men. They are all interested in the progress of their company and in each worker
sharing in the fruits of their endeavors equitably and generously. Their functions mesh
with one another. One group needs the other in the same way that the company
needs them all. The drivers, mechanics and conductors are necessary for the
company but technical, administrative and office personnel are also needed and
equally important for the smooth operation of the business. There may be differences
as to the nature of their individual assignments but the distinctions are not enough to
warrant the formation of separate unions. The private respondent has not even shown
that a separate bargaining unit would be beneficial to the employees concerned.
Office employees also belong to the rank and file. There is an existing employer wide
unit in the company represented by NAMAWU-MIF. And as earlier stated, the fact
that NAMAWU-MIF moved to intervene in the petition for certification election filed by
KASAMA KO negates the allegations that "substantial differences" exist between the
employees concerned. We find a commonality of interest among them. There are no
compelling reasons for the formation of another union.
[G.R. No. 79526 : December 21, 1990.] 192 SCRA 598
NATIONAL ASSOCIATION OF FREE TRADE UNIONS (NAFTU), Petitioner,
vs.MAINIT LUMBER DEVELOPMENT COMPANY WORKERS UNION-UNITED
LUMBER AND GENERAL WORKERS OF THE PHILIPPINES. (MALDECOWU-
ULGWP), Respondents.
This is a petition for Certiorari to annul and set aside the resolution ** of the public
respondent Bureau of Labor Relation dated January 29,1987 in BLR Case No. A-5-
99-85 entitled: IN RE: Petition for Direct Certification or Certification Election, Mainit
Lumber Development Company Workers Union-United Lumber and General Workers
of the Philippines (MALDECOWU-ULGWP), petitioner-appellee vs. Mainit Lumber
and Development Company, Inc. (MALDECO), respondent; National Association of
Free Trade Unions (NAFTU), compulsory intervenor-appellant, affirming the Order of
the Med-Arbiter date September 24, 1986 and denying petitioner's motion for
reconsideration.
The facts are as follows:
On January 28, 1985, private respondent Mainit Lumber Development Company
Workers Union-United Lumber and General Workers of the Philippines,
MALDECOWU-ULGWP (ULGWP, for short), a legitimate labor organization duly
registered with the Ministry of Labor and Employment under Registry No. 2944-IP,
filed with Regional Office No. 10, Ministry of Labor and Employment at Cagayan de
Oro City, a petition for certification election to determine the sole and exclusive
collective bargaining representative among the rank and file workers/employees of
Mainit Lumber Development Company Inc. (MALDECO), a duly organized, registered
and existing corporation engaged in the business of logging and saw-mill operations
employing approximately 136 rank and file employees/workers (Rollo, p. 11; Petition;
Annex "A"). The case was scheduled for hearing two (2) times. During the first
scheduled hearing on February 20, 1985, the counsel for compulsory intervenor (now
petitioner), National Association of Free Trade Union (NAFTU) requested for
postponement on the ground that he was leaving for abroad. During the scheduled
hearing of March 13, 1985, they, however, agreed to submit simultaneously their
respective position papers within twenty (20) days (Rollo, p. 17; Petition; Annex "D").
Petitioner ULGWP, private respondent herein, in its petition and position paper
alleged, among others: (1) that there was no certification election conducted within 12
months prior to the filing of the petition; (2) that the petition was filed within the 60 day
freedom period, i.e. CBA expired on February 28, 1985; (3) that the petition is
supported by the signatures of 101 rank and file employees out of a total of 201
employees of the employer or more than thirty percent (30%) than that required by
law (Rollo, p. 13; Petition; Annex "B").:-cralaw
On April 11, 1985, the Med-Arbiter granted the petition for certification election. On
April 26, 1985, NAFTU appealed the decision of the Med-Arbiter on the ground that
MALDECO was composed of two (2) bargaining units, the Sawmill Division and the
Logging Division, but both the petition and decision treated these separate and
distinct units only as one (Rollo, p. 20; Petition; Annex "E").
On April 28, 1986, the Bureau of Labor Relations affirmed the decision (Rollo, p. 26;
Petition; Annex "J"). Thus, a certification election was held on separate dates at the
employer's sawmill division and logging area respectively. In said election
MALDECOWU-ULGWP garnered a total vote of 146 while NAFTU garnered a total of
2 votes (Rollo, p. 42; Petition; Annex "O").
On July 26, 1986, NAFTU filed an election protest alleging massive vote buying
accompanied with grave and serious threat force and intimidation on the lives of 25
applicants as stated in a Joint Affidavit attached thereto (Rollo, p. 28; Petition;
Annexes "K", "K-3").
MALDECO filed its Manifestation on August 3, 1986, which corroborated petitioner's
stand. Attached to the said Manifestation was a joint affidavit executed by thirty five
(35) of its employees/workers (Rollo, p. 33; Petition; Annexes "L", "L-1").
On September 3, 1986, private respondent filed its position paper (Rollo, p. 36;
Petition; Annex "I"). On September 8, 1986 petitioner filed its opposition to private
respondent's position paper (Rollo, p. 39; Petition; Annex "N"). On September 24,
1986, the Med-Arbiter dismissed the election protest (Rollo, p. 42; Petition; Annex
"O").
On October 10, 1986, petitioner NAFTU appealed the order of the Med-Arbiter to the
Bureau of Labor Relations in Manila (Rollo, p. 46) which denied the appeal (Rollo, p.
48) and the two motions for reconsideration (Rollo, pp. 51, 55).
Hence, this petition.
The issues raised in this petition are:
I WHETHER OR NOT IT WAS RIGHT FOR THE MED-ARBITER TO CHANGE THE
EMPLOYER FROM TWO SEPARATE BARGAINING UNITS TO ONLY ONE.
II WHETHER OR NOT THERE WAS MASSIVE VOTE BUYING AND SERIOUS
THREAT TO LIFE TO JUSTIFY INVALIDATING THE RESULT OF THE ELECTION.
III WHETHER OR NOT AN ELECTION PROTEST IN A CERTIFICATION ELECTION
CAN BE GIVEN DUE COURSE EVEN IF NOT ENTERED IN THE MINUTES OF THE
ELECTION.
In the case at bar, petitioner alleges that the employer MALDECO was composed of
two bargaining units, the Sawmill Division in Butuan City and the Logging Division, in
Zapanta Valley, Kitcharao, Agusan Norte, about 80 kilometers distant from each other
and in fact, had then two separate CBA's, one for the Sawmill Division and another for
the Logging Division, both the petition and decision referred only to one bargaining
unit; that from 1979 to 1985, the Ministry of Labor and Employment recognized the
existence of two (2) separate bargaining units at MALDECO, one for its Logging
Division and another for its Sawmill Division.
Significantly, out of two hundred and one (201) employees of MALDECO, one
hundred seventy five (175) consented and supported the petition for certification
election, thereby confirming their desire for one bargaining representative (Rollo, p.
104).:- nad
Moreover, while the existence of a bargaining history is a factor that may be reckoned
with in determining the appropriate bargaining unit, the same is not decisive or
conclusive. Other factors must be considered. The test of grouping is community or
mutuality of interests. This is so because "the basic test of an asserted bargaining
unit's acceptability is whether or not it is fundamentally the combination which will
best assure to all employees the exercise of their collective bargaining rights."
(Democratic Labor Association v. Cebu Stevedoring Company, Inc., et al., 103 Phil.
1103 [1958]).
Certainly, there is a mutuality of interest among the employees of the Sawmill Division
and the Logging Division. Their functions mesh with one another. One group needs
the other in the same way that the company needs them both. There may be
difference as to the nature of their individual assignments but the distinctions are not
enough to warrant the formation of a separate bargaining unit.
and serious threats, force and intimidation are questions of fact which should be
contained in the minutes of said proceedings. There is no clear and convincing proof
presented by the protestant in support of its contention, hence, we have no other
alternative than to uphold the election results."
In the case of Philippine Airlines Employees' Association (PALEA) v. Hon. Pura
Ferrer-Calleja, et al., 162 SCRA 425 [1988]), this Court held that factual findings of
the Bureau of Labor Relations which are supported by substantial evidence are
binding on this Court and must be respected.: nad
PREMISES CONSIDERED, the resolution of public respondent Bureau of Labor
Relations dated January 29, 1987 is hereby AFFIRMED.
