Republic of the Philippines
SUPREME COURT
Manila
SPECIAL THIRD DIVISION
G.R. Nos. 158930-31 March 3, 2008
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED
INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU),
petitioner,
vs.
NESTLÉ PHILIPPINES, INCORPORATED, respondent.
x------------------------------------------x
G.R. Nos. 158944-45 March 3, 2008
NESTLÉ PHILIPPINES, INCORPORATED, petitioner,
vs.
UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED
INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU),
respondent.
RESOLUTION
CHICO-NAZARIO, J.:
On 22 August 2006, this Court promulgated its Decision1 in the above-
entitled cases, the dispositive part of which reads –
WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31
seeking that Nestlé be declared to have committed unfair labor practice in
allegedly setting a precondition to bargaining is DENIED. The Petition in G.R.
No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling
of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the
Secretary of the DOLE gravely abused her discretion in failing to confine her
assumption of jurisdiction power over the ground rules of the CBA
negotiations; but the ruling of the Court of Appeals on the inclusion of the
Retirement Plan as a valid issue in the collective bargaining negotiations
between UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are directed to
resume negotiations respecting the Retirement Plan and to take action
consistent with the discussions hereinabove set forth. No costs.
Subsequent thereto, Nestlé Philippines, Incorporated (Nestlé) filed a Motion
for Clarification2 on 20 September 2006; while Union of Filipro Employees –
Drug, Food and Allied Industries Union – Kilusang Mayo Uno (UFE-DFA-
KMU), on 21 September 2006, filed a Motion for Partial Reconsideration3 of
the foregoing Decision.
The material facts of the case, as determined by this Court in its Decision,
may be summarized as follows:
UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-
file employees of Nestlé belonging to the latter’s Alabang and Cabuyao
plants. On 4 April 2001, as the existing collective bargaining agreement
(CBA) between Nestlé and UFE-DFA-KMU4 was to end on 5 June 2001,5 the
Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed
Nestlé of their intent to "open [our] new Collective Bargaining Negotiation
for the year 2001-2004 x x x as early as June 2001."6 In response thereto,
Nestlé informed them that it was also preparing its own counter-proposal
and proposed ground rules to govern the impending conduct of the CBA
negotiations.
On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division
only)7, Nestlé reiterated its stance that "unilateral grants, one-time
company grants, company-initiated policies and programs, which include,
but are not limited to the Retirement Plan, Incidental Straight Duty Pay and
Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom."8
Dialogue between the company and the union thereafter ensued.
On 14 August 2001, however, Nestlé requested9 the National Conciliation
and Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite, to
conduct preventive mediation proceedings between it and UFE-DFA-KMU
owing to an alleged impasse in said dialogue; i.e., that despite fifteen (15)
1
meetings between them, the parties failed to reach any agreement on the
proposed CBA.
Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU
filed a Notice of Strike10 on 31 October 2001 with the NCMB, complaining,
in essence, of a bargaining deadlock pertaining to economic issues, i.e.,
"retirement (plan), panel composition, costs and attendance, and CBA".11
On 07 November 2001, another Notice of Strike12 was filed by the union,
this time predicated on Nestlé’s alleged unfair labor practices, that is,
bargaining in bad faith by setting pre-conditions in the ground rules and/or
refusing to include the issue of the Retirement Plan in the CBA negotiations.
The result of a strike vote conducted by the members of UFE-DFA-KMU
yielded an overwhelming approval of the decision to hold a strike.13
On 26 November 2001, prior to holding the strike, Nestlé filed with the
DOLE a Petition for Assumption of Jurisdiction,14 praying for the Secretary
of the DOLE, Hon. Patricia A. Sto. Tomas, to assume jurisdiction over the
current labor dispute in order to effectively enjoin any impending strike by
the members of the UFE-DFA-KMU at the Nestlé’s Cabuyao Plant in Laguna.
On 29 November 2001, Sec. Sto. Tomas issued an Order15 assuming
jurisdiction over the subject labor dispute. The fallo of said Order states
that:
CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over
the labor dispute at the Nestlé Philippines, Inc. (Cabuyao Plant) pursuant to
Article 263 (g) of the Labor Code, as amended.
Accordingly, any strike or lockout is hereby enjoined. The parties are
directed to cease and desist from committing any act that might lead to the
further deterioration of the current labor relations situation.
The parties are further directed to meet and convene for the discussion of
the union proposals and company counter-proposals before the National
Conciliation and Mediation Board (NCMB) who is hereby designated as the
delegate/facilitator of this Office for this purpose. The NCMB shall report to
this Office the results of this attempt at conciliation and delimitation of the
issues within thirty (30) days from the parties’ receipt of this Order, in no
case later than December 31, 2001. If no settlement of all the issues is
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reached, this Office shall thereafter define the outstanding issues and order
the filing of position papers for a ruling on the merits.
UFE-DFA-KMU sought reconsideration16 of the above but nonetheless
moved for additional time to file its position paper as directed by the
Assumption of Jurisdiction Order.
On 14 January 2002, Sec. Sto. Tomas denied said motion for
reconsideration.
On 15 January 2002, despite the order enjoining the conduct of any strike or
lockout and conciliation efforts by the NCMB, the employee members of
UFE-DFA-KMU at Nestlé’s Cabuyao Plant went on strike.
In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas
directed: (1) the members of UFE-DFA-KMU to return-to-work within
twenty-four (24) hours from receipt of such Order; (2) Nestlé to accept back
all returning workers under the same terms and conditions existing
preceding to the strike; (3) both parties to cease and desist from committing
acts inimical to the on-going conciliation proceedings leading to the further
deterioration of the situation; and (4) the submission of their respective
position papers within ten (10) days from receipt thereof. But
notwithstanding the Return-to-Work Order, the members of UFE-DFA-KMU
continued with their strike, thus, prompting Sec. Sto. Tomas to seek the
assistance of the Philippine National Police (PNP) for the enforcement of
said order.
On 7 February 2002, Nestlé and UFE-DFA-KMU filed their respective position
papers. Nestlé addressed several issues concerning economic provisions of
the CBA as well as the non-inclusion of the issue of the Retirement Plan in
the collective bargaining negotiations. On the other hand, UFE-DFA-KMU
limited itself to the issue of whether or not the retirement plan was a
mandatory subject in its CBA negotiations.
On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to
tender its stand on the other issues raised by Nestlé but not covered by its
initial position paper by way of a Supplemental Position Paper.
UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed
several pleadings, one of which was a Manifestation with Motion for
Reconsideration of the Order dated February 11, 2002 assailing the Order of
February 11, 2002 for supposedly being contrary to law, jurisprudence and
the evidence on record. The union posited that Sec. Sto. Tomas "could only
assume jurisdiction over the issues mentioned in the notice of strike subject
of the current dispute,"17 and that the Amended Notice of Strike it filed did
not cite, as one of the grounds, the CBA deadlock.
On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of
UFE-DFA-KMU.
Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court
of Appeals, alleging that Sec. Sto. Tomas committed grave abuse of
discretion amounting to lack or excess of jurisdiction when she issued the
Orders of 11 February 2002 and 8 March 2002.
In the interim, in an attempt to finally resolve the crippling labor dispute
between the parties, then Acting Secretary of the DOLE, Hon. Arturo D.
Brion, came out with an Order19 dated 02 April 2002, ruling that:
a. we hereby recognize that the present Retirement Plan at the Nestlé
Cabuyao Plant is a unilateral grant that the parties have expressly so
recognized subsequent to the Supreme Court’s ruling in Nestlé, Phils. Inc. vs.
NLRC, G.R. No. 90231, February 4, 1991, and is therefore not a mandatory
subject for bargaining;
b. the Union’s charge of unfair labor practice against the Company is hereby
dismissed for lack of merit;
c. the parties are directed to secure the best applicable terms of the
recently concluded CBSs between Nestlé Phils. Inc. and it eight (8) other
bargaining units, and to adopt these as the terms and conditions of the
Nestlé Cabuyao Plant CBA;
d. all union demands that are not covered by the provisions of the CBAs of
the other eight (8) bargaining units in the Company are hereby denied;
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e. all existing provisions of the expired Nestlé Cabuyao Plant CBA without
any counterpart in the CBAs of the other eight bargaining units in the
Company are hereby ordered maintained as part of the new Nestlé Cabuyao
Plant CBA;
f. the parties shall execute their CBA within thirty (30) days from receipt of
this Order, furnishing this Office a copy of the signed Agreement;
g. this CBA shall, in so far as representation is concerned, be for a term of
five (5) years; all other provisions shall be renegotiated not later than three
(3) years after its effective date which shall be December 5, 2001 (or on the
first day six months after the expiration on June 4, 2001 of the superceded
CBA).
UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was
subsequently denied on 6 May 2002.
For the second time, UFE-DFA-KMU went to the Court of Appeals via
another Petition for Certiorari seeking to annul the Orders of 02 April 2002
and 06 May 2002 of the Secretary of the DOLE, having been issued in grave
abuse of discretion amounting to lack or excess of jurisdiction.
On 27 February 2003, the appellate court promulgated its Decision on the
twin petitions for certiorari, ruling entirely in favor of UFE-DFA-KMU, the
dispositive part thereof stating –
WHEREFORE, in view of the foregoing, there being grave abuse on the part
of the public respondent in issuing all the assailed Orders, both petitions are
hereby GRANTED. The assailed Orders dated February 11, 2001, and March
8, 2001 (CA-G.R. SP No. 69805), as well as the Orders dated April 2, 2002
and May 6, 2002 (CA-G.R. SP No. 71540) of the Secretary of Labor and
Employment in the case entitled: "IN RE: LABOR DISPUTE AT NESTLE
PHILIPPINES INC. (CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIV-
CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-037-01, NCMB-RBIV-LAG-NS-
11-10-039—01) are hereby ANNULLED and SET ASIDE. Private respondent is
hereby directed to resume the CBA negotiations with the petitioner.20
Both parties appealed the aforequoted ruling. Nestlé essentially assailed
that part of the decision finding the DOLE Secretary to have gravely abused
her discretion amounting to lack or excess of jurisdiction when she ruled
that the Retirement Plan was not a valid issue to be tackled during the CBA
negotiations; UFE-DFA-KMU, in contrast, questioned the appellate court’s
decision finding Nestlé free and clear of any unfair labor practice.
Since the motions for reconsideration of both parties were denied by the
Court of Appeals in a joint Resolution dated 27 June 2003, UFE-DFA-KMU
and Nestlé separately filed the instant Petitions for Review on Certiorari
under Rule 45 of the Rules of Court, as amended.
G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestlé seeking to
reverse the Court of Appeals Decision insofar as the appellate court’s failure
to find Nestlé guilty of unfair labor practice was concerned; while G.R. No.
158944-45 was instituted by Nestlé against UFE-DFA-KMU likewise looking
to annul and set aside the part of the Court of Appeals Decision declaring
that: 1) the Retirement Plan was a valid collective bargaining issue; and 2)
the scope of the power of the Secretary of the Department of Labor and
Employment (DOLE) to assume jurisdiction over the labor dispute between
UFE-DFA-KMU and Nestlé was limited to the resolution of questions and
matters pertaining merely to the ground rules of the collective bargaining
negotiations to be conducted between the parties.
On 29 March 2004, this Court resolved21 to consolidate the two petitions
inasmuch as they (1) involved the same set of parties; (2) arose from the
same set of circumstances, i.e., from several Orders issued by then DOLE
Secretary, Hon. Patricia A. Sto. Tomas, respecting her assumption of
jurisdiction over the labor dispute between Nestlé and UFE-DFA-KMU,
Alabang and Cabuyao Divisions;22 and (3) similarly assailed the same
Decision and Resolution of the Court of Appeals.
After giving due course to the instant consolidated petitions, this Court
promulgated on 22 August 2006 its Decision, now subject of UFE-DFA-
KMU’s Motion for Partial Reconsideration and Nestlé’s Motion for
Clarification.
In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this
Court address and discuss anew points or arguments that have basically
been passed upon in this Court’s 22 August 2006 Decision. Firstly, it
questions this Court’s finding that Nestlé was not guilty of unfair labor
4
practice, considering that the transaction speaks for itself, i.e, res ipsa
loquitor. And made an issue again is the question of whether or not the
DOLE Secretary can take cognizance of matters beyond the amended Notice
of Strike.
As to Nestlé’s prayer for clarification, the corporation seeks elucidation
respecting the dispositive part of this Court’s Decision directing herein
parties to resume negotiations on the retirement compensation package of
the concerned employees. It posits that "[i]n directing the parties to
negotiate the Retirement Plan, the Honorable Court x x x might have
overlooked the fact that here, the Secretary of Labor had already assumed
jurisdiction over the entire 2001-2004 CBA controversy x x x."
As to the charge of unfair labor practice:
The motion does not put forward new arguments to substantiate the prayer
for reconsideration of this Court’s Decision except for the sole contention
that the transaction speaks for itself, i.e., res ipsa loquitor. Nonetheless,
even a perusal of the arguments of UFE-DFA-KMU in its petition and
memorandum in consideration of the point heretofore raised will not
convince us to change our disposition of the question of unfair labor
practice. UFE-DFA-KMU argues therein that Nestlé’s "refusal to bargain on a
very important CBA economic provision constitutes unfair labor practice."23
It explains that Nestlé set as a precondition for the holding of collective
bargaining negotiations the non-inclusion of the issue of Retirement Plan. In
its words, "respondent Nestlé Phils., Inc. insisted that the Union should first
agree that the retirement plan is not a bargaining issue before respondent
Nestlé would agree to discuss other issues in the CBA."24 It then concluded
that "the Court of Appeals committed a legal error in not ruling that
respondent company is guilty of unfair labor practice. It also committed a
legal error in failing to award damages to the petitioner for the ULP
committed by the respondent."25
We are unconvinced still.
The duty to bargain collectively is mandated by Articles 252 and 253 of the
Labor Code, as amended, which state –
ART. 252. Meaning of duty to bargain collectively. – The duty to bargain
collectively means the performance of a mutual obligation 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 grievances or questions arising under such agreement and executing a
contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any
concession.
ART. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. – When there is a collective bargaining agreement,
the duty to bargain collectively shall also mean that neither party shall
terminate nor modify such agreement during its lifetime. However, either
party can serve a written notice to terminate or modify the agreement at
least sixty (60) days prior to its expiration date. It shall be the duty of both
parties to keep the status quo and to continue in full force and effect the
terms of conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties.
Obviously, the purpose of collective bargaining is the reaching of an
agreement resulting in a contract binding on the parties; but the failure to
reach an agreement after negotiations have continued for a reasonable
period does not establish a lack of good faith. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one.
The duty to bargain does not include the obligation to reach an agreement.
The crucial question, therefore, of whether or not a party has met his
statutory duty to bargain in good faith typically turns on the facts of the
individual case. As we have said, there is no per se test of good faith in
bargaining. Good faith or bad faith is an inference to be drawn from the
facts. To some degree, the question of good faith may be a question of
credibility. The effect of an employer’s or a union’s individual actions is not
the test of good-faith bargaining, but the impact of all such occasions or
actions, considered as a whole, and the inferences fairly drawn therefrom
collectively may offer a basis for the finding of the NLRC.26
For a charge of unfair labor practice to prosper, it must be shown that
Nestlé was motivated by ill will, "bad faith, or fraud, or was oppressive to
5
labor, or done in a manner contrary to morals, good customs, or public
policy, and, of course, that social humiliation, wounded feelings, or grave
anxiety resulted x x x"27 in disclaiming unilateral grants as proper subjects
in their collective bargaining negotiations. While the law makes it an
obligation for the employer and the employees to bargain collectively with
each other, such compulsion does not include the commitment to
precipitately accept or agree to the proposals of the other. All it
contemplates is that both parties should approach the negotiation with an
open mind and make reasonable effort to reach a common ground of
agreement.
Herein, the union merely bases its claim of refusal to bargain on a letter28
dated 29 May 2001 written by Nestlé where the latter laid down its position
that "unilateral grants, one-time company grants, company-initiated policies
and programs, which include, but are not limited to the Retirement Plan,
Incidental Straight Duty Pay and Calling Pay Premium, are by their very
nature not proper subjects of CBA negotiations and therefore shall be
excluded therefrom." But as we have stated in this Court’s Decision, said
letter is not tantamount to refusal to bargain. In thinking to exclude the
issue of Retirement Plan from the CBA negotiations, Nestlé, cannot be
faulted for considering the same benefit as unilaterally granted, considering
that eight out of nine bargaining units have allegedly agreed to treat the
Retirement Plan as a unilaterally granted benefit. This is not a case where
the employer exhibited an indifferent attitude towards collective
bargaining, because the negotiations were not the unilateral activity of the
bargaining representative. Nestlé’s desire to settle the dispute and proceed
with the negotiation being evident in its cry for compulsory arbitration is
proof enough of its exertion of reasonable effort at good-faith bargaining.
In the case at bar, Nestle never refused to bargain collectively with UFE-
DFA-KMU. The corporation simply wanted to exclude the Retirement Plan
from the issues to be taken up during CBA negotiations, on the postulation
that such was in the nature of a unilaterally granted benefit. An employer’s
steadfast insistence to exclude a particular substantive provision is no
different from a bargaining representative’s perseverance to include one
that they deem of absolute necessity. Indeed, an adamant insistence on a
bargaining position to the point where the negotiations reach an impasse
does not establish bad faith.[fn24 p.10] It is but natural that at negotiations,
management and labor adopt positions or make demands and offer
proposals and counter-proposals. On account of the importance of the
economic issue proposed by UFE-DFA-KMU, Nestle could have refused to
bargain with the former – but it did not. And the management’s firm stand
against the issue of the Retirement Plan did not mean that it was bargaining
in bad faith. It had a right to insist on its position to the point of stalemate.
The foregoing things considered, this Court replicates below its clear
disposition of the issue:
The concept of "unfair labor practice" is defined by the Labor Code as:
ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR
PROSECUTION THEREOF. – Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their right to
bargain collectively and otherwise deal with each other in an atmosphere of
freedom and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.
x x x x.
The same code likewise provides the acts constituting unfair labor practices
committed by employers, to wit:
ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. – It shall be unlawful
for an employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their
right to self-organization;
(b) To require as a condition of employment that a person or an employee
shall not join a labor organization or shall withdraw from one to which he
belongs;
(c) To contract out services or functions being performed by union members
when such will interfere with, restrain or coerce employees in the exercise
of their right to self-organization;
6
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or
other support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership
in any labor organization. Nothing in this Code or in any other law shall stop
the parties from requiring membership in a recognized collective bargaining
agent as a condition for employment, except those employees who are
already members of another union at the time of the signing of the
collective bargaining agreement.
Employees of an appropriate collective bargaining unit who are not
members of the recognized collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and other fees paid by members of
the recognized collective bargaining agent, if such non-union members
accept the benefits under the collective agreement. Provided, That the
individual authorization required under Article 242, paragraph (o) of this
Code shall not apply to the nonmembers of the recognized collective
bargaining agent; [The article referred to is 241, not 242. – CAA]
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an
employee for having given or being about to give testimony under this
Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or
agents as part of the settlement of any issue in collective bargaining or any
other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations associations or partnerships who have
actually participated, authorized or ratified unfair labor practices shall be
held criminally liable. (Emphasis supplied.)
Herein, Nestlé is accused of violating its duty to bargain collectively when it
purportedly imposed a pre-condition to its agreement to discuss and engage
in collective bargaining negotiations with UFE-DFA-KMU.
A meticulous review of the record and pleadings of the cases at bar shows
that, of the two notices of strike filed by UFE-DFA-KMU before the NCMB, it
was only on the second that the ground of unfair labor practice was alleged.
Worse, the 7 November 2001 Notice of Strike merely contained a general
allegation that Nestlé committed unfair labor practice by bargaining in bad
faith for supposedly "setting pre-condition in the ground rules (Retirement
issue)." (Notice of Strike of 7 November 2001; Annex "C" of UFE-DFA-KMU
Position Paper; DOLE original records, p. 146.) In contrast, Nestlé, in its
Position Paper, did not confine itself to the issue of the non-inclusion of the
Retirement Plan but extensively discussed its stance on other economic
matters pertaining to the CBA. It is UFE-DFA-KMU, therefore, who had the
burden of proof to present substantial evidence to support the allegation of
unfair labor practice.
A perusal of the allegations and arguments raised by UFE-DFA-KMU in the
Memorandum (in G.R. Nos. 158930-31) will readily disclose the need for the
presentation of evidence other than its bare contention of unfair labor
practice in order to make certain the propriety or impropriety of the ULP
charge hurled against Nestlé. Under Rule XIII, Sec. 4, Book V of the
Implementing Rules of the Labor Code:
x x x. In cases of unfair labor practices, the notice of strike shall as far as
practicable, state the acts complained of and the efforts to resolve the
dispute amicably." (Emphasis supplied.)
In the case at bar, except for the assertion put forth by UFE-DFA-KMU,
neither the second Notice of Strike nor the records of these cases
substantiate a finding of unfair labor practice. It is not enough that the
union believed that the employer committed acts of unfair labor practice
when the circumstances clearly negate even a prima facie showing to
warrant such a belief. (Tiu v. National Labor Relations Commission, G.R. No.
123276, 18 August 1997, 277 SCRA 681, 688.)
Employers are accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. (Capitol
7
Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470
SCRA 125, 136.) This mass of privileges comprises the so-called
management prerogatives. (Capitol Medical Center, Inc. v. Meris, G.R. No.
155098, 16 September 2005, 470 SCRA 125, 136.) In this connection, the
rule is that good faith is always presumed. As long as the company’s
exercise of the same is in good faith to advance its interest and not for
purpose of defeating or circumventing the rights of employees under the
law or a valid agreement, such exercise will be upheld. (Capitol Medical
Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125,
136.)
There is no per se test of good faith in bargaining. (Hongkong Shanghai
Banking Corporation Employees Union v. National Labor Relations
Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Good
faith or bad faith is an inference to be drawn from the facts. (Hongkong
Shanghai Banking Corporation Employees Union v. National Labor Relations
Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.)
Herein, no proof was presented to exemplify bad faith on the part of Nestlé
apart from mere allegation. Construing arguendo that the content of the
aforequoted letter of 29 May 2001 laid down a pre-condition to its
agreement to bargain with UFE-DFA-KMU, Nestlé’s inclusion in its Position
Paper of its proposals affecting other matters covered by the CBA negates
the claim of refusal to bargain or bargaining in bad faith. Accordingly, since
UFE-DFA-KMU failed to proffer substantial evidence that would overcome
the legal presumption of good faith on the part of Nestlé, the award of
moral and exemplary damages is unavailing.
As to the jurisdiction of the DOLE Secretary under the amended Notice of
Strike:
This Court is not convinced by the argument raised by UFE-DFA-KMU that
the DOLE Secretary should not have gone beyond the disagreement on the
ground rules of the CBA negotiations. The union doggedly asserts that the
entire labor dispute between herein parties concerns only the ground rules.
Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining
deadlock as the basis for the filing of its Notice of Strike; and at the time of
the filing of the first Notice of Strike, several conciliation conferences had
already been undertaken where both parties had already exchanged with
each other their respective CBA proposals. In fact, during the conciliation
meetings before the NCMB, but prior to the filing of the notices of strike,
the parties had already delved into matters affecting the meat of the
collective bargaining agreement.
The Secretary of the DOLE simply relied on the Notices of Strike that were
filed by UFE-DFA-KMU as stated in her Order of 08 March 2002, to wit:
x x x The records disclose that the Union filed two Notices of Strike. The First
is dated October 31, 2001 whose grounds are cited verbatim hereunder:
"A. Bargaining Deadlock
1. Economic issues (specify)
1. Retirement
2. Panel Composition
3. Costs and Attendance
4. CBA"
The second Notice of Strike is dated November 7, 2001 and the cited ground
is like quoted verbatim below:
"B. Unfair Labor Practices (specify)
Bargaining in bad faith –
Setting pre-condition in the ground rules (Retirement issue)"
Nowhere in the second Notice of Strike is it indicated that this Notice is an
amendment to and took the place of the first Notice of Strike. In fact, our
Assumption of Jurisdiction Order dated November 29, 2001 specifically cited
the two (2) Notices of Strike without any objection on the part of the Union
x x x.29
8
Had the parties not been at the stage where the substantive provisions of
the proposed CBA had been put in issue, the union would not have based
thereon its initial notice to strike. This Court maintains its original position in
the Decision that, based on the Notices of Strike filed by UFE-DFA-KMU, the
Secretary of the DOLE rightly decided on matters of substance. That the
union later on changed its mind is of no moment because to give premium
to such would make the legally mandated discretionary power of the Dole
Secretary subservient to the whims of the parties.
As to the point of clarification on the resumption of negotiations respecting
the Retirement Plan:
As for the supposed confusion or uncertainty of the dispositive part of this
Court’s Decision, Nestle moves for clarification of the statement – "The
parties are directed to resume negotiations respecting the Retirement Plan
and to take action consistent with the discussion hereinabove set forth. No
costs." The entire fallo of this Court’s Decision reads:
WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31
seeking that Nestlé be declared to have committed unfair labor practice in
allegedly setting a precondition to bargaining is DENIED. The Petition in G.R.
No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling
of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the
Secretary of the DOLE gravely abused her discretion in failing to confine her
assumption of jurisdiction power over the ground rules of the CBA
negotiations; but the ruling of the Court of Appeals on the inclusion of the
Retirement Plan as a valid issue in the collective bargaining negotiations
between UFE-DFA-KMU and Nestlé is AFFIRMED. The parties are directed to
resume negotiations respecting the Retirement Plan and to take action
consistent with the discussions hereinabove set forth. No costs.
Nestle interprets the foregoing as an order for the parties to resume
negotiations by themselves respecting the issue of retirement benefits due
the employees of the Cabuyao Plant. Otherwise stated, Nestle posits that
the dispositive part of the Decision directs the parties to submit to a
voluntary mode of dispute settlement.
A read-through of this Court’s Decision reveals that the ambiguity is more
ostensible than real. This Court’s Decision of 22 August 2006 designated
marked boundaries as to the implications of the assailed Orders of the
Secretary of the DOLE. We said therein that 1) the Retirement Plan is still a
valid issue for herein parties’ collective bargaining negotiations; 2) the Court
of Appeals committed reversible error in limiting to the issue of the ground
rules the scope of the power of the Secretary of Labor to assume jurisdiction
over the subject labor dispute; and 3) Nestlé is not guilty of unfair labor
practice. Nowhere in our Decision did we require parties to submit to
negotiate by themselves the tenor of the retirement benefits of the
concerned employees of Nestlé, precisely because the Secretary of the
DOLE had already assumed jurisdiction over the labor dispute subject of
herein petitions. Again, we spell out what encompass the Secretary’s
assumption of jurisdiction power. The Secretary of the DOLE has been
explicitly granted by Article 263(g) of the Labor Code the authority to
assume jurisdiction over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, and decide the
same accordingly. And, as a matter of necessity, it includes questions
incidental to the labor dispute; that is, issues that are necessarily involved in
the dispute itself, and not just to that ascribed in the Notice of Strike or
otherwise submitted to him for resolution. In the case at bar, the issue of
retirement benefits was specifically what was presented before the
Secretary of the DOLE; hence, We reject Nestlé’s interpretation. Our
decision is crystal and cannot be interpreted any other way. The Secretary
having already assumed jurisdiction over the labor dispute subject of these
consolidated petitions, the issue concerning the retirement benefits of the
concerned employees must be remanded back to him for proper
disposition.
All told, in consideration of the points afore-discussed and the fact that no
substantial arguments have been raised by either party, this Court remains
unconvinced that it should modify or reverse in any way its disposition of
herein cases in its earlier Decision. The labor dispute between the Nestle
and UFE-DFA-KMU has dragged on long enough. As no other issues are
availing, let this Resolution write an ending to the protracted labor dispute
between Nestlé and UFE-DFA-KMU (Cabuyao Division).
WHEREFORE, premises considered, the basic issues of the case having been
passed upon and there being no new arguments availing, the Motion for
Partial Reconsideration is hereby DENIED WITH FINALITY for lack of merit.
Let these cases be remanded to the Secretary of the Department of Labor
9
and Employment for proper disposition, consistent with the discussions in
this Court’s Decision of 22 August 2006 and as hereinabove set forth. No
costs.
SO ORDERED.
[G.R. Nos. 88710-13 : December 19, 1990.]
192 SCRA 396
UNION OF FILIPRO EMPLOYEES (UFE), MANUEL L. SARMIENTO,
BENJAMIN M. ALTAREJOS, RODOLFO D. PAGLINAWAN, CARMELITA
G. NUQUI, CORAZON Y SAZON, RODRIGO P. LUCAS, RUDOLPH C.
ARMAS, EDUARDO A. ABELLA, ANGEL A. CANETE, JUANITO T.
CAPILI, ADOLFO S. CASTILLO, JR., PONCIANO A. CARINGAL,
ERIBERTO S. LEONARDO, ADELAIDA B. MIRA, EUGENIA C. NUÑEZ,
PAZ B. SAN JOSE, VENUSITO S. SOLIS, EMMANUEL S. VILLENA,
ALFONSO R. RICAFRENTE, MELANIO C. LANTIN, AMADOR M.
MONTOJO, RODOLFO M. MUNSOD, RENATO P. DIAZ, RODRIGO M.
URGELLES, CARLOS B. SAN JOSE, EUSTAQUIO E. BUNYI, NELSON P.
CENTENO, SOTERO A. GACUTAN, GUILLERMO G. DE BORJA,
DIONISIO H. NIPALES, EUGENIO S. SAN PEDRO, MANUEL DELA
FUENTE, CARLO MEDINA, CESAR B. PONCE, JORGE B. CASTRO, JR.,
RICARDO AREVALO, REY M. BEO, FELIX ESGUERRA, REYNALDO
ALMENANZA, MELITON C. ROXAS (as represented by his surviving
spouse, MA. CORAZON ROXAS), ROMEO A. ARANDELA, ISIDRO A.
NATIVIDAD, EMILIANO M. SAYAO, CELSO J. CENIDO, PAUL C.
MEJARES, SILVERIO C. PAMPANG, DIONISIO S. CANLOBO, GILBERT
C. NOBLE, RODOLFO D. CALONG-CALONG, SR., PEPITO Q.
QUITLONG, DIONISIO C. COMPLETO, ANTONIO T. AVELINO,
ANGELITO PAYABYAB, ISAIAS A. RIEZA, DEODITO M. BELARMINO,
QUEZON G. MATEO, CARLITO PRE, CIPRIANO P. LUPEBA, EFREN P.
DINSAY, WILDON C. BARROS, SUSAN A. BERRO, MANUEL A. LAVIN,
ROY U. BACONGUIS, JEROME T. FIEL, ANASTACIO G. CABALLERO,
JR., ROGELIO E. RAIZ, JOSE T. ISIDTO, ANGELITO M. ANICIETE, RAUL
ROBERTO C. NANQUIL, LIZA T. VILLANUEVA, CESAR S. CRUZ,
REYNALDO L. CALIGUIA, ERNESTO M. SOLOMON, OSCAR G.
AGUINALDO, DIEGO P. OLIVA, JAIME D. NILLAS, ELPIDIO A.
HERMOCILLA, DANTE L. ESCOSURA, FEDERICO P. CONTEMPRATO,
 LAURO C. MAKILING, RENATO O. MINDANAO, RAFAEL C. TURA AND
QUINTIN J. PEDRIDO, JR., Petitioners, vs. NESTLÉ PHILIPPINES, INC.,
NATIONAL LABOR RELATIONS COMMISSION, HON. EDUARDO G.
MAGNO, HON. ZOSIMO T. VASALLO and HON. EVANGELINE S.
LUBATON, Respondents.
DECISION
MEDIALDEA, J.:
This petition assails the decision of the NLRC, dated November 2, 1988 on
the consolidated appeals of petitioners, the dispositive portion of which
provides as follows:
"1. In NLRC Case No. NCR-12-4007-85 and NLRC Case No. NCR-1-295-86 —
a. Declaring the strike illegal;
b. Declaring the following respondent union officers, namely; M.L.
Sarmiento, B.M. Altarejos, R.D. Paglinawan, C.G. Nuqui, C.Y. Sazon, R.
Armas, E. Abella, A.A. Cañete, A.B. Mira, P.C. Caringal, E. Leonardo E.C.
Nuñez, P.D. San Jose, E. Villena A. Ricafrente, M. Lantin, A. Montojo, R.
Monsud, R. Diaz, R. Urgelles, C. San Jose, E. Bunyi, N. Centeno, R. Gacutan,
G. de Borja, N. Nipales, E. San Pedro, C. Ponce, J. Castro, R. Beo, E. Quino, M.
Roxas, R. Arandela, W. Ramirez, I. Natividad, S. Pampang, D. Canlobo, R.
Calong-Calong, G. Noble, E. Sayao, C. Cenido, P. Mijares, P. Quitlong, A.
Avelino, L. Payabyab, I. Rieza, C. Pre, D. Belarmino, to have lost their
employment status;
c. Ordering the reinstatement of the following respondents-appellants:
Juanito Capili, Carlo Medina, Rodrigo Lucas, Adoho Castillo, Jr., Venusito
Solis, Ricardo Arevalo, Quezon G. Mateo, Jr., Dionisio Completo, Felix
Esguerra, Manuel dela Fuente and Reymundo Almenanza, to their former or
equivalent positions without loss of seniority rights but without backwages;
10
d. Declaring the union (UFE) guilty of unfair labor practice; and
e. Dismissing the union complaint for unfair labor practice.- nad
2. In RAB-X-2-0047-86, the decision sought to be set aside is AFFIRMED and
the individual respondents-appellants namely: Roy Baconguis, Jerome T.
Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan E. Berro, Jose T. Isidto,
Wilson C. Barros, Rogelio E. Raiz, Manuel A. Lavin, Cipriano P. Lupeba are
hereby declared to have lost their employment status;.
3. In NLRC-00-09-0385-87, the challenged decision is likewise AFFIRMED,
except as it affects Cesar S. Cruz, who is ordered reinstated to his former or
equivalent position without backwages." (pp. 417-418, Rollo)
and the resolution dated March 7, 1989, quoted as follows:
"NLRC CASE NO. NCR-12-4007-85 entitled Union of Filipro Employees (UFE),
Petitioner-Appellants, versus, Filipro, Inc., et al., Respondents-Appellees,
NLRC CASE NO. NCR-1-295-86 entitled Nestle Phils., Inc., Petitioner-
Appellee, versus, Union of Filipro Employees, et al., Respondents-
Appellants, NLRC CASE NO. RAB-X-2-0047-86 entitled Nestle Phils., Inc.,
Petitioner-Appellee, versus, Cagayan de Oro Filipro Workers Union-WATU,
et al., Respondents-Appellants, NCR-00-09-0385-87 entitled Union of Filipro
Employees (UFE) and its officers, Complainants-Appellants, versus, Nestle
Phils., et al., Respondents-Appellees. The Commission sitting en banc, after
deliberation, resolved to rectify par. 3 of the dispositive portion of our
November 2, 1988 resolution by ordering the reinstatement of Quezon G.
Mateo, Jr. and Dionisio Completo to their former or equivalent position
without backwages and to deny the motion for reconsideration filed by
appellants UFE and its Officials adversely affected by said resolution." (p.
429, Rollo)
In a lengthy and voluminous petition, dwelling largely on facts, petitioner
Union of Filipro Employees and 70 union officers and a member (henceforth
"UFE") maintain that public respondent NLRC had acted with grave abuse of
discretion in its affirmance of the decisions of the Labor Arbiters a quo,
declaring illegal the strikes staged by UFE.
Respondent NLRC premised its decision on the following sets of facts:

