As amended by Sec 5 of R.A. No.

9481(2007), which reduced to three the ten grounds for

cancellation of union registration under the old Article 239. Under the old provision, the grounds
for cancellation were:
a. Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification and the list of members who took part in the ratification;

b. Failure to submit the documents mentioned in the preceding paragraph within thirty
(30) days from adoption or ratification of the constitution and by-laws or amendments
thereto;

c. Misrepresentation, false statement or fraud in connection with the election of officers,

minutes of the election of officers, the list of voters, or failure to submit these
documents together with the list of the newly elected/appointed officers and their postal
addresses within thirty (30) days from election;

d. Failure to submit the annual financial report to the Bureau within thirty (30) days after
the closing of the fiscal year and misrepresentation, false entries or fraud in the
preparation of financial report itself;

e. Acting as a labor contractor or engaging in the “cabo” system, or otherwise engaging

in any activity prohibited by law;

f. Entering into collective bargaining agreements which provide terms and conditions of
employment below minimum standards established by law;

g. Asking for or accepting attorney’s fees or negotiation fees from employers;

h. Other than for mandatory activities under this Code, checking off special assessments
or any other fees without duly signed individual written authorizations of the members;

i. Failure to submit list of individual members to the Bureau once a year or whenever
required by the Bureau; and

j. Failure to comply with requirements under Article 237 and 238.

Section 5 Article 247[239] OF R.A. 9481: Grounds for Cancellation of Union Registration –
Any of the following may constitute as grounds for cancellation of union registration:
a. Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification; (This was also
letter A in the old Article which is Article 239)
 b. Misrepresentation, false statements or fraud in connection with the election of officers,
minutes of the election of officers, and the list of voters; (This was a part of letter C in
the old Article which is Article 239)

c. Voluntary dissolution of members. (New provision and not under the old Article)

Cancellation of Registration: Where to File

Subject to the requirements of notice and due process, the registration of any legitimate
independent labor union, local/chapter and workers’ association maybe canceled by the Regional
Director upon the filing of a petition for cancellation of union registration or application by the
organization itself for voluntary dissolution.
The petition for cancellation or application for voluntary dissolution shall be filed in the
regional office which issued its certificate of registration or creation.
In the case of federations, national or industry unions and trade union centers, the Bureau
Director may cancel the registration upon the filing of a petition for cancellation or application for
voluntary dissolution in the Bureau of Labor Relations.
For further discussions, listed below are some definition of terms to better understand the
ground for cancellation of registration:

 Misrepresentation- the action or offense of giving a false or misleading account of the

nature of something.

 False statement- a statement that is known or believed by its maker to be incorrect or

untrue and is made especially with intent to deceive or mislead

 Fraud- wrongful or criminal deception intended to result in financial or personal gain.

 Adoption- the action or fact of choosing to take up, follow, or use something.

 Ratification- the action of signing or giving formal consent to a treaty, contract, or

agreement, making it officially valid.

 Constitution- refers to the 1987 Constitution of the Republic of the Philippines

 By- laws- a rule made by a company or society to control the actions of its members.

 Minutes- also known as the minutes of meeting, are the instant written record of a
meeting or hearing. They typically describe the events of the meeting and may include
a list of attendees, a statement of the issues considered by the participants, and related
responses or decisions for the issues.

 Dissolution- the closing down or dismissal of an assembly, partnership, or official body

 Moreover, below is a case involving Takata Philippines Corporation as the Petitioner,
Bureau of Relations and Samahang Lakas Manggagawa ng Takata (Salamat) as the Respondents
for illustration to better understand the instances when to cancel a Union registration.
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 196276 June 4, 2014

TAKATA (PHILIPPINES) CORPORATION, Petitioner,
vs. BUREAU OF LABOR RELATIONS and SAMAHANG LAKAS MANGGAGAWA NG
TAKATA (SALAMAT), Respondents.

DECISION

PERALTA, J.:

Before us is a petition for review on certiorari filed by petitioner TAKATA Philippines

Corporation assailing the Decision1 dated December 22, 2010 and the Resolution2 dated March
28, 2011 of the Court of Appeals in CA-G.R. SP No. 112406.

On July 7, 2009, petitioner filed with the Department of Labor and Employment (DOLE) Regional
Office a Petition for Cancellation of the Certificate of Union Registration of Respondent Samahang
Lakas Manggagawa ng Takata (SALAMAT) on the ground that the latter is guilty of
misrepresentation, false statement and fraud with respect to the number of those who participated
in the organizational meeting, the adoption and ratification of its Constitution and By-Laws, and
in the election of its officers. It contended that in the May 1, 2009 organizational meeting of
respondent, only 68 attendees signed the attendance sheet, and which number comprised only 17%
of the total number of the 396 regular rank- and-file employees which respondent sought to
represent, and hence, respondent failed to comply with the 20% minimum membership
requirement. Petitioner insisted that the document "Pangalan ng mga Kasapi ng Unyon" bore no
signatures of the alleged 119 union members; and that employees were not given sufficient
information on the documents they signed; that the document "Sama-Samang Pahayag ng Pagsapi"
was not submitted at the time of the filing of respondent's application for union registration; that
the 119 union members were actually only 117; and, that the total number of petitioner's employees
as of May 1, 2009 was 470, and not 396 as respondent claimed.