SO ORDERED.

Secondly, the issue had been raised earlier by petitioner. The respondent Bureau of
Labor Relations had already ruled on the same in its decision dated April 28, 1986
affirming the Med-Arbiter's Order dated April 11, 1985 which granted the petition for
Certification Election. NAFTU did not elevate the April 28, 1986 decision to this Court.
On the contrary, it participated in the questioned election and later it did not raise the
issue in its election protest (Rollo, p. 210). Hence, the principle of res judicata applies.
It was settled as early as 1956 that "the rule which forbids the reopening of a matter
once judicially determined by competent authority applies as well to the judicial and
quasi-judicial acts of public, executive or administrative officers and boards acting
within their jurisdiction as to the judgments of courts having general judicial powers . .
." (B.F. Goodrich Philippines, Inc. v. Workmen's Compensation Commission and
Leandro M. Castro, 159 SCRA 355 [1988]).

With regard to the second and third issues raised by petitioner, the public respondent
Bureau of Labor Relations in its order dated September 24, 1986 found the following,
to wit:

"After a careful perusal of the records of this case and after considering, adducing
and weighing all the pleadings, arguments, etc. and the circumstances attendant to
the instant case, this Office is of the opinion that the grounds relied upon by the
protestant NAFTU in its protest are bereft of any merit, hence, this Office finds no
cogent reason to order the invalidation or annulment of the certification election under
protest or the holding of a run-off election thereat between no union and the
protestee, MALDECOWU-ULGWP. Indeed, the minutes of said certification elections
conducted both at the sawmill and logging departments on August 15 and 21, 1986
respectively, of the respondent/employer showed that there was no protest on
massive vote buying accompanied with grave and serious threats, force and
intimidation raised by any of the parties who were ably represented in said elections.
Paragraph 2, Section 9, Rule 6 of the Rules and Regulations implementing the Labor
Code of the Philippines (now Section 3, Rule VI, Book 5 of the Omnibus Rules
Implementing the Labor Code) provides that protests not so raised and contained in
the minutes of the proceedings are deemed waived. Allegations of vote buying, grave
G.R. No. L-14656 November 29, 1960
PHILIPPINE LAND-AIR-SEA LABOR UNION (PLASLU), petitioner, vs. COURT OF
INDUSTRIAL RELATIONS, ET AL., respondents.
This is a petition to review on certiorari an order of the Court of Industrial Relations in
Case No. 38 MC-Cebu certifying the Allied Workers' Association of the Philippines,
San Carlos Chapter, as the sole collective bargaining representative of the
employees of the San Carlos Milling Co., Inc.
The record shows that in said Case No. 38 MC-Cebu the Industrial Court on May 25,
1956 ordered the holding of a certification election to determine which of the two
contending labor unions therein, herein petitioner Philippine Land-Air-Sea Labor
Union (PLASLU)or respondent Allied Workers' Association of the Philippines (AWA),
shall be the sole collective bargaining agent to the employees of the San Carlos
Milling Co. The pertinent portions of the court's order read as follows:
Considering the history of bargaining relations in this case where there has only
been one bargaining unit, and for purposes of effectuating the policies of the Act,
the same should be maintained. In other words, the appropriate bargaining unit is
the Employer unit composed of 602 employees including some 200 piece work
(pakiao) workers and stevedores appearing in the Employer's payrolls during the
milling and off the season minus the alleged laborers and operators of farm
tractors who are hired and paid by the sugar cane planters. (Emphasis supplied.)
All the foregoing considered, the Court hereby directs the Department of Labor to
conduct a certification election in the premises of the San Carlos Milling
Company, Ltd. at San Carlos, Negros Occidental for the purpose of determining,
under existing rules and regulations on the matter, which of the two (2)
contending labor unions herein, the PLASLU or the AWA shall be the sole
collective bargaining agent in accordance with the provisions of the Act. The
Employer is hereby ordered to submit a list of employees appearing in its payroll
during milling season for the year 1955 to the Department of Labor which,
together with the "Exhibit X-Court" now part of the records of this case shall be
used as the list of eligible voters minus employees who are performing functions
of supervisors and security guards who are excluded from participating in said
election. (Emphasis supplied.)
SO ORDERED.
Prior to the holding of the election, respondent AWA filed an urgent motion to exclude
144 employees from participating in the election. The motion, however, was denied,
the Industrial Court holding that the workers sought to be excluded were eligible to
vote since they were actual employees of good standing of the respondent company
during the milling season of 1955 and were included in the company's payroll as of
that date.
On September 21, 1956, the certification election was held in the premises of the San
Carlos Milling Co., PLASLU receiving 88 votes while AWA garnered 149, with 390
ballots recorded as challenged, 242 of them by the petitioner PLASLU and 148 by the
respondent AWA filed with the Industrial Court a petition contesting the election on
the ground of the ineligibility of the voters cast the 148 ballots is challenged by
PLASLU were cast by legitimate employee of the company, as they were the votes of
"piece work (pakiao) workers and stevedores appearing in the employer's payroll
during the milling and off-season" of 1955. PLSLU, on the other hand, in an urgent
motion filed on October 4, 1956, questioned the validity of the 242 ballots cast by
stevedores and piece workers. The motion was opposed by AWA on the ground that
as a protest of the election it was filed late. The Industrial Court, however, considered
the same as an answer to AWA'S petition, and on September 4, 1957, after hearing
the arguments of the parties, ordered that all the 390 challenged ballots were opened.
After the canvass, 148 votes challenged by AWA were counted in favor of PLASLU.
Of the 242 votes challenged by PLASLU, 3 were counted in its favor, 228 credited in
favor of AWA, and 11 declared either for no union or spoiled ballots. Adding the votes
to the results of the certification election, the final count showed that respondent AWA
garnered a total of 377 votes as against 239 for PLASLU. Accordingly, said
respondent was certified by the Industrial Court in its order dated March 12, 1958 as
the sole collective bargaining agent of the employees of the San Carlos Milling Co. As
its motion for reconsideration of the order was denied by the court en banc — with
Judge Feliciano Tabigne dissenting -- the petitioner PLASLU filed the present petition
for review, contending that Industrial Court erred in not excluding the 242 votes
challenged by it from the total number of votes credited to respondent AWA.
We find petitioner's contention to be meritorious.
In order of May 25, 1956 authorizing the certification election, the trial judge of the
Industrial Court directed the "list of employees appearing in its payroll during milling
season for the year 1955 ... together with the Exhibit "X-Court" now part of the
records of this case shall be used as the list of eligible voters minus employees who
are performing functions of supervisors and security guards who are excluded from
participating in said election." It being undisputed that the challenged votes were cast
by casual employees consisting of stevedores and piece workers who — as stated by
Judge Tabigne in his dissent — "were not included in the list of employees appearing
in the payroll of the company during the milling season for the year 1955 nor did they
appear in the Exhibit "X-Court" which formed portion of the list of personnel allowed to
vote in this certification election", the said challenged votes should have been
excluded. Citing that the appropriate bargaining unit is the employer's unit composed
of 602 employees, including the piece workers and stevedores whose votes were
challenged by PLASLU, the respondent AWA argues that the challenged votes were
cast by employees eligible to vote. It will be noted, however, that these employees
whose votes were challenged were hired on temporary or casual basis and had work
of a different nature from those of the laborers permitted to vote in the certification
election. In the case of Democratic Labor Union vs. Cebu Stevedoring Co., Inc., et al.
(G.R. No. L-10321, February 28, 1958) this Court had occasion to rule that in the
determination of the proper constituency of a collective bargaining unit, certain factors
must be considered, among them, the employment status of the employees to be
affected, that is to say, the positions and categories of work to which they belong, and
the unity of the employees' interest. And this is so because the basic test of a
bargaining unit's acceptability is whether it will best assure to all employees is
whether it will be assure to all employees the exercise of their collective bargaining
rights. (See also Alhambra Cigar & Cigarette Manufacturing Co. vs. Alhambra
Employee's Association, 107 Phil., 23.) It appearing that the 242 stevedores and
piece workers, whose votes have been challenged, were employed on casual or day
to day basis and have no reasonable basis for continued or renewed employment for
any appreciable substantial time — not to mention the nature of work they perform —
they cannot be considered to have such mutuality of interest as to justify their
inclusion in a bargaining unit composed of permanent or regular employees.