1. In NCR 12-4007-85 and NCR 1-295-86:
UFE filed a notice of strike on November 14, 1985, (BLR-NS-11-344-85) with
the Bureau of Labor Relations against Filipro (now Nestle Philippines, Inc.,
["Nestle"]). On December 4, 1988, UFE filed a complaint for Unfair Labor
Practice (ULP) against Nestle and its officials for violation of the Labor Code
(Art. 94) on Holiday Pay, non-implementation of the CBA provisions (Labor
Management Corporation scheme), Financial Assistance and other unfair
labor practice (p. 381, Rollo).:- nad
Acting on Nestle's petition seeking assumption of jurisdiction over the labor
dispute or its certification to the NLRC for compulsory arbitration, then
Minister of Labor and Employment Blas F. Ople assumed jurisdiction over
the dispute and issued the following order on December 11, 1985:
"WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute
at Filipino, Inc. pursuant to Article 264(g) of the Labor Code of the
Philippines, as amended. In lime with this assumption a strike, lockout, or
any other form of concerted action such as slowdowns, sitdowns, noise
barrages during office hours, which tend to disrupt company operations, are
strictly enjoined.
Let a copy of this Order be published in three (3) conspicuous places inside
company premises for strict compliance of all concerned." (p. 381-382,
Rollo)
On December 20, 1985, UFE filed a petition for Certiorari with prayer for
issuance of temporary restraining order, with this Court (G.R. No. 73129)
assailing the assumption of jurisdiction by the Minister. Notwithstanding the
automatic injunction against any concerted activity, and an absence of a
restraining order, the union members, at the instigation of its leaders, and
in clear defiance of Minister Ople's Order of December 11, 1986, staged a
strike and continued to man picket lines at the Makati Administrative Office
and all of Nestle's factories and warehouses at Alabang, Muntinlupa,
Cabuyao, Laguna, and Cagayan de Oro City. Likewise, the union officers and
members distributed leaflets to employees and passersby advocating a
boycott of company products (p. 383, Rollo).
11
On January 23, 1986, Nestle filed a petition to declare the strike illegal (NCR-
1-295-86) premised on violation of the CBA provisions on "no strike/no
lockout" clause and the grievance machinery provisions on settlement of
disputes.
On January 30, 1986, then Labor Minister Ople issued another Order, with
this disposition:
"WHEREFORE, in line with the Order of December 11, 1985, this Office
hereby orders all the striking workers to report for work and the company
to accept them under the same terms and conditions prevailing before the
work stoppage within forty eight (48) hours from notice of this Order.
The Director of Labor Relations is designated to immediately conduct
appropriate hearings and meetings and submit his recommendations to
enable this Office to decide the issues within thirty (30) days." (p. 383, Rollo)
Despite receipt of the second order dated January 30, 1986, and knowledge
of a notice caused to be published by Nestle in the Bulletin on February 1,
1986, advising all workers to report to work not later than February 3, 1986,
the officers and members of UFE continued with the strike.
On February 4, 1986, the Minister B. Ople denied their motion for
reconsideration of the return-to-work order portion as follows:
"WHEREFORE, the motion for reconsideration is hereby denied and no
further motion of similar nature shall be entertained.: nad
"The parties are further enjoined from committing acts that will disrupt the
peaceful and productive relations between the parties while the dispute is
under arbitration as well as acts considered illegal by law for the orderly
implementation of this Order like acts of coercion, harassment, blocking of
public thoroughfares, ingress and egress to company premises for lawful
purposes or those undertaken without regard to the rights of the other
party.
"Police and military authorities are requested to assist in the proper and
effective implementation of this Order." (p. 384, Rollo)
UFE defied the Minister and continued with their strike. Nestle filed criminal
charges against those involved.
On March 13, 1986, the new Minister of Labor and Employment, Augusto B.
Sanchez, issued a Resolution, the relevant portions of which stated thus:
"This Office hereby enjoins all striking workers to return-to-work
immediately and management to accept them under the same terms and
conditions prevailing previous to the work stoppage except as qualified in
this resolution. The management of Nestle Philippines is further directed to
grant a special assistance as suggested by this Ministry in an order dated 30
January 1986 to all striking employees covered by the bargaining units at
Makati, Alabang, Cabuyao and Cagayan de Oro City in an amount equivalent
to their weighted average monthly basic salary, plus the cash conversion
value of the vacation leave credits for the year 1986, payable not later than
five (5) days from the date of the actual return to work by the striking
workers." (p. 385, Rollo)
On March 17, 1986, the strikers returned to work.
On March 31, 1986, We granted UFE's Motion to Withdraw its Petition for
Certiorari (G.R. No. 73129) (p. 385, Rollo)
On April 23, 1986, Minister Sanchez rendered a Decision, the dispositive
portion of which reads:
WHEREFORE, the Union charge for unfair labor practices is hereby dismissed
for want of merit. Nestle Philippines is hereby directed to make good its
promise to grant an additional benefit in the form of bonus equivalent to
one (1) month's gross compensation to all employees entitled to the same
in addition to the one-month weighted average pay granted by this office in
the return-to-work Order." (p. 786, Rollo)
On June 6, 1986, Minister Sanchez modified the foregoing decision as
follows:
"WHEREFORE, our 23 April 1986 Decision is hereby modified as follows:
12
"1. Nestle Philippines is directed to pay the Anniversary bonus equivalent to
one month basic salary to all its employees in lieu of the one month gross
compensation previously ordered by this office." (p. 787, Rollo)
On November 13, 1987, after trial on the merits, Labor Arbiter Eduardo G.
Magno issued his decision, disposing as follows:
"WHEREFORE, judgment is hereby rendered:
"1. Declaring the strike illegal.: nad
"2. Declaring all the respondent union officers, namely: M.L. Sarmiento,
R.M. Alterejos, R.D. Paglinawan, C.G. Nuqui, C.Y. Sazon, R. Lucas, R. Armas,
E. Abella, A.A. Cañete, J.T. Capili, A.S. Castillo, Jr., P.C. Caringal, E. Leonardo,
E.B. Mira, E.C. Nuñez, P.D. San Jose, V. Solis, E. Villena, A. Ricafrente, M.
Lantin, A. Mortojo, R. Munsod, R. Diaz, R. Urgelles, C. San Jose, E. Bunyi, N.
Centeno, R. Gacutan, G. de Borja, N. Nipales, E. San Pedro, M. de la Fuente,
C. Medina, C. Ponce, J. Castro Jr., R. Arevalo, R. Beo, F. Esguerra, R.
Almenanza, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad, S.
Pampang, D. Canlobo, G. Noble, E. Sayao, C. Cenido, F. Mijares, R. Calong-
Calong, P. Quitlong, D. Completo, A. Avelino, L. Payabyab, I. Rieza, D.
Belarmino, Q. Mateo, and C. Pre to have lost their employment status.
"3. Declaring the union guilty of unfair labor practice; and
"4. Dismissing the Union complaint for unfair labor practice." (pp. 380-381,
Rollo)
2. In RAB-X-2-0047-86:
Filipro (Nestle) and the Cagayan de Oro Filipro Workers Union-WATU,
renewed a 3-year contract, made effective from December 1, 1984 up to
June 30, 1987. Petitioners signed the CBA as the duly-elected officers of the
Union.
On January 19, 1985, the union officers, together with other members of
the union sent a letter to Workers Alliance Trade Unions (WATU), advising
them "that henceforth we shall administer the CBA by ourselves and with
the help of the Union of Filipro Employees (UFE) to where we have allied
ourselves." WATU disregarded the unions's advice, claiming to be the
contracting party of the CBA. UFE filed a petition (Case No. CRD-M-88-326-
85) for administration of the existing CBAs at Cebu, Davao and Cagayan de
Oro bargaining units against TUPAS and WATU.
From January 22, 1986 to March 14, 1986, the rank and file employees of
the company staged a strike at the instigation of the UFE officers, who had
represented themselves as officers.
Nestle filed a petition to declare the strike illegal. The strikers countered
that their strike was legal because the same was staged pursuant to the
notice of strike filed by UFE on November 14, 1985 (BLR-NS-11-344-85), of
which they claim to be members, having disaffiliated themselves from CDO-
FWU-WATU.
On November 24, 1987, Executive Labor Arbiter Zosimo Vasallo issued his
decision, disposing as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
"1. Declaring the strike illegal;
"2. Declaring respondent union guilty of unfair labor practice; and
"3. Declaring the following individual respondent Union officers namely: Roy
Y. Baconguis, Jerome T. Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan
E. Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E. Raiz, Manuel A. Lavin and
Cipriano P. Lupeba to have lost their employment status." (p. 388, Rollo)
3. In NCR-00-09-03285-87.
(a) On August 13, 1986, UFE, its officers and members staged a walkout
from their jobs, and participated in the Welga ng Bayan. Nestlé filed a
petition to declare the walkout illegal (NLRC Case No. SRB-IV-1831-87) (p.
392, Rollo);
(b) On September 21, 1986, complainants (UFE) again did not proceed to
their work, but joined the picket line in sympathy with the striking workers
13
of Southern Textile Mills, which became the subject of an Illegal Strike
Petition (NLRC Case SRB-IV-I 1831-87) (p. 392, Rollo);
(c) On November 12, 1986, UFE its officers and members just left their work
premises and marched towards Calamba in a demonstration over the
slaying of a labor leader, . . . hence a complaint for Illegal Walkout (NLRC
Case No. SRB-IV-1833-87) was filed by Nestle (p. 392, Rollo);
(d) On December 4, 1986, UFE filed a Notice of Strike with the Bureau of
Labor Relations (BLR-NS-12-531-86) (to protest the unfair labor practices of
Nestle, such as hiring of contractual workers to perform regular jobs and
wage discrimination) (p. 392, Rollo);
(e) On December 23, 1986, then Minister Augusto S. Sanchez certified the
labor dispute to the Commission for compulsory arbitration, strictly
enjoining any intended or actual strike or lockout (p. 392, Rollo);
(f) On August 18, 1987, UFE union officers and members at the Cabuyao
factory again abandoned their jobs and just walked out, leaving unfinished
products on line and raw materials leading to their spoilage. The walk-out
resulted in economic losses to the company. Nestle filed a Petition to
Declare the Walkout Illegal. (NLRC Case No. SRB-IV-3-1898-87) (p. 407,
Rollo);
(g) On August 21, 1987, UFE union officers and members at the Alabang
factory also left their jobs in sympathy with the walkout staged by their
Cabuyao counterparts. Nestle filed again a Petition to Declare the Strike
Illegal (NLRC-NCR-Case No. 00-08-03003-87) (p. 407, Rollo);
(h) On August 27, 1987, UFE union members at the Alabang and Cabuyao
factories, in disregard of the Memorandum of Agreement entered into by
the Union and Management on August 21, 1987, (to exert their best efforts
for the normalization of production targets and standards and to consult
each other on any matter that may tend to disrupt production to attain
industrial peace) participated in an indignation rally in Cabuyao because of
the death of two (2) members of PAMANTIC, and in Alabang because one of
their members was allegedly mauled by a policeman during the nationwide
strike on August 26, 1987 (p. 408, Rollo);
(i) On September 4, 1987, around 6:00 P.M. all sections at the Alabang
factory went on a 20-minute mealbreak simultaneously, contrary to the
agreement and despite admonition of supervisors, resulting in complete
stoppage of their production lines. Responsible officials namely: Eugenio
San Pedro, Carlos Jose, and Cesar Ponce, were suspended from work for six
(6) days without pay (p. 408, Rollo);
(j) From September 5 to 8, 1987, at the instigation of UFE union officers, all
workers staged a sitdown strike; and
(k) On September 7, 1987, Cabuyao's culinary section's union members
sympathized with the sitdown strike at Alabang, followed at 12:30 P.M. by
the whole personnel of the production line and certain areas in the
Engineering Department. These sitdown strikes at the Alabang and Cabuyao
factories became the subject of two separate petitions to declare the strike
illegal (NCR-Case No. 00-09-03168-87 and SRB-IB-9-1903-87, respectively)
(p. 408, Rollo);
(l) On September 8, 1987, Hon. F. Drilon issued the following order:
"All the workers are hereby directed to return to work immediately, refrain
from resorting to any further slowdown, sitdown strike, walkout and any
other kind of activities that may tend to disrupt the normal operations of
the company. The company is directed to accept all employees and to
resume normal operations.: nad
Parties are likewise directed to cease and desist from committing any and all
acts that would aggravate the situation." (p. 394, Rollo)
(m) Despite the order, UFE staged a strike on September 11, 1987, without
notice of strike, strike vote and in blatant defiance of then Labor Minister
Sanchez's certification order dated November 23, 1986 and Secretary
Drilon's return-to-work order dated September 8, 1987." (p. 409, Rollo);
(n) Nestle sent individual letter of termination dated September 14, 1987
dismissing them from the service effective immediately for knowingly
instigating and participating in an illegal strike, defying the order of the
Secretary of Labor, dated September 8, 1987, and other illegal acts (pp. 394-
395, Rollo).
14
On September 22, 1987, UFE filed a complaint for Illegal Dismissal, ULP and
damages (NLRC NCR-00-03285-87). Labor Arbiter Evangeline Lubaton ruled
on both issues of dismissal and strike legality, upon the premise that the
issue on validity of the dismissal of the individual complainants from
employment "depends on the resolution of the issue on whether or not the
strike declared by complainants was illegal."
The decision dated January 12, 1988, disposed as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Dismissing the instant complaint for lack of merit; and
2. Confirming the dismissal of all individual complainants herein as valid and
legally justified." (p. 376, Rollo)
UFE appealed, assailing the three decisions, except that rendered in Case
No. NLRC-NCR-12-4007-85 (Complaint for Unfair Labor Practice Against UFE)
"because it was already rendered moot and academic by the return to work
agreement and order dated March 10 and 13, 1986, respectively." (p. 49,
Rollo).
Upon UFE's subsequent motion, the three appeals were ordered
consolidated and elevated to the NLRC en banc (p, 95, Rollo)
The NLRC affirmed the unanimous decisions of the three labor arbiters
which declared the strikes illegal, premised on the view that "the core of the
controversy rests upon the legality of the strikes."
In the petition before Us, UFE assigns several errors (pp. 63-321, Rollo),
which We have summarized as follows:
1. that Articles 263 and 264 are no longer good laws, since compulsory
arbitration has been curtailed under the present Constitution.
2. that the question on the legality of the strike was rendered moot and
academic when Nestle management accepted the striking workers in
compliance with the return-to-work order of then Minister of Labor Augusto
Sanchez dated March 13, 1986, (citing the case of Bisayan Land
Transportation Co. v. CIR (102 Phil. 439) and affirmed in the case of Feati
University Faculty Club (PAFLU) v. Feati University, G.R. No. L-31503, August
15, 1974, 58 SCRA 395).chanrobles virtual law library
3. that the union did not violate the no-strike/no lock-out clause,
considering that the prohibition applies to economic strikes, pursuant to
Philippine Metal Foundries v. CIR, G.R. No. L-34948-49, May 15, 1979, 90
SCRA 135. UFE, it is claimed, premised their strike on a violation of the labor
standard laws or non-payment of holiday pay, which is, in effect, a violation
of the CBA.
4. on the commission of illegal and prohibited acts which automatically
rendered the strike illegal, UFE claimed that there were no findings of
specific acts and identifies of those participating as to render them liable
(ESSO Phils. v. Malayang Manggagawa sa ESSO, G.R. No. L-36545, January
26, 1977, 75 SCRA 72; Shell Oil Workers Union v. CIR, G.R. No. L-28607,
February 12, 1972, 43 SCRA 224). By holding the officers liable for the illegal
acts of coercion, or denial of free ingress and egress, without specifying and
finding out their specific participation therein, the Labor Arbiter resorted to
the principle of vicarious liability which has since been discarded in the case
of Benguet Consolidated v. CIR, G.R. No. L-24711, April 30, 1968, 23 SCRA
465.
We agree with the Solicitor General that the petition failed to show that the
NLRC committed grave abuse of discretion in its affirmance of the decisions
of the Labor Arbiters a quo.
At the outset, UFE questions the power of the Secretary of Labor under Art.
263(g) of the Labor Code to assume jurisdiction over a labor dispute tainted
with national interests, or to certify the same for compulsory arbitration.
UFE contends that Arts. 263 and 264 are based on the 1973 Constitution,
specifically Sec. 9 of Art. II thereof, the pertinent portion of which reads:
"Sec. 9. . . . The State may provide for compulsory arbitration." (p. 801,
Rollo)
15
UFE argues that since the aforecited provision of Sec. 9 is no longer found in
the 1987 Constitution, Arts. 263(g) and 264 of the Labor Code are now
"unconstitutional and must be ignored."
We are not persuaded. We agree with the Solicitor General that on the
contrary, both provisions are still applicable.
We quote:
"Article 7 of the New Civil Code declares that:
'Article 7. Laws are repealed only by subsequent ones, and their violation or
non-observance shall not be excused by disuse or custom or practice to the
contrary.
x x x'
"In the case at bar, no law has ever been passed by Congress expressly
repealing Articles 263 and 264 of the Labor Code. Neither may the 1987
Constitution be considered to have impliedly repealed the said Articles
considering that there is no showing that said articles are inconsistent with
the said Constitution. Moreover, no court has ever declared that the said
articles are inconsistent with the 1987 Constitution.
"On the contrary, the continued validity and operation of Articles 263 and
264 of the Labor Code has been recognized by no less than the Congress of
the Philippines when the latter enacted into law R.A. 6715, otherwise
known as Herrera Law, Section 27 of which amended paragraphs (g) and (i)
of Article 263 of the Labor Code.
"At any rate, it must be noted that Articles 263 (g) and 264 of the Labor
Code have been enacted pursuant to the police power of the State, which
has been defined as the power inherent in a Government to enact laws,
within constitutional limits, to promote the order, safety, health, morals and
general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police
power, together with the power of eminent domain and the power of
taxation, is an inherent power of government and does not need to be
expressly conferred by the Constitution. Thus, it is submitted that the
argument of petitioners that Articles 263 (g) and 264 of the Labor Code do
not have any constitutional foundation is legally inconsequential." (pp. 801-
803, Rollo)
On the issue of the legality of the strike committed, UFE seeks to absolve
itself by pointing out qualifying factors such as motives, good faith, absence
of findings on specific participation and/or liability, and limiting the no-strike
provision to economic strikes.
UFE completely misses the underlying principle embodied in Art. 264(g) on
the settlement of labor disputes and this is, that assumption and
certification orders are executory in character and are to be strictly
complied with by the parties even during the pendency of any petition
questioning their validity. This extraordinary authority given to the Secretary
of Labor is aimed at arriving at a peaceful and speedy solution to labor
disputes, without jeopardizing national interests.
Regardless therefore of their motives, or the validity of their claims, the
striking workers must cease and/or desist from any and all acts that tend to,
or undermine this authority of the Secretary of Labor, once an assumption
and/or certification order is issued. They cannot, for instance, ignore return-
to-work orders, citing unfair labor practices on the part of the company, to
justify their actions. Thus, the NLRC in its decision, re-emphasized the
nature of a return-to-work order within the context of Art. 264(g) as
amended by BP Nos. 130 and 227:
"x x x
"One other point that must be underscored is that the return-to-work order
is issued pending the determination of the legality or illegality of the strike.
It is not correct to say that it may be enforced only if the strike is legal and
may be disregarded if the strike is illegal, for the purpose precisely is to
maintain the status quo while the determination is being made. Otherwise,
the workers who contend that their strike is legal can refuse to return to
work to their work and cause a standstill on the company operations while
retaining the positions they refuse to discharge or allow the management to
fill. Worse, they will also claim payment for work not done, on the ground
that they are still legally employed although actually engaged in the
activities inimical to their employer's interest. (Emphasis supplied)
16
"This is like eating one's cake and having it too, and at the expense of the
management. Such an unfair situation surely was not contemplated by our
labor laws and cannot be justified under the social justice policy, which is a
policy of fairness to both labor and management. Neither can this unseemly
arrangement be sustained under the due process clause as the order, if thus
interpreted, would be plainly oppressive and arbitrary.
". . ." (p. 415, Rollo)
Also, in the cases of Sarmiento v. Judge Tuico, (G.R. No. 75271-73; Asian
Transmission Corporation v. National Labor Relations Commission, G.R.
77567, 27 June 88, 162 SCRA 676). We stated:
"The return to work order does not so much confer a right as it imposes a
duty; and while as a right it may be waived, it must be discharged as a duty
even against the worker's will. Returning to work in this situation is not a
matter of option or voluntariness but of obligation. The worker must return
to his job together with his co-workers so the operations of the company
can be resumed and it can continue serving the public and promoting its
interest.": nad
We also wish to point out that an assumption and/or certification order of
the Secretary of Labor automatically results in a return-to-work of all
striking workers, whether or not a corresponding order has been issued by
the Secretary of Labor. Thus, the striking workers erred when they
continued with their strike alleging absence of a return-to-work order.
Article 264(g) is clear. Once an assumption/certification order is issued,
strikes are enjoined, or if one has already taken place, all strikers shall
immediately return to work.
A strike that is undertaken despite the issuance by the Secretary of Labor of
an assumption or certification order becomes a prohibited activity and thus
illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as
amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088, October 13,
1989; 178 SCRA 482). The Union officers and members, as a result, are
deemed to have lost their employment status for having knowingly
participated in an illegal act.
The NLRC also gave the following reasons:

1. The strike was staged in violation of the existing CBA provisions on "No
Strike/No Lockout Clause" stating that a strike, which is in violation of the
terms of the collective bargaining statement, is illegal, especially when such
terms provide for conclusive arbitration clause (Liberal Labor Union vs. Phil.
Can Co., 91 Phil. 72; Phil. Airlines vs. PAL Employees Association, L-8197,
October 31, 1958). The main purpose of such an agreement is to prevent a
strike and it must, therefore, be adhered to strictly and respected if their
ends are to be achieved (pp. 397-398, Rollo)
2. Instead of exhausting all the steps provided for in the grievance
machinery provided for in the collective bargaining agreement to resolve
the dispute amicably and harmoniously within the plant level, UFE went on
strike (p. 398, Rollo)
3. The prescribed mandatory cooling-off period and then 7-day strike and
after submission of the report of strike vote at Nestle's Makati Offices and
Muntinlupa and Cabuyao Plants were not complied with (NLRC-NCR-
124007-85 & NCR-1-295-86), while no notice of strike was filed by
respondents when they staged the strike at Nestle's Cagayan de Oro Plant
(RABX-2-0047-86) contrary to the pertinent provision of Articles 263 and
264 of the Labor Code, emphasizing that "the mandatory character of these
cooling-off periods has already been categorically ruled upon by the
Supreme Court" (National Federation of Sugar Workers (NFSW) vs. Ovejera,
et al., 114 SCRA 354) (p. 402, Rollo)- nad
4. In carrying out the strike, coercion, force, intimidation, violence with
physical injuries, sabotage, and the use of unnecessary and obscene
language or epithets were committed by the respondent officials and
members of either UFE or WATU. It is well-settled that a strike conducted in
this manner is illegal (United Seamen's Union vs. Davao Shipowners
Association, 20 SCRA 1226). In fact, criminal cases were filed with the
Makati Fiscal's Office (p. 402, Rollo).
Thus, the NLRC correctly upheld the illegality of the strikes and the
corresponding dismissal of the individual complainants because of their
"brazen disregard of successive lawful orders of then Labor Ministers Blas F.
Ople, Augusto Sanchez and Labor Secretary Franklin Drilon dated December
11, 1985, January 30, 1986 and February 4, 1986, respectively, and the
17
cavalier treatment of the provisions of the Labor Code and the return-to-
work orders of the Minister (now Secretary) of Labor and Employment, or
Articles 264 and 265 (now renumbered Arts. 263 and 264), providing in part
as follows:
"ART. 263. Strikes, picketing and lockouts. —
x x x
"(g) When in his opinion there exists a labor dispute causing or likely to
cause strikes or lockouts adversely affecting the national interest, such as
may occur in but not limited to public utilities, companies engaged in the
generation or distribution of energy, banks, hospitals, and export-oriented
industries including those within export processing zones, the Minister of
Labor and Employment shall assume jurisdiction over the dispute and
decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time
of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Minister may seek the assistance
of law enforcement agencies to ensure compliance with this provision as
well as with such orders as he may issue to enforce the same. (Italics
supplied)- nad
"The foregoing notwithstanding, the President of the Philippines shall not be
precluded from determining the industries wherein (sic) his opinion labor
disputes may adversely affect the national interest, and from intervening at
any time and assuming jurisdiction over any labor dispute adversely
affecting the national interest in order to settle or terminate the same.
x x x
ART. 264. Prohibited activities. —
(a) No labor organization or employer shall declare a strike or lockout
without first having bargained collectively in accordance with Title VII of this
Book or without first having filed the notice required in the preceding Article
or without the necessary strike or lockout vote first having been obtained
and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the
President or the Minister or after certification or submission of the dispute
to compulsory or voluntary arbitration or during the pendency o f cases
involving the same grounds for the strike or lockout." ([pp. 399-401, Rollo])
(Emphasis supplied)
On the alleged lack of jurisdiction of Labor Arbiter Lubaton, NLRC has
clarified that the question on the legality of strike was properly resolved by
the Labor Arbiter, not only because the question is perfectly within the
original and exclusive jurisdiction of the Labor Arbiter to adjudicate, but also
because the issue was not subsumed by the Order of Labor Minister
Sanchez, dated December 23, 1986, certifying the Notice of Strike dated
December 4, 1986 for compulsory arbitration, further clarifying that the
issue of whether or not the strike staged on September 11, 1987 by UFE and
its officials and members was illegal is a prejudicial question to the issue of
whether or not the complainants were illegally dismissed. We shall not
belabor the issue any further.: nad
ACCORDINGLY, the petition is DISMISSED, and the decision of public
respondent NLRC, dated November 2, 1988, and its Resolution, dated March
7, 1989, are both AFFIRMED in their entirety. No costs.
SO ORDERED
G.R. No. L-23495 September 30, 1970
18
LVN PICTURES EMPLOYEES AND WORKERS ASSOCIATION (NLU). Petitioner,
v. LVN PICTURES, INC., Respondent.
G.R. No. L-26432 September 30, 1970
LVN PICTURES CHECKERS UNION (NLU), Petitioner, vs. LVN PICTURES, INC.
and/or DALISAY PICTURES INC., and the COURT OF INDUSTRIAL
RELATIONS, Respondents.
Eulogio R. Lerum for petitioners.
Teofilo Sison & Nicanor Sison for respondent LVN Pictures, Inc.
Zacarias V. Flores for respondent Dalisay Pictures, Inc.
CASTRO, J.:
These two appeals by certiorari taken by the respective complainants from
the decision and the resolution dated October 8, 1963 and August 29, 1964,
respectively, of the Court of Industrial Relations (CIR) in case 2879-ULP (LVN
Pictures Employees and Workers Association [NLU] v. LVN Pictures, Inc.),
and from the decision and the resolution dated June 2, 1966 and July 18,
1966, respectively, of the same court in case 3013-ULP (LVN Pictures
Checkers Union [NLU] v. LVN Pictures, Inc. and/or Dalisay Pictures, Inc.), are
here considered together because all the complainants in both cases were
former employees of the LVN Pictures, Inc. and the two cases involve
similar, if no identical, factual situations and
issues.chanroblesvirtualawlibrarychanrobles virtual law library
The LVN Pictures, Inc. (hereinafter referred to as the LVN) was a corporation
engaged in the business of producing Tagalog movies. Among its employees
were the members of the LVN Pictures Employees and Workers Association
(NLU) (hereinafter referred to as the EWA) with which it executed on April
23, 1959 a collective bargaining agreement to expire on December 31, 1960.
During their employment with LVN, the members of the EWA served in
various capacities in the LVN, such as cameramen and their assistants,
soundmen and their assistants, sound technicians, carpenters, electricians,
drivers, laboratory personnel and laborers doing odd
jobs.chanroblesvirtualawlibrarychanrobles virtual law library
Previous to the year 1957, the LVN was realizing profits from its business.
However, from 1957 to 1961, it suffered heavy losses in its movie
production due to causes beyond its control. As of May 31, 1961 its total
losses amounted to P1,560,985.14, while its paid-up capital as of the said
date was only P1,204.000. Thus the losses exceeded the paid-up capital by
P356,985.14. Also as of May 31, 1961, the company's total liabilities reached
P1,189,946.19 while its total assets were only P853,961.05, so that its
liabilities exceeded its assets, by P335,985.14. In addition, outstanding loans
due from it amounted to P527,960.53. Of its overdraft line of P200,000 with
the Philippine National Bank which served as part of its operating capital, it
had used and withdrawn the total sum of P199,303.45, leaving the amount
of only P696.55. LVN had likewise used and withdrawn P199,167.95 of its
overdraft line in the amount of P200,000 with the Commercial Bank & Trust
Company, leaving a balance of
P832.05.chanroblesvirtualawlibrarychanrobles virtual law library
Not withstanding the foregoing adverse financial posture, the LVN
continued to operate its movie production with the expectation that it
would recoup part of its losses and investments. And in order to avoid
immediate closure of business, as well as lay-off of employees, the
management of the LVN, by letter dated March 14, 1960, proposed to the
EWA a change in the payment of salaries and wages of the employees from
salary or wage basis to the "pakiao" system per picture. This proposal was
however rejected in the union in its letter of March 31, 1960. On April 8,
1960 the LVN asked the EWA to reconsider its decision on the "pakiao"
system, to no avail. Again, on January 25, 1961, the LVN proposed to reduce
the monthly compensation of all its employees and laborers regardless of
whether or not they were union members, according to the following scale:
from P175.00 to P190.00 5%
from 200.00 to 350.00 10%
from 400.00 up 20%.
The salaries and/or wages of employees and workers below P175 as well as
the daily wage earners were not to be affected. This proposal was approved
by the board of directors of the LVN as a measure to stave off the mounting
19
losses in the operation of its Tagalog movie production. But it was also
rejected by the EWA in its letter of February 15,
1961.chanroblesvirtualawlibrarychanrobles virtual law library
After the expiration of the term of the collective bargaining contract, the
EWA proposed negotiations for a contract on February 24, 1961. In a letter-
reply dated March 2, 1961, the LVN informed the EWA that on March 15,
1961 the LVN stockholders would hold a meeting at which one of the
matters to be discussed was whether because of the financial losses of the
corporation, it would still continue to make pictures. The LVN therefore
advised the union that it would answer neither yes nor no to the proposed
negotiations but would await the outcome of the stockholders'
meeting.chanroblesvirtualawlibrarychanrobles virtual law library
By letter dated March 20, 1961, the LVN informed the EWA that, because of
huge losses incurred and the many obligations of the former which could
not be met, the stockholders had agreed not to invest additional capital and
to stop producing new moving pictures, and to finish only the pictures that
were then under production. Moreover, in view of the refusal of the EWA to
consider the LVN's proposals and because of the mounting losses, the LVN's
board of directors decided to close its movie production as of May 31,
1961.chanroblesvirtualawlibrarychanrobles virtual law library
As a necessary consequence of the stoppage of its movie production after
May 31, 1961, the LVN was compelled to dismiss all its personnel employed
in the said movie production, among them the 84 employees and/or
workers of the EWA The equipments and properties of the LVN were kept in
the studio premises under the care of a skeleton force selected for the
purpose. Thereafter, in order to secure rents to meet some of its obligations
the LVN leased its equipments and properties for the production of moving
pictures to the Tagalog Ilang-Ilang Productions, Arriba Productions, Inc.,
Manuel M. Lagunsad Productions, Galaxy Productions, Inc., Dalisay Pictures,
Inc., Magna East Productions and other producers, at P13,000 per picture. In
the production of moving pictures, the several lessees employed their own
personnel to handle the leased properties and equipments of the LVN.
There were some instances when these lessees employed former workers
and employees of the LVN.chanroblesvirtualawlibrarychanrobles virtual law
library
On May 31, 1961 the Dalisay Pictures, Inc. (hereinafter referred to as the
DPI) was incorporated, capitalized at P100,000 which was wholly subscribed
and fully paid by its incorporators, as follows: Delfin Buencamino, 1,000
shares, P50,000; Encarnacion Luna, 400 shares, P20,000; Maria Sevilla, 200
shares, P10,000; Jose T. Beltran, 200 shares, P10,000; and Nicanor S. Sison,
200 shares, P10,000.chanroblesvirtualawlibrarychanrobles virtual law library
On January 16, 1961, the LVN Pictures Checkers' Union (NLU) (hereinafter
referred to as the LPCU) was organized and was registered with the
Department of Labor on February 21, 1961. On February 27, 1961 it sent a
letter to the LVN containing collective bargaining proposals. The LVN
informed the LPCU that the former's stockholders would meet to decide
whether or not it would continue production of pictures. On March 24, 1961
all the members of LPCU received identical letters informing them that the
LVN would stop its movie production business effective May 31, 1961.
Thereafter, the LVN began reducing the work-load of the members of LPCU
and, in November 1961, dismissed them from
employment.chanroblesvirtualawlibrarychanrobles virtual law library
On July 18, 1961 the EWA filed a complaint charging the LVN with violations
of section 4(a) (1) and (4) of Republic Act 875 (Industrial Peace Act),
consisting of alleged union interference by the LVN and/or discriminatory
dismissal of 84 employees and workers because of the membership in the
EWA The LPCU likewise filed on October 20, 1961 a complaint against the
LVN and the DPI for alleged violations of sec. 4(a) (1), (4) and (6) in relation
to sections 12 and 13 of the Industrial Peace Act, consisting of alleged acts
of discrimination, shortening of working hours and/or days, and forced
dismissals. In both cases the CIR decided in favor of the respondents,
holding the latter not guilty of unfair labor practices in dismissing the
employees-members of the EWA and the LPCU, and, in the latter case filed
by the LPCU, declaring that the DPI is a business establishment and entity
separate and distinct from the LVN. The motions for reconsideration filed by
the respective complainants were denied by the
CIR.chanroblesvirtualawlibrarychanrobles virtual law library
Hence, these appeals.chanroblesvirtualawlibrarychanrobles virtual law
library
20
The numerous issues raised in both appeals can be capsulized into two main
issues: (1) Is the LVN guilty of unfair labor practice in dismissing its
employees who are members of the EWA and the LPCU? (2) Are the LVN
and the DPI one and the same corporation or entity?chanrobles virtual law
library
We resolve both issues in favor of the respondents LVN and DPI, and affirm
the CIR decisions and resolutions appealed
from.chanroblesvirtualawlibrarychanrobles virtual law library
1. The evidence in both appealed cases is clear that the LVN incurred
losses from 1957 to 1961, reducing it to a state of practical bankruptcy.
Thus, the respondent CIR found that as of December 31, 1957, the LVN
suffered a net loss of P364,320.32; December 31, 1958, P210,857.01;
December 31, 1959, P393,644.29; December 31, 1960, P399,085.85; and
December 31, 1961, P333,714.60. As of May 31, 1961, the total losses
suffered by LVN amounted to P1,560,985.14, whereas its paid-up capital
was only P1,204,000.00 - the former exceeding the latter by P356,785.14.
The liabilities of the LVN as of May 31, 1961 totalled P1,189,946.19, while its
total assets were only P853,961.05, the total liabilities exceeding the total
assets by P335,985.14. On top of these, the LVN as of May 31, 1961 had
loans due from it in the amount of P527,960.53. It had an overdraft line of
P200,000 with the Philippine National Bank which served as paint of its
operating capital, but of this amount it had already withdrawn and used the
total sum of P199,303.45 as of May 31, 1961, leaving a balance of only
P696.55. It had also as of the aforementioned date withdrawn and used
P199,167.95 of its P200,000 overdraft line with the Commercial Bank &
Trust Company, leaving a balance of only P832.05. Its yearly balance sheets,
yearly profit and loss statements, and yearly income tax returns
unquestionably proved that the LVN became insolvent due to heavy
financial losses suffered in good faith and in the ordinary course of business
operations from 1957 to May 31, 1961. Thus, it was constrained to stole its
movie production business. Since its operating capital of P400,000
consisting of an overdraft line in the amount of P200,000 each with the
Philippine National Bank and the Commercial Bank & Trust Company, was
nearly completely exhausted as of May 31, 1961, it is clear that when the
LVN completely stopped its movie production business on May 31, 1961, it
was not only insolvent but was also without any operating
capital.chanroblesvirtualawlibrarychanrobles virtual law library

It is to the credit of the LVN, however, that it did not decide to stop
producing movies immediately. Notwithstanding its insolvency and before it
finally closed its business on May 31, 1961, it had in good faith attempted to
avail of all possible arrangements with its employees to avoid the complete
closure of its business. It proposed various remedial measures, e.g., the
payment of wages or salaries on the pakiao system per picture, and the
gradual reduction of the employees' salaries. Unfortunately, these proposals
were flatly rejected. To avoid total bankruptcy, the LVN had no alternative
but to close and stop its movie production business. The employees, by their
refusal to meet the LVN halfway, in effect "killed the goose that laid the
golden eggs." It is not therefore correct to say that when the LVN proposed
the "pakiao" system and the reduction of wages for both union and non-
union members, it was committing an unfair labor practice. It was merely
trying, understandably and justifiably, to stave off eventual bankruptcy and
the ultimate folding-up of its movie production business. Neither can the
LVN be accused of being anti-labor when it gradually reduced the working
hours of the checkers and finally laid them off. The members of the LPCU
were theater-checkers of the LVN. Their services were needed only in the
exhibition of new pictures which were shown on percentage basis, in order
that the LVN might receive its lawful share in the gross gate receipts.
However, since the LVN stopped its movie production business on May 31,
1961, and its second or old pictures were being exhibited on flat-rate rental
basis, there was no longer any need to employ
checkers.chanroblesvirtualawlibrarychanrobles virtual law library
The argument is advanced that the LVN refused to bargain when it put off
answering the proposals of the EWA and the LPCU pending the
stockholders' meeting. We do not agree. It was entirely reasonable for the
LVN to hold in abeyance its answers to the proposals because whether or
not it would still enter into a collective bargaining agreement with the EWA
and the LPCU would depend on the consensus that would be arrived at by
the stockholders. There would be neither rhyme nor reason for a collective
bargaining agreement if the company would decide - as it did decide - to
stop producing moving pictures, because the resultant ultimate effect
would be the dismissal or separation of employees. In fact, subsequent
events proved the prudence of the action taken by the LVN. When the
stockholders decided to stop movie production as of May 31, 1961, the LVN
was compelled to dismiss its employees because there was no more work
21
for them. Had the LVN agreed to enter into collective bargaining
agreements with the two unions without awaiting the result of the
stockholders' meeting, the contracts would have become inutile anyway
because it was closing shop.chanroblesvirtualawlibrarychanrobles virtual
law library
The petitioners in both cases also allege that non-union members were
employed by the LVN even after May 31, 1961. This is not correct. The truth
is that although the LVN studio equipments and movie apparatus were
being used in the production of pictures, they were being used not to
produce LVN pictures but were leased to small independent producers. The
several lessees employed former workers of the LVN but the employment of
these people depended solely upon the discretion of the different lessees,
without any participation of ongoing interference from the
LVN.chanroblesvirtualawlibrarychanrobles virtual law library
The petitioners also contend that the LVN was not "really losing" because its
assets, namely, all the 320 finished films, were undervalued at only P320, or
at P1.00 book value per picture, when they were actually earning thousands
of pesos. We find no merit in this argument. In determining the yearly profit
or loss of a business enterprise, what is taken into account under section 28,
Chapter IV of the National Internal Revenue Code (Act No. 466, as
amended), are the "gross income computed under section twenty-nine, less
the deductions allowed by section thirty" of the said Act. A perusal of the
said pertinent provisions of the Tax Code will clearly show that the book
value or inventory value of assets (such as the 320 finished films book-
valued at P1.00 per picture) is immaterial and is not considered in the
preparation of the yearly profit and loss statement which is usually attached
to the yearly balance sheet. What are considered only are the incomes (not
book value of assets) and the expenses or deductions allowed in section 30
of the Tax Code. What is relevant and material, therefore, for purposes of
determining the yearly profit or loss of a corporation like the LVN is that all
such incomes are duly reported. And this has been done by the
LVN.chanroblesvirtualawlibrarychanrobles virtual law library
Besides, this rate of depreciation has been observed and adhered to strictly
by the LVN since 1946, and sanctioned and allowed by the Bureau of
Internal Revenue which, up to now has not found any occasion to object to
the said system of full depreciation after a period of 6 months from the date
of first exhibition. Indeed, under this procedure the LVN made and realized
annual profits from 1946 to 1956, inclusive, as aforementioned. However, as
hereinfore explained, it suffered losses in its movie production business
from 1957 to 1961.chanroblesvirtualawlibrarychanrobles virtual law library
The amount of P10,124,400.00 allegedly earned by these finished films from
1958 to 1961, included both the earnings from the old pictures that were
continued to be exhibited even after the period of six months, and the
incomes realized from the exhibition of all new pictures produced at an
average of 22 new pictures a year from 1956 to May 31, 1961. Therefore,
the said amount of P10,124,400.00 represented practically the total gross
income of the LVN in the period of five years as reflected in the yearly
operating account and yearly profit and loss statements attached to its
yearly balance sheets. Thus, the petitioners' allegation that the said amount
of P10,124,400.00 represented only the earnings of the 320 finished films
book-valued at P1.00 each, is inaccurate and
misleading.chanroblesvirtualawlibrarychanrobles virtual law library
This Court, in a number of cases, has recognized and affirmed the right of an
employer to lay off or dismiss employees because of losses in the operation
of its
business, 1 lack of work, 2 and considerable reduction in the volume of his
business. 3 We have held that such acts of dismissal do not constitute unfair
labor practice. 4 Indeed, "an employer may close his business, provided the
same is done in good faith and is due to causes beyond his control. To rule
otherwise would be oppressive and inhuman." 5chanrobles virtual law
library
The respondent CIR found for a fact, and our own independent study of the
evidence shows, that the LVN suffered tremendous losses, completely
depleting its capital which was needed to operate and continue its business
of producing moving pictures. In order to avoid immediate lay-off of
employees and the closure of its business, the LVN proposed to the EWA a
change in the payment of salaries and wages of the employees and workers
from salary or wage basis to the "pakiao" system; and when this was
rejected by the union, it offered to reduce the monthly compensation of all
the employees (except those receiving less than P175 a month and the daily
wage earners) regardless of their union membership, and this too was
rejected. In order to avoid further losses and in view of the refusal of the
22
union to cooperate in alleviating its mounting losses, the LVN was left with
no alternative but to close its movie production as of May 31, 1961 and to
dismiss its employees. This the LVN had the right to do, and it did so in good
faith. We are not unmindful of the plight of the employees in this case, but
we consider it oppressive to compel the LVN to continue its business of
producing movies when to do so would only result in its incurring further
losses.chanroblesvirtualawlibrarychanrobles virtual law library
Under the Termination Pay Law (R.A. 1052, sec. 1, as amended by R.A.
1787), one of the just causes for terminating an employment without a
definite period by the employer, is the closing or cessation of operations of
the establishment or enterprise, unless the closing is for the purpose of
defeating the intention of the said law. Since the LVN in good faith stopped
its movie production business on May 31, 1961, it could therefore legally
dismiss its employees. But before doing so, it gave them sufficient notice
and an ample period within which to look for other employments.
Therefore, contrary to the petitioners' allegation, the Termination Pay Law
applies.chanroblesvirtualawlibrarychanrobles virtual law library
2. Anent the second issue, the CIR found that the DPI is an entity separate
and distinct from the LVN. Thus, the CIR held in case 3013-ULP (LVN Pictures
Checkers' Union [NLU] v. LVN Pictures, et al.) that:
The Dalisay Pictures, Inc. is a separate and distinct entity from the LVN
Pictures, Inc., hence, it cannot be said that there was bad faith in the
termination of the employees mentioned in paragraph 5(a) of the
complaint. The Articles of Incorporation of the Dalisay Pictures, Inc. (Annex
"2" RCA) duly registered with the Securities and Exchange Commission
shows that the incorporators of the said corporation are Encarnacion Luna,
Maria Sevilla, Delfin Buencamino, Nicanor S. Sison, Jose T. Beltran, who are
entirely different from the owners of the LVN Pictures, namely, the De Leon
family, Villongco and the Navoa family. Hence, the two corporations are
distinct and separate from each other. The only point of contact between
the Dalisay Pictures, Inc. and the LVN Pictures, Inc. is when the former
leases its movie equipment with the latter.
To the same tenor is the CIR's holding in case 2879-ULP (LVN Pictures
Employees & Workers Association [NLU] v. LVN Pictures, Inc.) which states,
inter alia:

The lessees Dalisay Pictures, Inc., Ilang-Ilang Productions, Arriba
Productions, Inc., and Magna East Productions, are separate and distinct
business establishments and/or entities from the LVN Pictures, Inc. These
are separate and distinct corporate entities and independent from each
other. They pursue their business enterprises according to their respective
incorporation papers. They produce movie pictures of their own choice
employing their own capital and separate personnel force without the
intervention and interference of the respondent LVN Pictures, Inc. These
firms leased the equipments and production properties of the latter (LVN
Pictures, Inc.) with rents properly paid by them.
The foregoing factual findings of the CIR are supported by substantial
evidence on record and therefore are conclusive. The rule is now firmly
established that the CIR findings of fact are not to be disturbed on appeal as
long as they are supported by such material and relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, 6 the
appeal to the Supreme Court being then confined to questions of law. 7 We
cannot therefore disturb the CIR findings of fact on the matter of the
separate identities of the LVN and the
DPI.chanroblesvirtualawlibrarychanrobles virtual law library
3. We have noted that in the second case at bar (LVN Pictures
Checkers' Union [NLU], L-26432), the CIR awarded one-month pay to each of
the workers involved therein, in addition to holding that they should be
given the first preference in the event the LVN would operate
anew.chanroblesvirtualawlibrarychanrobles virtual law library
The award of one-month pay to the members of the LPCU is not justified
under the circumstances. For it is now settled that when an employment is
terminated for a just cause as defined in section 1 of Rep. Act 1052, as
amended by Rep. Act 1787, because of the losses incurred by the business,
the employee whose services are terminated or dispensed with is not
entitled to separation pay. 8 However, because the LVN did not appeal from
the said portion of the decision awarding a month's pay to each of the
members of the LPCU, nor discussed or called the attention of this Court to
this error, we are not authorized to consider this unassigned error.
9chanrobles virtual law library
23
ACCORDINGLY, the appealed decisions and resolutions of the Court of
Industrial Relations in case 2879-ULP (LVN Pictures Employees and Workers
Association [NLU] v. LVN Pictures, Inc.) and in case 3013-ULP (LVN Pictures
Checkers' Union [NLU] v. LVN Pictures, Inc., et al.) are affirmed. No
pronouncement as to costs.
Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo and Makasiar, JJ.,
concur.chanroblesvirtualawl
SECOND DIVISION
G.R. No. 211145, October 14, 2015
SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP. BY ITS
PRESIDENT, ALFIE ALIPIO, Petitioner, v. BUREAU OF LABOR RELATIONS,
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO., LTD. (HHIC-PHIL.),
Respondents.
DECISION
MENDOZA, J.:
The right to self-organization is not limited to unionism. Workers may also
form or join an association for mutual aid and protection and for other
legitimate purposes.
This is a petition for review on certiorari seeking to reverse and set aside the
July 4, 2013 Decision1 and the January 28, 2014 Resolution2 of the Court of
Appeals (CA) in CA-G.R. SP No. 123397, which reversed the November 28,
2011 Resolution3 of the Bureau of Labor Relations (BLR) and reinstated the
April 20, 2010 Decision4 of the Department of Labor and Employment
(DOLE) Regional Director, cancelling the registration of Samahan ng
Manggagawa sa Hanjin Shipyard (Samahan) as a worker's association under
Article 243 (now Article 249) of the Labor Code.
The Facts
On February 16, 2010, Samahan, through its authorized representative, Alfie
F. Alipio, filed an application for registration5 of its name "Samahan ng Mga
Manggagawa sa Hanjin Shipyard" with the DOLE. Attached to the
application were the list of names of the association's officers and
members, signatures of the attendees of the February 7, 2010 meeting,
copies of their Constitution and By-laws. The application stated that the
association had a total of 120 members.
On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando,
Pampanga (DOLE-Pampanga), issued the corresponding certificate of
registration6 in favor of Samahan.
On March 15, 2010, respondent Hanjin Heavy Industries and Construction
Co., Ltd. Philippines (Hanjin), with offices at Greenbeach 1, Renondo
Peninsula, Sitio Agustin, Barangay Cawag, Subic Bay Freeport Zone, filed a
petition7 with DOLE-Pampanga praying for the cancellation of registration
of Samahan's association on the ground that its members did not fall under
any of the types of workers enumerated in the second sentence of Article
243 (now 249).
Hanjin opined that only ambulant, intermittent, itinerant, rural workers,
self-employed, and those without definite employers may form a workers'
association. It further posited that one third (1/3) of the members of the
association had definite employers and the continued existence and
registration of the association would prejudice the company's goodwill.
On March 18, 2010, Hanjin filed a supplemental petition,8 adding the
alternative ground that Samahan committed a misrepresentation in
connection with the list of members and/or voters who took part in the
ratification of their constitution and by-laws in its application for
registration. Hanjin claimed that Samahan made it appear that its members
were all qualified to become members of the workers' association.
On March 26, 2010, DOLE-Pampanga called for a conference, wherein
Samahan requested for a 10-day period to file a responsive pleading. No
pleading, however, was submitted. Instead, Samahan filed a motion to
dismiss on April 14, 2010.9
The Ruling of the DOLE Regional Director
24
On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of
Hanjin. He found that the preamble, as stated in the Constitution and By-
Laws of Samahan, was an admission on its part that all of its members were
employees of Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay
naglalayong na isulong ang pagpapabuti ng kondisyon sa paggawa at
katiyakan sa hanapbuhay sa pamamagitan ng patuloy na pagpapaunlad ng
kasanayan ng para sa mga kasapi nito. Naniniwala na sa pamamagitan ng
aming mga angking lakas, kaalaman at kasanayan ay anting maitataguyod at
makapag-aambag sa kaunlaran ng isang lipunan. Na mararating at
makakamit ang antas ng pagkilala, pagdakila at pagpapahalaga sa mga tulad
naming mga manggagawa.
x x x10
The same claim was made by Samahan in its motion to dismiss, but it failed
to adduce evidence that the remaining 63 members were also employees of
Hanjin. Its admission bolstered Hanjin's claim that Samahan committed
misrepresentation in its application for registration as it made an express
representation that all of its members were employees of the former.
Having a definite employer, these 57 members should have formed a labor
union for collective bargaining.11 The dispositive portion of the decision of
the Dole Regional Director, reads:
WHEREFORE, premises considered, the petition is hereby GRANTED.
Consequently, the Certificate of Registration as Legitimate Workers
Association (LWA) issued to the SAMAHAN NG MGA MANGGAGAWA SA
HANJIN SHIPYARD (SAMAHAN) with Registration Numbers R0300-1002-WA-
009 dated February 26, 2010 is hereby CANCELLED, and said association is
dropped from the roster of labor organizations of this Office.
SO DECIDED.12
The Ruling of the Bureau of Labor Relations
Aggrieved, Samahan filed an appeal13 before the BLR, arguing that Hanjin
had no right to petition for the cancellation of its registration. Samahan
pointed out that the words "Hanjin Shipyard," as used in its application for
registration, referred to a workplace and not as employer or company. It
explained that when a shipyard was put up in Subic, Zambales, it became
known as Hanjin Shipyard. Further, the remaining 63 members signed the
Sama-Samang Pagpapatunay which stated that they were either working or
had worked at Hanjin. Thus, the alleged misrepresentation committed by
Samahan had no leg to stand on.14
In its Comment to the Appeal,15 Hanjin averred that it was a party-in-
interest. It reiterated that Samahan committed misrepresentation in its
application for registration before DOLE Pampanga. While Samahan insisted
that the remaining 63 members were either working, or had at least worked
in Hanjin, only 10 attested to such fact, thus, leaving its 53 members
without any workplace to claim.
On September 6, 2010, the BLR granted Samahan's appeal and reversed the
ruling of the Regional Director. It stated that the law clearly afforded the
right to self-organization to all workers including those without definite
employers.16 As an expression of the right to self-organization, industrial,
commercial and self-employed workers could form a workers' association if
they so desired but subject to the limitation that it was only for mutual aid
and protection.17 Nowhere could it be found that to form a workers'
association was prohibited or that the exercise of a workers' right to self-
organization was limited to collective bargaining.18
The BLR was of the opinion that there was no misrepresentation on the part
of Samahan. The phrase, "KAMI, ang mga Manggagawa sa Hanjin Shipyard"
if translated, would be: "We, the workers at Hanjin Shipyard." The use of the
preposition "at" instead of "of " would indicate that "Hanjin Shipyard" was
intended to describe a place.19 Should Hanjin feel that the use of its name
had affected the goodwill of the company, the remedy was not to seek the
cancellation of the association's registration. At most, the use by Samahan
of the name "Hanjin Shipyard" would only warrant a change in the name of
the association.20 Thus, the dispositive portion of the BLR decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III
Director Ernesto C. Bihis dated 20 April 2010 is REVERSED and SET ASIDE.
Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain
in the roster of legitimate workers' association.21
On October 14, 2010, Hanjin filed its motion for reconsideration.22
In its Resolution,23 dated November 28, 2011, the BLR affirmed its
September 6, 2010 Decision, but directed Samahan to remove the words
25
"Hanjin Shipyard" from its name. The BLR explained that the Labor Code had
no provision on the use of trade or business name in the naming of a
worker's association, such matters being governed by the Corporation Code.
According to the BLR, the most equitable relief that would strike a balance
between the contending interests of Samahan and Hanjin was to direct
Samahan to drop the name "Hanjin Shipyard" without delisting it from the
roster of legitimate labor organizations. The fallo reads:
WHEREFORE, premises considered, our Decision dated 6 September 2010 is
hereby AFFIRMED with a DIRECTIVE for SAMAHAN to remove "HANJIN
SHIPYARD" from its name.
SO RESOLVED.24
Unsatisfied, Samahan filed a petition for certiorari25 under Rule 65 before
the CA, docketed as CA-G.R. SP No. 123397.
In its March 21, 2012 Resolution,26 the CA dismissed the petition because
of Samahan's failure to file a motion for reconsideration of the assailed
November 28, 2011 Resolution.
On April 17, 2012, Samahan filed its motion for reconsideration27 and on
July 18, 2012, Hanjin filed its comment28 to oppose the same. On October
22, 2012, the CA issued a resolution granting Samahan's motion for
reconsideration and reinstating the petition. Hanjin was directed to file a
comment five (5) days from receipt of notice.29
On December 12, 2012, Hanjin filed its comment on the petition,30 arguing
that to require Samahan to change its name was not tantamount to
interfering with the workers' right to self-organization.31 Thus, it prayed,
among others, for the dismissal of the petition for Samahan's failure to file
the required motion for reconsideration.32
On January 17, 2013, Samahan filed its reply.33
On March 22, 2013, Hanjin filed its memorandum.34
The Ruling of the Court of Appeals
On July 4, 2013, the CA rendered its decision, holding that the registration of
Samahan as a legitimate workers' association was contrary to the provisions
of Article 243 of the Labor Code.35 It stressed that only 57 out of the 120
members were actually working in Hanjin while the phrase in the preamble
of Samahan's Constitution and By-laws, "KAMI, ang mga Manggagawa sa
Hanjin Shipyard" created an impression that all its members were
employees of HHIC. Such unqualified manifestation which was used in its
application for registration, was a clear proof of misrepresentation which
warranted the cancellation of Samahan's registration.
It also stated that the members of Samahan could not register it as a
legitimate worker's association because the place where Hanjin's industry
was located was not a rural area. Neither was there any evidence to show
that the members of the association were ambulant, intermittent or
itinerant workers.36
At any rate, the CA was of the view that dropping the words "Hanjin
Shipyard" from the association name would not prejudice or impair its right
to self-organization because it could adopt other appropriate names. The
dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive, ordering
that the words "Hanjin Shipyard" be removed from petitioner association's
name, is AFFIRMED. The Decision dated April 20, 2010 of the DOLE Regional
Director in Case No. R0300-1003-CP-001, which ordered the cancellation of
petitioner association's registration is REINSTATED.
SO ORDERED.37
Hence, this petition, raising the following
ISSUES
I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT SAMAHAN
CANNOT FORM A WORKERS' ASSOCIATION OF EMPLOYEES IN HANJIN AND
INSTEAD SHOULD HAVE FORMED A UNION, HENCE THEIR REGISTRATION AS
A WORKERS' ASSOCIATION SHOULD BE CANCELLED.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE
REMOVAL/DELETION OF THE WORD "HANJIN" IN THE NAME OF THE UNION
BY REASON OF THE COMPANY'S PROPERTY RIGHT OVER THE COMPANY
NAME "HANJIN."38
Samahan argues that the right to form a workers' association is not
exclusive to intermittent, ambulant and itinerant workers. While the Labor
26
Code allows the workers "to form, join or assist labor organizations of their
own choosing" for the purpose of collective bargaining, it does not prohibit
them from forming a labor organization simply for purposes of mutual aid
and protection. All members of Samahan have one common place of work,
Hanjin Shipyard. Thus, there is no reason why they cannot use "Hanjin
Shipyard" in their name.39
Hanjin counters that Samahan failed to adduce sufficient basis that all its
members were employees of Hanjin or its legitimate contractors, and that
the use of the name "Hanjin Shipyard" would create an impression that all
its members were employess of HHIC.40
Samahan reiterates its stand that workers with a definite employer can
organize any association for purposes of mutual aid and protection.
Inherent in the workers' right to self-organization is its right to name its own
organization. Samahan referred "Hanjin Shipyard" as their common place of
work. Therefore, they may adopt the same in their association's name.41
The Court's Ruling
The petition is partly meritorious.
Right to self-organization includes right to form a union, workers'
association and labor management councils
More often than not, the right to self-organization connotes unionism.
Workers, however, can also form and join a workers' association as well as
labor-management councils (LMC). Expressed in the highest law of the land
is the right of all workers to self-organization. Section 3, Article XIII of the
1987 Constitution states:
Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all. It shall guarantee the rights of all workers
to self-organization,
collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. xxx
[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in the public
and private sectors, to form unions, associations, or societies for purposes
not contrary to law shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy. The State shall afford protection to
labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed and regulate the relations between workers
and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane
conditions of work.
[Emphasis Supplied]
As Article 246 (now 252) of the Labor Code provides, the right to self-
organization includes the right to form, join or assist labor organizations for
the purpose of collective bargaining through representatives of their own
choosing and to engage in lawful concerted activities for the same purpose
for their mutual aid and protection. This is in line with the policy of the State
to foster the free and voluntary organization of a strong and united labor
movement as well as to make sure that workers participate in policy and
decision-making processes affecting their rights, duties and welfare.42
The right to form a union or association or to self-organization comprehends
two notions, to wit: (a) the liberty or freedom, that is, the absence of
restraint which guarantees that the employee may act for himself without
being prevented by law; and (b) the power, by virtue of which an employee
may, as he pleases, join or refrain from joining an association.43
In view of the revered right of every worker to self-organization, the law
expressly allows and even encourages the formation of labor organizations.
A labor organization is defined as "any union or association of employees
which exists in whole or in part for the purpose of collective bargaining or of
dealing with employers concerning terms and conditions of
employment."44 A labor organization has two broad rights: (1) to bargain
collectively and (2) to deal with the employer concerning terms and
conditions of employment. To bargain collectively is a right given to a union
once it registers itself with the DOLE. Dealing with the employer, on the
other hand, is a generic description of interaction between employer and
employees concerning grievances, wages, work hours and other terms and
27
conditions of employment, even if the employees' group is not registered
with the DOLE.45
A union refers to any labor organization in the private sector organized for
collective bargaining and for other legitimate purpose,46 while a workers'
association is an organization of workers formed for the mutual aid and
protection of its members or for any legitimate purpose other than
collective bargaining.47
Many associations or groups of employees, or even combinations of only
several persons, may qualify as a labor organization yet fall short of
constituting a labor union. While every labor union is a labor organization,
not every labor organization is a labor union. The difference is one of
organization, composition and operation.48
Collective bargaining is just one of the forms of employee participation.
Despite so much interest in and the promotion of collective bargaining, it is
incorrect to say that it is the device and no other, which secures industrial
democracy. It is equally misleading to say that collective bargaining is the
end-goal of employee representation. Rather, the real aim is employee
participation in whatever form it may appear, bargaining or no bargaining,
union or no union.49 Any labor organization which may or may not be a
union may deal with the employer. This explains why a workers' association
or organization does not always have to be a labor union and why
employer-employee collective interactions are not always collective
bargaining.50
To further strengthen employee participation, Article 255 (now 261)51 of
the Labor Code mandates that workers shall have the right 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 LMCs.
A cursory reading of the law demonstrates that a common element
between unionism and the formation of LMCs is the existence of an
employer-employee relationship. Where neither party is an employer nor an
employee of the other, no duty to bargain collectively would exist.52 In the
same manner, expressed in Article 255 (now 261) is the requirement that
such workers be employed in the establishment before they can participate
in policy and decision making processes.
In contrast, the existence of employer-employee relationship is not
mandatory in the formation of workers' association. What the law simply
requires is that the members of the workers' association, at the very least,
share the same interest. The very definition of a workers' association speaks
of "mutual aid and protection."
Right to choose whether to form or join a union or workers' association
belongs to workers themselves
In the case at bench, the Court cannot sanction the opinion of the CA that
Samahan should have formed a union for purposes of collective bargaining
instead of a workers' association because the choice belonged to it. The
right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising the said right. It is self-evident that just as
no one should be denied the exercise of a right granted by law, so also, no
one should be compelled to exercise such a conferred right.53 Also inherent
in the right to self-organization is the right to choose whether to form a
union for purposes of collective bargaining or a workers' association for
purposes of providing mutual aid and protection.
The right to self-organization, however, is subject to certain limitations as
provided by law. For instance, the Labor Code specifically disallows
managerial employees from joining, assisting or forming any labor union.
Meanwhile, supervisory employees, while eligible for membership in labor
organizations, are proscribed from joining the collective bargaining unit of
the rank and file employees.54 Even government employees have the right
to self-organization. It is not, however, regarded as existing or available for
purposes of collective bargaining, but simply for the furtherance and
protection of their interests.55
Hanjin posits that the members of Samahan have definite employers, hence,
they should have formed a union instead of a workers' association. The
Court disagrees. There is no provision in the Labor Code that states that
employees with definite employers may form, join or assist unions only.
28
The Court cannot subscribe either to Hanjin's position that Samahan's
members cannot form the association because they are not covered by the
second sentence of Article 243 (now 249), to wit:
Article 243. Coverage and employees' right to self-organization. All persons
employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical, or educational institutions, whether operating
for profit or not, shall have the right to self-organization and to form, join,
or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed
people, rural workers and those without any definite employers may form
labor organizations for their mutual aid and protection. (As amended by
Batas Pambansa Bilang 70, May 1, 1980)
[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of Department
Order (D.O.) No. 40-03, Series of 2003, which provides:
RULE II
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy. - It is the policy of the State to promote the free and
responsible exercise of the right to self-organization through the
establishment of a simplified mechanism for the speedy registration of labor
unions and workers associations, determination of representation status
and resolution of inter/intra-union and other related labor relations
disputes. Only legitimate or registered labor unions shall have the right to
represent their members for collective bargaining and other purposes.
Workers' associations shall have the right to represent their members for
purposes other than collective bargaining.
Section 2. Who may join labor unions and workers' associations. - All
persons employed in commercial, industrial and agricultural enterprises,
including employees of government owned or controlled corporations
without original charters established under the Corporation Code, as well as
employees of religious, charitable, medical or educational institutions
whether operating for profit or not, shall have the right to self-organization
and to form, join or assist labor unions for purposes of collective bargaining:
provided, however, that supervisory employees shall not be eligible for
membership in a labor union of the rank-and-file employees but may form,
join or assist separate labor unions of their own. Managerial employees
shall not be eligible to form, join or assist any labor unions for purposes of
collective bargaining. Alien employees with valid working permits issued by
the Department may exercise the right to self-organization and join or assist
labor unions for purposes of collective bargaining if they are nationals of a
country which grants the same or similar rights to Filipino workers, as
certified by the Department of Foreign Affairs.
For purposes of this section, any employee, whether employed for a definite
period or not, shall beginning on the first day of his/her service, be eligible
for membership in any labor organization.
All other workers, including ambulant, intermittent and other workers, the
self-employed, rural workers and those without any definite employers may
form labor organizations for their mutual aid and protection and other
legitimate purposes except collective bargaining.
[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules which provides
that workers, with definite employers, cannot form or join a workers'
association for mutual aid and protection. Section 2 thereof even broadens
the coverage of workers who can form or join a workers' association. Thus,
the Court agrees with Samahan's argument that the right to form a workers'
association is not exclusive to ambulant, intermittent and itinerant workers.
The option to form or join a union or a workers' association lies with the
workers themselves, and whether they have definite employers or not.
No misrepresentation on the part of Samahan to warrant cancellation of
registration
In this case, Samahan's registration was cancelled not because its members
were prohibited from forming a workers' association but because they
allegedly committed misrepresentation for using the phrase, "KAMI, ang
mga Manggagawa sa HAN JIN Shipyard."
Misrepresentation, as a ground for the cancellation of registration of a labor
organization, is committed "in connection with the adoption, or ratification
of the constitution and by-laws or amendments thereto, the minutes of
ratification, the list of members who took part in the ratification of the
29
constitution and by-laws or amendments thereto, and those in connection
with the election of officers, minutes of the election of officers, and the list
of voters, xxx."56
In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director
granted the petition for the cancellation of certificate of registration of
Samahang Lakas Manggagawa sa Takata (Salamat) after finding that the
employees who attended the organizational meeting fell short of the 20%
union registration requirement. The BLR, however, reversed the ruling of
the DOLE Regional Director, stating that petitioner Takata Corporation
(Takata) failed to prove deliberate and malicious misrepresentation on the
part of respondent Salamat. Although Takata claimed that in the list of
members, there was an employee whose name appeared twice and another
was merely a project employee, such facts were not considered
misrepresentations in the absence of showing that the respondent
deliberately did so for the purpose of increasing their union membership.
The Court ruled in favor of Salamat.
In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition
for cancellation of certificate of registration was denied. The Court wrote:
If the union's application is infected by falsification and like serious
irregularities, especially those appearing on the face of the application and
its attachments, a union should be denied recognition as a legitimate labor
organization. Prescinding from these considerations, the issuance to the
Union of Certificate of Registration No. RO300-00-02-UR-0003 necessarily
implies that its application for registration and the supporting documents
thereof are prima facie free from any vitiating irregularities. Another factor
which militates against the veracity of the allegations in the Sinumpaang
Petisyon is the lack of particularities on how, when and where respondent
union perpetrated the alleged fraud on each member. Such details are
crucial for in the proceedings for cancellation of union registration on the
ground of fraud or misrepresentation, what needs to be established is that
the specific act or omission of the union deprived the complaining
employees-members of their right to choose.
[Emphases Supplied]
Based on the foregoing, the Court concludes that misrepresentation, to be a
ground for the cancellation of the certificate of registration, must be done
maliciously and deliberately. Further, the mistakes appearing in the
application or attachments must be grave or refer to significant matters.
The details as to how the alleged fraud was committed must also be
indubitably shown.
The records of this case reveal no deliberate or malicious intent to commit
misrepresentation on the part of Samahan. The use of such words "KAMI,
ang mga Manggagawa sa HANJIN Shipyard" in the preamble of the
constitution and by-laws did not constitute misrepresentation so as to
warrant the cancellation of Samahan's certificate of registration. Hanjin
failed to indicate how this phrase constitutes a malicious and deliberate
misrepresentation. Neither was there any showing that the alleged
misrepresentation was serious in character. Misrepresentation is a devious
charge that cannot simply be entertained by mere surmises and
conjectures.
Even granting arguendo that Samahan's members misrepresented
themselves as employees or workers of Hanjin, said misrepresentation does
not relate to the adoption or ratification of its constitution and by-laws or to
the election of its officers.
Removal of the word "Hanjin Shipyard" from the association's name,
however, does not infringe on Samahan's right to self-organization
Nevertheless, the Court agrees with the BLR that "Hanjin Shipyard" must be
removed in the name of the association. A legitimate workers' association
refers to an association of workers organized for mutual aid and protection
of its members or for any legitimate purpose other than collective
bargaining registered with the DOLE.59 Having been granted a certificate of
registration, Samahan's association is now recognized by law as a legitimate
workers' association.
According to Samahan, inherent in the workers' right to self-organization is
its right to name its own organization. It seems to equate the dropping of
words "Hanjin Shipyard" from its name as a restraint in its exercise of the
right to self-organization. Hanjin, on the other hand, invokes that "Hanjin
Shipyard" is a registered trade name and, thus, it is within their right to
prohibit its use.
30
As there is no provision under our labor laws which speak of the use of
name by a workers' association, the Court refers to the Corporation Code,
which governs the names of juridical persons. Section 18 thereof provides:
No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly
similar to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary to existing
laws. When a change in the corporate name is approved, the Commission
shall issue an amended certificate of incorporation under the amended
name.
[Emphases Supplied]
The policy underlying the prohibition in Section 18 against the registration
of a corporate name which is "identical or deceptively or confusingly
similar" to that of any existing corporation or which is "patently deceptive"
or "patently confusing" or "contrary to existing laws," is the avoidance of
fraud upon the public which would have occasion to deal with the entity
concerned, the evasion of legal obligations and duties, and the reduction of
difficulties of administration and supervision over corporations.60
For the same reason, it would be misleading for the members of Samahan
to use "Hanjin Shipyard" in its name as it could give the wrong impression
that all of its members are employed by Hanjin.
Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:
The change of name of a labor organization shall not affect its legal
personality. All the rights and obligations of a labor organization under its
old name shall continue to be exercised by the labor organization under its
new name.
Thus, in the directive of the BLR removing the words "Hanjin Shipyard," no
abridgement of Samahan's right to self-organization was committed.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013 Decision
and the January 28, 2014 Resolution of the Court of Appeals are hereby
REVERSED and SET ASIDE. The September 6, 2010 Resolution of the Bureau
of Labor Relations, as modified by its November 28, 2011 Resolution, is
REINSTATED
Republic of the Philippines
 SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 96425 February 4, 1992
PROGRESSIVE DEVELOPMENT CORPORATION, petitioner,
vs.
THE HONORABLE SECRETARY, DEPARTMENT OF LABOR AND
EMPLOYMENT, MED-ARBITER EDGARDO DELA CRUZ and PAMBANSANG
KILUSAN NG PAGGAWA (KILUSAN)-TUCP, respondents.
Beltran, Bacungan & Candoy for petitioner.
Jimenez & Associates co-counsel for petitioner.
GUTIERREZ, JR., J.:
The controversy in this case centers on the requirements before a local or
chapter of a federation may file a petition for certification election and be
certified as the sole and exclusive bargaining agent of the petitioner's
employees.
Petitioner Progressive Development Corporation (PDC) filed this petition for
certiorari to set aside the following:
1) Resolution dated September 5, 1990, issued by respondent Med-
Arbiter Edgardo dela Cruz, directing the holding of the certification election
among the regular rank-and-file employees of PDC:
2) Order dated October 12, 1990, issued by the respondent Secretary of
Labor and Employment, denying PDC's appeal; and
3) Order dated November 12, 1990, also issued by the respondent
Secretary, denying the petitioner's Motion for Reconsideration.
31
On June 19, 1990, respondent Pambansang Kilusan ng Paggawa (KILUSAN) -
TUCP (hereinafter referred to as Kilusan) filed with the Department of Labor
and Employment (DOLE) a petition for certification election among the rank-
and-file employees of the petitioner alleging that it is a legitimate labor
federation and its local chapter, Progressive Development Employees Union,
was issued charter certificate No. 90-6-1-153. Kilusan claimed that there
was no existing collective bargaining agreement and that no other
legitimate labor organization existed in the bargaining unit.
Petitioner PDC filed its motion to dismiss dated July 11, 1990 contending
that the local union failed to comply with Rule II Section 3, Book V of the
Rules Implementing the Labor Code, as amended, which requires the
submission of: (a) the constitution and by-laws; (b) names, addresses and
list of officers and/or members; and (c) books of accounts.
On July 16 , 1990, respondent Kilusan submitted a rejoinder to PDC's motion
to dismiss claiming that it had submitted the necessary documentary
requirements for registration, such as the constitution and by-laws of the
local union, and the list of officers/members with their addresses. Kilusan
further averred that no books of accounts could be submitted as the local
union was only recently organized.
In its "Supplemental Position Paper" dated September 3, 1990, the
petitioner insisted that upon verification with the Bureau of Labor Relations
(BLR), it found that the alleged minutes of the organizational meeting was
unauthenticated, the list of members did not bear the corresponding
signatures of the purported members, and the constitution and by-laws did
not bear the signature of the members and was not duly subscribed. It
argued that the private respondent therefore failed to substantially comply
with the registration requirements provided by the rules. Additionally, it
prayed that Med-Arbiter Edgardo dela Cruz inhibit himself from handling
the case for the reason that he allegedly had prejudged the same.
In his September 5, 1990 resolution, Med Arbiter dela Cruz held that there
was substantial compliance with the requirements for the formation of the
chapter. He further stated that mere issuance of the charter certificate by
the federation was sufficient compliance with the rules. Considering that
the establishment was unorganized, he maintained that a certification
election should be conducted to resolve the question of representation.
Treating the motion for reconsideration filed by the PDC as an appeal to the
Office of the Secretary, Undersecretary Laguesma held that the same was
merely a "reiteration of the issues already ventilated in the proceedings
before the Med-Arbiter, specifically, the matter involving the formal
organization of the chapter." (Rollo, p. 20) PDC's motion for reconsideration
from the aforementioned ruling was likewise denied. Hence, this petition.
In an order dated February 25, 1991, the Court resolved to issue a
temporary restraining order enjoining the public respondents from carrying
out the assailed resolution and orders or from proceeding with the
certification election. (Rollo, pp. 37-39)
It is the petitioner's contention that a labor organization (such as the
Kilusan) may not validly invest the status of legitimacy upon a local or
chapter through the mere expedient of issuing a charter certificate and
submitting such certificate to the BLR (Rollo, p. 85) Petitioner PDC posits
that such local or chapter must at the same time comply with the
requirement of submission of duly subscribed constitution and by-laws, list
of officers and books of accounts. (Rollo, p. 35) PDC points out that the
constitution and by-laws and list of officers submitted were not duly
subscribed. Likewise, the petitioner claims that the mere filing of the
aforementioned documents is insufficient; that there must be due
recognition or acknowledgment accorded to the local or chapter by BLR
through a certificate of registration or any communication emanating from
it. (Rollo, p. 86)
The Solicitor General, in behalf of the public respondent, avers that there
was a substantial compliance with the requirements for the formation of a
chapter. Moreover, he invokes Article 257 of the Labor Code which
mandates the automatic conduct by the Med-Arbiter of a certification
election in any establishment where there is no certified bargaining
agreement.
The Court has repeatedly stressed that the holding of a certification election
is based on a statutory policy that cannot be circumvented. (Airtime
Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989]; Belyca Corporation v.
32
Ferrer-Calleja, 168 SCRA 184 [1988]; George and Peter Lines, Inc. v.
Associated Labor Unions, 134 SCRA 82 [1986]). The workers must be
allowed to freely express their choice in a determination where everything
is open to their sound judgment and the possibility of fraud and
misrepresentation is eliminated.
But while Article 257 cited by the Solicitor General directs the automatic
conduct of a certification election in an unorganized establishment, it also
requires that the petition for certification election must be filed by a
legitimate labor organization. Article 242 enumerates the exclusive rights of
a legitimate labor organization among which is the right to be certified as
the exclusive representative of all the employees in an appropriate
collective bargaining unit for purposes of collective bargaining.
Meanwhile, Article 212(h) defines a legitimate labor organization as "any
labor organization duly registered with the DOLE and includes any branch or
local thereof." (Emphasis supplied) Rule I, Section 1 (j), Book V of the
Implementing Rules likewise defines a legitimate labor organization as "any
labor organization duly registered with the DOLE and includes any branch,
local or affiliate thereof. (Emphasis supplied)
The question that now arises is: when does a branch, local or affiliate of a
federation become a legitimate labor organization?
Ordinarily, a labor organization acquires legitimacy only upon registration
with the BLR. Under Article 234 (Requirements of Registration):
Any applicant labor organization, association or group of unions or workers
shall acquire legal personality and shall be entitled to the rights and
privileges granted by law to legitimate labor organizations upon issuance of
the certificate of registration based on the following requirements:
(a) Fifty-pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meeting and the list of
the workers who participated in such meetings;
(c) The names of all its members comprising at least twenty 20% percent of
all the employees in the bargaining unit where it seek to operate;
(d) If the applicant 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, the
minutes of its adoption or ratification and the list of the members who
participated in it.
And under Article 235 (Action on Application)
The Bureau shall act on all applications for registration within thirty (30)
days from filing.
All requisite documents and papers shall be certified under oath by the
secretary or the treasurer of the organization, as the case may be, and
attested to by its president.
Moreover, section 4 of Rule II, Book V of the Implementing Rules requires
that the application should be signed by at least twenty percent (20%) of
the employees in the appropriate bargaining unit and be accompanied by a
sworn statement of the applicant union that there is no certified bargaining
agent or, where there is an existing collective bargaining agreement duly
submitted to the DOLE, that the application is filed during the last sixty (60)
days of the agreement.
The respondent Kilusan questions the requirements as too stringent in their
application but the purpose of the law in prescribing these requisites must
be underscored. Thus, in Philippine Association of Free Labor Unions v.
Secretary of Labor, 27 SCRA 40 (1969), the Court declared:
The theory to the effect that Section 23 of Republic Act No. 875 unduly
curtails the freedom of assembly and association guaranteed in the Bill of
Rights is devoid of factual basis. The registration prescribed in Paragraph (b)
of said section is not a limitation to the right of assembly or association,
which may be exercised with or without said registration. The latter is
merely a condition sine qua non for the acquisition of legal personality by
the labor organizations, associations or unions and the possession of the
33
"rights and privileges granted by law to legitimate labor organizations." The
Constitution does not guarantee these rights and the privileges, much less
said personality, which are mere statutory creations, for the possession and
exercise of which registration is required to protect both labor and the
public against abuses, fraud or impostors who pose as organizers, although
not truly accredited agents of the union they purport to represent. Such
requirement is a valid exercise of the police power, because the activities in
which labor organizations, associations and unions of workers are engaged
affect public interest, which should be protected. Furthermore, the
obligation to submit financial statements, as a condition for the non-
cancellation of a certificate of registration, is a reasonable regulation for the
benefit of the members of the organization, considering that the same
generally solicits funds or membership, as well as oftentimes collects, on
behalf of its members, huge amounts of money due to them or to the
organization. (Emphasis supplied)
But when an unregistered union becomes a branch, local or chapter of a
federation, some of the aforementioned requirements for registration are
no longer required. The provisions governing union affiliation are found in
Rule II, Section 3, Book V of the Implementing Rules, the relevant portions
of which are cited below:
Sec. 3. Union affiliation; direct membership with national union. — An
affiliate of a labor federation or national union may be a local or chapter
thereof or an independently registered union.
a) The labor federation or national union concerned shall issue a
charter certificate indicating the creation or establishment of a local or
chapter, copy of which shall be submitted to the Bureau of Labor Relations
within thirty (30) days from issuance of such charter certificate.
b) An independently registered union shall be considered an affiliate of a
labor federation or national union after submission to the Bureau of the
contract or agreement of affiliation within thirty (30) days after its
execution.
xxx xxx xxx
e) The local or chapter of a labor federation or national union shall have and
maintain a constitution and by laws, set of officers and books and accounts.
For reporting purposes, the procedure governing the reporting of
independently registered unions, federations or national unions shall be
observed.
Paragraph (a) refers to the local or chapter of a federation which did not
undergo the rudiments of registration while paragraph (b) refers to an
independently registered union which affiliated with a federation. Implicit in
the foregoing differentiation is the fact that a local or chapter need not be
independently registered. By force of law (in this case, Article 212[h]); such
local or chapter becomes a legitimate labor organization upon compliance
with the aforementioned provisions of Section 3.
Thus, several requirements that are otherwise required for union
registration are omitted, to wit:
(1) The requirement that the application for registration must be signed by
at least 20% of the employees in the appropriate bargaining unit;
2) The submission of officers' addresses, principal address of the labor
organization, the minutes of organizational meetings and the list of the
workers who participated in such meetings;
3) The submission of the minutes of the adoption or ratification of the
constitution and by the laws and the list of the members who participated in
it.
Undoubtedly, the intent of the law in imposing lesser requirements in the
case of the branch or local of a registered federation or national union is to
encourage the affiliation of a local union with the federation or national
union in order to increase the local union's bargaining powers respecting
terms and conditions of labor.
The petitioner maintains that the documentary requirements prescribed in
Section 3(c), namely: the constitution and by-laws, set of officers and books
of accounts, must follow the requirements of law. Petitioner PDC calls for
the similar application of the requirement for registration in Article 235 that
34
all requisite documents and papers be certified under oath by the secretary
or the treasurer of the organization and attested to by the president.
In the case at bar, the constitution and by-laws and list of officers submitted
in the BLR, while attested to by the chapter's president, were not certified
under oath by the secretary. Does such defect warrant the withholding of
the status of legitimacy to the local or chapter?
In the case of union registration, the rationale for requiring that the
submitted documents and papers be certified under oath by the secretary
or treasurer, as the case may be, and attested to by president is apparent.
The submission of the required documents (and payment of P50.00
registration fee) becomes the Bureau's basis for approval of the application
for registration. Upon approval, the labor union acquires legal personality
and is entitled to all the rights and privileges granted by law to a legitimate
labor organization. The employer naturally needs assurance that the union it
is dealing with is a bona fide organization, one which has not submitted
false statements or misrepresentations to the Bureau. The inclusion of the
certification and attestation requirements will in a marked degree allay
these apprehensions of management. Not only is the issuance of any false
statement and misrepresentation a ground for cancellation of registration
(see Article 239 (a), (c) and (d)); it is also a ground for a criminal charge of
perjury.
The certification and attestation requirements are preventive measures
against the commission of fraud. They likewise afford a measure of
protection to unsuspecting employees who may be lured into joining
unscrupulous or fly-by-night unions whose sole purpose is to control union
funds or to use the union for dubious ends.
In the case of the union affiliation with a federation, the documentary
requirements are found in Rule II, Section 3(e), Book V of the Implementing
Rules, which we again quote as follows:
(c) The local chapter of a labor federation or national union shall have
and maintain a 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. (Emphasis supplied)