Respondent denied the charge and claimed that the 119 union members were more than the 20%
requirement for union registration. The document "Sama-Samang Pahayag ng Pagsapi sa Unyon"
which it presented in its petition for certification election supported their claim of 119 members.
Respondent also contended that petitioner was estopped from assailing its legal personality as it
agreed to a certification election and actively participated in the pre-election conference of the
certification election proceedings. Respondent argued that the union members were informed of
the contents of the documents they signed and that the 68 attendees to the organizational meeting
constituted more than 50% of the total union membership, hence, a quo rumexisted for the conduct
of the said meeting.

On August 27, 2009, DOLE Regional Director, Atty. Ricardo S. Martinez, Sr., issued a Decision8
granting the petition for cancellation of respondent's certificate of registration, the dispositive
portion of which reads:

WHEREFORE, from the foregoing considerations, the petition is hereby GRANTED.

Accordingly, the respondent Union Certificate of Registration No. RO400A-2009-05-01-UR-
LAG, dated May 19, 2009 is hereby REVOCKED (sic) and /or CANCELLED pursuant to
paragraph (a) & (b), Section 3, Rule XIV of Department Order No. 40-03 and the Samahang Lakas
ng Manggagawa ng TAKATA (SALAMAT) is hereby delisted from the roll of legitimate labor
organization of this office.

In revoking respondent's certificate of registration, the Regional Director found that the 68
employees who attended the organizational meeting was obviously less than 20% of the total
number of 396 regular rank-and-file employees which respondent sought to represent, hence, short
of the union registration requirement; that the attendance sheet which contained the signatures and
names of the union members totalling to 68 contradicted the list of names stated in the document
denominated as "Pangalan ng mga Kasaping Unyon." The document "Sama-Samang Pahayag ng
Pagsapi" was not attached to the application for registration as it was only submitted in the petition
for certification election filed by respondent at a later date. The Regional Director also found that
the proceedings in the cancellation of registration and certification elections are two different and
entirely separate and independent proceedings which were not dependent on each other.

Dissatisfied, respondent, through Bukluran ng Manggagawang Pilipino (BMP) Paralegal Officer,

Domingo P. Mole, filed a Notice and Memorandum of Appeal with the Bureau of Labor Relations
(BLR). However, on September 28,2009, respondent, through its counsels, Attys.

Napoleon C. Banzuela, Jr. and Jehn Louie W. Velandrez, filed an Appeal Memorandum with
Formal Entry of Appearance to the Office of the DOLE Secretary, which the latter eventually
referred to the BLR. Petitioner filed an Opposition to the Appeals praying for their dismissal on
the ground of forum shopping as respondent filed two separate appeals in two separate venues;
and for failing to avail of the correct remedy within the period; and that the certificate of
registration was tainted with fraud, misrepresentation and falsification.

In its Answer, respondent claimed that there was no forum shopping as BMP's Paralegal Officer
was no longer authorized to file an appeal on behalf of respondent as the latter's link with BMP
was already terminated and only the Union President was authorized to file the appeal; and that it
complied with Department Order No. 40-03.

On December 9, 2009, after considering respondent's Appeal Memorandum with Formal Entry of
Appearance and petitioner's Answer, the BLR rendered its Decision reversing the Order of the
Regional Director, the decretal portion of which reads:
WHEREFORE, the appeal is hereby GRANTED. The Decision of Regional Director Ricardo S.
Martinez, Sr., dated 27 August 2009, is hereby REVERSEDand SET ASIDE.

Accordingly, Samahang Lakas Manggagawa ng TAKATA (SALAMAT) shall remain in the roster
of labor organizations.

In reversing, the BLR found that petitioner failed to prove that respondent deliberately and
maliciously misrepresented the number of rank-and-file employees. It pointed out petitioner's basis
for the alleged noncompliance with the minimum membership requirement for registration was
the attendance of 68 members to the May 1, 2009 organizational meeting supposedly comprising
only 17% of the total 396 regular rank-and-file employees. However, the BLR found that the list
of employees who participated in the organizational meeting was a separate and distinct
requirement from the list of the names of members comprising at least 20% of the employees in
the bargaining unit; and that there was no requirement for signatures opposite the names of the
union members; and there was no evidence showing that the employees assailed their inclusion in
the list of union members.

Petitioner filed a motion for reconsideration, which was denied by the BLR in a Resolution dated
January 8, 2010.

Undaunted, petitioner went to the CA via a petition for certiorari under Rule 65.

After the submission of the parties' respective pleadings, the case was submitted for decision.

On December 22, 2010, the CA rendered its assailed decision which denied the petition and
affirmed the decision of the BLR. Petitioner's motion for reconsideration was denied in a
Resolution dated March 29, 2011.

Hence this petition for review filed by petitioner raising the following issues, to wit:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR

IN AFFIRMING THE DECISION OF PUBLIC RESPONDENT BLR AND NOT FINDING
ANY VIOLATION BY SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT)
OF THE RULE ON FORUM SHOPPING IN THE FILING OF TWO VERIFIED APPEALS FOR
AND ITS BEHALF. BOTH OF THE APPEALS SHOULD HAVE BEEN DISMISSED
OUTRIGHT BY PUBLIC RESPONDENT BLR, ON GROUND OF FORUM SHOPPING.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE

APPLICATION FOR REGISTRATION OF SAMAHANG LAKAS MANGGAGAWA SA
TAKATA (SALAMAT) WAS COMPLIANT WITH THE LAW. CONSIDERING THE
CIRCUMSTANCES OBTAINING IN THE REGISTRATION OF SALAMAT, IT IS CLEAR
THAT THE SAME IS TAINTED WITH FRAUD, MISREPRESENTATION AND
FALSIFICATION. SALAMAT DID NOT POSSESS THE REQUIREDNUMBER OF
MEMBERS AT THE TIME OF FILING OF ITS APPLICATION FOR REGISTRATION,
HENCE, IT SHOULD BE HELD GUILTY OF MISREPRESENTATION, AND FALSE
STATEMENTS AND FRAUD IN CONNECTION THEREWITH.
Anent the first issue, petitioner contends that respondent had filed two separate appeals with two
different representations at two different venues, in violation of the rule on multiplicity of suits
and forum shopping, and instead of dismissing both appeals, the appeal erroneously filed before
the Labor Secretary was the one held validly filed, entertained and even granted; that it is not
within the discretion of BLR to choose which between the two appeals should be entertained, as it
is the fact of the filing of the two appeals that is being prohibited and not who among the
representatives therein possessed the authority.

We are not persuaded.

We find no error committed by the CA in finding that respondent committed no forum shopping.
As the CA correctly concluded, to wit:

It is undisputed that BMP Paralegal Officer Domingo P. Mole was no longer authorized to file an
appeal on behalf of union SALAMAT and that BMP was duly informed that its services was
already terminated. SALAMAT even submitted before the BLR its "Resolusyon Blg. 01-2009"
terminating the services of BMP and revoking the representation of Mr. Domingo Mole in any of
the pending cases being handled by him on behalf of the union. So, considering that BMP Paralegal
Officer Domingo P. Mole was no longer authorized to file an appeal when it filed the Notice and
Memorandum of Appeal to DOLE Regional Office No. IV-A, the same can no longer be treated
as an appeal filed by union SALAMAT. Hence, there is no forum shopping to speak of in this case
as only the Appeal Memorandum with Formal Entry of Appearance filed by Atty. Napoleon C.
Banzuela, Jr. and Atty. Jehn Louie W. Velandrez is sanctioned by SALAMAT.

Since Mole's appeal filed with the BLR was not specifically authorized by respondent, such appeal
is considered to have not been filed at all. It has been held that "if a complaint is filed for and in
behalf of the plaintiff who is not authorized to do so, the complaint is not deemed filed.

An unauthorized complaint does not produce any legal effect."

Respondent through its authorized representative filed its Appeal Memorandum with Formal Entry
of Appearance before the Labor Secretary, and not with the BLR. As the appeal emanated from
the petition for cancellation of certificate of registration filed with the Regional Office, the decision
canceling the registration is appealable to the BLR, and not with the Labor Secretary. However,
since the Labor Secretary motu propio referred the appeal with the BLR, the latter can now act on
it. Considering that Mole's appeal with the BLR was not deemed filed, respondent’s appeal,
through Banzuela and Associates, which the Labor Secretary referred to the BLR was the only
existing appeal with the BLR for resolution. There is, therefore, no merit to petitioner's claim that
BLR chose the appeal of Banzuela and Associates over Mole's appeal.

The case of Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union20 cited
by petitioner is not at all applicable in this case as the issue therein is the authority of the Labor
Secretary to review the decision of the Bureau of Labor Relations rendered in the exercise of its
appellate jurisdiction over decision of the Regional Director in cases involving cancellations of
certificate of registration of labor unions. We found no grave abuse of discretion committed by the
Secretary of Labor in not acting on therein petitioner's appeal. The decision of the Bureau of Labor
Relations on cases brought before it on appeal from the Regional Director are final and executory.
Hence, the remedy of the aggrieved party is to seasonably avail of the special civil action of
certiorari under Rule 65 and the Rules of Court. In this case, after the Labor Secretary motu propio
referred respondent's appeal filed with it to the BLR which rendered its decision reversing the
Regional Director, petitioner went directly to the CA via a petition for certiorari under Rule 65.

As to the second issue, petitioner seeks the cancellation of respondent's registration on grounds
offraud and misrepresentation bearing on the minimum requirement of the law as to its
membership, considering the big disparity in numbers, between the organizational meeting and the
list of members, and so misleading the BLR that it obtained the minimum required number of
employees for purposes of organization and registration.

We find no merit in the arguments.

Art. 234 of the Labor Code provides:

ART. 234. Requirements of Registration. - A federation, national union or industry or trade union
center or an independent union shall acquire legal personality and shall be entitled to the rights
and privileges granted by law to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:

(a) Fifty pesos (₱50.00)registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such
meetings;

(c) In case the applicant is an independent union, the names of all its members comprising at least
twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and

(e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it."

And after the issuance of the certificate of registration, the labor organization's registration could
be assailed directly through cancellation of registration proceedings in accordance with Articles
238 and 239 of the Labor Code. And the cancellation of union certificate of registration and the
grounds thereof are as follows:

ART. 238. Cancellation of Registration. - The certificate of registration of any legitimate labor
organization, whether national or local, may be cancelled by the Bureau, after due hearing, only
on the grounds specified in Article 239 hereof.
ART. 239. Grounds for Cancellation of Union Registration. - The following may constitute
grounds for cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of
the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of
members who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes
of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

Petitioner's charge that respondent committed misrepresentation and fraud in securing its
certificate of registration is a serious charge and must be carefully evaluated. Allegations thereof
should be compounded with supporting circumstances and evidence.21 We find no evidence on
record to support petitioner's accusation.