There is nothing to the contention that the order complained of is merely
complementary to the order of the Industrial Court dated September 4, 1957, which
has become final and executory the same not having been appealed. It will be
observed that the said order of September 4, 1957, merely ordered the opening and
canvassing of the challenged ballots. Any appeal taken from said order would
therefore have been premature.
Disregarding the votes cast by stevedores and piece workers which were counted in
favor of the respondent AWA, the final results of the certification election show that
the petitioner PLASLU garnered a majority of the votes cast by eligible voters.
Consequently, said petitioner should be certified as the sole collective bargaining
representative of the employees of the San Carlos Milling Co.
Wherefore, the order complained of is reversed and the petitioner PLASLU is hereby
certified as the collective bargaining agent of the employees of the San Carlos Milling
Company. Without costs.
G.R. No. 77395 November 29, 1988
BELYCA CORPORATION, petitioner, vs. DIR. PURA FERRER CALLEJA, LABOR
RELATIONS, MANILA, MINISTRY OF LABOR AND EMPLOYMENT; MED-
ARBITER, RODOLFO S. MILADO, MINISTRY OF LABOR AND EMPLOYMENT,
REGIONAL OFFICE NO. 10 AND ASSOCIATED LABOR UNION (ALU-TUCP),
MINDANAO REGIONAL OFFICE, CAGAYAN DE ORO CITY, respondents.
This is a petition for certiorari and prohibition with preliminary injunction seeking to
annul or to set aside the resolution of the Bureau of Labor Relations dated November
24, 1986 and denying the appeal, and the Bureau's resolution dated January 13,
1987 denying petitioner's motion for reconsideration.
The dispositive portion of the questioned resolution dated November 24, 1986 (Rollo,
p. 4) reads as follows:
WHEREFORE, in view of all the foregoing considerations, the Order is affirmed
and the appeal therefrom denied.
Let, therefore, the pertinent records of the case be remanded to the office of
origin for the immediate conduct of the certification election.
The dispositive portion of the resolution dated January 13, 1987 (Rollo, p. 92) reads,
as follows:
WHEREFORE, the Motion for Reconsideration filed by respondent Belyca
Corporation (Livestock Agro-Division) is hereby dismissed for lack of merit and
the Bureau's Resolution dated 24 November 1986 is affirmed. Accordingly, let
the records of this case be immediately forwarded to the Office of origin for the
holding of the certification elections.
No further motion shall hereafter be entertained.
The antecedents of the case are as follows:
On June 3, 1986, private respondent Associated Labor Union (ALU)-TUCP, a
legitimate labor organization duly registered with the Ministry of Labor and
Employment under Registration Certificate No. 783-IP, filed with the Regional Office
No. 10, Ministry of Labor and Employment at Cagayan de Oro City, a petition for
direct certification as the sole and exclusive bargaining agent of all the rank and file
employees/workers of Belyca Corporation (Livestock and Agro-Division), a duly
organized, registered and existing corporation engaged in the business of poultry
raising, piggery and planting of agricultural crops such as corn, coffee and various
vegetables, employing approximately 205 rank and file employees/workers, the
collective bargaining unit sought in the petition, or in case of doubt of the union's
majority representation, for the issuance of an order authorizing the immediate
holding of a certification election (Rollo, p. 18). Although the case was scheduled for
hearing at least three times, no amicable settlement was reached by the parties.
During the scheduled hearing of July 31, 1986 they, however, agreed to submit
simultaneously their respective position papers on or before August 11, 1986 (rollo. p.
62).
Petitioner ALU-TUCP, private respondent herein, in its petition and position paper
alleged, among others, (1) that there is no existing collective bargaining agreement
between the respondent employer, petitioner herein, and any other existing legitimate
labor unions; (2) that there had neither been a certification election conducted in the
proposed bargaining unit within the last twelve (12) months prior to the filing of the
petition nor a contending union requesting for certification as the. sole and exclusive
bargaining representative in the proposed bargaining unit; (3) that more than a
majority of respondent employer's rank-and-file employees/workers in the proposed
bargaining unit or one hundred thirty-eight (138) as of the date of the filing of the
petition, have signed membership with the ALU-TUCP and have expressed their
written consent and authorization to the filing of the petition; (4) that in response to
petitioner union's two letters to the proprietor/ General Manager of respondent
employer, dated April 21, 1986 and May 8, 1 986, requesting for direct recognition as
the sole and exclusive bargaining agent of the rank-and-file workers, respondent
employer has locked out 119 of its rank-and-file employees in the said bargaining unit
and had dismissed earlier the local union president, vice-president and three other
active members of the local unions for which an unfair labor practice case was filed
by petitioner union against respondent employer last July 2, 1986 before the NLRC in
Cagayan de Oro City (Rollo, pp. 18; 263).<äre||anº•1àw>
Respondent employer, on the other hand, alleged in its position paper, among others,
(1) that due to the nature of its business, very few of its employees are permanent,
the overwhelming majority of which are seasonal and casual and regular employees;
(2) that of the total 138 rank-and-file employees who authorized, signed and
supported the filing of the petition (a) 14 were no longer working as of June 3, 1986
(b) 4 resigned after June, 1986 (c) 6 withdrew their membership from petitioner union
(d) 5 were retrenched on June 23, 1986 (e) 12 were dismissed due to malicious
insubordination and destruction of property and (f) 100 simply abandoned their work
or stopped working; (3) that the 128 incumbent employees or workers of the livestock
section were merely transferred from the agricultural section as replacement for those
who have either been dismissed, retrenched or resigned; and (4) that the statutory
requirement for holding a certification election has not been complied with by the
union (Rollo, p. 26).
The Labor Arbiter granted the certification election sought for by petitioner union in his
order dated August 18, 1986 (Rollo, p. 62).
On February 4, 1987, respondent employer Belyca Corporation, appealed the order
of the Labor Arbiter to the Bureau of Labor Relations in Manila (Rollo, p. 67) which
denied the appeal (Rollo, p. 80) and the motion for reconsideration (Rollo, p. 92).
Thus, the instant petition received in this Court by mail on February 20, 1987 (Rollo,
p. 3).
In the resolution of March 4, 1987, the Second Division of this Court required
respondent Union to comment on the petition and issued a temporary restraining
order (,Rollo, p. 95).
Respondent union filed its comment on March 30, 1987 (Rollo, p. 190); public
respondents filed its comment on April 8, 1987 (Rollo, p. 218).
On May 4, 1987, the Court resolved to give due course to the petition and to require
the parties to submit their respective memoranda within twenty (20) days from notice
(Rollo, p. 225).
The Office of the Solicitor General manifested on June 11, 1987 that it is adopting the
comment for public respondents as its memorandum (Rollo, p. 226); memorandum
for respondent ALU was filed on June 30, 1987 (Rollo, p. 231); and memorandum for
petitioner, on July 30, 1987 (Rollo, p. 435).
The issues raised in this petition are:
I WHETHER OR NOT THE PROPOSED BARGAINING UNIT IS AN
APPROPRIATE BARGAINING UNIT.
II WHETHER OR NOT THE STATUTORY REQUIREMENT OF 30% (NOW 20%)
OF THE EMPLOYEES IN THE PROPOSED BARGAINING UNIT, ASKING FOR
A CERTIFICATION ELECTION HAD BEEN STRICTLY COMPLIED WITH.
In the instant case, respondent ALU seeks direct certification as the sole and
exclusive bargaining agent of all the rank-and-file workers of the livestock and agro
division of petitioner BELYCA Corporation (Rollo, p. 232), engaged in piggery, poultry
raising and the planting of agricultural crops such as corn, coffee and various
vegetables (Rollo, p. 26). But petitioner contends that the bargaining unit must include
all the workers in its integrated business concerns ranging from piggery, poultry, to
supermarts and cinemas so as not to split an otherwise single bargaining unit into
fragmented bargaining units (Rollo, p. 435).<äre||anº•1àw>
The Labor Code does not specifically define what constitutes an appropriate
collective bargaining unit. Article 256 of the Code provides:
Art. 256. Exclusive bargaining representative.—The labor organization
designated or selected by the majority of the employees in an appropriate
collective bargaining unit shall be exclusive representative of the employees in
such unit for the purpose of collective bargaining. However, an individual
employee or group of employee shall have the right at any time to present
grievances to their employer.