Since the "procedure governing the reporting of independently registered
unions" refers to the certification and attestation requirements contained in
Article 235, paragraph 2, it follows that the constitution and by-laws, set of
officers and books of accounts submitted by the local and chapter must
likewise comply with these requirements. The same rationale for requiring
the submission of duly subscribed documents upon union registration exists
in the case of union affiliation. Moreover, there is greater reason to exact
compliance with the certification and attestation requirements because, as
previously mentioned, several requirements applicable to independent
union registration are no longer required in the case of formation of a local
or chapter. The policy of the law in conferring greater bargaining power
upon labor unions must be balanced with the policy of providing preventive
measures against the commission of fraud.
A local or chapter therefore becomes a legitimate labor organization only
upon submission of the following to the BLR:
1) A charter certificate, within 30 days from its issuance by the labor
federation or national union, and
2) The constitution and by-laws, a statement on the set of officers, and the
books of accounts all of which are certified under oath by the secretary or
treasurer, as the case may be, of such local or chapter, and attested to by its
president.
Absent compliance with these mandatory requirements, the local or chapter
does not become a legitimate labor organization.
In the case at bar, the failure of the secretary of PDEU-Kilusan to certify the
required documents under oath is fatal to its acquisition of a legitimate
status.
We observe that, as borne out by the facts in this case, the formation of a
local or chapter becomes a handy tool for the circumvention of union
registration requirements. Absent the institution of safeguards, it becomes
a convenient device for a small group of employees to foist a not-so-
desirable federation or union on unsuspecting co-workers and pare the
need for wholehearted voluntariness which is basic to free unionism. The
35
records show that on June 16, 1990, Kilusan met with several employees of
the petitioner. Excerpts of the "Minutes of the Organizational/General
Membership Meeting of Progressive Development Employees Union (PDEU)
— Kilusan," are quoted below:
The meeting was formally called to order by Bro. Jose V. Parungao, KILUSAN
secretary for organization by explaining to the general membership the
importance of joining the union. He explained to the membership why they
should join a union, and briefly explained the ideology of the Pambansang
Kilusan ng Paggawa-TUCP as a democratically based organization and then
read the proposed Constitution and By-Laws, after which said Constitution
and By-Laws was duly and unanimously ratified after some clarification.
Bro. Jose Parungao was also unanimously voted by the group to act as the
chairman of the COMELEC in holding the organizational election of officers
of the union.
Bro. Jose Parungao, officially opened the table for nomination of candidates
after which the election of officers followed by secret balloting and the
following were the duly elected officers. (Original Record, p. 25)
The foregoing shows that Kilusan took the initiative and encouraged the
formation of a union which automatically became its chapter. On June 18,
1990, Kilusan issued a charter certificate in favor of PDEU-KILUSAN
(Records, page 1). It can be seen that Kilusan was moving very fast.
On June 19, 1990, or just three days after the organizational meeting,
Kilusan filed a petition for certification election (Records, pages 2 and 3)
accompanied by a copy each of the charter certificate, constitution and by-
laws and minutes of the organizational meeting. Had the local union filed an
application for registration, the petition for certification election could not
have been immediately filed. The applicant union must firstly comply with
the "20% signature" requirement and all the other requisites enumerated in
Article 234. Moreover, since under Article 235 the BLR shall act on any
application for registration within thirty (30) days from its filing, the
likelihood is remote that, assuming the union complied with all the
requirements, the application would be approved on the same day it was
filed.
We are not saying that the scheme used by the respondents is per se illegal
for precisely, the law allows such strategy. It is not this Court's function to
augment the requirements prescribed by law in order to make them wiser
or to allow greater protection to the workers and even their employer. Our
only recourse is, as earlier discussed, to exact strict compliance with what
the law provides as requisites for local or chapter formation.
It may likewise be argued that it was Kilusan (the mother union) and not the
local union which filed the petition for certification election and, being a
legitimate labor organization, Kilusan has the personality to file such
petition.
At this juncture, it is important to clarify the relationship between the
mother union and the local union. In the case of Liberty Cotton Mills
Workers Union v. Liberty Cotton Mills, Inc., 66 SCRA 512 [1975]), the Court
held that the mother union, acting for and in behalf of its affiliate, had the
status of an agent while the local union remained the basic unit of the
association, free to serve the common interest of all its members subject
only to the restraints imposed by the constitution and by-laws of the
association. Thus, where as in this case the petition for certification election
was filed by the federation which is merely an agent, the petition is deemed
to be filed by the chapter, the principal, which must be a legitimate labor
organization. The chapter cannot merely rely on the legitimate status of the
mother union.
The Court's conclusion should not be misconstrued as impairing the local
union's right to be certified as the employees' bargaining agent in the
petitioner's establishment. We are merely saying that the local union must
first comply with the statutory requirements in order to exercise this right.
Big federations and national unions of workers should take the lead in
requiring their locals and chapters to faithfully comply with the law and the
rules instead of merely snapping union after union into their folds in a
furious bid with rival federations to get the most number of members.
WHEREFORE, the petition is GRANTED. The assailed resolution and orders of
respondent Med-Arbiter and Secretary of Labor and Employment,
respectively, are hereby SET ASIDE. The temporary restraining order dated
February 25, 1991 is made permanent.
36
SO ORDERED.
SECOND DIVISION
[G.R. No. 110399. August 15, 1997]
SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND
ERNESTO L. PONCE, President, petitioners, vs. HONARABLE BIENVENIDO E.
LAGUESMA IN HIS CAPACITY AS UNDERSECRETARY OF LABOR AND
EMPLOYMENT, HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS
MED-ARBITER AND SAN MIGUEL CORPORATION, respondents..
DECISION
ROMERO, J.:
This is a Petition for Certiorari with Prayer for the Issuance of Preliminary
Injunction seeking to reverse and set aside the Order of public respondent,
Undersecretary of the Department of Labor and Employment, Bienvenido E.
Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91[1] entitled
In Re: Petition for Certification Election Among the Supervisory and Exempt
Employees of the San Miguel Corporation Magnolia Poultry Plants of
Cabuyao, San Fernando and Otis, San Miguel Corporation Supervisors and
Exempt Union, Petitioner. The Order excluded the employees under
supervisory levels 3 and 4 and the so-called exempt employees from the
proposed bargaining unit and ruled out their participation in the
certification election.
The antecedent facts are undisputed:
On October 5, 1990, petitioner union filed before the Department of Labor
and Employment (DOLE) a Petition for District Certification or Certification
Election among the supervisors and exempt employees of the SMC
Magnolia Poultry Products Plants of Cabuyao, San Fernando and Otis.
On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order
ordering the conduct of certification among the supervisors and exempt
employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San
Fernando and Otis as one bargaining unit.
On January 18, 1991, respondent San Miguel Corporation filed a Notice of
Appeal with Memorandum on Appeal, pointing out, among others, the
Med-Arbiters error in grouping together all three (3) separate plants, Otis,
Cabuyao and San Fernando, into one bargaining unit, and in including
supervisory levels 3 and above whose positions are confidential in nature.
On July 23, 1991, the public respondent, Undersecretary Laguesma, granted
respondent companys Appeal and ordered the remand of the case to the
Med-Arbiter of origin for determination of the true classification of each of
the employees sought to be included in the appropriate bargaining unit.
Upon petitioner-unions motion dated August 7, 1991, Undersecretary
Laguesma granted the reconsideration prayed for on September 3, 1991
and directed the conduct of separate certification elections among the
supervisors ranked as supervisory levels 1 to 4 (S1 to S4) and the exempt
employees in each of the three plants at Cabuyao, San Fernando and Otis.
On September 21, 1991, respondent company, San Miguel Corporation filed
a Motion for Reconsideration with Motion to suspend proceedings.
On March 11, 1993, an Order was issued by the public respondent granting
the Motion, citing the doctrine enunciated in Philips Industrial
Development, Inc. v. NLRC[2] case. Said Order reads in part:
x x x Confidential employees, like managerial employees, are not allowed to
form, join or assist a labor union for purposes of collective bargaining.
In this case, S3 and S4 and the so-called exempt employees are admittedly
confidential employees and therefore, they are not allowed to form, join or
assist a labor union for purposes of collective bargaining following the above
courts ruling. Consequently, they are not allowed to participate in the
certification election.
WHEREFORE, the motion is hereby granted and the Decision of this Office
dated 03 September 1991 is hereby modified to the extent that employees
under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt
employees are not allowed to join the proposed bargaining unit and are
therefore excluded from those who could participate in the certification
election.[3]
Hence this petition.
37
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 employees and his supervisor, and the supervisor must handle
the prescribed responsibilities relating to labor relations.[6]
The exclusion from bargaining units of employees who, in the normal course
of their duties, become aware of management policies relating to labor
relations is a principal objective sought to be accomplished by the
confidential employee rule. The broad rationale behind this rule is that
employees should not be placed in a position involving a potential conflict of
interests.[7] Management should not be required to handle labor relations
matters through employees who are represented by the union with the
company is required to deal and who in the normal performance of their
duties may obtain advance information of the companys position with
regard to contract negotiations, the disposition of grievances, or other labor
relations matters.[8]
There have been ample precedents in this regard, thus in Bulletin Publishing
Company v. Hon. Augusto Sanchez,[9] the Court held that if these
managerial employees would belong to or be affiliated with a Union, the
latter might not be assured of their loyalty to the Union in view of evident
conflict of interest. The Union can also become company-dominated with
the presence of managerial employees in Union membership. The same
rationale was applied to confidential employees in Golden Farms, Inc. v.
Ferrer-Calleja[10] and in the more recent case of Philips Industrial
Development, Inc. v. NLRC[11] which held that confidential employees, by
the very nature of their functions, assist and act in a confidential capacity to,
or have access to confidential matters of, persons who exercise managerial
functions in the field of labor relations. Therefore, the rationale behind the
ineligibility of managerial employees to form, assist or join a labor union
was held equally applicable to them.[12]
An important element of the confidential employee rule is the employees
need to use labor relations information. Thus, in determining the
confidentiality of certain employees, a key questions frequently considered
is the employees necessary access to confidential labor relations
information.[13]
It is the contention of respondent corporation that Supervisory employees 3
and 4 and the exempt employees come within the meaning of the term
confidential employees primarily because they answered in the affirmative
when asked Do you handle confidential data or documents? in the Position
Questionnaires submitted by the Union.[14] In the same questionnaire,
however, it was also stated that the confidential information handled by
questioned employees relate to product formulation, product standards and
product specification which by no means relate to labor relations.[15]
Granting arguendo that an employee has access to confidential labor
relations information but such is merely incidental to his duties and
knowledge thereof is not necessary in the performance of such duties, said
38
access does not render the employee a confidential employee.[16] If access
to confidential labor relations information is to be a factor in the
determination of an employees confidential status, such information must
relate to the employers labor relations policies. Thus, an employee of a
labor union, or of a management association, must have access to
confidential labor information with respect to his employer, the union, or
the association, to be regarded a confidential employee, and knowledge of
labor relations information pertaining to the companies with which the
union deals, or which the association represents, will not clause an
employee to be excluded from the bargaining unit representing employees
of the union or association.[17] Access to information which is regarded by
the employer to be confidential from the business standpoint, such as
financial information[18] or technical trade secrets, will not render an
employee a confidential employee.[19]
Herein listed are the functions of supervisors 3 and higher:
1. To undertake decisions to discontinue/temporarily stop shift operations
when situations require.
2. To effectively oversee the quality control function at the processing lines
in the storage of chicken and other products.
3. To administer efficient system of evaluation of products in the outlets.
4. To be directly responsible for the recall, holding and rejection of direct
manufacturing materials.
5. To recommend and initiate actions in the maintenance of sanitation and
hygiene throughout the plant.[20]
It is evident that whatever confidential data the questioned employees may
handle will have to relate to their functions. From the foregoing functions, it
can be gleaned that the confidential information said employees have
access to concern the employers internal business operations. As held in
Westinghouse Electric Corporation v. National Labor Relations Board,[21] an
employee may not be excluded from appropriate bargaining unit merely
because he has access to confidential information concerning employers
internal business operations and which is not related to the field of labor
relations.
It must be borne in mind that Section 3 of Article XIII of the 1987
Constitution mandates the State to guarantee to all workers the right to
self-organization. Hence, confidential employees who may be excluded from
bargaining unit must be strictly defined so as not to needlessly deprive
many employees of their right bargain collectively through representatives
of their choosing.[22]
In the case at bar, supervisors 3 and above may not be considered
confidential employees merely because they handle confidential data as
such must first be strictly classified as pertaining to labor relations for them
to fall under said restrictions. The information they handle are properly
classifiable as technical and internal business operations data which, to our
mind, has no relevance to negotiations and settlement of grievances
wherein the interests of a union and the management are invariably
adversarial. Since the employees are not classifiable under the confidential
type, this Court rules that they may appropriately form a bargaining unit for
purposes of collective bargaining. Furthermore, even assuming that they are
confidential employees, jurisprudence has established that there is no legal
prohibition against confidential employees who are not performing
managerial functions to form and join a union.[23]
In this connection, the issue of whether the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando,
and Otis constitute a single bargaining unit needs to be threshed out.
It is the contention of the petitioner union that the creation of three (3)
separate bargaining units, one each for Cabuyao Otis and San Fernando as
ruled by the respondent Undersecretary, is contrary to the one-company,
one-union policy. It adds that Supervisors level 1 to 4 and exempt
employees of the three plants have a similarity or a community of interests.
This Court finds the contention of the petitioner meritorious.
An appropriate bargaining unit may be defined as a group of employees of a
given employer, comprised of all or less than all of the entire body of
employees, which the collective interest of all the employees, consistent
39
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 interest, which is the standard in determining the proper
constituency of a collective bargaining unit.[26] It is undisputed that they all
belong to the Magnolia 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]
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 employees of the University of the Philippines inDiliman,
Quezon City, Padre Faura, Manila, Los Baos, 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.
SECOND DIVISION
[G.R. No. 152322. February 15, 2005]
ERNESTO C. VERCELES, DIOSDADO F. TRINIDAD, SALVADOR G. BLANCIA,
ROSEMARIE DE LUMBAN, FELICITAS F. RAMOS, MIGUEL TEAO, JAIME
BAUTISTA and FIDEL ACERO, as Officers of the University of the East
Employees Association, petitioners, vs. BUREAU OF LABOR RELATIONS-
DEPARTMENT OF LABOR AND EMPLOYMENT, DEPARTMENT OF LABOR
AND EMPLOYMENT-NATIONAL CAPITAL REGION, RODEL E. DALUPAN,
EFREN J. DE OCAMPO, PROCESO TOTTO, JR., ELIZABETH ALARCA, ELVIRA S.
MANALO, and RICARDO UY, respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, assailing the Decision[1] and Resolution[2]
rendered by the Court of Appeals, dated 24 October 2001 and 15 February
2002, respectively.
The Facts
Private respondents Rodel E. Dalupan, Efren J. De Ocampo, Proceso Totto,
Jr., Elizabeth Alarca, and Elvira S. Manalo are members of the University of
the East Employees Association (UEEA). On 15 September 1997, they each
received a Memorandum from the UEEA charging them with spreading false
rumors and creating disinformation among the members of the said
association. They were given seventy-two hours from receipt of the
Memorandum to submit their Answer.[3]
40
The acts of the respondents allegedly fall under General Assembly
Resolution No. 4, Series of 1979, to wit:
1. Circulating false rumors about the progress of the negotiations for
collective bargaining;
2. Creating distrust or loss of trust and confidence of members in the
Association;
3. Creating dissension among the members;
4. Circulating false rumors about the work of the Association or sabotaging
the same;
5. Withholding from the Association and/or members material information
as to their rightful entitlement to benefits and/or money claims;
6. Acting as a spy against the Association or divulging confidential matters to
persons not entitled thereto;
7. Such other offenses, which may injure or disrupt the functions of the
Association.[4]
Through a collective reply dated 19 September 1997, private respondents
denied the allegations. Thereafter, on 23 September 1997, they sent a letter
dated 22 September 1997 to the Chairman and Members of UEEAs
Disciplinary Committee, informing them that the Memorandum of 15
September 1997 was vague and without legal basis, therefore, no intelligent
answer may be made by them. They likewise stated that any sanction that
will be imposed by the committee would be violative of their right to due
process.[5]
The Disciplinary Committee issued another Memorandum, dated 24
September 1997, giving the respondents another seventy-two hours from
receipt within which to properly reply, explaining that the collective reply
letter and supplemental answer which were earlier submitted were not
responsive to the first Memorandum. Their failure would be construed as an
admission of the truthfulness and veracity of the charges.[6]
On 01 October 1997, the respondents issued a denial for the second time,
and inquired from the Disciplinary Committee as to whether they were
being formally charged.[7]
On 09 October 1997, Ernesto Verceles, in his capacity as president of the
association, through a Memorandum, informed Rodel Dalupan, et al., that
their membership in the association has been suspended and shall take
effect immediately upon receipt thereof. Verceles said he was acting upon
the disciplinary committees finding of a prima facie case against them.[8]
Respondent Ricardo Uy also received a similar memorandum on 03
November 1997.[9]
On 01 December 1997, a complaint[10] for illegal suspension, willful and
unlawful violation of UEEA constitution and by-laws, refusal to render
financial and other reports, deliberate refusal to call general and special
meetings, illegal holdover of terms and damages was filed by the
respondents against herein petitioners Ernesto C. Verceles, Diosdado F.
Trinidad, Salvador G. Blancia, Rosemarie De Lumban, Felicitas Ramos,
Miguel Teao, Jaime Bautista and Fidel Acero before the Department of
Labor and Employment, National Capital Region (DOLE-NCR).
A few days after the filing of the complaint, i.e., on 10 December 1997, a
resolution[11] was passed by UEEA which reads as follows:
RESOLUTION
WHEREAS, the Association has gone thru a most arduous, difficult, and
trying times in working to obtain the best terms and conditions of
employment for its members, specifically for the period 1992 to 1996;
WHEREAS, said difficulties are in the form of near strikes, cases with the
Department of Labor and Employment and its agencies, as well as with the
Supreme Court;
WHEREAS, the general membership (has) shown exceptional patience and
perseverance and generally (had) demonstrated full trust and confidence in
the Association officers and accordingly approved the manner and/or
actions undertaken in pursuing said difficult task of arriving at a most
beneficial agreement for the general membership;
41
NOW, THEREFORE, be it resolved as it is hereby resolved that:
...
b) the general membership reiterate its loyalty to the Association and
commends the Association officers for their effort expended in working for
the benefit of the whole membership.
APPROVED.
Manila. 10 December 1997.
On 22 November 1999, a decision[12] was rendered by Regional Director
Maximo B. Lim, adverse to petitioners, the dispositive portion of which
reads:
WHEREFORE, premises considered, respondent[s] [are] hereby ordered:
1. to immediately lift suspension imposed upon the complainants;
2. to hold a general membership meeting wherein they (respondents) make
open and available the unions/associations books of accounts and other
documents pertaining to the union funds [and] thereby explain the financial
status of the union;
3. to regularly conduct special and general membership meetings in
accordance with the unions constitution and by-laws;
4. to immediately hold/conduct an election of officers in accordance with
the unions constitution and by-laws.
Accordingly, the claims of complainants for damages [are] hereby ordered
dismissed for lack of jurisdiction.
However, within ten (10) days upon receipt of this Order, the complainants
are hereby directed to submit a written report whether or not the
respondents had complied with this Order.
The petitioners appealed to the Bureau of Labor Relations of the
Department of Labor and Employment (BLR-DOLE). During the pendency of
this appeal, or on 07 April 2000, an election of officers was held by the
UEEA. The appeal, however, was dismissed for lack of merit in a
Resolution[13] dated 22 September 2000, the decretal portion of which
reads:
WHEREFORE, the appeal is hereby DISMISSED for lack of merit and the
decision dated 22 (November) 1999 of Regional Director Maximo B. Lim,
DOLE-NCR, is AFFIRMED.
Meanwhile, Resolution No. 8, Series of 2000, was passed by the UEEA,
wherein the members allegedly reiterated their support and approval of the
acts and collateral actions of the officers.[14]
A Motion for Reconsideration[15] was filed by the petitioners with the BLR-
DOLE, but was denied in a Resolution[16] dated 15 January 2001.
A special civil action for certiorari[17] was thereafter filed before the Court
of Appeals citing grave abuse of discretion amounting to lack or excess of
jurisdiction. In a Resolution[18] dated 22 February 2001, the Court of
Appeals dismissed the petition outright for failure to comply with the
provisions of Section 1, Rule 65 in relation to Section 3, Rule 46 of the 1997
Rules of Civil Procedure. A Motion for Reconsideration[19] was filed which
was granted in a Resolution[20] dated 24 April 2001, thus, reinstating the
petition.
On 24 October 2001, the Court of Appeals rendered a Decision[21]
dismissing the petition, the dispositive portion of which reads:
WHEREFORE, premises considered, the instant petition is DENIED DUE
COURSE and DISMISSED for lack of merit. No pronouncement as to costs.
A Motion for Reconsideration[22] was thereafter filed by the petitioners. In
a Resolution[23] dated 15 February 2002, the Court of Appeals modified its
earlier decision. The decretal portion of which states:
WHEREFORE, the questioned decision of this court is MODIFIED. The 22
September 2000 and 15 January 2001 resolutions of the BLR insofar as they
42
affirmed the part of the 22 November 1999 decision of the Regional
Director of DOLE-NCR ordering the immediate holding of election are
HEREBY ANNULLED AND SET ASIDE. All the other aspects of the assailed
Resolutions are AFFIRMED.
Not satisfied, the petitioners filed a petition for review on certiorari[24]
before this Court.
The Issues
The petitioners raise the following issues:
1. WHETHER OR NOT THERE IS REVERSIBLE ERROR IN THE COURT OF
APPEALS UPHOLDING THE DOLE-NCR AND BLR-DOLE DECISIONS BASED
ONLY ON THE COMPLAINT AND ANSWER;
2. WHETHER OR NOT IT IS REVERSIBLE ERROR FOR THE COURT OF APPEALS
TO HOLD THE ELECTION OF APRIL 7, 2000 AS INVALID AND A NULLITY;
3. WHETHER OR NOT IT IS REVERSIBLE ERROR TO UPHOLD BLR-DOLES
FINDING THAT THE SUSPENSION WAS ILLEGAL; and
4. WHETHER OR NOT THE ALLEGED NON-HOLDING OF MEETINGS AND
ALLEGED NON-SUBMISSION OF REPORTS ARE MOOT AND ACADEMIC, AND
WHETHER THE DECISION TO HOLD MEETINGS AND SUBMIT REPORTS
CONTRADICT AND OVERRIDE THE SOVEREIGN WILL OF THE MAJORITY.[25]
The Courts Rulings
We shall discuss the issues in seriatim.
First Issue: was the court a quo correct in upholding the DOLE-NCR and BLR-
DOLE decisions based only on the complaint and answer?
Petitioners contend that the complaint filed by the private respondents in
DOLE-NCR was a mere recital of bare, self serving and unsubstantiated
allegations. Both parties did not submit position papers, and the DOLE-NCR
resolved the case based only on the complaint and answer. Also, by failing
to submit a reply to the answer, private respondents, in effect admitted the
petitioners controversion of the charges.[26] They further argue that the
private respondents did not exhaust administrative remedies and that the
requirement of support by at least 30% of the members of the association
pursuant to Section 1, Rule XIV, Article I, Department Order No. 9 of DOLE,
was not complied with.[27]
Private respondents, on the other hand, assert that the records show that
despite their failure to submit their position papers, they nonetheless
moved that the case be resolved by DOLE-NCR based on the complaint,
answer and available exhibits or annexes integrated with the aforesaid
pleadings.[28] The principle of non-exhaustion of administrative remedies
that would warrant the dismissal of the case should not operate against
them because they were deprived of their right to due process when they
were indefinitely suspended without the benefit of a formal charge which is
sufficient in form and substance.[29] The respondents also point out that
the thirty percent (30%) support requirement pursuant to Section 1, Rule
XIV, Article I, Department Order No. 9, is not applicable to them because
their complaint was primordially predicated on their suspension while the
rest of the causes of action were mere collateral consequences of the
principal cause of action.[30]
It is worthy to note that the BLR-DOLE, in its Resolution dated 22 September
2000, underscored the negligence of herein petitioners not only in the
submission of their pleadings but also in attending the hearings called for
the purpose.[31] Even the Court of Appeals, in its decision, made this
observation, thus:
It is apparent, however, that petitioners were to blame for their
predicament. They repeatedly failed to appear in a series of conferences
scheduled by the DOLE-NCR, asked for resetting of hearings, and requested
for extension of time to file its answer. Hence, when they again did not
attend a hearing on a date they themselves asked for, private respondents
(complainants therein) moved for the submission of the case based on their
complaint, position paper and annexes attached thereto.
When DOLE-NCR directed the parties to submit their respective position
papers, petitioners again moved for extension of time to file the same.
When another notice was given to the parties to comply with the directive,
petitioners prayed for another extension of time. (Private respondents,
however, reiterated their earlier motion to have the case resolved based on
43
available pleadings.) After six (6) months or so, petitioners finally filed not
their position paper but their answer.[32]
The Court of Appeals was justified in upholding the DOLE-NCR and BLR-
DOLE decisions based on the complaint and answer. We cannot accept
petitioners line of reasoning that since no position papers were submitted,
no decision may be made by the adjudicating body. As ruled by Regional
Director Maximo B. Lim in his decision, the complaint and the answer
thereto were adopted as the parties position papers. Thereafter, the case
shall be deemed submitted for resolution.[33]
Labor laws mandate the speedy disposition of cases, with the least attention
to technicalities but without sacrificing the fundamental requisites of due
process.[34] The essence of due process is simply an opportunity to be
heard.[35] In this case, it cannot be said that there was a denial of due
process on the part of the petitioners because they were given all the
chances to refute the allegations of the private respondents, and the delay
in the proceedings before the DOLE-NCR was clearly attributable to them.
The argument that there was failure to exhaust administrative remedies
cannot be sustained. One of the instances when the rule of exhaustion of
administrative remedies may be disregarded is when there is a violation of
due process.[36] In this case, the respondents have chronicled from the very
beginning that they were indefinitely suspended without the benefit of a
formal charge sufficient in form and substance. Therefore, the rule on
exhaustion of administrative remedies cannot squarely apply to them.
On the matter concerning the 30% support requirement needed to report
violations of rights and conditions of union membership, as found in the last
paragraph of Article 241 of the Labor Code,[37] we likewise cannot sanction
the petitioners. We have already made our pronouncement in the case of
Rodriguez v. Director, Bureau of Labor Relations[38] that the 30%
requirement is not mandatory. In this case, the Court, speaking through
Chief Justice Andres R. Narvasa,[39] held in part:
The respondent Directors ruling, however, that the assent of 30% of the
union membership, mentioned in Article 242 of the Labor Code, was
mandatory and essential to the filing of a complaint for any violation of
rights and conditions of membership in a labor organization (such as the
arbitrary and oppressive increase of union dues here complained of), cannot
be affirmed and will be reversed. The very article relied upon militates
against the proposition. It states that a report of a violation of rights and
conditions of membership in a labor organization may be made by (a)t least
thirty percent (30%) of all the members of a union or any member or
members specially concerned. The use of the permissive may in the
provision at once negates the notion that the assent of 30% of all the
members is mandatory. More decisive is the fact that the provision
expressly declares that the report may be made, alternatively by any
member or members specially concerned. And further confirmation that the
assent of 30% of the union members is not a factor in the acquisition of
jurisdiction by the Bureau of Labor Relations is furnished by Article 226 of
the same Labor Code, which grants original and exclusive jurisdiction to the
Bureau, and the Labor Relations Division in the Regional Offices of the
Department of Labor, over all inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from or affecting labor
management relations, making no reference whatsoever to any such 30%-
support requirement. Indeed, the officials mentioned are given the power
to act on all inter-union and intra-union conflicts (1) upon request of either
or both parties as well as (2) at their own initiative.
Second Issue: was the election held on 07 April 2000 valid or a nullity?
This issue arose from the fact that the original decision of the DOLE-NCR
dated 22 November 1999, ordered petitioners, among other things, to
immediately hold/conduct an election of officers . . . Petitioners, it must be
recalled, appealed from the DOLE-NCR decision to the BLR-DOLE. During the
pendency of the appeal, however, an election of officers was held on 07
April 2000. Subsequently, the BLR-DOLE affirmed the decision of the DOLE-
NCR, but with the pronouncement that . . . the supposed election conducted
on (07) April 2000 is null and void and cannot produce legal effects adverse
to appellants.[40]
The petitioners contend that since the election was held on 07 April 2000,
and the original complaint before the DOLE-NCR was filed on 01 December
1997, the former could not have been the subject of the complaint. There
was, according to petitioners, reversible error in the BLR-DOLEs adding to
the DOLE-NCRs decision, the nullification of the 07 April 2000 election. The
BLRDOLE should have limited itself to affirming, modifying or setting aside
44
and canceling the provisions of the dispositive portion of the DOLE-NCRs
decision which was subject of the appeal. The election was held because the
term of the petitioners (extended for five years under Republic Act No.
6715[41]) expired on 07 April 2000. As amended by Republic Act 6715,
paragraph (c) of Article 241 of the Labor Code now reads:
(c) The members shall directly elect their officers in the local union, as well
as their national officers in the national union or federation to which they or
their local union is affiliated, by secret ballots at intervals of five (5) years.
It just so happened that the holding of the election coincided with the DOLE-
NCR decision.[42]
The private respondents, in answer to this, point out that the 07 April 2000
election, as appearing in the 22 September 2000 Resolution of the BLR-
DOLE, was set aside not on the flimsy reason that there was no complaint to
invalidate it, but due to the appeal of the petitioners questioning the BLR-
DOLEs order. The appeal effectively suspended the effect of the DOLE-NCR
Regional Directors order for the immediate holding of election of officers in
accordance with the unions constitution and by-laws.[43]
On this matter, the Court of Appeals made the following observation:
Consequently, the Regional Director of DOLE-NCR erred in ordering the
immediate holding of election of officers of UEEA, and the Bureau of Labor
Relations (BLR)-Department of Labor and Employment, insofar as it affirmed
this particular order, committed an act amounting to grave abuse of
discretion.
Nonetheless, despite of this finding, the election of UEEA officers on 7 April
2000 cannot acquire a semblance of legality. First, it was conducted
pursuant to the aforesaid (erroneous) order of the Regional Director as
manifested by the petitioners. Second, it was purposely done to pre-empt
the resolution of the case by the BLR and to deprive private respondents
their substantial right to participate in the election. Third, petitioners cannot
be allowed to take an inconsistent position to later on claim that the
election of 7 April 2000 was held because it was already due while
previously declaring that it was made in line with the order of the Regional
Director, for this would go against the principle of fair play.