Petitioner's allegation of misrepresentation and fraud is based on its claim that during the
organizational meeting on May 1, 2009, only 68 employees attended, while respondent claimed
that it has 119 members as shown in the document denominated as "Pangalan ng mga Kasapi ng
Unyon;" hence, respondent misrepresented on the 20% requirement of the law as to its
membership.

We do not agree.

It does not appear in Article 234 (b) of the Labor Code that the attendees in the organizational
meeting must comprise 20% of the employees in the bargaining unit. In fact, even the
Implementing Rules and Regulations of the Labor Code does not so provide. It is only under
Article 234 (c) that requires the names of all its members comprising at least twenty percent (20%)
of all the employees in the bargaining unit where it seeks to operate. Clearly, the 20% minimum
requirement pertains to the employees’ membership in the union and not to the list of workers who
participated in the organizational meeting. Indeed, Article 234 (b) and (c) provide for separate
requirements, which must be submitted for the union's registration, and which respondent did
submit. Here, the total number of employees in the bargaining unit was 396, and 20% of which
was about 79. Respondent submitted a document entitled "Pangalan ng Mga Kasapi ng Unyon"
showing the names of 119 employees as union members, thus respondent sufficiently complied
even beyond the 20% minimum membership requirement. Respondent also submitted the
attendance sheet of the organizational meeting which contained the names and signatures of the
68 union members who attended the meeting. Considering that there are 119 union members which
are more than 20% of all the employees of the bargaining unit, and since the law does not provide
for the required number of members to attend the organizational meeting, the 68 attendees which
comprised at least the majority of the 119 union members would already constitute a quorum for
the meeting to proceed and to validly ratify the Constitution and By-laws of the union. There is,
therefore, no basis for petitioner to contend that grounds exist for the cancellation of respondent's
union registration. For fraud and misrepresentation to be grounds for cancellation of union
registration under Article 239 of the Labor Code, the nature of the fraud and misrepresentation
must be grave and compelling enough to vitiate the consent of a majority of union members.

Petitioner's claim that the alleged union members signed documents without adequate information
is not persuasive. The one who alleges a fact has the burden of proving it and a mere allegation is
not evidence. In fact, we note that not one of those listed in the document denominated as
"Pangalan ng Mga Kasaping Unyon" had come forward to deny their membership with respondent.
Notably, it had not been rebutted that the same union members had signed the document entitled
"Sama-Samang Pahayag ng Pagsapi," thus, strengtheningtheir desire to be members of the
respondent union.

Petitioner claims that in the list of members, there was an employee whose name appeared twice
and another employee who was merely a project employee. Such could not be considered a
misrepresentation in the absence of showing that respondent deliberately did so for the purpose of
increasing their union membership. In fact, even if those two names were not included in the list
of union members, there would still be 117 members which was still more than 20% of the 396
rank-and-file employees.

As to petitioner's argument that the total number of its employees as of May 1, 2009 was 470, and
not 396 as respondent claimed, still the 117 union members comprised more than the 20%
membership requirement for respondent's registration.

In Mariwasa Siam Ceramics v. Secretary of the Department of Labor and Employment, we said:

For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification; or, in connection with
the election of officers, the minutes of the election of officers, the list of voters, or failure to submit
these documents together with the list of the newly elected-appointed officers and their postal
addresses to the BLR.

The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not, to our mind, provide a valid reason to cancel respondent’s
certificate of registration. The cancellation of a union’s registration doubtless has an impairing
dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds
for cancellation of union registration under the Labor Code, the nature of the fraud and
misrepresentation must be grave and compelling enough to vitiate the consent of a majority of
union members.

In this case, we agree with the BLR and the CA that respondent could not have possibly committed
misrepresentation, fraud, or false statements. The alleged failure of respondent to indicate with
mathematical precision the total number of employees in the bargaining unit is of no moment,
especially as it was able to comply with the 20% minimum membership requirement. Even if the
total number of rank-and-file employees of petitioner is 528, while respondent declared that it
should only be 455, it still cannot be denied that the latter would have more than complied with
the registration requirement.
WHEREFORE, premises considered, the petition for review is DENIED. The Decision dated
December 22, 2010 and the Resolution dated March 28, 2011 of the Court of Appeals, in CA-G.R.
SP No. 112406, are AFFIRMED.

SO ORDERED.
Voluntary Cancellation of Registration
A legitimate labor organization may cancel its registration provided at least two thirds (2/3)
of its general membership votes to dissolve the organization in a meeting duly called for that
purpose and application to cancel its registration is thereafter submitted by the board of the
organization to the Regional/ Bureau Director, as the case may be. The application shall be attested
to by the President of the Organization.
Section 7 Article 252[242-A]: Reportorial Requirements – It shall be duty of every legitimate
labor union and workers’ association to submit to the Regional Office or the Bureau which
issued its certificate of registration or certificate of creation of local/chapter, as the case maybe,
two (2) copies of each of the following documents:

a. Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the
list of members who took part in the ratification of the constitution and by-laws within
thirty (30) days from adoption or ratification of the constitution and by-laws or
amendments thereto; (This was letter B in the old Article which is Article 239)

b. Its list of officers, minutes of the election of officers, and list of voters, within thirty
(30) days from election;

c. Its annual financial report within thirty (30) days after the close of every fiscal year;
and (This was Letter B in the old Article which is Article 239)
d. Its list of members at least once a year or whenever required by the Bureau. (This was
Letter I in the old Article which is Article 239)
Failure to comply with the above requirements shall not be a ground for cancellation of
union registration but shall subject the erring officers or members to suspension, expulsion from
membership, or any appropriate penalty.