According to Rothenberg, a proper bargaining unit maybe said to be a group of
employees of a given employer, comprised of all or less than all of the entire body of
employees, which the collective interests of all the employees, consistent with equity
to the employer, indicate to be best suited to serve reciprocal rights and duties of the
parties under the collective bargaining provisions of the law (Rothenberg in Labor
Relations, p. 482).
This Court has already taken cognizance of the crucial issue of determining the
proper constituency of a collective bargaining unit.
Among the factors considered in Democratic Labor Association v. Cebu Stevedoring
Co. Inc. (103 Phil 1103 [1958]) are: "(1) will of employees (Glove Doctrine); (2) affinity
and unity of employee's interest, such as substantial similarity of work and duties or
similarity of compensation and working conditions; (3) prior collective bargaining
history; and (4) employment status, such as temporary, seasonal and probationary
employees".
Under the circumstances of that case, the Court stressed the importance of the fourth
factor and sustained the trial court's conclusion that two separate bargaining units
should be formed in dealing with respondent company, one consisting of regular and
permanent employees and another consisting of casual laborers or stevedores.
Otherwise stated, temporary employees should be treated separately from permanent
employees. But more importantly, this Court laid down the test of proper grouping,
which is community and mutuality of interest.
Thus, in a later case, (Alhambra Cigar and Cigarette Manufacturing Co. et al. v.
Alhambra Employees' Association 107 Phil. 28 [1960]) where the employment status
was not at issue but the nature of work of the employees concerned; the Court
stressed the importance of the second factor otherwise known as the substantial-
mutual-interest test and found no reason to disturb the finding of the lower Court that
the employees in the administrative, sales and dispensary departments perform work
which has nothing to do with production and maintenance, unlike those in the raw
leaf, cigar, cigarette and packing and engineering and garage departments and
therefore community of interest which justifies the format or existence as a separate
appropriate collective bargaining unit.
Still later in PLASLU v. CIR et al. (110 Phil. 180 [1960]) where the employment status
of the employees concerned was again challenged, the Court reiterating the rulings,
both in Democratic Labor Association v. Cebu Stevedoring Co. Inc.
supra and Alhambra Cigar and Cigarette Co. et al. v. Alhambra Employees'
Association (supra) held that among the factors to be considered are: employment
status of the employees to be affected, that is the positions and categories of work to
which they belong, and the unity of employees' interest such as substantial similarity
of work and duties.
In any event, whether importance is focused on the employment status or the
mutuality of interest of the employees concerned "the basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the combination
which will best assure to all employees the exercise of their collective bargaining
rights (Democratic Labor Association v. Cebu Stevedoring Co. Inc. supra)
Hence, still later following the substantial-mutual interest test, the Court ruled that
there is a substantial difference between the work performed by musicians and that of
other persons who participate in the production of a film which suffice to show that
they constitute a proper bargaining unit. (LVN Pictures, Inc. v. Philippine Musicians
Guild, 1 SCRA 132 [1961]).
Coming back to the case at bar, it is beyond question that the employees of the
livestock and agro division of petitioner corporation perform work entirely different
from those performed by employees in the supermarts and cinema. Among others,
the noted difference are: their working conditions, hours of work, rates of pay,
including the categories of their positions and employment status. As stated by
petitioner corporation in its position paper, due to the nature of the business in which
its livestock-agro division is engaged very few of its employees in the division are
permanent, the overwhelming majority of which are seasonal and casual and not
regular employees (Rollo, p. 26). Definitely, they have very little in common with the
employees of the supermarts and cinemas. To lump all the employees of petitioner in
its integrated business concerns cannot result in an efficacious bargaining unit
comprised of constituents enjoying a community or mutuality of interest. Undeniably,
the rank and file employees of the livestock-agro division fully constitute a bargaining
unit that satisfies both requirements of classification according to employment status
and of the substantial similarity of work and duties which will ultimately assure its
members the exercise of their collective bargaining rights.
II
It is undisputed that petitioner BELYCA Corporation (Livestock and Agro Division)
employs more or less two hundred five (205) rank-and-file employees and workers. It
has no existing duly certified collective bargaining agreement with any legitimate labor
organization. There has not been any certification election conducted in the proposed
bargaining unit within the last twelve (12) months prior to the filing of the petition for
direct certification and/or certification election with the Ministry of Labor and
Employment, and there is no contending union requesting for certification as the sole
and exclusive bargaining representative in the proposed bargaining unit.
The records show that on the filing of the petition for certification and/or certification
election on June 3, 1986; 124 employees or workers which are more than a majority
of the rank-and-file employees or workers in the proposed bargaining unit had signed
membership with respondent ALU-TUCP and had expressed their written consent
and authorization to the filing of the petition. Thus, the Labor Arbiter ordered the
certification election on August 18, 1986 on a finding that 30% of the statutory
requirement under Art. 258 of the Labor Code has been met.
But, petitioner corporation contends that after June 3, 1986 four (4) employees
resigned; six (6) subsequently withdrew their membership; five (5) were retrenched;
twelve (12) were dismissed for illegally and unlawfully barricading the entrance to
petitioner's farm; and one hundred (100) simply abandoned their work.
Petitioner's claim was however belied by the Memorandum of its personnel officer to
the 119 employees dated July 28, 1986 showing that the employees were on strike,
which was confirmed by the finding of the Bureau of Labor Relations to the effect that
they went on strike on July 24, 1986 (Rollo, p. 419). Earlier the local union president,
Warrencio Maputi; the Vice-president, Gilbert Redoblado and three other active
members of the union Carmen Saguing, Roberto Romolo and Iluminada Bonio were
dismissed and a complaint for unfair labor practice, illegal dismissal etc. was filed by
the Union in their behalf on July 2, 1986 before the NLRC of Cagayan de Oro City
(Rollo, p. 415).<äre||anº•1àw> The complaint was amended on August 20, 1986 for
respondent Union to represent Warrencio Maputi and 137 others against petitioner
corporation and Bello Casanova President and General Manager for unfair labor
practice, illegal dismissal, illegal lockout, etc. (Rollo, p. 416).
Under Art. 257 of the Labor Code once the statutory requirement is met, the Director
of Labor Relations has no choice but to call a certification election (Atlas Free
Workers Union AFWU PSSLU Local v. Noriel, 104 SCRA 565 [1981]; Vismico
Industrial Workers Association (VIWA) v. Noriel, 131 SCRA 569 [1984]) It becomes in
the language of the New Labor Code "Mandatory for the Bureau to conduct a
certification election for the purpose of determining the representative of the
employees in the appropriate bargaining unit and certify the winner as the exclusive
bargaining representative of all employees in the unit." (Federacion Obrera de la
Industria Tabaquera y Otros Trabajadores de Filipinas v. Noriel, 72 SCRA 24 [1976];
Kapisanan Ng Mga Manggagawa v. Noriel, 77 SCRA 414 [1977]); more so when
there is no existing collective bargaining agreement. (Samahang Manggagawa Ng
Pacific Mills, Inc. v. Noriel, 134 SCRA 152 [1985]); and there has not been a
certification election in the company for the past three years (PLUM Federation of
Industrial and Agrarian Workers v. Noriel, 119 SCRA 299 [1982]) as in the instant
case.
It is significant to note that 124 employees out of the 205 employees of the Belyca
Corporation have expressed their written consent to the certification election or more
than a majority of the rank and file employees and workers; much more than the
required 30% and over and above the present requirement of 20% by Executive
Order No. 111 issued on December 24, 1980 and applicable only to unorganized
establishments under Art. 257, of the Labor Code, to which the BELYCA Corporation
belong (Ass. Trade Unions (ATU) v. Trajano, G.R. No. 75321, June 20, 1988).) More
than that, any doubt cast on the authenticity of signatures to the petition for holding a
certification election cannot be a bar to its being granted (Filipino Metals Corp. v. Ople
107 SCRA 211 [1981]). Even doubts as to the required 30% being met warrant
holding of the certification election (PLUM Federation of Industrial and Agrarian
Workers v. Noriel, 119 SCRA 299 [1982]). In fact, once the required percentage
requirement has been reached, the employees' withdrawal from union membership
taking place after the filing of the petition for certification election will not affect said
petition. On the contrary, the presumption arises that the withdrawal was not free but
was procured through duress, coercion or for a valuable consideration (La Suerte
Cigar and Cigarette Factory v. Director of the Bureau of Labor Relations, 123 SCRA
679 [1983]). Hence, the subsequent disaffiliation of the six (6) employees from the
union will not be counted against or deducted from the previous number who had
signed up for certification elections Vismico Industrial Workers Association (VIWA) v.