Thus, while the BLR was wrong in affirming the order of the Regional
Director for the immediate holding of election, it was right in nullifying the 7
April 2000 UEEA election of officers. It was simply improper for the
petitioners to implement the said order which was then one of the subjects
of their appeal in the BLR. To hold otherwise would be to dispossess the BLR
of its inherent power to control the conduct of the proceedings of cases
pending before it for resolution.[44]
Based on the prevailing facts of this case, we affirm the foregoing findings of
the court a quo. We cannot hold the election of 07 April 2000 valid as this
would make us condone an iniquitous act. Said election was perceptibly
done to hinder any resolution or decision that would be made by BLR-DOLE.
The Regional Director indeed ordered the immediate holding of an election
in its Order dated 22 November 1999. The records show that the petitioners
questioned this order of the Regional Director before the BLR-DOLE by way
of appeal,[45] and yet, they conducted the election, allegedly because it was
due under Republic Act No. 6715. Why this was done by the petitioners
escapes us. But as rightfully observed by the BLR-DOLE:
. . . Indeed, it is obvious that the general membership meeting and election
of officers was done purposely to pre-empt our resolution of this case and,
more importantly, the participation of appellees in the election. This cannot
be tolerated.[46]
Third Issue: was the indefinite suspension of the private respondents illegal?
We rule in the affirmative.
The petitioners posit the theory that the records do not support the findings
of the BLR-DOLE that no investigation was conducted making the
suspension illegal because of lack of due process.
It is best to remind the petitioners that this Court, as we have held in a long
line of decisions, is not a trier of facts.[47] The instant case is a petition for
review on certiorari[48] where only questions of law may be raised. The
exceptions[49] to this rule find no application here. This being the case, the
findings of fact of the DOLE-NCR and the BLR-DOLE as affirmed by the Court
45
of Appeals to the effect that no investigation was conducted, shall not be
disturbed. As properly held by the court a quo:
Petitioners have failed to show that the findings of facts and conclusions of
law of both the DOLE-NCR and BLR-DOLE were arrived at with grave abuse
of discretion or without substantial evidence. A careful review of the
pleadings before Us reveals that the decision and resolutions of the
concerned agencies were correctly anchored in law and on substantial
evidence.[50]
Fourth Issue: is the non-holding of meetings and non-submission of reports
by the petitioners moot and academic, and whether the decision to hold
meetings and submit reports contradict and override the sovereign will of
the majority?
We do not believe so.
This issue was precipitated by the Court of Appeals decision affirming the
order of DOLE Regional Director Maximo B. Lim for the petitioners to hold a
general membership meeting wherein they make open and available the
unions/associations books of accounts and other documents pertaining to
the union funds, and to regularly conduct special and general membership
meetings in accordance with the unions constitution and by-laws.[51] It is to
be recalled that the private respondents, when they filed a complaint before
the DOLE-NCR also complained of petitioners refusal to render financial and
other reports, and deliberate refusal to call general and special meetings.
Petitioners do not hide the fact that they belatedly submitted their financial
reports and the minutes of their meetings to the DOLE. The issue of
belatedly submitting these reports, according to the petitioners, had been
rendered moot and academic by their eventual compliance. Besides, this
has been the practice of the association.[52] Moreover, the petitioners
likewise maintain that the passage of General Assembly Resolution No. 10
dated 10 December 1997 and Resolution No. 8, Series of 2000, following the
application of the principle that the sovereign majority rules, cured any
liability that may have been brought about by their belated actions.[53]
As found by the Court of Appeals, the financial statements for the years
1995 up to 1997 were submitted to DOLE-NCR only on 06 February 1998
while that for the year 1998 was submitted only on 16 March 1999.[54] The
last associations meeting was conducted on 21 April 1995, and the copy of
the minutes thereon was submitted to BLR-DOLE only on 24 February 1998.
The passage of General Assembly Resolution No. 10 dated 10 December
1997 and Resolution No. 8, Series of 2000,[55] which supposedly cured the
lapses committed by the associations officers and reiterated the approval of
the general membership of the acts and collateral actions of the
associations officers cannot redeem the petitioners from their predicament.
The obligation to hold meetings and render financial reports is mandated by
UEEAs constitution and by-laws. This fact was never denied by the
petitioners. Their eventual compliance, as what happened in this case, shall
not release them from the obligation to accomplish these things in the
future.
Prompt compliance in rendering financial reports together with the holding
of regular meetings with the submission of the minutes thereon with the
BLR-DOLE and DOLE-NCR shall negate any suspicion of dishonesty on the
part of UEEAs officers. This is not only true with UEEA, but likewise with
other unions/associations, as this matter is imbued with public interest.
Undeniably, transparency in the official undertakings of union officers will
bolster genuine trade unionism in the country.
WHEREFORE, in view of all the foregoing, the Decision and Resolution of the
Court of Appeals subjects of the instant case, are AFFIRMED. Costs against
the petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 85333 February 26, 1990
CARMELITO L. PALACOL, ET AL., petitioners,
vs.
46
PURA FERRER-CALLEJA, Director of the Bureau of Labor Relations, MANILA
CCBPI SALES FORCE UNION, and COCA-COLA BOTTLERS (PHILIPPINES),
INC., respondents.
Wellington B. Lachica for petitioners.
Adolpho M. Guerzon for respondent Union.
GANCAYCO, J.:
Can a special assessment be validly deducted by a labor union from the
lump-sum pay of its members, granted under a collective bargaining
agreement (CBA), notwithstanding a subsequent disauthorization of the
same by a majority of the union members? This is the main issue for
resolution in the instant petition for certiorari.
As gleaned from the records of the case, the pertinent facts are as follows:
On October 12, 1987, the respondent Manila CCBPI Sales Force Union
(hereinafter referred to as the Union), as the collective bargaining agent of
all regular salesmen, regular helpers, and relief helpers of the Manila Plant
and Metro Manila Sales Office of the respondent Coca-Cola Bottlers
(Philippines), Inc. (hereinafter referred to as the Company) concluded a new
collective bargaining agreement with the latter. 1 Among the compensation
benefits granted to the employees was a general salary increase to be given
in lump sum including recomputation of actual commissions earned based
on the new rates of increase.
On the same day, the president of the Union submitted to the Company the
ratification by the union members of the new CBA and authorization for the
Company to deduct union dues equivalent to P10.00 every payday or P20.00
every month and, in addition, 10% by way of special assessment, from the
CBA lump-sum pay granted to the union members. The last one among the
aforementioned is the subject of the instant petition.
As embodied in the Board Resolution of the Union dated September 29,
1987, the purpose of the special assessment sought to be levied is "to put
up a cooperative and credit union; purchase vehicles and other items
needed for the benefit of the officers and the general membership; and for
the payment for services rendered by union officers, consultants and
others." 2 There was also an additional proviso stating that the "matter of
allocation ... shall be at the discretion of our incumbent Union President."
This "Authorization and CBA Ratification" was obtained by the Union
through a secret referendum held in separate local membership meetings
on various dates. 3 The total membership of the Union was about 800. Of
this number, 672 members originally authorized the 10% special
assessment, while 173 opposed the same. 4
Subsequently however, one hundred seventy (170) members of the Union
submitted documents to the Company stating that although they have
ratified the new CBA, they are withdrawing or disauthorizing the deduction
of any amount from their CBA lump sum. Later, 185 other union members
submitted similar documents expressing the same intent. These members,
numbering 355 in all (170 + 185), added to the original oppositors of 173,
turned the tide in favor of disauthorization for the special assessment, with
a total of 528 objectors and a remainder of 272 supporters. 5
On account of the above-mentioned disauthorization, the Company, being
in a quandary as to whom to remit the payment of the questioned amount,
filed an action for interpleader with the Bureau of Labor Relations in order
to resolve the conflicting claims of the parties concerned. Petitioners, who
are regular rank-and-file employees of the Company and bona fide
members of the Union, filed a motion/complaint for intervention therein in
two groups of 161 and 94, respectively. They claimed to be among those
union members who either did not sign any individual written authorization,
or having signed one, subsequently withdrew or retracted their signatures
therefrom.
Petitioners assailed the 10% special assessment as a violation of Article
241(o) in relation to Article 222(b) of the Labor Code. Article 222(b) provides
as follows:
ART. 222. Appearances and Fees. —
xxx xxx xxx
47
(b) No attorney's fees, negotiation fees or similar charges of any kind
arising from any collective bargaining negotiations or conclusion of the
collective agreement shall be imposed on any individual member of the
contracting union; Provided, however, that attorney's fees may be charged
against union funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary shall be null
and void.
On the other hand, Article 241(o) mandates that:
ART. 241. Rights and conditions of membership in a labor organization. —
xxx xxx xxx
(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other extraordinary
fees may be checked off from any amount due to an employee without an
individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deduction;
As authority for their contention, petitioners cited Galvadores v. Trajano, 6
wherein it was ruled that no check-offs from any amount due employees
may be effected without individual written authorizations duly signed by the
employees specifically stating the amount, purpose, and beneficiary of the
deduction.
In its answer, the Union countered that the deductions not only have the
popular indorsement and approval of the general membership, but likewise
complied with the legal requirements of Article 241 (n) and (o) of the Labor
Code in that the board resolution of the Union imposing the questioned
special assessment had been duly approved in a general membership
meeting and that the collection of a special fund for labor education and
research is mandated.
Article 241(n) of the Labor Code states that —
ART. 241. Rights and conditions of membership in a labor organization. —
xxx xxx xxx
(n) No special assessment or other extraordinary fees may be levied
upon the members of a labor organization unless authorized by a written
resolution of a majority of all the members at a general membership
meeting duly called for the purpose. The secretary of the organization shall
record the minutes of the meeting including the list of all members present,
the votes cast, the purpose of the special assessment or fees and the
recipient of such assessments or fees. The record shall be attested to by the
president;
Med-Arbiter Manases T. Cruz ruled in favor of petitioners in an order dated
February 15, 1988 whereby he directed the Company to remit the amount it
had kept in trust directly to the rank-and-file personnel without delay.
On appeal to the Bureau of Labor Relations, however, the order of the Med-
Arbiter was reversed and set aside by the respondent-Director in a
resolution dated August 19, 1988 upholding the claim of the Union that the
special assessment is authorized under Article 241 (n) of the Labor Code,
and that the Union has complied with the requirements therein.
Hence, the instant petition.
Petitioners allege that the respondent-Director committed a grave abuse of
discretion amounting to lack or excess of jurisdiction when she held Article
241 (n) of the Labor Code to be the applicable provision instead of Article
222(b) in relation to Article 241(o) of the same law.
According to petitioners, a cursory examination and comparison of the two
provisions of Article 241 reveals that paragraph (n) cannot prevail over
paragraph (o). The reason advanced is that a special assessment is not a
matter of major policy affecting the entire union membership but is one
which concerns the individual rights of union members.
Petitioners further assert that assuming arguendo that Article 241(n) should
prevail over paragraph (o), the Union has nevertheless failed to comply with
the procedure to legitimize the questioned special assessment by: (1)
presenting mere minutes of local membership meetings instead of a written
resolution; (2) failing to call a general membership meeting; (3) having the
48
minutes of three (3) local membership meetings recorded by a union
director, and not by the union secretary as required; (4) failing to have the
list of members present included in the minutes of the meetings; and (5)
failing to present a record of the votes cast. 7 Petitioners concluded their
argument by citing Galvadores.
After a careful review of the records of this case, We are convinced that the
deduction of the 10% special assessment by the Union was not made in
accordance with the requirements provided by law.
Petitioners are correct in citing the ruling of this Court in Galvadores which
is applicable to the instant case. The principle "that employees are
protected by law from unwarranted practices that diminish their
compensation without their known edge and consent" 8 is in accord with
the constitutional principle of the State affording full protection to labor. 9
The respondent-Union brushed aside the defects pointed out by petitioners
in the manner of compliance with the legal requirements as "insignificant
technicalities." On the contrary, the failure of the Union to comply strictly
with the requirements set out by the law invalidates the questioned special
assessment. Substantial compliance is not enough in view of the fact that
the special assessment will diminish the compensation of the union
members. Their express consent is required, and this consent must be
obtained in accordance with the steps outlined by law, which must be
followed to the letter. No shortcuts are allowed.
The applicable provisions are clear. The Union itself admits that both
paragraphs (n) and (o) of Article 241 apply. Paragraph (n) refers to "levy"
while paragraph (o) refers to "check-off" of a special assessment. Both
provisions must be complied with. Under paragraph (n), the Union must
submit to the Company a written resolution of a majority of all the members
at a general membership meeting duly called for the purpose. In addition,
the secretary of the organization must record the minutes of the meeting
which, in turn, must include, among others, the list of all the members
present as well as the votes cast.
As earlier outlined by petitioners, the Union obviously failed to comply with
the requirements of paragraph (n). It held local membership meetings on
separate occasions, on different dates and at various venues, contrary to
the express requirement that there must be a general membership meeting.
The contention of the Union that "the local membership meetings are
precisely the very general meetings required by law" 10 is untenable
because the law would not have specified a general membership meeting
had the legislative intent been to allow local meetings in lieu of the latter.
It submitted only minutes of the local membership meetings when what is
required is a written resolution adopted at the general meeting. Worse still,
the minutes of three of those local meetings held were recorded by a union
director and not by the union secretary. The minutes submitted to the
Company contained no list of the members present and no record of the
votes cast. Since it is quite evident that the Union did not comply with the
law at every turn, the only conclusion that may be made therefrom is that
there was no valid levy of the special assessment pursuant to paragraph (n)
of Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorization
duly signed by every employee in order that a special assessment may be
validly checked-off. Even assuming that the special assessment was validly
levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no
valid check-off considering that the majority of the union members had
already withdrawn their individual authorizations. A withdrawal of
individual authorizations is equivalent to no authorization at all. Hence, the
ruling in Galvadores that "no check-offs from any amounts due employees
may be effected without an individual written authorization signed by the
employees ... " is applicable.
The Union points out, however, that said disauthorizations are not valid for
being collective in form, as they are "mere bunches of randomly procured
signatures, under loose sheets of paper." 11 The contention deserves no
merit for the simple reason that the documents containing the
disauthorizations have the signatures of the union members. The Court
finds these retractions to be valid. There is nothing in the law which requires
that the disauthorization must be in individual form.
Moreover, it is well-settled that "all doubts in the implementation and
interpretation of the provisions of the Labor Code ... shall be resolved in
favor of labor."12 And as previously stated, labor in this case refers to the
49
union members, as employees of the Company. Their mere desire to
establish a separate bargaining unit, albeit unproven, cannot be construed
against them in relation to the legality of the questioned special
assessment. On the contrary, the same may even be taken to reflect their
dissatisfaction with their bargaining representative, the respondent-Union,
as shown by the circumstances of the instant petition, and with good
reason.
The Med-Arbiter correctly ruled in his Order that:
The mandate of the majority rank and file have (sic) to be respected
considering they are the ones directly affected and the realities of the high
standards of survival nowadays. To ignore the mandate of the rank and file
would enure to destabilizing industrial peace and harmony within the rank
and file and the employer's fold, which we cannot countenance.
Moreover, it will be recalled that precisely union dues are collected from
the union members to be spent for the purposes alluded to by respondent.
There is no reason shown that the regular union dues being now
implemented is not sufficient for the alleged expenses. Furthermore, the
rank and file have spoken in withdrawing their consent to the special
assessment, believing that their regular union dues are adequate for the
purposes stated by the respondent. Thus, the rank and file having spoken
and, as we have earlier mentioned, their sentiments should be respected.
Of the stated purposes of the special assessment, as embodied in the board
resolution of the Union, only the collection of a special fund for labor and
education research is mandated, as correctly pointed out by the Union. The
two other purposes, namely, the purchase of vehicles and other items for
the benefit of the union officers and the general membership, and the
payment of services rendered by union officers, consultants and others,
should be supported by the regular union dues, there being no showing that
the latter are not sufficient to cover the same.
The last stated purpose is contended by petitioners to fall under the
coverage of Article 222 (b) of the Labor Code. The contention is impressed
with merit. Article 222 (b) prohibits attorney's fees, negotiations fees and
similar charges arising out of the conclusion of a collective bargaining
agreement from being imposed on any individual union member. The
collection of the special assessment partly for the payment for services
rendered by union officers, consultants and others may not be in the
category of "attorney's fees or negotiations fees." But there is no question
that it is an exaction which falls within the category of a "similar charge,"
and, therefore, within the coverage of the prohibition in the
aforementioned article. There is an additional proviso giving the Union
President unlimited discretion to allocate the proceeds of the special
assessment. Such a proviso may open the door to abuse by the officers of
the Union considering that the total amount of the special assessment is
quite considerable — P1,027,694.33 collected from those union members
who originally authorized the deduction, and P1,267,863.39 from those who
did not authorize the same, or subsequently retracted their authorizations.
13 The former amount had already been remitted to the Union, while the
latter is being held in trust by the Company.
The Court, therefore, stakes down the questioned special assessment for
being a violation of Article 241, paragraphs (n) and (o), and Article 222 (b) of
the Labor Code.
WHEREFORE, the instant petition is hereby GRANTED. The Order of the
Director of the Bureau of Labor Relations dated August 19, 1988 is hereby
REVERSED and SET ASIDE, while the order of the Med-Arbiter dated
February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers
(Philippines), Inc. is hereby ordered to immediately remit the amount of
P1,267,863.39 to the respective union members from whom the said
amount was withheld. No pronouncement as to costs. This decision is
immediately executory.
SO ORDERED.
THIRD DIVISION
[G.R. No. 106518. March 11, 1999]
ABS CBN SUPERVISORS EMPLOYEE UNION MEMBERS, petitioner,
vs. ABS CBN BROADCASTING CORP., HERBERT RIVERA, ALBERTO
BERBON, CINDY MUNOZ, CELSO JAMBALOS, SALVADOR DE VERA,
ARNULFO ALCAZAR, JAKE MADERAZO, GON CARPIO, OSCAR
LANDRITO, FRED GARCIA, CESAR LOPEZ and RUBEN BARRAMEDA,
respondents.
50
DECISION
PURISIMA, J.:
At bar is a special civil action for Certiorari[1] seeking the reversal of the
Order[2] dated July 31, 1992 of public respondent Department of Labor and
Employment Undersecretary Bienvenido E. Laguesma[3] in Case No. NCR OD
M 90 07 - 037.
From the records on hand, it can be gathered, that:
On December 7, 1989, the ABS-CBN Supervisors Emloyees Union (the
Union), represented by respondent Union Officers, and ABS-CBN
Broadcasting Corporation (the Company) signed and concluded a Collective
Bargaining Agreement with the following check-off provision, to wit:
Article XII The [C]ompany agrees to advance to the Union a sum equivalent
to 10% of the sum total of all the salary increases and signing bonuses
granted to the Supervisors under this collective Bargaining Agreement and
upon signing hereof to cover the Unions incidental expenses, including
attorneys fees and representation expenses for its organization and (sic)
preparation and conduct hereof, and such advance shall be deducted from
the benefits granted herein as they accrue.
On September 19, 1990, Petitioners[4] filed with the Bureau of Labor
Relations, DOLE-NCR, Quezon City, a Complaint against the Union Officers[5]
and ABS-CBN Broadcasting corporation, praying that (1) the special
assessment of ten percent (10%) of the sum total of all salary increases and
signing bonuses granted by respondent Company to the members of the
Union be declared illegal for failure to comply with the labor Code, as
amended, particularly Article 241, paragraphs (g), (n), and (o); and in utter
violation of the Constitution and By-Laws of the ABS-CBN Supervisors
Employees Union; (2) respondent Company be ordered to suspend further
deductions from petitioners salaries for their shares thereof.
In their Answers, respondent Union Officers and Company prayed for the
dismissal of the Complaint for lack of merit. They argued that the check-off
provision is in accordance with law as majority of the Union members
individually executed a written authorization giving the Union officers and
the Company a blanket authority to deduct subject amount.
On January 21, 1991, Med-Arbiter Rasidali C. Abdula issued the following
Order:[6]
WHEREFORE, premises considered, judgment is hereby rendered:
a) declaring the special assessment of 10% of the sum total of CBA benefits
as illegal;
b) ordering respondents union officers to refund to the complainants and
other union members the amount of five Hundred Thousand Pesos
(P500,000.00) advanced by the respondent Company as part of the 10%
sum total of CBA benefits without unnecessary delay;
c) ordering the respondent company to stop and desist from further making
advances and deductions from the union members salaries their share in
the advances already made to the union;
d) ordering the respondent Company to remit directly to the complainants
and other union members the amount already deducted from the union
members salaries as part of their share in the advances already made to the
union and which it had kept in trust during the pendency of this case; and
e) directing the respondents union officers and respondent Company to
submit report on the compliance thereof.
SO ORDERED.
On appeal, respondent DOLE Undersecretary Bienvenido E. Laguesma
handed down a Decision[7] on July 1, 1991, disposing as follows:
WHEREFORE, the appeals are hereby denied, the Order of the Med-Arbiter
is affirmed en toto.
On July 5, 1991, the aforesaid Decision was received by the respondent
Union Officers and respondent Company. On July 13, 1991, they filed their
Motion for Reconsideration stating, inter alia that the questioned ten
percent (10%) special assessment is valid pursuant to the ruling in Bank of
the Philippine Islands Employee Union ALU vs. NLRC.[8]
51
On July 31, 1992, Undersecretary B.E. Laguesma issued an Order[9];
resolving, thus:
"WHEREFORE, the Decision dated 01 July 1991 is hereby SET ASIDE. In lieu
thereof, a new one is hereby entered DISMISSING the Complaint/Petition
for lack of merit."
Hence, the present petition seeking to annul and set aside the above-cited
Order of public respondent Undersecretary B.E. Laguesma, for being
allegedly tainted with grave abuse of discretion amounting to lack of
jurisdiction.
Did the public respondent act with grave abuse of discretion in issuing the
challenged Order reversing his own Decision of July 1, 1991? Such is the sole
issue posited,which we resolve in the negative. The petition is
unmeritorious.
Petitioners claim[10] that the Decision of the Secretary of Labor and
Employment dated July 1, 1991, affirming in toto the Order of Med-Arbiter
Rasidali Abdullah dated January 31, 1991, cannot be a subject of a motion
for reconsideration because it is final and unappealable pursuant to Section
8, Rule VIII, Book V of the Omnibus Rule Implementing the Labor Code. It is
further argued that the only remedy of the respondent Union Officers' is to
file a petition for certiorari with this Court.
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor
Code, provides:
"The Secretary shall have fifteen (15) calendar days within which to decide
the appeal from receipt of the records of the case. The decision of the
Secretary shall be final and inappealable." [Underscoring supplied].
(Comment, p. 101)
The aforecited provision cannot be construed to mean that the Decision of
the public respondent cannot be reconsidered since the same is reviewable
by writ of certiorari under Rule 65 of the Rules of Court. As a rule, the law
requires a motion for reconsideration to enable the public respondent to
correct his mistakes, if any. In Pearl S. Buck Foundation, Inc., vs. NLRC,[11]
this Court held:
"Hence, the only way by which a labor case may reach the Supreme Court is
through a petition for certiorari under Rule 65 of the Rules of Court alleging
lack or excess of jurisdiction or grave abuse of discretion. Such petition may
be filed within a reasonable time from receipt of the resolution denying the
motion for reconsideration of the NLRC decision." [Underscoring; supplied].
Clearly, before a petition for certiorari under Rule 65 of the Rules of Court
may be availed of, the filing of a motion for reconsideration is a condition
sine qua non to afford an opportunity for the correction of the error or
mistake complained of.
So also, considering that a decision of the Secretary of Labor is subject to
judicial review only through a special civil action of certiorari and, as a rule,
cannot be resorted to without the aggrieved party having exhausted
administrative remedies through a motion for reconsideration, the
aggrieved party, must be allowed to move for a reconsideration of the same
so that he can bring a special civil action for certiorari before the Supreme
Court.[12]
Furthermore, it appears that the petitioners filed with the public respondent
a Motion for Early Resolution[13] dated June 24, 1992. Averring that private
respondents' Motion for Reconsideration did not contain substantial factual
or legal grounds for the reversal of subject decision. Consequently,
petitioners are now estopped from raising the issue sought for resolution. In
Alfredo Marquez vs. Secretary of Labor,[14] the Court said:
"xxx The active participation of the party against whom the action was
brought, coupled with his failure to object to the jurisdiction of the court or
quasi-judicial body where the action is pending, is tantamount to an
invocation of that jurisdiction and a willingness to abide by the resolution of
the case and will bar said party from later on impugning the court or body's
jurisdiction."
What is more, it was only when the public respondents issued the Order
adverse to them that the petitioners raised the question for the first time
52
before this Court. Obviously, it is a patent afterthought which must be
abhorred.
Petitioners also argued that the check-off provision in question is illegal
because it was never submitted for consideration and approval to "all the
members at a general membership meeting called for the purpose"; and
further alleged that the formalities mandated by Art. 241, paragraphs (n)
and (o) of the Labor Code, as amended, were not complied with.
"A check-off is a process or device whereby the employer, on agreement
with the Union, recognized as the proper bargaining representative, or on
prior authorization from its employees, deducts union dues or agency fees
from the latter's wages and remits them directly to the union."[15] Its
desirability in a labor organization is quite evident. It is assured thereby of
continuous funding. As this Court has acknowledged, the system of check-
off is primarily for the benefit of the Union and only indirectly, for the
individual employees.
The legal basis of check-off is found in statutes or in contracts.[16] The
statutory limitations on check-offs are found in Article 241, Chapter II, Title
IV, Book Five of the Labor Code, which reads:
"Rights and conditions of membership in a labor organization. - The
following are the rights and conditions of membership in a labor
organization:
xxx
(g) No officer, agent, member of a labor organization shall collect any fees,
dues, or other contributions in its behalf or make any disbursement of its
money or funds unless he is duly authorized pursuant to its constitution and
by-laws.
xxx
(n) No special assessment or other extraordinary fees may be levied upon
the members of a labor organization unless authorized by a written
resolution of a majority of all the members of a general membership
meeting duly called for the purpose. The secretary of the organization shall
record the minutes of the meeting including the list of all members present,
the votes cast, the purpose of the special assessment or fees and the
recipient of such assessment or fees. The record shall be attested to by the
president.
(o) Other than for mandatory activities under the Code, no special
assessments, attorney's fees, negotiation fees or any other extraordinary
fees may be checked off from any amount due to an employee with an
individual written authorization duly signed by the employee. The
authorization should specifically state the amount, purpose and beneficiary
of the deductions. [Underscoring; supplied]
Article 241 of the Labor Code, as amended, must be read in relation to
Article 222, paragraph (b) of the same law, which states:
"No attorney's fees, negotiation fees or similar charges of any kind arising
from collective bargaining negotiations or conclusion of the collective
agreement shall be imposed on any individual member of the contracting
union: Provided, however, that attorney's fees may be charged against
union funds in an amount to be agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the contrary shall be null and
void." [Underscoring; supplied]
And this court elucidated the object and import of the said provision of law
in Bank of Philippine Islands Employees Union - Association Labor Union
(BPIEU-ALU) vs. National Labor Relations Commission:[17]
"The Court reads the afore-cited provision (Article 222 [b] of the Labor
Code) as prohibiting the payment of attorney's fees only when it is effected
through forced contributions from the workers from their own funds as
distinguished from the union funds. xxx"
Noticeably, Article 241 speaks of three (3) requisites that must be complied
with in order that the special assessment for Union's incidental expenses,
attorney's fees and representation expenses, as stipulated in Article XII of
the CBA, be valid and upheld namely: 1) authorization by a written
resolution of the majority of all the members at the general membership
meeting duly called for the purpose; (2) secretary's record of the minutes of
53
the meeting; and (3) individual written authorization for check-off duly
signed by the employee concerned.
After a thorough review of the records on hand, we find that the three (3)
requisites for the validity of the ten percent (10%) special assessment for
Union's incidental expenses, attorney's fees and representation expenses
were met.
It can be gleaned that on July 14, 1989, the ABS-CBN Supervisors Employee
Union held its general meeting, whereat it was agreed that a ten percent
(10%) special assessment from the total economic package due to every
member would be checked-off to cover expenses for negotiation, other
miscellaneous expenses and attorney's fees. The minutes of the said
meeting were recorded by the Union's Secretary, Ma. Carminda M. Munoz,
and noted by its President, Herbert Rivera.[18]
On May 24, 1991, said Union held its General Membership Meeting,
wherein majority of the members agreed that "in as much as the Union had
already paid Atty. P. Pascual the amount of P500,000.00, the same must be
shared by all the members until this is fully liquidated."[19]
Eighty-five (85) members of the same Union executed individual written
authorizations for check-off, thus:
"Towards that end, I hereby authorize the Management and/or Cashier of
ABS-CBN BROADCASTING CORPORATION to deduct from my salary the sum
of P30.00 per month as my regular union dues and said Management
and/or Cashier are further authorize (sic) to deduct a sum equivalent to 10%
of all and whatever benefits that will become due to me under the
COLLECTIVE BARGAINING AGREEMENT (CBA) that may be agreed upon by
the UNION and MANAGEMENT and to apply the said sum to the advance
that Management will make to our Union for incidental expenses such as
attorney's fees, representations and other miscellaneous expenses pursuant
to Article XII of the proposed CBA."[20]
Records do not indicate that the aforesaid check-off authorizations were
executed by the eighty-five (85) Union members under the influence of
force or compulsion. There is then, the presumption that such check-off
authorizations were executed voluntarily by the signatories thereto.
Petitioners contention that the amount to be deducted is uncertain[21] is
not persuasive because the check-off authorization clearly stated that the
sum to be deducted is equivalent to ten percent (10%) of all and whatever
benefits may accrue under the CBA. In other words, although the amount is
not fixed, it is determinable.
Petitioners further contend that Article 241 (n) of the Labor Code, as
amended, on special assessments, contemplates a general meeting after the
conclusion of the collective bargaining agreement.
Subject Article does not state that the general membership meeting should
be called after the conclusion of a collective bargaining agreement. Even
granting ex gratia argumenti that the general meeting should be held after
the conclusion of the CBA, such requirement was complied with since the
May 24, 1991 General Membership Meeting was held after the conclusion
of the Collective Bargaining Agreement, which was signed and concluded on
December 7, 1989.
Considering that the three requisites afforesaid for the validity of a special
assessment were observed or met, we uphold the validity of the ten percent
(10%) special assessment authorized in Article XII of the CBA.
We also concur in the finding by public respondent that the Bank of the
Philippine Islands Employees Union ALU vs. NLRC[22] is apposite in this case.
In BPIEU-ALU, the petitioners, impugned the Order of the NLRC, holding that
the validity of the five percent (5%) special assessment for attorneys fees is
contrary to Article 222, paragraph (b) of the Labor Code, as amended. The
court ratiocinated, thus:
The Court reads the aforecited provision as prohibiting the payment of
attorneys fees only when it is effected through forced contributions from
the workers from their own funds a distinguished from the union funds. The
purpose of the provision is to prevent imposition on the workers of the duty
to individually contribute their respective shares in the fee to be paid the
attorney for his services on behalf of the union in its negotiations with the
management. xxx [Underscoring supplied]
However, the public respondent overlooked the fact that in the said case,
the deduction of the stipulated five percent (5%) of the total economic
54
benefits under the new collective bargaining agreement was applied only to
workers who gave their individual signed authorizations. The Court
explained:
xxx And significantly, the authorized deduction affected only the workers
who adopted and signed the resolution and who were the only ones from
whose benefits the deductions were made by BPI. No similar deductions
were taken from the other workers who did not sign the resolution and so
were not bound by it. [Underscoring; supplied]
While the court also finds merit in the finding by the public respondents
that Palacol vs. Ferrer-Calleja[23] is inapropos in the case under scrutiny, it
does not subscribe to public respondents reasoning that Palacol should not
be retroactively applied to the present case in the interest of justice, equity
and fairplay.[24] The inapplicability of Palacol lies in the fact that it has a
different factual milieu from the present case. In Palacol, the check-off
authorization was declared invalid because majority of the Union members
had withdrawn their individual authorizations, to wit:
Paragraph (o) on the other hand requires an individual written authorization
duly signed by every employee in order that special assessment maybe
validly check-off. Even assuming that the special assessment was validly
levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no
valid check-off considering that the majority of the Union members had
already withdrawn their individual authorizations. A withdrawal of
individual authorization is equivalent to no authorization at all. xxx
[Underscoring; supplied]
In this case, the majority of the Union members gave their individual written
check-off authorizations for the ten percent (10%) special assessment. And
they have never withdraw their individual written authorizations for check-
off.
There is thus cogent reason to uphold the assailed Order, it appearing from
the records of the case that twenty (20)[25] of the forty-two (42) petitioners
executed as Compromise Agreement[26] ratifying the controversial check-
off provision in the CBA.
Premises studiedly considered, we are of the irresistable conclusion and, so
find, that the ruling in BPIEU-ALU vs. NLRC that (1) the prohibition against
attorneys fees in Article 222, paragraph (b) of the Labor Code applies only
when the payment of attorneys fees is effected through forced
contributions from the workers; and (2) that no deductions must be taken
from the workers who did not sign the check-off authorization, applies to
the case under consideration.
WHEREFORE, the assailed Order, dated July 31, 1992, of DOLE
Undersecretary B.E. Laguesma is AFFIRMED except that no deductions shall
be taken from the workers who did not give their individual written check-
off authorization. No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION
[G.R. No. 110007. October 18, 1996]
HOLY CROSS OF DAVAO COLLEGE, INC., petitioner, vs. HON. JEROME
JOAQUIN, in his capacity as Voluntary Arbitrator, and HOLY CROSS OF
DAVAO COLLEGE UNION KALIPUNAN NG MANGGAGAWANG PILIPINO
(KAMAPI), respondents.
DECISION
NARVASA, C.J.:
A collective bargaining agreement, effective from June 1, 1986 to May 31,
1989 was entered into between petitioner Holy Cross of Davao College, Inc.
(hereafter Holy Cross), an educational institution, and the affiliate labor
organization representing its employees, respondent Holy Cross of Davao
55
College Union-KAMAPI (hereafter KAMAPI). Shortly before the expiration of
the agreement, KAMAPI President Jose Lagahit, wrote Holy Cross under date
of April 12, 1989 expressing his unions desire to renew the agreement,
withal seeking its extension for two months, or until July 31, 1989, on the
ground that the teachers were still on summer vacation and union activities
necessary or incident to the negotiation of a new agreement could not yet
be conducted.[1] Holy Cross President Emilio P. Palma-Gil replied that he
had no objection to the extension sought, it being allowable under the
collective bargaining agreement.[2]
On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI
membership for the purpose of electing a new set of union officers, at which
Rodolfo Gallera won election as president. To the surprise of many, and
with resultant dissension among the membership, Galera forthwith initiated
discussions for the unions disaffiliation from the KAMAPI Federation.
Galleras group subsequently formed a separate organization known as the
Holy Cross of Davao College Teachers Union, and elected its own officers.
For its part, the existing union, KAMAPI, sent to the School its proposals for
a new collective bargaining contract; this it did on July 31, 1989, the expiry
date of the two-month extension it had sought.[3]
Holy Cross thereafter stopped deducting from the salaries and wages of its
teachers and employees the corresponding union dues and special
assessment (payable by union members), and agency fees (payable by non-
members), in accordance with the check-off clause of the CBA,[4] prompting
KAMAPI, on September 1, 1989, to demand an explanation.
In the meantime, there ensued between the two unions a full-blown action
on the basic issue of representation, which was to last for some two years. It
began with the filing by the new union (headed by Gallera) of a petition for
certification election in the Office of the Med-Arbiter.[5] KAMAPI responded
by filing a motion asking the Med-Arbiter to dismiss the petition. On August
31, 1989, KAMAPI also advised Holy Cross of the election of a new set of
officers who would also comprise its negotiating panel.[6]
The Med-Arbiter denied KAMAPIs motion to dismiss, and ordered the
holding of a certification election. On appeal, however, the Secretary of
Labor reversed the Med-Arbiters ruling and ordered the dismissal of the
petition for certification election, which action was eventually sustained by
this Court in appropriate proceedings.
After its success in the certification election case KAMAPI presented, on
April 11, 1991, revised bargaining proposals to Holy Cross;[7] and on July 11,
1991, it sent a letter to the School asking for its counter-proposals. The
School replied, that it did not know if the Supreme Court had in fact
affirmed the Labor Secretarys decision in favor of KAMAPI as the exclusive
bargaining representative of the School employees, whereupon KAMAPIs
counsel furnished it with a copy of the Courts resolution to that effect; and
on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its
counter-proposals as regards the terms of a new CBA.
In response, Holy Cross declared that it would take no action towards a new
CBA without a definitive ruling on the proper interpretation of Article I of
the old CBA which should have expired on May 31, 1989 (but, as above
stated, had been extended for two months at the KAMAPIs request). Said
Article provides inter alia for the automatic extension of the CBA for another
period of three (3) years counted from its expiration, if the parties fail to
agree on a renewal, modification or amendment thereof. It appears, in fact,
that the opinion of the DOLE Regional Director on the meaning and import
of said article I had earlier been sought by the College president, Emilio
Palma Gil.[8]
KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair
labor practice for refusing to bargain despite the formers repeated
demands; and on the following day, it filed a notice of strike with the
National Mediation and Conciliation Board..[9]
KAMAPI and Holy Cross were ordered to appear before Conciliator-
Mediator Agapito J. Adipen on October 2, 1991. Several conciliation
meetings were thereafter held between them, and when these failed to
bring about any amicable settlement, the parties agreed to submit the case
to voluntary arbitration.[10] Both parties being of the view that the dispute
did indeed revolve around the interpretation of 1 and 2 of Article I of the
CBA, they submitted position papers explicitly dealing with the following
issues presented by them for resolution to the voluntary arbitrator:
56
a. Whether or not the CBA which expired on May 31, 1989 was
automatically renewed and did not serve merely as a holdover CBA; and
b. Whether or not there was refusal to negotiate on the part of the Holy
Cross of Davao College.
On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of
KAMAPI.
Respecting the matter of the automatic renewal of the bargaining
agreement, the Voluntary Arbitrator ruled that the request for extension
filed by KAMAPI constituted seasonable notice of its intention to renew,
modify or amend the agreement, which it could not however pursue
because of the absence of the teachers who were then on summer
vacation.[11] He rejected the contention of Holy Cross that KAMAPI had
unreasonably delayed (until July 31, 1989) the submission of bargaining
proposals, opining that the delay was partly attributable to the Schools
prolonged inaction on KAMAPIs request for extension of the CBA. He also
ruled that Holy Cross was estopped from claiming automatic renewal of the
CBA because it ceased to implement the check-off provision embodied in
the CBA, declaring said Schools argument -- that a "definitive ruling" by the
DOLE on the correct interpretation of the automatic-extension clause of the
old CBA was a condition precedent to negotiation for a new CBA -- to be a
mere afterthought set up to justify its refusal to bargain with KAMAPI after
the latter had proven that it was the legally-empowered bargaining agent of
the school employees. In the dispositive portion of his award, the Voluntary
Arbitrator ordered Holy Cross to:
1. sit down, negotiate and conclude (an agreement) with the Holy Cross of
Davao College Faculty Union-KAMAPI, which, by Resolution of the Supreme
Court, remains the collective bargaining agent of the permanent and regular
teachers of said educational institution; (and)
2. pay to the Union the amount equivalent to the uncollected union dues
from August 1989 up to the time respondent shall have concluded a new
CBA with the Union, it appearing that respondent stopped complying with
the CBAs check-off provisions as of said date.[12]
The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC,
region XI, Davao City, to make the proper computation of the union dues to
be paid by management to the complainant union.
Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary
Arbitrators decision on the following grounds, viz.:[13]
1. That the voluntary arbitrator erred and acted in grave abuse of discretion
amounting to lack or excess of jurisdiction in ordering petitioner to pay the
union the uncollected union dues to private respondent which was not even
an issue submitted for voluntary arbitration, resulting in serious violation of
due process.
2. That the voluntary arbitrator erred in considering that petitioner refused
to negotiate with (the) Union, contrary to the records and evidence
presented in the case.
The Voluntary Arbitrators conclusion -- that petitioner Holy Cross had, in
light of the evidence on record, failed to negotiate with KAMAPI, adjudged
as the collective bargaining agent of the schools permanent and regular
teachers -- is a conclusion of fact that the Court will not review, the inquiry
at bar being limited to the issue of whether or not said Voluntary Arbitrator
had acted without or in excess of his jurisdiction, or with grave abuse of
discretion; nor does the Court see its way clear, after analyzing the record,
to pronouncing that reasoned conclusion to have been made so whimsically,
capriciously, oppressively, or unjustifiably -- in other words, attended by
grave abuse of discretion amounting to lack or excess of jurisdiction -- as to
call for extension of the Courts correcting hand through the extraordinary
writ of certiorari. Said finding should therefore be, and is hereby, sustained.
Now, concerning its alleged failure to observe the check-off provisions of
the collective bargaining agreement, Holy Cross contends that this was not
one of the issues raised in the arbitration proceedings; that said issue was
therefore extraneous and improper; and that even assuming the contrary, it
(Holy Cross) had not in truth violated the CBA.
Holy Cross asserts that it could not comply with the check-off provisions
because contrary to established practice prior to August, 1989, KAMAPI
failed to submit to the college comptroller every 8th day of the month, a list
57
of employees from whom union dues and the corresponding agency fees
were to be deducted; further, that there was an uncertainty as to the
recognized bargaining agent with whom it would deal -- a matter settled
only upon its receipt of a copy of this Courts Resolution on July 18, 1991 --
and in any case, the Voluntary Arbitrators order for it to pay to the union
the uncollected employees' dues or agency fees -- would amount to the
unions unjust enrichment.[14]
KAMAPI maintains, on the other hand, that the check-off issue was raised in
the position paper it submitted in the voluntary arbitration proceedings;
and that in any case, the issue was intimately connected with those
submitted for resolution and necessary for complete adjudication of the
rights and obligations of the parties;[15] and that said position paper had
alleged the manifest bad faith of management in not providing information
as to who were regular employees, thereby precluding determination of
teachers eligible for union membership.
Disregarding the objection of failure to seasonably set up the check-off
question -- the factual premises thereof not being indisputable, and
technical objections of this sort being generally inconsequential in quasi-
judicial proceedings -- the issues here ultimately boil down to whether or
not an employer is liable to pay to the union of its employees, the amounts
it failed to deduct from their salaries -- as union dues (with respect to union
members) or agency fees (as regards those not union members) -- in
accordance with the check-off provisions of the collective bargaining
contract (CBA) which it claims to have been automatically extended.
A check-off is a process or device whereby the employer, on agreement with
the union recognized as the proper bargaining representatives, or on prior
authorization from its employees, deducts union dues or agency fees from
the latter's wages and remits them directly to the union.[16] Its desirability
to a labor organization is quite evident; by it, it is assured of continuous
funding. Indeed, this Court has acknowledged that the system of check-off is
primarily for the benefit of the union and, only indirectly, of the individual
laborers.[17] When stipulated in a collective bargaining agreement, or
authorized in writing by the employees concerned -- the labor Code and its
Implementing Rules recognize it to be the duty of the employer to deduct
sums equivalent to the amount of union dues from the employees' wages
for direct remittance to the union, in order to facilitate the collection of
funds vital to the role of the union as representative of employees in a
bargaining unit to the role of the union as representative of employees in a
bargaining unit if not, indeed, to its very existence. And it may be
mentioned in this connection that the right to union dues deducted
pursuant to a check of, pertains to the local union which continues to
represent the employees under the terms of a CBA, and not to the parent
association from which it has dissaffiliated.[18]
The legal basis of check-off is thus found in statute or in contract.[19]
Statutory limitations on check-offs generally require written authorization
from each employee to deduct wages; however, a resolution approved and
adopted by a majority of the union members at a general meeting will
suffice when the right to check-off has been recognized by the employer,
including collection of reasonable assessments in connection with
mandatory activities of the union, or other special assessments and
extraordinary fees.[20]
Authorization to effect a check-off of union dues is co-terminous with the
union affiliation or membership of employees.[21] On the other hand, the
collection of agency fees in an amount equivalent to union dues and fees,
from employees who are not union members, is recognized by Article 248
(e) of the Labor Code. No requirement of written authorization from the
non-union employee is imposed. The employees acceptance of benefits
resulting from a collective bargaining agreement justifies the deduction of
agency fees from his pay and the unions entitlement thereto. In this aspect,
the legal basis of the unions right to agency fees is neither contractual nor
statutory, but quasi-contractual, deriving from the established principle that
non-union employees may not unjustly enrich themselves by benefiting
from employment conditions negotiated by the bargaining union.[22]
No provision of law makes the employer directly liable for the payment to
the labor organization of union dues and assessments that the former fails
to deduct from its employees salaries and wages pursuant to a check-off
stipulation. The employers failure to make the requisite deductions may
constitute a violation of a contractual commitment for which it may incur
liability for unfair labor practice.[23] But it does not by that omission, incur
liability to the union for the aggregate of dues or assessments uncollected
from the union members, or agency fees for non-union employees.
58
Check-offs in truth impose as extra burden on the employer in the form of
additional administrative and bookkeeping costs. It is a burden assumed by
management at the instance of the union and for its benefit, in order to
facilitate the collection of dues necessary for the latters life and sustenance.
But the obligation to pay union dues and agency fees obviously devolves not
upon the employer, but the individual employee. It is a personal obligation
not demandable from the employer upon default or refusal of the employer
to consent to a check-off. The only obligation of the employer under a
check-off is to effect the deductions and remit the collections to the union.
The principle of unjust enrichment necessarily precludes recovery of union
dues -- or agency fees -- from the employer, these being, to repeat,
obligations pertaining to the individual worker in favor of the bargaining
union. Where the employer fails or refuses to implement a check-off
agreement, logic and prudence dictate that the union itself undertake the
collection of union dues and assessments from its members (and agency
fees from non-union employees); this, of course, without prejudice to suing
the employer for unfair labor practice.
There was thus no basis for the Voluntary Arbitrator to require Holy Cross to
assume liability for the union dues and assessments, and agency fees that it
had failed to deduct from its employees salaries on the proffered plea that
contrary to established practice, KAMAPI had failed to submit to the college
comptroller every 8th day of the month, a list of employees from whose pay
union dues and the corresponding agency fees were to be deducted.
WHEREFORE, the requirement imposed on petitioner Holy Cross by the
challenged decision of the Voluntary Arbitrator, to pay respondent KAMAPI
the amount equivalent to the uncollected union dues and agency fees from
August 1989 up to the time a new collective bargaining agreement is
concluded, is NULLIFIED and SET ASIDE; but in all other respects, the
decision of the Voluntary Arbitrator is hereby AFFIRMED.
SO ORDERED.
FIRST DIVISION
[G.R. No. 111262. September 19, 1996]
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by
its President RAYMUNDO HIPOLITO, JR., petitioner, vs. HON. MA. NIEVES
 D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN
MIGUEL CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia
Plant) and SAN MIGUEL FOODS, INC. (Formerly, B-Meg Plant),
respondents.
DECISION
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the Secretary of Labor
rendered on February 15, 1993 involving a labor dispute at San Miguel
Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation Employees
Union - PTGWO entered into a Collective Bargaining Agreement (CBA) with
private respondent San Miguel Corporation (SMC) to take effect upon the
expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
SECTION 1. This Agreement which shall be binding upon the parties hereto
and their respective successors-in-interest, shall become effective and shall
remain in force and effect until June 30, 1992.
SEC. 2. In accordance with Article 253-A of the Labor Code as amended, the
term of this Agreement insofar as the representation aspect is concerned,
shall be for five (5) years from July 1, 1989 to June 30, 1994. Hence, the
freedom period for purposes of such representation shall be sixty (60) days
prior to June 30, 1994.
SEC. 3. Sixty (60) days prior to June 30, 1992 either party may initiate
negotiations of all provisions of this Agreement, except insofar as the
representation aspect is concerned. If no agreement is reached in such
59
negotiations, this Agreement shall nevertheless remain in force up to the
time a subsequent agreement is reached by the parties.[1]
In keeping with their vision and long term strategy for business expansion,
SMC management informed its employees in a letter dated August 13,
1991[2]that the company which was composed of four operating divisions
namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agri-business would undergo a restructuring.[3]
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were
spun-off and became two separate and distinct corporations: Magnolia
Corporation (Magnolia) and San Miguel Foods, Inc. (SMFI). Notwithstanding
the spin-offs, the CBA remained in force and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms
of the CBA and Article 253-A of the Labor Code. Negotiations started
sometime in July, 1992 with the two parties submitting their respective
proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining
unit of SMC should still include the employees of the spun-off corporations:
Magnolia and SMFI; and that the renegotiated terms of the CBA shall be
effective only for the remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had
moved to Magnolia and SMFI, automatically ceased to be part of the
bargaining unit at the SMC. Furthermore, the CBA should be effective for
three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and
duration of the CBA, petitioner-union declared a deadlock on September 29,
1990.
On October 2, 1992, a Notice of Strike was filed against SMC.
In order to avert a strike, SMC requested the National Conciliation and
Mediation Board (NCMB) to conduct preventive mediation. No settlement
was arrived at despite several meetings held between the parties.
On November 3, 1992, a strike vote was conducted which resulted in a yes
vote in favor of a strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a
petition with the Secretary of Labor praying that the latter assume
jurisdiction over the labor dispute in a vital industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor
dispute on November 10, 1992.[4] Several conciliation meetings were held
but still no agreement/settlement was arrived at by both parties.
After the parties submitted their respective position papers, the Secretary
of Labor issued the assailed Order on February 15, 1993 directing, among
others, that the renegotiated terms of the CBA shall be effective for the
period of three (3) years from June 30, 1992; and that such CBA shall cover
only the employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this
Order of the Secretary of Labor.
Subsequently, on March 30, 1995,[5] petitioner-union filed a Motion for
Issuance of a Temporary Restraining Order or Writ of Preliminary Injunction
to enjoin the holding of the certification elections in the different
companies, maintaining that the employees of Magnolia and SMFI fall
within the bargaining unit of SMC.
On March 29, 1995, the Court issued a resolution granting the temporary
restraining order prayed for.[6]
Meanwhile, an urgent motion for leave to intervene[7]in the case was filed
by the Samahan ng Malayang Manggagawa-San Miguel Corporation-
Federation of Free Workers (SMM-SMC-FFW) through its authorized
representiative, Elmer S. Armando, alleging that it is one of the contending
parties adversely effected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B.
Laguesma,[8] G.R. No. 101766, March 5, 1993, where the Court recognized
the separation of the employees of Magnolia from the SMC bargaining unit.
It then prayed for the lifting of the temporary restraining order.
60
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a
petition for the withdrawal/dismissal of the petition considering that the
temporary restraining order jeopardized the employees right to conclude a
new CBA. At the same time, he challenged the legal personality of Mr.
Raymundo Hipolito, Jr. to represent the Union as its president when the
latter was already officially dismissed from the company on October 4,
1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to
be effective for three years or for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees
of Magnolia and SMFI.
Petitioner-union contends that the duration for the non-representation
provisions of the CBA should be coterminous with the term of the
bargaining agency which in effect shall be for the remaining two years of the
current CBA, citing a previous decision of the Secretary of Labor on
December 14, 1992 in the matter of the labor dispute at Philippine Refining
Company.[9]
However, the Secretary of Labor, in her questioned Order of February 15,
1993 ruled that the renegotiated terms of the CBA at SMC should run for a
period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended which
reads:
ART. 253-A. Terms of a Collective Bargaining Agreement. Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No
petition questioning the majority status of the incumbent bargaining agent
shall be entertained and no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-day period
immediately before the date of expiry of such five year term of the
Collective Bargaining Agreement. All other provisions of the Collective
Bargaining Agreement shall be renegotiated not later than three (3) years
after its execution. Any agreement on such other provisions of the Collective
Bargaining Agreement entered into within six (6) months from the date of
expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such
date. If any such agreement is entered into beyond six months, the parties
shall agree on the duration of retroactivity thereof. In case of a deadlock in
the renegotiation of the collective bargaining agreement, the parties may
exercise their rights under this Code. (underlining supplied.)
Article 253-A is a new provision. This was incorporated by Section 21 of
Republic Act No. 6715 (the Herrera-Veloso Law) which took effect on March
21, 1989. This new provision states that the CBA has a term of five (5) years
instead of three years, before the amendment of the law as far as the
representation aspect is concerned. All other provisions of the CBA shall be
negotiated not later than three (3) years after its execution. The
representation aspect refers to the identity and majority status of the union
that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. All other provisions simply refers to
the rest of the CBA, economic as well as non-economic provisions, except
representation.[10]
As the Secretary of Labor herself observed in the instant case, the law is
clear and definite on the duration of the CBA insofar as the representation
aspect is concerned, but is quite ambiguous with the terms of the other
provisions of the CBA. It is a cardinal principle of statutory construction that
the Court must ascertain the legislative intent for the purpose of giving
effect to any statute. The history of the times and state of the things existing
when the act was framed or adopted must be followed and the conditions
of the things at the time of the enactment of the law should be considered
to determine the legislative intent.[11] We look into the discussions leading
to the passage of the law:
THE CHAIRMAN (REP. VELASCO): . . . the CBA, insofar as the economic
provisions are concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
61
THE CHAIRMAN (SEN. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three years puwede
nang magnegotiate in that CBA for the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years
or three years but assuming three years which, I think, thats the likelihood. .
..
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming
there will be a change of agent, at least he has one year to administer and
to adjust, to develop rapport with the management. Yan ang importante.
You know, for us na nagne-negotiate, and hazard talaga sa negotiation,
when we negotiate with somebody na hindi natin kilala, then, we are
governed by our biases na ito ay destroyer ng Labor; ang mga employer, ito
bayaran ko lang ito okay na.
Yan ang nangyayari, but let us give that allowance for one year to let them
know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial
peace if you encourage union to fight each other. Yan ang problema.[12]
xxxxxxxxx
HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the
CBA seem to provide some doubts later on in the implementation. Sabi kasi
rito, insofar as representation issue is concerned, seven years ang lifetime . .
.
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.

HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and
conditions, not later than three years.
HON. ISIDRO: Not later than three years, so within three years you have to
make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the terms, three years
na naman iyan then, seven years . . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period three years nang
three years, but under this law with respect to representation five years,
ano? Now, after three years, nagkaroon ng bagong terms, tapos na iyong
term, renewed na iyong terms, ang karapatan noon sa representation issue
mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat,
three plus three.
HON ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang
ang natatapos. So, another CBA was formed and this CBA mayroon na
naman siyang bagong five years with respect to representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and
conditions for three years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: On the third year you can start negotiating to
change the terms and conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .
62
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status
now can be questioned, so baka puwedeng magkaroon ng certification
election. If the incumbent union loses, then the new union administers the
contract for one year to give him time to know his counterpart the
employer, before he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with
respect to the terms and conditions and then, so you have to renew that in
three years you renew for another three years, mayroon na naman another
five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year. . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the
contract. Then, voluntary arbitration na kayo and then mayroon ka nang
probisyon retroact on the date of the expiry date. Pagnatalo and incumbent
unyon, mag-aassume and new union, administer the contract. As far as the
term ang condition, for one year, and that will give him time and the
employer to know each other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a
certification election, it would not want to administer a CBA which has not
been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what
is happening now in the country is that the term ng contract natin, duon din
mage-expire ang representation. Iyon and nangyari. That is where you have
the gulo. Ganoon and nangyari. So, ang nangyari diyan, pag-mayroon
certification election, expire ang contract, ano ang usual issue - company
union. I can you (sic) give you more what the incumbent union is giving. So
ang mangyayari diyan, pag-negotiate mo hardline na agad.
HON. CHAIRMAN VELOSO: Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms
and the representation aspect why do we have to distinguish between three
and five? Whats wrong with having a uniform expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang
reality diyan, Mart, pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six
months, thats the average, aabot pa minsan ng one year. Pagkatapos ng
negotiation mo, signing kayo. There will be an allowed period of one year.
Third year na, uumpisahan naman ang organizations, papasok na ang ibang
unyon because the reality in Trade Union committee, they organize, we
organize. So, actually, you have only industrial peace for one year, effective
industrial peace. That is what we are trying to change. Otherwise, we will
continue to discourage the investors and the union will never grow because
every other year it has to use its money for the certification election. Ang
grabe pang practice diyan, mag-a-advance ang federation for three years
union dues para panggastos lang sa certification election. That is what we
are trying to avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here is to create a legal
framework to promote industrial peace and to develop responsible and fair
labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the
effectivity . . .
xxx
HON. CHAIRMAN VELOSO. (continuing) . . in other words, the longer the
period of effectivity of the CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
63
HON. CHAIRMAN VELOSO: Only on
HON. CHAIRMAN HERRERA: the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have
to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years ang karamihan ng mga,
mag-negotiate when the company is (interrupted)[13]
xxx
From the aforesaid discussions, the legislators were more inclined to have
the period of effectivity for three (3) years insofar as the economic as well
as non-economic provisions are concerned, except representation.
Obviously, the framers of the law wanted to maintain industrial peace and
stability by having both management and labor work harmoniously together
without any disturbance. Thus, no outside union can enter the
establishment within five (5) years and challenge the status of the
incumbent union as the exclusive bargaining agent. Likewise, the terms and
conditions of employment (economic and non-economic) can not be
questioned by the employers or employees during the period of effectivity
of the CBA. The CBA is a contract between the parties and the parties must
respect the terms and conditions of the agreement.[14] Notably, the
framers of the law did not give a fixed term as to the effectivity of the terms
and conditions of employment. It can be gleaned from their discussions that
it was left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of effectivity for
the non-representation provisions of the CBA. Taking it from the history of
their CBAs, SMC intended to have the terms of the CBA effective for three
(3) years reckoned from the expiration of the old or previous CBA which was
on June 30, 1989, as it provides:

SECTION 1. This Agreement which shall be binding upon the parties hereto
and their respective successors-in-interest, shall become effective and shall
remain in force and effect until June 30, 1992.
The argument that the PRC case is applicable is indeed misplaced. We quote
with favor the Order of the Secretary of Labor in the light of SMCs peculiar
situation as compared with PRCs company situation.
It is true that in the Philippine Refining Company case (OS-AJ-0031-91 (sic),
Labor Dispute at Philippine Refining Company), we ruled that the term of
the renegotiated provisions of the CBA should coincide with the remaining
term of the agency. In doing so, we placed premium on the fact that PRC has
only two (2) unions and no other union had yet executed a renewed term of
3 years. Nonetheless, in ruling for a shortened term, we were guided by our
considered perception that the said term would improve, rather than ruin,
the general welfare of both the workers and the company. It is equally true
that once the economic provisions of the CBA expire, the residual
representative status of the union is effective for only 2 more years.
However, if circumstances warrant that the contract duration which it is
soliciting from the company for the benefit of the workers, shall be a little
bit longer than its lifespan, then this Office cannot stand in the way of a
more ideal situation. We must not lose sight of the fact that the primordial
purpose of a collective contract is to promote industrial harmony and
stability in the terms and conditions of employment. To our mind, this
objective cannot be achieved without giving due consideration to the
peculiarities and unique characteristics of the employer. In the case at bar,
there is no dispute that the mother corporation (SMC) spun-off two of its
divisions and thereby gave birth to two (2) other entities now known as
Magnolia Corporation and San Miguel Foods, Inc. In order to effect a
smooth transition, the companies concerned continued to recognize the
existing unions as the bargaining agents of their respective bargaining units.
In the meantime, the other unions in these companies eventually concluded
their CBA negotiations on the remaining term and all of them agreed on a 3-
year cycle. Notably, the following CBAs were forged incorporating a term of
3-years on the renegotiated provisions, to wit:
1. SMC - daily-paid employees union (IBM)
64
2. SMF - monthly-paid employees and daily-paid employees at the Cabuyao
Plant.
There is a direct link between the voluntary recognition by the company of
the continuing representative status of the unions after the aforementioned
spin-offs and the stand of the company for a 3-year renegotiated cycle when
the economic provisions of the existing CBAs expired, i.e., to maintain
stability and avoid confusion when the umbilical cord of the two divisions
were severed from their parent. These two cannot be considered
independently of each other for they were intended to reinforce one
another. Precisely, the company conceded to face the same union
notwithstanding the spin-offs in order to preserve industrial peace during
the infancy of the two corporations. If the union would insist on a shorter
renegotiated term, then all the advantages gained by both parties in this
regard, would have gone to naught. With this in mind, this office feels that it
will betray its mandate should we order the parties to execute a 2-year
renegotiated term for then chaos and confusion, rather than tranquility,
would be the order of the day. Worse, there is a strong likelihood that such
a ruling might spawn discontent and possible mass actions against the
company coming from the other unions who had already agreed to a 3-year
renegotiated terms. If this happens, the purpose of this Offices intervention
into the parties controversy would have been defeated.[15]
The issue as to the term of the non-representation provisions of the CBA
need not belabored especially when we take note of the Memorandum of
the Secretary of Labor dated February 24, 1994 which was mentioned in the
Resolution of Undersecretary Bienvenido Laguesma on January 16, 1995 in
the certification election case involving the SMC employees.[16] In said
memorandum, the Secretary of Labor had occasion to clarify the term of the
renegotiated terms of the CBA vis-a-vis the term of the bargaining agent, to
wit:
As a matter of policy the parties are encourages (sic) to enter into a
renegotiated CBA with a term which would coincidde (sic) with the aforesaid
five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a
renegotiated contract with a term of three (3) years or one which does not
coincide with the said 5-year term, and said agreement is ratified by
majority of the members in the bargaining unit, the subject contract is valid
and legal and therefore, binds the contracting parties. The same will
however not adversely affect the right of another union to challenge the
majority status of the incumbent bargaining agent within sixty (60) days
before the lapse of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the part of the
Secretary of Labor in ruling that the effectivity of the renegotiated terms of
the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-
unions assertion that the employees of Magnolia and SMFI should still be
considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct companies on
October 1, 1991. Management saw the need for these transformations in
keeping with its vision and long term strategy as it explained in its letter
addressed to the employees dated August 13, 1991:
x x x As early as 1986, we announced the decentralization program and
spoke of the need for structures that can react fast to competition, a
changing environment, shorter product life cycles and shifts in consumer
preference. We further stated in the 1987 Annual Report to Stockholders
that San Miguels businesses will be more autonomous and self sufficient so
as to better acquire and master new technologies, cope with a labor force
with different expertises and expectations, and master and satisfy the
changing needs of our customers and end-consumers. As subsidiaries,
Magnolia and FLD will gain better industry focus and flexibility, greater
awareness of operating results, and speedier, more responsive decision
making.
xxx
We only have to look at the experience of Coca-Cola Bottlers Philippines,
Inc., since this company was organized about ten years ago, to see the
benefits that arise from restructuring a division of San Miguel into a more
competitive organization. As a stand-alone enterprise, CCBPI engineered a
dramatic turnaround and has sustained its sales and market share
leadership ever since.
65
We are confident that history will repeat itself, and the transformation of
Magnolia and FLD will be successful as that of CCBPI.[17]
Undeniably, the transformation of the companies was a management
prerogative and business judgment which the courts can not look into
unless it is contrary to law, public policy or morals. Neither can we impute
any bad faith on the part of SMC so as to justify the application of the
doctrine of piercing the corporate veil.[18] Ever mindful of the employees
interests, management has assured the concerned employees that they will
be absorbed by the new corporations without loss of tenure and retaining
their present pay and benefits according to the existing CBAs.[19] They were
advised that upon the expiration of the CBAs, new agreements will be
negotiated between the management of the new corporations and the
bargaining representatives of the employees concerned. As a result of the
spin-offs:
1. Each of the companies are run by, supervised and controlled by different
management teams including separate human resource/personnel
managers.
2. Each Company enforces its own administrative and operational rules and
policies and are not dependent on each other in their operations.
3. Each entity maintains separate financial statements and are audited
separately from each other.[20]
Indubitably, therefore, Magnolia and SMFI became distinct entities with
separate juridical personalities. Thus, they can not belong to a single
bargaining unit as held in the case of Diatagon Labor Federation Local 110 of
the ULGWP v. Ople.[21] We elucidate:
The fact that their businesses are related and that the 236 employees of
Georgia Pacific International Corporation were originally employees of
Lianga Bay Logging Co., Inc. is not a justification for disregarding their
separate personalities. Hence, the 236 employees, who are now attached to
Georgia Pacific International Corporation, should not be allowed to vote in
the certification election at the Lianga Bay Logging Co., Inc. They should vote
at a separate certification election to determine the collective bargaining
representative of the employees of Georgia Pacific International
Corporation.
Petitioner-unions attempt to include the employees of Magnolia and SMFI
in the SMC bargaining unit so as to have a bigger mass base of employees
has, therefore, no more valid ground.
Moreover, in determining an appropriate bargaining unit, 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 performed.[22] Considering the spin-offs, the
companies would consequently have their respective and distinctive
concerns in terms of the nature of work, wages, hours of work and other
conditions of employment. Interests of employees in the different
companies perforce differ. SMC is engaged in the business of beer
manufacturing. Magnolia is involved in the manufacturing and processing of
dairy products[23] while SMFI is involved in the production of feeds and the
processing of chicken.[24] The nature of their products and scales of
business may require different skills which must necessarily be
commensurated by different compensation packages. The different
companies may have different volumes of work and different working
conditions. For such reason, the employees of the different companies see
the need to group themselves together and organize themselves into
distinctive and different groups. It would then be best to have separate
bargaining units for the different companies where the employees can
bargain separately according to their needs and according to their own
working conditions.
We reiterate what we have explained in the case of University of the
Philippines v. Ferrer-Calleja[25] that:
[T]here are various factors which must be satisfied and considered in
determining the proper constituency of a bargaining unit. No one particular
factor is itself decisive of the determination. The weight accorded to any
particular factor varies in accordance with the particular question or
questions that may arise in a given case. What are these factors?
Rothenberg mentions a good number, but the most pertinent to our case
are: (1) will of the employees (Globe Doctrine); (2) affinity and unit of
66
employees interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions; (3) prior collective
bargaining history; and (4) employment status, such as temporary, seasonal
and probationary employees x x.
xxx
An enlightening appraisal of the problem of defining an appropriate
bargaining unit is given in the 10th Annual Report of the National Labor
Relations Board wherein it is emphasized that the factors which said board
may consider and weigh in fixing appropriate units are: the history, extent
and type of organization of employees; the history of their collective
bargaining; the history, extent and type of organization of employees in
other plants of the same employer, or other employers in the same
industry; the skill wages, work, and working conditions of the employees;
the desires of the employees; the eligibility of the employees for
membership in the union or unions involved; and the relationship between
the unit or units proposed and the employers organization, management,
and operation x x.
x x In said report, it is likewise emphasized that the basic test in determining
the appropriate bargaining unit is that a unit, to be appropriate, must affect
a grouping of employees who have substantial, mutual interests in wages,
hours, working conditions and other subjects of collective bargaining (citing
Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162) x x.
Finally, we take note of the fact that the separate interests of the
employees of Magnolia and SMFI from those of SMC has been recognized in
the case of Daniel Borbon v. Laguesma.[26] We quote:
Even assuming in gratia argumenti that at the time of the election they were
regular employees of San Miguel, nonetheless, these workers are no longer
connected with San Miguel Corporation in any manner because Magnolia
has ceased to be a division of San Miguel Corporation and has been formed
into a separate corporation with a personality of its own (p. 305, Rollo). This
development, which was brought to our attention by private respondents,
necessarily renders moot and academic any further discourse on the
propriety of the elections which petitioners impugn via the present recourse
(p. 319, Rollo).