PROHIBITED GROUNDS FOR CANCELLATION OF REGISTRATION

The inclusion as Union members of employees who are outside the Bargaining Unit shall
not be a ground to cancel the union registration. The ineligible employees are automatically
deemed removed from the list of membership of the union.
The affiliation of the rank-and-file and supervisory unions operating within the same
establishment to the same federation or national union shall not be a ground to cancel the
registration of either union.

RELATIONSHIP BETWEEN MOTHER UNION AND LOCAL UNION

A National Union/Federation or Mother Union means any labor organization with at least
ten (10) locals or chapters each of which must be a duly recognized collective bargaining agent.
Local Union on the other hand is a direct member and an affiliate of a labor federation or national
union and is a labor organization operating at the enterprise-level.
 The local or chapter of a labor federation or national union shall have and maintain
constitution and by-laws, set of officers and books of accounts. For reporting purposes, the
procedure governing the reporting of independently registered unions, federations or national
unions shall be observed
The labor union that affiliates with a federation is subject to the laws of the parent body
under whose authority the local union functions, The Constitution, by-laws and rules of the mother
federation, together with the charter it issues to the local union, constitutes an enforceable contract
between them and between the members of the subordinate union inter se. Thus, pursuant to the
Constitution and by-laws, the federation has the right to investigate and expel members of the local
union.
Article 234-A. Chartering and Creation of a Local Chapter - A duly registered federation or
national union may directly create a local chapter by issuing a charter certificate indicating the
establishment of the local chapter. The chapter shall acquire legal personality only for purposes of
filing a petition for certification election from the date it was issued a charter certificate.
Certification Election means the process of determining, through secret ballot, the sole and
exclusive bargaining agent of the employees in an appropriate bargaining unit, for purposes of
collective bargaining.
The chapter shall be entitled to all other rights and privileges of a legitimate labor
organization only upon the submission of the following documents in addition to its charter
certificate:
(a) The names of the chapter’s officers, their addresses, and the principal office of the
chapter; and

(b) The chapter’s constitution and by-laws: Provided, That where the chapter’s constitution
and by-laws are the same as that of the federation or the national union, this fact shall
be indicated accordingly.
The additional supporting requirements shall be certified under oath by the secretary or
treasurer of the chapter and attested by its president.
Article. 238. Cancellation of Registration - The certificate of registration of any legitimate labor
organization, whether national or local, may be cancelled by the Bureau, after due hearing, only
on the grounds specified in Article 239 hereof.

SUBSTITUTIONARY DOCTRINE
Substitutionary doctrine refers to a principle in labor law which states that even during the
existence of a collective bargaining agreement executed between the employer and the employees
through their agent, the employees can change the said agent but the contract continues to bind
them up into its expiration date. According to the doctrine, the employees cannot revoke the validly
executed collective bargaining contract with their employer by the simple expedient of changing
their bargaining agent. 7n the event, the new agent must respect the earlier contract.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-24711 April 30, 1968

BENGUET CONSOLIDATED, INC., plaintiff-appellant,

vs.
BCI EMPLOYEES and WORKERS UNION-PAFLU, PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS, CIPRIANO CID and JUANITO GARCIA, defendants-appellees.

Ross, Selph, Del Rosario, Bito and Misa for plaintiff-appellant.

Cipriano Cid and Associates for defendants-appellees.

BENGZON, J.P., J.:

The contending parties in this case —Benguet Consolidated, Inc., ("BENGUET") on the one hand,
and on the other, BCI Employees & Workers Union ("UNION") and the Philippine Association of
Free Labor Unions ("PAFLU") —do not dispute the following factual settings established by the
lower court.