Noriel 131 SCRA 569 [1984]).<äre||anº•1àw> Similarly, until a decision, final in
character, has been issued declaring the strike illegal and the mass dismissal or
retrenchment valid, the strikers cannot be denied participation in the certification
election notwithstanding, the vigorous condemnation of the strike and the fact that the
picketing were attended by violence. Under the foregoing circumstances, it does not
necessarily follow that the strikers in question are no longer entitled to participate in
the certification election on the theory that they have automatically lost their jobs.
(Barrera v. CIR, 107 SCRA 596 [1981]). For obvious reasons, the duty of the
employer to bargain collectively is nullified if the purpose of the dismissal of the union
members is to defeat the union in the consent requirement for certification election.
(Samahang Manggagawa Ng Via Mare v. Noriel, 98 SCRA 507 [1980]). As stressed
by this Court, the holding of a certification election is a statutory policy that should not
be circumvented. (George and Peter Lines Inc. v. Associated Labor Unions (ALU),
134 SCRA 82 [1986]).

Finally, as a general rule, a certification election is the sole concern of the workers.
The only exception is where the employer has to file a petition for certification election
pursuant to Art. 259 of the Labor Code because the latter was requested to bargain
collectively. But thereafter the role of the employer in the certification process ceases.
The employer becomes merely a bystander (Trade Union of the Phil. and Allied
Services (TUPAS) v. Trajano, 120 SCRA 64 [1983]).

There is no showing that the instant case falls under the above mentioned exception.
However, it will be noted that petitioner corporation from the outset has actively
participated and consistently taken the position of adversary in the petition for direct
certification as the sole and exclusive bargaining representative and/or certification
election filed by respondent Associated Labor Unions (ALU)-TUCP to the extent of
filing this petition for certiorari in this Court. Considering that a petition for certification
election is not a litigation but a mere investigation of a non-adversary character to
determining the bargaining unit to represent the employees (LVN Pictures, Inc. v.
Philippine Musicians Guild, supra; Bulakena Restaurant & Caterer v. Court of
Industrial Relations, 45 SCRA 88 [1972]; George Peter Lines, Inc. v. Associated
Labor Union, 134 SCRA 82 [1986]; Tanduay Distillery Labor Union v. NLRC, 149
SCRA 470 [1987]), and its only purpose is to give the employees true representation
in their collective bargaining with an employer (Confederation of Citizens Labor
Unions CCLU v. Noriel, 116 SCRA 694 [1982]), there appears to be no reason for the
employer's objection to the formation of subject union, much less for the filing of the
petition for a certification election.

PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit (b)
resolution of the Bureau of Labor Relations dated Nov. 24, 1986 is AFFIRMED; and
the temporary restraining order issued by the Court on March 4, 1987 is LIFTED
permanently.

SO ORDERED.
G.R. No. 109002 April 12, 2000
DELA SALLE UNIVERSITY, petitioner, vs. DELA SALLE UNIVERSITY
EMPLOYEES ASSOCIATION (DLSUEA) and BUENAVENTURA
MAGSALIN,respondents.
x-----------------------x
G.R. No. 110072 April 12, 2000
DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION-NATIONAL
FEDERATION OF TEACHERS AND EMPLOYEES UNION (DLSUEA-
NAFTEU), petitioner, vs. DELA SALLE UNIVERSITY and BUENAVENTURA
MAGSALIN, respondents.
Filed with this Court are two petitions for certiorari,1 the first petition with preliminary
injunction and/or temporary restraining order, 2 assailing the decision of voluntary
arbitrator Buenaventura Magsalin, dated January 19, 1993, as having been rendered
with grave abuse of discretion amounting to lack or excess of jurisdiction. These two
petitions have been consolidated inasmuch as the factual antecedents, parties
involved and issues raised therein are interrelated.3
The facts are not disputed and, as summarized by the voluntary arbitrator, are as
follows. On December 1986, Dela Salle University (hereinafter referred to as
UNIVERSITY) and Dela Salle University Employees Association — National
Federation of Teachers and Employees Union (DLSUEA-NAFTEU), which is
composed of regular non-academic rank and file employees,4 (hereinafter referred to
as UNION) entered into a collective bargaining agreement with a life span of three (3)
years, that is, from December 23, 1986 to December 22, 1989. 5 During the freedom
period, or 60 days before the expiration of the said collective bargaining agreement,
the Union initiated negotiations with the University for a new collective bargaining
agreement6 which, however, turned out to be unsuccessful, hence, the Union filed a
Notice of Strike with the National Conciliation and Mediation Board, National Capital
Region.7 After several conciliation-mediation meetings, five (5) out of the eleven (11)
issues raised in the Notice of Strike were resolved by the parties. A partial collective
bargaining agreement was thereafter executed by the parties. 8 On March 18, 1991,
the parties entered into a Submission Agreement, identifying the remaining six (6)
unresolved issues for arbitration, namely: "(1) scope of the bargaining unit, (2) union
security clause, (3) security of tenure, (4) salary increases for the third and fourth
years [this should properly read second and third years]9 of the collective bargaining
agreement, (5) indefinite union leave, reduction of the union president's workload,
special leave, and finally, (6) duration of the agreement." 10 The parties appointed
Buenaventura Magsalin as voluntary arbitrator. 11 On January 19, 1993, the voluntary
arbitrator rendered the assailed decision. 12
In the said decision, the voluntary arbitrator, on the first issue involving the scope of
the bargaining unit, ruled that ". . . the Computer Operators assigned at the CSC
[Computer Services Center], just like any other Computer Operators in other units,
[should be] included as members of the bargaining unit," 13 after finding that
"[e]vidently, the Computer Operators are presently doing clerical and routinary work
and had nothing to do with [the] setting of management policies for the University, as
[may be] gleaned from the duties and responsibilities attached to the position and
embodied in the CSC [Computer Services Center] brochure. They may have, as
argued by the University, access to vital information regarding the University's
operations but they are not necessarily confidential." 14 Regarding the discipline
officers, the voluntary arbitrator ". . . believes that this type of employees belong (sic)
to the rank-and-file on the basis of the nature of their job." 15 With respect to the
employees of the College of St. Benilde, the voluntary arbitrator found that the
College of St. Benilde has a personality separate and distinct from the University and
thus, held ". . . that the employees therein are outside the bargaining unit of the
University's rank-and-file employees." 16
On the second issue regarding the propriety of the inclusion of a union shop clause in
the collective bargaining agreement, in addition to the existing maintenance of
membership clause, the voluntary arbitrator opined that a union shop clause ". . . is
not a restriction on the employee's right of (sic) freedom of association but rather a
valid form of union security while the CBA is in force and in accordance with the
Constitutional policy to promote unionism and collective bargaining and negotiations.
The parties therefore should incorporate such union shop clause in their CBA." 17
On the third issue with respect to the use of the "last-in-first-out" method in case of
retrenchment and transfer to other schools or units, the voluntary arbitrator upheld the
". . . elementary right and prerogative of the management of the University to select
and/or choose its employees, a right equally recognized by the Constitution and the
law. The employer, in the exercise of this right, can adopt valid and equitable grounds
as basis for lay-off or separation, like performance, qualifications, competence, etc.
Similarly, the right to transfer or reassign an employee is an employer's exclusive
right and prerogative." 18
Regarding the fourth issue concerning salary increases for the second and third years
of the collective bargaining agreement, the voluntary arbitrator opined that the ". .
.proposed budget of the University for SY 1992-93 could not sufficiently cope up with
the demand for increases by the Union. . . . . . . . With the present financial condition
of the University, it cannot now be required to grant another round of increases
through collective bargaining without exhausting its coffers for other legitimate needs
of the University as an institution," 19 thus, he ruled that ". . . the University can no
longer be required to grant a second round of increase for the school years under
consideration and charge the same to the incremental proceeds." 20
On the fifth issue as to the Union's demand for a reduction of the workload of the
union president, special leave benefits and indefinite union leave with pay, the
voluntary arbitrator rejected the same, ruling that unionism ". . . is no valid reason for
the reduction of the workload of its President," 21 and that there is ". . . no sufficient
justification to grant an indefinite leave." 22 Finding that the Union and the Faculty
Association are not similarly situated, technically and professionally, 23 and that
"[w]hile professional growth is highly encouraged on the part of the rank-and-file
employees, this educational advancement would not serve in the same degree as
 24 the
demanded of the faculty members," voluntary arbitrator denied the Union's
demand for special leave benefits.