In view of all the foregoing, we do not find any grave abuse of discretion on
the part of the Secretary of Labor in rendering the assailed Order.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary
Restraining Order issued on March 29, 1995 is lifted.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 106483 May 22, 1995
ERNESTO L. CALLADO, petitioner,
vs.
INTERNATIONAL RICE RESEARCH INSTITUTE, respondent.
ROMERO, J.:
Did the International Rice Research Institute (IRRI) waive its immunity from
suit in this dispute which arose from an employer-employee relationship?
We rule in the negative and vote to dismiss the petition.
Ernesto Callado, petitioner, was employed as a driver at the IRRI from April
11, 1983 to December 14, 1990. On February 11, 1990, while driving an IRRI
vehicle on an official trip to the Ninoy Aquino International Airport and back
to the IRRI, petitioner figured in an accident.
Petitioner was informed of the findings of a preliminary investigation
conducted by the IRRI's Human Resource Development Department
67
Manager in a Memorandum dated March 5, 1990. 1 In view of the aforesaid
findings, he was charged with:
(1) Driving an institute vehicle while on official duty under the influence of
liquor;
(2) Serious misconduct consisting of your failure to report to your
supervisors the failure of your vehicle to start because of a problem with the
car battery which, you alleged, required you to overstay in Manila for more
than six (6) hours, whereas, had you reported the matter to IRRI, Los Baños
by telephone, your problem could have been solved within one or two
hours;
(3) Gross and habitual neglect of your duties. 2
In a Memorandum dated March 9, 1990, petitioner submitted his answer
and defenses to the charges against him. 3 After evaluating petitioner's
answer, explanations and other evidence, IRRI issued a Notice of
Termination to petitioner on December 7, 1990. 4
Thereafter, petitioner filed a complaint on December 19, 1990 before the
Labor Arbiter for illegal dismissal, illegal suspension and indemnity pay with
moral and exemplary damages and attorney's fees.
On January 2, 1991, private respondent IRRI, through counsel, wrote the
Labor Arbiter to inform him that the Institute enjoys immunity from legal
process by virtue of Article 3 of Presidential Decree No. 1620, 5 and that it
invokes such diplomatic immunity and privileges as an international
organization in the instant case filed by petitioner, not having waived the
same. 6
IRRI likewise wrote in the same tenor to the Regional Director of the
Department of Labor and Employment. 7
While admitting IRRI's defense of immunity, the Labor Arbiter, nonetheless,
cited an Order issued by the Institute on August 13, 1991 to the effect that
"in all cases of termination, respondent IRRI waives its immunity," 8 and,
accordingly, considered the defense of immunity no longer a legal obstacle
in resolving the case. The dispositive portion of the Labor arbiter's decision
dated October 31, 1991, reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
respondent to reinstate complainant to his former position without loss or
(sic) seniority rights and privileges within five (5) days from receipt hereof
and to pay his full backwages from March 7, 1990 to October 31, 1991, in
the total amount of P83,048.75 computed on the basis of his last monthly
salary. 9
The NLRC found merit in private respondent' s appeal and, finding that IRRI
did not waive its immunity, ordered the aforesaid decision of the Labor
Arbiter set aside and the complaint dismissed. 10
Hence, this petition where it is contended that the immunity of the IRRI as
an international organization granted by Article 3 of Presidential Decree No.
1620 may not be invoked in the case at bench inasmuch as it waived the
same by virtue of its Memorandum on "Guidelines on the handling of
dismissed employees in relation to P.D. 1620." 11
It is also petitioner's position that a dismissal of his complaint before the
Labor Arbiter leaves him no other remedy through which he can seek
redress. He further states that since the investigation of his case was not
referred to the Council of IRRI Employees and Management (CIEM), he was
denied his constitutional right to due process.
We find no merit in petitioner's arguments.
IRRI's immunity from suit is undisputed.
Presidential Decree No. 1620, Article 3 provides:
Art. 3. Immunity from Legal Process. The Institute shall enjoy immunity from
any penal, civil and administrative proceedings, except insofar as that
immunity has been expressly waived by the Director-General of the Institute
or his authorized representatives.
In the case of International Catholic Migration Commission v. Hon. Calleja,
et al. and Kapisanan ng Manggagawa at TAC sa IRRI v. Secretary of Labor
68
and Employment and IRRI, 12 the Court upheld the constitutionality of the
aforequoted law. After the Court noted the letter of the Acting Secretary of
Foreign Affairs to the Secretary of Labor dated June 17, 1987, where the
immunity of IRRI from the jurisdiction of the Department of Labor and
Employment was sustained, the Court stated that this opinion constituted
"a categorical recognition by the Executive Branch of the Government that .
. . IRRI enjoy(s) immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon the
Courts in order not to embarass a political department of Government. 13
We cited the Court's earlier pronouncement in WHO v. Hon. Benjamin
Aquino, et al., 14 to wit:
It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by the
executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the
government as in the case at bar, it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law
officer of the government . . . or other officer acting under his direction.
Hence, in adherence to the settled principle that courts may not so exercise
their jurisdiction . . . as to embarass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that in such cases the
judicial department of (this) government follows the action of the political
branch and will not embarrass the latter by assuming an antagonistic
jurisdiction. 15
Further, we held that "(t)he raison d'etre for these immunities is the
assurance of unimpeded performance of their functions by the agencies
concerned.
The grant of immunity from local jurisdiction to . . . and IRRI is clearly
necessitated by their international character and respective purposes. The
objective is to avoid the danger of partiality and interference by the host
country in their internal workings. The exercise of jurisdiction by the
Department of Labor in these instances would defeat the very purpose of
immunity, which is to shield the affairs of international organizations, in
accordance with international practice, from political pressure or control by
the host country to the prejudice of member States of the organization, and
to ensure the unhampered the performance of their functions. 16
The grant of immunity to IRRI is clear and unequivocal and an express
waiver by its Director-General is the only way by which it may relinquish or
abandon this immunity.
On the matter of waiving its immunity from suit, IRRI had, early on, made its
position clear. Through counsel, the Institute wrote the Labor Arbiter
categorically informing him that the Institute will not waive its diplomatic
immunity. In the second place, petitioner's reliance on the Memorandum
with "Guidelines in handling cases of dismissal of employees in relation to
P.D. 1620" dated July 26, 1983, is misplaced. The Memorandum reads, in
part:
Time and again the Institute has reiterated that it will not use its immunity
under P.D. 1620 for the purpose of terminating the services of any of its
employees. Despite continuing efforts on the part of IRRI to live up to this
undertaking, there appears to be apprehension in the minds of some IRRI
employees. To help allay these fears the following guidelines will be
followed hereafter by the Personnel/Legal Office while handling cases of
dismissed employees.
xxx xxx xxx
2. Notification/manifestation to MOLE or labor arbiter
If and when a dismissed employee files a complaint against the Institute
contesting the legality of dismissal, IRRI's answer to the complaint will:
Indicate in the identification of IRRI that it is an international organization
operating under the laws of the Philippines including P.D. 1620. and
Base the defense on the merits and facts of the case as well as the legality of
the cause or causes for termination.
3) Waiving immunity under P.D. 1620
If the plaintiff's attorney or the arbiter, asks if IRRI will waive its immunity
we may reply that the Institute will be happy to do so, as it has in the past in
the formal manner required thereby reaffirming our commitment to abide
69
by the laws of the Philippines and our full faith in the integrity and
impartially of the legal system. 17 (Emphasis in this paragraphs ours)
From the last paragraph of the foregoing quotation, it is clear that in cases
involving dismissed employees, the Institute may waive its immunity,
signifying that such waiver is discretionary on its part.
We agree with private respondent IRRI that this memorandum cannot, by
any stretch of the imagination, be considered the express waiver by the
Director-General. Respondent Commission has quoted IRRI's reply thus:
The 1983 . . . is an internal memo addressed to Personnel and Legal Office
and was issued for its guidance in handling those cases where IRRI opts to
waive its immunity. It is not a declaration of waiver for all cases. This is
apparent from the use of the permissive term "may" rather than the
mandatory term "shall" in the last paragraph of the memo. Certainly the
memo cannot be considered as the express waiver by the Director General
as contemplated by P.D. 1620, especially since the memo was issued by a
former Director-General. At the very least, the express declaration of the
incumbent Director-general supersedes the 1983 memo and should be
accorded greater respect. It would be equally important to point out that
the Personnel and Legal Office has been non-existent since 1988 as a result
of major reorganization of the IRRI. Cases of IRRI before DOLE are handled
by an external Legal Counsel as in this particular
case. 18 (Emphasis supplied)
The memorandum, issued by the former Director-General to a now-defunct
division of the IRRI, was meant for internal circulation and not as a pledge of
waiver in all cases arising from dismissal of employees. Moreover, the IRRI's
letter to the Labor Arbiter in the case at bench made in 1991 declaring that
it has no intention of waiving its immunity, at the very least, supplants any
pronouncement of alleged waiver issued in previous cases.
Petitioner's allegation that he was denied due process is unfounded and has
no basis.
It is not denied that he was informed of the findings and charges resulting
from an investigation conducted of his case in accordance with IRRI policies
and procedures. He had a chance to comment thereon in a Memorandum
he submitted to the Manager of the Human Resource and Development
Department. Therefore, he was given proper notice and adequate
opportunity to refute the charges and findings, hereby fulfilling the basic
requirements of due process.
Finally, on the issue of referral to the Council of IRRI Employees and
Management (CIEM), petitioner similarly fails to persuade the Court.
The Court, in the Kapisanan ng mga Manggagawa at TAC sa IRRI case, 19
held:
Neither are the employees of IRRI without remedy in case of dispute with
management as, in fact, there had been organized a forum for better
management-employee relationship as evidenced by the formation of the
Council of IRRI Employees and Management (CIEM) wherein "both
management and employees were and still are represented for purposes of
maintaining mutual and beneficial cooperation between IRRI and its
employees." The existence of this Union factually and tellingly belies the
argument that Pres. Decree No. Decree No. 1620, which grants to IRRI the
status, privileges and immunities of an international organization, deprives
its employees of the right to self-organization.
We have earlier concluded that petitioner was not denied due process, and
this, notwithstanding the non-referral to the Council of IRRI Employees and
Management. Private respondent correctly pointed out that petitioner,
having opted not to seek the help of the CIEM Grievance Committee,
prepared his answer by his own self. 20 He cannot now fault the Institute
for not referring his case to the CIEM.
IN VIEW OF THE FOREGOING, the petition for certiorari is DISMISSED. No
costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
70
G.R. No. 88957 June 25, 1992
PHILIPS INDUSTRIAL DEVELOPMENT, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPS EMPLOYEES
ORGANIZATION (FFW), respondents.
DAVIDE, JR., J.:
In this petition for certiorari and prohibition under Rule 65 of the Rules of
Court with a prayer for a temporary restraining order and/or a writ of
preliminary injunction, petitioner Philips Industrial Development, Inc. (PIDI)
seeks to set aside the Decision and Resolution, dated 16 January 1989 and
17 March 1989, respectively, of the National Labor Relations Commission
(NLRC) in Case No. NLRC-NCR-00-11-03936-87 on the ground that it
committed grave abuse of discretion amounting to lack of jurisdiction in
holding that service engineers, sales representatives and confidential
employees of PIDI are qualified to be included in the existing bargaining
unit.
PIDI is a domestic corporation engaged in the manufacturing and marketing
of electronic products Since 1971, it had a total of six (6) collective
bargaining agreements (CBAs) with private respondent Philips Employees
Organization-FFW (PEO-FFW), a registered labor union and the certified
bargaining agent of all the rank and file employees of PIDI. In the first CBA
(1971-1974), the supervisors referred to in R.A. No. 875, confidential
employees, security guards, temporary employees and sales representatives
were excluded from the bargaining unit. In the second to the fifth CBAs
(1975-1977; 1978-1980; 1981-1983; and 1984-1986), the sales force,
confidential employees and heads of small units, together with the
managerial employees, temporary employees and security personnel, were
specifically excluded from the bargaining unit. 1 The confidential employees
are the division secretaries of light/telecom/data and consumer electronics,
marketing managers, secretaries of the corporate planning and business
manager, fiscal and financial system manager and audit and EDP manager,
and the staff of both the General Management and the Personnel
Department. 2
In the sixth CBA covering the years 1987 to 1989, it was agreed upon,
among others, that the subject of inclusion or exclusion of service
engineers, sales personnel and confidential employees in the coverage of
the bargaining unit would be submitted for arbitration. Pursuant thereto, on
June 1987, PEO-FFW filed a petition before the Bureau of Labor Relations
(BLR) praying for an order "directing the parties to select a voluntary
arbitrator in accordance with its rules and regulations."
As the parties failed to agree on a voluntary arbitrator, the BLR endorsed
the petition to the Executive Labor Arbiter of the National Capital Region for
compulsory arbitration pursuant to Article 228 of the Labor Code. Docketed
as Case No. NLRC-NCR-00-11-03936-87, the case was assigned to Executive
Labor Arbiter Arthur Amansec.
On 17 March 1988, Labor Arbiter Amansec rendered a decision, the
dispositive portion of which states:
In view of the foregoing, a decision is hereby rendered, ordering the
respondent to conduct a referendum to determine the will of the service
engineers, sales representatives as to their inclusion or exclusion in the
bargaining unit.
It is hereby declared that the Division Secretaries and all Staff of general
management, personnel and industrial relations department, secretaries of
audit, EDP, financial system are confidential employees and as such are
hereby deemed excluded in the bargaining unit.
SO ORDERED.
PEO-FFW appealed from the decision to the NLRC.
On 16 January 1989, the NLRC rendered the questioned decision, the
dispositive portion of which reads:
WHEREFORE, the foregoing premises considered, the appealed decision of
the Executive Labor Arbiter is hereby SET ASIDE and a new one entered
71
declaring respondent company's Service Engineers, Sales Force, division
secretaries, all Staff of General Management, Personnel and Industrial
Relations Department, Secretaries of Audit, EDP and Financial Systems are
included within the rank and file bargaining unit.
SO ORDERED.
The reversal is anchored on the respondent NLRC's conclusion that based on
Section 1, 3 Rule II, Book V of the Omnibus Rules Implementing the Labor
Code, as amended by Section 3, Implementing Rules of E.O. No. 111;
paragraph (c) Section 2, Rule V of the same Code, as amended by Section 6 4
of the Implementing Rules of E.O. No. 111; and Article 245 5 of the Labor
Code, as amended:
. . . all workers, except managerial employees and security personnel, are
qualified to join or be a part of the bargaining unit. . . .
It further ruled that:
The Executive Labor Arbiters directive that the service engineers and sales
representatives to (sic) conduct a referendum among themselves is
erroneous inasmuch as it arrogates unto said employees the right to define
what the law means. It would not be amiss to state at this point that there
would be no one more interested in excluding the subject employees from
the bargaining unit than management and that it would not be improbable
for the latter to lobby and/or exert pressure on the employees concerned,
thus agitating unrest among the rank-and-file. Likewise, the Executive Labor
Arbiter's declaration that the Division Secretaries and all Staff of general
management, personnel and industrial relations department, secretaries of
audit, EDP and financial system "are confidential employees and as such are
hereby deemed excluded in (sic) the bargaining unit" is contrary to law for
the simple reason that the law, as earlier quoted, does not mention them as
among those to be excluded from the bargaining unit only (sic) managerial
employees and security guards. As a matter of fact, supervisory unions have
already been dissolved and their members who do not fall within the
definition of managerial employees have become eligible to join or assist
the rank-and-file organization. 6
Its motion for the reconsideration of this decision having been denied by the
NLRC in its Resolution of 16 March 1989, a copy of which it received on 8
June 1989, petitioner PIDI filed the instant petition on 20 July 1989, alleging
that:
I representatives and confidential employees (division secretaries, staff of
THE NLRC COMMITTED ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION IN HOLDING THAT SERVICE ENGINEERS, SALES
REPRESENTATIVES AND CONFIDENTIAL EMPLOYEES OF PETITIONER ARE
QUALIFIED TO BE PART OF THE EXISTING BARGAINING UNIT.
II
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION IN NOT APPLYING THE TIME HONORED "GLOBE
DOCTRINE." 7
On 31 July 1989, this Court; required the respondents to comment on the
petition, which PEO-FFW complied with on 28 August 1989. Public
respondent NLRC, thru its counsel, the Solicitor General, moved for, and was
granted a 30-day extension to file its Comment.
On 18 September 1989, this Court required the parties to show cause why
the petition should not be dismissed in view of the finality of the NLRC
decision as provided for by the penultimate sentence of Article 223 of the
Labor Code, as amended by R.A. No. 6715 R..A. No. 6715, which amended
Article 223 of the Labor Code, was enacted on 2 March 1989 and took effect
on 21 March 1989. The parties subsequently complied with the Resolution.
On 16 May 1990, this Court required the parties to submit Memoranda
explaining the effect in this case of Article 223 of the Labor Code, as
amended by Section 12 of R.A. No-6715 with respect to the finality of
decisions of the NLRC. The parties complied separately with the same.
On 10 September 1990, this Court gave due course to the petition and
required the parties to submit their respective Memoranda. The petitioner
and the Office of the Solicitor General filed their separate Memoranda. On
the other hand, PEO-FFW moved that its Motion and manifestation dated
72
23 August 1989 be considered as its Memorandum; this Court granted the
same.
As stated earlier, the principal issue in this case is whether the NLRC
committed grave abuse of discretion in holding that service engineers, sales
general management, personnel and industrial relations department,
secretaries of audit, EDP and financial system) are qualified to be included in
the existing bargaining unit. Petitioner maintains that it did, and in support
of its stand that said employees should not be absorbed by the existing
bargaining unit, it urges this Court to consider these points:
1) The inclusion of the group in the existing bargaining unit would run
counter to the history of this parties CBA. The parties' five (5) previous CBAs
consistently excluded this group of employees from the scope of the
bargaining unit. The rationale for such exclusion is that these employees
hold positions which are highly sensitive, confidential and of a highly
fiduciary nature; to include them in the bargaining unit may subject the
company to breaches in security and the possible revelation of highly
sensitive and confidential matters. It would cripple the company's
bargaining position and would give undue advantage to the union.
2) The absence of mutuality of interests between this group of
employees and the regular rank and file militates against such inclusion. A
table prepared by the petitioner shows the disparity of interests between
the said groups:
SERVICE ENGINEERS SERVICE
SALES REPRESENTATIVES TECHNICIANS
(Non-Bargaining (Bargaining
AREAS OF INTEREST Unit Employees) Unit Employees)
Qualifications Professional Employees High School/
Vocational
Grads.
Work Schedule With Night Shift None
Schedule
Night Shift 10% of Basic Rate None
Differential Pay express will or desire of the employees shall be considered, they should be
Stand-By Call & On Stand-By Call with: None allowed to determine for themselves what union to join or form. The best
Allowance First Line:15% of way to determine their preference is through a referendum. As shown by
basic rate the records, such a. referendum was decreed by the Executive Labor
Second Line: 10% of Arbiter.
basic rate
Uniforms None 2 sets of polo The petition is impressed with merit.
& pants every
6 months At the outset, We express Our agreement with the petitioner's view that
Retirement Benefits 15 yrs. ser.70% 15 yrs. serv. 50% respondent NLRC did not quite accurately comprehend the issue raised
16 75% 16 85% before it. Indeed, the issue is not whether the subject employees may join
17 80% 17 90% or form a union, but rather, whether or not they may be part of the existing
18 85% 18 100% bargaining unit for the rank and file employees of PIDI.
19 90% 19 115%
20 100% 20 135% Even if the issue was, indeed, as perceived by the NLRC, still, a palpable
Year End Performance Merit Increase system None error was committed by it in ruling that under the law, all workers, except
Evaluation managerial employees and security personnel, are qualified to join a union,
Sales Commission Yes None or form part of a bargaining unit. At the time Case No. NLRC-NCR-00-11-
Car Loan Yes None 03936-87 was filed in 1987, security personnel were no longer disqualified
Precalculated Yes None from joining or forming a union.
Kilometer allowance
Section 6 of E.O. No. 111, enacted on 24 December 1986, repealed the
original provisions of Article 245 of the Labor Code, reading as follows:

The Office of the Solicitor General supports the decision of the Executive Art. 245. Ineligibility of security personnel to join any labor
Labor Arbiter and refuses to uphold the position of the NLRC. It holds the organization. — Security guards and other personnel employed for the
view that the division Secretaries; the staff members of General protection and security of the person, properties and premises of the
Management, Personnel and the Industrial Relations Department; and the employer shall not be eligible for membership, in any labor organization.
secretaries of Audit, EDP and Financial Systems, are disqualified from joining
the PEO-FFW as they are confidential employees. They cannot even form a and substituted it with the following provision:
union of their own for, as held in Golden Farms, Inc. vs. Ferrer-Calleja, 8 the
rationale for the disqualification of managerial employees from joining Art. 245. Right of employees in the public service. — 10
unions holds true also for confidential employees. As regards the sales
representatives and service engineers, however, there is no doubt that they xxx xxx xxx
are entitled to join or form a union, as they are not disqualified by law from
doing so. Considering that they have interests dissimilar to those of the rank By virtue of such repeal and substitution, security guards became eligible for
and file employees comprising the existing bargaining unit, and following membership in any labor organization. 11
the Globe Doctrine enunciated in In Re: Globe Machine and Stamping
Company 9 to the effect that in determining the proper bargaining unit the
73
On the main issue raised before Us, it is quite obvious that respondent NLRC
committed grave abuse of discretion in reversing the decision of the
Executive Labor Arbiter and in decreeing that PIDI's "Service Engineers, Sales
Force, division secretaries, all Staff of General Management, Personnel and
Industrial Relations Department, Secretaries of Audit, EDP and Financial
Systems are included within the rank and file bargaining unit."
In the first place, all these employees, with the exception of the service
engineers and the sales force personnel, are confidential employees. Their
classification as such is not seriously disputed by PEO-FFW; the five (5)
previous CBAs between PIDI and PEO-FFW explicitly considered them as
confidential employees. By the very nature of their functions, they assist
and act in a confidential capacity to, or have access to confidential matters
of, persons who exercise managerial functions in the field of labor relations.
12 As such, the rationale behind the ineligibility of managerial employees to
form, assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon Augusto Sanchez, 13 this Court
elaborated on this rationale, thus:
. . . The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the
latter might not be assured of their loyalty, to the Union in view of evident
conflict of interests. The Union can also become company-dominated with
the presence of managerial employees in Union membership.
In Golden Farms, Inc. vs. Ferrer-Calleja, 14 this Court explicitly made this
rationale applicable to confidential employees:
This rationale holds true also for confidential employees such as accounting
personnel, radio and telegraph operators, who having access to confidential
information, may become the source of undue advantage. Said employee(s)
may act as a spy or, spies of either party to a collective bargaining
agreement. This is specially true in the present case where the petitioning
Union is already the bargaining agent of the rank-and-file employees in the
establishment. To allow the confidential employees to join the existing
Union of the rank-and-file would be in violation of the terms of the
Collective Bargaining Agreement wherein this kind of employees by the
nature of their functions/ positions are expressly excluded.
74
As regards the service engineers and the sales representatives, two (2)
points which respondent NLRC likewise arbitrarily and erroneously ruled
upon agreed to be discussed. Firstly, in holding that they are included in the
bargaining unit for the rank and file employees of PIDI, the NLRC practically
forced them to become members of PEO-FFW or to be subject to its sphere
of influence, it being the certified bargaining agent for the subject
bargaining unit. This violates, obstructs, impairs and impedes the service
engineers' and the sales representatives' constitutional right to form unions
or associations 15 and to self-organization. 16 In Victoriano vs. Elizalde Rope
Workers Union, 17 this Court already ruled:
. . . Notwithstanding the different theories propounded by the different
schools of jurisprudence regarding the nature and contents of a "right", it
can be safely said that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely: first, liberty or freedom,
i.e., the absence of legal restraint, whereby an employee may act for himself
without being prevented by law; and second, power, whereby an employee
may, as he pleases, join or refrain from joining an association. It is,
therefore, the employee who should decide for himself whether he should
join or not an association; and should he choose to join, he himself makes
up his mind as to which association he would join; and even after he has
joined, he still retains the liberty and the power to leave and cancel his
membership with said organization at any time. 18 It is clear, therefore, that
the right to join a union includes the right to abstain from joining any
union. 19 Inasmuch as what both the Constitution and the Industrial Peace
Act have recognized, and guaranteed to the employee, is the "right" to join
associations of his choice, it would be absurd to say that the law also
imposes, in the same breath, upon the employee the duty to join
associations. The law does not enjoin an employee to sign up with any
association.
The decision then of the Executive Labor Arbiter in merely directing the
holding of a referendum "to determine the will of the service engineers,
sales representatives as to their inclusion or exclusion in (sic) the bargaining
unit" is the most appropriate procedure that conforms with their right to
form, assist or join in labor union or organization. However, since this
decision was rendered before the effectivity of R.A. No. 6715, it must now
be stressed that its future application to the private parties in this case
should, insofar as service engineers and sales representatives holding
supervisory positions or functions are concerned, take into account the
present Article 245 20 of the Labor Code which, as amended by R.A. No.
6715, now reads:

ARTICLE 245. Ineligibility of managerial employees to join any labor

organization; right of supervisory employees. — Managerial employees are
not eligible to join, assist or form any labor organization. Supervisory
employees shall not be eligible for membership in a labor organization of
the rank-and-file employees but may join, assist or form separate labor
organizations of their own. (emphasis supplied)

The foregoing disquisitions render unnecessary a discussion on the second

ground on the alleged grave abuse of discretion on the part of the NLRC in
not applying the "Globe Doctrine". Suffice it to state here that since the only
issue is the subject employees' inclusion in or exclusion from the bargaining
unit in question, and PIDI never questioned the decision of the Executive
Labor Arbiter, the Globe Doctrine finds no application. Besides, this doctrine
applies only in instances of evenly balanced claims by competitive groups
for the right to be established as the bargaining unit, 21 which do not obtain
in this case.

WHEREFORE, the petition is hereby GRANTED. The Decision of public

respondent National Labor Relations Commission in Case No. NLRC-NCR-00-
11-03936-87, promulgated on 16 January 1989, is hereby SET ASIDE while
the Decision of the Executive Labor Arbiter in said case dated 17 March
1988 is hereby REINSTATED, subject to the modifications above indicated.
Costs against private respondent.

SO ORDERED.

75