On June 23, 1959, the Benguet-Balatoc Workers Union ("BBWU"), for and in behalf of all
BENGUET employees in its mines and milling establishment located at Balatoc, Antamok and
Acupan, Municipality of Itogon, Mt. Province, entered into a Collective Bargaining Contract, Exh.
"Z" ("CONTRACT") with BENGUET. Pursuant to its very terms, said CONTRACT became
effective for a period of four and a half (4-½) years, or from June 23, 1959 to December 23, 1963.
It likewise embodied a No-Strike, No-Lockout clause.
About three years later, or on April 6, 1962, a certification election was conducted by the
Department of Labor among all the rank and file employees of BENGUET in the same collective
bargaining units. UNION obtained more than 50% of the total number of votes, defeating BBWU,
and accordingly, the Court of Industrial Relations, on August 18, 1962, certified UNION as the
sole and exclusive collective bargaining agent of all BENGUET employees as regards rates of pay,
wages, hours of work and such other terms and conditions of employment allowed them by law or
contract.
Subsequently, separate meetings were conducted on November 22, 23 and 24, 1962 at Antamok,
Balatoc and Acupan Mines respectively by UNION. The result thereof was the approval by
UNION members of a resolution directing its president to file a notice of strike against BENGUET
for:
1. [Refusal] to grant any amount as monthly living allowance for the workers;
 2. Violation of Agreements reached in conciliation meetings among which is the taking
down of investigation [sic] and statements of employees without the presence of union
representative;
3. Refusal to dismiss erring executive after affidavits had been presented, thereby company
showing [sic] bias and partiality to company personnel;
4. Discrimination against union members in the enforcement of disciplinary actions.
The Notice of Strike 3 was filed on December 28, 1962. Three months later, in the evening of
March 2, 1963, UNION members who were BENGUET employees in the mining camps at
Acupan, Antamok and Balatoc, went on strike. Regarding the conduct of the strike, the trial court
reports:
... Picket lines were formed at strategic points within the premises of the plaintiff. The picketers,
by means of threats and intimidation, and in some instances by the use of force and violence,
prevented passage thru the picket lines by personnel of the plaintiff who were reporting for work.
Human blocks were formed on points of entrance to working areas so that even vehicles could not
pass thru, while the officers of the plaintiff were not allowed for some time to leave the "staff"
area.
The strikers forming picket lines bore placards with the letters BBWU-PAFLU written thereon.
As a general rule, the picketers were unruly, aggressive and uttered threatening remarks to staff
members and non-strikers who desire to pass thru the picket lines. On some occasions, the
picketers resorted to violence by pushing back the car wherein staff officers were riding who would
like to enter the mine working area. The picketers lifted one side of the vehicle and were in the act
of overturning it when they were prevented from doing so by the timely intervention of PC soldiers,
who threw tear gas bombs to make the crowd disperse. Many of the picketers were apprehended
by the PC soldiers and criminal charges for grave coercion were filed against them before the Court
of First Instance of Baguio. Two of the strike leaders and twenty-two picketers, however, were
found guilty of light coercion while nineteen other accused were acquitted.
There was a complete stoppage of work during the strike in all the mines. After two weeks elapsed,
repair and maintenance of the water pump was allowed by the strikers and some of the staff
members were permitted to enter the mines, who inspected the premises in the company of PC
soldiers to ascertain the extent of the damage to the equipment and losses of company property.
On May 2, 1963, the parties agreed to end the raging dispute. Accordingly, BENGUET and
UNION executed the AGREEMENT, Exh. 1. PAFLU placed its conformity thereto and said
agreement was attested to by the Director of the Bureau of Labor Relations. About a year later or
on January 29, 1964, a collective bargaining contract was finally executed between UNION-
PAFLU and BENGUET.
Meanwhile, as a result, allegedly, of the strike staged by UNION and its members, BENGUET
had to incur expenses for the rehabilitation of mine openings, repair of mechanical equipment, cost
of pumping water out of the mines, value of explosives, tools and supplies lost and/or destroyed,
and other miscellaneous expenses, all amounting to P1,911,363.83. So, BENGUET sued UNION,
PAFLU and their respective Presidents to recover said amount in the Court of First Instance of
Manila, on the sole premise that said defendants breached their undertaking in the existing
CONTRACT not to strike during the effectivity thereof.
In answer to BENGUET's complaint, defendants unions and their respective presidents put up the
following defenses: (1) they were not bound by the CONTRACT which BBWU, the defeated
union, had executed with BENGUET; (2) the strike was due, inter alia, to unfair labor practices of
BENGUET; and (3) the strike was lawful and in the exercise of the legitimate rights of UNION-
PAFLU under Republic Act 875.
Issues having been joined, trial commenced. On February 23, 1965, the trial court rendered
judgment dismissing the complaint on the ground that the CONTRACT, particularly the No-Strike
clause, did not bind defendants. The latters' counterclaim was likewise denied. Failing to get a
reconsideration of said decision, BENGUET interposed the present appeal.
The several errors assigned by BENGUET basically ask three questions:
(1) Did the Collective Bargaining Contract executed between BENGUET and BBWU on
June 23, 1959 and effective until December 23, 1963 automatically bind UNION-PAFLU
upon its certification, on August 18, 1962, as sole bargaining representative of all
BENGUET employees?
(2) Are defendants labor unions and their respective presidents liable for the illegal acts
committed during the course of the strike and picketing by some union members?
(3) Are defendants liable to pay the damages claimed by BENGUET?
In support of an affirmative answer to the first question, BENGUET first invokes the so-called
"Doctrine of Substitution" referred to in General Maritime Stevedores' Union v. South Sea
Shipping Lines, L-14689, July 26, 1960. There it was remarked:
We also hold that where the bargaining contract is to run for more than two years, the principle of
substitution may well be adopted and enforced by the CIR to the effect that after two years of the
life of a bargaining agreement, a certification election may be allowed by the CIR; that if a
bargaining agent other than the union or organization that executed the contract, is elected, said
new agent would have to respect said contract, but that it may bargain with the management for
the shortening of the life of the contract if it considers it too long, or refuse to renew the contract