On the last issue regarding the duration of the collective bargaining agreement, the
voluntary arbitrator ruled that ". . . when the parties forged their CBA and signed it on
19 November 1990, where a provision on duration was explicitly included, the same
became a binding agreement between them. Notwithstanding the Submission
Agreement, thereby reopening this issue for resolution, this Voluntary Arbitrator is
constrained to respect the original intention of the parties, the same being not
contrary to law, morals or public policy." 25 As to the economic aspect of the collective
bargaining agreement, the voluntary arbitrator opined that the ". . . economic
provisions of the CBA shall be re-opened after the third year in compliance with the
mandate of the Labor Code, as amended." 26
Subsequently, both parties filed their respective motions for reconsideration which,
however, were not entertained by the voluntary arbitrator "pursuant to existing rules
and jurisprudence governing voluntary arbitration cases." 27
On March 5, 1993, the University filed with the Second Division of this Court, a
petition for certiorari with temporary restraining order and/or preliminary injunction
assailing the decision of the voluntary arbitrator, as having been rendered "in excess
of jurisdiction and/or with grave abuse of discretion." 28 Subsequently, on May 24,
1993, the Union also filed a petition for certiorari with the First Division. 29 Without
giving due course to the petition pending before each division, the First and Second
Divisions separately resolved to require the respondents in each petition, including
the Solicitor General on behalf of the voluntary arbitrator, to file their respective
Comments. 30 Upon motion by the Solicitor General dated July 29, 1993, both
petitions were consolidated and transferred to the Second Division. 31
In his consolidated Comment 32 filed on September 9, 1993 on behalf of voluntary
arbitrator Buenaventura C. Magsalin, the Solicitor General agreed with the voluntary
arbitrator's assailed decision on all points except that involving the employees of the
College of St. Benilde. According to the Solicitor General, the employees of the
College of St. Benilde should have been included in the bargaining unit of the rank-
and-file employees of the University. 33 The Solicitor General came to this conclusion
after finding ". . . sufficient evidence to justify the Union's proposal to consider the
University and the CSB [College of St. Benilde] as only one entity because the latter
is but a mere integral part of the University," to wit: 34
1. One of the duties and responsibilities of the CSB's Director of Academic
Services is to coordinate with the University's Director of Admissions regarding
the admission of freshmen, shiftees and transferees (Annex "3" of the
University's Reply);
2. Some of the duties and responsibilities of the CSB's Administrative Officer are
as follows:
A. xxx xxx xxx
4. Recommends and implements personnel policies and guidelines (in
accordance with the Staff Manual) as well as pertinent existing general policies of
the university as a whole. . . . .
12. Conducts and establishes liaison with all the offices concerned at the Main
Campus as well (sic) with other government agencies on all administrative-
related matters. . . .
B. xxx xxx xxx
7. Handles processing, canvassing and direct purchasing of all requisitions worth
more than P10,000 or less. Coordinates and canvasses with the Main Campus
all requisitions worth more than P10,000. . . .
C. xxx xxx xxx
7. Plans and coordinates with the Security and Safety Committee at the Main
Campus the development of a security and safety program during times of
emergency or occurrence of fire or other natural calamities. . . . (Annex "4" of the
University's Reply).
3. The significant role which the University assumes in the admission of students
at the CSB is revealed in the following provisions of the CSB's Bulletin for Arts
and Business Studies Department for the schoolyear 1992-1993, thus:
Considered in the process of admission for a (sic) high school graduate
applicants are the following criteria: results of DLSU College Entrance
Examination . . . .
Admission requirements for transferees are: . . . and an acceptable score in the
DLSU admission test. . . .
Shiftees from DLSU who are still eligible to enroll may be admitted in accordance
with the DLSU policy on shifting. Considering that there sometimes exist
exceptional cases where a very difficult but temporary situation renders a DLSU
student falling under this category a last chance to be re-admitted provided he
meets the cut-off scores required in the qualifying examination administered by
the university. . . .
He may not be remiss in his study obligations nor incur any violation whatsoever,
as such will be taken by the University to be an indication of his loss of initiative
to pursue further studies at DLSU. In sch (sic) a case, he renders himself
ineligible to continue studying at DLSU. DLSU thus reserves the right to the
discontinuance of the studies of any enrolee whose presence is inimical to the
objectives of the CSB/DLSU. . . .
 As a college within the university, the College of St. Benilde subscribes to the De
La Salle Mission." (Annexes "C-1," "C-2," and "C-3" of the Union's Consolidated
Reply and Rejoinder)
4. The academic programs offered at the CSB are likewise presented in the
University's Undergraduate Prospectus for schoolyear 1992-1993 (Annex "D" of
the Union's Consolidated Reply and Rejoinder).
5. The Leave Form Request (Annex "F" of the Union's Position Paper) at the
CSB requires prior permission from the University anent leaves of CSB
employees, to wit:
AN EMPLOYEE WHO GOES ON LEAVE WITHOUT PRIOR PERMISSION
FROM THE UNIVERSITY OR WHO OVEREXTENDS THE PERIOD OF HIS
APPROVED LEAVE WITHOUT SECURING AUTHORITY FROM THE
UNIVERSITY, OR WHO REFUSE TO BE RECALLED FROM AN APPROVED
LEAVE SHALL BE CONSIDERED ABSENT WITHOUT LEAVE AND SHALL BE
SUBJECT TO DISCIPLINARY ACTION.
6. The University officials themselves claimed during the 1990 University Athletic
Association of the Philippines (UAAP) meet that the CSB athletes represented
the University since the latter and the CSB comprise only one entity.
On February 9, 1994, this Court resolved to give due course to these consolidated
petitions and to require the parties to submit their respective memoranda. 35
In its memorandum filed on April 28, 1994, 36 pursuant to the above-stated
Resolution, 37 the University raised the following issues for the consideration of the
Court: 38
I. WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED
BY THE VOLUNTARY ARBITRATOR WHEN HE INCLUDED, WITHIN THE
BARGAINING UNIT COMPRISING THE UNIVERSITY'S RANK-AND-FILE
EMPLOYEES, THE COMPUTER OPERATORS ASSIGNED AT THE
UNIVERSITY'S COMPUTER SERVICES CENTER AND THE UNIVERSITY'S
DISCIPLINE OFFICERS, AND WHEN HE EXCLUDED THE COLLEGE OF
SAINT BENILDE EMPLOYEES FROM THE SAID BARGAINING UNIT.
II. WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED
BY THE VOLUNTARY ARBITRATOR WHEN HE UPHELD THE UNION'S
DEMAND FOR THE INCLUSION OF A UNION SHOP CLAUSE IN THE
PARTIES' COLLECTIVE BARGAINING AGREEMENT.
III. WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED
BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION'S
PROPOSAL FOR THE "LAST-IN-FIRST-OUT" METHOD OF LAY-OFF IN
CASES OF RETRENCHMENT.
IV. WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED
BY THE VOLUNTARY ARBITRATOR WHEN HE RULED THAT THE
UNIVERSITY CAN NO LONGER BE REQUIRED TO GRANT A SECOND
ROUND OF WAGE INCREASES FOR THE SCHOOL YEARS 1991-92 AND
1992-93 AND CHARGE THE SAME TO THE INCREMENTAL PROCEEDS.
V. WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED
BY THE VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION'S
PROPOSALS ON THE DELOADING OF THE UNION PRESIDENT, IMPROVED
LEAVE BENEFITS AND INDEFINITE UNION LEAVE WITH PAY.
The Union, on the other hand, raised the following issues, in its memorandum, 39 filed
pursuant to Supreme Court Resolution dated February 9, 1994, 40 to wit; that the
voluntary arbitrator committed grave abuse of discretion in:
(1) FAILING AND/OR REFUSING TO PIERCE THE VEIL OF CORPORATE
FICTION OF THE COLLEGE OF ST. BENILDE-DLSU DESPITE THE
PRESENCE OF SUFFICIENT BASIS TO DO SO AND IN FINDING THAT THE
EMPLOYEES THEREAT ARE OUTSIDE OF THE BARGAINING UNIT OF THE
DLSU'S RANK-AND-FILE EMPLOYEES. HE ALSO ERRED IN HIS
INTERPRETATION OF THE APPLICATION OF THE DOCTRINE;
(2) DENYING THE PETITIONER'S PROPOSAL FOR THE "LAST-IN FIRST-
OUT" METHOD OF LAY-OFF IN CASE OF RETRENCHMENT AND IN
UPHOLDING THE ALLEGED MANAGEMENT PREROGATIVE TO SELECT
AND CHOOSE ITS EMPLOYEES DISREGARDING THE BASIC TENETS OF
SOCIAL JUSTICE AND EQUITY UPON WHICH THIS PROPOSAL WAS
FOUNDED;
(3) FINDING THAT THE MULTISECTORAL COMMITTEE IN THE
RESPONDENT UNIVERSITY IS THE LEGITIMATE GROUP WHICH
DETERMINES AND SCRUTINIZES ANNUAL SALARY INCREASES AND
FRINGE BENEFITS OF THE EMPLOYEES;
(4) HOLDING THAT THE 70% SHARE IN THE INCREMENTAL TUITION
PROCEEDS IS THE ONLY SOURCE OF SALARY INCREASES AND FRINGE
BENEFITS OF THE EMPLOYEES;
(5) FAILING/REFUSING/DISREGARDING TO CONSIDER THE RESPONDENT
UNIVERSITY'S FINANCIAL STATEMENTS FACTUALLY TO DETERMINE THE
FORMER'S CAPABILITY TO GRANT THE PROPOSED SALARY INCREASES
OVER AND ABOVE THE 70% SHARE IN THE INCREMENTAL TUITION
PROCEEDS AND IN GIVING WEIGHT AND CONSIDERATION TO THE
RESPONDENT UNIVERSITY'S PROPOSED BUDGET WHICH IS MERELY AN
ESTIMATE.
 (6) FAILING TO EQUATE THE POSITION AND RESPONSIBILITIES OF THE
UNION PRESIDENT WITH THOSE OF THE PRESIDENT OF THE FACULTY
ASSOCIATION WHICH IS NOT EVEN A LEGITIMATE LABOR ORGANIZATION
AND IN SPECULATING THAT THE PRESIDENT OF THE FACULTY
ASSOCIATION SUFFERS A CORRESPONDING REDUCTION IN SALARY ON
THE ACCOUNT OF THE REDUCTION OF HIS WORKLOAD; IN FAILING TO
APPRECIATE THE EQUAL RIGHTS OF THE MEMBERS OF THE UNION AND
OF THE FACULTY FOR PROFESSIONAL ADVANCEMENT AS WELL AS THE
DESIRABLE EFFECTS OF THE INSTITUTIONALIZATION OF THE SPECIAL
LEAVE AND WORKLOAD REDUCTION BENEFITS. 41
The question which now confronts us is whether or not the voluntary arbitrator
committed grave abuse of discretion in rendering the assailed decision, particularly, in
resolving the following issues: (1) whether the computer operators assigned at the
University's Computer Services Center and the University's discipline officers may be
considered as confidential employees and should therefore be excluded from the
bargaining unit which is composed of rank and file employees of the University, and
whether the employees of the College of St. Benilde should also be included in the
same bargaining unit; (2) whether a union shop clause should be included in the
parties' collective bargaining agreement, in addition to the existing maintenance of
membership clause; (3) whether the denial of the Union's proposed "last-in-first-out"
method of laying-off employees, is proper; (4) whether the ruling that on the basis of
the University's proposed budget, the University can no longer be required to grant a
second round of wage increases for the school years 1991-92 and 1992-93 and
charge the same to the incremental proceeds, is correct; (5) whether the denial of the
Union's proposals on the deloading of the union president, improved leave benefits
and indefinite union leave with pay, is proper; (6) whether the finding that the multi-
sectoral committee in the University is the legitimate group which determines and
scrutinizes the annual salary increases and fringe benefits of the employees of the
University, is correct; and (7) whether the ruling that the 70% share in the incremental
tuition proceeds is the only source of salary increases and fringe benefits of the
employees, is proper.
Now, before proceeding to the discussion and resolution of the issues raised in the
pending petitions, certain preliminary matters call for disposition. As we reiterated in
the case of Caltex Refinery Employees Association (CREA) vs. Jose
S. Brillantes, 42 the following are the well-settled rules in a petition
for certiorari involving labor cases. "First, the factual findings of quasi-judicial
agencies (such as the Department of Labor and Employment), when supported by
substantial evidence, are binding on this Court and entitled to great respect,
considering the expertise of these agencies in their respective fields. It is well-
established that findings of these administrative agencies are generally accorded not
only respect but even finality. 43
Second, substantial evidence in labor cases is such amount of relevant evidence
which a reasonable mind will accept as adequate to justify a conclusion. 44
Third, in Flores vs. National Labor Relations Commission, 45 we explained the role
and function of Rule 65 as an extraordinary remedy:
It should be noted, in the first place, that the instant petition is a special civil
action for certiorari under Rule 65 of the Revised Rules of Court. An
extraordinary remedy, its use is available only and restrictively in truly
exceptional cases — those wherein the action of an inferior court, board or officer
performing judicial or quasi-judicial acts is challenged for being wholly void on
grounds of jurisdiction. The sole office of the writ of certiorari is the correction of
errors of jurisdiction including the commission of grave abuse of discretion
amounting to lack or excess of jurisdiction. It does not include correction of public
respondent NLRC's evaluation of the evidence and factual findings based
thereon, which are generally accorded not only great respect but even finality.
No question of jurisdiction whatsoever is being raised and/or pleaded in the case
at bench. Instead, what is being sought is a judicial re-evaluation of the adequacy
or inadequacy of the evidence on record, which is certainly beyond the province
of the extraordinary writ of certiorari. Such demand is impermissible for it would
involve this Court in determining what evidence is entitled to belief and the weight
to be assigned it. As we have reiterated countless times, judicial review by this
Court in labor cases does not go so far as to evaluate the sufficiency of the
evidence upon which the proper labor officer or office based his or its
determination but is limited only to issues of jurisdiction or grave abuse of
discretion amounting to lack of jurisdiction. (emphasis supplied).
With the foregoing rules in mind, we shall now proceed to discuss the merit of these
consolidated petitions.
We affirm in part and modify in part.
On the first issue involving the classification of the computer operators assigned at
the University's Computer Services Center and discipline officers, the University
argues that they are confidential employees and that the Union has already
recognized the confidential nature of their functions when the latter agreed in the
parties' 1986 collective bargaining agreement to exclude the said employees from the
bargaining unit of rank-and-file employees. As far as the said computer operators are
concerned, the University contends that ". . . the parties have already previously
agreed to exclude all positions in the University's Computer Services Center (CSC),
which include the positions of computer operators, from the collective bargaining unit.
. . . . . . . " 46 The University further contends that ". . . the nature of the work done by
these Computer Operators is enough justification for their exclusion from the
coverage of the bargaining unit of the University's rank-and-file employees. . . . . . .
." 47 According to the University, the Computer Services Center, where these
computer operators work, ". . . processes data that are needed by management for
strategic planning and evaluation of systems. It also houses the University's
confidential records and information [e.g. student records, faculty records, faculty and
staff payroll data, and budget allocation and expenditure related data] which are
contained in computer files and computer-generated reports. . . . . . . . Moreover, the
Computer Operators are in fact the repository of the University's confidential
information and data, including those involving and/or pertinent to labor relations. . . . .