pursuant to an automatic renewal clause. (Emphasis supplied)
The submission utterly fails to persuade Us. The above-quoted pronouncement was obiter dictum.
The only issue in the General Maritime Stevedores' Union case was whether a collective
bargaining agreement which had practically run for 5 years constituted a bar to certification
proceedings. We held it did not and accordingly directed the court a quo to order certification
elections. With that, nothing more was necessary for the disposition of the case. Moreover, the
pronouncement adverted to was rather premature. The possible certification of a union different
from that which signed the bargaining contract was a mere contingency then since the elections
were still to be held. Clearly, the Court was not called upon to rule on possible effects of such
proceedings on the bargaining agreement.
But worse, BENGUET's reliance upon the Principle of Substitution is totally misplaced. This
principle, formulated by the NLRB as its initial compromise solution to the problem facing it when
there occurs a shift in employees' union allegiance after the execution of a bargaining contract with
their employer, merely states that even during the effectivity of a collective bargaining agreement
executed between employer and employees thru their agent, the employees can change said agent
but the contract continues to bind them up to its expiration date. They may bargain however for
the shortening of said expiration date.
In formulating the "substitutionary" doctrine, the only consideration involved was the employees'
interest in the existing bargaining agreement. The agent's interest never entered the picture. In fact,
the justification for said doctrine was:
... that the majority of the employees, as an entity under the statute, is the true party in interest to
the contract, holding rights through the agency of the union representative. Thus, any exclusive
interest claimed by the agent is defeasible at the will of the principal.... (Emphasis supplied)
Stated otherwise, the "substitutionary" doctrine only provides that the employees cannot revoke
the validly executed collective bargaining contract with their employer by the simple expedient of
changing their bargaining agent. And it is in the light of this that the phrase "said new agent would
have to respect said contract" must be understood. It only means that the employees, thru their new
bargaining agent, cannot renege on their collective bargaining contract, except of course to
negotiate with management for the shortening thereof.
The "substitutionary" doctrine, therefore, cannot be invoked to support the contention that a newly
certified collective bargaining agent automatically assumes all the personal undertakings — like
the no-strike stipulation here — in the collective bargaining agreement made by the deposed union.
When BBWU bound itself and its officers not to strike, it could not have validly bound also all the
other rival unions existing in the bargaining units in question. BBWU was the agent of the
employees, not of the other unions which possess distinct personalities. To consider UNION
contractually bound to the no-strike stipulation would therefore violate the legal maxim that res
inter alios nec prodest nec nocet.
Of course, UNION, as the newly certified bargaining agent, could always voluntarily assume all
the personal undertakings made by the displaced agent. But as the lower court found, there was no
showing at all that, prior to the strike, UNION formally adopted the existing CONTRACT as its
own and assumed all the liabilities imposed by the same upon BBWU.
BENGUET also alleges that UNION is now in estoppel to claim that it is not contractually bound
by the CONTRACT for having filed on September 28, 1962, in Civil Case No. 1150 of the Court
of First Instance of Baguio, entitled "Bobok Lumber Jack Ass'n. vs. Benguet Consolidated, Inc.
and BCI Employees Workers Union-PAFLU" a motion praying for the dissolution of the ex parte
writ of preliminary injunction issued therein, wherein the following appears:
In that case, the CIR transferred the contractual rights of the BBWU to the defendant union. One
of such rights transferred was the right to the modified union-shop — checked off union dues
arrangement now under injunction.
The collective bargaining contract mentioned in the plaintiff's complaint did not expire by the mere
fact that the defendant union was certified as bargaining agent in place of the BBWU. The Court
of Industrial Relations in the case above mentioned made it clear that the collective bargaining
contract would be respected unless and until the parties act otherwise. In effect, the defendant
union by act of subrogation took the place of the BBWU as the UNION referred to in the contract.
(Emphasis supplied)
There is no estoppel. UNION did not assert the above statement against BENGUET to force it to
rely upon the same to effect the union check-off in its favor. UNION and BENGUET were together
as co-defendants in said Civil Case No. 1150. Rather, the statement was directed against Bobok
Lumber Jack Ass'n., plaintiff therein, to weaken its cause of action. Moreover, BENGUET did not
rely upon said statement. What prompted Bobok Lumber Jack Ass'n. to file the complaint for
declaratory relief was the fact that "... the defendants [UNION and BENGUET] are planning to
agree to the continuation of a modified union shop in the three camps mentioned above without
giving the employees concerned the opportunity to express their wishes on the matter ..."
BENGUET even went further in its answer filed on October 18, 1962, by asserting that "...
defendants have already agreed to the continuation of the modified union shop provision in the
collective bargaining agreement...."
Neither can we accept BENGUET's contention that the inclusion of said aforequoted motion in the
record on appeal filed in said Civil Case No. 1150, now on appeal before Us docketed as case No.
L-24729, refutes UNION's allegation that it has subsequently abandoned its stand against Bobok
Lumber Jack Ass'n., in said case. The mere appearance of such motion in the record on appeal is
but a compliance with the procedural requirement of Rule 41, Sec. 6, of the Rules of Court, that
all matters necessary for a proper understanding of the issues involved be included in the record
on appeal. This therefore cannot be taken as a rebuttal of the UNION's explanation.
There is nothing then, in law as well as in fact, to support plaintiff BENGUET's contention that
defendants are contractually bound by the CONTRACT. And the stand taken by the trial court all
the more becomes unassailable in the light of Art. 1704 of the Civil Code providing that:
In the collective bargaining, the labor union or members of the board or committee signing the
contract shall be liable for non-fulfillment thereof. (Emphasis supplied)
There is no question, defendants were not signatories nor participants in the CONTRACT.
Lastly, BENGUET contends, citing Clause II in connection with Clause XVIII of the
CONTRACT, that since all the employees, as principals, continue being bound by the no-strike
stipulation until the CONTRACT's expiration, UNION, as their agent, must necessarily be bound
also pursuant to the Law on Agency. This is untenable. The way We understand it, everything
binding on a duly authorized agent, acting as such, is binding on the principal; not vice-versa,
unless there is a mutual agency, or unless the agent expressly binds himself to the party with whom
he contracts. As the Civil Code decrees it: 14
The agent who acts as such is not personally liable to the party with whom he contracts, unless he
expressly binds himself or exceeds the limits of his authority without giving such party sufficient
notice of his powers. (Emphasis supplied)1äwphï1.ñët
Here, it was the previous agent who expressly bound itself to the other party, BENGUET. UNION,
the new agent, did not assume this undertaking of BBWU.
In view of all the foregoing, We see no further necessity of delving further into the other less
important points raised by BENGUET in connection with the first question.
On the second question, it suffices to consider, in answer thereto, that the rule of vicarious liability
has, since the passage of Republic Act 875, been expressly legislated out. 15 The standing rule
now is that for a labor union and/or its officials and members to be liable, there must be clear proof
of actual participation in, or authorization or ratification of the illegal acts. 16 While the lower
court found that some strikers and picketers resorted to intimidation and actual violence, it also
found that defendants presented uncontradicted evidence that before and during the strike, the
strike leaders had time and again warned the strikers not to resort to violence but to conduct
peaceful picketing only. 17 Assuming that the strikers did not heed these admonitions coming from
their leaders, the failure of the union officials to go against the erring union members pursuant to
the UNION and PAFLU constitutions and by-laws exposes, at the most, only a flaw or weakness
in the defense which, however, cannot be the basis for plaintiff BENGUET to recover.
Lastly, paragraph VI of the Answer 18 sufficiently traverses the material allegations in paragraph
VI of the Complaint, 19 thus precluding a fatal admission on defendants' part. The purpose behind
the rule requiring specific denial is obtained: defendants have set forth the matters relied upon in
support of their denial. Paragraph VI of the Answer may not be a model pleading, but it suffices
for purposes of the rule. Pleadings should, after all, be liberally construed. 20
Since defendants were not contractually bound by the no-strike clause in the CONTRACT, for the
simple reason that they were not parties thereto, they could not be liable for breach of contract to
plaintiff. The lower court therefore correctly absolved them from liability.
WHEREFORE, the judgment of the lower court appealed from is hereby affirmed. No costs. So
ordered.1äwphï1.ñët
 APPROPRIATE BARGAINING UNIT
Who may join unions- All persons employed in commercial, industrial and agricultural
enterprises, including employees of government corporations established under the Corporation
Code as well as employees of religious, medical or educational institutions whether operating for
profit or not, except managerial employees, shall have the right to self-organization and to form,
join or assist labor organizations for purposes of collective bargaining. Ambulant, intermittent and
itinerant workers, self-employed people, rural workers and those without any definite employers
may form labor organizations for their mutual aid and protection.
Supervisory employees and security guards shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own; Provided, that those supervisory employees who are included in an
existing rank-and-file bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain
in that unit; Provided, further, that alien employees with valid working permits issued by the
Department of Labor and Employment may exercise the right to self-organization and join or assist
labor organizations for purposes of collective bargaining if they are nationals of a country which
grants the same or similar rights to Filipino workers, as certified by the Department of Foreign
Affairs.
Section 1 (q), Rule I, Book V of the Omnibus Rules defines a "bargaining unit" as a group
of employees sharing mutual interests within a given employer unit comprised of all or less than
all of the entire body of employees in the employer unit or any specific occupational or
geographical grouping within such employer unit.
This definition has provided the "community or mutuality of interest" test as the standard
in determining the constituency of a collective bargaining unit. This is so because the basic test of
an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination
which will best assure to all employees the exercise of their collective bargaining rights. The
application of this test may either result in the formation of an employer unit or in the
fragmentation of an employer unit.
Article 255. Exclusive bargaining representation and workers’ participation in policy and
decision-making- The labor organization designated or selected by the majority of the employees
in an appropriate collective bargaining unit shall be the exclusive representative of the employees
in such unit for the purpose of collective bargaining. However, an individual employee or group
of employees shall have the right at any time to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such
rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in
policy and decision-making processes of the establishment where they are employed insofar as
said processes will directly affect their rights, benefits and welfare. For this purpose, workers and
employers may form labor-management councils: Provided, That the representatives of the
workers in such labor-management councils shall be elected by at least the majority of all
employees in said establishment. (As amended by Section 22, Republic Act No. 6715, March 21,
1989)
Article 245-A. Effect of Inclusion as Members of Employees outside the Bargaining Unit -
The inclusion as union members of employees outside the bargaining unit shall not be a ground
for the cancellation of the registration of the union. Said employees are automatically deemed
removed from the list of membership of said union.

Sources:
http://www.chanrobles.com/scdecisions/jurisprudence1985/jun1985/gr_l45824_1985.php
http://www.chanrobles.com/implementingrulesofthelaborcode5.html#.XikWh2gzaUk
https://www.senate.gov.ph/republic_acts/ra%209481.pdf
https://blr.dole.gov.ph/wp-content/uploads/2018/01/do_40-f-03_s2008.pdf
https://www.scribd.com/document/296103520/Effects-of-Affiliation-Disaffiliating-of-a-Union
http://www.chanrobles.com/implementingrulesofthelaborcode5.html#.XjZd_mgzY2y
https://www.lawphil.net/judjuris/juri1968/apr1968/gr_l-24711_1968.html
http://www.chanrobles.com/implementingrulesofthelaborcode5.html#.Xilg-mgzaUk
https://www.lawphil.net/judjuris/juri2013/jul2013/gr_179146_2013.htmlhttps://blr.dole.gov.ph/2
014/12/11/book-v-labor-relations/