. . ." 48
As to the discipline officers, the University maintains that " . . . they are likewise
excluded from the bargaining unit of the rank-and-file employees under the parties'
1986 CBA. The Discipline Officers are clearly alter egos of management as they
perform tasks which are inherent in management [e.g. enforce discipline, act as
peace officers, secure peace and safety of the students inside the campus, conduct
investigations on violations of University regulations, or of existing criminal laws,
committed within the University or by University employees] . . . . . . . " 49 The
University also alleges that "the Discipline Officers are privy to highly confidential
information ordinarily accessible only to management." 50
With regard to the employees of the College of St. Benilde, the Union, supported by
the Solicitor General at this point, asserts that the veil of corporate fiction should be
pierced, thus, according to the Union, the University and the College of St. Benilde
should be considered as only one entity because the latter is but a mere integral part
of the University. 51
The University's arguments on the first issue fail to impress us. The Court agrees with
the Solicitor General that the express exclusion of the computer operators and
discipline officers from the bargaining unit of rank-and-file employees in the 1986
collective bargaining agreement does not bar any re-negotiation for the future
inclusion of the said employees in the bargaining unit. During the freedom period, the
parties may not only renew the existing collective bargaining agreement but may also
propose and discuss modifications or amendments thereto. With regard to the alleged
confidential nature of the said employees' functions, after a careful consideration of
the pleadings filed before this Court, we rule that the said computer operators and
discipline officers are not confidential employees. As carefully examined by the
Solicitor General, the service record of a computer operator reveals that his duties are
basically clerical and non-confidential in nature. 52 As to the discipline officers, we
agree with the voluntary arbitrator that based on the nature of their duties, they are
not confidential employees and should therefore be included in the bargaining unit of
rank-and-file employees.
The Court also affirms the findings of the voluntary arbitrator that the employees of
the College of St. Benilde should be excluded from the bargaining unit of the rank-
and-file employees of Dela Salle University, because the two educational institutions
have their own separate juridical personality and no sufficient evidence was shown to
justify the piercing of the veil of corporate fiction. 53
On the second issue involving the inclusion of a union shop clause in addition to the
existing maintenance of membership clause in the collective bargaining agreement,
the University avers that ". . . it is in the spirit of the exercise of the constitutional right
to self-organization that every individual should be able to freely choose whether to
become a member of the Union or not. The right to join a labor organization should
carry with it the corollary right not to join the same. This position of the University is
but in due recognition of the individual's free will and capability for judgment." 54 The
University assails the Union's demand for a union shop clause as ". . . definitely
unjust and amounts to oppression. Moreover, such a demand is repugnant to
democratic principles and the constitutionally guaranteed freedom of individuals to
join or not to join an association as well as their right to security of tenure, particularly,
on the part of present employees." 55
The Union, on the other hand, counters that the Labor Code, as amended, recognizes
the validity of a union shop agreement in Article 248 thereof which reads:
Art. 248. Unfair labor practices of employers. —
xxx xxx xxx
(e) To discriminate in regard to hire or tenure of employment or any term or
condition of employment in order to encourage or discourage membership in
any labor organization. Nothing in this Code or in any other law shall prevent
the parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except of those employees who are
already members of another union at the time of the signing of the collective
bargaining agreement. . . . . . . ." (emphasis supplied)
We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop
provision in addition to the existing maintenance of membership clause in the
collective bargaining agreement. As the Solicitor General asserted in his
consolidated Comment, the University's reliance on the case of Victoriano
vs. Elizalde Rope Workers' Union 56 is clearly misplaced. In that case, we ruled
that ". . . the right to join a union includes the right to abstain from joining any
union. . . . . . . . The right to refrain from joining labor organizations recognized by
Section 3 of the Industrial Peace Act is, however, limited. The legal protection
granted to such right to refrain from joining is withdrawn by operation of law,
where a labor union and an employer have agreed on a closed shop, by virtue of
which the employer may employ only members of the collective bargaining union,
and the employees must continue to be members of the union for the duration of
the contract in order to keep their jobs. . . . . . . ." 57
On the third issue regarding the Union's proposal for the use of the "last-in-first-
out" method in case of lay-off, termination due to retrenchment and transfer of
employees, the Union relies on social justice and equity to support its
proposition, and submits that the University's prerogative to select and/or choose
the employees it will hire is limited, either by law or agreement, especially where
the exercise of this prerogative might result in the loss of employment. 58 The
Union further insists that its proposal is ". . . in keeping with the avowed State
policy '(q) To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare' (Art. 211, Labor Code, as
amended)." 59
On the other hand, the University asserts its management prerogative and
counters that "[w]hile it is recognized that this right of employees and workers to
'participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law' has been enshrined in the Constitution
(Article III, [should be Article XIII], Section 3, par. 2), said participation, however,
does not automatically entitle the Union to dictate as to how an employer should
choose the employees to be affected by a retrenchment program. The employer
still retains the prerogative to determine the reasonable basis for selecting such
employees." 60
We agree with the voluntary arbitrator that as an exercise of management
prerogative, the University has the right to adopt valid and equitable grounds as
basis for terminating or transferring employees. As we ruled in the case
of Autobus Workers' Union (AWU) and Ricardo Escanlar vs. National Labor
Relations Commission, 61 "[a] valid exercise of management prerogative is one
which, among others, covers: work assignment, working methods, time,
supervision of workers, transfer of employees, work supervision, and the
discipline, dismissal and recall of workers. Except as provided for, or limited by
special laws, an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment." (emphasis supplied)
On the fourth issue involving the voluntary arbitrator's ruling that on the basis of
the University's proposed budget, the University can no longer be required to
grant a second round of wage increases for the school years 1991-92 and 1992-
93 and charge the same to the incremental proceeds, we find that the voluntary
arbitrator committed grave abuse of discretion amounting to lack or excess of
jurisdiction. As we ruled in the case of Caltex Refinery Employees Association
(CREA) vs. Jose S. Brillantes, 62 ". . . . . . . [w]e believe that the standard proof of
a company's financial standing is its financial statements duly audited by
independent and credible external auditors." 63 Financial statements audited by
independent external auditors constitute the normal method of proof of profit and
loss performance of a company. 64 The financial capability of a company cannot
be based on its proposed budget because a proposed budget does not reflect
the true financial condition of a company, unlike audited financial statements, and
more importantly, the use of a proposed budget as proof of a company's financial
condition would be susceptible to abuse by scheming employers who might be
merely feigning dire financial condition in their business ventures in order to
avoid granting salary increases and fringe benefits to their employees.
faculty, administration and union, the University granted across-the-board salary
increases of 11.3% and 19% for the second and third years,
respectively. 67 While the voluntary arbitrator found that the said committee ". . .
decided to grant the said increases based on the University's viability which were
exclusively sourced from the tuition fees. . . . . . . .," no finding was made as to
the basis of the committee's decision. Be that as it may, assuming for the sake of
argument that the said committee is the group responsible for determining wage
increases and fringe benefits, as ruled by the voluntary arbitrator, the
committee's determination must still be based on duly audited financial
statements following our ruling on the fourth issue.1âwphi1
On the seventh and last issue involving the ruling that the 70% share in the
incremental tuition proceeds is the only source of salary increases and fringe
benefits of the employees, the Court deems that any determination of this alleged
error is unnecessary and irrelevant, in view of our rulings on the fourth and
preceding issues and there being no evidence presented before the voluntary
arbitrator that the University held incremental tuition fee proceeds from which any
wage increase or fringe benefit may be satisfied.
WHEREFORE, premises considered, the petitions in these consolidated cases, G.R.
No. 109002 and G.R. No. 110072 are partially GRANTED. The assailed decision
dated January 19, 1993 of voluntary arbitrator Buenaventura Magsalin is hereby
AFFIRMED with the modification that the issue on salary increases for the second
and third years of the collective bargaining agreement be REMANDED to the
voluntary arbitrator for definite resolution within one month from the finality of this
Decision, on the basis of the externally audited financial statements of the University
already submitted by the Union before the voluntary arbitrator and forming part of the
records.1âwphi1.nêt
SO ORDERED.

On the fifth issue involving the Union's proposals on the deloading of the union
president, improved leave benefits and indefinite union leave with pay, we agree
with the voluntary arbitrator's rejection of the said demands, there being no
justifiable reason for the granting of the same.

On the sixth issue regarding the finding that the multi-sectoral committee in the
University is the legitimate group which determines and scrutinizes the annual
salary increases and fringe benefits of the employees of the University, the Court
finds that the voluntary arbitrator did not gravely abuse his discretion on this
matter. From our reading of the assailed decision, it appears that during the
parties' negotiations for a new collective bargaining agreement, the Union
demanded for a 25% and 40% salary increase for the second and third years,
respectively, of the collective bargaining agreement. 65 The University's counter-
proposal was for a 10% increase for the third year. 66 After the meeting of the
multi-sectoral committee on budget, which is composed of students, parents,